10-K

TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from .................... to....................

Commission file number 1-4879

DIEBOLD, INCORPORATED

(Exact name of Registrant as specified in its charter)

Ohio	34-0183970
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio	44720-8077
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (330) 490-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered:
Common Shares $1.25 Par Value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

State the aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 1, 2000. The aggregate market value was computed by using the closing price on the New York Stock Exchange on March 1, 2000 of $24.75 per share.

Common Shares, Par Value $1.25 Per Share $1,740,394,904

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Class
Common Shares $1.25 Par Value Outstanding at March 1, 2000
71,158,405 Shares

DOCUMENTS INCORPORATED BY REFERENCE

(1) PROXY STATEMENT FOR 2000 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 19, 2000

		PART OF 10-K
		INTO WHICH
CAPTION OR HEADING	PAGE NO.	INCORPORATED	ITEM NO.
Information about Nominees for Election as Directors	3-8	III		10
Executive Compensation	8-18	III		11
Annual Meeting of Shareholders; Security Ownership of Directors and Management	2-6	III		12
Compensation Committee Interlocks and Insider Participation	8	III		13

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PART I.

ITEM 1. BUSINESS.

(a) General Development

      The Registrant was incorporated under the laws of the State of Ohio in August, 1876, succeeding a proprietorship established in 1859 and is engaged primarily in the sale, manufacture, installation and service of automated self-service transaction systems, electronic and physical security products, software and integrated systems. During 1999, no significant changes occurred in the manner of conducting the Registrant’s business, except for the acquisition of Procomp Amazonia Industria Eletronica S.A. On October 21, 1999, the Registrant acquired Procomp Amazonia Industria Eletronica, S.A. (Procomp), a Brazilian manufacturer and marketer of innovative technical solutions, including personal computers, servers, software, professional services and retail and banking automation equipment. The acquisition was effected in a combination of cash and stock for $222 million. Prior to the acquisition, Procomp was a major distributor for the Registrant in Latin America. Procomp results following the acquisition are consolidated with the results of the Registrant.

(b) Financial Information about Operating Segments

      In 1999, the Registrant redefined its operating segments to the following sales channels: North American Sales and Service (NASS), International Sales and Service (ISS) and a group of smaller sales channels which are combined in a category called Other. The NASS segment sells financial and retail systems, and also services financial, retail and medical systems in the United States and Canada. The ISS segment sells and services financial and retail systems over the remainder of the globe, including sales to IBM which was the Registrant’s former partner in the InterBold joint venture. The segment called Other, sells educational, medical, and other products and also services educational products in the United States. A reconciliation of segment customer revenues to Consolidated Net Sales and of segment operating contribution to Consolidated Operating Profit is contained in Note 16 to the Consolidated Financial Statements.

(c) Description of Business

      The Registrant develops, manufactures, sells and services automated teller machines (ATMs), electronic and physical security systems, various products used to equip bank facilities, software and integrated systems for global financial and commercial markets. Sales of systems and equipment are made directly to customers by the Registrant’s sales personnel and by manufacturer’s representatives and distributors. The sales/support organization works closely with customers and their consultants to analyze and fulfill the customers’ needs. Products are sold under contract for future delivery at agreed upon prices. In 1999, 1998, and 1997 the Registrant’s sales and services of financial systems and equipment accounted for more than 90% of consolidated net sales.

      The principal raw materials used by the Registrant are steel, copper, brass, lumber and plastics which are purchased from various major suppliers. Electronic parts and components are also procured from various suppliers. These materials and components are generally available in quantity at this time.

      The Registrant had no customers in 1999 that accounted for more than 10 percent of total net sales, while IBM, which was its partner in the InterBold joint venture, accounted for $51.6 million of the total net sales of $1.3 billion in 1999, $148.8 million of the total net sales of $1.2 billion in 1998, and $173.8 million of the total net sales of $1.2 billion in 1997.

3

ITEM 1. BUSINESS. — (continued)

      The Registrant’s operating results and the amount and timing of revenue are affected by numerous factors including production schedules, customer priorities, sales volume, and sales mix. During the past several years, the Registrant has dramatically changed the focus of its self-service business to that of a total solutions approach. The value of unfilled orders is not as meaningful an indicator of future revenues due to the significant portion of revenues derived from the Registrant’s growing service-based business, for which order information is not available. Therefore, the Registrant believes that backlog information is not material to an understanding of its business and does not disclose backlog information.

      All phases of the Registrant’s business are highly competitive; some products being in competition directly with similar products and others competing with alternative products having similar uses or producing similar results. The Registrant believes, based upon outside independent industry surveys, that it is a leading manufacturer of automated teller machines in the United States and is also a market leader internationally. In the area of automated transaction systems, the Registrant competes primarily with NCR Corporation, Triton, Siemens-Nixdorf, Dassault, Fujitsu, Itautec and Tidel. In serving the security products market for the financial services industry, the Registrant competes primarily with Mosler. Of these, some compete in only one or two product lines, while others sell a broader spectrum of products competing with the Registrant. However, the unavailability of comparative sales information and the large variety of individual products make it impossible to give reasonable estimates of the Registrant’s competitive ranking in or share of the market in its security product fields of activity. Many smaller manufacturers of safes, surveillance cameras, alarm systems and remote drive-up equipment are found in the market.

      The Registrant charged to expense approximately $43.0 million in 1999, $42.9 million in 1998, and $45.1 million in 1997 for research and development costs.

      Compliance by the Registrant with federal, state and local environmental protection laws during 1999 had no material effect upon capital expenditures, earnings or the competitive position of the Registrant and its subsidiaries.

      The total number of employees employed by the Registrant at December 31, 1999 was 9,935 compared with 6,489 at the end of the preceding year. The increase in 1999 is primarily due to the acquisition of Procomp Amazonia Industria Eletronica, S.A.

(d) Financial Information about International and U.S. Operations and Export Sales

      Sales to customers outside the United States as a percent of total consolidated net sales approximated 25.4 percent in 1999, 25.1 percent in 1998, and 26.1 percent in 1997.

ITEM 2. PROPERTIES.

      The Registrant’s corporate offices are located in North Canton, Ohio. It owns manufacturing facilities in Canton and Newark, Ohio; Lynchburg, Staunton and Danville, Virginia; and Sumter, South Carolina, and leases a manufacturing facility in Rancho Dominguez, California. The Registrant also has manufacturing facilities in Brazil and China. The Registrant has selling, service and administrative offices in the following locations: throughout the United States, and in Argentina, Australia, Austria, Brazil, China, Colombia, France, Germany, Hong Kong, Hungary, Poland, Russia, Singapore, South Africa, Spain, Taiwan, Thailand, the United Arab

4

Emirates, and the United Kingdom.The Registrant considers that its properties are generally in good condition, are well maintained, and are generally suitable and adequate to carry on the Registrant’s business.

ITEM 3. LEGAL PROCEEDINGS.

      At December 31, 1999, the Registrant was a party to several lawsuits that were incurred in the normal course of business, none of which individually or in the aggregate is considered material by management in relation to the Registrant’s financial position or results of operations. While in management’s opinion the financial statements would not be materially affected by the outcome of any present legal proceedings, commitments, or asserted claims, management is aware of a potential claim by the Internal Revenue Service concerning the Registrant’s corporate-owned life insurance programs. Management believes that it has complied with all applicable tax laws and regulations with respect to such programs and will vigorously contest any claim.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      No matters were submitted to a vote of security holders during the fourth quarter of 1999.

ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT.

      Refer to pages 6 through 8.

5

EXECUTIVE OFFICERS OF THE REGISTRANT

							Other Positions
					Year Elected		Held Last
Name	Age		Title		Present Office		Five Years
							1999
Robert W. Mahoney		63		Chairman of the Board		1999	Chairman of the Board President and Chief Executive Officer and Director
							1996-98
							Chairman of the Board and Chief Executive Officer and Director
							1993-96
							Chairman of the Board, President and Chief Executive Officer and Director
							1999
Walden W. O’Dell		54		President and Chief Executive Officer and Director		1999	Group Vice President, Tool Group and President of Ridge Tool Division — Emerson Electric Co.
							1991-99
							President — Liebert Corporation, a subsidiary of Emerson Electric Co.
							1997-99
David Bucci		48		Senior Vice President, North American Sales and Service (NASS)		1999	Group Vice President, NASS 1993-96 Vice President, NASS

6

EXECUTIVE OFFICERS OF THE REGISTRANT (continued)

							Other Positions
					Year Elected		Held Last
Name	Age		Title		Present Office		Five Years
							1997-99
Michael J. Hillock		48		Senior Vice President, ISS (International Sales and Service)		1999	Group Vice President, ISS 1993-97
							Vice President and General Manager, Sales and Service, Europe, Middle East and Africa
							1994-96
Alben W. Warf		61		Senior Vice President, Electronic Systems Development and Manufacturing		1996	Group Vice President, Self-Service Systems - Diebold
							1998-99
Charles J. Bechtel		54		Group Vice President, Global Services		1999	Vice President, Global Support Services
							1997-98
							Vice President, Information Systems
							1990-97
							Vice President, Marketing and Sales Operations
							1996-98
James L.M. Chen		39		Vice President and Managing Director, Asia-Pacific		1998	Philips Electronics China B.V. General Manager, Business Electronics
							1994-96
							AT&T China Company Limited, Managing Director, Global Information Solutions, China

7

EXECUTIVE OFFICERS OF THE REGISTRANT — (continued)

						Other Positions
				Year Elected		Held Last
Name	Age		Title	Present Office		Five Years
Warren W. Dettinger		46	Vice President, General Counsel and Assistant Secretary		1989	—
						1996-97
Reinoud G. J. Drenth		36	Vice President and Managing Director, Europe Middle East, and Africa		1997	Vice President Worldwide Marketing - - Diebold
						1987-96
						NCR Corporation
						1995 — Marketing Vice President, Financial Services Industry
						1990-1999
Donald E. Eagon, Jr.		57	Vice President, Global Communications and Investor Relations		1999	Vice President Corporate Communications
						1995-99
Jack E. Finefrock		48	Vice President, NASS, Central Division		1999	Division Vice President, NASS, Central Division
						1989-95
						Regional Sales Manager
Charee Francis-Vogelsang		53	Vice President and Secretary		1983	—
Bartholomew J. Frazzitta		57	Vice President and General Manager, Physical Security Division		1990	—
Larry D. Ingram		53	Vice President, Procurement and Services		1993	—

8

EXECUTIVE OFFICERS OF THE REGISTRANT — (continued)

						Other Positions
				Year Elected		Held Last
Name	Age		Title	Present Office		Five Years
						1996-99
Dennis M. Moriarty		47	Vice President, NASS, Eastern Division		1999	Division Vice President, NASS, Eastern Division
						1993-96
						Area General Manager - - Pitney Bowes Mailing Systems
						1994-99
Toni J. Portmann		44	Vice President, NASS, Western Division		1999	Division Vice President, NASS, Western Division
						1993-99
Anthony J. Rusciano		59	Vice President, NASS, Major Accounts Division		1999	Division Vice President, NASS, Major Accounts Division
Charles B. Scheurer		58	Vice President, Human Resources		1991	—
						1990-99
Robert L. Stockamp		56	Vice President and Corporate Controller and Interim Chief Financial Officer		1999	Vice President and Corporate Controller
						1984-97
Ernesto R. Unanue		58	Vice President and Managing Director, Latin America		1997	Vice President of Sales, Caribbean and South American Division
Robert J. Warren		53	Vice President and Treasurer		1990	—

There is no family relationship, either by blood, marriage or adoption, between any of the executive officers of the Registrant.

9

PART II.

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      On January 30, 1997, the Board of Directors of the Registrant declared a three-for-two stock split which was effected in the form of a stock dividend, distributed on February 19, 1997, to shareholders of record on February 7, 1997. Accordingly, all numbers of Common Shares, except authorized shares and treasury shares, and all per share data have been restated to reflect this stock split.

      The Common Shares of the Registrant are listed on the New York Stock Exchange with a symbol of DBD. The price ranges of Common Shares for the Registrant are as follows:

	1999				1998				1997
	High		Low		High		Low		High		Low
1st Quarter	$	39.88	$	22.06	$	55.31	$	41.69	$	44.88	$	36.38
2nd Quarter		30.69		20.75		44.44		23.63		43.63		28.00
3rd Quarter		30.38		22.69		31.44		20.00		50.63		39.75
4th Quarter		27.63		19.69		36.88		19.13		50.94		42.13
Full Year	$	39.88	$	19.69	$	55.31	$	19.13	$	50.94	$	28.00

      There were approximately 98,462 shareholders at December 31, 1999, which includes an estimated number of shareholders who have shares held for their accounts by banks, brokers, trustees for benefit plans and the agent for the dividend reinvestment plan.

      On the basis of amounts paid and declared the annualized quarterly dividends per share were $0.60 in 1999 $0.56 in 1998, and $0.50 in 1997.

      On October 15, 1999, 230,015 Common Shares were issued from treasury for the acquisition of Nexus Software, Inc. The fair market value of the shares on the date of issue was $7,023,072; these shares are considered unregistered.

      On December 30, 1998, 30,060 Common Shares were issued from treasury to Gregg A. Searle, former President, who resigned on September 30, 1998. The shares represented the distribution of Mr. Searle’s deferred compensation account which had been allocated in Common Shares, and accordingly, no purchase price was paid by Mr. Searle. The fair market value of the shares on the date of issue was $1,043,653; these shares were considered unregistered.

ITEM 6. SELECTED FINANCIAL DATA.

      (Dollars in thousands except per share amounts)

	1999		1998		1997		1996		1995
Net Sales	$	1,259,177	$	1,185,707	$	1,226,936	$	1,030,191	$	863,409
Net Income		128,856		76,148		122,516		97,425		76,209
Basic earnings per share		1.86		1.10		1.78		1.42		1.11
Diluted earnings per share		1.85		1.10		1.76		1.40		1.10
Total Assets		1,298,831		1,004,188		991,050		859,101		749,795
Cash dividends paid per Common Share		0.60		0.56		0.50		0.45		0.43

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      Management’s Analysis of Results of Operations

      The table below presents the changes in comparative financial data from 1997 to 1999. Comments on significant year-to-year fluctuations follow the table.

	1999									1998									1997
				Percent			Percent						Percent			Percent						Percent
(Dollars in thousands except				of Net			Increase						of Net			Increase						of Net
per share amounts)	Amount			Sales			(Decrease)			Amount			Sales			(Decrease)			Amount			Sales
Net sales Products	$	757,246			60.1	%		0.9	%	$	750,161			63.3	%		(9.1	)%	$	825,125			67.3	%
Services		501,931			39.9			15.2			435,546			36.7			8.4			401,811			32.7
		1,259,177			100.0			6.2			1,185,707			100.0			(3.4	)		1,226,936			100.0
Cost of sales Products		444,732			58.7			(3.9	)		462,788			61.7			(8.8	)		507,322			61.5
Special charges		—			—			—			9,864			—			—			—			—
Services		357,633			71.3			16.6			306,805			70.4			6.0			289,514			72.1
		802,365			63.7			2.9			779,457			65.7			(2.2	)		796,836			64.9
Gross profit		456,812			36.3			12.4			406,250			34.3			(5.5	)		430,100			35.1
Selling and administrative expense		221,393			17.6			13.8			194,535			16.4			1.4			191,842			15.7
Research, development and engineering expense		50,507			4.0			(6.8	)		54,215			4.6			(0.3	)		54,397			4.4
In-process research and development		2,050			0.2			—			—			—			—			—			—
Realignment charges		(3,261	)		(0.3	)		(106.4	)		51,253			4.3			—			—			—
		270,689			21.5			(9.8	)		300,003			25.3			21.8			246,239			20.1
Operating profit		186,123			14.8			75.2			106,247			9.0			(42.2	)		183,861			15.0
Other income, net		16,384			1.3			6.4			15,403			1.3			123.4			6,894			0.5
Minority interest		(1,169	)		(0.1	)		(36.6	)		(1,843	)		(0.2	)		(63.8	)		(5,096	)		(0.4	)
Income before taxes		201,338			16.0			68.1			119,807			10.1			(35.5	)		185,659			15.1
Taxes on income		72,482			5.8			66.0			43,659			3.7			(30.9	)		63,143			5.1
Net income	$	128,856			10.2	%		69.2	%	$	76,148			6.4	%		(37.8	)%	$	122,516			10.0	%

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Acquisitions

In 1999, the Registrant made several strategic acquisitions to enhance its globalization strategy. On October 21, 1999, the Registrant acquired Procomp Amazonia Industria Eletronica, S.A. (Procomp), a Brazilian manufacturer and marketer of innovative technical solutions, including personal computers, servers, software, professional services and retail and banking automation equipment. The acquisition was effected in a combination of cash and stock for $222,310. Prior to the acquisition, Procomp was a major distributor for the Registrant in Latin America. Procomp results following the acquisition are consolidated with the results of the Registrant. Procomp reported revenue of $41,615 for the period of October 22, 1999 through December 31, 1999. The acquisition was neutral on earnings per share, but dilutive at the operating profit level. While the Registrant expects Procomp to be slightly accretive in 2000, given the seasonal nature of its business, it will likely be dilutive in the first quarter of 2000.

On October 15, 1999, the Registrant acquired Nexus Software, Inc. (Nexus) of Raleigh, North Carolina. Nexus is a technology development and retail bank branch connectivity company that markets its suite of products to financial institutions around the world. The acquisition was effected in a combination of cash and stock for $13,900.

Both acquisitions have been accounted for as purchase business combinations and, accordingly, the purchase prices have been allocated to identifiable tangible and intangible assets acquired and liabilities assumed, based upon their respective fair values, with the excess allocated to goodwill to be amortized over the estimated economic lives from the respective dates of acquisition. The amounts of goodwill and periods of amortization for Procomp and Nexus are $132,826 over 17 years and $9,101 over 10 years, respectively. In connection with the Nexus acquisition, the Registrant immediately wrote off $2,050 of in-process research and development activities. The calculations of the write-off for the in-process research and development activities were made using the approaches outlined by the Securities and Exchange Commission.

Realignment and Special Charges

As of December 31, 1999, the Registrant completed its realignment plan originally announced in the second quarter of 1998. Under the realignment plan in 1998, the Registrant recorded realignment and special charges of $61,117 ($41,850 after-tax or $0.60 per diluted share). The majority of the realignment charge related to three areas: the ending of the InterBold joint venture with IBM, the exiting of the manufacturing and distribution channel for certain low-end self-service terminal products and the exiting of the proprietary electronic security business. The realignment charge was made up of two components: A special charge of $9,864 primarily for the write-off of inventory from exited lines of business and a realignment charge of $51,253 for all other realignment costs. In December 1999, the realignment plan concluded and the remaining accrual of $3,261, representing primarily employee costs that were not utilized, was brought back through income.

Net Sales

1999 net sales of $1,259,177 (including Procomp net sales of $41,615) represented an increase of $73,470 or 6.2 percent from 1998 and $32,241 or 2.6 percent from 1997. Product sales growth was less than experienced in prior years primarily due to a slowdown in bank spending and the Registrant’s ongoing efforts to replace IBM as its primary international distributor. IBM accounted for more than 10 percent of net sales in both 1998 and 1997. 1999 sales to IBM were $51,552 or 4.1 percent of net sales. 1999 service sales increased over 1998 by 15.2 percent and over 1997 by 24.9 percent. This increase is due to the Registrant’s efforts to position itself as a total solutions provider as opposed to strictly a self-service equipment supplier. The Registrant will continue to expand as a solutions provider through global acquisitions while gaining market share both domestically and around the world.

The Registrant’s operating results and the amount and timing of revenue are affected by numerous factors including production schedules, customer priorities, sales volume and sales mix. During the past several years, the Registrant has changed the focus of its self-service business to that of a total solutions approach. The value of unfilled orders is not as meaningful an indicator of future revenues due to the significant portion of revenues derived from the Registrant’s growing service-based business, for which order information is not recorded. Therefore, the Registrant believes that backlog information is not material to an understanding of its business and does not disclose backlog information.

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		Product Revenue by Geography
		1999		1998		1997
United States		$	515,620	$	495,432	$	549,387
Canada			23,440		32,083		24,725
Asia-Pacific			54,317		47,373		73,985
EMEA*			61,321		61,126		74,655
Latin America			102,548		114,147		102,373
	Total	$	757,246	$	750,161	$	825,125
*	Europe, Middle East and Africa

Product net sales of $757,246 improved over 1998 by $7,085, but fell short of 1997 results by $67,879 or 8.2 percent. During 1999 and 1998, the Registrant experienced slowdowns in global sales of ATMs. On a geographic basis, product sales increased in 1999 over 1998 in every region of the globe with the exception of Canada and Latin America. The decline in Canada was due to the replacement of IBM as the Registrant’s primary Canadian distributor, which did not take place as quickly as anticipated. The decline in Latin America was due to abnormally high sales in Venezuela in 1998 and the generally weak economic conditions in the region in 1999. Geographic comparisons to 1997 are all unfavorable with the exception of Latin America.

		Service Revenue
		1999		1998		1997
Domestic		$	423,397	$	393,068	$	357,101
International			78,534		42,478		44,710
	Total	$	501,931	$	435,546	$	401,811

Total service revenues in 1999 increased $66,385 or 15.2 percent over 1998 and $100,120 or 24.9 percent over 1997. Domestically, the Registrant’s service business has continued to show strong growth. Domestic service revenues have grown in 1999 by 7.7 percent over 1998 and 18.6 percent over 1997. This increase was due to a growing installed base of self-service terminals as well as the Registrant’s initiatives to further provide service offerings, such as first and second line service. Internationally, the Registrant has expanded operations and its service technicians are providing service to customers around the world. International service revenue in 1999 is up $36,056 or 84.9 percent over 1998, and $33,824 or 75.7 percent over 1997. Procomp accounted for $14,333 of 1999 service revenues. The Registrant expects to further grow its service business in 2000 and beyond by expanding service operations in more countries and enhancing its competitive market share of installed self-service terminals.

		Total Revenue by Product/Service Solution
		1999		1998		1997
Self-service solutions		$	536,166	$	549,942	$	657,642
Security solutions			179,957		178,095		151,966
Professional and special services			41,123		22,124		15,517
Custom maintenance services			501,931		435,546		401,811
	Total	$	1,259,177	$	1,185,707	$	1,226,936

Total revenue by product and service solution illustrate the Registrant’s growth in the professional/special services and custom maintenance service areas. Professional and special services increased in 1999, $18,999 or 85.9 percent over 1998, and are up $25,606 or 165.0 percent over 1997. Security solutions were basically flat in 1999 as compared with 1998, but have grown $27,991 or 18.4 percent over 1997. Self-service hardware sales, which have consistently decreased as a percentage of revenue, were down due in large part to the global slowdown in bank spending over the last two years.

Operating Segment Revenue and Operating Profit

	Customer Revenues by Segment
	1999		1998		1997
NASS	$	926,975	$	891,288	$	905,631
ISS		293,316		263,428		292,591
Other		37,131		34,180		27,360
Total	$	1,257,422	$	1,188,896	$	1,225,582

	Operating Profit by Segment
	1999			1998			1997
NASS	$	153,799		$	144,886		$	155,889
ISS		17,801			7,470			20,904
Other		(9,997	)		(9,106	)		(7,883	)
Total	$	161,603		$	143,250		$	168,910

In 1999, the Registrant redefined its operating segments to the following sales channels: North American Sales and Service (NASS), International Sales and Service (ISS) and a group of smaller sales channels which are combined in a category called Other. The NASS segment sells financial and retail systems, and also services financial, retail and medical systems in the United States and Canada. The ISS segment sells and services financial and retail systems over the remainder of the globe, including product sales to IBM, which was the Registrant’s former partner in the InterBold joint venture. The segment called Other sells products to educational and medical institutions and other customers. This segment also services educational customers in the United States. A reconciliation of segment customer revenues to Consolidated Net Sales and of segment operating profit

13

to Consolidated Operating Profit is contained in Note 16 to the Consolidated Financial Statements.

NASS customer revenues for 1999 were $926,975, an increase of $35,687 or 4.0 percent over 1998 and $21,344 or 2.4 percent over 1997. Growth in the NASS channel has come from increased service revenues. NASS posted an increase in operating profit in 1999 of $8,913 or 6.2 percent. Operating profits in 1999 compare unfavorably to 1997 predominately due to the impact of global slowdowns in bank spending.

ISS customer revenues of $293,316 are up over 1998 by $29,888 or 11.3 percent and are flat to 1997. All IBM sales have been reclassified to be included this year in the ISS channel. As IBM sales have diminished, ISS has successfully begun to replace those revenues. Procomp revenues of $41,615 are included in the ISS customer revenue line. Operating profits improved in 1999 to $17,801 from a low in 1998 of $7,470 and are unfavorable to 1997 operating contribution of $20,904. ISS continues to invest in international infrastructure and will strive for further operating efficiencies in 2000.

Sales channels in the Other category include educational and medical products. Revenues for other sales have increased to $37,131 in 1999, up $2,951 or 8.6 percent over 1998 and $9,771 or 35.7 percent over 1997. These channels are dilutive on the operating profit line, and their continued feasibility is being evaluated.

Cost of Sales and Expenses

Cost of sales for 1999 was $802,365, compared with $779,457 in 1998 and $796,836 in 1997. Product cost of sales as a percentage of product revenue was 58.7 percent in 1999, 61.7 percent in 1998 and 61.5 percent in 1997. Service cost of sales as a percentage of revenue was 71.3 percent in 1999, 70.4 percent in 1998 and 72.1 percent in 1997. The Registrant continues to aggressively work for further cost containment and for more efficient manufacturing and sourcing of the products it sells and services. Efficient and strategically placed manufacturing facilities will be key in the Registrant’s international growth. The Registrant acquired manufacturing facilities in Brazil through its acquisition of Procomp that will support sales in the Latin American region in the future.

Product gross profits continued to improve in 1999 to 41.3 percent, up from 38.3 percent in 1998 and 38.5 percent in 1997. Product margins have benefited greatly from the Registrant’s transition to its own international distribution channels and the ending of the InterBold joint venture with IBM. Sales to IBM through the InterBold joint venture had contractually lower margins. Service gross profits declined slightly to 28.7 percent in 1999 from a high in 1998 of 29.6 percent and 27.9 percent in 1997. Some of the drop in service margins can be attributed to the setup of new service branches worldwide and competitive bidding for international contracts.

Operating expenses in 1999 were $271,900 (excluding realignment charges and in-process research and development) compared with $248,750 (excluding realignment charges) in 1998 and $246,239 in 1997. The growth in operating spending in 1999 versus 1998 is due primarily to the setup of international facilities worldwide. The stability of operating expenses in 1998 versus 1997 stems from the Registrant’s efforts to contain operating costs on lower sales volumes and the initial benefits of the 1998 realignment. Research, development and engineering spending in 1999 was down $3,708 or 6.8 percent from 1998 and down $3,890 or 7.2 percent from 1997. The decrease in research, development and engineering spending is due primarily to effects of the 1998 realignment. The Registrant is committed to bringing new and innovative products to market and has focused on its product development efforts for the year 2000 and beyond.

Operating profit as a percent of sales excluding all realignment and special charges and in-process research and development costs was 14.7 percent in 1999, 14.1 percent in 1998 and 15.0 percent in 1997. Gains in this area in 1999 versus 1998 are due primarily to favorable product gross margins. 1999 compares unfavorably with 1997 due mostly to increases in selling and administrative spending.

Other Income, Net and Minority Interest Expense

Other income, net increased over 1998 by $981 and over 1997 by $9,490. Investment income was up due to favorable returns on the Registrant’s preferred stock portfolio as well as income from the Registrant’s investment in subsidiaries accounted for under the equity method. Finance receivables were again a large part of the Registrant’s investment strategy worldwide, and Procomp also provided financing to its customers in Brazil. As the Registrant uses its short-and long-term securities for worldwide acquisitions, it is expected that investment income will decline in the future. Miscellaneous, net expense of $6,577 in 1999 was up from $3,184 in 1998 and down from 1997 results of $12,215. Miscellaneous, net expense grew in 1999 over 1998 due in part to amortization of goodwill from newly acquired subsidiaries. 1999 compared favorably to 1997 because of goodwill write-offs under the Registrant’s 1998 realignment plan.

14

Minority interest expense of $1,169 was basically flat to 1998 levels of $1,843 and decreased from $5,096 in 1997 due to the Registrant purchasing IBM’s 30 percent minority share in the InterBold joint venture in January 1998. Minority interest expense consisted primarily of income or losses allocated to the minority ownership of Diebold Argentina, Diebold Colombia, Diebold Financial Equipment Company, Ltd. (China) and Diebold OLTP Systems C.A. (Venezuela). Minority interests for all companies are calculated as a percentage of profits of the joint ventures based on formulas defined in the relevant agreements establishing each venture.

Income

1999 income before taxes amounted to $200,127 (excluding realignment charges and in-process research and development) or 15.9 percent of net sales. 1999 results improved on 1998 pretax income (excluding realignment and special charges) of $180,924 (15.3 percent of net sales) and 1997 pretax income of $185,659 (15.1 percent of net sales).

The effective tax rate was 36.0 percent in 1999 compared with 36.4 percent in 1998 and 34.0 percent in 1997. The primary reason for the unusually high tax rate in 1998 was the write-off of intangible assets in connection with the Registrant’s realignment program, which is non-deductible for tax purposes. The tax rate in 1999 is up in comparison with 1997 due to the reduction in tax-exempt interest as a percentage of pretax income and tax law changes that have affected insurance contracts. Details of the reconciliation between the U.S. statutory rate and the effective tax rate are included in Note 14 of the 1999 Consolidated Financial Statements.

1999 net income of $128,856 grew over 1998 results of $117,998 (excluding realignment and special charges) and also grew over 1997 results of $122,516. 1999 net income as a percentage of sales was 10.2 percent, and 10.0 percent in both 1998 (excluding realignment and special charges) and 1997.

Management’s Analysis of Financial Condition

The Registrant continued to enhance its financial position during 1999 through its strategic acquisitions. Total assets increased $294,643 or 29.3 percent to a 1999 year-end level of $1,298,831. Procomp accounted for $141,906 of the increase in assets in 1999, excluding goodwill acquired in the purchase. Asset turnover (excluding cash, cash equivalents and short-term and long-term investment securities) fell in 1999 to 1.51 (measured quarterly) versus 1.53 in 1998.

Total current assets at December 31, 1999, of $647,936 represented an increase of $104,388 or 19.2 percent from the prior year-end. Trade receivables increased $30,619 over 1998 excluding the effects of Procomp trade receivables of $14,996. Inventories increased $5,591 excluding Procomp’s December 31, 1999 inventory of $36,314. Short-term notes receivable are primarily from Procomp’s financing to Brazilian customers.

Short-term investments and long-term securities and other investments increased by $27,139, or 13.2 percent to a level of $232,580 at December 31, 1999. The increase was due to the Procomp acquisition (Procomp had $36,489 in short-term investments at December 31, 1999) as well as additional cash flow from operating activities and the Registrant’s ability to keep its funds fully invested. The Registrant anticipates being able to meet both short- and long-term operational funding requirements through the use of its investment securities or drawing on its lines of credit. Certain securities may have to be liquidated in the future for strategic acquisitions. Since most of the Registrant’s securities are marketable, these securities could readily be converted into cash and cash equivalents if needed.

Total property, plant and equipment, net of accumulated depreciation, was $160,724 at the end of 1999. Procomp accounted for $15,135 of the total. Capital expenditures were $40,341 in 1999, compared with $30,768 in 1998. The increase in 1999 capital spending versus 1998 was primarily due to setting up sales and service operations internationally. Capital expenditures are expected to grow as international expansion continues and as the Registrant invests in capital items to support the future growth of its business.

Total current liabilities at December 31, 1999, were $382,407, which represented an increase of $146,874 over the prior year-end. The primary cause for the increase is due to short-term notes payable of $117,450 that were used to fund the Registrant’s acquisition of Procomp. Procomp also accounts for $24,030 of the rise in current liabilities. The Registrant’s current ratio dropped to 1.7 at December 31, 1999 versus 2.3 at the end of 1998, due primarily to the short-term notes payable on the Consolidated Balance Sheets.

At December 31, 1999, the Registrant had bank credit lines approximating $245,500 and EUR 100,000 (translation $99,315), with $117,450 of outstanding borrowings under these agreements. In addition, the Registrant had outstanding $20,800 of Industrial Development Revenue Bonds. The proceeds of the bonds issued in 1997 were used to finance three

15

manufacturing facilities located in Staunton and Danville, Virginia and in Lexington, North Carolina.

The Registrant’s financial position provides it with sufficient resources to meet projected future capital expenditures, dividend and working capital requirements. However, if the need arises, the Registrant’s strong financial position should ensure the availability of adequate additional financial resources.

Pension liabilities were $24,309 at December 31, 1999, representing an increase of $1,564 or 6.9 percent over the prior year-end. The net periodic pension costs of $5,673 charged to income in 1999 represented an increase of $809 from the prior year. Postretirement liabilities at December 31, 1999, were $22,497, an increase of $251 over the prior year end. Net periodic health and life benefit expense charged to income in 1999 of $1,477 increased slightly over the prior year’s expense of $1,303. In addition, the Registrant matches employee contributions to its defined contribution 401(k) savings plan. The Registrant matched 80 percent of each employee’s first 4 percent of savings and 40 percent of each employee’s second 4 percent of savings. Net expense for the 401(k) match was $9,012 in 1999, which was down from the prior year by $326.

Minority interests of $4,423 represented the minority interest in Diebold Financial Equipment Company, Ltd. (China) owned by the Aviation Industries of China and the Industrial and Commercial Bank of China, Shanghai Pudong Branch; in Diebold OLTP Systems, C.A (Venezuela), owned by five individual investors; in Diebold Argentina, owned by Ciccone Calcografica S.A.; and in Diebold Colombia, owned by Richardson and Company Ltd.

Shareholders’ equity increased $145,272 or 20.8 percent to $844,395 at December 31, 1999. Equity increased primarily due to current year earnings and share issuance for acquisitions. Shareholders’ equity per share was $11.88 at the end of 1999, compared with $10.15 in 1998. The Common Shares of the Registrant are listed on the New York Stock Exchange with a symbol of DBD. There were approximately 8,573 registered shareholders of record as of December 31, 1999.

The Board of Directors declared a first-quarter 2000 cash dividend of $0.155 per share. This amount, which represents a 3.3 percent increase from the prior year’s quarterly dividend rate, will be paid on March 10, 2000, to shareholders of record on February 18, 2000. Comparative quarterly cash dividends paid in 1999 and 1998 were $0.15 and $0.14 per share, respectively.

Management’s Analysis of Cash Flows

During 1999, the Registrant generated $188,585 in cash from operating activities, compared with $177,238 in 1998 and $111,330 in 1997. In addition to net income of $128,856 adjusted for depreciation, amortization and other charges of $53,435, decreases in prepaid expenses and other current assets and changes in other certain assets and liabilities increased cash provided by operations. Cash was utilized in operations to reduce accounts payable and to maintain adequate inventory levels. Expressed as a percentage of total assets employed, the Registrant’s cash yield from operations was 14.5 percent in 1999, 17.6 percent in 1998 and 11.2 percent in 1997.

Net cash generated from operating and financing activities in 1999 was used to reinvest $281,800 in assets of the Registrant, compared with $96,509 in 1998 and $102,725 in 1997. The Registrant returned $41,668 to shareholders in the form of cash dividends paid during 1999, which was a 7.9 percent increase from 1998 and a 20.9 percent increase from 1997.

Other Business Information

Year 2000 Disclosure

The Registrant was well prepared for the year 2000 and experienced no major problems with its internal systems or in products purchased from suppliers used in manufacturing and service of its customers. Registrant's web page (www.Diebold.com) gave information to customers on the year 2000 compliance of products and was a frequently used resource. As required, the Registrant expensed as incurred all costs associated with year 2000 issues. The costs did not have a material effect on the Registrant’s financial position or results of operations.

New Accounting Pronouncements For 2001

In June 1998, the FASB issued Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” which establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Registrant will adopt Statement No. 133 as required for its first quarterly filing of fiscal year 2001.

16

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Registrant does not have material exposure to interest rate risk, foreign currency exchange rate risk or commodity price risk. As the Registrant continues to expand internationally it expects market risks to have a greater impact on its financial position and results of operation.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Refer to pages 18 through 40.

17

Consolidated Balance Sheets
Diebold, Incorporated and Subsidiaries
December 31, 1999 and 1998
(Dollars in thousands except per share amounts)

			1999			1998
ASSETS
Current assets
	Cash and cash equivalents		$	27,299		$	42,540
	Short-term investments			57,348			37,433
	Trade receivables			312,506			266,891
	Notes receivable			13,287			—
	Inventories			169,785			127,880
	Finance receivables			19,592			19,856
	Deferred income taxes			27,022			34,038
	Prepaid expense and other current assets			21,097			14,910
		Total current assets		647,936			543,548
Securities and other investments				175,232			168,008
Property, plant and equipment, at cost				320,640			278,435
	Less accumulated depreciation and amortization			159,916			131,304
				160,724			147,131
Deferred income taxes				12,638			12,716
Finance receivables				83,804			65,573
Goodwill				160,073			19,430
Other assets				58,424			47,782
			$	1,298,831		$	1,004,188
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
	Accounts payable		$	96,351		$	89,881
	Notes payable			117,450			—
	Estimated income taxes			13,558			13,582
	Accrued insurance			16,299			16,386
	Accrued installation costs			17,420			17,455
	Deferred income			70,899			57,985
	Other current liabilities			50,430			40,244
		Total current liabilities		382,407			235,533
Bonds payable				20,800			20,800
Pensions				24,309			22,745
Postretirement benefits				22,497			22,246
Minority interest				4,423			3,741
Commitments and contingencies				—			—
Shareholders’ equity
Preferred Shares, no par value, authorized 1,000,000 shares, none issued				—			—
Common Shares, par value $1.25;
Authorized 125,000,000 shares;
issued 71,482,997 and 69,494,483 shares, respectively
outstanding 71,096,290 and 68,880,761 shares, respectively				89,354			86,868
Additional capital				87,169			43,281
Retained earnings				691,415			604,227
Treasury shares, at cost (386,707 and 613,722 shares, respectively)				(13,644	)		(21,902	)
Accumulated other comprehensive income				(5,865	)		(12,802	)
Other				(4,034	)		(549	)
		Total shareholders’ equity		844,395			699,123
			$	1,298,831		$	1,004,188

See accompanying Notes to Consolidated Financial Statements.

18

Consolidated Statements of Income
Diebold, Incorporated and Subsidiaries
Years Ended December 31, 1999, 1998 and 1997
(Dollars in thousands except per share amounts)

		1999			1998			1997
Net sales
	Products	$	757,246		$	750,161		$	825,125
	Services		501,931			435,546			401,811
			1,259,177			1,185,707			1,226,936
Cost of sales
	Products		444,732			462,788			507,322
	Special charges		—			9,864			—
	Services		357,633			306,805			289,514
			802,365			779,457			796,836
Gross profit			456,812			406,250			430,100
Selling and administrative expense			221,393			194,535			191,842
Research, development and engineering expense			50,507			54,215			54,397
In-process research and development			2,050			—			—
Realignment charges			(3,261	)		51,253			—
			270,689			300,003			246,239
Operating profit			186,123			106,247			183,861
Other income (expense)
	Investment income		22,961			18,587			19,109
	Miscellaneous, net		(6,577	)		(3,184	)		(12,215	)
Minority interest			(1,169	)		(1,843	)		(5,096	)
Income before taxes			201,338			119,807			185,659
Taxes on income			72,482			43,659			63,143
Net income		$	128,856		$	76,148		$	122,516
Basic weighted-average number of shares			69,359			68,960			68,939
Diluted weighted-average number of shares			69,562			69,310			69,490
Basic earnings per share		$	1.86		$	1.10		$	1.78
Diluted earnings per share		$	1.85		$	1.10		$	1.76

See accompanying Notes to Consolidated Financial Statements.

19

Consolidated Statements of Shareholders’ Equity
Diebold, Incorporated and Subsidiaries
Years Ended December 31, 1999, 1998 and 1997
(Dollars in thousands)

	Common Shares																Accumulated
														Compre-			Other
			Par		Additional			Retained			Treasury			hensive			Comprehensive
	Number		Value		Capital			Earnings			Shares			Income			Income			Other			Total
Balance,
December 31, 1996		68,997,276	$	86,246	$	28,110		$	478,667		$	(7,170	)				$	(10,068	)	$	(215	)	$	575,570
Net income - 1997									122,516					$	122,516									122,516
Translation adjustment															(185	)								(185	)
Pensions															217									217
Unrealized gain on investment securities															333									333
Other comprehensive income															365			365
Comprehensive income														$	122,881
Stock options exercised		180,247		226		5,821																		6,047
Unearned compensation		11,000		14		430															(171	)		273
Performance shares		87,191		109		3,886																		3,995
Dividends declared and paid									(34,473	)														(34,473	)
Treasury shares												(5,712	)											(5,712	)
Balance,
December 31, 1997		69,275,714	$	86,595	$	38,247		$	566,710		$	(12,882	)				$	(9,703	)	$	(386	)	$	668,581
Net income - 1998									76,148					$	76,148									76,148
Translation adjustment															150									150
Pensions															(2,797	)								(2,797	)
Unrealized loss on investment securities															(452	)								(452	)
Other comprehensive income															(3,099	)		(3,099	)
Comprehensive income														$	73,049
Stock options exercised		208,031		260		4,538																		4,798
Unearned compensation		10,738		13		511															(163	)		361
Dividends declared and paid									(38,631	)														(38,631	)
Treasury shares						(15	)					(9,020	)											(9,035	)
Balance,
December 31, 1998		69,494,483	$	86,868	$	43,281		$	604,227		$	(21,902	)				$	(12,802	)	$	(549	)	$	699,123
Net income - 1999									128,856					$	128,856									128,856
Translation adjustment															9,558									9,558
Pensions															614									614
Unrealized loss on investment securities															(3,235	)								(3,235	)
Other comprehensive income															6,937			6,937
Comprehensive income														$	135,793
Stock options exercised		108,104		134		1,918																		2,052
Unearned compensation		149,799		188		3,933															(3,485	)		636
Performance shares		20,397		26		686																		712
Procomp and Nexus acquisitions		1,710,214		2,138		37,351						9,487												48,976
Dividends declared and paid									(41,668	)														(41,668	)
Treasury shares												(1,229	)											(1,229	)
Balance,
December 31, 1999		71,482,997	$	89,354	$	87,169		$	691,415		$	(13,644	)				$	(5,865	)	$	(4,034	)	$	844,395

See accompanying Notes to Consolidated Financial Statements.

20

Consolidated Statements of Cash Flows
Diebold, Incorporated and Subsidiaries
Years ended December 31, 1999, 1998 and 1997
(Dollars in thousands)

			1999			1998			1997
Cash flow from operating activities:
Net income			$	128,856		$	76,148		$	122,516
Adjustments to reconcile net income to cash provided by operating activities:
	Minority share of income			1,169			1,843			5,096
	Depreciation			34,709			25,649			18,701
	Other charges and amortization			17,557			13,891			9,749
	Goodwill written off under realignment plan			—			23,001			—
	Deferred income taxes			8,505			(4,192	)		1,118
	Loss on disposal of assets, net			5,188			1,963			1,113
	Loss (gain) on sale of investments, net			257			(232	)		—
	Cash provided (used) by changes in certain assets and liabilities:
		Trade receivables		(16,077	)		35,994			(46,313	)
		Inventories		(4,634	)		202			(18,650	)
		Prepaid expenses and other current assets		19,821			1,477			(2,730	)
	Accounts payable			(31,048	)		(14,162	)		9,334
Other certain assets and liabilities				24,282			15,656			11,396
	Net cash provided by operating activities			188,585			177,238			111,330
Cash flow from investing activities:
	Payments for acquisitions, net of cash acquired			(159,026	)		—			—
	Proceeds from maturities of investments			45,521			41,438			52,109
	Proceeds from sales of investments			60,427			599			—
	Payments for purchases of investments			(142,169	)		(78,348	)		(44,486	)
	Capital expenditures			(40,341	)		(30,768	)		(67,722	)
	Increase in net finance receivables			(17,967	)		(10,900	)		(28,499	)
	Increase in other certain assets			(28,264	)		(18,456	)		(14,068	)
	Other			19			(74	)		(59	)
	Net cash used by investing activities			(281,800	)		(96,509	)		(102,725	)
Cash flow from financing activities:
	Dividends paid			(41,668	)		(38,631	)		(34,473	)
	Increase in short-term notes payable			117,450			—			—
	Distribution for purchase of IBM’s share of minority interest in InterBold			—			(16,141	)		—
	Distribution of affiliate’s earnings to minority interest holder			(1,000	)		—			(1,295	)
	Issuance of Common Shares			3,908			4,612			5,572
	Repurchase of Common Shares			(1,229	)		(8,325	)		(798	)
	Proceeds from long-term borrowings			—			—			20,800
	Other			513			—			—
	Net cash provided (used) by financing activities			77,974			(58,485	)		(10,194	)
(Decrease) increase in cash and cash equivalents				(15,241	)		22,244			(1,589	)
Cash and cash equivalents at the beginning of the year				42,540			20,296			21,885
Cash and cash equivalents at the end of the year			$	27,299		$	42,540		$	20,296
Cash paid for:
		Income taxes	$	55,307		$	38,997		$	60,738
		Short-term interest		1,427			—			—
		Long-term interest		682			743			176
Significant non-cash items:
		Share issuance for acquisition of Procomp	$	41,953		$	—		$	—
		Share issuance for acquisition of Nexus		7,023			—			—

See accompanying Notes to Consolidated Financial Statements.

21

Notes to Consolidated Financial Statements

Diebold, Incorporated and Subsidiaries
(Dollars in thousands except per share amounts)

Note 1: Summary of Significant
Accounting Policies

Principles of consolidation

The Consolidated Financial Statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Statements of Cash Flows

For the purposes of the Consolidated Statements of Cash Flows, the Registrant considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

International operations

The Registrant translates the assets and liabilities of its non-U.S. subsidiaries at the exchange rates in effect at year-end and the results of operations at the average rate throughout the year. The translation adjustments are recorded directly as a separate component of shareholders’ equity, while transaction gains (losses) are included in net income. Sales to customers outside the United States approximated 25.4 percent of net sales in 1999, 25.1 percent in 1998, and 26.1 percent in 1997.

Financial instruments

The carrying amount of financial instruments including cash and cash equivalents, trade receivables and accounts payable approximated fair value as of December 31, 1999 and 1998, because of the relatively short maturity of these instruments.

Trade receivables and sales

Revenue, after provision for installation, is generally recognized based on the terms of the sales contracts. The majority of sales contracts for products are written with selling terms “F.O.B. factory.” However, certain sales contracts may have other terms such as “F.O.B. destination” or “upon installation.” The Registrant recognizes revenue on these contracts when the appropriate event has occurred. The equipment that is sold is usually shipped and installed within one year. Installation that extends beyond one year is ordinarily attributable to causes not under the control of the Registrant. Service revenue is recognized in the period service is performed and subject to the individual terms of the service contract.

The concentration of credit risk in the Registrant’s trade receivables with respect to the banking and financial services industries is substantially mitigated by the Registrant’s credit evaluation process, reasonably short collection terms and the geographical dispersion of sales transactions from a large number of individual customers. The Registrant maintains allowances for potential credit losses, and such losses have been within management’s expectations.

Inventories

Inventories are valued at the lower of cost or market applied on a first-in, first-out basis. Cost is determined on the basis of actual cost.

Investment securities

Investment in debt and equity securities with readily determinable fair values are accounted for at fair value. The Registrant’s investment portfolio is classified as available-for-sale.

Depreciation and amortization

Depreciation of property, plant and equipment is computed using the straight-line method for financial statement purposes. Accelerated methods of depreciation are used for federal income tax purposes. Amortization of leasehold improvements is based upon the shorter of original terms of the lease or life of the improvement.

Research and development

Total research and development costs charged to expense were $42,975, $42,946, and $45,184 in 1999, 1998 and 1997, respectively.

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In-process research and development

Associated with the acquisition of Nexus Software, Inc. in the last quarter of 1999, the Registrant wrote off $2,050 of in-process research and development.

Goodwill

Goodwill is the costs in excess of the net assets of acquired businesses. These assets are stated at cost and are amortized ratably over a period not exceeding 20 years. The Registrant periodically monitors the value of goodwill by assessing whether the asset can be recovered over its remaining useful life through undiscounted cash flows generated by the underlying businesses.

Other assets

Other assets consist primarily of pension assets, computer software, customer demonstration equipment, deferred tooling and certain other assets. These assets are stated at cost and, if applicable, are amortized ratably over a period of three to five years.

Deferred income

Deferred income is recognized for customer billings in advance of the period in which the service will be performed and is recognized in income on a straight-line basis over the contract period.

Stock-based compensation

Compensation cost is measured on the date of grant only if the current market price of the underlying stock exceeds the exercise price. The Registrant provides pro forma net income and pro forma net earnings per share disclosures for employee stock option grants made in 1995 and subsequent years as if the fair value based method had been applied.

Taxes on income

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Earnings per share

Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if common stock equivalents were exercised and then shared in the earnings of the Registrant.

Comprehensive income

The Registrant displays comprehensive income in the Consolidated Statements of Shareholders’ Equity and accumulated other comprehensive income separately from retained earnings and additional paid-in-capital in the Consolidated Balance Sheets and Statements of Shareholders’ Equity. Items considered to be other comprehensive income include adjustments made for foreign currency translation (under Statement 52), pensions (under Statement 87) and unrealized holding gains and losses on available-for-sale securities (under Statement 115).

Accumulated other comprehensive income (loss) balances for 1999, 1998 and 1997 for foreign currency translations were $464, ($9,094) and ($9,244), for pensions were ($3,502), ($4,116) and ($1,319), and for unrealized holding gains/(losses) on investment securities were ($2,827), $408 and $859, respectively. The related tax (expense) or benefit for adjustments to accumulated other comprehensive income for 1999, 1998 and 1997 for pensions were ($331), $1,506, and ($117) and for unrealized holding gains/(losses) on investment securities were $1,742, $243, and ($179), respectively. Translation adjustments are not booked net of tax. Those adjustments are accounted for under the indefinite reversal criterion of APB Opinion 23, “Accounting for Income Taxes—Special Areas.”

23

Use of estimates in preparation of Consolidated Financial Statements

The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

The Registrant has reclassified the presentation of certain prior-year information to conform with the current presentation format.

Note 2: Related Party Transactions
InterBold joint venture

The Consolidated Financial Statements for the periods of January 1 through January 27, 1998, and the entire year of 1997, include the accounts of InterBold, a joint venture between the Registrant and IBM. The joint venture provided ATMs and other financial self-service systems worldwide.

On January 27, 1998, Registrant completed its purchase of IBM’s 30 percent minority interest in InterBold for $16,141. The purchase price represented IBM’s tax capital account on July 2, 1997, the date IBM informed Registrant that it was exercising its option to sell its 30 percent minority interest in InterBold to the Registrant. The Registrant financed the purchase with its cash reserves.

Note 3: Investment Securities

At December 31, 1999 and 1998, the investment portfolio was classified as available-for-sale. Marketable debt and equity securities are stated at fair value. The fair value of securities and other investments is estimated based on quoted market prices.

The Registrant’s investment securities, excluding insurance contracts, at December 31, are summarized as follows:

			Amortized		Fair
			Cost Basis		Value
1999
	Short-term investments:
		Tax-exempt municipal bonds	$	20,897	$	20,859
		Certificates of deposit and other investments		36,489		36,489
			$	57,386	$	57,348
	Securities and other investments:
		Tax-exempt municipal bonds	$	107,808	$	106,340
		Equity securities		32,236		29,392
			$	140,044	$	135,732

			Amortized		Fair
			Cost Basis		Value
1998
Short-term investments:
	Tax-exempt municipal bonds		$	37,151	$	37,433
Securities and other investments:
		Tax-exempt municipal bonds	$	108,256	$	109,234
		Equity securities		29,845		29,212
			$	138,101	$	138,446

The contractual maturities of tax-exempt municipal bonds at December 31, 1999 are as follows:

	Amortized		Fair
	Cost Basis		Value
Due within one year	$	20,897	$	20,859
Due after one year through five years		107,808		106,340
	$	128,705	$	127,199

Note 4: Inventories

Major classes of inventories at December 31, are summarized as follows:

	1999		1998
Finished goods and service parts	$	55,433	$	43,835
Work in process		114,300		83,873
Raw materials		52		172
	$	169,785	$	127,880

Note 5: Property, Plant and Equipment

Property, plant and equipment at December 31, together with annual depreciation and amortization rates, consisted of the following:

						Annual
		1999		1998		Rates
Land and land
	improvements	$	7,275	$	8,028		5-20	%
Buildings			64,181		64,216		2-34	%
Machinery, equipment and rotatable spares			236,531		187,362		5-40	%
Leasehold							Lease
	improvements		4,506		4,297		Term
Construction in progress			8,147		14,532		—
		$	320,640	$	278,435

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Note 6: Finance Receivables

The components of finance receivables for the net investment in sales-type leases are as follows:

		1999			1998
Total minimum
	lease receivable	$	121,266		$	103,929
Estimated unguaranteed residual values			5,587			5,762
			126,853			109,691
Less:
	Unearned interest income		(21,750	)		(22,411	)
	Unearned residuals		(1,707	)		(1,851	)
			(23,457	)		(24,262	)
		$	103,396		$	85,429

Future minimum lease receivables due from customers under sales-type leases as of December 31, 1999, are as follows:

2000	$	31,370
2001		27,637
2002		25,184
2003		19,578
2004		17,219
Thereafter		278
	$	121,266

Note 7: Short-Term Financing

At December 31, 1999, bank credit lines approximated $245,500 and EUR 100,000 (translation $99,315) with various institutions for short-term financing. The Registrant had $117,450 outstanding borrowings under these agreements at December 31, 1999 and no outstanding borrowings at December 31, 1998. $450 of the $117,450 outstanding is interest free, while the remaining $117,000 is at an average short-term rate of 6.69 percent. The Registrant had $128,000 and EUR 100,000 (translation $99,315) credit lines remaining at December 31, 1999.

The Registrant has informal understandings with certain banks to maintain compensating balances, which are not legally restricted as to withdrawal.

Note 8: Realignment and Special Charges

In the second quarter of 1998, the Registrant recognized realignment and special charges of $61,117 ($41,850 after-tax or $0.60 per diluted share) in connection with a corporate-wide realignment program. As expected, the realignment plan concluded as of December 31, 1999. At the conclusion of the plan, $3,261 of the original realignment accrual was brought back through income due to less than expected costs for lower-than-expected contractual lease obligations and for lower-than-expected job eliminations.

Realignment exit costs were accounted for under EITF 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring.)” Long-lived asset impairments were accounted for under Statement of Financial Accounting Standards No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of.” Inventory charges were taken when it was determined that the utility, as a result of the realignment decisions, was less than the costs for the affected inventory. Special charges of $9,864 mainly represent the write off of inventory for exited businesses and all other realignment charges of $51,253 were recognized as a separate operating expense in the Consolidated Statements of Income.

Elements of the realignment and special charges were divided into three categories: Facility closing and write down of assets, employee costs and other exit costs. Facility closing and write down of assets costs were estimated to be $40,343. Items included in this category were certain impaired intangible assets, mainly relating to the separation from IBM in the InterBold joint venture in 1998, manufacturing assets relating to exited businesses, redundant inventory of exited businesses and contractual costs to exit leased facilities. North American facilities were consolidated and several facilities were closed under the realignment program.

Termination pay and separation costs were estimated to be $8,269. More than 600 employees were estimated to be terminated, and at the conclusion of the realignment plan as of December 31, 1999, 560 jobs had been eliminated. The estimated costs in this category included the termination pay, job outplacement and fringe benefit costs for each eliminated job. Terminations came from all areas of the Registrant.

Other exit costs under the realignment program were estimated to be $12,505. These costs included legal, insurance and communications costs and the write-off of accounts receivable relating to exited businesses.

Assets relating to the realignment were written down or scrapped. Costs from the realignment were paid from operating funds over the term of the realignment plan. The entire realignment plan was completed as of December 31, 1999.

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The following table shows the realignment charge and accrual and all activity through December 31, 1999:

		Facility
		Closing and									Other
		Write-Down			Employee						Exit
		of Assets			Costs			Costs			Total
Original realignment charge at
	commencement of plan	$	40,343		$	8,269		$	12,505		$	61,117
Write-off of intangibles and long-lived assets under Statement 121			(24,857	)		—			—			(24,857	)
Beginning accrual at commencement of Plan			15,486			8,269			12,505			36,260
1998 activity			(13,409	)		(3,693	)		(7,910	)		(25,012	)
Balance at December 31, 1998			2,077			4,576			4,595			11,248
1999 activity			(1,849	)		(1,543	)		(4,595	)		(7,987	)
Remaining realignment accrual taken back into income			(228	)		(3,033	)		—			(3,261	)
Balance at December 31, 1999		$	—		$	—		$	—		$	—

Note 9: Bonds Payable

      Bonds payable at December 31 consisted of the following:

	1999		1998
Industrial Development Revenue Bond due January 1, 2017	$	5,800	$	5,800
Industrial Development Revenue Bond due April 1, 2017		7,500		7,500
Industrial Development Revenue Bond due June 1, 2017		7,500		7,500
	$	20,800	$	20,800

In 1997, three industrial development revenue bonds were issued on behalf of the Registrant. The proceeds from the bond issuances were used to construct new manufacturing facilities in Danville and Staunton, Virginia and Lexington, North Carolina. The Registrant guaranteed the payments of principal and interest on the bonds by obtaining letters of credit. Each industrial development revenue bond carries a variable interest rate, which is reset weekly by the remarketing agents. The bonds can be called at anytime. The Registrant is in compliance with the covenants of its loan agreements and believes that the covenants will not restrict its future operations.

Note 10: Shareholders’ Equity

      On the basis of amounts declared and paid, the annualized quarterly dividends per share were $0.60 in 1999, $0.56 in 1998, and $0.50 in 1997.

      In the following chart, the Registrant provides net income and basic and diluted earnings per share reduced by the pro forma amounts calculating compensation cost for the Registrant’s fixed stock option plan under the fair value method. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following average assumptions for 1999, 1998 and 1997, respectively: risk-free interest rates of 5.1, 4.7, and 5.7 percent; dividend yield of 1.4, 1.8, and 2.2 percent, volatility of 33, 24, and 19 percent; and average expected lives of six years for management and four years for executive management and non-employee directors. Pro forma net income reflects only options granted since January 1, 1995.

			1999		1998		1997
Net income
	As reported		$	128,856	$	76,148	$	122,516
	Pro forma		$	127,498	$	73,822	$	120,556
Earnings per share
	As reported
		Basic	$	1.86	$	1.10	$	1.78
		Diluted	$	1.85	$	1.10	$	1.76
	Pro forma
		Basic	$	1.84	$	1.07	$	1.75
		Diluted	$	1.83	$	1.07	$	1.74

Fixed stock options

Under the 1991 Equity and Performance Incentive Plan (1991 Plan), Common Shares are available for grant of options at a price not less than 85 percent of the fair market value of the Common Shares on the date of grant. The exercise price of options granted since January 1, 1995, was equal to the market price at the grant date, and accordingly, no compensation cost

26

has been recognized. In general, options are exercisable in cumulative annual installments over five years, beginning one year from the date of grant. The number of Common Shares that may be issued or delivered pursuant to the 1991 Plan is 6,265,313, of which 4,853,333 shares were available for issuance at December 31, 1999. The 1991 Plan will expire on April 2, 2002.

The 1991 Plan replaced the Amended and Extended 1972 Stock Option Plan (1972 Plan), which expired by its terms on April 2, 1992. Awards already outstanding under the 1972 Plan are unaffected by the adoption of the 1991 Plan.

Under the 1997 Milestone Stock Option Plan (Milestone Plan), options for 100 Common Shares were granted to all eligible salaried and hourly employees. The exercise price of the options granted under the Milestone Plan was equal to the market price at the grant date, and accordingly, no compensation cost has been recognized. In general, all options are exercisable beginning two years from the date of grant. The number of Common Shares that may be issued or delivered pursuant to the Milestone Plan is 600,000 of which 559,800 shares were available for issuance at December 31, 1999. The Milestone Plan will expire on March 2, 2002.

27

The following is a summary with respect to options outstanding at December 31, 1999, 1998 and 1997, and activity during the years ending on those dates:

		1999					1998					1997
					Weighted-					Weighted-					Weighted-
					Average					Average					Average
					Exercise					Exercise					Exercise
		Shares			Price		Shares			Price		Shares			Price
Outstanding at the beginning of year			1,989,032		$	30		2,121,223		$	27		1,529,545		$	18
Options granted			412,197			34		271,150			47		829,500			41
Options exercised			(112,698	)		12		(208,031	)		13		(203,260	)		10
Options expired or forfeited			(72,360	)		40		(195,310	)		39		(34,562	)		40
Outstanding at the end of year			2,216,171		$	31		1,989,032		$	30		2,121,223		$	27
Options exercisable at end of year			1,378,795					780,967					694,448
Weighted-average fair value
	of options granted during the year	$	10				$	12				$	7

The following table summarizes pertinent information regarding fixed stock options outstanding and options exercisable at December 31, 1999:

		Options Outstanding						Options Exercisable
				Weighted-
				Average
		Number		Remaining		Weighted-		Number		Weighted-
		Of		Contractual		Average		Of		Average
		Options		Life		Exercise		Options		Exercise
Range of Exercise Prices		Outstanding		(in Years)		Price		Exercisable		Price
	$7 - 29		15,911		0.27	$	19		13,823	$	17
	6 - 36		74,595		1.00		17		64,467		13
	9 - 42		626,170		2.00		37		579,662		37
	13 - 40		125,779		3.00		18		110,779		15
	17 - 27		134,566		4.00		19		103,066		17
	15 - 19		207,655		5.00		16		186,190		16
	24 - 34		235,665		6.00		24		162,112		24
	33 - 38		215,080		7.00		38		109,314		38
	29 - 48		207,550		8.00		47		48,782		47
	29 - 35		373,200		9.00		35		600		35
			2,216,171		5.17	$	31.45		1,378,795	$	28.72

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Restricted share grants

The 1991 Plan also provides for the issuance of restricted shares to certain employees. Outstanding shares granted at December 31, 1999, totaled 171,537 restricted shares. The shares are subject to forfeiture under certain circumstances. Unearned compensation representing the fair market value of the shares at the date of grant will be charged to income over the three-to-seven-year vesting period.

Performance share grants

The 1991 Plan also provides for the issuance of Common Shares based on certain management objectives achieved within a specified performance period of at least one year as determined by the Board of Directors. The management objectives set in 1999 are based on a three-year performance period ending December 31, 2001. The management objectives for the period ended December 31, 1999, were set in April 1997. Based on performance, a partial payout was made in Common Shares in 2000.

The compensation cost that has been charged against income for its performance-based share grant plan was $(1,712), $2,280, and $10,400, in 1999, 1998 and 1997, respectively.

On January 28, 1999 the Board of Directors announced the adoption of a new Rights Agreement that provided for Rights to be issued to shareholders of record on February 11, 1999. The description and terms of the Rights were set forth in the Rights Agreement, dated as of February 11, 1999, between the Registrant and the Bank of New York, as Agent. Under the Rights Agreement, the Rights trade together with the Common Shares and are not exercisable. In the absence of further Board action, the Rights generally will become exercisable and allow the holder to acquire Common Shares at a discounted price if a person or group acquires twenty percent or more of the outstanding Common Shares. Rights held by persons who exceed the applicable threshold will be void. Under certain circumstances, the Rights will entitle the holder to buy shares in an acquiring entity at a discounted price. The Rights Agreement also includes an exchange option. In general, after the Rights become exercisable, the Board of Directors may, at its option, effect an exchange of part or all of the Rights (other than Rights that have become void) for Common Shares. Under this Option, the Registrant would issue one Common Share for each Right, subject to adjustment in certain circumstances. The Rights are redeemable at any time prior to the Rights becoming exercisable and will expire on February 11, 2009, unless redeemed or exchanged earlier by the Registrant.

Note 11: Earnings Per Share
(In thousands except per share amounts)

      The following data show the amounts used in computing earnings per share and the effect on the weighted-average number of shares of dilutive potential common stock.

		1999		1998		1997
Numerator:
Income available to
	Common shareholders used in basic and diluted
	earnings per share	$	128,856	$	76,148	$	122,516
Denominator:
Weighted-average
	number of Common Shares used in basic earnings per share		69,359		68,960		68,939
Effect of dilutive fixed
	stock options and performance shares		203		350		551
Weighted-average
	number of Common Shares and dilutive potential Common Shares used in diluted earnings per share		69,562		69,310		69,490
Basic earnings per
	share	$	1.86	$	1.10	$	1.78
Diluted earnings per
	per share	$	1.85	$	1.10	$	1.76

Fixed stock options on 1,377 Common Shares in 1999 and 1,161 Common Shares in 1998 were not included in computing diluted earnings per share, because their effects were antidilutive.

Note 12: Pension Plans and
Postretirement Benefits

The Registrant has several pension plans covering substantially all domestic employees. Plans covering salaried employees provide pension benefits that are based on the employee’s compensation during the 10 years before retirement. The Registrant’s funding policy for those plans is to contribute annually at an actuarially determined rate. Plans covering hourly employees and union members generally provide benefits of stated amounts for each year of service. The Registrant’s funding policy for those plans is to make at least the minimum annual contributions required by applicable regulations.

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Approximately 90 percent of the plan assets at September 30, 1999 and 1998 were invested in listed stocks and investment grade bonds.

Minimum liabilities have been recorded in 1999 and 1998 for those plans whose total accumulated benefit obligation exceeded the fair value of the plan’s assets.

In addition to providing pension benefits, the Registrant provides healthcare and life insurance benefits for certain retired employees. Eligible employees may be entitled to these benefits based upon years of service with the Registrant, age at retirement and collective bargaining agreements. Presently, the Registrant has made no commitments to increase these benefits for existing retirees or for employees who may become eligible for these benefits in the future. Currently there are no plan assets and the Registrant funds the benefits as the claims are paid.

The effect of a one percentage point annual increase in the assumed healthcare cost trend rate would increase the service and interest cost components of the healthcare benefits by $113, a one percentage point decrease in the trend rate would decrease the service and interest components of the healthcare benefits by $100.

The postretirement benefit obligation was determined by application of the terms of medical and life insurance plans together with relevant actuarial assumptions and healthcare cost trend rates projected at annual rates declining from 7.5 percent in 1999 to 4.5 percent through the year of 2005 as well as the following years. The effect of a one percentage point annual increase in these assumed healthcare cost trend rates would increase the healthcare accumulated postretirement benefit obligation by $1,537, while a one percent decrease in the trend rate would decrease the accumulated postretirement benefit obligation by $1,323.

The following table sets forth the change in benefit obligation, change in plan assets, the funded status, the Consolidated Balance Sheet presentation, and the relevant assumptions for the Registrant’s defined benefit pension plans and health and life insurance post-retirement benefits at December 31:

30

	Pension Benefits						Health and Life Benefits
	1999			1998			1999			1998
Change in benefit obligation
Benefit obligation at beginning of year	$	245,302		$	214,655		$	21,844		$	20,778
Service cost		9,797			8,674			65			53
Interest cost		16,883			15,818			1,459			1,442
Assumption change		(18,011	)		8,884			(809	)		430
Liability (gain)/loss		(5,306	)		5,233			(171	)		1,178
Benefits paid		(8,077	)		(7,700	)		(1,834	)		(2,037	)
Expenses paid		(359	)		(262	)		—			—
Benefit obligation at end of year	$	240,229		$	245,302		$	20,554		$	21,844
Change in plan assets
Fair value of plan assets at beginning of year	$	261,208		$	271,643		$	—		$	—
Employer contributions		503			1,949			1,834			2,037
Benefits paid		(8,077	)		(7,700	)		(1,834	)		(2,037	)
Expenses paid		(359	)		(262	)		—			—
Investment return		57,038			(4,422	)		—			—
Fair value of plan assets at end of year	$	310,313		$	261,208		$	—		$	—
Funded status
Funded status	$	70,085		$	15,906		$	(20,554	)	$	(21,844	)
Unrecognized net gain		(68,784	)		(9,621	)		(3,683	)		(2,750	)
Prior service costs not yet recognized		5,201			6,263			—			—
Unrecognized net transition obligation		(8,172	)		(9,656	)		—			—
Prepaid/(accrued) pension cost	$	(1,670	)	$	2,892		$	(24,237	)	$	(24,594	)
Amounts recognized in Balance Sheet
Prepaid benefit cost	$	16,331		$	17,484		$	—		$	—
Accrued benefit liability		(24,409	)		(22,745	)		(24,237	)		(24,594	)
Intangible asset		1,036			1,835			—			—
Accumulated other comprehensive income		5,372			6,318			—			—
Net amount recognized	$	(1,670	)	$	2,892		$	(24,237	)	$	(24,594	)

	Pension Benefits									Health and Life Benefits
	1999			1998			1997			1999			1998			1997
Net periodic pension benefit cost
Service cost	$	9,797		$	8,673		$	7,795		$	65		$	53		$	62
Interest cost		16,882			15,818			14,260			1,459			1,442			1,788
Expected return on assets		(21,799	)		(19,531	)		(17,295	)		—			—			—
Transition (asset)/obligation recognition		(876	)		(1,484	)		(1,484	)		—			—			—
Prior service cost amortization		1,062			1,062			1,061			—			—			—
Net (gain)/loss recognition		607			326			309			(47	)		(192	)		—
Net periodic pension cost	$	5,673		$	4,864		$	4,646		$	1,477		$	1,303		$	1,850
Weighted-average assumptions as of
September 30 valuation date
Discount rate		7.50	%		7.00	%		7.25	%		7.50	%		7.00	%		7.25	%
Long-term rate of return on plan assets		9.25	%		9.25	%		9.00	%		—			—			—
Rate of increase in compensation level		5.00	%		5.00	%		5.00	%		—			—			—

31

Accrued benefit liabilities of $24,409 do not agree to what is reported on the Consolidated Balance Sheets due to an employer contribution payment of $100 made in December 1999, after the September 30, 1999 valuation date.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $(39,398), $(37,087), and $14,866, respectively as of December 31, 1999 and $(39,051), $(36,573) and $13,779, respectively as of December 31, 1998. The amounts included within other comprehensive income arising from a change in the additional minimum pension liability, net of tax were $614, and $(2,797) in 1999 and 1998, respectively.

The Registrant offers an employee 401(k) Savings Plan (Savings Plan) to encourage eligible employees to save on a regular basis by payroll deductions, and to provide them with an opportunity to become shareholders of the Registrant. Under the Savings Plan for the year ended December 31, 1999, the Registrant matched 80 percent of a participating employee’s first 4 percent of contributions and 40 percent of a participating employee’s second 4 percent of contributions. Total Registrant match in 1999, 1998 and 1997 was $9,012, $9,338, and $9,217, respectively.

Note 13: Leases

The Registrant’s future minimum lease payments due under operating leases for real and personal property in effect at December 31, 1999 are as follows:

				Real		Vehicles and
Expiring		Total		Estate		Equipment
	2000	$	28,817	$	10,920	$	17,897
	2001		22,015		7,792		14,223
	2002		15,195		6,549		8,646
	2003		8,396		5,515		2,881
	2004		4,710		4,601		109
	Thereafter		4,201		4,201		—
		$	83,334	$	39,578	$	43,756

Rental expense for 1999, 1998 and 1997 under all lease agreements amounted to approximately $32,281, $34,158, and $30,900, respectively.

Note 14: Income Taxes

Income tax expense attributable to income from continuing operations consists of:

		1999		1998			1997
Federal and international
	Current	$	55,317	$	39,656		$	54,348
	Deferred		10,840		(272	)		(265	)
		$	66,157	$	39,384		$	54,083
State and local
	Current	$	4,176	$	5,132		$	9,368
	Deferred		2,149		(857	)		(308	)
			6,325		4,275			9,060
Total income tax
	expense	$	72,482	$	43,659		$	63,143

In addition to the 1999 income tax expense of $72,482, certain deferred income tax benefits of $1,925 were allocated directly to shareholders’ equity.

A reconciliation of the difference between the U.S. statutory tax rate and the effective tax rate is as follows:

	1999			1998			1997
Statutory tax rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal tax benefit		2.0			2.3			3.2
Realignment charges		—			3.3			—
Exempt income		(3.3	)		(4.2	)		(2.5	)
Insurance contracts		(0.2	)		(2.4	)		(2.1	)
Other		2.5			2.4			0.4
Effective tax rate		36.0	%		36.4	%		34.0	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Registrant’s deferred tax assets and liabilities are as follows:

32

		1999			1998
Deferred Tax Assets:
Postretirement benefits		$	17,246		$	16,655
Accrued expenses			19,232			18,053
Inventory			3,630			7,084
Partnership income			1,496			2,131
Realignment charges			(91	)		6,408
Deferred revenue			4,976			5,951
Net operating loss carryforwards			3,508			1,692
State deferred taxes			5,906			9,197
Other			10,921			7,753
			66,824			74,924
Valuation allowance			(2,646	)		(1,579	)
Net deferred tax assets		$	64,178		$	73,345
Deferred Tax Liabilities:
Pension		$	7,075		$	7,645
Amortization			716			441
Depreciation			4,009			3,800
Finance receivables			7,277			7,520
Other			5,441			7,185
Net deferred tax
	liabilities		24,518			26,591
Net deferred tax asset		$	39,660		$	46,754

At December 31, 1999, the Registrant’s international subsidiaries had deferred tax assets relating to net operating loss carryforwards of $3,508, $1,320 of which expires in years 2000 through 2006, and $2,188 of which has an indefinite carryforward period. The Registrant recorded a valuation allowance to reflect the estimated amount of deferred tax assets, which more likely than not, will not be realized. The valuation allowance relates to certain international net operating losses and other international deferred tax assets.

Note 15: Commitments and Contingencies

At December 31, 1999, the Registrant was a party to several lawsuits that were incurred in the normal course of business, none of which individually or in the aggregate is considered material by management in relation to the Registrant’s financial position or results of operations. While in management’s opinion the financial statements would not be materially affected by the outcome of any present legal proceedings, commitments, or asserted claims, management is aware of a potential claim by the Internal Revenue Service concerning the Registrant’s corporate-owned life insurance programs. Management believes that it has complied with all applicable tax laws and regulations with respect to such programs and will vigorously contest any claim.

Note 16: Segment Information

The Registrant redefined its operating segments during 1999, and all historical information has been restated for consistency. The Registrant has defined its segments into its three main sales channels: North American Sales and Service (NASS), International Sales and Service (ISS) and Other which combines several of the Registrant’s smaller sales channels. These sales channels are evaluated based on the following information presented: revenues from customers, revenues from inter-segment transactions, and operating profit contribution to the total corporation. A reconciliation between segment information and the Consolidated Financial Statements is also disclosed. All income and expense items below operating profit are not allocated to the segments and are not disclosed. Revenue by geography and revenue by product and service solution are also disclosed.

The NASS segment sells financial and retail systems and also services financial, retail and medical systems in the United States and Canada. The ISS segment sells and services financial and retail systems over the remainder of the globe, including sales to IBM which was the Registrant’s former partner in the InterBold joint venture that terminated in January 1998. The segment called Other, sells products to educational and medical institutions and other customers. This segment also services educational customers in the United States. Each of the sales channels buys the goods it sells from the Registrant’s manufacturing plants through inter-company sales that are eliminated on consolidation. Each year, inter-company pricing is agreed upon which drives sales channel operating profit contribution. As permitted under Statement 131, certain information not routinely used in the management of these segments, information not allocated back to the segments or information that is impractical to report is not shown. Items not disclosed are as follows: interest revenue, interest expense, depreciation, amortization, equity in the net income of investees accounted for by the equity method, income tax expense or benefit, extraordinary items, significant noncash items and long-lived assets.

More than 90 percent of the Registrant’s customer revenues are derived from the sales and service of financial systems and equipment. The Registrant had no customers in 1999 that accounted for more than 10% of total net sales. The Registrant had one customer, IBM, its former partner in the InterBold joint venture that accounted for $148,755 of the total net sales of $1,185,707 in 1998, and $173,751 of the total net sales of $1,226,936 in 1997. 1999 sales to IBM were $51,552.

33

	NASS		ISS			Other			Total
1999 Segment Information by Channel
Customer revenues	$	926,975	$	293,316		$	37,131		$	1,257,422
Intersegment revenues		15,262		(284	)		11,502			26,480
Operating profit		153,799		17,801			(9,997	)		161,603
1998 Segment Information by Channel
Customer revenues		891,288		263,428			34,180			1,188,896
Intersegment revenues		26,176		278			9,509			35,963
Operating profit		144,886		7,470			(9,106	)		143,250
1997 Segment Information by Channel
Customer revenues		905,631		292,591			27,360			1,225,582
Intersegment revenues		27,456		38,875			13,166			79,497
Operating profit		155,889		20,904			(7,883	)		168,910

Reconciliation of Segment Information to Consolidated Statements of Income

		1999								1998									1997
				Inter-									Inter-								Inter-
		Customer		segment			Operating			Customer			segment			Operating			Customer		segment			Operating
		Revenues		Revenues			Profit			Revenues			Revenues			Profit			Revenues		Revenues			Profit
Total segment information		$	1,257,422	$	26,480		$	161,603		$	1,188,896		$	35,963		$	143,250		$	1,225,582	$	79,497		$	168,910
	Adjustments:
	Manufacturing		1,111		600,003			58,508			1,368			715,793			72,182			—		840,523			63,879
	Corporate		644		3,438			(35,199	)		(4,557	)		—			(48,068	)		1,354		(6,543	)		(48,928	)
	Realignment and special charges		—		—			3,261			—			—			(61,117	)		—		—			—
	In-process research and development costs		—		—			(2,050	)		—			—			—			—		—			—
	Eliminations		—		(629,921	)		—			—			(751,756	)		—			—		(913,477	)		—
	Total adjustments		1,755		(26,480	)		24,520			(3,189	)		(35,963	)		(37,003	)		1,354		(79,497	)		14,951
Consolidated Statements of Income		$	1,259,177	$	—		$	186,123		$	1,185,707		$	—		$	106,247		$	1,226,936	$	—		$	183,861

Product Revenue by Geography

		1999		1998		1997
United States		$	515,620	$	495,432	$	549,387
Canada			23,440		32,083		24,725
Asia-Pacific			54,317		47,373		73,985
Europe, Middle East and Africa			61,321		61,126		74,655
Latin America			102,548		114,147		102,373
	Total product revenue	$	757,246	$	750,161	$	825,125

Total Revenue Domestic vs. International

		1999			1998			1997
Domestic		$	939,017		$	888,500		$	906,488
	Percentage of total revenue		74.6	%		74.9	%		73.9	%

34

			1999			1998			1997
International				320,160			297,207			320,448
	Percentage of total revenue			25.4	%		25.1	%		26.1	%
		Total revenue	$	1,259,177		$	1,185,707		$	1,226,936

Total Revenue by Product /Service Solution

		1999		1998		1997
Self-service solutions		$	536,166	$	549,942	$	657,642
Security solutions			179,957		178,095		151,966
Professional and special services			41,123		22,124		15,517
Custom maintenance services			501,931		435,546		401,811
	Total revenue	$	1,259,177	$	1,185,707	$	1,226,936

Note 17: Acquisitions

On October 21, 1999, the Registrant acquired Procomp Amazonia Industria Eletronica, S.A. (Procomp), a Brazilian manufacturer and marketer of innovative technical solutions, including personal computers, servers, software, professional services and retail and banking automation equipment. The acquisition was effected in a combination of cash and stock for $222,310. The value of the shares issued was $41,953. Procomp results following the acquisition are consolidated with the results of the Registrant.

On October 15, 1999, the Registrant acquired Nexus Software, Inc. (Nexus) of Raleigh, North Carolina. Nexus is a technology development and retail bank branch connectivity company that markets its suite of products to financial institutions around the world. The acquisition was effected in a combination of cash and stock for $13,900. The value of the shares issued was $7,023. Nexus results following the acquisition are consolidated with the results of the Registrant.

Both acquisitions have been accounted for as purchase business combinations and, accordingly, the purchase prices have been allocated to identifiable tangible and intangible assets acquired and liabilities assumed, based upon their respective fair values, with the excess allocated to goodwill to be amortized over the estimated economic lives from the respective dates of acquisition. The amounts of goodwill and periods of amortization for Procomp and Nexus are $132,826 over 17 years and $9,101 over 10 years, respectively. In connection with the Nexus acquisition, the Registrant immediately wrote off $2,050 of in-process research and development activities. The calculations of the write-off for the in-process research and development activities were made using the approaches outlined by the Securities and Exchange Commission.

Yearly unaudited pro forma financial information assuming the acquisition of Procomp was effected on January 1, 1999 and 1998, respectively, is as follows: revenue $1,502,505 and $1,518,977, net income $118,346 and $79,434, and diluted earnings per share $1.67 and $1.12. In 1999, unaudited pro forma results were severely impacted by the devaluation of the Brazilian real beginning in January 1999.

Yearly unaudited pro forma financial information assuming the acquisition of Nexus was effected on January 1, 1999 and 1998, respectively, is as follows: revenue $1,267,953 and $1,196,804, net income $129,433 and $76,867, and diluted earnings per share $1.85 and $1.10.

No contingent payments, options or commitments are specified in the acquisition agreements for either Procomp or Nexus.

Note 18: Subsequent Event (Unaudited)

On February 9, 2000, the Registrant announced its plans to acquire the financial self-service assets and related development activities of European-based Groupe Bull and Getronics NV. The businesses to be acquired include ATMs, cash dispensers, other self-service terminals and related services primarily for the global banking industry. The acquisition is expected to be completed in early 2000 for approximately $160,000 to be paid in cash. As part of the proposed transaction, the Registrant would acquire approximately 1,300 new employees in the areas of sales, service, management and manufacturing.

35

Note 19: Quarterly Financial Information (Unaudited)

See “Comparison of Selected Quarterly Financial Data (Unaudited)” on page 38 of this Annual Report on Form 10-K.

36

Forward-Looking Statement Disclosure

In the Registrant’s written or oral statements, the use of the words “believes,” “anticipates,” “expects” and similar expressions is intended to identify forward-looking statements that have been made and may in the future be made by or on behalf of the Registrant, including statements concerning future operating performance, the Registrant’s share of new and existing markets, and the Registrant’s short- and long-term revenue and earnings growth rates. Although the Registrant believes that its outlook is based upon reasonable assumptions regarding the economy, its knowledge of its business, and on key performance indicators which impact the Registrant, there can be no assurance that the Registrant’s goals will be realized. The Registrant is not obligated to report changes to its outlook. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Registrant’s uncertainties could cause actual results to differ materially from those anticipated in forward-looking statements. These include, but are not limited to:

• competitiveness pressures, including pricing pressures and technological developments;

• changes in the Registrant’s relationships with customers, suppliers, distributors and/or partners in its business ventures;

• changes in political, economic or other factors such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the worldwide business in each of the Registrant’s operations, including Brazil, where a significant portion of the Registrant’s revenue is derived;

• acceptance of the Registrant’s product and technology introductions in the marketplace;

• unanticipated litigation, claims or assessments; and

• the ability to replace revenue generated by IBM as its primary international distributor.

37

Comparison of Selected Quarterly Financial Data (Unaudited)

	1st Quarter				2nd Quarter					3rd Quarter				4th Quarter
(Dollars in thousands except per share amounts)	1999		1998		1999		1998			1999		1998		1999		1998
Net sales	$	283,483	$	295,739	$	296,996	$	280,592		$	312,778	$	287,291	$	365,920	$	322,085
Gross profit		101,088		102,135		111,006		90,021			113,817		100,039		130,901		114,055
Net income*		29,124		26,850		31,561		(14,444	)		32,654		29,391		35,516		34,350
Basic earnings per share*		0.42		0.39		0.46		(0.21	)		0.47		0.43		0.50		0.50
Diluted earnings per share*		0.42		0.39		0.46		(0.21	)		0.47		0.43		0.50		0.50

See Note 19 to Consolidated Financial Statements and 5-Year Summary 1999-1995.

*The sum of quarterly figures does not equal annual figures due to rounding or differences in the weighted-average number of shares outstanding during the respective periods.

38

Report of Management

The management of Diebold, Incorporated is responsible for the contents of the consolidated financial statements, which are prepared in conformity with generally accepted accounting principles. The consolidated financial statements necessarily include amounts based on judgments and estimates. Financial information elsewhere in the Annual Report on Form 10-K is consistent with that in the consolidated financial statements.

The Registrant maintains a comprehensive accounting system which includes controls designed to provide reasonable assurance as to the integrity and reliability of the financial records and the protection of assets. An internal audit staff is employed to regularly test and evaluate both internal accounting controls and operating procedures, including compliance with the Registrant’s statement of policy regarding ethical and lawful conduct. The role of KPMG LLP, the independent auditors, is to provide an objective examination of the consolidated financial statements and the underlying transactions in accordance with generally accepted auditing standards. The report of KPMG LLP accompanies the consolidated financial statements.

The Audit Committee of the Board of Directors, composed of directors who are not members of management, meets regularly with management, the independent auditors and the internal auditors to ensure that their respective responsibilities are properly discharged. KPMG LLP and the Managing Director of Internal Audit have full and free access to the Audit Committee.

/s/Robert L. Stockamp

Robert L. Stockamp
Vice President and Corporate Controller
Interim Chief Financial Officer

39

5-Year Summary 1999-1995
Diebold, Incorporated and Subsidiaries
Selected Financial Data
(In thousands except per share amounts and ratios)

	1999			1998			1997			1996			1995
Operating Results
Net sales	$	1,259,177		$	1,185,707		$	1,226,936		$	1,030,191		$	863,409
Cost of sales		802,365			779,457			796,836			672,679			568,978
Gross profit		456,812			406,250			430,100			357,512			294,431
Selling and administrative expense		221,393			194,535			191,842			166,572			144,490
Research, development and engineering expense		50,507			54,215			54,397			50,576			43,130
In-process research and development		2,050			—			—			—			—
Operating profit		186,123			106,247			183,861			140,364			106,811
Other income, net		16,384			15,403			6,894			10,533			6,612
Minority interest		(1,169	)		(1,843	)		(5,096	)		(4,393	)		(200	)
Income before taxes		201,338			119,807			185,659			146,504			113,223
Taxes on income		72,482			43,659			63,143			49,079			37,014
Net income		128,856			76,148			122,516			97,425			76,209
Realignment and special charges (Note A)		(3,261	)		61,117			—			—			—
Basic earnings per share (Note B)		1.86			1.10			1.78			1.42			1.11
Diluted earnings per share (Note B)		1.85			1.10			1.76			1.40			1.10
Dividend and Common Share Data
Basic weighted-average shares outstanding (Note B)		69,359			68,960			68,939			68,796			68,649
Diluted weighted-average shares outstanding (Note B)		69,562			69,310			69,490			69,350			69,022
Common dividends paid	$	41,668		$	38,631		$	34,473		$	31,190		$	29,290
Common dividends paid per share (Note B)		0.60			0.56			0.50			0.45			0.43
Year-End Financial Position
Current assets	$	647,936		$	543,548		$	549,837		$	487,523		$	376,212
Current liabilities		382,407			235,533			242,080			228,220			189,078
Net working capital		265,529			308,015			307,757			259,303			187,134
Property, plant and equipment, net		160,724			147,131			143,901			95,934			84,072
Total assets		1,298,831			1,004,188			991,050			859,101			749,795
Long-term debt, less current maturities		20,800			20,800			20,800			—			—
Shareholders’ equity		844,395			699,123			668,581			575,570			507,680
Shareholders’ equity per share (Note C)		11.88			10.15			9.69			8.36			7.39
Ratios
Pretax profit on net sales (%)		16.0	%		10.1	%		15.1	%		14.2	%		13.1	%
Current ratio		1.7 to 1			2.3 to 1			2.3 to 1			2.1 to 1			2.0 to 1
Other Data
Capital expenditures	$	40,341		$	30,768		$	67,722		$	33,581		$	35,308
Depreciation		34,709			25,649			18,701			20,984			14,174

Note A — In the second quarter of 1998, the Registrant recorded realignment and special charges of $61,117 ($41,850 after-tax or $0.60 per diluted share). The realignment concluded as of December 31, 1999 with $3,261 of the original realignment accrual being brought back through income.

Note B — After adjustment for stock splits.

Note C — Based on shares outstanding at year-end adjusted for stock splits.

40

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

      There have been no changes in accountants or disagreements with accountants on accounting and financial disclosures.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      Information with respect to directors of the Registrant is included on pages 3 through 8 of the Registrant’s proxy statement for the 2000 Annual Meeting of Shareholders (“2000 Annual Meeting”) and is incorporated herein by reference. Refer to pages 6 through 8 of this Form 10-K for information with respect to executive officers. Information with respect to "Section 16(a) Beneficial Ownership Reporting Compliance" is included on page 6 of the Registrant's proxy statement for the 2000 Annual Meeting and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

      Information with respect to executive compensation is included on pages 8 through 18 of the Registrant’s proxy statement for the 2000 Annual Meeting and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      Information with respect to security ownership of certain beneficial owners and management is included on pages 2 through 6 of the Registrant’s proxy statement for the 2000 Annual Meeting and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      The information with respect to certain relationships and related transactions set forth under the caption “Compensation Committee Interlocks and Insider Participation” on page 8 of the Registrant’s proxy statement for the 2000 Annual Meeting is incorporated herein by reference.

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.

(a) Documents filed as a part of this report.

      1. The following additional information for the years 1999, 1998, and 1997 is submitted herewith:

      Independent Auditors’ Report on Consolidated Financial Statements and Financial Statement Schedule

      SCHEDULE II. Valuation and Qualifying Accounts

      All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.

41

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K. (continued)

2. Exhibits

	3.1 (i)	Amended and Restated Articles of Incorporation of Diebold, Incorporated — incorporated by reference to Exhibit 3.1 (i) of Registrant’s Annual Report on Form 10-K for the year ended December 31, 1994.
	3.1 (ii)	Code of Regulations — incorporated by reference to Exhibit 4(c) to Registrant’s Post-Effective Amendment No. 1 to Form S-8 Registration Statement No. 33-32960.
	3.2	Certificate of Amendment by Shareholders to Amended Articles of Incorporation of Diebold, Incorporated — incorporated by reference to Exhibit 3.2 to Registrant’s Form 10-Q for the quarter ended March 31, 1996.
	3.3	Certificate of Amendment to Amended Articles of Incorporation of Diebold, Incorporated — incorporated by reference to Exhibit 3.3 to Registrant’s Form 10-K for the year ended December 31, 1998.
	4.	Rights Agreement dated as of February 11, 1999 between Diebold, Incorporated and The Bank of New York — incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form 8-A dated February 11, 1999.
*	10.1	Form of Employment Agreement as amended and restated as of September 13, 1990— incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1990.
*	10.2	Schedule of Certain Officers who are Parties to Employment Agreements in the form of Exhibit 10.1.
*	10.5 (i)	Supplemental Employee Retirement Plan (as amended January 1, 1994) — incorporated by reference to Exhibit 10.5 of Registrant’s Annual Report on Form 10-K for the year ended December 31, 1994.
*	10.5 (ii)	Amendment No. 1 to the Amended and Restated Supplemental Retirement Plan – incorporated by reference to Exhibit 10.5 (ii) of Registrant’s Form 10-Q for the quarter ended March 31, 1998.
*	10.7 (i)	1985 Deferred Compensation Plan for Directors of Diebold, Incorporated — incorporated by reference to Exhibit 10.7 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1992.
*	10.7 (ii)	Amendment No. 1 to the Amended and Restated 1985 Deferred Compensation Plan for Directors of Diebold, Incorporated – incorporated by reference to Exhibit 10.7 (ii) to Registrant’s Form 10-Q for the quarter ended March 31, 1998.
*	10.8 (i)	1991 Equity and Performance Incentive Plan as Amended and Restated — incorporated by reference to Exhibit 10.8 to Registrant’s Form 10-Q for the quarter ended March 31, 1997.
*	10.8 (ii)	Amendment No. 1 to the 1991 Equity and Performance Incentive Plan as Amended and Restated — incorporated by reference to Exhibit 10.8 (ii) to Registrant’s Form 10-Q for the quarter ended September 30, 1998.

42

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(continued)

*	10.8 (iii)	Amendment No. 2 to the 1991 Equity and Performance Incentive Plan as Amended and Restated — incorporated by reference to Exhibit 10.8 (iii) to Registrant’s Form 10-Q for the quarter ended June 30, 1999.
*	10.9	Long-Term Executive Incentive Plan — incorporated by reference to Exhibit 10.9 of Registrant’s Annual Report on Form 10-K for the year ended December 31, 1993.
*	10.10 (i)	1992 Deferred Incentive Compensation Plan (as amended and restated as of July 1, 1993) -- incorporated by reference to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
*	10.10 (ii)	Amendment No. 1 to the Amended and Restated 1992 Deferred Incentive Compensation Plan — incorporated by reference to Exhibit 10.10 (ii) to Registrant’s Form 10-Q for the quarter ended March 31, 1998.
*	10.10 (iii)	Amendment No. 2 to the Amended and Restated 1992 Deferred Incentive Compensation Plan — incorporated by reference to Exhibit 10.10 (iii) to Registrant’s Form 10-Q for the quarter ended September 30, 1998.
*	10.11	Annual Incentive Plan — incorporated by reference to Exhibit 10.11 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1992.
*	10.13 (i)	Forms of Deferred Compensation Agreement and Amendment No. 1 to Deferred Compensation Agreement — incorporated by reference to Exhibit 10.13 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1996.
*	10.13 (ii)	Section 162 (m) Deferred Compensation Agreement (as amended and restated January 29, 1998) — incorporated by reference to Exhibit 10.13 (ii) to Registrant’s Form 10-Q for the quarter ended March 31, 1998.
*	10.14	Deferral of Stock Option Gains Plan — incorporated by reference to Exhibit 10.14 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1998.
*	10.15	Employment Agreement with Walden W. O’Dell.
*	10.16	Separation Agreement with Gerald F. Morris.
	10.17	Loan Agreement dated as of December 1, 1999 among Diebold, Incorporated, the Subsidiary Borrowers, the Lenders and Bank One, Michigan as Agent.

43

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(continued)

      21. Subsidiaries of the Registrant.

      23. Consent of Independent Auditors.

      24. Power of Attorney.

      27. Financial Data Schedule.

* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 14(c) of this report.

(b) Reports on Form 8-K.

Registrant filed a Form 8-K on October 21, 1999 and a Form 8-K/A on January 4, 2000 reporting the Stock Purchase Agreement between the Registrant and Procomp Amazonia Industria Eletronica S.A, effective as of October 21, 1999.

44

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DIEBOLD, INCORPORATED
March 4, 2000 Date	By: /s/Walden W. O’Dell Walden W. O’Dell President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/Walden W. O’Dell	President and Chief Executive Officer	March 4, 2000
	(Principal Executive Officer)
Walden W. O’Dell
/s/Robert L. Stockamp	Vice President and Controller	March 4, 2000
	(Interim Principal Accounting and Financial Officer)
Robert L. Stockamp
/s/Robert W. Mahoney	Chairman of Board and Director	March 4, 2000
Robert W. Mahoney
/s/Louis V. Bockius III	Director	March 4, 2000
Louis V. Bockius III
/s/Richard L. Crandall	Director	March 4, 2000
Richard L. Crandall
/s/Gale S. Fitzgerald	Director	March 4, 2000
Gale S. Fitzgerald
*	Director	March 4, 2000
Donald R. Gant
/s/L. Lindsey Halstead	Director	March 4, 2000
L. Lindsey Halstead

45

Signature	Title	Date
*	Director	March 4, 2000
————————————————
Phillip B. Lassiter
*	Director	March 4, 2000
————————————————
John N. Lauer
*	Director	March 4, 2000
————————————————
William F. Massy
/s/ W.R. Timken, Jr.	Director	March 4, 2000
————————————————
W. R. Timken, Jr.

* The undersigned, by signing his name hereto, does sign and execute this Annual Report on Form 10-K pursuant to the Powers of Attorney executed by the above-named officers and directors of the Registrant and filed with the Securities and Exchange Commissions on behalf of such officers and directors.

Dated: March 4, 2000	*By: /s/Robert L. Stockamp
——————————	—————————————————
	Robert L. Stockamp, Attorney-in-Fact

46

INDEPENDENT AUDITORS’ REPORT ON
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Shareholders
Diebold, Incorporated

      We have audited the accompanying consolidated balance sheets of Diebold, Incorporated and subsidiaries as of December 31, 1999 and 1998 and the related consolidated statements of income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 1999. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in Item 14 (a)(1) of Form 10-K of Diebold, Incorporated for each of the years in the three-year period ended December 31, 1999. These consolidated financial statements and financial statement schedule are the responsibility of the Registrant’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

      We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Diebold, Incorporated and subsidiaries as of December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/KPMG LLP

KPMG LLP
Cleveland, Ohio
January 18, 2000

47

DIEBOLD, INCORPORATED AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

	Balance at						Balance
	beginning						at end
	of year		Additions		Deductions		of year
Year ended December 31, 1999
Allowance for doubtful accounts	$	8,373,672	$	9,744,245	$	8,897,164	$	9,220,753
Year ended December 31, 1998
Allowance for doubtful accounts	$	6,838,018	$	7,949,869	$	6,414,215	$	8,373,672
Year ended December 31, 1997
Allowance for doubtful accounts	$	5,917,055	$	6,292,284	$	5,371,321	$	6,838,018

48

EXHIBIT INDEX

EXHIBIT NO.	DOCUMENT DESCRIPTION	PAGE NO.
10.2	Schedule of Certain Officers who are Parties to
	Employment Agreements in the form of Exhibit 10.1 and 10.15		50
10.15	Employment Agreement with Walden W. O’Dell		51
10.16	Separation Agreement with Gerald F. Morris		52
10.17	Loan Agreement dated as of December 1, 1999 among Diebold, Incorporated, the Subsidiary Borrowers, the Lenders and Bank One, Michigan as Agent.		53
21	Subsidiaries of the Registrant		54
23	Consent of Independent Auditors		55
24	Power of Attorney		56
27	Financial Data Schedule		57

49 EX-10.2 2 EXHIBIT 10.2 1 EXHIBIT 10.2 SCHEDULE OF CERTAIN OFFICERS WHO ARE PARTIES TO EMPLOYMENT AGREEMENTS Charles J. Bechtel David Bucci James L. M. Chen Warren W. Dettinger Reinoud G. J. Drenth Donald E. Eagon, Jr. Jack E. Finefrock Charee Francis-Vogelsang Bartholomew J. Frazzitta Michael J. Hillock Larry D. Ingram Robert W. Mahoney Dennis M. Moriarty Walden W. O'Dell Toni J. Portmann Anthony J. Rusciano Charles B. Scheurer Robert L. Stockamp Alben W. Warf Ernesto R. Unanue Robert J. Warren EX-10.15 3 EXHIBIT 10.15 1 Exhibit 10.15 EMPLOYMENT AGREEMENT AGREEMENT, made and entered into as of the Effective Date by and between Diebold, Incorporated, an Ohio corporation (together with its successors and assigns permitted under this Agreement, the "Company"), and Mr. Walden W. O'Dell (the "Executive"). W I T N E S S E T H - - - - - - - - - - WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment (this "Agreement") and the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a "Party" and together the "Parties") agree as follows: 1. DEFINITIONS. (a) "Affiliate" of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other entity specified. (b) "Base Salary" shall mean the salary provided for in Section 4 below or any increased salary granted to the Executive pursuant to Section 4. (c) "Board" shall mean the Board of Directors of the Company. (d) "Cause" shall mean that prior to any termination pursuant to Section 12(c), the Executive shall have committed: (i) an intentional act of fraud, embezzlement or theft in connection with his duties or in the course of his employment with the Company or any subsidiary; (ii) intentional wrongful damage to property of the Company or any subsidiary; (iii) intentional wrongful disclosure of secret processes or confidential information of the Company or any subsidiary; or (iv) intentional wrongful engagement in any competitive activity which would constitute a material breach of the duty of loyalty; -1- 2 and any such act shall have been materially harmful to the Company and its subsidiaries taken as a whole. For purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be deemed "intentional" if it was due primarily to an error in judgment or negligence, but shall be deemed "intentional" only if done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in or not opposed to the best interest of the Company and its subsidiaries. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for "Cause" hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive had committed an act set forth above in this Section 1(d) and specifying the particulars thereof in detail. (e) A "Change in Control" shall be as defined in the Change in Control Employment Agreement, which is attached hereto as Exhibit A. (f) "Constructive Termination Without Cause" shall mean termination by the Executive of his employment at his initiative within 30 days following the Executive's learning of the occurrence of any of the following events without his consent: (i) Failure to elect, reelect or otherwise maintain the Executive in the offices or positions in the Company or any subsidiary which the Executive held immediately prior to such termination, or the removal of the Executive as a Director of the Company (or any successor thereto) if the Executive shall have been a Director of the Company immediately prior to such termination, or the removal of the Executive as a member of the managing authority of any subsidiary if the Executive shall have been a member of such body immediately prior to such termination; (ii) Failure to elect or reelect the Executive to any of the positions described in Section 3 below, including the failure to make him Chairman of the Board prior to April 30, 2000; (iii) A significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position or positions with the Company and its Subsidiaries which the Executive held immediately prior to such termination, a reduction in the aggregate of the Executive's Base Salary and incentive pay received from the Company and its subsidiaries, or the termination of the Executive's rights to any employee benefits to which he was entitled immediately prior to such termination or a reduction in scope or value thereof without the prior written consent of the Executive, any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Executive of such change, reduction or termination, as the case may be; (iv) any purported termination of the Executive's employment that is not effected for Cause or Disability; -2- 3 (v) the expiration or termination by the Company of the Change in Control Employment Agreement unless replaced by an agreement providing benefits to the Executive that are no less favorable than the existing Change in Control Employment Agreement; or (vi) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a merger, consolidation, sale or similar transaction. Following written notice from the Executive of any of the events described above, the Company shall have 10 calendar days in which to cure. If the Company fails to cure, the Executive's termination shall become effective on the 11th calendar day following the written notice. (g) "Disability" shall mean the Executive's permanent and total disability as defined by the Social Security Administration. (h) "Effective Date" shall be November 1, 1999; provided, however that Executive may commence his employment with the Company earlier if his obligation to provide services with his previous employer ends earlier; in which event such earlier date of commencement of employment with the Company shall be the Effective Date. (i) "Equity Incentive Plan" shall mean the Company's 1991 Equity and Performance Incentive Plan, as amended and restated as of January 30, 1997, as amended. (j) "Pro Rata" shall mean a fraction, the numerator of which is the number of days that the Executive was employed in the applicable performance period (a calendar year in the case of an annual bonus and a performance cycle in the case of an award under the Equity Incentive Plan) and the denominator of which shall be the number of days in the applicable performance period. (k) "Shares" shall mean the Common Shares of the Company. (l) "Term of Employment" shall mean the period specified in Section 2 below (including any extension as provided therein). 2. TERM OF EMPLOYMENT. The Term of Employment shall begin on the Effective Date, and shall extend until the third anniversary of the Effective Date, with automatic one-year renewals thereafter unless either Party notifies the other at least 12 months before the scheduled expiration date that the term is not to renew. Notwithstanding the foregoing, the Term of Employment may be earlier terminated by either Party in accordance with the provisions of Section 12. -3- 4 3. POSITION, DUTIES AND RESPONSIBILITIES. (a) Commencing on the Effective Date and continuing for the remainder of the Term of Employment, the Executive shall be employed as the Chief Executive Officer and President of the Company and be responsible for the general management of the affairs of the Company. The Executive shall also be elected by the Board as a member of the Board, effective as of the Effective Date. The Executive, in carrying out his duties under this Agreement, shall report to the Board. The Executive shall become Chairman of the Board upon election at the annual Board meeting in April 2000, and it is the intention of the parties that he shall continue to serve as Chairman of the Board for the remainder of the Term of Employment. During the term of this Agreement, the Executive shall devote substantially all of his business time and attention to the business and affairs of the Company and shall use his best efforts, skills and abilities to promote its interests. (b) Nothing herein shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations with the concurrence of the Board, (ii) serving on the boards of a reasonable number of trade associations and/or charitable organizations, (iii) engaging in charitable activities and community affairs, and (iv) managing his personal investments and affairs, provided that such activities set forth in this Section 3(b) do not conflict or interfere with the effective discharge of his duties and responsibilities under Section 3(a). 4. BASE SALARY. The Executive shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of $500,000. The Base Salary shall be reviewed annually for increase in the discretion of the Board. 5. ANNUAL INCENTIVE AWARD. During the Term of Employment, commencing in 2000 the Executive shall have a bonus opportunity each year equal to 100% of Base Salary, payable in that amount if the maximum performance goals established for the relevant year are met. If such performance goals are not met, the Executive shall receive a lesser amount (or nothing) as determined in accordance with the Company's Annual Incentive Plan. The Executive shall be paid his annual incentive awards no later than other senior executives of the Company are paid their annual incentive awards. 6. SIGN-ON ARRANGEMENTS. (a) GENERAL. As soon as practicable following the Effective Date, the Company shall grant the Executive the cash and equity based awards described in this Section 6. (b) CASH SIGNING BONUS. In order to keep the Executive whole in respect of compensation he is forfeiting at his previous employer, the Company shall pay the Executive $1,750,000. Such amount shall be paid to the Executive as follows. On the first day of the -4- 5 Executive's employment with the Company, the Company shall pay $900,000 of the $1,750,000 to the Executive. The balance of the amount shall be credited to an account for the Executive under the Company's Amended and Restated 1992 Deferred Compensation Plan and become payable at such time as elected by the Executive under such plan, provided, however, that no amount shall be payable at a time at which the Company's deduction of such amount would be disallowed to the Company pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. (c) AWARD OF DEFERRED SHARES. In order to keep the Executive whole in respect of compensation he is forfeiting at his previous employer, as of the Effective Date the Company shall award the Executive, pursuant to the Equity Incentive Plan, Deferred Shares with terms substantially as summarized in Exhibit B attached hereto, such terms to be embodied in an agreement as soon as practicable. (d) PERFORMANCE-BASED EQUITY AWARDS. As a further inducement for Executive's entry into this Agreement, as of the Effective Date the Company shall award the Executive, pursuant to the Equity Incentive Plan, performance-based Restricted Shares and Performance Shares with terms substantially as summarized in Exhibit C attached hereto, such terms to be embodied in agreements as soon as practicable. 7. ADDITIONAL LONG-TERM INCENTIVE AWARDS. (a) STOCK OPTIONS. The Executive shall be eligible for stock option awards commencing with awards in 2002, or sooner at the discretion of the Board, in accordance with Company practices applicable to its senior-level executives at the sole discretion of the Board. (b) LONG-TERM INCENTIVE PLANS. The Executive shall be eligible to participate in the Company's Equity Incentive Plan (pro-rata participation in 1998-2000 award cycle and full participation in 1999-2001 and future award cycles) and any other long-term incentive plan the Company may adopt, on a basis comparable to other senior-level executives. 8. EMPLOYEE BENEFIT PROGRAMS. During the Term of Employment, the Executive shall be entitled to participate in any employee pension and welfare benefit plans and programs made available to the Company's senior level executives, as such plans or programs may be in effect from time to time, including, without limitation, pension, profit sharing, savings and other retirement plans or programs, 401(k), medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and any other pension or retirement plans or programs and any other employee welfare benefit plans or programs that may be sponsored by the Company from time to time, including any plans that supplement the above-listed types of plans or programs, whether funded or unfunded. The Executive's participation shall be based on, and the calculation of all benefits shall be based on, the assumptions that the Executive has met all service-period or other requirements for such participation. The Executive shall be entitled to five weeks paid vacation per year of employment, which shall be subject to the Company's vacation policy for senior executives. -5- 6 9. SUPPLEMENTAL PENSION. The Executive shall be provided a Supplemental Pension based upon the Company's Supplemental Employee Retirement Plan (the "SERP"). Upon commencement of employment, the Executive shall be deemed to have 7 years of credited service for purposes of the accrual of benefits under the SERP. In addition to such deemed credited service, the Executive shall receive credited service for each year of actual service (including any fractional year) and such additional credited service as may be applicable in the event of certain terminations of employment as provided in Section 12 below. Anything in the SERP to the contrary notwithstanding, the Executive shall at all times, including upon any termination of employment with less than 15 years of credited service, be deemed to be fully vested in his accrued benefit and to have satisfied the eligibility requirements for a supplemental pension under the SERP. In all events, the Executive shall be entitled to a supplemental pension that provides a benefit no less favorable than a benefit based on the SERP assuming the credited service as provided in the first three sentences of this Section. 10. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES; RELOCATION. (a) The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement and the Company shall promptly reimburse him for all reasonable business expenses incurred in connection with carrying out the business of the Company, subject to documentation in accordance with the Company's policy. The Company shall pay all reasonable financial consultant and legal fees and expenses incurred by the Executive in connection with the negotiation of the Executive's employment arrangements with the Company. (b) The Executive shall be entitled to participate in the Company's Relocation Policy, including without limitation, all reasonable moving, closing, temporary housing and other associated expenses. In addition, the Executive shall be entitled (i) to have the Company arrange for the purchase of his current residence, (ii) to be reimbursed for any expenses connected with the sale of such residence or any loss incurred by reason of a sale at less than fair market value of such residence, (iii) to be paid an amount equal to one month's salary as an allowance for miscellaneous expenses incurred in connection with his relocation and (iv) to be provided any of the reimbursements provided in this Section 10 on a tax grossed-up basis. 11. PERQUISITES. The Executive shall receive standard Company executive perquisites, including, without limitation, the following: (a) The Executive shall be entitled to fly first-class in the event the Company does not have its own aircraft available for his use. (b) The Executive shall be provided a luxury class automobile. (c) The Company shall reimburse the Executive for financial planning and tax preparation fees. -6- 7 (d) The Executive shall be provided with dues and membership fees for one country club. (e) The Executive shall be entitled to an annual physical at the Company's expense at the Cleveland Clinic (or equivalent facility.) (f) In the event any of the perquisites provided pursuant to this Section 11 result in tax to the Executive, they shall be provided on a tax grossed-up basis. 12. TERMINATION OF EMPLOYMENT. (a) TERMINATION DUE TO DEATH. In the event that the Executive's employment is terminated due to his death, his estate or his beneficiaries, as the case may be, shall be entitled to the following benefits; (i) Base Salary through the end of the month in which death occurs; (ii) Pro Rata annual incentive award for the year in which the Executive's death occurs, based on the higher of (A) the actual bonus awarded in the prior year or (B) the target bonus for the year of termination, payable when bonuses are paid to other officers; (iii) all outstanding options, whether or not then exercisable, shall become exercisable and shall remain exercisable for a period of one year or until their stated expiration date, if earlier; (iv) the sign-on Deferred Shares shall be immediately deliverable; (v) all unvested performance-based Restricted Shares and Performance Shares shall be forfeited; (vi) Pro Rata long-term incentives shall be payable when scheduled to be paid (if such awards are payable); and (vii) a pre-retirement death benefit based on Article XI of the Plan based on (A) the number of years credited service as provided in Section 9 of this Agreement and (B) on the Executive being deemed to have satisfied the eligibility requirements for a Supplemental Retirement Benefit under the Plan. (b) TERMINATION DUE TO DISABILITY. In the event that the Executive's employment is terminated due to his Disability, he shall be entitled to the following benefits: (i) disability benefits in accordance with the long-term disability program in effect for senior executives of the Company; provided, however, in no event shall such benefits provide the Executive with less than 60% of his Base Salary to age 65; -7- 8 (ii) Base Salary through the end of the month in which disability benefits commence; (iii) Pro Rata annual incentive award for the year in which the Executive's termination occurs, based an the higher of (A) the actual bonus awarded in the prior year or (B) the target bonus in the year of termination, payable when bonuses are paid to others; (iv) all outstanding options, whether or not then exercisable, shall become exercisable and shall remain exercisable for a period of one year or until their stated expiration date, if earlier; (v) the sign-on Deferred Shares shall be immediately deliverable; (vi) all unvested performance-based Restricted Shares and Performance Shares shall be forfeited; (vii) Pro Rata long-term incentives shall be payable when scheduled to be paid (if such awards are payable); (viii) 36 months of additional credited service for SERP benefits; and (ix) continued participation in all medical, dental, vision and hospitalization insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of 36 months following termination of employment or the date, or dates, he receives equivalent coverage and benefits from a subsequent employer. In no event shall a termination of the Executive's employment for Disability occur until the Party terminating his employment gives written notice to the other Party in accordance with Section 23 below. (c) TERMINATION BY THE COMPANY FOR CAUSE. In the event the Company terminates the Executive's employment for Cause: (i) he shall be entitled to Base Salary through the date of the termination; (ii) all outstanding options which are not then exercisable shall be forfeited; exercisable options shall remain exercisable until the earlier of the thirtieth day after the date of termination or the originally scheduled expiration date of the options unless the Compensation Committee determines otherwise; (iii) unvested sign-on Deferred Shares shall be forfeited; and (iv) unvested performance-based Restricted Shares and performance Shares shall be forfeited. -8- 9 (d) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION WITHOUT CAUSE. In the event the Executive's employment is terminated by the Company without Cause, other than due to Disability or death, or in the event there is a Constructive Termination without Cause, the Executive shall be entitled to the following benefits: (i) Base Salary through the date of termination; (ii) Base Salary, at the annualized rate in effect on the date of termination, for a period of 24 months following such termination, payable promptly following the date of termination in a lump sum; (iii) a Pro Rata annual incentive award for the year in which termination occurs, based on the higher of (A) the actual bonus awarded in the prior year or (B) the target bonus in the year of termination, payable in a single installment promptly after his termination; (iv) an annual incentive award for a period of 24 months following the date of termination, based on the higher of (A) the actual bonus awarded in the prior year or (B) the target bonus in the year of termination, and payable in a lump sum promptly following the date of termination; (v) options shall become exercisable and shall remain exercisable for a period of two years or until the end of their term, if less; (vi) the sign-on Deferred Shares shall be immediately deliverable; and (vii) unvested performance-based Restricted Shares and Performance Shares shall be forfeited; (viii) Pro Rata long-term incentives shall be payable when scheduled to be paid (if such awards are payable); (ix) 24 months of additional credited service for SERP benefits determined as provided in Section 9; and (x) continued participation in all medical, dental, vision and hospitalization insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of 24 months following termination of employment or the date, or dates, he receives equivalent coverage and benefits from a subsequent employer. In the event the Company's plans do not permit continuation of Executive's participation following his termination, the Company shall provide the Executive with an amount which, after taxes, is sufficient for him to purchase equivalent benefits. -9- 10 (e) VOLUNTARY TERMINATION. A termination of employment by the Executive on his own initiative, other than a termination due to Disability or a Constructive Termination without Cause, shall have the same consequences as provided in Section 12(c) for a termination for Cause, except that the unvested sign-on Deferred Shares shall not be forfeited, but shall become immediately deliverable. A voluntary termination under this Section 12(e) shall be effective on the date specified in the Executive's written notice. (f) NON-RENEWAL BY THE COMPANY. In the event that the Company notifies the Executive pursuant to Section 2 of this Agreement that the Term of Employment shall not renew, the Executive shall be entitled to the same benefits as provided in Section 12(d); PROVIDED, HOWEVER that the period for which entitlements are provided shall be 12 months instead of 24 months in all subsections where such period applies. (g) CONSEQUENCES OF A CHANGE IN CONTROL. The Executive's entitlements relating to a Change in Control of the Company shall be determined in accordance with the Change in Control Employment Agreement which is attached hereto as Exhibit A. In addition, in the event of a Change in Control, the sign-on Deferred Shares shall become immediately deliverable, the unvested performance-based Restricted Shares shall become nonforfeitable, and the unvested Performance Shares shall be immediately deliverable. In the event of any conflict between this Agreement and the Change in Control Employment Agreement after the occurrence of a Change in Control, the Change in Control Employment Agreement shall control and there shall be no duplication of benefits. (h) OTHER TERMINATION BENEFITS. In the case of any of the foregoing terminations, the Executive or his estate shall also be entitled to: (i) the balance of any incentive awards due for performance periods which have been completed, but which have not yet been paid; (ii) any expense reimbursements due the Executive; and (iii) other benefits, if any, in accordance with applicable plans and programs of the Company. (i) NO MITIGATION; NO OFFSET. In the event of any termination of employment under this Section 12, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. (j) NATURE OF PAYMENTS. Any amounts due under this Section 12 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty. -10- 11 13. CONFIDENTIALITY. (a) The Executive agrees that he will not, at any time during the Term of Employment or thereafter, disclose or use any trade secret, proprietary or confidential information of the Company or any subsidiary or Affiliate of the Company, obtained during the course of his employment, except as required in the course of such employment or with the written permission of the Company or, as applicable, any subsidiary or Affiliate of the Company or as may be required by law, provided that, if the Executive receives legal process with regard to disclosure of such information, he shall promptly notify the Company and cooperate with the Company in seeking a protective order. (b) The Executive agrees that at the time of the termination of his employment with the Company, whether at the instance of the Executive or the Company, and regardless of the reasons therefor, he will deliver to the Company, and not keep or deliver to anyone else, any and all notes, files, memoranda, papers and, in general, any and all physical matter containing information, including any and all documents significant to the conduct of the business of the Company or any subsidiary or Affiliate of the Company which are in his possession, except for any documents for which the Company or any subsidiary or Affiliate of the Company has given written consent to removal at the time of the termination of the Executive's employment and his personal rolodex, personal files, phone book and similar items. (c) The Executive agrees that the Company's remedies at law would be inadequate in the event of a breach or threatened breach of this Section 13; accordingly, the Company shall be entitled, in addition to its rights at law, to seek an injunction and other equitable relief without the need to post a bond. 14. RESOLUTION OF DISPUTES. Any disputes arising under or in connection with this Agreement shall be resolved by third party mediation of the dispute and, failing that, at the election of the Executive by binding arbitration, to be held in Cleveland, Ohio, in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof Each Party shall bear his or its own costs of the mediation, arbitration or litigation. 15. INDEMNIFICATION. The Company and the Executive shall enter into an Indemnification Agreement in substantially the form of Exhibit D effective as of the Effective Date. The Company agrees to continue and maintain a directors' and officers' liability insurance policy covering the Executive to the extent the Company provides such coverage for its other executive officers. 16. ASSIGNABILITY: BINDING NATURE. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. Rights or obligations -11- 12 of the Company under this Agreement may be assigned or transferred by the Company pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company further agrees that, in the event of a sale of assets or liquidation as described in the preceding sentence, it shall take whatever action it reasonably can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Company hereunder. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to compensation and benefits, which may be transferred only by will or operation of law. 17. ENTIRE AGREEMENT. This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. 18. AMENDMENT OR WAIVER. No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be. 19. SEVERABILITY. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law so as to achieve the purposes of this Agreement. 20. SURVIVORSHIP. Except as otherwise expressly set forth in this Agreement, the respective rights and obligations of the Parties hereunder shall survive any termination of the Executive's employment. This Agreement itself (as distinguished from the Executive's employment) may not be terminated by either Party without the written consent of the other Party. Upon the expiration of the term of the Agreement, the respective rights and obligations of the Parties shall survive such expiration to the extent necessary to carry out the intentions of the Parties an -12- 13 embodied in the rights (such as vested rights) and obligations of the Parties under this Agreement. 21. REFERENCES. In the event of the Executive's death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. 22. GOVERNING LAW. This Agreement shall be governed in accordance with the laws of Ohio without reference to principles of conflict of laws. 23. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed given when (a) delivered personally, (b) delivered by certified or registered mail, postage prepaid, return receipt requested or (c) delivered by overnight courier (provided that a written acknowledgment of receipt is obtained by the overnight courier) to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of: If to the Company: Diebold, Incorporated 5995 Mayfair Road North Canton, Ohio 44720 Attention: Vice President, Human Resources If to the Executive: Walden W. O'Dell Diebold, Incorporated 5995 Mayfair Road North Canton, Ohio 44720 24. HEADING. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement. -13- 14 25. COUNTERPARTS. This Agreement may be executed in two or more counterparts. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. The Company By: /s/ Robert W. Mahoney -------------------------- Robert W. Mahoney Chairman of the Board /s/ Walden W. O'Dell -------------------------- Walden W. O'Dell -14- 15 EXHIBIT A EMPLOYMENT AGREEMENT -------------------- This EMPLOYMENT AGREEMENT ("Agreement"), dated as of November 1, 1999 by and between DIEBOLD, INCORPORATED, an Ohio corporation (the "Company"), and WALDEN W. O'DELL (the "Executive"); WITNESSETH: ----------- WHEREAS, the Executive is a senior executive who has made and is expected to continue to make major contributions to the profitability, growth and financial strength of the Company and its Subsidiaries (as hereinafter defined); WHEREAS, the Company recognizes that, as is the case for most publicly held companies, the possibility of a Change in Control (as that term is hereafter defined) exists; WHEREAS, the Company desires to assure itself and its Subsidiaries of both present and future continuity of management in the event of a Change in Control and desires to establish certain minimum compensation rights for key senior executive officers, including the Executive, applicable in the event of a Change in Control; WHEREAS, the Company wishes to ensure that senior executives are not practically disabled from discharging their duties upon a Change in Control; WHEREAS, this Agreement is not intended to alter materially the compensation and benefits which the Executive could reasonably expect to receive absent a Change in Control and, accordingly, although effective and binding as of the date hereof, this Agreement shall become operative only upon the occurrence of a Change in Control; and WHEREAS, the Executive is willing to render services on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises, the Company and the Executive agree as follows: 1. OPERATION OF AGREEMENT: (a) This Agreement shall be effective and binding immediately upon its execution, but, anything in this Agreement to the contrary notwithstanding, this Agreement shall not become operative unless and until there shall have occurred a Change in Control. For purposes of this Agreement, a "Change in Control" shall have occurred if at any time during the Term (as that term is hereafter defined) any of the following events shall occur: (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 then-outstanding securities of such corporation or person immediately after such transaction is held in the aggregate by the holders of Voting Stock (as that term is hereafter 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 then-outstanding securities of such corporation or person immediately after such sale or transfer is held in the aggregate by the holders of Voting Stock of the Company immediately prior to such sale or transfer; 16 2. (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), 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% or more of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the Company ("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 Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each Director of the Company first elected during such period was approved by a vote of at least two-thirds of the Directors of the Company then still in office who were Directors of the Company at the beginning of any such period. Notwithstanding the foregoing provisions of Section 1(a)(iii) or 1(a)(iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes of this Agreement either (i) solely because (A) the Company, (B) a Subsidiary of the Company, or (C) any Company-sponsored employee stock ownership plan or any other employee benefit plan of the Company, either 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% 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 (ii) solely because of a change in control of any Subsidiary by which the Executive may be employed. Notwithstanding the foregoing provisions of Section 1(a)(i-iv) hereof, if, prior to any event described in Sections 1(a)(i-iv) hereof instituted by any person not an officer or director of the Company, or prior to any disclosed proposal instituted by any person not an officer or director of the Company which could lead to any such event, management proposes any restructuring of the Company which ultimately leads to an event described in Sections 1 (a)(i-iv) hereof pursuant to such management proposal, then a "Change in Control" shall not be deemed to have occurred for purposes of this Agreement. (b) Upon the occurrence of a Change in Control at any time during the Term, this Agreement shall become immediately operative, except that in the event that any such agreement to merge, consolidate, reorganize or sell or otherwise transfer assets referred to in Section 1(a)(i) or 1(a)(ii) is terminated without such merger, consolidation, reorganization or sale or transfer having been consummated, or the person filing such Schedule 13D or Schedule 14D-1 referred to in Section 1(a)(iii) files an amendment to such Schedules disclosing that it no longer is the beneficial owner of securities representing 20% or more of the Voting Stock of the Company, or the Company reports that the change of control which it reported in the filing referred to in Section 1(a)(iv) will not in fact occur, the Board of Directors of the Company (the "Board") may by notice to the Executive nullify the operation of this Agreement by reason of such Change in Control, without prejudice to any exercise by the Executive of his rights under this Agreement that may have occurred prior to such nullification. (c) The period during which this Agreement shall be in effect (the "Term") shall commence as of the date hereof and shall expire as of the later of (i) the close of business on December 31, 1993 and (ii) the expiration of the Period of Employment (as that term is hereafter defined), provided, however, that (A) commencing on January 1, 1991, and each January 1 thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than September 30 of the immediately preceding year, the Company or the Executive shall have given notice 17 3. that it or he, as the case may be, does not wish to have the Term extended, and (B) subject to Section 8 hereof, if, at any time prior to a Change in Control, the Executive for any reason is no longer an employee of the Company or a Subsidiary, thereupon the Term shall be deemed to have expired and this Agreement shall immediately terminate and be of no further effect. 2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms and conditions of this Agreement, upon the occurrence of a Change in Control, the Company shall continue the Executive in the employ of the Company and its Subsidiaries and the Executive shall remain in such employ for the period set forth in Section 2(b) hereof (the "Period of Employment"). During the Period of Employment, the Executive agrees to serve in such office or offices of the Company or any Subsidiary to which the Board or the managing authority of any Subsidiary may from time to time elect or appoint him. Throughout the Period of Employment, the Executive shall devote substantially all of his time during normal business hours (subject to vacations, sick leave and other absences in accordance with the policies of the Company and its Subsidiaries as in effect for senior executives immediately prior to the Change in Control) to the business and affairs of the Company and its Subsidiaries, but nothing in this Agreement shall preclude the Executive from devoting reasonable periods of time during normal business hours to (i) serving as a director, trustee or member of or participant in any organization or business so long as such activity would not constitute Competitive Activity (as that term is hereafter defined), (ii) engaging in charitable and community activities, or (iii) managing his personal investments. (b) The Period of Employment shall commence on the date of an occurrence of a Change in Control and, subject only to the provisions of Section 4 hereof, shall continue until the earlier of (i) the expiration of the third anniversary of the occurrence of the Change in Control, (ii) the Executive's death, or (iii) the Executive's attainment of age 65; provided, however, that commencing on each anniversary of the Change in Control, the Period of Employment shall automatically be extended for an additional year unless, not later than 90 calendar days prior to such anniversary date, either the Company or the Executive shall have given written notice to the other that the Period of Employment shall not be so extended. (c) As used in this Agreement, the term "Subsidiary" means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company, but such corporation, company or other entity shall be deemed to be a Subsidiary only so long as such ownership or control exists. 3. COMPENSATION DURING PERIOD OF EMPLOYMENT: (a) For his services pursuant to Section 2(a) hereof, upon the occurrence of a Change in Control, the Executive shall receive during the Period of Employment (i) annual base salary at a rate not less than the Executive's annual fixed or base compensation (payable monthly or otherwise as in effect for senior executives of the Company immediately prior to the occurrence of a Change in Control) or such higher rate as may be approved from time to time by the Board or the Compensation Committee thereof (the "Committee") (which base salary at such rate is herein referred to as "Base Pay") and (ii) an annual amount equal to not less than the highest aggregate annual bonus, incentive or other payments of cash compensation in addition to the amounts referred to in clause (i) above made or to be made in regard to services rendered in any calendar year during the two calendar years immediately preceding the year in which the Change in Control occurred pursuant to any bonus, incentive, profit-sharing, performance, discretionary pay or similar policy, plan, program or arrangement of the Company or any Subsidiary or any successor thereto providing benefits at least as great as the benefits payable thereunder prior to a Change in Control ("incentive Pay"), provided, however, that with the prior written consent of the Executive, nothing herein shall preclude a change in the mix between Base Pay and Incentive Pay so long as the aggregate cash compensation received by the Executive in any one calendar year is not reduced in connection therewith or as a result 18 4. thereof, and provided further, however, that in no event shall any increase in the Executive's aggregate cash compensation or any portion thereof in any way diminish any other obligation of the Company under this Agreement. (b) For his services pursuant to Section 2(a) hereof, during the Period of Employment the Executive shall be a full participant in, and shall be entitled to the perquisites, benefits and service credit for benefits as provided under, any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which senior executives of the Company or its Subsidiaries participate, including without limitation any stock option, stock purchase, stock appreciation, restricted stock grant, savings, pension, supplemental executive retirement or other retirement income or welfare benefit, deferred compensation, group and/or executive life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company or any Subsidiary), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company or any Subsidiary providing perquisites, benefits and service credit for benefits at least as great as are payable thereunder prior to a Change in Control (collectively, "Employee Benefits"), provided, however, that except as expressly provided in, and subject to the terms of, Section 5(a)(ii) hereof, the Executive's rights thereunder shall be governed by the terms thereof and shall not be enlarged hereunder or otherwise affected hereby. Subject to the proviso in the immediately preceding sentence, if and to the extent such perquisites, benefits or service credit for benefits are not payable or provided under any such policy, plan, program or arrangement as a result of the amendment or termination thereof, then the Company shall itself pay or provide therefor. Nothing in this Agreement shall preclude improvement or enhancement of any such Employee Benefits, provided that no such improvement shall in any way diminish any other obligation of the Company under this Agreement. (c) The Company has determined that the amounts payable pursuant to this Section 3 constitute reasonable compensation for services to be rendered during the Period of Employment. Accordingly, notwithstanding any other provision hereof, unless such action would be expressly prohibited by applicable law, if any amount paid or payable pursuant to this Section 3 for services to be rendered during the Period of Employment, or pursuant to Section 5, is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company will pay to the Executive an additional amount in cash equal to the amount necessary to cause the aggregate remuneration received by the Executive under this Section 3 for services to be rendered during the Period of Employment, or Section 5, including such additional cash payment (net of all federal, state and local income taxes and all taxes payable as the result of the application of Sections 280G and 4999 of the Code) to be equal to the aggregate remuneration the Executive would have received under this Section 3 for services to be rendered during the Period of Employment, or Section 5, excluding such additional payment (net of all federal, state and local income taxes), as if Sections 280G and 4999 of the Code (and any successor provisions thereto) had not been enacted into law. 4. TERMINATION FOLLOWING A CHANGE IN CONTROL: (a) In the event of the occurrence of a Change in Control, the Executive's employment with the Company and its Subsidiaries may be terminated by the Company and its Subsidiaries during the Period of Employment and the Executive shall not be entitled to the benefits provided by Section 5 hereof only upon the occurrence of one or more of the following events: (i) The Executive's death; (ii) If the Executive shall become permanently disabled within the meaning of, and begins actually to receive disability benefits pursuant to, the long-term disability plan in effect for senior executives of the Company and its Subsidiaries immediately prior to the Change in Control; or (iii) For "Cause," which for purposes of this Agreement shall mean that, prior to any termination pursuant to Section 4(b) hereof, the Executive shall have committed: 19 5. (A) an intentional act of fraud, embezzlement or theft in connection with his duties or in the course of his employment with the Company or any Subsidiary; (B) intentional wrongful damage to property of the Company or any Subsidiary; (C) intentional wrongful disclosure of secret processes or confidential information of the Company or any Subsidiary; or (D) intentional wrongful engagement in any competitive activity which would constitute a material breach of the duty of loyalty ("Competitive Activity"); and any such act shall have been materially harmful to the Company and its Subsidiaries taken as a whole. For purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be deemed "intentional" if it was due primarily to an error in judgment or negligence, but shall be deemed "intentional" only if done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in or not opposed to the best interest of the Company and its Subsidiaries. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for "Cause" hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive had committed an act set forth above in this Section 4(a)(iii) and specifying the particulars thereof in detail. Nothing herein shall limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination. (b) In the event of the occurrence of a Change in Control, during the Period of Employment the Executive shall be entitled to the benefits as provided in Section 5 hereof upon the occurrence of one or more of the following events: (i) Any termination by the Company and its Subsidiaries of the employment of the Executive prior to the date upon which the Executive shall have attained age 65, which termination shall be for any reason other than for Cause or as a result of the death of the Executive or by reason of the Executive's disability and the actual receipt of disability benefits in accordance with Section 4(a)(ii) hereof; or (ii) Termination by the Executive of his employment with the Company and its Subsidiaries during the Period of Employment after the Change in Control upon the occurrence of any of the following events: (A) Failure to elect, reelect or otherwise maintain the Executive in the offices or positions in the Company or any Subsidiary which the Executive held immediately prior to a Change in Control, or the removal of the Executive as a Director of the Company (or any successor thereto) if the Executive shall have been a Director of the Company immediately prior to the Change in Control, or the removal of the Executive as a member of the managing authority of any Subsidiary if the Executive shall have been a member of such body immediately prior to the Change in Control; (B) A significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position or positions with the Company and its Subsidiaries which the Executive held immediately prior to the Change in Control, a reduction in the aggregate of the Executive's Base Pay and Incentive Pay received from the Company and its Subsidiaries, or the termination of the Executive's rights to any Employee Benefits to which he was entitled immediately prior to the Change in Control or a reduction in scope or value thereof without the prior written consent of the Executive, any of 20 6. which is not remedied within 10 calendar days after receipt by the Company of written notice from the Executive of such change, reduction or termination, as the case may be; (C) A determination by the Executive made in good faith that as a result of a Change in Control and a change in circumstances thereafter significantly affecting his position, including without limitation a change in the scope of the business or other activities for which he was responsible immediately prior to the Change in Control, he has been rendered substantially unable to carry out, has been substantially hindered in the performance of, or has suffered a substantial reduction in, any of the authorities, powers, functions, responsibilities or duties attached to the position held by the Executive immediately prior to the Change in Control, which situation is not remedied within 10 calendar days after written notice to the Company from the Executive of such determination; (D) The liquidation, dissolution, merger, consolidation or reorganization of the Company or transfer of all or a significant portion of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization or otherwise) to which all or a significant portion of its business and/or assets have been transferred (directly or by operation of law) shall have assumed all duties and obligations of the Company under this Agreement pursuant to Section 10 hereof; (E) The Company shall relocate its principal executive offices, or the Company or any Subsidiary shall require the Executive to have his principal location of work changed, to any location which is in excess of 25 miles from the location thereof immediately prior to the Change in Control or the Company or any Subsidiary shall require the Executive to travel away from his office in the course of discharging his responsibilities or duties hereunder significantly more (in terms of either consecutive days or aggregate days in any calendar year) than was required of him prior to the Change in Control without, in either case, his prior written consent; or (F) Without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto. (c) A termination by the Company and its Subsidiaries pursuant to Section 4(a) hereof or by the Executive pursuant to Section 4(b) hereof shall not affect any rights which the Executive may have pursuant to any agreement, policy, plan, program or arrangement of the Company or any Subsidiary providing Employee Benefits, which rights shall be governed by the terms thereof. If this Agreement or the employment of the Executive is terminated under circumstances in which the Executive is not entitled to any payments under Section 3 or 5 hereof, the Executive shall have no further obligation or liability to the Company hereunder with respect to his prior or any future employment. 5. SEVERANCE COMPENSATION: (a) If, following the occurrence of a Change in Control, the Company and its Subsidiaries shall terminate the Executive's employment during the Period of Employment other than pursuant to Section 4(a) hereof, or if the Executive shall terminate his employment pursuant to Section 4(b) hereof, the Company shall pay to the Executive the amount specified in Section 5(a)(i) hereof within five business days after the date (the "Termination Date") that the Executive's employment is terminated (the effective date of which shall be the date of termination or such other date that may be specified by the Executive if the termination is pursuant to Section 4(b) hereof): (i) In lieu of any further payments to the Executive for periods subsequent to the Termination Date, but without affecting the rights of the Executive referred to in Section 5(b) hereof, a lump sum payment (the "Severance Payment") in an amount equal to three times the Base Pay of the Executive. (ii) (A) On the Termination Date and continuing until the earlier of (i) the expiration of the first anniversary of the Termination Date, (ii) the Executive's death, or (iii) the Executive's attainment of age 65 (the 21 7. "Benefits Period"), the Company shall arrange to provide the Executive with Employee Benefits (except that the Company shall not be required to grant stock options, stock purchase rights, restricted stock, or stock appreciation rights during the Benefits Period) substantially similar to those which the Executive was receiving or entitled to receive immediately prior to the Termination Date (and if and to the extent that such benefits shall not or cannot be paid or provided under any policy, plan, program or arrangement of the Company or its Subsidiaries solely due to the fact that the Executive is no longer an officer or employee of the Company and its Subsidiaries, then the Company shall itself pay or provide for the payment to the Executive, his dependents and beneficiaries, such Employee Benefits) and (B) without limiting the generality of the foregoing, the Benefits Period shall be considered service with the Company and its Subsidiaries for the purpose of service credits under the retirement income, supplemental executive retirement and other plans for Employee Benefits of the Company and its Subsidiaries applicable to the Executive or his beneficiaries immediately prior to the Termination Date. Without otherwise limiting the purposes or effect of Section 6 hereof, Employee Benefits payable to the Executive pursuant to this Section 5(a)(ii) by reason of any "welfare benefit plan" of the Company (as the term "welfare benefit plan" is defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) shall be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during the Benefits Period. (b) Upon written notice given by the Executive to the Company prior to the occurrence of a Change in Control, the Executive, at his sole option, without reduction to reflect the present value of such amounts as aforesaid, may elect to have all or any of the Severance Payment payable pursuant to Section 5(a)(i) hereof paid to him on a quarterly or monthly basis during the remainder of the Period of Employment. (c) There shall be no right of set-off or counterclaim in respect of any claim, debt or obligation against any payment to or benefit for the Executive provided for in this Agreement. (d) Without limiting the rights of the Executive at law or in equity, if the Company fails to make any payment required to be made hereunder on a timely basis, the Company shall pay interest on the amount thereof at an annualized rate of interest equal to eighteen percent (18%). 6. NO MITIGATION OBLIGATION: The Company hereby acknowledges that it will be difficult, and may be impossible, for the Executive to find reasonably comparable employment following the Termination Date. In addition, the Company acknowledges that its severance pay plans applicable in general to its salaried employees do not provide for mitigation, offset or reduction of any severance payment received thereunder. Accordingly, the parties hereto expressly agree that the payment of the severance compensation by the Company to the Executive in accordance with the terms of this Agreement will be liquidated damages, and that the Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise. 7. INDEMNIFICATION OF LEGAL FEES AND EXPENSES; SECURITY FOR PAYMENT: (a) INDEMNIFICATION OF LEGAL FEES. It is the intent of the Company that the Executive not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of his choice, at the expense of the Company as hereafter provided, to represent the Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any Subsidiary, Director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior 22 8. attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive's entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship shall exist between the Executive and such counsel. The Company shall pay or cause to be paid and shall be solely responsible for any and all attorneys' and related fees and expenses incurred by the Executive as a result of the Company's failure to perform this Agreement or any provision hereof or as a result of the Company or any person contesting the validity or enforceability of this Agreement or any provision hereof as aforesaid. (b) TRUST AGREEMENTS. To ensure that the provisions of this Agreement can be enforced by the Executive, two agreements ("Trust Agreement" and "Trust Agreement No. 2") dated as of February 10, 1989, have been established between National City Bank, a national banking association ("Trustee") and the Company. The Trust Agreement sets forth the terms and conditions relating to payment from the Trust Agreement of the Severance Payment and other Employee Benefits pursuant to Section 5(a) hereof owed by the Company, and Trust Agreement No. 2 sets forth the terms and conditions relating to payment from Trust Agreement No. 2 of attorneys' and related fees and expenses pursuant to Section 7(a) hereof owed by the Company. Executive shall make demand on the Company for any payments due Executive pursuant to Section 7(a) hereof prior to making demand therefor on the Trustee under Trust Agreement No. 2. Payments by such Trustee shall discharge the Company's liability under Section 7(a) hereof only to the extent that trust assets are used to satisfy such liability. (c) OBLIGATION OF THE COMPANY TO FUND TRUSTS. Upon the earlier to occur of (X) a Change in Control that involves a transaction that was not approved by the Board, and was not recommended to the Company's shareholders by the Board, (Y) a declaration by the Board that the Trusts should be funded in connection with a Change in Control that involves a transaction that was approved by the Board, or was recommended to shareholders by the Board, or (Z) a declaration by the Board that a Change in Control is imminent, the Company shall promptly to the extent it has not previously done so, and in any event within five (5) business days: (i) transfer to the Trustee to be added to the principal of the trust under the Trust Agreement a sum equal to the aggregate value on the date of the Change in Control of the Severance Payment and Employee Benefits which could become payable to Executive under the provisions of Section 5(a)(i) and Section 5(a)(ii) hereof; provided, however, that the Company shall not be required to transfer, in the aggregate, to the trust under the Trust Agreement a sum in excess of the maximum amount authorized by its Board by resolutions on February 10, 1989, which resolutions contemplate the funding of the trust under the Trust Agreement Any Severance Payment or other payment of Employee Benefits by the Trustee pursuant to the Trust Agreement shall, to the extent thereof, discharge the Company's obligation to pay the Severance Payment and other Employee Benefits hereunder, it being the intent of the Company that assets in such Trust be held as security for the Company's obligation to pay the Severance Payment and other Employee Benefits under this Agreement; and (ii) transfer to the Trustee to be added to the principal of the trust under Trust Agreement No. 2 the sum of Two Million Dollars ($2,000,000). Any payments of attorneys' and related fees and expenses, which are the obligation of the Company under Section 7(a) hereof, by the Trustee pursuant to Trust Agreement No. 2 shall, to the extent thereof, discharge the Company's obligation hereunder, it being the intent of the Company that such assets in such Trust be held as security for the Company's obligation under Section 7(a) hereof. 8. EMPLOYMENT RIGHTS: Nothing expressed or implied in this Agreement shall create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company or any Subsidiary prior to any Change in Control, provided, however, that any termination of employment of the Executive or the removal of the Executive from such Executive's office or position following the commencement of any discussion with a third person that ultimately results in a Change in Control shall be deemed to be a termination or removal of the Executive after a Change in Control for purposes of this Agreement. 23 9. 9. WITHHOLDING OF TAXES: The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling. 10. SUCCESSORS AND BINDING AGREEMENT: (a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the "Company" for the purposes of this Agreement), but shall not otherwise be assignable, transferable or delegable by the Company. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees and/or legatees. (c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Section 10(a) hereof. Without limiting the generality of the foregoing, the Executive's right to receive payments hereunder shall not be assignable, transferable or delegable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by his will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 10(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated. (d) The Company and the Executive recognize that each party will have no adequate remedy at law for breach by the other of any of the agreements contained herein and, in the event of any such breach, the Company and the Executive hereby agree and consent that the other shall be entitled to a decree of specific performance, mandamus or other appropriate remedy to enforce performance of this Agreement. 11. NOTICE: For all purposes of this Agreement, all communications including without limitation notices, consents, requests or approvals, provided for herein shall be in writing and shall be deemed to have been duly given when delivered or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of change of address shall be effective only upon receipt. 12. GOVERNING LAW: The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to the principles of conflict of laws of such State. 13. VALIDITY: If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal. 14. ENTIRE AGREEMENT This Agreement represents the entire agreement between the parties relating to the subject matter hereof and replaces any and all prior agreements pertaining thereto. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 24 10. 15. AMENDMENT: No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 16. COUNTERPARTS: This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written. DIEBOLD, INCORPORATED By ------------------------------- Robert W. Mahoney Chairman of the Board - --------------------------- Walden W. O'Dell 25 EXHIBIT B SIGN-ON BONUS ------------- DIEBOLD, INCORPORATED DEFERRED SHARE AGREEMENT WHEREAS, Walden W. O'Dell (hereinafter called the "Grantee") and Diebold, Incorporated (hereinafter called the "Corporation") have entered into an Employment Agreement dated as of November 1, 1999 (the "Employment Agreement") that provides for the award of 70,000 Deferred Shares pursuant to the 1991 Amended and Restated Equity and Performance Incentive Plan of the Corporation (the "1991 Plan"). NOW, THEREFORE, the Corporation hereby grants to the Grantee as of November 1, 1999, pursuant to the 1991 Plan and Section 6(c) of the Employment Agreement, 70,000 Deferred Shares subject to the terms and conditions of the 1991 Plan, and the terms and conditions described below. 1. DEFINITIONS. As used in this Agreement: (a) "Change in Control" means: (i) The Corporation 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 then-outstanding securities of such corporation or person immediately after such transaction is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Corporation immediately prior to such transaction; (ii) The Corporation 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 1 26 transfer less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale or transfer is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Corporation 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), 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 twenty (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 Corporation (the "Voting Stock"); (iv) The Corporation 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 Corporation 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 (2) consecutive years, individuals who at the beginning of any such period constitute the Directors of the Corporation cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation's stockholders, of each Director of the Corporation first elected during such period was approved by a vote of at least two-thirds (2/3) of the 2 27 Directors of the Corporation then still in office who were Directors of the Corporation at the beginning of any such period. Notwithstanding the foregoing provisions of subsections (iii) or (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes of this Agreement, either (1) solely because (A) the Corporation, (B) a Subsidiary of the Corporation, or (C) any Corporation-sponsored employee stock ownership plan or any other employee benefit plan of the Corporation, either 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 twenty (20) percent or otherwise, or because the Corporation reports that a change in control of the Corporation 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 the Grantee may be employed. Notwithstanding the foregoing provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv) hereof instituted by any person not an officer or director of the Corporation, or prior to any disclosed proposal instituted by any person not an officer or director of the Corporation which could lead to any such event, management proposes any restructuring of the Corporation which 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 this Agreement. (c) "Deferral Period" means the period commencing November 1, 1999 and ending on October 31, 2004. 3 28 (d) Capitalized terms used herein without definition shall have the meanings assigned to them in the 1991 Plan. 2. GRANT OF DEFERRED SHARES. The Corporation hereby grants to the Grantee 70,000 Deferred Shares, which shall become issuable to the Grantee at the time when they become nonforfeitable in accordance with Section 3 or Section 4 hereof 3. VESTING OF DEFERRED SHARES Subject to the terms and conditions of Sections 4 and 5 hereof, the Grantee's right to receive the Deferred Shares shall become nonforfeitable at the end of the Deferral Period. 4. EFFECT OF CHANGE IN CONTROL AND CERTAIN OTHER TERMINATIONS. In the event of (a) a Change in Control, or (b) the termination of Grantee's employment because of death, termination due to Disability (as defined in the Employment Agreement), Termination without Cause (as defined in the Employment Agreement), Constructive Termination without Cause (as defined in the Employment Agreement), Voluntary Termination (as defined in the Employment Agreement), or expiration of the Term of Employment (as defined in the Employment Agreement) due to notification by either the Corporation or the Grantee that the Term of Employment will not be renewed beyond the scheduled expiration date, prior to the end of the Deferral Period, the Deferred Shares granted hereby shall become nonforfeitable and shall be immediately due and deliverable in the form of Common Shares as soon as practicable following such Change in Control or termination of employment listed above. 4 29 5. EFFECT OF TERMINATIONS FOR CAUSE. In the event of termination of Grantee's employment before the end of the Deferral Period for Cause (as defined in the Employment Agreement), the Grantee shall forfeit any rights he may have in any Deferred Shares. 6. ISSUANCE OF DEFERRED SHARES. The Deferred Shares shall be issued to the Grantee at the time when they become nonforfeitable in accordance with Sections 3 or 4 hereof Any payment of Deferred Shares due pursuant to this Agreement to a deceased Grantee shall be paid to the beneficiary designated by the Grantee on the Designation of Death Beneficiary attached as EXHIBIT A hereto and filed with the Corporation. If no such beneficiary has been designated or survives the Grantee, payment shall be made to the Grantee's legal representative. A beneficiary designation may be changed or revoked by the Grantee at any time, provided the change or revocation is filed with the Corporation. Prior to payment, the Corporation shall only have an unfunded and unsecured obligation to make payment of earned awards to the Grantee. 7. PAYMENT OF DIVIDEND EQUIVALENTS. During the Deferral Period, from and after the Date of Grant and until the earlier of (a) the time when the Grantee receives the Deferred Shares in accordance with Section 3 or Section 4 hereof or (b) the time when the Grantee's right to receive Deferred Shares is forfeited in accordance with Section 5 hereof, the Company shall pay to the Grantee, whenever a dividend is paid on Common Shares, an amount of cash equal to the product of the per-share amount of the dividend paid times the number of such Deferred Shares. 5 30 8. SHARES NON-TRANSFERABLE. No right to Deferred Shares granted hereby that have not yet been earned out and paid shall be transferable other than by will or the laws of descent and distribution. 9. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the aggregate number of outstanding Common Shares by reason of (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, or (b) 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 (c) any other corporate transaction or event having an effect similar to any of the foregoing, then the Board of Directors (the "Board"), upon the recommendation of the Compensation and Organization Committee of the Board (the "Committee"), shall adjust the number of Deferred Shares then held by the Grantee in such manner as to prevent the dilution or enlargement of the rights of the Grantee that would otherwise result from such event to the extent practicable without causing the Deferred Shares to fail to be treated as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code. Furthermore, in the event that any transaction or event described or referred to in the immediately preceding sentence shall occur, the Board, upon the recommendation of the Committee, may provide in substitution of any or all of the Grantee's rights under this Agreement such alternative consideration as the Board may determine in good faith to be equitable under the circumstances. Such adjustments made by the Board shall be conclusive and binding for all purposes of this Agreement. 6 31 10. WITHHOLDING TAXES. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any delivery of Common Shares to the Grantee, and the amounts available to the Corporation for such withholding are insufficient, it shall be a condition to the receipt of such delivery that the Grantee make arrangements satisfactory to the Corporation for payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Corporation of a portion of the Common Shares delivered to the Grantee. The Corporation and the Grantee may also make similar arrangements with respect to the payment of any taxes with respect to which withholding is not required. If such election is made, the shares so retained shall be credited against such withholding requirement at the fair market value on the date of such delivery. Any such withholding may require compliance with Section 16 of the Exchange Act. 11. EMPLOYMENT RIGHTS. Neither this Agreement nor any action taken hereunder shall be construed as giving the Grantee any right to be retained in the employ of the Corporation, nor shall any action taken hereunder be construed as entitling the Corporation to the services of the Grantee for any period of time. For purposes of this Agreement, the continuous employ of the Grantee with the Corporation or a Subsidiary shall not be deemed interrupted, and the Grantee shall not be deemed to have ceased to be an associate of the Corporation or any Subsidiary, by reason of the transfer of his or her employment among the Corporation and its Subsidiaries. 12. AMENDMENTS. Any amendment to the Plan shall be deemed to be an amendment to this agreement to the extent that the amendment is applicable hereto; PROVIDED, HOWEVER, that no 7 32 amendment shall adversely affect the rights of the Grantee with respect to the Deferred Shares without the Grantee's consent. 13. SEVERABILITY. In the event that one or more of the provisions of this agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable. 14. GOVERNING LAW. This agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio. Executed as of the 1st day of November, 1999. DIEBOLD, INCORPORATED By: /s/ Robert W. Mahoney --------------------------------- Robert W. Mahoney Chairman of the Board The undersigned hereby acknowledges receipt of an executed original of this Deferred Share Agreement and accepts the Deferred Shares granted thereunder on the terms and conditions set forth therein and in the 1991 Plan. Date: 11/1/99 /s/ Walden W. O'Dell ------------------ --------------------------------- Walden W. O'Dell 8 33 EXHIBIT A --------- Designation of Death Beneficiary under the Diebold, Incorporated 1991 Amended and Restated Equity and Performance Incentive Plan I, the undersigned Grantee, do hereby designate the following person or persons as my Death Beneficiary under the Diebold, Incorporated 1991 Amended and Restated Equity and Performance Incentive Plan (the "Plan") and elect that any awards that may, after my death, be payable under said Plan be paid to my Death Beneficiary in accordance with this designation. NAME AND PRESENT ADDRESS RELATIONSHIP TO ME _____% to ______________________________ ______________________ ______________________________ ______________________________ _____% to ______________________________ ______________________ ______________________________ ______________________________ _____% to ______________________________ ______________________ ______________________________ ______________________________ If more than one person is designated above and not all of them are in existence at the time of such payment, then such payment shall be made prorata to the survivor or survivors of them at the time of such payment. If none of the persons designated above is in existence at the time of such payment, then such payment shall be made in accordance with the terms of the Plan. Subject to the terms of the Plan, I reserve the right to change or revoke this designation by written instrument signed by me and filed in accordance with the terms of such Plan. Date: ___________________ _________________________________ Grantee 9 34 EXHIBIT C SIGN-ON BONUS DIEBOLD, INCORPORATED Amended and Restated Restricted Share Agreement WHEREAS, Walden W. O'Dell (hereinafter called the "Grantee") and Diebold, Incorporated (hereinafter called the "Corporation") have entered into an Employment Agreement dated as of November 1, 1999 (the "Employment Agreement") that provides for the award of 130,000 Restricted Shares pursuant to the 1991 Amended and Restated Equity and Performance Incentive Plan of the Corporation (the "1991 Plan"); and WHEREAS, the Corporation has granted to the Grantee as of November 1, 1999 (the "Date of Grant"), 130,000 Restricted Shares on the terms and conditions set forth in a Restricted Share Agreement dated as of the Date of Grant; and WHEREAS, the Corporation, with the consent of the Grantee, desires to provide for fixed accounting treatment altering the terms of the Restricted Shares; NOW, THEREFORE, the Corporation and the Grantee hereby amend and restate the Restricted Share Agreement mentioned above to provide that the Restricted Shares shall be governed by the terms and conditions described below. 1. DEFINITIONS. As used in this Agreement: (a) "Base Price" means $26.25, which was the fair market value (latest available closing price) of the Common Shares on the Date of Grant. (b) "Change in Control" means: (i) The Corporation is merged or consolidated or reorganized into or with another corporation or other legal person, and as a result of such merger, 1 35 consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Corporation immediately prior to such transaction; (ii) The Corporation 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 then-outstanding securities of such corporation or person immediately after such sale or transfer is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Corporation 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), 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 twenty (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 Corporation (the "Voting Stock"); (iv) The Corporation 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) 2 36 that a change in control of the Corporation 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 (2) consecutive years, individuals who at the beginning of any such period constitute the Directors of the Corporation cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation's stockholders, of each Director of the Corporation first elected during such period was approved by a vote of at least two-thirds (2/3) of the Directors of the Corporation then still in office who were Directors of the Corporation at the beginning of any such period. Notwithstanding the foregoing provisions of subsections (iii) or (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes of this Agreement, either (1) solely because (A) the Corporation, (B) a Subsidiary of the Corporation, or (C) any Corporation-sponsored employee stock ownership plan or any other employee benefit plan of the Corporation, either 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 twenty (20) percent or otherwise, or because the Corporation reports that a change in control of the Corporation 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 the Grantee may be employed. Notwithstanding the foregoing provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv) hereof instituted by any person not an officer or director of the Corporation, or prior to any disclosed proposal instituted by any person 3 37 not an officer or director of the Corporation which could lead to any such event, management proposes any restructuring of the Corporation which 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 this Agreement. (c) "Management Objectives" mean the Target Price goals established pursuant to the Employment Agreement for the Performance Period covered by this Agreement, as defined in Section 5 of this Agreement. (d) "Market Price per Common Share" means the closing price of a Common Share on the New York Stock Exchange (as reported in the Midwest Edition of the WALL STREET JOURNAL) or such other exchange constituting the principal exchange for the Corporation's publicly traded shares or if there is no such exchange, the National Association of Securities Dealers Automated Quotation System. (e) "Performance Period" means the period commencing November 1, 1999 and ending on October 31, 2006. (f) Capitalized terms used herein without definition shall have the meanings assigned to them in the 1991 Plan. 2. MANAGEMENT OBJECTIVES. The Management Objectives for the Performance Period covered by this Agreement shall be increases in the market price of the Common Shares over the Base Price as specified in Section 5 below. 4 38 3. GRANT OF RESTRICTED SHARES. The Corporation hereby grants to the Grantee 130,000 Restricted Shares, which shall be fully paid and nonassessable and shall be represented by a certificate or certificates registered in the Grantee's name, endorsed with an appropriate legend referring to the restrictions hereinafter set forth. The Grantee shall have all the rights of a shareholder with respect to such shares, including the right to vote the shares and to receive all dividends paid thereon, provided that such shares, together with any additional shares which the Grantee may become entitled to receive by virtue of a share dividend, a merger or reorganization in which the Corporation is the surviving corporation or any other change in capital structure, shall be subject to the restrictions hereinafter set forth. 4. RESTRICTIONS ON TRANSFER. The Restricted Shares subject to this grant may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of by the Grantee except to the Corporation until such Restricted Shares have become nonforfeitable pursuant to Section 5 or Section 6 of this Agreement, except that the Grantee's rights with respect to such shares may be transferred by will or pursuant to the laws of descent and distribution. Any purported transfer in violation of the provisions of this section shall be void, and the purported transferee shall obtain no rights with respect to such shares. The Corporation in its sole discretion, when and as permitted by the Plan, may waive the restrictions on transferability with respect to all or a portion of the Restricted Shares subject to this grant. 5. VESTING OF RESTRICTED SHARES. All of the Restricted Shares granted hereby shall become nonforfeitable at the end of the Performance Period if the Grantee shall have remained in the continuous employ of the 5 39 Corporation or any Subsidiary throughout the Performance Period. Part or all of such Restricted Shares may become nonforfeitable earlier based on the achievement of each of the Management Objectives established for the Performance Period covered by this Agreement. The number of Restricted Shares eligible to become nonforfeitable based on the achievement of the Management Objectives shall be determined as follows: (i) one-third of the Restricted Shares hereinabove specified shall become nonforfeitable if the Market Price per Common Share has reached the applicable price set forth in the table below as Target Price I; (ii) an additional one-third of such Restricted Shares shall become nonforfeitable if the Market Price per Common Share has reached the applicable price set forth in the table below as Target Price II; and (iii) the remaining one-third of such Restricted Shares shall become nonforfeitable if the Market Price per Common Share has reached the applicable price set forth in the table below as Target Price III; PROVIDED, HOWEVER, that the Market Price per Common Share shall be deemed to reach any of the Target Prices only when the closing price of a Common Share shall have reached the specified Target Price and remained at or above such level for a minimum of 20 consecutive trading days (a "20-Day Period"). VESTING OF RESTRICTED SHARES ---------------------------- Base Price Target Price I Target Price II Target Price III [33 1/3% Increase [66 2/3% Increase [Double the from Base Price] from Base Price] Base Price] - -------------------------------------------------------------------------------- $26.25 $35.00 $43.75 $52.50 6 40 If the Compensation and Organization Committee of the Board of Directors (the "Committee") shall determine that during the Performance Period the Market Price per Common Share shall have reached a Target Price set forth in the Vesting of Restricted Shares Table set forth above and maintained such price for a 20-Day Period, then upon such determination, the applicable Restricted Shares shall become nonforfeitable, but only if the Grantee shall have been in the continuous employ of the Corporation or any Subsidiary of the Corporation through the end of the applicable 20-Day Period, except as otherwise provided in Sections 6 and 7 of this Agreement. The Committee shall determine and certify in writing whether a Target Price has been met and, thus, Restricted Shares have become nonforfeitable, not later than the date of the next regularly scheduled meeting of the Committee after any period of 20 consecutive days in which it may appear that a Target Price will be met. In all events the Committee shall make its determination within 60 days after it receives written notice from the Grantee that a Target Price has been met. No additional Restricted Shares shall be earned for actual achievement in excess of Target Price III. 6. EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control prior to the end of the Performance Period, the Restricted Shares granted hereby shall become nonforfeitable. 7. EFFECT OF OTHER TERMINATIONS OF EMPLOYMENT. In the event of termination of Grantee's employment because of death, termination due to Disability (as defined in the Employment Agreement), termination for Cause (as defined in the Employment Agreement), Termination without Cause (as defined in the Employment Agreement), Constructive Termination without Cause (as defined in the Employment Agreement), Voluntary Termination (as defined in the Employment Agreement) or in any other 7 41 manner (other than after a Change in Control as specified in Section 6 hereof), the Grantee shall forfeit any Restricted Shares that have not become nonforfeitable at the time of such termination. Notwithstanding the foregoing provisions of this Section 7, if, as of the date of any termination of employment other than for Cause, the closing price of a Common Share has reached a Target Price specified in Section 5 of this Agreement, and if the Target Price remains, for the first time, at or above such level for a minimum of 20 consecutive trading days, taking into account trading days before and after termination of employment, the applicable Restricted Shares shall become nonforfeitable as if the Grantee's employment had not terminated. 8. RETENTION OF STOCK CERTIFICATES BY CORPORATION; DELIVERY TO GRANTEE The certificate(s) representing the Restricted Shares covered by this Agreement shall be retained by the Corporation, together with the accompanying stock power signed by the Grantee and endorsed in blank until such Restricted Shares become nonforfeitable in accordance with Sections 5, 6 or 7. As soon as practicable after such Restricted Shares become nonforfeitable, the Corporation shall issue to the Grantee a stock certificate, representing the number of Common Shares issued as Restricted Shares, free of the restrictions and of the legend described in Section 3. 9. DEFERRAL OF DEFERRED SHARES. Grantee may elect to defer all or a specified part of his Restricted Shares pursuant to the Corporation's Amended and Restated 1992 Deferred Incentive Compensation Plan. 10. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the aggregate number of outstanding Common Shares by reason of (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, or (b) any merger, consolidation, spin-off, 8 42 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 (c) any other corporate transaction or event having an effect similar to any of the foregoing, then the Board, upon the recommendation of the Committee, shall adjust the Management Objectives and/or the number of Restricted Shares then held by the Grantee in such manner as to prevent the dilution or enlargement of the rights of the Grantee that would otherwise result from such event to the extent practicable without causing the Restricted Shares to fail to be treated as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code. Furthermore, in the event that any transaction or event described or referred to in the immediately preceding sentence shall occur, the Board, upon the recommendation of the Committee, may provide in substitution of any or all of the Grantee's rights under this Agreement such alternative consideration as the Board may determine in good faith to be equitable under the circumstances. Furthermore, if the Common Shares of the Corporation cease to be publicly traded at any time during the Performance Period, the Board, upon recommendation by the Committee, shall modify the Management Objectives with respect to any Restricted Shares granted under this Agreement which have not become nonforfeitable, in such a manner that the Grantee will have an opportunity to receive an equal number of shares, free of restriction, which is comparable to what the Grantee would have had if the Common Shares had continued to be publicly traded. 11. WITHHOLDING TAXES. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any delivery of Common Shares to the Grantee, and the amounts available to the Corporation for such withholding are insufficient, it shall be a condition to the receipt of such delivery that the Grantee make arrangements satisfactory to the Corporation for 9 43 payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Corporation of a portion of the Common Shares delivered to the Grantee. If such election is made, the shares so retained shall be credited against such withholding requirement at the Market Price per Common Share on the date of such delivery. Any such withholding may require compliance with Section 16 of the Exchange Act. 12. EMPLOYMENT RIGHTS. Neither this Agreement nor any action taken hereunder shall be construed as giving the Grantee any right to be retained in the employ of the Corporation, nor shall any action taken hereunder be construed as entitling the Corporation to the services of the Grantee for any period of time. For purposes of this Agreement, the continuous employ of the Grantee with the Corporation or a Subsidiary shall not be deemed interrupted, and the Grantee shall not be deemed to have ceased to be an associate of the Corporation or any Subsidiary, by reason of the transfer of his or her employment among the Corporation and its Subsidiaries. 13. AMENDMENTS. Any amendment to the Plan shall be deemed to be an amendment to this agreement to the extent that the amendment is applicable hereto; PROVIDED, HOWEVER, that no amendment shall adversely affect the rights of the Grantee with respect to Restricted Shares without the Grantee's consent. 14. SEVERABILITY. In the event that one or more of the provisions of this agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall 10 44 be deemed to be separable from the other provisions hereof and the remaining provisions hereof shall continue to be valid and fully enforceable. 15. GOVERNING LAW. This agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio. Executed as of the 31st day of December, 1999. DIEBOLD, INCORPORATED By: /s/ Robert W. Mahoney ----------------------------- Robert W. Mahoney Chairman of the Board The undersigned hereby acknowledges receipt of an executed original of this Amended and Restated Restricted Share Agreement and agrees to hold the Restricted Shares described herein on the terms and conditions set forth therein and in the 1991 Plan. Date: 1/5/2000 /s/ Walden W. O'Dell ---------- ----------------------------- Walden W. O'Dell 11 45 SIGN-ON BONUS ------------- DIEBOLD, INCORPORATED Amended and Restated Performance Share Agreement WHEREAS, Walden W. O'Dell (hereinafter called the "Grantee") and Diebold, Incorporated (hereinafter called the "Corporation") have entered into an Employment Agreement dated as of November 1, 1999 (the "Employment Agreement") that provides for the award of 50,000 Performance Shares pursuant to the 1991 Amended and Restated Equity and Performance Incentive Plan of the Corporation (the "1991 Plan"); and WHEREAS, the Corporation has granted to the Grantee as of November 1, 1999 (the "Date of Grant"), 50,000 Performance Shares on the terms and conditions set forth in a Performance Share Agreement dated as the Date of Grant; and WHEREAS, the Corporation, with the consent of the Grantee, desires to provide for fixed accounting treatment by altering the terms of the Performance Shares; NOW, THEREFORE, the Corporation and the Grantee hereby amend and restate the Performance Share Agreement mentioned above to provide that the Performance Shares shall be governed by the terms and conditions described below. 1. DEFINITIONS. As used in this Agreement: (a) "Base Price" means $26.25, which was the fair market value (latest available closing price) of the Common Shares on the Date of Grant. (b) "Change in Control" means: 1 46 (i) The Corporation 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 then-outstanding securities of such corporation or person immediately after such transaction is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Corporation immediately prior to such transaction; (ii) The Corporation 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 then-outstanding securities of such corporation or person immediately after such sale or transfer is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Corporation 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), 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 twenty (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 Corporation (the "Voting Stock"); 2 47 (iv) The Corporation 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 Corporation 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 (2) consecutive years, individuals who at the beginning of any such period constitute the Directors of the Corporation cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation's stockholders, of each Director of the Corporation first elected during such period was approved by a vote of at least two-thirds (2/3) of the Directors of the Corporation then still in office who were Directors of the Corporation at the beginning of any such period. Notwithstanding the foregoing provisions of subsections (iii) or (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes of this Agreement, either (1) solely because (A) the Corporation, (B) a Subsidiary of the Corporation, or (C) any Corporation-sponsored employee stock ownership plan or any other employee benefit plan of the Corporation, either 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 twenty (20) percent or otherwise, or because the Corporation reports that a change in control of the Corporation has or may have occurred or will or may occur in the future by reason of such beneficial ownership, or (2) 3 48 solely because of a change in control of any Subsidiary by which the Grantee may be employed. Notwithstanding the foregoing provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv) hereof instituted by any person not an officer or director of the Corporation, or prior to any disclosed proposal instituted by any person not an officer or director of the Corporation which could lead to any such event, management proposes any restructuring of the Corporation which 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 this Agreement. (c) "Management Objectives" mean the Target Price goals established pursuant to the Employment Agreement for the Performance Period covered by this Agreement, as defined in Section 4 of this Agreement. (d) "Market Price per Common Share" means the closing price of a Common Share on the New York Stock Exchange (as reported in the Midwest Edition of the WALL STREET JOURNAL) or such other exchange constituting the principal exchange for the Corporation's publicly traded shares or if there is no such exchange, the National Association of Securities Dealers Automated Quotation System. (e) "Performance Period" means the period commencing November 1, 1999 and ending on October 31, 2006. (f) Capitalized terms used herein without definition shall have the meanings assigned to them in the 1991 Plan. 4 49 2. MANAGEMENT OBJECTIVES. The Management Objectives for the Performance Period covered by this Agreement shall be increases in the market price of the Common Shares over the Base Price as specified in Section 4 below. 3. GRANT OF PERFORMANCE SHARES. The Corporation hereby grants to the Grantee 50,000 Performance Shares, which shall be earned out by the Grantee during the Performance Period as set forth in Section 4 of this Agreement. 4. EARN-OUT OF SHARES. All of the Performance Shares granted hereby shall be earned out at the end of the Performance Period if the Grantee shall have remained in the continuous employ of the Corporation or any Subsidiary throughout the Performance Period. Part or all of such Performance Shares may be earned out earlier based on the achievement of each of the Management Objectives established for the Performance Period covered by this Agreement. The number of Performance Shares eligible to be earned based on the achievement of the Management Objectives shall be determined as follows: (i) one-third of the Performance Shares hereinabove specified shall be earned if the Market Price per Common Share has reached the applicable price set forth in the table below as Target Price I; (ii) an additional one-third of such Performance Shares shall be earned if the Market Price per Common Share has reached the applicable price set forth in the table below as Target Price II; and 5 50 (iii) the remaining one-third of such Performance Shares shall be earned if the Market Price per Common Share has reached the applicable price set forth in the table below as Target Price III; PROVIDED, HOWEVER, that the Market Price per Common Share shall be deemed to reach any of the Target Prices only when the closing price of a Common Share shall have reached the specified Target Price and remained at or above such level for a minimum of 20 consecutive trading days (a "20-Day Period"). Performance Shares Earn Out --------------------------- Base Price Target Price I Target Price II Target Price III [33 1/3% Increase [66 2/3% Increase [Double the from Base Price] from Base Price] Base Price] - -------------------------------------------------------------------------------- $26.25 $35.00 $43.75 $52.50 If the Compensation and Organization Committee of the Board of Directors (the "Committee") shall determine that during the Performance Period the Market Price per Common Share shall have reached a Target Price set forth in the Performance Shares Earn Out Table set forth above and maintained such price for a 20-Day Period, then upon such determination the applicable Performance Shares shall be earned out, but only if the Grantee shall have been in the continuous employ of the Corporation or any Subsidiary of the Corporation through the end of the applicable 20-Day Period, except as otherwise provided in Sections 7 and 8 of this Agreement. No additional Performance Shares shall be earned for actual achievement in excess of Target Price III. 6 51 5. PAYMENT OF AWARDS. Payment shall be made in the form of shares of the Corporation's Common Shares, or in cash or a combination of Common Shares and cash, if so recommended by the Committee in its sole discretion and approved by the Board of Directors (the "Board"). Final awards shall be paid, less applicable taxes and in accordance with Section 16 of the Exchange Act, as soon as practicable after the end of the Performance Period or, if applicable, after the determination by the Committee of the achievement of the Management Objective, except as otherwise agreed to by the Corporation and the Grantee. The Committee shall determine and certify in writing whether a Target Price has been met and, thus, Performance Shares have been earned out, not later than the date of the next regularly scheduled meeting of the Committee after any period of 20 consecutive days in which it may appear that a Target Price will be met. In all events the Committee shall make its determination within 60 days after it receives written notice from the Grantee that a Target Price has been met. Any payment of awards due pursuant to this Agreement to a deceased Grantee shall be paid to the beneficiary designated by the Grantee on the Designation of Death Beneficiary attached as EXHIBIT A hereto and filed with the Corporation. If no such beneficiary has been designated or survives the Grantee, payment shall be made to the Grantee's legal representative. A beneficiary designation may be changed or revoked by a Grantee at any time, provided the change or revocation is filed with the Corporation. Prior to payment, the Corporation shall only have an unfunded and unsecured obligation to make payment of earned awards to the Grantee. 7 52 6. DEFERRAL OF PERFORMANCE SHARES. The Grantee may elect to defer all or a specified part of his earned Performance Shares pursuant to the Corporation's Amended and Restated 1992 Deferred Compensation Plan. 7. EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control prior to the end of the Performance Period, the Performance Shares granted hereby shall be deemed to have been earned in full and shall be immediately due and payable in the form of Common Shares as soon as practicable following such Change in Control. 8. EFFECT OF OTHER TERMINATIONS OF EMPLOYMENT. In the event of termination of Grantee's employment because of death, termination due to Disability (as defined in the Employment Agreement), termination for Cause (as defined in the Employment Agreement), Termination without Cause (as defined in the Employment Agreement), Constructive Termination without Cause (as defined in the Employment Agreement), Voluntary Termination (as defined in the Employment Agreement) or in any other manner (other than after a Change in Control as specified in Section 7 hereof), the Grantee shall forfeit any rights he may have in any Performance Shares that have not been earned out by such Grantee at the time of such termination. Notwithstanding the foregoing provisions of this Section 8, if, as of the date of any termination of employment other than for Cause, the closing price of a Common Share has reached a Target Price specified in Section 4 of this Agreement, and if the Target Price remains, for the first time, at or above such level for a minimum of 20 consecutive trading days, taking into account trading days before and after termination of employment, the 8 53 applicable Performance Shares shall be earned out as if the Grantee's employment had not terminated. 9. PAYMENT OF DIVIDEND EQUIVALENTS. During the Performance Period, from and after the Date of Grant and until the earlier of(a) the time when the Grantee receives any Performance Shares in accordance with Section 5 or Section 7 hereof or (b) the time when the Grantee's right to receive Performance Shares is forfeited in accordance with Section 8 hereof, the Company shall pay to the Grantee whenever a dividend is paid on Common Shares an amount of cash equal to the product of the per-share amount of the dividend paid times the number of such Performance Shares that have not been paid pursuant to Section 5 or 7 hereof. 10. SHARES NON-TRANSFERABLE. No right to Performance Shares granted hereby that have not yet been earned out and paid shall be transferable other than by will or the laws of descent and distribution. 11. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the aggregate number of outstanding Common Shares by reason of (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, or (b) 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 (c) any other corporate transaction or event having an effect similar to any of the foregoing, then the Board, upon the recommendation of the Committee, shall adjust the Management Objectives and/or the number of Performance Shares then held by the Grantee in such manner as to prevent the dilution or enlargement of the rights of the Grantee that would otherwise result from such event to the extent 9 54 practicable without causing the Performance Shares to fail to be treated as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code. Furthermore, in the event that any transaction or event described or referred to in the immediately preceding sentence shall occur, the Board, upon the recommendation of the Committee, may provide in substitution of any or all of the Grantee's rights under this Agreement such alternative consideration as the Board may determine in good faith to be equitable under the circumstances. Furthermore, if the Common Shares of the Corporation cease to be publicly traded at any time during the Performance Period, the Board, upon recommendation by the Committee, shall modify the Management Objectives with respect to any Performance Shares granted under this Agreement which have not been earned out, in such a manner that the Grantee will have an opportunity to earn out such Performance Shares which is comparable to what the Grantee would have had if the Common Shares had continued to be publicly traded. 12. WITHHOLDING TAXES. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any delivery of Common Shares to the Grantee, and the amounts available to the Corporation for such withholding are insufficient, it shall be a condition to the receipt of such delivery that the Grantee make arrangements satisfactory to the Corporation for payment of the balance of such taxes required to be withheld. The Grantee may elect that all or any part of such withholding requirement be satisfied by retention by the Corporation of a portion of the Common Shares delivered to the Grantee. If such election is made, the shares so retained shall be credited against such withholding requirement at the Market Price per Common Share on 10 55 the date of such delivery. Any such withholding may require compliance with Section 16 of the Exchange Act. 13. EMPLOYMENT RIGHTS. Neither this Agreement nor any action taken hereunder shall be construed as giving the Grantee any right to be retained in the employ of the Corporation, nor shall any action taken hereunder be construed as entitling the Corporation to the services of the Grantee for any period of time. For purposes of this Agreement, the continuous employ of the Grantee with the Corporation or a Subsidiary shall not be deemed interrupted, and the Grantee shall not be deemed to have ceased to be an associate of the Corporation or any Subsidiary, by reason of the transfer of his or her employment among the Corporation and its Subsidiaries. 14. AMENDMENTS. Any amendment to the Plan shall be deemed to be an amendment to this agreement to the extent that the amendment is applicable hereto; PROVIDED, HOWEVER, that no amendment shall adversely affect the rights of the Grantee with respect to Performance Shares without the Grantee's consent. 15. SEVERABILITY. In the event that one or more of the provisions of this agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable. 11 56 16. GOVERNING LAW. This agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio. Executed as of the 31st day of December, 1999. DIEBOLD, INCORPORATED By: /s/ Robert W. Mahoney ----------------------------------- Robert W. Mahoney Chairman of the Board The undersigned hereby acknowledges receipt of an executed original of this Amended and Restated Performance Share Agreement and agrees to accept the Performance Shares granted thereunder on the terms and conditions set forth therein and in the 1991 Plan. Date: 1/5/2000 /s/ Walden W. O'Dell ----------- ----------------------------------- Walden W. O'Dell PSG 12 57 Exhibit B BENEFICIARY DESIGNATION I designate my beneficiaries with respect to my Account pursuant to that certain Deferred Compensation Agreement, dated as of November 1, 1999 by and between myself and Diebold, Incorporated, to be as follows: I. PRIMARY BENEFICIARIES: ------------------------------------------------------- RELATIONSHIPS: ------------------------------------------------------- II. CONTINGENT BENEFICIARIES: ------------------------------------------------------- ------------------------------------------------------- ------------------------------------------------------- ------------------------------------------------------- ------------------------------------------------------- RELATIONSHIPS: ------------------------------------------------------- - -------------------------------- (Signature) Date: --------------------- 58 EXHIBIT D DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT ---------------------------------------------- This Director and Officer Indemnification Agreement, dated as of November 1, 1999 (this "Agreement"), is made by and between Diebold, Incorporated, an Ohio corporation (the "Company"), and Walden W. O'Dell (the "Indemnitee"), a director and an officer of the Company. RECITALS -------- A. The Indemnitee is presently serving as a director and an officer of the Company, and the Company desires that the Indemnitee continue serving in such capacities. The Indemnitee is willing, subject to certain conditions including the execution and performance of this Agreement by the Company, to continue serving in such capacities. B. In addition to the indemnification to which the Indemnitee is entitled under the Code of Regulations of the Company (the "Regulations"), the Company has obtained, at its sole expense, insurance protecting the Company and its officers and directors, including the Indemnitee, against certain losses arising out of any threatened, pending or completed action, suit, or proceeding to which such persons may be made or are threatened to be made parties. NOW, THEREFORE, in order to induce the Indemnitee to continue to serve in his present capacity, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Indemnitee agree as follows: 1. CONTINUED SERVICE ----------------- The Indemnitee shall continue to serve, at the will of the Company or in accordance with a separate contract, to the extent that such a contract is in effect at the time in question, as a director and an officer of the Company so long as he is duly elected in accordance with the Regulations or until he resigns in writing in accordance with applicable law. 2. INITIAL INDEMNITY ----------------- (a) The Company shall indemnify the Indemnitee if or when he is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Company), by reason of the fact that he is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, trustee, officer, employee, member, manager or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, or by reason of any action alleged to have been taken or omitted in any such capacity, and whether or not the basis of such action, suit or proceeding is the Indemnitee's alleged action in an official capacity while serving as a director, officer, employee, agent, trustee, member or manager, against any and all costs, charges, expenses (including fees and expenses of attorneys 59 or others; all such costs, charges and expenses being herein jointly referred to as "Expenses"), judgments, fines, and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection therewith, including any appeal of or from any judgment or decision, unless it is proved by clear and convincing evidence in a court of competent jurisdiction that the Indemnitee's action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company. In addition, with respect to any criminal action or proceeding, indemnification hereunder shall be made only if the Indemnitee had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not satisfy the foregoing standard of conduct to the extent applicable thereto. (b) The Company shall indemnify the Indemnitee if or when he is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding by or in the right of the Company to procure a judgment in its favor, by reason of the fact that the Indemnitee is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, trustee, officer, employee, member, manager or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust, or other enterprise, against any and all Expenses actually and reasonably incurred by the Indemnitee in connection with the defense or settlement thereof or any appeal of or from any judgment or decision, unless it is proved by clear and convincing evidence in a court of competent jurisdiction that the Indemnitee's action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company, except that no indemnification pursuant to this Section 2(b) shall be made in respect of any action or suit in which the only liability asserted against the Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code (the "ORC"). (c) Any indemnification under Section 2(a) or 2(b) (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 2(a) or 2(b). Such authorization shall be made (i) by the Board of Directors of the Company (the "Board") by a majority vote of a quorum consisting of directors who were not and are not parties to or threatened with such action, suit, or proceeding, or (ii) if such a quorum of disinterested directors is not available or if a majority of such quorum so directs, in a written opinion by independent legal counsel (designated for such purpose by the Board) which shall not be an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the Company, or any person to be indemnified, within the five years preceding such determination, or (iii) by the shareholders of the Company (the "Shareholders"), or (iv) by the court of common pleas or other court in which such action, suit, or proceeding was brought. (d) To the extent that the Indemnitee has been successful on the merits or otherwise, including the dismissal of an action without prejudice, in defense of any action, suit, or proceeding referred to in Section 2(a) or 2(b), or in defense of any claim, issue, or matter 60 therein, he shall be indemnified against Expenses actually and reasonably incurred by him in connection therewith. (e) Expenses actually and reasonably incurred by the Indemnitee in defending any such action, suit, or proceeding referred to in Section 2(a) or 2(b), or in defense of any claim, issue or matter therein, shall be paid by the Company as they are incurred in advance of the final disposition of action, suit, or proceeding under the procedure set forth in Section 4(b) hereof. (f) For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on the Indemnitee with respect to any employee benefit plan; references to "serving at the request of the Company" shall include any service as a director, officer, employee, or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or beneficiaries; references to the masculine shall include the feminine; references to the singular shall include the plural and vice versa; the word including is used by way of illustration only and not by way of limitation; and with respect to conduct by Indemnitee in his capacity as a trustee, administrator or other fiduciary of any employee benefit plan of the Company, if the Indemnitee acted in good faith and in a manner he reasonably believed to be in the interest of the participants or beneficiaries of such employee benefit plan, he shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to herein. (g) No amendment to the Amended Articles of Incorporation of the Company (the "Articles") or the Regulations shall deny, diminish, or encumber the Indemnitee's rights to indemnity pursuant to this Agreement, except to the extent that such amendment is required by law to be given effect. No amendment to the Articles or Regulations shall deny, diminish, or encumber the Indemnitee's rights to indemnity pursuant to the Regulations, the ORC, or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date upon which the amendment was approved by the Shareholders, except to the extent that such amendment is required by law to be given effect. 3. ADDITIONAL INDEMNIFICATIONS --------------------------- (a) Pursuant to Section 1701.13(E)(6) of the ORC, without limiting any right which the Indemnitee may have pursuant to Section 2 hereof or any other provision of this Agreement or the Articles, the Regulations, the ORC, any policy of insurance, or otherwise, but subject to any limitation on the maximum permissible indemnity which may exist under applicable law at the time of any request for indemnity hereunder and subject to the following provisions of this Section 3(a), the Company shall indemnify the Indemnitee against any amount which he is or becomes obligated to pay relating to or arising out of any claim made against him because of any act, failure to act, or neglect or breach of duty, including any actual or alleged error, misstatement, or misleading statement, that he commits, suffers, permits, or acquiesces in while acting in his capacity as a director or an officer of the Company. The payments which the Company is obligated to make pursuant to this Section 3(a) shall include any and all Expenses, judgments, fines, and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection therewith including any appeal of or from any judgment or decision; 61 PROVIDED, HOWEVER, that the Company shall not be obligated under this Section 3(a) to make any payment in connection with any claim against the Indemnitee: (i) to the extent of any fine or similar governmental imposition which the Company is prohibited by applicable law from paying which results from a final, nonappealable order; or (ii) to the extent based upon or attributable to the Indemnitee having actually realized a personal gain or profit to which he was not legally entitled, including profit from the purchase and sale by the Indemnitee of equity securities of the Company which are recoverable by the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or profit arising from transactions in publicly traded securities of the Company which were effected by the Indemnitee in violation of Section 10(b) of the Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder. (b) A determination as to whether the Indemnitee shall be entitled to indemnification under Section 3(a) shall be made in accordance with Section 4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to which Section 3(a) applies shall be paid by the Company as they are actually and reasonably incurred in advance of the final disposition of such claim under the procedure set forth in Section 4(b) hereof. (c) The Company agrees to indemnify the Indemnitee against any action which the Indemnitee's previous employer may bring against the Indemnitee in connection with his resignation, whether for damages, injunction or other forms of equitable relief, including the costs in the form of reasonable attorneys' fees and disbursements; PROVIDED, HOWEVER, that nothing in this Agreement shall be construed as requiring any breach of Indemnitee's existing contractual obligations, including, without limitation, the term of his services and the preservation of confidentiality of his previous employer's proprietary information. Indemnitee represents and warrants to the Company that his entering into the employ of the Company and the performance of his duties as contemplated by the Employment Agreement between the Company and the Indemnitee, dated of even date herewith, will not result in the breach of any subsisting agreement with his previous employer. 4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION ---------------------------------------------- (a) For purposes of pursuing his rights to indemnification under Section 3(a) hereof, the Indemnitee shall (i) submit to the Board a sworn statement of request for indemnification substantially in the form of Exhibit 1 attached hereto and made a part hereof (the "Indemnification Statement") averring that he is entitled to indemnification hereunder; and (ii) present to the Company reasonable evidence of all amounts for which indemnification is requested. Submission of an Indemnification Statement to the Board shall create a presumption that the Indemnitee is entitled to indemnification hereunder, and the Company shall, within 60 calendar days after submission of the Indemnification Statement, make the payments requested in the Indemnification Statement to or for the benefit of the Indemnitee, unless (A) within such 62 60-calendar-day period the Board shall resolve by vote of a majority of the directors at a meeting at which a quorum is present that the Indemnitee is not entitled to indemnification under Section 3(a) hereof, (B) such vote shall be based upon clear and convincing evidence (sufficient to rebut the foregoing presumption), and (C) the Board shall notify Indemnitee within such period of such vote, which notice shall disclose with particularity the evidence upon which the vote is based. The foregoing notice shall be sworn to by all persons who participated in the vote and voted to deny indemnification. The provisions of this Section 4(a) are intended to be procedural only and shall not affect the right of Indemnitee to indemnification under Section 3(a) of this Agreement so long as Indemnitee follows the prescribed procedure, and any determination by the Board that Indemnitee is not entitled to indemnification and any failure to make the payments requested in the Indemnification Statement shall be subject to judicial review by any court of competent jurisdiction. (b) For purposes of obtaining payments of Expenses in advance of final disposition pursuant to the last sentence of Section 2(d) or the last sentence of Section 3(b) hereof, the Indemnitee shall submit to the Company a sworn request for advancement of Expenses substantially in the form of Exhibit 2 attached hereto and made a part hereof (the "Undertaking"), averring that he has reasonably incurred or will reasonably incur actual Expenses in defending an action, suit or proceeding referred to in Section 2(a) or 2(b) or any claim referred to in Section 3(a), or pursuant to Section 8 hereof. The Indemnitee shall execute Part A of the Undertaking by which he undertakes to: (i) repay such amount if it is proved by clear and convincing evidence in a court of competent jurisdiction that the Indemnitee's action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company; and (ii) reasonably cooperate with the Company concerning the action, suit, proceeding or claim. The Indemnitee shall likewise execute Part B of the Undertaking by which he undertakes to repay such amount if it ultimately is determined that he is not entitled to be indemnified by the Company under this Agreement or otherwise. In the event that the Indemnitee executes both Part A and Part B of the Undertaking, the Expenses which are paid by the Company pursuant thereto shall be required to be repaid by the Indemnitee only if he is required to do so under the terms of both Part A and Part B of the Undertaking. Upon receipt of the Undertaking, the Company shall thereafter promptly pay such Expenses of the Indemnitee as are noticed to the Company in reasonable detail arising out of the matter described in the Undertaking. No security shall be required in connection with any Undertaking. The Company shall advance to the Indemnitee all reasonable costs and expenses incurred or to be incurred by him in connection with any action under Section 3(c) within 20 days of receipt by the Company of a written request for such advance. 5. LIMITATION ON INDEMNITY ----------------------- Notwithstanding anything contained herein to the contrary, the Company shall not be required hereby to indemnify the Indemnitee with respect to any action, suit, or proceeding that was initiated by the Indemnitee unless (a) such action, suit, or proceeding was initiated by the Indemnitee to enforce any rights to indemnification arising hereunder and such person shall have been formally adjudged to be entitled to indemnity by reason hereof, (b) authorized by another agreement to which the Company is a party whether heretofore or hereafter entered, or (c) otherwise ordered by the court in which the suit was brought. 63 6. SUBROGATION; DUPLICATION OF PAYMENTS ------------------------------------ (a) In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. (b) The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has actually received payment (under any insurance policy, the Regulations or otherwise) of the amounts otherwise payable hereunder. 7. SHAREHOLDER RATIFICATION ------------------------ The Company may, at its option, propose at any future meeting of Shareholders that this Agreement be ratified by the Shareholders; PROVIDED, HOWEVER, that the Indemnitee's rights hereunder shall be fully enforceable in accordance with the terms hereof whether or not such ratification is sought or obtained. 8. FEES AND EXPENSES OF ENFORCEMENT -------------------------------- It is the intent of the Company that the Indemnitee not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any action, suit or proceeding to deny, or to recover from, the Indemnitee the benefits intended to be provided to the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from time to time to retain counsel of his choice, at the expense of the Company as hereafter provided, to represent the Indemnitee in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, shareholder, or other person affiliated with the Company, in any jurisdiction. Regardless of the outcome thereof, the Company shall pay and be solely responsible for any and all costs, charges, and expenses, including fees and expenses of attorneys and others, reasonably incurred by the Indemnitee pursuant to this Section 8. 9. MERGER OR CONSOLIDATION ----------------------- In the event that the Company shall be a constituent corporation in a consolidation, merger, or other reorganization, the Company, if it shall not be the surviving, resulting, or acquiring corporation therein, shall require as a condition thereto that the surviving, resulting, or acquiring corporation agree to assume all of the obligations of the Company hereunder and to indemnify the Indemnitee to the full extent provided herein. Whether or not the Company is the resulting, surviving, or acquiring corporation in any such transaction, the Indemnitee shall stand in the same position under this Agreement with respect to the resulting, 64 surviving, or acquiring corporation as he would have with respect to the Company if its separate existence had continued. 10. NONEXCLUSIVITY; NO THIRD PARTY BENEFICIARIES; SEVERABILITY ---------------------------------------------------------- (a) The rights to indemnification provided by this Agreement shall not be exclusive of any other rights of indemnification to which the Indemnitee may be entitled under the Articles, the Regulations, the ORC or any other statute, any insurance policy, agreement, or vote of shareholders or directors or otherwise, as to any actions or failures to act by the Indemnitee, and shall continue after he has ceased to be a director, officer, employee, or agent of the Company or other entity for which his service gives rise to a right hereunder, and shall inure to the benefit of his heirs, executors and administrators. (b) Except as provided in Section 10(a), the rights to indemnification provided by this Agreement are personal to Indemnitee and are non-transferable by Indemnitee, and no party other than the Indemnitee is entitled to indemnification under this Agreement. (c) If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal. 11. SECURITY -------- To ensure that the Company's obligations pursuant to this Agreement can be enforced by Indemnitee, the Company may, at its option, establish a trust pursuant to which the Company's obligations pursuant to this Agreement and other similar agreements can be funded. 12. NOTICES ------- All notices and other communications hereunder shall be in writing and shall be personally delivered or sent by recognized overnight courier service (a) if to the Company, to the then-current principal executive offices of the Company (Attention: General Counsel) or (b) if to the Indemnitee, to the last known address of Indemnitee as reflected in the Company's records. Either party may change its address or the delivery of notices or other communications hereunder by providing notice to the other party as provided in this Section 12. All notices shall be effective upon actual delivery by the methods specified in this Section 12. 13. GOVERNING LAW ------------- This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without giving effect to the principles of conflict of laws thereof. 65 14. MODIFICATION ------------ This Agreement and the rights and duties of the Indemnitee and the Company hereunder may be modified only by an instrument in writing signed by both parties hereto. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. DIEBOLD, INCORPORATED By:___________________________ Robert W. Mahoney Chairman of the Board ______________________________ Walden W. O'Dell 66 Exhibit 1 --------- INDEMNIFICATION STATEMENT ------------------------- STATE OF ) ---------- )SS COUNTY OF ) ---------- I, _________________ , being first duly sworn, do depose and say as follows: 1. This Indemnification Statement is submitted pursuant to the Indemnification Agreement, dated ___________ , ____, between Diebold, Incorporated, an Ohio corporation (the "Company"), and the undersigned. 2. I am requesting indemnification against costs, charges, expenses (which may include fees and expenses of attorneys and/or others), judgments, fines, and amounts paid in settlement (collectively, "Liabilities"), which have been actually and reasonably incurred by me in connection with a claim referred to in Section 3(a) of the aforesaid Indemnification Agreement. 3. With respect to all matters related to any such claim, I am entitled to be indemnified as herein contemplated pursuant to the aforesaid Indemnification Agreement. 4. Without limiting any other rights which I have or may have, I am requesting indemnification against Liabilities which have or may arise out of - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [Signature of Indemnitee] Subscribed and sworn to before me, a Notary Public in and for said County and State, this ___ day of ______________________ , ______ [Seal] My commission expires the ____ day of ______________________ , ______ 67 Exhibit 2 --------- UNDERTAKING ----------- STATE OF _____________ SS COUNTY OF__________ I, ______________________ ,being first duly sworn, do depose and say as follows: 1. This Undertaking is submitted pursuant to the Indemnification Agreement, dated ___________ ____ , ____, between Diebold, Incorporated, an Ohio corporation (the "Company") and the undersigned. 2. I am requesting payment of costs, charges, and expenses which I have reasonably incurred or will reasonably incur in defending an action, suit or proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in Section 3(a), or pursuant to Section 8, of the aforesaid Indemnification Agreement. 3. The costs, charges, and expenses for which payment is requested are, in general, all expenses related to_____________________________________________ ________________________________________________________________________________ 4. Part A(1) -------- I hereby undertake to (a) repay all amounts paid pursuant hereto if it is proved by clear and convincing evidence in a court of competent jurisdiction that my action or failure to act which is the subject of the matter described herein involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company and (b) reasonably cooperate with the Company concerning the action, suit, proceeding or claim. ------------------------- [Signature of Indemnitee] - ---------- (1) The costs, charges and expenses which are paid by the Company pursuant hereto shall be required to be repaid by the Indemnitee only if he is required to do so under the terms of both Part A and Part B hereof. 68 4. Part B ------ I hereby undertake to repay all amounts paid pursuant hereto if it ultimately is determined that I am not entitled to be indemnified by the Company under the aforesaid Indemnification Agreement or otherwise. ------------------------------ [Signature of Indemnitee] Subscribed and sworn to before me, a Notary Public in and for said County and State, this _____ day of __________________ , _____ . [Seal] __________________________________ My commission expires the _____ day of__________________ , _____ . EX-10.16 4 EXHIBIT 10.16 1 EXHIBIT 10.16 SEPARATION AGREEMENT -------------------- THIS SEPARATION AGREEMENT (this "Agreement"), is made, entered into and effective as of October 26, 1999 (the "Transition Date"), by and between DIEBOLD, INCORPORATED (the "Company"), located at 5995 Mayfair Road, North Canton, Ohio 44720 and GERALD F. MORRIS ("Morris"), residing at 1423 Harbor Drive, N.W., Canton, Ohio 44708. WITNESSETH: ----------- WHEREAS, prior to the Transition Date Morris was the Executive Vice President and Chief Financial Officer of the Company; WHEREAS, Morris has determined that, effective on the Transition Date, he shall resign from any and all offices of the Company, and any other position, office or directorship of any other entity for which Morris was serving at the request of the Company, and, in addition, he shall retire early from his employment with the Company at the conclusion of a severance period; and WHEREAS, the Company accepts Morris' resignation and early retirement as of the dates referenced above and below; and WHEREAS, the Company and Morris desire to specify the services that Morris will provide to the Company as an employee after the Transition Date, and to set forth the payments and benefits that Morris will be entitled to receive from the Company after the Transition Date; and WHEREAS, the Company and Morris wish to resolve, settle and/or compromise certain matters, claims and issues between them, including, without limitation, Morris' resignation from the offices he held and his early retirement from his employment with the Company. NOW, THEREFORE, in consideration of the promises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound, the Company and Morris hereby agree as follows: 1. RESIGNATION OF OFFICES AND EARLY RETIREMENT. Morris hereby resigns, effective on the Transition Date, his position as Executive Vice President and Chief Financial Officer of the Company. Morris further resigns, effective on the Transition Date: (a) from all other offices of the Company to which he has been elected by the Board of Directors of the Company (or to which he has otherwise been appointed), (b) from all offices of any entity that is a subsidiary of, or is otherwise related to or affiliated with, the Company, (c) from all administrative, fiduciary or 2 other positions he may hold with respect to arrangements or plans for, of or relating to the Company, and (d) from any other directorship, office, or position of any corporation, partnership, joint venture, trust or other enterprise (each, an "Other Entity") insofar as Morris is serving in the directorship, office, or position of the Other Entity at the request of the Company. Subject to Subparagraph 2(1), Morris shall remain an employee of the Company continuously to the date of his early retirement from the Company, which early retirement date shall be October 1, 2003 (the "Early Retirement Date"). The Company hereby consents to and accepts said resignations and early retirements. 2. COMPENSATION AND BENEFITS. In consideration of the promises made by Morris in this Agreement and subject to the conditions hereof, the Company agrees to the following: (a.) CONTINUED SALARY. From the Transition Date to December 31, 1999, Morris shall continue to be paid a monthly salary at the rate he was paid immediately prior to the Transition Date. Effective January 1, 2000, and ending on October 1, 2003 (which period constitutes the "Severance Period"), Morris shall be paid a monthly salary at a rate equal to twenty-four (24) forty-fifths (24/45), or 53.33%, of the rate at which he was paid immediately prior to the Transition Date. Said payments shall be made in semi-monthly payments, via direct deposit account, subject to normal payroll deductions. Any vacation pay due Morris shall be deemed included in these continued salary payments. During the Severance Period, Morris shall perform such duties and provide such services as the Company shall reasonably request. (b.) DEFERRED COMPENSATION. Any amounts held for and on behalf of Morris under the Amended and Restated 1992 Deferred Incentive Compensation Plan for Diebold, Incorporated shall be distributed according to the terms and conditions of said Plan. (c.) ANNUAL BONUS PLAN; LONG TERM EXECUTIVE INCENTIVE PLAN. Morris shall be eligible to receive a full year's annual bonus for 1999 under the terms and conditions of the annual incentive plan applicable to him. The percentage to be paid under such plan (threshold, target, plan or maximum) will be determined by the Company's performance for fiscal year end 1999; provided, however, that in no event shall Morris be paid less than the threshold amount for 1999. Morris shall not be eligible for annual bonus participation after the 1999 bonus period. Morris shall not be eligible to receive compensation under the Company's Long Term Executive Incentive Plan ("LTIP") payable after the Transition Date, including, without limitation, that otherwise payable to him under the terms and conditions of the Performance Share Agreement between Morris and the Company for the performance period 1997-1999. Morris shall also not be eligible to participate in the LTIP for any subsequent performance period. (d.) STOCK OPTIONS. Morris has certain stock options that will be completely vested as of Morris' Early Retirement Date. Said stock options are those granted to him on the following dates: April 5, 1995 (22,500 shares); January 26, 1996 (22,500 shares); January 30, 1997 (22,500 shares); January 29, 1998 (22,500 shares); and January 28, 1999 (30,000 shares). In addition, Morris was granted certain "Milestone Options" on March 3, 1997, which will expire according to their terms on March 2, 2002. Morris' eligibility (as an employee of the Company prior to October 1, 2003, and as an early retiree of the Company on and after October 1, 2003) to exercise these vested options will continue to be governed by the terms and conditions of the 2 3 applicable nonqualified stock option agreements signed by Morris and the Company. Morris agrees and acknowledges that he is ineligible for any new stock options, grants or awards, and that he forfeits upon the Transition Date any rights in or to any stock option grants other than those set forth in this Subparagraph 2(d). (e.) MEDICAL COVERAGE. (i) Morris shall be allowed to continue as a plan participant in the Diebold, Incorporated Associate Health Care Plan during the Severance Period. (ii) For a period of eighteen (18) months following the end of the Severance Period, Morris may continue, at his cost, his participation in the Diebold, Incorporated Health Care Plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA"). (f.) BASIC INSURANCE. During the Severance Period Morris shall continue to be eligible for the Company's Basic Life Insurance coverage of $50,000. (g.) SPLIT DOLLAR AGREEMENT. Morris' eligibility for certain split dollar insurance pursuant to that certain Split Dollar Agreement dated April 7, 1995, shall continue after the Transition Date pursuant to the terms and conditions of said Split Dollar Agreement; PROVIDED, HOWEVER, that the Company will make no further premium payments for Morris' benefit after the Transition Date; and PROVIDED FURTHER, HOWEVER, that in the event that Morris cashes in any split dollar insurance policy that he has obtained under said Split Dollar Agreement, then he shall repay to the Company the total amount of the Company's premium contributions toward said policy. (h.) MOTOR VEHICLE USAGE. Morris shall be permitted to continue to use, during the first twelve (12) months of the Severance Period, the Company provided vehicle that he currently uses. At the end of said twelve (12) month period, Morris shall return the vehicle to the Company's possession, unless the parties otherwise agree in writing. During this twelve (12) month period, the Company shall continue its practice of payroll grossup for the value of this benefit less normal payroll deductions. (i.) COUNTRY CLUB MEMBERSHIP. The Company's payment of Morris' membership at Brookside Country Club shall be continued only through the Transition Date. The Company shall pay any remaining monthly service fees due up to the Transition Date, subject to normal payroll deductions. Morris will be responsible for any of his charges and expenses. The value of this membership (i.e., the stock certificate) is taxable to Morris and any taxes due shall be promptly deducted from any salary paid hereunder. Morris' company-sponsored membership at Glenmoor Country Club shall terminate as of twelve (12) months after the Transition Date, and during this twelve (12) month period, the Company shall pay only regular club dues and assessments, and no other charges. 3 4 (j.) PROFESSIONAL FEES. The Company shall pay up to $16,000 for Morris' reasonable legal fees incurred in this matter. A reasonably detailed itemization of such fees shall first be provided to the Company. Any such payment shall be made directly from the Company to Morris' attorney. (k.) FINANCIAL SERVICES. Morris shall continue to receive during the first twelve (12) months of the Severance Period those financial advisory and taxation services currently provided to him by IMG at the Company's expense. This shall include the cost of IMG's preparation of Morris' tax returns for the year 2000. (1.) RETIREMENT AND 401(k) PLANS. Morris' employment shall be deemed to terminate on the Transition Date for the purpose of determining his eligibility for benefits under the Retirement Plan for Salaried Employees ("Salaried Plan"). Morris' eligibility for benefits under the Supplemental Employee Retirement Plan, as amended and restated ("SERP") shall be as set forth in the SERP plan documents and shall be based on his Early Retirement Date. For the purpose of determining "Company Service" under the SERP, Morris shall not accrue any "Company Service" credit for the period beginning January 1, 2002, and ending on his Early Retirement Date. Morris' employment also shall be deemed to terminate on the Transition Date for the purpose of determining his eligibility for benefits under the Diebold Employee Savings Plan ("401k Plan"), and any such eligibility shall be as set forth in the 401k Plan documents, and Morris shall not be entitled to any further contributions (either by the employee or the Company) to his account in the 401k Plan for any pay period after December 31, 1999. (m.) BUSINESS EXPENSES. Morris will promptly pay any balance due on any Company credit card or other account used by him. The Company will either (1) reimburse Morris for any pending, reasonable business-related credit card charge for which Morris has not already been reimbursed provided Morris files a proper Travel and Expense Report, or (2) pay such charge directly to the card-issuing bank. Morris hereby authorizes the Company to deduct from monies due Morris under this Agreement any balance remaining on Morris' Company credit card account after such (1) reimbursement or (2) direct payment. (n.) NO OTHER COMPENSATION OR BENEFITS. Other than the compensation and benefits expressly agreed to and referenced in this Agreement, Morris shall be entitled to no additional compensation or benefits by virtue of his employment with, or retirement from, the Company. 3. NON-COMPETITION. (a.) During the Severance Period, Morris shall not, directly or indirectly, do or suffer to be done any of the following: own, manage, control or participate in the ownership, management or control of, or be employed or engaged by or otherwise affiliated or associated as a consultant, independent contractor or otherwise with any other corporation, partnership, proprietorship, firm, association or other business entity, or otherwise engage in any business, which is in competition with the Company's business; provided, however, that the ownership of not more than one percent (1%) of any class of publicly-traded securities of any entity shall not be deemed a violation of this Agreement. For purposes of this Agreement, the "Company's business" shall mean any business in which the Company actively engages now or until the end 4 5 of the Severance Period, and any business in which the Company has actively engaged in the two (2) year period prior to the date hereof, including, without limitation, the design, manufacture, assembly, distribution, sale, service or maintenance of those products listed in Exhibit A. (b.) In the event Morris shall violate any provision of this Paragraph 3 as to which there is a specific time period during which he is prohibited from taking certain actions or from engaging in certain activities as set forth in such provision, then, in such event, such violation shall toll the running of such time period from the date of such violation until such violation shall cease. The foregoing shall in no way limit the Company's rights under Paragraph 8 of this Agreement. (c.) Morris has carefully considered the nature and extent of the restrictions upon him and the rights and remedies conferred upon the Company under this Paragraph 3 and this Agreement, and hereby acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition which otherwise would be unfair to the Company, do not stifle the inherent skill and experience of Morris, would not operate as a bar to Morris' sole means of support, are fully required to protect the legitimate interests of the Company and do not confer a benefit upon the Company disproportionate to the detriment to Morris. Morris further acknowledges that his obligations in this Paragraph 3 are made in consideration of, and are adequately supported by, the payments by the Company to Morris described herein. 4. NO SOLICITATION OF EMPLOYEES. Morris agrees that he will not: (i) Employ, assist in employing, or otherwise associate in business with any person who is, or has been in the twelve (12) month period prior to such individual's association with Morris, an employee, officer or agent of the Company, or any of its affiliated, related or subsidiary entities, unless such employee was involuntarily terminated by the Company. (ii) Induce any person who is an employee, officer or agent of the Company, or any of its affiliated, related, or subsidiary entities to terminate such relationship. 5. RELEASE BY MORRIS. (a.) Morris for himself and his dependents, successors, assigns, heirs, executors and administrators (and his and their legal representatives of every kind), hereby releases, dismisses, remises and forever discharges the Company from any and all arbitrations, claims (including claims for attorney's fees), demands, damages, suits, proceedings, actions and/or causes of action of any kind and every description, whether known or unknown, which Morris now has or may have had for, upon, or by reason of any cause whatsoever (except that this release shall not apply to the obligations of the Company arising under or expressly referenced in this Agreement), against the Company ("claims"), including but not limited to: 5 6 (i) any and all claims, directly or indirectly, arising out of or relating to: (A) Morris' past employment or service with the Company; and (B) Morris' resignation as Executive Vice President and Chief Financial Officer and any other position described in Paragraph 1 of this Agreement; (ii) any and all claims of discrimination, including but not limited to claims of discrimination on the basis of sex, race, age, national origin, marital status, religion or disability, including, specifically, but without limiting the generality of the foregoing, any claims under the Age Discrimination in Employment Act, as amended (the "ADEA"), Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993 and Ohio Revised Code Chapter 4112; (iii) any and all claims of wrongful or unjust discharge or breach of any contract or promise, express or implied; (iv) any and all claims under or relating to any and all employee benefit, employee severance or employee incentive bonus plans and arrangements, including, without limitation, the LTIPs, the 401k Plan, and any claims under ERISA; (v) any and all worker compensation claims he may have against the Company by this Agreement, and further agrees to execute any documentation as may be reasonably required to perfect such release when presented to him by the Company. Nothing in this Paragraph 5 shall be construed to waive or release: (A) non-waivable claims pursuant to applicable law; or (B) Morris' entitlement to the amounts and benefits specified in Paragraph 2 above. (b.) Morris understands and acknowledges that the Company does not admit any violation of law, liability or invasion of any of his rights and that any such violation, liability or invasion is expressly denied. The consideration provided under this Agreement is made for the purpose of settling and extinguishing all claims and rights (and every other similar or dissimilar matter) that Morris ever had or now may have against the Company to the extent provided in this Paragraph 5. Morris further agrees and acknowledges that no representations, promises or inducements have been made by the Company other than as appear in this Agreement. (c.) Morris further understands and acknowledges that: (i) The release provided for in this Paragraph 5, including claims under the ADEA to and including the date of this Agreement, is in exchange for the additional consideration provided for in this Agreement, to which consideration he was not heretofore entitled; (ii) He has been advised by the Company to consult with legal counsel prior to executing this Agreement and the release provided for in this Paragraph 5, has had an opportunity to consult with and to be advised by legal counsel of his choice, fully 6 7 understands the terms of this Agreement, and enters into this Agreement freely, voluntarily and intending to be bound; (iii) He has been given a period of twenty-one (21) days to review and consider the terms of this Agreement, and the release contained herein, prior to its execution and that he may use as much of the twenty-one (21) day period as he desires; and (iv) He may, within seven (7) days after execution, revoke this Agreement. Revocation shall be made by delivering a written notice of revocation to the Vice President, Human Resources at the Company. For such revocation to be effective, written notice must be actually received by the Vice President, Human Resources at the Company no later than the close of business on the seventh (7th) day after Morris executes this Agreement. If Morris does exercise his right to revoke this Agreement, all of the terms and conditions of the Agreement shall be of no force and effect and the Company shall have no obligation to satisfy the terms or make any payment to Morris as set forth in Paragraph 2 of this Agreement. (d.) Morris will never file a lawsuit or other complaint asserting any claim that is released in this Paragraph 5. (e.) Morris and the Company acknowledge that his resignations as set forth above are by mutual agreement between the Company and Morris, and that Morris waives and releases any claim that he has or may have to employment or reemployment after his Early Retirement Date. (f.) For purposes of the above provisions of this Paragraph 5, the "Company" shall include its predecessors, subsidiaries, divisions, related or affiliated companies, officers, directors, stockholders, members, employees, heirs, successors, assigns, representatives, agents and counsel. 6. CONFIDENTIAL INFORMATION. (a.) Morris acknowledges and agrees that in the performance of his duties as an officer and employee of the Company he was brought into frequent contact with, had or may have had access to, and/or became informed of confidential and proprietary information of the Company and/or information which is a competitive asset of the Company (collectively, "Confidential Information") and the disclosure of which would be harmful to the interests of the Company or its subsidiaries. Confidential Information shall include, without limitation: (a) customer and distributor information such as names, addresses, sales histories, purchasing habits, credit status, pricing levels, etc., (b) certain prospective customer and distributor information lists, etc., (c) product and systems specifications, schematics, designs, concepts for new or improved products and services and other products and services data, (d) product and material costs, (e) suppliers' and prospective suppliers' names, addresses and contracts, (f) future corporate planning data, including, without limitation, data and information on possible mergers, acquisitions, strategic alliances, or any similar transactions, (g) production methods and equipment, (h) marketing strategies, (i) the Company's financial results and business condition, (j) any of the foregoing which belong to any other person or company but to which Morris has 7 8 had access by reason of his employment with the Company, and (k) any other information which constitutes a "trade secret" under federal or state law. Such Confidential Information is more fully described in Subparagraph (b) of this Paragraph 6. Morris acknowledges that the Confidential Information of the Company gained by Morris during his association with the Company was developed by and/or for the Company through substantial expenditure of time, effort and money and constitutes valuable and unique property of the Company. (b.) Morris will keep in strict confidence, and will not, directly or indirectly, at any time, disclose, furnish, disseminate, make available, use or suffer to be used in any manner any Confidential Information of the Company without limitation as to when or how Morris may have acquired such Confidential Information. Morris specifically acknowledges that Confidential Information includes any and all information, whether reduced to writing (or in a form from which information can be obtained, translated, or derived into reasonably usable form), or maintained in the mind or memory of Morris and whether compiled or created by the Company, which derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from the disclosure or use of such information, that reasonable efforts have been put forth by the Company to maintain the secrecy of confidential or proprietary or trade secret information, that such information is and will remain the sole property of the Company, and that any retention or use by Morris of confidential or proprietary or trade secret information after the termination of Morris' employment with and services for the Company shall constitute a misappropriation of the Company's Confidential Information. (c.) Morris will immediately return to the Company (to the extent he has not already returned), equipment, software, electronic files, computers, including any laptop, in good condition, all property of the Company, including, without limitation, property, documents and/or all other materials (including copies, reproductions, summaries and/or analyses) which constitute, refer or relate to Confidential Information of the Company. (d.) Morris further acknowledges that his obligation of confidentiality shall survive, regardless of any other breach of this Agreement or any other agreement, by any party hereto, until and unless such Confidential Information of the Company shall have become, through no fault of Morris, generally known to the public or Morris is required by law (after providing the Company with notice and opportunity to contest such requirement) to make disclosure. Morris' obligations under this Paragraph 6 are in addition to, and not in limitation or preemption of, all other obligations of confidentiality which Morris may have to the Company under general legal or equitable principles or statutes. 7. DISCLOSURE. From the date of this Agreement through the end of the Severance Period, Morris will communicate the contents of Paragraphs 3, 4, 6, 8, 9 and 11 of this Agreement to any person, firm, association, or corporation other than Diebold which he intends to be employed by, associated in business with, or represent. 8. BREACH. Morris acknowledges and agrees that the remedy at law available to the Company for breach by Morris of any of his obligations under Paragraphs 3, 4 and 6 of this Agreement would be inadequate and that damages flowing from such a breach would not readily be susceptible to being measured in monetary terms. Accordingly, Morris acknowledges, 8 9 consents and agrees that, in addition to any other rights or remedies which the Company may have at law, in equity or under this Agreement, upon adequate proof of Morris' violation of any provision of Paragraphs 3, 4 or 6 of this Agreement, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage. 9. CONTINUED AVAILABILITY AND COOPERATION. (a.) Morris shall cooperate fully with the Company and with the Company's counsel in connection with any present and future actual or threatened litigation or administrative proceeding involving the Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of Morris' employment by the Company. This cooperation by Morris shall include, but not be limited to: (i) making himself reasonably available for interviews and discussions with the Company's counsel as well as for depositions and trial testimony; (ii) if depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation therefor as and to the extent that the Company or the Company's counsel reasonably requests; (iii) refraining from impeding in any way the Company's prosecution or defense of such litigation or administrative proceeding; and (iv) cooperating fully in the development and presentation of the Company's prosecution or defense of such litigation or administrative proceeding. (b.) Morris shall be reimbursed by the Company for reasonable travel, lodging, telephone and similar expenses incurred in connection with such cooperation, which the Company shall reasonably endeavor to schedule at times not conflicting with the reasonable requirements of any employer of Morris, or with the requirements of any third party with whom Morris has a business relationship permitted hereunder that provides remuneration to Morris. Morris shall not unreasonably withhold his availability for such cooperation. (c.) Upon the Transition Date, Morris will update the Company as to the status of all pending matters for which he was responsible or otherwise involved. During the Severance Period, Morris will perform such services and provide such consultations as the Company shall reasonably request. (d.) The Company agrees, to the extent permitted by applicable law, to release Morris and indemnify and hold him harmless against all liability or loss, and against all claims or actions, arising from or connected with his past activities as an employee of the Company, including but not limited to those claims or actions based upon or arising out of negligent or wrongful acts to persons or property and the defense of any such claims or actions. 9 10 10. SUCCESSORS AND BINDING AGREEMENT. (a.) This Agreement shall be binding upon and inure to the benefit of the Company and any successor of or to the Company, including, without limitation, any persons acquiring, directly or indirectly, all or substantially all of the business and/or assets of the Company whether by purchase, merger, consolidation, reorganization, or otherwise (and such successor shall thereafter be deemed included in the definition of "the Company" for purposes of this Agreement), but shall not otherwise be assignable or delegable by the Company. (b.) This Agreement shall inure to the benefit of and be enforceable by Morris' personal or legal representatives, executors, administrators, successors, heirs, distributees, and/or legatees. (c.) This Agreement is personal in nature and none of the parties hereto shall, without the consent of the other parties, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Subparagraphs (a) and (b) of this Paragraph 10. (d.) This Agreement is intended to be for the exclusive benefit of the parties hereto, and except as provided in Subparagraphs (a) and (b) of this Paragraph 10, no third party shall have any rights hereunder. 11. NON-DISCLOSURE; STATEMENTS TO THIRD PARTIES. (a.) All provisions of this Agreement and the circumstances giving rise hereto are and shall remain confidential and shall not be disclosed to any person not a party hereto (other than (i) Morris' spouse, if any, (ii) each party's attorney, financial advisor and/or tax advisor to the extent necessary for such advisor to render appropriate legal, financial and tax advice, and (iii) persons or entities that fall within the scope of Paragraph 7 of this Agreement, but only to the extent required thereby), except as necessary to carry out the provisions of this Agreement, and except as may be required by law. Notwithstanding the foregoing, this Agreement may be filed with or provided to the Securities and Exchange Commission or any other governmental instrumentality or agency, including the Internal Revenue Service, if the Company deems such filing or provision to be necessary. (b.) Because the purpose of this Agreement is to settle amicably any and all potential disputes or claims among the parties, neither Morris nor the Company shall, directly or indirectly, make or cause to be made any statements to any third parties criticizing or disparaging the other or commenting on the character or business reputation of the other. Morris further hereby agrees not: (i) to comment to others concerning the status, plans or prospects of the business of the Company, or (ii) to engage in any act or omission that would be detrimental, financially or otherwise, to the Company, or that would subject the Company to public disrespect, scandal, or ridicule. For purposes of this Subparagraph 11.b., the "Company" shall mean Diebold, Incorporated and its directors, officers, predecessors, parents, subsidiaries, divisions, and related or affiliated companies. 10 11 12. NOTICES. For all purposes of this Agreement, all communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered, addressed to the Company (to the attention of the CEO) at its principal executive offices and to Morris at his principal residence, 1423 Harbor Drive, N.W., Canton, Ohio 44708, or to such other address as any party may have furnished to the other in writing and in accordance herewith. Notices of change of address shall be effective only upon receipt. 13. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by Morris and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied with respect to the subject matter hereof have been made by any of the parties that are not set forth expressly in this Agreement and every one of them (if, in fact, there have been any) is hereby terminated without liability or any other legal effect whatsoever. 14. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof and shall supersede all prior verbal or written agreements, covenants, communications, understandings, commitments, representations or warranties, whether oral or written, by any party hereto or any of its representatives pertaining to such subject matter. 15. GOVERNING LAW. Any dispute, controversy, or claim of whatever nature arising out of or relating to this Agreement or breach thereof shall be governed by and under the laws of the State of Ohio. The parties agree that any and all disputes, controversies, or claims of whatever nature arising out of or relating to this agreement or breach thereof shall be resolved by a court of general jurisdiction in the State of Ohio, and the parties hereby consent to the exclusive jurisdiction of such court in any action or proceeding arising under or brought to challenge, enforce, or interpret any of the terms of this Agreement. 16. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall nevertheless remain in full force and effect. 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement. 18. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings used herein are for convenience and are not part of this Agreement and shall not be used in construing it. 19. FURTHER ASSURANCES. Each party hereto shall execute such additional documents, and do such additional things, as may reasonably be requested by the other party to effectuate the purposes and provisions of this Agreement. 11 12 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first set forth above. DIEBOLD, INCORPORATED By: /s/ Robert W. Mahoney -------------------------------- Robert W. Mahoney Chairman of the Board Date: January 14, 2000 Witness: /s/ Terri L. Naiaue /s/ Gerald F. Morris -------------------- -------------------------------- Date: 14 Jan 2000 ------------------------------- 12 13 EXHIBIT A --------- Automated Teller Machines Teller Assist Devices Physical Security Devices (including, without limitation, Vault Doors and Chests) Electronics Funds Transfer Equipment Point of Sale Equipment and Systems Safe Deposit Boxes Access Control Devices and Systems Integrated Campus Access Management Devices and Systems Surveillance Equipment and Systems (including, without limitation, Surveillance Cameras) Remote Monitoring Systems (including, without limitation, Burglary, Robbery and Fire) Automated Monitoring, Dispensing and Reporting Devices and Systems for the Health Care Industry Transaction Processing Services and Systems Software Systems for the Above Service and Maintenance of the Above (including, without limitation, First and Second Line Service) The above list of products in this Exhibit A does not apply to general purpose computer hardware or peripherals such as mainframe computers, personal computers, printers, or application software such as spreadsheet, word processing and data base programs for general business or office use. 13 EX-10.17 5 EXHIBIT 10.17 1 Exhibit 10.17 Execution Copy DIEBOLD, INCORPORATED, THE SUBSIDIARY BORROWERS, ------------------------------ LOAN AGREEMENT dated as of December 1, 1999 ------------------------------ BANK ONE, MICHIGAN, as Agent and THE LENDERS PARTY HERETO ------------------------------ BANC ONE CAPITAL MARKETS, INC., as Arranger BANK OF AMERICA, N.A., as Syndication Agent 2 TABLE OF CONTENTS ARTICLE I - DEFINITIONS ........................................................ 1.1. Defined Terms ................................................ ARTICLE II- THE CREDITS ........................................................ 2.1. The Commitments .............................................. 2.2. Repayment of Loans; Evidence of Debt ......................... 2.3. Procedures for Borrowing ..................................... 2.4. Termination or Reduction of Revolving Credit Commitments ..... 2.5. Facility and Agent Fees ...................................... 2.6. Optional and Mandatory Principal Payments on All Loans 2.7. Conversion and Continuation of Outstanding Advances .......... 2.8. Interest Rates, Interest Payment Dates; Interest and Fee Basis ....................................... 2.9. Rates Applicable After Default ............................... 2.10. Pro Rata Payment, Method of Payment .......................... 2.11. Telephonic Notices ........................................... 2.12. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions ........................................ 2.13. Lending Installations ........................................ 2.14. Non-Receipt of Funds by the Agent ............................ 2.15. Facility Letters of Credit ................................... 2.16. Swing Loans .................................................. 2.17. Application of Payments with Respect to Defaulting Lenders ... 2.18 Guarantees ................................................... ARTICLE III - CHANGE IN CIRCUMSTANCES, TAXES ................................... 3.1. Yield Protection ............................................. 3.2. Changes in Capital Adequacy Regulations ...................... 3.3. Availability of Types of Advances ............................ 3.4. Funding Indemnification ...................................... 3.5. Lender Statements; Survival of Indemnity ..................... 3.6. Taxes ........................................................ 3.7. Substitution of Lender ....................................... ARTICLE IV - CONDITIONS PRECEDENT .............................................. 4.1. Closing Conditions ........................................... 4.2. Each Advance ................................................. ARTICLE V - REPRESENTATIONS AND WARRANTIES ..................................... 5.1. Corporate Existence and Standing ............................. 5.2. Authorization and Validity ................................... 5.3. No Conflict; Government Consent .............................. 5.4. Financial Statements ......................................... 5.5. Material Adverse Change ...................................... 5.6. Taxes ........................................................ 5.7. Litigation and Contingent Obligations ........................ ii 3 5.8. Subsidiaries ................................................. 5.9. ERISA ........................................................ 5.10. Accuracy of Information ...................................... 5.11. Regulations T, U and X ....................................... 5.12. Material Agreements .......................................... 5.13. Compliance With Laws ......................................... 5.14. Plan Assets; Prohibited Transactions ......................... 5.15. Environmental Matters ........................................ 5.16. Investment Company Act ....................................... 5.17. Public Utility Holding Company Act ........................... 5.18. Subsidiary Borrowers ......................................... 5.19. Insurance .................................................... 5.20. Ownership of Properties ...................................... 5.21 Labor Controversies .......................................... 5.22 Burdensome Obligations ....................................... 5.23 Year 2000 .................................................... ARTICLE VI- COVENANTS .......................................................... 6.1. Financial Reporting .......................................... 6.2. Use of Proceeds .............................................. 6.3. Notice of Default ............................................ 6.4. Properties; Conduct of Business .............................. 6.5. Taxes ........................................................ 6.6. Insurance .................................................... 6.7. Compliance with Laws ......................................... 6.8. Inspection ................................................... 6.9. Merger ....................................................... 6.10. Sale of Assets ............................................... 6.11. Investments .................................................. 6.12. Liens ........................................................ 6.13. Year 2000 .................................................... 6.14. Affiliates ................................................... 6.15. Indebtedness ................................................. 6.16. Limitation on Restrictions On Subsidiary Distributions ....... 6.17. Financial Contracts .......................................... 6.18. Total Debt to Capitalization Ratio ........................... 6.19. Interest Coverage Ratio ...................................... ARTICLE VII- DEFAULTS .......................................................... ARTICLE VIII- ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ................... 8.1. Acceleration ................................................. 8.2. Amendments ................................................... 8.3. Preservation of Rights ....................................... ARTICLE IX - GUARANTEE ......................................................... 9.1. Guarantee .................................................... 9.2. No Subrogation ............................................... 9.3. Amendments, etc. with respect to the Obligations; Waiver of Rights ............................................. iii 4 9.4. Guarantee Absolute and Unconditional ......................... 9.5. Reinstatement ................................................ 9.6. Payments ..................................................... ARTICLE X - GENERAL PROVISIONS ................................................. 10.1. Survival of Representations .................................. 10.2. Governmental Regulation ...................................... 10.3. Taxes ........................................................ 10.4. Headings ..................................................... 10.5. Entire Agreement ............................................. 10.6. Several Obligations; Benefits of this Agreement .............. 10.7. Expenses; Indemnification .................................... 10.8. Numbers of Documents ......................................... 10.9. Accounting ................................................... 10.10. Severability of Provisions ................................... 10.11. Nonliability of Lenders ...................................... 10.12. Confidentiality .............................................. 10.13. Nonreliance .................................................. ARTICLE XI- THE AGENT; ETC. .................................................... 11.1. Appointment; Nature of Relationship .......................... 11.2. Powers ....................................................... 11.3. General Immunity ............................................. 11.4. No Responsibility for Loans, Recitals, etc. .................. 11.5. Action on Instructions of Lenders ............................ 11.6. Employment of Agents and Counsel ............................. 11.7. Reliance on Documents; Counsel ............................... 11.8. Agent's Reimbursement and Indemnification .................... 11.9. Notice of Default ............................................ 11.10. Rights as a Lender ........................................... 11.11. Lender Credit Decision ....................................... 11.12. Successor Agents ............................................. 11.13 Right to Indemnity ........................................... 11.14 Delegation to Affiliates ..................................... ARTICLE XII- SETOFF; ADJUSTMENTS AMONG LENDERS ................................. 12.1. Setoff ....................................................... 12.2. Ratable Payments ............................................. ARTICLE XIII - BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ............... 13.1. Successors and Assigns ....................................... 13.2. Participations ............................................... 13.2.1 Permitted Participants; Effect ...................... 13.2.2. Voting Rights ....................................... 13.2.3. Benefit of Setoff ................................... 13.3. Assignments .................................................. 13.3.1. Permitted Assignments ............................... 13.3.2. Effect; Effective Date .............................. 13.4. Dissemination of Information ................................. 13.5. Tax Treatment ................................................ iv 5 ARTICLE XIV - NOTICES .......................................................... 14.1. Notices ...................................................... 14.2. Change of Address ............................................ ARTICLE XV - COUNTERPARTS ...................................................... ARTICLE XVI- CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL, JUDGMENT CURRENCY .................................. 16.1. Choice of Law ................................................ 16.2. Waiver of Jury Trial ......................................... 16.3. Submission to Jurisdiction; Waivers .......................... 16.4. Acknowledgments .............................................. 16.5. Power of Attorney ............................................ 16.6. Judgment ..................................................... EXHIBITS - -------- EXHIBIT A - PRICING SCHEDULE EXHIBIT B - DOMESTIC SUBSIDIARY BORROWER OPINION OF COUNSEL EXHIBIT C - FOREIGN SUBSIDIARY BORROWER OPINION OF COUNSEL EXHIBIT D - GUARANTY EXHIBIT E - JOINDER AGREEMENT EXHIBIT F-1 - REVOLVING CREDIT NOTE EXHIBIT F-2 - TERM LOAN NOTE EXHIBIT G - OPINION OF COUNSEL EXHIBIT H - WRITTEN TRANSFER INSTRUCTIONS EXHIBIT I - COMPLIANCE CERTIFICATE EXHIBIT J - ASSIGNMENT AGREEMENT v 6 SCHEDULES - --------- SCHEDULE 1.1(a) - COMMITMENTS SCHEDULE 1.1(b) - SUBSIDIARY BORROWERS SCHEDULE 5.7 - LITIGATION SCHEDULE 5.8 - SUBSIDIARIES SCHEDULE 6.12 - LIENS vi 7 THIS LOAN AGREEMENT (this "Agreement"), dated as of December 1, 1999, among DIEBOLD, INCORPORATED, an Ohio corporation (the "COMPANY"), the SUBSIDIARY BORROWERS (as hereinafter defined) from time to time parties hereto (together with the Company, the "BORROWERS"), the lenders from time to time parties hereto (the "LENDERS"), and BANK ONE, MICHIGAN, a Michigan banking corporation, as Agent. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows: ARTICLE I DEFiNITIONS ----------- 1.1 DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings: "ACQUISITION" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Company or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any Person or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the Voting Stock of any Person. "ADVANCE" means a borrowing hereunder (or conversion or continuation thereof) consisting of the aggregate amount of the several Loans or Facility Letters of Credit of the same Type and, in the case of Eurocurrency Loans, in the same Agreed Currency and for the same Interest Period, and further, in the case of Eurodollar Loans, for the same Interest Period, made by the Lenders on the same Borrowing Date (or converted or continued by the Lenders on the same date of conversion or continuation). "AFFILIATE" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of Voting Stock of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of Capital Stock, by contract or otherwise. "AGENT" means Bank One in its capacity as contractual representative of the Lenders pursuant to Article XI, and not in its individual capacity as a Lender, and any successor Agent appointed pursuant to Article XI. "AGGREGATE COMMITMENTS" means the aggregate amount, stated in U.S. Dollars, of the Commitments of all Lenders. "AGGREGATE EURO REVOLVING CREDIT COMMITMENTS" means the aggregate amount, stated in Euro, of the Euro Revolving Credit Commitments of all of the Euro Revolving Credit Lenders. "AGGREGATE EURO REVOLVING CREDIT OUTSTANDINGS" means as at any date of determination with respect to any Euro Revolving Credit Lender, the sum of the aggregate unpaid principal amount of such Lender's Euro Revolving Credit Loans on such date and the amount of such Lender's Pro Rata Share of 8 the Euro Facility Letter of Credit Obligations and Swing Loans to the Foreign Subsidiary Borrowers on such date, both stated in Euro based on the Euro Equivalent Amount. "AGGREGATE REVOLVING CREDIT COMMITMENTS" means, on any date of determination, the U.S. Dollar Equivalent on such date of the aggregate amount of the Revolving Credit Commitments of all of the Revolving Credit Lenders. "AGGREGATE EURO TERM LOAN COMMITMENTS" means the aggregate amount, stated in Euros, of Euro Term Loan Commitments of all the Euro Term Loan Lenders, as reduced from time to time pursuant to principal payments on the Euro Term Loans. "AGGREGATE EURO TERM LOAN OUTSTANDINGS" means as at any date of determination with respect to any Lender, the sum of the aggregate unpaid principal amount, stated in Euros based on the Euro Equivalent Amount, of such Lender's portion of the Euro Term Loans on such date. "AGGREGATE REVOLVING CREDIT OUTSTANDINGS" means as at any date of determination with respect to any Revolving Credit Lender, the sum of the U. S. Dollar Equivalent on such date of the aggregate unpaid principal amount of such Lender's Revolving Credit Loans on such date and the U. S. Dollar Equivalent on such date of the amount of such Lender's Pro Rata Share of the Facility Letter of Credit Obligations and Swing Loans on such date. "AGGREGATE TERM LOAN COMMITMENTS" means the aggregate amount, stated in U.S. Dollars, of Term Loan Commitments of all the Term Loan Lenders, as reduced from time to time pursuant to principal payments on the Term Loans. "AGGREGATE TERM LOAN OUTSTANDINGS" means as at any date of determination with respect to any Lender, the sum of the aggregate unpaid principal amount, stated in U.S. Dollars, of such Lender's portion of the Term Loans on such date. "AGGREGATE TOTAL OUTSTANDINGS" means as at any date of determination with respect to any Lender, the U.S. Dollar Equivalent of an amount equal to (a) the Aggregate Revolving Credit Outstandings of such Lender on such date or (b) the Aggregate Term Loan Outstandings of such Lender on such date, as the case may be. "AGGREGATE U.S. REVOLVING CREDIT COMMITMENTS" means the aggregate amount in U.S. Dollars of the U.S. Revolving Credit Commitments of all of the Revolving Credit Lenders. "AGGREGATE U.S. REVOLVING CREDIT OUTSTANDINGS" means as at any date of determination with respect to any Revolving Credit Lender, the sum of the aggregate unpaid principal amount of such Lender's U.S. Revolving Credit Loans on such date and the amount of such Lender's Pro Rata Share of the U.S. Facility Letter of Credit Obligations and Swing Loans to the Company on such date, both stated in U.S. Dollars. "AGGREGATE U.S. TERM LOAN COMMITMENTS" means the aggregate amount, stated in U.S. Dollars, of U.S. Term Loan Commitments of all the U.S. Term Loan Lenders, as reduced from time to time pursuant to principal payments on the U.S. Term Loans. "AGGREGATE U.S. TERM LOAN OUTSTANDINGS" means as at any date of determination with respect to any Lender, the sum of the aggregate unpaid principal amount, stated in U.S. Dollars, of such Lender's portion of the U.S. Term Loans on such date. 2 9 "AGREED CURRENCIES" means (i) Dollars, (ii) so long as it remains an Eligible Currency, the Euro, and (iii) any other Eligible Currency which the Borrowers request the Agent to include as an Agreed Currency hereunder and which is acceptable to all of the Euro Lenders and the Agent. "AGREEMENT" means this loan agreement, as it may be amended or modified and in effect from time to time. "AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting principles as in effect on the Effective Date in the United States, applied in a manner consistent with the audited consolidated financial statements of the Company and its Subsidiaries for the fiscal year ending December 31, 1998; PROVIDED, HOWEVER, that, if generally accepted accounting principles in the United States of America shall require the Company to adopt other principles, then the financial statements required to be delivered hereunder may be prepared on the basis of such other principles but when delivered shall also be accompanied by a reconciliation, reasonably satisfactory in scope and detail to the Agent, to permit the review of such financial statements as if they were prepared in accordance with Agreement Accounting Principles. "AGREEMENT CURRENCY" is defined in Section 16.6. "ALTERNATE BASE RATE" means, for any day, a rate of interest per annum equal to the higher of (a) the Prime Rate for such day or (b) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "APPLICABLE MARGIN" means the amounts set forth in the Pricing Schedule on Exhibit A hereto. "ARRANGER" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors. "ARTICLE" means an article of this Agreement unless another document is specifically referenced. "ASSIGNMENT" is defined in Section 13.3.1. "AUTHORIZED OFFICER" means, with respect to any Borrower, any of the president, the chief executive officer, any Designated Financial Officer or the secretary of the Company or any other Person designated by any of the foregoing in writing to the Agent from time to time to act on behalf of any Borrower (or, if so designated, a specific Borrower) which designation has not been rescinded in writing, in each case acting singly. "AVAILABLE FOREIGN CURRENCIES" means the Agreed Currencies other than Dollars. "BANK ONE" means Bank One, Michigan, a Michigan banking corporation. "BORROWERS" is defined in the preamble hereto. "BORROWING DATE" means any Business Day specified in a notice pursuant to Section 2.3, 2.7, 2.15 or 2.16 as a date on which a Borrower requests the Lenders to make Loans hereunder or, with respect to the issuance of any Facility Letter of Credit, the date the applicable Issuer issues such Facility Letter of Credit. "BUSINESS DAY" means (i) with respect to any borrowing, payment or rate selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on which banks generally are open in 3 10 Detroit, Chicago, London and New York for the conduct of substantially all of their commercial lending activities and on which dealings in Dollars and the other Agreed Currencies are carried on in the London interbank market (and, if the Advances which are the subject of such borrowing, payment or rate selection are denominated in Euro, a day upon which such clearing system as is determined by the Agent to be suitable for clearing or settlement of the Euro is open for business), and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Detroit, Chicago, London and New York for the conduct of substantially all of their commercial lending activities. "CAPITAL STOCK" means (i) in the case of any corporation, all capital stock and any securities exchangeable for or convertible into capital stock and any warrants, rights or other options to purchase or otherwise acquire capital stock or such securities or any other form of equity securities, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CAPITALIZED LEASE" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CASH EQUIVALENTS" means (i) securities issued directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), (ii) Dollar denominated time deposits, certificates of deposit and bankers' acceptances of (x) any Lender or (y) any bank whose short-term commercial paper rating from S&P is at least investment grade or the equivalent thereof (any such bank, an "Approved Lender"), (iii) commercial paper issued by any Lender or Approved Lender or by the parent company of any Lender or Approved Lender and commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least investment grade or the equivalent thereof, (iv) investment grade bonds and preferred stock of investment grade companies, including but not limited to municipal bonds, corporate bonds, treasury bonds, etc., (v) foreign Investments denominated in an Eligible Currency that are of similar type of, and that have a rating comparable to, any of the Investments referred to in the preceding clauses (i) through (iv) above, (vi) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (i) through (v) above and (vii) other securities and financial instruments which offer a security comparable to those listed above. "CHANGE OF CONTROL" means (i) a majority of the members of the Board of Directors of Company shall not be Continuing Directors; or (ii) any Person including a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) which includes such Person, shall purchase or otherwise acquire, directly or indirectly, beneficial ownership of Voting Stock of Company and, as a result of such purchase or acquisition, any such Person (together with its Affiliates), shall directly or indirectly beneficially own in the aggregate Voting Stock representing more than 30% of the combined voting power of Company's Voting Stock. "CODE" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. 4 11 "COMMITMENT" means, for each Lender, such Lender's U.S. Revolving Credit Commitment, Euro Revolving Credit Commitment, U.S. Term Loan Commitment and Euro Term Loan Commitment, and "Commitments" means the aggregate of all of the Lenders' Commitments. "COMPANY" is defined in the preamble hereto. "COMPLIANCE CERTIFICATE" is defined in Section 6.1(iii). "CONDEMNATION" is defined in Section 7.8. "CONFIDENTIAL INFORMATION" is defined in Section 10.11. "CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guaranties, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement or take-or-pay contract. The amount of any Contingent Obligation shall be equal to the amount of the obligation that is so guarantied or supported that is actually outstanding or otherwise due and payable from time to time, if a fixed and determinable amount or if there is no fixed or determinable amount, either (x) if a maximum amount is guaranteed, the maximum amount or (y) if there is no maximum amount the amount of the obligation that is so guarantied or supported. "CONTINUING DIRECTORS" means individuals who at the beginning of any period of two consecutive calendar years constituted the board of directors of the Company, together with any new directors whose election by such board of directors or whose nomination for election was approved by a vote of at least two-thirds of the members of such board of directors then still in office who either were members of such board of directors at the beginning of such period or whose election or nomination for election was previously so approved. "CONTROLLED GROUP" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any of its Subsidiaries, are treated as a single employer under Sections 414(b) or (c) of the Code. "CONVERSION/CONTINUATION NOTICE" is defined in Section 2.7.1. "DEFAULT" means an event described in Article VII. "DEFAULTING LENDER" means any Lender that (a) on any Borrowing Date fails to make available to the Agent such Lender's Loans required to be made to a Borrower on such Borrowing Date or (b) shall not have made a payment to the Issuer pursuant to Section 2.15.5 or the Agent pursuant to Section 2.16. Once a Lender becomes a Defaulting Lender, such Lender shall continue as a Defaulting Lender until such time as such Defaulting Lender makes available to the Agent the amount of such Defaulting Lender's Loans and/or to an Issuer such payments requested by an Issuer together with all other amounts required to be paid to the Agent and/or the Issuers pursuant to this Agreement. "DESIGNATED FINANCIAL OFFICER" means, with respect to any Borrower, its chief financial officer, director of treasury services, treasurer, assistant treasurer, or similar position. 5 12 "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part. "DOLLARS", "U.S. DOLLARS" and "$" means dollars in lawful currency of the United States of America. "DOLLAR EQUIVALENT AMOUNT" of any currency at any date shall mean (i) the amount of such currency if such currency is in Dollars or (ii) the Equivalent Amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such currency on the London market at 11:00 a.m., London time, on such date or as most recently determined by the Agent. "DOMESTIC SUBSIDIARY" means each present and future Subsidiary of the Company which is not a Foreign Subsidiary. "DOMESTIC SUBSIDIARY BORROWER" means each Domestic Subsidiary listed as a Domestic Subsidiary Borrower in Schedule 1.1(b) as amended from time to time in accordance with Section 8.2.2. "DOMESTIC SUBSIDIARY OPINION" means with respect to any Domestic Subsidiary Borrower, a legal opinion of counsel to such Domestic Subsidiary Borrower addressed to the Agent and the Lenders concluding that such Domestic Subsidiary Borrower and the Loan Documents to which it is a party substantially comply with the matters listed on Exhibit B, with such assumptions, qualifications and deviations therefrom as the Agent shall approve. "EBIT" means, for any period, the sum of (a) the consolidated net income (or loss) of the Company and its Subsidiaries for such period determined in conformity with Agreement Accounting Principles, PLUS (b)to the extent deducted in determining such net income, income taxes, and Interest Expense, and any extraordinary and non-recurring losses and non-cash charges and related tax effects in accordance with Agreement Accounting Principles, MINUS (c) to the extent included in determining such net income, each of the following, without duplication: (i) the income of any Person (other than a Wholly Owned Subsidiary of the Company) in which any Person other than the Company or any of its Subsidiaries has a joint interest or a partnership interest or other ownership interest, except to the extent of the amount of dividends or other distributions actually paid to the Company or any of its Subsidiaries by such Person during such period, (ii) the income of any Person accrued prior to the date it becomes a Subsidiary of the Company or is merged into or consolidated with the Company or any of its Subsidiaries or that Person's assets are acquired by the Company or any of its Subsidiaries, (iii) gains from the sale, exchange, transfer or other disposition of property or assets not in the ordinary course of business of the Company and its Subsidiaries, and related tax effects in accordance with Agreement Accounting Principles, (iv) any other extraordinary or non-recurring gains or other income not from the continuing operations of the Company or its Subsidiaries, and related tax effects in accordance with Agreement Accounting Principles and (v) the income of any Subsidiary of the Company (other than Subsidiaries which are not material in the aggregate as agreed upon between the Company and the Agent) to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. "EFFECTIVE DATE" means the date on which the conditions precedent set forth in Sections 4.1 and 4.2 are satisfied. 6 13 "ELIGIBLE CURRENCY" means any currency other than Dollars (i) that is readily available, (ii) that is freely traded, (iii) in which deposits are customarily offered to banks in the London interbank market, (iv) which is convertible into Dollars in the international interbank market and (v) as to which a Dollar Equivalent Amount may be readily calculated. If, after the designation by the Lenders of any currency as an Agreed Currency, (x) currency control or other exchange regulations are imposed in the country in which such currency is issued with the result that different types of such currency are introduced, (y) such currency is, in the determination of the Agent, no longer readily available or freely traded or (z) in the determination of the Agent, a Dollar Equivalent Amount of such currency is not readily calculable, the Agent shall promptly notify the Lenders and the Company, and such currency shall no longer be an Agreed Currency until such time as all of the Lenders agree to reinstate such currency as an Agreed Currency and promptly, but in any event within five Business Days of receipt of such notice from the Agent, the Borrower shall repay all Loans in such affected currency or convert such Loans into Loans in Dollars or another Agreed Currency, subject to the other terms set forth in Article II. "ENVIRONMENTAL LAWS" means, with respect to the Company or any of its Subsidiaries, any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (a) the protection of the environment, (b) effect of the environment on human health, (c) emissions, discharges or releases of Hazardous Substances into surface water, ground water or land, or (d) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances or the clean-up or other remediation thereof, in each case, applicable to the Company's or any of its Subsidiary's operations or Property. "EQUIVALENT AMOUNT" of any currency with respect to any amount of any other currency at any date means the equivalent in such currency of such amount of such other currency, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such currency at 11:00 a.m., London time, on the date on or as of which such amount is to be determined. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder. "EURO" and/or "EUR" means the euro referred to in Council Regulation (EC) No. 1103/97 dated June 17, 1997 passed by the Council of the European Union, or, if different, the then lawful currency of the member states of the European Union that participate in the third stage of Economic and Monetary Union. "EURO EQUIVALENT AMOUNT" of any currency at any date shall mean (i) the amount of such currency if such currency is in Euros or (ii) the Equivalent Amount of Euros if such currency is any currency other than Euros, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such currency on the London market at 11:00 a.m., London time, on such date or as most recently determined in good faith by the Agent. "EURO FACILITY LETTER OF CREDIT" means any Letter of Credit for the account of a Foreign Subsidiary Borrower. "EURO FACILITY LETTER OF CREDIT OBLIGATIONS" means Facility Letter of Credit Obligations with respect to Euro Facility Letters of Credit. "EURO LENDER" means any Euro Revolving Credit Lender or Euro Term Loan Lender. "EURO LOAN" means any Euro Revolving Credit Loan or Euro Term Loan. 7 14 "EURO REVOLVING CREDIT COMMITMENT" means, as to any Lender at any time, its obligation to make Revolving Credit Loans to the Foreign Subsidiary Borrowers under Section 2.1.2 in an aggregate Euro Equivalent Amount not to exceed at any time outstanding the Euro amount set forth opposite such Lender's name in Schedule 1.1(a) under the heading "Euro Revolving Credit Commitment" or as otherwise established pursuant to Section 13.3, as such amount may be reduced from time to time pursuant to Section 2.4, 13.3 and the other applicable provisions hereof. "EURO REVOLVING CREDIT LENDER" means any Lender which has a Euro Revolving Credit Commitment. "EURO REVOLVING CREDIT LOANS" means Revolving Credit Loans made to the Foreign Subsidiary Borrowers under Section 2.1.2. "EURO TERM LOAN" means, with respect to a Lender, such Lender's portion of the term loan made in Available Foreign Currencies pursuant to Section 2.1.4. "EURO TERM LOAN COMMITMENT" means as to any Lender at any time, its obligation to make the Euro Term Loan to the Company in an aggregate Euro Equivalent Amount not to exceed at any time outstanding the aggregate outstanding principal amount of its respective Euro Revolving Credit Loans of such Lender outstanding on the Facility Termination Date or as otherwise established pursuant to Section 13.3, as such amount may be reduced from time to time pursuant to Section 13.3 and the other applicable provisions hereof. "EURO TERM LOAN LENDERS" means those Lenders which have a Euro Term Loan Commitment or, if such Commitments have been terminated, have an outstanding Euro Term Loan. "EUROCURRENCY ADVANCE" means a Multicurrency Advance which bears interest at the Eurocurrency Rate. "EUROCURRENCY LOAN" means a Multicurrency Loan which bears interest at the Eurocurrency Rate. "EUROCURRENCY RATE" means, with respect to a Eurocurrency Loan for the relevant Interest Period, the sum of (a) the Eurocurrency Reference Rate applicable to such Interest Period, plus (b) the amount of all reserves, costs or similar requirements relating to the funding of the relevant Available Foreign Currency, as determined by the Agent, plus (c) the Applicable Margin. "EUROCURRENCY REFERENCE RATE" means, with respect to each Interest Period for a Multicurrency Loan: (a) the rate per annum quoted at or about 11:00 a.m. (London time) on the Quotation Date for such period on that page of the Bloombergs' or Reuters' Screen, as determined by the Agent, which displays British Bankers Association Interest Settlement Rates for deposits in the relevant Available Foreign Currency for such period or, if such page or service shall cease to be available, such other page or such other service (as the case may be) for the purpose of displaying British Bankers Association Interest Settlement Rates for such currency as the Agent, in its discretion, shall select. (b) If no such rate is displayed for the relevant currency and the relevant period and there is no Available Foreign Currency alternative service on which two or more such quotations for the Available Foreign Currency are displayed, "Eurocurrency Reference Rate" will 8 15 be the rate at which deposits in the Available Foreign Currency of that amount are offered by the Agent for that period to prime banks in the London inter bank market at or about 11:00 a.m. (London time) on the Quotation Date for such period. "EURODOLLAR ADVANCE" means an Advance which bears interest at a Eurodollar Rate. "EURODOLLAR BASE RATE" means, with respect to a Eurodollar Loan for the relevant Interest Period, the rate determined by the Agent to be the rate at which the Agent offers to place deposits in Dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity approximately equal to such Interest Period. "EURODOLLAR LOAN" means a Loan which bears interest at a Eurodollar Rate. "EURODOLLAR RATE" means, with respect to a Eurodollar Loan for the relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (b) the Applicable Margin. The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not such a multiple. "EXCHANGE RATE" means with respect to any non-U.S. Dollar currency on any date, the rate at which such currency may be exchanged into U.S. Dollars, as set forth on such date on the relevant Bloomberg currency page at or about 11:00 a.m., Detroit time. In the event that such rate does not appear on any Bloomberg currency page, the "Exchange Rate" with respect to such non-U.S. Dollar currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Agent and the Company or, in the absence of such agreement, such "Exchange Rate" shall instead be the Agent's spot rate of exchange in the interbank market where its foreign currency exchange operations in respect of such non-U.S. Dollar currency are then being conducted, at or about 10:00 a.m., local time, on such date for the purchase of U.S. Dollars with such non-U.S. Dollar currency, for delivery three Business Days later; PROVIDED, that if at the time of any such determination, no such spot rate can reasonably be quoted, the Agent may use any reasonable method as it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error. "FACILITY LETTER OF CREDIT" means a Letter of Credit issued by an Issuer pursuant to Section 2.15. "FACILITY LETTER OF CREDIT OBLIGATIONS" means, as at the time of determination thereof, all liabilities, whether actual or contingent, of a Borrower with respect to the Facility Letters of Credit, including the sum of (a) Reimbursement Obligations and, without duplication, (b) the aggregate undrawn face amount of the outstanding Facility Letters of Credit. "FACILITY TERMINATION DATE" means the earlier to occur of (a) November 29, 2000 or (b) the date on which the Revolving Credit Commitments are terminated pursuant to Article VIII. "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Detroit time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion or, when used in 9 16 connection with any Advance denominated in any Eligible Currency, "Federal Funds Effective Rate" means the correlative rate of interest with respect to such Eligible Currency as determined by the Agent in its sole discretion for such day. "FINANCIAL CONTRACT" of a Person means (a) any exchange-traded or over-the-counter futures, forward, swap or option contract or other financial instrument with similar characteristics or (b) any Rate Hedging Agreement. "FIXED RATE" means the Eurodollar Rate or the Eurocurrency Rate. "FIXED RATE ADVANCE" means an Advance which bears interest at a Fixed Rate. "FIXED RATE LOAN" means a Loan which bears interest at a Fixed Rate. "FLOATING RATE" means, for any day, a rate per annum (based on a year of 365 or 366 days as appropriate) equal to the sum of (a) the Applicable Margin plus (b) the Alternate Base Rate for such day, in each case changing when and as the Alternate Base Rate changes. "FLOATING RATE ADVANCE" means an Advance which bears interest at the Floating Rate. "FLOATING RATE LOAN" means a Loan which bears interest at the Floating Rate. "FOREIGN SUBSIDIARY" means each Subsidiary organized under the laws of a jurisdiction outside of the United States. "FOREIGN SUBSIDIARY BORROWER" means each Foreign Subsidiary listed as a Foreign Subsidiary Borrower in Schedule 1.1(b) as amended from time to time in accordance with Section 8.2.2. "FOREIGN SUBSIDIARY OPINION" means with respect to any Foreign Subsidiary Borrower, a legal opinion of counsel to such Foreign Subsidiary Borrower addressed to the Agent and the Lenders concluding that such Foreign Subsidiary Borrower and the Loan Documents to which it is a party substantially comply with the matters listed on Exhibit C, with such assumptions, qualifications and deviations therefrom as the Agent shall approve. "GOVERNMENTAL AUTHORITY" means any nation or government, any state, or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "GUARANTOR" means (a) with respect to the Obligations of the Subsidiary Borrowers, the Company, each present and future Domestic Subsidiary of the Company required to execute a Guaranty pursuant to Section 2.18 and, additionally with respect only to the Obligations of each Foreign Subsidiary Borrower, each parent corporation or other owner and Subsidiary of such Foreign Subsidiary Borrower (unless such parent corporation or other owner or Subsidiary Borrower is prohibited from doing so by law or a material adverse tax consequence would result therefrom) required to execute a Guaranty pursuant to Section 2.18, and (b) with respect to the Company, each present and future Domestic Subsidiary of the Company required to execute a Guaranty pursuant to Section 2.18 and any other Person executing a Guaranty at any time. "GUARANTY" means, with respect to the Company, the guarantee contained in Article IX and, with respect to any other Guarantor, each guaranty agreement in substantially the form of Exhibit D hereto or, in the case of Foreign Subsidiaries that are Guarantors, such other form agreed to by the Agent and the 10 17 Company duly executed and delivered by each such Guarantor to the Agent, including any amendment, modification, renewal or replacement of such guaranty agreement. "HAZARDOUS SUBSTANCES" means any material or substance: (1) which is or becomes defined as a hazardous substance, pollutant, or contaminant, pursuant to the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") (42 USC Section 9601 et. seq.) as amended and regulations promulgated under it; (2) containing gasoline, oil, diesel fuel or other petroleum products; (3) which is or becomes defined as hazardous waste pursuant to the Resource Conservation and Recovery Act ("RCRA") (42 USC Section 6901 et. seq.) as amended and regulations promulgated under it; (4) containing polychlorinated biphenyls (PCBs); (5) containing asbestos; (6) which is radioactive; (7) the presence of which requires investigation or remediation under any Environmental Law; (8) which is or becomes defined or identified as a hazardous waste, hazardous substance, hazardous or toxic chemical, pollutant, contaminant, or biologically Hazardous Substance under any Environmental Law. "INDEBTEDNESS" of a Person means, without duplication, such Person's (a) obligations for borrowed money or similar obligations, (b) obligations representing the deferred purchase price of Property or services (other than accounts payable and/or accrued expenses and commercial Letters of Credit with respect to the foregoing, in each case arising in the ordinary course of such Person's business payable in accordance with customary practices), (c) obligations, whether or not assumed, secured by Liens on property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or other instruments (other than Financial Contracts), to the extent of the amounts actually borrowed, due, payable or drawn, as the case may be, (e) Capitalized Lease Obligations, (f) all obligations in respect of Letters of Credit (other than commercial Letters of Credit referenced in clause (b) above), whether drawn or undrawn, contingent or otherwise, (g) any other obligation for borrowed money or other financial accommodation which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person, (h) Off-Balance Sheet Liabilities, and (i) Contingent Obligations with respect to any of the foregoing. "INTEREST COVERAGE RATIO" means, as of the end of any fiscal quarter, the ratio of (a) EBIT to (b) Interest Expense, in each case calculated for the four consecutive fiscal quarters then ending, on a consolidated basis for the Company and its Subsidiaries in accordance with Agreement Accounting Principles. "INTEREST EXPENSE" means, with respect to any period, the aggregate of all interest expense reported by the Company and its Subsidiaries in accordance with Agreement Accounting Principles during such period, net of any cash interest income received by the Company and its Subsidiaries during such period from Investments. As used in this definition, the term "interest" shall include, without limitation, all interest, fees and costs payable with respect to the obligations under this Agreement (other than fees and costs which may be capitalized as transaction costs in accordance with Agreement Accounting Principles), any discount in respect of sales of accounts receivable and/or related contract rights and the interest portion of Capitalized Lease payments during such period, all as determined in accordance with Agreement Accounting Principles. "INTEREST PERIOD" means with respect to any Fixed Rate Loan: (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Fixed Rate Loan and ending one, two, three, or six months thereafter, or such other period as agreed upon by the Lenders making such Fixed Rate Loan, as selected by the relevant Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and 11 18 (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Fixed Rate Loan and ending one, two, three or six months thereafter, or such other period as agreed upon by the Lenders, as selected by the relevant Borrower by irrevocable notice to the Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; PROVIDED that, all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period pertaining to a Fixed Rate Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period applicable to a Fixed Rate Loan that would otherwise extend beyond, with respect to any Term Loan, the Maturity Date, or, with respect to any other Loan, the Facility Termination Date, shall end on the Maturity Date or the Facility Termination Date, as the case may be; and (iii) any Interest Period pertaining to a Fixed Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month. "INVESTMENT" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable and/or accrued expenses arising in the ordinary course of business payable in accordance with customary practices and loans to employees in the ordinary course of business) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit accounts and certificates of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person (other than Financial Contracts). "ISSUERS" or "ISSUER" means (i) Bank One, and (ii) any Lending Installation of Bank One as Bank One may determine to be the issuer for any Facility Letter of Credit. "JOINDER AGREEMENT" means the Joinder Agreement to be entered into by each Subsidiary Borrower subsequent to the date hereof pursuant to Section 8.2.2, substantially in the form of Exhibit E hereto. "JUDGMENT CURRENCY" is defined in Section 16.6. "LENDERS" means the lending institutions listed on the signature pages of this Agreement or otherwise party hereto as a Lender from time to time, and their respective successors and, to the extent permitted by Section 13.3, assigns. "LENDING INSTALLATION" means, with respect to a Lender or the Agent, any office, branch, subsidiary or Affiliate of such Lender or the Agent, as the case may be. 12 19 "LETTER OF CREDIT" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. "LETTER OF CREDIT COLLATERAL ACCOUNT" is defined in Section 2.15.7. "LIEN" means any lien (statutory or other), mortgage, pledge, hypothecation, fixed or floating charge, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "LOAN" means, with respect to a Lender, such Lender's Revolving Credit Loans and portion of the Term Loans, and, with respect to the Agent, Swing Loans. "LOAN DOCUMENTS" means this Agreement, the Notes, any Rate Hedging Agreements with any Lenders or their Affiliates and the other agreements, certificates and other documents contemplated hereby or executed or delivered pursuant hereto by any Borrower or any Guarantor at any time with or in favor of the Agent or any Lender. "LONDON BANKING DAY" means any day on which banks in London are open for substantially all of their banking business, including dealings in foreign currency and exchange. "MARGIN STOCK" means "margin stock" as defined in Regulations U or X or "marginable OTC stock" or "foreign margin stock" within the meaning of Regulation T. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the business, Property, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Borrowers and Guarantors, taken as a whole, to pay the Obligations under the Loan Documents, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders thereunder. "MATURITY DATE" means the earlier to occur of (a) November 29, 2002 or (b) the date on which the maturity of the Term Loans are accelerated pursuant to Article VIII. "MOODY'S" means Moody's Investors Service, Inc. "MULTICURRENCY ADVANCE" means a borrowing hereunder (or continuation or a conversion thereof) consisting of the several Multicurrency Loans made on the same Borrowing Date (or date of conversion or continuation) by the Lenders to a Borrower of the same Type, in the same Available Foreign Currency and for the same Interest Period. "MULTICURRENCY LOANS" means, Euro Loans and any Swing Loans made to the Foreign Subsidiary Borrowers. "MULTIEMPLOYER PLAN" means a plan defined in Section 4001(a)(3) of ERISA to which the Company or any member of the Controlled Group has an obligation to contribute. "NET WORTH" means, as of any date, the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and retained earnings of the Company and its Subsidiaries on a consolidated basis, all as determined in accordance with Agreement Accounting Principles. 13 20 "NON-CONFIDENTIAL INFORMATION" is defined in Section 10.11. "NON-EXCLUDED TAXES" is defined in Section 3.6.1. "NOTES" means the collective reference to the Revolving Credit Notes and the Term Notes. "NOTICE OF ASSIGNMENT" is defined in Section 13.3.2. "OBLIGATIONS" means collectively, the unpaid principal of and interest on the Loans, all obligations and liabilities pursuant to the Facility Letters of Credit, all Rate Hedging Obligations and all other obligations and liabilities of each Borrower and each Guarantor to the Agent or the Lenders (including Affiliates of such Lenders in the case of Rate Hedging obligations) under this Agreement and the other Loan Documents (including, without limitation, interest accruing at the then applicable rate provided in this Agreement or any other applicable Loan Document after the maturity of the Loans and interest accruing at the then applicable rate provided in this Agreement or any other applicable Loan Document after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Borrower or any Guarantor, as the case may be, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, the other Loan Documents or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all reasonable fees and disbursements of counsel to the Agent or to the Lenders that are required to be paid by any Borrower or any Guarantor pursuant to the terms of this Agreement or any other Loan Document). "OBLIGOR" means any Person which is obligated to make payments for the provision of goods and services pursuant to a Contract. "OFF-BALANCE SHEET LIABILITY of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any liability under any so-called "synthetic lease" transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person. "PARTICIPANTS" is defined in Section 13.2.1. "PAYMENT DATE" means the last Business Day of each March, June, September and December occurring after the Effective Date, commencing December 31, 1999. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "PERSON" means any natural person, corporation, firm, joint venture, limited liability company, partnership, association, enterprise, company or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Company or any member of the Controlled Group has any obligation to contribute to on or after the Effective Date. 14 21 "PRIME RATE" means the per annum rate announced or established by the Agent from time to time as its "prime rate" (it being acknowledged that such announced rate may not necessarily be the lowest rate charged by the Agent to any of its customers) or the corporate base rate of interest announced or established by any Affiliate of the Agent or, when used in connection with any Advance denominated in any Eligible Currency, "Prime Rate" means the correlative floating rate of interest customarily applicable to similar extensions of credit to corporate borrowers denominated in such currency in the country of issue, as determined by the Agent, which Prime Rate shall change simultaneously with any change in such announced or established rates. "PRO RATA SHARE" means, for each Lender, the ratio of such Lender's Commitment (calculated using the U.S. Dollar Equivalent thereof) to the Aggregate Commitment (calculated using the U.S. Dollar Equivalent thereof), PROVIDED that (a) with respect to U.S. Revolving Credit Loans, U.S. Facility Letters of Credit, Swing Loans made to the Company and facility fees with respect to the U.S. Revolving Credit Commitment, Pro Rata Share means, for each Lender, the ratio such Lender's U.S. Revolving Credit Commitment bears to the Aggregate U.S. Revolving Credit Commitments, (b) with respect to Euro Revolving Credit Loans, Euro Facility Letters of Credit, Swing Loans made to the Foreign Subsidiary Borrowers and facility fees with respect to the Euro Revolving Credit Commitment, Pro Rata Share means, for each Lender, the ratio such Lender's Euro Revolving Credit Commitment bears to the Aggregate Euro Revolving Credit Commitments, (c) with respect to the U.S. Term Loan, Pro Rata Share means, for each Lender, the ratio such Lender's U.S. Term Loan Commitment bears to the Aggregate U.S. Term Loan Commitment, and (d) with respect to the Euro Term Loan, Pro Rata Share means, for each Lender, the ratio such Lender's Euro Term Loan Commitment bears to the Aggregate Euro Term Loan Commitment. If at any time the Commitments have been terminated, the amount of any Commitment for the purposes of this definition of "Pro Rata Share" only shall be deemed equal to the amount of such Commitment immediately prior to its termination. "PROPERTY" of a Person means any and all property, whether real, personal, movable, immovable, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "PURCHASERS" is defined in Section 13.3.1. "QUOTATION DATE" in relation to any period for which a Eurocurrency Reference Rate is to be determined hereunder, means the date on which quotations would ordinarily be given by prime Lenders in the London inter-bank market for deposits in the Available Foreign Currency in relation to which such rate is to be determined for delivery on the first day of that period, provided that, if, for such period, quotations would ordinarily be given on more than one date, the Quotation Date for that period shall be the last of those dates. "RATE HEDGING AGREEMENT" means an agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants. "RATE HEDGING OBLIGATIONS" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Rate Hedging Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Hedging Agreement. 15 22 "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "REGULATION T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors. "REGULATION U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors. "REGULATION X" means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors. "REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of the obligations of the Borrowers to the Lenders and the Issuers in respect of all unreimbursed payments or disbursements made by the Issuers and the Lenders under or in respect of the Facility Letters of Credit. "RELEASE" means any release, spill, leak, discharge or leaching of any Hazardous Substances into the environment in violation of any Environmental Law. "REMEDIAL ACTION" means an action to address a Release or other violation of Environmental Laws required by any Environmental Law. "REPORTABLE EVENT" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section with respect to a Plan subject to Title IV of ERISA, excluding, however, such events as to which the PBGC by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, PROVIDED, however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with Section 4043(a) of ERISA or of the minimum funding standard under Section 412(d) of the Code. "REQUIRED EURO REVOLVING CREDIT LENDERS" means (a) at any time prior to the termination of the Euro Revolving Credit Commitments, Euro Revolving Credit Lenders holding not less than 51% of the aggregate Euro Revolving Credit Commitments of all Euro Revolving Credit Lenders and (b) at any time after the termination of the Euro Revolving Credit Commitments, Euro Revolving Credit Lenders whose aggregate Euro Revolving Credit Loans and Pro Rata Shares of Euro Facility Letters of Credit aggregate at least 51% date of the Aggregate Euro Revolving Credit Loans of all Euro Revolving Credit Lenders and all Euro Facility Letters of Credit. "REQUIRED LENDERS" means (a) at any time prior to the termination of the Commitments, Lenders holding not less than 51% of the U. S. Dollar Equivalent of the aggregate Commitments of all Lenders; and (b) at any time after the termination of the Commitments, Lenders whose Aggregate Total Outstandings aggregate at least 51% of the Aggregate Total Outstandings of all Lenders. "REQUIRED U.S. REVOLVING CREDIT LENDERS" means (a) at any time prior to the termination of the U.S. Revolving Credit Commitments, U.S. Revolving Credit Lenders holding not less than 51% of the aggregate U.S. Revolving Credit Commitments of all U.S. Revolving Credit Lenders and (b) at any time 16 23 after the termination of the U.S. Revolving Credit Commitments, U.S. Revolving Credit Lenders whose aggregate U.S. Revolving Credit Loans and Pro Rata Shares of U.S. Facility Letters of Credit aggregate at least 51% date of the Aggregate U.S. Revolving Credit Loans of all U.S. Revolving Credit Lenders and all U.S. Facility Letters of Credit. "REQUIRED EURO TERM LOAN LENDERS" means Euro Term Loan Lenders holding not less than 51% of the aggregate amount of the Euro Term Loan made by all Euro Term Loan Lenders. "REQUIRED U.S. TERM LOAN LENDERS" means U.S. Term Loan Lenders holding not less than 51% of the aggregate amount of the U.S. Term Loan made by all U.S. Term Loan Lenders. "REQUIREMENT OF LAW" means as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject. "RESERVE REQUIREMENT" means, with respect to an Interest Period for Eurodollar Loans or Eurocurrency Loans, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves), assessments or similar requirements under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D). "REVOLVING CREDIT ADVANCE" means a borrowing hereunder (or continuation or conversion thereof) consisting of the several Revolving Credit Loans made on the same Borrowing Date (or date of conversion or continuation) by the Lenders to a Borrower of the same Type and in the case of Fixed Rate Advances, for the same Interest Period. "REVOLVING CREDIT COMMITMENTS" means the Euro Revolving Credit Commitments and the U.S. Revolving Credit Commitments. "REVOLVING CREDIT COMMITTED PERCENTAGE" means as to any Lender at any time, the percentage which the U.S. Dollar Equivalent of such Lender's Revolving Credit Commitments then constitutes of the aggregate U.S. Dollar Equivalent of the Revolving Credit Commitments of all Lenders (or, if the Revolving Credit Commitments have terminated or expired, the percentage which (a) the U.S. Dollar Equivalent of the Aggregate Revolving Credit Outstandings of such Lender at such time then constitutes of (b) the U.S. Dollar Equivalent of the Aggregate Revolving Credit Outstandings of all Revolving Credit Lenders at such time). "REVOLVING CREDIT LENDERS" means those Lenders which have a Revolving Credit Commitment or, if such Commitments shall have been terminated, have outstanding Revolving Credit Loans or Facility Letter of Credit Obligations. "REVOLVING CREDIT LOANS" means, with respect to a Lender, such Lender's revolving credit loans made pursuant to Section 2.1. "REVOLVING CREDIT NOTE" is defined in Section 2.2.3. "S&P" means Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc. 17 24 "SALE AND LEASEBACK TRANSACTION" means any sale or other transfer of property by any Person with the intent to lease or use such Property as lessee or in any other capacity. "SECTION" means a numbered section of this Agreement, unless another document is specifically referenced. "SIGNIFICANT SUBSIDIARY" means each present or future subsidiary of the Company which would constitute a "significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X as currently in effect promulgated by the Securities and Exchange Commission. "SINGLE EMPLOYER PLAN" means a Plan which is maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "SUBSIDIARY" of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" means a Subsidiary of the Company. "SUBSIDIARY BORROWERS" means Foreign Subsidiary Borrowers and Domestic Subsidiary Borrowers. "SUBSTANTIAL PORTION" means, with respect to the Property of the Company and its Subsidiaries, Property which (a) represents more than 15% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, (b) is responsible for more than 15% of the consolidated net sales of the Company and its Subsidiaries as reflected in the financial statements referred to in clause (a) above, (c) represents more than 25% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as of the Effective Date or (d) is responsible for more than 25% of the consolidated net sales of the Company and its Subsidiaries as reflected in the financial statements referred to in clause (c) above. "SWING LOANS" is defined in Section 2.16. "TANGIBLE NET WORTH" means, as of any date, the difference of (i) Net Worth, minus (ii) to the extent included in determining the amount under the foregoing clause (i), the net book value of goodwill, cost in excess of fair value of net assets acquired, patents, trademarks, tradenames and copyrights, treasury stock and all other assets which are deemed intangible assets under Agreement Accounting Principles. "TERM LOAN COMMITMENTS" means the Euro Term Loan Commitments and the U.S. Term Loan Commitments. "TERM LOANS" means, with respect to a Lender, such Lender's portion of the U.S. Term Loan and the Euro Term Loan. "TERM LOAN NOTE" is defined in Section 2.2.3. 18 25 "TOTAL DEBT" as of any date, means all of the following for the Company and its Subsidiaries on a consolidated basis and without duplication: (i) all debt for borrowed money and similar monetary obligations evidenced by bonds, notes, debentures, Capitalized Lease Obligations or otherwise, including without limitation obligations in respect of the deferred purchase price of properties or assets, in each case whether direct or indirect (other than accounts payable and/or accrued expenses and commercial Letters of Credit with respect to the foregoing, in each case arising in the ordinary course of such Person's business payable in accordance with customary practices); (ii) all liabilities secured by any Lien existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (iii) all reimbursement obligations under outstanding Letters of Credit (other than commercial Letters of Credit referenced in clause (i) above) in respect of drafts which (A) may be presented or (B) have been presented and have not yet been paid and are not included in clause (i) above; (iv) all Off Balance Sheet Liabilities; and (v) all guarantees and other Contingent Obligation relating to indebtedness or liabilities of the type described in the foregoing clauses (i), (ii) or (iii); provided that money borrowed by the Company against the cash value of life insurance policies owned by the Company shall not be considered part of Total Debt. "TOTAL DEBT TO CAPITALIZATION RATIO" means the ratio of Total Debt to the sum of(a) Total Debt plus (b) Net Worth, as calculated in accordance with Agreement Accounting Principles. "TRANSFEREE" is defined in Section 13.4. "TYPE" means, with respect to any Advance, its nature as a Floating Rate Advance, Eurocurrency Advance or Eurodollar Advance. "UNFUNDED LIABILITIES" means the amount (if any) by which the actuarial present value of all benefit liabilities under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefit liabilities, all determined as of the then most recent valuation date for such Plans in accordance with Section 4001(a)(18) of ERISA. "UNMATURED DEFAULT" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "U.S. DOLLAR EQUIVALENT" means, on any date with respect to an amount denominated in any currency other than U.S. Dollars, the equivalent in U.S. Dollars of such amount determined at the Exchange Rate on the date of determination of such equivalent. "U.S. FACILITY LETTER OF CREDIT" means any Letter of Credit for the account of the Company. "U.S. FACILITY LETTER OF CREDIT OBLIGATIONS" means Facility Letter of Credit Obligations with respect to U.S. Facility Letters of Credit. "U.S. LENDER" means any U.S. Revolving Credit Lender or U.S. Term Loan Lender. "U.S. LOAN" means any U.S. Revolving Credit Loan or U.S. Term Loan. "U.S. REVOLVING CREDIT COMMITMENT" means, as to any Lender at any time, its obligation to make Revolving Credit Loans to the Company in Dollars in an aggregate amount not to exceed at any time outstanding the U.S. Dollar amount set forth opposite such Lender's name in Schedule 1.1(a) under the heading "U.S. Revolving Credit Commitment" or as otherwise established pursuant to Section 13.3, as such amount may be reduced from time to time pursuant to Sections 2.4, 13.3 and the other applicable provisions hereof. 19 26 "U.S. REVOLVING CREDIT LENDER" means any Lender which has a U.S. Revolving Credit Commitment. "U.S. REVOLVING CREDIT LOANS" means Revolving Credit Loans made to the Company pursuant to Section 2.1.1. "U.S. TERM LOAN" means, with respect to a Lender, such Lender's portion of the term loan made in U.S. Dollars pursuant to Section 2.1.3. "U.S. TERM LOAN COMMITMENT" means as to any Lender at any time, its obligation to make the U.S. Term Loan to the Company in an aggregate amount not to exceed at any time outstanding the aggregate outstanding principal amount of its respective U.S. Revolving Credit Loans of such Lender outstanding on the Facility Termination Date or as otherwise established pursuant to Section 13.3, as such amount may be reduced from time to time pursuant to Section 13.3 and the other applicable provisions hereof. "U.S. TERM LOAN LENDER" means any Lender which has a U.S. Term Loan Commitment or, if such Commitments have been terminated, has an outstanding Term Loan. "VOTING STOCK" of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, trustees or similar persons thereof. "WHOLLY OWNED SUBSIDIARY" of a Person means any other Person of which 100% of the outstanding Voting Stock of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly Owned Subsidiaries of such Person, or by such Person and one or more Wholly Owned Subsidiaries of such Person. "YEAR 2000 ISSUES" means anticipated costs, problems and uncertainties associated with the inability of certain computer applications to effectively handle data including dates on and after January 1, 2000, as such inability directly affects the business, operations and financial condition of the Borrower and its Subsidiaries. "YEAR 2000 PROGRAM" is defined in Section 5.23. 1.2 RULES OF CONSTRUCTION. All terms defined in Section 1.1 shall include both the singular and the plural forms thereof and shall be construed accordingly. Use of the terms "HEREIN", "HEREOF", and "HEREUNDER" shall be deemed references to this Agreement in its entirety and not to the Section or clause in which such term appears. References to "SECTIONS" and "SUBSECTIONS" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. Notwithstanding anything herein, in any financial statements of the Company or in Agreement Accounting Principles to the contrary, for purposes of calculating the Applicable Margin and of calculating and determining compliance with the financial covenants in Sections 6.17 and 6.18, including defined terms used therein, any Acquisitions made by the Company or any of its Subsidiaries, including through mergers or consolidations and including the incurrence of all Indebtedness related thereto and any other related financial transactions, during the period for which such financial covenants were calculated shall be deemed to have occurred on the first day of the relevant period for which such financial covenants and the Applicable Margin were calculated on a pro forma basis acceptable to the Agent. ARTICLE II 20 27 THE CREDITS ----------- 2.1 COMMITMENTS. 2.1.1 From and including the Effective Date and prior to the Facility Termination Date, each U.S. Revolving Credit Lender severally agrees, on the terms and conditions set forth in this Agreement, to make U.S. Revolving Credit Loans to the Company and the Domestic Subsidiary Borrowers from time to time so long as after giving effect thereto and to any concurrent repayment of Loans the Aggregate U.S. Revolving Credit Outstandings of each U.S. Revolving Credit Lender are equal to or less than its U.S. Revolving Credit Commitment. Subject to the terms of this Agreement, the Company and the Domestic Subsidiary Borrowers may borrow, repay and reborrow U.S. Revolving Credit Loans at any time prior to the Facility Termination Date. The U.S. Revolving Credit Loans may be Floating Rate Loans or Eurodollar Loans, or a combination thereof selected in accordance with Sections 2.3 and 2.7. The U.S. Revolving Credit Commitments to lend hereunder shall expire on the Facility Termination Date. 2.1.2 From and including the Effective Date and prior to the Facility Termination Date, each Euro Revolving Credit Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Euro Revolving Credit Loans to the Company and the Foreign Subsidiary Borrowers from time to time so long as after giving effect thereto and to any concurrent repayment of Loans the Aggregate Euro Revolving Credit Outstandings of each Euro Revolving Credit Lender are equal to or less than its Euro Revolving Credit Commitment. Subject to the terms of this Agreement, the Company and the Foreign Subsidiary Borrowers may borrow, repay and reborrow Euro Revolving Credit Loans at any time prior to the Facility Termination Date. The Euro Revolving Credit Loans will be Eurocurrency Loans as selected in accordance with Sections 2.3 and 2.7. The Euro Revolving Credit Commitments to lend hereunder shall expire on the Facility Termination Date. 2.1.3 Each U.S. Term Loan Lender severally agrees, on the terms and conditions set forth in this Agreement, to make a single U.S. Term Loan to the Company and the Domestic Subsidiary Borrowers on the Facility Termination Date in an amount not to exceed, with respect to each U.S. Term Loan Lender, the aggregate outstanding principal amount of such Lender's U.S. Revolving Credit Loans outstanding on the Facility Termination Date. The U.S. Term Loan, or any portion thereof, may be Floating Rate Loans or Eurodollar Loans, or a combination thereof, with the selection in accordance with procedures acceptable to the Agent. 2.1.4 Each Euro Term Loan Lender severally agrees, on the terms and conditions set forth in this Agreement, to make a single Euro Term Loan to the Foreign Subsidiary Borrowers on the Facility Termination Date in an amount not to exceed, with respect to each Euro Term Loan Lender, the aggregate outstanding principal amount of such Lender's Euro Revolving Credit Loans outstanding on the Facility Termination Date. The Euro Term Loan, or any portion thereof, will be Eurocurrency Loans. 2.2 REPAYMENT OF LOANS; EVIDENCE OF DEBT. 2.2.1 (a) The Company and each Domestic Subsidiary Borrower hereby unconditionally promise to pay to the Agent for the account of each U.S. Revolving Credit Lender in U.S. Dollars the then unpaid principal amount of each U.S. Revolving Credit Loan of such Lender made to the Company or such Domestic Subsidiary Borrower on the Facility Termination Date and on such other dates and in such other amounts as may be required from time to time under the terms of this Agreement. The Company and each Domestic Subsidiary Borrower hereby further agree to pay to the Agent for the account of each U.S. Revolving Credit Lender interest in U.S. Dollars on the unpaid principal amount of 21 28 the U.S. Revolving Credit Loans from time to time outstanding until payment thereof in full at the rates per annum, and on the dates, set forth in Section 2.8. (b) The Company and each Foreign Subsidiary Borrower hereby unconditionally promise to pay to the Agent for the account of each Euro Revolving Credit Lender in the relevant Available Foreign Currency the then unpaid principal amount of each Euro Revolving Credit Loan of such Lender made to the Company or such Foreign Subsidiary Borrower on the Facility Termination Date and on such other dates and in such other amounts as may be required from time to time under the terms of this Agreement. The Company and each Foreign Subsidiary Borrower hereby further agree to pay to the Agent for the account of each Euro Revolving Credit Lender interest in the relevant Available Foreign Currency on the unpaid principal amount of the Euro Revolving Credit Loans from time to time outstanding until payment thereof in full at the rates per annum, and on the dates, set forth in Section 2.8. (c) The Company and each Domestic Subsidiary Borrower hereby unconditionally promise to pay to the Agent for the account of each U.S. Term Loan Lender in U.S. Dollars the entire outstanding principal amount of the U.S. Term Loan in eight (8) equal quarterly installments payable on the date three months after the Facility Termination Date and each successive three months thereafter to and including the Maturity Date, when the U.S. Term Loan should be due and payable in full. (d) The Company and each Foreign Subsidiary Borrower hereby unconditionally promise to pay to the Agent for the account of each Euro Term Loan Lender in the relevant Available Foreign Currencies the entire outstanding principal amount of the Euro Term Loan in eight (8) equal quarterly installments payable on the date three months after the Facility Termination Date and each successive three months thereafter to and including the Maturity Date, when the Euro Term Loan should be due and payable in full. 2.2.2 The books and records of the Agent and of each Lender shall, to the extent permitted by applicable law, be PRIMA FACIE evidence of the existence and amounts of the obligations of the Borrowers therein recorded; PROVIDED, HOWEVER, that the failure of any Lender or the Agent to maintain any such books and records or any error therein, shall not in any manner affect the obligation of the Borrowers to repay (with applicable interest) the Loans made to such Borrowers by such Lender in accordance with the terms of this Agreement. 2.2.3 The Borrowers agree that, upon the request to the Agent by any Lender from time to time and the subsequent request to the Company by the Agent, the relevant Borrowers will execute and deliver to such Lender (a) promissory notes of each Borrower evidencing the Revolving Credit Loans of any such requesting Revolving Credit Lender, substantially in the form of Exhibit F-1 with appropriate insertions as to date, currency and principal amount (each, a "REVOLVING CREDIT NOTE"), and (b) promissory notes of each Borrower evidencing the Term Loans of any such requesting Term Loan Lenders, substantially in the form of Exhibit F-2 with appropriate insertions as to date and principal amount (each, a "TERM LOAN NOTE"); PROVIDED, that the delivery of such Notes shall not be a condition precedent to the Effective Date or any Advance. 2.3 PROCEDURES FOR BORROWING. (a) The Company and each Domestic Subsidiary Borrower may borrow under the U.S. Revolving Credit Commitments and each Foreign Subsidiary Borrower may borrow under the Euro Revolving Credit Commitments, in each case from time to time prior to the Facility Termination Date on any Business Day. (b) In the case of a borrowing under the U.S. Revolving Credit Commitments, the Company and each borrowing Domestic Subsidiary Borrower shall give the Agent irrevocable notice (which notice must be received by the Agent prior to 11:00 a.m., Detroit time) (i) three Business Days 22 29 prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be Eurodollar Loans, or (ii) one Business Day prior to the requested Borrowing Date otherwise, specifying in each case (w) the amount to be borrowed, (x) the requested Borrowing Date, (y) whether the borrowing is to be of Eurodollar Loans, Floating Rate Loans or a combination thereof and (z) if the borrowing is to be entirely or partly of Eurodollar Loans, the amount of such Type of Loan and the length of the initial Interest Periods therefor. Each borrowing under the U.S. Revolving Credit Commitments shall be in an amount equal to (A) in the case of Floating Rate Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then aggregate available U.S. Revolving Credit Commitments are less than $5,000,000, such lesser amount) and (B) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from the Company or any such Domestic Subsidiary Borrower, as the case may be, the Agent shall promptly notify each Revolving Credit Lender thereof. Not later than noon, Detroit time on each requested Borrowing Date each Revolving Credit Lender shall make an amount equal to its Pro Rata Share of the principal amount of the Revolving Credit Loans requested to be made on such Borrowing Date available to the Agent at its Detroit office specified in Section 14.1 in U.S. Dollars and in immediately available funds. The Agent shall on such date credit the account of the Company on the books of such office with the aggregate of the amounts made available to the Agent by the Revolving Credit Lenders and in like funds as received by the Agent. (c) In the case of a borrowing under the Euro Revolving Credit Commitments, the Company and each Foreign Subsidiary Borrower shall give the Agent irrevocable notice (which notice must be received by the Agent prior to 11:00 a.m., London time three Business Days prior to the requested Borrowing Date) specifying in each case (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) the Available Foreign Currency thereof and (iv) the length of the initial Interest Period therefor. Each borrowing by the Company or a Foreign Subsidiary Borrower under Section 2.1.2 or 2.1.4 shall be in an Available Foreign Currency. Each such borrowing by the Company or any Foreign Subsidiary Borrower shall be in an amount equal to an amount in the relevant Available Foreign Currency which is 5,000,000 units or a whole multiple of 1,000,000 units in excess thereof or such other amounts as may be agreed upon between the Company and the Agent. Upon receipt of any such notice from any such Borrower, the Agent shall promptly notify the relevant Revolving Credit Lenders with respect to such Borrowing. Not later than 1:00 p.m., local time of the Agent's funding office for such Borrower, on the requested Borrowing Date, each such Revolving Credit Lender shall make an amount equal to its Pro Rata Share of the principal amount of such Revolving Loans requested to be made on such Borrowing Date available to the Agent at the Agent's funding office for such Borrower specified by the Agent from time to time by notice to such Revolving Credit Lenders and in immediately available or other same day funds customarily used for settlement in the relevant Available Foreign Currency. The amounts made available by each such Revolving Credit Lender will then be made-available to the relevant Borrower at the funding office for such Borrower and in like funds as received by the Agent. (d) The Company and each borrowing Domestic Subsidiary Borrower shall give the Agent irrevocable notice (which notice must be received by the Agent prior to 11:00 a.m. Detroit time) at least 15 days prior to the Facility Termination Date if the Company and such Domestic Subsidiary Borrowers will be borrowing the U.S. Term Loan. The Company and each borrowing Foreign Subsidiary Borrower shall give the Agent irrevocable notice (which notice must be received by the Agent prior to 11:00 a.m., London time) at least 15 days prior to the Facility Termination Date if the Company and such Foreign Subsidiary Borrowers will be borrowing the Euro Term Loan. The initial interest rate and Interest Period, if applicable, on the Term Loans will determined pursuant to procedures acceptable to the Agent and the Borrowers and consistent with this Agreement. 2.4 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The Company or any Foreign Subsidiary Borrower may permanently reduce the Euro Revolving Credit Commitments, in 23 30 whole or in part, ratably among the Euro Revolving Credit Lenders in integral multiples of EUR5,000,000 and the Company or any Domestic Subsidiary Borrower may permanently reduce the U.S. Revolving Credit Commitments, in whole or in part, ratably among the U.S. Revolving Credit Lenders in integral multiples of $10,000,000, in each case upon at least three Business Days' irrevocable written notice to the Agent, and which notice shall specify the amount of any such reduction, PROVIDED, however, that the Aggregate Euro Revolving Credit Commitments may not be reduced below the Aggregate Euro Revolving Credit Outstandings of all Lenders and the Aggregate U.S. Revolving Credit Commitments may not be reduced below the Aggregate U.S. Revolving Credit Outstandings of all Lenders. In addition, all accrued facility fees shall be payable on the effective date of any termination of the Revolving Credit Commitments. 2.5 FACILITY AND AGENT FEES. (a) Each Borrower agrees to pay to the Agent for the account of each Lender a facility fee at the rate per annum set forth in the Pricing Schedule on Exhibit A attached hereto, on the average daily amount of each Revolving Credit Commitment of such Lender to such Borrower, whether used or unused, from and including the Effective Date to but excluding the Facility Termination Date, payable on each Payment Date hereafter and on the Facility Termination Date. The facility fee payable in respect to each Revolving Credit Commitment shall be payable in the currency in which such Revolving Credit Commitment is denominated. (b) The Company agrees to pay to the Agent for its own account, such other fees as agreed to in writing between the Company and the Agent. 2.6 OPTIONAL AND MANDATORY PRINCIPAL PAYMENTS ON ALL LOANS. 2.6.1 Each Borrower may at any time and from time to time prepay Floating Rate Loans, in whole or in part, without penalty or premium, upon at least one Business Day's irrevocable notice to the Agent, specifying the date and amount of prepayment. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein. Partial prepayment of Floating Rate Loans shall be in a minimum aggregate amount of $1,000,000 or any integral multiple of $1,000,000 in excess thereof. 2.6.2 Each Borrower may at any time and from time to time prepay, without premium or penalty (but together with payment of any amount payable pursuant to Section 3.4), its Eurodollar Loans and its Multicurrency Loans in whole or in part, upon at least three Business Days' irrevocable notice to the Agent specifying the date and amount of prepayment. Partial payments of Eurodollar Loans shall be in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof. Partial prepayments of Multicurrency Loans shall be in an aggregate principal amount in the relevant Available Foreign Currency of 5,000,000 units or any integral multiple of 1,000,000 units in excess thereof, or such lesser principal amount as may equal the outstanding Multicurrency Loans or such lesser amount as may be agreed to by the Agent. 2.6.3 (i) If the Aggregate Euro Revolving Credit Outstandings exceed the Aggregate Euro Revolving Credit Commitments at any time the Foreign Subsidiary Borrowers shall promptly prepay the Aggregate Euro Revolving Credit Outstandings in the amount of such excess and (ii) if the Aggregate U.S. Revolving Credit Outstandings exceed the Aggregate U.S. Revolving Credit Commitments at any time the Company shall promptly prepay the Aggregate U.S. Revolving Credit Outstandings in the amount of such excess. 2.6.4 Each prepayment pursuant to this Section 2.6 and each conversion (other than a conversion of a Floating Rate Loan to a Fixed Rate Loan) pursuant to Section 2.7 shall be accompanied 24 31 by accrued and unpaid interest on the amount prepaid to the date of prepayment and any amounts payable under Section 3.4 in connection with such payment. 2.6.5 Prepayments pursuant to this Section 2.6 shall be applied as follows: (a) in the case of prepayments made by the Company or a Domestic Subsidiary Borrower, first to prepay Floating Rate Loans and second to prepay Eurodollar Loans then outstanding in such order as the Company or such Borrower may direct and (b) in the case of prepayments made by a Borrower of Multicurrency Loans, to prepay Multicurrency Loans made to such Borrower in such order as the Company or such Borrower may direct, provided that all prepayments on any Loans to a Borrower shall be applied pro rata to the Loans owing by such Borrower. 2.6.6 All amounts prepaid, other than prepayment of the Term Loans, may be reborrowed and successively repaid and reborrowed, subject to the other terms and conditions in this Agreement. All prepayments of the Term Loans will be applied to the maturities thereof in inverse order. 2.7. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. 2.7.1 ADVANCES. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless the Company shall have given the Agent a Conversion/Continuation Notice requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period. Subject to the terms hereof, the Company may elect from time to time to convert all or any part of a Revolving Credit Advance or Term Loan of any Type to the Company or any Domestic Subsidiary Borrower into any other Type or Types of Advance; PROVIDED that any conversion of any Eurodollar Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. The Company shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an Advance or continuation of a Eurodollar Advance not later than 11:00 a.m. (Detroit time) at least one Business Day, in the case of a conversion into a Floating Rate Advance, or three Business Days, in the case of a conversion into or continuation of a Eurodollar Advance, prior to the date of the requested conversion or continuation, specifying: (a) the requested date, which shall be a Business Day, of such conversion or continuation, (b) the aggregate amount and Type of the Revolving Credit Advance or Term Loan which is to be converted or continued, and (c) the amounts and Type(s) of Revolving Credit Advance(s) or Term Loan into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurodollar Advance, the duration of the Interest Period applicable thereto. 2.7.2 MULTICURRENCY ADVANCES. Any Multicurrency Advances may be continued as such upon the expiration of the then current Interest Period with respect thereto by the relevant Borrower giving the Agent irrevocable notice not later than 11:00 a.m. (London time) at least three Business Days prior to the date of the requested continuation, specifying the duration of the Interest Period applicable thereto, PROVIDED, that if the relevant Borrower shall fail to give such notice, such Multicurrency Advance shall be automatically continued for an Interest Period of one month provided that such continuation would not extend the Interest Period beyond the Facility Termination Date in the case of Euro Revolving Credit Loans or the Maturity Date in the case of the Euro Term Loan. 25 32 2.8 INTEREST RATES, INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. (a) Each Floating Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Loan is made or is converted from a Fixed Rate Loan into a Floating Rate Loan pursuant to Section 2.7 to but excluding the date it becomes due or is converted into a Fixed Rate Loan pursuant to Section 2.7 hereof, at a rate per annum equal to the Floating Rate for such day. Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such Interest Period. Each Multicurrency Loan to any Foreign Subsidiary Borrower (other than a Swing Loan) shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the applicable Eurocurrency Rate determined for such Interest Period or at such other interest rate as agreed to by such Foreign Subsidiary Borrower and all Euro Lenders with a Commitment to such Foreign Subsidiary Borrower. (b) Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the Effective Date and at maturity. Interest accrued on each Fixed Rate Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Fixed Rate Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Fixed Rate Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. (c) Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to 1:00 p.m. (local time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, except as otherwise provided in the definition of Interest Period, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. (d) All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period such interest or fee is payable over a year comprised of 360 days or, in the case of Floating Rate Loans, 365/366 days, unless the Agent determines that it is market practice to calculate such interest or fees on Multicurrency Advances on a different basis. (e) Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Fixed Rate Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such Fixed Rate Advance. No Interest Period may end after, with respect to any Term Loan, the Maturity Date, or, with respect to any Revolving Credit Loan, the Facility Termination Date. 2.9 RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the contrary contained in this Agreement, during the continuance of a Default the Required Lenders may, at their option, by notice to the Borrowers (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Advance may be made as, converted into or continued (after the expiration of the then current Interest Period) as a Fixed Rate Advance, provided that, notwithstanding the foregoing, any outstanding Eurocurrency Advance may be continued for an Interest Period not to exceed one month after such notice to the Borrowers by the Required Lenders. Upon and during the continuance of any Default under Section 7.2, the Required Lenders may, at their option, by notice to the Company (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders as to changes and interest rates) declare that (i) each 26 33 Fixed Rate Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum, and (ii) each Floating Rate Advance and any other amount due under this Agreement shall bear interest at a rate per annum equal to the Floating Rate otherwise applicable to Floating Rate Loans plus 2% per annum, provided that, upon and during the continuance of any acceleration for any reason of any of the Obligations, the interest rate set forth in clauses (i) and (ii) shall be applicable to all Advances without any election or action on the part of the Agent or any Lender. 2.10 PRO RATA PAYMENT, METHOD OF PAYMENT. 2.10.1 Each borrowing of Loans by the Company or any Domestic Subsidiary Borrower from the U.S. Lenders shall be made pro rata according to the Pro Rata Shares of such Lenders in effect on the date of such borrowing. Each payment by the Company or any Domestic Subsidiary Borrower on account of any facility fee shall be allocated by the Agent among the Lenders in accordance with their respective Pro Rata Shares. Any reduction of the Commitments of the U.S. Lenders shall be allocated by the Agent among the U.S. Lenders pro rata according to the Pro Rata Shares of the U.S. Lenders with respect thereto. Except as otherwise provided in this Agreement, each optional prepayment by the Company or any Domestic Subsidiary Borrower on account of principal or interest on its U.S. Loans shall be allocated by the Agent pro rata according to the respective outstanding principal amounts thereof. All payments (including prepayments) to be made by the Company or any Domestic Subsidiary Borrower hereunder in respect of amounts denominated in Dollars, whether on account of principal, interest, fees or otherwise, shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIV, or at any other Lending Installation of the Agent specified in writing by the Agent to the Company or the relevant Domestic Subsidiary Borrower, as the case may be, by 1:00 P.M. (Detroit time) on the date when due. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIV or at any Lending Installation specified in a notice received by the Agent from such Lender. 2.10.2 Each borrowing of Euro Loans by any Foreign Subsidiary Borrower in any Available Foreign Currency shall be allocated by the Agent pro rata according to the Pro Rata Shares of the Euro Lenders with respect to such Borrower in effect on the date of such Loan. Each payment by any Foreign Subsidiary Borrower on account of any facility fee shall be allocated by the Agent among the Lenders to such Foreign Subsidiary Borrower in accordance with their respective Pro Rata Shares. Any reduction of any of the Euro Commitments shall be allocated by the Agent pro rata according to the Pro Rata Shares of the Euro Lenders with respect thereto. Except as provided in Section 2.6, each payment (including each prepayment) by a Foreign Subsidiary Borrower on account of principal of and interest on Euro Loans shall be allocated by the Agent pro rata according to the respective principal amounts of the Euro Loans then due and owing by such Borrower to each Euro Lender that made such Euro Loans. All payments (including prepayments) to be made by a Borrower on account of Euro Loans, whether on account of principal, interest, fees or otherwise, shall be made without setoff, deduction, or counterclaim in the currency of such Euro Loans (in same day or other funds customarily used in the settlement of obligations in such currency) to the Agent for the account of the Euro Lenders that made such Loans, at the payment office for such Euro Loans specified from time to time by the Agent by notice to the Borrowers prior to 1:00 p.m. local time at such payment office on the due date thereof. The Agent shall distribute such payment to the Euro Lenders entitled to receive the same promptly upon receipt in like funds as received. In the case of any payment of facility fees by Foreign Subsidiary Borrowers under Section 2.5 and any prepayments required of Foreign Subsidiary Borrowers under Section 2.6.3, the Company shall designate which Foreign Subsidiary Borrowers shall pay such amounts and, absent such determination or if any Default has occurred and is continuing, the Agent shall determine which Foreign 27 34 Subsidiary Borrower or Foreign Subsidiary Borrowers shall make such payments, provided that it is acknowledged that each Foreign Subsidiary Borrower is liable, without duplication, for the full amount of facility fees payable under Section 2.5 and is obligated to make any required prepayments under Section 2.6.3 to the extent such Foreign Subsidiary Borrower has any Aggregate Euro Revolving Credit Outstandings. 2.11 TELEPHONIC NOTICES. Each Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any Person or Persons the Agent or any Lender reasonably and in good faith believes to be an Authorized Officer. Each Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error. 2.12 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Revolving Credit Commitment reduction notice, Multicurrency Commitment reduction notice, Borrowing notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Fixed Rate Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.13 LENDING INSTALLATIONS. Each Lender may, except as otherwise provided in Section 3.6, make and book its Loans at any Lending Installation(s) selected by such Lender and may change its Lending Installation(s) from time to time. All terms of this Agreement shall apply to any such Lending Installation(s) and the Notes, if any, shall be deemed held by each Lender for the benefit of such Lending Installation(s). Each Lender may, by written or telex notice to the Agent and the applicable Borrower, designate one or more Lending Installations which are to make and book Loans and for whose account Loan payments are to be made. 2.14 NON-RECEIPT OF FUNDS BY THE AGENT. Unless a Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (a) in the case of a Lender, the proceeds of a Loan or (b) in the case of a Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Lender, the Federal Funds Effective Rate for the first five days and the interest rate applicable to the relevant Loan for each day thereafter or (ii) in the case of payment by a Borrower, the interest rate applicable to the relevant Loan. 2.15 FACILITY LETTERS OF CREDIT. 2.15.1 OBLIGATION TO ISSUE. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Borrowers herein set forth, the Issuers hereby agree to issue for the account of a Borrower through such of the Issuer's Lending Installations or Affiliates as the Issuer may determine, one or more Facility Letters of Credit in accordance with this 28 35 Section 2.15, from time to time during the period, commencing on the Effective Date and ending five Business Days prior to the Facility Termination Date. 2.15.2 CONDITIONS FOR ISSUANCE. In addition to being subject to the satisfaction of the conditions contained in Sections 4.1 and 4.2, the obligation of an Issuer to issue any Facility Letter of Credit is subject to the satisfaction in full of the following conditions: (a) the aggregate maximum amount then available for drawing under Facility Letters of Credit issued by the Issuers, after giving effect to the Facility Letter of Credit requested hereunder, shall not exceed any limit imposed by law or regulation upon the Issuer; (b) the requested Facility Letter of Credit shall not have an expiration date later than the earlier of (i) one year after the date of issuance of such Facility Letter of Credit and (ii) five Business Days prior to the Facility Termination Date, PROVIDED that any Facility Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (ii) above); (c) after giving effect to the Facility Letter of Credit requested hereunder, the aggregate maximum amount then available for drawing under Facility Letters of Credit issued by the Issuers, shall not exceed (i) $50,000,000 in the case of Facility Letters of Credit for the account of the Company and Domestic Subsidiary Borrowers and (ii) EUR25,000,000 in the case of Facility Letters of Credit for the account of Foreign Subsidiary Borrowers, and no prepayment would be required under this Agreement and no provision of this Agreement would be breached; (d) the applicable Borrower shall have delivered to the applicable Issuer at such times and in such manner as such Issuer may reasonably prescribe such documents and materials as may be required pursuant to the terms of the proposed Letter of Credit and the proposed Letter of Credit shall be reasonably satisfactory to such Issuer as to form and content; and (e) as of the date of issuance, no order, judgment or decree of any Court, arbitrator or governmental authority shall purport by its terms to enjoin or restrain such Issuer from issuing the Facility Letter of Credit and no law, rule or regulation applicable to such Issuer and no request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over such Issuer shall prohibit or request that such Issuer refrain from the issuance of Letters of Credit generally or the issuance of that Facility Letter of Credit. 2.15.3 PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT. (a) The applicable Borrower shall give one of the Issuers and the Agent three Business Days' prior written notice of any requested issuance of a Facility Letter of Credit under this Agreement (except that, in lieu of such written notice, a Borrower may give an Issuer (i) notice of such request by tested telex or other tested arrangement satisfactory to such Issuer or (ii) telephonic notice of such request if confirmed in writing by delivery to such Issuer (A) immediately (x) of a telecopy of the written notice required hereunder which has been signed by an Authorized Officer of such Borrower or (y) of a telex containing all information required to be contained in such written notice and (B) promptly (but in no event later than the requested time of issuance) of a copy of the written notice required hereunder containing the original signature of an Authorized Officer of such Borrower); such notice shall be irrevocable and shall specify the stated amount and Available Foreign Currency or U.S. Dollars of the Facility Letter of Credit requested (which requested currency shall be limited to the currency in which such Borrower may obtain Loans under this Agreement), the effective date (which day shall be a Business Day) of issuance of such requested Facility Letter of Credit, the date on which such requested Facility Letter of Credit is to expire (which date shall be a Business Day and shall in no event be later than the fifth day prior to the Facility Termination Date), the purpose 29 36 for which such Facility Letter of Credit is to be issued, and the Person for whose benefit the requested Facility Letter of Credit is to be issued. The Agent shall give notice to each applicable Revolving Credit Lender of the issuance of each Facility Letter of Credit reasonably promptly after such Facility Letter of Credit is issued. At the time such request is made, the requesting Borrower shall also provide the applicable Issuer with all information necessary for the issuance of the Facility Letter of Credit it is requesting. Such notice, to be effective, must be received by such Issuer not later than 2:00 p.m. (local time) or the time agreed upon by such Issuer and such Borrower on the last Business Day on which notice can be given under this Section 2.15.3. (b) Subject to the terms and conditions of this Section 2.15.3 and provided that the applicable conditions set forth in Sections 4.1 and 4.2 hereof have been satisfied, the Issuer shall, on the requested date, issue a Facility Letter of Credit on behalf of the applicable Borrower in accordance with such Issuer's usual and customary business practices. (c) The Issuers shall not extend or amend any Facility Letter of Credit unless the requirements of this Section 2.15 are met as though a new Facility Letter of Credit was being requested and issued. 2.15.4 REIMBURSEMENT OBLIGATIONS. (a) Each Borrower agrees to pay to the Issuer the amount of all Reimbursement Obligations, interest and other amounts payable to the Issuer under or in connection with any Facility Letter of Credit issued on behalf of such Borrower immediately when due, irrespective of any claim, set-off, defense or other right that the Borrower, the Company or any Subsidiary may have at any time against the Issuer or any other Person, under all circumstances, including without limitation, any of the following circumstances: (i) any lack of validity or enforceability of this Agreement or any of the other Loan Documents; (ii) the existence of any claim, setoff, defense or other right that any Borrower or any Subsidiary may have at any time against a beneficiary named in a Facility Letter of Credit or any transferee of any Facility Letter of Credit (or any Person for whom any such transferee may be acting), any Issuer, any Lender, or any other Person, whether in connection with this Agreement, any Facility Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between any Borrower or any Subsidiary and the beneficiary named in any Facility Letter of Credit); (iii) any draft, certificate or any other document presented under the Facility Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; or (v) the occurrence of any Default or Unmatured Default. (b) The Issuer shall promptly notify the applicable Borrower of any draw under a Facility Letter of Credit. Such Borrower shall reimburse the applicable Issuer for drawings under a Facility Letter of Credit issued by it on behalf of such Borrower promptly after the payment by the Issuer. Any Reimbursement Obligation with respect to any Facility Letter of Credit shall bear interest from the date of the relevant drawings under the pertinent Facility Letter of Credit at (i) in the case of such Obligations denominated in U.S. Dollars, the interest rate for Floating Rate Loans or (ii) in the case of such 30 37 Obligations denominated in an Available Foreign Currency, at the correlative floating rate of interest customarily applicable to similar extensions of credit to corporate borrowers denominated in such currency in the country of issue of such currency, as reasonably determined by the Agent. In addition to its other rights, the Issuers shall also have all rights for indemnification and reimbursement as each Lender is entitled under this Agreement. 2.15.5 PARTICIPATION. (a) Immediately upon issuance by an Issuer of any Facility Letter of Credit in accordance with the procedures set forth in Section 2.15.3, (i) with respect to each U.S. Facility Letter of Credit, each Revolving Credit Lender shall be deemed to have irrevocably and unconditionally purchased and received from such Issuer, without recourse or warranty, an undivided interest and participation equal to its Pro Rata Share of such U.S. Facility Letter of Credit (including, without limitation, all obligations of the applicable Borrower with respect thereto) and any security therefor or guaranty pertaining thereto and (ii) with respect to each Multicurrency Facility Letter of Credit, each Euro Lender with respect to the Borrower for the account of which such Multicurrency Facility Letter of Credit is issued shall be deemed to have irrevocably and unconditionally purchased and received from such Issuer, without recourse or warranty, an undivided interest and participation equal to its Pro Rata Share in such Multicurrency Facility Letter of Credit (including, without limitation, all obligations of the applicable Borrower with respect thereto), any security therefor or guaranty pertaining thereto; PROVIDED, that a Letter of Credit issued by an Issuer shall not be deemed to be a Facility Letter of Credit for purposes of this Section 2.15.5 if such Issuer shall have received written notice from any Revolving Credit Lender on or before one Business Day prior to the date of its issuance of such Letter of Credit that one or more of the conditions contained in Sections 4.1 or 4.2 are not then satisfied, and, in the event an Issuer receives such a notice, it shall have no further obligation to issue any Letter of Credit until such notice is withdrawn by that Revolving Credit Lender or such condition has been effectively waived in accordance with the provisions of this Agreement. (b) In the event that an Issuer makes any payment under any Facility Letter of Credit and the applicable Borrower shall not have repaid such amount to the Issuer pursuant to Section 2.15.4, the Issuer shall promptly notify the Agent and each Revolving Credit Lender participating in such Letter of Credit of such failure, and each Revolving Credit Lender participating in such Letter of Credit shall promptly and unconditionally pay to the Agent for the account of such Issuer the amount of such Lender's Pro Rata Share of the unreimbursed amount of any such payment in such currency. If any Revolving Credit Lender participating in such Facility Letter of Credit fails to make available to such Issuer any amounts due to such Issuer pursuant to this Section 2.15.5(b), such Issuer shall be entitled to recover such amount, together with interest thereon (i) in the case of amounts denominated in U.S. Dollars, at the Federal Funds Effective Rate, for the first three Business Days after such Lender receives such notice and thereafter, at the Floating Rate, or (ii) in the case of amounts denominated in an Available Foreign Currency, at a local cost of funds rate for obligations in such currency as determined by the Agent for the first three Business Days after such Lender receives such notice, and thereafter at the floating rate of interest correlative to the Floating Rate customarily applicable to similar extensions of credit to corporate borrowers denominated in such currency in the country of issue of such currency, as determined by the Agent, in either case payable (i) on demand, (ii) by setoff against any payments made to such Issuer for the account of such Lender or (iii) by payment to such Issuer by the Agent of amounts otherwise payable to such Lender under this Agreement. The failure of any Revolving Credit Lender to make available to the Agent its Pro Rata Share of the unreimbursed amount of any such payment shall not relieve any other Revolving Credit Lender of its obligation hereunder to make available to the Agent its Pro Rata Share of the unreimbursed amount of any payment on the date such payment is to be made, but no Revolving Credit Lender shall be responsible for the failure of any other Revolving Credit Lender to make available to the Agent its Pro Rata Share of the unreimbursed amount of any payment on the date such payment is to be made. 31 38 (c) Whenever the Issuer receives a payment on account of a Reimbursement Obligation, including any interest thereon, it shall promptly pay to each Revolving Credit Lender that has funded its participating interest therein, in like funds as received an amount equal to such Lender's Pro Rata Share thereof. (d) The obligations of a Revolving Credit Lender to make payments to the Agent with respect to a Facility Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, set-off, qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances. (e) In the event any payment by a Borrower received by the Agent with respect to a Facility Letter of Credit and distributed by the Agent to the Lenders on account of their participations is thereafter set aside, avoided or recovered from the Agent in connection with any receivership, liquidation, reorganization or bankruptcy proceeding, each Revolving Credit Lender that received such distribution shall, upon demand by the Agent, contribute such Lender's Pro Rata Share of the amount set aside, avoided or recovered together with interest at the rate required to be paid by the Agent upon the amount required to be repaid by it. 2.15.6 COMPENSATION FOR FACILITY LETTERS OF CREDIT. The Issuer of a Facility Letter of Credit shall have the right to receive from the Borrower that requested issuance of such Facility Letter of Credit, solely for the account of such Issuer, a fronting fee in an amount equal to 0.10% per annum as well as the Issuer's reasonable and customary costs of issuing and servicing the Facility Letters of Credit. In addition, such Borrower shall pay to the Agent for the account of each Revolving Credit Lender participating in such Facility Letter of Credit a non-refundable fee at a per annum rate in the amount shown on the Pricing Schedule on Exhibit A applied to the face amount of the Facility Letter of Credit, payable quarterly in arrears for the account of all Revolving Credit Lenders participating in such Facility Letter of Credit (including the Issuers) ratably from the date such Facility Letter of Credit is issued until its stated expiry date. 2.15.7 LETTER OF CREDIT COLLATERAL ACCOUNT. Each Borrower hereby agrees that it will, until the final expiration date of any Facility Letter of Credit and thereafter as long as any amount is payable to the Lenders in respect of any Facility Letter of Credit, maintain a special collateral account (the "Letter of Credit Collateral Account") at the Agent's office at the address specified pursuant to Article XIV, in the name of such Borrower but under the sole dominion and control of the Agent, for the benefit of the Lenders and in which such Borrower shall have no interest other than as set forth in Section 8.1. The Agent will invest any funds on deposit from time to time in the Letter of Credit Collateral Account in certificates of deposit of the Agent having a maturity not exceeding 30 days. Nothing in this Section 2.15.7 shall either obligate the Agent to require any Borrower to deposit any funds in the Letter of Credit Collateral Account or limit the right of the Agent to release any funds held in the Letter of Credit Collateral Account other than as required by Section 8.1, and the Borrower's obligations to deposit funds in the Letter of Credit Collateral Account are limited to the circumstances required by Section 8.1. 2.15.8 NATURE OF OBLIGATIONS. (a) As among the Borrowers, the Issuers and the Revolving Credit Lenders, each Borrower assumes all risks of the acts and omissions of, or misuse of the Facility Letters of Credit by, the respective beneficiaries of the Facility Letters of Credit requested by it. In furtherance and not in limitation of the foregoing, the Issuers and the Revolving Credit Lenders shall not be responsible for (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Facility Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Facility Letter of Credit or the rights or benefits thereunder or proceeds 32 39 thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of a Facility Letter of Credit to comply fully with conditions required in order to draw upon such Facility Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise; (v) errors in interpretation of technical terms; (vi) misapplication by the beneficiary of a Facility Letter of Credit of the proceeds of any drawing under such Facility Letter of Credit; or (vii) any consequences arising from causes beyond the control of the Issuers or the Revolving Credit Lenders. In addition to amounts payable as elsewhere provided in this Section 2.15, such Borrower hereby agrees to protect, indemnify, pay and save the Agent, each Issuer and each Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) arising from the claims of third parties against the Agent or such Issuer in respect of any Facility Letter of Credit requested by such Borrower. (b) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuers or any Revolving Credit Lender under or in connection with the Facility Letters of Credit or any related certificates, if taken or omitted in good faith, shall not put such Issuer or such Lender under any resulting liability to any Borrower or relieve any Borrower of any of its obligations hereunder to the Issuers, the Agent or any Revolving Credit Lender. (c) Notwithstanding anything to the contrary contained in this Section 2.15.8, a Borrower shall not have any obligation to indemnify the Agent, any Issuer or any Lender under this Section 2.15 in respect of any liability incurred by each arising primarily out of the gross negligence or willful misconduct of such Agent, Issuer or Lender, as determined by a court of competent jurisdiction, or out of the wrongful dishonor by such Issuer of a proper demand for payment made under the Facility Letters of Credit issued by such Issuer as determined by a court of competent jurisdiction, unless such dishonor was made at the request of such Borrower in writing, or out of the wrongful honor by such Issuer of a demand for payment made under the Facility Letters of Credit issued by such Issuer which demand for payment does not comply with the conditions required in order to draw upon such Facility Letter of Credit as determined by a court of competent jurisdiction, unless such dishonor was made at the request of such Borrower in writing. 33 40 Section 2.16. SWING LOANS. (a) MAKING OF SWING LOANS. The Agent may elect in its sole discretion to make revolving loans (the "SWING LOANS") to any Borrower solely for the Agent's own account, from time to time prior to the Facility Termination Date up to an aggregate principal amount at any one time outstanding not to exceed (i) in the case of Swing Loans to the Company or a Domestic Subsidiary Borrower, the lesser of $20,000,000 or the unused amount of the Aggregate U.S. Revolving Credit Commitments and (ii) in the case of Swing Loans to a Foreign Subsidiary Borrower, the lesser of EUR10,000,000 or the unused amount of the Aggregate Euro Revolving Credit Commitments. The Agent may make Swing Loans (subject to the conditions precedent set forth in Article IV), PROVIDED that the Agent has received a request in writing or via telephone from an Authorized Officer of such Borrower for funding of a Swing Loan no later than such time required by the Agent, on the Business Day on which such Swing Loan is requested to be made. The Agent shall not make any Swing Loan in the period commencing one Business Day after the Agent becomes aware that one or more of the conditions precedent contained in Section 4.2 are not satisfied and ending upon the satisfaction or waiver of such condition(s). Each outstanding Swing Loan shall be payable on the Business Day following demand therefor, with interest at the Floating Rate in the case of Swing Loans to the Company or a Domestic Subsidiary Borrower and such rate agreed to between the Agent and such Borrower in the case of Swing Loans to a Foreign Subsidiary Borrower accrued thereon, and shall be subject to all the terms and conditions applicable to Loans, except that all interest thereon shall be payable to the Agent solely for its own account. (b) SWING LOAN BORROWING REQUESTS. Each Borrower agrees to deliver promptly to the Agent a written confirmation of each telephonic notice for Swing Loans signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent, the records of the Agent shall govern, absent manifest error. (c) REPAYMENT OF SWING LOANS. At any time after making a Swing Loan, the Agent may request such Borrower to, and upon request by the Agent such Borrower shall, promptly request an Advance from all Revolving Credit Lenders to such Borrower and apply the proceeds of such Advance to the repayment of any Swing Loan owing by such Borrower not later than the Business Day following the Agent's request. Notwithstanding the foregoing, upon the earlier to occur of (a) three Business Days after demand is made by the Agent, and (b) the Facility Termination Date, each Revolving Credit Lender to such Borrower (other than the Agent) shall irrevocably and unconditionally purchase from the Agent, without recourse or warranty, an undivided interest and participation in such Swing Loan in an amount equal to such Lender's Pro Rata Share of such Swing Loan and promptly pay such amount to the Agent in immediately available finds (or, in the case of participations in Swing Loans denominated in an Available Foreign Currency, same day funds). Such payment shall be made by the other Lenders whether or not a Default is then continuing or any other condition precedent set forth in Section 4.2 is then met and whether or not such Borrower has then requested an Advance in such amount. If any Lender fails to make available to the Agent, any amounts due to the Agent from such Lender pursuant to this Section, the Agent shall be entitled to recover such amount, together with interest thereon at the Federal Funds Effective Rate or such other local cost of funds rate determined by the Agent with respect to any Swing Loan denominated in any Available Foreign Currency for the first three Business Days after such Lender receives notice of such required purchase and thereafter, at the rate applicable to such Loan, payable (i) on demand, (ii) by setoff against any payments made to the Agent for the account of such Lender or (iii) by payment to the Agent by the Agent of amounts otherwise payable to such Lender under this Agreement. The failure of any Lender to make available to the Agent its Pro Rata Share of any unpaid Swing Loan shall not relieve any other Lender of its obligation hereunder to make available to the Agent its Pro Rata Share of any unpaid Swing Loan on the date such payment is to be made, but no Lender shall be responsible for the failure of any other Lender to make available to the Agent its Pro Rata Share of any unpaid Swing Loan. 34 41 2.17 APPLICATION OF PAYMENTS WITH RESPECT TO DEFAULTING LENDERS. No payments of principal, interest or fees delivered to the Agent for the account of any Defaulting Lender shall be delivered by the Agent to such Defaulting Lender. Instead, such payments shall, for so long as such Defaulting Lender shall be a Defaulting Lender, be held by the Agent, and the Agent is hereby authorized and directed by all parties hereto to hold such funds in escrow and apply such funds as follows: (i) FIRST, if applicable to any payments due to an Issuer pursuant to Section 2.15.5 or the Agent under Section 2.16; and (ii) SECOND, to Loans required to be made by such Defaulting Lender on any Borrowing Date to the extent such Defaulting Lender fails to make such Loans. Notwithstanding the foregoing, upon the termination of the Commitments and the payment and performance of all of the Obligations (other than those owing to a Defaulting Lender), any funds then held in escrow by the Agent pursuant to the preceding sentence shall be distributed to each Defaulting Lender, PRO RATA in proportion to amounts that would be due to each Defaulting Lender but for the fact that it is a Defaulting Lender. 2.18 GUARANTIES. The Company shall execute and deliver, or cause to be executed and delivered, to the Lenders and the Agent from time to time Guaranties of certain present and future Domestic Subsidiaries and certain Foreign Subsidiaries which are described as potential Guarantors in the definition of Guarantors such that, at all times, all such Subsidiaries which are not Guarantors do not, if considered in the aggregate as a single Subsidiary, constitute a Significant Subsidiary. In connection with the delivery of any such Guaranties, Company shall provide such other documentation to the Agent, including, without limitation, one or more opinions of counsel satisfactory to the Agent, corporate documents and resolutions, which in the reasonable opinion of the Agent is necessary or advisable in connection therewith. ARTICLE III CHANGE IN CIRCUMSTANCES, TAXES ------------------------------ 3.1 YIELD PROTECTION. If after the date hereof any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change or modification thereof, or any interpretation thereof, or the compliance of any Lender therewith, (a) subjects any Lender or any applicable Lending Installation to any tax, duty, charge or withholding on or from payments due from any Borrower or changes the basis of taxation of payments to any Lender in respect of its Loans or other amounts due it hereunder (excluding income taxes and franchise taxes (imposed in lieu of income taxes) imposed on the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein, other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), or 35 42 (b) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Fixed Rate Advances), or (c) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of loans held or interest received by it, by an amount deemed material by such Lender, then, within 15 days of demand by such Lender, the affected Borrower shall pay such Lender that portion of such increased expense incurred or reduction in an amount received that such Lender reasonably determines is attributable to making, funding and maintaining its Loans or its Commitments. 3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender reasonably determines that the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Company shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital that such Lender reasonably determines is attributable to this Agreement, its Loans or its obligation to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "Change" means (a) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (b) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement that affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3 AVAILABILITY OF TYPES OF ADVANCES. If any Lender reasonably determines that maintenance of its Eurodollar Loans or Multicurrency Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required U.S. Lenders with respect to Eurodollar Loans or the Required Euro Revolving Credit Lenders with respect to any Multicurrency Loan to any Foreign Subsidiary Borrower determine that (i) deposits of a currency, type and maturity appropriate to match fund Eurodollar or Eurocurrency Loans are not available or (ii) the interest rate applicable to a Eurocurrency Loan or Eurodollar Loan does not accurately reflect the cost of making or maintaining such Loans, then the Agent shall suspend the availability of the affected Type of Loans and require any Loans of the affected Type to be repaid at the end of the Interest Period for the affected Loan. Notwithstanding the satisfaction of all conditions referred to in Article II and Article IV with respect to any Advance in any Agreed Currency other than Dollars, if there shall occur on or prior to the date of such Advance any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the Agent or the Required Lenders make it impracticable for 36 43 the Eurocurrency Loans comprising such Advance to be denominated in the Agreed Currency specified by a Borrower, then the Agent shall forthwith give notice thereof to such Borrower and the Lenders, and such Loans shall not be made. 3.4 FUNDING INDEMNIFICATION. If any payment of a Fixed Rate Advance occurs on a date that is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Fixed Rate Advance is not made on the date specified by a Borrower for any reason other than default by the Lenders, such Borrower will indemnify each Lender for any reasonable loss or reasonable cost incurred by it resulting therefrom, including, without limitation, any reasonable loss or reasonable cost in liquidating or employing deposits acquired to fund or maintain the Fixed Rate Advance, but excluding the loss of the Applicable Margin. 3.5 LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Rate Loans and Multicurrency Rate Loans to reduce any liability of a Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Advance under Section 3.3, so long as such designation is not disadvantageous to such Lender in any material respect. Each Lender shall deliver a written statement of such Lender to the applicable Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall state that amounts determined in accordance with such procedures are being charged by such Lender to other borrowers with credit facilities similar to this Agreement and credit characteristics comparable to the Company as determined by such Lender and shall be final, conclusive and binding on the Borrowers in the absence of manifest error. Determination of amounts payable under such sections in connection with a Eurodollar Rate Loans and Multicurrency Rate Loans shall be calculated as though each Lender funded such Loans through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the interest rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the applicable Borrower of such written statement. The obligations of the Borrowers under Sections 3.1, 3.2, 3.4 and 3.6 shall survive payment of the Obligations and termination of this Agreement. The Borrowers shall have no obligation to compensate any Lender with respect to amounts provided in Sections 3.1, 3.2, 3.4 or 3.6 with respect to any period prior to the date which is 120 days prior to the date such Lender delivers its written statement hereunder requesting compensation. 3.6 TAXES. 3.6.1 All payments of principal and interest made by the Borrowers under this Agreement and any Note, if any, and all Reimbursement Obligations with respect to Facility Letters of Credit shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding income taxes and franchise taxes (imposed in lieu of income taxes) imposed on the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any amounts payable to the Agent, any Issuer or any Lender hereunder or under any Note or Facility Letter of Credit, the amounts so 37 44 payable to the Agent, such Issuer or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates and in the amounts specified in this Agreement PROVIDED, HOWEVER, that (i) with respect to any Loan or Facility Letter of Credit in U.S. Dollars to the Company, the Company shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails to comply with the requirements of Section 3.6.2, (ii) with respect to any Loan or Facility Letter of Credit in any Available Foreign Currency, a Borrower shall not be required to increase any such amounts payable to any Lender if such Lender fails to comply with the requirements of Section 3.6.3 and (iii) with respect to any Multicurrency Loan or any Multicurrency Facility Letter of Credit, the Foreign Subsidiary Borrower shall not be required to increase any such amounts payable to any Lender or the Agent to the extent such Lender could avoid the payment of such amount by changing its Lending Installation, provided that any such change in any Lending Installation shall not be required if such Lender cannot change its Lending Installation for any reason or such Lender has determined that it is disadvantageous to it to do so. Whenever any Non-Excluded Taxes are payable by a Borrower, as promptly as possible thereafter such Borrower shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by such Borrower showing payment thereof. If a Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, such Borrower shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 3.6.2 Each U.S. Lender that is not incorporated under the laws of the United States of America or a state thereof shall: (a) at least five Business Days before the date of the initial payment to be made by the Company under this Agreement to such Lender, deliver to the Company and the Agent (A) two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, certifying that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, certifying that it is entitled to an exemption from United States backup withholding tax; (b) deliver to the Company and the Agent two further copies of any such form or certification at least five Business Days before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Agent and the Company; (c) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Company or the Agent; and (d) file amendments to such forms as and when required; and each Lender (or Transferee) that is incorporated or organized under the laws of the United States of America or a State thereof shall provide two properly completed and duly executed copies of Form W-9, or successor applicable form, at the times specified for delivery of forms under this Section 3.6.2 unless an event (including, without limitation, any change in treaty, law or regulation) has occurred after the date such Person becomes a Lender hereunder which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such 38 45 form with respect to it and such Lender so advises the Company and the Agent; PROVIDED, however, that the Company may rely upon such forms provided to the Company for all periods prior to the occurrence of such event. Each Person that shall become a U.S. Lender or a Participant pursuant to Section 13.2 shall, upon the effectiveness of the related transfer, be required to provide all of the forms, certifications and statements required pursuant to this Section, PROVIDED that in the case of such Participant, the obligations of such Participant pursuant to this Section 3.6.2 shall be determined as if such Participant were a Lender, except that such Participant shall furnish all such required forms, certifications and statements to the Lender from which the related participation shall have been purchased. 3.6.3 Each Euro Lender that is not incorporated or organized under the laws of the jurisdiction (a) under the laws of which a Foreign Subsidiary Borrower is incorporated or organized, or (b) in which such Foreign Subsidiary Borrower is located, and, in either case, is a Lender to such Foreign Subsidiary Borrower shall, upon request by such Foreign Subsidiary Borrower, within a reasonable period of time after such request, deliver to such Foreign Subsidiary Borrower or the applicable governmental or taxing authority, as the case may be, any form or certificate required in order that any payment by such Foreign Subsidiary Borrower under this Agreement or any Notes to such Lender may be made free and clear of, and without deduction or withholding for or on account of any Non-Excluded Tax (or to allow any such deduction or withholding to be at a reduced rate) imposed on such payment under the laws of the jurisdiction under which such Foreign Subsidiary Borrower is incorporated or organized, PROVIDED that such Lender is legally entitled to complete, execute and deliver such form or certificate and such completion, execution or submission would not prejudice the legal position of such Lender. 3.6.4 Each Lender agrees to use reasonable efforts to avoid or to minimize any amounts that might otherwise be payable pursuant to this Section 3.6, PROVIDED that such effort shall not impose on any such Lender any additional costs or legal or regulatory burdens deemed by such Lender in its reasonable judgment to be material. In the event that any Lender determines that any event or circumstance that will lead to a claim by it under this Section 3.6 has occurred or will occur, such Lender will use its best efforts to so notify the Company in writing, PROVIDED that any failure to provide such notice shall in no way impair the rights of any Lender to demand and receive compensation under this Section 3.6. 3.7 SUBSTITUTION OF LENDER. If (a) the obligation of any Lender to make or maintain Fixed Rate Loans has been suspended pursuant to Section 3.3, except when all Lenders' obligations to make or maintain Fixed Rate Loans have been suspended other than by reason of such Lender's obligation to make or maintain Fixed Rate Loans being suspended, (b) any Lender has demanded compensation under Sections 3.1, 3.2 or 3.6 when all Lenders have not done so, (c) any Lender is a Defaulting Lender or (d) in connection with a request by any Borrower to obtain the consent of the Lenders to a waiver, amendment or modification of any provision of this Agreement or any other Loan Document that requires the consent of all Lenders, any Lender having not more than 10% of the sum of the Aggregate Total Outstandings of all Lenders at such time has declined to agree to such request when the Required Lenders have agreed to such request, the Company shall have the right, if no Default then exists, to replace such Lender (a "Replaced Lender") with one or more other lenders (collectively, the "Replacement Lender") acceptable to the Agent, PROVIDED that (i) at the time of any replacement pursuant to this Section 3.7, the Replacement Lender shall enter into one or more Assignments pursuant to which the Replacement Lender shall acquire the Commitments and outstanding Loans and other obligations of the Replaced Lender and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the sum of (A) the amount of principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender, (B) the amount of all accrued, but theretofore unpaid, fees owing to the Replaced Lender hereunder and (C) the amount that would be payable by the Borrowers to the Replaced Lender pursuant to Section 3.4, if any, if the Borrowers prepaid at the time of such replacement all of the 39 46 Loans of such Replaced Lender outstanding at such time and (ii) all obligations of the Borrowers then owing to the Replaced Lender (other than those specifically described in clause (i) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full to such Replaced Lender concurrently with such replacement. Upon the execution of the respective Assignments, the payment of amounts referred to in clauses (i) and (ii) above and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the appropriate Borrower, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder. The provisions of this Agreement (including without limitation Sections 3.4 and 10.7) shall continue to govern the rights and obligations of a Replaced Lender with respect to any Loans made or any other actions taken by such lender while it was a Lender. Nothing herein shall release any Defaulting Lender from any obligation it may have to any Borrower, the Agent, Issuer or any other Lender. ARTICLE IV CONDITIONS PRECEDENT -------------------- 4.1 CLOSING CONDITIONS. On the date hereof, the Borrowers shall furnish, or shall cause to be furnished, to the Agent, each of the following: (a) Copies of the articles of incorporation or similar organizational documents of each Borrower and Guarantor, together with all amendments thereto, and a certificate of good standing or similar governmental evidence of corporate existence, certified by the Secretary or an Assistant Secretary of such Borrower or Guarantor, as the case may be. (b) Copies of the by-laws and Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for any Lender) of each Borrower and Guarantor authorizing the execution of the Loan Documents, certified by the Secretary or an Assistant Secretary or other duly authorized representative of such Borrower or Guarantor, as the case may be. (c) An incumbency certificate of each Borrower and Guarantor, which shall identify by name and title and bear the signature of the officers of such Borrower or such Guarantor authorized to sign the applicable Loan Documents and to make borrowings hereunder, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by such Borrower or such Guarantor. (d) A Compliance Certificate, signed by any Designated Financial Officer of each Borrower. (e) A written opinion of the Borrowers' and Guarantors' counsel, addressed to the Agent and Lenders, in substantially the form of Exhibit G hereto. (f) Written money transfer instructions, in substantially the form of Exhibit H hereto, addressed to the Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. 40 47 (g) Copies of all governmental and nongovernmental consents, approvals, authorizations, declarations, registrations or filings required on the part of any Borrower or any Guarantor in connection with the execution, delivery and performance of the Loan Documents or the transactions contemplated hereby or thereby or as a condition to the legality, validity or enforceability of the Loan Documents, certified as true and correct in full force and effect as of the Effective Date by a duly authorized officer of the Borrowers, or if none is required, a certificate of such officer to that effect. (h) The Guaranty executed by all of the Guarantors. (i) Payment of all fees owing to the Agent or any Lender by the Borrowers and the Guarantors as of the Effective Date. (j) Satisfactory results of all due diligence required by the Agent, including a review of all contingent liabilities, a review of contracts and insurance, a review of all litigation, and environmental matters and other due diligence. (k) Copies of such financial statements of the Company and its Subsidiaries required by the Agent, together with prospective financial statements for the Company and its Subsidiaries, in each case in form and substance satisfactory to the Agent. (l) Evidence reasonably satisfactory to the Agent that, since September 30, 1999, there has been no change in the business, property, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. (m) Information reasonably satisfactory to the Agent regarding the Borrowers' Year 2000 Program. (n) Such other agreements and documents, and the satisfaction of such other conditions, as may be reasonably required by the Agent, including without limitation a subrogation and contribution agreement executed by the Borrowers and the Guarantors, and such funding instructions, sources and uses certificate and other certificates required by the Agent. 4.2 EACH ADVANCE. The Lenders shall not be required to make any Loans nor shall any Issuer be required to issue any Letter of Credit, unless on the applicable Borrowing Date, both before and after giving effect on a pro forma basis to such Loan or Letter of Credit: (a) There exists no Default or Unmatured Default. (b) The representations and warranties contained in Article V are true and correct as of such Borrowing Date except (i) to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall be true and correct on and as of such earlier date and (ii) the representations contained in Section 5.5 shall be limited (as determined by the Agent) with respect to any Loans or Letters of Credit made after the initial Loans and Letters of Credit hereunder if the credit facilities hereunder are used for commercial paper backup to the extent required by the relevant rating agencies with respect to such commercial paper. 41 48 (c) All legal matters incident to the making of such Loans or the issuance of such Facility Letter of Credit shall be satisfactory to the Agent and its counsel. (d) If such Loan is an initial Loan to a Subsidiary Borrower, the Agent shall have received a Foreign Subsidiary Opinion or Domestic Subsidiary Opinion, as the case may be, in respect of such Subsidiary Borrower and such other documents reasonably requested by the Agent. Each Borrowing notice with respect to each borrowing by a Borrower hereunder or each request for an issuance of a Facility Letter of Credit shall constitute a representation and warranty by the Company and such Borrower that the conditions contained in Sections 4.2(a), (b) and (c) have been satisfied. ARTICLE V REPRESENTATIONS AND WARRANTIES ------------------------------ Each of the Company and the Subsidiary Borrowers (insofar as the representations and warranties set forth below relate to such Subsidiary Borrower) represents and warrants to the Lenders that: 5.1 CORPORATE EXISTENCE AND STANDING. Each Borrower and Guarantor is a corporation, partnership, limited liability company or other organization, duly organized and validly existing under the laws of its jurisdiction of organization and has all requisite corporate, partnership, company or similar authority to conduct its business as presently conducted. 5.2 AUTHORIZATION AND VALIDITY. Each Borrower has the corporate or other power and authority and legal right to execute and deliver the Loan Documents and to perform its obligations thereunder. The execution and delivery by each of the Borrowers of the Loan Documents and the performance of their obligations thereunder have been duly authorized by proper corporate proceedings, and the Loan Documents to which they are a party constitute legal, valid and binding obligations of the Borrowers enforceable against the Borrowers in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. 5.3 NO CONFLICT: GOVERNMENT CONSENT. Neither the execution and delivery by the Borrowers of the Loan Documents, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Company or any of its Subsidiaries or the Company's or any Subsidiary's constitutive documents or the provisions of any indenture, instrument or agreement to which the Company or any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien (other than any Lien permitted by Section 6.12) in, of or on the Property of the Company or a Subsidiary pursuant to the terms of any such indenture, instrument or agreement. Other than those that have been obtained, no order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents. 5.4 FINANCIAL STATEMENTS. All financial statements of the Company and its Subsidiaries heretofore delivered to the Lenders were prepared in accordance with generally accepted accounting 42 49 principles in effect on the date such statements were prepared and fairly present in all material respects the consolidated financial condition and operations of the Company and its Subsidiaries. 5.5 MATERIAL ADVERSE CHANGE. Since September 30, 1999 or, after the first financial statements are delivered under Sections 6.1(i) or (ii), since the date of the financial statements most recently delivered under Section 6.1(i) or (ii), there has been no change in the business, Property, prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 5.6 TAXES. The Company and its Subsidiaries have filed all United States federal tax returns and all other material tax returns that are required to be filed by any Governmental Authority and have paid all taxes shown as due pursuant to said returns or pursuant to any assessment received by the Company or any of its Subsidiaries by any Governmental Authority, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien (other than as permitted by Section 6.12) exists. No tax liens have been filed and no claims are being asserted with respect to any such taxes, other than as permitted by Section 6.12. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of any taxes or other governmental charges are adequate. 5.7 LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth on Schedule 5.7 hereto, there is no litigation, arbitration or proceeding pending or, to the knowledge of any of the Company's executive officers, any governmental investigation or inquiry pending or any litigation, arbitration, governmental investigation, proceeding or inquiry threatened against or affecting the Company or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of the Loans or Advances. Other than any liability incident to such litigation, arbitration or proceedings listed on Schedule 5.7, the Company and its Subsidiaries have no material Contingent Obligations not provided for or disclosed in the financial statements referred to in Section 5.4. 5.8 SUBSIDIARIES. Schedule 5.8 hereto contains an accurate list of all Subsidiaries of the Company as of the date of this Agreement, setting forth their respective jurisdictions of incorporation or organization and the percentage of their respective Capital Stock owned by the Company or other Subsidiaries. All of the issued and outstanding shares of Capital Stock of such Subsidiaries held by the Company have been duly authorized and issued and are fully paid and non-assessable. 5.9 ERISA. Each member of the Controlled Group has fulfilled its material obligations under the minimum funding standards of ERISA and the Code with respect to each Single Employer Plan. Each member of the Controlled Group is in material compliance with the applicable provisions of ERISA and the Code with respect to each Plan except where such non compliance would not have a Material Adverse Effect. Each Single Employer Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event which has or may result in any material liability has occurred with respect to any Single Employer Plan, and no steps have been taken to reorganize or terminate any Single Employer Plan. No member of the Controlled Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan, (ii) failed to make any contribution or payment to any Single Employer Plan or Multiemployer Plan, or made any amendment to any Plan, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Code or (iii) incurred any material, actual liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA or a liability that has been satisfied. 43 50 5.10 ACCURACY OF INFORMATION. No information, exhibit or report furnished by the Company or any of its Subsidiaries in writing to the Agent or to any Lender in connection with the negotiation of the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, as of the date thereof; PROVIDED, HOWEVER, that with respect to projected financial information, the Company represents only that such information has been prepared in good faith based on assumptions believed by the Company to be reasonable. 5.11 REGULATIONS T, U AND X. Neither the Company nor any of its Subsidiaries extends or maintains, in the ordinary course of business, credit for the purpose, whether immediate, incidental, or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any Advance will be used for the purpose, whether immediate, incidental, or ultimate, of buying or carrying any such Margin Stock or maintaining or extending credit to others for such purpose in any way that would violate Regulation T, U or X. After applying the proceeds of each Advance, Margin Stock will not constitute more than 25% of the value of the assets (either of the Company alone or of the Company and its Subsidiaries on a consolidated basis) that are subject to any provisions of any Loan Document that may cause the Advances to be deemed secured, directly or indirectly, by Margin Stock. The Company and its Subsidiaries are in compliance with Section 6.2. 5.12 MATERIAL AGREEMENTS. Neither the Company nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which it is a party (including any agreement or instrument evidencing or governing Indebtedness), which default could reasonably be expected to have a Material Adverse Effect. 5.13 COMPLIANCE WITH LAWS; PROPERTIES. The Company and its Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property, failure to comply with which could reasonably be expected to have a Material Adverse Effect. 5.14 PLAN ASSETS; PROHIBITED TRANSACTIONS. The Company and its Subsidiaries have not engaged in any non-exempt prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code which could result in any material liability; and neither the execution of this Agreement nor the making of Loans (assuming the accuracy of the following representations and warranties which the Lenders hereby make for the benefit of the Borrowers: (i) that no part of the funds to be used by the Lenders for funding any of the Loans shall constitute assets of an "employee benefit plan" within the meaning of ERISA or the assets of a "plan" as defined in Section 4975(e)(l) of the Code and (ii) that no Lender will transfer its interest herein unless the prospective transferee makes the representations and warranties set forth in this parenthetical phrase as if had originally been a party to this agreement) hereunder will constitute a non-exempt prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.15 ENVIRONMENTAL MATTERS. In the ordinary course of its business, the officers of the Company consider the effect of Environmental Laws on the business of the Company and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Company and its Subsidiaries due to Environmental Laws. On the basis of this consideration, the Company has reasonably concluded that the Company and its Subsidiaries are not in violation of any Environmental Laws in such a fashion that could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any written notice to the effect that its 44 51 operations are not in material compliance with any of the requirements of applicable Environmental Laws or, to the knowledge of any Borrower, are the subject of any federal or state investigation evaluating whether any Remedial Action is required to be performed by the Company or any of its Subsidiaries, which non-compliance or Remedial Action could reasonably be expected to have a Material Adverse Effect. 5.16 INVESTMENT COMPANY ACT. No Borrower is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 5.17 PUBLIC UTILITY HOLDING COMPANY ACT. No Borrower is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.18 SUBSIDIARY BORROWERS. (a) Except as described on Schedule 5.8, each Subsidiary Borrower is a direct or indirect Wholly Owned Subsidiary of the Company (excluding director qualifying shares); and (b) Each Subsidiary Borrower will have, upon becoming a party hereto, all right and authority to enter into this Agreement and each other Loan Document to which it is a party, and to perform all of its obligations under this and each other Loan Document to which it is a party; all of the foregoing actions will have been taken prior to any request for Loans by such Borrower, duly authorized by all necessary action on the part of such Borrower, and when such Subsidiary Borrower becomes a party hereto, this Agreement and each other Loan Document to which it is a party will constitute valid and binding obligations of such Borrower enforceable in accordance with their respective terms except as such terms may be limited by the application of bankruptcy, moratorium, insolvency and similar laws affecting the rights of creditors generally and by general principles of equity. 5.19 INSURANCE. The Company and its Subsidiaries maintain insurance with financially sound and reputable insurance companies (or self-insurance programs) on their Property in such amounts (with such customary deductibles, exclusions and self-insurance) and covering such risks as management of the Company reasonably considers consistent with sound business practice. 5.20 OWNERSHIP OF PROPERTIES. On the Effective Date, the Company and its Subsidiaries will have good title, free of all Liens (other than as permitted by Section 6.12), to all Property and assets reflected in the financial statements as owned by it. 5.21 LABOR CONTROVERSIES. There are no labor controversies pending or, to the best of the Company's knowledge, threatened against the Company or any Subsidiary, that could reasonably be expected to have a Material Adverse Effect. 5.22 BURDENSOME OBLIGATIONS. The Company does not presently anticipate that future expenditures needed to meet the provisions of federal or state statutes, orders, rules or regulations will be so burdensome as to cause a Material Adverse Effect. 5.23 YEAR 2000. The Borrower has made a reasonable assessment of the Year 2000 Issues and has a realistic and achievable program for remediating the Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on such assessment and on the Year 2000 Program the Borrowers do not reasonably anticipate that Year 2000 Issues will have a Material Adverse Effect. 45 52 ARTICLE VI COVENANTS --------- During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1 FINANCIAL REPORTING. The Company will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with Agreement Accounting Principles, and furnish to the Lenders: (i) Within 90 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in Agreement Accounting Principles and required or approved by the Company's independent certified public accountants) audit report certified by independent certified public accountants reasonably acceptable to the Agent, prepared in accordance with Agreement Accounting Principles on a consolidated basis for itself and its Subsidiaries, including balance sheets as of the end of such period, related profit and loss statements, and a statement of cash flows, accompanied by a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (ii) Within 45 days after the close of each of the first three quarterly periods of each fiscal year, for itself and its Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated unaudited profit and loss statements and a consolidated unaudited statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its Designated Financial Officer. (iii) Together with the financial statements required under Sections 6.1(i) and (ii), a compliance certificate in substantially the form of Exhibit I (a "Compliance Certificate") signed by its Designated Financial Officer and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (iv) As soon as possible and in any event within 30 Business Days after the Company knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the Designated Financial Officer of the Company, describing said Reportable Event and the action which the Company proposes to take with respect thereto. (v) As soon as possible and in any event within 15 Business Days after receipt by the Company, a copy of (a) any written notice or claim to the effect that the Company or any of its Subsidiaries is or may be liable to any Person as a result of the Release by the Company, any of its Subsidiaries, or any other Person of any Hazardous Substances into the environment, and (b) any written notice alleging any violation of any Environmental Law by the Company or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (vi) Promptly after the sending or filing thereof, copies of all reports, proxy statements and financial statements that the Company or any of its Subsidiaries sends to or files with any of their respective securities holders or any securities exchange or the Securities Exchange and Commission or any successor agency thereof pertaining to the Company or any of its Subsidiaries as the issuer of securities. 46 53 (vii) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2 USE OF PROCEEDS. The Company will, and will cause each Subsidiary to, use the proceeds of the Advances for general corporate purposes, including Acquisitions and commercial paper back up. The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any Margin Stock in any way in violation of Regulation T, U or X. 6.3 NOTICE OF DEFAULT. The Company will, and will cause each Borrower and Subsidiary to, give prompt notice in writing to the Agent of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise (including, without limitation, developments with respect to Year 2000 Issues), which could reasonably be expected to have a Material Adverse Effect. 6.4 CONDUCT OF BUSINESS. The Company will, and will cause each Subsidiary to, carry on and conduct its business in substantially the same fields of enterprise as it is presently conducted or fields related thereto or extensions thereof (taking the Company and its Subsidiaries on a consolidated basis) and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, unless the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.5 TAXES. The Company will, and will cause each Subsidiary to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.6 INSURANCE. The Company will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts (with such customary deductibles, exclusions and self-insurance) and covering such risks as is consistent with sound business practice. 6.7 COMPLIANCE WITH LAWS. The Company will, and will cause each Subsidiary to, comply with all Requirements of Law, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.8 PROPERTIES; INSPECTION. The Company will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements to the extent the Company reasonably deems consistent with sound business practice. The Company will, and will cause each Subsidiary to, permit the Agent and the Lenders, by their respective representatives and agents, to reasonably inspect any of the Property of the Company and each Subsidiary, the financial or accounting records of the Company and each Subsidiary and other documents of the Company and each Subsidiary, in each case only to the extent any of the foregoing is reasonably related to the credit evaluation by the Agent and the Lenders under this Agreement, to examine and make copies of such records and documents of the Company and each Subsidiary, and to discuss the affairs, finances and accounts of the Company and each Subsidiary with, and to be advised as to the same by, their respective officers upon reasonable prior notice at such reasonable times and intervals as the Agent may designate. 47 54 6.9 MERGER. The Company will not, nor will it permit any Subsidiary to, merge or consolidate with or into any other Person, except that, provided that no Default or Unmatured Default shall have occurred and be continuing or would result therefrom on a pro forma basis reasonably acceptable to the Agent, the Company may merge or consolidate with any other U.S. corporation and each Subsidiary may merge or consolidate with any other Person, provided, further, that (i) in the case of any such merger or consolidation involving the Company, the Company is the surviving corporation and (ii) in the case of any such merger or consolidation involving a Subsidiary which is a Subsidiary Borrower, the surviving corporation assumes all of such Borrower's obligations under this Agreement and remains or becomes a Subsidiary Borrower. 6.10 SALE OF ASSETS. The Company will not, nor will it permit any Subsidiary to, lease, sell or otherwise dispose of its Property, to any other Person (other than to the Company or a Guarantor or between Foreign Subsidiaries), except: (i) Sales of inventory in the ordinary course of business. (ii) Sales or other dispositions in the ordinary course of business of fixed assets for the purpose of replacing such fixed assets, provided that such fixed assets are replaced within 180 days of such sale or other disposition with other fixed assets that have a fair market value not materially less than the fixed assets sold or otherwise disposed of. (iii) Other leases, sales (including sale-leasebacks) or other dispositions of its Property that, together with all other Property of the Company and its Subsidiaries previously leased, sold or disposed of (other than as provided in clauses (i) and (ii) above) as permitted by this Section during the twelve-month period ending with the month prior to the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Company and its Subsidiaries. Notwithstanding anything in this Section 6.10 to the contrary, (a) no such leases, sales or other dispositions of property may be made (other than pursuant to clause (i) above) if any Default or Unmatured Default has occurred and is continuing, and (b) all leases, sales and other dispositions of Property at any time shall be for not materially less than the fair market value of such Property as determined in good faith by the Company. 6.11 INVESTMENTS AND ACQUISITIONS. The Company will not, nor will it permit any Subsidiary to, make or suffer to exist any Investments, or commitments therefor, or to make any Acquisition of any Person, except, so long as no Default or Unmatured Default exists or would be caused thereby: (i) Investments in Cash Equivalents. (ii) Investments in Guarantors. (iii) Other Investments in existence on the date hereof. (iv) Other Investments provided that the aggregate amount of such Investments made in any fiscal year does not exceed 15% of Tangible Net Worth as of the beginning of such fiscal year. (v) Any Acquisition so long as the aggregate amount of consideration (including without limitation any payments in cash, Capital Stock or other consideration, any direct or deferred payments (to the extent such deferred payments should be shown as a liability on a balance sheet of the Company and its Subsidiaries in accordance with Agreement Accounting Principles) and the amount of any 48 55 Indebtedness (other than Letters of Credit incurred in the ordinary course of business) assumed or otherwise incurred in connection with such Acquisition) paid or payable by the Company or any Subsidiary in connection with any such Acquisition does not exceed 30% of the then Tangible Net Worth (or, in the case of the contemplated Acquisition identified by the Company to the Agent prior to the Effective Date as Project Road Runner, 40% of the then Tangible Net Worth, provided that the Company delivers to the Agent prior to such Acquisition a pro forma Compliance Certificate indicating pro forma compliance with Sections 6.18 and 6.19) and such Acquisition is not hostile and shall have been approved by the board of directors or similar governing body of the target of such Acquisition. 6.12 LIENS. The Company will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Company or any of its Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (ii) Liens imposed by law, such as landlord's, carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business that secure payment of obligations not more than 60 days past due or that are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation (other than Liens in favor of the PGBC). (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and that do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Company or its Subsidiaries. (v) Liens existing on the date hereof and described on Schedule 6.12, provided that no increase in the principal amount secured thereby is permitted. (vi) Any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in the foregoing clauses, provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured prior to such extension, renewal or replacement and that such extension, renewal or replacement Lien shall be limited to all or a part of the assets that secured the Lien so extended, renewed or replaced (plus improvements and construction on such real property). (vii) Liens securing Indebtedness and not otherwise permitted by the foregoing provisions of this Section 6.12, provided that the aggregate outstanding principal amount of the Indebtedness secured by all such Liens shall not at any time exceed 10% of Tangible Net Worth. 6.13 YEAR 2000. The Company will take and will cause each of its Subsidiaries to take all such actions as are reasonably necessary to successfully implement the Year 2000 Program and to assure that Year 2000 Issues will not have a Material Adverse Effect. At the request of the Agent, the Company will provide a description of the Year 2000 Program, together with any updates or progress reports with respect thereto. 49 56 6.14 AFFILIATES. The Company will not, and will not permit any Subsidiary to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms (taken as a whole) not materially less favorable to the Company or such Subsidiary than the Company or such Subsidiary would obtain in a comparable arms-length transaction. 6.15 INDEBTEDNESS OF CERTAIN SUBSIDIARIES. The Company will not permit any Subsidiary which is not a Guarantor to create, incur or suffer to exist any Indebtedness, except: (i) The Loans, the Facility Letters of Credit and the other Obligations. (ii) Indebtedness outstanding on the date of this Agreement, but no increase in the principal amount thereof. (iii) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness existed at the time such Person becomes a Subsidiary and was not created in contemplation of or in connection with such Person becoming a Subsidiary. (iv) Any refunding or refinancing of any Indebtedness referred to in clauses (ii) and (iii) above, provided that any such refunding or refinancing does not increase the principal amount thereof. (v) Indebtedness arising from (a) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, or (b) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business. (vi) Other Indebtedness; provided that, at the time of the creation, incurrence or assumption of such other Indebtedness and after giving effect thereto, the aggregate amount of all such other Indebtedness of such Subsidiaries does not exceed an amount equal to 10% of Tangible Net Worth at such time. 6.16 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. The Company will not, and will not permit any Subsidiary to, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Company to (i) pay dividends or make any other distributions in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Company or any other Subsidiary of the Company, (ii) make loans or advances to the Company or any other Subsidiary of the Company or (iii) transfer any of its assets to the Company or any other Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of (a) any restrictions existing under the Loan Documents, (b) any restrictions with respect to a Subsidiary imposed pursuant to an agreement which has been entered into in connection with the disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, (c) any restrictions with respect to assets encumbered by a Lien permitted by Section 6.12 so long as such restriction applies only to the assets encumbered by such permitted Lien, and (d) to the extent required by the minority shareholders thereof, any restriction with respect to a Foreign Subsidiary of which less than 90% of the Voting Stock is owned by the Company or any of its Subsidiaries. 6.17 FINANCIAL CONTRACTS. The Company will not, and will not permit any Subsidiary to, enter into or remain a party to any Financial Contract for purposes of financial speculation. 50 57 6.18 TOTAL DEBT TO CAPITALIZATION RATIO. The Company shall not permit its Total Debt to Capitalization Ratio to exceed 50%. 6.19 INTEREST COVERAGE RATIO. The Company shall not permit its Interest Coverage Ratio to be less than 5.0 to 1.0 as of the last day of any fiscal quarter. ARTICLE VII DEFAULTS -------- The occurrence of any one or more of the following events shall constitute a Default: 7.1 Any representation or warranty made, including without limitation those deemed made pursuant to Section 4.2, by or on behalf of the Company or its Subsidiaries to the Lenders or the Agent in any Loan Document, in connection with any Loan or Facility Letter of Credit, or in any certificate or information delivered in writing in connection with any Loan Document or in any certificate or information delivered in writing in connection with any Loan Document shall be false in any material respect on the date as of which made. 7.2 Nonpayment of principal of any Loan when due, or nonpayment of interest on any Loan or of any facility fee within five Business Days after written notice from the Agent that the same has become due, or nonpayment of any other obligations under any of the Loan Documents within five Business Days after written notice from the Agent that the same has become due. 7.3 The breach by any Borrower of any of the terms or provisions in Sections 6.2, 6.3, 6.9, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18 or 6.19. 7.4 The breach by any Borrower or Guarantor (other than a breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this Agreement or any other Loan Document which is not remedied within 30 days after written notice from the Agent. 7.5 Failure of the Company or any of its Subsidiaries to pay when due any Indebtedness or Rate Hedging Obligations aggregating in excess of $15,000,000 ("Material Indebtedness"); or the default by the Company or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement under which any such Material Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which is to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Company or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Company or any of its Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due. 7.6 The Company or any of its Subsidiaries, shall (i) have an order for relief entered with respect to it under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts or seeking similar relief under any law of any 51 58 jurisdiction, domestic or foreign, relating to bankruptcy, insolvency or reorganization or relief of debtors or similar proceeding or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate, company or other action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7 Without its application, approval or consent, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Company or any of its Subsidiaries or any Substantial Portion of their respective Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Company or any of its Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days. 7.8 Any court, government or governmental agency shall without appropriate compensation condemn, seize or otherwise appropriate, or take custody or control of (each a "Condemnation"), all or any portion of the Property of the Company or any of its Subsidiaries which, when taken together with all other Property of the Company and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such Condemnation occurs, constitutes a Substantial Portion and is reasonably likely to have a Material Adverse Effect. 7.9 The Company or any of its Subsidiaries shall fail within 90 days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $15,000,000 in aggregate amount for the Company and its Subsidiaries, which is not stayed on appeal. 7.10 Any member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of $15,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Single Employer Plan with Unfunded Liabilities in excess of $15,000,000 (a "Material Plan") shall be filed under Section 4041(c) of ERISA by any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist that could reasonably be expected to result in PBGC obtaining a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the Controlled Group to incur a current payment obligation for withdrawal liability in excess of $15,000,000 in aggregate amount for the Controlled Group. 7.11 The Company or any of its Subsidiaries shall be the subject of any proceeding or investigation pertaining to the Release by the Company or any of its Subsidiaries or any other Person of any Hazardous Substance, or any violation of any applicable Environmental Law, which, in either case, could reasonably be expected to have a Material Adverse Effect. 7.12 The occurrence of any Change of Control. 7.13. The occurrence of any "default", as defined in any Loan Document, or the breach of any of the terms or provisions of any Loan Document, which default or breach continues beyond any period of grace therein provided. 7.14 Any Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or assert the invalidity or unenforceability of any Guaranty by any Guarantor, or any 52 59 Guarantor shall fail to comply with any of the terms or provisions of any Guaranty to which it is a party, or any Guarantor denies that it has any further liability under any Guaranty to which it is a party, or gives notice to such effect. ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ---------------------------------------------- 8.1 ACCELERATION. (a) If any Default described in Section 7.6 or 7.7 occurs, (i) the obligations of the Lenders to make Loans hereunder and the obligations of the Issuers to issue Facility Letters of Credit shall automatically terminate and the Obligations shall immediately become due and payable without presentment, demand, protest or notice of any kind, all of which the Borrowers hereby expressly waive and without any election or action on the part of the Agent or any Lender and (ii) each Borrower will be and become thereby unconditionally obligated, without the need for demand or the necessity of any act or evidence, to deliver to the Agent, at its address specified pursuant to Article XIV, for deposit into the Letter of Credit Collateral Account, an amount (the "Collateral Shortfall Amount") equal to the excess, if any, of (A) 100% of the sum of the aggregate maximum amount remaining available to be drawn under the Facility Letters of Credit requested by such Borrower (assuming compliance with all conditions for drawing thereunder) issued by an Issuer and outstanding as of such time, OVER (B) the amount on deposit for such Borrower in the Letter of Credit Collateral Account at such time that is free and clear of all rights and claims of third parties (other than the Agent and the Lenders) and that has not been applied by the Lenders against the Obligations of such Borrower. (b) If any Default occurs and is continuing (other than a Default described in Section 7.6 or 7.7), (i) the Required Lenders may terminate or suspend the obligations of the Lenders to make Loans and the obligation of the Issuers to issue Facility Letters of Credit hereunder, or declare the Obligations to be due and payable, or both, whereupon (if so declared) the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrowers hereby expressly waive and (ii) the Required Lenders may, upon notice delivered to the Borrowers with outstanding Facility Letters of Credit and in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on each such Borrower to deliver (and each such Borrower will, forthwith upon demand by the Required Lenders and without necessity of further act or evidence, be and become thereby unconditionally obligated to deliver), to the Agent, at its address specified pursuant to Article XIV, for deposit into the Letter of Credit Collateral Account an amount equal to the Collateral Shortfall Amount payable by such Borrower. (c) If at any time while any Default is continuing, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on the Borrowers with outstanding Facility Letters of Credit to deliver (and each such Borrower will, forthwith upon demand by the Agent and without necessity of further act or evidence, be and become thereby unconditionally obligated to deliver), to the Agent as additional funds to be deposited and held in the Letter of Credit Collateral Account an amount equal to such Collateral Shortfall Amount payable by such Borrower at such time. (d) The Agent may at any time or from time to time after funds are deposited in the Letter of Credit Collateral Account, apply such funds to the payment of the Obligations of the relevant Borrowers 53 60 and any other amounts as shall from time to time have become due and payable by the relevant Borrowers to the Lenders under the Loan Documents. (e) Neither the Borrowers nor any Person claiming on behalf of or through the Borrowers shall have any right to withdraw any of the funds held in the Letter of Credit Collateral Account. After all of the Obligations have been indefeasibly paid in full or upon the request of the Company if no Default has occurred and is continuing, any funds remaining in the Letter of Credit Collateral Account shall be returned by the Agent to the applicable Borrower(s) or paid to whoever may be legally entitled thereto at such time. (f) The Agent shall exercise reasonable care in the custody and preservation of any funds held in the Letter of Credit Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Agent accords its own property, it being understood that the Agent shall not have any responsibility for taking any necessary steps to preserve rights against any Persons with respect to any such funds. 8.2 AMENDMENTS. 8.2.1 Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrowers may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrowers hereunder or waiving any Default hereunder; PROVIDED, HOWEVER no such supplemental agreement shall, (i) without the consent of the Required U.S. Revolving Credit Lenders, allow the Company to obtain a U.S. Revolving Credit Loan or U.S. Facility Letter of Credit if it would otherwise be unable to do so absent such supplemental agreement, (ii) without the consent of the Required Euro Revolving Credit Lenders, allow any Foreign Subsidiary Borrower to obtain a Euro Revolving Credit Loan or Euro Facility Letter of Credit if it would otherwise be unable to do so absent such supplemental agreement, (iii) without the consent of the Required U.S. Term Loan Lenders, allow the Company to obtain the U.S. Term Loan if it would otherwise be unable to do so absent such supplemental agreement, (iv) without the consent of the Required Euro Term Loan Lenders, allow any Foreign Subsidiary Borrower to obtain the Euro Term Loan if it would otherwise be unable to do so absent such supplemental agreement, (v) without the consent of the Agent, modify any rights or obligations of any kind of the Agent, and (vi) without the consent of the Issuer, modify any rights or obligations of any kind of the Issuer, and PROVIDED FURTHER that no such supplemental agreement shall, without the consent of each Lender: (a) Extend the final maturity of any Loan, Note or Reimbursement Obligation or postpone any regularly scheduled payment of principal of any Loan or forgive all or any portion of the principal amount thereof, or reduce the rate or extend the time of payment of interest or fees thereon. (b) Reduce the percentage specified in the definition of Required Lenders, Required Euro Revolving Credit Lenders, Required U.S. Revolving Credit Lenders, Required Euro Term Loan Lenders or Required U.S. Term Loan Lenders. (c) Extend the Facility Termination Date or the Maturity Date, or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.6, or increase the amount of any Commitment of any Lender hereunder or the Aggregate Commitments other than as allowed hereunder, or permit any Borrower to assign its rights under this Agreement. (d) Amend this Section 8.2.1. 54 61 (e) Release any Guarantor which is the Company or a Significant Subsidiary. 8.2.2 In addition to amendments effected pursuant to the foregoing, Schedule 1.1(b) may be amended as follows: (i) Schedule 1.1(b) will be automatically amended to add Subsidiaries of the Company as additional Subsidiary Borrowers upon (a) execution and delivery by the Company, any such Subsidiary Borrower and the Agent, of a Joinder Agreement providing for any such Subsidiary to become a Subsidiary Borrower, (b) delivery to the Agent of (A) a Domestic Subsidiary Opinion or Foreign Subsidiary Opinion, as the case may be, in respect of such additional Subsidiary Borrower and (B) such other documents with respect thereto as the Agent shall reasonably request and (C) the written approval of the Agent in its sole discretion. (ii) Schedule 1.1(b) will be automatically amended to remove any Subsidiary as a Subsidiary Borrower upon (A) written notice by the Company to the Agent to such effect and (B) repayment in full of all outstanding Loans and all other obligations pursuant to any Loan Document of such Subsidiary Borrower. (iii) It is acknowledged and agreed that there may be more than one Foreign Subsidiary Borrower, provided that there may not be a number thereof more than reasonably allowed by the Agent. 8.2.3 No modification or waiver of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. No modification or waiver of any provision of this Agreement relating to any Issuer shall be effective without the written consent of such Issuer. The Agent may waive payment of the fee required under Section 13.3.2 without obtaining the consent of any other party to this Agreement. Notwithstanding anything herein to the contrary, any Defaulting Lender shall not be entitled to vote (whether to consent or to withhold its consent) with respect to any amendment, modification, termination or waiver and, for purposes of determining the Required Euro Revolving Credit Lenders, Required U.S. Revolving Credit Lenders, Required Euro Term Loan Lenders and Required U.S. Term Loan Lenders, the Commitments and the Loans of such Defaulting Lender shall be disregarded and the Agent shall have the ability, but not the obligation, to replace any such Defaulting Lender with another lender or lenders. 8.2.4. New lenders ("New Lenders") may become Lenders hereunder and existing Lenders may increase their Commitments hereunder by executing an assumption agreement and other agreements and documents in form and substance acceptable to the Company and the Agent, provided that (i) the Company and the Agent consent thereto and (ii) without the prior written consent of all of the Lenders, the Aggregate Commitments may not be increased by more than a Dollar Equivalent Amount equal to $50,000,000 in excess of the Aggregate Commitments in effect on the Effective Date. 8.3 PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of the Borrowers to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. 55 62 ARTICLE IX GUARANTEE --------- 9.1 GUARANTEE. (a) The Company hereby unconditionally and irrevocably guarantees to the Agent and the Lenders and their respective successors, endorsees, transferees and assigns, the prompt and complete payment and performance by the Subsidiary Borrowers when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations owing by such Subsidiary Borrowers. (b) The Company further agrees to pay any and all reasonable expenses (including, without limitation, all reasonable fees and disbursements of counsel) which are paid or incurred by the Agent, or any Lender in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Company under this Section or, in the case of the Agent, obtaining advice of counsel in respect thereof. This Section shall remain in full force and effect until the Obligations are paid in full and the Commitments are terminated, notwithstanding that from time to time prior thereto the Borrowers may be free from any Obligations. (c) No payment or payments made by any Borrower or any other Person or received or collected by the Agent or any Lender from any Borrower or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Company hereunder, which shall, notwithstanding any such payment or payments, remain liable hereunder for the Obligations until the Obligations are paid in full and the Commitments are terminated. (d) The Company agrees that whenever, at any time, or from time to time, it shall make any payment to the Agent or any Lender on account of its liability under this Section, it will notify the Agent and such Lender in writing that such payment is made under this Section for such purpose. 9.2 NO SUBROGATION. Notwithstanding any payment or payments made by the Company hereunder, or any set-off or application of funds of the Company by the Agent or any Lender, the Company shall not be entitled to be subrogated to any of the rights of the Agent or any Lender against the Borrowers or against any guarantee or right of offset held by the Agent or any Lender for the payment of the Obligations, nor shall the Company seek or be entitled to seek any contribution or reimbursement from the Borrowers in respect of payments made by the Company hereunder, until all amounts owing to the Agent and the Lenders by the Borrowers on account of the Obligations are paid in full and the Commitments are terminated. If any amount shall be paid to the Company on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Company in trust for the Agent and the Lenders, segregated from other finds of the Company, and shall, forthwith upon receipt by the Company, be turned over to the Agent in the exact form received by the Company (duly endorsed by the Company to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as Agent may determine. The provisions of this paragraph shall survive the termination of this Agreement and the payment in full of the Obligations and the termination of the Commitments. 9.3 AMENDMENTS. ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF RIGHTS. The Company shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Company, and without notice to or further assent by the Company, any demand for payment of any of the Obligations made by the Agent or the Required Lenders may be rescinded by the Agent or the Required 56 63 Lenders, and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Agent or the Required Lenders, and any Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, in accordance with the provisions thereof as the Agent (or the Required Lenders, as the case may be) may deem advisable from time to time, and any guarantee or right of offset at any time held by the Agent or any Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. None of the Agent or any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Agreement or any property subject thereto. When making any demand hereunder against the Company, the Agent or any Lender may, but shall be under no obligation to, make a similar demand on any other Borrower or any other guarantor, and any failure by the Agent or any Lender to make any such demand or to collect any payments from any other Borrower or any such other guarantor or any release of the Borrowers or such other guarantor shall not relieve the Company of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Agent or any Lender against the Company. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 9.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Company waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Agent or any Lender upon this Agreement or acceptance of this Agreement; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Agreement; and all dealings among the Borrowers, on the one hand, and the Agent and the Lenders, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Agreement. The Company waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Subsidiary Borrowers and the Company with respect to the Obligations. This Article IX shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity, regularity or enforceability of this Agreement, any other Loan Document, any of the Obligations or any guarantee or right of offset with respect thereto at any time or from time to time held by the Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance by any Borrower) which may at any time be available to or be asserted by any Borrower against the Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Borrower) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrowers for the Obligations, or of the Company under this Section 9.4, in bankruptcy or in any other instance (other than a defense of payment or performance by the Borrowers). When pursuing its rights and remedies hereunder against the Company, the Agent and any Lender may, but shall be under no obligation to, pursue such rights and remedies as it may have against any Borrower or any other Person or against any guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Agent or any Lender to pursue such other rights or remedies or to collect any payments from the Borrowers or any such other Person or to realize upon any such guarantee or to exercise any such right of offset, or any release of the Borrowers or any such other Person or of any such guarantee or right of offset, shall not relieve the Company of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Agent or any Lender against the Company. This Article IX shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Company and its successors and assigns, and shall inure to the benefit of the Agent and the Lenders, and their respective successors, indorsees, transferees and assigns, until all the Obligations and the obligations of the Company under this Agreement shall have been satisfied by payment in full and the Commitments shall be terminated, notwithstanding that from time to time during the term of this Agreement the Borrowers may be free from any Obligations. 57 64 9.5 REINSTATEMENT. This Article IX shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or upon or as a result of the appointment of a receiver, intervenor or conservator of, or Trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, all as though such payments had not been made. 9.6 PAYMENTS. The Company hereby agrees that all payments required to be made by it hereunder will be made to the Agent without set-off or counterclaim in accordance with the terms of the Obligations, including, without limitation, in the currency in which payment is due. ARTICLE X GENERAL PROVISIONS ------------------ 10.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of the Borrowers contained in this Agreement shall survive delivery of the Loan Documents and the making of the Loans herein contemplated. 10.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to a Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 10.3 TAXES. Any taxes (excluding income taxes and franchise taxes (imposed in Lieu of income taxes), imposed on the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document)) or other similar assessments or charges made by any governmental or revenue authority in respect of the Loan Documents shall be paid by the Company, together with interest and penalties, if any. 10.4 HEADINGS. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 10.5 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement and understanding among the Borrowers, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Agent and the Lenders relating to the subject matter thereof other than any fee letters among any Borrowers and either of the Agent or Arranger and any other agreements of any of the Borrowers with the Agent which survive the execution of the Loan Documents. 10.6 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 58 65 10.7 EXPENSES; INDEMNIFICATION. (i) The Borrowers shall reimburse the Agent and the Arranger for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration (including, without limitation, preparation of the reports described below) of the Loan Documents. The Borrowers also agree to reimburse the Agent, the Arranger and the Lenders for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, the Arranger and the Lenders, which attorneys may be employees of the Agent, the Arranger or the Lenders) paid or incurred by the Agent, the Arranger or any Lender in connection with the collection and enforcement of the Loan Documents. The Borrowers acknowledge and agree that from time to time the Agent may prepare and may distribute to the Lenders (but shall have no obligation or duty to prepare or to distribute to the Lenders) certain audit reports (the "Reports") pertaining to any Borrower's and Guarantors' assets for internal use by the Agent from information furnished to it by or on behalf of the Borrowers, after the Agent has exercised its rights of inspection pursuant to this Agreement; provided that, if any Lender requests copies of any future similar Reports which the Agent has prepared, then the Agent will provide such reports to such Lender provided that such Lender has executed an indemnity agreement acceptable to the Agent. The Borrowers further acknowledge and agree that the Agent or any of its agents or representatives may conduct reasonable comprehensive field audits of the Property of the Company and each Subsidiary, financial or accounting records of the Company and each Subsidiary and other documents of the Company and each Subsidiary, in each case only to the extent any of the foregoing is reasonably related to the credit evaluation by the Agent and the Lenders under this Agreement, provided that (x) other than after the occurrence and during continuance of a Default, no more than one such comprehensive field audit shall be conducted in any fiscal year and (y) only after the occurrence and during continuance of a Default shall such field audits be at the Company's expense. (ii) The Borrowers hereby further agree to indemnify the Agent, the Arranger and each Lender, and their respective directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and reasonable expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor whether or not the Agent, the Arranger or any Lender is a party thereto) which any of them may pay or incur at any time arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Loan or Facility Letters of Credit hereunder except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrowers under this Section 10.7 shall survive the termination of this Agreement. 10.8 ACCOUNTING. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. For purposes of Article VI (including any baskets or limitations expressed in U.S. Dollars therein) of this Agreement, any Indebtedness, Investment or other amount made or incurred in any currency other than U.S. Dollars shall be deemed to be the U.S. Dollar Equivalent thereof. 10.9 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 59 66 10.10 NONLIABILITY OF LENDERS. The relationship between the Borrowers and the Lenders and the Agent shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to any Borrower. Neither the Agent nor any Lender undertakes any responsibility to any Borrower to review or inform any Borrower of any matter in connection with any phase of such Borrower's business or operations. Each Borrower agrees that neither the Agent nor any Lender shall have liability to any Borrower (whether sounding in tort, contract or otherwise) for losses suffered by any Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined by a court of competent jurisdiction in a final and non-appealable order that such losses resulted from the gross negligence or willful misconduct of, or violation of applicable laws or any of the Loan Documents by, the party from which recovery is sought. Neither the Agent nor any Lender shall have any liability with respect to, and each Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrowers in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 10.11 CONFIDENTIALITY. Each Lender agrees to hold any information that it may receive from any Borrower pursuant to this Agreement (such information, exclusive of Non-Confidential Information as defined below, is defined herein as the "Confidential Information") in confidence, and will not disclose or use for any purpose other than its credit evaluation under this Agreement such Confidential Information, except for disclosure: (i) to any Transferee or prospective Transferee to the extent provided in Section 13.4; (ii) to legal counsel, accountants and other professional advisors to that Lender to the extent necessary to advise that Lender concerning its rights or obligations in respect of this Agreement; PROVIDED that such professional advisor agrees to hold any Confidential Information which it may receive in confidence and not to disclose or use such Confidential Information for any purpose other than advising that Lender with respect to its rights and obligations under this Agreement; (iii) to regulatory officials to the extent required by applicable law, rule, regulations, order, policy or directive (whether or not any such policy or directive has the force of law); and (iv) pursuant to any order of any court, arbitrator or Governmental Authority of competent jurisdiction (or as otherwise required by law); PROVIDED, however, that the Lender (or other Person given Confidential Information by such Lender) shall provide the Company with prompt notice of any such required disclosure so that the Company may seek a protective order or other appropriate remedy, and in the event that such protective order or other remedy is not obtained, such Lender (or such other Person) will furnish only that portion of the Confidential Information which is legally required. As used herein, "Non-Confidential Information" shall mean any information which (a) is or becomes generally available to the public other than as a result of a disclosure by the Lender or the Lender's representatives, or (b) becomes available to the Lender on a non-confidential basis from a source other than the Company or one of its agents or (c) was known to the Lender on a non-confidential basis prior to its disclosure to the Lender by the Company or one of its agents. 10.12 NONRELIANCE. Each Lender hereby represents that it is not relying on or looking to any Margin Stock for the repayment of the Loans provided for herein. 60 67 ARTICLE XI THE AGENT --------- 11.1 APPOINTMENT; NATURE OF RELATIONSHIP. Bank One is hereby appointed by the Lenders as the Agent hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article XI. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. 11.2 POWERS. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall not have any implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent. 11.3 GENERAL IMMUNITY. Neither Agent nor any of its directors, officers, agents or employees shall be liable to the Borrowers, the Lenders or any Lender for (a) any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person; or (b) any determination by the Agent that compliance with any law or any governmental or quasi-governmental rule, regulation, order, policy, guideline or directive (whether or not having the force of law) requires the Advances and Commitments hereunder to be classified as being part of a "highly leveraged transaction". 11.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (iii) the satisfaction of any condition specified in Article IV; (iv) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (v) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; (vi) the existence or possible existence of any Default or Unmatured Default; or (vii) the financial condition of any Borrower or Guarantor or any of their respective Subsidiaries. The Agent shall not have any duty to disclose to the Lenders information that is not required to be furnished by the Borrowers to the Agent at the time, but is voluntarily furnished by the Borrowers to the Agent (either in its capacity as the Agent or in its individual capacity). 61 68 11.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders (or all Lenders if required under Section 8.2.1), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of the Obligations. The Lenders hereby acknowledge that the Agent shall not be under any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 11.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document. 11.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 11.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to reimburse and indemnify (to the extent not reimbursed by a Borrower and without limiting the obligation of any Borrower to do so) the Agent ratably in proportion to the U.S. Dollar Equivalent of their respective Commitments (or, if the Commitments have been terminated, in proportion to the U.S. Dollar Equivalent of their respective Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Company for which the Agent is entitled to reimbursement by the Company or the other Borrowers under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms thereof or of any such other documents, PROVIDED that no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent. The obligations of the Lenders under this Section 11.8 shall survive payment of the Obligations and termination of this Agreement. 11.9 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice 62 69 from a Lender or a Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. 11.10 RIGHTS AS A LENDER. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document as any Lender and may exercise the same as though it were not an Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Company or any of its Subsidiaries in which the Company or such Subsidiary is not restricted hereby from engaging with any other Person. 11.11 LENDER CREDIT DECISION. Each Lender acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Lender and based on the financial statements prepared by the Borrowers and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 11.12 SUCCESSOR AGENT. The Agent may resign at any time by giving written notice thereof to the Lenders and the Company, such resignation to be effective upon the appointment of a successor Agent or, if no such successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders and, unless a Default has occurred and is continuing, the Company, such removal to be effective on the date specified by the Required Lenders and, unless a Default has occurred and is continuing, the Company. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, with the consent of the Company (unless a Default has occurred and is continuing), on behalf of the Borrowers and the Lenders, a successor Agent to the Agent. If no such successor Agent shall have been so appointed by the Required Lenders within thirty days after such resigning Agent's giving notice of its intention to resign, then such resigning Agent may appoint, with the consent of the Company (unless a Default has occurred and is continuing), on behalf of the Company and the Lenders, a successor Agent for itself. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Company shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $500,000,000. Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article XI shall continue in effect for the benefit of the Agent in respect of any actions taken or omitted to be taken by it while it was acting as an Agent hereunder and under the other Loan Documents. 11.13 RIGHT TO INDEMNITY. The Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any 63 70 and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. 11.14 DELEGATION TO AFFILIATES. The Borrowers and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver, and other protective provisions to which the Agent is entitled under Articles X and XI. ARTICLE XII SETOFF; ADJUSTMENTS AMONG LENDERS --------------------------------- 12.1 SETOFF. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Default occurs and is continuing, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender to or for the credit or account of any Borrower may be offset and applied toward the payment of the Obligations owing to such Lender by such Borrower. 12.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise, has payment made to it upon its Obligations owing from a Borrower (other than payments received pursuant to Section 3.1, 3.2, 3.4, 3.6 or 10.7) in a greater proportion than that received by any other Lender on its Obligations owing from such Borrower, such Lender agrees, promptly upon demand, to purchase a portion of the Advances to such Borrower held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Advances to such Borrower. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives any protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such protection ratably in proportion to their Aggregate Total Outstandings (in accordance with the formula set forth in the next sentence). ARTICLE XIII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ------------------------------------------------- 13.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers and the Lenders and their respective successors and assigns, except that (i) the Borrowers shall not have the right to assign their rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 13.3. Notwithstanding clause (ii) of this Section, any Lender may at any time, without the consent of the Borrowers or the Agent, assign all or any portion of its rights under this Agreement, and the Loan Documents to a Federal Reserve Bank; PROVIDED, however, that no such assignment to a Federal Reserve Bank shall release the transferor Lender from its obligations hereunder. The Agent may treat the payee of any Loan Document as the owner thereof for all purposes hereof unless and until such payee complies with Section 13.3 in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Agent. Any assignee or transferee of any of the Advances or a Note agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or 64 71 giving such authority or consent is the owner of any of the Advances or a holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. 13.2 PARTICIPATIONS. 13.2.1 PERMITTED PARTICIPANTS; EFFECT. Subject to Section 13.4, any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Obligations owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Obligations or Note for all purposes under the Loan Documents, all amounts payable by the Borrowers under this Agreement shall be determined as if such Lender had not sold such participating interests (including without limitation payments with respect to Non-Excluded Taxes), and the Borrowers and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 13.2.2 VOTING RIGHTS. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, extends the Facility Termination Date, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment, releases the Company as guarantor of any such Loan or releases all or substantially all of the collateral, if any, securing any such Loan. 13.3 ASSIGNMENTS. 13.3.1 PERMITTED ASSIGNMENTS. Subject to Section 13.4, any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks, finance companies, insurance companies or other financial institutions or funds that are engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business or any other entity ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit J hereto (an "Assignment") or in such other form as may be agreed to by the parties thereto. The consent of the Agent, any Issuer and the Company shall be required prior to an assignment becoming effective, which consent shall not be unreasonably withheld or delayed and shall not be required if such assignment is to another Lender or to an Affiliate of a Lender; provided, upon and during the continuance of any Default, the consent of the Company shall not be required. Each such assignment shall be in an amount not less than the lesser of (i) $5,000,000 and in multiples of $1,000,000 (or its approximate equivalent in the relevant Available Foreign Currency) or (ii) unless such assignment is of the entire amount of the commitments of such Lender, the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment) shall not be less than $5,000,000 (or its approximate equivalent thereof in the relevant Available Foreign Currency). 13.3.2 EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of an Assignment, together with any consents required by Section 13.3.1, and (ii) payment of a $3,500 fee to the Agent for processing such assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. The Notice of Assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Loans under the 65 72 applicable assignment agreement are "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Company, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitments and Advances assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 13.3.2, the transferor Lender, the Agent and the Company shall make appropriate arrangements so that replacement Notes, if applicable, are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. 13.4 DISSEMINATION OF INFORMATION. Each Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Company and its Subsidiaries, PROVIDED that each Transferee and prospective Transferee agrees to be bound by Section 10.12. 13.5 TAX TREATMENT. If any interest in any Loan Document is transferred to any Transferee that is organized under the laws of any jurisdiction other than the United States or any State thereof (in the case of a Transferee that is a Lender to the Company or a Domestic Subsidiary Borrower), or of the jurisdiction in which a Foreign Subsidiary Borrower is located (in the case of a Transferee which is a Lender to such Foreign Subsidiary Borrower), the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.6. ARTICLE XIV NOTICES ------- 14.1 NOTICES. Except as otherwise permitted by Article II with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including bank wire, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of a Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth in Schedule 1.1(a) hereto or on the signature pages hereto or otherwise established pursuant to an Assignment or (z) in the case of any party, such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrowers. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; PROVIDED that notices to the Agent under Article II shall not be effective until received. 14.2 CHANGE OF ADDRESS. Any Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto. ARTICLE XV COUNTERPARTS ------------ 66 73 This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrowers, the Agent and the Lenders and each party has notified the Agent by telex or telephone, that it has taken such action. ARTICLE XVI CHOICE OF LAW, CONSENT TO JURISDICTION. --------------------------------------- WAIVER OF JURY TRIAL, JUDGMENT CURRENCY --------------------------------------- 16.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF MICHIGAN. 16.2 WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 16.3 SUBMISSION TO JURISDICTION; WAIVERS. (a) Each Borrower hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of any United States federal or Michigan state court sitting in Detroit, Michigan and appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company or such Foreign Subsidiary Borrower, as the case may be, at the address specified in Section 14.1, or at such other address of which the Agent shall have been notified pursuant thereto; (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (v) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 67 74 (b) Each Subsidiary Borrower hereby irrevocably appoints the Company as its agent for service of process in any proceeding referred to in Section 16.3(i) and agrees that service of process in any such proceeding may be made by mailing or delivering a copy thereof to it care of Company at its address for notices set forth in Section 14.1. 16.4 ACKNOWLEDGMENTS. Each Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) none of the Agent or any Lender has any fiduciary relationship with or duty to such Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Agent and the Lenders, on the one hand, and the Borrowers, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrowers and the Lenders. 16.5 POWER OF ATTORNEY. Each Subsidiary Borrower hereby grants to the Company an irrevocable power of attorney to act as its attorney-in-fact with regard to matters relating to this Agreement and each other Loan Document, including, without limitation, execution and delivery of any amendments, supplements, waivers or other modifications hereto or thereto, receipt of any notices hereunder or thereunder and receipt of service of process in connection herewith or therewith. Each Subsidiary Borrower hereby explicitly acknowledges that the Agent and each Lender have executed and delivered this Agreement and each other Loan Document to which it is a party, and has performed its obligations under this Agreement and each other Loan Document to which it is a party, in reliance upon the irrevocable grant of such power of attorney pursuant to this subsection. The power of attorney granted by each Subsidiary Borrower hereunder is coupled with an interest. 16.6 JUDGMENT. (a) If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in one currency into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, under applicable law that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase the first currency with such other currency in the city in which it normally conducts its foreign exchange operation for the first currency on the Business Day preceding the day on which final judgment is given. (b) The obligation of each Borrower in respect of any sum due from it to any Lender hereunder shall, notwithstanding any judgment in a currency (the "JUDGMENT CURRENCY") other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the "AGREEMENT CURRENCY"), be discharged only to the extent that on the Business Day following receipt by such Lender of any sum adjudged to be so due in the Judgment Currency such Lender may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency; if the amount of Agreement Currency so purchased is less than the sum originally due to such Lender in the Agreement Currency, such Borrower agrees notwithstanding any such judgment to indemnify such Lender against such loss, and if the amount of the Agreement Currency so purchased exceeds the sum originally due to any Lender, such Lender agrees to remit to such Borrower such excess. 68 75 IN WITNESS WHEREOF, the Borrowers, the Lenders and the Agent have executed this Agreement as of the date first above written. DIEBOLD, INCORPORATED By: /s/ Walden W. O'Dell ---------------------------------------- Print Name: Walden W. O'Dell ---------------------------------------- Title: President and Chief Executive Officer -------------------------------------- 5995 Mayfair Road North Canton, Ohio 44720-1507 Attention: Chief Financial Officer and Director of Treasury Services 69 76 BANK ONE, MICHIGAN, as Agent and as a Lender By: /s/ Patrick E. Dunphy ------------------------------------ Print Name: PATRICK E. DUNPHY ---------------------------- Title: VICE PRESIDENT --------------------------------- 611 Woodward Avenue Detroit Michigan 48226 Attention: Paul DeMelo Phone: 313-225-2520 Fax: 313-225-3269 70 77 ABN-AMRO BANK N.V. By: /s/ Louis K. McLinden, Jr. By: /s/ C. S. Helmeci --------------------------- ------------------------------- Print: Louis K. McLinden, Jr. Print Name: CHRISTOPHER S. HELMECI ------------------------ ----------------------- Title: Vice President Title: VICE PRESIDENT ------------------------ ---------------------------- One PPG Place Ste. 2950 Pittsburgh, PA 15222 Attention Chris Helmeci Phone 412-566-0984 Fax: 412-566-2266 71 78 BANK OF AMERICA, N.A. By: /s/ Valerie C. Mills --------------------------------- Print Name: VALERIE C. MILLS -------------------------- Title: MANAGING DIRECTOR ------------------------------ 231 S. LaSalle Street, MC IL 1-231-09-40 Chicago, IL 60697-1010 Phone: 312-828-6728 Fax: 312-987-0303 Attention: Jeff DeJesus 72 79 THE CHASE MANHATTAN BANK By: /s/ Dennis J. Dombek --------------------------------- Print Name: Dennis J. Dombek ------------------------- Title: Vice President ------------------------------ 2300 Main Place Tower Buffalo, NY 14202 Attention: Dennis Dombek Phone: 716-858-1420 Fax: 716-843-4939 73 80 KEYBANK NATIONAL ASSOCIATION By: /s/ Rod MacDonald ------------------------------ Print Name: Rod MacDonald ---------------------- Title: SVP --------------------------- 127 Public Square OH01-27-0606 Cleveland, OH 44114 Attention: Rod MacDonald Phone: 216-689-4445 Fax: 216-689-4981 74 81 NATIONAL CITY BANK By: /s/ Davis R. Bonner ---------------------------- Print Name: DAVIS R. BONNER -------------------- Title: SENIOR VICE PRESIDENT ------------------------- 1900 E. Ninth Street Location Code: 2077 Cleveland, OH 44114 Attention: Davis R. Bonner Phone: 216-575-3285 Fax: 216-222-0003 75 82 THE BANK OF NEW YORK By: /s/ Walter C. Parelli ---------------------------- Print Name: Walter C Parelli -------------------- Title: Vice President ------------------------- One Wall Street, 21st Floor New York, NY 10286 Attention: Ken McDonnell Phone: 212-635-1066 Fax: 212-635-6434 76 83 SCHEDULE 1.1(a) Commitments -----------

U.S. Revolving Euro Revolving Credit Commitments Credit Commitments ------------------ ------------------ Bank One, Administrative Agent $43,333,335 (21.67%) Euro 21,666,665 (21.67%) Bank of America, Syndication Agent 34,000,000 (17.00%) 17,000,000 (17.00%) KeyBank National Association, Co-Agent 29,333,333 (14.67%) 14,666,667 (14.67%) National City Bank, Co-Agent 29,333,333 (14.67%) 14,666,667 (14.67%) ABN Amro Bank, N.V. 21,333,333 (10.67%) 10,666,667 (10.67%) The Bank of New York 21,333,333 (10.67%) 10,666,667 (10.67%) The Chase Manhattan Bank 21,333,333 (10.67%) 10,666,667 (10.67%) ---------- ---------- $200,000,000 Euro 100,000,000

84 Diebold, Incorporated/Bank One, Michigan Loan Agreement Schedules Schedules 1.1(b) - Subsidiary Borrowers - --------------------------------------- None. Schedule 5.7 - Litigation - ------------------------- None. Schedule 5.8 - Subsidiaries - --------------------------- Attached. Schedule 6.12 - Liens - --------------------- Liens in respect of Industrial Revenue Bonds issued by: - --------------------------- ------------------------------------------- Staunton, Virginia Principal amount of secured indebtedness not to exceed $7,500,000; Lien limited to project assets - --------------------------- ------------------------------------------- Danville, Virginia Principal amount of secured indebtedness not to exceed $5,800,000; Lien limited to project assets - --------------------------- ------------------------------------------- Lexington, North Carolina Principal amount of secured indebtedness not to exceed $7,500,000; Lien limited to project assets - --------------------------- ------------------------------------------- 85 EXHIBIT A PRICING SCHEDULE The Applicable Margin for Floating Rate Loans, Eurodollar Loans and Multicurrency Loans, the Facility Fee payable pursuant to Section 2.5 and the Letter of Credit Fee payable pursuant to Section 2.15.6 shall, subject to the last sentence of this Exhibit A, be determined in accordance with the Pricing Matrix set forth below based on the Company's Total Debt to Capitalization Ratio in effect from time to time. Pricing Matrix (in basis points)

------------------------------------------------------------------------------------------------------------- Level Total Debt to Facility Fee Floating Rate Applicable Eurodollar/ Capitalization Margin for Eurocurrency Margin Ratio Revolving for Revolving Credit Credit Loans Loans, Multicurrency Loans and Letter of Credit Fees ------------------------------------------------------------------------------------------------------------- I Less than 25% 8.0 b.p. 0.0 b.p. 27.0 b.p. ------------------------------------------------------------------------------------------------------------- II Greater than or equal to 25% but Less than 35% 10.0 b.p. 0.0 b.p. 35.0 b.p ------------------------------------------------------------------------------------------------------------- III Greater than or equal to 35% but Less than 45% 15.0 b.p. 0.0 b.p. 40.0 b.p. ------------------------------------------------------------------------------------------------------------- IV Greater than or equal to 45% 20.0 b.p. 0.0 b.p. 55.0 b.p. -------------------------------------------------------------------------------------------------------------

If the Aggregate Total Outstandings of all Lenders exceeds 33%, but is less than 66%, of the Aggregate Commitments of all Lenders, the Eurodollar, Eurocurrency and Letter of Credit Fee Applicable Margin will increase by 7.5 basis points at every level on the Pricing Matrix. If the Aggregate Total Outstandings of all Lenders equals or exceeds 66% of the Aggregate Commitmeents of all Lenders, the Eurodollar, Eurocurrency and Letter of Credit Fee Applicable Margin will increase by 15 basis points at every level on the Pricing Matrix. Such Applicable Margin shall be determined in accordance with the foregoing Pricing Matrix based on the Company's level as reflected in the most recent financial statements of the Company delivered pursuant to Section 6.1.(i) and (ii) of the Loan Agreement. Adjustments, if any, to the Applicable Margin shall be effective 50 days after the end of each of the first three fiscal quarters of each fiscal year of he Company and 95 days after the end of each fiscal year of the Company, commencing with the first such day after the Effective Date. If the Borrower fails to deliver the financials statements required pursuant to Section 6.1(i) or (ii) at the time required or any other Default has occurred and is continuing, then the Applicable Margin shall be the highest Applicable Margin set forth in the foregoing Pricing Matrix until such Default is cured or waived under the Agreement. Notwithstanding the foregoing, the Applicable Margin for the period from the Effective Date until it shall be adjusted for the first time shall be the Level __ Applicable Margin described above. 86 EXHIBIT B OPINIONS FOR DOMESTIC SUBSIDIARY BORROWERS 1. The Domestic Subsidiary Borrower is duly organized, validly existing and in good standing under the laws of _________________ [specify the jurisdiction of its organization] (the "JURISDICTION"). 2. The Domestic Subsidiary Borrower has the power and authority, and the legal right, to make, deliver and perform its obligations under the Loan Agreement and the other Loan Documents to which it is a party (collectively, the "Domestic Subsidiary Loan Documents") and to borrow under the Loan Agreement. The Domestic Subsidiary Borrower has taken all necessary corporate and other action to authorize the performance of its obligations under the Domestic Subsidiary Loan Documents and to authorize the execution, delivery and performance of the Domestic Subsidiary Loan Documents. 3. Except for consents, authorizations, approvals, notices and filings described on the attached Schedule 1, if any, all of which have been obtained, made or waived and are in full force and effect, no consent or authorization of, approval by, notice to, filing with or other act by or in respect of, any Governmental Authority is required in connection with the borrowings by the Domestic Subsidiary Borrower under the Domestic Subsidiary Loan Documents or with the execution, delivery, performance, validity or enforceability of any of the Domestic Subsidiary Loan Documents. 4. The Domestic Subsidiary Loan Documents have been duly executed and delivered on behalf of the Domestic Subsidiary Borrower. 5. The execution and delivery of the Domestic Subsidiary Loan Documents by the Domestic Subsidiary Borrower, the performance of its obligations thereunder, the consummation of the transactions contemplated thereby, the compliance by the Domestic Subsidiary Borrower with any of the provisions thereof, the borrowings under the Loan Agreement and the use of proceeds thereof, all as provided therein, (a) will not violate, or constitute a default under, any Requirement of Law applicable to the Domestic Subsidiary Borrower and (b) will not result in, or require, the creation or imposition of any Lien on any of its properties or revenues pursuant to any such Requirement of Law. 6. In any action or proceeding arising out of or relating to the Domestic Subsidiary Loan Documents in any court in the Jurisdiction, such court would recognize and give effect to the choice of law provisions in the Domestic Subsidiary Loan Documents wherein the parties thereto agree that the Domestic Subsidiary Loan Documents shall be governed by, and construed and interpreted in accordance with, the laws of the State of Michigan. 7. The submission by the Domestic Subsidiary Borrower to the non-exclusive jurisdiction of any Michigan State court or United States federal court sitting in Detroit, Michigan is valid and binding under the laws of the Jurisdiction. 87 EXHIBIT C OPINIONS FOR FOREIGN SUBSIDIARY BORROWERS 1. The Foreign Subsidiary Borrower is duly organized, validly existing and in good standing under the laws of __________________ [specify the jurisdiction of its organization] (the "JURISDICTION"). 2. The Foreign Subsidiary Borrower has the power and authority, and the legal right, to make, deliver and perform its obligations under the Loan Agreement and the other Loan Documents to which it is a party (collectively, the "Foreign Subsidiary Loan Documents") and to borrow under the Loan Agreement. The Foreign Subsidiary Borrower has taken all necessary corporate and other action to authorize the performance of its obligations under the Foreign Subsidiary Loan Documents and to authorize the execution, delivery and performance of the Foreign Subsidiary Loan Documents. 3. Except for consents, authorizations, approvals, notices and filings described on the attached Schedule 1, all of which have been obtained, made or waived and are in full force and effect, no consent or authorization of, approval by, notice to, filing with or other act by or in respect of, any Governmental Authority is required in connection with the borrowings by the Foreign Subsidiary Borrower under the Foreign Subsidiary Loan Documents or with the execution, delivery, performance, validity or enforceability of any of the Foreign Subsidiary Loan Documents. 4. The Foreign Subsidiary Loan Documents have been duly executed and delivered on behalf of the Foreign Subsidiary Borrower. 5. The execution and delivery of the Foreign Subsidiary Loan Documents by the Foreign Subsidiary Borrower, the performance of its obligations thereunder, the consummation of the transactions contemplated thereby, the compliance by the Foreign Subsidiary Borrower with any of the provisions thereof, the borrowings under the Loan Agreement and the use of proceeds thereof, all as provided therein, (a) will not violate, or constitute a default under, any Requirement of Law applicable to the Foreign Subsidiary Borrower and (b) will not result in, or require, the creation or imposition of any Lien on any of its properties or revenues pursuant to any such Requirement of Law. 6. There are no taxes imposed by the Jurisdiction (a) on or by virtue of the execution, delivery, enforcement or performance of the Foreign Subsidiary Loan Documents and or (b) on any payment to be made by the Foreign Subsidiary Borrower pursuant to the Foreign Subsidiary Loan Documents other than any Non-Excluded Taxes payable by the Foreign Subsidiary Borrower as provided in the Loan Agreement. 7. To ensure the legality, validity, enforceability or admissibility in evidence of the Foreign Subsidiary Loan Documents it is not necessary that any Foreign Subsidiary Loan Documents or any other document be filed, registered or recorded with, or executed or notarized before, any court of other authority of the Jurisdiction or that any registration charge or stamp or similar tax be paid on or in respect of the Foreign Subsidiary Loan Documents, except for those described on Schedule 1 hereto, all of which have been duly made. 88 8. The Foreign Subsidiary Loan Documents are in proper legal form under the laws of the Jurisdiction for the enforcement thereof against the Foreign Subsidiary Borrower under the laws of the Jurisdiction. 9. In any action or proceeding arising out of or relating to the Foreign Subsidiary Loan Documents in any court in the Jurisdiction, such court would recognize and give effect to the choice of law provisions in the Foreign Subsidiary Loan Documents wherein the parties thereto agree that the Foreign Subsidiary Loan Documents shall be governed by, and construed and interpreted in accordance with, the laws of the State of Michigan. 10. It is not necessary under the laws of the Jurisdiction (a) in order to enable the Agent and the Lenders or any of them to enforce their respective rights of the Foreign Subsidiary Loan Documents or (b) by reason of the execution of the Foreign Subsidiary Loan Documents or the performance of the Foreign Subsidiary Loan Documents that any of them should be licensed, qualified or entitled to carry on business in the Jurisdiction. 11. Neither the Agent nor any of the Lenders will be deemed to be resident, domiciled, carrying on business or subject to taxation in the Jurisdiction merely by reason of the execution of the Foreign Subsidiary Loan Documents or the performance or enforcement of any thereof. The performance by the Agent and the Lenders or any of them of any action required or permitted under the Foreign Subsidiary Loan Documents will not violate any law or regulation, or be contrary to the public policy, of the Jurisdiction. 12. If any judgment of a competent court outside the Jurisdiction were rendered against the Foreign Subsidiary Borrower in connection with any action arising out of or relating to the Foreign Subsidiary Loan Documents, such judgment would be recognized and could be sued upon in the courts of the Jurisdiction, and such courts could grant a judgment which would be enforceable against the Foreign Subsidiary Borrower in the Jurisdiction without any retrial unless it is shown that (a) the foreign court did not have jurisdiction in accordance with its jurisdictional rules, (b) the party against whom the judgment of such foreign court was obtained had no notice of the proceedings or (c) the judgment of such foreign court was obtained through collusion or fraud or was based upon clear mistake of fact or law. 13. The submission by the Foreign Subsidiary Borrower to the non-exclusive jurisdiction of any Michigan State court or United States federal court sitting in Detroit, Michigan is valid and binding under the laws of the Jurisdiction. 2 89 EXHIBIT D GUARANTY AGREEMENT PARTIES ------- THIS GUARANTY AGREEMENT, dated as of December 1, 1999 (this "Guaranty"), is made by each of the undersigned (collectively, the "Guarantors") in favor of each of the Lenders as defined below. RECITALS -------- A. Diebold, Incorporated, an Ohio corporation (the "Company"), the Subsidiary Borrowers from time to time parties thereto (the "Subsidiary Borrowers", and together with the Company, the "Borrowers"), the lenders from time to time parties hereto (the "Lenders"), and Bank One, Michigan, a Michigan banking corporation, as agent for the Lenders (in such capacity, the "Agent") have executed a Loan Agreement dated as of the date hereof (as amended or modified from time to time, and together with any agreement executed in replacement therefor or otherwise refinancing such credit agreement, the "Loan Agreement", and the Loan Agreement, the Loan Documents (as defined in the Loan Agreement), any Rate Hedging Agreements among any Borrowers and any Lenders or their Affiliates, and all other agreements and instruments among the Borrowers, the Agent and the Lenders, or any of them, executed in connection therewith, whether now or hereafter executed, and any supplements or modifications thereof and any agreements or instruments issued in exchange or replacement therefor, collectively referred to as the "Agreements"). B. Pursuant to the terms of the Agreements the Lenders have agreed to make certain extensions of credit to the Borrowers. C. Each Guarantor is an affiliate of the Borrowers, the Borrowers and the Guarantors are engaged in related businesses, and the Guarantors have derived or will derive substantial direct and indirect benefit from the making of the extensions of credit by the Lenders. D. The obligation of the Lenders to make or continue to make certain extensions of credit under the Loan Agreement are conditioned upon, among other things, the execution and delivery by the Guarantors of this Guaranty, and the extensions of credit under the Loan Agreement were made in reliance upon the issuance of this Guaranty. AGREEMENT --------- In consideration of the premises and to induce the Lenders to make loans, extend credit or make other financial accommodations, and to continue to keep such credit and other financial accommodations available to the Borrowers, each Guarantor hereby agrees with and for the benefit of the Lenders as follows: 1. DEFINED TERMS. As used in this Guaranty, terms defined in the first paragraph of this Guaranty and in the recital paragraphs are used herein as defined therein, and the following terms shall have the following meanings: 90 "Cumulative Guarantors" shall mean the Guarantors and all other future guarantors of the Guaranteed Obligations. "Guaranteed Obligations" shall mean all indebtedness, obligations and liabilities of any kind of each of the Borrowers to any of the Lenders or the Agent in connection with or pursuant to the Agreements, including without limitation, all principal, interest (including but without limitation interest which, but for the filing of a bankruptcy petition, would have accrued on the principal amount of the Guaranteed Obligations), reimbursement obligations, indemnity obligations, charges, fees and costs and expenses, including without limitation reasonable fees and expenses of counsel, in each case whether now existing or hereafter arising, direct or indirect, absolute or contingent, joint and/or several, secured or unsecured, arising by operation of law or otherwise. All other capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement. 2. GUARANTEE. (a) Each Guarantor hereby guarantees to the Lenders and the Agent, irrevocably, absolutely and unconditionally, as primary obligor and not as surety only, the prompt and complete payment of the Guaranteed Obligations. Notwithstanding the foregoing or anything else herein to the contrary, any Guarantor that is a Foreign Subsidiary shall guarantee only the Guaranteed Obligations consisting of Obligations of Foreign Subsidiary Borrowers organized in the jurisdiction in which such Guarantor is organized. (b) All payments to be made under this Guaranty (except pursuant to paragraph (c) below) shall be made to each Lender pro rata in accordance with the unpaid amount of Guaranteed Obligations held by each Lender at the time of such payment. (c) The Guarantors agree to make prompt payment, on demand, of any and all reasonable costs and expenses incurred by the Agent or any Lender in connection with enforcing the obligations of any of the Guarantors hereunder, including without limitation the reasonable fees and disbursements of counsel. 3. CONSENTS TO RENEWALS, MODIFICATIONS AND OTHER ACTIONS AND EVENTS. This Guaranty and all of the obligations of the Guarantors hereunder shall remain in full force and effect without regard to and shall not be released, affected or impaired by: (a) any amendment, assignment, transfer, modification of or addition or supplement to the Guaranteed Obligations or any Agreement; (b) any extension, indulgence, increase in the Guaranteed Obligations or other action or inaction in respect of any of the Agreements or otherwise with respect to the Guaranteed Obligations, or any acceptance of security for, or other guaranties of, any of the Guaranteed Obligations or Agreements, or any surrender, release, exchange, impairment or alteration of any such security or guaranties including without limitation the failing to perfect a security interest in any such security or abstaining from taking advantage of or realizing upon any other guaranties or upon any security interest in any such security; (c) any default by any Borrower under, or any lack of due execution, invalidity or unenforceability of, or any irregularity or other defect in, any of the Agreements; (d) any waiver by any Lender or the Agent or any other person of any required performance or otherwise of any GUARANTY AGREEMENT -2- 91 condition precedent or waiver of any requirement imposed by any of the Agreements, any other guaranties or otherwise with respect to the Guaranteed Obligations; (e) any exercise or non-exercise of any right, remedy, power or privilege in respect of this Guaranty, any other guaranty or any of the Agreements; (f) any sale, lease, transfer or other disposition of the assets of any Borrower or any consolidation or merger of any Borrower with or into any other person, corporation, or entity, or any transfer or other disposition of any shares of Capital Stock of any Borrower; (g) any bankruptcy, insolvency, reorganization or similar proceedings involving or affecting any Borrower or any other guarantor of the Guaranteed Obligations; (h) the release or discharge of any Borrower or Guarantor from the performance or observance of any agreement, covenant, term or condition under any of the Guaranteed Obligations or contained in any of the Agreements, of any Cumulative Guarantor or of this Guaranty, by operation of law or otherwise; or (i) any other cause whether similar or dissimilar to the foregoing which, in the absence of this provision, would release, affect or impair the obligations, covenants, agreements and duties of any Guarantor hereunder, including without limitation any act or omission by any Lender or the Agent or any other any person which increases the scope of any Guarantor's risk; and in each case described in this paragraph whether or not any Guarantor shall have notice or knowledge of any of the foregoing, each of which is specifically waived by each Guarantor. Each Guarantor warrants to the Lenders and the Agent that it has adequate means to obtain from each Borrower on a continuing basis information concerning the financial condition and other matters with respect to each Borrower and that it is not relying on any Lender or the Agent to provide such information either now or in the future. 4. WAIVERS, ETC. Each Guarantor unconditionally waives: (a) notice of any of the matters referred to in Paragraph 3 above; (b) all notices which may be required by statute, rule of law or otherwise to preserve any rights of any Lender or the Agent, including, without limitation, notice to the Guarantors of default, presentment to and demand of payment or performance from any Borrower and protest for non-payment or dishonor; (c) any right to the exercise by any Lender or the Agent of any right, remedy, power or privilege in connection with any of the Agreements; (d) any requirement of diligence or marshaling on the part of any Lender or the Agent; (e) any requirement that any Lender or the Agent, in the event of any default by any Borrower, first make demand upon or seek to enforce remedies against, any Borrower or any other Cumulative Guarantor before demanding payment under or seeking to enforce this Guaranty; (f) any right to notice of the disposition of any security which any Lender or the Agent may hold from any Borrower or otherwise and any right to object to the commercial reasonableness of the disposition of any such security; and (g) all errors and omissions in connection with any Lender's or the Agent's administration of any of the Guaranteed Obligations, any of the Agreements or any other Cumulative Guarantor, or any other act or omission of any Lender or the Agent which changes the scope of such Guarantor's risk. The obligations of each Guarantor hereunder shall be complete and binding forthwith upon the execution of this Guaranty by it and subject to no condition whatsoever, precedent or otherwise, and notice of acceptance hereof or action in reliance hereon shall not be required. 5. NATURE OF GUARANTY; PAYMENTS. This Guaranty is an absolute, unconditional, irrevocable and continuing guaranty of payment and not a guaranty of collection, and is wholly independent of and in addition to other rights and remedies of any Lender or the Agent with respect to any Borrower, any collateral, any Cumulative Guarantor or otherwise, and it is not contingent upon the pursuit by any Lender or the Agent of any such rights and remedies, such pursuit being hereby waived by each Guarantor. The obligations of each Guarantor hereunder shall be continuing and shall continue (regardless of any statute of GUARANTY AGREEMENT -3- 92 limitations otherwise applicable) and cover and include all the Guaranteed Obligations of each Borrower accruing or in the process of accruing to the Lenders or the Agent before the Agent delivers to the Guarantors a release of this Guaranty, which is in writing, refers specifically to this Guaranty, and is signed by a President, a Senior Vice President, or a Vice President of the Agent. Nothing shall discharge or satisfy the liability of any Guarantor hereunder except the full and irrevocable payment and performance of all of the Guaranteed Obligations and the expiration or termination of all the Agreements. All payments to be made by the Guarantors hereunder shall be made without set-offs or counterclaim, and each Guarantor hereby waives the assertion of any such set-offs or counterclaims in any proceeding to enforce its obligations hereunder. All payments to be made by each Guarantor hereunder shall also be made without deduction or withholding for, or on account of, any present or future taxes or other similar charges of whatsoever nature, provided that if any Guarantor is nevertheless required by law to make any deduction or withholding, such Guarantor shall pay to the Lenders and the Agent such additional amounts as may be necessary to ensure that the Lenders and the Agent shall receive a net sum equal to the sum which it would have received had no such deduction or withholding been made. Each Guarantor agrees that, if at any time all or any part of any payment previously applied by any Lender or the Agent to any of the Guaranteed Obligations must be returned by such Lender or the Agent for any reason, whether by court order, administrative order, or settlement and whether as a "voidable preference", "fraudulent conveyance" or otherwise, each Guarantor remains liable for the full amount returned as if such amount had never been received by such Lender or the Agent, notwithstanding any termination of this Guaranty or any cancellation of any of the Agreements and the Guaranteed Obligations and all obligations of each Guarantor hereunder shall be reinstated in such case. 6. EVIDENCE OF GUARANTEED OBLIGATIONS. Each Lender's and the Agent's books and records showing the Guaranteed Obligations shall be admissible in any action or proceeding, shall be binding upon each Guarantor for the purpose of establishing the Guaranteed Obligations due from the Borrowers and shall constitute prima facie proof, absent manifest error, of the Guaranteed Obligations of the Borrowers to such Lender or the Agent, as well as the obligations of each Guarantor to such Lender or the Agent. 7. SUBORDINATION, SUBROGATION, CONTRIBUTION, ETC. Each Guarantor agrees that all present and future indebtedness, obligations and liabilities of the Borrowers to such Guarantor shall be fully subordinate and junior in right and priority of payment to any indebtedness of the Borrowers to the Lenders, and no Guarantor shall have any right of subrogation, contribution (including but without limitation the contribution and subrogation rights granted below), reimbursement or indemnity whatsoever nor any right of recourse to security for the debts and obligations of the Borrowers unless and until all Guaranteed Obligations shall have been paid in full, such payment is not subject to any possibility of revocation or rescission and all Agreements have expired or been terminated. Subject to the preceding sentence, if any Guarantor makes a payment in respect of the Guaranteed Obligations it shall be subrogated to the rights of the payee against the Borrowers with respect to such payment and shall have the rights of contribution set forth below against all other Cumulative Guarantors and each Guarantor agrees that all other Cumulative Guarantors shall have the rights of contribution against it set forth below. If any Guarantor makes a payment in respect of the Guaranteed Obligations that is smaller in proportion to its Payment Share (as hereinafter defined) than such payments made by the other Cumulative Guarantors are in proportion to the amounts of their respective Payment Shares, such Guarantor shall, when permitted by the first sentence of this Section 7, pay to the other Guarantors an amount such that the net payments made by the Cumulative GUARANTY AGREEMENT -4- 93 Guarantors in respect of the Guaranteed Obligations shall be shared among the Cumulative Guarantors pro rata in proportion to their respective Payment Shares. If any Guarantor receives any payment by way of subrogation that is greater in proportion to the amount of its Payment Share than the payments received by the other Cumulative Guarantors are in proportion to the amounts of their respective Payment Shares, such Guarantor shall, when permitted by the first sentence of this Section 7, pay to the other Cumulative Guarantors an amount such that the subrogation payments received by the Guarantors shall be shared among the Cumulative Guarantors pro rata in proportion to their respective Payment Shares. For purposes of this Guaranty, the "Payment Share" of any Cumulative Guarantor shall be the sum of (a) the aggregate proceeds of the Guaranteed Obligations received by such Guarantor (and, if received subject to a repayment obligation, remaining unpaid on the Determination Date, as hereinafter defined), plus (b) the product of (i) the aggregate Guaranteed Obligations remaining unpaid on the date such Guaranteed Obligations become due and payable in full, whether by stated maturity, acceleration or otherwise (the "Determination Date") reduced by the amount of such Guaranteed Obligations attributed to all of the Cumulative Guarantors pursuant to clause (a) above, times (ii) a fraction, the numerator of which is such Guarantor's net worth on the effective date of this Guaranty (determined as of the end of the immediately preceding fiscal reporting period of the Guarantor), and the denominator of which is the aggregate net worth of all of the Cumulative Guarantors, determined for each Cumulative Guarantor on the respective effective date of the guaranty signed by such Cumulative Guarantor. 8. ASSIGNMENT BY LENDERS. Each Lender and the Agent shall have the right to assign and transfer this Guaranty to any assignee of any portion of the Guaranteed Obligations. Each Lender's and the Agent's successors and assigns hereunder shall have the right to rely upon and enforce this Guaranty. 9. JOINT AND SEVERAL OBLIGATIONS. The obligations of the Guarantors hereunder and all other Cumulative Guarantors shall be joint and several and each Guarantor shall be liable for all of the Guaranteed Obligations to the extent provided herein regardless of any other Cumulative Guarantors, and each Lender and the Agent shall have the right, in its sole discretion to pursue its remedies against any Guarantor without the need to pursue its remedies against any other Cumulative Guarantor, whether now or hereafter in existence, or against any one or more Cumulative Guarantors separately or against any two or more jointly, or against some separately and some jointly. 10. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and warrants to the Lenders and the Agent that: (a) the execution, delivery and performance by the Guarantor of this Guaranty are within its corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official, and do not contravene or constitute a default under, any provision of applicable law or regulation or of the articles of incorporation or other charter documents or bylaws of such Guarantor, or of any agreement, judgment, injunction, order, decree or other instrument binding upon such Guarantor, or result in the creation or imposition of any lien, security interest or other charge or encumbrance on any asset of such Guarantor; GUARANTY AGREEMENT -5- 94 (b) this Guaranty constitutes a legal, valid and binding agreement of each Guarantor, enforceable against the Guarantor in accordance with its terms; (c) as of the date hereof, each of the following is true and correct for each Guarantor: (i) the fair saleable value and the fair valuation of such Guarantor's property is greater than the total amount of its liabilities (including contingent liabilities) and greater than the amount that would be required to pay its probable aggregate liability on its existing debts as they become absolute and matured, (ii) each Guarantor's capital is not unreasonably small in relation to its current and/or contemplated business or other undertaken transactions, and (iii) each Guarantor does not intend to incur, or believe that it will incur, debt beyond its ability to pay such debts as they become due; and (d) the Borrowers, the Guarantors and the other affiliates of the Borrowers are engaged as an integrated group in related businesses; that the integrated operation requires financing on such a basis that credit supplied to the Borrowers can be made available from time to time to various subsidiaries of the Borrowers, as required for the continued successful operation of the integrated group as a whole; and that each Guarantor has requested the Lenders to continue to lend and to make credit available to the Borrowers for the purpose of financing the integrated operations of the Borrowers and its subsidiaries, including each Guarantor, with each Guarantor expecting to derive benefit, direct or indirectly, from the loans and other credit extended by the Lenders to the Borrowers, both in such Guarantor's separate capacity and as a member of the integrated group, inasmuch as the successful operation and condition of each Guarantor is dependent upon the continued successful performance of the functions of the integrated group as a whole. Each of the Guarantors hereby determines and agrees that the execution, delivery and performance of this Guaranty are necessary and convenient to the conduct, promotion or attainment of the business of such Guarantor and in furtherance of the corporate purposes of such Guarantor. 11. BINDING ON SUCCESSORS AND ASSIGNS. This Guaranty shall be the valid, binding and enforceable obligation of the Guarantors and their successors and assigns. 12. INDEMNITY. As a separate, additional and continuing obligation, each Guarantor unconditionally and irrevocably undertakes and agrees with each Lender and the Agent that, should the Guaranteed Obligations not be recoverable from any Guarantor as guarantor under this Guaranty for any reason whatsoever (including, without limitation, by reason of any provision of any of the Guaranteed Obligations or the Agreements being or becoming void, unenforceable, or otherwise invalid under any applicable law) then, notwithstanding any knowledge thereof by any Lender or the Agent at any time, each Guarantor as original and independent obligor, upon demand by the Agent, will make payment to the Lenders and the Agent of the Guaranteed Obligations by way of a full indemnity. 13. CUMULATIVE RIGHTS AND REMEDIES, ETC. The obligations of each Guarantor under this Guaranty are continuing obligations and a new cause of action shall arise in respect of each default hereunder. No course of dealing on the part of any Lender or the Agent, nor any delay or failure on the part of any Lender or the Agent in exercising any right, power or privilege hereunder, shall operate as a waiver of such right, power, or privilege or otherwise prejudice the Lenders' or the Agent's rights and remedies hereunder; nor shall any single or partial exercise thereof preclude any further exercise thereof or the exercise of any other right, power or privilege. No right or remedy conferred upon or reserved to any GUARANTY AGREEMENT -6- 95 Lender or the Agent under this Guaranty is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing under any applicable law. Every right and remedy given by this Guaranty or by applicable law to the Lenders and the Agent may be exercised from time to time and as often as may be deemed expedient by any Lender or the Agent. 14. SEVERABILITY. If any one or more provisions of this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected, impaired, prejudiced or disturbed thereby, and any provision hereunder found partially unenforceable shall be interpreted to be enforceable to the fullest extent possible. If at any time all or any portion of the obligation of any Guarantor under this Guaranty would otherwise be determined by a court of competent jurisdiction to be invalid, unenforceable or avoidable under Section 548 of the federal Bankruptcy Code or under any fraudulent conveyance or transfer laws or similar applicable law of any jurisdiction, then notwithstanding any other provisions of this Guaranty to the contrary such obligation or portion thereof of such Guarantor under this Guaranty shall be limited to the greatest of (i) the value of any quantified economic benefits accruing to such Guarantor as a result of this Guaranty, (ii) an amount equal to 95% of the excess on the date the relevant Guaranteed Obligations were incurred of the present fair saleable value of the assets of such Guarantor over the amount of all liabilities of such Guarantor, contingent or otherwise, and (iii) the maximum amount of which this Guaranty is determined to be enforceable. 15. MERGER; AMENDMENTS; HEADINGS. This Guaranty is intended as a final expression of the subject matter hereof and is also intended as a complete and exclusive statement of the terms hereof. Each Guarantor's liability hereunder is independent of and in addition to its liability under any other guaranty previously of subsequently executed. No course of dealing, course of performance or trade usage, and no parole evidence of any nature, shall be used to supplement or modify any terms hereof, nor are there any conditions to the full effectiveness of this Guaranty. None of the terms and provisions of this Guaranty may be waived, altered, modified or amended in any way except by an instrument in writing executed by duly authorized officers of the Agent and the Guarantors. The headings of the various paragraphs hereof are for the convenience of reference only and shall in no way modify any of the terms hereof. 16. CHOICE OF LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF MICHIGAN. 17. WAIVER OF JURY TRIAL. EACH GUARANTOR, AND THE AGENT AND EACH LENDER IN ACCEPTING THIS GUARANTY, HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS GUARANTY OR THE RELATIONSHIP ESTABLISHED HEREUNDER. 18. SUBMISSION TO JURISDICTION; WAIVERS. (a) Each Guarantor hereby irrevocably and unconditionally: GUARANTY AGREEMENT -7- 96 (i) submits for itself and its property in any legal action or proceeding relating to this Guaranty, or for recognition and enforcement of any judgment in respect hereof, to the non-exclusive general jurisdiction of any United States federal or Michigan state court sitting in Detroit, Michigan and appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Guarantor at the address specified in Section 19, or at such other address of which the Agent shall have been notified pursuant thereto; (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (v) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 19. NOTICES. Any notice, demand, consent or request given or made to each Guarantor by any Lender or the Agent shall be deemed to have been duly given or made if sent in writing (including telecommunications) to such Guarantor to the address or telex or telecopy number set forth below the name of such Guarantor on the signature page hereof, or at such other address or telex or telecopy number as such Guarantor may hereafter specify to the Agent in writing. All notices or other communications sent by means of telecopy, telex or other wire transmission shall be made with request for assurance of receipt in a manner typical with respect to communications of that type. Written notices or other communications shall be deemed delivered upon receipt if delivered by hand or by telecopy, three Business Days after mailing if mailed, or one Business Day after deposit with an overnight courier service if delivered by overnight courier. Notices or other communications delivered by hand shall be deemed delivered upon receipt. GUARANTY AGREEMENT -8- 97 EXECUTED and effective as of the day and year first above written. DIEBOLD INVESTMENT COMPANY By:____________________________________ Title:_________________________ Wilmington Trust Company Rodney Square North 1100 North Market St. Wilmington, DE 19890 DIEBOLD FINANCE COMPANY, INC. By:____________________________________ Title:_________________________ Wilmington Trust Company Rodney Square North 1100 North Market St. Wilmington, DE 19890 DIEBOLD CREDIT CORPORATION By:____________________________________ Title:_________________________ Diebold, Incorporated 5995 Mayfair Rd. North Canton, OH 44720 GUARANTY AGREEMENT -9- 98 DIEBOLD SST HOLDING COMPANY, INC. By:____________________________________ Title:_________________________ Diebold, Incorporated 5995 Mayfair Rd. North Canton, OH 44720 DIEBOLD SELF-SERVICES SYSTEMS By:____________________________________ Title:_________________________ Diebold, Incorporated 5995 Mayfair Rd. North Canton, OH 44720 DIEBOLD HOLDING COMPANY, INC. By:____________________________________ Title:_________________________ Diebold, Incorporated 5995 Mayfair Rd. North Canton, OH 44720 GUARANTY AGREEMENT -10- 99 DIEBOLD MEXICO HOLDING COMPANY, INC. By:____________________________________ Title:_________________________ Diebold, Incorporated 5995 Mayfair Rd. North Canton, OH 44720 DIEBOLD LATIN AMERICA HOLDING COMPANY, INC. By:____________________________________ Title:_________________________ Diebold, Incorporated 5995 Mayfair Rd. North Canton, OH 44720 GUARANTY AGREEMENT -11- 100 EXHIBIT E JOINDER AGREEMENT THIS JOINDER AGREEMENT, dated as of ____________, ____, is entered into by _______________ (the "New Subsidiary Borrower") pursuant to the Loan Agreement dated as of December 1, 1999 (as amended or modified from time to time, the "Loan Agreement"), among Diebold, Incorporated (the "Company"), the Subsidiary Borrowers party thereto, the Lenders party thereto and Bank One, Michigan, as Agent. WITNESSETH: WHEREAS, the parties to this Joinder Agreement wish to designate the New Subsidiary Borrower as a Subsidiary Borrower under the Loan Agreement in the manner hereinafter set forth; and WHEREAS, this Joinder Agreement is entered into pursuant to the Loan Agreement; NOW, THEREFORE, in consideration of the premises, the parties hereto hereby agree as follows: 1. The New Subsidiary Borrower hereby acknowledges that it has received and reviewed a copy of the Loan Agreement and the other Loan Documents and unconditionally agrees to: (a) join the Loan Agreement and the other Loan Documents as a Subsidiary Borrower, (b) be bound by, and hereby ratifies and confirms, all covenants, agreements, consents, submissions, appointments, acknowledgments and other terms and provisions attributable to a Subsidiary Borrower in the Loan Agreement and the other Loan Documents; and (c) perform all obligations required of it as a Subsidiary Borrower by the Loan Agreement and the other Loan Documents. 2. The New Subsidiary Borrower hereby represents and warrants that the representations and warranties with respect to it contained in, or made or deemed made by it in, the Loan Agreement and any other Loan Document are true and correct on the date hereof. 3. The address and jurisdiction of incorporation of the New Subsidiary Borrower is set forth in Schedule A to this Joinder Agreement. 4. The Company agrees that its guarantee contained in Article IX of the Loan Agreement shall remain in full force and effect after giving effect to this Joinder Agreement, including without limitation after including the New Subsidiary Borrower as a Subsidiary Borrower under the Loan Agreement. 5. This Joinder Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Michigan. 6. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement. 7. This Joinder Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement. 101 IN WITNESS WHEREOF, each of the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the day and year set forth above. __________________________, as a Subsidiary Borrower By:________________________________ Name: _____________________________ Title: ____________________________ DIEBOLD, INCORPORATED By:________________________________ Name: _____________________________ Title: ____________________________ Accepted and Acknowledged: - -------------------------- BANK ONE, MICHIGAN, as Agent By:________________________________ Name: _____________________________ Title: ____________________________ 2 102 SCHEDULE A ---------- ADMINISTRATIVE INFORMATION 103 EXHIBIT F-I REVOLVING CREDIT NOTE _______________ ______________,_______ ____________________________ ("Borrower"), unconditionally promises to pay to the order of ________________ ("Lender") on or before the Facility Termination Date (as defined in the Loan Agreement hereinafter referred to) for the account of its applicable Lending Installation the principal sum of ___________________ or the aggregate unpaid principal amount of all Revolving Credit Loans made by the Lender to the Borrower pursuant to the Agreement whichever is less, in immediately available funds at the Lending Installation of the Agent designated by the Agent for the Borrower, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Loan Agreement. The Lender shall, and is hereby authorized to, record in accordance with its usual practice, the date and amount of each Revolving Credit Loan, the date and amount of each principal payment and the date to which payment of this Note has been extended, provided, however, that failure to do so shall not affect the Borrower's obligation to pay amounts due hereunder. The Borrower expressly waives any presentments, demand, protest or notice in connection with this Revolving Credit Note now, or hereafter, required by applicable law. This Revolving Credit Note is one of the Revolving Credit Notes issued pursuant to the provisions of the Loan Agreement dated as of December 1, 1999 among Diebold, Incorporated, the Subsidiary Borrowers party thereto, the Lenders party thereto, and Bank One, Michigan, as Agent, as it may be amended from time to time (the "Loan Agreement"), to which reference is hereby made for a statement of the terms and conditions under which this Revolving Credit Note may be prepaid or its maturity date extended or accelerated. The Revolving Credit Note shall be construed in accordance with and governed by the laws of Michigan applicable to contracts made and performed in Michigan by a Michigan borrower and a Michigan banking corporation located in Michigan, as lender. _______________________________ By: ___________________________ Title: ________________________ 104 EXHIBIT F-2 TERM NOTE _______________ ______________,_______ ____________________("Borrower"), unconditionally promises to pay to the order of ________________("Lender") on or before the Maturity Date (as defined in the Loan Agreement hereinafter referred to) for the account of its applicable Lending Installation the principal sum of__________________ (_____________) or the aggregate unpaid principal amount of all Term Loans made by the Lender to the Borrower pursuant to the Agreement whichever is less, in immediately available funds at the Lending Installation of the Agent designated by the Agent for the Borrower, together with principal installments and interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Loan Agreement. The Lender shall, and is hereby authorized to, record in accordance with its usual practice, the date and amount of each Term Loan, the date and amount of each principal payment and the date to which payment of this Note has been extended, provided, however, that failure to do so shall not affect the Borrower's obligation to pay amounts due hereunder. The Borrower expressly waives any presentments, demand, protest or notice in connection with this Term Note now, or hereafter, required by applicable law. This Term Note is one of the Term Notes issued pursuant to the provisions of the Loan Agreement dated as of December 1, 1999 among Diebold, Incorporated, the Subsidiary Borrowers party thereto, the Lenders party thereto, and Bank One, Michigan, as Agent, as it may be amended from time to time (the "Loan Agreement"), to which reference is hereby made for a statement of the terms and conditions under which this Term Note may be prepaid or its maturity date extended or accelerated. The Term Note shall be construed in accordance with and governed by the laws of Michigan applicable to contracts made and performed in Michigan by a Michigan borrower and a Michigan banking corporation located in Michigan, as lender. _______________________________ By: ___________________________ Title: ________________________ 105 EXHIBIT G December 1, 1999 To: The Agent and each Lender party to the Credit Agreement referred to below Re: Diebold Incorporated Credit Facility With Bank One, Michigan ------------------------------------------------------------ Ladies and Gentlemen: We have acted as special counsel for Diebold Investment Company, a Delaware corporation, Diebold Credit Corporation, a Delaware corporation, Diebold Holding Company, Inc., a Delaware corporation. Diebold SST Holding Company, a Delaware corporation, Diebold Self-Service Systems, a New York general partnership, Diebold Mexico Holding Company, Inc., a Delaware corporation, Diebold Latin America Holding Company, Inc., a Delaware corporation, and Diebold Finance Company, Inc., a Delaware corporation (collectively, the "GUARANTORS"), and Diebold, Incorporated, an Ohio corporation ("DIEBOLD", and, collectively with the Guarantors, the "LOAN PARTIES"), in connection with the Credit Agreement dated as of December 1 , 1999 (the "CREDIT AGREEMENT") by and among Diebold, certain Subsidiary Borrowers from time to time party thereto, the lenders party thereto (collectively, the "LENDERS"), and Bank One, Michigan as agent (the "AGENT"). This opinion is delivered to you at the request of Diebold pursuant to subsection 4.1(e) of the Credit Agreement. Capitalized terms used in this letter and not otherwise defined have the meanings assigned to such terms in the Credit Agreement. With your permission, all assumptions and statements of reliance in this letter have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated and we express no opinion with respect to the subject matter or accuracy of the assumptions or items upon which we have relied. In connection with the opinions expressed in this letter, we have examined such documents, records and matters of law as we have deemed necessary for the purposes of the opinions expressed below. We have examined among other documents, the following: (a) an executed copy of the Credit Agreement; (b) an executed copy of the Guaranty; and 106 December 1, 1999 Page 2 (c) an Officer's Certificate for the Loan Parties delivered to us in connection with this letter, a copy of which is attached as Annex A (the "OFFICER'S CERTIFICATE"). The documents referred to in items (a) and (b) above are collectively referred to in this letter as the "DOCUMENTS". In all such examinations, we have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures, the authenticity of original and certified documents and the conformity to original or certified copies of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed in this letter, we have relied upon, and assume the accuracy of, representations and warranties contained in the Documents and certificates and written statements and other information of or from representatives of the Loan Parties and others and assume compliance on the part of all parties (other than the Loan Parties) to the Documents with their covenants and agreements contained in such Documents. We have relied solely upon certificates of public officials as to the factual matters set forth therein and, as to the opinions expressed in paragraph 1 below, as to the legal conclusions expressed therein. With respect to the opinion expressed in paragraph 2 below, we have relied solely upon an officer's certificate delivered to us by Diebold Holding Company, Inc. and Diebold SST Holding Company, Inc. With respect to the opinions expressed in paragraphs 3 and 6 below, our opinions are limited (i) to our actual knowledge, if any, of the Loan Parties' specially regulated business activities and properties based solely upon an officer's certificate in respect of such matters and without any independent investigation or verification on our part and (ii) to our review of only those laws and regulations that, in our experience, are normally applicable to transactions of the type contemplated by the Documents. To the extent it may be relevant to the opinions expressed in this letter, we have assumed that the parties to the Documents other than the Loan Parties have the power to enter into and perform such Documents and to consummate the transactions contemplated by such Documents and that such Documents have been duly authorized, executed and delivered by. and constitute legal, valid and binding obligations of, such parties. Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth in this letter, we are of the opinion that: 1. Each Loan Party (other than Diebold Self-Service Systems) is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation as of the dates listed for such corporation on the attached Annex B. 2. Diebold Self-Service Systems is a general partnership, continued tinder the laws of the State of New York, between Diebold Holding Company, Inc. and Diebold SST Holding Company. 3. Each Loan Party has the organizational power and authority to conduct its business substantially as described in the Officer's Certificate. 2 107 December 1,1999 Page 3 4. The execution, delivery and performance by each Loan Party of the Documents (i) have been authorized by all necessary corporate (or, with respect to Diebold Self-Service Systems, partnership) action by such entity and (ii) do not contravene any provision of the certificate or articles of incorporation or bylaws (or with respect to Diebold Self-Service Systems, its amended and restated partnership agreement) of such Loan Party. 5. The execution, delivery and performance by each Loan Party of the Documents to which it is party (i) do not violate any agreement binding upon such Loan Party or its property or any court decree or order binding upon such Loan Party or its property (this opinion being limited (1) to those agreements, decrees or orders that have been identified to us in the Officer's Certificate other than agreements related to the Industrial Revenue Bonds identified therein and (2) in that we express no opinion with respect to any violation not readily ascertainable from the face of any such agreement, decree or order or arising under or based upon any cross-default provision insofar as it relates to a default under an agreement not so identified to us or arising under or based upon any covenant of a financial or numerical nature or requiring computation), and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of their respective properties under the provisions of any agreement or order binding upon such corporation or its properties other than any rights of set-off or other liens in favor of the Agent or the Lenders arising under any of the Documents or applicable law (this opinion being limited to those agreements and orders that have been identified to us in the Officer's Certificate other than agreements related to the Industrial Revenue Bonds identified therein). 6. The execution and delivery to the Agent and the Lenders by each Loan Party of the Documents to which such Loan Party is a party, the obtaining of any Loans and Letters of Credit thereunder, and the performance by each Loan Party of its obligations under such Documents do not violate the Delaware General Corporation Law (the "DGCL"), the Ohio General Corporation Law the New York Partnership Law, or any present law or present regulation of any governmental agency or authority of the United States of America known by us to be applicable to such Loan Party or its property. 7. The execution and delivery to the Agent and the Lenders by each Loan Party of the Documents to which such Loan Party is a party, the obtaining of any Loans and Letters of Credit thereunder, and the performance by each Loan Party of its obligations under such Documents do not require under present law any filing or registration by such Loan Patty with, or approval or consent to such Loan Party of, any governmental agency or authority of the States of Delaware, New York, Ohio or the United States of America that has not been made or obtained except those required in the ordinary course of business. 8. Each of the Documents to which any Loan Party is a party has been duly executed and delivered on behalf of such Loan Party. We express no opinion as to the application of, and our opinions above are subject to the effect, if any, of, any applicable fraudulent conveyance, fraudulent transfer, fraudulent obligation or preferential transfer law. 3 108 December 1, 1999 Page 4 The opinions expressed in this letter are limited to the federal law of the United States America, the DGCL, the New York Partnership Law and the Ohio General Corporation Law. We express no opinion as to the compliance or noncompliance, or the effect of compliance or noncompliance, of the addressee of this letter with any state or federal laws regulations applicable to it by reason of its status as or affiliation with a federally insured deposit institution. The opinions expressed in this letter are solely for the benefit of the Agent and each Lender in connection with the transactions referred to in this letter and may not be relied on by the Age or any Lender for any other purpose, in any manner or for any purpose by any other person or entity provided, that the Agent and each Lender may provide this opinion to each participant and permitted assignee under the Documents and such participants and assignees may rely on this opinion. Very truly yours, Jones, Day, Reavis & Pogue 4 109 ANNEX A DIEBOLD, INCORPORATED AND ITS SUBSIDIARIES Officer's Certificate --------------------- Reference is made to the opinion letter of Jones, Day, Reavis & Pogue (the "OPINION") delivered in connection with the Credit Agreement dated as of December 1, 1999 by and among Diebold, Incorporated and certain Subsidiary Borrowers from time to time party thereto, as borrowers, the lenders party thereto, as lenders, and Bank One, Michigan as agent. Capitalized terms used in this certificate and not otherwise defined have the meanings assigned to such terms in the Opinion. The undersigned officer of each Loan Party certifies, in connection with the execution, delivery and performance by the Loan Parties of the Documents, the consummation of the transactions contemplated by the Documents and the Opinion, as follows: 1. Attached as Schedule I for each Loan Party is a list of(i) all indentures, mortgages, deeds of trust, security or pledge agreements, guarantees, loan or credit agreements and other agreements or instruments and (ii) all decrees and orders, in each case in clause (i) and (ii) above, to which such Loan Party is a party or that are otherwise binding upon such Loan Party or any of its assets or property and that contain financial or other covenants or provisions for defaults or events of default or similar events or occurrences or that otherwise would or could have the effect of (a) restricting the types of provisions that any other agreement to which such Loan Party becomes a party may contain, (b) restricting the conduct of such Loan Party's business, the incurrence of indebtedness, guarantees or other liabilities or obligations, the creation of liens upon any of such Loan Party's property or assets or otherwise restricting the execution, delivery, and performance of, or the consummation of the transactions contemplated by, the Documents or (c) resulting in, or requiring the creation or imposition of, any lien upon any of such Loan Party's assets or property as a result of the execution, delivery or performance of, or the consummation of the transactions contemplated by, any of the Documents. A true and complete copy of each of the above agreements, instruments, documents, decrees and orders has been previously furnished to Jones, Day, Reavis & Pogue. No default or event of default or violation of any such agreements, instruments, decrees or orders exists or, immediately after giving effect to entry into the Documents or consummation of any of the transactions contemplated by the Documents, will exist. 2. The nature of each Loan Party's business and the purposes of each Loan Party is described for such Loan Party and attached as Schedule II. The Loan Parties are not engaged in any activity or business not permitted under those provisions of its constitutive documents specifying the nature of such Loan Party's business and the purposes of such Loan Party. No Loan Party engages or proposes to engage in any industry or business or activity, or own any property or asset, that causes or would cause it to be subject to special local, state or federal regulation not generally applicable to business corporations, other than the licensing requirements which Diebold must A-1 110 satisfy in numerous state and local jurisdictions to engage in its businesses of electronic security sales, installation and repair business and alarm monitoring in those jurisdictions. Executed and delivered as of the 1st day of December, 1999. DIEBOLD, INCORPORATED By:_________________________________ Title:______________________________ DIEBOLD INVESTMENT COMPANY By:_________________________________ Title:______________________________ DIEBOLD CREDIT CORPORATION By:_________________________________ Title:______________________________ DIEBOLD HOLDING COMPANY, INC. By:_________________________________ Title:______________________________ DIEBOLD SST HOLDING COMPANY By:_________________________________ Title:______________________________ A-2 111 DIEBOLD SELF-SERVICE SYSTEMS By:_________________________________ Title:______________________________ DIEBOLD MEXICO HOLDING COMPANY, INC. By:_________________________________ Title:______________________________ DIEBOLD LATIN AMERICA HOLDING COMPANY, INC. By:_________________________________ Title:______________________________ DIEBOLD FINANCE COMPANY, INC. By:_________________________________ Title:______________________________ A-3 112 SCHEDULE I TO OFFICER'S CERTIFICATE Material Agreements, Decrees and Orders --------------------------------------- Agreements ---------- Agreements with respect to the (i) $5,800,000.00 Industrial Development Authority of Danville, Virginia Adjustable Rate Industrial Revenue Bonds, Series 1997 (Diebold, Incorporated Project), (ii) $7,500,000.00 Industrial Development Authority of Staunton, Virginia Adjustable Rate Industrial Revenue Bonds, Series 1997 (Diebold, Incorporated Project), and (iii) $7,500,000.00 Davidson County Industrial Facilities and Pollution Control Financing Authority Adjustable Rate Industrial Development Revenue Bond Series 1997 (Diebold, Incorporated Project). Decrees and Orders ------------------ None. A-4 113 SCHEDULE II TO OFFICER'S CERTIFICATE Description of Business ----------------------- The Loan Parties develop, manufacture, sell and service automated teller machines ("ATMs"), electronic and physical security systems, various products used to equip bank facilities, and software and integrated systems for global financial and commercial markets. A-5 114 ANNEX B Good Standing ------------- Domestic Jurisdiction --------------------- Date ---- Diebold Investment Company Delaware 11/22/99 Diebold Credit Corporation Delaware 11/22/99 Diebold Holding Company, Inc. Delaware 11/22/99 Diebold SST Holding Company Delaware 11/22/99 Diebold Mexico Holding Company, Inc. Delaware 11/22/99 Diebold Latin America Holding Company, Inc. Delaware 11/22/99 Diebold Finance Company, Inc. Delaware 11/22/99 Diebold, Incorporated Ohio 11/23/99 B-1 115 EXHIBIT G (continued) December ___, 1999 To: Bank One, Michigan, Agent and each Lender party to the Credit Agreement referred to below Re: Diebold Incorporated Credit Facility With Bank One, Michigan ------------------------------------------------------------ Ladies and Gentlemen: In response to your request for an opinion, please be advised that this law firm has been engaged to act as special counsel for Diebold, Incorporated, in connection with the execution by Diebold Investment Company, a Delaware corporation, Diebold Credit Corporation, a Delaware corporation, Diebold Holding Company, Inc., a Delaware corporation, Diebold SST Holding Company, a Delaware corporation, Diebold Self Service Systems, a New York general partnership, Diebold Mexico Holding Company, Inc., a Delaware corporation, Diebold Latin America Holding Company, Inc., a Delaware corporation, and Diebold Finance Company, Inc., a Delaware corporation (collectively, the "GUARANTORS"), and Diebold, Incorporated, an Ohio corporation ("DIEBOLD", and, collectively with the Guarantors, the "LOAN PARTIES"), of a certain Credit Agreement dated as of December 1, 1999 and a certain Guaranty Agreement dated December 1, 1999 (collectively the "Loan Documents") by and among Diebold, certain Subsidiary Borrowers from time to time party thereto, the lenders party thereto (collectively, the "LENDERS"), and Bank One, Michigan as agent (the "AGENT"), and the effect of the execution, delivery and performance by each of the Loan Parties of the Loan Documents upon certain Agreements, as defined below. In connection with the opinion expressed in this letter, we have examined such documents, records and matters of law as we have deemed necessary for the purposes of the opinion expressed below. We have examined, among other documents, Bond Transcripts for the following Bond Issues: (a) $5,800,000.00 Industrial Development Authority Of Danville, Virginia Adjustable Rate Industrial Revenue Bonds, Series 1997 (Diebold, Incorporated Project) 116 (b) $7,500,000.00 Industrial Development Authority Of Staunton, Virginia, Adjustable R Industrial Development Revenue Bonds, Series 1997 (Diebold, Incorporated Project) and (c) $7,500,000.00 Davidson County Industrial Facilities And Pollution Control Financing Authority Adjustable Rate Industrial Development Revenue Bonds, Series 1997 (Diebold, Incorporated Project) The documents referred to in items (a) through (c) above are collectively referred to in this letter "as the "AGREEMENTS". Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth in this letter, we are of the opinion that: The execution, delivery and performance by each Loan Party of the Loan Documents (i) does not violate any of the Agreements binding upon such Loan Party or its property (this opinion being limited (1) to those Agreements identified above and (2) in that we express no opinion with respect to any violation not readily ascertainable from the face of any such Agreement or arising under or based upon any cross-default provision insofar as it relates to a default under an agreement not so identified to us or arising under or based upon any covenant of a financial or numerical nature or requiring computation), and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of their respective properties under the provisions of any the Agreements binding upon such corporation or its properties (this opinion being limited to those Agreements identified above). The opinions expressed in this letter are solely for the benefit of the Agent and each Lender in connection with the transactions referred to in this letter and may not be relied on for any other purpose, in any manner or for any purpose by any other person or entity; PROVIDED, that the Agent and each Lender may provide this opinion to each participant and permitted assignee under the Credit Agreement and such participants and assignees may rely on this opinion. Very truly yours BLACK, McCUSKEY, SOUERS & ARBAUGH 117 EXHIBIT H Money Transfer Instructions As supplied by the Company to the Agent prior to closing 118 EXHIBIT I COMPLIANCE CERTIFICATE To: The Agent and Lenders parties to the Credit Agreement Described Below This Compliance Certificate is furnished pursuant to that certain Loan Agreement dated as of December 1, 1999 (as amended, modified, renewed or extended from time to time, the "Agreement") among DIEBOLD, INCORPORATED (the "Company"), certain Subsidiary Borrowers, the lenders party thereto and BANK ONE, MICHIGAN, as Agent for the Lenders. Unless otherwise defined herein, capitalized terms used in this Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected __________ of the Company; 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I attached hereto sets forth financial data and computations evidencing the Company's compliance with Section 6.18 and 6.19 of the Agreement and calculations of the Applicable Margin, all of which data and computations are true, complete and correct. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this __ day of_____,___. ___________________________ -1- 119 SCHEDULE I TO COMPLIANCE CERTIFICATE Compliance Calculations for Loan Agreement CALCULATION AS OF_______________, ____ A. Leverage Ratio (Section 6.18) 1. Total Debt of the Company and its $___________ Subsidiaries 2. Net Worth $___________ 3. Total Debt to Capitalization Ratio _________:1.00 (must be no greater (Ratio of Line Al to Line Al than 0.50 to 1.00) + Line A2) B. Interest Coverage Ratio (Section 6.19) 1. Consolidated Net Income for past four fiscal quarters $___________ 2. Income taxes for past four fiscal $___________ quarters subtracted in calculating Consolidated Net Income 3. Interest expense for past four fiscal quarters $___________ subtracted in calculating Consolidated Net Income 4. EBIT (sum of lines Fl, F2 and F3) $___________ 5. Interest Expense $___________ 6. Ratio of Line B4 to Line B5 _________:1.00 (ratio of Line B4 to B5 must not be less than 5.00 to 1.00) -2- 120 EXHIBIT J ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between __________________________ (the "Assignor") and ___________________________ (the "Assignee") is dated as of___________,_____. The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Loan Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Loan Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Loan Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Loan Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Loan Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitments (or Loans, if the applicable Commitments have been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Loan Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitments or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise agreed among the Assignee and the Assignor. 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to -1- 121 the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of any Borrower or Guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of any Borrower or Guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of any Borrower or Guarantor, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Loan Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States and any other applicable government agency certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes or othe applicable documents. 8. GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Michigan. 9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Loan Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. -2- 122 SCHEDULE 1 to Assignment Agreement 1. Description and Date of Loan Agreement: 2. Date of Assignment Agreement: _______, ______ 3. Amounts (As of Date of Item 2 above): 4. Assignee's Commitments (or Loans with respect to terminated Commitments) purchased hereunder: [Description of Commitments assigned] 5. Proposed Effective Date: ______________________ Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By: _______________________________ By: ________________________________ Title:_____________________________ Title: _____________________________ If required: ACCEPTED AND CONSENTED TO BY ACCEPTED AND CONSENTED TO BY DIEBOLD, INCORPORATED BANK ONE, MICHIGAN, as Agent By: _______________________________ By: ________________________________ Title:_____________________________ Title: _____________________________ -3- 123 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT ADMINISTRATIVE INFORMATION SHEET -------------------------------- Attach Assignor's Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below) ASSIGNOR INFORMATION -------------------- Contact: - -------- Name:________________________________ Telephone No.: _____________________ Fax No.: ____________________________ Telex No.: _________________________ Answerback: ________________________ Payment Information: - -------------------- Name & ABA # of Destination Bank: ______________________________________________ ______________________________________________ Account Name & Number for Wire Transfer: _______________________________________ _______________________________________ Other Instructions:_____________________________________________________________ ________________________________________________________________________________ Address for Notices for Assignor: ______________________________________________ - -------------------------------- ______________________________________________ ______________________________________________ ASSIGNEE INFORMATION -------------------- Credit Contact: - --------------- Name:____________________________ Telephone No.:_____________________________ Fax No.:_________________________ Telex No.:_________________________________ Answerback:________________________________ Key Operations Contacts: - ------------------------ Booking Installation:____________ Booking Installation:______________________ Name:____________________________ Name:______________________________________ Telephone No.:___________________ Telephone No.:_____________________________ Fax No.:_________________________ Fax No.:___________________________________ Telex No.:_______________________ Telex No.:_________________________________ Answerback:______________________ Answerback:________________________________ -4- 124 Payment Information: - -------------------- Name & ABA # of Destination Bank:_______________________________________________ _______________________________________________ Account Name & Number for Wire Transfer:________________________________________ ________________________________________ Other Instructions:_____________________________________________________________ ________________________________________________________________________________ Address for Notices for Assignee: ______________________________________________ - -------------------------------- ______________________________________________ ______________________________________________ -5- EX-21 6 EXHIBIT 21 1 LIST OF SIGNIFICANT SUBSIDIARIES EXHIBIT 21 The following are the subsidiaries of the Registrant included in the Registrant's consolidated financial statements at December 31, 1999. Other subsidiaries are not listed because such subsidiaries are inactive. Subsidiaries are listed alphabetically under either the domestic or international categories.

Jurisdiction under Percent of voting securities Domestic which organized owned by Registrant - -------- ------------------ ---------------------------- ATM Finance, Inc. Ohio 100% Central Security Systems, Incorporated Hawaii 100% DBD Investment Management Company Delaware 100% Diebold Australia Holding Company, Inc. Delaware 100% Diebold China Security Holding Company, Inc. Delaware 100% Diebold Credit Corporation Delaware 100% Diebold Finance Company, Inc. Delaware 100% (1) Diebold Foreign Sales Corporation St. Thomas, U.S. Virgin Islands 100% (1) Diebold Holding Company, Inc. Delaware 100% Diebold Investment Company Delaware 100% Diebold Latin America Holding Company, Inc. Delaware 100% Diebold Mexico Holding Company, Inc. Delaware 100% Diebold Midwest Manufacturing, Inc. Delaware 100% Diebold of Nevada, Inc. Nevada 100% Diebold Self-Service Systems New York 100% (2) Diebold Southeast Manufacturing, Inc. Delaware 100% (3) Diebold SST Holding Company, Inc. Delaware 100% Diebold Texas, Incorporated Texas 100% Diebold Transaction Services, Inc. Delaware 100% Griffin Technology Incorporated New York 100% InterBold Technologies, Inc. Delaware 100% (4) Mayfair Software Distribution, Inc. Delaware 100% Nexus Software, Incorporated Delaware 100% Pioneer Systems, Inc. Pennsylvania 100% R. D. Products, Inc. New York 100% VDM Holding Company, Inc. Delaware 100% Verdi & Associates, Inc. New York 100%

(1) 100% of voting securities are owned by Diebold Investment Company which is 100% owned by the Registrant. (2) 70% of partnership interest is owned by Diebold Holding Company, Inc., which is 100% owned by the Registrant and 30% is owned by Diebold SST Holding Company, Inc., which is 100% owned by the Registrant. (3) 100% of voting securities are owned by Diebold Midwest Manufacturing, Inc., which is 100% owned by the Registrant. (4) 100% of voting securities are owned by Diebold Self-Service Systems, which is 70% owned by Diebold Holding Company, Inc. and 30% owned by Diebold SST Holding Company, Inc., which are 100% owned by the Registrant. 2

LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED) Jurisdiction under Percent of voting securities International which organized owned by Registrant - ------------- --------------- ---------------------------- China Diebold Financial Equipment Company LTD. Peoples Republic of China 71% DBD Asset Management S.A. de C.V. Mexico 100% (5) DCHC, S.A. Panama 100% (16) Diebold Argentina, S.A. Argentina 55% (15) Diebold Australia Pty. Ltd. Australia 100% (6) Diebold Belgium S.P.R.L. Belgium 90% (18) Diebold Brasil LTDA Brazil 100% (16) Diebold Colombia Colombia 55% (19) The Diebold Company of Canada Limited Canada 100% Diebold EMEA B.V. Netherlands 100% Diebold France SARL France 100% Diebold Germany GmbH Germany 100% (8) Diebold HMA Private Limited India 50% Diebold Hungary Ltd. Hungary 100% Diebold International Limited United Kingdom 100% Diebold Italy S.r.l. Italy 100% (18) Diebold Mexico, S.A. de C.V. Mexico 100% (7) Diebold Netherlands B.V. Netherlands 100% Diebold OLTP Systems, A.V.V. Aruba, Dutch West Indies 50% Diebold OLTP Systems, C.A. Venezuela 50% (14) Diebold Pacific, Limited Hong Kong 100% Diebold Panama, Inc. Panama 100% (16) Diebold Poland S.p. z.o.o. Poland 100% Diebold Safetell International Security Limited Australia 100% (10) Diebold Security and Services Pty. Australia 100% (10) Diebold Selbstbedienungssysteme GmbH Austria 100% Diebold Selbstbedienyngssysteme (Schweiz)GMBH Switzerland 100% Diebold Self Service Solutions LTD Liab. Co. Switzerland 100% Diebold Singapore Pte. Ltd Singapore 100% Diebold South Africa (PTY) LTD South Africa 100% Diebold Spain, S.L. Spain 100% Diebold (Thailand) Company Limited Thailand 100% DPB S.A. Argentina 50% (14)

3

LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED) Jurisdiction under Percent of voting securities International which organized owned by Registrant - ------------- ------------------ ---------------------------- DSSS Panama, S.A. Panama 55% (15) InterBold Pacific Limited Hong Kong 100% (8) InterBold Singapore Pte Ltd Singapore 100% (9) Mecaf Impressoras S.A. Brazil 100% (17) Nexus Software UK LTD. United Kingdom 100% (13) Procomp Amazonia Industria Eletronica S.A. Brazil 100% (17) Procomp Comercio e Servicos LTDA Brazil 100% (17) Procomp Industria Eletronica S.A. Brazil 100% (17) RLM Monitoring Pty. Ltd. Australia 100% (10) Safequip Automated Systems Pty. Ltd. Australia 50% (11) Safetell Cash Handling Pty. Ltd. Australia 100% (12) Safetell International Services Pty. Ltd. Australia 100% (12) Starbuck Computer Empire, A.V.V. Aruba, Dutch West Indies 50% Tecron Security Pty. Ltd. Australia 100% (10)

(5) 100% of voting securities are owned by Diebold Mexico, S.A. de C.V. which is 100% owned by Diebold Mexico Holding Company, Inc., which is 100% owned by the Registrant. (6) 100% of voting securities are owned by Diebold Australia Holding Company, Inc. which is 100% owned by the Registrant. (7) 100% of voting securities are owned by Diebold Mexico Holding Company, Inc. which is 100% owned by the Registrant. (8) 100% of voting securities are owned by Diebold Self-Service Systems which is 70% owned by Diebold Holding Company, Inc. and 30% owned by Diebold SST Holding Company, Inc., which are 100% owned by the Registrant. (9) 100% of voting securities are owned by InterBold Pacific Limited, which is 100% owned by Diebold Self-Service Systems which is 70% owned by Diebold Holding Company, Inc. and 30% owned by Diebold SST Holding Company, Inc., which are 100% owned by the Registrant. (10) 100% of voting securities are owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold Australia Holding Company, Inc., which is 100% owned by the Registrant. (11) 50% of voting securities are owned by Safetell Cash Handling Pty. Ltd., which is 100% owned by Safetell International Security Limited, which is 100% owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold Australia Holding Company, Inc. which is 100% owned by the Registrant. (12) 100% of voting securities are owned by Safetell International Security Limited, which is 100% owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold Australia Holding Company, Inc. which is 100% owned by the Registrant. (13) 100% of voting securities are owned by Nexus Software, Incorporated, which is 100% owned by the Registrant. (14) 50% of voting securities are owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant. (15) 55% of voting securities are owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant. (16) 100% of voting securities are owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant. (17) 100% of voting securities are owned by Diebold Brasil LTDA, which is 100% owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant. (18) 90% of voting securities are owned by the Registrant, while 10% of the voting securities are owned by Diebold Holding Company, Inc., which is 100% owned by the Registrant. (19) 21.44% of voting securities are owned by Diebold Latin America Holding Company, Inc., 16.78% of voting securities are owned by DSSS Panama, which is 100% owned by Diebold Latin America Holding Company, Inc., 16.78% of voting securities are owned by DCHC Panama SA, which is 100% owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant. EX-23 7 EXHIBIT 23 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS ------------------------------- The Board of Directors Diebold, Incorporated We consent to incorporation by reference in the Registration Statements (Nos. 2-44467, 2-92107, 33-32960, 33-39988, 33-55452, 33-54677, 33-54675, 333-32187 and 333-31993) on Form S-8 of Diebold, Incorporated of our report dated January 18, 2000 relating to the consolidated balance sheets of Diebold, Incorporated and subsidiaries as of December 31, 1999, and 1998, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1999, and related schedule, which report appears in the December 31, 1999 annual report on Form 10-K of Diebold, Incorporated. /s/KPMG LLP KPMG LLP Cleveland, Ohio March 4, 2000 EX-24 8 EXHIBIT 24 1 EXHIBIT 24 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, That the undersigned directors of Diebold, Incorporated, a corporation organized and existing under the laws of the State of Ohio, do for themselves and not for another, constitute and appoint Warren W. Dettinger, Charee Francis-Vogelsang, Robert L. Stockamp or the chief financial officer, or any one of them, a true and lawful attorney in fact in their names, place and stead, to sign their names to the report on Form 10-K for the year ended December 31, 1999, or to any and all amendments to such reports, and to cause the same to be filed with the Securities and Exchange Commission; it being intended to give and grant unto said attorneys in fact and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises as fully and to all intents and purposes as the undersigned by themselves could do if personally present. The undersigned directors ratify and confirm all that said attorneys in fact or either of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date set opposite their signature. 2

Signed in the presence of: Signature Date --------- ---- /s/Charee Francis-Vogelsang /s/Donald R. Gant March 4, 2000 Donald R. Gant, Director /s/Charee Francis-Vogelsang /s/Phillip B. Lassiter March 4, 2000 Phillip B. Lassiter, Director /s/Charee Francis-Vogelsang /s/John N. Lauer March 4, 2000 John N. Lauer, Director /s/Charee Francis-Vogelsang /s/William F. Massy March 4, 2000 William F. Massy, Director

EX-27 9 EXHIBIT 27

<ARTICLE> 5

<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1999 AND CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000 <CURRENCY> U.S. DOLLARS <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> DEC-31-1999 <EXCHANGE-RATE> 1 <CASH> 27,299 <SECURITIES> 57,348 <RECEIVABLES> 325,793 <ALLOWANCES> 0 <INVENTORY> 169,785 <CURRENT-ASSETS> 647,936 <PP&E> 320,640 <DEPRECIATION> 159,916 <TOTAL-ASSETS> 1,298,831 <CURRENT-LIABILITIES> 382,407 <BONDS> 20,800 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 89,354 <OTHER-SE> 755,041 <TOTAL-LIABILITY-AND-EQUITY> 1,298,831 <SALES> 757,246 <TOTAL-REVENUES> 1,259,177 <CGS> 444,732 <TOTAL-COSTS> 802,365 <OTHER-EXPENSES> 270,689 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 0 <INCOME-PRETAX> 201,338 <INCOME-TAX> 72,482 <INCOME-CONTINUING> 128,856 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 128,856 <EPS-BASIC> 1.86 <EPS-DILUTED> 1.85

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EX-10.2

   1
                                                                    EXHIBIT 10.2

                      SCHEDULE OF CERTAIN OFFICERS WHO ARE
                        PARTIES TO EMPLOYMENT AGREEMENTS



         Charles J. Bechtel
         David Bucci
         James L. M. Chen
         Warren W. Dettinger
         Reinoud G. J. Drenth
         Donald E. Eagon, Jr.
         Jack E. Finefrock
         Charee Francis-Vogelsang
         Bartholomew J. Frazzitta
         Michael J. Hillock
         Larry D. Ingram
         Robert W. Mahoney
         Dennis M. Moriarty
         Walden W. O'Dell
         Toni J. Portmann
         Anthony J. Rusciano
         Charles B. Scheurer
         Robert L. Stockamp
         Alben W. Warf
         Ernesto R. Unanue
         Robert J. Warren

EX-10.15

   1
                                                                   Exhibit 10.15

                              EMPLOYMENT AGREEMENT

         AGREEMENT, made and entered into as of the Effective Date by and
between Diebold, Incorporated, an Ohio corporation (together with its successors
and assigns permitted under this Agreement, the "Company"), and Mr. Walden W.
O'Dell (the "Executive").

                               W I T N E S S E T H
                               - - - - - - - - - -

         WHEREAS, the Company desires to employ the Executive and to enter into
an agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:

         1. DEFINITIONS.

            (a) "Affiliate" of a person or other entity shall mean a person or
other entity that directly or indirectly controls, is controlled by, or is under
common control with the person or other entity specified.

            (b) "Base Salary" shall mean the salary provided for in Section 4
below or any increased salary granted to the Executive pursuant to Section 4.

            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Cause" shall mean that prior to any termination pursuant to
Section 12(c), the Executive shall have committed:

                (i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the Company
or any subsidiary;

                (ii) intentional wrongful damage to property of the Company or
any subsidiary;

                (iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any subsidiary; or

                (iv) intentional wrongful engagement in any competitive activity
which would constitute a material breach of the duty of loyalty;





                                      -1-
   2



and any such act shall have been materially harmful to the Company and its
subsidiaries taken as a whole. For purposes of this Agreement, no act, or
failure to act, on the part of the Executive shall be deemed "intentional" if it
was due primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was in or not
opposed to the best interest of the Company and its subsidiaries.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for "Cause" hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the Board then in office at
a meeting of the Board called and held for such purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive had committed an act set forth above in this Section
1(d) and specifying the particulars thereof in detail.

            (e) A "Change in Control" shall be as defined in the Change in
Control Employment Agreement, which is attached hereto as Exhibit A.

            (f) "Constructive Termination Without Cause" shall mean termination
by the Executive of his employment at his initiative within 30 days following
the Executive's learning of the occurrence of any of the following events
without his consent:

                (i) Failure to elect, reelect or otherwise maintain the
Executive in the offices or positions in the Company or any subsidiary which the
Executive held immediately prior to such termination, or the removal of the
Executive as a Director of the Company (or any successor thereto) if the
Executive shall have been a Director of the Company immediately prior to such
termination, or the removal of the Executive as a member of the managing
authority of any subsidiary if the Executive shall have been a member of such
body immediately prior to such termination;

                (ii) Failure to elect or reelect the Executive to any of the
positions described in Section 3 below, including the failure to make him
Chairman of the Board prior to April 30, 2000;

                (iii) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the
position or positions with the Company and its Subsidiaries which the Executive
held immediately prior to such termination, a reduction in the aggregate of the
Executive's Base Salary and incentive pay received from the Company and its
subsidiaries, or the termination of the Executive's rights to any employee
benefits to which he was entitled immediately prior to such termination or a
reduction in scope or value thereof without the prior written consent of the
Executive, any of which is not remedied within 10 calendar days after receipt by
the Company of written notice from the Executive of such change, reduction or
termination, as the case may be;

                (iv) any purported termination of the Executive's employment
that is not effected for Cause or Disability;





                                      -2-
   3



                (v) the expiration or termination by the Company of the Change
in Control Employment Agreement unless replaced by an agreement providing
benefits to the Executive that are no less favorable than the existing Change in
Control Employment Agreement; or

                (vi) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all or
substantially all of the assets of the Company within 15 days after a merger,
consolidation, sale or similar transaction.

Following written notice from the Executive of any of the events described
above, the Company shall have 10 calendar days in which to cure. If the Company
fails to cure, the Executive's termination shall become effective on the 11th
calendar day following the written notice.

            (g) "Disability" shall mean the Executive's permanent and total
disability as defined by the Social Security Administration.

            (h) "Effective Date" shall be November 1, 1999; provided, however
that Executive may commence his employment with the Company earlier if his
obligation to provide services with his previous employer ends earlier; in which
event such earlier date of commencement of employment with the Company shall be
the Effective Date.

            (i) "Equity Incentive Plan" shall mean the Company's 1991 Equity and
Performance Incentive Plan, as amended and restated as of January 30, 1997, as
amended.

            (j) "Pro Rata" shall mean a fraction, the numerator of which is the
number of days that the Executive was employed in the applicable performance
period (a calendar year in the case of an annual bonus and a performance cycle
in the case of an award under the Equity Incentive Plan) and the denominator of
which shall be the number of days in the applicable performance period.

            (k) "Shares" shall mean the Common Shares of the Company.

            (l) "Term of Employment" shall mean the period specified in Section
2 below (including any extension as provided therein).

         2. TERM OF EMPLOYMENT.

         The Term of Employment shall begin on the Effective Date, and shall
extend until the third anniversary of the Effective Date, with automatic
one-year renewals thereafter unless either Party notifies the other at least 12
months before the scheduled expiration date that the term is not to renew.
Notwithstanding the foregoing, the Term of Employment may be earlier terminated
by either Party in accordance with the provisions of Section 12.






                                      -3-
   4



         3. POSITION, DUTIES AND RESPONSIBILITIES.

            (a) Commencing on the Effective Date and continuing for the
remainder of the Term of Employment, the Executive shall be employed as the
Chief Executive Officer and President of the Company and be responsible for the
general management of the affairs of the Company. The Executive shall also be
elected by the Board as a member of the Board, effective as of the Effective
Date. The Executive, in carrying out his duties under this Agreement, shall
report to the Board. The Executive shall become Chairman of the Board upon
election at the annual Board meeting in April 2000, and it is the intention of
the parties that he shall continue to serve as Chairman of the Board for the
remainder of the Term of Employment. During the term of this Agreement, the
Executive shall devote substantially all of his business time and attention to
the business and affairs of the Company and shall use his best efforts, skills
and abilities to promote its interests.

            (b) Nothing herein shall preclude the Executive from (i) serving on
the boards of directors of a reasonable number of other corporations with the
concurrence of the Board, (ii) serving on the boards of a reasonable number of
trade associations and/or charitable organizations, (iii) engaging in charitable
activities and community affairs, and (iv) managing his personal investments and
affairs, provided that such activities set forth in this Section 3(b) do not
conflict or interfere with the effective discharge of his duties and
responsibilities under Section 3(a).

         4. BASE SALARY.

         The Executive shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of $500,000. The
Base Salary shall be reviewed annually for increase in the discretion of the
Board.

         5. ANNUAL INCENTIVE AWARD.

         During the Term of Employment, commencing in 2000 the Executive shall
have a bonus opportunity each year equal to 100% of Base Salary, payable in that
amount if the maximum performance goals established for the relevant year are
met. If such performance goals are not met, the Executive shall receive a lesser
amount (or nothing) as determined in accordance with the Company's Annual
Incentive Plan. The Executive shall be paid his annual incentive awards no later
than other senior executives of the Company are paid their annual incentive
awards.

         6. SIGN-ON ARRANGEMENTS.

            (a) GENERAL. As soon as practicable following the Effective Date,
the Company shall grant the Executive the cash and equity based awards described
in this Section 6.

            (b) CASH SIGNING BONUS. In order to keep the Executive whole in
respect of compensation he is forfeiting at his previous employer, the Company
shall pay the Executive $1,750,000. Such amount shall be paid to the Executive
as follows. On the first day of the





                                      -4-
   5

Executive's employment with the Company, the Company shall pay $900,000 of the
$1,750,000 to the Executive. The balance of the amount shall be credited to an
account for the Executive under the Company's Amended and Restated 1992 Deferred
Compensation Plan and become payable at such time as elected by the Executive
under such plan, provided, however, that no amount shall be payable at a time at
which the Company's deduction of such amount would be disallowed to the Company
pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended.

            (c) AWARD OF DEFERRED SHARES. In order to keep the Executive whole
in respect of compensation he is forfeiting at his previous employer, as of the
Effective Date the Company shall award the Executive, pursuant to the Equity
Incentive Plan, Deferred Shares with terms substantially as summarized in
Exhibit B attached hereto, such terms to be embodied in an agreement as soon as
practicable.

            (d) PERFORMANCE-BASED EQUITY AWARDS. As a further inducement for
Executive's entry into this Agreement, as of the Effective Date the Company
shall award the Executive, pursuant to the Equity Incentive Plan,
performance-based Restricted Shares and Performance Shares with terms
substantially as summarized in Exhibit C attached hereto, such terms to be
embodied in agreements as soon as practicable.

         7. ADDITIONAL LONG-TERM INCENTIVE AWARDS.

            (a) STOCK OPTIONS. The Executive shall be eligible for stock option
awards commencing with awards in 2002, or sooner at the discretion of the Board,
in accordance with Company practices applicable to its senior-level executives
at the sole discretion of the Board.

            (b) LONG-TERM INCENTIVE PLANS. The Executive shall be eligible to
participate in the Company's Equity Incentive Plan (pro-rata participation in
1998-2000 award cycle and full participation in 1999-2001 and future award
cycles) and any other long-term incentive plan the Company may adopt, on a basis
comparable to other senior-level executives.

         8. EMPLOYEE BENEFIT PROGRAMS.

         During the Term of Employment, the Executive shall be entitled to
participate in any employee pension and welfare benefit plans and programs made
available to the Company's senior level executives, as such plans or programs
may be in effect from time to time, including, without limitation, pension,
profit sharing, savings and other retirement plans or programs, 401(k), medical,
dental, hospitalization, short-term and long-term disability and life insurance
plans, accidental death and dismemberment protection, travel accident insurance,
and any other pension or retirement plans or programs and any other employee
welfare benefit plans or programs that may be sponsored by the Company from time
to time, including any plans that supplement the above-listed types of plans or
programs, whether funded or unfunded. The Executive's participation shall be
based on, and the calculation of all benefits shall be based on, the assumptions
that the Executive has met all service-period or other requirements for such
participation. The Executive shall be entitled to five weeks paid vacation per
year of employment, which shall be subject to the Company's vacation policy for
senior executives.






                                      -5-
   6




         9. SUPPLEMENTAL PENSION.

         The Executive shall be provided a Supplemental Pension based upon the
Company's Supplemental Employee Retirement Plan (the "SERP"). Upon commencement
of employment, the Executive shall be deemed to have 7 years of credited service
for purposes of the accrual of benefits under the SERP. In addition to such
deemed credited service, the Executive shall receive credited service for each
year of actual service (including any fractional year) and such additional
credited service as may be applicable in the event of certain terminations of
employment as provided in Section 12 below. Anything in the SERP to the contrary
notwithstanding, the Executive shall at all times, including upon any
termination of employment with less than 15 years of credited service, be deemed
to be fully vested in his accrued benefit and to have satisfied the eligibility
requirements for a supplemental pension under the SERP. In all events, the
Executive shall be entitled to a supplemental pension that provides a benefit no
less favorable than a benefit based on the SERP assuming the credited service as
provided in the first three sentences of this Section.

         10. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES; RELOCATION.

             (a) The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all reasonable business expenses
incurred in connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy. The Company shall pay all
reasonable financial consultant and legal fees and expenses incurred by the
Executive in connection with the negotiation of the Executive's employment
arrangements with the Company.

             (b) The Executive shall be entitled to participate in the Company's
Relocation Policy, including without limitation, all reasonable moving, closing,
temporary housing and other associated expenses. In addition, the Executive
shall be entitled (i) to have the Company arrange for the purchase of his
current residence, (ii) to be reimbursed for any expenses connected with the
sale of such residence or any loss incurred by reason of a sale at less than
fair market value of such residence, (iii) to be paid an amount equal to one
month's salary as an allowance for miscellaneous expenses incurred in connection
with his relocation and (iv) to be provided any of the reimbursements provided
in this Section 10 on a tax grossed-up basis.

         11. PERQUISITES. The Executive shall receive standard Company executive
perquisites, including, without limitation, the following:

             (a) The Executive shall be entitled to fly first-class in the event
the Company does not have its own aircraft available for his use.

             (b) The Executive shall be provided a luxury class automobile.

             (c) The Company shall reimburse the Executive for financial
planning and tax preparation fees.





                                      -6-
   7



             (d) The Executive shall be provided with dues and membership fees
for one country club.

             (e) The Executive shall be entitled to an annual physical at the
Company's expense at the Cleveland Clinic (or equivalent facility.)

             (f) In the event any of the perquisites provided pursuant to this
Section 11 result in tax to the Executive, they shall be provided on a tax
grossed-up basis.

         12. TERMINATION OF EMPLOYMENT.

             (a) TERMINATION DUE TO DEATH. In the event that the Executive's
employment is terminated due to his death, his estate or his beneficiaries, as
the case may be, shall be entitled to the following benefits;

                 (i) Base Salary through the end of the month in which death
occurs;

                 (ii) Pro Rata annual incentive award for the year in which the
Executive's death occurs, based on the higher of (A) the actual bonus awarded in
the prior year or (B) the target bonus for the year of termination, payable when
bonuses are paid to other officers;

                 (iii) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable for a period of one year
or until their stated expiration date, if earlier;

                 (iv) the sign-on Deferred Shares shall be immediately
deliverable;

                 (v) all unvested performance-based Restricted Shares and
Performance Shares shall be forfeited;

                 (vi) Pro Rata long-term incentives shall be payable when
scheduled to be paid (if such awards are payable); and

                 (vii) a pre-retirement death benefit based on Article XI of the
Plan based on (A) the number of years credited service as provided in Section 9
of this Agreement and (B) on the Executive being deemed to have satisfied the
eligibility requirements for a Supplemental Retirement Benefit under the Plan.

             (b) TERMINATION DUE TO DISABILITY. In the event that the
Executive's employment is terminated due to his Disability, he shall be entitled
to the following benefits:

                 (i) disability benefits in accordance with the long-term
disability program in effect for senior executives of the Company; provided,
however, in no event shall such benefits provide the Executive with less than
60% of his Base Salary to age 65;





                                      -7-
   8




                 (ii) Base Salary through the end of the month in which
disability benefits commence;

                 (iii) Pro Rata annual incentive award for the year in which the
Executive's termination occurs, based an the higher of (A) the actual bonus
awarded in the prior year or (B) the target bonus in the year of termination,
payable when bonuses are paid to others;

                 (iv) all outstanding options, whether or not then exercisable,
shall become exercisable and shall remain exercisable for a period of one year
or until their stated expiration date, if earlier;

                 (v) the sign-on Deferred Shares shall be immediately
deliverable;

                 (vi) all unvested performance-based Restricted Shares and
Performance Shares shall be forfeited;

                 (vii) Pro Rata long-term incentives shall be payable when
scheduled to be paid (if such awards are payable);

                 (viii) 36 months of additional credited service for SERP
benefits; and

                 (ix) continued participation in all medical, dental, vision and
hospitalization insurance coverage and in other employee benefit plans or
programs in which he was participating on the date of the termination of his
employment until the earlier of 36 months following termination of employment or
the date, or dates, he receives equivalent coverage and benefits from a
subsequent employer.

         In no event shall a termination of the Executive's employment for
Disability occur until the Party terminating his employment gives written notice
to the other Party in accordance with Section 23 below.

             (c) TERMINATION BY THE COMPANY FOR CAUSE. In the event the Company
terminates the Executive's employment for Cause:

                 (i) he shall be entitled to Base Salary through the date of the
termination;

                 (ii) all outstanding options which are not then exercisable
shall be forfeited; exercisable options shall remain exercisable until the
earlier of the thirtieth day after the date of termination or the originally
scheduled expiration date of the options unless the Compensation Committee
determines otherwise;

                 (iii) unvested sign-on Deferred Shares shall be forfeited; and

                 (iv) unvested performance-based Restricted Shares and
performance Shares shall be forfeited.





                                      -8-
   9

             (d) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION WITHOUT
CAUSE. In the event the Executive's employment is terminated by the Company
without Cause, other than due to Disability or death, or in the event there is a
Constructive Termination without Cause, the Executive shall be entitled to the
following benefits:

                 (i) Base Salary through the date of termination;

                 (ii) Base Salary, at the annualized rate in effect on the date
of termination, for a period of 24 months following such termination, payable
promptly following the date of termination in a lump sum;

                 (iii) a Pro Rata annual incentive award for the year in which
termination occurs, based on the higher of (A) the actual bonus awarded in the
prior year or (B) the target bonus in the year of termination, payable in a
single installment promptly after his termination;

                 (iv) an annual incentive award for a period of 24 months
following the date of termination, based on the higher of (A) the actual bonus
awarded in the prior year or (B) the target bonus in the year of termination,
and payable in a lump sum promptly following the date of termination;

                 (v) options shall become exercisable and shall remain
exercisable for a period of two years or until the end of their term, if less;

                 (vi) the sign-on Deferred Shares shall be immediately
deliverable; and

                 (vii) unvested performance-based Restricted Shares and
Performance Shares shall be forfeited;

                 (viii) Pro Rata long-term incentives shall be payable when
scheduled to be paid (if such awards are payable);

                 (ix) 24 months of additional credited service for SERP benefits
determined as provided in Section 9; and

                 (x) continued participation in all medical, dental, vision and
hospitalization insurance coverage and in other employee benefit plans or
programs in which he was participating on the date of the termination of his
employment until the earlier of 24 months following termination of employment or
the date, or dates, he receives equivalent coverage and benefits from a
subsequent employer. In the event the Company's plans do not permit continuation
of Executive's participation following his termination, the Company shall
provide the Executive with an amount which, after taxes, is sufficient for him
to purchase equivalent benefits.





                                      -9-
   10



             (e) VOLUNTARY TERMINATION. A termination of employment by the
Executive on his own initiative, other than a termination due to Disability or a
Constructive Termination without Cause, shall have the same consequences as
provided in Section 12(c) for a termination for Cause, except that the unvested
sign-on Deferred Shares shall not be forfeited, but shall become immediately
deliverable. A voluntary termination under this Section 12(e) shall be effective
on the date specified in the Executive's written notice.

             (f) NON-RENEWAL BY THE COMPANY. In the event that the Company
notifies the Executive pursuant to Section 2 of this Agreement that the Term of
Employment shall not renew, the Executive shall be entitled to the same benefits
as provided in Section 12(d); PROVIDED, HOWEVER that the period for which
entitlements are provided shall be 12 months instead of 24 months in all
subsections where such period applies.

             (g) CONSEQUENCES OF A CHANGE IN CONTROL. The Executive's
entitlements relating to a Change in Control of the Company shall be determined
in accordance with the Change in Control Employment Agreement which is attached
hereto as Exhibit A. In addition, in the event of a Change in Control, the
sign-on Deferred Shares shall become immediately deliverable, the unvested
performance-based Restricted Shares shall become nonforfeitable, and the
unvested Performance Shares shall be immediately deliverable. In the event of
any conflict between this Agreement and the Change in Control Employment
Agreement after the occurrence of a Change in Control, the Change in Control
Employment Agreement shall control and there shall be no duplication of
benefits.

             (h) OTHER TERMINATION BENEFITS. In the case of any of the foregoing
terminations, the Executive or his estate shall also be entitled to:

                 (i) the balance of any incentive awards due for performance
periods which have been completed, but which have not yet been paid;

                 (ii) any expense reimbursements due the Executive; and

                 (iii) other benefits, if any, in accordance with applicable
plans and programs of the Company.

             (i) NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this Section 12, the Executive shall be under no obligation to
seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.

             (j) NATURE OF PAYMENTS. Any amounts due under this Section 12 are
in the nature of severance payments considered to be reasonable by the Company
and are not in the nature of a penalty.





                                      -10-
   11



         13. CONFIDENTIALITY.

             (a) The Executive agrees that he will not, at any time during the
Term of Employment or thereafter, disclose or use any trade secret, proprietary
or confidential information of the Company or any subsidiary or Affiliate of the
Company, obtained during the course of his employment, except as required in the
course of such employment or with the written permission of the Company or, as
applicable, any subsidiary or Affiliate of the Company or as may be required by
law, provided that, if the Executive receives legal process with regard to
disclosure of such information, he shall promptly notify the Company and
cooperate with the Company in seeking a protective order.

             (b) The Executive agrees that at the time of the termination of his
employment with the Company, whether at the instance of the Executive or the
Company, and regardless of the reasons therefor, he will deliver to the Company,
and not keep or deliver to anyone else, any and all notes, files, memoranda,
papers and, in general, any and all physical matter containing information,
including any and all documents significant to the conduct of the business of
the Company or any subsidiary or Affiliate of the Company which are in his
possession, except for any documents for which the Company or any subsidiary or
Affiliate of the Company has given written consent to removal at the time of the
termination of the Executive's employment and his personal rolodex, personal
files, phone book and similar items.

             (c) The Executive agrees that the Company's remedies at law would
be inadequate in the event of a breach or threatened breach of this Section 13;
accordingly, the Company shall be entitled, in addition to its rights at law, to
seek an injunction and other equitable relief without the need to post a bond.

         14. RESOLUTION OF DISPUTES.

         Any disputes arising under or in connection with this Agreement shall
be resolved by third party mediation of the dispute and, failing that, at the
election of the Executive by binding arbitration, to be held in Cleveland, Ohio,
in accordance with the rules and procedures of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof Each Party shall bear his or
its own costs of the mediation, arbitration or litigation.

         15. INDEMNIFICATION.

         The Company and the Executive shall enter into an Indemnification
Agreement in substantially the form of Exhibit D effective as of the Effective
Date. The Company agrees to continue and maintain a directors' and officers'
liability insurance policy covering the Executive to the extent the Company
provides such coverage for its other executive officers.

         16. ASSIGNABILITY: BINDING NATURE.

         This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. Rights or obligations





                                      -11-
   12



of the Company under this Agreement may be assigned or transferred by the
Company pursuant to a merger or consolidation in which the Company is not the
continuing entity, or the sale or liquidation of all or substantially all of the
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of a sale of assets or liquidation as
described in the preceding sentence, it shall take whatever action it reasonably
can in order to cause such assignee or transferee to expressly assume the
liabilities, obligations and duties of the Company hereunder. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only by will or operation of law.

         17. ENTIRE AGREEMENT.

         This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.

         18. AMENDMENT OR WAIVER.

         No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.

         19. SEVERABILITY.

         In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law so as to
achieve the purposes of this Agreement.

         20. SURVIVORSHIP.

         Except as otherwise expressly set forth in this Agreement, the
respective rights and obligations of the Parties hereunder shall survive any
termination of the Executive's employment. This Agreement itself (as
distinguished from the Executive's employment) may not be terminated by either
Party without the written consent of the other Party. Upon the expiration of the
term of the Agreement, the respective rights and obligations of the Parties
shall survive such expiration to the extent necessary to carry out the
intentions of the Parties an




                                      -12-
   13





embodied in the rights (such as vested rights) and obligations of the Parties
under this Agreement.

         21. REFERENCES.

         In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.

         22. GOVERNING LAW.

         This Agreement shall be governed in accordance with the laws of Ohio
without reference to principles of conflict of laws.

         23. NOTICES.

         All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given when (a) delivered personally, (b)
delivered by certified or registered mail, postage prepaid, return receipt
requested or (c) delivered by overnight courier (provided that a written
acknowledgment of receipt is obtained by the overnight courier) to the Party
concerned at the address indicated below or to such changed address as such
Party may subsequently give such notice of:

If to the Company:

         Diebold, Incorporated
         5995 Mayfair Road
         North Canton, Ohio 44720

         Attention: Vice President, Human Resources


If to the Executive:

         Walden W. O'Dell
         Diebold, Incorporated
         5995 Mayfair Road
         North Canton, Ohio 44720

         24. HEADING.

         The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.


                                      -13-

   14



         25. COUNTERPARTS.

         This Agreement may be executed in two or more counterparts.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.

                                        The Company


                                        By: /s/ Robert W. Mahoney
                                            --------------------------
                                            Robert W. Mahoney
                                            Chairman of the Board

                                            /s/ Walden W. O'Dell
                                            --------------------------
                                            Walden W. O'Dell




                                      -14-
   15



                                                                       EXHIBIT A

                              EMPLOYMENT AGREEMENT
                              --------------------

         This EMPLOYMENT AGREEMENT ("Agreement"), dated as of November 1, 1999
by and between DIEBOLD, INCORPORATED, an Ohio corporation (the "Company"), and
WALDEN W. O'DELL (the "Executive");



                                   WITNESSETH:
                                   -----------

         WHEREAS, the Executive is a senior executive who has made and is
expected to continue to make major contributions to the profitability, growth
and financial strength of the Company and its Subsidiaries (as hereinafter
defined);

         WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as that term is
hereafter defined) exists;

         WHEREAS, the Company desires to assure itself and its Subsidiaries of
both present and future continuity of management in the event of a Change in
Control and desires to establish certain minimum compensation rights for key
senior executive officers, including the Executive, applicable in the event of a
Change in Control;

         WHEREAS, the Company wishes to ensure that senior executives are not
practically disabled from discharging their duties upon a Change in Control;

         WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Executive could reasonably expect to receive
absent a Change in Control and, accordingly, although effective and binding as
of the date hereof, this Agreement shall become operative only upon the
occurrence of a Change in Control; and

         WHEREAS, the Executive is willing to render services on the terms and
subject to the conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the premises, the Company and the
Executive agree as follows:

         1. OPERATION OF AGREEMENT: (a) This Agreement shall be effective and
binding immediately upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement shall not become operative unless and
until there shall have occurred a Change in Control. For purposes of this
Agreement, a "Change in Control" shall have occurred if at any time during the
Term (as that term is hereafter defined) any of the following events shall
occur:

                (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 then-outstanding securities of such
      corporation or person immediately after such transaction is held in the
      aggregate by the holders of Voting Stock (as that term is hereafter
      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 then-outstanding securities of such
      corporation or person immediately after such sale or transfer is held in
      the aggregate by the holders of Voting Stock of the Company immediately
      prior to such sale or transfer;





   16
                                                                              2.








                (iii) There is a report filed on Schedule 13D or Schedule 14D-1
      (or any successor schedule, form or report), 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% or more of the combined voting power
      of the then-outstanding securities entitled to vote generally in the
      election of directors of the Company ("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 Directors of the
      Company cease for any reason to constitute at least a majority thereof,
      unless the election, or the nomination for election by the Company's
      stockholders, of each Director of the Company first elected during such
      period was approved by a vote of at least two-thirds of the Directors of
      the Company then still in office who were Directors of the Company at the
      beginning of any such period.

Notwithstanding the foregoing provisions of Section 1(a)(iii) or 1(a)(iv)
hereof, a "Change in Control" shall not be deemed to have occurred for purposes
of this Agreement either (i) solely because (A) the Company, (B) a Subsidiary of
the Company, or (C) any Company-sponsored employee stock ownership plan or any
other employee benefit plan of the Company, either 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% 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 (ii) solely because of a change in control of any Subsidiary by
which the Executive may be employed. Notwithstanding the foregoing provisions of
Section 1(a)(i-iv) hereof, if, prior to any event described in Sections
1(a)(i-iv) hereof instituted by any person not an officer or director of the
Company, or prior to any disclosed proposal instituted by any person not an
officer or director of the Company which could lead to any such event,
management proposes any restructuring of the Company which ultimately leads to
an event described in Sections 1 (a)(i-iv) hereof pursuant to such management
proposal, then a "Change in Control" shall not be deemed to have occurred for
purposes of this Agreement.

            (b) Upon the occurrence of a Change in Control at any time during
the Term, this Agreement shall become immediately operative, except that in the
event that any such agreement to merge, consolidate, reorganize or sell or
otherwise transfer assets referred to in Section 1(a)(i) or 1(a)(ii) is
terminated without such merger, consolidation, reorganization or sale or
transfer having been consummated, or the person filing such Schedule 13D or
Schedule 14D-1 referred to in Section 1(a)(iii) files an amendment to such
Schedules disclosing that it no longer is the beneficial owner of securities
representing 20% or more of the Voting Stock of the Company, or the Company
reports that the change of control which it reported in the filing referred to
in Section 1(a)(iv) will not in fact occur, the Board of Directors of the
Company (the "Board") may by notice to the Executive nullify the operation of
this Agreement by reason of such Change in Control, without prejudice to any
exercise by the Executive of his rights under this Agreement that may have
occurred prior to such nullification.

            (c) The period during which this Agreement shall be in effect (the
"Term") shall commence as of the date hereof and shall expire as of the later of
(i) the close of business on December 31, 1993 and (ii) the expiration of the
Period of Employment (as that term is hereafter defined), provided, however,
that (A) commencing on January 1, 1991, and each January 1 thereafter, the term
of this Agreement shall automatically be extended for an additional year unless,
not later than September 30 of the immediately preceding year, the Company or
the Executive shall have given notice





   17
                                                                              3.






that it or he, as the case may be, does not wish to have the Term extended, and
(B) subject to Section 8 hereof, if, at any time prior to a Change in Control,
the Executive for any reason is no longer an employee of the Company or a
Subsidiary, thereupon the Term shall be deemed to have expired and this
Agreement shall immediately terminate and be of no further effect.

         2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms and
conditions of this Agreement, upon the occurrence of a Change in Control, the
Company shall continue the Executive in the employ of the Company and its
Subsidiaries and the Executive shall remain in such employ for the period set
forth in Section 2(b) hereof (the "Period of Employment"). During the Period of
Employment, the Executive agrees to serve in such office or offices of the
Company or any Subsidiary to which the Board or the managing authority of any
Subsidiary may from time to time elect or appoint him. Throughout the Period of
Employment, the Executive shall devote substantially all of his time during
normal business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company and its Subsidiaries as in effect
for senior executives immediately prior to the Change in Control) to the
business and affairs of the Company and its Subsidiaries, but nothing in this
Agreement shall preclude the Executive from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or member of
or participant in any organization or business so long as such activity would
not constitute Competitive Activity (as that term is hereafter defined), (ii)
engaging in charitable and community activities, or (iii) managing his personal
investments.

            (b) The Period of Employment shall commence on the date of an
occurrence of a Change in Control and, subject only to the provisions of Section
4 hereof, shall continue until the earlier of (i) the expiration of the third
anniversary of the occurrence of the Change in Control, (ii) the Executive's
death, or (iii) the Executive's attainment of age 65; provided, however, that
commencing on each anniversary of the Change in Control, the Period of
Employment shall automatically be extended for an additional year unless, not
later than 90 calendar days prior to such anniversary date, either the Company
or the Executive shall have given written notice to the other that the Period of
Employment shall not be so extended.

            (c) As used in this Agreement, the term "Subsidiary" means a
corporation, company or other entity (i) more than 50 percent of whose
outstanding shares or securities (representing the right to vote for the
election of directors or other managing authority) are, or (ii) which does not
have outstanding shares or securities (as may be the case in a partnership,
joint venture or unincorporated association), but more than 50 percent of whose
ownership interest representing the right generally to make decisions for such
other entity is, now or hereafter, owned or controlled, directly or indirectly,
by the Company, but such corporation, company or other entity shall be deemed to
be a Subsidiary only so long as such ownership or control exists.

         3. COMPENSATION DURING PERIOD OF EMPLOYMENT: (a) For his services
pursuant to Section 2(a) hereof, upon the occurrence of a Change in Control, the
Executive shall receive during the Period of Employment (i) annual base salary
at a rate not less than the Executive's annual fixed or base compensation
(payable monthly or otherwise as in effect for senior executives of the Company
immediately prior to the occurrence of a Change in Control) or such higher rate
as may be approved from time to time by the Board or the Compensation Committee
thereof (the "Committee") (which base salary at such rate is herein referred to
as "Base Pay") and (ii) an annual amount equal to not less than the highest
aggregate annual bonus, incentive or other payments of cash compensation in
addition to the amounts referred to in clause (i) above made or to be made in
regard to services rendered in any calendar year during the two calendar years
immediately preceding the year in which the Change in Control occurred pursuant
to any bonus, incentive, profit-sharing, performance, discretionary pay or
similar policy, plan, program or arrangement of the Company or any Subsidiary or
any successor thereto providing benefits at least as great as the benefits
payable thereunder prior to a Change in Control ("incentive Pay"), provided,
however, that with the prior written consent of the Executive, nothing herein
shall preclude a change in the mix between Base Pay and Incentive Pay so long as
the aggregate cash compensation received by the Executive in any one calendar
year is not reduced in connection therewith or as a result





   18
                                                                              4.





thereof, and provided further, however, that in no event shall any increase in
the Executive's aggregate cash compensation or any portion thereof in any way
diminish any other obligation of the Company under this Agreement.

            (b) For his services pursuant to Section 2(a) hereof, during the
Period of Employment the Executive shall be a full participant in, and shall be
entitled to the perquisites, benefits and service credit for benefits as
provided under, any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which senior executives of the
Company or its Subsidiaries participate, including without limitation any stock
option, stock purchase, stock appreciation, restricted stock grant, savings,
pension, supplemental executive retirement or other retirement income or welfare
benefit, deferred compensation, group and/or executive life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company or any Subsidiary), disability, salary continuation,
expense reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company or any
Subsidiary providing perquisites, benefits and service credit for benefits at
least as great as are payable thereunder prior to a Change in Control
(collectively, "Employee Benefits"), provided, however, that except as expressly
provided in, and subject to the terms of, Section 5(a)(ii) hereof, the
Executive's rights thereunder shall be governed by the terms thereof and shall
not be enlarged hereunder or otherwise affected hereby. Subject to the proviso
in the immediately preceding sentence, if and to the extent such perquisites,
benefits or service credit for benefits are not payable or provided under any
such policy, plan, program or arrangement as a result of the amendment or
termination thereof, then the Company shall itself pay or provide therefor.
Nothing in this Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way diminish
any other obligation of the Company under this Agreement.

            (c) The Company has determined that the amounts payable pursuant to
this Section 3 constitute reasonable compensation for services to be rendered
during the Period of Employment. Accordingly, notwithstanding any other
provision hereof, unless such action would be expressly prohibited by applicable
law, if any amount paid or payable pursuant to this Section 3 for services to be
rendered during the Period of Employment, or pursuant to Section 5, is subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), the Company will pay to the Executive an additional
amount in cash equal to the amount necessary to cause the aggregate remuneration
received by the Executive under this Section 3 for services to be rendered
during the Period of Employment, or Section 5, including such additional cash
payment (net of all federal, state and local income taxes and all taxes payable
as the result of the application of Sections 280G and 4999 of the Code) to be
equal to the aggregate remuneration the Executive would have received under this
Section 3 for services to be rendered during the Period of Employment, or
Section 5, excluding such additional payment (net of all federal, state and
local income taxes), as if Sections 280G and 4999 of the Code (and any successor
provisions thereto) had not been enacted into law.

         4. TERMINATION FOLLOWING A CHANGE IN CONTROL: (a) In the event of the
occurrence of a Change in Control, the Executive's employment with the Company
and its Subsidiaries may be terminated by the Company and its Subsidiaries
during the Period of Employment and the Executive shall not be entitled to the
benefits provided by Section 5 hereof only upon the occurrence of one or more of
the following events:

                (i) The Executive's death;

                (ii) If the Executive shall become permanently disabled within
      the meaning of, and begins actually to receive disability benefits
      pursuant to, the long-term disability plan in effect for senior executives
      of the Company and its Subsidiaries immediately prior to the Change in
      Control; or

                (iii) For "Cause," which for purposes of this Agreement shall
      mean that, prior to any termination pursuant to Section 4(b) hereof, the
      Executive shall have committed:




   19
                                                                              5.




                    (A) an intentional act of fraud, embezzlement or theft in
          connection with his duties or in the course of his employment with the
          Company or any Subsidiary;

                    (B) intentional wrongful damage to property of the Company
          or any Subsidiary;

                    (C) intentional wrongful disclosure of secret processes or
          confidential information of the Company or any Subsidiary; or

                    (D) intentional wrongful engagement in any competitive
          activity which would constitute a material breach of the duty of
          loyalty ("Competitive Activity");

and any such act shall have been materially harmful to the Company and its
Subsidiaries taken as a whole. For purposes of this Agreement, no act, or
failure to act, on the part of the Executive shall be deemed "intentional" if it
was due primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was in or not
opposed to the best interest of the Company and its Subsidiaries.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for "Cause" hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the Board then in office at
a meeting of the Board called and held for such purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive had committed an act set forth above in this Section
4(a)(iii) and specifying the particulars thereof in detail. Nothing herein shall
limit the right of the Executive or his beneficiaries to contest the validity or
propriety of any such determination.

            (b) In the event of the occurrence of a Change in Control, during
the Period of Employment the Executive shall be entitled to the benefits as
provided in Section 5 hereof upon the occurrence of one or more of the following
events:

                (i) Any termination by the Company and its Subsidiaries of the
      employment of the Executive prior to the date upon which the Executive
      shall have attained age 65, which termination shall be for any reason
      other than for Cause or as a result of the death of the Executive or by
      reason of the Executive's disability and the actual receipt of disability
      benefits in accordance with Section 4(a)(ii) hereof; or

                (ii) Termination by the Executive of his employment with the
      Company and its Subsidiaries during the Period of Employment after the
      Change in Control upon the occurrence of any of the following events:

                     (A) Failure to elect, reelect or otherwise maintain the
             Executive in the offices or positions in the Company or any
             Subsidiary which the Executive held immediately prior to a Change
             in Control, or the removal of the Executive as a Director of the
             Company (or any successor thereto) if the Executive shall have been
             a Director of the Company immediately prior to the Change in
             Control, or the removal of the Executive as a member of the
             managing authority of any Subsidiary if the Executive shall have
             been a member of such body immediately prior to the Change in
             Control;

                     (B) A significant adverse change in the nature or scope of
             the authorities, powers, functions, responsibilities or duties
             attached to the position or positions with the Company and its
             Subsidiaries which the Executive held immediately prior to the
             Change in Control, a reduction in the aggregate of the Executive's
             Base Pay and Incentive Pay received from the Company and its
             Subsidiaries, or the termination of the Executive's rights to any
             Employee Benefits to which he was entitled immediately prior to the
             Change in Control or a reduction in scope or value thereof without
             the prior written consent of the Executive, any of




   20
                                                                              6.




             which is not remedied within 10 calendar days after receipt by
             the Company of written notice from the Executive of such change,
             reduction or termination, as the case may be;

                     (C) A determination by the Executive made in good faith
             that as a result of a Change in Control and a change in
             circumstances thereafter significantly affecting his position,
             including without limitation a change in the scope of the business
             or other activities for which he was responsible immediately prior
             to the Change in Control, he has been rendered substantially unable
             to carry out, has been substantially hindered in the performance
             of, or has suffered a substantial reduction in, any of the
             authorities, powers, functions, responsibilities or duties attached
             to the position held by the Executive immediately prior to the
             Change in Control, which situation is not remedied within 10
             calendar days after written notice to the Company from the
             Executive of such determination;

                     (D) The liquidation, dissolution, merger, consolidation or
             reorganization of the Company or transfer of all or a significant
             portion of its business and/or assets, unless the successor or
             successors (by liquidation, merger, consolidation, reorganization
             or otherwise) to which all or a significant portion of its business
             and/or assets have been transferred (directly or by operation of
             law) shall have assumed all duties and obligations of the Company
             under this Agreement pursuant to Section 10 hereof;

                     (E) The Company shall relocate its principal executive
             offices, or the Company or any Subsidiary shall require the
             Executive to have his principal location of work changed, to any
             location which is in excess of 25 miles from the location thereof
             immediately prior to the Change in Control or the Company or any
             Subsidiary shall require the Executive to travel away from his
             office in the course of discharging his responsibilities or duties
             hereunder significantly more (in terms of either consecutive days
             or aggregate days in any calendar year) than was required of him
             prior to the Change in Control without, in either case, his prior
             written consent; or

                     (F) Without limiting the generality or effect of the
             foregoing, any material breach of this Agreement by the Company or
             any successor thereto.

             (c) A termination by the Company and its Subsidiaries pursuant to
Section 4(a) hereof or by the Executive pursuant to Section 4(b) hereof shall
not affect any rights which the Executive may have pursuant to any agreement,
policy, plan, program or arrangement of the Company or any Subsidiary providing
Employee Benefits, which rights shall be governed by the terms thereof. If this
Agreement or the employment of the Executive is terminated under circumstances
in which the Executive is not entitled to any payments under Section 3 or 5
hereof, the Executive shall have no further obligation or liability to the
Company hereunder with respect to his prior or any future employment.

         5. SEVERANCE COMPENSATION: (a) If, following the occurrence of a Change
in Control, the Company and its Subsidiaries shall terminate the Executive's
employment during the Period of Employment other than pursuant to Section 4(a)
hereof, or if the Executive shall terminate his employment pursuant to Section
4(b) hereof, the Company shall pay to the Executive the amount specified in
Section 5(a)(i) hereof within five business days after the date (the
"Termination Date") that the Executive's employment is terminated (the effective
date of which shall be the date of termination or such other date that may be
specified by the Executive if the termination is pursuant to Section 4(b)
hereof):

                (i) In lieu of any further payments to the Executive for periods
      subsequent to the Termination Date, but without affecting the rights of
      the Executive referred to in Section 5(b) hereof, a lump sum payment (the
      "Severance Payment") in an amount equal to three times the Base Pay of the
      Executive.

                (ii) (A) On the Termination Date and continuing until the
      earlier of (i) the expiration of the first anniversary of the Termination
      Date, (ii) the Executive's death, or (iii) the Executive's attainment of
      age 65 (the




   21
                                                                              7.





      "Benefits Period"), the Company shall arrange to provide the Executive
      with Employee Benefits (except that the Company shall not be required to
      grant stock options, stock purchase rights, restricted stock, or stock
      appreciation rights during the Benefits Period) substantially similar to
      those which the Executive was receiving or entitled to receive immediately
      prior to the Termination Date (and if and to the extent that such benefits
      shall not or cannot be paid or provided under any policy, plan, program or
      arrangement of the Company or its Subsidiaries solely due to the fact that
      the Executive is no longer an officer or employee of the Company and its
      Subsidiaries, then the Company shall itself pay or provide for the payment
      to the Executive, his dependents and beneficiaries, such Employee
      Benefits) and (B) without limiting the generality of the foregoing, the
      Benefits Period shall be considered service with the Company and its
      Subsidiaries for the purpose of service credits under the retirement
      income, supplemental executive retirement and other plans for Employee
      Benefits of the Company and its Subsidiaries applicable to the Executive
      or his beneficiaries immediately prior to the Termination Date. Without
      otherwise limiting the purposes or effect of Section 6 hereof, Employee
      Benefits payable to the Executive pursuant to this Section 5(a)(ii) by
      reason of any "welfare benefit plan" of the Company (as the term "welfare
      benefit plan" is defined in Section 3(1) of the Employee Retirement Income
      Security Act of 1974, as amended) shall be reduced to the extent
      comparable welfare benefits are actually received by the Executive from
      another employer during the Benefits Period.

            (b) Upon written notice given by the Executive to the Company prior
to the occurrence of a Change in Control, the Executive, at his sole option,
without reduction to reflect the present value of such amounts as aforesaid, may
elect to have all or any of the Severance Payment payable pursuant to Section
5(a)(i) hereof paid to him on a quarterly or monthly basis during the remainder
of the Period of Employment.

            (c) There shall be no right of set-off or counterclaim in respect of
any claim, debt or obligation against any payment to or benefit for the
Executive provided for in this Agreement.

            (d) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment required to be made hereunder
on a timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to eighteen percent (18%).

         6. NO MITIGATION OBLIGATION: The Company hereby acknowledges that it
will be difficult, and may be impossible, for the Executive to find reasonably
comparable employment following the Termination Date. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the parties hereto expressly agree
that the payment of the severance compensation by the Company to the Executive
in accordance with the terms of this Agreement will be liquidated damages, and
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.

         7. INDEMNIFICATION OF LEGAL FEES AND EXPENSES; SECURITY FOR PAYMENT:
(a) INDEMNIFICATION OF LEGAL FEES. It is the intent of the Company that the
Executive not be required to incur the expenses associated with the enforcement
of his rights under this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder. Accordingly, if it should
appear to the Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation designed to deny, or to recover from, the Executive
the benefits intended to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain counsel of his
choice, at the expense of the Company as hereafter provided, to represent the
Executive in connection with the initiation or defense of any litigation or
other legal action, whether by or against the Company or any Subsidiary,
Director, officer, stockholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior




   22
                                                                              8.





attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. The Company shall pay or cause to be paid and shall
be solely responsible for any and all attorneys' and related fees and expenses
incurred by the Executive as a result of the Company's failure to perform this
Agreement or any provision hereof or as a result of the Company or any person
contesting the validity or enforceability of this Agreement or any provision
hereof as aforesaid.

            (b) TRUST AGREEMENTS. To ensure that the provisions of this
Agreement can be enforced by the Executive, two agreements ("Trust Agreement"
and "Trust Agreement No. 2") dated as of February 10, 1989, have been
established between National City Bank, a national banking association
("Trustee") and the Company. The Trust Agreement sets forth the terms and
conditions relating to payment from the Trust Agreement of the Severance Payment
and other Employee Benefits pursuant to Section 5(a) hereof owed by the Company,
and Trust Agreement No. 2 sets forth the terms and conditions relating to
payment from Trust Agreement No. 2 of attorneys' and related fees and expenses
pursuant to Section 7(a) hereof owed by the Company. Executive shall make demand
on the Company for any payments due Executive pursuant to Section 7(a) hereof
prior to making demand therefor on the Trustee under Trust Agreement No. 2.
Payments by such Trustee shall discharge the Company's liability under Section
7(a) hereof only to the extent that trust assets are used to satisfy such
liability.

            (c) OBLIGATION OF THE COMPANY TO FUND TRUSTS. Upon the earlier to
occur of (X) a Change in Control that involves a transaction that was not
approved by the Board, and was not recommended to the Company's shareholders by
the Board, (Y) a declaration by the Board that the Trusts should be funded in
connection with a Change in Control that involves a transaction that was
approved by the Board, or was recommended to shareholders by the Board, or (Z) a
declaration by the Board that a Change in Control is imminent, the Company shall
promptly to the extent it has not previously done so, and in any event within
five (5) business days:

                (i) transfer to the Trustee to be added to the principal of the
         trust under the Trust Agreement a sum equal to the aggregate value on
         the date of the Change in Control of the Severance Payment and Employee
         Benefits which could become payable to Executive under the provisions
         of Section 5(a)(i) and Section 5(a)(ii) hereof; provided, however, that
         the Company shall not be required to transfer, in the aggregate, to the
         trust under the Trust Agreement a sum in excess of the maximum amount
         authorized by its Board by resolutions on February 10, 1989, which
         resolutions contemplate the funding of the trust under the Trust
         Agreement Any Severance Payment or other payment of Employee Benefits
         by the Trustee pursuant to the Trust Agreement shall, to the extent
         thereof, discharge the Company's obligation to pay the Severance
         Payment and other Employee Benefits hereunder, it being the intent of
         the Company that assets in such Trust be held as security for the
         Company's obligation to pay the Severance Payment and other Employee
         Benefits under this Agreement; and

                (ii) transfer to the Trustee to be added to the principal of the
         trust under Trust Agreement No. 2 the sum of Two Million Dollars
         ($2,000,000). Any payments of attorneys' and related fees and expenses,
         which are the obligation of the Company under Section 7(a) hereof, by
         the Trustee pursuant to Trust Agreement No. 2 shall, to the extent
         thereof, discharge the Company's obligation hereunder, it being the
         intent of the Company that such assets in such Trust be held as
         security for the Company's obligation under Section 7(a) hereof.

         8. EMPLOYMENT RIGHTS: Nothing expressed or implied in this Agreement
shall create any right or duty on the part of the Company or the Executive to
have the Executive remain in the employment of the Company or any Subsidiary
prior to any Change in Control, provided, however, that any termination of
employment of the Executive or the removal of the Executive from such
Executive's office or position following the commencement of any discussion with
a third person that ultimately results in a Change in Control shall be deemed to
be a termination or removal of the Executive after a Change in Control for
purposes of this Agreement.




   23
                                                                              9.




         9. WITHHOLDING OF TAXES: The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling.

         10. SUCCESSORS AND BINDING AGREEMENT: (a) The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required to perform if no
such succession had taken place. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such successor
shall thereafter be deemed the "Company" for the purposes of this Agreement),
but shall not otherwise be assignable, transferable or delegable by the Company.

             (b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and/or legatees.

             (c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Section 10(a) hereof. Without limiting the generality of the
foregoing, the Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will or by the laws of
descent and distribution and, in the event of any attempted assignment or
transfer contrary to this Section 10(c), the Company shall have no liability to
pay any amount so attempted to be assigned, transferred or delegated.

             (d) The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of this Agreement.

         11. NOTICE: For all purposes of this Agreement, all communications
including without limitation notices, consents, requests or approvals, provided
for herein shall be in writing and shall be deemed to have been duly given when
delivered or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Executive at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

         12. GOVERNING LAW: The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Ohio, without giving effect to the principles of conflict of laws of such State.

         13. VALIDITY: If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.

         14. ENTIRE AGREEMENT This Agreement represents the entire agreement
between the parties relating to the subject matter hereof and replaces any and
all prior agreements pertaining thereto. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.




   24
                                                                             10.





         15. AMENDMENT: No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

         16. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.


                                        DIEBOLD, INCORPORATED


                                        By
                                        -------------------------------
                                        Robert W. Mahoney
                                        Chairman of the Board




- ---------------------------
Walden W. O'Dell







   25




                                                                       EXHIBIT B



                                                                   SIGN-ON BONUS
                                                                   -------------


                             DIEBOLD, INCORPORATED

                            DEFERRED SHARE AGREEMENT

         WHEREAS, Walden W. O'Dell (hereinafter called the "Grantee") and
Diebold, Incorporated (hereinafter called the "Corporation") have entered into
an Employment Agreement dated as of November 1, 1999 (the "Employment
Agreement") that provides for the award of 70,000 Deferred Shares pursuant to
the 1991 Amended and Restated Equity and Performance Incentive Plan of the
Corporation (the "1991 Plan").

         NOW, THEREFORE, the Corporation hereby grants to the Grantee as of
November 1, 1999, pursuant to the 1991 Plan and Section 6(c) of the Employment
Agreement, 70,000 Deferred Shares subject to the terms and conditions of the
1991 Plan, and the terms and conditions described below.

         1. DEFINITIONS.

            As used in this Agreement:

            (a) "Change in Control" means:

                (i) The Corporation 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 then-outstanding securities of such
         corporation or person immediately after such transaction is held in the
         aggregate by the holders of Voting Stock (as hereinafter defined) of
         the Corporation immediately prior to such transaction;

                (ii) The Corporation 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







                                                                               1
   26



         transfer less than a majority of the combined voting power of the
         then-outstanding securities of such corporation or person immediately
         after such sale or transfer is held in the aggregate by the holders of
         Voting Stock (as hereinafter defined) of the Corporation 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), 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 twenty (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
         Corporation (the "Voting Stock");

                (iv) The Corporation 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 Corporation 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 (2) consecutive years,
         individuals who at the beginning of any such period constitute the
         Directors of the Corporation cease for any reason to constitute at
         least a majority thereof, unless the election, or the nomination for
         election by the Corporation's stockholders, of each Director of the
         Corporation first elected during such period was approved by a vote of
         at least two-thirds (2/3) of the





                                       2
   27




Directors of the Corporation then still in office who were Directors of the
Corporation at the beginning of any such period. Notwithstanding the foregoing
provisions of subsections (iii) or (iv) hereof, a "Change in Control" shall not
be deemed to have occurred for purposes of this Agreement, either (1) solely
because (A) the Corporation, (B) a Subsidiary of the Corporation, or (C) any
Corporation-sponsored employee stock ownership plan or any other employee
benefit plan of the Corporation, either 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 twenty (20) percent or otherwise,
or because the Corporation reports that a change in control of the Corporation
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 the Grantee may be employed. Notwithstanding the foregoing
provisions of subsections (i-iv) hereof, if, prior to any event described in
subsections (i-iv) hereof instituted by any person not an officer or director of
the Corporation, or prior to any disclosed proposal instituted by any person not
an officer or director of the Corporation which could lead to any such event,
management proposes any restructuring of the Corporation which 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 this Agreement.

             (c) "Deferral Period" means the period commencing November 1, 1999
and ending on October 31, 2004.





                                       3
   28



             (d) Capitalized terms used herein without definition shall have the
meanings assigned to them in the 1991 Plan.

         2. GRANT OF DEFERRED SHARES.

         The Corporation hereby grants to the Grantee 70,000 Deferred Shares,
which shall become issuable to the Grantee at the time when they become
nonforfeitable in accordance with Section 3 or Section 4 hereof

         3. VESTING OF DEFERRED SHARES

         Subject to the terms and conditions of Sections 4 and 5 hereof, the
Grantee's right to receive the Deferred Shares shall become nonforfeitable at
the end of the Deferral Period.

         4. EFFECT OF CHANGE IN CONTROL AND CERTAIN OTHER TERMINATIONS.

         In the event of (a) a Change in Control, or (b) the termination of
Grantee's employment because of death, termination due to Disability (as defined
in the Employment Agreement), Termination without Cause (as defined in the
Employment Agreement), Constructive Termination without Cause (as defined in the
Employment Agreement), Voluntary Termination (as defined in the Employment
Agreement), or expiration of the Term of Employment (as defined in the
Employment Agreement) due to notification by either the Corporation or the
Grantee that the Term of Employment will not be renewed beyond the scheduled
expiration date, prior to the end of the Deferral Period, the Deferred Shares
granted hereby shall become nonforfeitable and shall be immediately due and
deliverable in the form of Common Shares as soon as practicable following such
Change in Control or termination of employment listed above.





                                       4
   29



         5. EFFECT OF TERMINATIONS FOR CAUSE.

         In the event of termination of Grantee's employment before the end of
the Deferral Period for Cause (as defined in the Employment Agreement), the
Grantee shall forfeit any rights he may have in any Deferred Shares.

         6. ISSUANCE OF DEFERRED SHARES.

         The Deferred Shares shall be issued to the Grantee at the time when
they become nonforfeitable in accordance with Sections 3 or 4 hereof

         Any payment of Deferred Shares due pursuant to this Agreement to a
deceased Grantee shall be paid to the beneficiary designated by the Grantee on
the Designation of Death Beneficiary attached as EXHIBIT A hereto and filed with
the Corporation. If no such beneficiary has been designated or survives the
Grantee, payment shall be made to the Grantee's legal representative. A
beneficiary designation may be changed or revoked by the Grantee at any time,
provided the change or revocation is filed with the Corporation.

         Prior to payment, the Corporation shall only have an unfunded and
unsecured obligation to make payment of earned awards to the Grantee.

         7. PAYMENT OF DIVIDEND EQUIVALENTS.

         During the Deferral Period, from and after the Date of Grant and until
the earlier of (a) the time when the Grantee receives the Deferred Shares in
accordance with Section 3 or Section 4 hereof or (b) the time when the Grantee's
right to receive Deferred Shares is forfeited in accordance with Section 5
hereof, the Company shall pay to the Grantee, whenever a dividend is paid on
Common Shares, an amount of cash equal to the product of the per-share amount of
the dividend paid times the number of such Deferred Shares.





                                       5
   30



         8. SHARES NON-TRANSFERABLE.

         No right to Deferred Shares granted hereby that have not yet been
earned out and paid shall be transferable other than by will or the laws of
descent and distribution.

         9. DILUTION AND OTHER ADJUSTMENTS.

         In the event of any change in the aggregate number of outstanding
Common Shares by reason of (a) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Corporation, or (b) 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 (c) any
other corporate transaction or event having an effect similar to any of the
foregoing, then the Board of Directors (the "Board"), upon the recommendation of
the Compensation and Organization Committee of the Board (the "Committee"),
shall adjust the number of Deferred Shares then held by the Grantee in such
manner as to prevent the dilution or enlargement of the rights of the Grantee
that would otherwise result from such event to the extent practicable without
causing the Deferred Shares to fail to be treated as performance-based
compensation for purposes of Section 162(m) of the Internal Revenue Code.
Furthermore, in the event that any transaction or event described or referred to
in the immediately preceding sentence shall occur, the Board, upon the
recommendation of the Committee, may provide in substitution of any or all of
the Grantee's rights under this Agreement such alternative consideration as the
Board may determine in good faith to be equitable under the circumstances. Such
adjustments made by the Board shall be conclusive and binding for all purposes
of this Agreement.





                                       6
   31



         10. WITHHOLDING TAXES.

         To the extent that the Corporation is required to withhold federal,
state, local or foreign taxes in connection with any delivery of Common Shares
to the Grantee, and the amounts available to the Corporation for such
withholding are insufficient, it shall be a condition to the receipt of such
delivery that the Grantee make arrangements satisfactory to the Corporation for
payment of the balance of such taxes required to be withheld. The Grantee may
elect that all or any part of such withholding requirement be satisfied by
retention by the Corporation of a portion of the Common Shares delivered to the
Grantee. The Corporation and the Grantee may also make similar arrangements with
respect to the payment of any taxes with respect to which withholding is not
required. If such election is made, the shares so retained shall be credited
against such withholding requirement at the fair market value on the date of
such delivery. Any such withholding may require compliance with Section 16 of
the Exchange Act.

         11. EMPLOYMENT RIGHTS.

         Neither this Agreement nor any action taken hereunder shall be
construed as giving the Grantee any right to be retained in the employ of the
Corporation, nor shall any action taken hereunder be construed as entitling the
Corporation to the services of the Grantee for any period of time. For purposes
of this Agreement, the continuous employ of the Grantee with the Corporation or
a Subsidiary shall not be deemed interrupted, and the Grantee shall not be
deemed to have ceased to be an associate of the Corporation or any Subsidiary,
by reason of the transfer of his or her employment among the Corporation and its
Subsidiaries.

         12. AMENDMENTS.

         Any amendment to the Plan shall be deemed to be an amendment to this
agreement to the extent that the amendment is applicable hereto; PROVIDED,
HOWEVER, that no





                                       7
   32



amendment shall adversely affect the rights of the Grantee with respect to the
Deferred Shares without the Grantee's consent.

         13. SEVERABILITY.

         In the event that one or more of the provisions of this agreement shall
be invalidated for any reason by a court of competent jurisdiction, any
provision so invalidated shall be deemed to be separable from the other
provisions hereof, and the remaining provisions hereof shall continue to be
valid and fully enforceable.

         14. GOVERNING LAW.

         This agreement is made under, and shall be construed in accordance with
the internal substantive laws of the State of Ohio.

         Executed as of the 1st day of November, 1999.


                                             DIEBOLD, INCORPORATED


                                           By: /s/ Robert W. Mahoney
                                               ---------------------------------
                                               Robert W. Mahoney
                                               Chairman of the Board



         The undersigned hereby acknowledges receipt of an executed original of
this Deferred Share Agreement and accepts the Deferred Shares granted thereunder
on the terms and conditions set forth therein and in the 1991 Plan.



Date: 11/1/99                                  /s/ Walden W. O'Dell
     ------------------                        ---------------------------------
                                               Walden W. O'Dell




                                       8
   33



                                                                       EXHIBIT A
                                                                       ---------

                        Designation of Death Beneficiary
                        under the Diebold, Incorporated
        1991 Amended and Restated Equity and Performance Incentive Plan


         I, the undersigned Grantee, do hereby designate the following person or
persons as my Death Beneficiary under the Diebold, Incorporated 1991 Amended and
Restated Equity and Performance Incentive Plan (the "Plan") and elect that any
awards that may, after my death, be payable under said Plan be paid to my Death
Beneficiary in accordance with this designation.

          NAME AND PRESENT ADDRESS          RELATIONSHIP TO ME

_____% to ______________________________    ______________________
          ______________________________
          ______________________________

_____% to ______________________________    ______________________
          ______________________________
          ______________________________

_____% to ______________________________    ______________________
          ______________________________
          ______________________________


         If more than one person is designated above and not all of them are in
existence at the time of such payment, then such payment shall be made prorata
to the survivor or survivors of them at the time of such payment.

         If none of the persons designated above is in existence at the time of
such payment, then such payment shall be made in accordance with the terms of
the Plan.

         Subject to the terms of the Plan, I reserve the right to change or
revoke this designation by written instrument signed by me and filed in
accordance with the terms of such Plan.

Date: ___________________                   _________________________________
                                            Grantee





                                       9
   34



                                                                       EXHIBIT C

                                                                   SIGN-ON BONUS



                             DIEBOLD, INCORPORATED

                Amended and Restated Restricted Share Agreement

         WHEREAS, Walden W. O'Dell (hereinafter called the "Grantee") and
Diebold, Incorporated (hereinafter called the "Corporation") have entered into
an Employment Agreement dated as of November 1, 1999 (the "Employment
Agreement") that provides for the award of 130,000 Restricted Shares pursuant to
the 1991 Amended and Restated Equity and Performance Incentive Plan of the
Corporation (the "1991 Plan"); and

         WHEREAS, the Corporation has granted to the Grantee as of November 1,
1999 (the "Date of Grant"), 130,000 Restricted Shares on the terms and
conditions set forth in a Restricted Share Agreement dated as of the Date of
Grant; and

         WHEREAS, the Corporation, with the consent of the Grantee, desires to
provide for fixed accounting treatment altering the terms of the Restricted
Shares;

         NOW, THEREFORE, the Corporation and the Grantee hereby amend and
restate the Restricted Share Agreement mentioned above to provide that the
Restricted Shares shall be governed by the terms and conditions described below.

         1. DEFINITIONS.

            As used in this Agreement:

           (a) "Base Price" means $26.25, which was the fair market value
(latest available closing price) of the Common Shares on the Date of Grant.

           (b) "Change in Control" means:

               (i) The Corporation is merged or consolidated or reorganized into
       or with another corporation or other legal person, and as a result of
       such merger,






                                       1
   35



consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction is held in the aggregate by the holders of
Voting Stock (as hereinafter defined) of the Corporation immediately prior to
such transaction;

               (ii) The Corporation 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 then-outstanding securities of such
       corporation or person immediately after such sale or transfer is held in
       the aggregate by the holders of Voting Stock (as hereinafter defined) of
       the Corporation 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), 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 twenty (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 Corporation (the
       "Voting Stock");

               (iv) The Corporation 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)





                                       2
   36




       that a change in control of the Corporation 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 (2) consecutive years,
       individuals who at the beginning of any such period constitute the
       Directors of the Corporation cease for any reason to constitute at least
       a majority thereof, unless the election, or the nomination for election
       by the Corporation's stockholders, of each Director of the Corporation
       first elected during such period was approved by a vote of at least
       two-thirds (2/3) of the Directors of the Corporation then still in office
       who were Directors of the Corporation at the beginning of any such
       period. Notwithstanding the foregoing provisions of subsections (iii) or
       (iv) hereof, a "Change in Control" shall not be deemed to have occurred
       for purposes of this Agreement, either (1) solely because (A) the
       Corporation, (B) a Subsidiary of the Corporation, or (C) any
       Corporation-sponsored employee stock ownership plan or any other employee
       benefit plan of the Corporation, either 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 twenty
       (20) percent or otherwise, or because the Corporation reports that a
       change in control of the Corporation 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 the
       Grantee may be employed. Notwithstanding the foregoing provisions of
       subsections (i-iv) hereof, if, prior to any event described in
       subsections (i-iv) hereof instituted by any person not an officer or
       director of the Corporation, or prior to any disclosed proposal
       instituted by any person





                                       3
   37




       not an officer or director of the Corporation which could lead to any
       such event, management proposes any restructuring of the Corporation
       which 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 this
       Agreement.

            (c) "Management Objectives" mean the Target Price goals established
pursuant to the Employment Agreement for the Performance Period covered by this
Agreement, as defined in Section 5 of this Agreement.

            (d) "Market Price per Common Share" means the closing price of a
Common Share on the New York Stock Exchange (as reported in the Midwest Edition
of the WALL STREET JOURNAL) or such other exchange constituting the principal
exchange for the Corporation's publicly traded shares or if there is no such
exchange, the National Association of Securities Dealers Automated Quotation
System.

            (e) "Performance Period" means the period commencing November 1,
1999 and ending on October 31, 2006.

            (f) Capitalized terms used herein without definition shall have the
meanings assigned to them in the 1991 Plan.

         2. MANAGEMENT OBJECTIVES.

         The Management Objectives for the Performance Period covered by this
Agreement shall be increases in the market price of the Common Shares over the
Base Price as specified in Section 5 below.





                                       4
   38



         3. GRANT OF RESTRICTED SHARES.

         The Corporation hereby grants to the Grantee 130,000 Restricted Shares,
which shall be fully paid and nonassessable and shall be represented by a
certificate or certificates registered in the Grantee's name, endorsed with an
appropriate legend referring to the restrictions hereinafter set forth. The
Grantee shall have all the rights of a shareholder with respect to such shares,
including the right to vote the shares and to receive all dividends paid
thereon, provided that such shares, together with any additional shares which
the Grantee may become entitled to receive by virtue of a share dividend, a
merger or reorganization in which the Corporation is the surviving corporation
or any other change in capital structure, shall be subject to the restrictions
hereinafter set forth.

         4. RESTRICTIONS ON TRANSFER.

         The Restricted Shares subject to this grant may not be sold, exchanged,
assigned, transferred, pledged or otherwise disposed of by the Grantee except to
the Corporation until such Restricted Shares have become nonforfeitable pursuant
to Section 5 or Section 6 of this Agreement, except that the Grantee's rights
with respect to such shares may be transferred by will or pursuant to the laws
of descent and distribution. Any purported transfer in violation of the
provisions of this section shall be void, and the purported transferee shall
obtain no rights with respect to such shares. The Corporation in its sole
discretion, when and as permitted by the Plan, may waive the restrictions on
transferability with respect to all or a portion of the Restricted Shares
subject to this grant.

         5. VESTING OF RESTRICTED SHARES.

         All of the Restricted Shares granted hereby shall become nonforfeitable
at the end of the Performance Period if the Grantee shall have remained in the
continuous employ of the





                                       5
   39



Corporation or any Subsidiary throughout the Performance Period. Part or all of
such Restricted Shares may become nonforfeitable earlier based on the
achievement of each of the Management Objectives established for the Performance
Period covered by this Agreement. The number of Restricted Shares eligible to
become nonforfeitable based on the achievement of the Management Objectives
shall be determined as follows:

                (i)     one-third of the Restricted Shares hereinabove specified
                        shall become nonforfeitable if the Market Price per
                        Common Share has reached the applicable price set forth
                        in the table below as Target Price I;

                (ii)    an additional one-third of such Restricted Shares shall
                        become nonforfeitable if the Market Price per Common
                        Share has reached the applicable price set forth in the
                        table below as Target Price II; and

                (iii)   the remaining one-third of such Restricted Shares shall
                        become nonforfeitable if the Market Price per Common
                        Share has reached the applicable price set forth in the
                        table below as Target Price III;

PROVIDED, HOWEVER, that the Market Price per Common Share shall be deemed to
reach any of the Target Prices only when the closing price of a Common Share
shall have reached the specified Target Price and remained at or above such
level for a minimum of 20 consecutive trading days (a "20-Day Period").

                          VESTING OF RESTRICTED SHARES
                          ----------------------------

Base Price      Target Price I            Target Price II       Target Price III

                [33 1/3% Increase         [66 2/3% Increase     [Double the
                from Base Price]          from Base Price]      Base Price]

- --------------------------------------------------------------------------------

$26.25          $35.00                    $43.75                $52.50





                                       6
   40




If the Compensation and Organization Committee of the Board of Directors (the
"Committee") shall determine that during the Performance Period the Market Price
per Common Share shall have reached a Target Price set forth in the Vesting of
Restricted Shares Table set forth above and maintained such price for a 20-Day
Period, then upon such determination, the applicable Restricted Shares shall
become nonforfeitable, but only if the Grantee shall have been in the continuous
employ of the Corporation or any Subsidiary of the Corporation through the end
of the applicable 20-Day Period, except as otherwise provided in Sections 6 and
7 of this Agreement. The Committee shall determine and certify in writing
whether a Target Price has been met and, thus, Restricted Shares have become
nonforfeitable, not later than the date of the next regularly scheduled meeting
of the Committee after any period of 20 consecutive days in which it may appear
that a Target Price will be met. In all events the Committee shall make its
determination within 60 days after it receives written notice from the Grantee
that a Target Price has been met.

            No additional Restricted Shares shall be earned for actual
achievement in excess of Target Price III.

         6. EFFECT OF CHANGE IN CONTROL.

            In the event of a Change in Control prior to the end of the
Performance Period, the Restricted Shares granted hereby shall become
nonforfeitable.

         7. EFFECT OF OTHER TERMINATIONS OF EMPLOYMENT.

         In the event of termination of Grantee's employment because of death,
termination due to Disability (as defined in the Employment Agreement),
termination for Cause (as defined in the Employment Agreement), Termination
without Cause (as defined in the Employment Agreement), Constructive Termination
without Cause (as defined in the Employment Agreement), Voluntary Termination
(as defined in the Employment Agreement) or in any other





                                       7
   41




manner (other than after a Change in Control as specified in Section 6 hereof),
the Grantee shall forfeit any Restricted Shares that have not become
nonforfeitable at the time of such termination. Notwithstanding the foregoing
provisions of this Section 7, if, as of the date of any termination of
employment other than for Cause, the closing price of a Common Share has reached
a Target Price specified in Section 5 of this Agreement, and if the Target Price
remains, for the first time, at or above such level for a minimum of 20
consecutive trading days, taking into account trading days before and after
termination of employment, the applicable Restricted Shares shall become
nonforfeitable as if the Grantee's employment had not terminated.

         8. RETENTION OF STOCK CERTIFICATES BY CORPORATION; DELIVERY TO
GRANTEE

            The certificate(s) representing the Restricted Shares covered by
this Agreement shall be retained by the Corporation, together with the
accompanying stock power signed by the Grantee and endorsed in blank until such
Restricted Shares become nonforfeitable in accordance with Sections 5, 6 or 7.
As soon as practicable after such Restricted Shares become nonforfeitable, the
Corporation shall issue to the Grantee a stock certificate, representing the
number of Common Shares issued as Restricted Shares, free of the restrictions
and of the legend described in Section 3.

         9. DEFERRAL OF DEFERRED SHARES.

         Grantee may elect to defer all or a specified part of his Restricted
Shares pursuant to the Corporation's Amended and Restated 1992 Deferred
Incentive Compensation Plan.

         10. DILUTION AND OTHER ADJUSTMENTS.

             In the event of any change in the aggregate number of outstanding
Common Shares by reason of (a) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Corporation, or (b) any merger, consolidation, spin-off,





                                       8
   42



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 (c) any other corporate transaction or event having an effect
similar to any of the foregoing, then the Board, upon the recommendation of the
Committee, shall adjust the Management Objectives and/or the number of
Restricted Shares then held by the Grantee in such manner as to prevent the
dilution or enlargement of the rights of the Grantee that would otherwise result
from such event to the extent practicable without causing the Restricted Shares
to fail to be treated as performance-based compensation for purposes of Section
162(m) of the Internal Revenue Code. Furthermore, in the event that any
transaction or event described or referred to in the immediately preceding
sentence shall occur, the Board, upon the recommendation of the Committee, may
provide in substitution of any or all of the Grantee's rights under this
Agreement such alternative consideration as the Board may determine in good
faith to be equitable under the circumstances. Furthermore, if the Common Shares
of the Corporation cease to be publicly traded at any time during the
Performance Period, the Board, upon recommendation by the Committee, shall
modify the Management Objectives with respect to any Restricted Shares granted
under this Agreement which have not become nonforfeitable, in such a manner that
the Grantee will have an opportunity to receive an equal number of shares, free
of restriction, which is comparable to what the Grantee would have had if the
Common Shares had continued to be publicly traded.

         11. WITHHOLDING TAXES.

             To the extent that the Corporation is required to withhold federal,
state, local or foreign taxes in connection with any delivery of Common Shares
to the Grantee, and the amounts available to the Corporation for such
withholding are insufficient, it shall be a condition to the receipt of such
delivery that the Grantee make arrangements satisfactory to the Corporation for





                                       9
   43



payment of the balance of such taxes required to be withheld. The Grantee may
elect that all or any part of such withholding requirement be satisfied by
retention by the Corporation of a portion of the Common Shares delivered to the
Grantee. If such election is made, the shares so retained shall be credited
against such withholding requirement at the Market Price per Common Share on the
date of such delivery. Any such withholding may require compliance with Section
16 of the Exchange Act.

         12. EMPLOYMENT RIGHTS.

             Neither this Agreement nor any action taken hereunder shall be
construed as giving the Grantee any right to be retained in the employ of the
Corporation, nor shall any action taken hereunder be construed as entitling the
Corporation to the services of the Grantee for any period of time. For purposes
of this Agreement, the continuous employ of the Grantee with the Corporation or
a Subsidiary shall not be deemed interrupted, and the Grantee shall not be
deemed to have ceased to be an associate of the Corporation or any Subsidiary,
by reason of the transfer of his or her employment among the Corporation and its
Subsidiaries.

         13. AMENDMENTS.

             Any amendment to the Plan shall be deemed to be an amendment to
this agreement to the extent that the amendment is applicable hereto; PROVIDED,
HOWEVER, that no amendment shall adversely affect the rights of the Grantee with
respect to Restricted Shares without the Grantee's consent.

         14. SEVERABILITY.

             In the event that one or more of the provisions of this agreement
shall be invalidated for any reason by a court of competent jurisdiction, any
provision so invalidated shall





                                       10
   44



be deemed to be separable from the other provisions hereof and the remaining
provisions hereof shall continue to be valid and fully enforceable.

         15. GOVERNING LAW.

             This agreement is made under, and shall be construed in accordance
with the internal substantive laws of the State of Ohio.

             Executed as of the 31st day of December, 1999.

                                                  DIEBOLD, INCORPORATED


                                               By: /s/ Robert W. Mahoney
                                                   -----------------------------
                                                   Robert W. Mahoney
                                                   Chairman of the Board



         The undersigned hereby acknowledges receipt of an executed original of
this Amended and Restated Restricted Share Agreement and agrees to hold the
Restricted Shares described herein on the terms and conditions set forth therein
and in the 1991 Plan.

Date: 1/5/2000                                     /s/ Walden W. O'Dell
      ----------                                   -----------------------------
                                                   Walden W. O'Dell





                                       11
   45




                                                                   SIGN-ON BONUS
                                                                   -------------



                             DIEBOLD, INCORPORATED
                Amended and Restated Performance Share Agreement

         WHEREAS, Walden W. O'Dell (hereinafter called the "Grantee") and
Diebold, Incorporated (hereinafter called the "Corporation") have entered into
an Employment Agreement dated as of November 1, 1999 (the "Employment
Agreement") that provides for the award of 50,000 Performance Shares pursuant to
the 1991 Amended and Restated Equity and Performance Incentive Plan of the
Corporation (the "1991 Plan"); and

         WHEREAS, the Corporation has granted to the Grantee as of November 1,
1999 (the "Date of Grant"), 50,000 Performance Shares on the terms and
conditions set forth in a Performance Share Agreement dated as the Date of
Grant; and

         WHEREAS, the Corporation, with the consent of the Grantee, desires to
provide for fixed accounting treatment by altering the terms of the Performance
Shares;

         NOW, THEREFORE, the Corporation and the Grantee hereby amend and
restate the Performance Share Agreement mentioned above to provide that the
Performance Shares shall be governed by the terms and conditions described
below.

         1. DEFINITIONS.

            As used in this Agreement:

            (a) "Base Price" means $26.25, which was the fair market value
(latest available closing price) of the Common Shares on the Date of Grant.

            (b) "Change in Control" means:





                                       1
   46



                (i) The Corporation 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 then-outstanding securities of such
         corporation or person immediately after such transaction is held in the
         aggregate by the holders of Voting Stock (as hereinafter defined) of
         the Corporation immediately prior to such transaction;

                (ii) The Corporation 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 then-outstanding securities of such
         corporation or person immediately after such sale or transfer is held
         in the aggregate by the holders of Voting Stock (as hereinafter
         defined) of the Corporation 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), 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 twenty (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
         Corporation (the "Voting Stock");





                                       2
   47




                (iv) The Corporation 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 Corporation 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 (2) consecutive years,
         individuals who at the beginning of any such period constitute the
         Directors of the Corporation cease for any reason to constitute at
         least a majority thereof, unless the election, or the nomination for
         election by the Corporation's stockholders, of each Director of the
         Corporation first elected during such period was approved by a vote of
         at least two-thirds (2/3) of the Directors of the Corporation then
         still in office who were Directors of the Corporation at the beginning
         of any such period. Notwithstanding the foregoing provisions of
         subsections (iii) or (iv) hereof, a "Change in Control" shall not be
         deemed to have occurred for purposes of this Agreement, either (1)
         solely because (A) the Corporation, (B) a Subsidiary of the
         Corporation, or (C) any Corporation-sponsored employee stock ownership
         plan or any other employee benefit plan of the Corporation, either
         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 twenty (20) percent or otherwise, or
         because the Corporation reports that a change in control of the
         Corporation has or may have occurred or will or may occur in the future
         by reason of such beneficial ownership, or (2)





                                       3
   48




         solely because of a change in control of any Subsidiary by which the
         Grantee may be employed. Notwithstanding the foregoing provisions of
         subsections (i-iv) hereof, if, prior to any event described in
         subsections (i-iv) hereof instituted by any person not an officer or
         director of the Corporation, or prior to any disclosed proposal
         instituted by any person not an officer or director of the Corporation
         which could lead to any such event, management proposes any
         restructuring of the Corporation which 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 this Agreement.

            (c) "Management Objectives" mean the Target Price goals established
pursuant to the Employment Agreement for the Performance Period covered by this
Agreement, as defined in Section 4 of this Agreement.


            (d) "Market Price per Common Share" means the closing price of a
Common Share on the New York Stock Exchange (as reported in the Midwest Edition
of the WALL STREET JOURNAL) or such other exchange constituting the principal
exchange for the Corporation's publicly traded shares or if there is no such
exchange, the National Association of Securities Dealers Automated Quotation
System.

            (e) "Performance Period" means the period commencing November 1,
1999 and ending on October 31, 2006.

            (f) Capitalized terms used herein without definition shall have the
meanings assigned to them in the 1991 Plan.





                                       4
   49



         2. MANAGEMENT OBJECTIVES.

         The Management Objectives for the Performance Period covered by this
Agreement shall be increases in the market price of the Common Shares over the
Base Price as specified in Section 4 below.

         3. GRANT OF PERFORMANCE SHARES.

         The Corporation hereby grants to the Grantee 50,000 Performance Shares,
which shall be earned out by the Grantee during the Performance Period as set
forth in Section 4 of this Agreement.

         4. EARN-OUT OF SHARES.

         All of the Performance Shares granted hereby shall be earned out at the
end of the Performance Period if the Grantee shall have remained in the
continuous employ of the Corporation or any Subsidiary throughout the
Performance Period. Part or all of such Performance Shares may be earned out
earlier based on the achievement of each of the Management Objectives
established for the Performance Period covered by this Agreement. The number of
Performance Shares eligible to be earned based on the achievement of the
Management Objectives shall be determined as follows:

             (i) one-third of the Performance Shares hereinabove specified shall
                 be earned if the Market Price per Common Share has reached the
                 applicable price set forth in the table below as Target
                 Price I;

            (ii) an additional one-third of such Performance Shares shall be
                 earned if the Market Price per Common Share has reached the
                 applicable price set forth in the table below as Target
                 Price II; and





                                       5
   50



           (iii) the remaining one-third of such Performance Shares shall be
                 earned if the Market Price per Common Share has reached the
                 applicable price set forth in the table below as Target
                 Price III;

PROVIDED, HOWEVER, that the Market Price per Common Share shall be deemed to
reach any of the Target Prices only when the closing price of a Common Share
shall have reached the specified Target Price and remained at or above such
level for a minimum of 20 consecutive trading days (a "20-Day Period").

                          Performance Shares Earn Out
                          ---------------------------

Base Price    Target Price I         Target Price II            Target Price III

              [33 1/3% Increase      [66 2/3% Increase          [Double the
              from Base Price]       from Base Price]           Base Price]

- --------------------------------------------------------------------------------

$26.25             $35.00                  $43.75                 $52.50

If the Compensation and Organization Committee of the Board of Directors (the
"Committee") shall determine that during the Performance Period the Market Price
per Common Share shall have reached a Target Price set forth in the Performance
Shares Earn Out Table set forth above and maintained such price for a 20-Day
Period, then upon such determination the applicable Performance Shares shall be
earned out, but only if the Grantee shall have been in the continuous employ of
the Corporation or any Subsidiary of the Corporation through the end of the
applicable 20-Day Period, except as otherwise provided in Sections 7 and 8 of
this Agreement.

         No additional Performance Shares shall be earned for actual achievement
in excess of Target Price III.





                                       6
   51



         5. PAYMENT OF AWARDS.

            Payment shall be made in the form of shares of the Corporation's
Common Shares, or in cash or a combination of Common Shares and cash, if so
recommended by the Committee in its sole discretion and approved by the Board of
Directors (the "Board"). Final awards shall be paid, less applicable taxes and
in accordance with Section 16 of the Exchange Act, as soon as practicable after
the end of the Performance Period or, if applicable, after the determination by
the Committee of the achievement of the Management Objective, except as
otherwise agreed to by the Corporation and the Grantee. The Committee shall
determine and certify in writing whether a Target Price has been met and, thus,
Performance Shares have been earned out, not later than the date of the next
regularly scheduled meeting of the Committee after any period of 20 consecutive
days in which it may appear that a Target Price will be met. In all events the
Committee shall make its determination within 60 days after it receives written
notice from the Grantee that a Target Price has been met.

            Any payment of awards due pursuant to this Agreement to a deceased
Grantee shall be paid to the beneficiary designated by the Grantee on the
Designation of Death Beneficiary attached as EXHIBIT A hereto and filed with the
Corporation. If no such beneficiary has been designated or survives the Grantee,
payment shall be made to the Grantee's legal representative. A beneficiary
designation may be changed or revoked by a Grantee at any time, provided the
change or revocation is filed with the Corporation.

         Prior to payment, the Corporation shall only have an unfunded and
unsecured obligation to make payment of earned awards to the Grantee.





                                       7
   52



         6. DEFERRAL OF PERFORMANCE SHARES.

            The Grantee may elect to defer all or a specified part of his earned
Performance Shares pursuant to the Corporation's Amended and Restated 1992
Deferred Compensation Plan.

         7. EFFECT OF CHANGE IN CONTROL.

            In the event of a Change in Control prior to the end of the
Performance Period, the Performance Shares granted hereby shall be deemed to
have been earned in full and shall be immediately due and payable in the form of
Common Shares as soon as practicable following such Change in Control.

         8. EFFECT OF OTHER TERMINATIONS OF EMPLOYMENT.

            In the event of termination of Grantee's employment because of
death, termination due to Disability (as defined in the Employment Agreement),
termination for Cause (as defined in the Employment Agreement), Termination
without Cause (as defined in the Employment Agreement), Constructive Termination
without Cause (as defined in the Employment Agreement), Voluntary Termination
(as defined in the Employment Agreement) or in any other manner (other than
after a Change in Control as specified in Section 7 hereof), the Grantee shall
forfeit any rights he may have in any Performance Shares that have not been
earned out by such Grantee at the time of such termination. Notwithstanding the
foregoing provisions of this Section 8, if, as of the date of any termination of
employment other than for Cause, the closing price of a Common Share has reached
a Target Price specified in Section 4 of this Agreement, and if the Target Price
remains, for the first time, at or above such level for a minimum of 20
consecutive trading days, taking into account trading days before and after
termination of employment, the





                                       8
   53




applicable Performance Shares shall be earned out as if the Grantee's employment
had not terminated.

         9. PAYMENT OF DIVIDEND EQUIVALENTS. During the Performance Period,
from and after the Date of Grant and until the earlier of(a) the time when the
Grantee receives any Performance Shares in accordance with Section 5 or Section
7 hereof or (b) the time when the Grantee's right to receive Performance Shares
is forfeited in accordance with Section 8 hereof, the Company shall pay to the
Grantee whenever a dividend is paid on Common Shares an amount of cash equal to
the product of the per-share amount of the dividend paid times the number of
such Performance Shares that have not been paid pursuant to Section 5 or 7
hereof.

         10. SHARES NON-TRANSFERABLE.

             No right to Performance Shares granted hereby that have not yet
been earned out and paid shall be transferable other than by will or the laws of
descent and distribution.

         11. DILUTION AND OTHER ADJUSTMENTS.

             In the event of any change in the aggregate number of outstanding
Common Shares by reason of (a) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Corporation, or (b) 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 (c) any
other corporate transaction or event having an effect similar to any of the
foregoing, then the Board, upon the recommendation of the Committee, shall
adjust the Management Objectives and/or the number of Performance Shares then
held by the Grantee in such manner as to prevent the dilution or enlargement of
the rights of the Grantee that would otherwise result from such event to the
extent





                                       9
   54




practicable without causing the Performance Shares to fail to be treated as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code. Furthermore, in the event that any transaction or event described
or referred to in the immediately preceding sentence shall occur, the Board,
upon the recommendation of the Committee, may provide in substitution of any or
all of the Grantee's rights under this Agreement such alternative consideration
as the Board may determine in good faith to be equitable under the
circumstances. Furthermore, if the Common Shares of the Corporation cease to be
publicly traded at any time during the Performance Period, the Board, upon
recommendation by the Committee, shall modify the Management Objectives with
respect to any Performance Shares granted under this Agreement which have not
been earned out, in such a manner that the Grantee will have an opportunity to
earn out such Performance Shares which is comparable to what the Grantee would
have had if the Common Shares had continued to be publicly traded.

         12. WITHHOLDING TAXES.

             To the extent that the Corporation is required to withhold federal,
state, local or foreign taxes in connection with any delivery of Common Shares
to the Grantee, and the amounts available to the Corporation for such
withholding are insufficient, it shall be a condition to the receipt of such
delivery that the Grantee make arrangements satisfactory to the Corporation for
payment of the balance of such taxes required to be withheld. The Grantee may
elect that all or any part of such withholding requirement be satisfied by
retention by the Corporation of a portion of the Common Shares delivered to the
Grantee. If such election is made, the shares so retained shall be credited
against such withholding requirement at the Market Price per Common Share on





                                       10
   55




the date of such delivery. Any such withholding may require compliance with
Section 16 of the Exchange Act.

         13. EMPLOYMENT RIGHTS.

             Neither this Agreement nor any action taken hereunder shall be
construed as giving the Grantee any right to be retained in the employ of the
Corporation, nor shall any action taken hereunder be construed as entitling the
Corporation to the services of the Grantee for any period of time. For purposes
of this Agreement, the continuous employ of the Grantee with the Corporation or
a Subsidiary shall not be deemed interrupted, and the Grantee shall not be
deemed to have ceased to be an associate of the Corporation or any Subsidiary,
by reason of the transfer of his or her employment among the Corporation and its
Subsidiaries.

         14. AMENDMENTS.

             Any amendment to the Plan shall be deemed to be an amendment to
this agreement to the extent that the amendment is applicable hereto; PROVIDED,
HOWEVER, that no amendment shall adversely affect the rights of the Grantee with
respect to Performance Shares without the Grantee's consent.

         15. SEVERABILITY.

             In the event that one or more of the provisions of this agreement
shall be invalidated for any reason by a court of competent jurisdiction, any
provision so invalidated shall be deemed to be separable from the other
provisions hereof, and the remaining provisions hereof shall continue to be
valid and fully enforceable.





                                       11
   56




         16. GOVERNING LAW.

             This agreement is made under, and shall be construed in accordance
with the internal substantive laws of the State of Ohio.



             Executed as of the 31st day of December, 1999.


                                             DIEBOLD, INCORPORATED


                                          By: /s/ Robert W. Mahoney
                                             -----------------------------------
                                             Robert W. Mahoney
                                             Chairman of the Board



         The undersigned hereby acknowledges receipt of an executed original of
this Amended and Restated Performance Share Agreement and agrees to accept the
Performance Shares granted thereunder on the terms and conditions set forth
therein and in the 1991 Plan.

Date: 1/5/2000                               /s/ Walden W. O'Dell
      -----------                            -----------------------------------
                                             Walden W. O'Dell

PSG





                                       12
   57



                                                                       Exhibit B

                             BENEFICIARY DESIGNATION


I designate my beneficiaries with respect to my Account pursuant to that certain
Deferred Compensation Agreement, dated as of November 1, 1999 by and between
myself and Diebold, Incorporated, to be as follows:


I.       PRIMARY
         BENEFICIARIES:
                         -------------------------------------------------------





         RELATIONSHIPS:
                         -------------------------------------------------------


II.      CONTINGENT
         BENEFICIARIES:
                         -------------------------------------------------------

                         -------------------------------------------------------

                         -------------------------------------------------------

                         -------------------------------------------------------

                         -------------------------------------------------------

         RELATIONSHIPS:
                         -------------------------------------------------------



- --------------------------------
      (Signature)





Date:
      ---------------------




   58




                                                                       EXHIBIT D






                 DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
                 ----------------------------------------------


         This Director and Officer Indemnification Agreement, dated as of
November 1, 1999 (this "Agreement"), is made by and between Diebold,
Incorporated, an Ohio corporation (the "Company"), and Walden W. O'Dell (the
"Indemnitee"), a director and an officer of the Company.

                                    RECITALS
                                    --------

         A. The Indemnitee is presently serving as a director and an officer of
the Company, and the Company desires that the Indemnitee continue serving in
such capacities. The Indemnitee is willing, subject to certain conditions
including the execution and performance of this Agreement by the Company, to
continue serving in such capacities.

         B. In addition to the indemnification to which the Indemnitee is
entitled under the Code of Regulations of the Company (the "Regulations"), the
Company has obtained, at its sole expense, insurance protecting the Company and
its officers and directors, including the Indemnitee, against certain losses
arising out of any threatened, pending or completed action, suit, or proceeding
to which such persons may be made or are threatened to be made parties.

         NOW, THEREFORE, in order to induce the Indemnitee to continue to serve
in his present capacity, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Indemnitee agree as follows:

1.       CONTINUED SERVICE
         -----------------

         The Indemnitee shall continue to serve, at the will of the Company or
in accordance with a separate contract, to the extent that such a contract is in
effect at the time in question, as a director and an officer of the Company so
long as he is duly elected in accordance with the Regulations or until he
resigns in writing in accordance with applicable law.

2.       INITIAL INDEMNITY
         -----------------

         (a) The Company shall indemnify the Indemnitee if or when he is a party
or is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Company), by
reason of the fact that he is or was a director, officer, employee or agent of
the Company or is or was serving at the request of the Company as a director,
trustee, officer, employee, member, manager or agent of another corporation,
domestic or foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, or by reason of any
action alleged to have been taken or omitted in any such capacity, and whether
or not the basis of such action, suit or proceeding is the Indemnitee's alleged
action in an official capacity while serving as a director, officer, employee,
agent, trustee, member or manager, against any and all costs, charges, expenses
(including fees and expenses of attorneys





   59



or others; all such costs, charges and expenses being herein jointly referred to
as "Expenses"), judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by the Indemnitee in connection therewith, including any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company. In addition, with respect to any criminal
action or proceeding, indemnification hereunder shall be made only if the
Indemnitee had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not satisfy the foregoing
standard of conduct to the extent applicable thereto.

         (b) The Company shall indemnify the Indemnitee if or when he is a
party, or is threatened to be made a party, to any threatened, pending, or
completed action, suit, or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is or
was a director, officer, employee or agent of the Company or is or was serving
at the request of the Company as a director, trustee, officer, employee, member,
manager or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership, joint venture, trust, or
other enterprise, against any and all Expenses actually and reasonably incurred
by the Indemnitee in connection with the defense or settlement thereof or any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company, except that no indemnification pursuant to
this Section 2(b) shall be made in respect of any action or suit in which the
only liability asserted against the Indemnitee is pursuant to Section 1701.95 of
the Ohio Revised Code (the "ORC").

         (c) Any indemnification under Section 2(a) or 2(b) (unless ordered by
a court) shall be made by the Company only as authorized in the specific case
upon a determination that indemnification of the Indemnitee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 2(a) or 2(b). Such authorization shall be made (i) by the Board of
Directors of the Company (the "Board") by a majority vote of a quorum consisting
of directors who were not and are not parties to or threatened with such action,
suit, or proceeding, or (ii) if such a quorum of disinterested directors is not
available or if a majority of such quorum so directs, in a written opinion by
independent legal counsel (designated for such purpose by the Board) which shall
not be an attorney, or a firm having associated with it an attorney, who has
been retained by or who has performed services for the Company, or any person to
be indemnified, within the five years preceding such determination, or (iii) by
the shareholders of the Company (the "Shareholders"), or (iv) by the court of
common pleas or other court in which such action, suit, or proceeding was
brought.

         (d) To the extent that the Indemnitee has been successful on the merits
or otherwise, including the dismissal of an action without prejudice, in defense
of any action, suit, or proceeding referred to in Section 2(a) or 2(b), or in
defense of any claim, issue, or matter




   60



therein, he shall be indemnified against Expenses actually and reasonably
incurred by him in connection therewith.

         (e) Expenses actually and reasonably incurred by the Indemnitee in
defending any such action, suit, or proceeding referred to in Section 2(a) or
2(b), or in defense of any claim, issue or matter therein, shall be paid by the
Company as they are incurred in advance of the final disposition of action,
suit, or proceeding under the procedure set forth in Section 4(b) hereof.

         (f) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on the Indemnitee with respect to any employee benefit
plan; references to "serving at the request of the Company" shall include any
service as a director, officer, employee, or agent of the Company which imposes
duties on, or involves services by, the Indemnitee with respect to an employee
benefit plan, its participants or beneficiaries; references to the masculine
shall include the feminine; references to the singular shall include the plural
and vice versa; the word including is used by way of illustration only and not
by way of limitation; and with respect to conduct by Indemnitee in his capacity
as a trustee, administrator or other fiduciary of any employee benefit plan of
the Company, if the Indemnitee acted in good faith and in a manner he reasonably
believed to be in the interest of the participants or beneficiaries of such
employee benefit plan, he shall be deemed to have acted in a manner "not opposed
to the best interests of the Company" as referred to herein.

         (g) No amendment to the Amended Articles of Incorporation of the
Company (the "Articles") or the Regulations shall deny, diminish, or encumber
the Indemnitee's rights to indemnity pursuant to this Agreement, except to the
extent that such amendment is required by law to be given effect. No amendment
to the Articles or Regulations shall deny, diminish, or encumber the
Indemnitee's rights to indemnity pursuant to the Regulations, the ORC, or any
other applicable law as applied to any act or failure to act occurring in whole
or in part prior to the date upon which the amendment was approved by the
Shareholders, except to the extent that such amendment is required by law to be
given effect.

3.       ADDITIONAL INDEMNIFICATIONS
         ---------------------------

         (a) Pursuant to Section 1701.13(E)(6) of the ORC, without limiting any
right which the Indemnitee may have pursuant to Section 2 hereof or any other
provision of this Agreement or the Articles, the Regulations, the ORC, any
policy of insurance, or otherwise, but subject to any limitation on the maximum
permissible indemnity which may exist under applicable law at the time of any
request for indemnity hereunder and subject to the following provisions of this
Section 3(a), the Company shall indemnify the Indemnitee against any amount
which he is or becomes obligated to pay relating to or arising out of any claim
made against him because of any act, failure to act, or neglect or breach of
duty, including any actual or alleged error, misstatement, or misleading
statement, that he commits, suffers, permits, or acquiesces in while acting in
his capacity as a director or an officer of the Company. The payments which the
Company is obligated to make pursuant to this Section 3(a) shall include any and
all Expenses, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by the Indemnitee in connection therewith including any
appeal of or from any judgment or decision;




   61



PROVIDED, HOWEVER, that the Company shall not be obligated under this Section
3(a) to make any payment in connection with any claim against the Indemnitee:

             (i)  to the extent of any fine or similar governmental imposition
                  which the Company is prohibited by applicable law from paying
                  which results from a final, nonappealable order; or

             (ii) to the extent based upon or attributable to the Indemnitee
                  having actually realized a personal gain or profit to which he
                  was not legally entitled, including profit from the purchase
                  and sale by the Indemnitee of equity securities of the Company
                  which are recoverable by the Company pursuant to Section 16(b)
                  of the Securities Exchange Act of 1934, or profit arising from
                  transactions in publicly traded securities of the Company
                  which were effected by the Indemnitee in violation of Section
                  10(b) of the Securities Exchange Act of 1934, or Rule 10b-5
                  promulgated thereunder.

         (b) A determination as to whether the Indemnitee shall be entitled to
indemnification under Section 3(a) shall be made in accordance with Section 4(a)
hereof. Expenses incurred by the Indemnitee in defending any claim to which
Section 3(a) applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of such claim under the
procedure set forth in Section 4(b) hereof.

         (c) The Company agrees to indemnify the Indemnitee against any action
which the Indemnitee's previous employer may bring against the Indemnitee in
connection with his resignation, whether for damages, injunction or other forms
of equitable relief, including the costs in the form of reasonable attorneys'
fees and disbursements; PROVIDED, HOWEVER, that nothing in this Agreement shall
be construed as requiring any breach of Indemnitee's existing contractual
obligations, including, without limitation, the term of his services and the
preservation of confidentiality of his previous employer's proprietary
information. Indemnitee represents and warrants to the Company that his entering
into the employ of the Company and the performance of his duties as contemplated
by the Employment Agreement between the Company and the Indemnitee, dated of
even date herewith, will not result in the breach of any subsisting agreement
with his previous employer.

4.       CERTAIN PROCEDURES RELATING TO INDEMNIFICATION
         ----------------------------------------------

         (a) For purposes of pursuing his rights to indemnification under
Section 3(a) hereof, the Indemnitee shall (i) submit to the Board a sworn
statement of request for indemnification substantially in the form of Exhibit 1
attached hereto and made a part hereof (the "Indemnification Statement")
averring that he is entitled to indemnification hereunder; and (ii) present to
the Company reasonable evidence of all amounts for which indemnification is
requested. Submission of an Indemnification Statement to the Board shall create
a presumption that the Indemnitee is entitled to indemnification hereunder, and
the Company shall, within 60 calendar days after submission of the
Indemnification Statement, make the payments requested in the Indemnification
Statement to or for the benefit of the Indemnitee, unless (A) within such



   62




60-calendar-day period the Board shall resolve by vote of a majority of the
directors at a meeting at which a quorum is present that the Indemnitee is not
entitled to indemnification under Section 3(a) hereof, (B) such vote shall be
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and (C) the Board shall notify Indemnitee within such period of
such vote, which notice shall disclose with particularity the evidence upon
which the vote is based. The foregoing notice shall be sworn to by all persons
who participated in the vote and voted to deny indemnification. The provisions
of this Section 4(a) are intended to be procedural only and shall not affect
the right of Indemnitee to indemnification under Section 3(a) of this Agreement
so long as Indemnitee follows the prescribed procedure, and any determination by
the Board that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be subject to
judicial review by any court of competent jurisdiction.

         (b) For purposes of obtaining payments of Expenses in advance of final
disposition pursuant to the last sentence of Section 2(d) or the last sentence
of Section 3(b) hereof, the Indemnitee shall submit to the Company a sworn
request for advancement of Expenses substantially in the form of Exhibit 2
attached hereto and made a part hereof (the "Undertaking"), averring that he has
reasonably incurred or will reasonably incur actual Expenses in defending an
action, suit or proceeding referred to in Section 2(a) or 2(b) or any claim
referred to in Section 3(a), or pursuant to Section 8 hereof. The Indemnitee
shall execute Part A of the Undertaking by which he undertakes to: (i) repay
such amount if it is proved by clear and convincing evidence in a court of
competent jurisdiction that the Indemnitee's action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests of the
Company; and (ii) reasonably cooperate with the Company concerning the action,
suit, proceeding or claim. The Indemnitee shall likewise execute Part B of the
Undertaking by which he undertakes to repay such amount if it ultimately is
determined that he is not entitled to be indemnified by the Company under this
Agreement or otherwise. In the event that the Indemnitee executes both Part A
and Part B of the Undertaking, the Expenses which are paid by the Company
pursuant thereto shall be required to be repaid by the Indemnitee only if he is
required to do so under the terms of both Part A and Part B of the Undertaking.
Upon receipt of the Undertaking, the Company shall thereafter promptly pay such
Expenses of the Indemnitee as are noticed to the Company in reasonable detail
arising out of the matter described in the Undertaking. No security shall be
required in connection with any Undertaking. The Company shall advance to the
Indemnitee all reasonable costs and expenses incurred or to be incurred by him
in connection with any action under Section 3(c) within 20 days of receipt by
the Company of a written request for such advance.

5.       LIMITATION ON INDEMNITY
         -----------------------

         Notwithstanding anything contained herein to the contrary, the Company
shall not be required hereby to indemnify the Indemnitee with respect to any
action, suit, or proceeding that was initiated by the Indemnitee unless (a) such
action, suit, or proceeding was initiated by the Indemnitee to enforce any
rights to indemnification arising hereunder and such person shall have been
formally adjudged to be entitled to indemnity by reason hereof, (b) authorized
by another agreement to which the Company is a party whether heretofore or
hereafter entered, or (c) otherwise ordered by the court in which the suit was
brought.





   63




6.       SUBROGATION; DUPLICATION OF PAYMENTS
         ------------------------------------

         (a) In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.

         (b) The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the extent
Indemnitee has actually received payment (under any insurance policy, the
Regulations or otherwise) of the amounts otherwise payable hereunder.

7.       SHAREHOLDER RATIFICATION
         ------------------------

         The Company may, at its option, propose at any future meeting of
Shareholders that this Agreement be ratified by the Shareholders; PROVIDED,
HOWEVER, that the Indemnitee's rights hereunder shall be fully enforceable in
accordance with the terms hereof whether or not such ratification is sought or
obtained.

8.       FEES AND EXPENSES OF ENFORCEMENT
         --------------------------------

         It is the intent of the Company that the Indemnitee not be required to
incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee
that the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any action, suit
or proceeding to deny, or to recover from, the Indemnitee the benefits intended
to be provided to the Indemnitee hereunder, the Company irrevocably authorizes
the Indemnitee from time to time to retain counsel of his choice, at the expense
of the Company as hereafter provided, to represent the Indemnitee in connection
with the initiation or defense of any litigation or other legal action, whether
by or against the Company or any director, officer, shareholder, or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all costs,
charges, and expenses, including fees and expenses of attorneys and others,
reasonably incurred by the Indemnitee pursuant to this Section 8.

9.       MERGER OR CONSOLIDATION
         -----------------------

         In the event that the Company shall be a constituent corporation in a
consolidation, merger, or other reorganization, the Company, if it shall not be
the surviving, resulting, or acquiring corporation therein, shall require as a
condition thereto that the surviving, resulting, or acquiring corporation agree
to assume all of the obligations of the Company hereunder and to indemnify the
Indemnitee to the full extent provided herein. Whether or not the Company is the
resulting, surviving, or acquiring corporation in any such transaction, the
Indemnitee shall stand in the same position under this Agreement with respect to
the resulting,




   64




surviving, or acquiring corporation as he would have with respect to the Company
if its separate existence had continued.

10.      NONEXCLUSIVITY; NO THIRD PARTY BENEFICIARIES; SEVERABILITY
         ----------------------------------------------------------

         (a) The rights to indemnification provided by this Agreement shall not
be exclusive of any other rights of indemnification to which the Indemnitee may
be entitled under the Articles, the Regulations, the ORC or any other statute,
any insurance policy, agreement, or vote of shareholders or directors or
otherwise, as to any actions or failures to act by the Indemnitee, and shall
continue after he has ceased to be a director, officer, employee, or agent of
the Company or other entity for which his service gives rise to a right
hereunder, and shall inure to the benefit of his heirs, executors and
administrators.

         (b) Except as provided in Section 10(a), the rights to indemnification
provided by this Agreement are personal to Indemnitee and are non-transferable
by Indemnitee, and no party other than the Indemnitee is entitled to
indemnification under this Agreement.

         (c) If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.

11.      SECURITY
         --------

         To ensure that the Company's obligations pursuant to this Agreement can
be enforced by Indemnitee, the Company may, at its option, establish a trust
pursuant to which the Company's obligations pursuant to this Agreement and other
similar agreements can be funded.

12.      NOTICES
         -------

         All notices and other communications hereunder shall be in writing and
shall be personally delivered or sent by recognized overnight courier service
(a) if to the Company, to the then-current principal executive offices of the
Company (Attention: General Counsel) or (b) if to the Indemnitee, to the last
known address of Indemnitee as reflected in the Company's records. Either party
may change its address or the delivery of notices or other communications
hereunder by providing notice to the other party as provided in this Section 12.
All notices shall be effective upon actual delivery by the methods specified in
this Section 12.

13.      GOVERNING LAW
         -------------

         This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without giving effect to the principles of
conflict of laws thereof.






   65



14.      MODIFICATION
         ------------

         This Agreement and the rights and duties of the Indemnitee and the
Company hereunder may be modified only by an instrument in writing signed by
both parties hereto.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.

                           DIEBOLD, INCORPORATED


                           By:___________________________
                           Robert W. Mahoney
                           Chairman of the Board



                           ______________________________
                           Walden W. O'Dell




   66



                                                                       Exhibit 1
                                                                       ---------

                           INDEMNIFICATION STATEMENT
                           -------------------------

STATE OF          )
        ----------
                  )SS
COUNTY OF         )
        ----------


         I, _________________ , being first duly sworn, do depose and say as
follows:

         1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated ___________ , ____, between Diebold,
Incorporated, an Ohio corporation (the "Company"), and the undersigned.

         2. I am requesting indemnification against costs, charges, expenses
(which may include fees and expenses of attorneys and/or others), judgments,
fines, and amounts paid in settlement (collectively, "Liabilities"), which have
been actually and reasonably incurred by me in connection with a claim referred
to in Section 3(a) of the aforesaid Indemnification Agreement.

         3. With respect to all matters related to any such claim, I am entitled
to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.

         4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------


                                             [Signature of Indemnitee]


         Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ___ day of ______________________ , ______









[Seal]
         My commission expires the ____ day of ______________________ , ______





   67
                                                                       Exhibit 2
                                                                       ---------





                                  UNDERTAKING
                                  -----------


STATE OF _____________
                         SS
COUNTY OF__________


         I, ______________________ ,being first duly sworn, do depose and say as
follows:

         1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated ___________ ____ , ____, between Diebold, Incorporated, an Ohio
corporation (the "Company") and the undersigned.

         2. I am requesting payment of costs, charges, and expenses which I have
reasonably incurred or will reasonably incur in defending an action, suit or
proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3(a), or pursuant to Section 8, of the aforesaid Indemnification
Agreement.

         3. The costs, charges, and expenses for which payment is requested are,
in general, all expenses related to_____________________________________________
________________________________________________________________________________


         4. Part A(1)
            --------

         I hereby undertake to (a) repay all amounts paid pursuant hereto if it
is proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.


                                   -------------------------
                                   [Signature of Indemnitee]



- ----------
(1)  The costs, charges and expenses which are paid by the Company pursuant
     hereto shall be required to be repaid by the Indemnitee only if he is
     required to do so under the terms of both Part A and Part B hereof.





   68




         4. Part B
            ------

         I hereby undertake to repay all amounts paid pursuant hereto if it
ultimately is determined that I am not entitled to be indemnified by the Company
under the aforesaid Indemnification Agreement or otherwise.


               ------------------------------
               [Signature of Indemnitee]

         Subscribed and sworn to before me, a Notary Public in and for said
County and State, this _____ day of __________________ , _____ .

[Seal] __________________________________

         My commission expires the _____ day of__________________ , _____ .

EX-10.16

   1

                                                                   EXHIBIT 10.16

                              SEPARATION AGREEMENT
                              --------------------

         THIS SEPARATION AGREEMENT (this "Agreement"), is made, entered into and
effective as of October 26, 1999 (the "Transition Date"), by and between
DIEBOLD, INCORPORATED (the "Company"), located at 5995 Mayfair Road, North
Canton, Ohio 44720 and GERALD F. MORRIS ("Morris"), residing at 1423 Harbor
Drive, N.W., Canton, Ohio 44708.


                                  WITNESSETH:
                                  -----------


         WHEREAS, prior to the Transition Date Morris was the Executive Vice
President and Chief Financial Officer of the Company;

         WHEREAS, Morris has determined that, effective on the Transition Date,
he shall resign from any and all offices of the Company, and any other position,
office or directorship of any other entity for which Morris was serving at the
request of the Company, and, in addition, he shall retire early from his
employment with the Company at the conclusion of a severance period; and

         WHEREAS, the Company accepts Morris' resignation and early retirement
as of the dates referenced above and below; and

         WHEREAS, the Company and Morris desire to specify the services that
Morris will provide to the Company as an employee after the Transition Date, and
to set forth the payments and benefits that Morris will be entitled to receive
from the Company after the Transition Date; and

         WHEREAS, the Company and Morris wish to resolve, settle and/or
compromise certain matters, claims and issues between them, including, without
limitation, Morris' resignation from the offices he held and his early
retirement from his employment with the Company.

         NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Company and Morris hereby agree as follows:

         1. RESIGNATION OF OFFICES AND EARLY RETIREMENT. Morris hereby resigns,
effective on the Transition Date, his position as Executive Vice President and
Chief Financial Officer of the Company. Morris further resigns, effective on the
Transition Date: (a) from all other offices of the Company to which he has been
elected by the Board of Directors of the Company (or to which he has otherwise
been appointed), (b) from all offices of any entity that is a subsidiary of, or
is otherwise related to or affiliated with, the Company, (c) from all
administrative, fiduciary or




   2



other positions he may hold with respect to arrangements or plans for, of or
relating to the Company, and (d) from any other directorship, office, or
position of any corporation, partnership, joint venture, trust or other
enterprise (each, an "Other Entity") insofar as Morris is serving in the
directorship, office, or position of the Other Entity at the request of the
Company. Subject to Subparagraph 2(1), Morris shall remain an employee of the
Company continuously to the date of his early retirement from the Company, which
early retirement date shall be October 1, 2003 (the "Early Retirement Date").
The Company hereby consents to and accepts said resignations and early
retirements.

         2. COMPENSATION AND BENEFITS. In consideration of the promises made by
Morris in this Agreement and subject to the conditions hereof, the Company
agrees to the following:

            (a.) CONTINUED SALARY. From the Transition Date to December 31,
1999, Morris shall continue to be paid a monthly salary at the rate he was paid
immediately prior to the Transition Date. Effective January 1, 2000, and ending
on October 1, 2003 (which period constitutes the "Severance Period"), Morris
shall be paid a monthly salary at a rate equal to twenty-four (24) forty-fifths
(24/45), or 53.33%, of the rate at which he was paid immediately prior to the
Transition Date. Said payments shall be made in semi-monthly payments, via
direct deposit account, subject to normal payroll deductions. Any vacation pay
due Morris shall be deemed included in these continued salary payments. During
the Severance Period, Morris shall perform such duties and provide such services
as the Company shall reasonably request.

            (b.) DEFERRED COMPENSATION. Any amounts held for and on behalf of
Morris under the Amended and Restated 1992 Deferred Incentive Compensation Plan
for Diebold, Incorporated shall be distributed according to the terms and
conditions of said Plan.

            (c.) ANNUAL BONUS PLAN; LONG TERM EXECUTIVE INCENTIVE PLAN. Morris
shall be eligible to receive a full year's annual bonus for 1999 under the terms
and conditions of the annual incentive plan applicable to him. The percentage to
be paid under such plan (threshold, target, plan or maximum) will be determined
by the Company's performance for fiscal year end 1999; provided, however, that
in no event shall Morris be paid less than the threshold amount for 1999. Morris
shall not be eligible for annual bonus participation after the 1999 bonus
period. Morris shall not be eligible to receive compensation under the Company's
Long Term Executive Incentive Plan ("LTIP") payable after the Transition Date,
including, without limitation, that otherwise payable to him under the terms and
conditions of the Performance Share Agreement between Morris and the Company for
the performance period 1997-1999. Morris shall also not be eligible to
participate in the LTIP for any subsequent performance period.

            (d.) STOCK OPTIONS. Morris has certain stock options that will be
completely vested as of Morris' Early Retirement Date. Said stock options are
those granted to him on the following dates: April 5, 1995 (22,500 shares);
January 26, 1996 (22,500 shares); January 30, 1997 (22,500 shares); January 29,
1998 (22,500 shares); and January 28, 1999 (30,000 shares). In addition, Morris
was granted certain "Milestone Options" on March 3, 1997, which will expire
according to their terms on March 2, 2002. Morris' eligibility (as an employee
of the Company prior to October 1, 2003, and as an early retiree of the Company
on and after October 1, 2003) to exercise these vested options will continue to
be governed by the terms and conditions of the


                                       2
   3



applicable nonqualified stock option agreements signed by Morris and the
Company. Morris agrees and acknowledges that he is ineligible for any new stock
options, grants or awards, and that he forfeits upon the Transition Date any
rights in or to any stock option grants other than those set forth in this
Subparagraph 2(d).

            (e.) MEDICAL COVERAGE.

                 (i) Morris shall be allowed to continue as a plan participant
      in the Diebold, Incorporated Associate Health Care Plan during the
      Severance Period.

                 (ii) For a period of eighteen (18) months following the end of
      the Severance Period, Morris may continue, at his cost, his participation
      in the Diebold, Incorporated Health Care Plan pursuant to the Consolidated
      Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA").

            (f.) BASIC INSURANCE. During the Severance Period Morris shall
continue to be eligible for the Company's Basic Life Insurance coverage of
$50,000.

            (g.) SPLIT DOLLAR AGREEMENT. Morris' eligibility for certain split
dollar insurance pursuant to that certain Split Dollar Agreement dated April 7,
1995, shall continue after the Transition Date pursuant to the terms and
conditions of said Split Dollar Agreement; PROVIDED, HOWEVER, that the Company
will make no further premium payments for Morris' benefit after the Transition
Date; and PROVIDED FURTHER, HOWEVER, that in the event that Morris cashes in any
split dollar insurance policy that he has obtained under said Split Dollar
Agreement, then he shall repay to the Company the total amount of the Company's
premium contributions toward said policy.

            (h.) MOTOR VEHICLE USAGE. Morris shall be permitted to continue to
use, during the first twelve (12) months of the Severance Period, the Company
provided vehicle that he currently uses. At the end of said twelve (12) month
period, Morris shall return the vehicle to the Company's possession, unless the
parties otherwise agree in writing. During this twelve (12) month period, the
Company shall continue its practice of payroll grossup for the value of this
benefit less normal payroll deductions.

            (i.) COUNTRY CLUB MEMBERSHIP. The Company's payment of Morris'
membership at Brookside Country Club shall be continued only through the
Transition Date. The Company shall pay any remaining monthly service fees due up
to the Transition Date, subject to normal payroll deductions. Morris will be
responsible for any of his charges and expenses. The value of this membership
(i.e., the stock certificate) is taxable to Morris and any taxes due shall be
promptly deducted from any salary paid hereunder. Morris' company-sponsored
membership at Glenmoor Country Club shall terminate as of twelve (12) months
after the Transition Date, and during this twelve (12) month period, the Company
shall pay only regular club dues and assessments, and no other charges.






                                       3
   4




            (j.) PROFESSIONAL FEES. The Company shall pay up to $16,000 for
Morris' reasonable legal fees incurred in this matter. A reasonably detailed
itemization of such fees shall first be provided to the Company. Any such
payment shall be made directly from the Company to Morris' attorney.

            (k.) FINANCIAL SERVICES. Morris shall continue to receive during the
first twelve (12) months of the Severance Period those financial advisory and
taxation services currently provided to him by IMG at the Company's expense.
This shall include the cost of IMG's preparation of Morris' tax returns for the
year 2000.

            (1.) RETIREMENT AND 401(k) PLANS. Morris' employment shall be deemed
to terminate on the Transition Date for the purpose of determining his
eligibility for benefits under the Retirement Plan for Salaried Employees
("Salaried Plan"). Morris' eligibility for benefits under the Supplemental
Employee Retirement Plan, as amended and restated ("SERP") shall be as set forth
in the SERP plan documents and shall be based on his Early Retirement Date. For
the purpose of determining "Company Service" under the SERP, Morris shall not
accrue any "Company Service" credit for the period beginning January 1, 2002,
and ending on his Early Retirement Date. Morris' employment also shall be deemed
to terminate on the Transition Date for the purpose of determining his
eligibility for benefits under the Diebold Employee Savings Plan ("401k Plan"),
and any such eligibility shall be as set forth in the 401k Plan documents, and
Morris shall not be entitled to any further contributions (either by the
employee or the Company) to his account in the 401k Plan for any pay period
after December 31, 1999.

            (m.) BUSINESS EXPENSES. Morris will promptly pay any balance due on
any Company credit card or other account used by him. The Company will either
(1) reimburse Morris for any pending, reasonable business-related credit card
charge for which Morris has not already been reimbursed provided Morris files a
proper Travel and Expense Report, or (2) pay such charge directly to the
card-issuing bank. Morris hereby authorizes the Company to deduct from monies
due Morris under this Agreement any balance remaining on Morris' Company credit
card account after such (1) reimbursement or (2) direct payment.

            (n.) NO OTHER COMPENSATION OR BENEFITS. Other than the compensation
and benefits expressly agreed to and referenced in this Agreement, Morris shall
be entitled to no additional compensation or benefits by virtue of his
employment with, or retirement from, the Company.

         3. NON-COMPETITION.

            (a.) During the Severance Period, Morris shall not, directly or
indirectly, do or suffer to be done any of the following: own, manage, control
or participate in the ownership, management or control of, or be employed or
engaged by or otherwise affiliated or associated as a consultant, independent
contractor or otherwise with any other corporation, partnership, proprietorship,
firm, association or other business entity, or otherwise engage in any business,
which is in competition with the Company's business; provided, however, that the
ownership of not more than one percent (1%) of any class of publicly-traded
securities of any entity shall not be deemed a violation of this Agreement. For
purposes of this Agreement, the "Company's business" shall mean any business in
which the Company actively engages now or until the end





                                       4
   5




of the Severance Period, and any business in which the Company has actively
engaged in the two (2) year period prior to the date hereof, including, without
limitation, the design, manufacture, assembly, distribution, sale, service or
maintenance of those products listed in Exhibit A.

            (b.) In the event Morris shall violate any provision of this
Paragraph 3 as to which there is a specific time period during which he is
prohibited from taking certain actions or from engaging in certain activities as
set forth in such provision, then, in such event, such violation shall toll the
running of such time period from the date of such violation until such violation
shall cease. The foregoing shall in no way limit the Company's rights under
Paragraph 8 of this Agreement.

            (c.) Morris has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company
under this Paragraph 3 and this Agreement, and hereby acknowledges and agrees
that the same are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to the Company, do not stifle the
inherent skill and experience of Morris, would not operate as a bar to Morris'
sole means of support, are fully required to protect the legitimate interests of
the Company and do not confer a benefit upon the Company disproportionate to the
detriment to Morris. Morris further acknowledges that his obligations in this
Paragraph 3 are made in consideration of, and are adequately supported by, the
payments by the Company to Morris described herein.

         4. NO SOLICITATION OF EMPLOYEES. Morris agrees that he will not:

            (i) Employ, assist in employing, or otherwise associate in business
         with any person who is, or has been in the twelve (12) month period
         prior to such individual's association with Morris, an employee,
         officer or agent of the Company, or any of its affiliated, related or
         subsidiary entities, unless such employee was involuntarily terminated
         by the Company.

            (ii) Induce any person who is an employee, officer or agent of the
         Company, or any of its affiliated, related, or subsidiary entities to
         terminate such relationship.

         5. RELEASE BY MORRIS.

            (a.) Morris for himself and his dependents, successors, assigns,
heirs, executors and administrators (and his and their legal representatives of
every kind), hereby releases, dismisses, remises and forever discharges the
Company from any and all arbitrations, claims (including claims for attorney's
fees), demands, damages, suits, proceedings, actions and/or causes of action of
any kind and every description, whether known or unknown, which Morris now has
or may have had for, upon, or by reason of any cause whatsoever (except that
this release shall not apply to the obligations of the Company arising under or
expressly referenced in this Agreement), against the Company ("claims"),
including but not limited to:








                                       5
   6




            (i) any and all claims, directly or indirectly, arising out of or
         relating to: (A) Morris' past employment or service with the Company;
         and (B) Morris' resignation as Executive Vice President and Chief
         Financial Officer and any other position described in Paragraph 1 of
         this Agreement;

            (ii) any and all claims of discrimination, including but not limited
         to claims of discrimination on the basis of sex, race, age, national
         origin, marital status, religion or disability, including,
         specifically, but without limiting the generality of the foregoing, any
         claims under the Age Discrimination in Employment Act, as amended (the
         "ADEA"), Title VII of the Civil Rights Act of 1964, as amended, the
         Americans with Disabilities Act of 1990, the Family and Medical Leave
         Act of 1993 and Ohio Revised Code Chapter 4112;

            (iii) any and all claims of wrongful or unjust discharge or breach
         of any contract or promise, express or implied;

            (iv) any and all claims under or relating to any and all employee
         benefit, employee severance or employee incentive bonus plans and
         arrangements, including, without limitation, the LTIPs, the 401k Plan,
         and any claims under ERISA;

            (v) any and all worker compensation claims he may have against the
         Company by this Agreement, and further agrees to execute any
         documentation as may be reasonably required to perfect such release
         when presented to him by the Company.

Nothing in this Paragraph 5 shall be construed to waive or release: (A)
non-waivable claims pursuant to applicable law; or (B) Morris' entitlement to
the amounts and benefits specified in Paragraph 2 above.

            (b.) Morris understands and acknowledges that the Company does not
         admit any violation of law, liability or invasion of any of his rights
         and that any such violation, liability or invasion is expressly denied.
         The consideration provided under this Agreement is made for the purpose
         of settling and extinguishing all claims and rights (and every other
         similar or dissimilar matter) that Morris ever had or now may have
         against the Company to the extent provided in this Paragraph 5. Morris
         further agrees and acknowledges that no representations, promises or
         inducements have been made by the Company other than as appear in this
         Agreement.

            (c.) Morris further understands and acknowledges that:

            (i) The release provided for in this Paragraph 5, including claims
         under the ADEA to and including the date of this Agreement, is in
         exchange for the additional consideration provided for in this
         Agreement, to which consideration he was not heretofore entitled;

            (ii) He has been advised by the Company to consult with legal
         counsel prior to executing this Agreement and the release provided for
         in this Paragraph 5, has had an opportunity to consult with and to be
         advised by legal counsel of his choice, fully





                                       6
   7




         understands the terms of this Agreement, and enters into this
         Agreement freely, voluntarily and intending to be bound;

            (iii) He has been given a period of twenty-one (21) days to review
         and consider the terms of this Agreement, and the release contained
         herein, prior to its execution and that he may use as much of the
         twenty-one (21) day period as he desires; and

            (iv) He may, within seven (7) days after execution, revoke this
         Agreement. Revocation shall be made by delivering a written notice of
         revocation to the Vice President, Human Resources at the Company. For
         such revocation to be effective, written notice must be actually
         received by the Vice President, Human Resources at the Company no later
         than the close of business on the seventh (7th) day after Morris
         executes this Agreement. If Morris does exercise his right to revoke
         this Agreement, all of the terms and conditions of the Agreement shall
         be of no force and effect and the Company shall have no obligation to
         satisfy the terms or make any payment to Morris as set forth in
         Paragraph 2 of this Agreement.

            (d.) Morris will never file a lawsuit or other complaint asserting
any claim that is released in this Paragraph 5.

            (e.) Morris and the Company acknowledge that his resignations as set
forth above are by mutual agreement between the Company and Morris, and that
Morris waives and releases any claim that he has or may have to employment or
reemployment after his Early Retirement Date.

            (f.) For purposes of the above provisions of this Paragraph 5, the
"Company" shall include its predecessors, subsidiaries, divisions, related or
affiliated companies, officers, directors, stockholders, members, employees,
heirs, successors, assigns, representatives, agents and counsel.

         6. CONFIDENTIAL INFORMATION.

            (a.) Morris acknowledges and agrees that in the performance of his
duties as an officer and employee of the Company he was brought into frequent
contact with, had or may have had access to, and/or became informed of
confidential and proprietary information of the Company and/or information which
is a competitive asset of the Company (collectively, "Confidential Information")
and the disclosure of which would be harmful to the interests of the Company or
its subsidiaries. Confidential Information shall include, without limitation:
(a) customer and distributor information such as names, addresses, sales
histories, purchasing habits, credit status, pricing levels, etc., (b) certain
prospective customer and distributor information lists, etc., (c) product and
systems specifications, schematics, designs, concepts for new or improved
products and services and other products and services data, (d) product and
material costs, (e) suppliers' and prospective suppliers' names, addresses and
contracts, (f) future corporate planning data, including, without limitation,
data and information on possible mergers, acquisitions, strategic alliances, or
any similar transactions, (g) production methods and equipment, (h) marketing
strategies, (i) the Company's financial results and business condition, (j) any
of the foregoing which belong to any other person or company but to which Morris
has





                                       7
   8




had access by reason of his employment with the Company, and (k) any other
information which constitutes a "trade secret" under federal or state law. Such
Confidential Information is more fully described in Subparagraph (b) of this
Paragraph 6. Morris acknowledges that the Confidential Information of the
Company gained by Morris during his association with the Company was developed
by and/or for the Company through substantial expenditure of time, effort and
money and constitutes valuable and unique property of the Company.

            (b.) Morris will keep in strict confidence, and will not, directly
or indirectly, at any time, disclose, furnish, disseminate, make available, use
or suffer to be used in any manner any Confidential Information of the Company
without limitation as to when or how Morris may have acquired such Confidential
Information. Morris specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing (or in a form from
which information can be obtained, translated, or derived into reasonably usable
form), or maintained in the mind or memory of Morris and whether compiled or
created by the Company, which derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from the disclosure or use of such information, that reasonable
efforts have been put forth by the Company to maintain the secrecy of
confidential or proprietary or trade secret information, that such information
is and will remain the sole property of the Company, and that any retention or
use by Morris of confidential or proprietary or trade secret information after
the termination of Morris' employment with and services for the Company shall
constitute a misappropriation of the Company's Confidential Information.

            (c.) Morris will immediately return to the Company (to the extent he
has not already returned), equipment, software, electronic files, computers,
including any laptop, in good condition, all property of the Company, including,
without limitation, property, documents and/or all other materials (including
copies, reproductions, summaries and/or analyses) which constitute, refer or
relate to Confidential Information of the Company.

            (d.) Morris further acknowledges that his obligation of
confidentiality shall survive, regardless of any other breach of this Agreement
or any other agreement, by any party hereto, until and unless such Confidential
Information of the Company shall have become, through no fault of Morris,
generally known to the public or Morris is required by law (after providing the
Company with notice and opportunity to contest such requirement) to make
disclosure. Morris' obligations under this Paragraph 6 are in addition to, and
not in limitation or preemption of, all other obligations of confidentiality
which Morris may have to the Company under general legal or equitable principles
or statutes.

            7. DISCLOSURE. From the date of this Agreement through the end of
the Severance Period, Morris will communicate the contents of Paragraphs 3, 4,
6, 8, 9 and 11 of this Agreement to any person, firm, association, or
corporation other than Diebold which he intends to be employed by, associated in
business with, or represent.

            8. BREACH. Morris acknowledges and agrees that the remedy at law
available to the Company for breach by Morris of any of his obligations under
Paragraphs 3, 4 and 6 of this Agreement would be inadequate and that damages
flowing from such a breach would not readily be susceptible to being measured in
monetary terms. Accordingly, Morris acknowledges,





                                       8
   9




consents and agrees that, in addition to any other rights or remedies which the
Company may have at law, in equity or under this Agreement, upon adequate proof
of Morris' violation of any provision of Paragraphs 3, 4 or 6 of this Agreement,
the Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach, without the
necessity of proof of actual damage.

         9. CONTINUED AVAILABILITY AND COOPERATION.

            (a.) Morris shall cooperate fully with the Company and with the
Company's counsel in connection with any present and future actual or threatened
litigation or administrative proceeding involving the Company that relates to
events, occurrences or conduct occurring (or claimed to have occurred) during
the period of Morris' employment by the Company. This cooperation by Morris
shall include, but not be limited to:

            (i) making himself reasonably available for interviews and
         discussions with the Company's counsel as well as for depositions and
         trial testimony;

            (ii) if depositions or trial testimony are to occur, making himself
         reasonably available and cooperating in the preparation therefor as and
         to the extent that the Company or the Company's counsel reasonably
         requests;

            (iii) refraining from impeding in any way the Company's prosecution
         or defense of such litigation or administrative proceeding; and

            (iv) cooperating fully in the development and presentation of the
         Company's prosecution or defense of such litigation or administrative
         proceeding.

         (b.) Morris shall be reimbursed by the Company for reasonable travel,
lodging, telephone and similar expenses incurred in connection with such
cooperation, which the Company shall reasonably endeavor to schedule at times
not conflicting with the reasonable requirements of any employer of Morris, or
with the requirements of any third party with whom Morris has a business
relationship permitted hereunder that provides remuneration to Morris. Morris
shall not unreasonably withhold his availability for such cooperation.

         (c.) Upon the Transition Date, Morris will update the Company as to the
status of all pending matters for which he was responsible or otherwise
involved. During the Severance Period, Morris will perform such services and
provide such consultations as the Company shall reasonably request.

         (d.) The Company agrees, to the extent permitted by applicable law, to
release Morris and indemnify and hold him harmless against all liability or
loss, and against all claims or actions, arising from or connected with his past
activities as an employee of the Company, including but not limited to those
claims or actions based upon or arising out of negligent or wrongful acts to
persons or property and the defense of any such claims or actions.






                                       9
   10




         10. SUCCESSORS AND BINDING AGREEMENT.

             (a.) This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of or to the Company, including, without
limitation, any persons acquiring, directly or indirectly, all or substantially
all of the business and/or assets of the Company whether by purchase, merger,
consolidation, reorganization, or otherwise (and such successor shall thereafter
be deemed included in the definition of "the Company" for purposes of this
Agreement), but shall not otherwise be assignable or delegable by the Company.

             (b.) This Agreement shall inure to the benefit of and be
enforceable by Morris' personal or legal representatives, executors,
administrators, successors, heirs, distributees, and/or legatees.

             (c.) This Agreement is personal in nature and none of the parties
hereto shall, without the consent of the other parties, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Subparagraphs (a) and (b) of this Paragraph 10.

         (d.) This Agreement is intended to be for the exclusive benefit of the
parties hereto, and except as provided in Subparagraphs (a) and (b) of this
Paragraph 10, no third party shall have any rights hereunder.

          11. NON-DISCLOSURE; STATEMENTS TO THIRD PARTIES.

             (a.) All provisions of this Agreement and the circumstances giving
rise hereto are and shall remain confidential and shall not be disclosed to any
person not a party hereto (other than (i) Morris' spouse, if any, (ii) each
party's attorney, financial advisor and/or tax advisor to the extent necessary
for such advisor to render appropriate legal, financial and tax advice, and
(iii) persons or entities that fall within the scope of Paragraph 7 of this
Agreement, but only to the extent required thereby), except as necessary to
carry out the provisions of this Agreement, and except as may be required by
law. Notwithstanding the foregoing, this Agreement may be filed with or provided
to the Securities and Exchange Commission or any other governmental
instrumentality or agency, including the Internal Revenue Service, if the
Company deems such filing or provision to be necessary.

             (b.) Because the purpose of this Agreement is to settle amicably
any and all potential disputes or claims among the parties, neither Morris nor
the Company shall, directly or indirectly, make or cause to be made any
statements to any third parties criticizing or disparaging the other or
commenting on the character or business reputation of the other. Morris further
hereby agrees not: (i) to comment to others concerning the status, plans or
prospects of the business of the Company, or (ii) to engage in any act or
omission that would be detrimental, financially or otherwise, to the Company, or
that would subject the Company to public disrespect, scandal, or ridicule. For
purposes of this Subparagraph 11.b., the "Company" shall mean Diebold,
Incorporated and its directors, officers, predecessors, parents, subsidiaries,
divisions, and related or affiliated companies.






                                       10
   11



          12. NOTICES. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered, addressed to the Company (to the attention of the CEO) at
its principal executive offices and to Morris at his principal residence, 1423
Harbor Drive, N.W., Canton, Ohio 44708, or to such other address as any party
may have furnished to the other in writing and in accordance herewith. Notices
of change of address shall be effective only upon receipt.

          13. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by Morris and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied with respect to the subject matter hereof
have been made by any of the parties that are not set forth expressly in this
Agreement and every one of them (if, in fact, there have been any) is hereby
terminated without liability or any other legal effect whatsoever.

         14. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
shall supersede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.

          15. GOVERNING LAW. Any dispute, controversy, or claim of whatever
nature arising out of or relating to this Agreement or breach thereof shall be
governed by and under the laws of the State of Ohio. The parties agree that any
and all disputes, controversies, or claims of whatever nature arising out of or
relating to this agreement or breach thereof shall be resolved by a court of
general jurisdiction in the State of Ohio, and the parties hereby consent to the
exclusive jurisdiction of such court in any action or proceeding arising under
or brought to challenge, enforce, or interpret any of the terms of this
Agreement.

          16. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall nevertheless remain in full force and
effect.

          17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.

          18. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience and are not part of this Agreement and shall not
be used in construing it.

          19. FURTHER ASSURANCES. Each party hereto shall execute such
additional documents, and do such additional things, as may reasonably be
requested by the other party to effectuate the purposes and provisions of this
Agreement.





                                       11
   12



         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.


                                             DIEBOLD, INCORPORATED

                                            By: /s/ Robert W. Mahoney
                                                --------------------------------
                                                Robert W. Mahoney
                                                Chairman of the Board



                                            Date: January 14, 2000


Witness: /s/ Terri L. Naiaue                /s/ Gerald F. Morris
         --------------------               --------------------------------


                                            Date: 14 Jan 2000
                                                 -------------------------------



                                       12
   13




                                    EXHIBIT A
                                    ---------


Automated Teller Machines
Teller Assist Devices
Physical Security Devices
     (including, without limitation, Vault Doors and Chests)
Electronics Funds Transfer Equipment
Point of Sale Equipment and Systems
Safe Deposit Boxes
Access Control Devices and Systems
Integrated Campus Access Management Devices and Systems
Surveillance Equipment and Systems
     (including, without limitation, Surveillance Cameras)
Remote Monitoring Systems
     (including, without limitation, Burglary, Robbery and Fire)
Automated Monitoring, Dispensing and Reporting
     Devices and Systems for the Health Care Industry
Transaction Processing Services and Systems
Software Systems for the Above
Service and Maintenance of the Above
     (including, without limitation, First and Second Line Service)


The above list of products in this Exhibit A does not apply to general purpose
computer hardware or peripherals such as mainframe computers, personal
computers, printers, or application software such as spreadsheet, word
processing and data base programs for general business or office use.


                                       13

EX-10.17

   1



                                                                   Exhibit 10.17


                                                                  Execution Copy


                             DIEBOLD, INCORPORATED,

                           THE SUBSIDIARY BORROWERS,

                         ------------------------------



                                 LOAN AGREEMENT

                          dated as of December 1, 1999

                         ------------------------------



                          BANK ONE, MICHIGAN, as Agent

                                      and

                            THE LENDERS PARTY HERETO

                         ------------------------------





                        BANC ONE CAPITAL MARKETS, INC.,
                                  as Arranger

                             BANK OF AMERICA, N.A.,
                              as Syndication Agent



   2



                               TABLE OF CONTENTS

ARTICLE I - DEFINITIONS ........................................................
         1.1.     Defined Terms ................................................

ARTICLE II- THE CREDITS ........................................................
         2.1.     The Commitments ..............................................
         2.2.     Repayment of Loans; Evidence of Debt .........................
         2.3.     Procedures for Borrowing .....................................
         2.4.     Termination or Reduction of Revolving Credit Commitments .....
         2.5.     Facility and Agent Fees ......................................
         2.6.     Optional and Mandatory Principal Payments on All Loans
         2.7.     Conversion and Continuation of Outstanding Advances ..........
         2.8.     Interest Rates, Interest Payment Dates;
                  Interest and Fee Basis .......................................
         2.9.     Rates Applicable After Default ...............................
         2.10.    Pro Rata Payment, Method of Payment ..........................
         2.11.    Telephonic Notices ...........................................
         2.12.    Notification of Advances, Interest Rates, Prepayments and
                  Commitment Reductions ........................................
         2.13.    Lending Installations ........................................
         2.14.    Non-Receipt of Funds by the Agent ............................
         2.15.    Facility Letters of Credit ...................................
         2.16.    Swing Loans ..................................................
         2.17.    Application of Payments with Respect to Defaulting Lenders ...
         2.18     Guarantees ...................................................

ARTICLE III - CHANGE IN CIRCUMSTANCES, TAXES ...................................
         3.1.     Yield Protection .............................................
         3.2.     Changes in Capital Adequacy Regulations ......................
         3.3.     Availability of Types of Advances ............................
         3.4.     Funding Indemnification ......................................
         3.5.     Lender Statements; Survival of Indemnity .....................
         3.6.     Taxes ........................................................
         3.7.     Substitution of Lender .......................................

ARTICLE IV - CONDITIONS PRECEDENT ..............................................
         4.1.     Closing Conditions ...........................................
         4.2.     Each Advance .................................................

ARTICLE V - REPRESENTATIONS AND WARRANTIES .....................................
         5.1.     Corporate Existence and Standing .............................
         5.2.     Authorization and Validity ...................................
         5.3.     No Conflict; Government Consent ..............................
         5.4.     Financial Statements .........................................
         5.5.     Material Adverse Change ......................................
         5.6.     Taxes ........................................................
         5.7.     Litigation and Contingent Obligations ........................


                                       ii


   3




         5.8.     Subsidiaries .................................................
         5.9.     ERISA ........................................................
         5.10.    Accuracy of Information ......................................
         5.11.    Regulations T, U and X .......................................
         5.12.    Material Agreements ..........................................
         5.13.    Compliance With Laws .........................................
         5.14.    Plan Assets; Prohibited Transactions .........................
         5.15.    Environmental Matters ........................................
         5.16.    Investment Company Act .......................................
         5.17.    Public Utility Holding Company Act ...........................
         5.18.    Subsidiary Borrowers .........................................
         5.19.    Insurance ....................................................
         5.20.    Ownership of Properties ......................................
         5.21     Labor Controversies ..........................................
         5.22     Burdensome Obligations .......................................
         5.23     Year 2000 ....................................................


ARTICLE VI- COVENANTS ..........................................................
         6.1.     Financial Reporting ..........................................
         6.2.     Use of Proceeds ..............................................
         6.3.     Notice of Default ............................................
         6.4.     Properties; Conduct of Business ..............................
         6.5.     Taxes ........................................................
         6.6.     Insurance ....................................................
         6.7.     Compliance with Laws .........................................
         6.8.     Inspection ...................................................
         6.9.     Merger .......................................................
         6.10.    Sale of Assets ...............................................
         6.11.    Investments ..................................................
         6.12.    Liens ........................................................
         6.13.    Year 2000 ....................................................
         6.14.    Affiliates ...................................................
         6.15.    Indebtedness .................................................
         6.16.    Limitation on Restrictions On Subsidiary Distributions .......
         6.17.    Financial Contracts ..........................................
         6.18.    Total Debt to Capitalization Ratio ...........................
         6.19.    Interest Coverage Ratio ......................................

ARTICLE VII- DEFAULTS ..........................................................

ARTICLE VIII- ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ...................
         8.1.     Acceleration .................................................
         8.2.     Amendments ...................................................
         8.3.     Preservation of Rights .......................................

ARTICLE IX - GUARANTEE .........................................................
         9.1.     Guarantee ....................................................
         9.2.     No Subrogation ...............................................
         9.3.     Amendments, etc. with respect to the Obligations;
                  Waiver of Rights .............................................

                                      iii

   4




         9.4.     Guarantee Absolute and Unconditional .........................
         9.5.     Reinstatement ................................................
         9.6.     Payments .....................................................
ARTICLE X - GENERAL PROVISIONS .................................................
         10.1.    Survival of Representations ..................................
         10.2.    Governmental Regulation ......................................
         10.3.    Taxes ........................................................
         10.4.    Headings .....................................................
         10.5.    Entire Agreement .............................................
         10.6.    Several Obligations; Benefits of this Agreement ..............
         10.7.    Expenses; Indemnification ....................................
         10.8.    Numbers of Documents .........................................
         10.9.    Accounting ...................................................
         10.10.   Severability of Provisions ...................................
         10.11.   Nonliability of Lenders ......................................
         10.12.   Confidentiality ..............................................
         10.13.   Nonreliance ..................................................

ARTICLE XI- THE AGENT; ETC. ....................................................
         11.1.    Appointment; Nature of Relationship ..........................
         11.2.    Powers .......................................................
         11.3.    General Immunity .............................................
         11.4.    No Responsibility for Loans, Recitals, etc. ..................
         11.5.    Action on Instructions of Lenders ............................
         11.6.    Employment of Agents and Counsel .............................
         11.7.    Reliance on Documents; Counsel ...............................
         11.8.    Agent's Reimbursement and Indemnification ....................
         11.9.    Notice of Default ............................................
         11.10.   Rights as a Lender ...........................................
         11.11.   Lender Credit Decision .......................................
         11.12.   Successor Agents .............................................
         11.13    Right to Indemnity ...........................................
         11.14    Delegation to Affiliates .....................................

ARTICLE XII- SETOFF; ADJUSTMENTS AMONG LENDERS .................................
         12.1.    Setoff .......................................................
         12.2.    Ratable Payments .............................................

ARTICLE XIII - BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ...............
         13.1.    Successors and Assigns .......................................
         13.2.    Participations ...............................................
                  13.2.1   Permitted Participants; Effect ......................
                  13.2.2.  Voting Rights .......................................
                  13.2.3.  Benefit of Setoff ...................................
         13.3.    Assignments ..................................................
                  13.3.1.  Permitted Assignments ...............................
                  13.3.2.  Effect; Effective Date ..............................
         13.4.    Dissemination of Information .................................
         13.5.    Tax Treatment ................................................

                                       iv

   5




ARTICLE XIV - NOTICES ..........................................................
         14.1.    Notices ......................................................
         14.2.    Change of Address ............................................

ARTICLE XV - COUNTERPARTS ......................................................

ARTICLE XVI- CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER
             OF JURY TRIAL, JUDGMENT CURRENCY ..................................
         16.1.    Choice of Law ................................................
         16.2.    Waiver of Jury Trial .........................................
         16.3.    Submission to Jurisdiction; Waivers ..........................
         16.4.    Acknowledgments ..............................................
         16.5.    Power of Attorney ............................................
         16.6.    Judgment .....................................................

EXHIBITS
- --------

EXHIBIT A - PRICING SCHEDULE

EXHIBIT B - DOMESTIC SUBSIDIARY BORROWER OPINION OF COUNSEL

EXHIBIT C - FOREIGN SUBSIDIARY BORROWER OPINION OF COUNSEL

EXHIBIT D - GUARANTY

EXHIBIT E - JOINDER AGREEMENT

EXHIBIT F-1 - REVOLVING CREDIT NOTE

EXHIBIT F-2 - TERM LOAN NOTE

EXHIBIT G - OPINION OF COUNSEL

EXHIBIT H - WRITTEN TRANSFER INSTRUCTIONS

EXHIBIT I - COMPLIANCE CERTIFICATE

EXHIBIT J - ASSIGNMENT AGREEMENT

                                       v

   6



SCHEDULES
- ---------

SCHEDULE 1.1(a) - COMMITMENTS

SCHEDULE 1.1(b) - SUBSIDIARY BORROWERS

SCHEDULE 5.7 - LITIGATION

SCHEDULE 5.8 - SUBSIDIARIES

SCHEDULE 6.12 - LIENS






                                       vi

   7



         THIS LOAN AGREEMENT (this "Agreement"), dated as of December 1, 1999,
among DIEBOLD, INCORPORATED, an Ohio corporation (the "COMPANY"), the SUBSIDIARY
BORROWERS (as hereinafter defined) from time to time parties hereto (together
with the Company, the "BORROWERS"), the lenders from time to time parties hereto
(the "LENDERS"), and BANK ONE, MICHIGAN, a Michigan banking corporation, as
Agent.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:


                                   ARTICLE I

                                  DEFiNITIONS
                                  -----------

         1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:

         "ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any Person or division thereof, whether
through purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the Voting Stock of
any Person.

         "ADVANCE" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans or Facility
Letters of Credit of the same Type and, in the case of Eurocurrency Loans, in
the same Agreed Currency and for the same Interest Period, and further, in the
case of Eurodollar Loans, for the same Interest Period, made by the Lenders on
the same Borrowing Date (or converted or continued by the Lenders on the same
date of conversion or continuation).

         "AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of Voting Stock of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.

         "AGENT" means Bank One in its capacity as contractual representative of
the Lenders pursuant to Article XI, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article XI.

         "AGGREGATE COMMITMENTS" means the aggregate amount, stated in U.S.
Dollars, of the Commitments of all Lenders.

         "AGGREGATE EURO REVOLVING CREDIT COMMITMENTS" means the aggregate
amount, stated in Euro, of the Euro Revolving Credit Commitments of all of the
Euro Revolving Credit Lenders.

         "AGGREGATE EURO REVOLVING CREDIT OUTSTANDINGS" means as at any date of
determination with respect to any Euro Revolving Credit Lender, the sum of the
aggregate unpaid principal amount of such Lender's Euro Revolving Credit Loans
on such date and the amount of such Lender's Pro Rata Share of




   8



the Euro Facility Letter of Credit Obligations and Swing Loans to the Foreign
Subsidiary Borrowers on such date, both stated in Euro based on the Euro
Equivalent Amount.

         "AGGREGATE REVOLVING CREDIT COMMITMENTS" means, on any date of
determination, the U.S. Dollar Equivalent on such date of the aggregate amount
of the Revolving Credit Commitments of all of the Revolving Credit Lenders.

         "AGGREGATE EURO TERM LOAN COMMITMENTS" means the aggregate amount,
stated in Euros, of Euro Term Loan Commitments of all the Euro Term Loan
Lenders, as reduced from time to time pursuant to principal payments on the Euro
Term Loans.

         "AGGREGATE EURO TERM LOAN OUTSTANDINGS" means as at any date of
determination with respect to any Lender, the sum of the aggregate unpaid
principal amount, stated in Euros based on the Euro Equivalent Amount, of such
Lender's portion of the Euro Term Loans on such date.

         "AGGREGATE REVOLVING CREDIT OUTSTANDINGS" means as at any date of
determination with respect to any Revolving Credit Lender, the sum of the U. S.
Dollar Equivalent on such date of the aggregate unpaid principal amount of such
Lender's Revolving Credit Loans on such date and the U. S. Dollar Equivalent on
such date of the amount of such Lender's Pro Rata Share of the Facility Letter
of Credit Obligations and Swing Loans on such date.

         "AGGREGATE TERM LOAN COMMITMENTS" means the aggregate amount, stated in
U.S. Dollars, of Term Loan Commitments of all the Term Loan Lenders, as reduced
from time to time pursuant to principal payments on the Term Loans.

         "AGGREGATE TERM LOAN OUTSTANDINGS" means as at any date of
determination with respect to any Lender, the sum of the aggregate unpaid
principal amount, stated in U.S. Dollars, of such Lender's portion of the Term
Loans on such date.

         "AGGREGATE TOTAL OUTSTANDINGS" means as at any date of determination
with respect to any Lender, the U.S. Dollar Equivalent of an amount equal to (a)
the Aggregate Revolving Credit Outstandings of such Lender on such date or (b)
the Aggregate Term Loan Outstandings of such Lender on such date, as the case
may be.

         "AGGREGATE U.S. REVOLVING CREDIT COMMITMENTS" means the aggregate
amount in U.S. Dollars of the U.S. Revolving Credit Commitments of all of the
Revolving Credit Lenders.

         "AGGREGATE U.S. REVOLVING CREDIT OUTSTANDINGS" means as at any date of
determination with respect to any Revolving Credit Lender, the sum of the
aggregate unpaid principal amount of such Lender's U.S. Revolving Credit Loans
on such date and the amount of such Lender's Pro Rata Share of the U.S. Facility
Letter of Credit Obligations and Swing Loans to the Company on such date, both
stated in U.S. Dollars.

         "AGGREGATE U.S. TERM LOAN COMMITMENTS" means the aggregate amount,
stated in U.S. Dollars, of U.S. Term Loan Commitments of all the U.S. Term Loan
Lenders, as reduced from time to time pursuant to principal payments on the U.S.
Term Loans.

         "AGGREGATE U.S. TERM LOAN OUTSTANDINGS" means as at any date of
determination with respect to any Lender, the sum of the aggregate unpaid
principal amount, stated in U.S. Dollars, of such Lender's portion of the U.S.
Term Loans on such date.


                                       2

   9




         "AGREED CURRENCIES" means (i) Dollars, (ii) so long as it remains an
Eligible Currency, the Euro, and (iii) any other Eligible Currency which the
Borrowers request the Agent to include as an Agreed Currency hereunder and which
is acceptable to all of the Euro Lenders and the Agent.

         "AGREEMENT" means this loan agreement, as it may be amended or modified
and in effect from time to time.

         "AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect on the Effective Date in the United States, applied in a
manner consistent with the audited consolidated financial statements of the
Company and its Subsidiaries for the fiscal year ending December 31, 1998;
PROVIDED, HOWEVER, that, if generally accepted accounting principles in the
United States of America shall require the Company to adopt other principles,
then the financial statements required to be delivered hereunder may be prepared
on the basis of such other principles but when delivered shall also be
accompanied by a reconciliation, reasonably satisfactory in scope and detail to
the Agent, to permit the review of such financial statements as if they were
prepared in accordance with Agreement Accounting Principles.

         "AGREEMENT CURRENCY" is defined in Section 16.6.

         "ALTERNATE BASE RATE" means, for any day, a rate of interest per annum
equal to the higher of (a) the Prime Rate for such day or (b) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.

         "APPLICABLE MARGIN" means the amounts set forth in the Pricing Schedule
on Exhibit A hereto.

         "ARRANGER" means Banc One Capital Markets, Inc., a Delaware
corporation, and its successors.

         "ARTICLE" means an article of this Agreement unless another document is
specifically referenced.

         "ASSIGNMENT" is defined in Section 13.3.1.

         "AUTHORIZED OFFICER" means, with respect to any Borrower, any of the
president, the chief executive officer, any Designated Financial Officer or the
secretary of the Company or any other Person designated by any of the foregoing
in writing to the Agent from time to time to act on behalf of any Borrower (or,
if so designated, a specific Borrower) which designation has not been rescinded
in writing, in each case acting singly.

         "AVAILABLE FOREIGN CURRENCIES" means the Agreed Currencies other than
Dollars.

         "BANK ONE" means Bank One, Michigan, a Michigan banking corporation.

         "BORROWERS" is defined in the preamble hereto.

         "BORROWING DATE" means any Business Day specified in a notice pursuant
to Section 2.3, 2.7, 2.15 or 2.16 as a date on which a Borrower requests the
Lenders to make Loans hereunder or, with respect to the issuance of any Facility
Letter of Credit, the date the applicable Issuer issues such Facility Letter of
Credit.

         "BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in


                                       3

   10



Detroit, Chicago, London and New York for the conduct of substantially all of
their commercial lending activities and on which dealings in Dollars and the
other Agreed Currencies are carried on in the London interbank market (and, if
the Advances which are the subject of such borrowing, payment or rate selection
are denominated in Euro, a day upon which such clearing system as is determined
by the Agent to be suitable for clearing or settlement of the Euro is open for
business), and (ii) for all other purposes, a day (other than a Saturday or
Sunday) on which banks generally are open in Detroit, Chicago, London and New
York for the conduct of substantially all of their commercial lending
activities.

         "CAPITAL STOCK" means (i) in the case of any corporation, all capital
stock and any securities exchangeable for or convertible into capital stock and
any warrants, rights or other options to purchase or otherwise acquire capital
stock or such securities or any other form of equity securities, (ii) in the
case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

         "CAPITALIZED LEASE" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.

         "CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

         "CASH EQUIVALENTS" means (i) securities issued directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) Dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Lender or
(y) any bank whose short-term commercial paper rating from S&P is at least
investment grade or the equivalent thereof (any such bank, an "Approved
Lender"), (iii) commercial paper issued by any Lender or Approved Lender or by
the parent company of any Lender or Approved Lender and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least investment grade or the equivalent thereof,
(iv) investment grade bonds and preferred stock of investment grade companies,
including but not limited to municipal bonds, corporate bonds, treasury bonds,
etc., (v) foreign Investments denominated in an Eligible Currency that are of
similar type of, and that have a rating comparable to, any of the Investments
referred to in the preceding clauses (i) through (iv) above, (vi) investments in
money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (v) above and (vii)
other securities and financial instruments which offer a security comparable to
those listed above.

         "CHANGE OF CONTROL" means (i) a majority of the members of the Board of
Directors of Company shall not be Continuing Directors; or (ii) any Person
including a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) which includes such Person, shall
purchase or otherwise acquire, directly or indirectly, beneficial ownership of
Voting Stock of Company and, as a result of such purchase or acquisition, any
such Person (together with its Affiliates), shall directly or indirectly
beneficially own in the aggregate Voting Stock representing more than 30% of the
combined voting power of Company's Voting Stock.

         "CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.


                                       4

   11



         "COMMITMENT" means, for each Lender, such Lender's U.S. Revolving
Credit Commitment, Euro Revolving Credit Commitment, U.S. Term Loan Commitment
and Euro Term Loan Commitment, and "Commitments" means the aggregate of all of
the Lenders' Commitments.

         "COMPANY" is defined in the preamble hereto.

         "COMPLIANCE CERTIFICATE" is defined in Section 6.1(iii).

         "CONDEMNATION" is defined in Section 7.8.

         "CONFIDENTIAL INFORMATION" is defined in Section 10.11.

         "CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guaranties, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract. The amount of any Contingent Obligation shall
be equal to the amount of the obligation that is so guarantied or supported that
is actually outstanding or otherwise due and payable from time to time, if a
fixed and determinable amount or if there is no fixed or determinable amount,
either (x) if a maximum amount is guaranteed, the maximum amount or (y) if there
is no maximum amount the amount of the obligation that is so guarantied or
supported.

         "CONTINUING DIRECTORS" means individuals who at the beginning of any
period of two consecutive calendar years constituted the board of directors of
the Company, together with any new directors whose election by such board of
directors or whose nomination for election was approved by a vote of at least
two-thirds of the members of such board of directors then still in office who
either were members of such board of directors at the beginning of such period
or whose election or nomination for election was previously so approved.

         "CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any of its Subsidiaries, are
treated as a single employer under Sections 414(b) or (c) of the Code.

         "CONVERSION/CONTINUATION NOTICE" is defined in Section 2.7.1.

         "DEFAULT" means an event described in Article VII.

         "DEFAULTING LENDER" means any Lender that (a) on any Borrowing Date
fails to make available to the Agent such Lender's Loans required to be made to
a Borrower on such Borrowing Date or (b) shall not have made a payment to the
Issuer pursuant to Section 2.15.5 or the Agent pursuant to Section 2.16. Once a
Lender becomes a Defaulting Lender, such Lender shall continue as a Defaulting
Lender until such time as such Defaulting Lender makes available to the Agent
the amount of such Defaulting Lender's Loans and/or to an Issuer such payments
requested by an Issuer together with all other amounts required to be paid to
the Agent and/or the Issuers pursuant to this Agreement.

         "DESIGNATED FINANCIAL OFFICER" means, with respect to any Borrower, its
chief financial officer, director of treasury services, treasurer, assistant
treasurer, or similar position.


                                       5

   12




         "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part.

         "DOLLARS", "U.S. DOLLARS" and "$" means dollars in lawful currency of
the United States of America.

         "DOLLAR EQUIVALENT AMOUNT" of any currency at any date shall mean (i)
the amount of such currency if such currency is in Dollars or (ii) the
Equivalent Amount of Dollars if such currency is any currency other than
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Agent for such currency on the London market at
11:00 a.m., London time, on such date or as most recently determined by the
Agent.

         "DOMESTIC SUBSIDIARY" means each present and future Subsidiary of the
Company which is not a Foreign Subsidiary.

         "DOMESTIC SUBSIDIARY BORROWER" means each Domestic Subsidiary listed as
a Domestic Subsidiary Borrower in Schedule 1.1(b) as amended from time to time
in accordance with Section 8.2.2.

         "DOMESTIC SUBSIDIARY OPINION" means with respect to any Domestic
Subsidiary Borrower, a legal opinion of counsel to such Domestic Subsidiary
Borrower addressed to the Agent and the Lenders concluding that such Domestic
Subsidiary Borrower and the Loan Documents to which it is a party substantially
comply with the matters listed on Exhibit B, with such assumptions,
qualifications and deviations therefrom as the Agent shall approve.

         "EBIT" means, for any period, the sum of (a) the consolidated net
income (or loss) of the Company and its Subsidiaries for such period determined
in conformity with Agreement Accounting Principles, PLUS (b)to the extent
deducted in determining such net income, income taxes, and Interest Expense, and
any extraordinary and non-recurring losses and non-cash charges and related tax
effects in accordance with Agreement Accounting Principles, MINUS (c) to the
extent included in determining such net income, each of the following, without
duplication: (i) the income of any Person (other than a Wholly Owned Subsidiary
of the Company) in which any Person other than the Company or any of its
Subsidiaries has a joint interest or a partnership interest or other ownership
interest, except to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Subsidiaries by such Person during
such period, (ii) the income of any Person accrued prior to the date it becomes
a Subsidiary of the Company or is merged into or consolidated with the Company
or any of its Subsidiaries or that Person's assets are acquired by the Company
or any of its Subsidiaries, (iii) gains from the sale, exchange, transfer or
other disposition of property or assets not in the ordinary course of business
of the Company and its Subsidiaries, and related tax effects in accordance with
Agreement Accounting Principles, (iv) any other extraordinary or non-recurring
gains or other income not from the continuing operations of the Company or its
Subsidiaries, and related tax effects in accordance with Agreement Accounting
Principles and (v) the income of any Subsidiary of the Company (other than
Subsidiaries which are not material in the aggregate as agreed upon between the
Company and the Agent) to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.

         "EFFECTIVE DATE" means the date on which the conditions precedent set
forth in Sections 4.1 and 4.2 are satisfied.


                                       6

   13



         "ELIGIBLE CURRENCY" means any currency other than Dollars (i) that is
readily available, (ii) that is freely traded, (iii) in which deposits are
customarily offered to banks in the London interbank market, (iv) which is
convertible into Dollars in the international interbank market and (v) as to
which a Dollar Equivalent Amount may be readily calculated. If, after the
designation by the Lenders of any currency as an Agreed Currency, (x) currency
control or other exchange regulations are imposed in the country in which such
currency is issued with the result that different types of such currency are
introduced, (y) such currency is, in the determination of the Agent, no longer
readily available or freely traded or (z) in the determination of the Agent, a
Dollar Equivalent Amount of such currency is not readily calculable, the Agent
shall promptly notify the Lenders and the Company, and such currency shall no
longer be an Agreed Currency until such time as all of the Lenders agree to
reinstate such currency as an Agreed Currency and promptly, but in any event
within five Business Days of receipt of such notice from the Agent, the Borrower
shall repay all Loans in such affected currency or convert such Loans into Loans
in Dollars or another Agreed Currency, subject to the other terms set forth in
Article II.

         "ENVIRONMENTAL LAWS" means, with respect to the Company or any of its
Subsidiaries, any and all federal, state, local and foreign statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees,
plans, injunctions, permits, concessions, grants, franchises, licenses,
agreements and other governmental restrictions relating to (a) the protection of
the environment, (b) effect of the environment on human health, (c) emissions,
discharges or releases of Hazardous Substances into surface water, ground water
or land, or (d) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances or the clean-up
or other remediation thereof, in each case, applicable to the Company's or any
of its Subsidiary's operations or Property.

         "EQUIVALENT AMOUNT" of any currency with respect to any amount of any
other currency at any date means the equivalent in such currency of such amount
of such other currency, calculated on the basis of the arithmetical mean of the
buy and sell spot rates of exchange of the Agent for such currency at 11:00
a.m., London time, on the date on or as of which such amount is to be
determined.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

         "EURO" and/or "EUR" means the euro referred to in Council Regulation
(EC) No. 1103/97 dated June 17, 1997 passed by the Council of the European
Union, or, if different, the then lawful currency of the member states of the
European Union that participate in the third stage of Economic and Monetary
Union.

         "EURO EQUIVALENT AMOUNT" of any currency at any date shall mean (i) the
amount of such currency if such currency is in Euros or (ii) the Equivalent
Amount of Euros if such currency is any currency other than Euros, calculated on
the basis of the arithmetical mean of the buy and sell spot rates of exchange of
the Agent for such currency on the London market at 11:00 a.m., London time, on
such date or as most recently determined in good faith by the Agent.

         "EURO FACILITY LETTER OF CREDIT" means any Letter of Credit for the
account of a Foreign Subsidiary Borrower.

         "EURO FACILITY LETTER OF CREDIT OBLIGATIONS" means Facility Letter of
Credit Obligations with respect to Euro Facility Letters of Credit.

         "EURO LENDER" means any Euro Revolving Credit Lender or Euro Term Loan
Lender.

         "EURO LOAN" means any Euro Revolving Credit Loan or Euro Term Loan.

                                       7


   14



         "EURO REVOLVING CREDIT COMMITMENT" means, as to any Lender at any time,
its obligation to make Revolving Credit Loans to the Foreign Subsidiary
Borrowers under Section 2.1.2 in an aggregate Euro Equivalent Amount not to
exceed at any time outstanding the Euro amount set forth opposite such Lender's
name in Schedule 1.1(a) under the heading "Euro Revolving Credit Commitment" or
as otherwise established pursuant to Section 13.3, as such amount may be reduced
from time to time pursuant to Section 2.4, 13.3 and the other applicable
provisions hereof.

         "EURO REVOLVING CREDIT LENDER" means any Lender which has a Euro
Revolving Credit Commitment.

         "EURO REVOLVING CREDIT LOANS" means Revolving Credit Loans made to the
Foreign Subsidiary Borrowers under Section 2.1.2.

         "EURO TERM LOAN" means, with respect to a Lender, such Lender's portion
of the term loan made in Available Foreign Currencies pursuant to Section 2.1.4.

         "EURO TERM LOAN COMMITMENT" means as to any Lender at any time, its
obligation to make the Euro Term Loan to the Company in an aggregate Euro
Equivalent Amount not to exceed at any time outstanding the aggregate
outstanding principal amount of its respective Euro Revolving Credit Loans of
such Lender outstanding on the Facility Termination Date or as otherwise
established pursuant to Section 13.3, as such amount may be reduced from time to
time pursuant to Section 13.3 and the other applicable provisions hereof.

         "EURO TERM LOAN LENDERS" means those Lenders which have a Euro Term
Loan Commitment or, if such Commitments have been terminated, have an
outstanding Euro Term Loan.

         "EUROCURRENCY ADVANCE" means a Multicurrency Advance which bears
interest at the Eurocurrency Rate.

         "EUROCURRENCY LOAN" means a Multicurrency Loan which bears interest at
the Eurocurrency Rate.

         "EUROCURRENCY RATE" means, with respect to a Eurocurrency Loan for the
relevant Interest Period, the sum of (a) the Eurocurrency Reference Rate
applicable to such Interest Period, plus (b) the amount of all reserves, costs
or similar requirements relating to the funding of the relevant Available
Foreign Currency, as determined by the Agent, plus (c) the Applicable Margin.

         "EUROCURRENCY REFERENCE RATE" means, with respect to each Interest
Period for a Multicurrency Loan:

         (a) the rate per annum quoted at or about 11:00 a.m. (London time) on
             the Quotation Date for such period on that page of the Bloombergs'
             or Reuters' Screen, as determined by the Agent, which displays
             British Bankers Association Interest Settlement Rates for deposits
             in the relevant Available Foreign Currency for such period or, if
             such page or service shall cease to be available, such other page
             or such other service (as the case may be) for the purpose of
             displaying British Bankers Association Interest Settlement Rates
             for such currency as the Agent, in its discretion, shall select.

         (b) If no such rate is displayed for the relevant currency and the
             relevant period and there is no Available Foreign Currency
             alternative service on which two or more such quotations for the
             Available Foreign Currency are displayed, "Eurocurrency Reference
             Rate" will


                                       8

   15



             be the rate at which deposits in the Available Foreign Currency of
             that amount are offered by the Agent for that period to prime banks
             in the London inter bank market at or about 11:00 a.m. (London
             time) on the Quotation Date for such period.

         "EURODOLLAR ADVANCE" means an Advance which bears interest at a
Eurodollar Rate.

         "EURODOLLAR BASE RATE" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the rate determined by the Agent to be the rate at
which the Agent offers to place deposits in Dollars with first-class banks in
the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of Bank One's relevant Eurodollar Loan and having a maturity
approximately equal to such Interest Period.

         "EURODOLLAR LOAN" means a Loan which bears interest at a Eurodollar
Rate.

         "EURODOLLAR RATE" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base
Rate applicable to such Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(b) the Applicable Margin. The Eurodollar Rate shall be rounded to the next
higher multiple of 1/16 of 1% if the rate is not such a multiple.

         "EXCHANGE RATE" means with respect to any non-U.S. Dollar currency on
any date, the rate at which such currency may be exchanged into U.S. Dollars, as
set forth on such date on the relevant Bloomberg currency page at or about 11:00
a.m., Detroit time. In the event that such rate does not appear on any Bloomberg
currency page, the "Exchange Rate" with respect to such non-U.S. Dollar currency
shall be determined by reference to such other publicly available service for
displaying exchange rates as may be agreed upon by the Agent and the Company or,
in the absence of such agreement, such "Exchange Rate" shall instead be the
Agent's spot rate of exchange in the interbank market where its foreign currency
exchange operations in respect of such non-U.S. Dollar currency are then being
conducted, at or about 10:00 a.m., local time, on such date for the purchase of
U.S. Dollars with such non-U.S. Dollar currency, for delivery three Business
Days later; PROVIDED, that if at the time of any such determination, no such
spot rate can reasonably be quoted, the Agent may use any reasonable method as
it deems applicable to determine such rate, and such determination shall be
conclusive absent manifest error.

         "FACILITY LETTER OF CREDIT" means a Letter of Credit issued by an
Issuer pursuant to Section 2.15.

         "FACILITY LETTER OF CREDIT OBLIGATIONS" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of a
Borrower with respect to the Facility Letters of Credit, including the sum of
(a) Reimbursement Obligations and, without duplication, (b) the aggregate
undrawn face amount of the outstanding Facility Letters of Credit.

         "FACILITY TERMINATION DATE" means the earlier to occur of (a) November
29, 2000 or (b) the date on which the Revolving Credit Commitments are
terminated pursuant to Article VIII.

         "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Detroit
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion or, when used in

                                       9


   16



connection with any Advance denominated in any Eligible Currency, "Federal Funds
Effective Rate" means the correlative rate of interest with respect to such
Eligible Currency as determined by the Agent in its sole discretion for such
day.

         "FINANCIAL CONTRACT" of a Person means (a) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics or (b) any Rate Hedging Agreement.

         "FIXED RATE" means the Eurodollar Rate or the Eurocurrency Rate.

         "FIXED RATE ADVANCE" means an Advance which bears interest at a Fixed
Rate.

         "FIXED RATE LOAN" means a Loan which bears interest at a Fixed Rate.

         "FLOATING RATE" means, for any day, a rate per annum (based on a year
of 365 or 366 days as appropriate) equal to the sum of (a) the Applicable Margin
plus (b) the Alternate Base Rate for such day, in each case changing when and as
the Alternate Base Rate changes.

         "FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.

         "FLOATING RATE LOAN" means a Loan which bears interest at the Floating
Rate.

         "FOREIGN SUBSIDIARY" means each Subsidiary organized under the laws of
a jurisdiction outside of the United States.

         "FOREIGN SUBSIDIARY BORROWER" means each Foreign Subsidiary listed as a
Foreign Subsidiary Borrower in Schedule 1.1(b) as amended from time to time in
accordance with Section 8.2.2.

         "FOREIGN SUBSIDIARY OPINION" means with respect to any Foreign
Subsidiary Borrower, a legal opinion of counsel to such Foreign Subsidiary
Borrower addressed to the Agent and the Lenders concluding that such Foreign
Subsidiary Borrower and the Loan Documents to which it is a party substantially
comply with the matters listed on Exhibit C, with such assumptions,
qualifications and deviations therefrom as the Agent shall approve.

         "GOVERNMENTAL AUTHORITY" means any nation or government, any state, or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

         "GUARANTOR" means (a) with respect to the Obligations of the Subsidiary
Borrowers, the Company, each present and future Domestic Subsidiary of the
Company required to execute a Guaranty pursuant to Section 2.18 and,
additionally with respect only to the Obligations of each Foreign Subsidiary
Borrower, each parent corporation or other owner and Subsidiary of such Foreign
Subsidiary Borrower (unless such parent corporation or other owner or Subsidiary
Borrower is prohibited from doing so by law or a material adverse tax
consequence would result therefrom) required to execute a Guaranty pursuant to
Section 2.18, and (b) with respect to the Company, each present and future
Domestic Subsidiary of the Company required to execute a Guaranty pursuant to
Section 2.18 and any other Person executing a Guaranty at any time.

         "GUARANTY" means, with respect to the Company, the guarantee contained
in Article IX and, with respect to any other Guarantor, each guaranty agreement
in substantially the form of Exhibit D hereto or, in the case of Foreign
Subsidiaries that are Guarantors, such other form agreed to by the Agent and the


                                       10

   17



Company duly executed and delivered by each such Guarantor to the Agent,
including any amendment, modification, renewal or replacement of such guaranty
agreement.

         "HAZARDOUS SUBSTANCES" means any material or substance: (1) which is or
becomes defined as a hazardous substance, pollutant, or contaminant, pursuant to
the Comprehensive Environmental Response Compensation and Liability Act
("CERCLA") (42 USC Section 9601 et. seq.) as amended and regulations promulgated
under it; (2) containing gasoline, oil, diesel fuel or other petroleum products;
(3) which is or becomes defined as hazardous waste pursuant to the Resource
Conservation and Recovery Act ("RCRA") (42 USC Section 6901 et. seq.) as amended
and regulations promulgated under it; (4) containing polychlorinated biphenyls
(PCBs); (5) containing asbestos; (6) which is radioactive; (7) the presence of
which requires investigation or remediation under any Environmental Law; (8)
which is or becomes defined or identified as a hazardous waste, hazardous
substance, hazardous or toxic chemical, pollutant, contaminant, or biologically
Hazardous Substance under any Environmental Law.

         "INDEBTEDNESS" of a Person means, without duplication, such Person's
(a) obligations for borrowed money or similar obligations, (b) obligations
representing the deferred purchase price of Property or services (other than
accounts payable and/or accrued expenses and commercial Letters of Credit with
respect to the foregoing, in each case arising in the ordinary course of such
Person's business payable in accordance with customary practices), (c)
obligations, whether or not assumed, secured by Liens on property now or
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or other instruments (other than Financial Contracts), to
the extent of the amounts actually borrowed, due, payable or drawn, as the case
may be, (e) Capitalized Lease Obligations, (f) all obligations in respect of
Letters of Credit (other than commercial Letters of Credit referenced in clause
(b) above), whether drawn or undrawn, contingent or otherwise, (g) any other
obligation for borrowed money or other financial accommodation which in
accordance with Agreement Accounting Principles would be shown as a liability on
the consolidated balance sheet of such Person, (h) Off-Balance Sheet
Liabilities, and (i) Contingent Obligations with respect to any of the
foregoing.

         "INTEREST COVERAGE RATIO" means, as of the end of any fiscal quarter,
the ratio of (a) EBIT to (b) Interest Expense, in each case calculated for the
four consecutive fiscal quarters then ending, on a consolidated basis for the
Company and its Subsidiaries in accordance with Agreement Accounting Principles.

         "INTEREST EXPENSE" means, with respect to any period, the aggregate of
all interest expense reported by the Company and its Subsidiaries in accordance
with Agreement Accounting Principles during such period, net of any cash
interest income received by the Company and its Subsidiaries during such period
from Investments. As used in this definition, the term "interest" shall include,
without limitation, all interest, fees and costs payable with respect to the
obligations under this Agreement (other than fees and costs which may be
capitalized as transaction costs in accordance with Agreement Accounting
Principles), any discount in respect of sales of accounts receivable and/or
related contract rights and the interest portion of Capitalized Lease payments
during such period, all as determined in accordance with Agreement Accounting
Principles.

         "INTEREST PERIOD" means with respect to any Fixed Rate Loan:

                  (a) initially, the period commencing on the borrowing or
         conversion date, as the case may be, with respect to such Fixed Rate
         Loan and ending one, two, three, or six months thereafter, or such
         other period as agreed upon by the Lenders making such Fixed Rate Loan,
         as selected by the relevant Borrower in its notice of borrowing or
         notice of conversion, as the case may be, given with respect thereto;
         and

                                       11


   18



                  (b) thereafter, each period commencing on the last day of the
         next preceding Interest Period applicable to such Fixed Rate Loan and
         ending one, two, three or six months thereafter, or such other period
         as agreed upon by the Lenders, as selected by the relevant Borrower by
         irrevocable notice to the Agent not less than three Business Days prior
         to the last day of the then current Interest Period with respect
         thereto;

         PROVIDED that, all of the foregoing provisions relating to Interest
         Periods are subject to the following:

                           (i) if any Interest Period pertaining to a Fixed Rate
                  Loan would otherwise end on a day that is not a Business Day,
                  such Interest Period shall be extended to the next succeeding
                  Business Day unless the result of such extension would be to
                  carry such Interest Period into another calendar month in
                  which event such Interest Period shall end on the immediately
                  preceding Business Day;

                           (ii) any Interest Period applicable to a Fixed Rate
                  Loan that would otherwise extend beyond, with respect to any
                  Term Loan, the Maturity Date, or, with respect to any other
                  Loan, the Facility Termination Date, shall end on the Maturity
                  Date or the Facility Termination Date, as the case may be; and

                           (iii) any Interest Period pertaining to a Fixed Rate
                  Loan that begins on the last Business Day of a calendar month
                  (or on a day for which there is no numerically corresponding
                  day in the calendar month at the end of such Interest Period)
                  shall end on the last Business Day of a calendar month.

         "INVESTMENT" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable and/or accrued expenses arising in the ordinary course of business
payable in accordance with customary practices and loans to employees in the
ordinary course of business) or contribution of capital by such Person; stocks,
bonds, mutual funds, partnership interests, notes, debentures or other
securities owned by such Person; any deposit accounts and certificates of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person
(other than Financial Contracts).

         "ISSUERS" or "ISSUER" means (i) Bank One, and (ii) any Lending
Installation of Bank One as Bank One may determine to be the issuer for any
Facility Letter of Credit.

         "JOINDER AGREEMENT" means the Joinder Agreement to be entered into by
each Subsidiary Borrower subsequent to the date hereof pursuant to Section
8.2.2, substantially in the form of Exhibit E hereto.

         "JUDGMENT CURRENCY" is defined in Section 16.6.

         "LENDERS" means the lending institutions listed on the signature pages
of this Agreement or otherwise party hereto as a Lender from time to time, and
their respective successors and, to the extent permitted by Section 13.3,
assigns.

         "LENDING INSTALLATION" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or Affiliate of such Lender or the Agent, as the
case may be.


                                       12

   19



         "LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

         "LETTER OF CREDIT COLLATERAL ACCOUNT" is defined in Section 2.15.7.

         "LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, fixed or floating charge, assignment, deposit arrangement,
encumbrance or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).

         "LOAN" means, with respect to a Lender, such Lender's Revolving Credit
Loans and portion of the Term Loans, and, with respect to the Agent, Swing
Loans.

         "LOAN DOCUMENTS" means this Agreement, the Notes, any Rate Hedging
Agreements with any Lenders or their Affiliates and the other agreements,
certificates and other documents contemplated hereby or executed or delivered
pursuant hereto by any Borrower or any Guarantor at any time with or in favor of
the Agent or any Lender.

         "LONDON BANKING DAY" means any day on which banks in London are open
for substantially all of their banking business, including dealings in foreign
currency and exchange.

         "MARGIN STOCK" means "margin stock" as defined in Regulations U or X or
"marginable OTC stock" or "foreign margin stock" within the meaning of
Regulation T.

         "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise) or results of operations
of the Company and its Subsidiaries taken as a whole, (ii) the ability of the
Borrowers and Guarantors, taken as a whole, to pay the Obligations under the
Loan Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent or the Lenders thereunder.

         "MATURITY DATE" means the earlier to occur of (a) November 29, 2002 or
(b) the date on which the maturity of the Term Loans are accelerated pursuant to
Article VIII.

         "MOODY'S" means Moody's Investors Service, Inc.

         "MULTICURRENCY ADVANCE" means a borrowing hereunder (or continuation or
a conversion thereof) consisting of the several Multicurrency Loans made on the
same Borrowing Date (or date of conversion or continuation) by the Lenders to a
Borrower of the same Type, in the same Available Foreign Currency and for the
same Interest Period.

         "MULTICURRENCY LOANS" means, Euro Loans and any Swing Loans made to the
Foreign Subsidiary Borrowers.

         "MULTIEMPLOYER PLAN" means a plan defined in Section 4001(a)(3) of
ERISA to which the Company or any member of the Controlled Group has an
obligation to contribute.

         "NET WORTH" means, as of any date, the amount of any capital stock,
paid in capital and similar equity accounts plus (or minus in the case of a
deficit) the capital surplus and retained earnings of the Company and its
Subsidiaries on a consolidated basis, all as determined in accordance with
Agreement Accounting Principles.


                                       13

   20




         "NON-CONFIDENTIAL INFORMATION" is defined in Section 10.11.

         "NON-EXCLUDED TAXES" is defined in Section 3.6.1.

         "NOTES" means the collective reference to the Revolving Credit Notes
and the Term Notes.

         "NOTICE OF ASSIGNMENT" is defined in Section 13.3.2.

         "OBLIGATIONS" means collectively, the unpaid principal of and interest
on the Loans, all obligations and liabilities pursuant to the Facility Letters
of Credit, all Rate Hedging Obligations and all other obligations and
liabilities of each Borrower and each Guarantor to the Agent or the Lenders
(including Affiliates of such Lenders in the case of Rate Hedging obligations)
under this Agreement and the other Loan Documents (including, without
limitation, interest accruing at the then applicable rate provided in this
Agreement or any other applicable Loan Document after the maturity of the Loans
and interest accruing at the then applicable rate provided in this Agreement or
any other applicable Loan Document after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to any Borrower or any Guarantor, as the case may be,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the other Loan Documents or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all reasonable fees
and disbursements of counsel to the Agent or to the Lenders that are required to
be paid by any Borrower or any Guarantor pursuant to the terms of this Agreement
or any other Loan Document).

         "OBLIGOR" means any Person which is obligated to make payments for the
provision of goods and services pursuant to a Contract.

         "OFF-BALANCE SHEET LIABILITY of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any Sale and Leaseback
Transaction which is not a Capitalized Lease, (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person.

         "PARTICIPANTS" is defined in Section 13.2.1.

         "PAYMENT DATE" means the last Business Day of each March, June,
September and December occurring after the Effective Date, commencing December
31, 1999.

         "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

         "PERSON" means any natural person, corporation, firm, joint venture,
limited liability company, partnership, association, enterprise, company or
other entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

         "PLAN" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Company or any member of the Controlled Group has any
obligation to contribute to on or after the Effective Date.

                                       14

   21




         "PRIME RATE" means the per annum rate announced or established by the
Agent from time to time as its "prime rate" (it being acknowledged that such
announced rate may not necessarily be the lowest rate charged by the Agent to
any of its customers) or the corporate base rate of interest announced or
established by any Affiliate of the Agent or, when used in connection with any
Advance denominated in any Eligible Currency, "Prime Rate" means the correlative
floating rate of interest customarily applicable to similar extensions of credit
to corporate borrowers denominated in such currency in the country of issue, as
determined by the Agent, which Prime Rate shall change simultaneously with any
change in such announced or established rates.

         "PRO RATA SHARE" means, for each Lender, the ratio of such Lender's
Commitment (calculated using the U.S. Dollar Equivalent thereof) to the
Aggregate Commitment (calculated using the U.S. Dollar Equivalent thereof),
PROVIDED that (a) with respect to U.S. Revolving Credit Loans, U.S. Facility
Letters of Credit, Swing Loans made to the Company and facility fees with
respect to the U.S. Revolving Credit Commitment, Pro Rata Share means, for each
Lender, the ratio such Lender's U.S. Revolving Credit Commitment bears to the
Aggregate U.S. Revolving Credit Commitments, (b) with respect to Euro Revolving
Credit Loans, Euro Facility Letters of Credit, Swing Loans made to the Foreign
Subsidiary Borrowers and facility fees with respect to the Euro Revolving Credit
Commitment, Pro Rata Share means, for each Lender, the ratio such Lender's Euro
Revolving Credit Commitment bears to the Aggregate Euro Revolving Credit
Commitments, (c) with respect to the U.S. Term Loan, Pro Rata Share means, for
each Lender, the ratio such Lender's U.S. Term Loan Commitment bears to the
Aggregate U.S. Term Loan Commitment, and (d) with respect to the Euro Term Loan,
Pro Rata Share means, for each Lender, the ratio such Lender's Euro Term Loan
Commitment bears to the Aggregate Euro Term Loan Commitment. If at any time the
Commitments have been terminated, the amount of any Commitment for the purposes
of this definition of "Pro Rata Share" only shall be deemed equal to the amount
of such Commitment immediately prior to its termination.

         "PROPERTY" of a Person means any and all property, whether real,
personal, movable, immovable, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.

         "PURCHASERS" is defined in Section 13.3.1.

         "QUOTATION DATE" in relation to any period for which a Eurocurrency
Reference Rate is to be determined hereunder, means the date on which quotations
would ordinarily be given by prime Lenders in the London inter-bank market for
deposits in the Available Foreign Currency in relation to which such rate is to
be determined for delivery on the first day of that period, provided that, if,
for such period, quotations would ordinarily be given on more than one date, the
Quotation Date for that period shall be the last of those dates.

         "RATE HEDGING AGREEMENT" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.

         "RATE HEDGING OBLIGATIONS" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Rate
Hedging Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Hedging Agreement.


                                       15

   22



         "REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.

         "REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors.

         "REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors.

         "REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors.

         "REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of the
obligations of the Borrowers to the Lenders and the Issuers in respect of all
unreimbursed payments or disbursements made by the Issuers and the Lenders under
or in respect of the Facility Letters of Credit.

         "RELEASE" means any release, spill, leak, discharge or leaching of any
Hazardous Substances into the environment in violation of any Environmental Law.

         "REMEDIAL ACTION" means an action to address a Release or other
violation of Environmental Laws required by any Environmental Law.

         "REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section with respect to a Plan
subject to Title IV of ERISA, excluding, however, such events as to which the
PBGC by regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, PROVIDED, however, that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver of the notice requirement in accordance with Section 4043(a) of
ERISA or of the minimum funding standard under Section 412(d) of the Code.

         "REQUIRED EURO REVOLVING CREDIT LENDERS" means (a) at any time prior to
the termination of the Euro Revolving Credit Commitments, Euro Revolving Credit
Lenders holding not less than 51% of the aggregate Euro Revolving Credit
Commitments of all Euro Revolving Credit Lenders and (b) at any time after the
termination of the Euro Revolving Credit Commitments, Euro Revolving Credit
Lenders whose aggregate Euro Revolving Credit Loans and Pro Rata Shares of Euro
Facility Letters of Credit aggregate at least 51% date of the Aggregate Euro
Revolving Credit Loans of all Euro Revolving Credit Lenders and all Euro
Facility Letters of Credit.

         "REQUIRED LENDERS" means (a) at any time prior to the termination of
the Commitments, Lenders holding not less than 51% of the U. S. Dollar
Equivalent of the aggregate Commitments of all Lenders; and (b) at any time
after the termination of the Commitments, Lenders whose Aggregate Total
Outstandings aggregate at least 51% of the Aggregate Total Outstandings of all
Lenders.

         "REQUIRED U.S. REVOLVING CREDIT LENDERS" means (a) at any time prior to
the termination of the U.S. Revolving Credit Commitments, U.S. Revolving Credit
Lenders holding not less than 51% of the aggregate U.S. Revolving Credit
Commitments of all U.S. Revolving Credit Lenders and (b) at any time


                                       16

   23



after the termination of the U.S. Revolving Credit Commitments, U.S. Revolving
Credit Lenders whose aggregate U.S. Revolving Credit Loans and Pro Rata Shares
of U.S. Facility Letters of Credit aggregate at least 51% date of the Aggregate
U.S. Revolving Credit Loans of all U.S. Revolving Credit Lenders and all U.S.
Facility Letters of Credit.

         "REQUIRED EURO TERM LOAN LENDERS" means Euro Term Loan Lenders holding
not less than 51% of the aggregate amount of the Euro Term Loan made by all Euro
Term Loan Lenders.

         "REQUIRED U.S. TERM LOAN LENDERS" means U.S. Term Loan Lenders holding
not less than 51% of the aggregate amount of the U.S. Term Loan made by all U.S.
Term Loan Lenders.

         "REQUIREMENT OF LAW" means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.

         "RESERVE REQUIREMENT" means, with respect to an Interest Period for
Eurodollar Loans or Eurocurrency Loans, the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves),
assessments or similar requirements under any regulations of the Board of
Governors of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto dealing with reserve requirements prescribed
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D).

         "REVOLVING CREDIT ADVANCE" means a borrowing hereunder (or continuation
or conversion thereof) consisting of the several Revolving Credit Loans made on
the same Borrowing Date (or date of conversion or continuation) by the Lenders
to a Borrower of the same Type and in the case of Fixed Rate Advances, for the
same Interest Period.

         "REVOLVING CREDIT COMMITMENTS" means the Euro Revolving Credit
Commitments and the U.S. Revolving Credit Commitments.

         "REVOLVING CREDIT COMMITTED PERCENTAGE" means as to any Lender at any
time, the percentage which the U.S. Dollar Equivalent of such Lender's Revolving
Credit Commitments then constitutes of the aggregate U.S. Dollar Equivalent of
the Revolving Credit Commitments of all Lenders (or, if the Revolving Credit
Commitments have terminated or expired, the percentage which (a) the U.S. Dollar
Equivalent of the Aggregate Revolving Credit Outstandings of such Lender at such
time then constitutes of (b) the U.S. Dollar Equivalent of the Aggregate
Revolving Credit Outstandings of all Revolving Credit Lenders at such time).

         "REVOLVING CREDIT LENDERS" means those Lenders which have a Revolving
Credit Commitment or, if such Commitments shall have been terminated, have
outstanding Revolving Credit Loans or Facility Letter of Credit Obligations.

         "REVOLVING CREDIT LOANS" means, with respect to a Lender, such Lender's
revolving credit loans made pursuant to Section 2.1.

         "REVOLVING CREDIT NOTE" is defined in Section 2.2.3.

         "S&P" means Standard & Poor's Rating Services, a division of The McGraw
Hill Companies, Inc.


                                       17

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         "SALE AND LEASEBACK TRANSACTION" means any sale or other transfer of
property by any Person with the intent to lease or use such Property as lessee
or in any other capacity.

         "SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.

         "SIGNIFICANT SUBSIDIARY" means each present or future subsidiary of the
Company which would constitute a "significant subsidiary" within the meaning of
Rule 1-02 of Regulation S-X as currently in effect promulgated by the Securities
and Exchange Commission.

         "SINGLE EMPLOYER PLAN" means a Plan which is maintained by the Company
or any member of the Controlled Group for employees of the Company or any member
of the Controlled Group.

         "SUBSIDIARY" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
means a Subsidiary of the Company.

         "SUBSIDIARY BORROWERS" means Foreign Subsidiary Borrowers and Domestic
Subsidiary Borrowers.

         "SUBSTANTIAL PORTION" means, with respect to the Property of the
Company and its Subsidiaries, Property which (a) represents more than 15% of the
consolidated assets of the Company and its Subsidiaries as would be shown in the
consolidated financial statements of the Company and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in which such
determination is made, (b) is responsible for more than 15% of the consolidated
net sales of the Company and its Subsidiaries as reflected in the financial
statements referred to in clause (a) above, (c) represents more than 25% of the
consolidated assets of the Company and its Subsidiaries as would be shown in the
consolidated financial statements of the Company and its Subsidiaries as of the
Effective Date or (d) is responsible for more than 25% of the consolidated net
sales of the Company and its Subsidiaries as reflected in the financial
statements referred to in clause (c) above.

         "SWING LOANS" is defined in Section 2.16.

         "TANGIBLE NET WORTH" means, as of any date, the difference of (i) Net
Worth, minus (ii) to the extent included in determining the amount under the
foregoing clause (i), the net book value of goodwill, cost in excess of fair
value of net assets acquired, patents, trademarks, tradenames and copyrights,
treasury stock and all other assets which are deemed intangible assets under
Agreement Accounting Principles.

         "TERM LOAN COMMITMENTS" means the Euro Term Loan Commitments and the
U.S. Term Loan Commitments.

         "TERM LOANS" means, with respect to a Lender, such Lender's portion of
the U.S. Term Loan and the Euro Term Loan.

         "TERM LOAN NOTE" is defined in Section 2.2.3.


                                       18

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         "TOTAL DEBT" as of any date, means all of the following for the Company
and its Subsidiaries on a consolidated basis and without duplication: (i) all
debt for borrowed money and similar monetary obligations evidenced by bonds,
notes, debentures, Capitalized Lease Obligations or otherwise, including without
limitation obligations in respect of the deferred purchase price of properties
or assets, in each case whether direct or indirect (other than accounts payable
and/or accrued expenses and commercial Letters of Credit with respect to the
foregoing, in each case arising in the ordinary course of such Person's business
payable in accordance with customary practices); (ii) all liabilities secured by
any Lien existing on property owned or acquired subject thereto, whether or not
the liability secured thereby shall have been assumed; (iii) all reimbursement
obligations under outstanding Letters of Credit (other than commercial Letters
of Credit referenced in clause (i) above) in respect of drafts which (A) may be
presented or (B) have been presented and have not yet been paid and are not
included in clause (i) above; (iv) all Off Balance Sheet Liabilities; and (v)
all guarantees and other Contingent Obligation relating to indebtedness or
liabilities of the type described in the foregoing clauses (i), (ii) or (iii);
provided that money borrowed by the Company against the cash value of life
insurance policies owned by the Company shall not be considered part of Total
Debt.

         "TOTAL DEBT TO CAPITALIZATION RATIO" means the ratio of Total Debt to
the sum of(a) Total Debt plus (b) Net Worth, as calculated in accordance with
Agreement Accounting Principles.

         "TRANSFEREE" is defined in Section 13.4.

         "TYPE" means, with respect to any Advance, its nature as a Floating
Rate Advance, Eurocurrency Advance or Eurodollar Advance.

         "UNFUNDED LIABILITIES" means the amount (if any) by which the actuarial
present value of all benefit liabilities under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefit
liabilities, all determined as of the then most recent valuation date for such
Plans in accordance with Section 4001(a)(18) of ERISA.

         "UNMATURED DEFAULT" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.

         "U.S. DOLLAR EQUIVALENT" means, on any date with respect to an amount
denominated in any currency other than U.S. Dollars, the equivalent in U.S.
Dollars of such amount determined at the Exchange Rate on the date of
determination of such equivalent.

         "U.S. FACILITY LETTER OF CREDIT" means any Letter of Credit for the
account of the Company.

         "U.S. FACILITY LETTER OF CREDIT OBLIGATIONS" means Facility Letter of
Credit Obligations with respect to U.S. Facility Letters of Credit.

         "U.S. LENDER" means any U.S. Revolving Credit Lender or U.S. Term Loan
Lender.

         "U.S. LOAN" means any U.S. Revolving Credit Loan or U.S. Term Loan.

         "U.S. REVOLVING CREDIT COMMITMENT" means, as to any Lender at any time,
its obligation to make Revolving Credit Loans to the Company in Dollars in an
aggregate amount not to exceed at any time outstanding the U.S. Dollar amount
set forth opposite such Lender's name in Schedule 1.1(a) under the heading "U.S.
Revolving Credit Commitment" or as otherwise established pursuant to Section
13.3, as such amount may be reduced from time to time pursuant to Sections 2.4,
13.3 and the other applicable provisions hereof.


                                       19

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         "U.S. REVOLVING CREDIT LENDER" means any Lender which has a U.S.
Revolving Credit Commitment.

         "U.S. REVOLVING CREDIT LOANS" means Revolving Credit Loans made to the
Company pursuant to Section 2.1.1.

         "U.S. TERM LOAN" means, with respect to a Lender, such Lender's portion
of the term loan made in U.S. Dollars pursuant to Section 2.1.3.

         "U.S. TERM LOAN COMMITMENT" means as to any Lender at any time, its
obligation to make the U.S. Term Loan to the Company in an aggregate amount not
to exceed at any time outstanding the aggregate outstanding principal amount of
its respective U.S. Revolving Credit Loans of such Lender outstanding on the
Facility Termination Date or as otherwise established pursuant to Section 13.3,
as such amount may be reduced from time to time pursuant to Section 13.3 and the
other applicable provisions hereof.

         "U.S. TERM LOAN LENDER" means any Lender which has a U.S. Term Loan
Commitment or, if such Commitments have been terminated, has an outstanding Term
Loan.

         "VOTING STOCK" of a Person means all classes of Capital Stock of such
Person then outstanding and normally entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers, trustees or
similar persons thereof.

         "WHOLLY OWNED SUBSIDIARY" of a Person means any other Person of which
100% of the outstanding Voting Stock of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly Owned
Subsidiaries of such Person, or by such Person and one or more Wholly Owned
Subsidiaries of such Person.

         "YEAR 2000 ISSUES" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
directly affects the business, operations and financial condition of the
Borrower and its Subsidiaries.

         "YEAR 2000 PROGRAM" is defined in Section 5.23.

         1.2 RULES OF CONSTRUCTION. All terms defined in Section 1.1 shall
include both the singular and the plural forms thereof and shall be construed
accordingly. Use of the terms "HEREIN", "HEREOF", and "HEREUNDER" shall be
deemed references to this Agreement in its entirety and not to the Section or
clause in which such term appears. References to "SECTIONS" and "SUBSECTIONS"
shall be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided. Notwithstanding anything herein, in any
financial statements of the Company or in Agreement Accounting Principles to the
contrary, for purposes of calculating the Applicable Margin and of calculating
and determining compliance with the financial covenants in Sections 6.17 and
6.18, including defined terms used therein, any Acquisitions made by the Company
or any of its Subsidiaries, including through mergers or consolidations and
including the incurrence of all Indebtedness related thereto and any other
related financial transactions, during the period for which such financial
covenants were calculated shall be deemed to have occurred on the first day of
the relevant period for which such financial covenants and the Applicable Margin
were calculated on a pro forma basis acceptable to the Agent.


                                   ARTICLE II


                                       20

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                                  THE CREDITS
                                  -----------

         2.1   COMMITMENTS.

         2.1.1 From and including the Effective Date and prior to the Facility
Termination Date, each U.S. Revolving Credit Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make U.S. Revolving Credit
Loans to the Company and the Domestic Subsidiary Borrowers from time to time so
long as after giving effect thereto and to any concurrent repayment of Loans the
Aggregate U.S. Revolving Credit Outstandings of each U.S. Revolving Credit
Lender are equal to or less than its U.S. Revolving Credit Commitment. Subject
to the terms of this Agreement, the Company and the Domestic Subsidiary
Borrowers may borrow, repay and reborrow U.S. Revolving Credit Loans at any time
prior to the Facility Termination Date. The U.S. Revolving Credit Loans may be
Floating Rate Loans or Eurodollar Loans, or a combination thereof selected in
accordance with Sections 2.3 and 2.7. The U.S. Revolving Credit Commitments to
lend hereunder shall expire on the Facility Termination Date.

         2.1.2 From and including the Effective Date and prior to the Facility
Termination Date, each Euro Revolving Credit Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make Euro Revolving Credit
Loans to the Company and the Foreign Subsidiary Borrowers from time to time so
long as after giving effect thereto and to any concurrent repayment of Loans the
Aggregate Euro Revolving Credit Outstandings of each Euro Revolving Credit
Lender are equal to or less than its Euro Revolving Credit Commitment. Subject
to the terms of this Agreement, the Company and the Foreign Subsidiary Borrowers
may borrow, repay and reborrow Euro Revolving Credit Loans at any time prior to
the Facility Termination Date. The Euro Revolving Credit Loans will be
Eurocurrency Loans as selected in accordance with Sections 2.3 and 2.7. The Euro
Revolving Credit Commitments to lend hereunder shall expire on the Facility
Termination Date.

         2.1.3 Each U.S. Term Loan Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make a single U.S. Term Loan to the
Company and the Domestic Subsidiary Borrowers on the Facility Termination Date
in an amount not to exceed, with respect to each U.S. Term Loan Lender, the
aggregate outstanding principal amount of such Lender's U.S. Revolving Credit
Loans outstanding on the Facility Termination Date. The U.S. Term Loan, or any
portion thereof, may be Floating Rate Loans or Eurodollar Loans, or a
combination thereof, with the selection in accordance with procedures acceptable
to the Agent.

         2.1.4 Each Euro Term Loan Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make a single Euro Term Loan to the
Foreign Subsidiary Borrowers on the Facility Termination Date in an amount not
to exceed, with respect to each Euro Term Loan Lender, the aggregate outstanding
principal amount of such Lender's Euro Revolving Credit Loans outstanding on the
Facility Termination Date. The Euro Term Loan, or any portion thereof, will be
Eurocurrency Loans.

         2.2   REPAYMENT OF LOANS; EVIDENCE OF DEBT.

         2.2.1 (a) The Company and each Domestic Subsidiary Borrower hereby
unconditionally promise to pay to the Agent for the account of each U.S.
Revolving Credit Lender in U.S. Dollars the then unpaid principal amount of each
U.S. Revolving Credit Loan of such Lender made to the Company or such Domestic
Subsidiary Borrower on the Facility Termination Date and on such other dates and
in such other amounts as may be required from time to time under the terms of
this Agreement. The Company and each Domestic Subsidiary Borrower hereby further
agree to pay to the Agent for the account of each U.S. Revolving Credit Lender
interest in U.S. Dollars on the unpaid principal amount of


                                       21

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the U.S. Revolving Credit Loans from time to time outstanding until payment
thereof in full at the rates per annum, and on the dates, set forth in Section
2.8.

               (b) The Company and each Foreign Subsidiary Borrower hereby
unconditionally promise to pay to the Agent for the account of each Euro
Revolving Credit Lender in the relevant Available Foreign Currency the then
unpaid principal amount of each Euro Revolving Credit Loan of such Lender made
to the Company or such Foreign Subsidiary Borrower on the Facility Termination
Date and on such other dates and in such other amounts as may be required from
time to time under the terms of this Agreement. The Company and each Foreign
Subsidiary Borrower hereby further agree to pay to the Agent for the account of
each Euro Revolving Credit Lender interest in the relevant Available Foreign
Currency on the unpaid principal amount of the Euro Revolving Credit Loans from
time to time outstanding until payment thereof in full at the rates per annum,
and on the dates, set forth in Section 2.8.

               (c) The Company and each Domestic Subsidiary Borrower hereby
unconditionally promise to pay to the Agent for the account of each U.S. Term
Loan Lender in U.S. Dollars the entire outstanding principal amount of the U.S.
Term Loan in eight (8) equal quarterly installments payable on the date three
months after the Facility Termination Date and each successive three months
thereafter to and including the Maturity Date, when the U.S. Term Loan should be
due and payable in full.

               (d) The Company and each Foreign Subsidiary Borrower hereby
unconditionally promise to pay to the Agent for the account of each Euro Term
Loan Lender in the relevant Available Foreign Currencies the entire outstanding
principal amount of the Euro Term Loan in eight (8) equal quarterly installments
payable on the date three months after the Facility Termination Date and each
successive three months thereafter to and including the Maturity Date, when the
Euro Term Loan should be due and payable in full.

         2.2.2 The books and records of the Agent and of each Lender shall, to
the extent permitted by applicable law, be PRIMA FACIE evidence of the existence
and amounts of the obligations of the Borrowers therein recorded; PROVIDED,
HOWEVER, that the failure of any Lender or the Agent to maintain any such books
and records or any error therein, shall not in any manner affect the obligation
of the Borrowers to repay (with applicable interest) the Loans made to such
Borrowers by such Lender in accordance with the terms of this Agreement.

         2.2.3 The Borrowers agree that, upon the request to the Agent by any
Lender from time to time and the subsequent request to the Company by the Agent,
the relevant Borrowers will execute and deliver to such Lender (a) promissory
notes of each Borrower evidencing the Revolving Credit Loans of any such
requesting Revolving Credit Lender, substantially in the form of Exhibit
F-1 with appropriate insertions as to date, currency and principal amount (each,
a "REVOLVING CREDIT NOTE"), and (b) promissory notes of each Borrower evidencing
the Term Loans of any such requesting Term Loan Lenders, substantially in the
form of Exhibit F-2 with appropriate insertions as to date and principal amount
(each, a "TERM LOAN NOTE"); PROVIDED, that the delivery of such Notes shall not
be a condition precedent to the Effective Date or any Advance.

         2.3   PROCEDURES FOR BORROWING. (a) The Company and each Domestic
Subsidiary Borrower may borrow under the U.S. Revolving Credit Commitments and
each Foreign Subsidiary Borrower may borrow under the Euro Revolving Credit
Commitments, in each case from time to time prior to the Facility Termination
Date on any Business Day.

               (b) In the case of a borrowing under the U.S. Revolving Credit
Commitments, the Company and each borrowing Domestic Subsidiary Borrower shall
give the Agent irrevocable notice (which notice must be received by the Agent
prior to 11:00 a.m., Detroit time) (i) three Business Days


                                       22

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prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be Eurodollar Loans, or (ii) one Business Day
prior to the requested Borrowing Date otherwise, specifying in each case (w) the
amount to be borrowed, (x) the requested Borrowing Date, (y) whether the
borrowing is to be of Eurodollar Loans, Floating Rate Loans or a combination
thereof and (z) if the borrowing is to be entirely or partly of Eurodollar
Loans, the amount of such Type of Loan and the length of the initial Interest
Periods therefor. Each borrowing under the U.S. Revolving Credit Commitments
shall be in an amount equal to (A) in the case of Floating Rate Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
aggregate available U.S. Revolving Credit Commitments are less than $5,000,000,
such lesser amount) and (B) in the case of Eurodollar Loans, $5,000,000 or a
whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice
from the Company or any such Domestic Subsidiary Borrower, as the case may be,
the Agent shall promptly notify each Revolving Credit Lender thereof. Not later
than noon, Detroit time on each requested Borrowing Date each Revolving Credit
Lender shall make an amount equal to its Pro Rata Share of the principal amount
of the Revolving Credit Loans requested to be made on such Borrowing Date
available to the Agent at its Detroit office specified in Section 14.1 in U.S.
Dollars and in immediately available funds. The Agent shall on such date credit
the account of the Company on the books of such office with the aggregate of the
amounts made available to the Agent by the Revolving Credit Lenders and in like
funds as received by the Agent.

               (c) In the case of a borrowing under the Euro Revolving Credit
Commitments, the Company and each Foreign Subsidiary Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
11:00 a.m., London time three Business Days prior to the requested Borrowing
Date) specifying in each case (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) the Available Foreign Currency thereof and (iv) the length
of the initial Interest Period therefor. Each borrowing by the Company or a
Foreign Subsidiary Borrower under Section 2.1.2 or 2.1.4 shall be in an
Available Foreign Currency. Each such borrowing by the Company or any Foreign
Subsidiary Borrower shall be in an amount equal to an amount in the relevant
Available Foreign Currency which is 5,000,000 units or a whole multiple of
1,000,000 units in excess thereof or such other amounts as may be agreed upon
between the Company and the Agent. Upon receipt of any such notice from any such
Borrower, the Agent shall promptly notify the relevant Revolving Credit Lenders
with respect to such Borrowing. Not later than 1:00 p.m., local time of the
Agent's funding office for such Borrower, on the requested Borrowing Date, each
such Revolving Credit Lender shall make an amount equal to its Pro Rata Share of
the principal amount of such Revolving Loans requested to be made on such
Borrowing Date available to the Agent at the Agent's funding office for such
Borrower specified by the Agent from time to time by notice to such Revolving
Credit Lenders and in immediately available or other same day funds customarily
used for settlement in the relevant Available Foreign Currency. The amounts made
available by each such Revolving Credit Lender will then be made-available to
the relevant Borrower at the funding office for such Borrower and in like funds
as received by the Agent.

               (d) The Company and each borrowing Domestic Subsidiary Borrower
shall give the Agent irrevocable notice (which notice must be received by the
Agent prior to 11:00 a.m. Detroit time) at least 15 days prior to the Facility
Termination Date if the Company and such Domestic Subsidiary Borrowers will be
borrowing the U.S. Term Loan. The Company and each borrowing Foreign Subsidiary
Borrower shall give the Agent irrevocable notice (which notice must be received
by the Agent prior to 11:00 a.m., London time) at least 15 days prior to the
Facility Termination Date if the Company and such Foreign Subsidiary Borrowers
will be borrowing the Euro Term Loan. The initial interest rate and Interest
Period, if applicable, on the Term Loans will determined pursuant to procedures
acceptable to the Agent and the Borrowers and consistent with this Agreement.

         2.4 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Company or any Foreign Subsidiary Borrower may permanently reduce the Euro
Revolving Credit Commitments, in


                                       23

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whole or in part, ratably among the Euro Revolving Credit Lenders in integral
multiples of EUR5,000,000 and the Company or any Domestic Subsidiary Borrower
may permanently reduce the U.S. Revolving Credit Commitments, in whole or in
part, ratably among the U.S. Revolving Credit Lenders in integral multiples of
$10,000,000, in each case upon at least three Business Days' irrevocable written
notice to the Agent, and which notice shall specify the amount of any such
reduction, PROVIDED, however, that the Aggregate Euro Revolving Credit
Commitments may not be reduced below the Aggregate Euro Revolving Credit
Outstandings of all Lenders and the Aggregate U.S. Revolving Credit Commitments
may not be reduced below the Aggregate U.S. Revolving Credit Outstandings of all
Lenders. In addition, all accrued facility fees shall be payable on the
effective date of any termination of the Revolving Credit Commitments.

         2.5   FACILITY AND AGENT FEES. (a) Each Borrower agrees to pay to the
Agent for the account of each Lender a facility fee at the rate per annum set
forth in the Pricing Schedule on Exhibit A attached hereto, on the average daily
amount of each Revolving Credit Commitment of such Lender to such Borrower,
whether used or unused, from and including the Effective Date to but excluding
the Facility Termination Date, payable on each Payment Date hereafter and on the
Facility Termination Date. The facility fee payable in respect to each Revolving
Credit Commitment shall be payable in the currency in which such Revolving
Credit Commitment is denominated.

               (b) The Company agrees to pay to the Agent for its own account,
such other fees as agreed to in writing between the Company and the Agent.

         2.6   OPTIONAL AND MANDATORY PRINCIPAL PAYMENTS ON ALL LOANS.

         2.6.1 Each Borrower may at any time and from time to time prepay
Floating Rate Loans, in whole or in part, without penalty or premium, upon at
least one Business Day's irrevocable notice to the Agent, specifying the date
and amount of prepayment. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein. Partial
prepayment of Floating Rate Loans shall be in a minimum aggregate amount of
$1,000,000 or any integral multiple of $1,000,000 in excess thereof.

         2.6.2 Each Borrower may at any time and from time to time prepay,
without premium or penalty (but together with payment of any amount payable
pursuant to Section 3.4), its Eurodollar Loans and its Multicurrency Loans in
whole or in part, upon at least three Business Days' irrevocable notice to the
Agent specifying the date and amount of prepayment. Partial payments of
Eurodollar Loans shall be in a minimum aggregate amount of $5,000,000 or any
integral multiple of $1,000,000 in excess thereof. Partial prepayments of
Multicurrency Loans shall be in an aggregate principal amount in the relevant
Available Foreign Currency of 5,000,000 units or any integral multiple of
1,000,000 units in excess thereof, or such lesser principal amount as may equal
the outstanding Multicurrency Loans or such lesser amount as may be agreed to by
the Agent.

         2.6.3 (i) If the Aggregate Euro Revolving Credit Outstandings exceed
the Aggregate Euro Revolving Credit Commitments at any time the Foreign
Subsidiary Borrowers shall promptly prepay the Aggregate Euro Revolving Credit
Outstandings in the amount of such excess and (ii) if the Aggregate U.S.
Revolving Credit Outstandings exceed the Aggregate U.S. Revolving Credit
Commitments at any time the Company shall promptly prepay the Aggregate U.S.
Revolving Credit Outstandings in the amount of such excess.

         2.6.4 Each prepayment pursuant to this Section 2.6 and each conversion
(other than a conversion of a Floating Rate Loan to a Fixed Rate Loan) pursuant
to Section 2.7 shall be accompanied


                                       24

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by accrued and unpaid interest on the amount prepaid to the date of prepayment
and any amounts payable under Section 3.4 in connection with such payment.

         2.6.5 Prepayments pursuant to this Section 2.6 shall be applied as
follows: (a) in the case of prepayments made by the Company or a Domestic
Subsidiary Borrower, first to prepay Floating Rate Loans and second to prepay
Eurodollar Loans then outstanding in such order as the Company or such Borrower
may direct and (b) in the case of prepayments made by a Borrower of
Multicurrency Loans, to prepay Multicurrency Loans made to such Borrower in such
order as the Company or such Borrower may direct, provided that all prepayments
on any Loans to a Borrower shall be applied pro rata to the Loans owing by such
Borrower.

         2.6.6 All amounts prepaid, other than prepayment of the Term Loans, may
be reborrowed and successively repaid and reborrowed, subject to the other terms
and conditions in this Agreement. All prepayments of the Term Loans will be
applied to the maturities thereof in inverse order.

         2.7.  CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES.

         2.7.1 ADVANCES. Floating Rate Advances shall continue as Floating Rate
Advances unless and until such Floating Rate Advances are converted into
Eurodollar Advances. Each Eurodollar Advance shall continue as a Eurodollar
Advance until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Advance shall be automatically converted into a Floating
Rate Advance unless the Company shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or
another Interest Period. Subject to the terms hereof, the Company may elect from
time to time to convert all or any part of a Revolving Credit Advance or Term
Loan of any Type to the Company or any Domestic Subsidiary Borrower into any
other Type or Types of Advance; PROVIDED that any conversion of any Eurodollar
Advance shall be made on, and only on, the last day of the Interest Period
applicable thereto. The Company shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a Eurodollar Advance not later than 11:00 a.m. (Detroit time) at
least one Business Day, in the case of a conversion into a Floating Rate
Advance, or three Business Days, in the case of a conversion into or
continuation of a Eurodollar Advance, prior to the date of the requested
conversion or continuation, specifying:

         (a) the requested date, which shall be a Business Day, of such
conversion or continuation,

         (b) the aggregate amount and Type of the Revolving Credit Advance or
Term Loan which is to be converted or continued, and

         (c) the amounts and Type(s) of Revolving Credit Advance(s) or Term Loan
into which such Advance is to be converted or continued and, in the case of a
conversion into or continuation of a Eurodollar Advance, the duration of the
Interest Period applicable thereto.

         2.7.2 MULTICURRENCY ADVANCES. Any Multicurrency Advances may be
continued as such upon the expiration of the then current Interest Period with
respect thereto by the relevant Borrower giving the Agent irrevocable notice not
later than 11:00 a.m. (London time) at least three Business Days prior to the
date of the requested continuation, specifying the duration of the Interest
Period applicable thereto, PROVIDED, that if the relevant Borrower shall fail to
give such notice, such Multicurrency Advance shall be automatically continued
for an Interest Period of one month provided that such continuation would not
extend the Interest Period beyond the Facility Termination Date in the case of
Euro Revolving Credit Loans or the Maturity Date in the case of the Euro Term
Loan.


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         2.8 INTEREST RATES, INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. (a)
Each Floating Rate Loan shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Loan is made or is
converted from a Fixed Rate Loan into a Floating Rate Loan pursuant to Section
2.7 to but excluding the date it becomes due or is converted into a Fixed Rate
Loan pursuant to Section 2.7 hereof, at a rate per annum equal to the Floating
Rate for such day. Each Eurodollar Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such Interest Period. Each Multicurrency Loan to
any Foreign Subsidiary Borrower (other than a Swing Loan) shall bear interest
for each day during each Interest Period with respect thereto at a rate per
annum equal to the applicable Eurocurrency Rate determined for such Interest
Period or at such other interest rate as agreed to by such Foreign Subsidiary
Borrower and all Euro Lenders with a Commitment to such Foreign Subsidiary
Borrower.

         (b) Interest accrued on each Floating Rate Advance shall be payable on
each Payment Date, commencing with the first such date to occur after the
Effective Date and at maturity. Interest accrued on each Fixed Rate Advance
shall be payable on the last day of its applicable Interest Period, on any date
on which the Fixed Rate Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Fixed Rate Advance having
an Interest Period longer than three months shall also be payable on the last
day of each three-month interval during such Interest Period.

         (c) Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
1:00 p.m. (local time) at the place of payment. If any payment of principal of
or interest on an Advance shall become due on a day which is not a Business Day,
except as otherwise provided in the definition of Interest Period, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.

         (d) All interest and fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period such interest or fee is payable over a year comprised of 360
days or, in the case of Floating Rate Loans, 365/366 days, unless the Agent
determines that it is market practice to calculate such interest or fees on
Multicurrency Advances on a different basis.

         (e) Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate. Each Fixed Rate Advance shall bear interest
on the outstanding principal amount thereof from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such Fixed
Rate Advance. No Interest Period may end after, with respect to any Term Loan,
the Maturity Date, or, with respect to any Revolving Credit Loan, the Facility
Termination Date.

         2.9 RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in this Agreement, during the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrowers (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that no Advance may be made as, converted into or
continued (after the expiration of the then current Interest Period) as a Fixed
Rate Advance, provided that, notwithstanding the foregoing, any outstanding
Eurocurrency Advance may be continued for an Interest Period not to exceed one
month after such notice to the Borrowers by the Required Lenders. Upon and
during the continuance of any Default under Section 7.2, the Required Lenders
may, at their option, by notice to the Company (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders as to changes and interest rates)
declare that (i) each


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Fixed Rate Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus 2%
per annum, and (ii) each Floating Rate Advance and any other amount due under
this Agreement shall bear interest at a rate per annum equal to the Floating
Rate otherwise applicable to Floating Rate Loans plus 2% per annum, provided
that, upon and during the continuance of any acceleration for any reason of any
of the Obligations, the interest rate set forth in clauses (i) and (ii) shall be
applicable to all Advances without any election or action on the part of the
Agent or any Lender.

         2.10   PRO RATA PAYMENT, METHOD OF PAYMENT.

         2.10.1 Each borrowing of Loans by the Company or any Domestic
Subsidiary Borrower from the U.S. Lenders shall be made pro rata according to
the Pro Rata Shares of such Lenders in effect on the date of such borrowing.
Each payment by the Company or any Domestic Subsidiary Borrower on account of
any facility fee shall be allocated by the Agent among the Lenders in accordance
with their respective Pro Rata Shares. Any reduction of the Commitments of the
U.S. Lenders shall be allocated by the Agent among the U.S. Lenders pro rata
according to the Pro Rata Shares of the U.S. Lenders with respect thereto.
Except as otherwise provided in this Agreement, each optional prepayment by the
Company or any Domestic Subsidiary Borrower on account of principal or interest
on its U.S. Loans shall be allocated by the Agent pro rata according to the
respective outstanding principal amounts thereof. All payments (including
prepayments) to be made by the Company or any Domestic Subsidiary Borrower
hereunder in respect of amounts denominated in Dollars, whether on account of
principal, interest, fees or otherwise, shall be made, without setoff,
deduction, or counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article XIV, or at any other Lending
Installation of the Agent specified in writing by the Agent to the Company or
the relevant Domestic Subsidiary Borrower, as the case may be, by 1:00 P.M.
(Detroit time) on the date when due. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender in
the same type of funds that the Agent received at its address specified pursuant
to Article XIV or at any Lending Installation specified in a notice received by
the Agent from such Lender.

         2.10.2 Each borrowing of Euro Loans by any Foreign Subsidiary Borrower
in any Available Foreign Currency shall be allocated by the Agent pro rata
according to the Pro Rata Shares of the Euro Lenders with respect to such
Borrower in effect on the date of such Loan. Each payment by any Foreign
Subsidiary Borrower on account of any facility fee shall be allocated by the
Agent among the Lenders to such Foreign Subsidiary Borrower in accordance with
their respective Pro Rata Shares. Any reduction of any of the Euro Commitments
shall be allocated by the Agent pro rata according to the Pro Rata Shares of the
Euro Lenders with respect thereto. Except as provided in Section 2.6, each
payment (including each prepayment) by a Foreign Subsidiary Borrower on account
of principal of and interest on Euro Loans shall be allocated by the Agent pro
rata according to the respective principal amounts of the Euro Loans then due
and owing by such Borrower to each Euro Lender that made such Euro Loans. All
payments (including prepayments) to be made by a Borrower on account of Euro
Loans, whether on account of principal, interest, fees or otherwise, shall be
made without setoff, deduction, or counterclaim in the currency of such Euro
Loans (in same day or other funds customarily used in the settlement of
obligations in such currency) to the Agent for the account of the Euro Lenders
that made such Loans, at the payment office for such Euro Loans specified from
time to time by the Agent by notice to the Borrowers prior to 1:00 p.m. local
time at such payment office on the due date thereof. The Agent shall distribute
such payment to the Euro Lenders entitled to receive the same promptly upon
receipt in like funds as received. In the case of any payment of facility fees
by Foreign Subsidiary Borrowers under Section 2.5 and any prepayments required
of Foreign Subsidiary Borrowers under Section 2.6.3, the Company shall designate
which Foreign Subsidiary Borrowers shall pay such amounts and, absent such
determination or if any Default has occurred and is continuing, the Agent shall
determine which Foreign


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Subsidiary Borrower or Foreign Subsidiary Borrowers shall make such payments,
provided that it is acknowledged that each Foreign Subsidiary Borrower is
liable, without duplication, for the full amount of facility fees payable under
Section 2.5 and is obligated to make any required prepayments under Section
2.6.3 to the extent such Foreign Subsidiary Borrower has any Aggregate Euro
Revolving Credit Outstandings.

         2.11   TELEPHONIC NOTICES. Each Borrower hereby authorizes the Lenders
and the Agent to extend, convert or continue Advances, effect selections of
Types of Advances and to transfer funds based on telephonic notices made by any
Person or Persons the Agent or any Lender reasonably and in good faith believes
to be an Authorized Officer. Each Borrower agrees to deliver promptly to the
Agent a written confirmation, if such confirmation is requested by the Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.

         2.12   NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Revolving Credit Commitment reduction
notice, Multicurrency Commitment reduction notice, Borrowing notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each Fixed
Rate Advance promptly upon determination of such interest rate and will give
each Lender prompt notice of each change in the Alternate Base Rate.

         2.13   LENDING INSTALLATIONS. Each Lender may, except as otherwise
provided in Section 3.6, make and book its Loans at any Lending Installation(s)
selected by such Lender and may change its Lending Installation(s) from time to
time. All terms of this Agreement shall apply to any such Lending
Installation(s) and the Notes, if any, shall be deemed held by each Lender for
the benefit of such Lending Installation(s). Each Lender may, by written or
telex notice to the Agent and the applicable Borrower, designate one or more
Lending Installations which are to make and book Loans and for whose account
Loan payments are to be made.

         2.14   NON-RECEIPT OF FUNDS BY THE AGENT. Unless a Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan or (b) in the case of a Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or Borrower, as the case may be, has not in fact made such payment
to the Agent, the recipient of such payment shall, on demand by the Agent,
repay to the Agent the amount so made available together with interest thereon
in respect of each day during the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers such amount at
a rate per annum equal to (i) in the case of payment by a Lender, the Federal
Funds Effective Rate for the first five days and the interest rate applicable to
the relevant Loan for each day thereafter or (ii) in the case of payment by a
Borrower, the interest rate applicable to the relevant Loan.

         2.15   FACILITY LETTERS OF CREDIT.

         2.15.1 OBLIGATION TO ISSUE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrowers herein set forth, the Issuers hereby agree to issue for the account of
a Borrower through such of the Issuer's Lending Installations or Affiliates as
the Issuer may determine, one or more Facility Letters of Credit in accordance
with this


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Section 2.15, from time to time during the period, commencing on the Effective
Date and ending five Business Days prior to the Facility Termination Date.

         2.15.2 CONDITIONS FOR ISSUANCE. In addition to being subject to the
satisfaction of the conditions contained in Sections 4.1 and 4.2, the obligation
of an Issuer to issue any Facility Letter of Credit is subject to the
satisfaction in full of the following conditions:

         (a) the aggregate maximum amount then available for drawing under
Facility Letters of Credit issued by the Issuers, after giving effect to the
Facility Letter of Credit requested hereunder, shall not exceed any limit
imposed by law or regulation upon the Issuer;

         (b) the requested Facility Letter of Credit shall not have an
expiration date later than the earlier of (i) one year after the date of
issuance of such Facility Letter of Credit and (ii) five Business Days prior to
the Facility Termination Date, PROVIDED that any Facility Letter of Credit with
a one-year tenor may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in clause
(ii) above);

         (c) after giving effect to the Facility Letter of Credit requested
hereunder, the aggregate maximum amount then available for drawing under
Facility Letters of Credit issued by the Issuers, shall not exceed (i)
$50,000,000 in the case of Facility Letters of Credit for the account of the
Company and Domestic Subsidiary Borrowers and (ii) EUR25,000,000 in the case of
Facility Letters of Credit for the account of Foreign Subsidiary Borrowers, and
no prepayment would be required under this Agreement and no provision of this
Agreement would be breached;

         (d) the applicable Borrower shall have delivered to the applicable
Issuer at such times and in such manner as such Issuer may reasonably prescribe
such documents and materials as may be required pursuant to the terms of the
proposed Letter of Credit and the proposed Letter of Credit shall be reasonably
satisfactory to such Issuer as to form and content; and

         (e) as of the date of issuance, no order, judgment or decree of any
Court, arbitrator or governmental authority shall purport by its terms to enjoin
or restrain such Issuer from issuing the Facility Letter of Credit and no law,
rule or regulation applicable to such Issuer and no request or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over such Issuer shall prohibit or request that such Issuer refrain
from the issuance of Letters of Credit generally or the issuance of that
Facility Letter of Credit.

         2.15.3 PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT. (a) The
applicable Borrower shall give one of the Issuers and the Agent three Business
Days' prior written notice of any requested issuance of a Facility Letter of
Credit under this Agreement (except that, in lieu of such written notice, a
Borrower may give an Issuer (i) notice of such request by tested telex or other
tested arrangement satisfactory to such Issuer or (ii) telephonic notice of such
request if confirmed in writing by delivery to such Issuer (A) immediately (x)
of a telecopy of the written notice required hereunder which has been signed by
an Authorized Officer of such Borrower or (y) of a telex containing all
information required to be contained in such written notice and (B) promptly
(but in no event later than the requested time of issuance) of a copy of the
written notice required hereunder containing the original signature of an
Authorized Officer of such Borrower); such notice shall be irrevocable and shall
specify the stated amount and Available Foreign Currency or U.S. Dollars of the
Facility Letter of Credit requested (which requested currency shall be limited
to the currency in which such Borrower may obtain Loans under this Agreement),
the effective date (which day shall be a Business Day) of issuance of such
requested Facility Letter of Credit, the date on which such requested Facility
Letter of Credit is to expire (which date shall be a Business Day and shall in
no event be later than the fifth day prior to the Facility Termination Date),
the purpose


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for which such Facility Letter of Credit is to be issued, and the Person for
whose benefit the requested Facility Letter of Credit is to be issued. The Agent
shall give notice to each applicable Revolving Credit Lender of the issuance of
each Facility Letter of Credit reasonably promptly after such Facility Letter of
Credit is issued. At the time such request is made, the requesting Borrower
shall also provide the applicable Issuer with all information necessary for the
issuance of the Facility Letter of Credit it is requesting. Such notice, to be
effective, must be received by such Issuer not later than 2:00 p.m. (local time)
or the time agreed upon by such Issuer and such Borrower on the last Business
Day on which notice can be given under this Section 2.15.3.

         (b) Subject to the terms and conditions of this Section 2.15.3 and
provided that the applicable conditions set forth in Sections 4.1 and 4.2 hereof
have been satisfied, the Issuer shall, on the requested date, issue a Facility
Letter of Credit on behalf of the applicable Borrower in accordance with such
Issuer's usual and customary business practices.

         (c) The Issuers shall not extend or amend any Facility Letter of Credit
unless the requirements of this Section 2.15 are met as though a new Facility
Letter of Credit was being requested and issued.

         2.15.4 REIMBURSEMENT OBLIGATIONS. (a) Each Borrower agrees to pay to
the Issuer the amount of all Reimbursement Obligations, interest and other
amounts payable to the Issuer under or in connection with any Facility Letter of
Credit issued on behalf of such Borrower immediately when due, irrespective of
any claim, set-off, defense or other right that the Borrower, the Company or any
Subsidiary may have at any time against the Issuer or any other Person, under
all circumstances, including without limitation, any of the following
circumstances:

         (i) any lack of validity or enforceability of this Agreement or any of
the other Loan Documents;

         (ii) the existence of any claim, setoff, defense or other right that
any Borrower or any Subsidiary may have at any time against a beneficiary named
in a Facility Letter of Credit or any transferee of any Facility Letter of
Credit (or any Person for whom any such transferee may be acting), any Issuer,
any Lender, or any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between any Borrower or any
Subsidiary and the beneficiary named in any Facility Letter of Credit);

         (iii) any draft, certificate or any other document presented under the
Facility Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;

         (iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; or

         (v) the occurrence of any Default or Unmatured Default.

         (b) The Issuer shall promptly notify the applicable Borrower of any
draw under a Facility Letter of Credit. Such Borrower shall reimburse the
applicable Issuer for drawings under a Facility Letter of Credit issued by it on
behalf of such Borrower promptly after the payment by the Issuer. Any
Reimbursement Obligation with respect to any Facility Letter of Credit shall
bear interest from the date of the relevant drawings under the pertinent
Facility Letter of Credit at (i) in the case of such Obligations denominated in
U.S. Dollars, the interest rate for Floating Rate Loans or (ii) in the case of
such


                                       30

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Obligations denominated in an Available Foreign Currency, at the correlative
floating rate of interest customarily applicable to similar extensions of credit
to corporate borrowers denominated in such currency in the country of issue of
such currency, as reasonably determined by the Agent. In addition to its other
rights, the Issuers shall also have all rights for indemnification and
reimbursement as each Lender is entitled under this Agreement.

         2.15.5 PARTICIPATION. (a) Immediately upon issuance by an Issuer of any
Facility Letter of Credit in accordance with the procedures set forth in Section
2.15.3, (i) with respect to each U.S. Facility Letter of Credit, each Revolving
Credit Lender shall be deemed to have irrevocably and unconditionally purchased
and received from such Issuer, without recourse or warranty, an undivided
interest and participation equal to its Pro Rata Share of such U.S. Facility
Letter of Credit (including, without limitation, all obligations of the
applicable Borrower with respect thereto) and any security therefor or guaranty
pertaining thereto and (ii) with respect to each Multicurrency Facility Letter
of Credit, each Euro Lender with respect to the Borrower for the account of
which such Multicurrency Facility Letter of Credit is issued shall be deemed to
have irrevocably and unconditionally purchased and received from such Issuer,
without recourse or warranty, an undivided interest and participation equal to
its Pro Rata Share in such Multicurrency Facility Letter of Credit (including,
without limitation, all obligations of the applicable Borrower with respect
thereto), any security therefor or guaranty pertaining thereto; PROVIDED, that a
Letter of Credit issued by an Issuer shall not be deemed to be a Facility Letter
of Credit for purposes of this Section 2.15.5 if such Issuer shall have received
written notice from any Revolving Credit Lender on or before one Business Day
prior to the date of its issuance of such Letter of Credit that one or more of
the conditions contained in Sections 4.1 or 4.2 are not then satisfied, and, in
the event an Issuer receives such a notice, it shall have no further obligation
to issue any Letter of Credit until such notice is withdrawn by that Revolving
Credit Lender or such condition has been effectively waived in accordance with
the provisions of this Agreement.

         (b) In the event that an Issuer makes any payment under any Facility
Letter of Credit and the applicable Borrower shall not have repaid such amount
to the Issuer pursuant to Section 2.15.4, the Issuer shall promptly notify the
Agent and each Revolving Credit Lender participating in such Letter of Credit of
such failure, and each Revolving Credit Lender participating in such Letter of
Credit shall promptly and unconditionally pay to the Agent for the account of
such Issuer the amount of such Lender's Pro Rata Share of the unreimbursed
amount of any such payment in such currency. If any Revolving Credit Lender
participating in such Facility Letter of Credit fails to make available to such
Issuer any amounts due to such Issuer pursuant to this Section 2.15.5(b), such
Issuer shall be entitled to recover such amount, together with interest thereon
(i) in the case of amounts denominated in U.S. Dollars, at the Federal Funds
Effective Rate, for the first three Business Days after such Lender receives
such notice and thereafter, at the Floating Rate, or (ii) in the case of amounts
denominated in an Available Foreign Currency, at a local cost of funds rate for
obligations in such currency as determined by the Agent for the first three
Business Days after such Lender receives such notice, and thereafter at the
floating rate of interest correlative to the Floating Rate customarily
applicable to similar extensions of credit to corporate borrowers denominated in
such currency in the country of issue of such currency, as determined by the
Agent, in either case payable (i) on demand, (ii) by setoff against any payments
made to such Issuer for the account of such Lender or (iii) by payment to such
Issuer by the Agent of amounts otherwise payable to such Lender under this
Agreement. The failure of any Revolving Credit Lender to make available to the
Agent its Pro Rata Share of the unreimbursed amount of any such payment shall
not relieve any other Revolving Credit Lender of its obligation hereunder to
make available to the Agent its Pro Rata Share of the unreimbursed amount of any
payment on the date such payment is to be made, but no Revolving Credit Lender
shall be responsible for the failure of any other Revolving Credit Lender to
make available to the Agent its Pro Rata Share of the unreimbursed amount of any
payment on the date such payment is to be made.


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         (c) Whenever the Issuer receives a payment on account of a
Reimbursement Obligation, including any interest thereon, it shall promptly pay
to each Revolving Credit Lender that has funded its participating interest
therein, in like funds as received an amount equal to such Lender's Pro Rata
Share thereof.

         (d) The obligations of a Revolving Credit Lender to make payments to
the Agent with respect to a Facility Letter of Credit shall be absolute,
unconditional and irrevocable, not subject to any counterclaim, set-off,
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances.

         (e) In the event any payment by a Borrower received by the Agent with
respect to a Facility Letter of Credit and distributed by the Agent to the
Lenders on account of their participations is thereafter set aside, avoided or
recovered from the Agent in connection with any receivership, liquidation,
reorganization or bankruptcy proceeding, each Revolving Credit Lender that
received such distribution shall, upon demand by the Agent, contribute such
Lender's Pro Rata Share of the amount set aside, avoided or recovered together
with interest at the rate required to be paid by the Agent upon the amount
required to be repaid by it.

         2.15.6 COMPENSATION FOR FACILITY LETTERS OF CREDIT. The Issuer of a
Facility Letter of Credit shall have the right to receive from the Borrower that
requested issuance of such Facility Letter of Credit, solely for the account of
such Issuer, a fronting fee in an amount equal to 0.10% per annum as well as the
Issuer's reasonable and customary costs of issuing and servicing the Facility
Letters of Credit. In addition, such Borrower shall pay to the Agent for the
account of each Revolving Credit Lender participating in such Facility Letter of
Credit a non-refundable fee at a per annum rate in the amount shown on the
Pricing Schedule on Exhibit A applied to the face amount of the Facility Letter
of Credit, payable quarterly in arrears for the account of all Revolving Credit
Lenders participating in such Facility Letter of Credit (including the Issuers)
ratably from the date such Facility Letter of Credit is issued until its stated
expiry date.

         2.15.7 LETTER OF CREDIT COLLATERAL ACCOUNT. Each Borrower hereby agrees
that it will, until the final expiration date of any Facility Letter of Credit
and thereafter as long as any amount is payable to the Lenders in respect of any
Facility Letter of Credit, maintain a special collateral account (the "Letter of
Credit Collateral Account") at the Agent's office at the address specified
pursuant to Article XIV, in the name of such Borrower but under the sole
dominion and control of the Agent, for the benefit of the Lenders and in which
such Borrower shall have no interest other than as set forth in Section 8.1. The
Agent will invest any funds on deposit from time to time in the Letter of Credit
Collateral Account in certificates of deposit of the Agent having a maturity not
exceeding 30 days. Nothing in this Section 2.15.7 shall either obligate the
Agent to require any Borrower to deposit any funds in the Letter of Credit
Collateral Account or limit the right of the Agent to release any funds held in
the Letter of Credit Collateral Account other than as required by Section 8.1,
and the Borrower's obligations to deposit funds in the Letter of Credit
Collateral Account are limited to the circumstances required by Section 8.1.

         2.15.8 NATURE OF OBLIGATIONS. (a) As among the Borrowers, the Issuers
and the Revolving Credit Lenders, each Borrower assumes all risks of the acts
and omissions of, or misuse of the Facility Letters of Credit by, the respective
beneficiaries of the Facility Letters of Credit requested by it. In furtherance
and not in limitation of the foregoing, the Issuers and the Revolving Credit
Lenders shall not be responsible for (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Facility Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
a Facility Letter of Credit or the rights or benefits thereunder or proceeds


                                       32

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thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of a Facility Letter of Credit to
comply fully with conditions required in order to draw upon such Facility Letter
of Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; (v)
errors in interpretation of technical terms; (vi) misapplication by the
beneficiary of a Facility Letter of Credit of the proceeds of any drawing under
such Facility Letter of Credit; or (vii) any consequences arising from causes
beyond the control of the Issuers or the Revolving Credit Lenders. In addition
to amounts payable as elsewhere provided in this Section 2.15, such Borrower
hereby agrees to protect, indemnify, pay and save the Agent, each Issuer and
each Lender harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees) arising from the claims of third parties against the Agent or such Issuer
in respect of any Facility Letter of Credit requested by such Borrower.

         (b) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuers or
any Revolving Credit Lender under or in connection with the Facility Letters of
Credit or any related certificates, if taken or omitted in good faith, shall not
put such Issuer or such Lender under any resulting liability to any Borrower or
relieve any Borrower of any of its obligations hereunder to the Issuers, the
Agent or any Revolving Credit Lender.

         (c) Notwithstanding anything to the contrary contained in this Section
2.15.8, a Borrower shall not have any obligation to indemnify the Agent, any
Issuer or any Lender under this Section 2.15 in respect of any liability
incurred by each arising primarily out of the gross negligence or willful
misconduct of such Agent, Issuer or Lender, as determined by a court of
competent jurisdiction, or out of the wrongful dishonor by such Issuer of a
proper demand for payment made under the Facility Letters of Credit issued by
such Issuer as determined by a court of competent jurisdiction, unless such
dishonor was made at the request of such Borrower in writing, or out of the
wrongful honor by such Issuer of a demand for payment made under the Facility
Letters of Credit issued by such Issuer which demand for payment does not comply
with the conditions required in order to draw upon such Facility Letter of
Credit as determined by a court of competent jurisdiction, unless such dishonor
was made at the request of such Borrower in writing.


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         Section 2.16. SWING LOANS.

         (a) MAKING OF SWING LOANS. The Agent may elect in its sole discretion
to make revolving loans (the "SWING LOANS") to any Borrower solely for the
Agent's own account, from time to time prior to the Facility Termination Date up
to an aggregate principal amount at any one time outstanding not to exceed (i)
in the case of Swing Loans to the Company or a Domestic Subsidiary Borrower, the
lesser of $20,000,000 or the unused amount of the Aggregate U.S. Revolving
Credit Commitments and (ii) in the case of Swing Loans to a Foreign Subsidiary
Borrower, the lesser of EUR10,000,000 or the unused amount of the Aggregate Euro
Revolving Credit Commitments. The Agent may make Swing Loans (subject to the
conditions precedent set forth in Article IV), PROVIDED that the Agent has
received a request in writing or via telephone from an Authorized Officer of
such Borrower for funding of a Swing Loan no later than such time required by
the Agent, on the Business Day on which such Swing Loan is requested to be made.
The Agent shall not make any Swing Loan in the period commencing one Business
Day after the Agent becomes aware that one or more of the conditions precedent
contained in Section 4.2 are not satisfied and ending upon the satisfaction or
waiver of such condition(s). Each outstanding Swing Loan shall be payable on the
Business Day following demand therefor, with interest at the Floating Rate in
the case of Swing Loans to the Company or a Domestic Subsidiary Borrower and
such rate agreed to between the Agent and such Borrower in the case of Swing
Loans to a Foreign Subsidiary Borrower accrued thereon, and shall be subject to
all the terms and conditions applicable to Loans, except that all interest
thereon shall be payable to the Agent solely for its own account.

         (b) SWING LOAN BORROWING REQUESTS. Each Borrower agrees to deliver
promptly to the Agent a written confirmation of each telephonic notice for Swing
Loans signed by an Authorized Officer. If the written confirmation differs in
any material respect from the action taken by the Agent, the records of the
Agent shall govern, absent manifest error.

         (c) REPAYMENT OF SWING LOANS. At any time after making a Swing Loan,
the Agent may request such Borrower to, and upon request by the Agent such
Borrower shall, promptly request an Advance from all Revolving Credit Lenders to
such Borrower and apply the proceeds of such Advance to the repayment of any
Swing Loan owing by such Borrower not later than the Business Day following the
Agent's request. Notwithstanding the foregoing, upon the earlier to occur of (a)
three Business Days after demand is made by the Agent, and (b) the Facility
Termination Date, each Revolving Credit Lender to such Borrower (other than the
Agent) shall irrevocably and unconditionally purchase from the Agent, without
recourse or warranty, an undivided interest and participation in such Swing Loan
in an amount equal to such Lender's Pro Rata Share of such Swing Loan and
promptly pay such amount to the Agent in immediately available finds (or, in the
case of participations in Swing Loans denominated in an Available Foreign
Currency, same day funds). Such payment shall be made by the other Lenders
whether or not a Default is then continuing or any other condition precedent set
forth in Section 4.2 is then met and whether or not such Borrower has then
requested an Advance in such amount. If any Lender fails to make available to
the Agent, any amounts due to the Agent from such Lender pursuant to this
Section, the Agent shall be entitled to recover such amount, together with
interest thereon at the Federal Funds Effective Rate or such other local cost of
funds rate determined by the Agent with respect to any Swing Loan denominated in
any Available Foreign Currency for the first three Business Days after such
Lender receives notice of such required purchase and thereafter, at the rate
applicable to such Loan, payable (i) on demand, (ii) by setoff against any
payments made to the Agent for the account of such Lender or (iii) by payment to
the Agent by the Agent of amounts otherwise payable to such Lender under this
Agreement. The failure of any Lender to make available to the Agent its Pro Rata
Share of any unpaid Swing Loan shall not relieve any other Lender of its
obligation hereunder to make available to the Agent its Pro Rata Share of any
unpaid Swing Loan on the date such payment is to be made, but no Lender shall be
responsible for the failure of any other Lender to make available to the Agent
its Pro Rata Share of any unpaid Swing Loan.


                                       34

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         2.17 APPLICATION OF PAYMENTS WITH RESPECT TO DEFAULTING LENDERS. No
payments of principal, interest or fees delivered to the Agent for the account
of any Defaulting Lender shall be delivered by the Agent to such Defaulting
Lender. Instead, such payments shall, for so long as such Defaulting Lender
shall be a Defaulting Lender, be held by the Agent, and the Agent is hereby
authorized and directed by all parties hereto to hold such funds in escrow and
apply such funds as follows:

         (i)  FIRST, if applicable to any payments due to an Issuer pursuant to
Section 2.15.5 or the Agent under Section 2.16; and

         (ii) SECOND, to Loans required to be made by such Defaulting Lender on
any Borrowing Date to the extent such Defaulting Lender fails to make such
Loans.

Notwithstanding the foregoing, upon the termination of the Commitments and the
payment and performance of all of the Obligations (other than those owing to a
Defaulting Lender), any funds then held in escrow by the Agent pursuant to the
preceding sentence shall be distributed to each Defaulting Lender, PRO RATA in
proportion to amounts that would be due to each Defaulting Lender but for the
fact that it is a Defaulting Lender.

         2.18 GUARANTIES. The Company shall execute and deliver, or cause to be
executed and delivered, to the Lenders and the Agent from time to time
Guaranties of certain present and future Domestic Subsidiaries and certain
Foreign Subsidiaries which are described as potential Guarantors in the
definition of Guarantors such that, at all times, all such Subsidiaries which
are not Guarantors do not, if considered in the aggregate as a single
Subsidiary, constitute a Significant Subsidiary. In connection with the delivery
of any such Guaranties, Company shall provide such other documentation to the
Agent, including, without limitation, one or more opinions of counsel
satisfactory to the Agent, corporate documents and resolutions, which in the
reasonable opinion of the Agent is necessary or advisable in connection
therewith.



                                  ARTICLE III

                         CHANGE IN CIRCUMSTANCES, TAXES
                         ------------------------------

         3.1  YIELD PROTECTION. If after the date hereof any law or any
governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change or
modification thereof, or any interpretation thereof, or the compliance of any
Lender therewith,

              (a) subjects any Lender or any applicable Lending Installation to
                  any tax, duty, charge or withholding on or from payments due
                  from any Borrower or changes the basis of taxation of payments
                  to any Lender in respect of its Loans or other amounts due it
                  hereunder (excluding income taxes and franchise taxes (imposed
                  in lieu of income taxes) imposed on the Agent or any Lender as
                  a result of a present or former connection between the Agent
                  or such Lender and the jurisdiction of the Governmental
                  Authority imposing such tax or any political subdivision or
                  taxing authority thereof or therein, other than any such
                  connection arising solely from the Agent or such Lender having
                  executed, delivered or performed its obligations or received a
                  payment under, or enforced, this Agreement or any other Loan
                  Document), or


                                       35

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              (b) imposes or increases or deems applicable any reserve,
                  assessment, insurance charge, special deposit or similar
                  requirement against assets of, deposits with or for the
                  account of, or credit extended by, any Lender or any
                  applicable Lending Installation (other than reserves and
                  assessments taken into account in determining the interest
                  rate applicable to Fixed Rate Advances), or

              (c) imposes any other condition the result of which is to increase
                  the cost to any Lender or any applicable Lending Installation
                  of making, funding or maintaining loans or reduces any amount
                  receivable by any Lender or any applicable Lending
                  Installation in connection with loans, or requires any Lender
                  or any applicable Lending Installation to make any payment
                  calculated by reference to the amount of loans held or
                  interest received by it, by an amount deemed material by such
                  Lender,

then, within 15 days of demand by such Lender, the affected Borrower shall pay
such Lender that portion of such increased expense incurred or reduction in an
amount received that such Lender reasonably determines is attributable to
making, funding and maintaining its Loans or its Commitments.

         3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender reasonably
determines that the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a Change, then, within 15
days of demand by such Lender, the Company shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital that such Lender reasonably determines is attributable
to this Agreement, its Loans or its obligation to make Loans hereunder (after
taking into account such Lender's policies as to capital adequacy). "Change"
means (a) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (b) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement that affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.

         3.3 AVAILABILITY OF TYPES OF ADVANCES. If any Lender reasonably
determines that maintenance of its Eurodollar Loans or Multicurrency Loans at a
suitable Lending Installation would violate any applicable law, rule,
regulation, or directive, whether or not having the force of law, or if the
Required U.S. Lenders with respect to Eurodollar Loans or the Required Euro
Revolving Credit Lenders with respect to any Multicurrency Loan to any Foreign
Subsidiary Borrower determine that (i) deposits of a currency, type and maturity
appropriate to match fund Eurodollar or Eurocurrency Loans are not available or
(ii) the interest rate applicable to a Eurocurrency Loan or Eurodollar Loan does
not accurately reflect the cost of making or maintaining such Loans, then the
Agent shall suspend the availability of the affected Type of Loans and require
any Loans of the affected Type to be repaid at the end of the Interest Period
for the affected Loan. Notwithstanding the satisfaction of all conditions
referred to in Article II and Article IV with respect to any Advance in any
Agreed Currency other than Dollars, if there shall occur on or prior to the date
of such Advance any change in national or international financial, political or
economic conditions or currency exchange rates or exchange controls which would
in the reasonable opinion of the Agent or the Required Lenders make it
impracticable for

                                       36

   43



the Eurocurrency Loans comprising such Advance to be denominated in the Agreed
Currency specified by a Borrower, then the Agent shall forthwith give notice
thereof to such Borrower and the Lenders, and such Loans shall not be made.

         3.4   FUNDING INDEMNIFICATION. If any payment of a Fixed Rate Advance
occurs on a date that is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Fixed Rate
Advance is not made on the date specified by a Borrower for any reason other
than default by the Lenders, such Borrower will indemnify each Lender for any
reasonable loss or reasonable cost incurred by it resulting therefrom,
including, without limitation, any reasonable loss or reasonable cost in
liquidating or employing deposits acquired to fund or maintain the Fixed Rate
Advance, but excluding the loss of the Applicable Margin.

         3.5   LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Rate Loans and Multicurrency Rate
Loans to reduce any liability of a Borrower to such Lender under Sections 3.1
and 3.2 or to avoid the unavailability of a Type of Advance under Section 3.3,
so long as such designation is not disadvantageous to such Lender in any
material respect. Each Lender shall deliver a written statement of such Lender
to the applicable Borrower (with a copy to the Agent) as to the amount due, if
any, under Section 3.1, 3.2 or 3.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall state that amounts determined in accordance with such procedures are
being charged by such Lender to other borrowers with credit facilities similar
to this Agreement and credit characteristics comparable to the Company as
determined by such Lender and shall be final, conclusive and binding on the
Borrowers in the absence of manifest error. Determination of amounts payable
under such sections in connection with a Eurodollar Rate Loans and Multicurrency
Rate Loans shall be calculated as though each Lender funded such Loans through
the purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the interest rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the applicable Borrower of such written statement. The
obligations of the Borrowers under Sections 3.1, 3.2, 3.4 and 3.6 shall survive
payment of the Obligations and termination of this Agreement. The Borrowers
shall have no obligation to compensate any Lender with respect to amounts
provided in Sections 3.1, 3.2, 3.4 or 3.6 with respect to any period prior to
the date which is 120 days prior to the date such Lender delivers its written
statement hereunder requesting compensation.

         3.6   TAXES.

         3.6.1 All payments of principal and interest made by the Borrowers
under this Agreement and any Note, if any, and all Reimbursement Obligations
with respect to Facility Letters of Credit shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding income taxes and franchise
taxes (imposed in lieu of income taxes) imposed on the Agent or any Lender as a
result of a present or former connection between the Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("NON-EXCLUDED TAXES") are required to be withheld from any amounts payable to
the Agent, any Issuer or any Lender hereunder or under any Note or Facility
Letter of Credit, the amounts so

                                       37

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payable to the Agent, such Issuer or such Lender shall be increased to the
extent necessary to yield to the Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates and in the amounts specified in this Agreement PROVIDED, HOWEVER, that (i)
with respect to any Loan or Facility Letter of Credit in U.S. Dollars to the
Company, the Company shall not be required to increase any such amounts payable
to any Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the requirements
of Section 3.6.2, (ii) with respect to any Loan or Facility Letter of Credit in
any Available Foreign Currency, a Borrower shall not be required to increase any
such amounts payable to any Lender if such Lender fails to comply with the
requirements of Section 3.6.3 and (iii) with respect to any Multicurrency Loan
or any Multicurrency Facility Letter of Credit, the Foreign Subsidiary Borrower
shall not be required to increase any such amounts payable to any Lender or the
Agent to the extent such Lender could avoid the payment of such amount by
changing its Lending Installation, provided that any such change in any Lending
Installation shall not be required if such Lender cannot change its Lending
Installation for any reason or such Lender has determined that it is
disadvantageous to it to do so. Whenever any Non-Excluded Taxes are payable by a
Borrower, as promptly as possible thereafter such Borrower shall send to the
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by such Borrower
showing payment thereof. If a Borrower fails to pay any Non-Excluded Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, such Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.

         3.6.2 Each U.S. Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:

               (a) at least five Business Days before the date of the initial
         payment to be made by the Company under this Agreement to such Lender,
         deliver to the Company and the Agent (A) two duly completed copies of
         United States Internal Revenue Service Form 1001 or 4224, or successor
         applicable form, as the case may be, certifying that it is entitled to
         receive payments under this Agreement without deduction or withholding
         of any United States federal income taxes and (B) an Internal Revenue
         Service Form W-8 or W-9, or successor applicable form, as the case may
         be, certifying that it is entitled to an exemption from United States
         backup withholding tax;

               (b) deliver to the Company and the Agent two further copies of
         any such form or certification at least five Business Days before the
         date that any such form or certification expires or becomes obsolete
         and after the occurrence of any event requiring a change in the most
         recent form previously delivered by it to the Agent and the Company;

               (c) obtain such extensions of time for filing and complete such
         forms or certifications as may reasonably be requested by the Company
         or the Agent; and

               (d) file amendments to such forms as and when required; and each
         Lender (or Transferee) that is incorporated or organized under the laws
         of the United States of America or a State thereof shall provide two
         properly completed and duly executed copies of Form W-9, or successor
         applicable form, at the times specified for delivery of forms under
         this Section 3.6.2 unless an event (including, without limitation, any
         change in treaty, law or regulation) has occurred after the date such
         Person becomes a Lender hereunder which renders all such forms
         inapplicable or which would prevent such Lender from duly completing
         and delivering any such

                                       38

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         form with respect to it and such Lender so advises the Company and the
         Agent; PROVIDED, however, that the Company may rely upon such forms
         provided to the Company for all periods prior to the occurrence of such
         event. Each Person that shall become a U.S. Lender or a Participant
         pursuant to Section 13.2 shall, upon the effectiveness of the related
         transfer, be required to provide all of the forms, certifications and
         statements required pursuant to this Section, PROVIDED that in the case
         of such Participant, the obligations of such Participant pursuant to
         this Section 3.6.2 shall be determined as if such Participant were a
         Lender, except that such Participant shall furnish all such required
         forms, certifications and statements to the Lender from which the
         related participation shall have been purchased.

         3.6.3 Each Euro Lender that is not incorporated or organized under the
laws of the jurisdiction (a) under the laws of which a Foreign Subsidiary
Borrower is incorporated or organized, or (b) in which such Foreign Subsidiary
Borrower is located, and, in either case, is a Lender to such Foreign Subsidiary
Borrower shall, upon request by such Foreign Subsidiary Borrower, within a
reasonable period of time after such request, deliver to such Foreign Subsidiary
Borrower or the applicable governmental or taxing authority, as the case may be,
any form or certificate required in order that any payment by such Foreign
Subsidiary Borrower under this Agreement or any Notes to such Lender may be made
free and clear of, and without deduction or withholding for or on account of any
Non-Excluded Tax (or to allow any such deduction or withholding to be at a
reduced rate) imposed on such payment under the laws of the jurisdiction under
which such Foreign Subsidiary Borrower is incorporated or organized, PROVIDED
that such Lender is legally entitled to complete, execute and deliver such form
or certificate and such completion, execution or submission would not prejudice
the legal position of such Lender.

         3.6.4 Each Lender agrees to use reasonable efforts to avoid or to
minimize any amounts that might otherwise be payable pursuant to this Section
3.6, PROVIDED that such effort shall not impose on any such Lender any
additional costs or legal or regulatory burdens deemed by such Lender in its
reasonable judgment to be material. In the event that any Lender determines that
any event or circumstance that will lead to a claim by it under this Section 3.6
has occurred or will occur, such Lender will use its best efforts to so notify
the Company in writing, PROVIDED that any failure to provide such notice shall
in no way impair the rights of any Lender to demand and receive compensation
under this Section 3.6.

         3.7   SUBSTITUTION OF LENDER. If (a) the obligation of any Lender to
make or maintain Fixed Rate Loans has been suspended pursuant to Section 3.3,
except when all Lenders' obligations to make or maintain Fixed Rate Loans have
been suspended other than by reason of such Lender's obligation to make or
maintain Fixed Rate Loans being suspended, (b) any Lender has demanded
compensation under Sections 3.1, 3.2 or 3.6 when all Lenders have not done so,
(c) any Lender is a Defaulting Lender or (d) in connection with a request by any
Borrower to obtain the consent of the Lenders to a waiver, amendment or
modification of any provision of this Agreement or any other Loan Document that
requires the consent of all Lenders, any Lender having not more than 10% of the
sum of the Aggregate Total Outstandings of all Lenders at such time has declined
to agree to such request when the Required Lenders have agreed to such request,
the Company shall have the right, if no Default then exists, to replace such
Lender (a "Replaced Lender") with one or more other lenders (collectively, the
"Replacement Lender") acceptable to the Agent, PROVIDED that (i) at the time of
any replacement pursuant to this Section 3.7, the Replacement Lender shall enter
into one or more Assignments pursuant to which the Replacement Lender shall
acquire the Commitments and outstanding Loans and other obligations of the
Replaced Lender and, in connection therewith, shall pay to the Replaced Lender
in respect thereof an amount equal to the sum of (A) the amount of principal of,
and all accrued interest on, all outstanding Loans of the Replaced Lender, (B)
the amount of all accrued, but theretofore unpaid, fees owing to the Replaced
Lender hereunder and (C) the amount that would be payable by the Borrowers to
the Replaced Lender pursuant to Section 3.4, if any, if the Borrowers prepaid at
the time of such replacement all of the

                                       39

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Loans of such Replaced Lender outstanding at such time and (ii) all obligations
of the Borrowers then owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Lender concurrently with such replacement. Upon the execution
of the respective Assignments, the payment of amounts referred to in clauses (i)
and (ii) above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Note or Notes executed by the appropriate
Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder. The provisions of
this Agreement (including without limitation Sections 3.4 and 10.7) shall
continue to govern the rights and obligations of a Replaced Lender with respect
to any Loans made or any other actions taken by such lender while it was a
Lender. Nothing herein shall release any Defaulting Lender from any obligation
it may have to any Borrower, the Agent, Issuer or any other Lender.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT
                              --------------------

         4.1 CLOSING CONDITIONS. On the date hereof, the Borrowers shall
furnish, or shall cause to be furnished, to the Agent, each of the following:

             (a) Copies of the articles of incorporation or similar
                 organizational documents of each Borrower and Guarantor,
                 together with all amendments thereto, and a certificate of good
                 standing or similar governmental evidence of corporate
                 existence, certified by the Secretary or an Assistant Secretary
                 of such Borrower or Guarantor, as the case may be.

             (b) Copies of the by-laws and Board of Directors' resolutions (and
                 resolutions of other bodies, if any are deemed necessary by
                 counsel for any Lender) of each Borrower and Guarantor
                 authorizing the execution of the Loan Documents, certified by
                 the Secretary or an Assistant Secretary or other duly
                 authorized representative of such Borrower or Guarantor, as the
                 case may be.

             (c) An incumbency certificate of each Borrower and Guarantor, which
                 shall identify by name and title and bear the signature of the
                 officers of such Borrower or such Guarantor authorized to sign
                 the applicable Loan Documents and to make borrowings hereunder,
                 upon which certificate the Agent and the Lenders shall be
                 entitled to rely until informed of any change in writing by
                 such Borrower or such Guarantor.

             (d) A Compliance Certificate, signed by any Designated Financial
                 Officer of each Borrower.

             (e) A written opinion of the Borrowers' and Guarantors' counsel,
                 addressed to the Agent and Lenders, in substantially the form
                 of Exhibit G hereto.

             (f) Written money transfer instructions, in substantially the form
                 of Exhibit H hereto, addressed to the Agent and signed by an
                 Authorized Officer, together with such other related money
                 transfer authorizations as the Agent may have reasonably
                 requested.

                                       40

   47



             (g) Copies of all governmental and nongovernmental consents,
                 approvals, authorizations, declarations, registrations or
                 filings required on the part of any Borrower or any Guarantor
                 in connection with the execution, delivery and performance of
                 the Loan Documents or the transactions contemplated hereby or
                 thereby or as a condition to the legality, validity or
                 enforceability of the Loan Documents, certified as true and
                 correct in full force and effect as of the Effective Date by a
                 duly authorized officer of the Borrowers, or if none is
                 required, a certificate of such officer to that effect.

             (h) The Guaranty executed by all of the Guarantors.

             (i) Payment of all fees owing to the Agent or any Lender by the
                 Borrowers and the Guarantors as of the Effective Date.

             (j) Satisfactory results of all due diligence required by the
                 Agent, including a review of all contingent liabilities, a
                 review of contracts and insurance, a review of all litigation,
                 and environmental matters and other due diligence.

             (k) Copies of such financial statements of the Company and its
                 Subsidiaries required by the Agent, together with prospective
                 financial statements for the Company and its Subsidiaries, in
                 each case in form and substance satisfactory to the Agent.

             (l) Evidence reasonably satisfactory to the Agent that, since
                 September 30, 1999, there has been no change in the business,
                 property, condition (financial or otherwise) or results of
                 operations of the Company and its Subsidiaries which could
                 reasonably be expected to have a Material Adverse Effect.

             (m) Information reasonably satisfactory to the Agent regarding the
                 Borrowers' Year 2000 Program.

             (n) Such other agreements and documents, and the satisfaction of
                 such other conditions, as may be reasonably required by the
                 Agent, including without limitation a subrogation and
                 contribution agreement executed by the Borrowers and the
                 Guarantors, and such funding instructions, sources and uses
                 certificate and other certificates required by the Agent.

         4.2 EACH ADVANCE. The Lenders shall not be required to make any Loans
nor shall any Issuer be required to issue any Letter of Credit, unless on the
applicable Borrowing Date, both before and after giving effect on a pro forma
basis to such Loan or Letter of Credit:

         (a) There exists no Default or Unmatured Default.

         (b) The representations and warranties contained in Article V are true
and correct as of such Borrowing Date except (i) to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall be true and correct on and as
of such earlier date and (ii) the representations contained in Section 5.5 shall
be limited (as determined by the Agent) with respect to any Loans or Letters of
Credit made after the initial Loans and Letters of Credit hereunder if the
credit facilities hereunder are used for commercial paper backup to the extent
required by the relevant rating agencies with respect to such commercial paper.

                                       41

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         (c) All legal matters incident to the making of such Loans or the
issuance of such Facility Letter of Credit shall be satisfactory to the Agent
and its counsel.

         (d) If such Loan is an initial Loan to a Subsidiary Borrower, the Agent
shall have received a Foreign Subsidiary Opinion or Domestic Subsidiary Opinion,
as the case may be, in respect of such Subsidiary Borrower and such other
documents reasonably requested by the Agent.

         Each Borrowing notice with respect to each borrowing by a Borrower
hereunder or each request for an issuance of a Facility Letter of Credit shall
constitute a representation and warranty by the Company and such Borrower that
the conditions contained in Sections 4.2(a), (b) and (c) have been satisfied.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

         Each of the Company and the Subsidiary Borrowers (insofar as the
representations and warranties set forth below relate to such Subsidiary
Borrower) represents and warrants to the Lenders that:

         5.1 CORPORATE EXISTENCE AND STANDING. Each Borrower and Guarantor is a
corporation, partnership, limited liability company or other organization, duly
organized and validly existing under the laws of its jurisdiction of
organization and has all requisite corporate, partnership, company or similar
authority to conduct its business as presently conducted.

         5.2 AUTHORIZATION AND VALIDITY. Each Borrower has the corporate or
other power and authority and legal right to execute and deliver the Loan
Documents and to perform its obligations thereunder. The execution and delivery
by each of the Borrowers of the Loan Documents and the performance of their
obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents to which they are a party constitute legal,
valid and binding obligations of the Borrowers enforceable against the Borrowers
in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.

         5.3 NO CONFLICT: GOVERNMENT CONSENT. Neither the execution and delivery
by the Borrowers of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Company or any of its Subsidiaries or the Company's or any
Subsidiary's constitutive documents or the provisions of any indenture,
instrument or agreement to which the Company or any of its Subsidiaries is a
party or is subject, or by which it, or its Property, is bound, or conflict with
or constitute a default thereunder, or result in the creation or imposition of
any Lien (other than any Lien permitted by Section 6.12) in, of or on the
Property of the Company or a Subsidiary pursuant to the terms of any such
indenture, instrument or agreement. Other than those that have been obtained, no
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents.

         5.4 FINANCIAL STATEMENTS. All financial statements of the Company and
its Subsidiaries heretofore delivered to the Lenders were prepared in accordance
with generally accepted accounting

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principles in effect on the date such statements were prepared and fairly
present in all material respects the consolidated financial condition and
operations of the Company and its Subsidiaries.

         5.5 MATERIAL ADVERSE CHANGE. Since September 30, 1999 or, after the
first financial statements are delivered under Sections 6.1(i) or (ii), since
the date of the financial statements most recently delivered under Section
6.1(i) or (ii), there has been no change in the business, Property, prospects,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.

         5.6 TAXES. The Company and its Subsidiaries have filed all United
States federal tax returns and all other material tax returns that are required
to be filed by any Governmental Authority and have paid all taxes shown as due
pursuant to said returns or pursuant to any assessment received by the Company
or any of its Subsidiaries by any Governmental Authority, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been provided in accordance with Agreement Accounting Principles and as to which
no Lien (other than as permitted by Section 6.12) exists. No tax liens have been
filed and no claims are being asserted with respect to any such taxes, other
than as permitted by Section 6.12. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.

         5.7 LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth on
Schedule 5.7 hereto, there is no litigation, arbitration or proceeding pending
or, to the knowledge of any of the Company's executive officers, any
governmental investigation or inquiry pending or any litigation, arbitration,
governmental investigation, proceeding or inquiry threatened against or
affecting the Company or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect or which seeks to prevent, enjoin or
delay the making of the Loans or Advances. Other than any liability incident to
such litigation, arbitration or proceedings listed on Schedule 5.7, the Company
and its Subsidiaries have no material Contingent Obligations not provided for or
disclosed in the financial statements referred to in Section 5.4.

         5.8 SUBSIDIARIES. Schedule 5.8 hereto contains an accurate list of all
Subsidiaries of the Company as of the date of this Agreement, setting forth
their respective jurisdictions of incorporation or organization and the
percentage of their respective Capital Stock owned by the Company or other
Subsidiaries. All of the issued and outstanding shares of Capital Stock of such
Subsidiaries held by the Company have been duly authorized and issued and are
fully paid and non-assessable.

         5.9 ERISA. Each member of the Controlled Group has fulfilled its
material obligations under the minimum funding standards of ERISA and the Code
with respect to each Single Employer Plan. Each member of the Controlled Group
is in material compliance with the applicable provisions of ERISA and the Code
with respect to each Plan except where such non compliance would not have a
Material Adverse Effect. Each Single Employer Plan complies in all material
respects with all applicable requirements of law and regulations, no Reportable
Event which has or may result in any material liability has occurred with
respect to any Single Employer Plan, and no steps have been taken to reorganize
or terminate any Single Employer Plan. No member of the Controlled Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Single Employer Plan or Multiemployer Plan, or made any amendment to any Plan,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any material,
actual liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA or a liability that has been satisfied.

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         5.10 ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Company or any of its Subsidiaries in writing to the Agent or
to any Lender in connection with the negotiation of the Loan Documents contained
any material misstatement of fact or omitted to state a material fact or any
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which made, as of the date thereof; PROVIDED, HOWEVER,
that with respect to projected financial information, the Company represents
only that such information has been prepared in good faith based on assumptions
believed by the Company to be reasonable.

         5.11 REGULATIONS T, U AND X. Neither the Company nor any of its
Subsidiaries extends or maintains, in the ordinary course of business, credit
for the purpose, whether immediate, incidental, or ultimate, of buying or
carrying Margin Stock, and no part of the proceeds of any Advance will be used
for the purpose, whether immediate, incidental, or ultimate, of buying or
carrying any such Margin Stock or maintaining or extending credit to others for
such purpose in any way that would violate Regulation T, U or X. After applying
the proceeds of each Advance, Margin Stock will not constitute more than 25% of
the value of the assets (either of the Company alone or of the Company and its
Subsidiaries on a consolidated basis) that are subject to any provisions of any
Loan Document that may cause the Advances to be deemed secured, directly or
indirectly, by Margin Stock. The Company and its Subsidiaries are in compliance
with Section 6.2.

         5.12 MATERIAL AGREEMENTS. Neither the Company nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement to which it is a party (including any
agreement or instrument evidencing or governing Indebtedness), which default
could reasonably be expected to have a Material Adverse Effect.

         5.13 COMPLIANCE WITH LAWS; PROPERTIES. The Company and its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property, failure to comply with
which could reasonably be expected to have a Material Adverse Effect.

         5.14 PLAN ASSETS; PROHIBITED TRANSACTIONS. The Company and its
Subsidiaries have not engaged in any non-exempt prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code which could
result in any material liability; and neither the execution of this Agreement
nor the making of Loans (assuming the accuracy of the following representations
and warranties which the Lenders hereby make for the benefit of the Borrowers:
(i) that no part of the funds to be used by the Lenders for funding any of the
Loans shall constitute assets of an "employee benefit plan" within the meaning
of ERISA or the assets of a "plan" as defined in Section 4975(e)(l) of the Code
and (ii) that no Lender will transfer its interest herein unless the prospective
transferee makes the representations and warranties set forth in this
parenthetical phrase as if had originally been a party to this agreement)
hereunder will constitute a non-exempt prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code.

         5.15 ENVIRONMENTAL MATTERS. In the ordinary course of its business, the
officers of the Company consider the effect of Environmental Laws on the
business of the Company and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Company
and its Subsidiaries due to Environmental Laws. On the basis of this
consideration, the Company has reasonably concluded that the Company and its
Subsidiaries are not in violation of any Environmental Laws in such a fashion
that could reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received any written notice to the effect that
its

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operations are not in material compliance with any of the requirements of
applicable Environmental Laws or, to the knowledge of any Borrower, are the
subject of any federal or state investigation evaluating whether any Remedial
Action is required to be performed by the Company or any of its Subsidiaries,
which non-compliance or Remedial Action could reasonably be expected to have a
Material Adverse Effect.

         5.16 INVESTMENT COMPANY ACT. No Borrower is an "investment company" or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.

         5.17 PUBLIC UTILITY HOLDING COMPANY ACT. No Borrower is a "holding
company" or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

         5.18 SUBSIDIARY BORROWERS. (a) Except as described on Schedule 5.8,
each Subsidiary Borrower is a direct or indirect Wholly Owned Subsidiary of the
Company (excluding director qualifying shares); and

         (b)  Each Subsidiary Borrower will have, upon becoming a party hereto,
all right and authority to enter into this Agreement and each other Loan
Document to which it is a party, and to perform all of its obligations under
this and each other Loan Document to which it is a party; all of the foregoing
actions will have been taken prior to any request for Loans by such Borrower,
duly authorized by all necessary action on the part of such Borrower, and when
such Subsidiary Borrower becomes a party hereto, this Agreement and each other
Loan Document to which it is a party will constitute valid and binding
obligations of such Borrower enforceable in accordance with their respective
terms except as such terms may be limited by the application of bankruptcy,
moratorium, insolvency and similar laws affecting the rights of creditors
generally and by general principles of equity.

         5.19 INSURANCE. The Company and its Subsidiaries maintain insurance
with financially sound and reputable insurance companies (or self-insurance
programs) on their Property in such amounts (with such customary deductibles,
exclusions and self-insurance) and covering such risks as management of the
Company reasonably considers consistent with sound business practice.

         5.20 OWNERSHIP OF PROPERTIES. On the Effective Date, the Company and
its Subsidiaries will have good title, free of all Liens (other than as
permitted by Section 6.12), to all Property and assets reflected in the
financial statements as owned by it.

         5.21 LABOR CONTROVERSIES. There are no labor controversies pending or,
to the best of the Company's knowledge, threatened against the Company or any
Subsidiary, that could reasonably be expected to have a Material Adverse Effect.

         5.22 BURDENSOME OBLIGATIONS. The Company does not presently anticipate
that future expenditures needed to meet the provisions of federal or state
statutes, orders, rules or regulations will be so burdensome as to cause a
Material Adverse Effect.

         5.23 YEAR 2000. The Borrower has made a reasonable assessment of the
Year 2000 Issues and has a realistic and achievable program for remediating the
Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on such
assessment and on the Year 2000 Program the Borrowers do not reasonably
anticipate that Year 2000 Issues will have a Material Adverse Effect.


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                                   ARTICLE VI

                                   COVENANTS
                                   ---------

         During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

         6.1 FINANCIAL REPORTING. The Company will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with Agreement Accounting Principles, and furnish to the Lenders:

             (i) Within 90 days after the close of each of its fiscal years, an
unqualified (except for qualifications relating to changes in accounting
principles or practices reflecting changes in Agreement Accounting Principles
and required or approved by the Company's independent certified public
accountants) audit report certified by independent certified public accountants
reasonably acceptable to the Agent, prepared in accordance with Agreement
Accounting Principles on a consolidated basis for itself and its Subsidiaries,
including balance sheets as of the end of such period, related profit and loss
statements, and a statement of cash flows, accompanied by a certificate of said
accountants that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no knowledge of any Default
or Unmatured Default, or if, in the opinion of such accountants, any Default or
Unmatured Default shall exist, stating the nature and status thereof.

             (ii) Within 45 days after the close of each of the first three
quarterly periods of each fiscal year, for itself and its Subsidiaries,
consolidated unaudited balance sheets as at the close of each such period and
consolidated unaudited profit and loss statements and a consolidated unaudited
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its Designated Financial Officer.

             (iii) Together with the financial statements required under
Sections 6.1(i) and (ii), a compliance certificate in substantially the form of
Exhibit I (a "Compliance Certificate") signed by its Designated Financial
Officer and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status thereof.

             (iv) As soon as possible and in any event within 30 Business Days
after the Company knows that any Reportable Event has occurred with respect to
any Plan, a statement, signed by the Designated Financial Officer of the
Company, describing said Reportable Event and the action which the Company
proposes to take with respect thereto.

             (v) As soon as possible and in any event within 15 Business Days
after receipt by the Company, a copy of (a) any written notice or claim to the
effect that the Company or any of its Subsidiaries is or may be liable to any
Person as a result of the Release by the Company, any of its Subsidiaries, or
any other Person of any Hazardous Substances into the environment, and (b) any
written notice alleging any violation of any Environmental Law by the Company or
any of its Subsidiaries, which, in either case, could reasonably be expected to
have a Material Adverse Effect.

             (vi) Promptly after the sending or filing thereof, copies of all
reports, proxy statements and financial statements that the Company or any of
its Subsidiaries sends to or files with any of their respective securities
holders or any securities exchange or the Securities Exchange and Commission or
any successor agency thereof pertaining to the Company or any of its
Subsidiaries as the issuer of securities.

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             (vii) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably request.

         6.2 USE OF PROCEEDS. The Company will, and will cause each Subsidiary
to, use the proceeds of the Advances for general corporate purposes, including
Acquisitions and commercial paper back up. The Company will not, nor will it
permit any Subsidiary to, use any of the proceeds of the Advances to purchase or
carry any Margin Stock in any way in violation of Regulation T, U or X.

         6.3 NOTICE OF DEFAULT. The Company will, and will cause each Borrower
and Subsidiary to, give prompt notice in writing to the Agent of the occurrence
of any Default or Unmatured Default and of any other development, financial or
otherwise (including, without limitation, developments with respect to Year 2000
Issues), which could reasonably be expected to have a Material Adverse Effect.

         6.4 CONDUCT OF BUSINESS. The Company will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
fields of enterprise as it is presently conducted or fields related thereto or
extensions thereof (taking the Company and its Subsidiaries on a consolidated
basis) and do all things necessary to remain duly incorporated or organized,
validly existing and (to the extent such concept applies to such entity) in good
standing as a domestic corporation, partnership or limited liability company in
its jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

         6.5 TAXES. The Company will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable foreign, state
and local tax returns required by law and pay when due all taxes, assessments
and governmental charges and levies upon it or its income, profits or Property,
except those that are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside in accordance
with Agreement Accounting Principles, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.

         6.6 INSURANCE. The Company will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts (with such customary deductibles, exclusions
and self-insurance) and covering such risks as is consistent with sound business
practice.

         6.7 COMPLIANCE WITH LAWS. The Company will, and will cause each
Subsidiary to, comply with all Requirements of Law, except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect.

         6.8 PROPERTIES; INSPECTION. The Company will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements to the extent the Company
reasonably deems consistent with sound business practice. The Company will, and
will cause each Subsidiary to, permit the Agent and the Lenders, by their
respective representatives and agents, to reasonably inspect any of the Property
of the Company and each Subsidiary, the financial or accounting records of the
Company and each Subsidiary and other documents of the Company and each
Subsidiary, in each case only to the extent any of the foregoing is reasonably
related to the credit evaluation by the Agent and the Lenders under this
Agreement, to examine and make copies of such records and documents of the
Company and each Subsidiary, and to discuss the affairs, finances and accounts
of the Company and each Subsidiary with, and to be advised as to the same by,
their respective officers upon reasonable prior notice at such reasonable times
and intervals as the Agent may designate.

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         6.9   MERGER. The Company will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that, provided
that no Default or Unmatured Default shall have occurred and be continuing or
would result therefrom on a pro forma basis reasonably acceptable to the Agent,
the Company may merge or consolidate with any other U.S. corporation and each
Subsidiary may merge or consolidate with any other Person, provided, further,
that (i) in the case of any such merger or consolidation involving the Company,
the Company is the surviving corporation and (ii) in the case of any such merger
or consolidation involving a Subsidiary which is a Subsidiary Borrower, the
surviving corporation assumes all of such Borrower's obligations under this
Agreement and remains or becomes a Subsidiary Borrower.

         6.10  SALE OF ASSETS. The Company will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any other
Person (other than to the Company or a Guarantor or between Foreign
Subsidiaries), except:

         (i)   Sales of inventory in the ordinary course of business.

         (ii)  Sales or other dispositions in the ordinary course of business of
fixed assets for the purpose of replacing such fixed assets, provided that such
fixed assets are replaced within 180 days of such sale or other disposition with
other fixed assets that have a fair market value not materially less than the
fixed assets sold or otherwise disposed of.

         (iii) Other leases, sales (including sale-leasebacks) or other
dispositions of its Property that, together with all other Property of the
Company and its Subsidiaries previously leased, sold or disposed of (other than
as provided in clauses (i) and (ii) above) as permitted by this Section during
the twelve-month period ending with the month prior to the month in which any
such lease, sale or other disposition occurs, do not constitute a Substantial
Portion of the Property of the Company and its Subsidiaries.

Notwithstanding anything in this Section 6.10 to the contrary, (a) no such
leases, sales or other dispositions of property may be made (other than pursuant
to clause (i) above) if any Default or Unmatured Default has occurred and is
continuing, and (b) all leases, sales and other dispositions of Property at any
time shall be for not materially less than the fair market value of such
Property as determined in good faith by the Company.

         6.11  INVESTMENTS AND ACQUISITIONS. The Company will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments, or
commitments therefor, or to make any Acquisition of any Person, except, so long
as no Default or Unmatured Default exists or would be caused thereby:

         (i)   Investments in Cash Equivalents.

         (ii)  Investments in Guarantors.

         (iii) Other Investments in existence on the date hereof.

         (iv)  Other Investments provided that the aggregate amount of such
Investments made in any fiscal year does not exceed 15% of Tangible Net Worth as
of the beginning of such fiscal year.

         (v)   Any Acquisition so long as the aggregate amount of consideration
(including without limitation any payments in cash, Capital Stock or other
consideration, any direct or deferred payments (to the extent such deferred
payments should be shown as a liability on a balance sheet of the Company and
its Subsidiaries in accordance with Agreement Accounting Principles) and the
amount of any

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Indebtedness (other than Letters of Credit incurred in the ordinary course of
business) assumed or otherwise incurred in connection with such Acquisition)
paid or payable by the Company or any Subsidiary in connection with any such
Acquisition does not exceed 30% of the then Tangible Net Worth (or, in the case
of the contemplated Acquisition identified by the Company to the Agent prior to
the Effective Date as Project Road Runner, 40% of the then Tangible Net Worth,
provided that the Company delivers to the Agent prior to such Acquisition a pro
forma Compliance Certificate indicating pro forma compliance with Sections 6.18
and 6.19) and such Acquisition is not hostile and shall have been approved by
the board of directors or similar governing body of the target of such
Acquisition.

         6.12   LIENS. The Company will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Company or any of its Subsidiaries, except:

         (i)    Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with
Agreement Accounting Principles shall have been set aside on its books.

         (ii)   Liens imposed by law, such as landlord's, carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business that secure payment of obligations not more than 60
days past due or that are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.

         (iii)  Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation (other than Liens in
favor of the PGBC).

         (iv)   Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and that do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries.

         (v)    Liens existing on the date hereof and described on Schedule
6.12, provided that no increase in the principal amount secured thereby is
permitted.

         (vi)   Any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing clauses, provided, however, that the principal amount of Indebtedness
secured thereby shall not exceed the principal amount of Indebtedness so secured
prior to such extension, renewal or replacement and that such extension, renewal
or replacement Lien shall be limited to all or a part of the assets that secured
the Lien so extended, renewed or replaced (plus improvements and construction on
such real property).

         (vii)  Liens securing Indebtedness and not otherwise permitted by the
foregoing provisions of this Section 6.12, provided that the aggregate
outstanding principal amount of the Indebtedness secured by all such Liens shall
not at any time exceed 10% of Tangible Net Worth.

         6.13   YEAR 2000. The Company will take and will cause each of its
Subsidiaries to take all such actions as are reasonably necessary to
successfully implement the Year 2000 Program and to assure that Year 2000 Issues
will not have a Material Adverse Effect. At the request of the Agent, the
Company will provide a description of the Year 2000 Program, together with any
updates or progress reports with respect thereto.

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         6.14  AFFILIATES. The Company will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms
(taken as a whole) not materially less favorable to the Company or such
Subsidiary than the Company or such Subsidiary would obtain in a comparable
arms-length transaction.

         6.15  INDEBTEDNESS OF CERTAIN SUBSIDIARIES. The Company will not permit
any Subsidiary which is not a Guarantor to create, incur or suffer to exist any
Indebtedness, except:

         (i)   The Loans, the Facility Letters of Credit and the other
Obligations.

         (ii)  Indebtedness outstanding on the date of this Agreement, but no
increase in the principal amount thereof.

         (iii) Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that such Indebtedness existed at the time such Person
becomes a Subsidiary and was not created in contemplation of or in connection
with such Person becoming a Subsidiary.

         (iv)  Any refunding or refinancing of any Indebtedness referred to in
clauses (ii) and (iii) above, provided that any such refunding or refinancing
does not increase the principal amount thereof.

         (v) Indebtedness arising from (a) the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, or (b) the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business.

         (vi)  Other Indebtedness; provided that, at the time of the creation,
incurrence or assumption of such other Indebtedness and after giving effect
thereto, the aggregate amount of all such other Indebtedness of such
Subsidiaries does not exceed an amount equal to 10% of Tangible Net Worth at
such time.

         6.16  LIMITATION ON RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. The
Company will not, and will not permit any Subsidiary to, enter into or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the Company to (i) pay dividends or make any other
distributions in respect of any Capital Stock of such Subsidiary held by, or
pay any Indebtedness owed to, the Company or any other Subsidiary of the
Company, (ii) make loans or advances to the Company or any other Subsidiary of
the Company or (iii) transfer any of its assets to the Company or any other
Subsidiary of the Company, except for such encumbrances or restrictions existing
under or by reason of (a) any restrictions existing under the Loan Documents,
(b) any restrictions with respect to a Subsidiary imposed pursuant to an
agreement which has been entered into in connection with the disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, (c) any
restrictions with respect to assets encumbered by a Lien permitted by Section
6.12 so long as such restriction applies only to the assets encumbered by such
permitted Lien, and (d) to the extent required by the minority shareholders
thereof, any restriction with respect to a Foreign Subsidiary of which less than
90% of the Voting Stock is owned by the Company or any of its Subsidiaries.

         6.17 FINANCIAL CONTRACTS. The Company will not, and will not permit any
Subsidiary to, enter into or remain a party to any Financial Contract for
purposes of financial speculation.

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         6.18 TOTAL DEBT TO CAPITALIZATION RATIO. The Company shall not permit
its Total Debt to Capitalization Ratio to exceed 50%.

         6.19 INTEREST COVERAGE RATIO. The Company shall not permit its Interest
Coverage Ratio to be less than 5.0 to 1.0 as of the last day of any fiscal
quarter.

                                  ARTICLE VII

                                    DEFAULTS
                                    --------

         The occurrence of any one or more of the following events shall
constitute a Default:

         7.1 Any representation or warranty made, including without limitation
those deemed made pursuant to Section 4.2, by or on behalf of the Company or its
Subsidiaries to the Lenders or the Agent in any Loan Document, in connection
with any Loan or Facility Letter of Credit, or in any certificate or information
delivered in writing in connection with any Loan Document or in any certificate
or information delivered in writing in connection with any Loan Document shall
be false in any material respect on the date as of which made.

         7.2 Nonpayment of principal of any Loan when due, or nonpayment of
interest on any Loan or of any facility fee within five Business Days after
written notice from the Agent that the same has become due, or nonpayment of any
other obligations under any of the Loan Documents within five Business Days
after written notice from the Agent that the same has become due.

         7.3 The breach by any Borrower of any of the terms or provisions in
Sections 6.2, 6.3, 6.9, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18 or
6.19.

         7.4 The breach by any Borrower or Guarantor (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement or any other Loan Document which is not remedied
within 30 days after written notice from the Agent.

         7.5 Failure of the Company or any of its Subsidiaries to pay when due
any Indebtedness or Rate Hedging Obligations aggregating in excess of
$15,000,000 ("Material Indebtedness"); or the default by the Company or any of
its Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any such Material Indebtedness was
created or is governed, or any other event shall occur or condition exist, the
effect of which is to cause, or to permit the holder or holders of such Material
Indebtedness to cause, such Material Indebtedness to become due prior to its
stated maturity; or any Material Indebtedness of the Company or any of its
Subsidiaries shall be declared to be due and payable or required to be prepaid
or repurchased (other than by a regularly scheduled payment) prior to the stated
maturity thereof; or the Company or any of its Subsidiaries shall not pay, or
admit in writing its inability to pay, its debts generally as they become due.

         7.6 The Company or any of its Subsidiaries, shall (i) have an order for
relief entered with respect to it under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts or seeking similar
relief under any law of any

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jurisdiction, domestic or foreign, relating to bankruptcy, insolvency or
reorganization or relief of debtors or similar proceeding or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate, company or other action to authorize
or effect any of the foregoing actions set forth in this Section 7.6 or (vi)
fail to contest in good faith any appointment or proceeding described in Section
7.7.

         7.7 Without its application, approval or consent, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for the Company or
any of its Subsidiaries or any Substantial Portion of their respective Property,
or a proceeding described in Section 7.6(iv) shall be instituted against the
Company or any of its Subsidiaries and such appointment continues undischarged
or such proceeding continues undismissed or unstayed for a period of 60
consecutive days.

         7.8 Any court, government or governmental agency shall without
appropriate compensation condemn, seize or otherwise appropriate, or take
custody or control of (each a "Condemnation"), all or any portion of the
Property of the Company or any of its Subsidiaries which, when taken together
with all other Property of the Company and its Subsidiaries so condemned,
seized, appropriated, or taken custody or control of, during the twelve-month
period ending with the month in which any such Condemnation occurs, constitutes
a Substantial Portion and is reasonably likely to have a Material Adverse
Effect.

         7.9 The Company or any of its Subsidiaries shall fail within 90 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $15,000,000 in aggregate amount for the Company and its
Subsidiaries, which is not stayed on appeal.

         7.10 Any member of the Controlled Group shall fail to pay when due an
amount or amounts aggregating in excess of $15,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to terminate a
Single Employer Plan with Unfunded Liabilities in excess of $15,000,000 (a
"Material Plan") shall be filed under Section 4041(c) of ERISA by any member of
the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist that could reasonably be expected to
result in PBGC obtaining a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one
or more Multiemployer Plans which causes one or more members of the Controlled
Group to incur a current payment obligation for withdrawal liability in excess
of $15,000,000 in aggregate amount for the Controlled Group.

         7.11 The Company or any of its Subsidiaries shall be the subject of any
proceeding or investigation pertaining to the Release by the Company or any of
its Subsidiaries or any other Person of any Hazardous Substance, or any
violation of any applicable Environmental Law, which, in either case, could
reasonably be expected to have a Material Adverse Effect.

         7.12 The occurrence of any Change of Control.

         7.13. The occurrence of any "default", as defined in any Loan Document,
or the breach of any of the terms or provisions of any Loan Document, which
default or breach continues beyond any period of grace therein provided.

         7.14 Any Guaranty shall fail to remain in full force or effect or any
action shall be taken to discontinue or assert the invalidity or
unenforceability of any Guaranty by any Guarantor, or any

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Guarantor shall fail to comply with any of the terms or provisions of any
Guaranty to which it is a party, or any Guarantor denies that it has any further
liability under any Guaranty to which it is a party, or gives notice to such
effect.

                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
                 ----------------------------------------------

         8.1 ACCELERATION. (a) If any Default described in Section 7.6 or 7.7
occurs, (i) the obligations of the Lenders to make Loans hereunder and the
obligations of the Issuers to issue Facility Letters of Credit shall
automatically terminate and the Obligations shall immediately become due and
payable without presentment, demand, protest or notice of any kind, all of which
the Borrowers hereby expressly waive and without any election or action on the
part of the Agent or any Lender and (ii) each Borrower will be and become
thereby unconditionally obligated, without the need for demand or the necessity
of any act or evidence, to deliver to the Agent, at its address specified
pursuant to Article XIV, for deposit into the Letter of Credit Collateral
Account, an amount (the "Collateral Shortfall Amount") equal to the excess, if
any, of

         (A) 100% of the sum of the aggregate maximum amount remaining available
to be drawn under the Facility Letters of Credit requested by such Borrower
(assuming compliance with all conditions for drawing thereunder) issued by an
Issuer and outstanding as of such time, OVER

         (B) the amount on deposit for such Borrower in the Letter of Credit
Collateral Account at such time that is free and clear of all rights and claims
of third parties (other than the Agent and the Lenders) and that has not been
applied by the Lenders against the Obligations of such Borrower.

         (b) If any Default occurs and is continuing (other than a Default
described in Section 7.6 or 7.7), (i) the Required Lenders may terminate or
suspend the obligations of the Lenders to make Loans and the obligation of the
Issuers to issue Facility Letters of Credit hereunder, or declare the
Obligations to be due and payable, or both, whereupon (if so declared) the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrowers hereby
expressly waive and (ii) the Required Lenders may, upon notice delivered to the
Borrowers with outstanding Facility Letters of Credit and in addition to the
continuing right to demand payment of all amounts payable under this Agreement,
make demand on each such Borrower to deliver (and each such Borrower will,
forthwith upon demand by the Required Lenders and without necessity of further
act or evidence, be and become thereby unconditionally obligated to deliver), to
the Agent, at its address specified pursuant to Article XIV, for deposit into
the Letter of Credit Collateral Account an amount equal to the Collateral
Shortfall Amount payable by such Borrower.

         (c) If at any time while any Default is continuing, the Agent
determines that the Collateral Shortfall Amount at such time is greater than
zero, the Agent may make demand on the Borrowers with outstanding Facility
Letters of Credit to deliver (and each such Borrower will, forthwith upon demand
by the Agent and without necessity of further act or evidence, be and become
thereby unconditionally obligated to deliver), to the Agent as additional funds
to be deposited and held in the Letter of Credit Collateral Account an amount
equal to such Collateral Shortfall Amount payable by such Borrower at such time.

         (d) The Agent may at any time or from time to time after funds are
deposited in the Letter of Credit Collateral Account, apply such funds to the
payment of the Obligations of the relevant Borrowers

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and any other amounts as shall from time to time have become due and payable by
the relevant Borrowers to the Lenders under the Loan Documents.

         (e)   Neither the Borrowers nor any Person claiming on behalf of or
through the Borrowers shall have any right to withdraw any of the funds held in
the Letter of Credit Collateral Account. After all of the Obligations have been
indefeasibly paid in full or upon the request of the Company if no Default has
occurred and is continuing, any funds remaining in the Letter of Credit
Collateral Account shall be returned by the Agent to the applicable Borrower(s)
or paid to whoever may be legally entitled thereto at such time.

         (f)   The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords its own property, it
being understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any Persons with respect to any such
funds.

         8.2   AMENDMENTS.

         8.2.1 Subject to the provisions of this Article VIII, the Required
Lenders (or the Agent with the consent in writing of the Required Lenders) and
the Borrowers may enter into agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Loan Documents or changing in any
manner the rights of the Lenders or the Borrowers hereunder or waiving any
Default hereunder; PROVIDED, HOWEVER no such supplemental agreement shall, (i)
without the consent of the Required U.S. Revolving Credit Lenders, allow the
Company to obtain a U.S. Revolving Credit Loan or U.S. Facility Letter of Credit
if it would otherwise be unable to do so absent such supplemental agreement,
(ii) without the consent of the Required Euro Revolving Credit Lenders, allow
any Foreign Subsidiary Borrower to obtain a Euro Revolving Credit Loan or Euro
Facility Letter of Credit if it would otherwise be unable to do so absent such
supplemental agreement, (iii) without the consent of the Required U.S. Term Loan
Lenders, allow the Company to obtain the U.S. Term Loan if it would otherwise be
unable to do so absent such supplemental agreement, (iv) without the consent of
the Required Euro Term Loan Lenders, allow any Foreign Subsidiary Borrower to
obtain the Euro Term Loan if it would otherwise be unable to do so absent such
supplemental agreement, (v) without the consent of the Agent, modify any rights
or obligations of any kind of the Agent, and (vi) without the consent of the
Issuer, modify any rights or obligations of any kind of the Issuer, and PROVIDED
FURTHER that no such supplemental agreement shall, without the consent of each
Lender:

         (a)   Extend the final maturity of any Loan, Note or Reimbursement
Obligation or postpone any regularly scheduled payment of principal of any Loan
or forgive all or any portion of the principal amount thereof, or reduce the
rate or extend the time of payment of interest or fees thereon.

         (b)   Reduce the percentage specified in the definition of Required
Lenders, Required Euro Revolving Credit Lenders, Required U.S. Revolving Credit
Lenders, Required Euro Term Loan Lenders or Required U.S. Term Loan Lenders.

         (c)   Extend the Facility Termination Date or the Maturity Date, or
reduce the amount or extend the payment date for, the mandatory payments
required under Section 2.6, or increase the amount of any Commitment of any
Lender hereunder or the Aggregate Commitments other than as allowed hereunder,
or permit any Borrower to assign its rights under this Agreement.

         (d)   Amend this Section 8.2.1.

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         (e)   Release any Guarantor which is the Company or a Significant
Subsidiary.

         8.2.2 In addition to amendments effected pursuant to the foregoing,
Schedule 1.1(b) may be amended as follows:

                (i) Schedule 1.1(b) will be automatically amended to add
         Subsidiaries of the Company as additional Subsidiary Borrowers upon (a)
         execution and delivery by the Company, any such Subsidiary Borrower and
         the Agent, of a Joinder Agreement providing for any such Subsidiary to
         become a Subsidiary Borrower, (b) delivery to the Agent of (A) a
         Domestic Subsidiary Opinion or Foreign Subsidiary Opinion, as the case
         may be, in respect of such additional Subsidiary Borrower and (B) such
         other documents with respect thereto as the Agent shall reasonably
         request and (C) the written approval of the Agent in its sole
         discretion.

                (ii) Schedule 1.1(b) will be automatically amended to remove any
         Subsidiary as a Subsidiary Borrower upon (A) written notice by the
         Company to the Agent to such effect and (B) repayment in full of all
         outstanding Loans and all other obligations pursuant to any Loan
         Document of such Subsidiary Borrower.

                (iii) It is acknowledged and agreed that there may be more than
         one Foreign Subsidiary Borrower, provided that there may not be a
         number thereof more than reasonably allowed by the Agent.

         8.2.3  No modification or waiver of any provision of this Agreement
relating to the Agent shall be effective without the written consent of the
Agent. No modification or waiver of any provision of this Agreement relating to
any Issuer shall be effective without the written consent of such Issuer. The
Agent may waive payment of the fee required under Section 13.3.2 without
obtaining the consent of any other party to this Agreement. Notwithstanding
anything herein to the contrary, any Defaulting Lender shall not be entitled to
vote (whether to consent or to withhold its consent) with respect to any
amendment, modification, termination or waiver and, for purposes of determining
the Required Euro Revolving Credit Lenders, Required U.S. Revolving Credit
Lenders, Required Euro Term Loan Lenders and Required U.S. Term Loan Lenders,
the Commitments and the Loans of such Defaulting Lender shall be disregarded and
the Agent shall have the ability, but not the obligation, to replace any such
Defaulting Lender with another lender or lenders.

         8.2.4. New lenders ("New Lenders") may become Lenders hereunder and
existing Lenders may increase their Commitments hereunder by executing an
assumption agreement and other agreements and documents in form and substance
acceptable to the Company and the Agent, provided that (i) the Company and the
Agent consent thereto and (ii) without the prior written consent of all of the
Lenders, the Aggregate Commitments may not be increased by more than a Dollar
Equivalent Amount equal to $50,000,000 in excess of the Aggregate Commitments in
effect on the Effective Date.

         8.3    PRESERVATION OF RIGHTS. No delay or omission of the Lenders or
the Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence therein, and
the making of a Loan notwithstanding the existence of a Default or the inability
of the Borrowers to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.

                                       55


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                                   ARTICLE IX

                                   GUARANTEE
                                   ---------

         9.1 GUARANTEE. (a) The Company hereby unconditionally and irrevocably
guarantees to the Agent and the Lenders and their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and
performance by the Subsidiary Borrowers when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations owing by such
Subsidiary Borrowers.

         (b) The Company further agrees to pay any and all reasonable expenses
(including, without limitation, all reasonable fees and disbursements of
counsel) which are paid or incurred by the Agent, or any Lender in enforcing any
rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, the Company under
this Section or, in the case of the Agent, obtaining advice of counsel in
respect thereof. This Section shall remain in full force and effect until the
Obligations are paid in full and the Commitments are terminated, notwithstanding
that from time to time prior thereto the Borrowers may be free from any
Obligations.

         (c) No payment or payments made by any Borrower or any other Person or
received or collected by the Agent or any Lender from any Borrower or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Company hereunder, which shall, notwithstanding any such
payment or payments, remain liable hereunder for the Obligations until the
Obligations are paid in full and the Commitments are terminated.

         (d) The Company agrees that whenever, at any time, or from time to
time, it shall make any payment to the Agent or any Lender on account of its
liability under this Section, it will notify the Agent and such Lender in
writing that such payment is made under this Section for such purpose.

         9.2 NO SUBROGATION. Notwithstanding any payment or payments made by the
Company hereunder, or any set-off or application of funds of the Company by the
Agent or any Lender, the Company shall not be entitled to be subrogated to any
of the rights of the Agent or any Lender against the Borrowers or against any
guarantee or right of offset held by the Agent or any Lender for the payment of
the Obligations, nor shall the Company seek or be entitled to seek any
contribution or reimbursement from the Borrowers in respect of payments made by
the Company hereunder, until all amounts owing to the Agent and the Lenders by
the Borrowers on account of the Obligations are paid in full and the Commitments
are terminated. If any amount shall be paid to the Company on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by the Company in trust for the Agent
and the Lenders, segregated from other finds of the Company, and shall,
forthwith upon receipt by the Company, be turned over to the Agent in the exact
form received by the Company (duly endorsed by the Company to the Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as Agent may determine. The provisions of this paragraph shall
survive the termination of this Agreement and the payment in full of the
Obligations and the termination of the Commitments.

         9.3 AMENDMENTS. ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF RIGHTS.
The Company shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Company, and without notice to or further
assent by the Company, any demand for payment of any of the Obligations made by
the Agent or the Required Lenders may be rescinded by the Agent or the Required

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Lenders, and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or the Required
Lenders, and any Loan Documents and any other documents executed and delivered
in connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, in accordance with the provisions thereof as the Agent (or the
Required Lenders, as the case may be) may deem advisable from time to time, and
any guarantee or right of offset at any time held by the Agent or any Lender for
the payment of the Obligations may be sold, exchanged, waived, surrendered or
released. None of the Agent or any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Agreement or any property subject thereto. When making
any demand hereunder against the Company, the Agent or any Lender may, but shall
be under no obligation to, make a similar demand on any other Borrower or any
other guarantor, and any failure by the Agent or any Lender to make any such
demand or to collect any payments from any other Borrower or any such other
guarantor or any release of the Borrowers or such other guarantor shall not
relieve the Company of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of the Agent or any Lender against the Company. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.

         9.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Company waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender upon
this Agreement or acceptance of this Agreement; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Agreement; and
all dealings among the Borrowers, on the one hand, and the Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Agreement. The Company waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Subsidiary Borrowers and the Company with respect to the
Obligations. This Article IX shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of this Agreement, any other Loan Document, any of
the Obligations or any guarantee or right of offset with respect thereto at any
time or from time to time held by the Agent or any Lender, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance by any
Borrower) which may at any time be available to or be asserted by any Borrower
against the Agent or any Lender, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of any Borrower) that constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrowers for
the Obligations, or of the Company under this Section 9.4, in bankruptcy or in
any other instance (other than a defense of payment or performance by the
Borrowers). When pursuing its rights and remedies hereunder against the Company,
the Agent and any Lender may, but shall be under no obligation to, pursue such
rights and remedies as it may have against any Borrower or any other Person or
against any guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Agent or any Lender to pursue such other rights
or remedies or to collect any payments from the Borrowers or any such other
Person or to realize upon any such guarantee or to exercise any such right of
offset, or any release of the Borrowers or any such other Person or of any such
guarantee or right of offset, shall not relieve the Company of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Agent or any Lender
against the Company. This Article IX shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon the Company
and its successors and assigns, and shall inure to the benefit of the Agent and
the Lenders, and their respective successors, indorsees, transferees and
assigns, until all the Obligations and the obligations of the Company under this
Agreement shall have been satisfied by payment in full and the Commitments shall
be terminated, notwithstanding that from time to time during the term of this
Agreement the Borrowers may be free from any Obligations.

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         9.5  REINSTATEMENT. This Article IX shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or returned
by the Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or Trustee or similar
officer for, any Borrower or any substantial part of its property, or otherwise,
all as though such payments had not been made.

         9.6  PAYMENTS. The Company hereby agrees that all payments required to
be made by it hereunder will be made to the Agent without set-off or
counterclaim in accordance with the terms of the Obligations, including, without
limitation, in the currency in which payment is due.

                                   ARTICLE X

                               GENERAL PROVISIONS
                               ------------------

         10.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrowers contained in this Agreement shall survive delivery of the Loan
Documents and the making of the Loans herein contemplated.

         10.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to a
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

         10.3 TAXES. Any taxes (excluding income taxes and franchise taxes
(imposed in Lieu of income taxes), imposed on the Agent or any Lender as a
result of a present or former connection between the Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document)) or other similar assessments or
charges made by any governmental or revenue authority in respect of the Loan
Documents shall be paid by the Company, together with interest and penalties, if
any.

         10.4 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.

         10.5 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Agent and the Lenders and supersede
all prior agreements and understandings among the Borrowers, the Agent and the
Lenders relating to the subject matter thereof other than any fee letters among
any Borrowers and either of the Agent or Arranger and any other agreements of
any of the Borrowers with the Agent which survive the execution of the Loan
Documents.

         10.6 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.

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         10.7 EXPENSES; INDEMNIFICATION. (i) The Borrowers shall reimburse the
Agent and the Arranger for any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent, which attorneys may be employees of the Agent) paid or
incurred by the Agent or the Arranger in connection with the preparation,
negotiation, execution, delivery, syndication, review, amendment, modification,
and administration (including, without limitation, preparation of the reports
described below) of the Loan Documents. The Borrowers also agree to reimburse
the Agent, the Arranger and the Lenders for any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent, the Arranger and the Lenders, which
attorneys may be employees of the Agent, the Arranger or the Lenders) paid or
incurred by the Agent, the Arranger or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrowers acknowledge and
agree that from time to time the Agent may prepare and may distribute to the
Lenders (but shall have no obligation or duty to prepare or to distribute to the
Lenders) certain audit reports (the "Reports") pertaining to any Borrower's and
Guarantors' assets for internal use by the Agent from information furnished to
it by or on behalf of the Borrowers, after the Agent has exercised its rights of
inspection pursuant to this Agreement; provided that, if any Lender requests
copies of any future similar Reports which the Agent has prepared, then the
Agent will provide such reports to such Lender provided that such Lender has
executed an indemnity agreement acceptable to the Agent. The Borrowers further
acknowledge and agree that the Agent or any of its agents or representatives may
conduct reasonable comprehensive field audits of the Property of the Company and
each Subsidiary, financial or accounting records of the Company and each
Subsidiary and other documents of the Company and each Subsidiary, in each case
only to the extent any of the foregoing is reasonably related to the credit
evaluation by the Agent and the Lenders under this Agreement, provided that (x)
other than after the occurrence and during continuance of a Default, no more
than one such comprehensive field audit shall be conducted in any fiscal year
and (y) only after the occurrence and during continuance of a Default shall such
field audits be at the Company's expense.

              (ii) The Borrowers hereby further agree to indemnify the Agent,
the Arranger and each Lender, and their respective directors, officers and
employees against all losses, claims, damages, penalties, judgments, liabilities
and reasonable expenses (including, without limitation, all reasonable expenses
of litigation or preparation therefor whether or not the Agent, the Arranger or
any Lender is a party thereto) which any of them may pay or incur at any time
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loan or Facility Letters of Credit
hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrowers under this Section 10.7 shall
survive the termination of this Agreement.

         10.8 ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles. For purposes of Article VI (including any baskets or limitations
expressed in U.S. Dollars therein) of this Agreement, any Indebtedness,
Investment or other amount made or incurred in any currency other than U.S.
Dollars shall be deemed to be the U.S. Dollar Equivalent thereof.

         10.9 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

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         10.10 NONLIABILITY OF LENDERS. The relationship between the Borrowers
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
any Borrower. Neither the Agent nor any Lender undertakes any responsibility to
any Borrower to review or inform any Borrower of any matter in connection with
any phase of such Borrower's business or operations. Each Borrower agrees that
neither the Agent nor any Lender shall have liability to any Borrower (whether
sounding in tort, contract or otherwise) for losses suffered by any Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless it is determined by
a court of competent jurisdiction in a final and non-appealable order that such
losses resulted from the gross negligence or willful misconduct of, or violation
of applicable laws or any of the Loan Documents by, the party from which
recovery is sought. Neither the Agent nor any Lender shall have any liability
with respect to, and each Borrower hereby waives, releases and agrees not to sue
for, any special, indirect or consequential damages suffered by the Borrowers in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.

         10.11 CONFIDENTIALITY. Each Lender agrees to hold any information that
it may receive from any Borrower pursuant to this Agreement (such information,
exclusive of Non-Confidential Information as defined below, is defined herein as
the "Confidential Information") in confidence, and will not disclose or use for
any purpose other than its credit evaluation under this Agreement such
Confidential Information, except for disclosure: (i) to any Transferee or
prospective Transferee to the extent provided in Section 13.4; (ii) to legal
counsel, accountants and other professional advisors to that Lender to the
extent necessary to advise that Lender concerning its rights or obligations in
respect of this Agreement; PROVIDED that such professional advisor agrees to
hold any Confidential Information which it may receive in confidence and not to
disclose or use such Confidential Information for any purpose other than
advising that Lender with respect to its rights and obligations under this
Agreement; (iii) to regulatory officials to the extent required by applicable
law, rule, regulations, order, policy or directive (whether or not any such
policy or directive has the force of law); and (iv) pursuant to any order of any
court, arbitrator or Governmental Authority of competent jurisdiction (or as
otherwise required by law); PROVIDED, however, that the Lender (or other Person
given Confidential Information by such Lender) shall provide the Company with
prompt notice of any such required disclosure so that the Company may seek a
protective order or other appropriate remedy, and in the event that such
protective order or other remedy is not obtained, such Lender (or such other
Person) will furnish only that portion of the Confidential Information which is
legally required. As used herein, "Non-Confidential Information" shall mean any
information which (a) is or becomes generally available to the public other than
as a result of a disclosure by the Lender or the Lender's representatives, or
(b) becomes available to the Lender on a non-confidential basis from a source
other than the Company or one of its agents or (c) was known to the Lender on a
non-confidential basis prior to its disclosure to the Lender by the Company or
one of its agents.

              10.12 NONRELIANCE. Each Lender hereby represents that it is not
relying on or looking to any Margin Stock for the repayment of the Loans
provided for herein.

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                                   ARTICLE XI

                                   THE AGENT
                                   ---------

         11.1 APPOINTMENT; NATURE OF RELATIONSHIP. Bank One is hereby appointed
by the Lenders as the Agent hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
XI. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents. Each
of the Lenders hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Lender hereby waives.

         11.2 POWERS. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall not have any implied duties to the Lenders, or any obligation to
the Lenders to take any action thereunder except any action specifically
provided by the Loan Documents to be taken by the Agent.

         11.3 GENERAL IMMUNITY. Neither Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrowers, the Lenders or
any Lender for (a) any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have arisen from
the gross negligence or willful misconduct of such Person; or (b) any
determination by the Agent that compliance with any law or any governmental or
quasi-governmental rule, regulation, order, policy, guideline or directive
(whether or not having the force of law) requires the Advances and Commitments
hereunder to be classified as being part of a "highly leveraged transaction".

         11.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV; (iv)
the validity, enforceability, effectiveness, sufficiency or genuineness of any
Loan Document or any other instrument or writing furnished in connection
therewith; (v) the value, sufficiency, creation, perfection or priority of any
Lien in any collateral security; (vi) the existence or possible existence of any
Default or Unmatured Default; or (vii) the financial condition of any Borrower
or Guarantor or any of their respective Subsidiaries. The Agent shall not have
any duty to disclose to the Lenders information that is not required to be
furnished by the Borrowers to the Agent at the time, but is voluntarily
furnished by the Borrowers to the Agent (either in its capacity as the Agent or
in its individual capacity).


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         11.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or all Lenders if required under Section 8.2.1), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders and on all holders of the Obligations. The Lenders
hereby acknowledge that the Agent shall not be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.

         11.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.

         11.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper Person or Persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

         11.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify (to the extent not reimbursed by a Borrower and without
limiting the obligation of any Borrower to do so) the Agent ratably in
proportion to the U.S. Dollar Equivalent of their respective Commitments (or, if
the Commitments have been terminated, in proportion to the U.S. Dollar
Equivalent of their respective Commitments immediately prior to such
termination) (i) for any amounts not reimbursed by the Company for which the
Agent is entitled to reimbursement by the Company or the other Borrowers under
the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including, without
limitation, for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the Lenders)
and (iii) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted
against the Agent in connection with any dispute between the Agent and any
Lender or between two or more of the Lenders), or the enforcement of any of the
terms thereof or of any such other documents, PROVIDED that no Lender shall be
liable for any of the foregoing to the extent any of the foregoing is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this Section 11.8 shall survive payment of the
Obligations and termination of this Agreement.

         11.9 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice

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from a Lender or a Borrower referring to this Agreement describing such Default
or Unmatured Default and stating that such notice is a "notice of default". In
the event that the Agent receives such a notice, the Agent shall give prompt
notice thereof to the Lenders.

         11.10 RIGHTS AS A LENDER. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not an Agent,
and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Company or any of its Subsidiaries in which the Company
or such Subsidiary is not restricted hereby from engaging with any other Person.

         11.11 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Borrowers and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.

         11.12 SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Company, such resignation to be
effective upon the appointment of a successor Agent or, if no such successor
Agent has been appointed, forty-five days after the retiring Agent gives notice
of its intention to resign. The Agent may be removed at any time with or without
cause by written notice received by the Agent from the Required Lenders and,
unless a Default has occurred and is continuing, the Company, such removal to be
effective on the date specified by the Required Lenders and, unless a Default
has occurred and is continuing, the Company. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, with the consent
of the Company (unless a Default has occurred and is continuing), on behalf of
the Borrowers and the Lenders, a successor Agent to the Agent. If no such
successor Agent shall have been so appointed by the Required Lenders within
thirty days after such resigning Agent's giving notice of its intention to
resign, then such resigning Agent may appoint, with the consent of the Company
(unless a Default has occurred and is continuing), on behalf of the Company and
the Lenders, a successor Agent for itself. If the Agent has resigned or been
removed and no successor Agent has been appointed, the Lenders may perform all
the duties of the Agent hereunder and the Company shall make all payments in
respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the appointment. Any
such successor Agent shall be a commercial bank having capital and retained
earnings of at least $500,000,000. Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Agent. Upon the effectiveness of the resignation or
removal of the Agent, the resigning or removed Agent shall be discharged from
its duties and obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation or removal of an Agent, the provisions of this
Article XI shall continue in effect for the benefit of the Agent in respect of
any actions taken or omitted to be taken by it while it was acting as an Agent
hereunder and under the other Loan Documents.

         11.13 RIGHT TO INDEMNITY. The Agent shall be fully justified in failing
or refusing to take any action hereunder unless it shall first be indemnified to
its satisfaction by the Lenders pro rata against any

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and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

         11.14 DELEGATION TO AFFILIATES. The Borrowers and the Lenders agree
that the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents
and employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver, and other
protective provisions to which the Agent is entitled under Articles X and XI.

                                  ARTICLE XII

                       SETOFF; ADJUSTMENTS AMONG LENDERS
                       ---------------------------------

         12.1  SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if any Default occurs and is continuing, any
and all deposits (including all account balances, whether provisional or final
and whether or not collected or available) and any other Indebtedness at any
time held or owing by any Lender to or for the credit or account of any Borrower
may be offset and applied toward the payment of the Obligations owing to such
Lender by such Borrower.

         12.2  RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Obligations owing from a Borrower (other than
payments received pursuant to Section 3.1, 3.2, 3.4, 3.6 or 10.7) in a greater
proportion than that received by any other Lender on its Obligations owing from
such Borrower, such Lender agrees, promptly upon demand, to purchase a portion
of the Advances to such Borrower held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Advances to such
Borrower. If any Lender, whether in connection with setoff or amounts which
might be subject to setoff or otherwise, receives any protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such protection ratably in proportion to their Aggregate
Total Outstandings (in accordance with the formula set forth in the next
sentence).

                                  ARTICLE XIII

               BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
               -------------------------------------------------

         13.1  SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers and
the Lenders and their respective successors and assigns, except that (i) the
Borrowers shall not have the right to assign their rights or obligations under
the Loan Documents and (ii) any assignment by any Lender must be made in
compliance with Section 13.3. Notwithstanding clause (ii) of this Section, any
Lender may at any time, without the consent of the Borrowers or the Agent,
assign all or any portion of its rights under this Agreement, and the Loan
Documents to a Federal Reserve Bank; PROVIDED, however, that no such assignment
to a Federal Reserve Bank shall release the transferor Lender from its
obligations hereunder. The Agent may treat the payee of any Loan Document as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 13.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Agent. Any assignee
or transferee of any of the Advances or a Note agrees by acceptance thereof to
be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or

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giving such authority or consent is the owner of any of the Advances or a holder
of any Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in exchange
therefor.

         13.2   PARTICIPATIONS.

         13.2.1 PERMITTED PARTICIPANTS; EFFECT. Subject to Section 13.4, any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Obligations owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such sale
by a Lender of participating interests to a Participant such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Obligations or
Note for all purposes under the Loan Documents, all amounts payable by the
Borrowers under this Agreement shall be determined as if such Lender had not
sold such participating interests (including without limitation payments with
respect to Non-Excluded Taxes), and the Borrowers and the Agent shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under the Loan Documents.

         13.2.2 VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable with respect to any such Loan or
Commitment, extends the Facility Termination Date, postpones any date fixed for
any regularly-scheduled payment of principal of, or interest or fees on, any
such Loan or Commitment, releases the Company as guarantor of any such Loan or
releases all or substantially all of the collateral, if any, securing any such
Loan.

         13.3   ASSIGNMENTS.

         13.3.1 PERMITTED ASSIGNMENTS. Subject to Section 13.4, any Lender may,
in the ordinary course of its business and in accordance with applicable law, at
any time assign to one or more banks, finance companies, insurance companies or
other financial institutions or funds that are engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
or any other entity ("Purchasers") all or any part of its rights and obligations
under the Loan Documents. Such assignment shall be substantially in the form of
Exhibit J hereto (an "Assignment") or in such other form as may be agreed to by
the parties thereto. The consent of the Agent, any Issuer and the Company shall
be required prior to an assignment becoming effective, which consent shall not
be unreasonably withheld or delayed and shall not be required if such assignment
is to another Lender or to an Affiliate of a Lender; provided, upon and during
the continuance of any Default, the consent of the Company shall not be
required. Each such assignment shall be in an amount not less than the lesser of
(i) $5,000,000 and in multiples of $1,000,000 (or its approximate equivalent in
the relevant Available Foreign Currency) or (ii) unless such assignment is of
the entire amount of the commitments of such Lender, the remaining amount of the
assigning Lender's Commitment (calculated as at the date of such assignment)
shall not be less than $5,000,000 (or its approximate equivalent thereof in the
relevant Available Foreign Currency).

         13.3.2 EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of an
Assignment, together with any consents required by Section 13.3.1, and (ii)
payment of a $3,500 fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in such Notice
of Assignment. The Notice of Assignment shall contain a representation by the
Purchaser to the effect that none of the consideration used to make the purchase
of the Commitment and Loans under the

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applicable assignment agreement are "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan Documents
will not be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by the Company, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate Commitments
and Advances assigned to such Purchaser. Upon the consummation of any assignment
to a Purchaser pursuant to this Section 13.3.2, the transferor Lender, the Agent
and the Company shall make appropriate arrangements so that replacement Notes,
if applicable, are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their respective Commitments, as adjusted pursuant
to such assignment.

         13.4 DISSEMINATION OF INFORMATION. Each Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Company and its Subsidiaries, PROVIDED
that each Transferee and prospective Transferee agrees to be bound by Section
10.12.

         13.5 TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee that is organized under the laws of any jurisdiction other
than the United States or any State thereof (in the case of a Transferee that is
a Lender to the Company or a Domestic Subsidiary Borrower), or of the
jurisdiction in which a Foreign Subsidiary Borrower is located (in the case of a
Transferee which is a Lender to such Foreign Subsidiary Borrower), the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section 3.6.

                                  ARTICLE XIV

                                    NOTICES
                                    -------

         14.1 NOTICES. Except as otherwise permitted by Article II with respect
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, facsimile transmission
or similar writing) and shall be given to such party: (x) in the case of a
Borrower or the Agent, at its address or facsimile number set forth on the
signature pages hereof, (y) in the case of any Lender, at its address or
facsimile number set forth in Schedule 1.1(a) hereto or on the signature pages
hereto or otherwise established pursuant to an Assignment or (z) in the case of
any party, such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrowers. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; PROVIDED that notices
to the Agent under Article II shall not be effective until received.

         14.2 CHANGE OF ADDRESS. Any Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.

                                   ARTICLE XV

                                  COUNTERPARTS
                                  ------------

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         This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrowers, the
Agent and the Lenders and each party has notified the Agent by telex or
telephone, that it has taken such action.

                                  ARTICLE XVI

                    CHOICE OF LAW, CONSENT TO JURISDICTION.
                    ---------------------------------------
                    WAIVER OF JURY TRIAL, JUDGMENT CURRENCY
                    ---------------------------------------

         16.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF MICHIGAN.

         16.2 WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

         16.3 SUBMISSION TO JURISDICTION; WAIVERS. (a) Each Borrower hereby
irrevocably and unconditionally:

                  (i)   submits for itself and its property in any legal action
              or proceeding relating to this Agreement and the other Loan
              Documents to which it is a party, or for recognition and
              enforcement of any judgment in respect thereof, to the
              non-exclusive general jurisdiction of any United States federal or
              Michigan state court sitting in Detroit, Michigan and appellate
              courts from any thereof;

                  (ii)  consents that any such action or proceeding may be
              brought in such courts and waives any objection that it may now or
              hereafter have to the venue of any such action or proceeding in
              any such court or that such action or proceeding was brought in an
              inconvenient court and agrees not to plead or claim the same;

                  (iii) agrees that service of process in any such action or
              proceeding may be effected by mailing a copy thereof by registered
              or certified mail (or any substantially similar form of mail),
              postage prepaid, to the Company or such Foreign Subsidiary
              Borrower, as the case may be, at the address specified in Section
              14.1, or at such other address of which the Agent shall have been
              notified pursuant thereto;

                  (iv)  agrees that nothing herein shall affect the right to
              effect service of process in any other manner permitted by law or
              shall limit the right to sue in any other jurisdiction; and

                  (v)   waives, to the maximum extent not prohibited by law, any
              right it may have to claim or recover in any legal action or
              proceeding referred to in this subsection any special, exemplary,
              punitive or consequential damages.

                                       67

   74



         (b) Each Subsidiary Borrower hereby irrevocably appoints the Company as
its agent for service of process in any proceeding referred to in Section
16.3(i) and agrees that service of process in any such proceeding may be made by
mailing or delivering a copy thereof to it care of Company at its address for
notices set forth in Section 14.1.

         16.4 ACKNOWLEDGMENTS. Each Borrower hereby acknowledges that:

              (a) it has been advised by counsel in the negotiation, execution
         and delivery of this Agreement and the other Loan Documents;

              (b) none of the Agent or any Lender has any fiduciary
         relationship with or duty to such Borrower arising out of or in
         connection with this Agreement or any of the other Loan Documents, and
         the relationship between the Agent and the Lenders, on the one hand,
         and the Borrowers, on the other hand, in connection herewith or
         therewith is solely that of debtor and creditor; and

              (c) no joint venture is created hereby or by the other Loan
         Documents or otherwise exists by virtue of the transactions
         contemplated hereby among the Lenders or among the Borrowers and the
         Lenders.

         16.5 POWER OF ATTORNEY. Each Subsidiary Borrower hereby grants to the
Company an irrevocable power of attorney to act as its attorney-in-fact with
regard to matters relating to this Agreement and each other Loan Document,
including, without limitation, execution and delivery of any amendments,
supplements, waivers or other modifications hereto or thereto, receipt of any
notices hereunder or thereunder and receipt of service of process in connection
herewith or therewith. Each Subsidiary Borrower hereby explicitly acknowledges
that the Agent and each Lender have executed and delivered this Agreement and
each other Loan Document to which it is a party, and has performed its
obligations under this Agreement and each other Loan Document to which it is a
party, in reliance upon the irrevocable grant of such power of attorney pursuant
to this subsection. The power of attorney granted by each Subsidiary Borrower
hereunder is coupled with an interest.

         16.6 JUDGMENT. (a) If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, under applicable law that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.

         (b) The obligation of each Borrower in respect of any sum due from it
to any Lender hereunder shall, notwithstanding any judgment in a currency (the
"JUDGMENT CURRENCY") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "AGREEMENT
CURRENCY"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment Currency
such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, such Borrower agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Lender, such Lender
agrees to remit to such Borrower such excess.

                                       68
   75

         IN WITNESS WHEREOF, the Borrowers, the Lenders and the Agent have
executed this Agreement as of the date first above written.

                              DIEBOLD, INCORPORATED

                              By: /s/ Walden W. O'Dell
                                 ----------------------------------------

                              Print Name: Walden W. O'Dell
                                 ----------------------------------------

                              Title: President and Chief Executive Officer
                                    --------------------------------------

                              5995 Mayfair Road
                              North Canton, Ohio 44720-1507

                              Attention: Chief Financial Officer and Director of
                                               Treasury Services

                                       69

   76



                                 BANK ONE, MICHIGAN, as Agent and as a
                                 Lender

                                 By: /s/ Patrick E. Dunphy
                                    ------------------------------------

                                 Print Name: PATRICK E. DUNPHY
                                            ----------------------------

                                 Title: VICE PRESIDENT
                                       ---------------------------------

                                 611 Woodward Avenue
                                 Detroit Michigan 48226

                                 Attention: Paul DeMelo
                                 Phone: 313-225-2520
                                 Fax: 313-225-3269

                                       70

   77



                                    ABN-AMRO BANK N.V.

By: /s/ Louis K. McLinden, Jr.      By: /s/ C. S. Helmeci
   ---------------------------         -------------------------------

Print: Louis K. McLinden, Jr.       Print Name: CHRISTOPHER S. HELMECI
      ------------------------                 -----------------------

Title: Vice President               Title: VICE PRESIDENT
      ------------------------            ----------------------------

                                    One PPG Place Ste. 2950
                                    Pittsburgh, PA 15222

                                    Attention Chris Helmeci
                                    Phone 412-566-0984
                                    Fax: 412-566-2266

                                       71

   78



                                    BANK OF AMERICA, N.A.

                                    By: /s/ Valerie C. Mills
                                       ---------------------------------

                                    Print Name: VALERIE C. MILLS
                                              --------------------------

                                    Title: MANAGING DIRECTOR
                                          ------------------------------

                                    231 S. LaSalle Street, MC IL 1-231-09-40
                                    Chicago, IL 60697-1010
                                    Phone: 312-828-6728
                                    Fax:   312-987-0303
                                    Attention: Jeff DeJesus

                                       72

   79



                                   THE CHASE MANHATTAN BANK

                                   By: /s/ Dennis J. Dombek
                                      ---------------------------------

                                   Print Name: Dennis J. Dombek
                                              -------------------------

                                   Title: Vice President
                                         ------------------------------

                                   2300 Main Place Tower
                                   Buffalo, NY 14202

                                   Attention: Dennis Dombek
                                   Phone: 716-858-1420
                                   Fax:   716-843-4939

                                       73

   80



                                  KEYBANK NATIONAL ASSOCIATION

                                  By: /s/ Rod MacDonald
                                     ------------------------------

                                  Print Name: Rod MacDonald
                                             ----------------------

                                  Title: SVP
                                        ---------------------------

                                  127 Public Square
                                  OH01-27-0606
                                  Cleveland, OH 44114
                                  Attention: Rod MacDonald
                                  Phone: 216-689-4445
                                  Fax:   216-689-4981

                                       74
   81



                                  NATIONAL CITY BANK

                                  By: /s/ Davis R. Bonner
                                     ----------------------------

                                  Print Name: DAVIS R. BONNER
                                             --------------------

                                  Title: SENIOR VICE PRESIDENT
                                        -------------------------

                                  1900 E. Ninth Street
                                  Location Code: 2077
                                  Cleveland, OH 44114

                                  Attention: Davis R. Bonner
                                  Phone: 216-575-3285
                                  Fax:   216-222-0003

                                       75

   82




                                  THE BANK OF NEW YORK

                                  By: /s/ Walter C. Parelli
                                     ----------------------------

                                  Print Name: Walter C Parelli
                                             --------------------

                                  Title: Vice President
                                        -------------------------

                                  One Wall Street, 21st Floor
                                  New York, NY 10286

                                  Attention: Ken McDonnell
                                  Phone: 212-635-1066
                                  Fax:   212-635-6434



                                       76

   83



                                SCHEDULE 1.1(a)

                                  Commitments
                                  -----------




                                    U.S. Revolving            Euro Revolving
                                    Credit Commitments        Credit Commitments
                                    ------------------        ------------------
                                                        
Bank One, Administrative Agent      $43,333,335 (21.67%)      Euro   21,666,665  (21.67%)
Bank of America, Syndication Agent   34,000,000 (17.00%)             17,000,000  (17.00%)
KeyBank National
 Association, Co-Agent               29,333,333 (14.67%)             14,666,667  (14.67%)
National City Bank, Co-Agent         29,333,333 (14.67%)             14,666,667  (14.67%)
ABN Amro Bank, N.V.                  21,333,333 (10.67%)             10,666,667  (10.67%)
The Bank of New York                 21,333,333 (10.67%)             10,666,667  (10.67%)
The Chase Manhattan Bank             21,333,333 (10.67%)             10,666,667  (10.67%)
                                     ----------                      ----------
                                   $200,000,000               Euro  100,000,000




   84



                    Diebold, Incorporated/Bank One, Michigan
                            Loan Agreement Schedules

Schedules 1.1(b) - Subsidiary Borrowers
- ---------------------------------------

     None.

Schedule 5.7 - Litigation
- -------------------------

     None.

Schedule 5.8 - Subsidiaries
- ---------------------------

     Attached.

Schedule 6.12 - Liens
- ---------------------

     Liens in respect of Industrial Revenue Bonds issued by:

- ---------------------------   -------------------------------------------
Staunton, Virginia            Principal amount of secured indebtedness
                              not to exceed $7,500,000; Lien limited to
                              project assets
- ---------------------------   -------------------------------------------
Danville, Virginia            Principal amount of secured indebtedness
                              not to exceed $5,800,000; Lien limited to
                              project assets
- ---------------------------   -------------------------------------------
Lexington, North Carolina     Principal amount of secured indebtedness
                              not to exceed $7,500,000; Lien limited to
                              project assets
- ---------------------------   -------------------------------------------




   85



                                   EXHIBIT A

                                PRICING SCHEDULE

         The Applicable Margin for Floating Rate Loans, Eurodollar Loans and
Multicurrency Loans, the Facility Fee payable pursuant to Section 2.5 and the
Letter of Credit Fee payable pursuant to Section 2.15.6 shall, subject to the
last sentence of this Exhibit A, be determined in accordance with the Pricing
Matrix set forth below based on the Company's Total Debt to Capitalization Ratio
in effect from time to time.

Pricing Matrix (in basis points)




         -------------------------------------------------------------------------------------------------------------
         Level                     Total Debt to                 Facility Fee   Floating Rate   Applicable Eurodollar/
                                   Capitalization                               Margin for      Eurocurrency Margin
                                        Ratio                                   Revolving       for Revolving Credit
                                                                                Credit Loans    Loans, Multicurrency
                                                                                                Loans and Letter of
                                                                                                Credit Fees
         -------------------------------------------------------------------------------------------------------------
                                                                                      
         I        Less than 25%                                    8.0 b.p.        0.0 b.p.     27.0 b.p.
         -------------------------------------------------------------------------------------------------------------
         II       Greater than or equal to 25% but Less than 35%   10.0 b.p.       0.0 b.p.     35.0 b.p
         -------------------------------------------------------------------------------------------------------------
         III      Greater than or equal to 35% but Less than 45%   15.0 b.p.       0.0 b.p.     40.0 b.p.
         -------------------------------------------------------------------------------------------------------------
         IV       Greater than or equal to 45%                     20.0 b.p.       0.0 b.p.     55.0 b.p.
         -------------------------------------------------------------------------------------------------------------


         If the Aggregate Total Outstandings of all Lenders exceeds 33%, but is
less than 66%, of the Aggregate Commitments of all Lenders, the Eurodollar,
Eurocurrency and Letter of Credit Fee Applicable Margin will increase by 7.5
basis points at every level on the Pricing Matrix. If the Aggregate Total
Outstandings of all Lenders equals or exceeds 66% of the Aggregate Commitmeents
of all Lenders, the Eurodollar, Eurocurrency and Letter of Credit Fee Applicable
Margin will increase by 15 basis points at every level on the Pricing Matrix.

         Such Applicable Margin shall be determined in accordance with the
foregoing Pricing Matrix based on the Company's level as reflected in the most
recent financial statements of the Company delivered pursuant to Section 6.1.(i)
and (ii) of the Loan Agreement. Adjustments, if any, to the Applicable Margin
shall be effective 50 days after the end of each of the first three fiscal
quarters of each fiscal year of he Company and 95 days after the end of each
fiscal year of the Company, commencing with the first such day after the
Effective Date. If the Borrower fails to deliver the financials statements
required pursuant to Section 6.1(i) or (ii) at the time required or any other
Default has occurred and is continuing, then the Applicable Margin shall be the
highest Applicable Margin set forth in the foregoing Pricing Matrix until such
Default is cured or waived under the Agreement. Notwithstanding the foregoing,
the Applicable Margin for the period from the Effective Date until it shall be
adjusted for the first time shall be the Level __ Applicable Margin described
above.


   86



                                   EXHIBIT B


                                  OPINIONS FOR
                         DOMESTIC SUBSIDIARY BORROWERS

         1. The Domestic Subsidiary Borrower is duly organized, validly existing
and in good standing under the laws of _________________ [specify the
jurisdiction of its organization] (the "JURISDICTION").

         2. The Domestic Subsidiary Borrower has the power and authority, and
the legal right, to make, deliver and perform its obligations under the Loan
Agreement and the other Loan Documents to which it is a party (collectively, the
"Domestic Subsidiary Loan Documents") and to borrow under the Loan Agreement.
The Domestic Subsidiary Borrower has taken all necessary corporate and other
action to authorize the performance of its obligations under the Domestic
Subsidiary Loan Documents and to authorize the execution, delivery and
performance of the Domestic Subsidiary Loan Documents.

         3. Except for consents, authorizations, approvals, notices and filings
described on the attached Schedule 1, if any, all of which have been obtained,
made or waived and are in full force and effect, no consent or authorization of,
approval by, notice to, filing with or other act by or in respect of, any
Governmental Authority is required in connection with the borrowings by the
Domestic Subsidiary Borrower under the Domestic Subsidiary Loan Documents or
with the execution, delivery, performance, validity or enforceability of any of
the Domestic Subsidiary Loan Documents.

         4. The Domestic Subsidiary Loan Documents have been duly executed and
delivered on behalf of the Domestic Subsidiary Borrower.

         5. The execution and delivery of the Domestic Subsidiary Loan Documents
by the Domestic Subsidiary Borrower, the performance of its obligations
thereunder, the consummation of the transactions contemplated thereby, the
compliance by the Domestic Subsidiary Borrower with any of the provisions
thereof, the borrowings under the Loan Agreement and the use of proceeds
thereof, all as provided therein, (a) will not violate, or constitute a default
under, any Requirement of Law applicable to the Domestic Subsidiary Borrower and
(b) will not result in, or require, the creation or imposition of any Lien on
any of its properties or revenues pursuant to any such Requirement of Law.

         6. In any action or proceeding arising out of or relating to the
Domestic Subsidiary Loan Documents in any court in the Jurisdiction, such court
would recognize and give effect to the choice of law provisions in the Domestic
Subsidiary Loan Documents wherein the parties thereto agree that the Domestic
Subsidiary Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Michigan.

         7. The submission by the Domestic Subsidiary Borrower to the
non-exclusive jurisdiction of any Michigan State court or United States federal
court sitting in Detroit, Michigan is valid and binding under the laws of the
Jurisdiction.


   87



                                   EXHIBIT C

                                  OPINIONS FOR
                          FOREIGN SUBSIDIARY BORROWERS

         1. The Foreign Subsidiary Borrower is duly organized, validly existing
and in good standing under the laws of __________________ [specify the
jurisdiction of its organization] (the "JURISDICTION").

         2. The Foreign Subsidiary Borrower has the power and authority, and the
legal right, to make, deliver and perform its obligations under the Loan
Agreement and the other Loan Documents to which it is a party (collectively, the
"Foreign Subsidiary Loan Documents") and to borrow under the Loan Agreement. The
Foreign Subsidiary Borrower has taken all necessary corporate and other action
to authorize the performance of its obligations under the Foreign Subsidiary
Loan Documents and to authorize the execution, delivery and performance of the
Foreign Subsidiary Loan Documents.

         3. Except for consents, authorizations, approvals, notices and filings
described on the attached Schedule 1, all of which have been obtained, made or
waived and are in full force and effect, no consent or authorization of,
approval by, notice to, filing with or other act by or in respect of, any
Governmental Authority is required in connection with the borrowings by the
Foreign Subsidiary Borrower under the Foreign Subsidiary Loan Documents or with
the execution, delivery, performance, validity or enforceability of any of the
Foreign Subsidiary Loan Documents.

         4. The Foreign Subsidiary Loan Documents have been duly executed and
delivered on behalf of the Foreign Subsidiary Borrower.

         5. The execution and delivery of the Foreign Subsidiary Loan Documents
by the Foreign Subsidiary Borrower, the performance of its obligations
thereunder, the consummation of the transactions contemplated thereby, the
compliance by the Foreign Subsidiary Borrower with any of the provisions
thereof, the borrowings under the Loan Agreement and the use of proceeds
thereof, all as provided therein, (a) will not violate, or constitute a default
under, any Requirement of Law applicable to the Foreign Subsidiary Borrower and
(b) will not result in, or require, the creation or imposition of any Lien on
any of its properties or revenues pursuant to any such Requirement of Law.

         6. There are no taxes imposed by the Jurisdiction (a) on or by virtue
of the execution, delivery, enforcement or performance of the Foreign Subsidiary
Loan Documents and or (b) on any payment to be made by the Foreign Subsidiary
Borrower pursuant to the Foreign Subsidiary Loan Documents other than any
Non-Excluded Taxes payable by the Foreign Subsidiary Borrower as provided in the
Loan Agreement.

         7. To ensure the legality, validity, enforceability or admissibility in
evidence of the Foreign Subsidiary Loan Documents it is not necessary that any
Foreign Subsidiary Loan Documents or any other document be filed, registered or
recorded with, or executed or notarized before, any court of other authority of
the Jurisdiction or that any registration charge or stamp or similar tax be paid
on or in respect of the Foreign Subsidiary Loan Documents, except for those
described on Schedule 1 hereto, all of which have been duly made.



   88



         8. The Foreign Subsidiary Loan Documents are in proper legal form under
the laws of the Jurisdiction for the enforcement thereof against the Foreign
Subsidiary Borrower under the laws of the Jurisdiction.

         9. In any action or proceeding arising out of or relating to the
Foreign Subsidiary Loan Documents in any court in the Jurisdiction, such court
would recognize and give effect to the choice of law provisions in the Foreign
Subsidiary Loan Documents wherein the parties thereto agree that the Foreign
Subsidiary Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Michigan.

         10. It is not necessary under the laws of the Jurisdiction (a) in order
to enable the Agent and the Lenders or any of them to enforce their respective
rights of the Foreign Subsidiary Loan Documents or (b) by reason of the
execution of the Foreign Subsidiary Loan Documents or the performance of the
Foreign Subsidiary Loan Documents that any of them should be licensed, qualified
or entitled to carry on business in the Jurisdiction.

         11. Neither the Agent nor any of the Lenders will be deemed to be
resident, domiciled, carrying on business or subject to taxation in the
Jurisdiction merely by reason of the execution of the Foreign Subsidiary Loan
Documents or the performance or enforcement of any thereof. The performance by
the Agent and the Lenders or any of them of any action required or permitted
under the Foreign Subsidiary Loan Documents will not violate any law or
regulation, or be contrary to the public policy, of the Jurisdiction.

         12. If any judgment of a competent court outside the Jurisdiction were
rendered against the Foreign Subsidiary Borrower in connection with any action
arising out of or relating to the Foreign Subsidiary Loan Documents, such
judgment would be recognized and could be sued upon in the courts of the
Jurisdiction, and such courts could grant a judgment which would be enforceable
against the Foreign Subsidiary Borrower in the Jurisdiction without any retrial
unless it is shown that (a) the foreign court did not have jurisdiction in
accordance with its jurisdictional rules, (b) the party against whom the
judgment of such foreign court was obtained had no notice of the proceedings or
(c) the judgment of such foreign court was obtained through collusion or fraud
or was based upon clear mistake of fact or law.

         13. The submission by the Foreign Subsidiary Borrower to the
non-exclusive jurisdiction of any Michigan State court or United States federal
court sitting in Detroit, Michigan is valid and binding under the laws of the
Jurisdiction.

                                       2

   89




                                   EXHIBIT D

                               GUARANTY AGREEMENT

                                    PARTIES
                                    -------

         THIS GUARANTY AGREEMENT, dated as of December 1, 1999 (this
"Guaranty"), is made by each of the undersigned (collectively, the "Guarantors")
in favor of each of the Lenders as defined below.

                                    RECITALS
                                    --------

         A. Diebold, Incorporated, an Ohio corporation (the "Company"), the
Subsidiary Borrowers from time to time parties thereto (the "Subsidiary
Borrowers", and together with the Company, the "Borrowers"), the lenders from
time to time parties hereto (the "Lenders"), and Bank One, Michigan, a Michigan
banking corporation, as agent for the Lenders (in such capacity, the "Agent")
have executed a Loan Agreement dated as of the date hereof (as amended or
modified from time to time, and together with any agreement executed in
replacement therefor or otherwise refinancing such credit agreement, the "Loan
Agreement", and the Loan Agreement, the Loan Documents (as defined in the Loan
Agreement), any Rate Hedging Agreements among any Borrowers and any Lenders or
their Affiliates, and all other agreements and instruments among the Borrowers,
the Agent and the Lenders, or any of them, executed in connection therewith,
whether now or hereafter executed, and any supplements or modifications thereof
and any agreements or instruments issued in exchange or replacement therefor,
collectively referred to as the "Agreements").

         B. Pursuant to the terms of the Agreements the Lenders have agreed to
make certain extensions of credit to the Borrowers.

         C. Each Guarantor is an affiliate of the Borrowers, the Borrowers and
the Guarantors are engaged in related businesses, and the Guarantors have
derived or will derive substantial direct and indirect benefit from the making
of the extensions of credit by the Lenders.

         D. The obligation of the Lenders to make or continue to make certain
extensions of credit under the Loan Agreement are conditioned upon, among other
things, the execution and delivery by the Guarantors of this Guaranty, and the
extensions of credit under the Loan Agreement were made in reliance upon the
issuance of this Guaranty.

                                   AGREEMENT
                                   ---------

         In consideration of the premises and to induce the Lenders to make
loans, extend credit or make other financial accommodations, and to continue to
keep such credit and other financial accommodations available to the Borrowers,
each Guarantor hereby agrees with and for the benefit of the Lenders as follows:

         1. DEFINED TERMS. As used in this Guaranty, terms defined in the first
paragraph of this Guaranty and in the recital paragraphs are used herein as
defined therein, and the following terms shall have the following meanings:



   90



            "Cumulative Guarantors" shall mean the Guarantors and all other
future guarantors of the Guaranteed Obligations.

            "Guaranteed Obligations" shall mean all indebtedness, obligations
and liabilities of any kind of each of the Borrowers to any of the Lenders or
the Agent in connection with or pursuant to the Agreements, including without
limitation, all principal, interest (including but without limitation interest
which, but for the filing of a bankruptcy petition, would have accrued on the
principal amount of the Guaranteed Obligations), reimbursement obligations,
indemnity obligations, charges, fees and costs and expenses, including without
limitation reasonable fees and expenses of counsel, in each case whether now
existing or hereafter arising, direct or indirect, absolute or contingent, joint
and/or several, secured or unsecured, arising by operation of law or otherwise.

All other capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Loan Agreement.

         2. GUARANTEE. (a) Each Guarantor hereby guarantees to the Lenders and
the Agent, irrevocably, absolutely and unconditionally, as primary obligor and
not as surety only, the prompt and complete payment of the Guaranteed
Obligations. Notwithstanding the foregoing or anything else herein to the
contrary, any Guarantor that is a Foreign Subsidiary shall guarantee only the
Guaranteed Obligations consisting of Obligations of Foreign Subsidiary Borrowers
organized in the jurisdiction in which such Guarantor is organized.

            (b) All payments to be made under this Guaranty (except pursuant to
paragraph (c) below) shall be made to each Lender pro rata in accordance with
the unpaid amount of Guaranteed Obligations held by each Lender at the time of
such payment.

            (c) The Guarantors agree to make prompt payment, on demand, of any
and all reasonable costs and expenses incurred by the Agent or any Lender in
connection with enforcing the obligations of any of the Guarantors hereunder,
including without limitation the reasonable fees and disbursements of counsel.

         3. CONSENTS TO RENEWALS, MODIFICATIONS AND OTHER ACTIONS AND EVENTS.
This Guaranty and all of the obligations of the Guarantors hereunder shall
remain in full force and effect without regard to and shall not be released,
affected or impaired by: (a) any amendment, assignment, transfer, modification
of or addition or supplement to the Guaranteed Obligations or any Agreement; (b)
any extension, indulgence, increase in the Guaranteed Obligations or other
action or inaction in respect of any of the Agreements or otherwise with respect
to the Guaranteed Obligations, or any acceptance of security for, or other
guaranties of, any of the Guaranteed Obligations or Agreements, or any
surrender, release, exchange, impairment or alteration of any such security or
guaranties including without limitation the failing to perfect a security
interest in any such security or abstaining from taking advantage of or
realizing upon any other guaranties or upon any security interest in any such
security; (c) any default by any Borrower under, or any lack of due execution,
invalidity or unenforceability of, or any irregularity or other defect in, any
of the Agreements; (d) any waiver by any Lender or the Agent or any other person
of any required performance or otherwise of any

                               GUARANTY AGREEMENT

                                      -2-


   91



condition precedent or waiver of any requirement imposed by any of the
Agreements, any other guaranties or otherwise with respect to the Guaranteed
Obligations; (e) any exercise or non-exercise of any right, remedy, power or
privilege in respect of this Guaranty, any other guaranty or any of the
Agreements; (f) any sale, lease, transfer or other disposition of the assets of
any Borrower or any consolidation or merger of any Borrower with or into any
other person, corporation, or entity, or any transfer or other disposition of
any shares of Capital Stock of any Borrower; (g) any bankruptcy, insolvency,
reorganization or similar proceedings involving or affecting any Borrower or any
other guarantor of the Guaranteed Obligations; (h) the release or discharge of
any Borrower or Guarantor from the performance or observance of any agreement,
covenant, term or condition under any of the Guaranteed Obligations or contained
in any of the Agreements, of any Cumulative Guarantor or of this Guaranty, by
operation of law or otherwise; or (i) any other cause whether similar or
dissimilar to the foregoing which, in the absence of this provision, would
release, affect or impair the obligations, covenants, agreements and duties of
any Guarantor hereunder, including without limitation any act or omission by any
Lender or the Agent or any other any person which increases the scope of any
Guarantor's risk; and in each case described in this paragraph whether or not
any Guarantor shall have notice or knowledge of any of the foregoing, each of
which is specifically waived by each Guarantor. Each Guarantor warrants to the
Lenders and the Agent that it has adequate means to obtain from each Borrower on
a continuing basis information concerning the financial condition and other
matters with respect to each Borrower and that it is not relying on any Lender
or the Agent to provide such information either now or in the future.

         4. WAIVERS, ETC. Each Guarantor unconditionally waives: (a) notice of
any of the matters referred to in Paragraph 3 above; (b) all notices which may
be required by statute, rule of law or otherwise to preserve any rights of any
Lender or the Agent, including, without limitation, notice to the Guarantors of
default, presentment to and demand of payment or performance from any Borrower
and protest for non-payment or dishonor; (c) any right to the exercise by any
Lender or the Agent of any right, remedy, power or privilege in connection with
any of the Agreements; (d) any requirement of diligence or marshaling on the
part of any Lender or the Agent; (e) any requirement that any Lender or the
Agent, in the event of any default by any Borrower, first make demand upon or
seek to enforce remedies against, any Borrower or any other Cumulative Guarantor
before demanding payment under or seeking to enforce this Guaranty; (f) any
right to notice of the disposition of any security which any Lender or the Agent
may hold from any Borrower or otherwise and any right to object to the
commercial reasonableness of the disposition of any such security; and (g) all
errors and omissions in connection with any Lender's or the Agent's
administration of any of the Guaranteed Obligations, any of the Agreements or
any other Cumulative Guarantor, or any other act or omission of any Lender or
the Agent which changes the scope of such Guarantor's risk. The obligations of
each Guarantor hereunder shall be complete and binding forthwith upon the
execution of this Guaranty by it and subject to no condition whatsoever,
precedent or otherwise, and notice of acceptance hereof or action in reliance
hereon shall not be required.

         5. NATURE OF GUARANTY; PAYMENTS. This Guaranty is an absolute,
unconditional, irrevocable and continuing guaranty of payment and not a guaranty
of collection, and is wholly independent of and in addition to other rights and
remedies of any Lender or the Agent with respect to any Borrower, any
collateral, any Cumulative Guarantor or otherwise, and it is not contingent upon
the pursuit by any Lender or the Agent of any such rights and remedies, such
pursuit being hereby waived by each Guarantor. The obligations of each Guarantor
hereunder shall be continuing and shall continue (regardless of any statute of

                               GUARANTY AGREEMENT

                                      -3-

   92



limitations otherwise applicable) and cover and include all the Guaranteed
Obligations of each Borrower accruing or in the process of accruing to the
Lenders or the Agent before the Agent delivers to the Guarantors a release of
this Guaranty, which is in writing, refers specifically to this Guaranty, and is
signed by a President, a Senior Vice President, or a Vice President of the
Agent. Nothing shall discharge or satisfy the liability of any Guarantor
hereunder except the full and irrevocable payment and performance of all of the
Guaranteed Obligations and the expiration or termination of all the Agreements.
All payments to be made by the Guarantors hereunder shall be made without
set-offs or counterclaim, and each Guarantor hereby waives the assertion of any
such set-offs or counterclaims in any proceeding to enforce its obligations
hereunder. All payments to be made by each Guarantor hereunder shall also be
made without deduction or withholding for, or on account of, any present or
future taxes or other similar charges of whatsoever nature, provided that if any
Guarantor is nevertheless required by law to make any deduction or withholding,
such Guarantor shall pay to the Lenders and the Agent such additional amounts as
may be necessary to ensure that the Lenders and the Agent shall receive a net
sum equal to the sum which it would have received had no such deduction or
withholding been made. Each Guarantor agrees that, if at any time all or any
part of any payment previously applied by any Lender or the Agent to any of the
Guaranteed Obligations must be returned by such Lender or the Agent for any
reason, whether by court order, administrative order, or settlement and whether
as a "voidable preference", "fraudulent conveyance" or otherwise, each Guarantor
remains liable for the full amount returned as if such amount had never been
received by such Lender or the Agent, notwithstanding any termination of this
Guaranty or any cancellation of any of the Agreements and the Guaranteed
Obligations and all obligations of each Guarantor hereunder shall be reinstated
in such case.

         6. EVIDENCE OF GUARANTEED OBLIGATIONS. Each Lender's and the Agent's
books and records showing the Guaranteed Obligations shall be admissible in any
action or proceeding, shall be binding upon each Guarantor for the purpose of
establishing the Guaranteed Obligations due from the Borrowers and shall
constitute prima facie proof, absent manifest error, of the Guaranteed
Obligations of the Borrowers to such Lender or the Agent, as well as the
obligations of each Guarantor to such Lender or the Agent.

         7. SUBORDINATION, SUBROGATION, CONTRIBUTION, ETC. Each Guarantor agrees
that all present and future indebtedness, obligations and liabilities of the
Borrowers to such Guarantor shall be fully subordinate and junior in right and
priority of payment to any indebtedness of the Borrowers to the Lenders, and no
Guarantor shall have any right of subrogation, contribution (including but
without limitation the contribution and subrogation rights granted below),
reimbursement or indemnity whatsoever nor any right of recourse to security for
the debts and obligations of the Borrowers unless and until all Guaranteed
Obligations shall have been paid in full, such payment is not subject to any
possibility of revocation or rescission and all Agreements have expired or been
terminated. Subject to the preceding sentence, if any Guarantor makes a payment
in respect of the Guaranteed Obligations it shall be subrogated to the rights of
the payee against the Borrowers with respect to such payment and shall have the
rights of contribution set forth below against all other Cumulative Guarantors
and each Guarantor agrees that all other Cumulative Guarantors shall have the
rights of contribution against it set forth below. If any Guarantor makes a
payment in respect of the Guaranteed Obligations that is smaller in proportion
to its Payment Share (as hereinafter defined) than such payments made by the
other Cumulative Guarantors are in proportion to the amounts of their respective
Payment Shares, such Guarantor shall, when permitted by the first sentence of
this Section 7, pay to the other Guarantors an amount such that the net payments
made by the Cumulative



                               GUARANTY AGREEMENT

                                       -4-

   93




Guarantors in respect of the Guaranteed Obligations shall be shared among the
Cumulative Guarantors pro rata in proportion to their respective Payment Shares.
If any Guarantor receives any payment by way of subrogation that is greater in
proportion to the amount of its Payment Share than the payments received by the
other Cumulative Guarantors are in proportion to the amounts of their respective
Payment Shares, such Guarantor shall, when permitted by the first sentence of
this Section 7, pay to the other Cumulative Guarantors an amount such that the
subrogation payments received by the Guarantors shall be shared among the
Cumulative Guarantors pro rata in proportion to their respective Payment Shares.

         For purposes of this Guaranty, the "Payment Share" of any Cumulative
Guarantor shall be the sum of (a) the aggregate proceeds of the Guaranteed
Obligations received by such Guarantor (and, if received subject to a repayment
obligation, remaining unpaid on the Determination Date, as hereinafter defined),
plus (b) the product of (i) the aggregate Guaranteed Obligations remaining
unpaid on the date such Guaranteed Obligations become due and payable in full,
whether by stated maturity, acceleration or otherwise (the "Determination Date")
reduced by the amount of such Guaranteed Obligations attributed to all of the
Cumulative Guarantors pursuant to clause (a) above, times (ii) a fraction, the
numerator of which is such Guarantor's net worth on the effective date of this
Guaranty (determined as of the end of the immediately preceding fiscal reporting
period of the Guarantor), and the denominator of which is the aggregate net
worth of all of the Cumulative Guarantors, determined for each Cumulative
Guarantor on the respective effective date of the guaranty signed by such
Cumulative Guarantor.

         8. ASSIGNMENT BY LENDERS. Each Lender and the Agent shall have the
right to assign and transfer this Guaranty to any assignee of any portion of the
Guaranteed Obligations. Each Lender's and the Agent's successors and assigns
hereunder shall have the right to rely upon and enforce this Guaranty.

         9. JOINT AND SEVERAL OBLIGATIONS. The obligations of the Guarantors
hereunder and all other Cumulative Guarantors shall be joint and several and
each Guarantor shall be liable for all of the Guaranteed Obligations to the
extent provided herein regardless of any other Cumulative Guarantors, and each
Lender and the Agent shall have the right, in its sole discretion to pursue its
remedies against any Guarantor without the need to pursue its remedies against
any other Cumulative Guarantor, whether now or hereafter in existence, or
against any one or more Cumulative Guarantors separately or against any two or
more jointly, or against some separately and some jointly.

         10. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents
and warrants to the Lenders and the Agent that:

             (a) the execution, delivery and performance by the Guarantor of
this Guaranty are within its corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official, and do not contravene or
constitute a default under, any provision of applicable law or regulation or of
the articles of incorporation or other charter documents or bylaws of such
Guarantor, or of any agreement, judgment, injunction, order, decree or other
instrument binding upon such Guarantor, or result in the creation or imposition
of any lien, security interest or other charge or encumbrance on any asset of
such Guarantor;

                               GUARANTY AGREEMENT

                                      -5-
   94



             (b) this Guaranty constitutes a legal, valid and binding agreement
of each Guarantor, enforceable against the Guarantor in accordance with its
terms;

             (c) as of the date hereof, each of the following is true and
correct for each Guarantor: (i) the fair saleable value and the fair valuation
of such Guarantor's property is greater than the total amount of its liabilities
(including contingent liabilities) and greater than the amount that would be
required to pay its probable aggregate liability on its existing debts as they
become absolute and matured, (ii) each Guarantor's capital is not unreasonably
small in relation to its current and/or contemplated business or other
undertaken transactions, and (iii) each Guarantor does not intend to incur, or
believe that it will incur, debt beyond its ability to pay such debts as they
become due; and

             (d) the Borrowers, the Guarantors and the other affiliates of the
Borrowers are engaged as an integrated group in related businesses; that the
integrated operation requires financing on such a basis that credit supplied to
the Borrowers can be made available from time to time to various subsidiaries of
the Borrowers, as required for the continued successful operation of the
integrated group as a whole; and that each Guarantor has requested the Lenders
to continue to lend and to make credit available to the Borrowers for the
purpose of financing the integrated operations of the Borrowers and its
subsidiaries, including each Guarantor, with each Guarantor expecting to derive
benefit, direct or indirectly, from the loans and other credit extended by the
Lenders to the Borrowers, both in such Guarantor's separate capacity and as a
member of the integrated group, inasmuch as the successful operation and
condition of each Guarantor is dependent upon the continued successful
performance of the functions of the integrated group as a whole. Each of the
Guarantors hereby determines and agrees that the execution, delivery and
performance of this Guaranty are necessary and convenient to the conduct,
promotion or attainment of the business of such Guarantor and in furtherance of
the corporate purposes of such Guarantor.

         11. BINDING ON SUCCESSORS AND ASSIGNS. This Guaranty shall be the
valid, binding and enforceable obligation of the Guarantors and their successors
and assigns.

         12. INDEMNITY. As a separate, additional and continuing obligation,
each Guarantor unconditionally and irrevocably undertakes and agrees with each
Lender and the Agent that, should the Guaranteed Obligations not be recoverable
from any Guarantor as guarantor under this Guaranty for any reason whatsoever
(including, without limitation, by reason of any provision of any of the
Guaranteed Obligations or the Agreements being or becoming void, unenforceable,
or otherwise invalid under any applicable law) then, notwithstanding any
knowledge thereof by any Lender or the Agent at any time, each Guarantor as
original and independent obligor, upon demand by the Agent, will make payment to
the Lenders and the Agent of the Guaranteed Obligations by way of a full
indemnity.

         13. CUMULATIVE RIGHTS AND REMEDIES, ETC. The obligations of each
Guarantor under this Guaranty are continuing obligations and a new cause of
action shall arise in respect of each default hereunder. No course of dealing on
the part of any Lender or the Agent, nor any delay or failure on the part of any
Lender or the Agent in exercising any right, power or privilege hereunder, shall
operate as a waiver of such right, power, or privilege or otherwise prejudice
the Lenders' or the Agent's rights and remedies hereunder; nor shall any single
or partial exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege. No right or remedy conferred
upon or reserved to any

                               GUARANTY AGREEMENT

                                      -6-

   95



Lender or the Agent under this Guaranty is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative and in addition
to every other right or remedy given hereunder or now or hereafter existing
under any applicable law. Every right and remedy given by this Guaranty or by
applicable law to the Lenders and the Agent may be exercised from time to time
and as often as may be deemed expedient by any Lender or the Agent.

         14. SEVERABILITY. If any one or more provisions of this Guaranty should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected, impaired, prejudiced or disturbed thereby, and any provision
hereunder found partially unenforceable shall be interpreted to be enforceable
to the fullest extent possible. If at any time all or any portion of the
obligation of any Guarantor under this Guaranty would otherwise be determined by
a court of competent jurisdiction to be invalid, unenforceable or avoidable
under Section 548 of the federal Bankruptcy Code or under any fraudulent
conveyance or transfer laws or similar applicable law of any jurisdiction, then
notwithstanding any other provisions of this Guaranty to the contrary such
obligation or portion thereof of such Guarantor under this Guaranty shall be
limited to the greatest of (i) the value of any quantified economic benefits
accruing to such Guarantor as a result of this Guaranty, (ii) an amount equal to
95% of the excess on the date the relevant Guaranteed Obligations were incurred
of the present fair saleable value of the assets of such Guarantor over the
amount of all liabilities of such Guarantor, contingent or otherwise, and (iii)
the maximum amount of which this Guaranty is determined to be enforceable.

         15. MERGER; AMENDMENTS; HEADINGS. This Guaranty is intended as a final
expression of the subject matter hereof and is also intended as a complete and
exclusive statement of the terms hereof. Each Guarantor's liability hereunder is
independent of and in addition to its liability under any other guaranty
previously of subsequently executed. No course of dealing, course of performance
or trade usage, and no parole evidence of any nature, shall be used to
supplement or modify any terms hereof, nor are there any conditions to the full
effectiveness of this Guaranty. None of the terms and provisions of this
Guaranty may be waived, altered, modified or amended in any way except by an
instrument in writing executed by duly authorized officers of the Agent and the
Guarantors. The headings of the various paragraphs hereof are for the
convenience of reference only and shall in no way modify any of the terms
hereof.

         16. CHOICE OF LAW. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF MICHIGAN.

         17. WAIVER OF JURY TRIAL. EACH GUARANTOR, AND THE AGENT AND EACH LENDER
IN ACCEPTING THIS GUARANTY, HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS GUARANTY OR THE RELATIONSHIP ESTABLISHED HEREUNDER.

         18. SUBMISSION TO JURISDICTION; WAIVERS. (a) Each Guarantor hereby
irrevocably and unconditionally:



                               GUARANTY AGREEMENT

                                      -7-

   96




               (i) submits for itself and its property in any legal action or
          proceeding relating to this Guaranty, or for recognition and
          enforcement of any judgment in respect hereof, to the non-exclusive
          general jurisdiction of any United States federal or Michigan state
          court sitting in Detroit, Michigan and appellate courts from any
          thereof;

               (ii) consents that any such action or proceeding may be brought
          in such courts and waives any objection that it may now or hereafter
          have to the venue of any such action or proceeding in any such court
          or that such action or proceeding was brought in an inconvenient court
          and agrees not to plead or claim the same;

               (iii) agrees that service of process in any such action or
          proceeding may be effected by mailing a copy thereof by registered or
          certified mail (or any substantially similar form of mail), postage
          prepaid, to such Guarantor at the address specified in Section 19, or
          at such other address of which the Agent shall have been notified
          pursuant thereto;

               (iv) agrees that nothing herein shall affect the right to effect
          service of process in any other manner permitted by law or shall limit
          the right to sue in any other jurisdiction; and

               (v) waives, to the maximum extent not prohibited by law, any
          right it may have to claim or recover in any legal action or
          proceeding referred to in this subsection any special, exemplary,
          punitive or consequential damages.

         19.   NOTICES. Any notice, demand, consent or request given or made to
each Guarantor by any Lender or the Agent shall be deemed to have been duly
given or made if sent in writing (including telecommunications) to such
Guarantor to the address or telex or telecopy number set forth below the name of
such Guarantor on the signature page hereof, or at such other address or telex
or telecopy number as such Guarantor may hereafter specify to the Agent in
writing. All notices or other communications sent by means of telecopy, telex or
other wire transmission shall be made with request for assurance of receipt in a
manner typical with respect to communications of that type. Written notices or
other communications shall be deemed delivered upon receipt if delivered by hand
or by telecopy, three Business Days after mailing if mailed, or one Business Day
after deposit with an overnight courier service if delivered by overnight
courier. Notices or other communications delivered by hand shall be deemed
delivered upon receipt.

                               GUARANTY AGREEMENT

                                      -8-

   97

EXECUTED and effective as of the day and year first above written.

                             DIEBOLD INVESTMENT COMPANY


                             By:____________________________________

                                     Title:_________________________

                                     Wilmington Trust Company
                                     Rodney Square North
                                     1100 North Market St.
                                     Wilmington, DE 19890

                             DIEBOLD FINANCE COMPANY, INC.


                             By:____________________________________

                                     Title:_________________________

                                     Wilmington Trust Company
                                     Rodney Square North
                                     1100 North Market St.
                                     Wilmington, DE 19890

                             DIEBOLD CREDIT CORPORATION


                             By:____________________________________

                                     Title:_________________________

                                     Diebold, Incorporated
                                     5995 Mayfair Rd.
                                     North Canton, OH 44720


                               GUARANTY AGREEMENT

                                      -9-

   98

                             DIEBOLD SST HOLDING COMPANY, INC.

                             By:____________________________________

                                     Title:_________________________

                                     Diebold, Incorporated
                                     5995 Mayfair Rd.
                                     North Canton, OH 44720


                             DIEBOLD SELF-SERVICES SYSTEMS

                             By:____________________________________

                                     Title:_________________________

                                     Diebold, Incorporated
                                     5995 Mayfair Rd.
                                     North Canton, OH 44720

                             DIEBOLD HOLDING COMPANY, INC.

                             By:____________________________________

                                     Title:_________________________

                                     Diebold, Incorporated
                                     5995 Mayfair Rd.
                                     North Canton, OH 44720

                               GUARANTY AGREEMENT

                                      -10-

   99

                             DIEBOLD MEXICO HOLDING COMPANY, INC.

                             By:____________________________________

                                     Title:_________________________

                                     Diebold, Incorporated
                                     5995 Mayfair Rd.
                                     North Canton, OH 44720

                             DIEBOLD LATIN AMERICA HOLDING COMPANY,
                             INC.

                             By:____________________________________

                                     Title:_________________________

                                     Diebold, Incorporated
                                     5995 Mayfair Rd.
                                     North Canton, OH 44720


                               GUARANTY AGREEMENT

                                      -11-

   100

                                   EXHIBIT E

                               JOINDER AGREEMENT

         THIS JOINDER AGREEMENT, dated as of ____________, ____, is entered into
by _______________ (the "New Subsidiary Borrower") pursuant to the Loan
Agreement dated as of December 1, 1999 (as amended or modified from time to
time, the "Loan Agreement"), among Diebold, Incorporated (the "Company"), the
Subsidiary Borrowers party thereto, the Lenders party thereto and Bank One,
Michigan, as Agent.

                                  WITNESSETH:

         WHEREAS, the parties to this Joinder Agreement wish to designate the
New Subsidiary Borrower as a Subsidiary Borrower under the Loan Agreement in the
manner hereinafter set forth; and

         WHEREAS, this Joinder Agreement is entered into pursuant to the Loan
Agreement;

         NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:

         1. The New Subsidiary Borrower hereby acknowledges that it has received
and reviewed a copy of the Loan Agreement and the other Loan Documents and
unconditionally agrees to: (a) join the Loan Agreement and the other Loan
Documents as a Subsidiary Borrower, (b) be bound by, and hereby ratifies and
confirms, all covenants, agreements, consents, submissions, appointments,
acknowledgments and other terms and provisions attributable to a Subsidiary
Borrower in the Loan Agreement and the other Loan Documents; and (c) perform all
obligations required of it as a Subsidiary Borrower by the Loan Agreement and
the other Loan Documents.

         2. The New Subsidiary Borrower hereby represents and warrants that the
representations and warranties with respect to it contained in, or made or
deemed made by it in, the Loan Agreement and any other Loan Document are true
and correct on the date hereof.

         3. The address and jurisdiction of incorporation of the New Subsidiary
Borrower is set forth in Schedule A to this Joinder Agreement.

         4. The Company agrees that its guarantee contained in Article IX of the
Loan Agreement shall remain in full force and effect after giving effect to this
Joinder Agreement, including without limitation after including the New
Subsidiary Borrower as a Subsidiary Borrower under the Loan Agreement.

         5. This Joinder Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Michigan.

         6. Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Loan Agreement.

         7. This Joinder Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement.



   101



         IN WITNESS WHEREOF, each of the undersigned has caused this Joinder
Agreement to be duly executed and delivered as of the day and year set forth
above.

                                    __________________________,
                                    as a Subsidiary Borrower

                                    By:________________________________
                                    Name: _____________________________
                                    Title: ____________________________

                                    DIEBOLD, INCORPORATED

                                    By:________________________________
                                    Name: _____________________________
                                    Title: ____________________________


Accepted and Acknowledged:
- --------------------------

BANK ONE, MICHIGAN,
as Agent

By:________________________________
Name: _____________________________
Title: ____________________________


                                       2
   102



                                   SCHEDULE A
                                   ----------

                           ADMINISTRATIVE INFORMATION





   103



                                  EXHIBIT F-I

                             REVOLVING CREDIT NOTE

_______________                                           ______________,_______

         ____________________________ ("Borrower"), unconditionally promises to
pay to the order of ________________ ("Lender") on or before the Facility
Termination Date (as defined in the Loan Agreement hereinafter referred to) for
the account of its applicable Lending Installation the principal sum of
___________________ or the aggregate unpaid principal amount of all Revolving
Credit Loans made by the Lender to the Borrower pursuant to the Agreement
whichever is less, in immediately available funds at the Lending Installation of
the Agent designated by the Agent for the Borrower, together with interest on
the unpaid principal amount hereof at the rates and on the dates set forth in
the Loan Agreement.

         The Lender shall, and is hereby authorized to, record in accordance
with its usual practice, the date and amount of each Revolving Credit Loan, the
date and amount of each principal payment and the date to which payment of this
Note has been extended, provided, however, that failure to do so shall not
affect the Borrower's obligation to pay amounts due hereunder.

         The Borrower expressly waives any presentments, demand, protest or
notice in connection with this Revolving Credit Note now, or hereafter, required
by applicable law.

         This Revolving Credit Note is one of the Revolving Credit Notes issued
pursuant to the provisions of the Loan Agreement dated as of December 1, 1999
among Diebold, Incorporated, the Subsidiary Borrowers party thereto, the Lenders
party thereto, and Bank One, Michigan, as Agent, as it may be amended from time
to time (the "Loan Agreement"), to which reference is hereby made for a
statement of the terms and conditions under which this Revolving Credit Note may
be prepaid or its maturity date extended or accelerated.

         The Revolving Credit Note shall be construed in accordance with and
governed by the laws of Michigan applicable to contracts made and performed in
Michigan by a Michigan borrower and a Michigan banking corporation located in
Michigan, as lender.


                                       _______________________________

                                       By: ___________________________

                                       Title: ________________________



   104



                                  EXHIBIT F-2

                                   TERM NOTE
_______________                                           ______________,_______

         ____________________("Borrower"), unconditionally promises to pay to
the order of ________________("Lender") on or before the Maturity Date (as
defined in the Loan Agreement hereinafter referred to) for the account of its
applicable Lending Installation the principal sum of__________________
(_____________) or the aggregate unpaid principal amount of all Term Loans made
by the Lender to the Borrower pursuant to the Agreement whichever is less, in
immediately available funds at the Lending Installation of the Agent designated
by the Agent for the Borrower, together with principal installments and interest
on the unpaid principal amount hereof at the rates and on the dates set forth in
the Loan Agreement.

         The Lender shall, and is hereby authorized to, record in accordance
with its usual practice, the date and amount of each Term Loan, the date and
amount of each principal payment and the date to which payment of this Note has
been extended, provided, however, that failure to do so shall not affect the
Borrower's obligation to pay amounts due hereunder.

         The Borrower expressly waives any presentments, demand, protest or
notice in connection with this Term Note now, or hereafter, required by
applicable law.

         This Term Note is one of the Term Notes issued pursuant to the
provisions of the Loan Agreement dated as of December 1, 1999 among Diebold,
Incorporated, the Subsidiary Borrowers party thereto, the Lenders party thereto,
and Bank One, Michigan, as Agent, as it may be amended from time to time (the
"Loan Agreement"), to which reference is hereby made for a statement of the
terms and conditions under which this Term Note may be prepaid or its maturity
date extended or accelerated.

         The Term Note shall be construed in accordance with and governed by the
laws of Michigan applicable to contracts made and performed in Michigan by a
Michigan borrower and a Michigan banking corporation located in Michigan, as
lender.

                                       _______________________________

                                       By: ___________________________

                                       Title: ________________________



   105



                                   EXHIBIT G

                                December 1, 1999

To:  The Agent and each Lender
     party to the Credit Agreement
     referred to below

         Re: Diebold Incorporated Credit Facility With Bank One, Michigan
             ------------------------------------------------------------

Ladies and Gentlemen:

         We have acted as special counsel for Diebold Investment Company, a
Delaware corporation, Diebold Credit Corporation, a Delaware corporation,
Diebold Holding Company, Inc., a Delaware corporation. Diebold SST Holding
Company, a Delaware corporation, Diebold Self-Service Systems, a New York
general partnership, Diebold Mexico Holding Company, Inc., a Delaware
corporation, Diebold Latin America Holding Company, Inc., a Delaware
corporation, and Diebold Finance Company, Inc., a Delaware corporation
(collectively, the "GUARANTORS"), and Diebold, Incorporated, an Ohio corporation
("DIEBOLD", and, collectively with the Guarantors, the "LOAN PARTIES"), in
connection with the Credit Agreement dated as of December 1 , 1999 (the "CREDIT
AGREEMENT") by and among Diebold, certain Subsidiary Borrowers from time to time
party thereto, the lenders party thereto (collectively, the "LENDERS"), and Bank
One, Michigan as agent (the "AGENT"). This opinion is delivered to you at the
request of Diebold pursuant to subsection 4.1(e) of the Credit Agreement.
Capitalized terms used in this letter and not otherwise defined have the
meanings assigned to such terms in the Credit Agreement. With your permission,
all assumptions and statements of reliance in this letter have been made without
any independent investigation or verification on our part except to the extent
otherwise expressly stated and we express no opinion with respect to the subject
matter or accuracy of the assumptions or items upon which we have relied.

In connection with the opinions expressed in this letter, we have
examined such documents, records and matters of law as we have deemed necessary
for the purposes of the opinions expressed below. We have examined among other
documents, the following:

         (a)  an executed copy of the Credit Agreement;

         (b)  an executed copy of the Guaranty; and


   106

December 1, 1999
Page 2


         (c) an Officer's Certificate for the Loan Parties delivered to us in
             connection with this letter, a copy of which is attached as Annex A
             (the "OFFICER'S CERTIFICATE").

The documents referred to in items (a) and (b) above are collectively referred
to in this letter as the "DOCUMENTS".

         In all such examinations, we have assumed the legal capacity of all
natural persons executing documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to original
or certified copies of all copies submitted to us as conformed or reproduction
copies. As to various questions of fact relevant to the opinions expressed in
this letter, we have relied upon, and assume the accuracy of, representations
and warranties contained in the Documents and certificates and written
statements and other information of or from representatives of the Loan Parties
and others and assume compliance on the part of all parties (other than the Loan
Parties) to the Documents with their covenants and agreements contained in such
Documents. We have relied solely upon certificates of public officials as to the
factual matters set forth therein and, as to the opinions expressed in paragraph
1 below, as to the legal conclusions expressed therein. With respect to the
opinion expressed in paragraph 2 below, we have relied solely upon an officer's
certificate delivered to us by Diebold Holding Company, Inc. and Diebold SST
Holding Company, Inc. With respect to the opinions expressed in paragraphs 3 and
6 below, our opinions are limited (i) to our actual knowledge, if any, of the
Loan Parties' specially regulated business activities and properties based
solely upon an officer's certificate in respect of such matters and without any
independent investigation or verification on our part and (ii) to our review of
only those laws and regulations that, in our experience, are normally applicable
to transactions of the type contemplated by the Documents.

         To the extent it may be relevant to the opinions expressed in this
letter, we have assumed that the parties to the Documents other than the Loan
Parties have the power to enter into and perform such Documents and to
consummate the transactions contemplated by such Documents and that such
Documents have been duly authorized, executed and delivered by. and constitute
legal, valid and binding obligations of, such parties.

         Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth in this letter, we are of the opinion
that:

         1. Each Loan Party (other than Diebold Self-Service Systems) is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation as of the dates listed for such corporation on the
attached Annex B.

         2. Diebold Self-Service Systems is a general partnership, continued
tinder the laws of the State of New York, between Diebold Holding Company, Inc.
and Diebold SST Holding Company.

         3. Each Loan Party has the organizational power and authority to
conduct its business substantially as described in the Officer's Certificate.

                                       2
   107



December 1,1999
Page 3

         4. The execution, delivery and performance by each Loan Party of the
Documents (i) have been authorized by all necessary corporate (or, with respect
to Diebold Self-Service Systems, partnership) action by such entity and (ii) do
not contravene any provision of the certificate or articles of incorporation or
bylaws (or with respect to Diebold Self-Service Systems, its amended and
restated partnership agreement) of such Loan Party.

         5. The execution, delivery and performance by each Loan Party of the
Documents to which it is party (i) do not violate any agreement binding upon
such Loan Party or its property or any court decree or order binding upon such
Loan Party or its property (this opinion being limited (1) to those agreements,
decrees or orders that have been identified to us in the Officer's Certificate
other than agreements related to the Industrial Revenue Bonds identified therein
and (2) in that we express no opinion with respect to any violation not readily
ascertainable from the face of any such agreement, decree or order or arising
under or based upon any cross-default provision insofar as it relates to a
default under an agreement not so identified to us or arising under or based
upon any covenant of a financial or numerical nature or requiring computation),
and (ii) will not result in or require the creation or imposition of any
security interest or lien upon any of their respective properties under the
provisions of any agreement or order binding upon such corporation or its
properties other than any rights of set-off or other liens in favor of the Agent
or the Lenders arising under any of the Documents or applicable law (this
opinion being limited to those agreements and orders that have been identified
to us in the Officer's Certificate other than agreements related to the
Industrial Revenue Bonds identified therein).

         6. The execution and delivery to the Agent and the Lenders by each Loan
Party of the Documents to which such Loan Party is a party, the obtaining of any
Loans and Letters of Credit thereunder, and the performance by each Loan Party
of its obligations under such Documents do not violate the Delaware General
Corporation Law (the "DGCL"), the Ohio General Corporation Law the New York
Partnership Law, or any present law or present regulation of any governmental
agency or authority of the United States of America known by us to be applicable
to such Loan Party or its property.

         7. The execution and delivery to the Agent and the Lenders by each Loan
Party of the Documents to which such Loan Party is a party, the obtaining of any
Loans and Letters of Credit thereunder, and the performance by each Loan Party
of its obligations under such Documents do not require under present law any
filing or registration by such Loan Patty with, or approval or consent to such
Loan Party of, any governmental agency or authority of the States of Delaware,
New York, Ohio or the United States of America that has not been made or
obtained except those required in the ordinary course of business.

         8. Each of the Documents to which any Loan Party is a party has been
duly executed and delivered on behalf of such Loan Party.

         We express no opinion as to the application of, and our opinions above
are subject to the effect, if any, of, any applicable fraudulent conveyance,
fraudulent transfer, fraudulent obligation or preferential transfer law.

                                       3

   108



December 1, 1999
Page 4

         The opinions expressed in this letter are limited to the federal law of
the United States America, the DGCL, the New York Partnership Law and the Ohio
General Corporation Law.

         We express no opinion as to the compliance or noncompliance, or the
effect of compliance or noncompliance, of the addressee of this letter with any
state or federal laws regulations applicable to it by reason of its status as or
affiliation with a federally insured deposit institution.

         The opinions expressed in this letter are solely for the benefit of the
Agent and each Lender in connection with the transactions referred to in this
letter and may not be relied on by the Age or any Lender for any other purpose,
in any manner or for any purpose by any other person or entity provided, that
the Agent and each Lender may provide this opinion to each participant and
permitted assignee under the Documents and such participants and assignees may
rely on this opinion.

                                            Very truly yours,



                                            Jones, Day, Reavis & Pogue


                                       4
   109



                                    ANNEX A


                             DIEBOLD, INCORPORATED
                              AND ITS SUBSIDIARIES

                             Officer's Certificate
                             ---------------------

         Reference is made to the opinion letter of Jones, Day, Reavis & Pogue
(the "OPINION") delivered in connection with the Credit Agreement dated as of
December 1, 1999 by and among Diebold, Incorporated and certain Subsidiary
Borrowers from time to time party thereto, as borrowers, the lenders party
thereto, as lenders, and Bank One, Michigan as agent. Capitalized terms used in
this certificate and not otherwise defined have the meanings assigned to such
terms in the Opinion.

         The undersigned officer of each Loan Party certifies, in connection
with the execution, delivery and performance by the Loan Parties of the
Documents, the consummation of the transactions contemplated by the Documents
and the Opinion, as follows:

         1. Attached as Schedule I for each Loan Party is a list of(i) all
indentures, mortgages, deeds of trust, security or pledge agreements,
guarantees, loan or credit agreements and other agreements or instruments and
(ii) all decrees and orders, in each case in clause (i) and (ii) above, to which
such Loan Party is a party or that are otherwise binding upon such Loan Party or
any of its assets or property and that contain financial or other covenants or
provisions for defaults or events of default or similar events or occurrences or
that otherwise would or could have the effect of (a) restricting the types of
provisions that any other agreement to which such Loan Party becomes a party may
contain, (b) restricting the conduct of such Loan Party's business, the
incurrence of indebtedness, guarantees or other liabilities or obligations, the
creation of liens upon any of such Loan Party's property or assets or otherwise
restricting the execution, delivery, and performance of, or the consummation of
the transactions contemplated by, the Documents or (c) resulting in, or
requiring the creation or imposition of, any lien upon any of such Loan Party's
assets or property as a result of the execution, delivery or performance of, or
the consummation of the transactions contemplated by, any of the Documents. A
true and complete copy of each of the above agreements, instruments, documents,
decrees and orders has been previously furnished to Jones, Day, Reavis & Pogue.
No default or event of default or violation of any such agreements, instruments,
decrees or orders exists or, immediately after giving effect to entry into the
Documents or consummation of any of the transactions contemplated by the
Documents, will exist.

         2. The nature of each Loan Party's business and the purposes of each
Loan Party is described for such Loan Party and attached as Schedule II. The
Loan Parties are not engaged in any activity or business not permitted under
those provisions of its constitutive documents specifying the nature of such
Loan Party's business and the purposes of such Loan Party. No Loan Party engages
or proposes to engage in any industry or business or activity, or own any
property or asset, that causes or would cause it to be subject to special local,
state or federal regulation not generally applicable to business corporations,
other than the licensing requirements which Diebold must


                                      A-1
   110



satisfy in numerous state and local jurisdictions to engage in its businesses of
electronic security sales, installation and repair business and alarm monitoring
in those jurisdictions.

         Executed and delivered as of the 1st day of December, 1999.


                              DIEBOLD, INCORPORATED


                              By:_________________________________
                              Title:______________________________


                              DIEBOLD INVESTMENT COMPANY


                              By:_________________________________
                              Title:______________________________


                              DIEBOLD CREDIT CORPORATION


                              By:_________________________________
                              Title:______________________________


                              DIEBOLD HOLDING COMPANY, INC.


                              By:_________________________________
                              Title:______________________________



                              DIEBOLD SST HOLDING COMPANY


                              By:_________________________________
                              Title:______________________________

                                      A-2
   111



                              DIEBOLD SELF-SERVICE SYSTEMS


                              By:_________________________________
                              Title:______________________________


                              DIEBOLD MEXICO HOLDING COMPANY, INC.


                              By:_________________________________
                              Title:______________________________


                              DIEBOLD LATIN AMERICA HOLDING COMPANY, INC.


                              By:_________________________________
                              Title:______________________________


                              DIEBOLD FINANCE COMPANY, INC.


                              By:_________________________________
                              Title:______________________________


                                      A-3
   112



                                   SCHEDULE I
                            TO OFFICER'S CERTIFICATE

                    Material Agreements, Decrees and Orders
                    ---------------------------------------

     Agreements
     ----------

         Agreements with respect to the (i) $5,800,000.00 Industrial Development
Authority of Danville, Virginia Adjustable Rate Industrial Revenue Bonds, Series
1997 (Diebold, Incorporated Project), (ii) $7,500,000.00 Industrial Development
Authority of Staunton, Virginia Adjustable Rate Industrial Revenue Bonds, Series
1997 (Diebold, Incorporated Project), and (iii) $7,500,000.00 Davidson County
Industrial Facilities and Pollution Control Financing Authority Adjustable Rate
Industrial Development Revenue Bond Series 1997 (Diebold, Incorporated Project).

     Decrees and Orders
     ------------------

         None.


                                      A-4
   113



                                  SCHEDULE II
                            TO OFFICER'S CERTIFICATE

                            Description of Business
                            -----------------------

         The Loan Parties develop, manufacture, sell and service automated
teller machines ("ATMs"), electronic and physical security systems, various
products used to equip bank facilities, and software and integrated systems for
global financial and commercial markets.


                                      A-5
   114



                                    ANNEX B

                                 Good Standing
                                 -------------

                                             Domestic Jurisdiction
                                             ---------------------

                                                                        Date
                                                                        ----

Diebold Investment Company                           Delaware          11/22/99
Diebold Credit Corporation                           Delaware          11/22/99
Diebold Holding Company, Inc.                        Delaware          11/22/99
Diebold SST Holding Company                          Delaware          11/22/99
Diebold Mexico Holding Company, Inc.                 Delaware          11/22/99
Diebold Latin America Holding Company, Inc.          Delaware          11/22/99
Diebold Finance Company, Inc.                        Delaware          11/22/99
Diebold, Incorporated                                Ohio              11/23/99


                                      B-1
   115



                             EXHIBIT G (continued)

                               December ___, 1999



To:  Bank One, Michigan, Agent
     and each Lender
     party to the Credit Agreement
     referred to below




                Re: Diebold Incorporated Credit Facility With Bank One, Michigan
                    ------------------------------------------------------------

Ladies and Gentlemen:

         In response to your request for an opinion, please be advised that this
law firm has been engaged to act as special counsel for Diebold, Incorporated,
in connection with the execution by Diebold Investment Company, a Delaware
corporation, Diebold Credit Corporation, a Delaware corporation, Diebold Holding
Company, Inc., a Delaware corporation, Diebold SST Holding Company, a Delaware
corporation, Diebold Self Service Systems, a New York general partnership,
Diebold Mexico Holding Company, Inc., a Delaware corporation, Diebold Latin
America Holding Company, Inc., a Delaware corporation, and Diebold Finance
Company, Inc., a Delaware corporation (collectively, the "GUARANTORS"), and
Diebold, Incorporated, an Ohio corporation ("DIEBOLD", and, collectively with
the Guarantors, the "LOAN PARTIES"), of a certain Credit Agreement dated as of
December 1, 1999 and a certain Guaranty Agreement dated December 1, 1999
(collectively the "Loan Documents") by and among Diebold, certain Subsidiary
Borrowers from time to time party thereto, the lenders party thereto
(collectively, the "LENDERS"), and Bank One, Michigan as agent (the "AGENT"),
and the effect of the execution, delivery and performance by each of the Loan
Parties of the Loan Documents upon certain Agreements, as defined below.

         In connection with the opinion expressed in this letter, we have
examined such documents, records and matters of law as we have deemed necessary
for the purposes of the opinion expressed below. We have examined, among other
documents, Bond Transcripts for the following Bond Issues:

         (a) $5,800,000.00 Industrial Development Authority Of Danville,
             Virginia Adjustable Rate Industrial Revenue Bonds, Series 1997
             (Diebold, Incorporated Project)


   116



         (b) $7,500,000.00 Industrial Development Authority Of Staunton,
             Virginia, Adjustable R Industrial Development Revenue Bonds, Series
             1997 (Diebold, Incorporated Project) and

         (c) $7,500,000.00 Davidson County Industrial Facilities And Pollution
             Control Financing Authority Adjustable Rate Industrial Development
             Revenue Bonds, Series 1997 (Diebold, Incorporated Project)

The documents referred to in items (a) through (c) above are collectively
referred to in this letter "as the "AGREEMENTS".

         Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth in this letter, we are of the opinion
that:

             The execution, delivery and performance by each Loan Party of the
Loan Documents (i) does not violate any of the Agreements binding upon such Loan
Party or its property (this opinion being limited (1) to those Agreements
identified above and (2) in that we express no opinion with respect to any
violation not readily ascertainable from the face of any such Agreement or
arising under or based upon any cross-default provision insofar as it relates to
a default under an agreement not so identified to us or arising under or based
upon any covenant of a financial or numerical nature or requiring computation),
and (ii) will not result in or require the creation or imposition of any
security interest or lien upon any of their respective properties under the
provisions of any the Agreements binding upon such corporation or its properties
(this opinion being limited to those Agreements identified above).

             The opinions expressed in this letter are solely for the benefit of
the Agent and each Lender in connection with the transactions referred to in
this letter and may not be relied on for any other purpose, in any manner or for
any purpose by any other person or entity; PROVIDED, that the Agent and each
Lender may provide this opinion to each participant and permitted assignee under
the Credit Agreement and such participants and assignees may rely on this
opinion.


                                       Very truly yours



                                       BLACK, McCUSKEY, SOUERS & ARBAUGH


   117



                                   EXHIBIT H



                          Money Transfer Instructions


As supplied by the Company to the Agent prior to closing



   118



                                   EXHIBIT I

                             COMPLIANCE CERTIFICATE

To:      The Agent and Lenders parties to the
         Credit Agreement Described Below

         This Compliance Certificate is furnished pursuant to that certain Loan
Agreement dated as of December 1, 1999 (as amended, modified, renewed or
extended from time to time, the "Agreement") among DIEBOLD, INCORPORATED (the
"Company"), certain Subsidiary Borrowers, the lenders party thereto and BANK
ONE, MICHIGAN, as Agent for the Lenders. Unless otherwise defined herein,
capitalized terms used in this Certificate have the meanings ascribed thereto in
the Agreement.

         THE UNDERSIGNED HEREBY CERTIFIES THAT:

         1. I am the duly elected __________ of the Company;

         2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Company and its Subsidiaries during the accounting period
covered by the attached financial statements;

         3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and

         4. Schedule I attached hereto sets forth financial data and
computations evidencing the Company's compliance with Section 6.18 and 6.19 of
the Agreement and calculations of the Applicable Margin, all of which data and
computations are true, complete and correct.

         Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         _______________________________________________________________________

         The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this __ day of_____,___.


                                               ___________________________

                                      -1-
   119



                      SCHEDULE I TO COMPLIANCE CERTIFICATE





                   Compliance Calculations for Loan Agreement

                     CALCULATION AS OF_______________, ____

A. Leverage Ratio (Section 6.18)

   1. Total Debt of the Company and its   $___________
      Subsidiaries

   2. Net Worth                           $___________

   3. Total Debt to Capitalization Ratio  _________:1.00 (must be no greater
      (Ratio of Line Al to Line Al                       than 0.50 to 1.00)
      + Line A2)

B. Interest Coverage Ratio (Section 6.19)

   1. Consolidated Net Income for past
      four fiscal quarters                $___________

   2. Income taxes for past four fiscal   $___________
      quarters subtracted in calculating
      Consolidated Net Income

   3. Interest expense for past four
      fiscal quarters                     $___________
      subtracted in calculating
      Consolidated Net Income

   4. EBIT (sum of lines Fl, F2 and F3)   $___________

   5. Interest Expense                    $___________

   6. Ratio of Line B4 to Line B5         _________:1.00 (ratio of Line B4
                                                         to B5 must not be
                                                         less than 5.00 to 1.00)


                                      -2-

   120



                                   EXHIBIT J

                              ASSIGNMENT AGREEMENT

         This Assignment Agreement (this "Assignment Agreement") between
__________________________ (the "Assignor") and ___________________________ (the
"Assignee") is dated as of___________,_____. The parties hereto agree as
follows:

         1. PRELIMINARY STATEMENT. The Assignor is a party to a Loan Agreement
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Loan Agreement") described in Item 1 of Schedule 1 attached
hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Loan Agreement.

         2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Loan
Agreement and the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Loan Agreement and the other Loan
Documents relating to the facilities listed in Item 3 of Schedule 1. The
aggregate Commitments (or Loans, if the applicable Commitments have been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.

         3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after
this Assignment Agreement, together with any consents required under the Loan
Agreement, are delivered to the Agent. In no event will the Effective Date occur
if the payments required to be made by the Assignee to the Assignor on the
Effective Date are not made on the proposed Effective Date.

         4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of
Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the
amount agreed to by the Assignor and the Assignee. On and after the Effective
Date, the Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee will promptly remit to the Assignor any interest on Loans and fees
received from the Agent which relate to the portion of the Commitments or Loans
assigned to the Assignee hereunder for periods prior to the Effective Date and
not previously paid by the Assignee to the Assignor. In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.

         5. RECORDATION FEE. The Assignor and Assignee each agree to pay
one-half of the recordation fee required to be paid to the Agent in connection
with this Assignment Agreement unless otherwise agreed among the Assignee and
the Assignor.

         6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder, (ii) such
interest is free and clear of any adverse claim created by the Assignor and
(iii) the execution and delivery of this Assignment Agreement by the Assignor is
duly authorized. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to

                                      -1-

   121



the Assignee. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency or collectability
of any Loan Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of any Borrower or
Guarantor, (ii) any representation, warranty or statement made in or in
connection with any of the Loan Documents, (iii) the financial condition or
creditworthiness of any Borrower or Guarantor, (iv) the performance of or
compliance with any of the terms or provisions of any of the Loan Documents, (v)
inspecting any of the property, books or records of any Borrower or Guarantor,
(vi) the validity, enforceability, perfection, priority, condition, value or
sufficiency of any collateral securing or purporting to secure the Loans or
(vii) any mistake, error of judgment, or action taken or omitted to be taken in
connection with the Loans or the Loan Documents.

         7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i)
confirms that it has received a copy of the Loan Agreement, together with copies
of the financial statements requested by the Assignee and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information at it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (iii) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, (iv) confirms that the execution
and delivery of this Assignment Agreement by the Assignee is duly authorized,
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, (vi) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vii)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are "plan assets" as defined
under ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and
hold the Assignor harmless against all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement, and
(ix) if applicable, attaches the forms prescribed by the Internal Revenue
Service of the United States and any other applicable government agency
certifying that the Assignee is entitled to receive payments under the Loan
Documents without deduction or withholding of any United States federal income
taxes or othe applicable documents.

         8. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Michigan.

         9. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Loan Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.

         10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may
be executed in counterparts. Transmission by facsimile of an executed
counterpart of this Assignment Agreement shall be deemed to constitute due and
sufficient delivery of such counterpart and such facsimile shall be deemed to be
an original counterpart of this Assignment Agreement.

         IN WITNESS WHEREOF, the duly authorized officers of the parties hereto
have executed this Assignment Agreement by executing Schedule 1 hereto as of the
date first above written.

                                      -2-

   122



                                   SCHEDULE 1

                            to Assignment Agreement

1. Description and Date of Loan Agreement:

2. Date of Assignment Agreement: _______, ______

3. Amounts (As of Date of Item 2 above):

4. Assignee's Commitments (or Loans
   with respect to terminated
   Commitments) purchased
   hereunder:                              [Description of Commitments assigned]

5. Proposed Effective Date:                ______________________

Accepted and Agreed:

[NAME OF ASSIGNOR]                         [NAME OF ASSIGNEE]

By: _______________________________        By: ________________________________
Title:_____________________________        Title: _____________________________

If required:
ACCEPTED AND CONSENTED TO BY               ACCEPTED AND CONSENTED TO BY
DIEBOLD, INCORPORATED                      BANK ONE, MICHIGAN, as Agent

By: _______________________________        By: ________________________________
Title:_____________________________        Title: _____________________________

                                      -3-

   123



                Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT

                        ADMINISTRATIVE INFORMATION SHEET
                        --------------------------------

         Attach Assignor's Administrative Information Sheet, which must
           include notice addresses for the Assignor and the Assignee
                           (Sample form shown below)

                              ASSIGNOR INFORMATION
                              --------------------

Contact:
- --------
Name:________________________________       Telephone No.: _____________________
Fax No.: ____________________________       Telex No.: _________________________
                                            Answerback: ________________________

Payment Information:
- --------------------

Name & ABA # of Destination Bank: ______________________________________________
                                  ______________________________________________

Account Name & Number for Wire Transfer: _______________________________________
                                         _______________________________________

Other Instructions:_____________________________________________________________
________________________________________________________________________________

Address for Notices for Assignor: ______________________________________________
- --------------------------------  ______________________________________________
                                  ______________________________________________


                              ASSIGNEE INFORMATION
                              --------------------

Credit Contact:
- ---------------

Name:____________________________    Telephone No.:_____________________________
Fax No.:_________________________    Telex No.:_________________________________
                                     Answerback:________________________________

Key Operations Contacts:
- ------------------------

Booking Installation:____________    Booking Installation:______________________
Name:____________________________    Name:______________________________________
Telephone No.:___________________    Telephone No.:_____________________________
Fax No.:_________________________    Fax No.:___________________________________
Telex No.:_______________________    Telex No.:_________________________________
Answerback:______________________    Answerback:________________________________


                                      -4-

   124



Payment Information:
- --------------------

Name & ABA # of Destination Bank:_______________________________________________
                                 _______________________________________________

Account Name & Number for Wire Transfer:________________________________________
                                        ________________________________________

Other Instructions:_____________________________________________________________
________________________________________________________________________________


Address for Notices for Assignee: ______________________________________________
- --------------------------------  ______________________________________________
                                  ______________________________________________

                                      -5-

EX-21

   1

                        LIST OF SIGNIFICANT SUBSIDIARIES

                                                                      EXHIBIT 21

The following are the subsidiaries of the Registrant included in the
Registrant's consolidated financial statements at December 31, 1999. Other
subsidiaries are not listed because such subsidiaries are inactive. Subsidiaries
are listed alphabetically under either the domestic or international categories.



                                                           Jurisdiction under         Percent of voting securities
Domestic                                                     which organized               owned by Registrant
- --------                                                   ------------------         ----------------------------
                                                                                    
ATM Finance, Inc.                                          Ohio                                  100%
Central Security Systems, Incorporated                     Hawaii                                100%
DBD Investment Management Company                          Delaware                              100%
Diebold Australia Holding Company, Inc.                    Delaware                              100%
Diebold China Security Holding Company, Inc.               Delaware                              100%
Diebold Credit Corporation                                 Delaware                              100%
Diebold Finance Company, Inc.                              Delaware                              100% (1)
Diebold Foreign Sales Corporation                          St. Thomas, U.S. Virgin Islands       100% (1)
Diebold Holding Company, Inc.                              Delaware                              100%
Diebold Investment Company                                 Delaware                              100%
Diebold Latin America Holding Company, Inc.                Delaware                              100%
Diebold Mexico Holding Company, Inc.                       Delaware                              100%
Diebold Midwest Manufacturing, Inc.                        Delaware                              100%
Diebold of Nevada, Inc.                                    Nevada                                100%
Diebold Self-Service Systems                               New York                              100% (2)
Diebold Southeast Manufacturing, Inc.                      Delaware                              100% (3)
Diebold SST Holding Company, Inc.                          Delaware                              100%
Diebold Texas, Incorporated                                Texas                                 100%
Diebold Transaction Services, Inc.                         Delaware                              100%
Griffin Technology Incorporated                            New York                              100%
InterBold Technologies, Inc.                               Delaware                              100% (4)
Mayfair Software Distribution, Inc.                        Delaware                              100%
Nexus Software, Incorporated                               Delaware                              100%
Pioneer Systems, Inc.                                      Pennsylvania                          100%
R. D. Products, Inc.                                       New York                              100%
VDM Holding Company, Inc.                                  Delaware                              100%
Verdi & Associates, Inc.                                   New York                              100%


(1)  100% of voting securities are owned by Diebold Investment Company which is
     100% owned by the Registrant.
(2)  70% of  partnership  interest  is owned by  Diebold  Holding  Company,
     Inc.,  which is 100% owned by the Registrant and 30% is owned by  Diebold
     SST Holding Company, Inc., which is 100% owned by the Registrant.
(3)  100% of voting securities are owned by Diebold Midwest Manufacturing,
     Inc., which is 100%  owned by the Registrant.
(4)  100% of voting  securities  are  owned by  Diebold  Self-Service  Systems,
     which is 70% owned by  Diebold Holding  Company, Inc. and 30% owned by
     Diebold  SST  Holding  Company,  Inc.,  which are 100% owned by the
     Registrant.




   2




                  LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED)

                                                                Jurisdiction under        Percent of voting securities
International                                                    which organized              owned by Registrant
- -------------                                                    ---------------          ----------------------------
                                                                                         
China Diebold Financial Equipment Company LTD.                  Peoples Republic of China              71%
DBD Asset Management S.A. de C.V.                               Mexico                                100% (5)
DCHC, S.A.                                                      Panama                                100% (16)
Diebold Argentina, S.A.                                         Argentina                              55% (15)
Diebold Australia Pty. Ltd.                                     Australia                             100% (6)
Diebold Belgium S.P.R.L.                                        Belgium                                90% (18)
Diebold Brasil LTDA                                             Brazil                                100% (16)
Diebold Colombia                                                Colombia                               55% (19)
The Diebold Company of Canada Limited                           Canada                                100%
Diebold EMEA B.V.                                               Netherlands                           100%
Diebold France SARL                                             France                                100%
Diebold Germany GmbH                                            Germany                               100% (8)
Diebold HMA Private Limited                                     India                                  50%
Diebold Hungary Ltd.                                            Hungary                               100%
Diebold International Limited                                   United Kingdom                        100%
Diebold Italy S.r.l.                                            Italy                                 100% (18)
Diebold Mexico, S.A. de C.V.                                    Mexico                                100% (7)
Diebold Netherlands B.V.                                        Netherlands                           100%
Diebold OLTP Systems, A.V.V.                                    Aruba, Dutch West Indies               50%
Diebold OLTP Systems, C.A.                                      Venezuela                              50% (14)
Diebold Pacific, Limited                                        Hong Kong                             100%
Diebold Panama, Inc.                                            Panama                                100% (16)
Diebold Poland S.p. z.o.o.                                      Poland                                100%
Diebold Safetell International Security Limited                 Australia                             100% (10)
Diebold Security and Services Pty.                              Australia                             100% (10)
Diebold Selbstbedienungssysteme GmbH                            Austria                               100%
Diebold Selbstbedienyngssysteme (Schweiz)GMBH                   Switzerland                           100%
Diebold Self Service Solutions LTD Liab. Co.                    Switzerland                           100%
Diebold Singapore Pte. Ltd                                      Singapore                             100%
Diebold South Africa (PTY) LTD                                  South Africa                          100%
Diebold Spain, S.L.                                             Spain                                 100%
Diebold (Thailand) Company Limited                              Thailand                              100%
DPB S.A.                                                        Argentina                              50% (14)






   3





                  LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED)

                                                        Jurisdiction under        Percent of voting securities
International                                             which organized              owned by Registrant
- -------------                                           ------------------        ----------------------------
                                                                              
DSSS Panama, S.A.                                       Panama                            55% (15)
InterBold Pacific Limited                               Hong Kong                        100% (8)
InterBold Singapore Pte Ltd                             Singapore                        100% (9)
Mecaf Impressoras S.A.                                  Brazil                           100% (17)
Nexus Software UK LTD.                                  United Kingdom                   100% (13)
Procomp Amazonia Industria Eletronica S.A.              Brazil                           100% (17)
Procomp Comercio e Servicos LTDA                        Brazil                           100% (17)
Procomp Industria Eletronica S.A.                       Brazil                           100% (17)
RLM Monitoring Pty. Ltd.                                Australia                        100% (10)
Safequip Automated Systems Pty. Ltd.                    Australia                         50% (11)
Safetell Cash Handling Pty. Ltd.                        Australia                        100% (12)
Safetell International Services Pty. Ltd.               Australia                        100% (12)
Starbuck Computer Empire, A.V.V.                        Aruba, Dutch West Indies          50%
Tecron Security Pty. Ltd.                               Australia                        100% (10)



(5)  100% of voting  securities  are owned by  Diebold  Mexico,  S.A.  de C.V.
     which is 100%  owned by Diebold Mexico Holding Company, Inc., which is
     100% owned by the Registrant.
(6)  100% of voting  securities are owned by Diebold  Australia  Holding
     Company,  Inc. which is 100% owned by the Registrant.
(7)  100% of voting  securities  are owned by  Diebold  Mexico  Holding
     Company,  Inc.  which is 100% owned by the Registrant.
(8)  100% of voting securities are owned by Diebold Self-Service Systems which
     is 70% owned by Diebold Holding Company, Inc. and 30% owned by Diebold SST
     Holding Company, Inc., which are 100% owned by the Registrant.
(9)  100% of voting securities are owned by InterBold Pacific Limited, which is
     100% owned by Diebold Self-Service Systems which is 70% owned by Diebold
     Holding Company, Inc. and 30% owned by Diebold SST Holding Company, Inc.,
     which are 100% owned by the Registrant.
(10) 100% of voting securities are owned by Diebold Australia Pty. Ltd., which
     is 100% owned by Diebold Australia Holding Company, Inc., which is 100%
     owned by the Registrant.
(11) 50% of voting securities are owned by Safetell Cash Handling Pty. Ltd.,
     which is 100% owned by Safetell International Security Limited, which is
     100% owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold
     Australia Holding Company, Inc. which is 100% owned by the Registrant.
(12) 100% of voting securities are owned by Safetell International Security
     Limited, which is 100% owned by Diebold Australia Pty. Ltd., which is 100%
     owned by Diebold Australia Holding Company, Inc. which is 100% owned by the
     Registrant.
(13) 100% of voting securities are owned by Nexus Software, Incorporated, which
     is 100% owned by the Registrant.
(14) 50% of voting securities are owned by Diebold Latin America Holding
     Company, Inc., which is 100% owned by the Registrant.
(15) 55% of voting securities are owned by Diebold Latin America Holding
     Company, Inc., which is 100% owned by the Registrant.
(16) 100% of voting securities are owned by Diebold Latin America Holding
     Company, Inc., which is 100% owned by the Registrant.
(17) 100% of voting securities are owned by Diebold Brasil LTDA, which is 100%
     owned by Diebold Latin America Holding Company, Inc., which is 100% owned
     by the Registrant.
(18) 90% of voting securities are owned by the Registrant, while 10% of the
     voting securities are owned by Diebold Holding Company, Inc., which is 100%
     owned by the Registrant.
(19) 21.44% of voting securities are owned by Diebold Latin America Holding
     Company, Inc., 16.78% of voting securities are owned by DSSS Panama, which
     is 100% owned by Diebold Latin America Holding Company, Inc., 16.78% of
     voting securities are owned by DCHC Panama SA, which is 100% owned by
     Diebold Latin America Holding Company, Inc., which is 100% owned by the
     Registrant.

EX-23

   1
                                                                     EXHIBIT 23



                        CONSENT OF INDEPENDENT AUDITORS
                        -------------------------------




The Board of Directors
Diebold, Incorporated



We consent to incorporation by reference in the Registration Statements (Nos.
2-44467, 2-92107, 33-32960, 33-39988, 33-55452, 33-54677, 33-54675, 333-32187
and 333-31993) on Form S-8 of Diebold, Incorporated of our report dated January
18, 2000 relating to the consolidated balance sheets of Diebold, Incorporated
and subsidiaries as of December 31, 1999, and 1998, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1999, and related schedule, which
report appears in the December 31, 1999 annual report on Form 10-K of Diebold,
Incorporated.




/s/KPMG LLP


KPMG LLP
Cleveland, Ohio
March 4, 2000

EX-24

   1
                                                                      EXHIBIT 24


                                POWER OF ATTORNEY
                                -----------------


         KNOW ALL MEN BY THESE PRESENTS, That the undersigned directors of
Diebold, Incorporated, a corporation organized and existing under the laws of
the State of Ohio, do for themselves and not for another, constitute and appoint
Warren W. Dettinger, Charee Francis-Vogelsang, Robert L. Stockamp or the chief
financial officer, or any one of them, a true and lawful attorney in fact in
their names, place and stead, to sign their names to the report on Form 10-K for
the year ended December 31, 1999, or to any and all amendments to such reports,
and to cause the same to be filed with the Securities and Exchange Commission;
it being intended to give and grant unto said attorneys in fact and each of them
full power and authority to do and perform any act and thing necessary and
proper to be done in the premises as fully and to all intents and purposes as
the undersigned by themselves could do if personally present. The undersigned
directors ratify and confirm all that said attorneys in fact or either of them
shall lawfully do or cause to be done by virtue hereof.

         IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the date set opposite their signature.




   2





Signed in the presence of:                    Signature                                          Date
                                              ---------                                          ----
                                                                                           




/s/Charee Francis-Vogelsang                   /s/Donald R. Gant                           March 4, 2000
                                                Donald R. Gant, Director




/s/Charee Francis-Vogelsang                   /s/Phillip B. Lassiter                      March 4, 2000
                                                Phillip B. Lassiter, Director




/s/Charee Francis-Vogelsang                   /s/John N. Lauer                            March 4, 2000
                                                John N. Lauer, Director




/s/Charee Francis-Vogelsang                   /s/William F. Massy                         March 4, 2000
                                                William F. Massy, Director

EX-27

 

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AT DECEMBER 31, 1999 AND CONSOLIDATED STATEMENTS OF INCOME FOR
THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<EXCHANGE-RATE>                                      1
<CASH>                                          27,299
<SECURITIES>                                    57,348
<RECEIVABLES>                                  325,793
<ALLOWANCES>                                         0
<INVENTORY>                                    169,785
<CURRENT-ASSETS>                               647,936
<PP&E>                                         320,640
<DEPRECIATION>                                 159,916
<TOTAL-ASSETS>                               1,298,831
<CURRENT-LIABILITIES>                          382,407
<BONDS>                                         20,800
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        89,354
<OTHER-SE>                                     755,041
<TOTAL-LIABILITY-AND-EQUITY>                 1,298,831
<SALES>                                        757,246
<TOTAL-REVENUES>                             1,259,177
<CGS>                                          444,732
<TOTAL-COSTS>                                  802,365
<OTHER-EXPENSES>                               270,689
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                201,338
<INCOME-TAX>                                    72,482
<INCOME-CONTINUING>                            128,856
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   128,856
<EPS-BASIC>                                       1.86
<EPS-DILUTED>                                     1.85


 

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