-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TIV5c/hd6MhkXb6fdyZEMCaiFoJEDFKjMbgVEIFeM/Hj/+h5sbPw4RqMYch4U7gq 9FZG1Dt20xB0TqJzQbEOKQ== 0000950152-05-001286.txt : 20050216 0000950152-05-001286.hdr.sgml : 20050216 20050216151713 ACCESSION NUMBER: 0000950152-05-001286 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050210 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050216 DATE AS OF CHANGE: 20050216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIEBOLD INC CENTRAL INDEX KEY: 0000028823 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 340183970 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04879 FILM NUMBER: 05620737 BUSINESS ADDRESS: STREET 1: P.O. BOX 3077 STREET 2: 5995 MAYFAIR RD CITY: CANTON STATE: OH ZIP: 44720-8077 BUSINESS PHONE: 3304904000 MAIL ADDRESS: STREET 1: PO BOX 3077 CITY: CANTON STATE: OH ZIP: 44720-8077 8-K 1 l12189ae8vk.htm DIEBOLD, INCORPORATED 8-K DIEBOLD, INCORPORATED 8-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 10, 2005

(DIEBOLD LOGO)

DIEBOLD, INCORPORATED

(Exact name of registrant as specified in its charter)
         
Ohio   1-4879   34-0183970
(State or other jurisdiction   (Commission File Number)   (IRS Employer Identification Number)
of incorporation)        
     
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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

TABLE OF CONTENTS

Item 1.01 Entry into a Material Definitive Agreement
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX-10.1 Form of Non-Qualified Stock Option Agreement
EX-10.2 Form of Restricted Share Agreement
EX-10.3 Form of RSU Agreement
EX-10.4 Form of 2003-2005 Performance Share Agreement
EX-10.5 Form of 2004-2006 Performance Share Agreement

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Item 1.01 Entry into a Material Definitive Agreement.

     This Form 8-K is to describe ordinary course executive officer compensation actions taken by the Compensation Committee (the “Committee”) of the Board of Directors of Diebold, Incorporated (the “Corporation”) in connection with annual cash bonuses and equity awards.

Compensation Payouts to Named Executive Officers

     At its meetings on February 10 and 11, 2005, the Committee approved the following executive compensation payouts to the Corporation’s Named Executive Officers (as defined in Regulation S-K item 402(a)(3)):

                                 
                    2002-04        
                    Performance     2005-07  
            2005 Option     Share Award     Performance  
Executive Officer   2004 Bonus (1)     Grant (#) (2)     Payout (#) (3)     Share Award (#) (4)  
 
Walden W. O’Dell
                                
Chairman and Chief Executive Officer
   $ 470,016       85,000       30,000       19,000  
 
Eric C. Evans
                                
President and Chief Operating Officer
   $ 288,500       30,000       7,500       15,000  
 
Gregory T. Geswein
                                
Senior Vice President and Chief Financial Officer
   $ 163,713       28,100       16,500       10,300  
 
Michael J. Hillock
                                
President, International
   $ 145,260       23,400       15,000       9,400  
 
David Bucci(5)
                                
Senior Vice President, Customer Solutions Group
   $ 172,368       25,000       15,000       9,400  
 

(1)   The 2004 cash bonuses were determined based on the Corporation’s percentage increase in earnings per share over 2003. The Committee established the threshold at a level that required the Corporation to exceed by 4% the level of earnings per share achieved in 2003 before any payout could occur, with the maximum payout at 17% over 2003. The bonuses are generally weighted 50% on the Corporation achieving its earnings per share goal, and 50% on the individual’s goals and objectives. Generally, cash bonuses are paid only if the Corporation achieves the minimum threshold amount of its earnings per share goal even though an individual may have achieved his or her personal goals and objectives.
 
(2)   Option grants have a term of ten years with an exercise price of $55.23, and vesting occurs at the rate of 25% annually beginning one year from the date of grant.
 
(3)   Each performance share entitles the holder to the current value of one Common Share as of February 11, 2004. Performance shares were earned based upon the achievement, over the three-year period of January 1, 2002 through December 31, 2004, of performance goals relating to growth in revenue (weighted 25%), growth in earnings per share (weighted 25%), return on total capital (weighted 25%), and relative total shareholder return (weighted 25%). No performance shares are payable unless the threshold amount is exceeded. For 2004, the Committee determined that the maximum award of 150% of the target amount was earned due to the Corporation’s achievement of the maximum performance measures.
 
(4)   These performance shares will be earned out in 2008 upon the achievement of certain specified management objectives. While the 2005-2007 Performance Share Agreement for these awards has not yet been finalized by the Committee, it is anticipated that the measures will be calculated over a three-year period beginning on or around January 31, 2005, and ending on or around February 1, 2008, and the performance measures and terms will otherwise be substantially similar to those of the 2004-2006 Performance Share Agreement.
 
(5)   Mr. Bucci also received a one-time, meritorious equity grant of 1,250 restricted shares with a three-year cliff vesting and dividends paid on a quarterly basis.

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     Periodic grants of stock options, restricted shares, restricted stock units (“RSU’s”) and performance shares by the Committee to executive officers (including the Named Executive Officers) are authorized pursuant to the Corporation’s Amended and Restated 1991 Equity and Performance Incentive Plan (the “1991 Plan”). The 1991 Plan was originally approved at the Corporation’s 1991 annual meeting of shareholders and was approved as amended and restated at the Corporation’s 1997 annual meeting of shareholders. The 1991 Plan, as further amended, was approved again at the Corporation’s 2001 annual meeting of shareholders.

     The following is a summary of the equity compensation currently awarded by the Committee to executive officers (including the Named Executive Officers), under the 1991 Plan and the related forms of agreements controlling such awards.

Non-qualified Stock Option Agreement

     The Corporation awards stock options to executive officers (including the Named Executive Officers) of the Corporation on an annual basis under the 1991 Plan. The term of the options is ten years. These options have a reload feature, under which an optionee can elect to pay the exercise price using previously owned shares and receive a new option at the then current market price for a number of shares equal to those surrendered. The reload feature is only available, however, if the optionee agrees to defer receipt of the balance of the option shares for at least two years. The form of Non-qualified Stock Option Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Restricted Share Agreement

     The Corporation occasionally awards restricted shares to executive officers (including the Named Executive Officers) of the Corporation under the 1991 Plan. Each restricted share is equivalent to one Common Share, including the right to vote the share and to receive dividends thereon. The restricted shares may not be sold or otherwise transferred for a specified period from the date of grant, and they remain subject to forfeiture for such period. The form of Restricted Share Agreement is attached hereto as Exhibit 10.2 and incorporated herein by reference.

RSU Agreement

     The Corporation occasionally awards RSU’s to executive officers (including the Named Executive Officers) of the Corporation in lieu of stock options under the 1991 Plan. RSU’s vest and become nonforfeitable after a specified period after the grant date with no partial vesting. Each RSU entitles the holder to receive one Common Share at the time of vesting. During the vesting period, the cash equivalents of dividends are paid on RSU’s. The form of RSU Agreement is attached hereto as Exhibit 10.3 and incorporated herein by reference.

2003-2005 Performance Share Agreement

     The Corporation awards performance shares to executive officers (including the Named Executive Officers) of the Corporation on an annual basis under the 1991 Plan. Payouts of awards for the 2003-2005 performance period will be based on three separate financial measures: growth in earnings per share (weighted 50%), return on total capital (weighted 25%), and relative total shareholder return (weighted 25%). No amount is payable unless the threshold amount is exceeded. The measures are calculated over the three-year period from January 1, 2003 through December 31, 2005, except for relative total shareholder return, which is calculated from February 1, 2003 through January 31, 2005. The maximum award amount, which can be up to 170% of the target amount, will be earned only if the Corporation achieves the maximum performance measure. The form of 2003-2005 Performance Share Agreement is attached hereto as Exhibit 10.4 and incorporated herein by reference.

2004-2006 Performance Share Agreement

     Beginning with the 2004-2006 performance period, payouts of awards will be based upon the Corporation’s relative total shareholder return, ranked against each of a peer group of companies and all companies comprising the S&P MidCap 400 Index as of January 28, 2004. The measures are calculated over the three-year period from January 28, 2004 through the day of the Corporation’s annual earnings release in January 2007. No amount is payable unless the threshold amount is exceeded. The maximum award amount, which can be up to 200% of the target amount, will be earned only if the Corporation achieves the maximum performance measure. The form of 2004-2006 Performance Share Agreement is attached hereto as Exhibit 10.5 and incorporated herein by reference.

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Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

     
Exhibit No.   Exhibit Description
10.1
  Form of Non-qualified Stock Option Agreement
10.2
  Form of Restricted Share Agreement
10.3
  Form of RSU Agreement
10.4
  Form of 2003-2005 Performance Share Agreement
10.5
  Form of 2004-2006 Performance Share Agreement

SIGNATURES

     Pursuant to the requirements 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
 
        
Date: February 16, 2005
  By:   /s/ Kevin J. Krakora
       
      Kevin J. Krakora
      Vice President and Corporate Controller
      (Principal Accounting Officer)

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EXHIBIT INDEX

     
Exhibit No.   Exhibit Description
10.1
  Form of Non-qualified Stock Option Agreement
10.2
  Form of Restricted Share Agreement
10.3
  Form of RSU Agreement
10.4
  Form of 2003-2005 Performance Share Agreement
10.5
  Form of 2004-2006 Performance Share Agreement

5

EX-10.1 2 l12189aexv10w1.txt EX-10.1 FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT [DIEBOLD LOGO] EXHIBIT 10.1 [No. 11, Std. U.S. & Intl. 2004] NONQUALIFIED STOCK OPTION AGREEMENT DATE OF GRANT: _______________ WHEREAS, _________________ (hereinafter called the "Optionee") is a key associate of Diebold, Incorporated (hereinafter called the "Corporation") or a Subsidiary; and WHEREAS, the execution of a Nonqualified Stock Option Agreement substantially in the form hereof has been authorized by a resolution of the Compensation Committee (the "Committee") of the Board of Directors of the Corporation (the "Board") duly adopted on ____________, 20___; and WHEREAS, the option granted hereby is intended as a nonqualified stock option and shall not be treated as an "incentive stock option" (an "ISO") within the meaning of that term under Section 422 of the Internal Revenue Code of 1986, as amended. NOW, THEREFORE, the Corporation hereby grants to the Optionee, effective as of ___________, 20___ (the "Date of Grant"), an option pursuant to the Corporation's 1991 Equity and Performance Incentive Plan (As Amended and Restated as of February 7, 2001), and as further amended by Amendments No. 1 and No. 2 (the "Plan") to purchase _________ Common Shares of the Corporation at a price of $______ per share (which represents the Fair Market Value on the Date of Grant) (the "Option Price"), and agrees to cause certificates for any shares purchased hereunder to be delivered to the Optionee upon payment of the Option Price in full, all subject, however, to the terms and conditions of the Plan and the terms and conditions hereinafter set forth. 1. (A) This option (until terminated as hereinafter provided) shall be exercisable only to the extent of __________ (_____) of the shares hereinabove specified after the Optionee shall have been in the continuous employ of the Corporation or any Subsidiary for one (1) full year from the Date of Grant and to the extent of an additional __________ (____) of such shares after each of the next ______ (__) successive full years thereafter during which the Optionee shall have been in the continuous employ of the Corporation or any Subsidiary. For the purposes of this paragraph, leaves of absence approved by the Chief Executive Officer of the Corporation for illness, military or governmental service, or other cause, shall be considered as employment. To the extent exercisable, this option may be exercised in whole or part from time to time. (B) Notwithstanding the provisions of paragraph (A) above, the option granted hereby shall become immediately exercisable in full if at any time during the employment of the Optionee, a "Change in Control" shall occur. A "Change in Control" shall be deemed to have occurred if any of the following events shall occur: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either: (A) the then-outstanding shares of common stock of the Corporation (the "Corporation Common Stock") or (B) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors ("Voting Stock"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary of the Corporation, or (4) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 1(b); or (ii) Individuals who, as of the date hereof, constitute the Board cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Corporation Common Stock and Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Corporation Common Stock and Voting Stock of the Corporation, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of 2 the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination; or (iv) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. (C) Notwithstanding paragraph (A) above (i) If the Optionee should die or become permanently and totally disabled while in the employ of the Corporation or any Subsidiary this option shall immediately become exercisable in full and shall remain exercisable until terminated in accordance with Section 4(B) below. (ii) If the Optionee should retire under a retirement plan (including, without limitation, any supplemental retirement plan) of the Corporation or any Subsidiary at or after the earliest voluntary retirement age provided for in any such retirement plan or should retire at an earlier age with the consent of the Board, this option shall immediately become exercisable in full and shall remain exercisable until terminated in accordance with Section 4(C) below. 2. The Option Price shall be payable (A) in cash or by check acceptable to the Corporation, (B) by actual or constructive transfer to the Corporation of nonforfeitable, unrestricted Common Shares that have been owned by the Optionee for more than six (6) months prior to the date of exercise, Restricted Shares or other Common Shares that are forfeitable or subject to restrictions on transfer, including, without limitation, Common Shares issued pursuant to the earn out of Performance Shares or Performance Units, or (C) by a combination of such methods of payment. The requirement of payment in cash shall be deemed satisfied if the Optionee shall have made arrangements satisfactory to the Corporation with a bank or a broker who is a member of the National Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of the shares being purchased so that the net proceeds of the sale transaction will at least equal the Option Price plus payment of any applicable withholding taxes and pursuant to which the bank or broker undertakes to deliver the full Option Price plus payment of any applicable withholding taxes to the Corporation on a date satisfactory to the Corporation, but not later than the date on which the sale transaction will settle in the ordinary course of business. 3. Whenever payment of the Option Price is made in whole or in part in any of the forms of consideration specified in Section 2(B) herein, the Common Shares received upon exercise of the Option Rights shall be subject to such risks of forfeiture or restrictions on transfer as may correspond to any that apply to the consideration surrendered, but only to the extent of the number of Restricted Shares or other Common Shares that are forfeitable or subject to restrictions on transfer, including, without limitation, Common Shares issued pursuant to the earn out of Performance Shares or Performance Units surrendered. 4. This option shall terminate on the earliest of the following dates: (A) Ninety (90) days after the Optionee ceases to be an associate of the Corporation or a Subsidiary, unless he or she ceases to be such associate by reason of death or permanent total disability or by reason of retirement under any retirement plan (including any supplemental retirement plan) of the Corporation or a Subsidiary at or after the earliest voluntary retirement 3 age provided for in any such retirement plan or retirement at an earlier age with the consent of the Committee (in which case all outstanding options of the Optionee become immediately exercisable in full pursuant to Section 1(C) herein); (B) One (1) year after the death or permanent total disability of the Optionee if the Optionee dies or becomes permanently and totally disabled while an associate of the Corporation or a Subsidiary (in which case all outstanding options of the Optionee become immediately exercisable in full pursuant to Section 1(C) herein), or if the same occurs within the ninety (90) day period referred to in subsection (A) hereof; (C) Ten (10) years from the Date of Grant; or (D) Immediately if the Optionee engages in any Detrimental Activity (as hereinafter defined). 5. If the Optionee, either during employment by the Corporation or a Subsidiary or within one year after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, and (except for any Detrimental Activity described in Section 6(v)(B)) the Optionee shall not have ceased all Detrimental Activity within 30 days after notice of such finding given within one year after commencement of such Detrimental Activity, the Optionee shall: (A) Return to the Corporation, in exchange for payment by the Corporation of the Option Price paid therefor, all Common Shares that the Optionee has not disposed of that were purchased pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, and (B) With respect to any Common Shares that the Optionee has disposed of that were purchased pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, pay to the Corporation in cash the difference between: (i) The Option Price paid therefor by the Optionee pursuant to this Agreement, and (ii) The closing price of the Common Shares on the New York Stock Exchange on the date of such purchase (or on the last trading day prior to such purchase, if there was no trading on the purchase date). To the extent that such amounts are not paid to the Corporation, the Corporation may set off the amounts so payable to it against any amounts that may be owing from time to time by the Corporation or a Subsidiary to the Optionee, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason. 6. For purposes of this Agreement, the term "Detrimental Activity" shall include: (i) Engaging in any activity, as an employee, principal, agent, or consultant for another entity, and in a capacity, that directly competes with the Corporation or any Subsidiary in any actual product, service, or business activity (or in any product, service, or business activity which was under active development while the Optionee was employed by the Corporation if such development is being actively pursued by the 4 Corporation during the one-year period first referred to in Section 5) for which the Optionee has had any direct responsibility and direct involvement during the last two years of his or her employment with the Corporation or a Subsidiary, in any territory in which the Corporation or a Subsidiary manufactures, sells, markets, services, or installs such product or service, or engages in such business activity. (ii) Soliciting any employee of the Corporation or a Subsidiary to terminate his or her employment with the Corporation or a Subsidiary. (iii) The disclosure to anyone outside the Corporation or a Subsidiary, or the use in other than the Corporation or a Subsidiary's business, without prior written authorization from the Corporation, of any confidential, proprietary or trade secret information or material relating to the business of the Corporation and its Subsidiaries, acquired by the Optionee during his or her employment with the Corporation or its Subsidiaries or while acting as a consultant for the Corporation or its Subsidiaries thereafter. (iv) The failure or refusal to disclose promptly and to assign to the Corporation upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Optionee during employment by the Corporation and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Company or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Corporation or any Subsidiary to secure a patent where appropriate in the United States and in other countries. (v) Activity that results in Termination for Cause. For the purposes of this Section, "Termination for Cause" shall mean a termination: (A) due to the Optionee's willful and continuous gross neglect of his or her duties for which he or she is employed, or (B) due to an act of dishonesty on the part of the Optionee constituting a felony resulting or intended to result, directly or indirectly, in his or her gain for personal enrichment at the expense of the Corporation or a Subsidiary. 7. This option is not transferable by the Optionee otherwise than by will or the laws of descent and distribution, except (so long as the Optionee is not a director or officer of the Corporation within the meaning of Section 16 of the Securities Exchange Act of 1934) to a fully revocable trust of which the Optionee is treated as the owner for federal income tax purposes. 8. This option shall not be exercisable if such exercise would involve a violation of any applicable federal, state or other securities law. 9. The Committee shall make such adjustments in the option price and in the number or kind of Common Shares or other securities covered by this option as the Committee in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of the Optionee that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, or (ii) any merger, consolidation, separation, reorganization or partial or complete liquidation, or (iii) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Committee, in its 5 discretion, may provide in substitution for any or all of the Option Rights provided for herein such alternative consideration as it, in good faith, may determine to be equitable in the circumstances. 10. If the Corporation shall be required to withhold any federal, state, local or foreign tax in connection with exercise of this option, it shall be a condition to such exercise that the Optionee pay or make provision satisfactory to the Corporation for payment of all such taxes. The Optionee may elect that all or any part of such withholding requirement be satisfied by retention by the Corporation of a portion of the shares purchased upon exercise of this option. 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 exercise. In no event, however, shall the Corporation accept Common Shares for payment of taxes in excess of required tax withholding rates, except that, unless otherwise determined by the Committee at any time, the Optionee may surrender Common Shares owned for more than 6 months to satisfy any tax obligations resulting from any such transaction. 11. For purposes of this Agreement, the continuous employ of the Optionee with the Corporation or a Subsidiary shall not be deemed interrupted, and the Optionee 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. This option award is a voluntary, discretionary bonus being made on a one-time basis and it does not constitute a commitment to make any future awards. This option award and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Optionee any right to continue employment with the Corporation or any Subsidiary, as the case may be, or interfere in any way with the right of the Corporation or a Subsidiary to terminate the employment of the Optionee. 13. Information about the Optionee and the Optionee's participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Optionee understands that such processing of this information may need to be carried out by the Corporation and its Subsidiaries and by third party administrators whether such persons are located within the Optionee's country or elsewhere, including the United States of America. The Optionee consents to the processing of information relating to the Optionee and the Optionee's participation in the Plan in any one or more of the ways referred to above. 14. This Agreement is subject to the terms and conditions of the Plan. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. 15. 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 in any other person or circumstances shall not be affected, and the provisions 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. 16. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Ohio, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction. 6 The undersigned Optionee hereby accepts the Option Rights granted pursuant to this Nonqualified Stock Option Agreement on the terms and conditions set forth herein. Dated:__________________ ___________________________________ [OPTIONEE NAME] Executed in the name and on behalf of the Corporation at North Canton, Ohio, as of the ______ day of __________, 20___. DIEBOLD, INCORPORATED Walden W. O'Dell Chairman of the Board and Chief Executive Officer 7 EX-10.2 3 l12189aexv10w2.txt EX-10.2 FORM OF RESTRICTED SHARE AGREEMENT [DIEBOLD LOGO] EXHIBIT 10.2 RESTRICTED SHARE AGREEMENT DATE OF GRANT: ________________ WHEREAS, ______________ (hereinafter called the "Grantee") is a key associate of Diebold, Incorporated (hereinafter called the "Corporation"); and WHEREAS, the execution of a Restricted Share Agreement (hereinafter called the "Agreement") substantially in the form hereof has been authorized by a resolution of the Board of Directors of the Corporation duly adopted on ____________, 20___. NOW, THEREFORE, the Corporation, pursuant to its 1991 Amended and Restated Equity and Performance Incentive Plan (the "Plan"), has this day granted to the Grantee, a total of _____________ (_______) Common Shares of the Corporation subject to the terms and conditions of the Plan and the following terms, conditions, limitations and restrictions: 1. The Common Shares subject to this grant 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. 2. The Common 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 _______ (__) years have elapsed from the Date of Grant, 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 Common Shares subject to this grant. 3. All the Common Shares subject to this grant shall be forfeited by the Grantee if the Grantee's employment with the Corporation is terminated before the _______ (____) anniversary of the Date of Grant voluntarily on the Grantee's part or in the event of a Termination for Cause. As used herein, the term "Termination for Cause" shall mean a termination (i) due to the Grantee's willful and continuous gross neglect of his or her duties for which he or she is employed, or (ii) due to an act of dishonesty on 2. the part of the Grantee constituting a felony resulting or intended to result, directly or indirectly, in his or her gain for personal enrichment at the expense of the Corporation or a Subsidiary. 4. If, however, the Grantee's employment with the Corporation is terminated before the ______ (___) anniversary of the Date of Grant as a result of the Grantee's death or permanent total disability or owing to the Grantee's termination of employment without Cause, the restrictions on the shares provided in Sections 2 and 3 hereof shall lapse as to the number of shares which bears the same ratio to the total number of shares subject to this grant as the number of full years from the date of this grant to the date of the termination of such employment bears to _______ (___), and the balance of the shares subject to this grant shall be forfeited to the Corporation. 5. During the period in which the transferability and forfeiture restrictions provided in Sections 2 and 3 hereof are in effect, the certificates representing the Common Shares covered by this grant shall be retained by the Corporation, together with the accompanying stock power signed by the Grantee and endorsed in blank. 6. In the event of a "Change in Control" as hereinafter defined, the restrictions on the Common Shares subject to this grant provided in Sections 2 and 3 hereof shall thereupon lapse and terminate. For the purposes of this section, a Change in Control shall occur upon the happening of any of the following events: (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 3. 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 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. 7. The Grantee hereby acknowledges that federal and state income, payroll or other applicable taxes may apply with respect to this grant. If the Corporation determines, in its sole discretion, that withholding is required, the Grantee agrees by the acceptance of this grant that such withholding may be accomplished through withholding from the cash compensation due to the Grantee from the Corporation an amount sufficient to satisfy the full withholding obligation. If withholding pursuant to the foregoing sentence is insufficient (in the sole judgment of the Corporation) to satisfy the full withholding obligation, the Grantee agrees that either (a) the Grantee will pay over to the Corporation 4. the amount of cash necessary to satisfy such remaining withholding obligation by the time thereafter specified in writing by the Corporation, or (b) the Corporation may retain such number of the shares covered by this grant as shall be equal in value to the amount of the remaining withholding obligation. 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. 8. 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. 9. Nothing contained in this Agreement shall limit whatever right the Corporation or a Subsidiary might otherwise have to terminate the employment of the Grantee. 10. This Agreement is subject to the terms and conditions of the Plan. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. EXECUTED as of the ____ day of _______________. DIEBOLD, INCORPORATED ___________________________________ By: Walden W. O'Dell Chairman of the Board, President and Chief Executive Officer The undersigned Grantee hereby acknowledges receipt of an executed original of this Restricted Share Agreement and accepts the Restricted Shares granted thereunder. Dated: _______________ ______________________________ (Signature) EX-10.3 4 l12189aexv10w3.txt EX-10.3 FORM OF RSU AGREEMENT [DIEBOLD LOGO] EXHIBIT 10.3 RSU AGREEMENT WHEREAS,_______________ (hereinafter called the "Grantee") is a key associate of Diebold, Incorporated (hereinafter called the "Corporation") or a Subsidiary; WHEREAS, the execution of an RSU Agreement substantially in the form hereof has been authorized by a resolution of the Compensation Committee (the "Committee") of the Board of Directors of the Corporation (the "Board") duly adopted on _____________, 20___; NOW, THEREFORE, the Corporation hereby grants to the Grantee effective as of ____________, 20___ (the "Date of Grant"), pursuant to the Corporation's 1991 Equity and Performance Incentive Plan (As Amended and Restated as of February 7, 2001), and as further amended by Amendments No. 1 and No. 2 (the "Plan"), _____________ Deferred Shares in the form of Restricted Stock Units ("RSU's") 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" shall be deemed to have occurred if any of the following events shall occur: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either: (A) the then-outstanding shares of common stock of the Corporation (the "Corporation Common Stock") or (B) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors ("Voting Stock"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary of the Corporation, or (4) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 1(b); or (ii) Individuals who, as of the date hereof, constitute the Board cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Corporation Common Stock and Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Corporation Common Stock and Voting Stock of the Corporation, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or such entity resulting from such Business 2 Combination) beneficially owns, directly or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination; or (iv) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. (b) "Deferral Period" means the period commencing ___________, 20___ and ending on _____________, 20___. (c) Capitalized terms used herein without definition shall have the meanings assigned to them in the 1991 Plan. 2. Payment of RSU's. The RSU's granted hereby shall become payable to the Grantee if they become nonforfeitable in accordance with Section 3, Section 4 or Section 5 hereof. 3. Vesting of RSU's. Subject to the terms and conditions of Sections 4, 5 and 6 hereof, the Grantee's right to receive Common Shares under this Agreement shall become nonforfeitable at the end of the Deferral Period. 4. Effect of Change in Control. In the event of a Change in Control prior to the end of the Deferral Period, the RSU's granted hereby shall become nonforfeitable. 5. Effect of Death, Disability or Retirement. If the Grantee's employment with the Corporation or one of its Subsidiaries should terminate because of death, permanent total disability or retirement under a retirement plan (including, without limitation, any supplemental retirement plan) of the Corporation or a Subsidiary at or after the earliest voluntary retirement age provided for in any such retirement plan or should retire at an earlier age with the consent of the Committee prior to the end of the Deferral Period, the RSU's granted hereby shall become nonforfeitable. 6. Effect of Terminations of Employment; Detrimental Activity. In the event that the Grantee's employment shall terminate in a manner other than any specified in Section 5 hereof or if the Grantee shall engage in any Detrimental Activity (as 3 defined below), the Grantee shall forfeit any RSU's that have not become nonforfeitable by such Grantee at the time of such termination; provided, however, that the Board upon recommendation of the Committee may order that any part or all of such RSU's become nonforfeitable. 7. Form and Time of Payment of RSU's. Payment shall be made in the form of the Corporation's Common Shares at the time they become nonforfeitable in accordance with Section 3, 4 or 5 hereof. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with the delivery of Common Shares to the Grantee or any other person under this Agreement, the number of Common Shares to be delivered to the Grantee or such other person shall be reduced (based on the Market Value per Share as of the date the RSU's become payable) to provide for the taxes required to be withheld, with any fractional shares that would otherwise be delivered being rounded up to the next nearest whole share. The Committee may, at its discretion, adopt any alternative method of providing for taxes required to be withheld. 8. Detrimental Activity. If the Grantee, either during employment by the Corporation or a Subsidiary or within one year after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, and (except for any Detrimental Activity described in Section 8(d)(v)(B)) if the Grantee shall not have ceased all Detrimental Activity within 30 days after notice of such finding given within one year after commencement of such Detrimental Activity, the Grantee shall: (a) Return to the Corporation all Common Shares that the Grantee has not disposed of that were paid out pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, and (b) With respect to any Common Shares that the Grantee has disposed of that were paid out pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, pay to the Corporation in cash the value of such Common Shares on the date such Common Shares were paid out. (c) To the extent that the amounts referred to in Section 8(a) and (b) above are not paid to the Corporation, the Corporation may set off the amounts so payable to it against any amounts that may be owing from time to time by the Corporation or a Subsidiary to the Grantee, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason. (d) For purposes of this Agreement, the term "Detrimental Activity" shall include: (i) Engaging in any activity, as an employee, principal, agent, or consultant for another entity, and in a capacity, that directly competes with 4 the Corporation or any Subsidiary in any actual product, service or business activity (or in any product, service or business activity which was under active development while the Grantee was employed by the Corporation if such development is being actively pursued by the Corporation during the one-year period first referred to in this Section 8) for which the Grantee has had any direct responsibility and direct involvement during the last two years of his or her employment with the Corporation or a Subsidiary, in any territory in which the Corporation or a Subsidiary manufactures, sells, markets, services, or installs such product or service, or engages in such business activity. (ii) Soliciting any employee of the Corporation or a Subsidiary to terminate his or her employment with the Corporation or a Subsidiary. (iii) The disclosure to anyone outside the Corporation or a Subsidiary, or the use in other than the Corporation or a Subsidiary's business, without prior written authorization from the Corporation, of any confidential, proprietary or trade secret information or material relating to the business of the Corporation and its Subsidiaries, acquired by the Grantee during his or her employment with the Corporation or its Subsidiaries or while acting as a consultant for the Corporation or its Subsidiaries thereafter. (iv) The failure or refusal to disclose promptly and to assign to the Corporation upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Grantee during employment by the Corporation and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Corporation or any Subsidiary to secure a patent where appropriate in the United States and in other countries. (v) Activity that results in Termination for Cause. For the purposes of this Section, "Termination for Cause" shall mean a termination: (A) due to the Grantee's willful and continuous gross neglect of his or her duties for which he or she is employed, or (B) due to an act of dishonesty on the part of the Grantee constituting a felony resulting or intended to result, directly or indirectly, in his or her gain for personal enrichment at the expense of the Corporation or a Subsidiary. 5 9. 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 RSU's become payable in accordance with Section 3, Section 4 or Section 5 hereof or (b) the time when the Grantee's right to receive Common Shares upon payment of RSU's is forfeited in accordance with Section 6 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 RSU's. 10. RSU's Non-Transferable. Neither the RSU's granted hereby nor any interest therein or in the Common Shares related thereto shall be transferable other than by will or the laws of descent and distribution prior to payment. 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 Committee shall adjust the number of RSU's 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. Furthermore, in the event that any transaction or event described or referred to in the immediately preceding sentence shall occur, the Committee may provide in substitution of any or all of the Grantee's rights under this Agreement such alternative consideration as the Committee may determine in good faith to be equitable under the circumstances. Such adjustments made by the Committee shall be conclusive and binding for all purposes of this Agreement. 12. Employment Rights. 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. This RSU award is a voluntary, discretionary bonus being made on a one-time basis and it does not constitute a commitment to make any future awards. This RSU award and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Grantee any right to continue employment with the Corporation or any Subsidiary, as the case may be, or interfere in any way with the right of the Corporation or a Subsidiary to terminate the employment of the Grantee. 6 13. Data Privacy. Information about the Grantee and the Grantee's participation in the Plan may be collected, recorded, and held, used and disclosed for any purpose related to the administration of the Plan. The Grantee understands that such processing of this information may need to be carried out by the Corporation and its Subsidiaries and by third party administrators whether such persons are located within the Grantee's country or elsewhere, including the United States of America. The Grantee consents to the processing of information relating to the Grantee and the Grantee's participation in the Plan in any one or more of the ways referred to above. 14. Plan and Capitalized Terms. This Agreement is subject to the terms and conditions of the Plan. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. 15. 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 RSU's without the Grantee's consent. 16. 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 in any other person or circumstances shall not be affected, and the provisions 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. 17. Governing Law. This Agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio. * * * 7 The undersigned hereby acknowledges receipt of an executed original of this RSU Agreement and accepts the RSU's granted thereunder on the terms and conditions set forth herein in the Plan. Date:_________________________ ______________________________ [Signature] Executed in the name and on behalf of the Corporation at North Canton, Ohio as of the ____ day of ___________, 20___. DIEBOLD, INCORPORATED Walden W. O'Dell Chairman of the Board and Chief Executive Officer 8 EX-10.4 5 l12189aexv10w4.txt EX-10.4 FORM OF 2003-2005 PERFORMANCE SHARE AGREEMENT EXHIBIT 10.4 PERFORMANCE PERIOD 2003-2005 [DIEBOLD LOGO] PERFORMANCE SHARE AGREEMENT WHEREAS, _____________ (hereinafter called the "Grantee") is a key associate of Diebold, Incorporated (hereinafter called the "Corporation"); and WHEREAS, the Board of Directors (the "Board"), pursuant to the 1991 Amended and Restated Equity and Performance Incentive Plan of the Corporation (the "1991 Plan"), which is attached as Exhibit A to this Agreement encourages executives of the Corporation to achieve the Management Objectives established by the Compensation and Organization Committee of the Board of Directors (the "Committee"). WHEREAS, the Committee adopted the Management Objectives for the Performance Period (as defined below) on February 5, 2003. NOW, THEREFORE, subject to the terms and conditions of the 1991 Plan and the terms and conditions described below, the Corporation hereby grants to the Grantee as of February 5, 2003, ___________ Performance Shares, together with the opportunity to earn up to an additional 70% of such number of Performance Shares for superior performance as described herein. 1. Definitions. As used in this Agreement: (a) A "Change in Control" shall be deemed to have occurred if any of the following events shall occur: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% of more of either: (A) the then-outstanding shares of common stock of the Corporation (the "Corporation Common Stock") or (B) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors ("Voting Stock"); provided, however, that for purposes of this subsection (i), the following acquisition shall not constitute a Change in Control (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary of the Corporation, or (4) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 1(b); or (ii) Individuals who, as to the date hereof, constitute the Board cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Corporation Common Stock and Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Corporation Common Stock and Voting Stock of the Corporation , as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or any 2 employee benefit plan (or related trust) sponsored or maintained by the Corporation or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination; or (iv) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. (b) "Growth in Earnings Per Share" or "EPS" means the compound annual growth rate (CAGR) in reported earnings per share, excluding extraordinary items. (c) "Management Objectives" means the Return on Total Capital, Growth in Earning Per Share and Relative Total Shareholder Return goals established by the Board for the Corporation for the Performance Period covered by this Agreement as described in Section 2 of this Agreement. (d) "Performance Period" means the period commencing January 1, 2003 and ending on December 31, 2005, except that solely with respect to the Relative Total Shareholder Return goal, the term Performance Period shall mean February 1, 2003 through January 31, 2006. (e) "Relative Total Shareholder Return" or "Relative TSR" means the return, including reinvested dividends, shareholders earn from investing in Company shares, relative to the return earned from an investment in a benchmark peer group index comprised of the 13 companies (including the Corporation) set forth on Exhibit B. (f) "Return on Total Capital" or "ROTC" means the 3-year average of net income before extraordinary items and special charges divided by the average total capital employed. Any debt incurred in connection with an acquisition consummated within the last 6 months of the Performance Period shall be excluded from the calculation. Calculations shall be based on quarterly results, using thirteen data points. 3 (g) 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 are set forth on Exhibit C. The following applies with respect to the Management Objectives. (a) Each Management Objective shall be evaluated separately with the total award determined as the sum of the amounts determined under each of the three separate Management Objectives. (b) Each Management Objective shall have an equal weighting. (c) Notwithstanding that the number of Performance Shares earned for achievement of the maximum level of performance of any individual Management Objective can amount to 200% of the number of Performance Shares earned for achievement of the target level of performance, in no event shall the Grantee be entitled to receive more than 170% of the Performance Shares granted hereunder. 3. Grant of Performance Shares. The Corporation hereby grants to the Grantee the number of Performance Shares specified above, which may be earned by the Grantee during the Performance Period as set forth in Section 4 of this Agreement. 4. Earned Shares. The Performance Shares granted hereby shall be earned based on the level of the Corporation's results with respect to each of the Management Objectives established for the Performance Period covered by this Agreement. The number of Performance Shares earned shall be determined based on the level of results of the Management Objectives as shown in Exhibit C. In no event shall any Performance Shares be earned if results fall below the threshold level of results for each Management Objective. In addition, no additional Performance Shares shall be earned for results in excess of the maximum level of results for any Management Objective. If results for a Management Objective shall have been attained over the threshold level, but under the target level, or over the threshold level and under the 4 maximum level, a proportionate number of Performance Shares shall be earned, as determined by mathematical interpolation and rounded up to the nearest whole percent. Once determined, the percentage of Performance Shares earned for each Management Objective shall be used to determine the aggregate percentage earned. The percentages earned for all of the Management Objectives so calculated shall be added together and multiplied by the number of Performance Shares granted hereby to determine the number of Performance Shares to be paid out to the Grantee for the Performance Period covered by this Agreement, subject to the limit set forth in Section 2(c) of this Agreement. For example, results at the target level of Return on Total Capital would result in an earned percentage of 25%. Results at the target level of Growth in Earning Per Share would result in an earned percentage of 50%. With respect to Relative TSR, if the Company ranks 1st out of 13 peer companies, the percentage earned would be 50%. The total percentages added together would be 125%. Since this percentage is less than the 170% limit, the number of Performance Shares granted hereby would then be multiplied by 125%. Any fractional share resulting from the application of the total percentage would be rounded up to the nearest whole share. 5. Payment of Awards. Payment shall be made in the form of the Corporation's Common Shares, cash or a combination of Common Shares and cash, as recommended by the Committee in its sole discretion with approval by the Board. Final awards shall be paid, less applicable taxes, as soon as practicable after the receipt of audited financial statements relating to the last fiscal year of the Performance Period covered by this Agreement and the determination by the Committee of the level of attainment of each Management Objective, except as otherwise agreed to by the Corporation and the Grantee. Any payment of awards due pursuant to this Agreement to a deceased Grantee shall be paid to the beneficiary designated by the Grantee by the latest Designation of Death Beneficiary in the form attached as Exhibit D hereto filed by the Grantee 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. 5 6. Effect of Death, Disability or Retirement. If the Grantee's employment with the Corporation or one of its Subsidiaries should terminate because of death, permanent total disability or retirement under a retirement plan (including, without limitation, any supplemental retirement plan) of the Corporation or a Subsidiary at or after the earliest voluntary retirement age provided for in any such retirement plan or should retire at an earlier age with the consent of the Board, prior to the payment of an award, the extent to which the Performance Shares granted hereby shall be deemed to have been earned shall be determined as if the Grantee's employment had not terminated and the result shall be multiplied by a fraction, the numerator of which is the number of full months the Grantee was employed during the Performance Period and the denominator of which is the total number of months in the Performance Period; provided, however, the Board, upon the recommendation of the Committee may, in its discretion, increase payments made under the foregoing circumstances up to the full amount payable for service throughout the Performance Period. 7. Effect of Other Terminations of Employment; Detrimental Activity. In the event that the Grantee's employment shall terminate prior to the payment of an award in a manner other than any specified in Section 6 hereof or if the Grantee shall at any time engage in any Detrimental Activity (as defined below), the Grantee shall forfeit any rights he or she may have in any Performance Shares that have not been paid out to the Grantee prior to the time of such termination; provided, however, that the Board, upon recommendation of the Committee, may order payment of an award in an amount determined as in Section 6 hereof for termination owing to death, disability or retirement, under circumstances which warrant such exceptional treatment in the judgment of the Committee and the Board. 8. Detrimental Activity. If the Grantee, either during employment by the Corporation or a Subsidiary or within one year after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, and (except for any Detrimental Activity described in Section 8(d)(v)(B)) if the Grantee shall not have ceased all Detrimental Activity within 30 days after notice of such finding given within one year after commencement of such Detrimental Activity, the Grantee shall: 6 (a) Return to the Corporation all Performance Shares that the Grantee has not disposed of and an amount equal to all cash paid out pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, and (b) With respect to any Performance Shares that the Grantee has disposed of that were paid out pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, pay to the Corporation in cash the value of such Performance Shares on the date such Performance Shares were paid out. (c) To the extent that the amounts referred to in Section 8(a) and (b) above are not paid to the Corporation, the Corporation may set off the amounts so payable to it against any amounts that may be owing from time to time by the Corporation or a Subsidiary to the Grantee, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason. (d) For purposes of this Agreement, the term "Detrimental Activity" shall include: (i) Engaging in any activity, as an employee, principal, agent, or consultant for another entity, and in a capacity, that directly competes with the Corporation or any Subsidiary in any actual product, service or business activity (or in any product, service or business activity which was under active development while the Grantee was employed by the Corporation if such development is being actively pursued by the Corporation during the one-year period first referred to in this Section 8) for which the Grantee has had any direct responsibility and direct involvement during the last two years of his or her employment with the Corporation or a Subsidiary, in any territory in which the Corporation or a Subsidiary manufactures, sells, markets, services, or installs such product or service, or engages in such business activity. (ii) Soliciting any employee of the Corporation or a Subsidiary to terminate his or her employment with the Corporation or a Subsidiary. (iii) The disclosure to anyone outside the Corporation or a Subsidiary, or the use in other than the Corporation or a Subsidiary's business, without prior written authorization from the Corporation, of any confidential, proprietary or trade secret information or material relating to the business of the Corporation and its Subsidiaries, acquired by the Grantee during his or her employment with the Corporation or its Subsidiaries or while acting as a consultant for the Corporation or its Subsidiaries thereafter. 7 (iv) The failure or refusal to disclose promptly and to assign to the Corporation upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Grantee during employment by the Corporation and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Corporation or any Subsidiary to secure a patent where appropriate in the United States and in other countries. (v) Activity that results in Termination for Cause. For the purposes of this Section, "Termination for Cause" shall mean a termination: (A) due to the Grantee's willful and continuous gross neglect of his or her duties for which he or she is employed, or (B) due to an act of dishonesty on the part of the Grantee constituting a felony resulting or intended to result, directly or indirectly, in his or her gain for personal enrichment at the expense of the Corporation or a Subsidiary. (vi) Any other conduct or act determined to be injurious, detrimental or prejudicial to any significant interest of the Corporation or any Subsidiary unless the Grantee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation. 9. Shares Non-Transferable. The Performance Shares granted hereby that have not yet been paid out are not transferable other than by will or the laws of descent and distribution. 10. Dilution and Other Adjustments. In the event of any change in the aggregate number of outstanding Common Shares by reason of any stock dividend or stock split, recapitalization, reclassification, merger, consolidation, combination or exchange of shares or other similar corporate change, 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. Such adjustments made by the Board shall be conclusive and binding for all purposes of this Agreement. 11. Withholding Taxes. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with the delivery of Common Shares to the Grantee or other person 8 under this Agreement, 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 or such other person will make arrangements satisfactory to the Corporation for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Board) may include relinquishment of a portion of such benefit. In no event, however, shall the Corporation accept Common Shares for payment of taxes in excess of required tax withholding rates, except that, in the discretion of the Board, the Grantee or such other person may surrender Common Shares owned for more than 6 months to satisfy any tax obligations resulting from any such transaction. 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 1991 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 the Performance Shares without the Grantee's consent. 14. 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 in any other person or circumstances shall not be affected, and the provisions 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. 15. Governing Law. This Agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio. 9 Executed as of the 5th day of February, 2003. DIEBOLD, INCORPORATED ____________________________________ Walden W. O'Dell Chairman of the Board, President and Chief Executive Officer The undersigned hereby acknowledges receipt of an executed original of this Performance Share Agreement and accepts the Performance Shares granted thereunder on the terms and conditions set forth therein and in the 1991 Plan. Date:___________________ __________________________________ 10 EXHIBIT B DIEBOLD, INCORPORATED - RELATIVE TSR - PEER GROUP LIST (13 PEERS) - FEBRUARY 1, 2003 - JANUARY 31, 2006
NAME TICKER ---- ------ AFFILIATED COMPUTER SVCS-A ACS AMERICAN MANAGEMENT SYSTEMS AMSY BELL & HOWELL COMPANY (PROQUEST) PQE CHECK POINT SYSTEMS CHKP DELUXE CORP DLX DIEBOLD, INCORPORATED DBD FISERV INC FISV HARRIS CORP HRS NATIONAL DATA CORP (NDC HEATH) NDC NCR CORPORATION NCR SUNGARD DATA SYSTEMS SDS SYMBOL TECHNOLOGIES INC SBL THOMAS & BETTS CORP TNB VARIAN INC VARI
EXHIBIT B-1 RELATIVE TOTAL SHAREHOLDER RETURN POTENTIAL (FEBRUARY 1, 2003-JANUARY 31, 2006 PERFORMANCE PERIOD)
13 PEERS 12 PEERS 11 PEERS OR FEWER -------- -------- ----------------- 1. 50.00% 50.00% 50.00% 2. 46.00 45.00 43.75 3. 41.25 40.00 39.00 4. 37.50 35.00 125.00 5. 33.25 30.00 25.00 6. 29.25 25.00 21.00 7. 25.00 21.00 16.75 8. 21.00 16.75 12.50 9. 16.75 12.50 0 10. 12.50 0 0 11. 0 0 0 12. 0 0 13. 0
EXHIBIT C MANAGEMENT OBJECTIVES JANUARY 1, 2003 - DECEMBER 31, 2005 (FOR RELATIVE TSR, FEBRUARY 1, 2003 THROUGH JANUARY 31, 2006) 1. One-quarter of the Performance Shares (plus up to an additional 25%) will be earned based upon the Corporation's Return on Total Capital (ROTC), according to the following schedule:
Level of Achievement ROTC % Performance Shares Earned (1) - -------------------- ---- --------------------------- Threshold 13.0% 12.5% Target 13.4% 25.0% Maximum 14.2% 50.0%
2. One-half of the Performance Shares (plus up to an additional 25%) will be earned based upon the Corporation's Growth in Earnings Per Share (EPS - CAGR), according to the following schedule:
Level of Achievement EPS - CAGR % Performance Shares Earned (1) - -------------------- ---------- --------------------------- Threshold 7.5% 25% Target 12.0% 50% Maximum 15.0% 100%
3. One-quarter of the Performance Shares (plus up to an additional 25%) will be earned based upon the Corporation's Relative Total Shareholder Return (Relative TSR), according to the following schedule:
TSR RANK (13 Peers) % Performance Shares Earned ------------------- --------------------------- Threshold 10th(2) 12.5% Target 7th(3) 25.0% Maximum 1st 50.0%
(1) The percentage of Performance Shares earned for interim levels of performance shall be calculated by mathematical interpolation. (2) If the number of companies in the peer group drops to 12, as a result of merger, consolidation or other cause acknowledged by the Committee*, the threshold TSR Rank shall change to 9th. If it drops to 11 or fewer, the threshold TSR Rank shall change to 8th. (3) If the number of companies in the peer group drops to 12 or fewer as a result of merger, consolidation or other cause acknowledged by the Committee*, the target TSR Rank shall change to 6th. If it drops to 11 or fewer, the target TSR Rank shall change to 5th. (4) The following table illustrates the changes described in notes (2) and (3) above.
Rank 13 Peers 12 Peers 11 Peers or fewer - ---- -------- -------- ----------------- 1 50% 50% 50% 2 3 4 5 25% 6 25% 7 25% 8 12.5% 9 12.5% 10 12.5% 11 12 13
- ---------- * (In the event of bankruptcy or liquidation, the company remains in the peer group and is counted) EXHIBIT D [DIEBOLD LOGO] DESIGNATION OF DEATH BENEFICIARY I, the undersigned Grantee, do hereby designate the following person or persons as my Death Beneficiary for the Performance Share Grant 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 awards 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 EX-10.5 6 l12189aexv10w5.txt EX-10.5 FORM OF 2004-2006 PERFORMANCE SHARE AGREEMENT EXHIBIT 10.5 PERFORMANCE PERIOD 2004-2006 [DIEBOLD LOGO] PERFORMANCE SHARE AGREEMENT WHEREAS, ___________ (hereinafter called the "Grantee") is a key associate of Diebold, Incorporated (hereinafter called the "Corporation") or a Subsidiary; and WHEREAS, the execution of a Performance Share Agreement substantially in the form hereof has been authorized by a resolution of the Compensation Committee (the "Committee") of the Board of Directors of the Corporation (the "Board") duly adopted on February 11, 2004. NOW, THEREFORE, subject to the terms and conditions of the 1991 Equity and Performance Incentive Plan (As Amended and Restated as of February 7, 2001), and as further amended by Amendment No. 1 and Amendment No. 2 (the "Plan"), and the terms and conditions described below, the Corporation hereby grants to the Grantee as of February 11, 2004, ____________ Performance Shares, together with the opportunity to earn up to an additional 100% of such number of Performance Shares for superior performance as described herein. 1. Definitions. As used in this Agreement: (a) A "Change in Control" shall be deemed to have occurred if any of the following events shall occur: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% of more of either: (A) the then-outstanding shares of common stock of the Corporation (the "Corporation Common Stock") or (B) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors ("Voting Stock"); provided, however, that for purposes of this subsection (i), the following acquisition shall not constitute a Change in Control (1) any acquisition directly from the Corporation, (2) any acquisition by the Corporation, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary of the Corporation, or (4) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 1(b); or (ii) Individuals who, as to the date hereof, constitute the Board cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Corporation Common Stock and Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Corporation Common Stock and Voting Stock of the Corporation, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 15% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination; or (iv) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. (b) "Management Objectives" means Relative Total Shareholder Return goals established by the Board for the Corporation for the Performance Period covered by this Agreement as described in Section 2 of this Agreement. (c) "Performance Period" means the period commencing with the closing price of the Common Shares of the Corporation on January 28, 2004 through the time of the determination of the closing price on the New York Stock Exchange on the day of the Corporation's annual earnings release in January 2007. (d) "Relative Total Shareholder Return" or "Relative TSR" means the return, including reinvested dividends (or as determined at the beginning of the Performance Period in such manner as is consistent with the index), shareholders earn from investing in Common Shares, relative to the return earned from an investment in each of the following: (i) a benchmark peer group index comprised of the 14 companies set forth on Exhibit A and (ii) all the companies comprising the Standard & Poors 400 Midcap Index at the closing prices of January 28, 2004. (e) Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. 2 2. Management Objectives. The Management Objectives for the Performance Period covered by this Agreement are set forth on Exhibit B. The following applies with respect to the Management Objectives. (a) Each Management Objective shall be evaluated separately with the total award determined through the matrix set forth on Exhibit B, which correlates the Corporation's performance against each Management Objective. (b) In no event shall the Grantee be entitled to receive more than 200% of the Performance Shares granted hereunder. 3. Grant of Performance Shares. The Corporation hereby grants to the Grantee the number of Performance Shares specified above, which may be earned by the Grantee during the Performance Period as set forth in Section 4 of this Agreement. 4. Earned Shares. The Performance Shares granted hereby shall be earned based on the level of the Corporation's results with respect to each of the Management Objectives established for the Performance Period covered by this Agreement. The number of Performance Shares earned shall be determined based on the level of results of the Management Objectives in accordance with the matrix, which correlates performance against both measures, as set forth on Exhibit B. No additional Performance Shares shall be earned for results in excess of the maximum level of results for the Management Objectives. If results for a Management Objective are attained at interim levels of performance on the matrix, a proportionate number of Performance Shares shall be earned, as determined by mathematical interpolation, as described by example in Exhibit B. If the Corporation's performance with respect to both Management Objectives is determined to be below the 10th percentile, the number of Performance Shares earned, if any, shall be at the discretion of the Committee, except in the case of Covered Employees. 5. Payment of Awards. Payment shall be made in the form of the Corporation's Common Shares, cash or a combination of Common Shares and cash, as determined by the Committee in its sole discretion. Final awards shall be paid, less applicable taxes, as soon as practicable after the receipt of audited financial statements relating to the last fiscal year of the Performance Period covered by this Agreement and the determination by the Committee of the level of attainment of each Management Objective, except as otherwise agreed to by the Corporation and the Grantee. Any payment of awards due pursuant to this Agreement to a deceased Grantee shall be paid to the beneficiary designated by the Grantee by the latest Designation of Death Beneficiary in the form attached as Exhibit C hereto filed by the Grantee 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. 6. 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 (and under any prior Performance Share Agreements 3 between the Corporation and the Grantee) 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. 7. Effect of Death, Disability or Retirement. If the Grantee's employment with the Corporation or one of its Subsidiaries should terminate because of death, permanent total disability or retirement under a retirement plan (including, without limitation, any supplemental retirement plan) of the Corporation or a Subsidiary at or after the earliest voluntary retirement age provided for in any such retirement plan or should retire at an earlier age with the consent of the Committee, prior to the payment of an award, the extent to which the Performance Shares granted hereby shall be deemed to have been earned shall be determined as if the Grantee's employment had not terminated and the result shall be multiplied by a fraction, the numerator of which is the number of full months the Grantee was employed during the Performance Period and the denominator of which is the total number of months in the Performance Period; provided, however, the Board, upon the recommendation of the Committee may, in its discretion, increase payments made under the foregoing circumstances up to the full amount payable for service throughout the Performance Period. 8. Effect of Other Terminations of Employment; Detrimental Activity. In the event that the Grantee's employment shall terminate prior to the payment of an award in a manner other than any specified in Section 7 hereof or if the Grantee shall at any time engage in any Detrimental Activity (as defined below), the Grantee shall forfeit any rights he or she may have in any Performance Shares that have not been paid out to the Grantee prior to the time of such termination; provided, however, that the Board, upon recommendation of the Committee, may order payment of an award in an amount determined as in Section 7 hereof for termination owing to death, disability or retirement, under circumstances which warrant such exceptional treatment in the judgment of the Committee and the Board. 9. Detrimental Activity. If the Grantee, either during employment by the Corporation or a Subsidiary or within one year after termination of such employment, shall engage in any Detrimental Activity, and the Board shall so find, and (except for any Detrimental Activity described in Section 9(d)(v)(B)) if the Grantee shall not have ceased all Detrimental Activity within 30 days after notice of such finding given within one year after commencement of such Detrimental Activity, the Grantee shall: (a) Return to the Corporation all Performance Shares that the Grantee has not disposed of and an amount equal to all cash paid out pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, and (b) With respect to any Performance Shares that the Grantee has disposed of that were paid out pursuant to this Agreement within a period of one year prior to the date of the commencement of such Detrimental Activity, pay to the Corporation in cash the value of such Performance Shares on the date such Performance Shares were paid out. (c) To the extent that the amounts referred to in Section 9(a) and (b) above are not paid to the Corporation, the Corporation may set off the amounts so payable to it against any amounts that may be owing from time to time by the Corporation or a Subsidiary to the Grantee, whether as wages, deferred compensation or vacation pay or in the form of any other benefit or for any other reason. 4 (d) For purposes of this Agreement, the term "Detrimental Activity" shall include: (i) Engaging in any activity, as an employee, principal, agent, or consultant for another entity, and in a capacity, that directly competes with the Corporation or any Subsidiary in any actual product, service or business activity (or in any product, service or business activity which was under active development while the Grantee was employed by the Corporation if such development is being actively pursued by the Corporation during the one-year period first referred to in this Section 9) for which the Grantee has had any direct responsibility and direct involvement during the last two years of his or her employment with the Corporation or a Subsidiary, in any territory in which the Corporation or a Subsidiary manufactures, sells, markets, services, or installs such product or service, or engages in such business activity. (ii) Soliciting any employee of the Corporation or a Subsidiary to terminate his or her employment with the Corporation or a Subsidiary. (iii) The disclosure to anyone outside the Corporation or a Subsidiary, or the use in other than the Corporation or a Subsidiary's business, without prior written authorization from the Corporation, of any confidential, proprietary or trade secret information or material relating to the business of the Corporation and its Subsidiaries, acquired by the Grantee during his or her employment with the Corporation or its Subsidiaries or while acting as a consultant for the Corporation or its Subsidiaries thereafter. (iv) The failure or refusal to disclose promptly and to assign to the Corporation upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Grantee during employment by the Corporation and any Subsidiary, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Corporation or any Subsidiary to secure a patent where appropriate in the United States and in other countries. (v) Activity that results in Termination for Cause. For the purposes of this Section, "Termination for Cause" shall mean a termination: (A) due to the Grantee's willful and continuous gross neglect of his or her duties for which he or she is employed, or (B) due to an act of dishonesty on the part of the Grantee constituting a felony resulting or intended to result, directly or indirectly, in his or her gain for personal enrichment at the expense of the Corporation or a Subsidiary. 10. Shares Non-Transferable. The Performance Shares granted hereby that have not yet been paid out are not 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 any stock dividend or stock split, recapitalization, reclassification, merger, consolidation, combination or exchange of shares or other similar corporate change, then the Committee, shall adjust the Management Objectives and/or the number of Performance Shares then held by the Grantee. Such adjustments made by the Committee shall be conclusive and binding for all purposes of this Agreement. 5 12. Withholding Taxes. To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with the delivery of Common Shares to the Grantee or other person under this Agreement, 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 or such other person will make arrangements satisfactory to the Corporation for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit. In no event, however, shall the Corporation accept Common Shares for payment of taxes in excess of required tax withholding rates, except that, in the discretion of the Committee, the Grantee or such other person may surrender Common Shares owned for more than 6 months to satisfy any tax obligations resulting from any such transaction. 13. Employment Rights. 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. This award is a voluntary, discretionary bonus being made on a one-time basis and it does not constitute a commitment to make any future awards. This award and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Grantee any right to continue employment with the Corporation or any Subsidiary, as the case may be, or interfere in any way with the right of the Corporation or a Subsidiary to terminate the employment of the Grantee. 14. Data Protection. Information about the Grantee and the Grantee's participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Grantee understands that such processing of this information may need to be carried out by the Corporation and its Subsidiaries and by third party administrators whether such persons are located within the Grantee's country or elsewhere, including the United States of America. The Grantee consents to the processing of information relating to the Grantee and the Grantee's participation in the Plan in any one or more of the ways referred to above. 15. 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 the Performance Shares without the Grantee's consent. 16. 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 in any other person or circumstances shall not be affected, and the provisions 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. 17. Governing Law. This Agreement is made under, and shall be construed in accordance with the internal substantive laws of the State of Ohio. 6 Executed as of the 11th day of February, 2004. DIEBOLD, INCORPORATED Walden W. O'Dell Chairman of the Board and Chief Executive Officer The undersigned hereby acknowledges receipt of an executed original of this Performance Share Agreement and accepts the Performance Shares granted thereunder on the terms and conditions set forth therein and in the Plan. Date:___________________ ________________________________ [Signature] 7 EXHIBIT A DIEBOLD, INCORPORATED - RELATIVE TSR - PEER GROUP INDEX (14 PEERS) - CLOSING PRICE ON JANUARY 28, 2004 - TIME OF DETERMINATION THROUGH CLOSING PRICE ON NEW YORK STOCK EXCHANGE ON DATE OF THE CORPORATION'S ANNUAL EARNINGS RELEASE IN JANUARY 2007
NAME TICKER ---- ------ Affiliated Computer Services, Inc. ACS The Bisys Group, Inc. BSG Certegy Inc. CEY Convergys Corporation CVG Deluxe Corporation DLX Dover Corporation DOV Fiserv Inc. FISV Harris Corporation HRS NCR Corporation NCR Pitney Bowes Inc. PBI Sungard Data Systems Inc. SDS Symbol Technologies, Inc. SBL Thomas & Betts Corporation TNB Varian Inc. VARI
EXHIBIT B MANAGEMENT OBJECTIVES (FOR RELATIVE TSR, CLOSING PRICE ON JANUARY 28, 2004 TIME OF DETERMINATION THROUGH CLOSING PRICE ON NEW YORK STOCK EXCHANGE ON DATE OF THE CORPORATION'S ANNUAL EARNINGS RELEASE IN JANUARY 2007) Performance Shares will be earned based upon the Corporation's Relative Total Shareholder Return (Relative TSR), ranking against each of the 14 Company Peer Group and all Companies comprising the Standard & Poor's 400 Midcap Index as of January 28, 2004, as set forth in the matrix below. > or = 80TH 1.0 1.2 1.3 1.5 1.7 1.8 2.0 70TH 0.8 1.0 1.2 1.3 1.5 1.7 1.8 60TH 0.7 0.8 1.0 1.2 1.3 1.5 1.7 50TH 0.6 0.7 0.8 1.0 1.2 1.3 1.5 S&P 400 40TH 0.5 0.6 0.7 0.8 1.0 1.2 1.3 30TH 0.4 0.5 0.6 0.7 0.8 1.0 1.2 < or = 20TH 0.3 0.4 0.5 0.6 0.7 0.8 1.0 < or = 20TH 30TH 40TH 50TH 60TH 70TH > or = 80TH PEERS
(1) The percentage of Performance Shares earned for interim levels of performance shall be calculated by mathematical interpolation. (2) If Diebold performance is below the 10th percentile in both measures, payout, if any is at the discretion of the Compensation Committee of the Board of Directors. Examples: Hypothetical Results 1. Target Shares 10,000 Performance 70th percentile of S&P 400; 80th percentile of Peers Payout 1.8 X 10,000 = 18,000 shares 2. Hypothetical Results Target Shares 10,000 Performance 53rd percentile of S&P 400; 67th percentile of peers Payout 1.32 X 10,000 = 13,200 shares DETAILS FOR EXAMPLE #2 - Peers Interpolation = ((1.3 - 1.2) X (3/10)) + 1.2 = 1.23 - Peers Interpolation = ((1.5 - 1.3) X (3/10)) + 1.3 = 1.36 - Peers & S&P 400 Interpolation = ((1.36-1.23) X (7/10)) + 1.23 = 1.32 EXHIBIT C [DIEBOLD LOGO] DESIGNATION OF DEATH BENEFICIARY I, the undersigned Grantee, do hereby designate the following person or persons as my Death Beneficiary for the Performance Share Grant 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 awards 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 GRAPHIC 7 l12189al1218900.gif GRAPHIC begin 644 l12189al1218900.gif M1TE&.#EAU0`C`/<``````(````"``("`````@(``@`"`@,#`P,#/CX^KJZO'Q\?CX^/_[\*"@I("`@/\```#_ M`/__````__\`_P#______RP`````U0`C```(_@#_"1Q(L.!`!0@3*ER(T*## MAQ`C2IQ(L2)!A@TM:MS(L>-#C"`7?@R94"#)DQE1AN2H,F/$DQ1;BJQ8G7D2NQ?JV:DZM;FVL;ACTKEF[!N%KK@BRZ]BY;I7CUIJ4;^")> MK5>G'O;[UN)AF61Y1C9J^/%?P3C5%C8,V/+@LXLGQVU*5/%CCWX]?QZ;&'-/ MUZ%AYS5[&C5IU9F=:MY[FS?NFJVM>K8MNVMHW:9YBRXIN7CNTLF5WZ2)5GEO MJE6I__ M^LNTQ3<>?.B1!V!3N]'7GX!@^?B?>1F"*(";5X'YVB3CB7O;-6.!_U:TXDXWNI>3@:.OQY>!Y-^(( M7X`*S29>::"3Z*8EYI(DMAFF6_6:>)OQGT)Y8&Q;;EE?A?*Z1&@79$G MY(F,]MAD;<3Q69:;<+8FJ6IS[CAFI71!2 MNFBCJS+6Z4R4OGHK<++.RM2J]!%6:*_"`EDIF8\B^F&AAP97K%W'0NOHKKSB M.:BHU#(Y)*A:6@K4LY?^N6>VW6W+K:*C?KMLN*&.2VZGM<8K[[RU;D?OO10% #!``[ ` end -----END PRIVACY-ENHANCED MESSAGE-----