EX-10.10






Exhibit 10.10




DIEBOLD, INCORPORATED




DEFERRED INCENTIVE COMPENSATION PLAN NO. 2




(Effective as of January 1, 2005)




     Diebold, Incorporated establishes, effective as of January 1, 2005, the Deferred Incentive
Compensation Plan No. 2 for Diebold, Incorporated. Such plan is established to provide the
opportunity to defer incentive compensation payments in compliance with Section 409A of the
Internal Revenue Code of 1986. Incentive compensation payments (and earnings thereon) that are
“deferred” (for purposes of Section 409A of the Internal Revenue Code of 1986) after December 31,
2004 are eligible for deferral in accordance with the provisions of this plan. Incentive
compensation payments (and earnings thereon) that are “deferred” (for purposes of Section 409A of
the Internal Revenue Code) on or before December 31, 2004 are eligible for deferral in accordance
with the provisions of 1992 Deferred Incentive Compensation Plan for Diebold, Incorporated.



ARTICLE I




DEFINITIONS




     For the purposes hereof, the following words and phrases shall have the meanings indicated.



     1. “Account” shall mean a bookkeeping account in which Incentive Compensation which is
deferred by a Participant shall be recorded and to which gains, losses, earnings, dividends,
distributions and interest may be credited in accordance with the Plan.



     2. “Beneficiary” or “Beneficiaries” shall mean the person or persons designated by a
Participant in accordance with the Plan to receive payment of the remaining balance of the
Participant’s Account in the event of the death of the Participant prior to receipt of the entire
amount credited to the Participant’s Account.



     3. “Board” shall mean the Board of Directors of the Company.



     4. “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     5. “Change in Control” shall mean that: (i) The Company is merged or consolidated or
reorganized into or with another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting power of the securities
of such corporation or person that are outstanding immediately following the consummation of such
transaction is held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the
Company immediately prior to such transaction;



          (ii) The Company sells or otherwise transfers all or substantially all of its assets to any
other corporation or other legal person, and as a result of such sale or transfer less than a
majority of the combined voting power of the securities of such corporation or person that are
outstanding immediately following the consummation of such sale or transfer is held in the




 









 




aggregate by the holders of Voting Stock (as hereinafter defined) of the Company immediately
prior to such sale or transfer;




          (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report) thereto, each as promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), disclosing that any person (as the term “person” is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term
“beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated
under the Exchange Act) of securities representing 20 percent or more of the combined voting power
of the then-outstanding securities entitled to vote generally in the election of directors of the
Company (the “Voting Stock”);




          (iv) The Company files a report or proxy statement with the Securities and Exchange Commission
pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing contract or transaction;
or




          (v) If during any period of two consecutive years, individuals who at the beginning of any
such period constitute the Board cease for any reason to constitute at least a majority of the
members thereof, unless the election, or the nomination for election by the Company’s stockholders,
of each member of the Board first elected during such period was approved by a vote of at least
two-thirds of the members of the Board then still in office who were members of the Board at the
beginning of any such period.




     Notwithstanding the foregoing provisions of subsection (iii) or (iv) hereof, a “Change in
Control” shall not be deemed to have occurred for purposes of this Agreement, either (1) solely
because the Company, a Subsidiary, or any Company-sponsored employee stock ownership plan or other
employee benefit plan of the Company, files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because
the Company reports that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership or (2) solely because of a change in
control of any Subsidiary by which any Participant may be employed. Notwithstanding the foregoing
provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv)
hereof that may be instituted by any person who is not an officer or director of the Company, or
prior to any disclosed proposal that may be instituted by any person who is not an officer or
director of the Company that could lead to any such event, management proposes any restructuring of
the Company that ultimately leads to an event described in subsections (i-iv) hereof pursuant to
such management proposal, then a “Change in Control” shall not be deemed to have occurred for
purposes of the Plan.



     6. “Committee” shall mean the Compensation and Pension Committee of the Board or such other
Committee as may be authorized by the Board to administer the Plan.



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     7. “Common Shares” shall mean Common Shares, $1.25 par value, of the Company or any security
into which such Common Shares may be changed by reason of any transaction or event of the type
referred to in Section 9 of Article II of the Plan.



     8. “Company” shall mean Diebold, Incorporated and its successors, including, without
limitation, the surviving corporation resulting from any merger or consolidation of Diebold,
Incorporated with any other corporation or corporations.



     9. “Effective Date” shall mean January 1, 2005.



     10. “Election Agreement” shall mean an agreement in substantially the form attached hereto as
Exhibit A, as modified from time to time by the Company.



     11. “Eligible Associate” shall mean an associate of the Company (or a Subsidiary that has
adopted the Plan) who is selected by the Board or a duly authorized committee thereof to
participate in this Plan. An associate will be considered an Eligible Associate as of the date
designated by the Board as his or her effective date of eligibility. Unless otherwise determined
by the Board or a committee thereof, an Eligible Associate shall continue as such until termination
of employment.



     12. “Incentive Compensation” shall mean (i) cash incentive compensation earned as an associate
pursuant to an incentive compensation plan now in effect or hereafter established by the Company,
including, without limitation, the Annual Incentive Plan and the 1991 Plan, and (ii) incentive
compensation payable in the form of Common Shares pursuant to the 1991 Plan or any similar plan
approved by the Board for purposes of this Plan.



     13. “Participant” shall mean any Eligible Associate who has at any time elected to defer the
receipt of Incentive Compensation in accordance with the Plan.



     14. “Plan” shall mean this deferred incentive compensation plan as amended and restated
hereby, together with all amendments hereto, which shall be known as the Deferred Incentive
Compensation Plan No. 2 for Diebold, Incorporated.



     15. “Subsidiary” shall mean any corporation, joint venture, partnership, unincorporated
association or other entity in which the Company has a direct or indirect ownership or other equity
interest and directly or indirectly owns or controls more than 50 percent of the total combined
voting or other decision-making power.



     16. “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant
resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent
(as defined in Section 152 of the Code without regard to Sections 152(b)(1), 152(b)(2) and
152(d)(1)(B) of the Code) of the Participant, loss of the Participant’s property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant. A withdrawal on account of an Unforeseeable Emergency may be paid
to the Participant only if the amounts distributed with respect to an emergency do not exceed the
amounts necessary to satisfy such emergency plus amounts necessary to pay taxes and penalties
reasonably anticipated as a result of the distribution, after taking into account the extent to
which such hardship is or may be relieved through reimbursement or compensation by



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insurance or otherwise or by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship) or by cessation of
deferrals under the Plan.



     17. “Year” shall mean a calendar year.



     18. “1991 Plan” shall mean the Diebold, Incorporated 1991 Equity and Performance Incentive
Plan, as amended from time to time.



ARTICLE II




ELECTION TO DEFER




     1. Eligibility. An Eligible Associate may elect to defer receipt of all or a
specified part of his or her Incentive Compensation for any Year in accordance with Section 2 of
this Article. An Eligible Associate’s entitlement to defer shall cease with respect to the Year
following the Year in which he or she ceases to be an Eligible Associate.



     2. Election to Defer. (i) An Eligible Associate who desires to defer the payment of
all or a portion of his or her Incentive Compensation must complete and deliver an Election
Agreement to the Secretary of the Company before the first day of the first Year of service for
which such Incentive Compensation is payable. An Eligible Associate who timely delivers an
Election Agreement to the Secretary of the Company shall be a Participant.



          (ii) Notwithstanding the foregoing provision of Subsection (i), any associate who becomes an
Eligible Associate after the Effective Date, e.g., new hires or promoted associates, may
become a Participant for a Year with respect to services performed subsequent to the filing of an
Election Agreement if he or she submits to the Secretary of the Company a properly completed
Election Agreement within thirty (30) days after becoming an Eligible Associate.




          (iii) Notwithstanding the foregoing provision of Subsection (i), subject to the approval of
the Company, with respect to any “performance-based” compensation (as determined by the Company in
accordance with Section 409A of the Code) based on services performed over a period of at least 12
months, an Eligible Associate may complete and deliver an Election Agreement to the Secretary of
the Company no later than six months before the end of such period.




          (iv) An Election Agreement that is timely delivered shall be effective for the succeeding Year
and, except as otherwise specified by an Eligible Associate in his or her Election Agreement, shall
continue to be effective from Year to Year until revoked or modified by written notice to the
Secretary of the Company. Except as provided for in the below provision of Subsection (v), in
order to be effective to revoke or modify an election to defer Incentive Compensation otherwise
payable for any particular Year, a revocation or modification must be delivered prior to the date
that an initial election would be required to be delivered under either Subsection (i) or
Subsection (iii) above.




          (v) Subject to the approval of the Company, a Participant may make a subsequent election
requesting a change in the period of deferral (subject to the limitations set forth in Section 3 of
this Article) and/or the form of payment (subject to the limitations set forth in




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this Section 5). Such subsequent election must meet all of the following requirements and
shall be in writing on a form provided by the Company:




               (a) the subsequent election shall not take effect until at least 12 months after the date on
which such amendment is made;



               (b) in the case of a subsequent election related to a payment not made on account of the
Participant’s death or an Unforeseeable Emergency, the first payment with respect to which the
amendment is made shall in all cases be deferred for a period of not less then 5 years from the
date on which such payment otherwise would have been made;



               (c) in the case of a subsequent election related to a payment that is to be made at a
specified time or pursuant to a fixed schedule, such an amendment of the election must be made at
least 12 months prior to the date of the first scheduled payment.



     3. Amount Deferred; Period of Deferral. A Participant shall designate on the Election
Agreement the percentage of his or her Incentive Compensation that is to be deferred. A
Participant may specify in the Election Agreement that different percentages shall apply to
different Incentive Compensation plans or different forms of payment, i.e., cash or Common Shares.
The applicable percentage or percentages of Incentive Compensation shall be deferred until the
earlier to occur of (a) the date the Participant experiences a “separation from service” with the
Company (determined in accordance with the standards of Section 409A of the Code);
provided, however, that in the case of a Participant who is a “specified employee”
(within the meaning of Code Section 409A of the Code) as of the date of such separation from
service, such date shall be the first day of the seventh month after the date of the Participant’s
separation from service with the Company, or (b) the date specified by the Participant on the
Election Agreement.



     4. Accounts. (i) Cash Incentive Compensation that a Participant elects to defer
shall be treated as if it were set aside in an Account on the date the Incentive Compensation would
otherwise have been paid to the Participant. A Participant’s Account shall be credited with gains,
losses and earnings based on hypothetical investment directions made by the Participant, in
accordance with investment deferral crediting options and procedures adopted by the Committee from
time to time. A Participant may change such hypothetical investment directions pursuant to such
procedures adopted by the Committee from time to time. The Company specifically retains the right
in its sole discretion to change the investment deferral crediting options and procedures from time
to time. By electing to defer any amount pursuant to the Plan, each Participant shall thereby
acknowledge and agree that the Company is not and shall not be required to make any investment in
connection with the Plan, nor is it required to follow the Participant’s hypothetical investment
directions in any actual investment it may make or acquire in connection with the Plan or in
determining the amount of any actual or contingent liability or obligation of the Company
thereunder or relating thereto. Any amounts credited to a Participant’s Account with respect to
which a Participant does not provide investment direction shall be credited with earnings in an
amount determined by the Committee in its sole discretion or, if an amount is not so determined,
such amounts shall bear interest at                      until further ordered by the Committee or the Board
of Directors. A Participant’s Account shall be adjusted as of each business day, except that
interest, if any, for a calendar quarter shall be credited on the first day of the following
quarter.



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          (ii) Incentive Compensation payable in the form of Common Shares that a Participant elects to
defer shall be reflected in a separate Account, which shall be credited with the number of Common
Shares that would otherwise have been issued or transferred and delivered to the Participant. Such
Account shall be credited from time to time with amounts equal to dividends or other distributions
paid on the number of Common Shares reflected in such Account, and such Account shall be credited
with gains, losses and earnings on cash amounts credited to such Account from time to time in the
manner provided in Subsection (i) above with respect to Cash Incentive Compensation.




     5. Payment of Accounts. The amounts in Participants’ Accounts shall be paid as
provided in this Section 5.



          (i) The amount of a Participant’s Account attributable to deferral of cash Incentive
Compensation shall be paid to the Participant in a lump sum or in a number of approximately equal
quarterly installments (not to exceed 40), as designated by the Participant in the Election
Agreement. The amount of such Account remaining unpaid shall continue to be credited with gains,
losses and earnings as provided in Section 4 of this Article. The lump sum payment or the first
quarterly installment, as the case may be, shall be made on the last day of the period of deferral
as specified in Section 3 of this Article. Each payment to the Participant under this Section 5(i)
shall be considered a separate payment and not one of a series of payments.




          (ii) The number of Common Shares in a Participant’s Account attributable to deferral of
Incentive Compensation payable in the form of Common Shares shall be issued or transferred to the
Participant on the last day of the period of deferral as specified in Section 3 of this Article.
All amounts credited to such Account in respect of dividends and distributions, and the gains,
losses and earnings thereon as provided in Subsection (ii) of Section 4 of this Article shall
likewise be paid to the Participant at such time. Upon application of an Eligible Associate prior
to his or her election to defer Incentive Compensation payable in the form of Common Shares, the
Committee may authorize payment in installments of the amounts in his or her Account attributable
to such Incentive Compensation, which shall commence to be paid on the last day of the period of
deferral as specified in Section 3 of this Article. Each payment to the Participant under this
Section 5(ii) shall be considered a separate payment and not one of a series of payments.




     6. Death of a Participant. In the event of the death of a Participant, the amount of
the Participant’s Account or Accounts shall be paid to the Beneficiary or Beneficiaries designated
in a writing substantially in the form attached hereto as Exhibit B (the “Beneficiary
Designation”), in accordance with the Participant’s Election Agreement and Section 5 of this
Article. A Participant’s Beneficiary Designation may be changed at any time prior to his or her
death by the execution and delivery of a new Beneficiary Designation. The Beneficiary Designation
on file with the Company that bears the latest date at the time of the Participant’s death shall
govern. In the absence of a Beneficiary Designation or the failure of any Beneficiary to survive
the Participant, the amount of the Participant’s Account or Accounts shall be paid to the
Participant’s estate. In the event of the death of the Beneficiary or Beneficiaries after the
death of a Participant, the remaining amount of the Account or Accounts shall continue to be paid
to the estate of the last Beneficiary to receive payments. Any payments to be made upon the death
of the Participant before the Participant’s Account has begun to be paid shall be paid or commence
to be paid within ninety (90) days of the date of the Participant’s death, provided that the
Beneficiary shall not have the right to



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designate the taxable year of payment. Any payments to be made upon the death of the
Participant after the Participant’s Account has begun to be paid shall be paid to the Beneficiary
at the same time as they would have been paid to the Participant if then living.



     7. Small Payments. Notwithstanding the foregoing, if, upon the date that payments
would commence under Section 3, the total value of the account balance(s) held by a Participant
under this Plan, and any other agreements, methods, programs, plans or other arrangements with
respect to which deferrals of compensation are treated as having been deferred under a single
nonqualified deferred compensation plan with the account balances under the Plan under Treas. Reg.
§ 1.409A-1(c)(2), does not exceed the applicable dollar amount under Section 402(g)(1)(B) of the
Code, the entire amount of the Account shall be paid in a lump sum in accordance with Section 5 of
this Article.



     8. Acceleration. Notwithstanding the provisions of the foregoing: (i) if a Change in
Control, which constitutes a “change in the ownership or effective control of the corporation, or
in the ownership of a substantial portion of the assets of the corporation” (for purposes of
Section 409A of the Code), occurs, the amount of each Participant’s Account or Accounts shall
immediately be paid to the Participant in full on the date of the closing of such transaction or
(ii) if a Participant incurs an Unforeseeable Emergency, to the extent permitted by Section 409A of
the Code, an amount from such Participant’s Account or Accounts shall be immediately paid to the
Participant on the date within thirty (30) days after the date the Committee determines that the
Participant has incurred an Unforeseeable Emergency, provided that the Participant shall not have
the right to designate the taxable year of payment.



     9. Adjustments. The Board may make or provide for such adjustments in the numbers of
Common Shares credited to Participants’ Accounts, and in the kind of shares so credited, as the
Board in its sole discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants that otherwise would result from (i)
any stock dividend, stock split, combination of shares, recapitalization or other change in the
capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance
of rights or warrants to purchase securities, or (iii) any other corporate transaction or event
having an effect similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board, in its discretion, may provide in substitution for any or all Common Shares
deliverable under this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances.



     10. Fractional Shares. The Company shall not be required to issue any fractional
Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for
the settlement of fractions in cash.



ARTICLE III




ADMINISTRATION




     The Company, through its Board, shall be responsible for the general administration of the
Plan and for carrying out the provisions hereof. The Board may delegate any or all of its
authority



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under the Plan to the Committee. The Company shall have all such powers as may be necessary
to carry out the provisions of the Plan, including the power to (i) determine all questions
relating to eligibility for participation in the Plan and the amount in the Account or Accounts of
any Participant and all questions pertaining to claims for benefits and procedures for claim
review, (ii) resolve all other questions arising under the Plan, including any questions of
construction, and (iii) take such further action as the Company shall deem advisable in the
administration of the Plan. The actions taken and the decisions made by the Company hereunder
shall be final and binding upon all interested parties. In accordance with the provisions of
Section 503 of the Employee Retirement Income Security Act of 1974, the Company shall provide a
procedure for handling claims of Participants or their Beneficiaries under this Plan. Such
procedure shall be in accordance with regulations issued by the Secretary of Labor and shall
provide adequate written notice within a reasonable period of time with respect to the denial of
any such claim as well as a reasonable opportunity for a full and fair review by the Company of any
such denial.




ARTICLE IV




AMENDMENT AND TERMINATION




     The Company reserves the right to amend or terminate the Plan with respect to any future Year
at any time by action of the Board; provided, however, that no such action shall adversely affect
any Participant or Beneficiary who has an Account, or result in the acceleration of payment of the
amount of any Account (except as otherwise permitted under the Plan).



ARTICLE V




MISCELLANEOUS




     1. Non-alienation of Deferred Compensation. Except as permitted by this Plan, no
right or interest under this Plan of any Participant or Beneficiary shall, without the written
consent of the Company, be (i) assignable or transferable in any manner, (ii) subject to
alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal process
or (iii) in any manner liable for or subject to the debts or liabilities of the Participant or
Beneficiary.



     2. Participation by Associates of Subsidiaries. An Eligible Associate who is employed
by a Subsidiary and elects to participate in the Plan shall participate on the same basis as an
associate of the Company. The Account or Accounts of a Participant employed by a Subsidiary shall
be paid in accordance with the Plan solely by such Subsidiary to the extent attributable to
Incentive Compensation that would have been paid by such Subsidiary in the absence of deferral
pursuant to the Plan.



     3. Interest of Associate. The obligation of the Company under the Plan to make
payment of amounts reflected in an Account merely constitutes the unsecured promise of the Company
to make payments from its general assets or in the form of its Common Shares, as the case may be,
as provided herein, and no Participant or Beneficiary shall have any interest in, or a lien or
prior claim upon, any property of the Company. Further, no Participant or Beneficiary shall have
any claim whatsoever against any Subsidiary for amounts reflected in an Account. The Company shall
establish a so-called “rabbi trust” to hold funds, Common Shares or other securities



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to be used in payment of its obligations under the Plan, and may fund such trust; provided,
however, that any funds contained therein shall remain subject to the claims of the general
creditors of the Company or the Subsidiary for which the Eligible Associate performs services.
Nothing in this Plan shall be construed as guaranteeing future employment to Eligible Associates.
It is the intention of the Company that the Plan be unfunded for tax purposes and for purposes of
Title I of ERISA.



     4. Claims of Other Persons. The provisions of the Plan shall in no event be construed
as giving any other person, firm or corporation any legal or equitable right as against the
Company or any Subsidiary or the officers, associates or directors of the Company or any
Subsidiary, except any such rights as are specifically provided for in the Plan or are hereafter
created in accordance with the terms and provisions of the Plan.



     5. Severability. The invalidity and unenforceability of any particular provision of
the Plan shall not affect any other provision hereof, and the Plan shall be construed in all
respects as if such invalid or unenforceable provision were omitted herefrom.



     6. Governing Law. Except to the extent preempted by federal law, the provisions of
the Plan shall be governed and construed in accordance with the laws of the State of Ohio.



     7. Relationship to Other Plans. This Plan is intended to serve the purposes of and to
be consistent with the 1991 Plan and any similar plan approved by the Board for purposes of this
Plan. The issuance or transfer of Common Shares pursuant to this Plan shall be subject in all
respects to the terms and conditions of the 1991 Plan and any other such plan. Without limiting
the generality of the foregoing, Common Shares credited to the Accounts of Participants pursuant to
this Plan as Incentive Compensation shall be taken into account for purposes of Section 3 of the
1991 Plan (Shares Available Under the Plan) and for purposes of the corresponding provisions of any
other such plan.



     8. Compliance with Section 409A of the Code. To the extent applicable, it is intended
that this Plan and any grants made hereunder comply with the provisions of Section 409A of the
Code. The Plan and any grants made hereunder shall be administered in a manner consistent with
this intent.




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