EX-10.7(iv)






Exhibit 10.7(iv)




DIEBOLD, INCORPORATED




DEFERRED COMPENSATION PLAN NO. 2




FOR DIRECTORS OF DIEBOLD, INCORPORATED




(Effective as of January 1, 2005)




          Diebold, Incorporated hereby establishes, effective as of January 1, 2005, the Deferred
Compensation Plan No. 2 for Directors of Diebold, Incorporated to provide Directors with the
opportunity to defer payment of their directors’ fees in compliance with Section 409A of the
Internal Revenue Code of 1986. Directors’ fees (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. Directors’ fees (and earnings
thereon) that are “deferred” (for purposes of Section 409A of the Internal Revenue Code) on or
before December 31, 2004 are eligible for deferral in accordance with the provisions of the 1985
Deferred Compensation Plan for Directors of Diebold, Incorporated.




ARTICLE I




DEFINITIONS




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




     1. “Account” shall mean the bookkeeping account on which the amount of the Fees which are
deferred by a Participant shall be recorded and on which gains, losses and earnings shall be
credited in accordance with the Plan.



     2. “Beneficiary” of “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 Account
in the event of the death of the Participant prior to receipt of the entire amount credited to the
Participant’s Account.



     3. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



     4. “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.



     5. “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.



     6. “Director” shall mean any member of the Board of Directors of the Corporation.



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



 









 





     8. “Fee” shall mean all fees and compensation earned as a Director including retainer and
committee fees.



     9. “Participant” shall mean any Director who has at any time elected to defer the receipt of
Fees in accordance with the Plan.



     10. “Plan” shall mean the deferred compensation plan as set forth herein, together with all
amendments hereto, which Plan shall be called the Deferred Compensation Plan No. 2 for Directors of
Diebold, Incorporated.



     11. “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 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.



     12. “Year” shall mean the calendar year.



ARTICLE II




ELECTION TO DEFER




     1. Eligibility. Any Director may elect to defer receipt of all or a specified part of
his or her Fees for any Year in accordance with Section 2 of this Article. A Director’s
entitlement to defer shall cease with respect to the Year following the Year in which he or she
ceases to be a Director.



     2. Election to Defer. (i) A Director who desires to defer the payment of all or a
portion of his or her Fees for any Year 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 Fees are
payable. A Director 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 Director hereafter elected
to the Board of Directors of the Company who was not a Director on the preceding December 31 may
make an election to defer payment of Fees with respect to services performed subsequent to the
filing of the Election Agreement by delivering the Election Agreement to the Secretary of the
Company within thirty (30) days of such election.




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          (iii) Notwithstanding the foregoing provision of Subsection (i), with respect to any
“performance-based” compensation (as determined by the Company in accordance with Section 409A of
the Code) based on services performed over a period of at least 12 months a Participant 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, once timely delivered, shall be effective for all Fees for the
succeeding Year and, except as otherwise specified by a Director in his or her Election Agreement,
shall continue to be effective from Year to Year until terminated or modified by written notice to
the Secretary of the Company. Except as provided for in the below provisions of Subsection (v), in
order to be effective to revoke or modify an election to defer fees otherwise payable in any
particular Year, a revocation or modification must be delivered prior to the date that an initial
election would be required to be delivered under either Subsection (i) or Subsection (iii) above.




          (v) Subject to the approval of the Company, a Participant may make a subsequent election
requesting a change in the period of deferral (subject to the limitations set forth in Section 3 of
this Article) and/or the form of payment (subject to the limitations set forth in this Section 5).
Such subsequent election must meet all of the following requirements and shall be in writing on a
form provided by the Company:




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



               (b) in the case of a subsequent election related to a payment not made on account of the
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 Fees that are to be deferred. That percentage of Fees shall
be deferred until the earliest to occur of (i) 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 business day of the seventh month after the date of the Participant’s
separation from service with the Company, or (ii) the date specified by the Participant on the
Election Agreement, at which time payment of the amount deferred shall be made in accordance with
Section 5 or 6 of this Article.



     4. Account; Earnings. The percentage of Fees which a Participant elects to defer
shall be treated as if it were set aside in an Account on the date the Fees would otherwise have
been paid to the Participant. A Participant’s Account shall be credited with gains, losses and
earnings based



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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.



     5. Payment of Account. The amount of a Participant’s Account 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 on the Election Agreement. The amount of the 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 shall be considered a separate payment and not one of a
series of payments.



     6. Death of Participant. In the event of the death of a Participant, the amount of
the Participant’s Account shall be paid to the Beneficiary or Beneficiaries designated in a writing
substantially in the form attached hereto as Exhibit B, 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 death by execution and delivery of a new Beneficiary designation
form. The form on file with the Corporation at the time of the Participant’s death which bears the
latest date 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 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 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 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



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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 foregoing, (i) in the event of the acquisition
of substantially all of the assets of the Company or more than fifty percent (50%) of its stock by
any person, firm, corporation or group of related corporations, in a transaction or transactions
not approved by the Board of Directors of the Company, provided such transaction 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),
the entire amount of a Participant’s Account will be paid in a lump sum to the Participant or his
Beneficiary 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.



ARTICLE III




ADMINISTRATION




          The Company, through its Board of Directors, shall be responsible for the general
administration of the Plan and for carrying out the provisions hereof. The Board of Directors may
delegate any or all of its authority under the Plan to the Committee. The Company shall have all
such powers as may be necessary to carry out the provisions of the Plan, including the power to
determine all questions relating to eligibility for and the amount in the Account and all questions
pertaining to claims for benefits and procedures for claim review; to resolve all other questions
arising under the Plan, including any questions of construction; and to 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 Income Retirement 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 its Board of Directors; provided, however, that no such action shall
adversely affect any Participant or Beneficiary who has a Account or shall result in




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acceleration of payment of the amount of an Account, except as otherwise permitted under the
Plan.




ARTICLE V




MISCELLANEOUS




     1. Nonalienation of Deferred Compensation. No Participant or Beneficiary shall
encumber or dispose of the right to receive any payments hereunder.



     2. Interest of Director. The obligation of the Company under the Plan to make payment
of amounts reflected on an Account merely constitutes the unsecured promise of only the Company to
make payments from its general assets 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 on an Account. The Company may establish a so-called “rabbi trust” to hold funds, stock
or other securities to be used in payment of its obligations under the Plan, and may fund such
trust; provided, however, that any funds contained therein shall remain subject to the claims of
the Company’s general creditors.



     3. Claims of Other Persons. The provisions of the Plan shall in no event be construed
as giving any person, firm or corporation any legal or equitable right as against the Company or
any subsidiary, or the officers, employees, 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.



     4. 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.



     5. Governing Law. The provisions of the Plan shall be governed and construed in
accordance with the laws of the State of Ohio.



     6. 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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