Long-Term Incentive Deferred Share Agreement
Exhibit 10.22
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 Long-Term Incentive Deferred Share Agreement (hereinafter called the “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 xxxxxxxx xx 20xx (the “Date of Grant”).
NOW, THEREFORE, subject to the terms and conditions of the 1991 Equity and Performance Incentive Plan (As Amended and Restated as of February 12, 2014) (the “Plan”), and the terms and conditions described below, the Corporation hereby confirms to the Grantee the grant, effective on the Date of Grant, of * Deferred Shares, together with the opportunity to earn up to an additional ___% of such number of Deferred 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 30% 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 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(a); or
(ii)Individuals who, as to the date hereof, constitute the Board (as modified by this subsection (ii), the “Incumbent 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 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 certain goals established by the Board for the Corporation for the Performance Period covered by this Agreement as described in Section 2 of this Agreement and detailed on Exhibit A.
(c)“Performance Period” means the period commencing on xxxxxxxx xx, 20xx and ending on xxxxxxxx xx, 20xx.
(d)“Termination for Good Cause” means the Grantee’s termination of the Grantee’s employment with the Corporation or a Subsidiary as a result of the occurrence of any of the following:
(i)a change in the Grantee’s principal location of employment that is greater than fifty (50) miles from its location as of the date hereof without the Grantee’s consent; provided, however, that the Grantee hereby acknowledges that the Grantee may be required to engage in travel in connection with the performance of the Grantee’s duties hereunder and that such travel shall not constitute a change in the Grantee’s principal location of employment for purposes hereof;
(ii)a material diminution in the Grantee’s base compensation;
(iii)a change in the Grantee’s position with the Corporation without the Grantee’s consent such that there is a material diminution in the Grantee’s authority, duties or responsibilities; or
(iv)any other action or inaction that constitutes a material breach by the Corporation of the agreement under which the Grantee provides services.
Notwithstanding the foregoing, the Grantee’s termination of the Grantee’s employment with the Corporation as a result of the occurrence of any of the foregoing shall not constitute a “Termination For Good Cause” unless (A) the Grantee gives the Corporation written notice of such occurrence within ninety (90) days of such occurrence and such occurrence is not cured by the Corporation within thirty (30) days of the date on which such written notice is received by the Corporation and (B) the Grantee actually terminates his or her employment with the Corporation prior to the three hundred sixty-fifth (365th) day following such occurrence.
(e)Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan.
2.Management Objectives.
The Management Objectives for the Performance Period covered by this Agreement are set forth on Exhibit A. The following applies with respect to the Management Objectives:
(a)In no event shall the Grantee be entitled to receive more than 200% of the Deferred Shares granted hereunder.
3.Grant of Deferred Shares.
The Corporation hereby grants to the Grantee the number of Deferred 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 Deferred 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 Deferred Shares earned shall be determined based on the level of results of the Management Objectives, which correlates performance against both measures, as set forth on Exhibit A. No additional Deferred 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 as set forth on Exhibit A, a proportionate number of Deferred Shares shall be earned, as determined by mathematical interpolation.
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, (but in all events by the last day of the fiscal year following the last fiscal year of the Performance Period); provided, however, that in the event the award becomes nonforfeitable pursuant to Section 6, the award (except as otherwise required under Section 13) shall be payable within 30 days of becoming nonforfeitable.
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 B 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 after the Date of Grant but prior to the end of the Performance Period, the Grantee shall be deemed to have earned 100% of the Deferred Shares granted hereunder as of the date of the Change in Control, and such earned Deferred Shares shall be payable in the form of Common Shares. The Deferred Shares earned under this Section 6 shall be paid to the Grantee as soon as practicable following the end of the Performance Period, but in all events by the last day of the fiscal year following the last fiscal year of the Performance Period, only if the Grantee remains employed by the
Corporation or a Subsidiary as of the end of the Performance Period, otherwise such earned Deferred Shares shall be forfeited; provided, that if, prior to the end of the Performance Period, the Grantee’s employment with the Corporation or a Subsidiary is terminated by the Grantee as a “Termination for Good Cause,” the Grantee is terminated by the Corporation other than as a “Termination for Cause,” or the Grantee’s employment with the Corporation or a Subsidiary terminates under the circumstances set forth in Section 7(a) through 7(d) hereof, then the Deferred Shares earned under this Section 6 shall become immediately nonforfeitable upon such termination. Notwithstanding anything in this Section 6 to the contrary, in connection with a Business Combination the result of which is that the Corporation Common Stock and Voting Stock is exchanged for or becomes exchangeable for securities of another entity, cash or a combination thereof, if the entity resulting from such Business Combination does not assume the Deferred Shares evidenced hereby and the Corporation’s obligations hereunder, or replace the Deferred Shares evidenced hereby with a substantially equivalent security of the entity resulting from such Business Combination, then the Deferred Shares evidenced hereby shall become immediately nonforfeitable as of immediately prior to such Business Combination.
7.Effect of Death, Disability or Retirement.
If the Grantee’s employment with the Corporation or one of its Subsidiaries should terminate under the circumstances set forth in Section 7(a) through 7(d) below, prior to the payment of an award, the extent to which the Deferred 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:
(a)because of death;
(b)because of permanent disability;
(c)on or after the date on which the Grantee attains age 65 and on such date the Grantee shall have completed five (5) or more years of continuous employment with the Corporation and its Subsidiaries; or
(d)any sum of the Grantee’s age and the number of the Grantee’s years of continuous employment with the Corporation and its Subsidiaries on such termination date equals or exceeds 70.
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
Deferred 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 for the reasons set forth in Section 7 hereof, 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 Deferred 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 Deferred 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 Deferred Shares on the date such Deferred Shares were paid out.
(c)To the extent that the amounts referred to in Section 9(a) and 9(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 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 9 and Section 6, “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 Deferred 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, the Committee shall adjust the Management Objectives and/or the number of Deferred Shares then held by the Grantee. Such adjustments made by the Committee shall be conclusive and binding for all purposes of this Agreement.
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.Compliance with Section 409A of the Code.
To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) do not apply to the Grantee. This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause the Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Corporation without the consent of the Grantee). In particular, to the extent the Deferred Shares become nonforfeitable pursuant to Section 6 and payment at such time would subject the Grantee to penalties under Section 409A of the Code, then notwithstanding anything to the contrary in Section 5, payment will be made, to the extent necessary to comply with the provisions of Section 409A of the Code, to the Grantee on the earlier of (a) the Grantee’s “separation from service” with the Corporation (determined in accordance with Section 409A of the Code); provided, however, that if the Grantee is a “specified employee” (within the meaning of Section 409A of the Code), the payment date shall be the date that is six months after the date of the Grantee’s “separation of service” with the Corporation, (b) the date payment otherwise would have made under Section 5 above, or (c) the Grantee’s death. Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.
14.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.
15.Data Protection.
The Grantee hereby explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of Grantee’s personal data as described in this document by and among, as applicable, the Corporation, its affiliates, and its Subsidiaries (the “Company Group”) for the exclusive purpose of implementing, administering, and managing Grantee’s participation in the Plan.
The Grantee understands that the Company Group holds certain personal information about the Grantee, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title, any Common Shares or directorships held in the Corporation, details of all Deferred Shares or any other entitlement to Common Shares awarded, canceled, exercised, vested, unvested, or outstanding in Grantee’s favor, for the purpose of implementing, administering, and managing the Plan (“Data”). Grantee understands that Data may be transferred to any third parties assisting in the implementation, administration, and management of the plan, that these recipients may be located in Grantee’s country or elsewhere, and that the recipient’s country may have different data privacy laws that the Grantee’s country. The Grantee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the local human resources representatives. The Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Grantee may elect to deposit any Shares acquired. The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage Grantee’s participation in the Plan. The Grantee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the local human resources representative. The Grantee understands, however, that refusing or withdrawing consent may affect the Grantee’s ability to participate in the Plan. For more information on the consequences of a refusal to consent or withdrawal of consent, the Grantee may contact his or her local human resources representative.
16.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 Deferred Shares without the Grantee’s consent.
17.Validity.
If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or under any 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.
18.Governing Law.
The validity, construction, interpretation, and enforceability of this Agreement shall be determined and governed by the laws of the State of Ohio, USA without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction and agree that such litigation shall be conducted in the federal or state courts of the State of Ohio, USA.
Executed as of the Xth day of XXXXXXX, 20XX.
DIEBOLD, INCORPORATED
The undersigned hereby acknowledges receipt of an executed original of this Agreement and accepts the Deferred Shares granted hereunder on the terms and conditions set forth herein and in the Plan.
Date:___________________ | ___________________________________ |
[Signature] | |
EXHIBIT A
Management Objectives
Exhibit B
Designation of Death Beneficiary
I, the undersigned Grantee, do hereby designate the following person or persons as my Death Beneficiary for my Deferred Share Grants under the ▇▇▇▇▇▇▇, Incorporated, 1991 Equity and Performance Incentive Plan (As Amended and Restated as of February 12, 2014) (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 | |