Exemption Orders (Discretionary)

DIEBOLD, INCORPORATED


2001 BCSECCOM 1009


Headnote:

Mutual Reliance Review System for Exemptive Relief Applications - Request for relief from the requirement to reconcile to Canadian GAAP financial statements included in an Information Circular which are prepared in accordance with U.S. GAAP.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, ss 117(2), 119(2)(b) and Form 54-901.

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND BRITISH COLUMBIA

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF DIEBOLD, INCORPORATED

AND

IN THE MATTER OF GLOBAL ELECTION SYSTEMS INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Ontario and British Columbia (the “Jurisdictions”) has received an application from Diebold, Incorporated (“Diebold”), Diebold Acquisition Ltd. (“Subco”) and Global Election Systems Inc. (“Global” and, together with Diebold and Subco, the “Applicants”) for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that the requirements contained in the Legislation:

(a) that the notes to the financial statements of Diebold explain and quantify any significant differences, or the effect of material differences, between Canadian generally accepted accounting principles (“GAAP”) and United States (U.S.) GAAP and thereby provide a reconciliation of such financial statements to Canadian GAAP, and provide disclosure consistent with Canadian GAAP requirements to the extent not already reflected in the financial statements;

(b) that the Diebold auditor’s report disclose any material differences in the form and content of its auditor’s report as compared to a Canadian auditor’s report, explain any significant differences between the generally accepted auditing standards (“GAAS”) of the U.S as compared with Canadian GAAS and confirm that the auditing standards applied are substantially equivalent to Canadian GAAS; and

(c) that the Diebold consolidated financial information and MD&A disclosure provide a cross-reference to the notes in the financial statements that reconcile the differences between U.S. GAAP and Canadian GAAP,

(collectively, the “Foreign GAAP Reconciliation Requirements”) shall not apply to the Applicants with respect to disclosure in a management information circular (the “Circular”) to be sent to the shareholders of Global (the “Global Shareholders”) in connection with a proposed transaction (the “Transaction”) whereby Diebold will acquire all of the outstanding common shares of Global pursuant to an arrangement among the Applicants (the “Arrangement”);

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission (“OSC”) is the principal regulator for this application;

AND WHEREAS the Applicants have represented to the Decision Makers that:

1. Diebold is a corporation incorporated under the laws of the state of Ohio;

2. Diebold is not, and has no present intention of becoming, a reporting issuer under the Legislation or under the securities legislation of any other province or territory of Canada, but is subject to the reporting requirements of the United States Securities Exchange Act of 1934 (the “1934 Act”);

3. the authorized capital of Diebold consists of 125,000,000 shares of Common stock, US$1.25 par value (the “Diebold Shares”) and 1,000,000 shares of Preferred stock, without par value; as at August 9, 2001 there were 72,095,743 Diebold Shares and no shares of Preferred stock issued and outstanding;

4. the Diebold Shares are listed for trading on the New York Stock Exchange (the “NYSE”);

5. as at August 30, 2001, there were approximately 27 registered holders of Diebold Shares in Canada holding approximately 0.2% of the total number of issued and outstanding Diebold Shares;

6. Subco was incorporated under the laws of British Columbia as a wholly-owned subsidiary of Diebold; Subco is not, and has no present intention of becoming, a reporting issuer under the Legislation or under the securities legislation of any other province or territory of Canada;

7. Global is a company amalgamated under the laws of British Columbia;

8. Global is a reporting issuer under the Legislation but is not a reporting issuer or the equivalent under the securities legislation of any other province or territory in Canada; Global is also subject to the reporting requirements of the 1934 Act;

9. the authorized capital of Global consists of 100,000,000 common shares without par value (the “Global Shares”) and 20,000,000 convertible preferred shares without par value; as of September 4, 2001 approximately 20,695,340 Global Shares and no preferred shares were issued and outstanding;

10. the Global Shares are listed for trading on the Toronto Stock Exchange the (the “TSE”) and the American Stock Exchange (“AMEX”);

11. as at August 13, 2001, there were approximately 263 registered holders of Global Shares in Canada holding, in aggregate, approximately 61.1% of the total number of issued and outstanding Global Shares;

12. an extraordinary general meeting (the “Meeting”) of the Global Shareholders will be held on or about October 25, 2001, at which Meeting Global will seek the requisite shareholder approval for the Arrangement;

13. in connection with the Meeting Global will mail, on or about September 25, 2001 to each Global Shareholder: (i) a notice of the Meeting, (ii) a form of proxy, and (iii) the Circular. The Circular will be prepared in accordance with Rule 54-501 of the OSC and Form 54-901.F (formerly Form 30) of the British Columbia Securities Commission, except with respect to any relief granted therefrom, and will contain disclosure of the Transaction and the business and affairs of each of Diebold and Global;

14. the Circular will contain the following financial statements:

(a) audited annual financial statements of Diebold for each of the three fiscal years ended December 31, 2000, December 31, 1999 and December 31, 1998 together with balance sheets as required and the auditor’s reports thereon, all in accordance with U.S. GAAP;

(b) unaudited financial statements of Diebold for the interim period ended June 30, 2001, prepared in accordance with U.S. GAAP; and

(c) audited annual financial statements of Global for each of the three fiscal years ended June 30, 2001, June 30, 2000 and June 30, 1999 together with balance sheets as required and the auditor’s reports thereon, all in accordance with Canadian GAAP;

15. Global will effect the Arrangement following approval of the Arrangement by the Global Shareholders and the Supreme Court of British Columbia. Pursuant to the Arrangement, the following will be deemed to occur in the following order without any further act or formality at the effective time of the Arrangement (the “Effective Time”):

(a) the issued and outstanding Global Shares, other than those held directly or indirectly by Diebold or Global and those held by any dissenting shareholders (the “Dissenting Shareholders”), will be transferred to Subco or its assignee in exchange for cash and Diebold Shares, calculated based on the exchange ratio set out in the Arrangement Agreement;as of the Effective Time, holders of such Global Shares will cease to have any rights as Global Shareholders other than the right to be paid the exchange consideration; and

(b) the Global Shares held by Dissenting Shareholders who have validly exercised their dissent rights will be transferred to Global and cancelled; as of the Effective Time, such Dissenting Shareholders will cease to have any rights as Global Shareholders other than the right to be paid the fair value of their Global Shares;

16. Holders of outstanding options and warrants of Global will be dealt with in accordance with agreements entered into prior to the completion of the Transaction;

17. Diebold is making an application to the NYSE in order that the Diebold Shares issued pursuant to the Arrangement be listed for trading on the NYSE;

18. Diebold intends to have Global delisted from the TSE and AMEX, and intends to file an application with the applicable Canadian securities regulatory authorities to have Global cease to be a reporting issuer upon the consummation of the Arrangement or shortly thereafter; and

19. upon the completion of the Transaction, assuming that all of the Global Shareholders elect to exchange their Global Shares for Diebold Shares, it is expected that the holders of Diebold Shares resident in Canada will hold less than 1% of the issued and outstanding Diebold Shares.

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

The Decision of the Decision Makers under the Legislation is that the Foreign GAAP Reconciliation Requirements shall not apply in connection with the disclosure pertaining to Diebold in the Circular.

DATED this 24th day of September, 2001.

K.S. Soden

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