<PAGE>   1

                                                                   EXHIBIT 10.16

                              SEPARATION AGREEMENT
                              --------------------

         THIS SEPARATION AGREEMENT (this "Agreement"), is made, entered into and
effective as of October 26, 1999 (the "Transition Date"), by and between
DIEBOLD, INCORPORATED (the "Company"), located at 5995 Mayfair Road, North
Canton, Ohio 44720 and GERALD F. MORRIS ("Morris"), residing at 1423 Harbor
Drive, N.W., Canton, Ohio 44708.


                                  WITNESSETH:
                                  -----------


         WHEREAS, prior to the Transition Date Morris was the Executive Vice
President and Chief Financial Officer of the Company;

         WHEREAS, Morris has determined that, effective on the Transition Date,
he shall resign from any and all offices of the Company, and any other position,
office or directorship of any other entity for which Morris was serving at the
request of the Company, and, in addition, he shall retire early from his
employment with the Company at the conclusion of a severance period; and

         WHEREAS, the Company accepts Morris' resignation and early retirement
as of the dates referenced above and below; and

         WHEREAS, the Company and Morris desire to specify the services that
Morris will provide to the Company as an employee after the Transition Date, and
to set forth the payments and benefits that Morris will be entitled to receive
from the Company after the Transition Date; and

         WHEREAS, the Company and Morris wish to resolve, settle and/or
compromise certain matters, claims and issues between them, including, without
limitation, Morris' resignation from the offices he held and his early
retirement from his employment with the Company.

         NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Company and Morris hereby agree as follows:

         1. RESIGNATION OF OFFICES AND EARLY RETIREMENT. Morris hereby resigns,
effective on the Transition Date, his position as Executive Vice President and
Chief Financial Officer of the Company. Morris further resigns, effective on the
Transition Date: (a) from all other offices of the Company to which he has been
elected by the Board of Directors of the Company (or to which he has otherwise
been appointed), (b) from all offices of any entity that is a subsidiary of, or
is otherwise related to or affiliated with, the Company, (c) from all
administrative, fiduciary or




<PAGE>   2



other positions he may hold with respect to arrangements or plans for, of or
relating to the Company, and (d) from any other directorship, office, or
position of any corporation, partnership, joint venture, trust or other
enterprise (each, an "Other Entity") insofar as Morris is serving in the
directorship, office, or position of the Other Entity at the request of the
Company. Subject to Subparagraph 2(1), Morris shall remain an employee of the
Company continuously to the date of his early retirement from the Company, which
early retirement date shall be October 1, 2003 (the "Early Retirement Date").
The Company hereby consents to and accepts said resignations and early
retirements.

         2. COMPENSATION AND BENEFITS. In consideration of the promises made by
Morris in this Agreement and subject to the conditions hereof, the Company
agrees to the following:

            (a.) CONTINUED SALARY. From the Transition Date to December 31,
1999, Morris shall continue to be paid a monthly salary at the rate he was paid
immediately prior to the Transition Date. Effective January 1, 2000, and ending
on October 1, 2003 (which period constitutes the "Severance Period"), Morris
shall be paid a monthly salary at a rate equal to twenty-four (24) forty-fifths
(24/45), or 53.33%, of the rate at which he was paid immediately prior to the
Transition Date. Said payments shall be made in semi-monthly payments, via
direct deposit account, subject to normal payroll deductions. Any vacation pay
due Morris shall be deemed included in these continued salary payments. During
the Severance Period, Morris shall perform such duties and provide such services
as the Company shall reasonably request.

            (b.) DEFERRED COMPENSATION. Any amounts held for and on behalf of
Morris under the Amended and Restated 1992 Deferred Incentive Compensation Plan
for Diebold, Incorporated shall be distributed according to the terms and
conditions of said Plan.

            (c.) ANNUAL BONUS PLAN; LONG TERM EXECUTIVE INCENTIVE PLAN. Morris
shall be eligible to receive a full year's annual bonus for 1999 under the terms
and conditions of the annual incentive plan applicable to him. The percentage to
be paid under such plan (threshold, target, plan or maximum) will be determined
by the Company's performance for fiscal year end 1999; provided, however, that
in no event shall Morris be paid less than the threshold amount for 1999. Morris
shall not be eligible for annual bonus participation after the 1999 bonus
period. Morris shall not be eligible to receive compensation under the Company's
Long Term Executive Incentive Plan ("LTIP") payable after the Transition Date,
including, without limitation, that otherwise payable to him under the terms and
conditions of the Performance Share Agreement between Morris and the Company for
the performance period 1997-1999. Morris shall also not be eligible to
participate in the LTIP for any subsequent performance period.

            (d.) STOCK OPTIONS. Morris has certain stock options that will be
completely vested as of Morris' Early Retirement Date. Said stock options are
those granted to him on the following dates: April 5, 1995 (22,500 shares);
January 26, 1996 (22,500 shares); January 30, 1997 (22,500 shares); January 29,
1998 (22,500 shares); and January 28, 1999 (30,000 shares). In addition, Morris
was granted certain "Milestone Options" on March 3, 1997, which will expire
according to their terms on March 2, 2002. Morris' eligibility (as an employee
of the Company prior to October 1, 2003, and as an early retiree of the Company
on and after October 1, 2003) to exercise these vested options will continue to
be governed by the terms and conditions of the


                                       2
<PAGE>   3



applicable nonqualified stock option agreements signed by Morris and the
Company. Morris agrees and acknowledges that he is ineligible for any new stock
options, grants or awards, and that he forfeits upon the Transition Date any
rights in or to any stock option grants other than those set forth in this
Subparagraph 2(d).

            (e.) MEDICAL COVERAGE.

                 (i) Morris shall be allowed to continue as a plan participant
      in the Diebold, Incorporated Associate Health Care Plan during the
      Severance Period.

                 (ii) For a period of eighteen (18) months following the end of
      the Severance Period, Morris may continue, at his cost, his participation
      in the Diebold, Incorporated Health Care Plan pursuant to the Consolidated
      Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA").

            (f.) BASIC INSURANCE. During the Severance Period Morris shall
continue to be eligible for the Company's Basic Life Insurance coverage of
$50,000.

            (g.) SPLIT DOLLAR AGREEMENT. Morris' eligibility for certain split
dollar insurance pursuant to that certain Split Dollar Agreement dated April 7,
1995, shall continue after the Transition Date pursuant to the terms and
conditions of said Split Dollar Agreement; PROVIDED, HOWEVER, that the Company
will make no further premium payments for Morris' benefit after the Transition
Date; and PROVIDED FURTHER, HOWEVER, that in the event that Morris cashes in any
split dollar insurance policy that he has obtained under said Split Dollar
Agreement, then he shall repay to the Company the total amount of the Company's
premium contributions toward said policy.

            (h.) MOTOR VEHICLE USAGE. Morris shall be permitted to continue to
use, during the first twelve (12) months of the Severance Period, the Company
provided vehicle that he currently uses. At the end of said twelve (12) month
period, Morris shall return the vehicle to the Company's possession, unless the
parties otherwise agree in writing. During this twelve (12) month period, the
Company shall continue its practice of payroll grossup for the value of this
benefit less normal payroll deductions.

            (i.) COUNTRY CLUB MEMBERSHIP. The Company's payment of Morris'
membership at Brookside Country Club shall be continued only through the
Transition Date. The Company shall pay any remaining monthly service fees due up
to the Transition Date, subject to normal payroll deductions. Morris will be
responsible for any of his charges and expenses. The value of this membership
(i.e., the stock certificate) is taxable to Morris and any taxes due shall be
promptly deducted from any salary paid hereunder. Morris' company-sponsored
membership at Glenmoor Country Club shall terminate as of twelve (12) months
after the Transition Date, and during this twelve (12) month period, the Company
shall pay only regular club dues and assessments, and no other charges.






                                       3
<PAGE>   4




            (j.) PROFESSIONAL FEES. The Company shall pay up to $16,000 for
Morris' reasonable legal fees incurred in this matter. A reasonably detailed
itemization of such fees shall first be provided to the Company. Any such
payment shall be made directly from the Company to Morris' attorney.

            (k.) FINANCIAL SERVICES. Morris shall continue to receive during the
first twelve (12) months of the Severance Period those financial advisory and
taxation services currently provided to him by IMG at the Company's expense.
This shall include the cost of IMG's preparation of Morris' tax returns for the
year 2000.

            (1.) RETIREMENT AND 401(k) PLANS. Morris' employment shall be deemed
to terminate on the Transition Date for the purpose of determining his
eligibility for benefits under the Retirement Plan for Salaried Employees
("Salaried Plan"). Morris' eligibility for benefits under the Supplemental
Employee Retirement Plan, as amended and restated ("SERP") shall be as set forth
in the SERP plan documents and shall be based on his Early Retirement Date. For
the purpose of determining "Company Service" under the SERP, Morris shall not
accrue any "Company Service" credit for the period beginning January 1, 2002,
and ending on his Early Retirement Date. Morris' employment also shall be deemed
to terminate on the Transition Date for the purpose of determining his
eligibility for benefits under the Diebold Employee Savings Plan ("401k Plan"),
and any such eligibility shall be as set forth in the 401k Plan documents, and
Morris shall not be entitled to any further contributions (either by the
employee or the Company) to his account in the 401k Plan for any pay period
after December 31, 1999.

            (m.) BUSINESS EXPENSES. Morris will promptly pay any balance due on
any Company credit card or other account used by him. The Company will either
(1) reimburse Morris for any pending, reasonable business-related credit card
charge for which Morris has not already been reimbursed provided Morris files a
proper Travel and Expense Report, or (2) pay such charge directly to the
card-issuing bank. Morris hereby authorizes the Company to deduct from monies
due Morris under this Agreement any balance remaining on Morris' Company credit
card account after such (1) reimbursement or (2) direct payment.

            (n.) NO OTHER COMPENSATION OR BENEFITS. Other than the compensation
and benefits expressly agreed to and referenced in this Agreement, Morris shall
be entitled to no additional compensation or benefits by virtue of his
employment with, or retirement from, the Company.

         3. NON-COMPETITION.

            (a.) During the Severance Period, Morris shall not, directly or
indirectly, do or suffer to be done any of the following: own, manage, control
or participate in the ownership, management or control of, or be employed or
engaged by or otherwise affiliated or associated as a consultant, independent
contractor or otherwise with any other corporation, partnership, proprietorship,
firm, association or other business entity, or otherwise engage in any business,
which is in competition with the Company's business; provided, however, that the
ownership of not more than one percent (1%) of any class of publicly-traded
securities of any entity shall not be deemed a violation of this Agreement. For
purposes of this Agreement, the "Company's business" shall mean any business in
which the Company actively engages now or until the end





                                       4
<PAGE>   5




of the Severance Period, and any business in which the Company has actively
engaged in the two (2) year period prior to the date hereof, including, without
limitation, the design, manufacture, assembly, distribution, sale, service or
maintenance of those products listed in Exhibit A.

            (b.) In the event Morris shall violate any provision of this
Paragraph 3 as to which there is a specific time period during which he is
prohibited from taking certain actions or from engaging in certain activities as
set forth in such provision, then, in such event, such violation shall toll the
running of such time period from the date of such violation until such violation
shall cease. The foregoing shall in no way limit the Company's rights under
Paragraph 8 of this Agreement.

            (c.) Morris has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon the Company
under this Paragraph 3 and this Agreement, and hereby acknowledges and agrees
that the same are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to the Company, do not stifle the
inherent skill and experience of Morris, would not operate as a bar to Morris'
sole means of support, are fully required to protect the legitimate interests of
the Company and do not confer a benefit upon the Company disproportionate to the
detriment to Morris. Morris further acknowledges that his obligations in this
Paragraph 3 are made in consideration of, and are adequately supported by, the
payments by the Company to Morris described herein.

         4. NO SOLICITATION OF EMPLOYEES. Morris agrees that he will not:

            (i) Employ, assist in employing, or otherwise associate in business
         with any person who is, or has been in the twelve (12) month period
         prior to such individual's association with Morris, an employee,
         officer or agent of the Company, or any of its affiliated, related or
         subsidiary entities, unless such employee was involuntarily terminated
         by the Company.

            (ii) Induce any person who is an employee, officer or agent of the
         Company, or any of its affiliated, related, or subsidiary entities to
         terminate such relationship.

         5. RELEASE BY MORRIS.

            (a.) Morris for himself and his dependents, successors, assigns,
heirs, executors and administrators (and his and their legal representatives of
every kind), hereby releases, dismisses, remises and forever discharges the
Company from any and all arbitrations, claims (including claims for attorney's
fees), demands, damages, suits, proceedings, actions and/or causes of action of
any kind and every description, whether known or unknown, which Morris now has
or may have had for, upon, or by reason of any cause whatsoever (except that
this release shall not apply to the obligations of the Company arising under or
expressly referenced in this Agreement), against the Company ("claims"),
including but not limited to:








                                       5
<PAGE>   6




            (i) any and all claims, directly or indirectly, arising out of or
         relating to: (A) Morris' past employment or service with the Company;
         and (B) Morris' resignation as Executive Vice President and Chief
         Financial Officer and any other position described in Paragraph 1 of
         this Agreement;

            (ii) any and all claims of discrimination, including but not limited
         to claims of discrimination on the basis of sex, race, age, national
         origin, marital status, religion or disability, including,
         specifically, but without limiting the generality of the foregoing, any
         claims under the Age Discrimination in Employment Act, as amended (the
         "ADEA"), Title VII of the Civil Rights Act of 1964, as amended, the
         Americans with Disabilities Act of 1990, the Family and Medical Leave
         Act of 1993 and Ohio Revised Code Chapter 4112;

            (iii) any and all claims of wrongful or unjust discharge or breach
         of any contract or promise, express or implied;

            (iv) any and all claims under or relating to any and all employee
         benefit, employee severance or employee incentive bonus plans and
         arrangements, including, without limitation, the LTIPs, the 401k Plan,
         and any claims under ERISA;

            (v) any and all worker compensation claims he may have against the
         Company by this Agreement, and further agrees to execute any
         documentation as may be reasonably required to perfect such release
         when presented to him by the Company.

Nothing in this Paragraph 5 shall be construed to waive or release: (A)
non-waivable claims pursuant to applicable law; or (B) Morris' entitlement to
the amounts and benefits specified in Paragraph 2 above.

            (b.) Morris understands and acknowledges that the Company does not
         admit any violation of law, liability or invasion of any of his rights
         and that any such violation, liability or invasion is expressly denied.
         The consideration provided under this Agreement is made for the purpose
         of settling and extinguishing all claims and rights (and every other
         similar or dissimilar matter) that Morris ever had or now may have
         against the Company to the extent provided in this Paragraph 5. Morris
         further agrees and acknowledges that no representations, promises or
         inducements have been made by the Company other than as appear in this
         Agreement.

            (c.) Morris further understands and acknowledges that:

            (i) The release provided for in this Paragraph 5, including claims
         under the ADEA to and including the date of this Agreement, is in
         exchange for the additional consideration provided for in this
         Agreement, to which consideration he was not heretofore entitled;

            (ii) He has been advised by the Company to consult with legal
         counsel prior to executing this Agreement and the release provided for
         in this Paragraph 5, has had an opportunity to consult with and to be
         advised by legal counsel of his choice, fully





                                       6
<PAGE>   7




         understands the terms of this Agreement, and enters into this
         Agreement freely, voluntarily and intending to be bound;

            (iii) He has been given a period of twenty-one (21) days to review
         and consider the terms of this Agreement, and the release contained
         herein, prior to its execution and that he may use as much of the
         twenty-one (21) day period as he desires; and

            (iv) He may, within seven (7) days after execution, revoke this
         Agreement. Revocation shall be made by delivering a written notice of
         revocation to the Vice President, Human Resources at the Company. For
         such revocation to be effective, written notice must be actually
         received by the Vice President, Human Resources at the Company no later
         than the close of business on the seventh (7th) day after Morris
         executes this Agreement. If Morris does exercise his right to revoke
         this Agreement, all of the terms and conditions of the Agreement shall
         be of no force and effect and the Company shall have no obligation to
         satisfy the terms or make any payment to Morris as set forth in
         Paragraph 2 of this Agreement.

            (d.) Morris will never file a lawsuit or other complaint asserting
any claim that is released in this Paragraph 5.

            (e.) Morris and the Company acknowledge that his resignations as set
forth above are by mutual agreement between the Company and Morris, and that
Morris waives and releases any claim that he has or may have to employment or
reemployment after his Early Retirement Date.

            (f.) For purposes of the above provisions of this Paragraph 5, the
"Company" shall include its predecessors, subsidiaries, divisions, related or
affiliated companies, officers, directors, stockholders, members, employees,
heirs, successors, assigns, representatives, agents and counsel.

         6. CONFIDENTIAL INFORMATION.

            (a.) Morris acknowledges and agrees that in the performance of his
duties as an officer and employee of the Company he was brought into frequent
contact with, had or may have had access to, and/or became informed of
confidential and proprietary information of the Company and/or information which
is a competitive asset of the Company (collectively, "Confidential Information")
and the disclosure of which would be harmful to the interests of the Company or
its subsidiaries. Confidential Information shall include, without limitation:
(a) customer and distributor information such as names, addresses, sales
histories, purchasing habits, credit status, pricing levels, etc., (b) certain
prospective customer and distributor information lists, etc., (c) product and
systems specifications, schematics, designs, concepts for new or improved
products and services and other products and services data, (d) product and
material costs, (e) suppliers' and prospective suppliers' names, addresses and
contracts, (f) future corporate planning data, including, without limitation,
data and information on possible mergers, acquisitions, strategic alliances, or
any similar transactions, (g) production methods and equipment, (h) marketing
strategies, (i) the Company's financial results and business condition, (j) any
of the foregoing which belong to any other person or company but to which Morris
has





                                       7
<PAGE>   8




had access by reason of his employment with the Company, and (k) any other
information which constitutes a "trade secret" under federal or state law. Such
Confidential Information is more fully described in Subparagraph (b) of this
Paragraph 6. Morris acknowledges that the Confidential Information of the
Company gained by Morris during his association with the Company was developed
by and/or for the Company through substantial expenditure of time, effort and
money and constitutes valuable and unique property of the Company.

            (b.) Morris will keep in strict confidence, and will not, directly
or indirectly, at any time, disclose, furnish, disseminate, make available, use
or suffer to be used in any manner any Confidential Information of the Company
without limitation as to when or how Morris may have acquired such Confidential
Information. Morris specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing (or in a form from
which information can be obtained, translated, or derived into reasonably usable
form), or maintained in the mind or memory of Morris and whether compiled or
created by the Company, which derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from the disclosure or use of such information, that reasonable
efforts have been put forth by the Company to maintain the secrecy of
confidential or proprietary or trade secret information, that such information
is and will remain the sole property of the Company, and that any retention or
use by Morris of confidential or proprietary or trade secret information after
the termination of Morris' employment with and services for the Company shall
constitute a misappropriation of the Company's Confidential Information.

            (c.) Morris will immediately return to the Company (to the extent he
has not already returned), equipment, software, electronic files, computers,
including any laptop, in good condition, all property of the Company, including,
without limitation, property, documents and/or all other materials (including
copies, reproductions, summaries and/or analyses) which constitute, refer or
relate to Confidential Information of the Company.

            (d.) Morris further acknowledges that his obligation of
confidentiality shall survive, regardless of any other breach of this Agreement
or any other agreement, by any party hereto, until and unless such Confidential
Information of the Company shall have become, through no fault of Morris,
generally known to the public or Morris is required by law (after providing the
Company with notice and opportunity to contest such requirement) to make
disclosure. Morris' obligations under this Paragraph 6 are in addition to, and
not in limitation or preemption of, all other obligations of confidentiality
which Morris may have to the Company under general legal or equitable principles
or statutes.

            7. DISCLOSURE. From the date of this Agreement through the end of
the Severance Period, Morris will communicate the contents of Paragraphs 3, 4,
6, 8, 9 and 11 of this Agreement to any person, firm, association, or
corporation other than Diebold which he intends to be employed by, associated in
business with, or represent.

            8. BREACH. Morris acknowledges and agrees that the remedy at law
available to the Company for breach by Morris of any of his obligations under
Paragraphs 3, 4 and 6 of this Agreement would be inadequate and that damages
flowing from such a breach would not readily be susceptible to being measured in
monetary terms. Accordingly, Morris acknowledges,





                                       8
<PAGE>   9




consents and agrees that, in addition to any other rights or remedies which the
Company may have at law, in equity or under this Agreement, upon adequate proof
of Morris' violation of any provision of Paragraphs 3, 4 or 6 of this Agreement,
the Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach, without the
necessity of proof of actual damage.

         9. CONTINUED AVAILABILITY AND COOPERATION.

            (a.) Morris shall cooperate fully with the Company and with the
Company's counsel in connection with any present and future actual or threatened
litigation or administrative proceeding involving the Company that relates to
events, occurrences or conduct occurring (or claimed to have occurred) during
the period of Morris' employment by the Company. This cooperation by Morris
shall include, but not be limited to:

            (i) making himself reasonably available for interviews and
         discussions with the Company's counsel as well as for depositions and
         trial testimony;

            (ii) if depositions or trial testimony are to occur, making himself
         reasonably available and cooperating in the preparation therefor as and
         to the extent that the Company or the Company's counsel reasonably
         requests;

            (iii) refraining from impeding in any way the Company's prosecution
         or defense of such litigation or administrative proceeding; and

            (iv) cooperating fully in the development and presentation of the
         Company's prosecution or defense of such litigation or administrative
         proceeding.

         (b.) Morris shall be reimbursed by the Company for reasonable travel,
lodging, telephone and similar expenses incurred in connection with such
cooperation, which the Company shall reasonably endeavor to schedule at times
not conflicting with the reasonable requirements of any employer of Morris, or
with the requirements of any third party with whom Morris has a business
relationship permitted hereunder that provides remuneration to Morris. Morris
shall not unreasonably withhold his availability for such cooperation.

         (c.) Upon the Transition Date, Morris will update the Company as to the
status of all pending matters for which he was responsible or otherwise
involved. During the Severance Period, Morris will perform such services and
provide such consultations as the Company shall reasonably request.

         (d.) The Company agrees, to the extent permitted by applicable law, to
release Morris and indemnify and hold him harmless against all liability or
loss, and against all claims or actions, arising from or connected with his past
activities as an employee of the Company, including but not limited to those
claims or actions based upon or arising out of negligent or wrongful acts to
persons or property and the defense of any such claims or actions.






                                       9
<PAGE>   10




         10. SUCCESSORS AND BINDING AGREEMENT.

             (a.) This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of or to the Company, including, without
limitation, any persons acquiring, directly or indirectly, all or substantially
all of the business and/or assets of the Company whether by purchase, merger,
consolidation, reorganization, or otherwise (and such successor shall thereafter
be deemed included in the definition of "the Company" for purposes of this
Agreement), but shall not otherwise be assignable or delegable by the Company.

             (b.) This Agreement shall inure to the benefit of and be
enforceable by Morris' personal or legal representatives, executors,
administrators, successors, heirs, distributees, and/or legatees.

             (c.) This Agreement is personal in nature and none of the parties
hereto shall, without the consent of the other parties, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Subparagraphs (a) and (b) of this Paragraph 10.

         (d.) This Agreement is intended to be for the exclusive benefit of the
parties hereto, and except as provided in Subparagraphs (a) and (b) of this
Paragraph 10, no third party shall have any rights hereunder.

          11. NON-DISCLOSURE; STATEMENTS TO THIRD PARTIES.

             (a.) All provisions of this Agreement and the circumstances giving
rise hereto are and shall remain confidential and shall not be disclosed to any
person not a party hereto (other than (i) Morris' spouse, if any, (ii) each
party's attorney, financial advisor and/or tax advisor to the extent necessary
for such advisor to render appropriate legal, financial and tax advice, and
(iii) persons or entities that fall within the scope of Paragraph 7 of this
Agreement, but only to the extent required thereby), except as necessary to
carry out the provisions of this Agreement, and except as may be required by
law. Notwithstanding the foregoing, this Agreement may be filed with or provided
to the Securities and Exchange Commission or any other governmental
instrumentality or agency, including the Internal Revenue Service, if the
Company deems such filing or provision to be necessary.

             (b.) Because the purpose of this Agreement is to settle amicably
any and all potential disputes or claims among the parties, neither Morris nor
the Company shall, directly or indirectly, make or cause to be made any
statements to any third parties criticizing or disparaging the other or
commenting on the character or business reputation of the other. Morris further
hereby agrees not: (i) to comment to others concerning the status, plans or
prospects of the business of the Company, or (ii) to engage in any act or
omission that would be detrimental, financially or otherwise, to the Company, or
that would subject the Company to public disrespect, scandal, or ridicule. For
purposes of this Subparagraph 11.b., the "Company" shall mean Diebold,
Incorporated and its directors, officers, predecessors, parents, subsidiaries,
divisions, and related or affiliated companies.






                                       10
<PAGE>   11



          12. NOTICES. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered, addressed to the Company (to the attention of the CEO) at
its principal executive offices and to Morris at his principal residence, 1423
Harbor Drive, N.W., Canton, Ohio 44708, or to such other address as any party
may have furnished to the other in writing and in accordance herewith. Notices
of change of address shall be effective only upon receipt.

          13. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by Morris and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied with respect to the subject matter hereof
have been made by any of the parties that are not set forth expressly in this
Agreement and every one of them (if, in fact, there have been any) is hereby
terminated without liability or any other legal effect whatsoever.

         14. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
shall supersede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.

          15. GOVERNING LAW. Any dispute, controversy, or claim of whatever
nature arising out of or relating to this Agreement or breach thereof shall be
governed by and under the laws of the State of Ohio. The parties agree that any
and all disputes, controversies, or claims of whatever nature arising out of or
relating to this agreement or breach thereof shall be resolved by a court of
general jurisdiction in the State of Ohio, and the parties hereby consent to the
exclusive jurisdiction of such court in any action or proceeding arising under
or brought to challenge, enforce, or interpret any of the terms of this
Agreement.

          16. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall nevertheless remain in full force and
effect.

          17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.

          18. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience and are not part of this Agreement and shall not
be used in construing it.

          19. FURTHER ASSURANCES. Each party hereto shall execute such
additional documents, and do such additional things, as may reasonably be
requested by the other party to effectuate the purposes and provisions of this
Agreement.





                                       11
<PAGE>   12



         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.


                                             DIEBOLD, INCORPORATED

                                            By: /s/ Robert W. Mahoney
                                                --------------------------------
                                                Robert W. Mahoney
                                                Chairman of the Board



                                            Date: January 14, 2000


Witness: /s/ Terri L. Naiaue                /s/ Gerald F. Morris
         --------------------               --------------------------------


                                            Date: 14 Jan 2000
                                                 -------------------------------



                                       12
<PAGE>   13




                                    EXHIBIT A
                                    ---------


Automated Teller Machines
Teller Assist Devices
Physical Security Devices
     (including, without limitation, Vault Doors and Chests)
Electronics Funds Transfer Equipment
Point of Sale Equipment and Systems
Safe Deposit Boxes
Access Control Devices and Systems
Integrated Campus Access Management Devices and Systems
Surveillance Equipment and Systems
     (including, without limitation, Surveillance Cameras)
Remote Monitoring Systems
     (including, without limitation, Burglary, Robbery and Fire)
Automated Monitoring, Dispensing and Reporting
     Devices and Systems for the Health Care Industry
Transaction Processing Services and Systems
Software Systems for the Above
Service and Maintenance of the Above
     (including, without limitation, First and Second Line Service)


The above list of products in this Exhibit A does not apply to general purpose
computer hardware or peripherals such as mainframe computers, personal
computers, printers, or application software such as spreadsheet, word
processing and data base programs for general business or office use.


                                       13