APPLIED INNOVATION INC.



                              EMPLOYMENT AGREEMENT

                              --------------------



         This Agreement is made as of this 13th day of July, 2000, by and

between ROBERT L. SMIALEK and APPLIED INNOVATION INC., a Delaware corporation

with its principal office at 5800 Innovation Drive, Dublin, Ohio 43016, its

subsidiaries, successors and assigns (the "Company").



                                    RECITALS

                                    --------



         A. The Company is engaged in the business of developing, manufacturing,

and marketing data communications and data transmission equipment, software, and

services to telephone companies, interexchange telephone carriers, cable

television companies, and electric utilities, for alarm data communications,

network mediation and management, interoperability of networks, and network

switching and routing, and develops and uses valuable technical and nontechnical

trade secrets and other confidential information which it desires to protect.



         B.       You are to be employed as an executive officer of the Company.



         C. The Company considers your continued services to be in the best

interest of the Company and desires, through this Agreement, to assure your

continued services on behalf of the Company on an objective and impartial basis

and without distraction or conflict of interest in the event of an attempt to

obtain control of the Company.



         D. You are willing to become employed by and to remain in the employ of

the Company on the terms set forth in this agreement.



                                    AGREEMENT

                                    ---------



         NOW, THEREFORE, the parties agree as follows:



         1. CONSIDERATION. As consideration for your entering into this

Agreement and your willingness to remain bound by its terms, the Company shall

employ you and provide you with access to certain Confidential Information as

defined in this Agreement and other valuable consideration as provided for

throughout this Agreement, including in Sections 3 and 4 of this Agreement.



         2.       EMPLOYMENT.



                  (a) POSITION. You will be employed as President and Chief

Executive Officer of the Company, reporting to the Board of Directors of the

Company. You shall perform the duties, undertake the responsibilities and

exercise the authority customarily performed, undertaken and







                                      -1-

<PAGE>   2





exercised by persons employed in similar executive capacities. You will be

elected to the Company's Board of Directors.



                  (b) Restricted Employment. While employed by the Company, you

shall devote your best efforts to the business of the Company and shall not

engage in any outside employment or consulting work without first securing the

approval of the Company's Board of Directors. Furthermore, so long as you are

employed under this Agreement, you agree to devote your full time and efforts

exclusively on behalf of the Company and to competently, diligently, and

effectively discharge your duties hereunder; provided, however, that you may

continue to serve on the Boards of Directors of Coors Tek and General Cable

Corp. You shall not be prohibited from engaging in such personal, charitable, or

other nonemployment activities that do not interfere with your full time

employment hereunder and which do not violate the other provisions of this

Agreement. You further agree to comply fully with all policies and practices of

the Company as are from time to time in effect.



         3.       COMPENSATION.



                  (a) Your compensation will be at an annual base rate of

$300,000 through December 31, 2001 ("Basic Salary"), payable in accordance with

the normal payroll practices of the Company. Your base salary may be increased

from time to time by action of the Board of Directors of the Company. You will

also be eligible for a cash bonus under a bonus plan which is determined

annually by the Board of Directors of the Company. For the year 2000, you will

be entitled to a cash bonus on the same basis as the bonus plan in place for

Gerard B. Moersdorf, Jr., pro rated for the number of days you are employed by

the Company during 2000.



                  (b) Upon commencement of your employment hereunder, you will

be granted options under the Company's 1996 Stock Option Plan to purchase

400,000 shares of stock, vesting at the rate of 20% per year based on continued

employment, and expiring 10 years from the grant date. The first 200,000 options

will be exercisable at $12 per share, the closing price per share of the

Company's common stock on the date prior to the approval of the options by the

Stock Option and Compensation Committee of the Board of Directors of the

Company, and the second 200,000 options will be exercisable at $24 per share.

You will be eligible to receive additional stock options to purchase shares of

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC