Exhibit 10.2
SEPARATION AGREEMENT
AND RELEASE OF ALL CLAIMS
     This Separation Agreement And Release Of All Claims (the “Agreement”) is
entered into effective as of July 10, 2006, by Applied Innovation Inc., a
Delaware corporation, hereinafter referred to, together with all its
predecessors and past, present and future assigns, successors, affiliates,
subsidiary organizations, divisions, and corporations, and including all past,
present and future officers, directors, shareholders, employees, and agents of
the same, individually and in their respective capacities, as the “Company,” and
John F. Petro, hereinafter referred to, together with his heirs, executors,
administrators, successors, assigns and other personal representatives as
“Mr. Petro,” under the following circumstances:
     A. Mr. Petro has been employed by the Company since May 20, 2002, and
entered into a written Employment Agreement with the Company dated May 20, 2002
(the “Employment Agreement”).
     B. The Company has proposed, and Mr. Petro has agreed, to certain severance
benefits in connection with his resignation as an officer and the termination of
his employment.
     C. Mr. Petro acknowledges that the severance benefits described in the
Agreement, other than those described in Section 2(a) of this Agreement that are
in accordance with Section 9(d) of the Employment Agreement, include benefits to
which he is not otherwise entitled.
     NOW THEREFORE, the parties agree, in consideration of the provisions
contained herein, as follows:
     1. Termination of Employment; Resignation from Office. Mr. Petro’s
employment with the Company terminates effective July 10, 2006 (the “Termination
Date”) and Mr. Petro resigns as an officer of the Company effective on the
Termination Date. This termination is categorized as “without cause” as defined
in Section 9(d) of the Employment Agreement.

 

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     2. Severance Benefits.
          (a) In accordance with Section 9(d) of the Employment Agreement, the
Company agrees to pay Mr. Petro his basic salary in the amount of $6,923.08
bi-weekly, less all applicable withholding and FICA taxes, for six (6) months
from the Termination Date, payable in accordance with the Company’s normal
salary payment schedule; provided, however, any such payments will immediately
end if (i) Mr. Petro violates any of his obligations under Sections 6
(Confidential Information), 7 (Inventions) or 8 (Noncompetition and
Nonsolicitation) of the Employment Agreement, which obligations continue
following the Termination Date; or (ii) the Company, after the Termination Date,
learns of any facts about Mr. Petro’s performance or conduct that would have
given the Company Cause, as defined in Section 9(b) of the Employment Agreement,
to terminate his employment for Cause.
          (b) In addition to the severance benefits provided under the
Employment Agreement as described in Section 2(a) above, the Company agrees to
pay Mr. Petro an additional $769.23 bi-weekly ($10,000 total), less all
applicable withholding and FICA taxes, for six months from the Termination Date,
payable in accordance with the Company’s normal salary payment schedule.
     3. Reference. The Company agrees to provide a neutral job reference for
Mr. Petro stating the following information: hire and termination dates, and
last position held.
     4. Benefit Programs. Mr. Petro understands and agrees that all benefit
programs he participates in as a result of his employment with the Company have
(except to the extent vested and nonforfeitable by law) ceased effective upon
the Termination Date, except for the Company provided medical insurance, which
will terminate on July 31, 2006. If Mr. Petro elects to continue his medical
and/or dental coverage under COBRA, as an additional benefit, the Company shall
continue to pay the Company’s cost for continuing such coverage at the same rate
as for active employees, for six (6) months, or until he becomes eligible for
group medical coverage through another employer, whichever occurs first.
Mr. Petro agrees that he will

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notify the Company within one week of his becoming eligible for group insurance
coverage through another employer.
     5. Release of Claims. In exchange for the consideration set forth in
paragraphs 2(b) and 4 and other valuable consideration, the adequacy of which
Mr. Petro expressly acknowledges, Mr. Petro hereby releases and forever
discharges the Company, and all of its affiliates, parent corporations,
subsidiaries, divisions, predecessors, successors, and assigns, and all of their
respective directors, officers, agents and employees, personally and in their
representative and official capacities, from any and all local, state and
federal lawsuits, claims, remedies, damages, demands, discrimination suits or
charges, costs and attorneys fees, and any causes of action of whatever type or
nature, whether legal or equitable, whether known, unknown or unforeseen. The
rights, liabilities, claims and actions released, waived and extinguished here
by Mr. Petro, and with respect to which Mr. Petro covenants not to sue, shall
include but not be limited to those arising or which might arise under Title VII
of the Civil Rights Act of 1964; any and all claims under the Civil Rights Act
of 1866; any and all claims under the Americans With Disabilities Act of 1990;
any and all claims under the Age Discrimination in Employment Act, as amended,
including the Older Workers Benefit Protection Act of 1990; any and all claims
under Family Medical Leave Act of 1993; any and all claims under the Employment
Retirement Income Security Act; any and all claims for attorneys fees; any and
all contract, tort or common law claims, included but not limited to, any and
all claims for compensation or bonuses under any of the Company’s compensation
plans; and any and all claims under any federal, state or local statute or
ordinance or under any federal, state or local common law.
     6. No Admission. The parties agree that this Agreement is entered into
solely because of a desire of the parties to amicably resolve all matters
between them, and nothing contained herein, and no actions undertaken by the
Company with respect to this Agreement, shall ever be treated as, or claimed or
construed to be, an admission by the Company of any fault, wrongdoing,
liability, injury or damages.
     7. Confidentiality. Mr. Petro agrees to keep the existence and terms of
this Agreement strictly confidential, and further agrees not to disclose or
permit disclosure of any

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dollar amount, benefit or other term or information concerning this Agreement,
to any other person, commercial or non-profit entity, print, radio or television
news media, or make other disclosure of any kind whatsoever, except: (a) as
required to do so by court order; (b) as necessary for tax preparation or to
respond to inquiries or audits by a federal, state or local taxing authority;
(c) to an immediate family member, such as a spouse (who must be instructed
about the confidentiality requirements and penalties of this Agreement); or
(d) to his legal counsel in connection with his execution of this Agreement.
     8. Company Property. Mr. Petro agrees that all information, files, records,
materials and property furnished to him by or on behalf of the Company in the
performance of his employment for the Company and all information, files,
records, materials and property prepared or maintained by him in the performance
of his employment for the Company are and shall remain the sole and exclusive
property of the Company. Mr. Petro represents and agrees that all such
information, files, records, materials and property, company identification
card, business cards and any Company credit cards and all keys to any Company
property or premises have been turned over to the Company.
     9. Cooperation. Mr. Petro agrees to cooperate fully with the Company in
providing information and assistance to make whatever transitions the Company
deems necessary on any Company matters or projects in which he is or may have
been involved. Mr. Petro also agrees to not make any disparaging statements
about the Company, including but not limited to, its management, staff, products
or services. Mr. Petro further agrees that if future litigation or claims are
asserted against or by the Company, its assets, employees or officers regarding
any matter that arose during his employment and relate to him or his area of
responsibility, that he will cooperate fully in supplying thorough and accurate
information for the Company’s investigation, defense or prosecution of such
claims or litigation.
     10. Binding Agreement. This Agreement is binding on and will inure to the
benefit of both parties and the parties’ respective heirs, executives,
administrators, personal representatives, successors and assigns. Each party
acknowledges and represents that they have the authority to enter into and bind
themselves to the terms and conditions of this Agreement.

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     11. Saving. In the event that one or more of the provisions of this
Agreement or portions thereof are determined to be illegal or unenforceable, all
remaining provisions will remain valid and in full force and effect to the
fullest extent permitted by law.
     12. Governing Law. This Agreement is entered into in the State of Ohio,
enforceable by either party, and will be construed and interpreted in accordance
with Ohio law. This Agreement also may be used as the basis for an injunction
action in the event a breach or threatened breach of its confidentiality
provision occurs.
     13. Entire Agreement. This Agreement contains the entire agreement between
the parties and no additional promises have been made or relied upon and this
Agreement supersedes all previous agreements between the parties with respect to
the employment of Mr. Petro; provided, however, this Agreement does not
supersede, modify or affect Sections 6 (Confidential Information), 7
(Inventions), 8 (Noncompetition and Nonsolicitation), 9(b) (Termination by
Company for Cause), 9(c) (Termination by You), 9(d) (Termination by Company
Without Cause), 10 (Remedies; Venue; Process), 12 (No Waiver), 13 (Saving), 14
(No Limitation), and 17 (Further Acknowledgement) of the Employment Agreement,
which sections of said agreement remain in full force and effect and Mr. Petro
continues to be fully bound by the terms thereof. The terms of this Agreement
are contractual and not a mere recital and the parties intend this Agreement to
be a substituted contract, and not an executory accord.
[INTENTIONALLY LEFT BLANK]

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     By their signature below, the parties acknowledge that they have read the
foregoing Agreement, and fully understand it. Mr. Petro acknowledges that he was
given up to twenty-one (21) days within which to consider this Agreement, that
he was advised to consult with legal counsel prior to signing the Agreement, and
that he has the right to revoke this Agreement, in writing to the Company, for a
period not to exceed seven (7) days after the date on which it is signed by him.
The parties hereby acknowledge that if Mr. Petro fails to exercise this right to
revoke, this Agreement will immediately become a binding contract as to its
terms. We now voluntarily sign this Agreement effective as of the date first
written above, signifying our agreement and willingness to be bound by its
terms.
     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the date first above stated.

                      Applied Innovation Inc.                
 
                   
By:
  /s/ William H. Largent
 
William H. Largent           /s/ John F. Petro
 
John F. Petro    
 
  President and CEO                
 
                   
Date:
  July 11, 2006       Date:   July 11, 2006    

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