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                                                                    Exhibit 10.1

                             APPLIED INNOVATION INC.

                              EMPLOYMENT AGREEMENT

     This Agreement is made as of this 19th day of December, 2005, by and
between JULIA FRATIANNE 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 will 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 Vice President and Chief
Financial Officer, reporting to the President and Chief Executive Officer of the
Company. You shall perform the duties, undertake the responsibilities and
exercise the authority customarily performed, undertaken and exercised by
persons employed in similar executive capacities.


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          (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. 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 $130,000
through December 31, 2006 ("Basic Salary"), payable in accordance with the
normal payroll practices of the Company. Your Basic 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.

          (b) You will be entitled to receive stock options to purchase shares
of the common stock of the Company pursuant to the terms of plans adopted by the
Board of Directors of the Company from time to time. If a "Change in Control,"
as defined in Section 9(e)(v), shall occur (i) in which the Company does not
survive as a result of such Change in Control or substantially all of the assets
of the Company are sold as a result of such Change in Control, and (ii) in which
the surviving entity does not assume the obligations of your outstanding stock
options upon the Change in Control, then vesting of all outstanding stock
options issued to you prior to the Change in Control will be accelerated by
twenty-four (24) months plus an additional twelve (12) months for each full year
you have been employed by the Company and such options will be exercisable (to
the extent then vested) for a period of thirty (30) days from the date of the
Change in Control.

          (c) Subject to applicable Company policies, you will be reimbursed for
necessary and reasonable business expenses incurred in connection with the
performance of your duties hereunder or for promoting, pursuing or otherwise
furthering the business or interests of the Company.

     4. FRINGE BENEFITS. You will be entitled to receive employee benefits and
participate in any employee benefit plans, in accordance with their terms as
from time to time amended, that the Company maintains during your employment and
which are made generally available to all other management employees in like
positions. This includes a 401(k) and profit sharing plan. It is agreed that the
Company will pay any necessary COBRA payments on your behalf due to any break in
medical coverage for any reason, including pre-existing conditions.

     5. RESERVED.


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     6. CONFIDENTIAL INFORMATION.

          (a) As used throughout this Agreement, the term "Confidential
Information" means any information you acquire during employment by the Company
(including information you conceive, discover or develop) which is not readily
available to the general public and which relates to the business, including
research and development projects, of the Company, its subsidiaries or its
affiliated companies.

          (b) Confidential Information includes, without limitation, information
of a technical nature (such as trade secrets, inventions, discoveries, product
requirements, designs, software codes and manufacturing methods), matters of a
business nature (such as customer lists, the identities of customer contacts,
information about customer requirements and preferences, the terms of the
Company's contracts with its customers and suppliers, and the Company's costs
and prices), personnel information (such as the identities, duties, customer
contacts, and skills of the Company's employees) and other financial information
relating to the Company and its customers (including credit terms, methods of
conducting business, computer systems, computer software, personnel data, and
strategic marketing, sales or other business plans). Confidential Information
may or may not be patentable.

          (c) Confidential Information does not include information which you
learned prior to employment with the Company from sources other than the
Company, information you develop after employment from sources other than the
Company's Confidential Information or information which is readily available to
persons with equivalent skills, training and experience in the same fields or
fields of endeavor as you. You must presume that all information that is
disclosed or made accessible to you during employment by the Company is
Confidential Information if you have a reasonable basis to believe the
information is Confidential Information or if you have notice that the Company
treats the information as Confidential Information.

          (d) Except in conducting the Company's business, you shall not at any
time, either during or following your employment with the Company, make use of,
or disclose to any other person or entity, any Confidential Information unless
(i) the specific information becomes public from a source other than you or
another person or entity that owes a duty of confidentiality to the Company and
(ii) twelve months have passed since the specific information became public.
However, you may discuss Confidential Information with employees of the Company
when necessary to perform your duties to the Company. Notwithstanding the
foregoing, if you are ordered by a court of competent jurisdiction to disclose
Confidential Information, you will officially advise the Court that you are
under a duty of confidentiality to the Company hereunder, take reasonable steps
to delay disclosure until the Company may be heard by the Court, give the
Company prompt notice of such Court order, and if ordered to disclose such
Confidential Information you shall seek to do so under seal or in camera or in
such other manner as reasonably designed to restrict the public disclosure and
maintain the maximum confidentiality of such Confidential Information.

          (e) Upon Employment Separation, you shall deliver to the Company all
originals, copies, notes, documents, computer data bases, disks, and CDs, or
records of any kind that reflect or relate to any Confidential Information. As
used herein, the term "notes" means


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written or printed words, symbols, pictures, numbers or formulae. As used
throughout this Agreement, the term "Employment Separation" means the separation
from and/or termination of your employment with the Company, regardless of the
time, manner or cause of such separation or termination.

     7. INVENTIONS.

          (a) As used throughout this Agreement, the term "Inventions" means any
inventions, improvements, designs, plans, discoveries or innovations of a
technical or business nature, whether patentable or not, relating in any way to
the Company's business or contemplated business if the Invention is conceived or
reduced to practice by you during your employment by the Company. Inventions
includes all data, records, physical embodiments and intellectual property
pertaining thereto. Inventions reduced to practice within one year following
Employment Separation shall be presumed to have been conceived during
employment.

          (b) Inventions are the Company's exclusive property and shall be
promptly disclosed and assigned to the Company without additional compensation
of any kind. If requested by the Company, you, your heirs, your executors, your
administrators or legal representative will provide any information, documents,
testimony or other assistance needed for the Company to acquire, maintain,
perfect or exercise any form of legal protection that the Company desires in
connection with an Invention.

          (c) Upon Employment Separation, you shall deliver to the Company all
copies of and all notes with respect to all documents or records of any kind
that relate to any Inventions.

     8. NONCOMPETITION AND NONSOLICITATION.

          (a) By entering into this Agreement, you acknowledge that the
Confidential Information has been and will be developed and acquired by the
Company by means of substantial expense and effort, that the Confidential
Information is a valuable asset of the Company's business, that the disclosure
of the Confidential Information to any of the Company's competitors would cause
substantial and irreparable injury to the Company's business, and that any
customers of the Company developed by you or others during your employment are
developed on behalf of the Company. You further acknowledge that you have been
provided with access to Confidential Information, including Confidential
Information concerning the Company's major customers, and its technical,
marketing and business plans, disclosure or misuse of which would irreparably
injure the Company.

          (b) In exchange for the consideration specified in Section 1 of this
Agreement -- the adequacy of which you expressly acknowledge -- you agree that
during your employment by the Company and for a period of twelve (12) months
following Employment Separation, you shall not, directly or indirectly, as an
owner, shareholder, officer, employee, manager, consultant, independent
contractor, or otherwise:


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               (i) Attempt to recruit or hire, interfere with or harm, or
     attempt to interfere with or harm, the relationship of the Company, its
     subsidiaries or affiliates, with any person who is an employee, customer or
     supplier of the Company, it subsidiaries or affiliates;

               (ii) Contact any employee of the Company for the purpose of
     discussing or suggesting that such employee resign from employment with the
     Company for the purpose of becoming employed elsewhere or provide
     information about individual employees of the Company or personnel policies
     or procedures of the Company to any person or entity, including any
     individual, agency or company engaged in the business of recruiting
     employees, executives or officers; or

               (iii) Own, manage, operate, join, control, be employed by,
     consult with or participate in the ownership, management, operation or
     control of, or be connected with (as a stockholder, partner, or otherwise),
     any business, individual, partner, firm, corporation, or other entity that
     competes or plans to compete, directly or indirectly, with the Company, its
     products, or any division, subsidiary or affiliate of the Company;
     provided, however, that your "beneficial ownership," either individually or
     as a member of a "group" as such terms are used in Rule 13d of the General
     Rules and Regulations under the Securities Exchange Act of 1934, as amended
     (the "Exchange Act"), of not more than two percent (2%) of the voting stock
     of any publicly held corporation, shall not be a violation of this
     Agreement.

     9. TERMINATION OF EMPLOYMENT.

          (a) Termination Upon Death or Disability. Your employment will
terminate automatically upon your death. The Company will be entitled to
terminate your employment because of your disability upon 30 days written
notice. "Disability" will mean "total disability" as defined in the Company's
long term disability plan or any successor thereto. In the event of a
termination under this Section 9(a), the Company will pay you only the earned
but unpaid portion of your Basic Salary through the termination date.

          (b) Termination by Company for Cause. An Employment Separation for
Cause will occur upon a determination by the Company that "Cause" exists for
your termination and the Company serves you written notice of such termination.
As used in this Agreement, the term "Cause" shall refer only to any one or more
of the following grounds:

               (i) Commission of an act of dishonesty involving the Company, its
     business or property, including, but not limited to, misappropriation of
     funds or any property of the Company;

               (ii) Engagement in activities or conduct clearly injurious to the
     best interests or reputation of the Company;

               (iii) Willful and continued failure substantially to perform your
     duties under this Agreement (other than as a result of physical or mental
     illness or injury), after


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     the Board of Directors of the Company delivers to you a written demand for
     substantial performance that specifically identifies the manner in which
     the Board believes that you have not substantially performed your duties;

               (iv) Illegal conduct or gross misconduct that is willful and
     results in material and demonstrable damage to the business or reputation
     of the Company;

               (v) The clear violation of any of the material terms and
     conditions of this Agreement or any other written agreement or agreements
     you may from time to time have with the Company;

               (vi) The clear violation of the Company's code of business
     conduct or the clear violation of any other rules of behavior as may be
     provided in any employee handbook which would be grounds for dismissal of
     any employee of the Company; or

               (vii) Commission of a crime which is a felony, a misdemeanor
     involving an act of moral turpitude, or a misdemeanor committed in
     connection with your employment by the Company which causes the Company a
     substantial detriment.

          No act or failure to act shall be considered "willful" unless it is
done, or omitted to be done, by you in bad faith or without reasonable belief
that your action or omission was in the best interests of the Company. Any act
or failure to act that is based upon authority given pursuant to a resolution
duly adopted by the Board of Directors, or the advice of counsel for the
Company, shall be conclusively presumed to be done, or omitted to be done, by
you in good faith and in the best interests of the Company.

          In the event of a termination under this Section 9(b), the Company
will pay you only the earned but unpaid portion of your Basic Salary through the
termination date.

          Following a termination for Cause by the Company, if you desire to
contest such determination, your sole remedy will be to submit the Company's
determination of Cause to arbitration in Columbus, Ohio before a single
arbitrator under the commercial arbitration rules of the American Arbitration
Association. If the arbitrator determines that the termination was other than
for Cause, the Company's sole liability to you will be the amount that would be
payable to you under Section 9(d) of this Agreement for a termination of your
employment by the Company without Cause. Each party will bear his or its own
expenses of the arbitration.

          (c) Termination by You. In the event of an Employment Separation as a
result of a termination by you for any reason, you must provide the Company with
at least 14 days advance written notice ("Notice of Termination") and continue
working for the Company during the 14-day notice period, but only if the Company
so desires to continue your employment and to compensate you during such period.

          In the event of such termination under this Section, the Company will
pay you the earned but unpaid portion of your Basic Salary through the
termination date.


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          (d) Termination by Company Without Cause. In the event of an
Employment Separation as a result of termination by the Company without Cause,
the Company will pay you the earned but unpaid portion of your Basic Salary
through the termination date and will continue to pay you your Basic Salary for
an additional three (3) months (the "Severance Period"); provided, however, any
such payments will immediately end if (i) you are in violation of any of your
obligations under this Agreement, including Sections 6, 7 and/or 8; or (ii) the
Company, after your termination, learns of any facts about your job performance
or conduct that would have given the Company Cause, as defined in Section 9(b),
to terminate your employment.

          (e) Termination Following Change of Control. If a "Change in Control",
as defined in Section 9(e)(v), shall have occurred and within 13 months
following such Change in Control the Company terminates your employment other
than for Cause, as defined in Section 9(b), or you terminate your employment for
Good Reason, as that term is defined in Section 9(e)(vii), then you shall be
entitled to the benefits described below:

               (i) You shall be entitled to the unpaid portion of your Basic
          Salary plus credit for any vacation accrued but not taken and the
          amount of any earned but unpaid portion of any bonus, incentive
          compensation, or any other Fringe Benefit to which you are entitled
          under this Agreement through the date of the termination as a result
          of a Change in Control (the "Unpaid Earned Compensation"), plus 1.0
          times your "Current Annual Compensation" as defined in this Section
          9(e)(i) (the "Salary Termination Benefit"). "Current Annual
          Compensation" shall mean the total of your Basic Salary in effect at
          the Termination Date, plus the average annual performance bonus
          actually received by you over the last three years fiscal years (or if
          you have been employed for a shorter period of time over such period
          during which you performed services for the Company), and shall not
          include the value of any stock options granted or exercised,
          restricted stock awards granted or vested, contributions to 401(k) or
          other qualified plans, medical, dental, or other insurance benefits,
          or other fringe benefits.

               (ii) Vesting of all outstanding stock options and restricted
          stock awards issued to you will be accelerated by twenty-four (24)
          months plus an additional twelve (12) months for each full year you
          have been employed by the Company, and thereafter shall be exercisable
          in accordance with such governing stock option or restricted stock
          agreements and plans.

               (iii) The Company shall maintain for your benefit (or at your
          election make COBRA payments for your benefit), until the earlier of
          (A) 12 months after termination of employment following a Change in
          Control, or (B) your commencement of full-time employment with a new
          employer, all life insurance, medical, health and accident, and
          disability plans or programs, such plans or programs to be maintained
          at the then current standards of the Company, in which you shall have
          been entitled to participate prior to termination of employment
          following a Change in Control, provided your continued participation
          is permitted


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          under the general terms of such plans and programs after the Change in
          Control ("Fringe Termination Benefit"); (collectively the Salary
          Termination Benefit and the Fringe Termination Benefit are referred to
          as the "Termination Benefits").

               (iv) The Unpaid Earned Compensation shall be paid to you within
          15 days after termination of employment, one-half of the Termination
          Benefits shall be payable to you as severance pay in a lump sum
          payment within 30 days after termination of employment, and one-half
          of the Termination Benefits shall be payable to you as severance pay
          in 12 monthly payments commencing 30 days after termination of
          employment; provided, however, the Company may immediately discontinue
          the payment of the Termination Benefits if (i) you are in violation of
          any of your obligations under this Agreement, including in Sections 6,
          7 and/or 8; and/or (ii) the Company, after your termination, learns of
          any facts about your job performance or conduct that would have given
          the Company Cause as defined in Section 9(b) to terminate your
          employment. You shall have no duty to mitigate your damages by seeking
          other employment, and the Company shall not be entitled to set off
          against amounts payable hereunder any compensation which you may
          receive from future employment.

               (v) A "Change in Control" shall be deemed to have occurred if and
          when, after the date hereof, (i) any "person" (as that term is used in
          Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
          amended (the "Exchange Act") on the date hereof), including any
          "group" as such term is used in Section 13(d)(3) of the Exchange Act
          on the date hereof, shall acquire (or disclose the previous
          acquisition of) beneficial ownership (as that term is defined in
          Section 13(d) of the Exchange Act and the rules thereunder on the date
          hereof) of shares of the outstanding stock of any class or classes of
          the Company which results in such person or group possessing more than
          50% of the total voting power of the Company's outstanding voting
          securities ordinarily having the right to vote for the election of
          directors of the Company; or (ii) as the result of, or in connection
          with, any tender or exchange offer, merger or other business
          combination, or contested election, or any combination of the
          foregoing transactions (a "Transaction"), the owners of the voting
          shares of the Company outstanding immediately prior to such
          Transaction own less than a majority of the voting shares of the
          Company after the Transaction; or (iii) during any period of two
          consecutive years during the term of this Agreement, individuals who
          at the beginning of such period constitute the Board of Directors of
          the Company (or who take office following the approval of a majority
          of the directors then in office who were directors at the beginning of
          the period) cease for any reason to constitute at least one-half
          thereof, unless the election of each director who was not a director
          at the beginning of such period has been approved in advance by
          directors of the Company representing at least one-half of the
          directors then in office who were directors at the beginning of the
          period; or (iv) the sale, exchange, transfer, or other disposition of
          all or substantially all of the assets of the Company (a "Sale
          Transaction") shall have occurred.


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               (vi) If any portion of the payments and benefits provided under
          this Agreement to you, alone or with other payments and benefits,
          would constitute "parachute payments" within the meaning of Section
          280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
          "Code"), and shall be determined by the Company's independent
          compensation specialist to be nondeductible to the Company, then the
          aggregate present value of all of the amounts payable to you under
          Section 9(e) hereof shall be reduced to the maximum amount which would
          cause all of the payments under Section 9(e) to be deductible and in
          such event you shall have the option, but not the obligation, to
          designate or select those kinds of payments which shall be reduced and
          the order of such reductions, but your failure to make such selections
          within a period of 30 days following notice of the determination that
          a reduction is necessary will result in a reduction of all such
          payments, pro rata. If you disagree with the determination of the
          reduced amount by the Company's independent compensation specialist,
          you may contest that determination by giving notice of such contest
          within 30 days of learning of the determination and may use an
          independent compensation specialist of your choice in connection with
          such contest. The Company shall pay all of your costs in connection
          with such contest if the ultimate determination by the two independent
          compensation specialists in consultation with each other, or by a
          third independent compensation specialist, jointly chosen by the two
          first-named independent compensation specialists in the event the
          first two cannot agree, represents a lesser reduction in the amounts
          payable under Section 9(e) hereof than the Company's independent
          compensation specialist established in the first instance. Otherwise,
          you shall pay your own and any additional costs incurred by the
          Company in contesting such determination. If there is a final
          determination by the Internal Revenue Service or a court of competent
          jurisdiction that the Company overpaid amounts under Section 280G of
          the Code, the amount of the overpayment shall be treated as a loan to
          you and shall be repaid immediately, together with interest on such
          amount at the prime rate of interest at Huntington National Bank,
          Columbus, Ohio, or any successor thereto, in effect from time to time.
          If the Internal Revenue Service or a court of competent jurisdiction
          finally determines, or if the Code or regulations thereunder shall
          change such that the Company underpaid you under Section 280G of the
          Code, the Company shall pay the difference to you with interest as
          specified above.

               (vii) As used in this Agreement, the term "Good Reason" means,
          without your written consent:

                    (A) a material change in your status, position or
               responsibilities which, in your reasonable judgment, does not
               represent a promotion from your existing status, position or
               responsibilities as in effect immediately prior to the Change in
               Control; the assignment of any duties or responsibilities or the
               removal or termination of duties or responsibilities (except in
               connection with the termination of employment for total and
               permanent disability, death, or Cause, or by you other than for
               Good


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               Reason), which, in your reasonable judgment, are materially
               inconsistent with such status, position or responsibilities;

                    (B) a reduction by the Company in your Basic Salary as in
               effect on the date hereof or as the same may be increased from
               time to time during the term of this Agreement or the Company's
               failure to increase (within twelve months of your last increase
               in Basic Salary) your Basic Salary after a Change in Control in
               an amount which at least equals, on a percentage basis, the
               average percentage increase in Basic Salary for all executive and
               senior officers of the Company, in like positions, which were
               effected in the preceding twelve months;

                    (C) the relocation of the Company's principal executive
               offices to a location outside the Columbus metropolitan area or
               the relocation of you by the Company to any place other than the
               location at which you performed duties prior to a Change in
               Control, except for required travel on the Company's business to
               an extent consistent with business travel obligations at the time
               of a Change in Control;

                    (D) the failure of the Company to continue in effect, or
               continue or materially reduce your participation in, any
               incentive, bonus or other compensation plan in which you
               participate, including but not limited to the Company's stock
               option plans, unless an equitable arrangement (embodied in an
               ongoing substitute or alternative plan), has been made or offered
               with respect to such plan in connection with the Change in
               Control;

                    (E) the failure by the Company to continue to provide you
               with benefits substantially similar to those enjoyed or to which
               you are entitled under any of the Company's pension, profit
               sharing, life insurance, medical, dental, health and accident, or
               disability plans at the time of a Change in Control, the taking
               of any action by the Company which would directly or indirectly
               materially reduce any of such benefits or deprive you of any
               material fringe benefit enjoyed or to which you are entitled at
               the time of the Change in Control, or the failure by the Company
               to provide the number of paid vacation and sick leave days to
               which you are entitled on the basis of years of service with the
               Company in accordance with the Company's normal vacation policy
               in effect on the date hereof;

                    (F) the failure of the Company to obtain a satisfactory
               agreement from any successor or assign of the Company to assume
               and agree to perform this Agreement;

                    (G) any request by the Company that you participate in an
               unlawful act or take any action constituting a breach of your
               professional standard of conduct; or


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<PAGE>

                    (H) any breach of this Agreement on the part of the Company.

               Notwithstanding anything in this Section to the contrary, your
               right to terminate your employment pursuant to this Section shall
               not be affected by incapacity due to physical or mental illness.

               (viii) Upon any termination or expiration of this Agreement or
          any cessation of your employment hereunder, the Company shall have no
          further obligations under this Agreement and no further payments shall
          be payable by the Company to you, except as provided in Section 9
          above and except as required under any benefit plans or arrangements
          maintained by the Company and applicable to you at the time of such
          termination, expiration or cessation of your employment.

               (ix) Enforcement of Agreement. The Company is aware that upon the
          occurrence of a Change in Control, the Board of Directors or a
          shareholder of the Company may then cause or attempt to cause the
          Company to refuse to comply with its obligations under this Agreement,
          or may cause or attempt to cause the Company to institute, or may
          institute litigation seeking to have this Agreement declared
          unenforceable, or may take or attempt to take other action to deny you
          the benefits intended under this Agreement. In these circumstances,
          the purpose of this Agreement could be frustrated. Accordingly, if
          following a Change in Control it should appear to you that the Company
          has failed to comply with any of its obligations under Section 9 of
          this Agreement or in the event that the Company or any other person
          takes any action to declare Section 9 of this Agreement void or
          enforceable, or institutes any litigation or other legal action
          designed to deny, diminish or to recover from you the benefits
          entitled to be provided to you under Section 9, and that you have
          complied with all your obligations under this Agreement, the Company
          authorizes you to retain counsel of your choice, at the expense of the
          Company as provided in this Section 9(e)(ix), to represent you in
          connection with the initiation or defense of any pre-suit settlement
          negotiations, litigation or other legal action, whether such action is
          by or against the Company or any Director, officer, shareholder, or
          other person affiliated with the Company, in any jurisdiction.
          Notwithstanding any existing or prior attorney-client relationship
          between the Company and such counsel, the Company consents to you
          entering into an attorney-client relationship with such counsel, and
          in that connection the Company and you agree that a confidential
          relationship shall exist between you and such counsel, except with
          respect to any fee and expense invoices generated by such counsel. The
          reasonable fees and expenses of counsel selected by you as hereinabove
          provided shall be paid or reimbursed to you by the Company on a
          regular, periodic basis upon presentation by you of a statement or
          statements prepared by such counsel in accordance with its customary
          practices, up to a maximum aggregate amount of $50,000. Any legal
          expenses incurred by the Company by reason of any dispute between the
          parties as to enforceability of Section 9 or the terms contained in
          Section 9(f),


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<PAGE>

          notwithstanding the outcome of any such dispute, shall be the sole
          responsibility of the Company, and the Company shall not take any
          action to seek reimbursement from you for such expenses.

          (f) The noncompetition periods described in Section 8 of this
Agreement shall be suspended while you engage in any activities in breach of
this Agreement. In the event that a court grants injunctive relief to the
Company for your failure to comply with Section 8, the noncompetition period
shall begin again on the date such injunctive relief is granted.

          (g) Nothing contained in this Section 9 shall be construed as limiting
your obligations under Sections 6, 7, or 8 of this Agreement concerning
Confidential Information, Inventions, or Noncompetition and Nonsolicitation.

          (h) Code Section 409A. Notwithstanding any provision of this Agreement
to the contrary, if the Company determines that you are a "specified employee"
as defined in Section 409A of the Code or any guidance promulgated thereunder
("Code Section 409A"), you shall not be entitled to any payments upon Employment
Separation until the earlier of (i) the date which is six months after
Employment Separation, or (ii) the date of your death.

          If any provision of this Agreement (or of any award of compensation,
including equity compensation or benefits) would cause you to incur any
additional tax or interest under Code Section 409A, the Company shall, after
consulting with you and receiving your approval (which shall not be unreasonably
withheld), reform such provision in such a manner as shall not cause you to
incur any such tax or interest, for example, by providing that any payments upon
Employment Separation shall not be made until the earlier of (i) the date which
is six months after Employment Separation, or (ii) the date of your death.

     10. REMEDIES; VENUE; PROCESS.

          (a) You hereby acknowledge and agree that the Confidential Information
disclosed to you prior to and during the term of this Agreement is of a special,
unique and extraordinary character, and that any breach of this Agreement will
cause the Company irreparable injury and damage, and consequently the Company
shall be entitled, in addition to all other legal and equitable remedies
available to it, to injunctive and any other equitable relief to prevent or
cease a breach of Sections 6, 7, or 8 of this Agreement without further proof of
harm and entitlement; that the terms of this Agreement, if enforced by the
Company, will not unduly impair your ability to earn a living or pursue your
vocation; and further, that the Company may cease paying any compensation and
benefits under Section 9 if you fail to comply with this Agreement, without
restricting the Company from other legal and equitable remedies. The parties
agree that the prevailing party in litigation concerning a breach of this
Agreement shall be entitled to all costs and expenses (including reasonable
legal fees and expenses) which it incurs in successfully enforcing this
Agreement and in prosecuting or defending any litigation (including appellate
proceedings) concerning a breach of this Agreement.

          (b) Except for actions brought under Section 9(b) of this Agreement,
the parties agree that jurisdiction and venue in any action brought pursuant to
this Agreement to


                                      -12-

<PAGE>

enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in either the United States District Court for the
Southern District of Ohio, Eastern Division, Columbus, Ohio, or the Court of
Common Pleas of Franklin County, Ohio. Such jurisdiction and venue is exclusive,
except that the Company may bring suit in any jurisdiction and venue where
jurisdiction and venue would otherwise be proper if you may have breached
Sections 6, 7, or 8 of this Agreement. The parties further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court.

     11. EXIT INTERVIEW. Prior to Employment Separation, you shall attend an
exit interview if desired by the Company and shall, in any event, inform the
Company at the earliest possible time of the identity of your future employer
and of the nature of your future employment.

     12. NO WAIVER. Any failure by the Company to enforce any provision of this
Agreement shall not in any way affect the Company's right to enforce such
provision or any other provision at a later time.

     13. SAVING. If any provision of this Agreement is later found to be
completely or partially unenforceable, the remaining part of that provision of
any other provision of this Agreement shall still be valid and shall not in any
way be affected by the finding. Moreover, if any provision is for any reason
held to be unreasonably broad as to time, duration, geographical scope, activity
or subject, such provision shall be interpreted and enforced by limiting and
reducing it to preserve enforceability to the maximum extent permitted by law.

     14. NO LIMITATION. You acknowledge that your employment by the Company may
be terminated at any time by the Company or by you with or without cause in
accordance with the terms of this Agreement. This Agreement is in addition to
and not in place of other obligations of trust, confidence and ethical duty
imposed on you by law.

     15. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Ohio without reference to its choice of
law rules.

     16. FINAL AGREEMENT. This Agreement replaces any existing agreement between
you and the Company relating to the same subject matter and may be modified only
by an agreement in writing signed by both you and a duly authorized
representative of the Company.

     17. FURTHER ACKNOWLEDGMENTS. YOU ACKNOWLEDGE THAT YOU HAVE RECEIVED A COPY
OF THIS AGREEMENT, THAT YOU HAVE READ AND UNDERSTOOD THIS AGREEMENT, THAT YOU
UNDERSTAND THIS AGREEMENT AFFECTS YOUR RIGHTS, AND THAT YOU HAVE ENTERED INTO
THIS AGREEMENT VOLUNTARILY.


                                      -13-

<PAGE>

                                        APPLIED INNOVATION INC.


                                        By: /s/ William H. Largent
                                            ------------------------------------
                                            William H. Largent
                                            President and Chief Executive
                                            Officer


                                        EXECUTIVE:

                                            /s/ Julia Fratianne
                                            ------------------------------------
                                            Julia Fratianne


                                      -14-