Document:

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                                                                   EXHIBIT 10.17

                             APPLIED INNOVATION INC.

                              EMPLOYMENT AGREEMENT

      This Agreement is made as of this 6th day of February, 2002, by and
between WILLIAM J. MRUKOWSKI 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 currently 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.
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            (a) POSITION. You will be employed as Senior Vice President,
International Sales 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.

            (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 at least half of your 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 $96,250
through December 31, 2002 ("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.

            (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 and paid medical
insurance. 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.
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      5. RESERVED.

      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.
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            (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 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 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;
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                  (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 her 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 six (6) 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 fiscal years, except
            that only 50% of any such bonuses received in fiscal 1999, 2000 and
            2001 shall be included in such calculation, 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 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").
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                  (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 Reason), which, in your reasonable
<PAGE>
                  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
<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), 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.
<PAGE>

            (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.

      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 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.
<PAGE>
      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.

                                     APPLIED INNOVATION INC.

                                     By: /s/ Robert L. Smialek
                                         ---------------------------------------
                                         Robert L. Smialek,
                                         President and Chief Executive Officer

                                     EXECUTIVE:

                                         /s/ William J. Mrukowski
                                     -------------------------------------------
                                         William J. Mrukowski<PAGE>
                                                                    EXHIBIT 10.1

                           MCM CAPITAL GROUP, INC.
                              5775 ROSCOE COURT
                         SAN DIEGO, CALIFORNIA 92123

                              As of May 22, 2000

Mr. Carl C. Gregory III

Dear Mr. Gregory:

      It is with great pleasure that we hereby confirm your employment as
President and Chief Executive Officer of MCM Capital Group, Inc. (the
"Company"), on the terms and conditions set forth in this letter and in the
attached "Employment Term Sheet." This letter and the Employment Term Sheet are
collectively referred to as this "Agreement". Capitalized terms that are not
defined herein shall have the meaning set forth in the Employment Term Sheet.

      1. During the term of your employment with the Company, you shall also
serve as President of Midland Credit Management, Inc. and may also serve as an
officer and/or director of certain other subsidiaries of the Company.

      2. This Agreement contains the entire agreement between the parties with
respect to the matters covered herein and supersedes all prior agreements,
written or oral, with respect thereto. This Agreement may only be amended,
superseded or canceled and the terms hereof waived, by a written instrument
signed by you and the Company, or in the case of a waiver, by the party waiving
compliance.

      3. You will report to the Board of Directors of the Company (the "Board")
and your duties will be performed primarily at the Company's offices in the San
Diego, California area. The Company shall furnish sufficient facilities,
services, staffing and assistance to enable you to perform your duties
hereunder. The term of your employment shall continue through May 22, 2002,
provided that such term shall be automatically extended for successive one (l)
year periods unless either you or the Company gives written notice to the other,
at least ninety (90) calendar days before such extension is to (or would) take
effect, that they do not wish to extend (the "Term"). Your employment may be
terminated prior to the expiration of the Term: (i) in the event that you shall
die; (ii) in the event that you shall become Disabled (for purposes of this
clause (ii), "Disabled" shall mean that you shall have failed, due to illness or
other physical or

                                       13
<PAGE>
mental incapacity, to render services of the character contemplated by this
Agreement for an aggregate of more than ninety (90) calendar days during any
twelve (12) month period); (iii) for "Cause" (as hereinafter defined); or (iv)
in the event that you give written notice to the Company of your resignation.

      4. For purposes of this Agreement, "Cause" means: (i) commission of any
act of fraud or gross negligence by you in the course of your employment
hereunder which, in the case of gross negligence, has a material adverse effect
on the business or condition (financial or otherwise) of the Company; (ii)
willful material misrepresentation at any time by you to the Board or the
Chairman of the Board; (iii) willful failure or refusal to comply with any of
your obligations hereunder or with the reasonable and lawful instructions of the
Board; (iv) engagement by you in any conduct or the commission by you of any act
which is in the reasonable opinion of the Board, materially injurious or
detrimental to the substantial interest of the Company or any of its material
subsidiaries or affiliates; (v) conviction of or pleading guilty to any felony,
whether of the United States or any state thereof or any similar foreign law to
which you may be subject; (vi) any failure to substantially comply with any
written lawful rules, regulations, policies or procedures of the Company
furnished to you which, if not complied with, could reasonably be expected to
have a material adverse effect on the business of the Company or any of its
material subsidiaries or affiliates; or (vii) any willful failure to comply with
the Company's, or any of its subsidiaries' or affiliates' policies regarding
insider trading; provided, however, that in the case of clause (vi) of the
definition of "Cause" set forth in this section, if your failure or refusal
referred to therein is curable by you, then "Cause" shall not be deemed to exist
unless you fail to so cure within five (5) business days of your receipt from
the Company of a written request for such cure and such request to cure is the
first such request delivered under this section with respect to such failure.

      5. If either (i) your employment is terminated "Without Cause" by the
Company (as hereinafter defined) or (ii) there is a "Control Event," (as
hereinafter defined) then in either event the Company shall pay to you a sum
equal to your Base Salary in effect as of the effective date of such termination
for the longer of (A) the then remaining effective Term, or (B) 18 months from
the date of the termination of your employment, payable in semi-monthly
installments commencing with the month after such termination; provided,
however, that if you have secured full-time employment prior to or during the
last six (6) months of such eighteen (18) month period (or such longer period),
such semi-monthly payments required to be made during such six month period
after you begin receiving payments from your new employer will be offset by the
base salary you earn from such new employer during such six (6) month period. In
addition, in the event of either of the foregoing, you will be entitled (i) to
receive (A) payment of all accrued and unpaid vacation days and other benefits
and reimbursements, and (B) within 30 days of such termination, a pro rata
portion of your annual bonus for the portion of the calendar year that you
worked for the Company prior to such termination of employment computed using
the amount of your bonus for the prior calendar year, and (ii) at your election,
to continue for a period of 18 months your coverage under all health, medical,
disability and other similar insurance policies, pursuant to Section 4980B of
the Internal Revenue Code, as amended, or under Part 6 of Title I of the
Employment Retirement Income Security Act of 1974, as amended, provided to you
by the Company, the cost of such coverage to be allocated between you and the
Company in a manner consistent with the allocation of the costs thereof
applicable prior to the termination of

                                       2
<PAGE>
your employment. Terminated "Without Cause" shall mean (i) the termination of
your employment for any reason other than (A) as set forth in clauses (i) - (iv)
of Section 3 or (B) a decision by you to deliver the written notice referred to
in the third sentence of Section 3, (ii) a substantial and material reduction of
your responsibilities as President and Chief Executive Officer, (iii) a
reduction in your Base Salary, (iv) a requirement that you relocate outside the
San Diego, California metropolitan area without your consent, or (v) a decision
by the Company to deliver the written notice referred to in the third sentence
of Section 3. "Control Event" shall mean the occurrence of both (i) a "Change of
Control" as defined on Annex A hereto, and (ii) within 12 months thereof, one of
the events described in clauses (ii), (iii) or (iv) of the definition of
"Without Cause" shall have occurred and within such twelve (12) month time
period you shall have resigned from the Company. In consideration of the monies
to be paid and the benefits to be provided to you, you agree to execute and
deliver to the Company on or before any payment by the Company a release
substantially in the form of Annex B hereto, failing which, except to the extent
required by law, the Company shall be relieved of all of its obligations
hereunder. Upon any termination of your employment with the Company, you will
return to the Company, all Company/or its subsidiary-owned property, including,
without limitation, credit cards, computers, cellular phones, files, etc.

      6. You acknowledge that as the Company's President and Chief Executive
Officer you will be involved, at the highest level, in the development,
implementation, and management of the Company's and its subsidiaries'
businesses, strategies and plans, including those which involve the Company's
and its subsidiaries' finances, marketing, industrial relations, operations,
acquisitions, business models and programs. By virtue of your unique and
sensitive position, your employment by a competitor of the Company or its
subsidiaries represents a serious competitive danger to the Company and its
subsidiaries and the use of your talent, knowledge, and information about the
Company's and its subsidiaries' businesses, strategies, and plans can and would
constitute a valuable competitive advantage over the Company and its
subsidiaries. In view of the foregoing, you covenant and agree that during the
term of your employment and, for the period during which you are receiving any
payments pursuant to Section 5, you will not engage or be engaged in a similar
capacity or responsibility as you served or performed for the Company, directly
or indirectly, including, but not limited to, as an employee, agent, consultant,
manager, executive, owner, financing source or stockholder (except as a passive
investor owning less than one percent (1%) interest in a publicly held company)
in the Collection Business. For purposes of this Section 6, "Collection
Business" shall be defined as the business of purchasing and/or collecting
charged off consumer debt. Notwithstanding the foregoing, if this Agreement is
assigned by the Company as provided herein, the terms of this section shall not
apply to any business engaged in by the assignee that is not related or similar
to any business engaged in (or contemplated to be engaged in) by the Company at
the time of such assignment.

      7. You agree to treat as confidential and not to disclose to anyone other
than the Company, its subsidiaries and affiliated companies, and you agree that
you will not at any time during your employment and at any time thereafter,
without the prior written consent of the Company, divulge, furnish, or make
known or accessible to, or use for the benefit of anyone other than the Company,
its subsidiaries and affiliated companies, any information of a confidential
nature relating in any way to the business of the Company, its subsidiaries or
affiliated companies, or any of their respective affiliates, members,
shareholders, officers,

                                       3
<PAGE>
employees or directors, or any other Person having a direct business
relationship with the Company or its subsidiaries, unless (i) you are required
to disclose such information by requirements of law, (ii) such information is in
the public domain through no fault of yours, or (iii) such information has been
lawfully acquired by you from other sources unless you know that such
information was obtained in violation of an agreement of confidentiality. You
further agree, that in consideration of this Agreement, that you will refrain
from engaging in any conduct or making any statement, written or oral, which are
detrimental to the Company, its subsidiaries or affiliated companies or any of
their respective affiliates, members, shareholders, officers, employees or
directors, other than statements to the Chairman of the Board of the Company or
the Board of Directors of the Company, or any member thereof.

      8. You agree that in addition to any other remedy provided at law or in
equity (a) the Company shall be entitled to a temporary restraining order, and
both preliminary and permanent injunctive relief restraining you from violating
the provisions of the Paragraphs 6 and 7; and (b) the Company's remaining
obligations under this letter agreement, if any, shall cease (other than payment
of your base salary through the date of such violation, plus $100.00 and any
earned but unpaid vacation or except as may be required by law) as a result of
any willful or reckless material violation of such provisions.

      9. The provisions of the Sections 6, 7, 8, 10 and 13 of this Agreement
shall specifically survive any termination of this Agreement.

      10. You agree that the Company may withhold from any amounts payable to
you hereunder all federal, state, local or other taxes that the Company
determines are required to be withheld pursuant to any applicable law or
regulation. You further agree that if the Internal Revenue Service or other
taxing authority (each, a Taxing Authority) asserts a liability against the
Company for failure to withhold taxes on any payment hereunder, you will pay to
the Company the amount determined by such taxing authority that had not been
withheld within ninety (90) days of notice to you of such determination. Such
notice shall include a copy of any correspondence received from a Taxing
Authority with respect to such withholding.

      11. Any notice or other communication required or permitted under this
Agreement shall be in writing and shall be delivered personally, or sent by
certified, registered or express mail, postage prepaid, return receipt
requested. Any such notice shall be deemed given when so delivered personally,
or, if mailed, on the earlier of actual receipt or the third (3rd) business day
after the date of such mailing, (i) if to the Company, to the attention of the
General Counsel at the address first written above (with a copy to Snell &
Wilmer, One Arizona Center, Phoenix, Arizona 85004, Attention: Steven D.
Pidgeon, Esq.), and (ii) if to you, at the address first written above.

      12. This Agreement and your rights and obligations hereunder may not be
assigned by you, provided that upon death your rights hereunder shall survive
and may be assigned, or conveyed by will, trust or operation of law, including
without limitation, intestate succession. The Company may assign this letter
agreement and its rights, together with its obligations, hereunder in connection
with any sale, transfer or other disposition of all or substantially all of its
assets or business, whether by merger, consolidation or otherwise.

                                       4
<PAGE>
      13. This letter agreement constitutes the entire agreement between you and
Company with respect to the matters referred to herein and supersedes all prior
agreements, whether written or oral with respect hereto, other than the
Indemnification Agreement dated December 6, 2000 between the Company and you.
This letter agreement shall be governed by the laws of the State of California,
without regard to principles of conflicts of laws of such State. Each party
agrees to reimburse the other for any reasonable attorneys' fees and expenses
expended by it to enforce its rights hereunder if the other party willfully or
recklessly breaches its obligations hereunder.

      If you agree with the terms of this Agreement, please date and sign the
copy of this letter enclosed for that purpose and return it to me.

                                    Sincerely,

                                    MCM CAPITAL GROUP, INC.

                                    By: /s/ Eric D. Kogan
                                        -----------------
                                          Eric D. Kogan

Agreed and Accepted:

/s/ Carl C. Gregory, III
------------------------
Carl C. Gregory, III

Date: March 20, 2002

                                       5
<PAGE>
                               CARL C. GREGORY III
                                    PRESIDENT
                                       OF
                             MCM CAPITAL GROUP, INC.
                         MIDLAND CREDIT MANAGEMENT, INC.

                              EMPLOYMENT TERM SHEET

<TABLE>
<CAPTION>
      PROVISION                      TERM                          COMMENTS
      ---------                      ----                          --------
<S>                      <C>                             <C>
CONTRACT TERM            Initial Term through May        Automatic one (1) year
                         22, 2002                        extensions granted at the
                                                         end of such initial term and
                                                         each annual anniversary
                                                         thereafter, unless the
                                                         executive or the Company
                                                         gives notice ninety (90)
                                                         calendar days before such
                                                         extension is or would take
                                                         effect.
BASE SALARY              $350,000/year, to be paid       Subject to annual review
("Base Salary")          on a regular basis by the       during January of each year
                         Company in accordance with      commencing in 2002.
                         the Company's payroll
                         procedures and policies.
ANNUAL CASH              The executive shall be
INCENTIVE BONUS          eligible to receive annual
                         cash bonuses based on the
                         Company and individual
                         performance assessed for
                         each fiscal year relative to
                         objectives agreed to in
                         advance between the
                         executive and the Board;
                         provided that with respect
                         to the year ended December
                         31, 2001, the executive's
                         cash bonus shall be no less
                         than $175,000.

                         Executive's bonus target
                         shall be 100% of his Base
                         Salary.

STOCK OPTIONS            300,000 options with an         Additional grants to be
                         exercise price of               considered annually.
                         $1.00/share.
                         50% will vest:                  The grant, vesting and
                           1/3 on May 23, 2000,          exercising of options shall
                           1/3 on May 23, 2001, and      be governed by the Company's
                           1/3 on May 23, 2002.          Equity Participation Plan,
                         25% will vest on May 23,        as it may be amended or
                         2003.                           restated from time to time
                         25% will vest on May 23,        and any Stock Option
                         2004.                           Agreement between

</TABLE>

                                       6
<PAGE>
<TABLE>
<S>                      <C>                             <C>
                                                         the executive and the Company.

                                                         Options will vest on change
                                                         of control (as defined in
                                                         Annex A)
BENEFITS                 Benefits as are generally
                         made available to other
                         executives of the Company,
                         including participation in
                         the Company's
                         health/medical and
                         insurance programs, or at
                         the executive's election,
                         the continuation of the
                         executive's existing
                         health/medical/disability
                         or similar insurance.
VACATION                 4 weeks per year.               Can carry forward any unused
                                                         days in accordance with
                                                         Company policy.
EXPENSES                 Reasonable and necessary
                         out-of-pocket expenses
                         incurred in the performance
                         of duties shall be
                         reimbursed by the Company
                         in accordance with its
                         policies.
</TABLE>

                                       7
<PAGE>
                                                                         Annex A

For purposes of this Agreement, the term "Change of Control" shall mean and
include any one or more of the following events:

      (i) the Company is merged into or consolidated with another corporation,
in a transaction in which, upon completion, the Company's stockholders
beneficially own (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), less than 50% of the total voting
securities entitled to vote generally in the election of directors of the
surviving or resulting company outstanding;

      (ii)  all or substantially all of the assets of the Company are
acquired by another corporation;

      (iii) any person (as such term is used in Section 13(d) and 14(d)(2) of
the Exchange Act), other than any employee benefit plan of the Company or any
subsidiary of the Company or any entity holding shares of capital stock of the
Company for or pursuant to the terms of any such employee benefit plan in its
role as an agent or trustee for such plan, shall acquire 50% or more of the
Company's outstanding voting stock entitled to vote generally in the election of
directors; or

      (iv)  a majority of the Directors of the Company being Individuals not
nominated by the Board of Directors.

      Notwithstanding the foregoing, the events described above shall not be
deemed to be a "Change of Control" if they occur as a result of (i) a
transaction involving any person (as defined in clause (iii) above) which is the
beneficial owner (as defined in clause (i) above) as of the date of this
Agreement, of more than 5% of the Company's outstanding voting stock entitled to
vote generally in the election of directors or any "associate" or "affiliate" of
such person (as such terms are defined in Rule 405 promulgated under the
Securities Act of 1933, as amended) or (ii) in the case of clause (iii) above, a
person acquiring such 50% ownership position as a result of the acquisition by
the Company of its voting stock which reduces the number of outstanding shares
of voting stock of the Company.

                                       8
<PAGE>
                                                                         Annex B

                               GENERAL RELEASE
                           AND COVENANT NOT TO SUE

      TO ALL WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW that:

      Carl C. Gregory III (the "Executive"), on his own behalf and on behalf of
his descendants, dependents, heirs, executors and administrators and permitted
assigns, past and present, in consideration for the amounts payable to the
undersigned under that Letter Agreement dated as of May 22, 2000 (the
"Employment Agreement") between Executive and MCM Capital Group, Inc. (the
"Company"), does hereby covenant not to sue or pursue any litigation (or file
any charge or otherwise correspond with any Federal, state or local
administrative agency) against, and waives, releases and discharges the Company,
and its respective assigns, affiliates, subsidiaries, parents, predecessors and
successors, and the past and present shareholders, employees, officers,
directors, representatives and agents or any of them (collectively, the "Company
Group"), from any and all claims, demands, rights, judgments, defenses, actions,
charges or causes of action whatsoever, of any and every kind and description,
whether known or unknown, accrued or not accrued, that Executive ever had, now
has or shall or may have or assert as of the date of this General Release
against any of them, including, without limiting the generality of the
foregoing, any claims, demands, rights, judgments, defenses, actions, charges or
causes of action related to employment or termination of employment or that
arise out of or relate in any way to the Age Discrimination in Employment Act of
1967 ("ADEA), as amended, the Older Workers Benefit Protection Act, Title VII of
the Civil Rights Act of 1964, as amended, and other Federal, state and local
laws relating to discrimination on the basis of age, sex or other protected
class, all claims under Federal, state or local laws for express or implied
breach of contract, wrongful discharge, defamation, intentional infliction of
emotional distress, and any related claims for attorneys' fees and costs;
provided, however, that nothing herein shall release any member of the Company
Group from any of its obligations under the Employment Agreement or any rights
to indemnification under any charter or by-laws (or similar documents) of any
member of the Company Group. The Executive further agrees that this General
Release and Covenant to Sue may be pleaded as a full defense to any action, suit
or other proceeding covered by the terms hereof which is or may be initiated,
prosecuted or maintained by the Executive, his heirs or assigns. Notwithstanding
the foregoing, the Executive understands and confirms that he is executing this
General Release and Covenant Not to Sue voluntarily and knowingly, and this
Covenant Not to Sue shall not affect the Executive's right to claim otherwise
under ADEA. In addition, the Executive shall not be precluded by this Covenant
from filing a charge with any relevant Federal, State or local administrative
agency, but the Executive agrees not to participate in, and agrees to waive his
rights with respect to any monetary or other financial relief arising from any
such administrative proceeding.

      The Company, on its own behalf and on behalf of its assigns, affiliates,
subsidiaries, parents, predecessors and successors, and its past and present
shareholders, employees, officers, directors, representatives and agents or any
of them, does hereby covenant not to sue or pursue

                                       9
<PAGE>
any litigation (or file any charge or otherwise correspond with any Federal,
state or local administrative agency) against, and waives, releases and
discharges Executive and his heirs, successors and assigns, descendants,
dependents, executors and administrators, past and present, and any of his
affiliates and each of them (collectively, the "Executive Releasees") from any
and all claims, demands, rights, judgments, defenses, actions, charges or causes
of action whatsoever, of any and every kind and description, whether known or
unknown, accrued or not accrued, that the Company or any of its subsidiaries
ever had, now has or shall or may have or assert as of the date of this General
Release against any of them, based on facts known to any executive officer of
the Company as of the date of this General Release and Covenant Not to Sue
(other than the Executive), including specifically, but not exclusively and
without limiting the generality of the foregoing, any and all claims, demands,
agreements, obligations and causes of action arising out of or in any way
connected with any transaction, occurrence, act or omission related to
Executive's employment by the Company or any of its subsidiaries or the
termination of that employment; provided, however, that nothing herein shall
release the Executive Releasees from any obligations arising out of or related
in any way to Executive's obligations under the Employment Agreement or any
agreement governing the terms of any stock options granted to the Executive or
impair the right or ability of the Company to enforce the terms thereof.

      In consideration for the amounts payable to the Executive under the
Employment Agreement, the Executive agrees to cooperate, at the expense of the
Company Group, with the members of the Company Group in connection with all
litigation relating to the activities of the Company and its affiliates during
the period of the Executive's employment with the Company including, without
limitation, being available to take depositions and to be a witness at trial,
help in preparation of any legal documentation and providing affidavits and any
advice or support that the Company or any affiliate thereof may request of the
Executive in connection with such claims.

      In furtherance of their respective agreements set forth above, each of the
Executive and the Company hereby expressly waives and relinquishes any and all
rights under any applicable statute, doctrine or principle of law restricting
the right of any person to release claims which such person does not know or
suspect to exist at the time of executing a release, which claims, if known, may
have materially affected such person's decision to give such a release. In
connection with such waiver and relinquishment, each of the Executive and the
Company acknowledges that it is aware that it may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which it now knows or believes to be true, with respect to the matters
released herein. Nevertheless, it is the intention of each of the Executive and
the Company to fully, finally and forever release all such matters, and all
claims relative thereto which now exist, may exist or theretofore have existed,
as specifically provided herein. The parties hereto acknowledge and agree that
this waiver shall be an essential and material term of the release contained
above. In addition, and not by way of limitation to the foregoing, each of the
Executive and the Company fully understands and knowingly and expressly waives
its rights and benefits under Section 1542 of the California Civil Code or under
any similar provision of law. Section 1542 of the California Civil Code states
that:

            "A general release does not extend to claims which the creditor does
            not know or suspect to exist in his favor at the time of

                                       10
<PAGE>
            executing the release, which if known by him must have materially
            affected his settlement with the debtor."

Nothing in this paragraph is intended to expand the scope of the release as
specified herein.

      This General Release shall be governed by and construed in accordance with
the laws of the State of California, applicable to agreements made and to be
performed entirely within such State.

      To the extent that the Executive is forty (40) years of age or older, this
paragraph shall apply. The Executive acknowledges that he has been offered a
period of time of at least twenty-one (21) days to consider whether to sign this
General Release, which he has waived, and the Company agrees that the Executive
may cancel this General Release at any time during the seven (7) days following
the date on which this General Release has been signed by all parties to this
General Release. In order to cancel or revoke this General Release, the
Executive must deliver to the General Counsel of the Company written notice
stating that the Executive is canceling or revoking this General Release. If
this General Release is timely cancelled or revoked, none of the provisions of
this General Release shall be effective or enforceable and the Company shall not
be obligated to make the payments to the Executive or to provide the Executive
with the other benefits described in this General Release and all contracts and
provisions modified, relinquished or rescinded hereunder shall be reinstated to
the extent in effect immediately prior hereto.

      Each party agrees that as part of the consideration for this General
Release, they will not make disparaging or derogatory remarks, whether oral or
written, about the other party or its representatives.

      Each of the Executive and the Company acknowledge that they have entered
into this General Release knowingly and willingly and has had ample opportunity
to consider the terms and provisions of this General Release.

      IN WITNESS WHEREOF, the parties hereto have caused this General Release to
be executed on this _____ day of __________________, 200__.

                                          ______________________________________
                                          Carl C. Gregory III

                                          MCM CAPITAL GROUP, INC.

                                          By:___________________________________
                                          Name:
                                          Title:

                                       11

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