Document:

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                                                                    Exhibit 10.7

                     SCHEDULE OF INDEMNIFICATION AGREEMENTS

The Company has entered into indemnification agreements with the following
individuals:

         -  Gerard B. Moersdorf, Jr.
         -  Robert L. Smialek
         -  James H. Blough
         -  Thomas W. Huseby
         -  William H. Largent
         -  Curtis A. Loveland
         -  Gerard B. Moersdorf, Sr.
         -  Richard W. Oliver
         -  Alexander B. Trevor<PAGE>   1

                                                                   Exhibit 10.10

                             APPLIED INNOVATION INC.

                              EMPLOYMENT AGREEMENT
                              --------------------

         This Agreement is made as of this 19th day of October, 2000, by and
between GERARD B. MOERSDORF, JR. 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.

                  (a) POSITION. You will be employed as Chairman of the Board
and Founder of the Company, reporting to the Board of Directors of the Company.
You shall perform the duties, undertake the responsibilities and exercise the
authority customarily performed, undertaken and

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exercised by persons employed in similar executive capacities. You will be
elected to the Company's Board of Directors.

         (b) RESTRICTED EMPLOYMENT. While employed by the Company, you shall
devote your best efforts to the business of the Company and shall not engage in
any outside employment or consulting work without first securing the approval of
the Company's Board of Directors. Furthermore, so long as you are employed under
this Agreement, you agree to devote your full time and efforts exclusively on
behalf of the Company and to competently, diligently, and effectively discharge
your duties hereunder. 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
$250,000 through December 31, 2000 ("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, all outstanding stock
options issued to you shall become 100% vested and thereafter exercisable in
accordance with such governing stock option agreements and plans.

                  (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.

         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 written or printed words,
symbols, pictures, numbers or formulae. As used throughout this

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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:

                           (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;

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                           (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;

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

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                           (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.

                  (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 12 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

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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), or if
you terminate your employment for any reason during the 13th month following a
Change in Control, 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 2.0 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) All outstanding stock options and restricted
                  stock awards issued to you shall become 100% vested and
                  thereafter 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) 24 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").

                           (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

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                  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.

                            (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

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                  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 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

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                           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

                                    (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

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                  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.

                  (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

                                      -11-
<PAGE>   12

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) 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.

         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.

                                      -12-
<PAGE>   13

         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/ Gerard B. Moersdorf, Jr.
                                       -----------------------------------------
                                       Gerard B. Moersdorf, Jr.

                                      -13-

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