Document:

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                                                                    EXHIBIT 10.1
                                CREDIT AGREEMENT

         This Credit Agreement (the "Agreement") is entered into as of the 31st
day of May, 2002, by and between HEALTH CARE REIT, INC., a Delaware corporation
("Borrower") and FIFTH THIRD BANK, an Ohio banking corporation ("Bank").

Section 1.        DEFINITIONS.

         All financial terms used in the Agreement but not defined in the Loan
Documents have the meanings given to them by generally accepted accounting
principles ("GAAP"). All other undefined terms have the meanings given to them
in the Ohio Uniform Commercial Code.

Section 2.        LOAN.

         2.01. REVOLVING CREDIT LOAN. (a) Subject to the terms and conditions
hereof, Bank hereby extends to Borrower a line of credit facility (the
"Facility") (the "Loan") under which Bank may make loans (the Revolving Loans")
to Borrower at Borrower's request from time to time during the term of this
Agreement. Bank will have discretion at all times as to whether or not to make
any Revolving Loan, if there is any Event of Default. Borrower may borrow,
prepay, and reborrow under the Facility, provided that the principal amount of
all Revolving Loans outstanding at any one time under the Facility will not
exceed the foregoing limits or those limits specified in the Revolving Note. If
the amount of the Revolving Loans outstanding at any time under the Facility
exceeds the limits set forth above or in the Revolving Note, Borrower will
immediately pay the amount of such excess to Bank. Bank has agreed to make this
loan upon the terms and subject to the conditions of this Agreement and all
documents executed pursuant to or in connection with this Agreement (all such
documents and this Agreement will be called ("Loan Documents"), provided the
loan is secured as set forth in this Agreement.

         (b) Borrower may request a Revolving Loan by written or telephone
notice to Bank. Bank will make a Revolving Loan by wire transfer to any account
designated by Borrower. Loan proceeds may be used for purposes not prohibited
herein.

         (c) On the date hereof, Borrower will duly issue and deliver to Bank a
Revolving Note (the "Revolving Note"), in the principal amount of TWENTY FIVE
MILLION AND 00/100 DOLLARS ($25,000,000.00) bearing interest as specified in
Section 2.02 herein.

         (d) The term of the Facility will expire on MAY 31, 2003 and the
Revolving Note will become payable in full on that date.

         2.03 INTEREST ON REVOLVING CREDIT LOAN. The principal amounts
outstanding hereunder shall bear interest commencing on the date of the first
advance hereunder at the rate or rates per annum set forth below which shall be
designated by Borrower as more fully set forth herein. At any time, from time to
time, during the term of this note, so long as no Event of Default exists and so
long as such Borrowings are not then subject to an Interest Rate Election,
Borrower may notify Bank that it wishes to exercise its right to adjust the rate
of interest accruing on some or all amounts of principal outstanding under this
Note (in a minimum amount of $500,000.00) to one of the rates set forth below,
however, once the rate of interest accruing against any amounts outstanding
hereunder is adjusted to one of the following interest rates during an Interest
Period, Borrower may not elect to adjust such interest rate to a different
interest rate until the expiration of such Interest Period:

     (a)  LIBOR RATE. Upon telephonic notice by Borrower to Bank, Borrower may
          elect to have all or any portion of the Borrowings in a minimum amount
          of $500,000.00 per election bear interest at the per annum rate equal
          to two hundred basis points (200) in excess of the LIBOR Rate (a
          "LIBOR Rate Election"). Such notice shall inform Bank of the amount of
          Borrowings to be subject to the LIBOR Rate Election, the LIBOR
          interest period and the effective date of the LIBOR interest period.

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          Borrower's right to make a LIBOR Rate Election shall be terminated
          automatically if Bank, by telephonic notice, shall notify Borrower
          that LIBOR deposits with a maturity corresponding to the maturity of
          the LIBOR Interest Period, in an amount equal to the Borrowings to be
          subject to the LIBOR Rate Election are not readily available in the
          London Inter-Bank Offered Rate Market, or that, by reason of
          circumstances affecting such Market, adequate and reasonable methods
          do not exist for ascertaining the interest rate applicable to such
          deposits for the proposed LIBOR Interest Period.

          In addition, notwithstanding anything herein contained to the
          contrary, if, prior to or during any period with respect to which a
          LIBOR Rate is in effect, any change in any law, regulation or official
          directive, or in the interpretation thereof, by any governmental body
          charged with the administration thereof, shall make it unlawful for
          the Bank to find or maintain its funding in Eurodollars of any portion
          of the Borrowings subject to the LIBOR Rate or otherwise to give
          effect to Bank's obligations as contemplated hereby, (i) Bank may by
          written notice to Borrower, declare Bank's obligations in respect of
          the LIBOR Rate to be terminated forthwith, and (ii) the LIBOR Rate
          with respect to Bank shall forthwith cease to be in effect, and
          interest shall from and after such date be calculated at Prime Rate,
          unless Borrower shall thereafter elect one or more other Interest Rate
          Election.

     (b)  PRIME RATE. Upon telephonic notice by Borrower to Bank prior to or on
          the Effective Date, Borrower may elect to have all or part of the
          Borrowings (provided such Borrowings are not then subject to an
          Interest Rate Election) bear interest at the per annum rate equal to
          the Prime Rate ("Prime Rate Election"). Such telephonic notice shall
          inform Bank of the amount of the Borrowings to be subject to the Prime
          Rate Election, the Prime Rate Interest Period and the Effective Date
          for the Prime Rate Interest Period.

          If at any time during the term hereof (i) the outstanding principal
          hereunder is less than $500,000.00, or (ii) Borrower fails to
          designate one of the interest rates set forth above or at any time
          after Borrower has elected to adjust the interest rate accruing on any
          principal outstanding hereunder to a rate other than the fixed rate
          set forth above, at the expiration of any Interest Period, if Borrower
          has not made another Interest Rate Election hereunder, then in either
          such event, such outstanding amounts of principal will accrue interest
          at a rate of interest equal to the Prime Rate.

As used herein, the following terms will have the meanings set forth below:

     (a)  "Effective Date" means the date on which a LIBOR Rate Election or
          Prime Rate Election will begin.
     (b)  "Interest Rate Election" means a LIBOR Rate Election, or a Prime Rate
          Election or any one or more of the foregoing.
     (c)  "LIBOR Interest Period" means, with respect to a Borrowing elected to
          accrue interest at the LIBOR Rate, a period of 90 days commencing on a
          business day selected by the Borrower pursuant to this Note. Such
          LIBOR Interest Period shall end on the day in the succeeding calendar
          month which corresponds numerically to the beginning day of such LIBOR
          Interest Period, provided, however, that if there is no such
          numerically corresponding day in such succeeding month, such LIBOR
          Interest Period shall end on the last business day of such succeeding
          month. If a LIBOR Interest Period would otherwise end on a day which
          is not a business day, such LIBOR Interest Period shall end on the
          next succeeding business day, provided, however, that if said next
          succeeding business day falls in a new month, such LIBOR Interest
          Period shall end on the immediately preceding business day.

          2.03 STATEMENTS. After the end of each quarter, Bank will render to
               Borrower a statement on each of Borrower's loan accounts with
               Bank hereunder, which statement will be considered correct and
               will be conclusively binding upon Borrower unless Borrower
               notifies Bank in writing of any discrepancy within thirty (30)
               days from the date of such statement.

Section 3.        REPRESENTATIONS AND WARRANTIES.

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         Borrower hereby warrants and represents to Bank the following:

         3.01 ORGANIZATION AND QUALIFICATION. Borrower is duly organized and
validly existing under the laws of its state of organization and has the power
to own its assets and to transact the business in which it is presently engaged
and in which it proposes to be engaged. Borrower is in good standing in its
state of organization and in each state in which it is qualified to do business
unless the failure to so qualify would have a material adverse effect on
Borrower.

         3.02 DUE AUTHORIZATION. The execution, delivery and performance by
Borrower of this Agreement, the Loan and any other Loan Documents have been duly
authorized by all necessary corporate action, and will not contravene any law or
any governmental rule or order binding on Borrower, or the Articles of
Incorporation, Code of Regulations or Bylaws of Borrower, nor violate any
agreement or instrument by which Borrower is bound nor result in the creation of
a lien on any assets of Borrower except the lien to Bank granted herein.
Borrower has duly executed and delivered this Agreement and the other Loan
Documents and they are valid and binding obligations of Borrower enforceable
according to their respective terms except as limited by equitable principles
and by bankruptcy, insolvency or similar laws affecting the rights of creditors
generally. No notice to or consent by any governmental body is needed in
connection with this transaction.

         3.03 LITIGATION. There is no litigation, nor are there any proceedings
by or before any public body, agency or authority presently pending or
threatened against Borrower or any other person, the outcome of which might
materially and adversely affect the continued operations or assets of Borrower,
or the transactions contemplated by this Agreement.

         3.04 BUSINESS. Borrower is not a party to or subject to any agreement
or restriction which in the opinion of Borrower's management is so unusual or
burdensome that it might have a material adverse effect on Borrower's business,
properties or prospects.

         3.05 LAWS AND TAXES. To the best of Borrower's knowledge, Borrower is
in compliance with all laws, regulations, rulings, orders, injunctions, decrees,
conditions or other requirements applicable to or imposed upon Borrower by any
law or by any governmental authority, court or agency. Borrower has filed all
required tax returns and reports that are now required to be filed by it in
connection with any federal, state and local tax, duty or charge levied,
assessed or imposed upon Borrower or its assets, including unemployment, social
security, and real estate taxes. Borrower has paid all taxes which are now due
and payable. No taxing authority has asserted or assessed any additional tax
liabilities against Borrower which are outstanding on the date of this
Agreement, and Borrower has filed timely requests for extensions to file its
2000 tax returns.

         3.06 FINANCIAL CONDITION. All financial information relating to
Borrower which has been or may hereafter be delivered to Bank is true and
correct and has been prepared in accordance with generally accepted accounting
principles consistently applied. Borrower has no material obligations or
liabilities of any kind not disclosed in that financial information, and there
has been no material adverse change in the financial condition of Borrower nor
has Borrower suffered any damage, destruction or loss which has adversely
affected its business or assets since the submission of the most recent
financial information to Bank.

         3.07 TITLE TO PROPERTIES. Borrower has good and marketable title in fee
simple to, or valid leasehold interests in, all real property necessary or used
in the ordinary course of its business, except for such defects in title as
could not individually or in the aggregate, have a material adverse effect on
Borrower.

         3.08 DEFAULTS. Borrower is in compliance with all material agreements
applicable to it and to the best of Borrower's knowledge, there does not now
exist any default or violation by Borrower of or under any of the terms,
conditions or obligations of (a) its Articles of Incorporation or Bylaws, or (b)
any indenture, mortgage, deed of trust, franchise, permit, contract, agreement
or other instrument to which Borrower is a party or by which it is bound, and
the consummation of the transactions contemplated by this Agreement will not
result in such default or violation, which default could have a material adverse
effect on Borrower.

         3.09 SUBSIDIARIES. If Borrower has any additional subsidiaries at any
time during the term of this Agreement, the term "Borrower" in each
representation, warranty and covenant herein will mean "Borrower and each
subsidiary individually

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and in the aggregate," and Borrower will cause each subsidiary to be in
compliance therewith.

         3.10 ERISA. To the best of Borrower's knowledge, Borrower is in
compliance with all of its obligations to contribute to any employee benefit
plan or pension plan regulated by the Federal Employee Retirement Income
Security Act of 1974 ("ERISA"). Borrower has not received notice informing it
that it is not in full compliance with any of the requirements of ERISA, and the
regulations promulgated thereunder and, there exists no event described in
Section 4043(3) thereof ("Reportable Event").

         3.11 ENVIRONMENTAL LAWS. To the best of Borrower's knowledge, (a)
Borrower has obtained all permits, licenses and other authorizations which are
required under environmental laws and Borrower is in compliance in all material
respects with all terms and conditions of the required permits, licenses and
authorizations, and is also in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
environmental laws, which failure to obtain or noncompliance could have a
material adverse effect on Borrower.

              (b) To the best of Borrower's knowledge, Borrower is not aware of,
and has not received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent compliance or continued compliance, in any material
respect, with Environmental Laws, or may give rise to any material common law or
legal liability, or otherwise from the basis of any material claim, action,
demand, suit, proceeding, hearing, study, or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste, which could have a material adverse
effect on Borrower.

              (c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or to the best of Borrower's knowledge,
threatened against Borrower, relating in any way to environmental laws, which
could have a material adverse effect on Borrower.

         3.12 MARGIN STOCK. No part of the Facility will be used to purchase or
carry, or to reduce or retire or refinance credit incurred to purchase or carry,
any margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Board of Governors of the Federal Reserve System) or to extend
credit to others for the purpose of purchasing or carrying any margin stock. If
requested by Bank, Borrower will furnish to Bank statements in conformity with
the requirements of Federal Reserve Form U-1.

         3.13 LICENSES, ETC. Borrower has obtained any and all licenses,
permits, franchises, governmental authorizations, patents, trademarks,
copyrights or other rights necessary for the ownership of its properties and the
advantageous conduct of its business, the failure of which could have a material
adverse effect on Borrower. Borrower possesses adequate licenses, patents,
patent applications, copyrights, trademarks, trademark applications, and trade
names to continue to conduct its business as heretofore conducted by it, without
any conflict with the rights of any other person or entity, which the lack
thereof could have a material adverse effect on Borrower. All of the foregoing
are in full force and effect and none of the foregoing are known to conflict
with the rights of others, which conflict could have a material adverse effect
on Borrower.

Section 4.        AFFIRMATIVE COVENANTS.

         4.01 AFFIRMATIVE COVENANTS. Borrower shall comply with the Affirmative
Covenants set forth in either (a) Article 6 of the Loan Agreement by and among
Health Care REIT, Inc., the Bank signatory thereto, Key Corporate Capital Inc.
(f/k/a Key Bank National Association) and Fleet National Bank (formerly Fleet
Bank, NA), dated March 28, 1997, as amended by Amendment No. 1 dated October 1,
1998, as further amended by Amendment No.2 dated January 29, 2001, and as such
agreement may be amended (the "Key/Fleet Agreement"), or (b) a replacement loan
agreement.

         4.02 CLOSING COSTS. Borrower shall pay to Bank its fees, costs and
expenses (including, without limitation, reasonable attorneys' fees, court
costs, litigation and other expense) (collectively, "Costs") incurred or paid by
Bank in negotiating, documenting, administering, and enforcing the Loan
Documents and Bank's security interest in the Collateral or

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any other property pledged to secure the Facility. The costs will be due upon
demand by Bank. If Borrower fails to pay the Costs when upon such demand, Bank
is entitled to disburse such sums as an advance under the Facility, thereafter
the Costs will bear interest from the date incurred or disbursed at the highest
rate set forth in the Note. Borrower shall be responsible for all out of pocket
expenses incurred by Borrower and Bank.

         4.03 OTHER AMOUNTS DEEMED LOAN. If Borrower fails to pay any tax,
assessment, governmental charge or levy or to maintain insurance within the time
permitted by this Agreement, or to discharge any lien prohibited hereby, or to
comply with any other obligation, Bank may, but shall not be obligated to, pay,
satisfy, discharge or bond the same for the account of Borrower, and to the
extent permitted by law and at the option of Bank, all monies so paid by Bank on
behalf of Borrower will be deemed Revolving Loans and Obligations.

Section 5.        EVENTS OF DEFAULT AND REMEDIES.

         5.01 EVENTS OF DEFAULT. (a) If any one or more of the following events
("Events of Default") shall occur and be continuing, the Loan shall terminate
and the entire unpaid balance of the principal of and interest on the Loan
outstanding and all other obligations and indebtedness of the Borrower to the
Bank arising hereunder and under the Loan Documents shall immediately become due
and payable upon written notice to that effect given to the Borrower by the Bank
(except in the case of the occurrence of any Event of Default described in
Section 5.01(c), (d) or (f) no such notice shall be required), without
presentment or demand for payment, notice of non-payment, protest or further
notice or demand of any kind, all of which are expressly waived by the Borrower.

         (b)      Borrower defaults in the payment of any principal or interest
                  on any Obligation when due and payable, by acceleration or
                  otherwise; or

         (c)      a court enters a decree or order for relief with respect to
                  Borrower in an involuntary case under any applicable
                  bankruptcy, insolvency or other similar law then in effect, or
                  appoints a receiver, liquidator, assignee, custodian, trustee,
                  sequestrator (or other similar official) of Borrower or for
                  any substantial part of its property, or orders the wind-up or
                  liquidation of its affairs; or a petition initiating an
                  involuntary case under any such bankruptcy, insolvency or
                  similar law is filed and is pending for thirty (30) days
                  without dismissal; or

         (d)      Borrower commences a voluntary case under any applicable
                  bankruptcy, insolvency or other similar law in effect, or
                  makes any general assignment for the benefit of creditors, or
                  fails generally to pay its debts as such debts become due, or
                  takes corporate action in furtherance of any of the foregoing;
                  or

         (e)      final judgment of the payment of money in excess of
                  $1,500,000.00 is rendered against Borrower and remains
                  undischarged for 10 days during which execution is not
                  effectively stayed; or

         (f)      the dissolution of Borrower; or,

         (g)      Borrower shall fail to comply with the covenants as set forth
                  in either (a) Article 6 of the Key/Fleet Agreement, or (b) a
                  replacement agreement.

         5.02 REMEDIES. If any Event of Default will occur, Bank may cease
advancing money hereunder, and/or declare all Obligations to be due and payable
forthwith, whereupon they will forthwith become due and payable without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrower.

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         5.03 SETOFF. If any Event of Default will occur, Bank is authorized,
without notice to Borrower, to offset and apply to all or any part of the
Obligations all moneys, credits and other property of any nature whatsoever of
Borrower now or at any time hereafter in the possession of, in transit to or
from, under the control or custody of, or on deposit with (whether held by
Borrower individually or jointly with another party), Bank, including but not
limited to certificates of deposit.

         5.04 DEFAULT RATE. After the occurrence of an Event of Default, the
Bank may increase the interest rate on any loan in accordance with the
provisions of any note evidencing the loan. This provision does not constitute a
waiver of any Events of Default or an agreement by Bank to permit any late
payments whatsoever.

         5.05 LATE PAYMENT PENALTY. If any payment is not paid when due (whether
by acceleration or otherwise), Borrower agrees to pay to Bank a late payment fee
equal to five percent (5%) of the payment amount, with a minimum fee of $20.00.

         5.06 NO REMEDY EXCLUSIVE. No remedy set forth herein is exclusive of
any other available remedy or remedies, but each is cumulative and in addition
to every other remedy available under this Agreement, the Loan Documents or as
maybe now or hereafter existing at law, in equity or by statute. Borrower waives
any requirement of marshalling of assets which may be secured by any of the Loan
Documents.

         5.07 EFFECT OF TERMINATION. The termination of this Agreement will not
affect any rights of either party or any obligation of either party to the
other, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights created or Obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated. The security interest,
lien and rights granted to Bank hereunder and under the Loan Documents will
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that no Loans are outstanding to Borrower, until all of
the Obligations, have been paid in full.

Section 6.        CONDITIONS PRECEDENT.

         6.01 CONDITIONS TO LOAN. Bank will have no obligation to make or
advance any Loan until Borrower has delivered to Bank at or before the closing
date, in form and substance satisfactory to Bank:

                  (a)      An executed Revolving Note of even date herewith.

                  (b)      A Corporate Resolution of Borrower.

                  (c)      An executed Credit Agreement.

                  (d)      Such additional information and materials as Bank may
                           reasonably request.

         6.02     CONDITIONS TO EACH LOAN.  On the date of the Revolving Loan,
the following statements will be true:

                  (a) All of the representations and warranties contained herein
and in the Loan Documents will be correct in all material respects as though
made on such date.

                  (b) No event will have occurred and be continuing, or would
result from such Loan, which constitutes an Event of Default, or would
constitute an Event of Default but for the requirement that notice be given or
lapse of time or both.

                  (c) The aggregate unpaid principal amount of the Revolving
Loans after giving effect to such Revolving Loans will not violate the lending
limits set forth in Section 2.01 of this Agreement.

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                  The acceptance by Borrower of the proceeds of each Loan will
be deemed to constitute a representation and warranty by Borrower that the
conditions in Section 7.02 of this Agreement, other than those that have been
waived in writing by Bank, have been satisfied.

Section 7.        MISCELLANEOUS PROVISIONS.

         7.01 MISCELLANEOUS. This Agreement, the exhibits and the other Loan
Documents are the complete agreement of the parties hereto and supersede all
previous understandings relating to the subject matter hereof. This Agreement
may be amended only in writing signed by the party against whom enforcement of
this amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, the remainder of this Agreement will not
be affected thereby. This Agreement is and is intended to be a continuing
agreement and will remain in full force and effect until the Loan is finally and
irrevocably paid in full.

         7.02 WAIVER BY BORROWER. Borrower waives notice of non-payment, demand,
presentment, protest or notice of protest of any accounts, and all other notices
(except those notices specifically provided for in this Agreement or other Loan
Documents); consents to any renewals or extensions of time of payment thereof;
and generally waives any all suretyship defenses and defenses in the nature
thereof.

         7.03 BINDING EFFECT. This Agreement will be binding upon and inure to
the benefit of the respective legal representatives, successors and assigns of
the parties hereto; however, Borrower may not assign any of its rights or
delegate any of its obligations hereunder. Bank (and any subsequent assignee)
may transfer and assign this Agreement or may assign partial interests or
participation in the Loans to other persons. Bank may disclose to all
prospective and actual assignees and participants all financial, business and
other information about Borrower which Bank may possess at any time.

         7.04 SUBSIDIARIES. If Borrower has any Subsidiaries at any time during
the term of this Agreement, the term "Borrower" in each representation, warranty
and covenant herein will mean "Borrower" and each Subsidiary individually and in
the aggregate, and Borrower will cause each Subsidiary to be in compliance
therewith.

         7.05 SURVIVAL. All representations, warranties, covenants and
agreements made by Borrower herein and in the Loan Documents will survive the
execution and delivery of this Agreement, the Loan Documents and the issuance of
the Note.

         7.06 DELAY OR OMISSION. No delay or omission on the part of Bank in
exercising any right, remedy or power arising from any Event of Default will
impair any such right, remedy or power; or any other right, remedy or power to
be considered a waiver; or any right, remedy or power or any Event of Default
nor will the action or omission to act by Bank upon the occurrence of any Event
of Default impair any right, remedy or power arising as a result thereof or
affect any subsequent Event of Default of the same or different nature.

         7.07 NOTICES. Any notices under or pursuant to this Agreement will be
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, addressed as follows:

               To Borrower:      Health Care REIT, Inc.
                                 One Seagate, Suite 1950
                                 Toledo, Ohio 43603
                                 Attention: Michael A. Crabtree, Treasurer

               To Bank:          Fifth Third Bank
                                 606 Madison Avenue
                                 Toledo, Ohio, 43604
                                 Attention: Dirk VanHeyst, Senior Vice President

         Either party may change such address by sending notice of the change to
the other party.

         7.08 NO PARTNERSHIP. Nothing contained herein or in any of the Loan
Documents is intended to create or will be

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construed to create any relationship between Bank and Borrower other than as
expressly set forth herein or therein and will not create any joint venture,
partnership or other relationship.

         7.09 INDEMNIFICATION. If after receipt of any payment of all or part of
the Obligations, Bank is for any reason compelled to surrender such payment to
any person or entity, because such payment is determined to be void or voidable
as a preference, impermissible setoff, or diversion of trust funds, or for any
other reason, this Agreement will continue in full force and effect and Borrower
will be liable to, and will indemnify, save and hold Bank, its officers,
directors, attorneys, and employees harmless of and from the amount of such
payment surrendered. The provisions of this Section will be and remain effective
notwithstanding any contrary action which may have been taken by Bank in
reliance on such payment, and any such contrary action so taken will be without
prejudice to Bank's rights under this Agreement and will be deemed to have been
conditioned upon such payment becoming final, indefeasible and irrevocable. In
addition, Borrower will indemnify, defend, save and hold Bank, its officers,
directors, attorneys, and employees harmless of, from and against all claims,
demands, liabilities, judgments, losses, damages, costs and expenses, joint or
several (including all accounting fees and attorneys' fees reasonably incurred),
that Bank or any such indemnified party may incur arising out of this Agreement,
any of the Loan Documents or any act taken by Bank hereunder except for the
willful misconduct or gross negligence of such indemnified party. The provisions
of this Section will survive the termination of this Agreement.

         7.10 GOVERNING LAW; JURISDICTION. This Agreement, the Note and the
other Loan Documents, will be governed by the domestic laws of the State of
Ohio. Borrower agrees that the state and federal courts in Lucas County, Ohio,
or any other court in a jurisdiction in which Borrower does business and in
which Bank initiates proceedings have exclusive jurisdiction over all matters
arising out of this Agreement, and that service of process in any such
proceeding will be effective if mailed to Borrower at its address described in
the Notices section of this Agreement. BANK AND BORROWER HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY.

         IN WITNESS WHEREOF, Borrower and Bank have executed this Agreement by
their duly authorized officers as of the date first above written.

                             BORROWER:

                             HEALTH CARE REIT, INC.,
                             A DELAWARE CORPORATION

                             By:
                                     -------------------------------------------
                                     George L. Chapman, Chairman of the Board

                             FIFTH THIRD BANK,
                             AN OHIO BANKING CORPORATION

                             By:
                                     -------------------------------------------
                             Dirk VanHeyst, Senior Vice President

                                       8<PAGE>
                                                                    Exhibit 10.1

                             APPLIED INNOVATION INC.

                              EMPLOYMENT AGREEMENT

      This Agreement is made as of this 20th day of May, 2002, by and between
JOHN F. PETRO and APPLIED INNOVATION INC., a Delaware corporation with its
principal office at 5800 Innovation Drive, Dublin, Ohio 43016, its subsidiaries,
successors and assigns (the "Company").

                                    RECITALS

      A. The Company is engaged in the business of developing, manufacturing,
and marketing data communications and data transmission equipment, software, and
services to telephone companies, interexchange telephone carriers, cable
television companies, and electric utilities, for alarm data communications,
network mediation and management, interoperability of networks, and network
switching and routing, and develops and uses valuable technical and nontechnical
trade secrets and other confidential information which it desires to protect.

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

      C. The Company considers your continued services to be in the best
interest of the Company and desires, through this Agreement, to assure your
continued services on behalf of the Company on an objective and impartial basis
and without distraction or conflict of interest in the event of an attempt to
obtain control of the Company.

      D. You are willing to become employed by and to remain in the employ of
the Company on the terms set forth in this agreement.

                                    AGREEMENT

      NOW, THEREFORE, the parties agree as follows:

      1. CONSIDERATION. As consideration for your entering into this Agreement
and your willingness to remain bound by its terms, the Company shall employ you
and provide you with access to certain Confidential Information as defined in
this Agreement and other valuable consideration as provided for throughout this
Agreement, including in Sections 3 and 4 of this Agreement.

      2. EMPLOYMENT.

            (a) POSITION. You will be employed as Vice President of Engineering,
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.

                                      - 1 -
<PAGE>
            (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 $160,000
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. 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.

                                      - 2 -
<PAGE>
      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

                                      - 3 -
<PAGE>
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:

                  (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

                                      - 4 -
<PAGE>
      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;

                                      - 5 -
<PAGE>
                  (iv) Illegal conduct or gross misconduct that is willful and
      results in material and demonstrable damage to the business or reputation
      of the Company;

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

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

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

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

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

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

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

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

            (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

                                      - 6 -
<PAGE>
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 years fiscal years (or
            if you have been employed for a shorter period of time over such
            period during which you performed services for the Company), and
            shall not include the value of any stock options granted or
            exercised, restricted stock awards granted or vested, contributions
            to 401(k) or other qualified plans, medical, dental, or other
            insurance benefits, or other fringe benefits.

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

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

                                      - 7 -
<PAGE>
                  (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.

                  (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

                                      - 8 -
<PAGE>
            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
                  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

                                      - 9 -
<PAGE>
                  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

                        (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.

                                     - 10 -
<PAGE>
                  (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.

            (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.

                                     - 11 -
<PAGE>
            (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.

      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,

                                     - 12 -
<PAGE>
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/ Kathy L. Brooks
                                              ----------------------------------
                                              Kathy L. Brooks,
                                              Vice President, Human Resources

                                          EXECUTIVE:

                                              /s/ John F. Petro
                                          --------------------------------------
                                                  John F. Petro

                                     - 13 -

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