Vice President of Human Resources Employment Agreement

APPLIED INNOVATION INC.


EMPLOYMENT AGREEMENT


This Agreement is made as of this 15th day of August, 2001, by and between KATHY BARRICK 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 Vice President of Human Resources, reporting to the President and Chief Executive Officer of the Company. You shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons employed in similar executive capacities.


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(b) RESTRICTED EMPLOYMENT. While employed by the Company, you shall devote your best efforts to the business of the Company and shall not engage in any outside employment or consulting work without first securing the approval of the Company's Board of Directors. Furthermore, so long as you are employed under this Agreement, you agree to devote your full time and efforts exclusively on behalf of the Company and to competently, diligently, and effectively discharge your duties hereunder. You shall not be prohibited from engaging in such personal, charitable, or other nonemployment activities that do not interfere with your full time employment hereunder and which do not violate the other provisions of this Agreement. You further agree to comply fully with all policies and practices of the Company as are from time to time in effect.


3. COMPENSATION.


(a) Your compensation will be at an annual base rate of $128,000 through December 31, 2001 ("Basic Salary"), payable in accordance with the normal payroll practices of the Company. Your base salary may be increased from time to time by action of the Board of Directors of the Company. You will also be eligible for a cash bonus under a bonus plan which is determined annually by the Board of Directors of the Company.


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


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


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


5. RESERVED.


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6. CONFIDENTIAL INFORMATION.


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


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


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


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


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


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


7. INVENTIONS.


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


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


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


8. NONCOMPETITION AND NONSOLICITATION.


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


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


(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


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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 you ...