APPLIED INNOVATION INC. [INCENTIVE/NONSTATUTORY] STOCK OPTION AGREEMENT UNDER THE 2001 STOCK INCENTIVE PLAN

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Exhibit 10.1

APPLIED INNOVATION INC.

[INCENTIVE/NONSTATUTORY] STOCK OPTION AGREEMENT

UNDER THE

2001 STOCK INCENTIVE PLAN

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Applied Innovation Inc. (the "Company") hereby grants, effective this

____ day of ______, 20__ (the "Effective Date") to (the "Optionee") an option to

purchase shares of its common stock, $.01 par value (the "Option Shares"), at a

price of $________ per share pursuant to the Company's 2001 Stock Incentive Plan

(the "Plan"), subject to the following:

1. RELATIONSHIP TO THE PLAN. This option is granted pursuant to the

Plan, and is in all respects subject to the terms, provisions and definitions of

the Plan and any amendments thereto. The Optionee acknowledges receipt of a copy

of the Plan and represents that he or she is familiar with the terms and

conditions thereof. The Optionee accepts this option subject to all the terms

and provisions of the Plan (including without limitation provisions relating to

nontransferability, exercise of the option, sale of the option shares,

termination of the option, adjustment of the number of shares subject to the

option, and the exercise price of the option). The Optionee further agrees that

all decisions and interpretations made by the Stock Option Committee (the

"Committee"), as established under the Plan, and as from time to time

constituted, are final, binding, and conclusive upon the Optionee and his or her

heirs. This option [is/is not] an Incentive Stock Option under the Plan.

2. TIME OF EXERCISE. This option may be exercised, from time to time,

in full or in part, by the Optionee to the extent the option is vested based

upon [the number of full years the Optionee is an employee of the Company after

the Effective Date] (the "Vested Percentage") and remains exercisable (subject

to the provisions herein and the Plan) until it has been exercised as to all of

the Option Shares or the[ _____ anniversary of the Effective Date], whichever

occurs first. The Optionee is entitled to exercise this option to the extent of

the percentage of, and not to exceed in the aggregate, the maximum number of the

Option Shares, based upon the Vested Percentage, from time to time, as

determined in accordance with the following schedule:

[Years of Employment] Total

After the Effective Date Vested Percentage

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Notwithstanding the foregoing, this option may not be exercised unless (i) the

Option Shares are registered under the Securities Act of 1933, as amended, and

are registered or qualified under applicable state securities or "blue sky"

laws, or (ii) the Company has received an opinion of counsel to the Company to

the effect that the option may be exercised and Option Shares may be issued by

the Company pursuant thereto without such registration or qualification. If this

option is not otherwise exercisable by reason of the foregoing sentence, the

Company will take reasonable steps to comply with applicable state and federal

securities laws in connection with such issuance.

[Alternate Section 2 for non-employee director grants:

2. TIME OF EXERCISE. This option is vested at the date of grant but may

not be exercised prior to the one year anniversary of the Effective Date. It may

thereafter be exercised from time to time in full or in part and shall remain

exercisable (subject to the provisions of the Plan) until it has been exercised

as to all shares subject hereto or the [ _____ anniversary of the Effective

Date], whichever occurs first. Notwit