<SUBMISSION>
<ACCESSION-NUMBER>0000950134-04-013554
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20040907
<ITEMS>1.01
<ITEMS>9.01
<FILING-DATE>20040913
<DATE-OF-FILING-DATE-CHANGE>20040913
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>DIGI INTERNATIONAL INC
<CIK>0000854775
<ASSIGNED-SIC>3576
<IRS-NUMBER>411532464
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-17972
<FILM-NUMBER>041027704
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>11001 BREN ROAD EAST
<CITY>MINNETONKA
<STATE>MN
<ZIP>55343
<PHONE>6129123444
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>11001 BREN ROAD EAST
<CITY>MINNETONKA
<STATE>MN
<ZIP>55343
</MAIL-ADDRESS>
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<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>c88151e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

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<P align="center" style="font-size: 14pt">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION

<DIV align="center" style="font-size: 12pt">Washington, D.C. 20549
</DIV>


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<P align="center" style="font-size: 18pt"><B>FORM 8-K</B>


<P align="center" style="font-size: 12pt"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B><BR>
&nbsp;


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<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">Date of Report (Date of earliest event reported)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;September&nbsp;7, 2004</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>


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</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt">&nbsp;</DIV>


<P align="center" style="font-size: 18pt"><B>Digi International Inc.</B>

<DIV align="center" style="font-size: 10pt"><HR size="1" noshade></DIV>


<DIV align="center" style="font-size: 10pt">(Exact name of Registrant as specified in its charter)</DIV>


<DIV align="center" style="font-size: 10pt">&nbsp;</DIV>


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    <TD width="30%">&nbsp;</TD>
</TR>

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<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>0-17972</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>41-1532464</B></TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="5" valign="top" align="left"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction<BR>
of incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer<BR>
Identification No.)</TD>
</TR>

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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

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    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>

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<TR valign="bottom">
    <TD align="center" valign="top"><B>11001 Bren Road East<BR>
Minnetonka, Minnesota</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;<B>55343</B>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>

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</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

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    <TD width="1%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">Registrant&#146;s telephone number, including area code
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(952)&nbsp;912-3444</B></TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>


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</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (<I>see </I>General Instruction A.2. below):


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Written communications pursuant to Rule&nbsp;425 under the
Securities Act (17 CFR 230.425)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Soliciting material pursuant to Rule&nbsp;14a-12 under the
Exchange Act (17 CFR 240.14a-12)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Pre-commencement communications pursuant to Rule&nbsp;14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Pre-commencement communications pursuant to Rule&nbsp;13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))


<P>
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<P align="center" style="font-size: 10pt">&nbsp;
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<DIV style="font-family: 'Times New Roman',Times,serif">








<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
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	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">Item&nbsp;1.01. Entry into a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">Item&nbsp;9.01. Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="c88151exv10wxay.htm">Form of Notice of Grant</A></TD></TR>
</TABLE>
</CENTER>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link1 "Item&nbsp;1.01. Entry into a Material Definitive Agreement" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="left" style="font-size: 10pt">Item&nbsp;1.01. &nbsp;&nbsp; Entry into a Material Definitive Agreement


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, Digi International Inc. (the &#147;Company&#148;) makes stock
option awards to employees (including executive officers) pursuant to the
stockholder-approved Stock Option Plan of the Company as Amended and Restated
as of January&nbsp;22, 2003, a copy of which is on file with the SEC as Exhibit
Number 10(a) to the Company&#146;s Form 10-Q for the quarter ended December&nbsp;31, 2002
(File no. 0-17972), and the stockholder-approved 2000 Omnibus Stock Plan of the
Company as Amended and Restated as of January&nbsp;22, 2003, a copy of which is on
file with the SEC as Exhibit&nbsp;Number 10(g) to the Company&#146;s Form 10-Q for the
quarter ended December&nbsp;31, 2002 (File no. 0-17972). The Company is filing
herewith a copy of the form of Notice of Grant of Stock Options and Option
Agreement and Terms and Conditions of Nonstatutory Stock Option Agreement
granted under the Plan. Stock options granted to executive officers from time
to time are issued pursuant to this general form of agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;7, 2004, the Company granted the following stock options to
executive officers pursuant to the form of agreement described above and filed
as an exhibit hereto:

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    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B><HR size="1" noshade></TD>
</TR>


<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Bruce H. Berger</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Joseph T. Dunsmore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Subramanian Krishnan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">The options vest as to 25% of the shares on the first anniversary of the date
of grant, which was September&nbsp;7, 2004, and thereafter in 36 equal monthly
increments, subject to accelerated vesting upon a change of control as
described in the option agreement. The options expire on September&nbsp;7, 2014.
The exercise price of the options is $10.78 per share. These executive
officers are parties to employment agreements with the Company that are
described in the Company&#146;s SEC filings.


<!-- link1 "Item&nbsp;9.01. Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="left" style="font-size: 10pt">Item&nbsp;9.01. &nbsp;&nbsp; Financial Statements and Exhibits.


<P align="left" style="font-size: 10pt">(c) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits. The following exhibit is filed herewith:


<DIV align="center">
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    <TD width="93%">&nbsp;</TD>
</TR>

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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10(a)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Notice of Grant of Stock Options
and Option Agreement and Terms and Conditions of
Nonstatutory Stock Option Agreement.</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">2
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center" style="font-size: 10pt">SIGNATURES



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

<DIV align="center">
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    <TD width="45%">&nbsp;</TD>
</TR>

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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">DIGI INTERNATIONAL INC.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: September&nbsp;13, 2004
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Joseph T. Dunsmore</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joseph T. Dunsmore<BR>
Chairman, President and Chief Executive Officer</TD>
</TR>

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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center" style="font-size: 10pt">EXHIBIT INDEX


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

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    <TD width="11%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>No.</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>Exhibit</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Manner of Filing</B><HR size="1" noshade></TD>
</TR>


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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top" align="center"><DIV style="margin-left:0px; text-indent:-0px">10(a)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Notice of Grant of Stock
Options and Option Agreement and Terms
and Conditions of Nonstatutory Stock
Option Agreement.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed
Electronically</TD>
</TR>


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</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(A)
<SEQUENCE>2
<FILENAME>c88151exv10wxay.htm
<DESCRIPTION>FORM OF NOTICE OF GRANT
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt"><B>EXHIBIT 10(a)</B>


<P align="center" style="font-size: 10pt"><HR size="1" noshade>



<P align="center" style="font-size: 10pt"><B>Digi International Inc.<BR>
ID: _______________</B><BR>
11001 Bren Road East<BR>
Minnetonka, MN 55343



<P align="left" style="font-size: 10pt"><B>Notice of Grant of Stock Options</B>

<DIV align="left" style="font-size: 10pt"><HR size="1" noshade></DIV>

<DIV align="left" style="font-size: 10pt"><B>and Option Agreement</B></DIV>

<DIV align="left" style="font-size: 10pt"><HR size="1" noshade></DIV>

<DIV align="left" style="font-size: 10pt">&nbsp;</DIV>

<DIV align="left" style="font-size: 10pt"><HR size="1" noshade></DIV>

<DIV align="left" style="font-size: 10pt">&nbsp;</DIV>

<DIV align="left" style="font-size: 10pt"><HR size="1" noshade></DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&#091;Optionee&#093;</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Option Number:</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&#091;Address&#093;</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Plan:</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&#091;City, State, Zip&#093;</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>ID:</B></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><HR size="1" noshade>


<P align="left" style="font-size: 10pt">Effective &#091;date&#093;, you have been granted a(n) Non-Qualified Stock Option to buy
&#091;number of shares&#093; shares of Digi International Inc. (the Company) stock at
$&#091;per share exercise price&#093;- per share.


<P align="left" style="font-size: 10pt">The total option price of the shares granted is $&#091;aggregate exercise price&#093;.


<P align="left" style="font-size: 10pt">Shares in each period will become fully vested on the date shown.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="55%">

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    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Shares</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Vest Type</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Full Vest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Expiration</B><HR size="1" noshade></TD>
</TR>


<!-- End Table Head -->

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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
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</TD>
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</TR>

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</TD>
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<P align="center" style="font-size: 10pt"><HR size="1" noshade>


<P align="left" style="font-size: 10pt">&nbsp;


<P align="left" style="font-size: 10pt">By your signature and the Company&#146;s signature below, you and the Company agree
that these options
are granted under and governed by the terms and conditions of the Company&#146;s
Stock Option Plan as
amended and the Option Agreement, all of which are attached and made a part of
this document.


<P align="left" style="font-size: 10pt">&nbsp;



<P align="center" style="font-size: 10pt"><HR size="1" noshade>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

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</TR>

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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><HR size="1" noshade><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Digi International Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><HR size="1" noshade><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;Optionee&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date</TD>
</TR>

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</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>DIGI INTERNATIONAL INC.<BR>
___________________________ PLAN</B>



<P align="center" style="font-size: 10pt">&nbsp;<BR>
<B>Terms and Conditions of Nonstatutory Stock Option Agreement</B><BR>
&nbsp;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These are the terms and conditions applicable to the NONSTATUTORY STOCK
OPTION AGREEMENT between Digi International Inc., a Delaware corporation (the
&#147;Company&#148;), and the optionee (the &#147;Optionee&#148;) listed on the cover page hereof
(the &#147;Cover Page&#148;) effective as of the date of grant. The Cover Page together
with these terms and conditions of Nonstatutory Stock Option Agreement
constitute the &#147;Nonstatutory Stock Option Agreement.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company desires to carry out the purposes of its Digi
International Inc. ___________________ Plan as amended from time to time
(the &#147;Plan&#148;), by affording the Optionee an opportunity to purchase Common Stock
of the Company, par value $.01 per share (the &#147;Common Shares&#148;), according to
the terms set forth herein and on the Cover Page;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW THEREFORE, the Company hereby grants this Option to the Optionee under
the terms and conditions as follows.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;</B>&nbsp;&nbsp;<B>Grant of Option. </B>Subject to the terms of the Plan, the Company hereby
grants to the Optionee the right and option (the &#147;Option&#148;) to purchase the
number of Common Shares specified on the Cover Page, on the terms and
conditions hereinafter set forth. The Option is not intended by the Company to
be an &#147;incentive stock option&#148; within the meaning of Section&nbsp;422A of the
Internal Revenue Code of 1986, as amended (the &#147;Code&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;</B>&nbsp;&nbsp;<B>Purchase Price. </B>The purchase price of each of the Common Shares
subject to the Option shall be the exercise price per share specified on the
Cover Page, which price has been specified in accordance with the Plan and
shall not be less than 50% of the Fair Market Value (as defined in paragraph
5(c) of the Plan) of a common share as of the date of grant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;</B>&nbsp;&nbsp;<B>Option Period.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;Subject to the provisions of paragraphs 5(a), 5(b) and 6(b) hereof,
the Option shall become exercisable as to the number of shares and on the dates
specified in the exercise schedule on the Cover Page. The exercise schedule
shall be cumulative; thus, to the extent the Option has not already been
exercised and has not expired, terminated or been canceled, the Optionee may at
any time, and from time to time, purchase all or any portion of the Common
Shares then purchasable under the exercise schedule. Notwithstanding the
foregoing or any other provision herein to the contrary, the Option shall
become immediately exercisable:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;upon the occurrence of the death or disability within the
meaning of Section&nbsp;22(e)(3) of the Code, of the Optionee (as more
particularly described in paragraphs 5(a)(ii) or 5(b) and 6(a)
hereof); or



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;in the event that the committee under the Plan (the
&#147;Committee&#148;) shall declare pursuant to paragraph 6(b) hereof that
the Option shall be canceled at the time of, or immediately prior
to the occurrence of an Event, as defined in paragraph 6(b) hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Option and all rights to purchase shares thereunder shall cease on
the earliest of:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;the expiration date specified on the Cover Page (which
date shall not be more than ten years after the date of this
Nonstatutory Stock Option Agreement);



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;the expiration of the period after the termination of the
Optionee&#146;s employment (as defined in paragraph 4 of the Plan)
within which the Option is exercisable as specified in paragraph
5(a) or 5(b), whichever is applicable; or


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<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;the date, if any, fixed for cancellation pursuant to
paragraph 6(b) hereof.

<P align="left" style="font-size: 10pt">Notwithstanding any other provision in this Nonstatutory Stock Option
Agreement, in no event may anyone exercise the Option, in whole or in part,
after its original expiration date.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.&nbsp;</B>&nbsp;&nbsp;<B>Manner of Exercising Option.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of this Nonstatutory Stock Option
Agreement, the Option may be exercised by delivering written notice of exercise
to the Company at its principal executive office, to the attention of its
President. The notice shall state the election to exercise the Option and the
number of Common Shares in respect of which it is being exercised, and shall be
signed by the person exercising the Option. If the person exercising the
Option is not the Optionee, he or she also shall send with the notice
appropriate proof of his or her right to exercise the Option. Such notice
shall be accompanied by either:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;payment (by check, bank draft or money order payable to
the Company) of the full purchase price of the Common Shares being
purchased; or



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;certificates for unencumbered Common Shares having an
aggregate Fair Market Value on the date of exercise equal to the
purchase price of the Common Shares to be purchased; provided,
however, that the person exercising this Option shall not be
permitted to pay any portion of the purchase price with Common
Shares if, in the opinion of the Committee, payment in such manner
could have adverse financial accounting consequences for the
Company; or



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;a combination of cash and such uencumbered Common
Shares; provided, however, that the person exercising this Option
shall not be permitted to pay any portion of the purchase price
with Common Shares if, in the opinion of the Committee, payment in
such manner could have adverse financial accounting consequences
for the Company.

<P align="left" style="font-size: 10pt">The Optionee shall duly endorse all certificates delivered to the Company
pursuant to the foregoing subparagraphs (a)(ii) or (a)(iii) in blank and shall
represent and warrant in writing that he or she is the owner of the Common
Shares so delivered free and clear of all liens, security interests and other
restrictions or encumbrances.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;As soon as practicable after receipt of the purchase price provided
for above, the Company shall deliver to the person exercising the Option, in
the name of the Optionee or his or her estate or heirs, as the case may be, a
certificate or certificates representing the Common Shares being purchased.
The Company shall pay all original issue or transfer taxes, if any, with
respect to the issue or transfer of the Common Shares to the person exercising
the Option and all fees and expenses necessarily incurred by the Company in
connection therewith. All Common Shares so issued shall be fully paid and
nonassessable. Notwithstanding anything to the contrary in this Nonstatutory
Stock Option Agreement, the Company shall not be required, upon the exercise of
this Option or any part thereof, to issue or deliver any Common Shares prior to
the completion of such registration or other qualification of such Common
Shares under any State law, rule or regulation as the Company shall determine
to be necessary or desirable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.&nbsp;</B>&nbsp;&nbsp;<B>Exercisability of Option After Termination of Employment.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;During the lifetime of the Optionee, the Option may be exercised only
while the Optionee is employed (as defined in paragraph 4 of the Plan) by the
Company or a parent or subsidiary thereof, and only if the Optionee has been
continuously so employed since the date of this Nonstatutory Stock Option
Agreement, except that:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;if the Optionee is not an Outside Director (as defined in
paragraph 4 of the Plan), the Option shall continue to be
exercisable for three months after termination of the Optionee&#146;s
employment but only to the extent that the Option was exercisable
immediately prior to the Optionee&#146;s termination of employment, and
if the Optionee is an Outside Director, the Option shall continue
to be exercisable after the Optionee ceases to be a director of the
Company but only to the extent that the Option was exercisable
immediately prior to the Optionee&#146;s ceasing to be a director;



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;in the event the Optionee is disabled (within the meaning
of Section&nbsp;22(e)(3) of the Code) while employed, the Optionee or
his or her legal representative may exercise the Option within one
year after the termination of the Optionee&#146;s employment; and


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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;if the Optionee&#146;s employment terminates after a
declaration pursuant to paragraph 6(b) of this Nonstatutory Stock
Option Agreement, the Optionee may exercise the Option at any time
permitted by such declaration.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;In the event of the Optionee&#146;s death while employed by the Company or
a parent or subsidiary thereof, or within three months after his or her
termination of employment, the legal representative, heirs or legatees of the
Optionee&#146;s estate or the person who acquired the right to exercise the Option
by bequest or inheritance may exercise the Option within one year after the
death of the Optionee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Neither the transfer of the Optionee between any combination of the
Company, its parent and any subsidiary of the Company, nor a leave of absence
granted to the Optionee and approved by the Committee, shall be deemed a
termination of employment. The terms &#147;parent&#148; and &#147;subsidiary&#148; as used herein
shall have the meaning ascribed to &#147;parent corporation&#148; and &#147;subsidiary
corporation,&#148; respectively, in Sections 425(e) and (f) (or successor
provisions) of the Code.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.</B>&nbsp;&nbsp;<B>Acceleration of Option.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Disability or Death. If paragraph 5(a)(ii) or 5(b) of this
Nonstatutory Stock Option Agreement is applicable, the Option, whether or not
previously exercisable, shall become immediately exercisable in full if the
Optionee shall have been employed continuously by the Company or a parent or
subsidiary thereof between the date the Option was granted and the date of such
disability or, in the event of death, a date not more than three months, prior
to such death.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Dissolution, Liquidation, Merger. In the event of (i)&nbsp;a proposed
merger or consolidation of the Company with or into any other corporation,
regardless of whether the Company is the surviving corporation, unless
appropriate provision shall have been made for the protection of the Option by
the substitution, in lieu of the Option, of an option to purchase appropriate
voting common stock (the &#147;Survivor&#146;s Stock&#148;) of the corporation surviving any
such merger or consolidation or, if appropriate, the parent corporation of the
Company or such surviving corporation, or, alternatively, by the delivery of a
number of shares of the Survivor&#146;s Stock which has a Fair Market Value as of
the effective date of such merger or consolidation equal to the product of (A)
the excess of (x)&nbsp;the Event Proceeds per Common Share (as hereinafter defined)
covered by the Option as of such effective date, over (y)&nbsp;the Option exercise
price per Common Share, times (B)&nbsp;the number of Common Shares covered by the
Option, or (ii)&nbsp;the proposed dissolution or liquidation of the Company (such
merger, consolidation, dissolution or liquidation being herein called an
&#147;Event&#148;), the Committee shall declare, at least ten days prior to the actual
effective date of an Event, and provide written notice to the Optionee of the
declaration, that the Option, whether or not then exercisable, shall be
canceled at the time of, or immediately prior to the occurrence of, the Event
(unless it shall have been exercised prior to the occurrence of the Event) in
exchange for payment to the Optionee, within ten days after the Event, of cash
equal to the amount (if any), for each Common Share covered by the canceled
Option, by which the Event Proceeds per Common Share (as hereinafter defined)
exceeds the exercise price per Common Share covered by the Option. At the time
of the declaration provided for in the immediately preceding sentence, the
Option shall immediately become exercisable in full and the Optionee shall have
the right, during the period preceding the time of cancellation of the Option,
to exercise the Option as to all or any part of the Common Shares covered
thereby. The Option, to the extent it shall not have been exercised prior to
the Event, shall be canceled at the time of, or immediately prior to, the
Event, as provided in the declaration, and this Plan shall terminate at the
time of such cancellation, subject to the payment obligations of the Company
provided in this paragraph 6(b). For purposes of this paragraph, &#147;Event
Proceeds per Common Share&#148; shall mean the cash plus the fair market value, as
determined in good faith by the Committee, of the non-cash consideration to be
received per Common Share by the stockholders of the Company upon the
occurrence of the Event.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.&nbsp;</B>&nbsp;&nbsp;<B>Limitation on Transfer. </B>During the lifetime of the Optionee, only the
Optionee or his or her guardian or legal representative may exercise the
Option. The Optionee shall not assign or transfer the Option otherwise than by
will or the laws of descent and distribution, and the Option shall not be
subject to pledge, hypothecation, execution, attachment or similar process.
Any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of
the Option contrary to the provisions hereof, and the levy of any attachment or
similar process upon the Option, shall be null and void.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.</B>&nbsp;&nbsp;<B>Stockholder Rights Before Exercise. </B>The Optionee shall have none of
the rights of a stockholder of the Company with respect to any share subject to
the Option until the share is actually issued to him or her upon exercise of
the Option.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.&nbsp;</B>&nbsp;&nbsp;<B>Discretionary Adjustment. </B>The Committee may in its sole discretion
make appropriate adjustments in the number of shares subject to the Option and
in the purchase price per share to give effect to any adjustments made in the
number of outstanding Common Shares of the Company through a merger,
consolidation, recapitalization, reclassification, combination, stock dividend,
stock split or other relevant change, provided that fractional shares shall be
rounded to the nearest whole share.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.&nbsp;</B>&nbsp;&nbsp;<B>Tax Withholding. </B>The parties hereto recognize that the Company or a
parent or subsidiary thereof may be obligated to withhold federal and state
income taxes and social security or other taxes upon the Optionee&#146;s exercise of
the Option. The Optionee agrees that, at the time he or she exercises the
Option, if the Company or a parent or subsidiary thereof is required to
withhold such taxes, he or she will promptly pay in cash upon demand to the
Company, or the parent or subsidiary having such obligation, such amounts as
shall be necessary to satisfy such obligation; provided, however, that in lieu
of all or any part of such a cash payment, the Committee may, but shall not be
required to, (or, in the case of an Optionee who is an Outside Director (as
defined in paragraph 4 of the Plan), the Committee shall) permit the Optionee
to elect to cover all or any part of the required withholdings, and to cover
any additional withholdings up to the amount needed to cover the Optionee&#146;s
full FICA and federal, state and local income tax with respect to income
arising from the exercise of the Option, through a reduction of the number of
Common Shares delivered to the Optionee or through a subsequent return to the
Company of shares delivered to the Optionee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.</B>&nbsp;&nbsp;<B>Interpretation of this Nonstatutory Stock Option Agreement. </B>All
decisions and interpretations made by the Committee with regard to any question
arising hereunder or under the Plan shall be binding and conclusive upon the
Company and the Optionee. In the event that there is any inconsistency between
the provisions of this Nonstatutory Stock Option Agreement and the Plan, the
provisions of the Plan shall govern.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.</B>&nbsp;&nbsp;<B>Discontinuance of Employment. </B>This Nonstatutory Stock Option
Agreement shall not give the Optionee a right to continued employment with the
Company or any parent or subsidiary thereof, and the Company or any such parent
or subsidiary thereof employing the Optionee may terminate his or her
employment and otherwise deal with the Optionee without regard to the effect it
may have upon him or her under this Nonstatutory Stock Option Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.</B>&nbsp;&nbsp;<B>General. </B>The Company shall at all times during the term of this
Option reserve and keep available such number of Common Shares as will be
sufficient to satisfy the requirements of this Nonstatutory Stock Option
Agreement. This Nonstatutory Stock Option Agreement shall be binding in all
respects on the Optionee&#146;s heirs, representatives, successors and assigns.
This Nonstatutory Stock Option Agreement is entered into under the laws of the
State of Minnesota and shall be construed and interpreted thereunder.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt">&#091;Certain of the options have an addendum regarding acceleration of vesting substantially similar to the following&#093;



<P align="center" style="font-size: 10pt">ADDENDUM I<BR>
TO<BR>
TERMS AND CONDITIONS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph&nbsp;6, entitled &#147;Acceleration of Option,&#148; is amended to add new
subparagraph (c)&nbsp;which provide as follows:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;Change in Control. The Option, whether or not previously
exercisable, shall become immediately exercisable in full upon the
occurrence of any &#147;Change in Control&#148;. A &#147;Change in Control&#148; shall be
deemed to have occurred upon the occurrence of either of the following
events:



<P align="left" style="margin-left:4%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;any person, as defined in Sections&nbsp;3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the
&#147;Exchange Act&#148;), becomes the &#147;beneficial owner&#148; (as defined
in Rule&nbsp;13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of securities of the Company having
25% or more of the voting power in the election of directors
of the Company, excluding, however, Optionee (or a group of
persons, including Optionee, acting in concert); or



<P align="left" style="margin-left:4%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;the occurrence within any period, commencing
immediately after an Annual Meeting of Stockholders and
continuing to and including the Annual Meeting of
Stockholders occurring on or about the third anniversary date
of the commencement of such period, of a change in the Board
of Directors of the Company with the result that the
Incumbent Members (as defined below) do not constitute a
majority of the Company&#146;s Board of Directors. The term
&#147;Incumbent Members&#148; shall mean the members of the Board on
the date of the commencement of such period, provided that
any person becoming a director during such period whose
election or nomination for election was approved by a
majority of the directors who, on the date of such election
or nomination for election, comprised the Incumbent Members
shall be considered one of the Incumbent Members in respect
of such period.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt">&#091;Certain of the options have an addendum regarding acceleration of vesting substantially similar to the following



<P align="center" style="font-size: 10pt">ADDENDUM I<BR>
TO<BR>
TERMS AND CONDITIONS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph&nbsp;6, entitled &#147;Acceleration of Option,&#148; is amended to add new
subparagraphs (c)&nbsp;and (d)&nbsp;which provide as follows:



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;Termination Without Cause. The Option, whether or not
previously exercisable, shall become immediately exercisable in full
immediately prior to any termination of Optionee&#146;s employment by the
Company without cause (as defined below or as may be subsequently defined
in any Employment Agreement between Optionee and the Company). The term
&#147;cause&#148; shall mean only the following: (i)&nbsp;indictment or conviction of,
or a plea of nolo contendere to, (A)&nbsp;any felony (other than any felony
arising out of negligence) or any misdemeanor involving moral turpitude,
or (B)&nbsp;any crime or offense involving dishonesty with respect to the
Company or any of its subsidiaries; (ii)&nbsp;theft or embezzlement of Company
property or commission of similar acts involving dishonesty or moral
turpitude; (iii)&nbsp;repeated material negligence in the performance of your
duties; (iv)&nbsp;if you are a full-time employee, your failure to devote
substantially all of you working time and efforts during normal business
hours to the Company&#146;s business; (v)&nbsp;knowing engagement in conduct which
is materially injurious to the Company; (vi)&nbsp;knowing failure, for your
own benefit, to comply with the Company&#146;s policies concerning
confidentiality; (vii)&nbsp;knowingly providing materially misleading
information concerning the Company to the Company&#146;s Chief Executive
Officer or Board of Directors, any governmental body or regulatory agency
or to any lender or other financing source or proposed financing source
of the Company; or (viii)&nbsp;any other failure by you to substantially
perform your material duties (excluding nonperformance resulting from
your disability) which failure is not cured within thirty (30)&nbsp;days after
written notice from the Chairman of the Board or the Chief Executive
Officer of the Company specifying the act of nonperformance or within
such longer period (but no longer than ninety (90)&nbsp;days in any event) as
is reasonably required to cure such nonperformance.



<P align="left" style="margin-left:2%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;Change in Control. The Option, whether or not previously
exercisable, shall become immediately exercisable in full upon the
occurrence of any &#147;Change in Control&#148;. A &#147;Change in Control&#148; shall be
deemed to have occurred upon the occurrence of either of the following
events:



<P align="left" style="margin-left:4%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;any person, as defined in Sections&nbsp;3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the
&#147;Exchange Act&#148;), becomes the &#147;beneficial owner&#148; (as defined
in Rule&nbsp;13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of securities of the Company having
25% or more of the voting power in the election of directors
of the Company, excluding, however, Optionee (or a group of
persons, including Optionee, acting in concert); or



<P align="left" style="margin-left:4%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;the occurrence within any period, commencing
immediately after an Annual Meeting of Stockholders and
continuing to and including the Annual Meeting of
Stockholders occurring on or about the third anniversary date
of the commencement of such period, of a change in the Board
of Directors of the Company with the result that the
Incumbent Members (as defined below) do not constitute a
majority of the Company&#146;s Board of Directors. The term
&#147;Incumbent Members&#148; shall mean the members of the Board on
the date of the commencement of such period, provided that
any person becoming a director during such period whose
election or nomination for election was approved by a
majority of the directors who, on the date of such election
or nomination for election, comprised the Incumbent Members
shall be considered one of the Incumbent Members in respect
of such period.



<P align="center" style="font-size: 10pt">-7-
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