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                                                                     EXHIBIT 4.3

                             Digi International Inc.
                             2000 Omnibus Stock Plan

                       (effective as of November 6, 2000)

         1. Purpose. The purpose of the Digi International Inc. 2000 Omnibus
Stock Plan (the "Plan") is to promote the interests of the Company and its
stockholders by providing key personnel of the Company and its Affiliates with
an opportunity to acquire a proprietary interest in the Company and reward them
for achieving a high level of corporate performance and thereby develop a
stronger incentive to put forth maximum effort for the continued success and
growth of the Company and its Affiliates. In addition, the opportunity to
acquire a proprietary interest in the Company will aid in attracting and
retaining key personnel of outstanding ability. The Plan is also intended to
provide Outside Directors with an opportunity to acquire a proprietary interest
in the Company, to compensate Outside Directors for their contribution to the
Company and to aid in attracting and retaining Outside Directors.

         2.       Definitions.

                  2.1      The capitalized terms used elsewhere in the Plan have
         the meanings set forth below.

                           (a) "Affiliate" means any corporation that is a
                  "parent corporation" or "subsidiary corporation" of the
                  Company, as those terms are defined in Code Sections 424(e)
                  and (f), or any successor provisions, and, for purposes other
                  than the grant of Incentive Stock Options, any joint venture
                  in which the Company or any such "parent corporation" or
                  "subsidiary corporation" owns an equity interest.

                           (b) "Agreement" means a written contract (i)
                  consistent with the terms of the Plan entered into between the
                  Company or an Affiliate and a Participant and (ii) containing
                  the terms and conditions of an Award in such form and not
                  inconsistent with the Plan as the Committee shall approve from
                  time to time, together with all amendments thereto, which
                  amendments may be unilaterally made by the Company (with the
                  approval of the Committee) unless such amendments are deemed
                  by the Committee to be materially adverse to the Participant
                  and not required as a matter of law.

                           (c) "Award" or "Awards" means a grant made under the
                  Plan in the form of Restricted Stock, Options, Stock
                  Appreciation Rights, Performance Units, Stock or any other
                  stock-based award.

                           (d) "Board" means the Board of Directors of the
                  Company.

                           (e) "Code" means the Internal Revenue Code of 1986,
                  as amended and in effect from time to time or any successor
                  statute.

                           (f) "Committee" means two or more Non-Employee
                  Directors designated by the Board to administer the Plan under
                  Plan Section 3.1 and constituted so as to permit grants
                  thereby to comply with Exchange Act Rule 16b-3 and Code
                  Section 162(m).

                           (g) "Company" means Digi International  Inc., a
                  Delaware  corporation, or any successor to all or
                  substantially all of its businesses by merger, consolidation,
                  purchase of assets or otherwise.

                           (h) "Effective Date" means the date specified in Plan
                  Section 12.1.

                           (i) "Employee"  means an employee (including an
                  officer or director who is also an employee) of the Company or
                  an Affiliate.



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                           (j) "Exchange Act" means the Securities Exchange Act
                  of 1934, as amended and in effect from time to time or any
                  successor statute.

                           (k) "Exchange Act Rule 16b-3" means Rule 16b-3
                  promulgated by the Securities and Exchange Commission under
                  the Exchange Act, as now in force and in effect from time to
                  time or any successor regulation.

                           (l) "Fair Market Value" as of any date means, unless
                  otherwise expressly provided in the Plan:

                                    (i) the closing sale price of a Share on the
                           date immediately preceding that date or, if no sale
                           of Shares shall have occurred on that date, on the
                           next preceding day on which a sale of Shares occurred

                                        (A) on the composite tape for New York
                                     Stock Exchange listed shares, or

                                        (B) if the Shares are not quoted on
                                    the composite tape for New York Stock
                                    Exchange listed shares, on the principal
                                    United States Securities Exchange registered
                                    under the Exchange Act on which the Shares
                                    are listed, or

                                        (C) if the Shares are not listed on any
                                    such  exchange, on the National Association
                                    of Securities Dealers, Inc. Automated
                                    Quotations National Market System or any
                                    system then in use, or

                                    (ii) if clause (i) is inapplicable, the mean
                           between the closing "bid" and the closing "asked"
                           quotation of a Share on the date immediately
                           preceding that date, or, if no closing bid or asked
                           quotation is made on that date, on the next preceding
                           day on which a closing bid and asked quotation is
                           made, on the National Association of Securities
                           Dealers, Inc. Automated Quotations System or any
                           system then in use, or

                                    (iii) if clauses (i) and (ii) are
                           inapplicable, what the Committee determines in good
                           faith to be 100% of the fair market value of a Share
                           on that date, using such criteria as it shall
                           determine, in its sole discretion, to be appropriate
                           for valuation.

                           However, if the applicable securities exchange or
                  system has closed for the day at the time the event occurs
                  that triggers a determination of Fair Market Value, whether
                  the grant of an Award, the exercise of an Option or Stock
                  Appreciation Right or otherwise, all references in this
                  paragraph to the "date immediately preceding that date" shall
                  be deemed to be references to "that date." In the case of an
                  Incentive Stock Option, if this determination of Fair Market
                  Value is not consistent with the then current regulations of
                  the Secretary of the Treasury, Fair Market Value shall be
                  determined in accordance with those regulations. The
                  determination of Fair Market Value shall be subject to
                  adjustment as provided in Plan Section 16.

                           (m) "Fundamental Change" means a dissolution or
                  liquidation of the Company, a sale of substantially all of the
                  assets of the Company, a merger or consolidation of the
                  Company with or into any other corporation, regardless of
                  whether the Company is the surviving corporation, or a
                  statutory share exchange involving capital stock of the
                  Company.

                           (n) "Incentive Stock Option" means any Option
                  designated as such and granted in accordance with the
                  requirements of Code Section 422 or any successor provision.

                           (o) "Insider" as of a particular date means any
                  person who, as of that date is an officer of the Company as
                  defined under Exchange Act Rule 16a-1(f) or its successor
                  provision.



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                           (p) "Non-Employee Director" means a member of the
                  Board who is considered a non-employee director within the
                  meaning of Exchange Act Rule 16b-3(b)(3) or its successor
                  provision and an outside director for purposes of Code Section
                  162(m).

                           (q) "Non-Statutory Stock Option" means an Option
                  other than an Incentive Stock Option.

                           (r) "Option" means a right to purchase Stock,
                  including both Non-Statutory Stock Options and Incentive Stock
                  Options.

                           (s) "Outside Director" means a director who is not an
                  Employee.

                           (t) "Participant" means a person or entity to whom an
                  Award is or has been made in accordance with the Plan.

                           (u) "Performance Cycle" means the period of time as
                  specified in an Agreement over which Performance Units are to
                  be earned.

                           (v) "Performance Units" means an Award made pursuant
                  to Plan Section 11.

                           (w) "Plan" means this Digi International Inc. 2000
                  Omnibus Stock Plan, as may be amended and in effect from time
                  to time.

                           (x) "Restricted Stock" means Stock granted under Plan
                  Section 7 so long as such Stock remains subject to one or more
                  restrictions.

                           (y) "Section 16" or "Section 16(b)" means Section 16
                  or Section 16(b), respectively, of the Exchange Act or any
                  successor statute and the rules and regulations promulgated
                  thereunder as in effect and as amended from time to time.

                           (z) "Share" means a share of Stock.

                           (aa) "Stock" means the common stock, par value $.01
                  per share, of the Company.

                           (bb) "Stock Appreciation Right" means a right, the
                  value of which is determined in relation to the appreciation
                  in value of Shares pursuant to an Award granted under Plan
                  Section 10.

                           (cc) "Subsidiary" means a "subsidiary corporation,"
                  as that term is defined in Code Section 424(f) or any
                  successor provision.

                           (dd) "Successor" with respect to a Participant means
                  the legal representative of an incompetent Participant, and if
                  the Participant is deceased the estate of the Participant or
                  the person or persons who may, by bequest or inheritance, or
                  pursuant to the terms of an Award, acquire the right to
                  exercise an Option or Stock Appreciation Right or to receive
                  cash and/or Shares issuable in satisfaction of an Award in the
                  event of the Participant's death.

                           (ee) "Term" means the period during which an Option
                  or Stock Appreciation Right may be exercised or the period
                  during which the restrictions or terms and conditions placed
                  on Restricted Stock or any other Award are in effect.

                           (ff) "Transferee" means any member of the
                  Participant's immediate family (i.e., his or her children,
                  step-children, grandchildren and spouse) or one or more trusts
                  for the benefit of such family members or partnerships in
                  which such family members are the only partners.


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                  2.2 Gender and Number. Except when otherwise indicated by the
         context, reference to the masculine gender shall include, when used,
         the feminine gender and any term used in the singular shall also
         include the plural.

         3.       Administration and Indemnification.

                  3.1      Administration.

                           (a) The Committee shall administer the Plan. The
                  Committee shall have exclusive power to (i) make Awards, (ii)
                  determine when and to whom Awards will be granted, the form of
                  each Award, the amount of each Award (except as to the amount
                  of the Outside Director Options pursuant to Plan Section 9.3),
                  and any other terms or conditions of each Award consistent
                  with the Plan, and (iii) determine whether, to what extent and
                  under what circumstances, Awards may be settled, paid or
                  exercised in cash, Shares or other Awards, or other property
                  or canceled, forfeited or suspended. Each Award shall be
                  subject to an Agreement authorized by the Committee. A
                  majority of the members of the Committee shall constitute a
                  quorum for any meeting of the Committee, and acts of a
                  majority of the members present at any meeting at which a
                  quorum is present or the acts unanimously approved in writing
                  by all members of the Committee shall be the acts of the
                  Committee. Notwithstanding the foregoing, the Board shall have
                  the sole and exclusive power to administer the Plan with
                  respect to Awards granted to Outside Directors, including any
                  grants made under Plan Section 9.3(e).

                           (b) Solely for purposes of determining and
                  administering Awards to Participants who are not Insiders, the
                  Committee may delegate all or any portion of its authority
                  under the Plan to one or more persons who are not Non-Employee
                  Directors.

                           (c) To the extent within its discretion and subject
                  to Plan Sections 15 and 16, other than price, the Committee
                  may amend the terms and conditions of any outstanding Award.

                           (d) It is the intent that the Plan and all Awards
                  granted pursuant to it shall be administered by the Committee
                  so as to permit the Plan and Awards to comply with Exchange
                  Act Rule 16b-3, except in such instances as the Committee, in
                  its discretion, may so provide. If any provision of the Plan
                  or of any Award would otherwise frustrate or conflict with the
                  intent expressed in this Section 3.1(d), that provision to the
                  extent possible shall be interpreted and deemed amended in the
                  manner determined by the Committee so as to avoid the
                  conflict. To the extent of any remaining irreconcilable
                  conflict with this intent, the provision shall be deemed void
                  as applicable to Insiders to the extent permitted by law and
                  in the manner deemed advisable by the Committee.

                           (e) The Committee's interpretation of the Plan and of
                  any Award or Agreement made under the Plan and all related
                  decisions or resolutions of the Board or Committee shall be
                  final and binding on all parties with an interest therein.
                  Consistent with its terms, the Committee shall have the power
                  to establish, amend or waive regulations to administer the
                  Plan. In carrying out any of its responsibilities, the
                  Committee shall have discretionary authority to construe the
                  terms of the Plan and any Award or Agreement made under the
                  Plan.

                  3.2 Indemnification. Each person who is or shall have been a
         member of the Committee, or of the Board, and any other person to whom
         the Committee delegates authority under the Plan, shall be indemnified
         and held harmless by the Company, to the extent permitted by law,
         against and from any loss, cost, liability or expense that may be
         imposed upon or reasonably incurred by such person in connection with
         or resulting from any claim, action, suit or proceeding to which such
         person may be a party or in which such person may be involved by reason
         of any action taken or failure to act, made in good faith, under the
         Plan and against and from any and all amounts paid by such person in
         settlement thereof, with the Company's approval, or paid by such person
         in satisfaction of any judgment in any such action, suit or proceeding
         against such person, provided such person shall give the Company an
         opportunity, at the


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         Company's expense, to handle and defend the same before such person
         undertakes to handle and defend it on such person's own behalf. The
         foregoing right of indemnification shall not be exclusive of any other
         rights of indemnification to which such person or persons may be
         entitled under the Company's Certificate of Incorporation or Bylaws,
         as a matter of law, or otherwise, or any power that the Company may
         have to indemnify them or hold them harmless.

         4.       Shares Available Under the Plan.

                           (a) The number of Shares available for distribution
                  under the Plan shall not exceed 750,000 (subject to adjustment
                  pursuant to Plan Section 16).

                           (b) Any Shares subject to the terms and conditions of
                  an Award under the Plan that are not used because the terms
                  and conditions of the Award are not met may again be used for
                  an Award under the Plan; provided however, that Shares with
                  respect to which a Stock Appreciation Right has been exercised
                  whether paid in cash and/or in Shares may not again be awarded
                  under the Plan.

                           (c) Any unexercised or undistributed portion of any
                  terminated, expired, exchanged, or forfeited Award, or any
                  Award settled in cash in lieu of Shares (except as provided in
                  Plan Section 4(b)) shall be available for further Awards.

                           (d) For the purposes of computing the total number of
                  Shares granted under the Plan, the following rules shall apply
                  to Awards payable in Shares where appropriate:

                                (i) each Option shall be deemed to be the
                           equivalent of the maximum number of Shares that may
                           be issued upon exercise of the particular Option;

                                (ii) an Award (other than an Option) payable
                           in some other security shall be deemed to be equal to
                           the number of Shares to which it relates;

                                 (iii) where the number of Shares available
                           under the Award is variable on the date it is
                           granted, the number of Shares shall be deemed to be
                           the maximum number of Shares that could be received
                           under that particular Award; and

                                 (iv) where two or more types of Awards (all
                           of which are payable in Shares) are granted to a
                           Participant in tandem with each other, such that the
                           exercise of one type of Award with respect to a
                           number of Shares cancels at least an equal number of
                           Shares of the other, each such joint Award shall be
                           deemed to be the equivalent of the maximum number of
                           Shares available under the largest single Award.

                           Additional rules for determining the number of Shares
                  granted under the Plan may be made by the Committee as it
                  deems necessary or desirable.

                           (e) No fractional Shares may be issued under the
                  Plan; however, cash shall be paid in lieu of any fractional
                  Share in settlement of an Award.

                           (f) The maximum number of Shares that may be awarded
                  to a Participant in any calendar year in the form of Options
                  is 250,000 and the maximum number of Shares that may be
                  awarded to a Participant in any calendar year in the form of
                  Stock Appreciation Rights is 100,000.


         5. Eligibility. Participation in the Plan shall be limited to Employees
and to individuals or entities who are not Employees but who provide services to
the Company or an Affiliate, including services provided in the capacity of a
consultant, advisor or director. The granting of Awards is solely at the
discretion of the Committee, except that Incentive Stock Options may only be
granted to Employees and except for certain Awards to Outside


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Directors pursuant to Plan Section 9.3. References herein to "employed,"
"employment" or similar terms (except "Employee") shall include the providing of
services in any capacity or as a director. Neither the transfer of employment of
a Participant between any of the Company or its Affiliates, nor a leave of
absence granted to such Participant and approved by the Committee, shall be
deemed a termination of employment for purposes of the Plan.

         6.       General Terms of Awards.

                  6.1 Amount of Award. Each Agreement shall set forth the number
         of Shares of Restricted Stock, Stock or Performance Units subject to
         the Agreement, or the number of Shares to which the Option subject to
         the Agreement applies or with respect to which payment upon the
         exercise of the Stock Appreciation Right subject to the Agreement is to
         be determined, as the case may be, together with such other terms and
         conditions applicable to the Award as determined by the Committee
         acting in its sole discretion.

                  6.2 Term. Each Agreement, other than those relating solely to
         Awards of Shares without restrictions, shall set forth the Term of the
         Option, Stock Appreciation Right, Restricted Stock or other Award or
         the Performance Cycle for the Performance Units, as the case may be.
         Acceleration of the expiration of the applicable Term is permitted,
         upon such terms and conditions as shall be set forth in the Agreement,
         which may, but need not, include, without limitation, acceleration in
         the event of the Participant's death or retirement. Acceleration of the
         Performance Cycle of Performance Units shall be subject to Plan Section
         11.2.

                  6.3 Transferability. Except as provided in this Section,
         during the lifetime of a Participant to whom an Award is granted, only
         that Participant (or that Participant's legal representative) may
         exercise an Option or Stock Appreciation Right, or receive payment with
         respect to Performance Units or any other Award. No Award of Restricted
         Stock (before the expiration of the restrictions), Options, Stock
         Appreciation Rights or Performance Units or other Award may be sold,
         assigned, transferred, exchanged or otherwise encumbered other than to
         a Successor in the event of a Participant's death or pursuant to a
         qualified domestic relations order as defined in the Code or Title 1 of
         the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA"), or the rules thereunder; any attempted transfer in violation
         of this Section 6.3 shall be of no effect. Notwithstanding the
         immediately preceding sentence, the Committee, in an Agreement or
         otherwise at its discretion, may provide that the Award (other than
         Incentive Stock Options) may be transferable to a Transferee if the
         Participant does not receive any consideration for the transfer. Any
         Award held by a Transferee shall continue to be subject to the same
         terms and conditions that were applicable to that Award immediately
         before the transfer thereof to the Transferee. For purposes of any
         provision of the Plan relating to notice to a Participant or to
         acceleration or termination of an Award upon the death, disability or
         termination of employment of a Participant (or, in the case of Plan
         Section 9.3, an Outside Director) the references to "Participant" (or
         "Outside Director") shall mean the original grantee of an Award and not
         any Transferee.

                  6.4 Termination of Employment. Except as otherwise determined
         by the Committee or provided by the Committee in an Agreement, in case
         of a Participant's termination of employment, the following provisions
         shall apply:


                           (a)      Options and Stock Appreciation Rights.

                           (i)      If a Participant's employment or other
                                    relationship with the Company and its
                                    Affilitates terminates because of the
                                    Participant's death, then any Option or
                                    Stock Appreciation Right that has not
                                    expired or been terminated shall become
                                    exercisable in full if the Participant's
                                    employment or other relationship with the
                                    Company and its Affiliates has been
                                    continuous between the date the Option or
                                    Stock Appreciation Right was granted and a
                                    date not more than three months prior to
                                    such death, and may be exercised by the
                                    Participant's Successor at any time, or from
                                    time to time, within one year after the date
                                    of the Participant's death.



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                           (ii)     If a Participant's employment or other
                                    relationship with the Company and its
                                    Affiliates terminates because the
                                    Participant is disabled (within the meaning
                                    of Section 22(e)(3) of the Code), then any
                                    Option or Stock Appreciation Right that has
                                    not expired or been terminated shall become
                                    exercisable in full if the Participant's
                                    employment or other relationship with the
                                    Company and its Affiliates has been
                                    continuous between the date the Option or
                                    Stock Appreciation Right was granted and the
                                    date of such disability, and the Participant
                                    or the Participant's Successor may exercise
                                    such Option or Stock Appreciation Right at
                                    any time, or from time to time, within one
                                    year after the date of the Participant's
                                    disability.

                           (iii)    If a Participant's employment terminates for
                                    any reason other than death or disability,
                                    then any Option or Stock Appreciation Right
                                    that has not expired or been terminated
                                    shall remain exercisable for three months
                                    after termination of the Participant's
                                    employment, but, unless otherwise provided
                                    in the Agreement, only to the extent that
                                    such Option or Stock Appreciation Right was
                                    exercisable immediately prior to such
                                    Participant's termination of employment;
                                    provided, however, that if the Participant
                                    is an Outside Director, the Option or Stock
                                    Appreciation Right shall remain exercisable
                                    until the expiration of the Term after such
                                    Outside Director ceases to be a director of
                                    the Company but, unless otherwise provided
                                    in the Agreement, only to the extent that
                                    such Option or Stock Appreciation Right was
                                    exercisable immediately prior to such
                                    Outside Director ceasing to be a director.

                           (iv)     Notwithstanding the foregoing Plan Sections
                                    6.4(a)(i), (ii) and (iii), in no event shall
                                    an Option or a Stock Appreciation Right be
                                    exercisable after the expiration of the Term
                                    of such Award. Any Option or Stock
                                    Appreciation Right that is not exercised
                                    within the periods set forth in Plan
                                    Sections 6.4 (i), (ii) and (iii), except as
                                    otherwise provided by the Committee in the
                                    Agreement, shall terminate as of the end of
                                    the periods described in such Sections.

                            (b) Performance Units. If a Participant's employment
                  or other relationship with the Company and its Affiliates
                  terminates during a Performance Cycle because of death or
                  disability, or under other circumstances provided by the
                  Committee in its discretion in the Agreement or otherwise, the
                  Participant, unless the Committee shall otherwise provide in
                  the Agreement, shall be entitled to a payment with respect to
                  Performance Units at the end of the Performance Cycle based
                  upon the extent to which achievement of performance targets
                  was satisfied at the end of such period (as determined at the
                  end of the Performance Cycle) and prorated for the portion of
                  the Performance Cycle during which the Participant was
                  employed by the Company or its Affiliates. Except as provided
                  in this Section 6.4(b) or in the Agreement, if a Participant's
                  employment or other relationship with the Company and its
                  Affiliates terminates during a Performance Cycle, then such
                  Participant shall not be entitled to any payment with respect
                  to that Performance Cycle.

                           (c) Restricted Stock Awards. Unless otherwise
                  provided in the Agreement, in case of a Participant's death or
                  disability, the Participant shall be entitled to receive a
                  number of Shares of Restricted Stock under outstanding Awards
                  that has been prorated for the portion of the Term of the
                  Awards during which the Participant was employed by the
                  Company and its Affiliates, and, with respect to such Shares,
                  all restrictions shall lapse. Any Shares of Restricted Stock
                  as to which restrictions do not lapse under the preceding
                  sentence shall terminate at the date of the Participant's
                  termination of employment and such Shares of Restricted Stock
                  shall be forfeited to the Company.

                  6.5 Rights as Stockholder. Each Agreement shall provide that a
         Participant shall have no rights as a stockholder with respect to any
         securities covered by an Award unless and until the date the
         Participant becomes the holder of record of the Stock, if any, to which
         the Award relates.

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         7.       Restricted Stock Awards.

                           (a) An Award of Restricted Stock under the Plan shall
                  consist of Shares subject to restrictions on transfer and
                  conditions of forfeiture, which restrictions and conditions
                  shall be included in the applicable Agreement. The Committee
                  may provide for the lapse or waiver of any such restriction or
                  condition based on such factors or criteria as the Committee,
                  in its sole discretion, may determine.

                           (b) Except as otherwise provided in the applicable
                  Agreement, each Stock certificate issued with respect to an
                  Award of Restricted Stock shall either be deposited with the
                  Company or its designee, together with an assignment separate
                  from the certificate, in blank, signed by the Participant, or
                  bear such legends with respect to the restricted nature of the
                  Restricted Stock evidenced thereby as shall be provided for in
                  the applicable Agreement.

                           (c) The Agreement shall describe the terms and
                  conditions by which the restrictions and conditions of
                  forfeiture upon awarded Restricted Stock shall lapse. Upon the
                  lapse of the restrictions and conditions, Shares free of
                  restrictive legends, if any, relating to such restrictions
                  shall be issued to the Participant or a Successor or
                  Transferee.

                           (d) A Participant or a Transferee with a Restricted
                  Stock Award shall have all the other rights of a stockholder
                  including, but not limited to, the right to receive dividends
                  and the right to vote the Shares of Restricted Stock.

                           (e) No more than 100,000 of the total number of
                  Shares available for Awards under the Plan shall be issued
                  during the term of the Plan as Restricted Stock. This
                  limitation shall be calculated pursuant to the applicable
                  provisions of Plan Sections 4 and 16.

         8.       Other Awards. The Committee may from time to time grant
Stock and other Awards under the Plan including, without limitation, those
Awards pursuant to which Shares are or may in the future be acquired, Awards
denominated in Stock units, securities convertible into Stock and phantom
securities. The Committee, in its sole discretion, shall determine the terms and
conditions of such Awards provided that such Awards shall not be inconsistent
with the terms and purposes of the Plan. The Committee may, at its sole
discretion, direct the Company to issue Shares subject to restrictive legends
and/or stop transfer instructions that are consistent with the terms and
conditions of the Award to which the Shares relate. No more than 50,000 of the
total number of Shares available for Awards under the Plan shall be issued
during the term of the Plan in the form of Stock without restrictions.

         9.       Stock Options.

                  9.1      Terms of All Options.

                           (a) An Option shall be granted pursuant to an
                  Agreement as either an Incentive Stock Option or a
                  Non-Statutory Stock Option. The purchase price of each Share
                  subject to an Option shall be determined by the Committee and
                  set forth in the Agreement, but shall not be less than 50% of
                  the Fair Market Value of a Share as of the date the Option is
                  granted (except as provided in Plan Sections 9.2 and 19).

                           (b) The purchase price of the Shares with respect to
                  which an Option is exercised shall be payable in full at the
                  time of exercise, provided that to the extent permitted by
                  law, the Agreement may permit some or all Participants to
                  simultaneously exercise Options and sell the Shares thereby
                  acquired pursuant to a brokerage or similar relationship and
                  use the proceeds from the sale as payment of the purchase
                  price of the Shares. The purchase price may be payable in
                  cash, by delivery or tender of Shares having a Fair Market
                  Value as of the date the Option is exercised equal to the
                  purchase price of the Shares being purchased pursuant to the
                  Option, or a combination thereof, as determined by the
                  Committee, but no fractional Shares will be issued or
                  accepted. Provided, however, that a Participant exercising a
                  stock option shall not be permitted to



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                  pay any portion of the purchase price with Shares if, in the
                  opinion of the Committee, payment in such manner could have
                  adverse financial accounting consequences for the Company.

                           (c) The Committee may provide, in an Agreement or
                  otherwise, that a Participant who exercises an Option and pays
                  the Option price in whole or in part with Shares then owned by
                  the Participant will be entitled to receive another Option
                  covering the same number of shares tendered and with a price
                  of no less than Fair Market Value on the date of grant of such
                  additional Option ("Reload Option"). Unless otherwise provided
                  in the Agreement, a Participant, in order to be entitled to a
                  Reload Option, must pay with Shares that have been owned by
                  the Participant for at least the preceding 180 days.

                           (d) Each Option shall be exercisable in whole or in
                  part on the terms provided in the Agreement. In no event shall
                  any Option be exercisable at any time after the expiration of
                  its Term. When an Option is no longer exercisable, it shall be
                  deemed to have lapsed or terminated.

                  9.2      Incentive Stock Options. In addition to the other
         terms and conditions applicable to all Options:

                           (i) the purchase price of each Share subject to an
                  Incentive Stock Option shall not be less than 100% of the Fair
                  Market Value of a Share as of the date the Incentive Stock
                  Option is granted if this limitation is necessary to qualify
                  the Option as an Incentive Stock Option (except as provided in
                  Plan Section 19);

                           (ii) the aggregate Fair Market Value (determined as
                  of the date the Option is granted) of the Shares with respect
                  to which Incentive Stock Options held by an individual first
                  become exercisable in any calendar year (under the Plan and
                  all other incentive stock option plans of the Company and its
                  Affiliates) shall not exceed $100,000 (or such other limit as
                  may be required by the Code) if this limitation is necessary
                  to qualify the Option as an Incentive Stock Option and to the
                  extent an Option or Options granted to a Participant exceed
                  this limit the Option or Options shall be treated as a
                  Non-Statutory Stock Option;

                           (iii) an Incentive Stock Option shall not be
                  exercisable more than 10 years after the date of grant (or
                  such other limit as may be required by the Code) if this
                  limitation is necessary to qualify the Option as an Incentive
                  Stock Option;

                           (iv) the Agreement covering an Incentive Stock Option
                  shall contain such other terms and provisions that the
                  Committee determines necessary to qualify this Option as an
                  Incentive Stock Option; and

                           (v) notwithstanding any other provision of the Plan
                  to the contrary, no Participant may receive an Incentive Stock
                  Option under the Plan if, at the time the Award is granted,
                  the Participant owns (after application of the rules contained
                  in Code Section 424(d), or its successor provision), Shares
                  possessing more than 10% of the total combined voting power of
                  all classes of stock of the Company or its Subsidiaries,
                  unless (i) the option price for that Incentive Stock Option is
                  at least 110% of the Fair Market Value of the Shares subject
                  to that Incentive Stock Option on the date of grant and (ii)
                  that Option is not exercisable after the date five years from
                  the date that Incentive Stock Option is granted.

                  9.3 Terms and Conditions of Outside Director Options. This
         Section 9.3 shall apply from and after the earlier of the date of
         termination of the Digi International Inc. Stock Option Plan or the
         date on which no Shares remain available for issuance thereunder.

                           (a) Outside Director Option Grants. Subject to the
                  terms and conditions of the Plan, the Committee shall grant
                  Options to each Outside Director who is not on the date such
                  Option



                                       9


<PAGE>   10

                  would be granted the beneficial owner (as defined in Rule
                  13d-3 under the Exchange Act) of more than 5% of the
                  outstanding Shares, on the terms and conditions set forth in
                  this Section 9.3. During the term of the Plan and provided
                  that sufficient Shares are available pursuant to Plan Section
                  4:
                           (i)      each person who is elected to be an Outside
                                    Director and who was not at any time
                                    previously a director of the Company shall
                                    be granted a Non-Statutory Stock Option. The
                                    date such person is elected to be an Outside
                                    Director of the Company shall be the date of
                                    grant for such Options granted pursuant to
                                    this Section 9.3(a)(i). The number of Shares
                                    covered by each such Option shall be 5,000;

                           (ii)     each person who is an Outside Director at
                                    the conclusion of an Annual Meeting of
                                    Stockholders shall be granted a
                                    Non-Statutory Stock Option on the date of
                                    such Annual Meeting of Stockholders. The
                                    date of such Annual Meeting of Stockholders
                                    shall also be the date of grant for Options
                                    granted pursuant to this Section 9.3(a)(ii).
                                    The number of Shares covered by each such
                                    Option shall be 1,500;

                           (iii)    each person who is elected to be an Outside
                                    Director between Annual Meetings of
                                    Stockholders shall be granted a
                                    Non-Statutory Stock Option. The date such
                                    person is elected to be an Outside Director
                                    of the Company by the Board shall be the
                                    date of grant for such Options granted
                                    pursuant to this Section 9.3(a)(iii). The
                                    number of Shares covered by each such Option
                                    shall be 1,500 multiplied by a fraction, the
                                    numerator of which shall be 12 minus the
                                    number of whole 30-day months that have
                                    elapsed from the date of the most recent
                                    Annual Meeting of Stockholders to the date
                                    such person is elected to be an Outside
                                    Director, and the denominator of which shall
                                    be 12;

                           (iv)     each person who is an Outside Director at
                                    the conclusion of an Annual Meeting of
                                    Stockholders may elect in writing to be
                                    granted a Non-Statutory Stock Option on the
                                    date of such Annual Meeting of Stockholders
                                    in lieu of all cash compensation to which
                                    such Outside Director would be entitled for
                                    the Board year of the Company commencing
                                    with such Annual Meeting of Stockholders.
                                    The date of such Annual Meeting of
                                    Stockholders shall also be the date of grant
                                    for Options granted pursuant to this Section
                                    9.3(a)(iv). The number of Shares covered by
                                    each such Option shall be 6,000. Any such
                                    election by an Outside Director shall be
                                    subject to prior approval by the Committee;
                                    and

                           (v)      each person who is elected to be an Outside
                                    Director between Annual Meetings of
                                    Stockholders may elect in writing to be
                                    granted a Non-Statutory Stock Option in lieu
                                    of all cash compensation to which such
                                    Outside Director would otherwise be entitled
                                    for the period commencing with the date such
                                    person is elected to be an Outside Director
                                    of the Company by the Board and ending on
                                    the date of the next Annual Meeting of
                                    Stockholders. The date such person is
                                    elected to be an Outside Director of the
                                    Company by the Board shall be the date of
                                    grant for such Options granted pursuant to
                                    this Section 9.3(a)(v). The number of Shares
                                    covered by each such Option shall be 6,000
                                    multiplied by a fraction, the numerator of
                                    which shall be 12 minus the number of whole
                                    30-day months that have elapsed from the
                                    date of the most recent Annual Meeting of
                                    Stockholders to the date such person is
                                    elected to be an Outside Director, and the
                                    denominator of which shall be 12. Such
                                    election by an Outside Director shall be
                                    subject to prior approval by the Committee.

                           (b) Exercise Price of Outside Director Options. The
                  purchase price of each Share subject to an Option granted to
                  an Outside Director pursuant to this Section 9.3 shall be the
                  Fair Market Value of a Share on the date of grant.

                                       10
<PAGE>   11



                           (c)      Vesting of Outside Director Options.

                           (i)      Subject to the provisions of Plan Sections
                                    9.3(d) and (e), (x) options granted to
                                    Outside Directors pursuant to Plan Sections
                                    9.3(a)(ii) and (iv) and (y) options granted
                                    to Outside Directors pursuant to Plan
                                    Section 9.3(a)(i) if the date of grant of
                                    such Options is the date of an Annual
                                    Meeting of Stockholders shall vest and
                                    become exercisable in accordance with the
                                    following schedule:

<TABLE>
<CAPTION>
             Annual Meeting                       Cumulative Percentage
             of Stockholders                       Becoming Exercisable
          ---------------------                   ---------------------
<S>                                                <C>
          One Year After Grant                             50%
          Two Years After Grant                            100%
</TABLE>


                           (ii)     Subject to the provisions of Plan Sections
                                    9.3(d) and (e), (x) the options granted to
                                    Outside Directors pursuant to Plan Sections
                                    9.3(a)(iii) and (v) and (y) options granted
                                    to Outside Directors pursuant to Plan
                                    Section 9.3(a)(i) if the date of grant of
                                    such Options is a date other than the date
                                    of an Annual Meeting of Stockholders shall
                                    vest and become exercisable in accordance
                                    with the following schedule:

<TABLE>
<CAPTION>
           Anniversary of the                    Cumulative Percentage
             Date of Grant                        Becoming Exercisable
         ---------------------                   ---------------------
<S>                                              <C>
          One Year After Grant                             50%
         Two Years After Grant                            100%
</TABLE>


                           (d) Accelerated Vesting of Outside Director Options.
                  Notwithstanding the vesting schedules set forth in Plan
                  Section 9.3(c), an Option held by an Outside Director shall
                  vest and become immediately exercisable upon the latest of (i)
                  the date on which such Outside Director attains 62 years of
                  age, (ii) the date on which such Outside Director has
                  completed five years of Service (as hereinafter defined) and
                  (iii) the first anniversary of the date of grant of such
                  Option or, if applicable, the Annual Meeting of Stockholders
                  next succeeding the Annual Meeting at which such Option was
                  granted. Any Option granted to an Outside Director on or after
                  the first accelerated vesting date for such Outside Director
                  shall automatically vest on the Annual Meeting of Stockholders
                  next succeeding the Annual Meeting at which such Option was
                  granted. As used herein, "Service" shall mean service to the
                  Company or an Affiliate in the capacity of any advisor,
                  consultant, employee, officer or director, and Service as a
                  director from an Annual Meeting of Stockholders to the next
                  succeeding Annual Meeting shall constitute a year of Service,
                  notwithstanding that such period may actually be more or less
                  than one year.

                           (e) Non-exclusivity of Section 9.3. The provisions of
                  this Section 9.3 are not intended to be exclusive; the
                  Committee, in its discretion, may grant Options or other
                  Awards to an Outside Director.

         10. Stock Appreciation Rights. An Award of a Stock Appreciation Right
shall entitle the Participant (or a Successor or Transferee), subject to terms
and conditions determined by the Committee, to receive upon exercise of the
Stock Appreciation Right all or a portion of the excess of (i) the Fair Market
Value of a specified number of Shares as of the date of exercise of the Stock
Appreciation Right over (ii) a specified price that shall not be less than 100%
of the Fair Market Value of such Shares as of the date of grant of the Stock
Appreciation Right. A Stock Appreciation Right may be granted in connection with
part or all of, in addition to, or completely independent of an Option or any
other Award under the Plan. If issued in connection with a previously or
contemporaneously granted Option, the Committee may impose a condition that
exercise of a Stock Appreciation Right cancels a pro rata portion of the Option
with which it is connected and vice versa. Each Stock Appreciation Right may be
exercisable in whole or in part on the terms provided in the Agreement. No Stock
Appreciation Right shall be exercisable at any time after the expiration of its
Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated.



                                       11

<PAGE>   12



Upon exercise of a Stock Appreciation Right, payment to the Participant or a
Successor or Transferee shall be made at such time or times as shall be provided
in the Agreement in the form of cash, Shares or a combination of cash and Shares
as determined by the Committee. The Agreement may provide for a limitation upon
the amount or percentage of the total appreciation on which payment (whether in
cash and/or Shares) may be made in the event of the exercise of a Stock
Appreciation Right.

         11.      Performance Units.

                  11.1     Initial Award.

                           (a) An Award of Performance Units under the Plan
                  shall entitle the Participant or a Successor or Transferee to
                  future payments of cash, Shares or a combination of cash and
                  Shares, as determined by the Committee, based upon the
                  achievement of pre-established performance targets. These
                  performance targets may, but need not, include, without
                  limitation, targets relating to one or more of the Company's
                  or a group's, unit's, Affiliate's or an individual's
                  performance. The Agreement may establish that a portion of a
                  Participant's Award will be paid for performance that exceeds
                  the minimum target but falls below the maximum target
                  applicable to the Award. The Agreement shall also provide for
                  the timing of the payment.

                           (b) Following the conclusion or acceleration of each
                  Performance Cycle, the Committee shall determine the extent to
                  which (i) performance targets have been attained, (ii) any
                  other terms and conditions with respect to an Award relating
                  to the Performance Cycle have been satisfied and (iii) payment
                  is due with respect to an Award of Performance Units.

                  11.2 Acceleration and Adjustment. The Agreement may permit an
         acceleration of the Performance Cycle and an adjustment of performance
         targets and payments with respect to some or all of the Performance
         Units awarded to a Participant, upon the occurrence of certain events,
         which may, but need not include, without limitation, a Fundamental
         Change, a recapitalization, a change in the accounting practices of the
         Company, a change in the Participant's title or employment
         responsibilities, the Participant's death or retirement or, with
         respect to payments in Shares with respect to Performance Units, a
         reclassification, stock dividend, stock split or stock combination as
         provided in Plan Section 16. The Agreement also may provide for a
         limitation on the value of an Award of Performance Units that a
         Participant may receive.

         12.      Effective Date and Duration of the Plan.

                  12.1 Effective Date. The Plan shall become effective as of
         November 6, 2000, provided that the Plan is approved by the requisite
         vote of stockholders at the January 2001 Annual Meeting of Stockholders
         or any adjournment thereof.

                  12.2 Duration of the Plan. The Plan shall remain in effect
         until all Stock subject to it shall be distributed, all Awards have
         expired or lapsed, the Plan is terminated pursuant to Plan Section 15,
         or November 6, 2010 (the "Termination Date"); provided, however, that
         Awards made before the Termination Date may be exercised, vested or
         otherwise effectuated beyond the Termination Date unless limited in the
         Agreement or otherwise. No Award of an Incentive Stock Option shall be
         made more than 10 years after the Effective Date (or such other limit
         as may be required by the Code) if this limitation is necessary to
         qualify the Option as an Incentive Stock Option. The date and time of
         approval by the Committee of the granting of an Award shall be
         considered the date and time at which the Award is made or granted.

         13.      Plan Does Not Affect Employment Status.

                           (a) Status as an eligible Employee shall not be
                  construed as a commitment that any Award will be made under
                  the Plan to that eligible Employee or to eligible Employees
                  generally.



                                       12


<PAGE>   13



                           (b) Nothing in the Plan or in any Agreement or
                  related documents shall confer upon any Employee or
                  Participant any right to continue in the employment of the
                  Company or any Affiliate or constitute any contract of
                  employment or affect any right that the Company or any
                  Affiliate may have to change such person's compensation, other
                  benefits, job responsibilities, or title, or to terminate the
                  employment of such person with or without cause.

         14.      Tax Withholding. The Company shall have the right to withhold
from any cash payment under the Plan to a Participant or other person (including
a Successor or a Transferee) an amount sufficient to cover any required
withholding taxes. The Company shall have the right to require a Participant or
other person receiving Shares under the Plan to pay the Company a cash amount
sufficient to cover any required withholding taxes before actual receipt of
those Shares. In lieu of all or any part of a cash payment from a person
receiving Shares under the Plan, the Committee may permit the individual to
cover all or any part of the required withholdings through a reduction of the
number of Shares delivered or delivery or tender return to the Company of Shares
held by the Participant or other person, in each case valued in the same manner
as used in computing the withholding taxes under the applicable laws.

         15.      Amendment, Modification and Termination of the Plan.

                  (a) The Board may at any time and from time to time terminate,
         suspend or modify the Plan. Except as limited in (b) below, the
         Committee may at any time alter or amend any or all Agreements under
         the Plan to the extent permitted by law.

                  (b) No termination, suspension, or modification of the Plan
         will materially and adversely affect any right acquired by any
         Participant or Successor or Transferee under an Award granted before
         the date of termination, suspension, or modification, unless otherwise
         agreed to by the Participant in the Agreement or otherwise, or required
         as a matter of law; but it will be conclusively presumed that any
         adjustment for changes in capitalization provided for in Plan Sections
         11.2 or 16 does not adversely affect these rights.

         16.      Adjustment for Changes in Capitalization. Subject to any
required action by the Company's stockholders, appropriate adjustments, so as to
prevent enlargement of rights or inappropriate dilution -- (i) in the aggregate
number and type of Shares available for Awards under the Plan, (ii) in the
limitations on the number of Shares that may be issued to an individual
Participant as an Option or a Stock Appreciation Right in any calendar year or
that may be issued in the form of Restricted Stock or Shares without
restrictions, (iii) in the number and type of Shares and amount of cash subject
to Awards then outstanding, (iv) in the Option price as to any outstanding
Options and, (v) subject to Plan Section 11.2, in outstanding Performance Units
and payments with respect to outstanding Performance Units -- may be made by the
Committee in its sole discretion to give effect to adjustments made in the
number or type of Shares through a Fundamental Change (subject to Plan Section
17), recapitalization, reclassification, stock dividend, stock split, stock
combination or other relevant change, provided that fractional Shares shall be
rounded to the nearest whole Share.

         17.      Fundamental Change. In the event of a proposed Fundamental
Change, the Committee may, but shall not be obligated to:

                  (a) if the Fundamental Change is a merger or consolidation or
         statutory share exchange, make appropriate provision for the protection
         of the outstanding Options and Stock Appreciation Rights by the
         substitution of options, stock appreciation rights and appropriate
         voting common stock of the corporation surviving any merger or
         consolidation or, if appropriate, the parent corporation of the Company
         or such surviving corporation; or

                  (b) at least ten days before the occurrence of the Fundamental
         Change, declare, and provide written notice to each holder of an Option
         or Stock Appreciation Right of the declaration, that each outstanding
         Option and Stock Appreciation Right, whether or not then exercisable,
         shall be canceled at the time of, or immediately before the occurrence
         of the Fundamental Change in exchange for payment to each holder of an
         Option or Stock Appreciation Right, within ten days after the
         Fundamental Change, of cash equal to (i) for each Share covered by the
         canceled Option, the amount, if any, by which the Fair Market


                                       14


<PAGE>   14


         Value (as defined in this Section) per Share exceeds the exercise price
         per Share covered by such Option or (ii) for each Stock Appreciation
         Right, the price determined pursuant to Section 10, except that Fair
         Market Value of the Shares as of the date of exercise of the Stock
         Appreciation Right, as used in clause (i) of Plan Section 10, shall be
         deemed to mean Fair Market Value for each Share with respect to which
         the Stock Appreciation Right is calculated determined in the manner
         hereinafter referred to in this Section. At the time of the declaration
         provided for in the immediately preceding sentence, each Stock
         Appreciation Right and each Option shall immediately become exercisable
         in full and each person holding an Option or a Stock Appreciation Right
         shall have the right, during the period preceding the time of
         cancellation of the Option or Stock Appreciation Right, to exercise the
         Option as to all or any part of the Shares covered thereby or the Stock
         Appreciation Right in whole or in part, as the case may be. In the
         event of a declaration pursuant to Plan Section 17(b), each outstanding
         Option and Stock Appreciation Right granted pursuant to the Plan that
         shall not have been exercised before the Fundamental Change shall be
         canceled at the time of, or immediately before, the Fundamental Change,
         as provided in the declaration. Notwithstanding the foregoing, no
         person holding an Option or a Stock Appreciation Right shall be
         entitled to the payment provided for in this Section 17(b) if such
         Option or Stock Appreciation Right shall have terminated, expired or
         been cancelled. For purposes of this Section only, "Fair Market Value"
         per Share means the cash plus the fair market value, as determined in
         good faith by the Committee, of the non-cash consideration to be
         received per Share by the stockholders of the Company upon the
         occurrence of the Fundamental Change.

         18.      Forfeitures. An Agreement may provide that if a Participant
has received or been entitled to payment of cash, delivery of Shares, or a
combination thereof pursuant to an Award within six months before the
Participant's termination of employment with the Company and its Affiliates, the
Committee, in its sole discretion, may require the Participant to return or
forfeit the cash and/or Shares received with respect to the Award (or its
economic value as of (i) the date of the exercise of Options or Stock
Appreciation Rights, (ii) the date of, and immediately following, the lapse of
restrictions on Restricted Stock or the receipt of Shares without restrictions,
or (iii) the date on which the right of the Participant to payment with respect
to Performance Units vests, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than 15 months after the Participant's
termination of employment with the Company and its Affiliates. The occurrences
may, but need not, include competition with the Company or any Affiliate,
unauthorized disclosure of material proprietary information of the Company or
any Affiliate, a violation of applicable business ethics policies of the Company
or Affiliate or any other occurrence specified in the Agreement within the
period or periods of time specified in the Agreement.

         19.      Corporate Mergers, Acquisitions, Etc. The Committee may also
grant Options, Stock Appreciation Rights, Restricted Stock or other Awards under
the Plan in substitution for, or in connection with the assumption of, existing
options, stock appreciation rights, restricted stock or other award granted,
awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving
a corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a Subsidiary is a party.
The terms and conditions of the substitute Awards may vary from the terms and
conditions set forth in the Plan to the extent as the Board at the time of the
grant may deem appropriate to conform, in whole or in part, to the provisions of
the awards in substitution for which they are granted.

         20.      Unfunded Plan. The Plan shall be unfunded and the Company
shall not be required to segregate any assets that may at any time be
represented by Awards under the Plan. Neither the Company, its Affiliates, the
Committee, nor the Board of Directors shall be deemed to be a trustee of any
amounts to be paid under the Plan nor shall anything contained in the Plan or
any action taken pursuant to its provisions create or be construed to create a
fiduciary relationship between the Company and/or its Affiliates, and a
Participant or Successor or Transferee. To the extent any person acquires a
right to receive an Award under the Plan, this right shall be no greater than
the right of an unsecured general creditor of the Company.

         21.      Limits of Liability.

                  (a) Any liability of the Company to any Participant with
         respect to an Award shall be based solely upon contractual obligations
         created by the Plan and the Award Agreement.



                                       14


<PAGE>   15


                  (b) Except as may be required by law, neither the Company nor
         any member of the Board of Directors or of the Committee, nor any other
         person participating in any determination of any question under the
         Plan, or in the interpretation, administration or application of the
         Plan, shall have any liability to any party for any action taken, or
         not taken, in good faith under the Plan.

         22.      Compliance with Applicable Legal Requirements. No certificate
for Shares distributable pursuant to the Plan shall be issued and delivered
unless the issuance of the certificate complies with all applicable legal
requirements including, without limitation, compliance with the provisions of
applicable state securities laws, the Securities Act of 1933, as amended and in
effect from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges on which the Company's Shares may, at the time, be
listed.

         23.      Deferrals and Settlements. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.

         24.      Other Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay laws of any country
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or unless the Committee expressly
determines that an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.

         25.      Beneficiary Upon  Participant's Death. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate or
to the person who acquires the right to succeed to the Award by bequest or
inheritance.

         26.      Requirements of Law.

                  (a) To the extent that federal laws do not otherwise control,
         the Plan and all determinations made and actions taken pursuant to the
         Plan shall be governed by the laws of the State of Minnesota without
         regard to its conflicts-of-law principles and shall be construed
         accordingly.

                  (b) If any provision of the Plan shall be held illegal or
         invalid for any reason, the illegality or invalidity shall not effect
         the remaining parts of the Plan, and the Plan shall be construed and
         enforced as if the illegal or invalid provision had not been included.



                                       15