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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 2, 2000
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DIGI INTERNATIONAL INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 0-17972 41-1532464
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
11001 BREN ROAD EAST
MINNETONKA, MINNESOTA 55343
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 912-3444
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Item 2. Acquisition of disposition of interests.
On October 2, 2000, ION Acquisition Inc., a Texas corporation
and wholly owned subsidiary of the Registrant ("Merger Sub"), merged (the
"Merger") with and into Inside Out Networks, Inc., a Texas corporation ("ION").
ION, as the surviving corporation in the Merger, has become a wholly owned
subsidiary of the Registrant. The Merger was pursuant to an Agreement and Plan
of Merger dated as of September 26, 2000 (the "Merger Agreement") by and among
Registrant, Merger Sub, ION, the holders of the outstanding shares of common
stock and preferred stock of ION ("ION Shareholders"), and the holders of the
outstanding options and warrants to purchase ION common stock.
In connection with the Merger, the ION Shareholders received
cash in exchange for their shares of common stock and preferred stock of ION and
no longer have an equity interest in ION. Holders of outstanding options and
warrants to purchase ION common stock received the cash consideration payable to
the ION Shareholders less the exercise price of their option or warrant and the
amount of any withholding obligation. Digi paid to the ION Shareholders and the
holders of outstanding options and warrants an initial purchase price of
$6,410,000 in the aggregate. The cash payment is subject to a purchase price
adjustment, if any, based upon the net worth of ION at the effective time of the
Merger. The purchase price will be adjusted upward or downward by any amount by
which the liabilities of ION are less than or exceed, respectively, the net
worth of ION at the effective time of the Merger. The ION Shareholders and the
holders of outstanding options and warrants will also have the right to receive
up to $8,500,000 in cash (the "Contingent Consideration") payable over a three
year earnout period commencing on October 1, 2000. The payment of the Contingent
Consideration is attributable to the achievement of certain cumulative revenue
targets and certain cumulative operating income targets for the earnout period.
The Registrant will use current cash reserves to fund the initial purchase price
to be paid in the Merger.
The Merger will be accounted for under the purchase method and
will be a taxable transaction to the ION Shareholders. The Registrant intends to
continue ION's business of providing universal serial bus products for business
users.
Additional information regarding the terms of the Merger is
included in the Merger Agreement and Press Releases included herein as exhibits.
Item 7. Financial Statements and Exhibits.
The following information follows or is attached hereto as an
exhibit:
(a) Financial Statements of ION: Not required.
(b) Pro Forma Financial Information of Registrant and
ION: Not required.
(c) Exhibits
2. Agreement and Plan of Merger dated as of
September 26, 2000 among the Registrant,
Merger Sub, ION and others.
The Registrant hereby agrees to furnish
supplementally a copy of any omitted
schedule or exhibit to the Commission upon
request.
99.1 Press Release of the Registrant dated
September 27, 2000.
99.2 Press Release of the Registrant dated
October 2, 2000.
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SIGNATURES
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.
DIGI INTERNATIONAL INC.
Date: October 13, 2000 By /s/ Joseph T. Dunsmore
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Joseph T. Dunsmore
President and Chief Executive Officer
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EXHIBIT INDEX
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No. Exhibit Page
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2 Agreement and Plan of Merger dated as of September 26, 2000 Filed
among the Registrant, Merger Sub, ION and others Electronically
99.1 Press release dated September 27, 2000. Filed
Electronically
99.2 Press release dated October 2, 2000 Filed
Electronically
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