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UNITED STATES
SECURITITES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
JULY 1, 2000
(DATE OF REPORT - DATE OF EARLIEST EVENT REPORTED)
APPLIEDTHEORY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 000-25759 16-1491253
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.)
1500 BROADWAY, 3RD FLOOR 10036
NEW YORK, NY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 398-7070
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
LAST REPORT DATE)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 10, 2000, AppliedTheory Corporation ("AppliedTheory") entered into
an agreement and plan of merger (the "Merger Agreement") with Team Tech
International, Inc., a Texas Corporation ("Team Tech"), AppliedTheory TT
Acquisition Corp., ("Merger Sub") a Texas corporation wholly owned by
AppliedTheory, and Art Borrego, Roger Lewis and Tim Blackwood, Team Tech's
principal shareholders ("Team Tech Shareholders"). The merger contemplated by
the Merger Agreement was closed and effective on July 1, 2000. In connection
with the closing of the transactions contemplated by the Merger Agreement (the
"Merger"), AppliedTheory will deliver up to approximately 444,489 shares of
AppliedTheory common stock in consideration for all of the outstanding shares
of Team Tech common stock. The Merger Agreement also includes a performance
incentive payment clause whereby up to an additional 538,140 shares of
AppliedTheory common stock will be delivered by December 31, 2000 if specific
post-closing revenue, EBITDA (earnings before interest, taxes, depreciaton and
amortization) and balance sheet targets are satisfied. Upon the closing of the
Merger Agreement, Team Tech and Merger Sub merged, with Team Tech being the
surviving corporation. Following the completion of the Merger, Team Tech has
been renamed AppliedTheory Austin Corporation and all its capital stock is
owned by AppliedTheory.
Team Tech provides Web consulting and e-Business solutions to commercial
clients and government agencies worldwide. It was founded in 1994 and is based
in Austin, Texas.
The purchase price for AppliedTheory's acquisition of Team Tech was
determined through arm's-length negotiations between AppliedTheory, Team Tech
and the other parties to the Merger Agreement. During these negotiations, the
parties considered, among other things, the market for Team Tech's services,
Team Tech's Web consulting and e-Business solutions businesses, the present
stage of development of Team Tech's business and operations, Team Tech's
financial condition, and Team Tech's future business prospects.
In connection with the closing of the merger, AppliedTheory also entered
into an escrow agreement (the "Escrow Agreement") with Team Tech, Art Borrego,
Roger Lewis and Tim Blackwood whereby 51,628 shares of AppliedTheory common
stock from the total merger consideration to which the Team Tech Shareholders
are entitled in consideration for the Merger will be held in an escrow account
(the "Escrow Account") by Wells Fargo Investment Management & Trust (the
"Escrow Agent") for a period of one year following the closing of the Merger.
Following the closing of the Merger, the shares of AppliedTheory common stock
held in the Escrow Account will be available as a fund against which
AppliedTheory may seek indemnification from the Team Tech Shareholders pursuant
to the Merger Agreement.
Finally, in connection with the Merger, AppliedTheory entered into a
registration rights agreement (the "Registration Rights Agreement") with Art
Borrego, Roger Lewis and Tim Blackwood whereby they will have the right to
"piggyback" the registration of any number of the shares of AppliedTheory common
stock delivered pursuant to the Merger, for the period beginning on the closing
of the Merger and ending on the first anniversary of the closing of the Merger.
The Merger Agreement, Escrow Agreement, and Registration Rights Agreement
are included as Exhibits 2.15, 2.16, and 2.17 to this Current Report on Form
8-K. Please review these documents for additional information regarding the
terms of these agreements.
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AppliedTheory applied a portion the funds raised through its initial public
offering (SEC File No. 333-72133) for the cash portion of expenses incurred in
the merger.
AppliedTheory intends to operate Team Tech as a wholly-owned subsidiary
known as AppliedTheory Austin Corporation. Team Tech will continue to operate
its business in the same manner as before the acquisition.
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ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL
INFORMATION AND EXHIBITS
(a.) Financial Statements of Team Tech International, Inc.
Not required.
(b.) Pro Forma Financial Information.
Not required
(c.) Exhibits.
Following is the Index of Exhibits furnished in accordance with Item 601 of
Regulation S-K, filed as part of this Current Report on Form 8-K or incorporated
by reference herewith:
2.15 Merger Agreement, dated June 10, 2000, by and among AppliedTheory
Corporation, a Delaware corporation; AppliedTheory TT Acquisition Corp.,
a Texas Corporation; Team Tech International, Inc., a Texas Corporation;
Art Borrego, Roger Lewis and Tim Blackwood.
2.16 Escrow Agreement, dated June 29, 2000, by and among, AppliedTheory
Corporation, AppliedTheory TT Acquisition Corp., Art Borrego, Roger
Lewis and Tim Blackwood.
2.17 Registration Rights Agreement dated June 29, 2000, by and between
AppliedTheory Corporation, Team Tech, Wells Fargo Investment Management
& Trust, Art Borrego, Roger Lewis and Tim Blackwood.
99.5 Press release issued by AppliedTheory Corporation on June 12, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AppliedTheory Corporation
Date: July 14, 2000 by: /s/ Richard Mandelbaum
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Richard Mandelbaum
Chairman of the Board,
Chief Executive Officer, and
Director (Principal Executive Officer)
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EXHIBIT INDEX
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Exhibit No. Description
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2.15 Merger Agreement, dated June 10, 2000, by and among
AppliedTheory Corporation, a Delaware corporation;
AppliedTheory TT Acquisition Corp., a Texas Corporation; Team
Tech International, Inc., a Texas Corporation; Art Borrego,
Roger Lewis and Tim Blackwood.
2.16 Escrow Agreement, dated June 29, 2000, by and among,
AppliedTheory Corporation, AppliedTheory TT Acquisition Corp.,
Art Borrego, Roger Lewis and Tim Blackwood.
2.17 Registration Rights Agreement dated June 29, 2000, by
and between AppliedTheory Corporation, Team Tech, Wells Fargo
Investment Management & Trust, Art Borrego, Roger Lewis and
Tim Blackwood.
99.5 Press release issued by AppliedTheory Corporation on
June 12, 2000.
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