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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
MAY 23, 2000
(DATE OF REPORT - DATE OF EARLIEST EVENT REPORTED)
APPLIEDTHEORY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 000-25759 16-1491253
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(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)
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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 May 15, 2000, AppliedTheory Corporation ("AppliedTheory") entered
into an agreement and plan of merger (the "Merger Agreement") with The Cordada
Group, Inc. ("Cordada"), AppliedTheory Seattle Corporation, ("Merger Sub") a
Delaware corporation wholly owned by AppliedTheory, and Robert J. Margulis,
Cordada's principal shareholder. On May 23, 2000, the effective date of the
Merger Agreement, AppliedTheory exchanged approximately 758,219 shares of
AppliedTheory common stock for all of the outstanding shares of Cordada common
stock. Upon the closing of the Merger Agreement, Cordada and Merger Sub merged
with Cordada being the surviving corporation (the "Merger"). Following the
completion of the Merger, Cordada has changed its name to AppliedTheory Seattle
Corporation and all its capital stock is owned by AppliedTheory.
Cordada provides e-Business solutions to businesses ranging from
start-ups to Global 500 companies. It was founded in 1991 and is based in
Seattle, Washington.
The purchase price for AppliedTheory's acquisition of Cordada was
determined through arm's-length negotiations between AppliedTheory, Cordada and
the other parties to the Merger Agreement. During these negotiations, the
parties considered, among other things, the market for Cordada's services,
Cordada's e-Business solutions businesses, the present stage of development of
Cordada's business and operations, Cordada's financial condition, Cordada's
future business prospects, and the estimated value of the synergies to be
realized between AppliedTheory and Cordada following the closing of the Merger.
In connection with that closing, AppliedTheory also entered into an
escrow agreement (the "Escrow Agreement") with Merger Sub and Robert J.
Margulis whereby 160,000 shares of AppliedTheory common stock from the total
merger consideration to which Mr. Margulis is entitled in respect of his shares
of Cordada common stock will be held in an escrow account (the "Escrow
Account") 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 Mr. Margulis pursuant to the Merger
Agreement.
Finally, in connection with the Merger, AppliedTheory entered into a
registration rights agreement (the "Registration Rights Agreement") with Robert
J. Margulis whereby he 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 2.7, 2.8, and 2.9 to this Current Report on
Form 8-K. Please review these documents for additional information regarding
the terms of these agreements.
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 Cordada as a wholly-owned subsidiary
known as AppliedTheory Seattle Corporation. Cordada 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 The Cordada Group, 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:
2.7 Merger Agreement, dated May 15, 2000, by and among AppliedTheory
Corporation, a Delaware corporation; AppliedTheory Seattle
Corporation, a Delaware Corporation; The Cordada Group, Inc., a
Washington Corporation; and Robert J. Margulis.
2.8 Escrow Agreement, dated May 23, 2000, by and among, AppliedTheory
Corporation, AppliedTheory Seattle Corporation, and Robert J.
Margulis.
2.9 Registration Rights Agreement dated May 23, 2000, by and between
AppliedTheory Corporation and Robert J. Margulis.
99.3 Press release issued by AppliedTheory Corporation on May 15,
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: May 30, 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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2.7 Merger Agreement, dated May 15, 2000, by and among AppliedTheory Corporation, a Delaware corporation;
AppliedTheory Seattle Corporation, a Delaware Corporation; The Cordada Group, Inc., a
Washington Corporation; and Robert J. Margulis.
2.8 Escrow Agreement, dated May 23, 2000, by and among, AppliedTheory Corporation, AppliedTheory
Seattle Corporation, and Robert J. Margulis.
2.9 Registration Rights Agreement dated May 23, 2000, by and between AppliedTheory Corporation,
Robert J. Margulis.
99.3 Press release issued by AppliedTheory Corporation on May 15, 2000.
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