<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
/X/ Annual report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
-----------------
or
/ / Transition report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ____________ to ___________
Commission File Number 0-28284
INFONAUTICS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2707366
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 West Valley Road, Suite 1000
Wayne, PA 19087
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 610-971-8840
Title of each class: Name of each exchange on which registered:
None None
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, no par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days: YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
registrant is approximately $140,000,000. Such aggregate market value was
computed by reference to the closing price of the Common Stock as reported on
The Nasdaq SmallCap Market on March 17, 2000. For purposes of this calculation
only, the registrant has defined affiliates as including all directors and
executive officers. In making such calculation, registrant is not making a
determination of the affiliate or non-affiliate status of any holders of shares
of Common Stock.
The number of shares of the registrant's Common Stock outstanding as of
March 17, 2000 was 12,059,033.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
None.
PRELIMINARY NOTE:
This Form 10-K/A is being filed to report Part III information in lieu of the
incorporation of such information by reference to the Company's definitive proxy
material for its 2000 Annual Meeting of Shareholders. In addition, in order
to give the Company's shareholders sufficient time to receive, review, and
vote their annual meeting proxies, the Company is rescheduling its annual
meeting of shareholders from May 25, 2000 to June 21, 2000.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations
Name of Director Age During Past Five Years and Certain Directorships
- ---------------- --- -------------------------------------------------
<S> <C> <C>
Lloyd N. Morrisett 70 Dr. Morrisett has served as a director of the Company since February 1994 and
as Chairman of the board of directors since March 1998. He is the co-founder
of the Children's Television Workshop and served from 1969-1998 as President of
The Markle Foundation, a charitable organization. Dr. Morrisett is a director
of WEBS Index Funds, Inc.
Israel J. Melman 80 Mr. Melman, a co-founder of the Company, has served as a director of the
Company since April 1993. He is presently, and for the last 27 years has been,
the president of Lexan Associates, a management consulting firm working with
companies in the areas of video, graphics, microelectronics, communication,
optics and robotics. From 1985 through 1993, Mr. Melman was Chairman of
Telebase Systems, Inc., a developer of customized information and
entertainment services that is now part of CDnow, Inc. as a result of its
merger with N2K Inc.
Howard L. Morgan 54 Dr. Morgan has served as a director of the Company since March 1993. He is
currently Vice-Chairman and President, NY for idealab!, which creates and
operates Internet companies. Since 1989, he has been President of the Arca
Group, Inc., a consulting and investment management firm specializing in the
areas of computer and communications technologies. Dr. Morgan also served as
Chief Executive Officer of Franklin Electronic Publishers, Inc. in early 1998.
Dr. Morgan was Professor of Decision Sciences at the Wharton School of the
University of Pennsylvania from 1972 through 1986. Dr. Morgan serves as
director for a number of technology companies, including Cylink Corporation,
Franklin Electronic Publishers, Inc., MyPoints.com, Inc., Segue Software, Inc.,
Tickets.com, Inc. and Unitronix Corporation.
David Van Riper Morris 45 Mr. Morris has served as Chief Executive Officer, President and as a director
of the Company since March 1998. Mr. Morris joined the Company as President
and Chief Operating Officer in September 1995. From 1992 until he joined the
Company, Mr. Morris held various vice president and general management
positions at Legent Corporation ("Legent"), a systems management software
company. From 1987 to 1992, Mr. Morris was employed by Goal Systems
International ("Goal"), initially as Director of Marketing, later as Vice
President of Marketing. Goal was purchased by Legent in 1992.
Brian Segal 56 Dr. Segal has served as a director of the Company since May 1998. Dr. Segal is
</TABLE>
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<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations
Name of Director Age During Past Five Years and Certain Directorships
- ---------------- --- -------------------------------------------------
<S> <C> <C>
the President and CEO of Publishing and Online Services, Rogers Media, Canada's
leading magazine publishing and interactive media company. Rogers Media is a
wholly-owned subsidiary of Rogers Communications Inc. Rogers Media is party to
a transaction with the Company. See "Certain Relationships and Related
Transactions." Before joining Rogers in 1992, Dr. Segal was president of the
University of Guelph and chair of the Council of Ontario Universities.
Lester Wunderman 79 Mr. Wunderman has served as a director of the Company since December 1996. He
is Chairman Emeritus of Wunderman Cato Johnson, now known as Impiric, a
world-wide direct marketing agency, which he founded in 1958. He is also
manager of Wunderman LLC and a Visiting Professor of Direct Marketing at the
School for Continuing Education at New York University ("NYU"). He served as
Chairman of the Executive Committee of the Center for Direct Marketing at NYU
and is a Trustee of the Children's Television Workshop. Mr. Wunderman is a
director of Transmedia Network Inc. and MyPoints.com.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of such reports received by
the Company and written representations from certain reporting persons that no
Forms 5 were required for those persons, the Company believes that during the
year ended December 31, 1999, all filing requirements applicable to its
officers, directors and ten-percent shareholders were satisfied except that
Marvin Weinberger failed to timely report on Form 4 the sale of at least 25,000
shares of Class A Common Stock in November 1999. The Company understands
that Mr. Weinberger is in the process of making such required filing.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Executive Officers and Directors
The following table sets forth for the years ended December 31, 1999,
1998, and 1997 certain compensation paid by the Company to: (i) its Chief
Executive Officer, (ii) its four most highly compensated executive officers
(other than the Chief Executive Officer) who were serving as executive officers
as of December 31, 1999, and (iii) up to two additional executive officers who
would otherwise be required to be named in this table except for the fact that
they were no longer executive officers as of December 31, 1999 (the "Named
Executive Officers").
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation Awards
Annual Compensation --------------------------
--------------------------------- Restricted Securities
Other Annual Stock Underlying Other
Name and Principal Position Year Salary Bonus Compensation Awards Options Compensation
- --------------------------- ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David Van Riper Morris 1999 $175,000 -- -- -- 200,000 --
President & Chief 1998 $166,667 -- -- -- 75,000 --
Executive Officer 1997 $147,254 -- -- -- 100,000 --
Federica F. O'Brien(1) 1999 $121,970 $5,000 -- -- 20,000 --
Vice President & Chief 1998 $86,500 -- -- -- 13,500 --
Financial Officer, Treasurer 1997 $66,917 -- -- -- 3,000 --
Gerard J. Lewis, Jr.(2) 1999 $127,256 -- -- -- 45,000 --
Vice President & General 1998 $108,986 -- -- -- 25,000 --
Counsel, Secretary 1997 $90,267 -- -- -- 30,000 --
Cedarampattu Mohan(3) 1999 $125,663 -- -- -- 80,000 --
Vice President & Chief 1998 $90,000 -- -- -- 20,000 --
Technical Officer 1997 $73,224 -- -- -- 9,500 --
William R. Burger(4) 1999 $135,833 -- -- -- -- $140,000(5)
Vice President--Content 1998 $127,500 -- -- -- 30,000 --
and Media Services 1997 $111,200 $5,000 -- -- 30,000 --
Joshua M. Kopelman(6) 1999 $69,913 $20,000 -- -- -- $280,000(7)
Executive Vice President & 1998 $109,000 $15,000 -- -- 10,000 --
Secretary 1997 $99,672 $40,010 -- -- 10,000 --
</TABLE>
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(1) Ms. O'Brien was named Vice President & Chief Financial Officer in
September 1999 and Acting Chief Financial Officer in August 1998.
(2) Mr. Lewis was appointed Secretary of the Company in September 1999.
(3) Mr. Mohan became an executive officer of the Company in January 1999.
(4) Mr. Burger ended his employment with the Company effective January 7,
2000.
(5) Represents a severance payment made under the January 2, 1997
employment agreement between Mr. Burger and the Company. The payment
was made in January 2000.
(6) Mr. Kopelman ended his employment with the Company effective July 6,
1999 in order to start a new company, Half.com, Inc.
(7) Represents a payment to Half.com, Inc. made under the Amendment to
Employment Agreement dated June 17, 1999 between the Company and
Mr. Kopelman.
<PAGE>
The following table summarizes stock options granted during 1999 to the
Named Executive Officers.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants(1)
Grant Date Value(2)
Number of
Securities Percent of Total
Underlying Options Granted to Exercise or Expiration Grant Date
Name Options Granted Employees in 1999 Base Price Date Present Value
- ---- --------------- ------------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
David Van Riper Morris 200,000 26.0% $6.09 7/6/09 $800,000
Federica F. O'Brien 20,000 2.6% $6.09 7/6/09 $80,000
Gerard J. Lewis, Jr. 45,000 5.8% $6.09 7/6/09 $180,000
Cedarampattu S. Mohan 80,000 10.4% $6.09 7/6/09 $320,000
William R. Burger -- -- -- -- --
Joshua M. Kopelman -- -- -- -- --
</TABLE>
- -------------------
(1) The options, which were granted under the Company's 1996 Amended and
Restated Equity Compensation Plan or its 1994 Omnibus Stock Plan, have
a term of ten years, subject to earlier termination in certain events
related to the termination of employment. The options granted in 1999
vest over the course of one year with 50% of the options vesting at six
months, 25% vesting at nine months, and the remaining 25% vesting at 12
months. If a "change of control" (as defined in the 1994 or 1996 Plans)
were to occur, these options would become immediately exercisable in
full. However, "change of control" does not include any transaction
that would otherwise constitute a "change of control" if the
transaction was publicly announced on or before July 8, 1999.
(2) Grant date present value has been calculated using the Black-Scholes
pricing model.
The following table summarizes option exercises during 1999 and the
value of vested and unvested options for the Named Executive Officers at
December 31, 1999. Year-end values are based upon a price of $7.00 per share,
which was the closing market price of a share of the Company's Class A Common
Stock on December 31, 1999.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options at
Shares December 31, 1999 December 31, 1999
Acquired on Value ----------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Van Riper Morris -- -- 438,200 200,000 $1,269,000 $182,000
Federica F. O'Brien -- -- 19,000 20,000 $90,592 $18,200
Gerard J. Lewis, Jr. -- -- 70,000 45,000 $261,875 $40,950
Cedarampattu S. Mohan -- -- 33,500 80,000 $135,663 $72,800
William R. Burger -- -- 60,000 -- $218,750 --
Joshua M. Kopelman 107,500 $342,454 -- -- -- --
</TABLE>
The Company does not currently grant any long-term incentives, other
than stock options, to its executives or other employees. Similarly, the Company
does not sponsor any defined benefit or actuarial plans at this time.
<PAGE>
Employment Agreements
As of September 5, 1995, Van Morris entered into an employment
agreement with the Company that provided for an annual base salary of $135,000,
which salary is subject to review at least annually and is currently $175,000.
His employment agreement was subsequently amended on November 4, 1996. In
connection with his employment agreement, the Company agreed to grant Mr. Morris
an aggregate of 152,000 options to purchase Class A Common Stock. Mr. Morris'
employment agreement is at-will, with limited non-compete provisions applicable
for up to one year after certain terminations, as long as the Company continues
certain salary payments during the period. However, if the Company terminates
Mr. Morris without cause, the Company is required to pay Mr. Morris as severance
a lump sum equal to his annual salary within 30 days of termination. Such
payment is conditioned on the Company receiving a general release from
Mr. Morris. The Company's obligations to pay Mr. Morris will terminate upon
Mr. Morris obtaining other employment or other full-time consulting work.
Effective November 24, 1997, the Company entered into an employment
agreement with Gerard J. Lewis, Jr. that provided for a base annual salary
$95,000, which salary is subject to review at least annually and is currently
$140,000. This employment agreement is at-will. However, if the Company
terminates Mr. Lewis without cause, the Company is required to pay as severance
a lump sum equal to his annual salary within 30 days of termination. Such
payment is contingent on the Company receiving a general release from Mr. Lewis
and Mr. Lewis' compliance with any provisions of the employment agreement that
expressly survive its termination.
Effective January 2, 1997, the Company entered into an employment
agreement with William R. Burger. Effective January 7, 2000, the Company
eliminated Mr. Burger's position following the Company's restructuring after the
closing of its transaction with Bell & Howell Company and bigchalk.com, Inc. As
a result of eliminating Mr. Burger's position, in January 2000 the Company paid
him a severance payment equal to his then current annual salary of $140,000,
less certain deductions including repayment in full (plus interest) of a $40,000
loan made by the Company to Mr. Burger in November 1999. As required by
Mr. Burger's employment agreement, the Company obtained a general release from
Mr. Burger as well as acknowledgment of his continued compliance with any
provisions of the employment agreement that expressly survive its termination.
These provisions include a limited non-compete provision applicable for up to
one year.
As of January 1, 1993, Joshua M. Kopelman entered into an employment
agreement and royalty agreement with the Company. Effective June 17, 1999, the
Company amended Mr. Kopelman's employment agreement and revoked and canceled his
royalty agreement. Mr. Kopelman ended his employment with the Company effective
July 6, 1999. In consideration for the amendments to the employment agreement
and revocation of the royalty agreement, the Company agreed to pay Mr. Kopelman
$20,000 in bonuses. In addition, the Company agreed that at its election it
could either (i) pay $160,000 to Mr. Kopelman personally or (ii) invest $280,000
in a new company formed by Mr. Kopelman for an initial 10% equity ownership in
the new company. The Company paid Mr. Kopelman the $20,000 in bonuses in 1999
and elected and made the $280,000 investment in Mr. Kopelman's new company,
Half.com, Inc., in 1999. Under the amended employment agreement, the Company has
one seat on the Half.com, Inc. board of directors, which is currently held by
Van Morris. The Company and Mr. Kopelman also entered into a consulting
agreement which terminated at the end of January 6, 2000. The Company paid
approximately $2,100 for consulting services made under the consulting
agreement.
Compensation of Directors
The non-employee directors of the Company each receive $5,000 per year
for their service on the board of directors and are reimbursed for their
out-of-pocket expenses. Dr. Morrisett, as Chairman of the board, receives an
additional $3,000 per month for his service on the board. Other directors do not
receive compensation for their service on the board of directors or any
committee thereof, although they are reimbursed for their out-of-pocket expenses
for serving on the board of directors.
Under the Amended and Restated 1996 Equity Compensation Plan (the
"Plan"), each non-employee director who was a member of the board of directors
as of the effective date of the Plan received a formula grant of a
<PAGE>
non-qualified stock option ("NQSO"), to purchase 10,000 shares of Class A Common
Stock at a price equal to the initial public offering price in the Company's
initial public offering. Dr. Morgan waived his rights to the initial grant of
options to purchase 10,000 shares of Class A Common Stock. In addition, each
non-employee director who became or becomes a member of the board of directors
after the effective date of the Plan received or will receive a formula grant of
an NQSO to purchase 10,000 shares of Class A Common Stock on the date that
director became or becomes a member of the board of directors at an exercise
price equal to the closing price per share on The Nasdaq SmallCap Market on the
date of grant. However, the exercise price for each non-employee director who
became or becomes a member of the board of directors after January 5, 1999 is
equal to the mean between the last reported "bid" and "asked" prices per share
on The Nasdaq SmallCap Market on the date of grant.
On each date on which the Company holds its annual meeting of
shareholders, each non-employee director in office immediately before and after
the annual election of directors will receive a grant of an NQSO to purchase
2,500 shares of Class A Common Stock at an exercise price equal to the mean
between the last reported "bid" and "asked" prices per share on The Nasdaq
SmallCap Market on the date of grant. The term of each such option is or will be
five years, and each such option is or will be fully and immediately exercisable
on the date of grant.
Each of the directors is a party to an indemnification agreement with
the Company. Pursuant to these agreements, the directors are indemnified against
liabilities and expenses incurred as a result of litigation which may be brought
alleging that they violated their fiduciary duties to the Company, if they have
not met the applicable standard of care.
Dr. Morgan is a party to a consulting agreement with the Company
pursuant to which he provides consulting services to the Company for up to three
days per month for a monthly consulting fee of $3,000. The agreement may be
terminated with 10 days' notice by either Dr. Morgan or the Company. In general,
Dr. Morgan's services to date have focused on technical assessment and planning
for the Company's services and products.
The Company had a consulting agreement with Mr. Melman that called for
him to provide consulting services to the Company for a monthly consulting fee
of $3,000. By the mutual agreement of Mr. Melman and the Company, this
consulting agreement was terminated as of January 31, 1999. Upon the termination
of Mr. Melman's consulting agreement, the Company paid Mr. Melman 3,918 shares
of Class A Common Stock for the final six months of the consulting agreement in
lieu of the monthly $3,000 cash fee for those final six months.
Compensation Committee Interlocks and Insider Participation
Dr. Morgan, a member of the Compensation Committee, is party to a
consulting agreement with the Company. Mr. Melman, a member of the Compensation
Committee, was a party to a consulting agreement with the Company. See Item 11
above for a detailed discussion.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 17, 2000
(except as may otherwise be noted) regarding the ownership of Class A and Class
B Common Stock (i) by each person known by the Company to be the beneficial
owner of more than five percent of the Company's outstanding common stock, (ii)
by each director of the Company, (iii) by each executive officer named in the
Summary Compensation Table and (iv) by all named executive officers and
directors of the Company as a group.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address Beneficially Owned(1) Outstanding Shares(2)
- ---------------- --------------------- ---------------------
<S> <C> <C>
Marvin I. Weinberger(3)
Sabine and Essex Avenues
Narberth, PA 19072 1,531,521 12.7%
Emerald Advisers, Inc.(4)
P.O. Box 10666
Lancaster, PA 17605 1,170,996 9.7
Officers and Directors
- ----------------------
David Van Riper Morris(5) 622,300 5.2
Howard L. Morgan(6) 247,500 2.0
Gerard J. Lewis, Jr.(7) 103,900 *
Cedarampattu Mohan(8) 94,830 *
Israel J. Melman(9) 101,922 *
Lloyd N. Morrisett(10) 39,500 *
Federica O'Brien(11) 34,000 *
Lester Wunderman(12) 17,500 *
Brian Segal(13) 12,500 *
Josh Kopelman (14) 27,004 *
William R. Burger(15) 10,000 *
All named executive officers
and directors as a group
(11 persons) 1,310,956 10.9
</TABLE>
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* Less than one percent.
(1) Nature of ownership consists of sole voting and investment power unless
otherwise indicated. The number of shares indicated includes shares
issuable upon the exercise of outstanding stock options held by each
individual or group to the extent such options are exercisable within
sixty days of April 1, 2000.
(2) The percentage for each individual or group is based on the aggregate
of the shares outstanding as of March 17, 2000, which was 12,059,033
shares, and all shares issuable upon the exercise of outstanding stock
options held by such individual or group to the extent such options are
exercisable within sixty days of April 1, 2000.
(3) Represents 1,225,557 shares of Class A Common Stock; 100,000 shares of
Class B Common Stock (for which Mr. Weinberger has 50 votes per Class B
share); 160,000 shares of Class A Common Stock held by Fran Solow
Weinberger (Mr. Weinberger's wife) and Howard L. Morgan, Trustees under
The Marvin Weinberger 1996 Trust Agreement dated January 31, 1996 (the
"1996 Trust"); 17,400 shares of Class A Common Stock held by Fran Solow
Weinberger and Howard L. Morgan, Trustees under The Marvin Weinberger
GST Trust dated January 31, 1996 (the "GST Trust"); and 28,544 shares
of Class A Common Stock held by The Danna Company, an Ohio corporation
("Danna"), of which Mr. Weinberger is the president and a director.
Mrs. Weinberger and Dr. Morgan have shared voting and investment power
with respect to the shares held by the 1996 Trust and the GST Trust.
Mr. Weinberger disclaims beneficial ownership with respect to such
shares. Mr. Weinberger has shared voting and investment power with
respect to the shares held by Danna and disclaims beneficial ownership
with respect to such shares. The
<PAGE>
1,225,557 shares of Class A Common Stock specified earlier in this
footnote includes 50,000 shares which were exercised as options in
1998, but which were not issued until 1999.
(4) Represents 906,831 shares of Class A Common Stock for which the owner
has sole voting and investment power and 264,165 shares of Class A
Common Stock for which the owner has shared voting power and sole
investment power. All such shares are owned for investment advisory and
investment company clients of the owner.
(5) Represents 34,100 shares of Class A Common Stock and options to
purchase 588,200 shares of Class A Common Stock.
(6) Represents 125,000 shares of Class A Common Stock, options to purchase
up to 116,500 shares of Class A Common Stock, 2,000 shares of Class A
Common Stock held by Eleanor Morgan (Dr. Morgan's wife) and Beverly
Budin, Trustees under the Howard L. Morgan 1989 Indenture of Trust
F/B/O Kimberly D. Morgan, 2,000 shares of Class A Common Stock held by
Eleanor Morgan and Beverly Budin, Trustees under the Howard L. Morgan
1989 Indenture of Trust F/B/O Elizabeth S. Morgan, and 2,000 shares of
Class A Common Stock held by Eleanor Morgan and Beverly Budin, Trustees
under the Howard L. Morgan 1989 Indenture of Trust F/B/O Danielle A.
Morgan (such trusts being collectively referred to as the "Howard L.
Morgan Trusts"). Mrs. Morgan and Beverly Budin have shared voting and
investment power with respect to the shares held by the Howard L.
Morgan Trusts. Dr. Morgan disclaims beneficial ownership with respect
to such shares. Excludes 160,000 shares of Class A Common Stock held by
Fran Solow Weinberger and Howard L. Morgan, Trustees under the 1996
Trust, and 17,400 shares of Class A Common Stock held by Fran Solow
Weinberger and Howard L. Morgan, Trustees under the GST Trust. Mrs.
Weinberger and Dr. Morgan have shared voting and investment power with
respect to the shares held by the 1996 Trust and the GST Trust.
Dr. Morgan disclaims beneficial ownership with respect to such shares.
(7) Represents 150 shares of Class A Common Stock and options to purchase
103,750 shares of Class A Common Stock.
(8) Represents 1,330 shares of Class A Common Stock and options to purchase
93,500 shares of Class A Common Stock.
(9) Represents 84,670 shares of Class A Common Stock and options to
purchase 10,000 shares of Class A Common Stock held by Mr. Melman. Also
includes 7,252 shares of Class A Common Stock held by the Melman Trust,
with respect to which Mr. Melman has shared voting and investment
power.
(10) Represents 22,000 shares of Class A Common Stock held jointly by Dr.
Morrisett and his wife and options to purchase 17,500 shares of Class A
Common Stock owned by Dr. Morrisett.
(11) Represents options to purchase 34,000 shares of Class A Common Stock.
(12) Represents options to purchase 17,500 shares of Class A Common Stock.
(13) Represents options to purchase 12,500 shares of Class A Common Stock.
(14) Represents 27,004 shares of Class A Common Stock held jointly by
Mr. Kopelman and his wife.
(15) Represents 10,000 shares of Class A Common Stock.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions Involving Executive Officers
and Directors
On December 15, 1999, the Company closed a transaction with Bell &
Howell Company ("Bell & Howell") and its wholly owned subsidiary, Bell and
Howell Information and Learning Company ("BHIL"), following approval of the
transaction by our shareholders on November 30, 1999. In the transaction, we
contributed our Electric Library K-12 and public library business and assets and
liabilities into what is now bigchalk.com, Inc. ("bigchalk.com"), an Internet
education company. Also in the transaction, BHIL contributed its ProQuest K-12
and public library business and certain assets and liabilities into
bigchalk.com. As part of the transaction, we also sold our e-commerce online
archive business to BHIL and granted an option to bigchalk.com to purchase our
Electric Library end-user business. As a result of the transaction and taking
into account our subsequent $3.5 million investment in, and the private
placement by, bigchalk.com, we ultimately received a total of $18.5 million in
cash and currently own approximately 20% of bigchalk.com's stock. In addition,
two members of our Board of Directors, Mr. Morris and Dr. Morrisett, are also
members of the Board of Directors of bigchalk.com.
Brian Segal is President and Chief Executive Officer of Publishing
and Online Services of Rogers Media Inc. ("Rogers"). The Company completed
development of its first international edition of the Electric Library
service for Rogers in Canada during 1998. Rogers and the Company entered into
an agreement in 1997 giving Rogers the exclusive right to distribute the
Electric Library Canada service in Canada subject to that agreement's terms.
Rogers paid the Company approximately $420,000 in advances in connection with
this agreement during 1997 and $174,000 during 1998. No amounts were due to
Infonautics under the agreement during 1999. As a result of the closing of
the Bell & Howell transaction, the Company's agreement with Rogers was
assigned to bigchalk.com as of December 15, 1999. However, the Company
retains certain rights under the Rogers agreement for the end-user and
consumer market.
In February 1998, the Company entered into an agreement with Marvin I.
Weinberger, the former Chairman of the Board, Chief Executive Officer and
founder of the Company, pursuant to which he resigned as Chairman and Chief
Executive Officer of the Company to become the Chief Executive Officer of a
newly formed company called Electric Schoolhouse, LLC. Under the February 1998
Agreement, Electric Schoolhouse LLC is obligated to repay us for certain
expenses and costs. We are continuing to pursue collection of these amounts,
repayment of which was originally due on September 30, 1998 and remains
outstanding. However, we have expensed as bad debt the balance due from Electric
Schoolhouse, LLC, approximately $172,000, which is owed to us.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
INFONAUTICS, INC.
(Registrant)
Dated: April 27, 2000
By: /s/ Gerard J. Lewis, Jr.
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Gerard J. Lewis, Jr.
Vice President & General Counsel, Secretary
