Check out their agreement with AOL:
From Hoover's Form S-1/A:
On August 24, 1998, the Company entered into agreements with AOL to provide
white pages directory and classifieds information services to AOL. Pursuant to
the white pages directory services agreement, the Company has agreed to
provide to AOL white pages listings and directory service. The Company is
required to pay to AOL a quarterly carriage fee, the retention of which is
conditioned on the quarterly achievement of a minimum number of searches on
the AOL white pages site. The quarterly carriage fee is paid in advance at the
beginning of the quarter in which the searches are expected to occur and is
recorded as a prepaid expense in the quarter it is paid. The fee is refundable
if the minimum number of searches on the AOL white pages site for such quarter
is not achieved. In addition, AOL has guaranteed to the Company a minimum
number of searches over the term of the agreement. In the event that AOL does
not deliver the guaranteed minimum number of searches over the term of the
agreement, AOL has agreed to pay to the Company a cash penalty payment. The
Company will share with AOL revenues generated by advertising on the Company's
white pages directory services delivered to AOL. The Company is entitled to a
greater percentage of advertising revenue than is AOL if the amount of such
revenue received by the Company is less than the carriage fees paid to AOL.
The Company has agreed to provide white pages directory services to AOL for
a three-year term beginning on the date of first commercial launch
(anticipated to be November 1998), which term may be extended for four
additional one-year terms at AOL's discretion. The agreement may be terminated
by AOL for any reason after 18 months or at any time upon the acquisition by
AOL of a competing white pages directory services business. In the event of
any such termination, AOL is required to pay a termination fee to the Company.
In addition, without the payment of a termination fee, AOL has the right to
terminate the agreement in the event of a change of control of the Company.
The Company has agreed to provide classifieds information services to AOL
for a two-year term, with up to three one-year extensions at AOL's discretion.
AOL has agreed to pay to the Company a quarterly fee and will share with the
Company revenues generated from payments by individuals and commercial listing
services for listings on the AOL classifieds service.
Pursuant to the terms of these agreements, the Company has granted AOL the
right to negotiate with the Company exclusively and in good faith for a period
of 30 days with respect to proposals or discussions that would result in a
sale of a controlling interest of the Company or other merger, asset sale or
other disposition that effectively results in a change of control of the
Company.
In connection with the agreements, on August 24, 1998, the Company issued to
AOL warrants to purchase up to 989,916 shares of Common Stock, which warrants
vest in 16 equal quarterly installments over four years, conditioned on the
delivery by AOL of a minimum number of searches each quarter on the Company's
white pages directory service. The warrants have an exercise price of $12.00
per share. |
