AutoWeb Signs License Agreement with DealerX
Under the terms of the agreement, AutoWeb will receive a perpetual license to access and use DealerX's proprietary platform and technology for targeted, online marketing. This will be implemented through the creation of consumer information databases and audiences, which will allow AutoWeb to generate traffic, clicks, and leads. DealerX will operate the platform for AutoWeb and provide enhancements to and support for the platform for an initial five-year period, which may be extended in perpetuity.
"Today, most dealers know very little about users of their websites and many display the same message to all users—a ‘one size fits all' strategy," said
At the end of 2016, AutoWeb promoted
Ferriolo stated: "DealerX has created a unique, all-in-one automotive online marketing platform encompassing data collection, activation, analytics and attribution. Its platform employs extensive machine learning in the determination of what content to show which consumer across multiple devices, where and when. This is all derived from the real-time capture and scoring of consumer-driven behavioral events. We look forward to using this audience intelligence to deliver a better car-buying experience for consumers."
The transaction consideration consists of a lump-sum payment to DealerX of
Tax Benefit Preservation Plan
The Plan was adopted by the company's board of directors to preserve the company's NOLs and other tax attributes, and thus reduce the risk of a possible change of ownership under Section 382 of the Internal Revenue Code. Any such change of ownership under Section 382 would limit or eliminate the ability of the company to use its existing NOLs for federal income tax purposes. In general, an ownership change will occur if the company's 5% shareholders, for purposes of Section 382, collectively increase their ownership in the company by an aggregate of more than 50 percentage points over a rolling three-year period. The Plan is designed to reduce the likelihood that the company experiences such an ownership change by discouraging any person or group from becoming a new 5% shareholder under Section 382. Rights issued under the Plan could be triggered upon the acquisition by any person or group of 4.9% or more of the company's outstanding common stock and could result in substantial dilution of the acquirer's percentage ownership in the company. There is no guarantee that the Plan will achieve the objective of preserving the value of the company's NOLs.
In connection with the license agreement, the company's board of directors considered and granted to DealerX an exemption under the Plan with respect to the shares of common stock that may be issued to DealerX under the license agreement, and DealerX and the company entered into a stockholder agreement that provides for various restrictions on transfers of the shares and the grant of a proxy to the company to vote the shares as long as the restrictions remain in effect.
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