As filed with the Securities and Exchange Commission on March 11, 2004
Registration No. 333-111191
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-4
REGISTRATION STATEMENT
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UNDER
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THE SECURITIES ACT OF 1933
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OBSIDIAN ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 3444 13-3431486
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification
or organization) Number)
111 Monument Circle, Suite 4800
Indianapolis, Indiana 46204
(317) 237-4122
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Timothy S. Durham
OBSIDIAN ENTERPRISES, INC.
111 Monument Circle, Suite 4800
Indianapolis, Indiana 46204
(317) 237-4055
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Stephen J. Dutton, Esq.
Barnes & Thornburg LLP
11 South Meridian Street
Indianapolis, Indiana 46204
(317) 236-1313
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
|_|_______________________________________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
CALCULATION OF REGISTRATION FEE
============================================== ================ =================== ==================== =============
Proposed maximum Proposed maximum Amount of
Title of each class of securities to be Amount to be offering price aggregate offering registration
registered(1) registered(2) per unit price(3) fee
Common Stock, $0.0001 par value 844,360 $0.39 $11,206,411 $0 (4)
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(1) This registration statement relates to securities of Obsidian
Enterprises, Inc., a Delaware corporation, exchangeable for all of the issued
and outstanding shares of common stock, par value $0.0001 per share, of Net
Perceptions, Inc., a Delaware corporation, in the exchange offer by the
registrant for all of the issued and outstanding shares of Net Perceptions
common stock.
(2) The number of shares registered pursuant to this registration statement
is based upon the approximate number of shares of Net Perceptions common stock
outstanding or reserved for issuance under various plans or otherwise expected
to be issued upon the consummation of the proposed transaction to which this
registration statement relates multiplied by the exchange ratio of 3/100 share
of Obsidian common stock for each Net Perceptions share.
(3) Estimated solely for purposes of calculating the registration fee. The
registration fee was calculated pursuant to Rules 457(f)(1) and 457(f)(3) under
the Securities Act of 1933, as amended, based on the average of the high and low
prices for shares of Net Perceptions common stock as reported on the NASDAQ
National Market on December 12, 2003 ($0.39) and the maximum number of Net
Perceptions shares (approximately 28,734,388) that may be exchanged for the
securities being registered.
(4) The registrant previously paid a filing fee of $906.60 when it filed
the initial Form S-4 to which this Amendment No. 2 relates.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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The information in this preliminary prospectus may change. We may not complete
the exchange offer and issue these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these secrities and we are not soliciting
offers to buy these securities in any state where the offer is not permitted.
PROSPECTUS
Preliminary Prospectus dated March 11, 2004
OBSIDIAN ENTERPRISES, INC.
OFFER TO EXCHANGE
Each Outstanding Share of Common Stock of
Net Perceptions, Inc.
(including associated preferred stock purchase rights)
for Cash and Shares of Common Stock of
Obsidian Enterprises, Inc.
by
Obsidian Enterprises, Inc.
in each case subject to the procedures and limitations described
in this prospectus and the related letter of transmittal.
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The exchange offer will expire at 5:00 p.m., New York City time,
on March 17, 2004, unless extended. You may withdraw shares you have
tendered pursuant to this exchange offer at any time prior to the
expiration of this offer.
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We are offering to exchange $0.20 in cash and 3/100 share of our common
stock, par value $0.0001 per share, for each of the issued and outstanding
shares of common stock, par value $0.0001 per share, of Net Perceptions, Inc.,
upon the terms and subject to the conditions set forth in this prospectus.
We are making this exchange offer to acquire voting control of, and
ultimately the entire equity interest in, Net Perceptions.
Our obligation to complete this offer is subject to each of the conditions
described in this prospectus.
Our common stock trades on the over the counter bulletin board under the
symbol "OBDE", and the Net Perceptions common stock trades on the NASDAQ
National Market under the symbol "NETP".
All references to Net Perceptions common stock include the associated Net
Perceptions preferred stock purchase rights issued pursuant to the Net
Perceptions Rights Agreement described in this prospectus.
The exchange of your shares of Net Perceptions common stock for cash and
shares of our common stock in this exchange offer is likely to be subject to
United States federal income tax.
SEE "RISK FACTORS" BEGINNING ON PAGE 20 FOR A DISCUSSION OF VARIOUS FACTORS
THAT YOU SHOULD CONSIDER BEFORE MAKING A DECISION TO EXCHANGE YOUR SHARES OF NET
PERCEPTIONS COMMON STOCK FOR CASH AND SHARES OF OUR COMMON STOCK.
WE ARE NOT ASKING YOU FOR A PROXY AND WE REQUEST THAT YOU DO NOT SEND US A
PROXY. We will make any solicitation of proxies only pursuant to separate proxy
solicitation materials complying with the requirements of Section 14(a) of the
Securities Exchange Act of 1934.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is March , 2004.
TABLE OF CONTENTS
PAGE
Summary Term Sheet.............................................................1
Summary........................................................................5
Forward-Looking Statements....................................................19
Risk Factors..................................................................20
Background of the Exchange Offer..............................................23
Reasons for the Exchange Offer................................................26
Plans for Net Perceptions after the Proposed Merger...........................27
The Exchange Offer............................................................27
Comparative Market Price Information..........................................47
Description of Obsidian Enterprises Capital Stock.............................48
Comparison of Rights of Holders of Obsidian Enterprises
Common Stock and Net Perceptions Common Stock...............................49
Where Can I Find More Information?............................................56
Net Perceptions Information...................................................57
Legal Matters.................................................................57
Experts.......................................................................57
Unaudited Condensed Pro Forma Combined Financial Statements..................F-1
Annex A--Directors and Executive Officers of Obsidian Enterprises............A-1
Annex B--Dissenters' Appraisal Rights........................................B-1
In this prospectus, "Obsidian Enterprises," "we, "us" and "our" refer to
Obsidian Enterprises, Inc., a Delaware corporation, and, where appropriate, our
subsidiaries. You should rely only on the information contained or incorporated
by reference in this prospectus. We have not authorized anyone to provide you
with different or additional information. We are not offering these securities
in any jurisdiction where the offer is not permitted. The information contained
in this prospectus is accurate only as of the date on the cover page of this
prospectus, and the information contained in any document accompanying this
prospectus and/or incorporated by reference in this prospectus is accurate only
as of the date of that document. We undertake no obligation to update this
information in the future. Our business, financial condition, results of
operations and prospects may have changed since those dates.
Along with this prospectus, we are delivering to you a copy of our Annual
Report on Form 10-K for the fiscal year ended October 31, 2003 (the "Annual
Report") and the Annual Report on Form 10-K of Net Perceptions, Inc. ("Net
Perceptions") for the fiscal year ended December 31, 2002 (the "Net Perceptions
Annual Report") and its Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2003. Important business and financial information about
Obsidian Enterprises and Net Perceptions and their respective subsidiaries is
contained in documents filed with the Securities and Exchange Commission ("SEC")
that have not been included in, or delivered with, this prospectus. This
information is available on the SEC's website at http://www.sec.gov and from
other sources. See "Where Can I Find More Information?" on page 56.
You may also request copies of these documents from us, without charge,
upon written or oral request to our information agent, Innisfree M&A
Incorporated, toll-free at (888) 750-5834 or by calling collect at (212)
750-5833, or upon written or oral request to our Dealer Manager, Multiple
Financial Services, Inc., at (949) 753-2727. You must request these documents no
later than March 12, 2004 (five business days before the scheduled expiration of
the exchange offer).
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SUMMARY TERM SHEET
Obsidian Enterprises, Inc. is offering to exchange $0.20 in cash and 3/100
share common stock for each outstanding share of common stock (including
associated preferred stock purchase rights) of Net Perceptions, Inc. on the
terms and subject to the conditions in this Offer to Exchange and the
accompanying Letter of Transmittal. The following are some questions you, as a
Net Perceptions stockholder, may have and the answers to those questions. You
should carefully read this Offer to Exchange and the accompanying Letter of
Transmittal in their entirety because the information in this summary term sheet
is not complete and additional important information is contained in the
remainder of this Offer to Exchange and the Letter of Transmittal.
Who is offering to exchange my Net Perceptions common stock?
We are a holding company headquartered in Indianapolis, Indiana, and have
historically invested in and acquired small and midcap companies in basic
industries such as manufacturing and transportation. See "Summary--Information
about Obsidian Enterprises" on page 6.
What are you proposing?
We are proposing to acquire voting control of, and ultimately the entire
equity interest in, Net Perceptions by offering to exchange all of the
outstanding shares of common stock, par value $0.0001 per share, and the
associated preferred stock purchase rights, of Net Perceptions (the "Net
Perceptions common stock") for cash and shares of newly issued common stock, par
value $0.0001 per share, of Obsidian Enterprises ("our common stock"). We intend
to then have Net Perceptions merge with a wholly-owned subsidiary of ours as
soon as possible after the completion of the exchange offer (the "proposed
merger"). The purpose of the proposed merger would be to acquire all of the
shares of Net Perceptions common stock not exchanged in the exchange offer. See
"Purpose of the Exchange Offer; the Proposed Merger" on page 37. As used in this
prospectus, "Net Perceptions common stock" includes the associated preferred
stock purchase rights issued pursuant to Net Perceptions' Rights Agreement,
dated as of June 1, 2001, as amended, between Net Perceptions and Wells Fargo
Bank Minnesota, N.A. as rights agent (the "Net Perceptions Rights Agreement").
What would I receive in exchange for my Net Perceptions shares?
Under the terms of the exchange offer, you would receive $0.20 in cash and
3/100 share of our common stock in exchange for each share of Net Perceptions
common stock you tender. We will fund the cash consideration to be paid by
borrowing under an available line of credit with a related party. See "The
Exchange Offer--Consideration to be Paid" on page 28.
Are the shares of Obsidian Enterprises publicly traded?
Our shares are traded on the OTC Bulletin Board. Following the exchange we
intend to apply for inclusion on the NASDAQ SmallCap Market. While we believe
that we will satisfy the requirements for inclusion, NASDAQ exercises broad
discretion when determining whether to include a security in its markets. NASDAQ
may not approve our listing application.
Is Obsidian Enterprises' financial condition relevant to my decision to tender
shares in the offer?
Yes. If you tender your shares of Net Perceptions common stock, and we
accept your tender, you will receive shares of our common stock. You should
consider our financial condition before you decide to become one of our
shareholders through the exchange offer. In considering our financial condition,
you should review the information contained in this prospectus and the documents
accompanying and/or incorporated by reference in this prospectus, because they
contain detailed business, financial and other information about us. See "Where
Can I Find More Information" on page 56.
How long will it take to complete the exchange offer and the proposed merger?
We hope to complete the exchange offer and the proposed merger in the
second quarter of calendar 2004, or as soon thereafter as possible. The proposed
merger must be proposed by the board of directors of Net Perceptions. We expect
to complete the proposed merger shortly after we complete the exchange offer if
we acquire
1
90% or more of the outstanding shares of Net Perceptions common stock in the
exchange offer. If less than 90% of the shares of Net Perceptions common stock
are tendered in the exchange offer, then the proposed merger will require
approval of Net Perceptions shareholders. In that case, we would complete the
proposed merger shortly after a special meeting of Net Perceptions shareholders
is held to approve the proposed merger.
What are the most significant conditions to the completion of the exchange
offer?
Our offer is subject to several material conditions, which must be
satisfied or waived for us to complete the exchange offer. The most significant
of these conditions are:
o there being validly tendered and not withdrawn before the expiration
of the offer a number of shares, which, together with the shares then
owned by us, represents at least 51% of the total number of shares
outstanding on a fully diluted basis (the "Minimum Tender Condition");
o Net Perceptions' board of directors taking action which would cause
the associated preferred stock purchase rights to be inapplicable to
the offer and the proposed merger or our being satisfied, in our
reasonable discretion, that the rights have been invalidated or are
otherwise inapplicable to the offer and the proposed merger of Net
Perceptions and us (or one of our subsidiaries) as described in this
prospectus (the "Rights Condition"); and
o our being satisfied, in our reasonable discretion, that Section 203 of
the Delaware General Corporation Law is inapplicable to the merger of
Net Perceptions, Inc. and us (or one of our subsidiaries) as described
in this prospectus (the "Section 203 Condition").
See "The Exchange Offer--Conditions to the Exchange Offer" beginning on
page 40.
How long do I have to decide whether to tender my shares?
You have until the expiration date of the offer to tender. The offer is
currently scheduled to expire on March 17, 2004, at 5:00 p.m., New York City
time. We have the option to extend the offer and we currently expect that we
would extend offer until the principal conditions to the offer, described above,
are satisfied. See "The Exchange Offer--Timing of the Exchange Offer" beginning
on page 28.
We may elect to provide a "subsequent offering period" for the offer. A
subsequent offering period, if one is included, will be an additional period of
time beginning after we have acquired shares tendered during the offer during
which stockholders may tender their shares and receive the offer consideration.
During a subsequent offering period, you may not withdraw any shares you tender
and you will receive the exchange offer consideration immediately upon tender of
your shares.
Will I be notified if the offer is extended?
Yes. If we decide to extend or are required to extend the exchange offer,
we will inform the exchange agent of that fact and we will make a public
announcement of the results of the exchange offer and announce the new
expiration date, no later than 9:00 a.m., New York City time, on the next
business day after the day on which the offer was previously scheduled to
expire. See "The Exchange Offer--Extension, Termination and Amendment" beginning
on page 28.
How do I tender my shares in the exchange offer?
To tender your shares, you should do one of the following:
o If you hold shares of Net Perceptions common stock in your own name,
complete and sign the letter of transmittal and return it with your
physical share certificates to StockTrans, Inc., the exchange agent
for the exchange offer, at the appropriate address specified on the
back cover page of this prospectus before the expiration date of the
exchange offer.
o If you hold your shares in "street name" through a broker, instruct
your broker to tender your shares before the expiration date.
o If your Net Perceptions share certificates are not immediately
available or if you cannot deliver your Net Perceptions share
certificates and other documents to the exchange agent prior to the
expiration of
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the exchange offer, or you cannot complete the procedure for delivery
by book-entry transfer on a timely basis, you may still tender your
shares of Net Perceptions common stock if you comply with the
guaranteed delivery procedures described under "The Exchange
Offer--Procedure for Tendering" beginning on page 30.
Will I have to pay any fees or commissions?
Perhaps. If you are the record owner of your shares of Net Perceptions
common stock and you tender your shares of Net Perceptions common stock directly
to the exchange agent, you will not have to pay brokerage fees or incur similar
expenses. If you own your shares through a broker or other nominee, and your
broker tenders the shares on your behalf, your broker may charge you a fee for
doing so. You should consult with your broker or nominee to determine whether
any charges will apply to you.
How long do I have to withdraw my previously tendered shares?
You may withdraw previously tendered shares of Net Perceptions common stock
any time prior to the expiration of the exchange offer, and, following the
expiration, you may withdraw any tendered shares at any time until we accept
such shares for exchange. Once we have accepted shares for exchange pursuant to
the offer, all tenders become irrevocable. See "The Exchange Offer--Withdrawal
Rights" on page 29.
How do I withdraw my previously tendered shares?
To withdraw your previously tendered shares of Net Perceptions common
stock, you must deliver a written or facsimile notice of withdrawal with the
required information to the exchange agent while you still have the right to
withdraw. If you tendered shares by giving instructions to a broker or bank, you
must instruct the broker or bank to arrange for the withdrawal of your shares.
See "The Exchange Offer--Withdrawal Rights" on page 30.
Will the offer be followed by a merger if all the Net Perceptions shares are not
tendered in the offer?
If we accept for exchange, and exchange, at least 51% of the outstanding
shares of Net Perceptions on a fully diluted basis, we expect to merge Net
Perceptions with a wholly owned subsidiary of ours. If that proposed merger
takes place, we will own all of the shares of Net Perceptions common stock and
all remaining stockholders (other than us and stockholders properly exercising
their appraisal rights) will receive the stock consideration exchanged in the
exchange offer. See "The Exchange Offer-Dissenter's Appraisal Rights" on page
37.
Will Net Perceptions common stock continue to be publicly traded after the
exchange offer and the proposed merger?
Probably not. Thus, if you decide not to tender your shares of Net
Perceptions, your shares of Net Perceptions will probably not be publicly
traded. If the proposed merger occurs, Net Perceptions will no longer be
publicly owned and its common stock will no longer be publicly traded.
Even if the proposed merger does not occur, Net Perceptions may not
continue to be publicly traded. Net Perceptions has disclosed in its public
filings that the minimum bid price for shares of Net Perceptions common stock
has been less than $1 since its $1.50 per share distribution to shareholders as
of September 3, 2003, and that, as a result, Net Perceptions is unlikely to meet
the requirements for continued inclusion on NASDAQ. While the shares of Net
Perceptions might trade in the over the counter markets if they are no longer
traded on NASDAQ, if we purchase a large portion of the outstanding shares of
Net Perceptions common stock in the exchange offer, there may be so few
remaining Net Perceptions stockholders that Net Perceptions may cease making
filings with the SEC or cease being required to comply with the SEC rules
relating to publicly held companies. As a result, there may not be a public
trading market for shares of Net Perceptions common stock.
Further, Net Perceptions has also disclosed in its public filings that if
its stockholders approve and adopt the plan of liquidation proposed by its board
of directors (the "Plan of Liquidation"), it expects to terminate registration
of its common stock under the Securities Exchange Act of 1934 (the "Exchange
Act"), which will substantially reduce publicly available information about Net
Perceptions.
3
If I decide not to tender, how will the offer affect my shares?
If you decide not to tender your shares of Net Perceptions, your shares may
be affected by the offer. If the offer is successful, we expect to conclude a
merger transaction in which all shares of Net Perceptions will be exchanged for
the same cash and stock consideration paid in the offer. If the proposed
second-step merger takes place, stockholders who do not tender in the offer
(other than those properly exercising their appraisal rights) will receive the
same cash and stock consideration that they would have received had they
tendered their shares in the offer. Therefore, if the proposed merger takes
place, the only differences between tendering and not tendering shares in the
offer are that tendering stockholders will receive their cash and shares of our
common stock earlier and non-tendering stockholders will have the opportunity to
exercise dissenters' appraisal rights. If, however, the proposed merger does not
take place, and the offer is consummated, the number of stockholders and the
number of shares that are still in the hands of the public may be so small that
there will no longer be an active or liquid public trading market (or, possibly,
any public trading market) for shares held by stockholders other than us, which
may affect the prices at which shares trade. Also, as described above, Net
Perceptions may cease making filings with the SEC or being required to comply
with the SEC rules relating to publicly held companies. See "The Exchange
Offer--Effect of the Exchange Offer on the Market for Net Perceptions Shares;
Registration Under the Exchange Act" on page 35 and "The Exchange
Offer--Dissenters' Appraisal Rights" on page 37.
What is the market value of my shares as of a recent date?
On November 12, 2003, the last full trading day before the announcement of
our intention to commence the offer, the last reported sales price of Net
Perceptions common stock reported on the NASDAQ National Market was $0.39 per
share. On March 10, 2004, the last full trading day before the date of this
prospectus, the last reported sales price of Net Perceptions common stock
reported on the NASDAQ National Market was $0.41 per share. Please obtain a
recent quotation for your shares before deciding whether to tender.
What are the federal income tax consequences of participating in the offer?
In general, your exchange of shares pursuant to the offer, more likely than
not, will be a taxable transaction for U.S. federal income tax purposes and may
also be a taxable transaction under applicable state, local or foreign income or
other tax laws. You should consult your tax advisor about the tax consequences
to you of participating in the offer in light of your particular circumstances.
See "The Exchange Offer--Material U.S. Federal Income Tax Consequences of the
Exchange Offer and the Proposed Merger" on page 34.
Where can I find more information about Obsidian Enterprises and Net
Perceptions?
Along with this prospectus, we are delivering to you a copy of our Annual
Report and the Net Perceptions Annual Report and its Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 2003. Important business and
financial information about Obsidian Enterprises and Net Perceptions and their
respective subsidiaries is contained in documents filed with the SEC that have
not been included in, or delivered with, this prospectus. This information is
available on the SEC's website at http://www.sec.gov and from other sources. You
can find out information about Obsidian Enterprises and Net Perceptions from
sources described under "Where Can I Find More Information?" on page 56.
Whom can I call if I have questions about the exchange offer and the proposed
merger?
You can contact our information agent using the following contact
information:
Innisfree M&A Incorporated
501 Madison Avenue - 20th Floor
New York, NY 10022
(212) 750-5833 (call collect)
or
(888) 750-5834 (toll-free)
email: info@innisfreema.com
4
TO THE STOCKHOLDERS OF NET PERCEPTIONS, INC.:
SUMMARY
This summary provides an overview of the key aspects of the exchange offer.
This summary is not complete and does not contain all of the information you
should consider before tendering your shares of Net Perceptions common stock.
You should carefully read all of the information contained in, incorporated by
reference in, and/or accompanying this prospectus, including the information set
forth in the "Risk Factors" section and our financial statements and related
notes.
THE EXCHANGE OFFER (PAGE 27).
Under the terms of the exchange offer, we are offering to exchange $0.20 in
cash and 3/100 share of our common stock for each issued and outstanding share
of Net Perceptions common stock.
You will not receive any fractional share of our common stock in the
exchange offer. Instead, you will receive cash in an amount equal to the value
of the fractional share of our common stock that you otherwise would have been
entitled to receive.
SUBSEQUENT MERGER (PAGE 37).
Promptly after we complete the exchange offer, we intend to seek to have
Net Perceptions complete the proposed merger with our subsidiary. We refer to
the exchange offer, together with the proposed merger, as the "Net Perceptions
acquisition". In the proposed merger, each share of Net Perceptions common stock
that has not been exchanged in the exchange offer (except for treasury shares of
Net Perceptions and shares we beneficially own directly or indirectly for our
own account) would be converted into the right to receive the same acquisition
consideration as offered in the exchange offer, subject to dissenters' appraisal
rights under Delaware law. See "The Exchange Offer--Dissenters' Appraisal
Rights" on page 37. Upon completion of the Net Perceptions acquisition, based on
the receipt by Net Perceptions shareholders of the total stock consideration,
the former Net Perceptions shareholders would own a maximum of 22% of the then
outstanding shares of our common stock. See "The Exchange Offer--Purpose of the
Exchange Offer; The Proposed Merger" in this prospectus.
YOUR RECEIPT OF CASH AND OUR COMMON STOCK IN EXCHANGE FOR NET PERCEPTIONS COMMON
STOCK PURSUANT TO THIS EXCHANGE OFFER MAY BE A TAXABLE TRANSACTION TO YOU (PAGE
34).
In the opinion of our counsel, Barnes & Thornburg LLP, the exchange of
shares of Net Perceptions common stock for cash and shares of our common stock
pursuant to the exchange offer and the proposed merger (1) will be treated for
federal income tax purposes as component parts of an integrated transaction
pursuant to a plan, but (2) the integrated transaction will nevertheless, more
likely than not, fail to qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended. Consequently,
holders of shares of Net Perceptions common stock generally will recognize gain
or loss for United States federal income tax purposes on the exchange of their
shares of Net Perceptions common stock for cash and our common stock in the
exchange offer and the proposed merger. The gain or loss you may have to
recognize generally will be measured by the difference between the sum of the
cash and the fair market value of our common stock received in the exchange
offer and the proposed merger (plus any cash received in lieu of fractional
shares), compared with your tax basis for the shares of Net Perceptions common
stock surrendered in the exchange offer and proposed merger. See "The Exchange
Offer--Material U.S. Federal Income Tax Consequences of the Exchange Offer and
the Proposed Merger" in this prospectus.
OUR OBLIGATION TO COMPLETE THE EXCHANGE OFFER IS SUBJECT TO A NUMBER OF
CONDITIONS (PAGE 40).
Our obligation to exchange cash and shares of our common stock for Net
Perceptions common stock pursuant to this exchange offer is subject to the
following material conditions, any of which we may waive:
o Tender of more than 51% of the shares of Net Perceptions common stock.
Shareholders of Net Perceptions common stock must have tendered enough
shares so that, after the completion of the
5
exchange offer, we own a number of shares of Net Perceptions common
stock which constitutes at least 51% of the total outstanding shares
of Net Perceptions common stock on a fully diluted basis, as though
all options or other securities convertible into or exercisable or
exchangeable for shares of Net Perceptions common stock had been
converted, exercised or exchanged.
o Rights Inapplicable. The board of directors of Net Perceptions shall
have taken action which would cause the rights issued under the Net
Perceptions Right Agreement to be inapplicable to the offer and the
proposed merger, or the Net Perceptions Rights Agreement shall have
been found inapplicable or illegal so the associated preferred stock
purchase rights would not be triggered by the exchange offer and the
proposed merger.
o Section 203 Inapplicable. We are satisfied, in our reasonable
discretion, that Section 203 of the Delaware General Corporation Law
is inapplicable to the proposed merger as described in this
prospectus.
The exchange offer is also subject to other terms and conditions, including
that the registration statement filed with the SEC relating to the securities to
be issued in the exchange offer, shall have become effective. These conditions
and the other conditions to the exchange offer are discussed under "The Exchange
Offer--Conditions to the Exchange Offer" in this prospectus.
INFORMATION ABOUT OBSIDIAN ENTERPRISES (PAGE 56).
Obsidian Enterprises, Inc.
111 Monument Circle, Suite 4800
Indianapolis, Indiana 46204
(317) 237-4122
We are a holding company headquartered in Indianapolis, Indiana, and have
historically invested in and acquired small and mid cap companies in basic
industries such as manufacturing and transportation. We conduct business through
our subsidiaries:
o Pyramid Coach, Inc., a Tennessee corporation, and Obsidian Leasing
Co., Inc., a Mississippi corporation (collectively "Pyramid"),
providers of corporate and celebrity entertainer coach leases;
o U.S. Rubber Reclaiming, Inc., an Indiana corporation ("U.S. Rubber"),
a butyl-rubber reclaiming operation;
o United Expressline, Inc., an Indiana corporation, and its division,
Southwest Trailers, manufacturers of steel-framed cargo, racing ATV
and specialty trailers; and
o Danzer Industries, Inc., a Maryland corporation ("Danzer"), a
manufacturer of service and utility truck bodies and accessories and
steel-framed cargo trailers.
A change in control and reorganization of Obsidian Enterprises occurred on
June 21, 2001. On that date, Timothy S. Durham was elected as our Chief
Executive Officer and Chairman of the Board, and we acquired from Obsidian
Capital Partners, L.P. ("Obsidian Capital"), Mr. Durham and certain other
shareholders, all of the shares of the following companies: Pyramid; Champion
Trailer, Inc., an Indiana corporation ("Champion"), which we sold in January
2003; and U.S. Rubber. On July 31, 2001, we acquired from Obsidian Capital and
Mr. Durham, substantially all of the assets of United Acquisition, Inc., an
Indiana corporation ("United Acquisition"), which we now operate as United
Expressline, Inc. We made all of the acquisitions in exchange for shares of our
Series C Preferred Stock ("Series C Preferred Stock") and pursuant to an
Acquisition Agreement and Plan of Reorganization (the "Acquisition Agreement")
by and among us, Danzer, Pyramid, Champion, United Acquisition, U.S. Rubber,
Obsidian Capital, Timothy S. Durham and other related parties, dated as of June
21, 2001. Prior to the reorganization, we had engaged, through our wholly owned
subsidiary, Danzer, in the fabrication of metal parts and truck bodies for the
service and utility markets.
In October 2001, we changed our jurisdiction of incorporation from New York
to Delaware and we changed our name from Danzer Corporation to Obsidian
Enterprises, Inc. We were originally incorporated in New York in 1987 under the
name Affiliated National, Inc. and subsequently changed our name to Global
Environmental
6
Corp. and then to Danzer Corporation. For more information about us, you should
read our Annual Report, which is being delivered to you with this prospectus.
Also see "Where Can I Find More Information?" in this prospectus.
INFORMATION ABOUT NET PERCEPTIONS, INC. (PAGE 56).
We derived the following information from the publicly available documents
of Net Perceptions.
Net Perceptions, Inc.
7700 France Avenue South
Edina, Minnesota 55435
(952) 842-5000
Net Perceptions was incorporated in Delaware in July 1996, and its initial
product was shipped in January 1997. Net Perceptions developed and marketed
software products to customers in the retail industry to enable those customers
to integrate and analyze information about their customers, products and
transaction activity to generate specific actions to take to improve their
marketing, selling and merchandising effectiveness.
Net Perceptions has sustained losses on a quarterly and annual basis since
inception. As of September 30, 2003, Net Perceptions had an accumulated deficit
of $221 million. In the third quarter of 2003, its net loss was $1.7 million.
These losses resulted from significant costs incurred in the development and
marketing of its products and services as well as a decline in its revenues
since the third quarter of 2000.
On October 21, 2003, Net Perceptions announced that its board of directors
had unanimously approved the Plan of Liquidation, which Net Perceptions intended
to submit to its stockholders for approval and adoption at a special meeting of
stockholders to be held as soon as reasonably practicable. Net Perceptions filed
a preliminary proxy statement relating to the Plan of Liquidation on Schedule
14A with the Securities and Exchange Commission on November 4, 2003 and, after
filing various amendments to the preliminary proxy statement, filed definitive
proxy materials on February 12, 2004. The special meeting is scheduled to be
held on March 12, 2004. The key features of the Plan of Liquidation are (i)
filing a Certificate of Dissolution with the Secretary of State of Delaware and
thereafter remaining in existence as a non-operating entity for three years;
(ii) winding up its affairs, including selling its remaining non-cash assets,
and taking such action as may be necessary to preserve the value of its assets
and distributing its assets in accordance with the Plan of Liquidation; (iii)
paying its creditors; (iv) terminating any of its remaining commercial
agreements, relationships or outstanding obligations; (v) resolving its
outstanding litigation; (vi) establishing a contingency reserve for payment of
its expenses and liabilities; and (vii) preparing to make distributions to its
stockholders.
Net Perceptions has stated that it continues to service its existing
customers and may continue to derive a declining level of revenues from software
licenses, software maintenance and professional services relating to existing
customers. However, Net Perceptions has stated that it is no longer actively
marketing its products and has not retained any employees to do so. Net
Perceptions has stated that it expects that the size of its customer base will
decline and that it does not expect that future product or service revenues, if
any, will be significant. Net Perceptions has stated that it anticipates that
its operating expenses will continue to decline in 2003, but will continue to
constitute a material use of its cash resources. Net Perceptions has stated that
it expects to incur additional losses and continued negative cash flow for the
foreseeable future and that it does not expect to be profitable as an
independent company. For more information, you should read the Net Perceptions
Annual Report and its most recent Quarterly Report on Form 10-Q, both of which
are being delivered to you with this prospectus. Also, see "Where Can I Find
More Information?" in this prospectus.
REASONS FOR THE EXCHANGE OFFER (PAGE 26).
We are proposing the exchange offer and the proposed merger because we
believe that the exchange offer and the proposed merger will benefit our
shareholders, including Net Perceptions shareholders who would become Obsidian
Enterprises shareholders by means of the Net Perceptions acquisition. The
exchange offer will expand our shareholder base and increase our stockholders'
equity. The proposed merger will further expand our shareholder base and further
increase our stockholders' equity and will also provide us with cash for our
operations and additional possible acquisitions. Our board of directors' reasons
for recommending the exchange offer and the proposed merger are set forth in
"Reasons for the Exchange Offer" in this prospectus.
7
OUR PLANS FOR NET PERCEPTIONS (PAGE 27).
We have not determined whether we will continue to operate the remaining
business of Net Perceptions or whether we would seek to sell that business or
its assets. We plan to use the cash remaining in Net Perceptions after the
proposed merger to fund additional possible acquisitions and for working capital
purposes. See "Plans for Net Perceptions after the Proposed Merger" in this
prospectus.
OUR DIVIDEND POLICY (PAGE 56).
We have not historically paid regular cash dividends. The holders of our
common stock would receive dividends if and when declared by our board of
directors out of legally available funds. The declaration and payment of
dividends will depend upon business conditions, operating results, capital and
reserve requirements, covenants in our debt instruments and our board of
directors' consideration of other relevant factors. We can give shareholders no
assurance that we will pay dividends on our common stock in the future. See
"Market for the Registrant's Common Equity and Related Stockholder Matters" in
our Annual Report, which is incorporated by reference in this prospectus. See
"Where Can I Find More Information?" in this prospectus.
DIVIDEND POLICY OF NET PERCEPTIONS (PAGE 56).
The following description is based on our understanding of Net Perceptions'
dividend policy as derived from its publicly available documents.
Net Perceptions has not declared or paid any cash dividends on its common
stock since its inception, other than the $1.50 per share cash distribution to
its shareholders of record as of August 18, 2003, and does not intend to pay any
cash dividends in the foreseeable future except in connection with the
liquidation and dissolution proposed by its board of directors. See "Market for
Registrant's Common Equity and Related Stockholder Matters" in the Net
Perceptions Annual Report, which is incorporated by reference in this
prospectus. See "Where Can I Find More Information?" in this prospectus.
THE EXCHANGE OFFER IS CURRENTLY SCHEDULED TO EXPIRE ON MARCH 17, 2004 (PAGE 28).
The exchange offer will expire at 5:00 p.m., New York City time, on March
17, 2004 unless we extend the period of time for which the exchange offer is
open. See "The Exchange Offer--Timing of the Exchange Offer" in this prospectus.
THE EXCHANGE OFFER MAY BE EXTENDED, TERMINATED OR AMENDED (PAGE 28).
We expressly reserve the right, in our sole discretion, at any time or from
time to time, to extend the period of time during which the exchange offer
remains open, and we can do so by giving oral or written notice of the extension
to the exchange agent. We are not providing any assurance that we will exercise
this right to extend the exchange offer, although we currently intend to do so
until all conditions have been satisfied or, to the extent permissible, waived.
During any extension, all shares of Net Perceptions common stock previously
tendered and not properly withdrawn will remain subject to the exchange offer,
subject to the right of each shareholder of Net Perceptions to withdraw his or
her shares of Net Perceptions common stock.
Subject to the SEC's applicable rules and regulations, we also reserve the
right, in our sole discretion, at any time or from time to time:
o to delay our acceptance for exchange or the exchange of any shares of
Net Perceptions common stock, or to terminate the exchange offer, upon
the failure of any of the conditions of the exchange offer to be
satisfied prior to the expiration date;
o to waive any condition (other than the conditions that cannot be
waived); or
o to amend the exchange offer in any respect, by giving oral or written
notice of such delay, termination or amendment to the exchange agent
and by making a public announcement.
We will follow any extension, termination, amendment or delay with a public
announcement, as promptly as practicable. In the case of an extension, any
related announcement will be issued no later than 9:00 A.M., New
8
York City time, on the next business day after the previously scheduled
expiration date. Subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Securities Exchange Act of 1934, as amended, which require
that any material change in the information published, sent or given to Net
Perceptions shareholders in connection with the offer to exchange be promptly
sent to those shareholders in a manner reasonably designed to inform them of
that change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any public announcement of this type other than by making a release
to the Dow Jones News Service, PR Newswire or some other similar national news
service. See "The Exchange Offer--Extension, Termination and Amendment" in this
prospectus.
DIRECTORS AND EXECUTIVE OFFICERS OF OBSIDIAN ENTERPRISES (PAGE A-1).
The name, current principal occupation or employment and material
occupations, positions, offices or employment for the past five years of each
director and executive officer of Obsidian Enterprises are set forth in Annex A
to this prospectus.
THE EXCHANGE OFFER SHALL OCCUR PROMPTLY AFTER THE EXPIRATION DATE (PAGE 29).
Upon the terms and subject to the conditions of the exchange offer,
including, if the exchange offer is extended or amended, the terms and
conditions of any extension or amendment, promptly after the expiration date, we
will accept for exchange, and will exchange, shares of Net Perceptions common
stock that have been validly tendered and have not properly withdrawn. See "The
Exchange Offer--Exchange of Net Perceptions Shares; Delivery of Obsidian
Enterprises Common Stock" in this prospectus.
YOU MAY WITHDRAW TENDERED SHARES AT ANY TIME PRIOR TO THE EXCHANGE OF THOSE
SHARES (PAGE 30).
You may withdraw any shares of Net Perceptions common stock that you have
tendered pursuant to the exchange offer at any time prior to the expiration
date. You may also withdraw your shares at any time after the expiration date
until we have accepted your shares pursuant to the exchange offer. See "The
Exchange Offer--Withdrawal Rights" in this prospectus.
YOU MUST COMPLY WITH THE PROCEDURE FOR TENDERING SHARES (PAGE 31).
For you to validly tender shares of Net Perceptions common stock pursuant
to the exchange offer:
o the exchange agent must receive at one of its addresses set forth on
the back cover of this prospectus (1) a properly completed and duly
executed letter of transmittal, along with any required signature
guarantees, or an agent's message in connection with a book-entry
transfer, and any other required documents, and (2) either
certificates for tendered shares of Net Perceptions common stock or,
if you tender those shares of Net Perceptions common stock pursuant to
the procedures for book-entry set forth below, confirmation of receipt
of that tender, in each case before the expiration date, or
o you must comply with the guaranteed delivery procedures set forth in
"The Exchange Offer--Procedure for Tendering--Guaranteed Delivery" in
this prospectus.
See "The Exchange Offer--Procedure for Tendering" in this prospectus.
THERE ARE NO DISSENTERS' APPRAISAL RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER.
HOWEVER, DISSENTERS' APPRAISAL RIGHTS WILL EXIST IN CONNECTION WITH THE PROPOSED
MERGER (PAGE 37).
No dissenters' rights are available in connection with the exchange offer.
However, if the proposed merger is consummated, Net Perceptions shareholders
would have certain rights under the Delaware General Corporation Law to dissent
and demand appraisal rights and to receive payment in cash of the fair value of
their shares as determined by a Delaware trial court. The procedures for
perfecting such rights are set forth in Section 262 of the Delaware General
Corporation Law and are further described under "The Exchange Offer-Dissenters'
Appraisal Rights" in this prospectus.
9
A copy of Section 262 of the Delaware General Corporation Law is provided
in Annex B to this prospectus.
THERE ARE MATERIAL DIFFERENCES IN THE RIGHTS OF OUR SHAREHOLDERS AND OF NET
PERCEPTIONS SHAREHOLDERS (PAGE 49).
Our governing documents and the governing documents of Net Perceptions
vary, and, to that extent, Net Perceptions shareholders will have different
rights once they become Obsidian Enterprises shareholders. The differences are
described in more detail under "Comparison of Rights of Holders of Obsidian
Enterprises Common Stock and Net Perceptions Common Stock" in this prospectus.
WE WILL ACCOUNT FOR THE PROPOSED MERGER USING THE PURCHASE METHOD (PAGE 46).
We will account for the proposed merger as a purchase for financial
reporting purposes. See "The Exchange Offer--Accounting Treatment" in this
prospectus.
REGULATORY APPROVALS (PAGE 46).
We are not aware of any federal or state regulatory approvals, government
licenses or permits or other regulatory requirements that would be triggered by
the acquisition of shares pursuant to this exchange offer. See "The Exchange
Offer--Regulatory Approvals" in this prospectus.
RISK FACTORS (PAGE 20).
In evaluating whether to tender your shares of Net Perceptions pursuant to
this exchange offer, you should carefully read this prospectus and the documents
incorporated by reference in the prospectus and, in particular, you should
consider the factors discussed in the section entitled "Risk Factors" in this
prospectus.
COMPARATIVE MARKET PRICE INFORMATION (PAGE 47).
The following table lists the closing prices of our common stock (adjusted
for the 1 for 50 reverse stock split that was effective for trading purposes on
February 18, 2004) and Net Perceptions common stock on November 12, 2003, the
last trading day before we announced the offer.
Obsidian Net
Enterprises Perceptions
----------------- ------------------
November 12, 2003 $15.00 $0.39
You can obtain current stock price quotations for our common stock and Net
Perceptions common stock from a newspaper, on the Internet or by calling your
broker.
SUMMARY FINANCIAL AND OTHER DATA (PAGE 56; PAGE F-1).
OBSIDIAN ENTERPRISES SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth certain selected consolidated financial
information concerning Obsidian Enterprises. This information is not covered by
the independent auditor's report. For further information, see:
o the Consolidated Financial Statements of Obsidian Enterprises, Inc.
and subsidiaries for the years ended October 31, 2003 and 2002, and
the ten-month period ended October 31, 2001 in our Annual Report,
which has been delivered with and is incorporated by reference in this
prospectus, and the information set forth in Item 7 of the Annual
Report, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and in Item 8 of the Annual Report,
"Financial Statements and Supplementary Data."
10
The information for the years ended December 31, 2000 and 1999 is for that
of U.S. Rubber only, the accounting acquiror in the reverse merger further
described in Items 7 and 8 of the Annual Report. See "Where Can I Find More
Information?" on page 56 for information on where such documents are available.
Selected Consolidated Financial Data
(Amounts in thousands, except per share data)
Operating Data
Year Ended Ten Months Ended Year Ended
October 31, October 31, December 31,
--------------------------------------------------------------------------------
2003 2002 2001 2000 1999
--------------------------------------------------------------------------------
Net sales $ 59,295 $ 57,274 $24,689 $12,583 $11,439
Income (loss) from operations (978) 449 981 184 413
Discontinued operations, net of tax (49) (1,040) (3,376) - -
Cumulative effect of change in
accounting principle - (2,015) - - -
Net income (loss) (3,873) (6,330) (4,395) 48 216
Basic and diluted earnings (loss) per
share(1)
From continuing operations (1.47) (1.38) (0.64) - -
Discontinued operations (0.02) (0.44) (2.29) - -
Cumulative effect of change in
accounting principle - (0.86) - - -
Net income (loss) per share (1.49) (2.68) (2.93) - -
(1) Includes the effect of the 1 for 50 reverse stock split effective for
trading purposes on February 18, 2004 and the conversion of the Series C
and Series D preferred shares.
Balance Sheet Data
October 31, October 31, October 31, December 31,
--------------------------------------------------------------------
2003 2002 2001 2000 1999
--------------------------------------------------------------------
Working capital (deficit) $6,045 $ 1,591 $(2,528) $ 864 $ 1,896
Total assets 45,882 45,923 48,850 9,633 11,633
Long-term debt, including current
portion and mandatory redeemable
preferred stock 43,221 36,464 35,382 3,846 5,914
Stockholders' equity (deficit) (3,253) (689) 1,331 4,939 4,890
No dividends have been declared or paid in any period presented.
11
NET PERCEPTIONS SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data of Net Perceptions in the tables
below should be read in conjunction with:
o the unaudited financial statements and the notes to the unaudited
financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which are included in
Net Perceptions' Quarterly Report on Form 10-Q for the period ended
September 30, 2003 which accompanies this prospectus; and
o the audited financial statements (the "Net Perceptions Financial
Statements") and the notes to the Net Perceptions Financial Statements
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are included in the Net Perceptions
Annual Report, which is being delivered with and is incorporated by
reference in this prospectus.
The statement of operations data for each of the years in the periods ended
December 31, 2002, 2001 and 2000, and the balance sheet data at December 31,
2002 and 2001, were derived by Net Perceptions from the Net Perceptions
Financial Statements. The statement of operations data for the years ended
December 31, 1999 and 1998 and the balance sheet data at December 31, 2000, 1999
and 1998 were derived by Net Perceptions from audited financial statements not
included in the Net Perceptions Annual Report, and were reclassified by Net
Perceptions to conform with current period presentation relating to reimbursable
expenses that were previously recorded net to cost of revenue. See "Where Can I
Find More Information?" on page 56 for information on where such documents are
available. You should read this summary selected financial information together
with the Net Perceptions Financial Statements and notes thereto.
12
Selected Consolidated Financial Data1
(Amounts in thousands, except per share amounts)
Twelve Months
Ended September
30, Year Ended December 31,
------------------- ----------- ------------ ------------ ----------- -----------
2003(4) 2002 2001 2000 1999 1998
------------------- ----------- ------------ ------------ ----------- -----------
Statement of Operations Data
Revenues:
Product $ 721 $1,703 $ 2,979 $25,087 $ 11,408 $3,955
Service and maintenance 2,139 3,541 7,535 12,342 3,922 542
------- ------ -------- ------- -------- ------
Total revenues 2,860 5,244 10,514 37,429 15,330 4,497
------- ------ -------- ------- -------- ------
Cost of revenues:
Product 46 292 943 1,807 286 52
Service and maintenance 954 2,101 5,143 11,532 2,936 393
------- ------ -------- ------- -------- ------
Total cost of revenues 1,000 2,393 6,086 13,339 3,222 445
------- ------ -------- ------- -------- ------
Gross margin 1,860 2,851 4,428 24,090 12,108 4,052
------- ------ -------- ------- -------- ------
Operating expenses:
Sales and marketing 2,284 4,550 15,215 25,589 12,883 5,238
Research and development 2,752 5,933 10,572 19,354 8,625 2,372
General and administrative 1,908 2,819 6,198 11,146 4,005 1,474
Lease abandonment expense - - 225 1,250 - -
Restructuring related charges(2) 2,251 768 15,551 - - -
Amortization of intangibles 27 110 9,650 25,394 - -
Impairment of goodwill and other
intangibles(3) 6,546 6,546 75,298 - - -
------- ------ -------- ------- -------- ------
Total operating expenses 15,768 20,726 132,709 82,733 25,513 9,084
------- ------ -------- ------- -------- ------
Loss from operations (13,908) (17,875) (128,281) (58,643) (13,405) (5,032)
Other income, net 1,282 1,141 4,483 5,096 1,366 64
------- ------ -------- ------- -------- ------
Net loss $ (12,626) $(16,734) $(123,798) $(53,547) $(12,039) $ (4,968)
Basic and diluted net loss per share $ (0.46) $ (0.61) $ (4.59) $ (2.12) $ (0.78) $ (1.40)
------- ------ -------- ------- -------- ------
Shares used in computing basic and
diluted net loss per share 27,605 27,216 26,951 25,209 15,402 3,546
------- ------ -------- ------- -------- ------
1 The selected consolidated financial data for the years ended December 31,
2002, 2001 and 2000 include the effects of the acquisition of Knowledge
Discovery One, Inc. ("KD1") in February 2000, which was accounted for under
the purchase method of accounting. See Note 4 to the Net Perceptions
Financial Statements.
2 In 2001, Net Perceptions incurred a restructuring related charge of $15.6
million, consisting of charges relating to facility consolidation and
employee terminations, losses and estimated losses on the disposal of
assets and other restructuring related charges. In 2002, Net Perceptions
incurred a restructuring related charge of $768,000 consisting primarily of
charges relating to employee terminations. See Note 6 to the Net
Perceptions Financial Statements.
3 At March 31, 2001, Net Perceptions performed an impairment assessment of
the goodwill and other intangible assets recorded in connection with the
acquisition of KD1. As a result of its review, Net Perceptions recorded a
$75.3 million impairment charge to reduce goodwill and other intangible
assets to their estimated fair values.
13
At December 31, 2002, Net Perceptions performed an additional impairment
assessment of the remaining goodwill and other intangible assets recorded
in connection with the acquisition of KD1. As a result of its review, Net
Perceptions recorded a $6.5 million impairment charge to reduce goodwill
and other intangible assets to zero value. See Note 4 to the Net
Perceptions Financial Statements.
4 The selected consolidated financial data for the twelve months ended
September 30, 2003 was calculated using amounts reported for the nine
months ended September 30, 2003 and 2002, respectively, and the year ended
December 31, 2002.
September 30, December 31,
-------------------- ----------- ---------- ----------- ----------- ----------
2003 2002 2001 2000 1999 1998
-------------------- ----------- ---------- ----------- ----------- ----------
(unaudited)
Balance Sheet Data
Cash, cash equivalents, and
short-term investments $12,187 $62,959 $73,605 $68,880 $36,854 $972
Working capital 12,174 57,031 64,321 66,364 37,372 468
Total assets 13,558 65,796 88,878 211,834 58,748 5,637
Long-term liabilities, net of
current portion - 510 577 1,951 707 538
Redeemable preferred stock - - - - - 650
Total stockholders' equity 12,600 58,342 75,407 198,518 48,388 421
SELECTED UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL DATA
The following selected unaudited condensed pro forma financial information
combines the historical balance sheet data and statements of operations data of
Obsidian Enterprises and Net Perceptions after the transaction. The financial
information also provides selected unaudited pro forma financial data on the
basis of the continuation and non-continuation of Net Perceptions' operations.
The unaudited condensed pro forma combined balance sheet data at October 31,
2003 reflects our purchase of substantially all of Net Perceptions' common stock
using the purchase method of accounting and assumes the acquisition was
consummated as of October 31, 2003. The following unaudited condensed pro forma
combined statements of operations for the year ended October 31, 2003 gives
effect to the acquisition of Net Perceptions as if it occurred at the beginning
of the period presented. The weighted average shares outstanding reflects the
issuance of an estimated 844,360 shares at the closing of the transaction and
has been adjusted to give effect to our 1 for 50 reverse stock split.
The pro forma adjustments necessary to fairly present the unaudited
condensed pro forma combined financial data have been made based on available
information and in the opinion of our management are reasonable. The following
financial information should be read in conjunction with the "Unaudited
Condensed Pro Forma Combined Financial Statements" and the related Notes
beginning on page F-1.
Because no determination has been made by our management to either continue
operating the remaining business of Net Perceptions or to dispose of it, two
separate pro forma presentations of operating data have been prepared. Because
we have not been able to perform any due diligence regarding the fair value of
Net Perceptions' operating assets, the pro forma balance sheets under either
course of action are not materially different at this time. Therefore, only one
pro forma balance sheet has been presented. However, upon completing such due
diligence and determining the value of such operating assets, the pro forma
balance sheets for either course of action will most likely be materially
different. Furthermore, once the final determination is made of the fair values
acquired and the final purchase price allocation is made, the pro forma
operating data as presented will change and such change could be material.
14
Selected Unaudited Condensed Pro Forma Financial Data
Assuming Continuation of Net Perceptions' Business
(Amounts in thousands except per share data)
Unaudited Pro Forma Statement of Operations Data
Year Ended
October 31, 2003
------------------------
Net Sales $ 62,155
Cost of Sales 52,736
---------
Gross Profit 9,419
Expenses 28,085
---------
Loss from continuing operations before tax (18,666)
Tax benefit 937
Minority interest (172)
---------
Loss from continuing operations $( 17,901)
===========
Loss per share from continuing operations
Basic and diluted $ (4.93)
===========
Weighted average common shares outstanding 3,710
===========
Pro Forma
October 31, 2003
-------------------------
Earnings per share footnote presentation:
Loss from continuing operations $ (17,901)
Change in fair value of mandatory redeemable preferred stock (403)
---------
Loss attributable to common shareholders from
continuing operations $ (18,304)
Weighted average shares 3,710
Loss per share from continuing operations
Basic and diluted $ (4.93)
Unaudited Pro Forma Balance Sheet Data
October 31, 2003
-------------------------
Working Capital $ 11,465
Total Assets 55,883
Long-term debt, including current portion and mandatory
redeemable preferred stock 43,221
Total Equity 6,216
15
Selected Unaudited Condensed Pro Forma Financial Data
Assuming No Continuation of Net Perceptions' Business
(Amounts in thousands except per share data)
Unaudited Pro Forma Statement of Operations Data
Year Ended
October 31, 2003
-----------------------
Net Sales $ 59,295
Cost of Sales 51,736
---------
Gross Profit 7,559
Operating expenses 23,577
---------
Loss from continuing operations before tax (16,018)
Tax benefit 937
Minority interest (172)
---------
Loss from continuing operations $ (15,253)
---------
Loss per share from continuing operations
Basic and diluted $ (4.22)
===========
Weighted average common shares outstanding 3,710
===========
Pro Forma
October 31, 2003
----------------------
Earnings per share footnote presentation:
Loss from continuing operations $ (15,253)
Change in fair value of mandatory redeemable preferred stock (403)
----------
Loss attributable to common shareholders from
continuing operations $ (15,656)
Weighted average shares 3,710
Loss per share from continuing operations
Basic and diluted $ (4.22)
Unaudited Pro Forma Balance Sheet Data
October 31, 2003
-----------------------
Working Capital $ 11,465
Total Assets 55,883
Long-term debt, including current portion and mandatory redeemable
preferred stock 43,221
Total Equity 6,216
COMPARATIVE UNAUDITED PER SHARE DATA
Set forth below are net income and book value per common share amounts for
Obsidian Enterprises and Net Perceptions on a historical basis and for Obsidian
Enterprises and Net Perceptions on an unaudited pro forma combined basis after
giving effect to the transaction.
The following information should be read in conjunction with (1) the
separate historical financial statements (including the unaudited condensed
financial data for the year ended October 31, 2003 for Obsidian Enterprises and
the nine months ended September 30, 2003 for Net Perceptions) and related notes
of Obsidian Enterprises and Net Perceptions included in this prospectus and (2)
the unaudited condensed pro forma combined financial information and related
notes beginning on Page F-1 of this prospectus and the selected consolidated
16
financial data of each of Obsidian Enterprises and Net Perceptions beginning on
pages 10 and 12, respectively, of this prospectus.
The pro forma information is presented for illustrative purposes only, and
is not necessarily indicative of the operating results or financial position
that would have occurred if the transaction had been completed as of the
beginning of the earliest period presented, nor is it necessarily indicative of
the future operating results or financial position of the combined companies.
Comparative Unaudited Per Share Data
Historical:
Year Ended
October 31, 2003
---------------------------
Obsidian Enterprises data, per common share
Loss attributable to common shareholders from continuing
operations - basic and diluted (D) $ (5.87)
Cash dividends declared $ -
Book value at end of period $ (4.52)
Twelve Months Ended
September 30, 2003
---------------------------
Net Perceptions data, per common share
Net loss - basic and diluted $ (0.46)
Cash dividends declared $ 1.52
Book value at end of period $ .46
Year Ended
October 31, 2003
---------------------------
Unaudited pro forma assuming continuation of Net Perceptions'
business
Obsidian Enterprises and Net Perceptions combined
data, pro forma per common share
Loss from continuing operations - basic and diluted (A) $ (4.93)
Book value at October 31, 2003 (B) $ 1.68
Year Ended
October 31, 2003
---------------------------
Unaudited pro forma assuming no continuation of
Net Perceptions' business
Obsidian Enterprises and Net Perceptions
combined data, pro forma per common share
Loss from continuing operations - basic and diluted (C) $ (4.22)
Book value at October 31, 2003 (B) $ 1.68
(A) Pro forma loss per share amounts from continuing operations are based
on the combined historical results of Obsidian Enterprises and Net Perceptions
as well as pro forma adjustments. Pro forma basic and diluted shares used in the
calculations are our historical weighted average shares outstanding plus our
weighted average Series C Preferred Stock and Series D Preferred Stock
outstanding on an as if converted basis plus the pro forma shares assumed to be
issued in the transaction. In addition, all shares in the pro forma calculations
have been adjusted for our reverse split of one new share for each fifty shares
held.
(B) Pro forma book value per common share is computed by dividing the pro
forma shareholders' equity at October 31, 2003 by the pro forma number of common
shares outstanding at October 31, 2003.
(C) This presentation assumes that effective with the acquisition of Net
Perceptions, we would no longer operate the ongoing business of Net Perceptions.
Accordingly the pro forma loss per share amounts are based on our historical
results with pro forma adjustments and include only a portion of the interest
income amounts of Net Perceptions related to its investment portfolio. Pro forma
basic and diluted shares used in the calculations are our historical weighted
average shares outstanding plus
17
our weighted average Series C Preferred Stock and Series D Preferred Stock
outstanding on an as if converted basis plus the pro forma shares assumed to be
issued in the transaction. In addition, all shares in the pro forma calculations
have been adjusted for our reverse split of one new share for each fifty shares
held.
(D) Includes the effect of the 1 for 50 reverse stock split effective for
trading purposes on February 18, 2004.
18
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain "forward-looking statements." Forward-looking statements are
based on currently available competitive, financial and economic data and
management's views and assumptions regarding future events. Such statements
include, but are not limited to (1) statements about the benefits of the Net
Perceptions acquisition; (2) statements with respect to our plans, objectives,
expectations and intentions and other statements that are not historical facts;
and (3) other statements identified by words such as "believes," "expects,"
"anticipates," "estimates," "intends," "plans," "targets," "projects" and other
similar expressions. Forward-looking statements are inherently uncertain.
Because those statements are based on expectations and not historical facts,
actual results may differ materially from those projected in the particular
statements.
Important factors that could cause future results to differ include, but
are not limited to, those listed under "Risk Factors" beginning on page 20 and
the following:
o The board of directors of Net Perceptions may fail to recommend the
proposed merger;
o Net Perceptions shareholders may fail to approve the proposed merger;
o Competitive pressures may increase significantly and may have an
effect on pricing, spending, third-party relationships and revenues;
o The U.S. legal and regulatory framework may change;
o Adverse conditions in the stock market, the public debt market and
other capital markets (including changes in interest rate conditions)
may adversely affect the combined company's activities;
o The availability of liquidity under our existing lines of credit may
be limited;
o Integration of other acquired or merged businesses may be difficult,
time-consuming or more costly than expected;
o We may not be able to retain key management and employees;
o We may not be able to meet demand at competitive prices in our coach
leasing segment and our trailer and related transportation equipment
manufacturing segment;
o We may not be able to successfully develop alternative sources of raw
materials in our butyl rubber reclaiming segment; and
o We may not be able to maintain our relationships with certain
significant customers.
These and other matters are difficult to predict, and many are beyond our
control, including those we discuss in this prospectus and our filings with the
SEC. Accordingly, you should not rely on the accuracy of predictions contained
in forward-looking statements. These statements speak only as of the date of
this prospectus or, in the case of documents incorporated by reference, the date
of those documents. We undertake no obligation to update these statements in the
future.
19
RISK FACTORS
You should carefully read this prospectus as well as the other information
included in or incorporated by reference into this prospectus before deciding
whether to tender shares of Net Perceptions common stock for exchange pursuant
to the exchange offer. You should, in particular, read and consider the
following risk factors, including the risks associated with our business and Net
Perceptions' business, because these risks will also affect the combined
businesses should the proposed merger be completed.
RISKS RELATED TO THE EXCHANGE OFFER AND THE MERGER
If Net Perceptions has liabilities that are not fully reflected on its balance
sheet, the cash available for our operations following the proposed merger may
be less than we expect.
On November 2, 2001, Timothy J. Fox filed a purported class action lawsuit
against Net Perceptions, FleetBoston Robertson Stephens, Inc., the lead
underwriter of Net Perceptions' April 1999 initial public offering, several
other underwriters who participated in Net Perceptions' initial public offering,
Steven J. Snyder, Net Perceptions' then president and chief executive officer,
and Thomas M. Donnelly, Net Perceptions' then chief financial officer and
currently its president and chief financial officer. The lawsuit was filed in
the United States District Court for the Southern District of New York and has
been assigned to the judge who is also the pretrial coordinating judge for
substantially similar lawsuits involving more than 300 other issuers. An amended
class action complaint, captioned In re Net Perceptions, Inc. Initial Public
Offering Securities Litigation, 01 Cit. 9675 (SAS), was filed on April 22, 2002,
expanding the basis for the action to include allegations relating to Net
Perceptions' March 2000 follow-on public offering in addition to those relating
to our initial public offering.
The amended complaint generally alleges that the defendants violated
federal securities laws by not disclosing certain actions taken by the
underwriter defendants in connection with Net Perceptions' initial public
offering and its follow-on public offering. The amended complaint alleges
specifically that the underwriter defendants, with Net Perceptions' direct
participation and agreement and without disclosure thereof, conspired to and did
raise and increase their underwriters' compensation and the market prices of Net
Perceptions common stock following Net Perceptions' initial public offering and
in its follow-on public offering by requiring their customers, in exchange for
receiving allocations of shares of Net Perceptions common stock sold in its
initial public offering, to pay excessive commissions on transactions in other
securities, to purchase additional shares of Net Perceptions' common stock in
the initial public offering aftermarket at pre-determined prices above the
initial public offering price, and to purchase shares of Net Perceptions common
stock in its follow-on public offering. The amended complaint seeks unspecified
monetary damages and certification of a plaintiff class consisting of all
persons who acquired Net Perceptions common stock from April 22, 1999 through
December 6, 2000. The plaintiffs have since agreed to dismiss the claims against
Mr. Snyder and Mr. Donnelly without prejudice, in return for their agreement to
toll any statute of limitations applicable to those claims; and those claims
have been dismissed without prejudice. On July 15, 2002, all of the issuer
defendants filed a joint motion to dismiss the plaintiffs' claims in all of the
related cases. On February 19, 2003, the Court ruled against Net Perceptions on
this motion.
A special committee of the board of directors of Net Perceptions has
authorized the company to negotiate a settlement of the pending claims
substantially consistent with a memorandum of understanding negotiated among
class plaintiffs, issuer defendants and their insurers. Any such settlement
would be subject to approval by the court.
Net Perceptions has stated that it believes that the allegations against it
are without merit. However, as this litigation is in an initial stage, we are
unable to predict its outcome or its ultimate effect, if any, on Net
Perceptions' financial condition or the financial condition of the combined
companies following the exchange offer and proposed merger. Any costs and
expenses paid by Net Perceptions in connection with, or as a result of, this
lawsuit may reduce the cash available to us following the proposed merger.
Resales of our common stock following the offer to exchange may cause the market
price of our stock to fall.
Upon the effectiveness of our reverse stock split, holders of our Series C
Preferred Stock and Series D Preferred Stock converted their shares of Series C
Preferred Stock and Series D Preferred Stock into our common stock. As a result,
the number of shares of our common stock outstanding has been increased from
approximately 720,000 to approximately 2,866,000 on a post-reverse split basis.
The majority of the shares of our common stock that issued on that conversion
are subject to sale by the holders under Rule 144. The availability of these
shares for
20
sale together with the shares issued in exchange for the Net Perceptions common
stock could have the effect of depressing the market price for our common stock.
The trading price of our common stock may be affected by factors different from
those affecting the price of Net Perceptions common stock.
Upon completion of the exchange offer and the proposed merger, holders of
Net Perceptions common stock will become holders of our common stock. Our
business differs from that of Net Perceptions, and our results of operations, as
well as the trading price of our common stock, may be affected by factors
different from those affecting Net Perceptions' results of operations and the
price of Net Perceptions common stock.
Actions by the current board of directors and management of Net Perceptions
could substantially increase the costs of the contemplated transactions.
If the current board of directors of Net Perceptions does not voluntarily
take action to satisfy the Rights Condition and the Section 203 Condition, our
options would be to abandon the transaction or to request the Delaware Chancery
Court to mandate that action. That litigation would be expensive for us and for
Net Perceptions, and the result would be uncertain.
Further, if we are successful in acquiring 51% or more of the Net
Perceptions common stock in the exchange offer, unless the members of the
current board of directors recommend the proposed merger, we would be required
to remove the directors.
These factors and other actions that the current board of directors and
management of Net Perceptions may take could substantially increase the cost to
us of the transaction and could incur substantial expense for Net Perceptions.
If we do not continue Net Perceptions' business, the goodwill resulting from our
acquisition of Net Perceptions may become materially impaired.
The pro forma balance sheet at October 31, 2003 reflects additional
goodwill of approximately $3,623, resulting from the acquisition of Net
Perceptions. As we have not yet determined whether to continue to operate the
remaining business of Net Perceptions, or whether we would seek to sell that
business or its assets, this goodwill may become impaired and that impairment
may be material.
RISK FACTORS RELATED TO OUR BUSINESS
We may not be able to obtain credit to operate our business.
We cannot be certain that we will have sufficient liquidity available under
existing lines of credit to meet our working capital needs. Four of our
subsidiaries were acquired in highly leveraged transactions. During the year
ended October 31, 2003, three of our subsidiaries were in violation of certain
requirements and covenants in their debt agreements relating to maintenance of
specified minimum ratios and levels of earnings to funded debt and fixed charge
coverage. All of these violations were waived or cured by amendment. We cannot
be certain whether we will be able to meet the covenant requirements contained
in the debt agreements. Although we have been able to obtain waivers of previous
violations, we may not be able to obtain waivers of such covenants if waivers
are needed in the future.
We have relied on borrowing from related parties for a significant portion
of our working capital needs. Although we are confident that the related party
borrowing facility will provide adequate liquidity in the near term, there can
be no assurance that such facility will be adequate in the long term.
The lenders may not continue to lend to us. Lenders' criteria for loans
change, and, if there is a general tightening of credit standards, we may not
qualify for credit. Further, if our financial performance deteriorates from the
manner in which our various operations have historically performed, our lenders
may declare defaults and refuse to advance funds under revolving credit lines.
Under these circumstances we may not be able to obtain credit on any terms and
may not be able to meet our working capital needs.
21
An increase in interest rates would increase our interest expense.
We are exposed to market risk related to changes in interest rates on our
debt. Approximately 60% of our primary debt at October 31, 2003 bore interest at
a variable rate. An interest rate increase of one percentage point would
increase our interest expense over a one-year period by approximately $248,000
at current debt levels.
We may not be able to successfully compete with other companies in our lines of
business.
We face strong competition in our coach leasing segment and our trailer and
related transportation equipment manufacturing segment. Our coach leasing
business competes with a number of other companies that lease luxury coaches.
Our success in the coach leasing segment is dependent upon our ability to meet
demand and to match the quality and amenities sought after by our target market
at competitive prices. Our trailer and related transportation equipment
manufacturing segment competes with a number of companies, including a number
who are much larger than us and have equal or greater technical and financial
resources.
If we are unable to develop alternative sources of raw materials, our cost of
scrap butyl rubber may increase, reducing our profits from our butyl rubber
reclaiming operations.
Our butyl rubber reclaiming segment is highly dependent upon the
availability of raw materials. We are facing increasing competition for raw
materials from foreign manufacturers as the supply of the scrap butyl rubber
from inner tubes continues to decline. The success of this segment will depend
in large measure upon our ability to successfully develop alternative sources of
raw materials.
If the price of crude oil falls, we may experience lower revenues and lower
profits in our butyl rubber reclaiming operations.
The demand for butyl rubber by some of our customers also is closely tied
to the price of crude oil, with demand falling as the price of crude oil falls.
If the price of crude oil falls, our revenues and our profit may decrease.
Decreases in consumer spending during recessionary periods and unavailability of
quality drivers may decrease revenues and reduce profits in our coach leasing
operations.
Our coach leasing segment leases luxury coaches primarily to performers in
the entertainment industry. This segment is highly dependent upon the state of
the general economy and its effect on entertainment spending. Consumer spending
on entertainment tends to decline during recessionary periods when disposable
income is low, reducing our revenues in this segment. The availability of
quality contract drivers is another factor that affects the success of the coach
leasing segment. Although customers generally are responsible for engaging their
own drivers, we assist customers by suggesting drivers with whom we have had
experience. We may lose business and revenues if quality drivers are not
available.
Competitive factors in the trailer business may require continued discounting,
which may reduce our revenues and our profits.
During the year ended October 31, 2003, we were forced to offer discounts
and other incentives to compete for the sales of trailers which reduced our
revenues and our net income for 2003. While we do not believe that we will be
required to offer incentives at the same level in our current fiscal year, there
is a risk that the incentives will be required.
The economic condition of the telecommunications industry and the bankruptcy of
a significant customer have adversely affected our trailer and related
transportation equipment manufacturing operations.
A majority of the truck bodies manufactured by us have historically been
used in the telecommunications industry. The success of our trailer and related
transportation equipment manufacturing segment is dependent upon overall
economic conditions and in particular on the state of the telecommunications
industry. We have experienced decreased revenues as a result of the economic
condition of the telecommunications industry. If the economic condition of the
industry does not improve, we may continue to experience declining revenues. In
addition, slightly more than one half of our revenue from the manufacture of
service truck bodies, which is part of our trailer and related transportation
equipment manufacturing segment, was derived from a single customer who is in
bankruptcy and has sold its manufacturing assets to another firm. The loss of
this customer has materially reduced our revenues in our truck body business.
22
We may be unable to retain personnel who are key to our businesses.
The success of our operations is dependent, among other things, on our
ability to attract and retain highly qualified professional personnel.
Competition for key personnel in the various localities and business segments in
which we operate is intense. Our ability to attract and retain key personnel, in
particular senior officers, is dependent on a number of factors, including
prevailing market conditions and compensation packages offered by companies
competing for the same talent.
We may not be successful in executing on our acquisition strategy.
A key element of our business plan is the acquisition of additional
businesses. There is no assurance that businesses will be available for sale at
attractive prices and that we will be successful in integrating those
businesses, once acquired, into our operations and in operating them on a
profitable basis.
If we are not successful in being included on the NASDAQ SmallCap Market, we may
not be able to increase the liquidity of our common stock.
Our common stock currently trades on the OTC Bulletin Board. We plan to
apply for initial inclusion of our common stock on the NASDAQ SmallCap Market
following the exchange offer to increase the liquidity of our common stock.
While we believe that we will satisfy the conditions for initial inclusion,
NASDAQ exercises discretion when determining whether to include a security in
its markets. NASDAQ may not approve our listing application.
BACKGROUND OF THE EXCHANGE OFFER
From time to time during the past few years, we have considered expanding
our operations through acquisitions of other companies.
During the period from approximately February 2003 through October 15,
2003, and prior to their engagement by us, our strategic advisor, Acclaim
Financial Group Venture III LLC ("AFGIII") had held various meetings and
conversations with and submitted various proposals to Net Perceptions and its
legal advisors, Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps") and
its former financial advisors, US Bancorp Piper Jaffray Inc. ("Piper Jaffray"),
regarding a possible strategic transaction between AFGIII and Net Perceptions.
During this period, Mr. Durham held conversations with AFGIII regarding
providing financing for AFGIII to complete a transaction with Net Perceptions.
On October 21, 2003, Net Perceptions announced its proposed Plan of
Liquidation. Net Perceptions filed a preliminary proxy statement relating to the
Plan of Liquidation on Schedule 14A with the Securities and Exchange Commission
on November 4, 2003. The key features of the Plan of Liquidation are (i) filing
a Certificate of Dissolution with the Secretary of State of Delaware and
thereafter remaining in existence as a non-operating entity for three years;
(ii) winding up its affairs, including selling its remaining non-cash assets,
and taking such action as may be necessary to preserve the value of its assets
and distributing its assets in accordance with the Plan of Liquidation; (iii)
paying its creditors; (iv) terminating any of its remaining commercial
agreements, relationships or outstanding obligations; (v) resolving its
outstanding litigation; (vi) establishing a contingency reserve for payment of
its expenses and liabilities; and (vii) preparing to make distributions to its
stockholders.
On November 10, 2003, we held conversations with AFGIII regarding Net
Perceptions and engaged them as our strategic advisor on November 12, 2003. On
November 13, 2003, we sent a letter to the board of directors of Net Perceptions
indicating our interest in a business combination between Obsidian Enterprises
and Net Perceptions. In our letter, we offered to exchange each share of Net
Perceptions common stock for $0.20 in cash and 0.6 of a share of our common
stock. We issued a press release with the text of the letter and filed the press
release with the SEC to ensure that Net Perceptions shareholders were aware of
the offer.
During the period from November 13, 2003 through November 24, 2003, we
contacted Net Perceptions. We were advised via a letter dated November 19, 2003,
that the board of directors of Net Perceptions was unable to evaluate our
proposal until, among other things, they had engaged a financial advisor. Net
Perceptions has stated in its public filings that at a November 18, 2003 board
meeting "it was noted that [Net Perceptions'] financial advisor, Piper Jaffray
had resigned." In an effort to advance the negotiations, our Chief Executive
Officer, Tim Durham, proposed meeting with Net Perceptions' President, Tom
Donnelley.
23
On November 24, 2003, we entered into a confidentiality agreement with Net
Perceptions, and that evening Mr. Durham, Terry Whitesell, our president and
chief operating officer, and Anthony Schlichte, our executive vice president,
met with Mr. Donnelley and a representative of Net Perceptions' newly retained
financial advisor, Candlewood Partners, Inc. ("Candlewood"), to discuss our
interest and proposed terms for a transaction.
During the period from November 24, 2003 through November 30, 2003,
representatives of our legal advisors, Barnes & Thornburg, and AFGIII held
various conversations with representatives of Skadden Arps, and Candlewood in an
effort to confirm the Net Perceptions' board of directors' willingness to
proceed with a transaction and to negotiate a mutually acceptable transaction
structure and definitive documentation. Initially, based on a series of
conversations with Mr. Donnelley and a representative of Candlewood, we
understood that Net Perceptions' board of directors was prepared to accept an
offer that would provide Net Perceptions shareholders the opportunity to receive
cash in the range of approximately $0.40 per share or, provided that the cash
alternative were also available to the Net Perceptions shareholders, the
opportunity to alternatively receive a combination of cash and our common stock
or just our common stock. On November 30, 2003, AFGIII confirmed orally to
Candlewood that we were prepared to accept these pricing terms and that we
desired to proceed to definitive documentation.
During the period from November 25, 2003 through December 8, 2003, AFGIII
and Candlewood held various conversations. On December 2, 2003, we sent another
letter to Net Perceptions proposing that we would offer to each Net Perceptions
shareholder the opportunity to receive for each share of Net Perceptions common
stock either two shares of our common stock or $0.40 in cash in an exchange
offer followed by a merger. Skadden Arps responded to Barnes & Thornburg LLP
that (i) a traditional financing commitment or a transaction structure we viewed
as customary and providing reasonable certainty as to funding were not
acceptable, and (ii) in order to proceed with a transaction, Net Perceptions
would require (a) that we escrow the full amount of the potential transaction
value in cash (approximately $11.2 million) with an acceptable third party and
(b) that closure of the transaction be a certainty and there be no conditions to
closing. Barnes & Thornburg LLP attempted to negotiate what we viewed as
customary and reasonable resolution of these issues. Barnes & Thornburg LLP
proposed to Skadden Arps restructuring the transaction as a voted on merger
would assure the necessary cash since Net Perceptions had more than the
equivalent of $0.40 per share in cash on hand and, assuming a favorable
shareholder vote, the parties could be assured the transaction would close. They
were advised by Skadden Arps that this solution was not acceptable to the Net
Perceptions' board of directors.
On December 8, 2003, we sent another letter to the board of directors of
Net Perceptions with a revised proposal to enter a business combination with Net
Perceptions in which we would exchange either two shares of our common stock or
$0.40 in cash for each share of Net Perceptions common stock. We issued a press
release with the text of the letter and filed the press release with the SEC to
ensure that Net Perceptions shareholders were aware of the offer.
After we delivered this letter on December 8, 2003, Candlewood and Skadden
Arps informed AFGIII and Barnes & Thornburg LLP that the solutions we proposed
to address Net Perceptions' concerns regarding financing and certainty of
transaction closure were not acceptable to the Net Perceptions' board of
directors.
On December 11, 2003, we issued a press release announcing our plan to make
an offer for shares of Net Perceptions common stock directly to the Net
Perceptions shareholders. The press release indicated that we would offer Net
Perceptions shareholders two shares of our common stock for each share of Net
Perceptions common stock. We eliminated the cash alternative because we prefer
an all equity transaction.
On December 15, 2003, we filed a registration statement and a tender offer
statement with the SEC. On December 17, 2003, we filed amendments to each of
those documents and issued a press release announcing that we had commenced our
tender offer for shares of Net Perceptions common stock. We filed the press
release with the SEC.
On December 23, 2003, Net Perceptions issued a press release reporting that
it had amended its shareholder rights plan. Net Perceptions has stated in its
public filings that the amendment "is intended to remove the Company's
stockholder rights plan as an impediment to Obsidian or another bidder
completing its offer and a subsequent merger, while also affording protection to
stockholders who do not tender their shares...if, despite the board's
recommendation... the holders of [85%] of Net Perceptions stock ... elect to
accept Obsidian's offer." Net Perceptions also announced that our exchange offer
was under consideration.
On December 31, 2003, Net Perceptions announced that its board of directors
had rejected our exchange offer and recommended that its shareholders not tender
their shares of Net Perceptions common stock to us. Net
24
Perceptions stated that, absent a definitive agreement with a potential acquiror
for a transaction that would provide higher realizable value to its shareholders
than the Plan of Liquidation, it planned to pursue stockholder approval of the
Plan of Liquidation and to proceed with the SEC review process related thereto.
Net Perceptions filed proxy materials and a solicitation/recommendation
statement setting forth its recommendation.
Net Perceptions also announced on December 31, 2003, that it had entered
into an agreement with Thalveg Data Flow LLC to sell to Thalveg Net Perceptions'
patent portfolio for a purchase price of $1.8 million. As stated in Net
Perceptions' press release, the agreement includes a royalty-free license back
to Net Perceptions under the patents, patent licenses and pending patent
applications being transferred. The press release also states that the
transaction does not involve any other intellectual property rights or other
assets of Net Perceptions, including its proprietary software products, which
remain with Net Perceptions. Consummation of the transaction is subject to
stockholder approval as part of Net Perceptions' Plan of Liquidation. Net
Perceptions also announced that it had granted to a software company a
non-exclusive source code license to a portion of Net Perceptions' intellectual
property for a cash payment of $325,000, and that, under the license agreement,
Net Perceptions will provide certain consulting and support services to the
licensee for additional cash payments totaling $75,000.
On January 6, 2004, Net Perceptions filed a revised preliminary proxy
statement with the SEC in connection with its Plan of Liquidation. The Plan of
Liquidation as described in the revised preliminary proxy materials is not
materially different from the Plan of Liquidation described in its preliminary
proxy materials filed on October 21, 2003 and described above. The revised
preliminary proxy materials describe the exchange offer's effect on the Plan of
Liquidation. The revised materials also describe Candlewood's liquidation
analysis and its opinion with respect to our exchange offer.
On January 9, 2004, Net Perceptions announced that it had established
procedures for each potential acquiror to follow in submitting "a proposed
definitive agreement containing all the terms and conditions of a potential
acquiror's best and final offer" no later than the close of business on January
19, 2004. On January 19, in compliance with the procedures established by Net
Perceptions, we submitted a proposed definitive agreement whereby we proposed to
acquire all outstanding shares of Net Perceptions common stock in exchange for
two shares of our common stock. We issued a press release on January 21, 2004
announcing that we had submitted a proposal. We filed the press release with the
SEC.
On each of January 29, 2004, and February 6, 2004, Net Perceptions filed a
revised preliminary statement in connection with its Plan of Liquidation. The
Plan of Liquidation as described in each of the revised preliminary proxy
statements is not materially different from the Plan of Liquidation described in
Net Perceptions' preliminary proxy materials filed on October 21, 2003 and
January 6, 2004 and described above. In its revised preliminary proxy materials,
Net Perceptions disclosed that it had received nine submissions in response to
its requests for offers, and that its board of directors had determined that
"four submissions were the only submissions that either complied with, or
reflected a good faith effort to comply with, the previously announced
procedures, or otherwise merited further consideration and review."
The four submissions, which are described in greater detail in Net
Perceptions' proxy materials, included:
o our proposal,
o a proposal by an American Stock Exchange listed company for a
stock-for-stock merger,
o a proposal made public by MicroSkills San Diego, LP, whereby Net
Perceptions would acquire MicroSkills in exchange for newly issued
shares of Net Perceptions common stock and the existing owners of
MicroSkills would receive 49.99% of the Net Perceptions common stock,
and
o a proposal by an investment firm whereby the investment firm would
invest cash in Net Perceptions in exchange for non-voting convertible
securities of Net Perceptions.
Net Perceptions further disclosed that its board had determined to reject
all offers it had received and to proceed with its seeking stockholder approval
of the Plan of Liquidation. The revised materials include expanded descriptions
of the various offers received by Net Perceptions and the reasons that the Net
Perceptions board of directors rejected each of these offers.
Net Perceptions mailed its proxy materials on or about February 12, 2004.
25
On February 17, 2004, we filed preliminary proxy materials with the SEC
that we would use to solicit proxies from Net Perceptions shareholders opposing
the Plan of Liquidation. We issued a press release on February 17, 2004
announcing that we had filed preliminary proxy materials.
On February 18, 2004, our previously disclosed reverse stock split became
effective for trading purposes. The exchange offer consideration, $0.20 in cash
and 3/100 share of our common stock for each share of Net Perceptions common
stock, reflects the reverse stock split.
On February 20, 2004, we announced that we were extending the expiration of
the exchange offer from February 20, 2004 until March 17, 2004. We issued a
press release describing the extension and filed the press release with the SEC.
On February 24, 2004, Net Perceptions filed a supplement to its proxy
materials. Net Perceptions stated that it filed the supplement to provide
additional disclosure requested by plaintiff's counsel in the pending Blakstad
litigation described in Net Perceptions' proxy statement "in an effort to avoid
the further expenditure of stockholder funds in defending the Blakstad
litigation." In the supplement Net Perceptions disclosed:
o that its estimated net operating loss carry-forward at December 31,
2003, was approximately $119.0 million, that its net operating loss
carry-forwards are subject to limitations under the Internal Revenue
Code and that, if the plan of liquidation is approved and adopted, Net
Perceptions will never be able to use those net operating loss
carry-forwards;
o detailed information concerning the analysis by Candlewood of the
American Stock Exchange listed company's proposal;
o that, despite requests from the American Stock Exchange listed company
for a meeting, the Net Perceptions board never met with
representatives of that company; and
o detailed information concerning the analysis by Candlewood of the
MicroSkills proposal.
On February 27, 2004, we commenced distribution of a letter to Net
Perceptions shareholders whose shares are held in street name. In the letter, we
encouraged Net Perceptions shareholders to refrain from returning Net
Perceptions' management's proxy card and to wait until they have received our
proxy materials before making a voting decision regarding the Plan of
Liquidation.
On March 1, 2004, we filed revised preliminary proxy materials with the
SEC.
On March 5, 2004, we began distributing a second letter to Net Perceptions
shareholders with shares held in street name, again urging those shareholders to
wait until receiving our proxy materials before submitting their votes on the
Plan of Liquidation. We filed our letter with the SEC on March 5, 2004.
Also on March 5, 2004, we changed the terms of our exchange offer;
increasing the consideration being offered from 1/25 share of our common stock
to $0.20 in cash and 3/100 share of our common stock for each share of Net
Perceptions common stock. We issued a press release on March 5, 2004 announcing
that we had increased our offer and filed the press release with the SEC.
Also on March 5, 2004, we filed definitive proxy materials with the SEC and
began distributing these materials on March 8, 2004. On March 9, 2004, we issued
a press release announcing that we had filed our definitive proxy materials and
had commenced our proxy solicitation.
On March 10, 2004, Net Perceptions announced that the Blakstad litigation
had been dismissed with prejudice.
REASONS FOR THE EXCHANGE OFFER
We believe that our proposed acquisition of Net Perceptions common stock
presents the opportunity to expand our shareholder base and increase our
stockholders' equity. The proposed merger will further expand our shareholder
base and further increase our stockholders' equity and will also provide us with
cash for our operations and additional possible acquisitions.
We believe that the combination of Net Perceptions and Obsidian Enterprises
is in our best interest and in the best interest of our shareholders, Net
Perceptions and its shareholders. Accordingly, our board of directors
26
unanimously approved the exchange offer and the proposed merger. In reaching its
decision, our board of directors consulted with our management, legal counsel
and strategic advisors. Our board of directors considered a number of factors,
to which relative weights were not assigned, including the following:
o The increase in our stockholders' equity as a result of the proposed
transaction and the effect of that increase on our ability to have our
common stock included for trading on the NASDAQ SmallCap Market,
o The best interests of Obsidian Enterprises, our subsidiaries and our
shareholders including, among other things, the anticipated financial
strength of the combined company,
o The business, operations, financial condition and earnings of Obsidian
Enterprises and Net Perceptions on an historical and a prospective
basis and of the combined company on a pro forma basis, including the
business of the resulting entity and each company's historical stock
performance,
o The financial condition and prospects of Obsidian Enterprises and Net
Perceptions, including but not limited to results of operations,
o Our board's review of Net Perceptions' financial condition,
o The consideration to be paid to Net Perceptions shareholders in
relation to the cash and cash equivalents held by Net Perceptions and
the liabilities of Net Perceptions, and
o The consideration to be paid to Net Perceptions shareholders in
relation to the uncertain amount and timing of payment to Net
Perceptions shareholders under the Plan of Liquidation.
In making its determination, our board of directors did not ascribe any
relative or specific weights to the factors that it considered. The foregoing
discussion of the factors considered by our board of directors is not intended
to be exhaustive, but it does include the material factors considered by the
board.
The only information available to us regarding Net Perceptions is
information that they have made publicly available. If we conduct due diligence,
our beliefs about the benefits of the exchange offer and the proposed merger may
change.
There are numerous factors, other than the exchange offer and the proposed
merger, that could cause our results of operations, including, among other
things, earnings per share, to increase or decrease after the exchange offer and
proposed merger. Therefore, we cannot assure you that the anticipated benefits
of the combination of Obsidian Enterprises and Net Perceptions discussed in the
previous paragraphs will happen. You should read "Risk Factors" beginning on
page 20 and "Forward-Looking Statements" beginning on page 19 for a discussion
of some of the other factors that could affect our future operations and
financial condition.
PLANS FOR NET PERCEPTIONS AFTER THE PROPOSED MERGER
We are making the exchange offer in order to acquire voting control of, and
ultimately the entire equity interest in, Net Perceptions. We intend to then
have Net Perceptions merge with our subsidiary as soon as possible after
completion of the exchange offer. The purpose of the proposed merger would be to
acquire all shares of Net Perceptions common stock not exchanged in the exchange
offer. In the proposed merger, each then-outstanding share of Net Perceptions
common stock, except for treasury shares of Net Perceptions and shares
beneficially owned directly or indirectly by us for our own account, would be
converted into the same consideration per Net Perceptions share offered in the
exchange offer, subject to dissenters' appraisal rights under Delaware law.
We have not determined whether we will continue to operate the remaining
business of Net Perceptions or whether we would seek to sell that business or
its assets. We plan to use the cash remaining in Net Perceptions after the
proposed merger to fund additional possible acquisitions and for working capital
purposes.
THE EXCHANGE OFFER
GENERAL
If we obtain all of the shares of Net Perceptions common stock pursuant to
the exchange offer, former shareholders of Net Perceptions would own
approximately 22% of the shares of our common stock.
27
Our obligation to exchange the consideration described in this prospectus
for shares of Net Perceptions common stock pursuant to the exchange offer is
subject to the conditions referred to under "Conditions to the Exchange Offer"
in this prospectus.
Net Perceptions shareholders who tender shares of Net Perceptions common
stock pursuant to the exchange offer will not be obligated to pay any charges or
expenses of the exchange agent. We, or another party on our behalf, will pay
transfer taxes on the exchange of Net Perceptions common stock pursuant to our
exchange offer unless we disclose otherwise in the instructions to the letter of
transmittal.
Our offer to acquire Net Perceptions common stock is also an offer to
acquire the preferred stock purchase rights associated with the Net Perceptions
common stock, as described in the Net Perceptions Rights Agreement. All
references to the shares of Net Perceptions common stock include the associated
preferred stock purchase rights under the Net Perceptions Rights Agreement,
unless we indicate otherwise. In addition, all references to the preferred stock
purchase rights include the benefits to holders of those rights pursuant to the
Net Perceptions Rights Agreement, including the right to receive any payment due
upon redemption of those rights. The procedure for tendering your share purchase
rights is described below under "Procedure for Tendering -- Share Purchase
Rights."
Currently, we are not offering, as part of the exchange offer, to purchase
any Net Perceptions options outstanding and we will not accept tenders of Net
Perceptions options. Holders of exercisable Net Perceptions options who wish to
participate in the exchange offer may exercise their options and purchase shares
of Net Perceptions common stock and then tender the shares in accordance with
the exchange offer. In addition, we do not anticipate converting options to
purchase Net Perceptions common stock into options to purchase our common stock.
The expected treatment of options is subject to change. In particular, if the
transaction becomes negotiated, our anticipated treatment of Net Perceptions
options may change. If you hold any options to purchase Net Perceptions common
stock pursuant to any Net Perceptions equity stock compensation plan, the terms
of that plan will govern whether any unvested options will become exercisable
prior to the consummation of the exchange offer.
CONSIDERATION TO BE PAID
You will receive $0.20 in cash and 3/100 share of our common stock for each
share of Net Perceptions common stock that you hold that you validly tender and
do not properly withdraw. You will not receive any fractional share of our
common stock. Instead, you will receive cash in an amount equal to the value of
the fractional share of our common stock that you would otherwise have been
entitled to receive. See "Cash Instead of Fractional Shares of Obsidian
Enterprises Common Stock" in this prospectus.
We have an existing line of credit with a related party, Fair Holdings,
Inc. To finance the cash portion of the exchange offer consideration, we have
entered into an amended promissory note with Fair Holdings, Inc. to increase the
amount available under our line of credit. If all shares of Net Perceptions
common stock were tendered in the exchange offer, the amount of funds required
to pay the cash portion of the exchange offer consideration would be $5,746,878,
based on 28,734,388 shares of Net Perceptions outstanding as of September 30,
2003. There are no conditions to the financing, and we have no alternative
financing arrangements or alternative financing plans.
The principal balance of the promissory note is $15,000,000 and the final
maturity date is January 1, 2007. Interest is payable monthly at the interest
rate of 10%. The line of credit is secured by all of our assets and is
guaranteed by certain officers. As of January 31, 2003, we had $6,045,000 debt
outstanding under the line of credit.
TIMING OF THE EXCHANGE OFFER
Our exchange offer is scheduled to expire at 5:00 p.m., New York City time,
on March 17, 2004. For more information, you should read the discussion below
under the caption "Extension, Termination and Amendment".
The term "expiration date" means 5:00 p.m., New York City time, on March
17, 2004, unless we extend the period of time for which the exchange offer is
open, in which case the term "expiration date" means the latest time and date on
which the exchange offer, as so extended, expires.
EXTENSION, TERMINATION AND AMENDMENT
We expressly reserve the right, in our sole discretion, at any time or from
time to time, to extend the period of time during which the exchange offer
remains open, and we can do so by giving oral or written notice of that
28
extension to the exchange agent. We cannot assure you that we will exercise our
right to extend the exchange offer, although currently we intend to do so until
all conditions have been satisfied or, where permissible, waived. During any
extension, all shares of Net Perceptions common stock previously tendered and
not withdrawn will remain subject to the exchange offer, subject to each
shareholder's right to withdraw his or her shares of Net Perceptions common
stock. You should read the discussion under the caption "Withdrawal Rights" in
this prospectus for more details.
Subject to the SEC's applicable rules and regulations, we also reserve the
right, in our sole discretion:
o to terminate the exchange offer and not accept for exchange or
exchange any shares of Net Perceptions common stock not previously
accepted for exchange or exchanged, upon the failure of any of the
conditions of the exchange offer to be satisfied prior to the
expiration date,
o to waive any condition, other than the condition relating to the
absence of an order or decree of any court or agency of competent
jurisdiction preventing the completion of the exchange offer, and the
condition relating to the effectiveness of the registration statement
for our shares to be issued in the exchange offer, or
o to amend the exchange offer in any respect, by giving oral or written
notice of such delay, termination or amendment to the exchange agent
and by making a public announcement.
We will follow any extension, termination, amendment or delay, as promptly
as practicable, with a public announcement. In the case of an extension, the
related announcement will be issued no later than 9:00 A.M., New York City time,
on the next business day after the previously scheduled expiration date.
Applicable law, including Rules 14d-4(d) and 14d-6(c) under the Exchange Act,
requires that any material change in the information published, sent or given to
Net Perceptions shareholders in connection with the exchange offer be promptly
sent to shareholders in a manner reasonably designed to inform shareholders of
that change. Without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any public announcement of the type described in this paragraph
other than by issuing a press release to the Dow Jones News Service, PR Newswire
or some other similar national news service.
If we make a material change in the terms of the exchange offer or the
information concerning the exchange offer, or if we waive a material condition
of the exchange offer, we will extend the exchange offer to the extent required
under the Exchange Act. If, prior to the expiration date, we change the
percentage of shares of Net Perceptions common stock sought in the exchange or
the consideration offered to Net Perceptions shareholders, that change will
apply to all holders whose shares of Net Perceptions common stock are accepted
for exchange pursuant to the exchange offer, whether those shares of Net
Perceptions common stock were accepted for exchange prior to the change. If at
the time notice of such a change is first published, sent or given to Net
Perceptions shareholders, the exchange offer is scheduled to expire at any time
earlier than the tenth business day from and including the date that the related
notice is first so published, sent or given, we will extend the exchange offer
until the expiration of that ten business day period. For purposes of the
exchange offer, a business day means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 A.M. through 12:00
midnight, New York City time.
If Net Perceptions agrees upon a negotiated merger with us, we may amend or
terminate the exchange offer without purchasing any shares of Net Perceptions
common stock.
EXCHANGE OF NET PERCEPTIONS SHARES; DELIVERY OF OBSIDIAN ENTERPRISES COMMON
STOCK
Upon the terms and subject to the conditions of the exchange offer,
including, if the exchange offer is extended or amended, the terms and
conditions of any extension or amendment, we will accept, and will exchange,
shares of Net Perceptions common stock validly tendered and not properly
withdrawn promptly after the expiration date. In all cases, exchange of shares
of Net Perceptions common stock tendered and accepted for exchange pursuant to
the exchange offer will be made only after timely receipt by the exchange agent
of:
o certificates for those shares of Net Perceptions common stock (or a
confirmation of a book-entry transfer of those shares of Net
Perceptions common stock in the exchange agent's account at The
Depository Trust Company ("DTC")),
29
o a properly completed and duly executed letter of transmittal or a
manually signed facsimile of that document, and
o any other required documents.
For purposes of the exchange offer, we will be deemed to have accepted for
exchange shares of Net Perceptions common stock validly tendered and not
withdrawn if and when we notify the exchange agent of our acceptance for
exchange of those shares of Net Perceptions common stock pursuant to the
exchange offer. Promptly after receipt of that notice, the exchange agent will
deliver the exchange offer consideration to Net Perceptions shareholders who
tendered Net Perceptions common stock. The exchange agent will act as agent for
tendering Net Perceptions shareholders for the purpose of receiving from us the
exchange offer consideration, including our common stock and $0.20 in cash for
each Net Perceptions share and any cash to be paid in lieu of fractional shares
of our common stock, and transmitting the exchange offer consideration, if any,
to such shareholders. You will not receive any interest on any cash that we pay
you regardless of any delay in making the exchange.
If we do not accept any tendered shares of Net Perceptions common stock for
exchange pursuant to the terms and conditions of the exchange offer for any
reason, or if certificates are submitted for more shares of Net Perceptions
common stock than are tendered, we will return certificates for such shares of
Net Perceptions common stock without expense to the tendering shareholder. In
the case of shares of Net Perceptions common stock tendered by book-entry
transfer of those shares of Net Perceptions common stock into the exchange
agent's account at DTC pursuant to the procedures set forth below under the
discussion entitled "Procedure for Tendering," those shares of Net Perceptions
common stock will be credited to an account maintained within DTC promptly
following expiration or termination of the exchange offer.
CASH INSTEAD OF FRACTIONAL SHARES OF OBSIDIAN ENTERPRISES COMMON STOCK
We will not issue fractional shares of our common stock pursuant to the
exchange offer. Instead, each tendering Net Perceptions shareholder who would
otherwise be entitled to a fractional share of our common stock will receive
cash in an amount equal to that fraction (expressed as a decimal, rounded to the
nearest 0.01 of a share) multiplied by the average of the closing sale prices
for a share of our common stock for the ten consecutive trading days immediately
preceding the expiration of the exchange offer, as reported in the OTC Bulletin
Board.
WITHDRAWAL RIGHTS
You may withdraw any shares of Net Perceptions common stock tendered
pursuant to the exchange offer at any time prior to the expiration date. You may
also withdraw your shares at any time after the expiration date until we have
accepted the shares for payment. Once we accept tendered shares for exchange,
your tender is irrevocable.
For a withdrawal to be effective, the exchange agent must receive from each
withdrawing Net Perceptions shareholder a written notice of withdrawal at one of
the exchange agent's addresses set forth on the back cover of this prospectus.
Such notice must include the Net Perceptions shareholder's name, address, social
security number, the certificate number(s) and the number of shares of Net
Perceptions common stock to be withdrawn as well as the name of the registered
holder, if it is different from that of the person who tendered those shares of
Net Perceptions common stock.
A financial institution must guarantee all signatures on the notice of
withdrawal in order for the exchange agent to release withdrawn securities. Most
banks, savings and loan associations and brokerage houses are able to effect
these signature guarantees for shareholders. The financial institution must be a
participant in the Securities Transfer Agents Medallion Program, unless those
shares of Net Perceptions common stock have been tendered for the account of
such a financial institution.
If shares of Net Perceptions common stock have been tendered pursuant to
the procedures for book-entry tender discussed under the caption entitled
"Procedure for Tendering", any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn shares of Net
Perceptions common stock and must otherwise comply with DTC's procedures. If
certificates have been delivered or otherwise identified to the exchange agent,
the name of the registered holder and the serial numbers of the particular
certificates evidencing the withdrawn shares of Net Perceptions common stock
withdrawn must also be furnished to the exchange agent, as stated above, prior
to the physical release of those certificates.
30
We will decide all questions as to the form and validity, including time of
receipt, of any notice of withdrawal in our sole discretion, and our decision
shall be final and binding. None of Obsidian Enterprises, the dealer manager,
the exchange agent, the information agent, or any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or will incur any liability for failure to give any notification. Any
shares of Net Perceptions common stock properly withdrawn will be deemed not to
have been validly tendered for purposes of the exchange offer. However, Net
Perceptions shareholders may retender withdrawn shares of Net Perceptions common
stock by following one of the procedures discussed below under the captions
entitled "Procedure for Tendering" or "Guaranteed Delivery" at any time prior to
the expiration date.
If you withdraw any of your Net Perceptions common stock, you automatically
withdraw the associated share purchase rights. You may not withdraw rights
unless you also withdraw the associated Net Perceptions common stock.
PROCEDURE FOR TENDERING
GENERAL
To validly tender shares of Net Perceptions common stock pursuant to the
exchange offer,
o the exchange agent must receive at its addresses set forth on the back
cover of this prospectus (1) a properly completed and duly executed
letter of transmittal, along with any required signature guarantees,
or an agent's message in connection with a book-entry transfer, and
any other required documents, and (2) either certificates for tendered
shares of Net Perceptions common stock or, if those shares of Net
Perceptions common stock are tendered pursuant to the procedures for
book-entry tender set forth below, a book-entry confirmation of
receipt of that tender, in each case before the expiration date, or
o you must comply with the guaranteed delivery procedures set forth
below under "Guaranteed Delivery."
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
that states that DTC has received an express acknowledgment from the DTC
participant tendering the shares of Net Perceptions common stock that are the
subject of that book-entry confirmation, that the participant has received and
agrees to be bound by the terms of the letter of transmittal and that we may
enforce that agreement against the participant.
PREFERRED STOCK PURCHASE RIGHTS
You must tender one preferred stock purchase right under the Net
Perceptions Rights Agreement, if you hold such a right, for each share of Net
Perceptions common stock tendered to effect a valid tender of Net Perceptions
common stock, unless Net Perceptions' board of directors shall have taken such
action which would cause the preferred stock purchase rights to be inapplicable
to the exchange offer and the proposed merger, or we have been satisfied, in our
reasonable discretion, that the preferred stock purchase rights have been
invalidated or are otherwise inapplicable to the exchange offer and the proposed
merger. The rights are currently represented by the certificates for the Net
Perceptions common stock and your tender of Net Perceptions common stock prior
to the date the preferred stock purchase rights become exercisable and
transferable will also constitute a tender of the associated preferred stock
purchase rights. We will not make a separate payment to you for the preferred
stock purchase rights. When and if the rights become exercisable and
transferable, separate certificates representing the rights will be mailed to
holders of record of Net Perceptions common stock as soon as practicable, and
those separate rights certificates alone will evidence the rights.
If the rights under the Net Perceptions Rights Agreement become exercisable
and transferable, and Net Perceptions or the related rights agent distributes
separate certificates representing the rights to you prior to the time that you
tender your Net Perceptions common stock pursuant to the exchange offer,
certificates representing a number of rights equal to the number of shares of
Net Perceptions common stock tendered must be delivered to the exchange agent,
or, if available, a book-entry confirmation received by the exchange agent with
respect thereto, for your shares of Net Perceptions common stock to be validly
tendered. If the rights become exercisable and transferable and separate
certificates representing the rights are not distributed prior to the time
shares of Net
31
Perceptions common stock are tendered pursuant to our exchange offer, rights may
be tendered prior to the time that you receive the certificates for rights by
use of the guaranteed delivery procedure described under "Guaranteed Delivery"
below.
If rights certificates are distributed but are not available to you before
you tender Net Perceptions common stock pursuant to the exchange offer, a tender
of Net Perceptions common stock constitutes an agreement by you to deliver to
the exchange agent, pursuant to the guaranteed delivery procedures described
below, rights certificates representing a number of rights equal to the number
of shares of Net Perceptions common stock tendered prior to the expiration of
the period to be specified in the notice of guaranteed delivery and the related
letter of transmittal for delivery of rights certificates or a book-entry
confirmation for rights. We refer to this period as the rights delivery period.
We reserve the right to require receipt of such rights certificates, or a
book-entry confirmation with respect to such rights, prior to accepting Net
Perceptions common stock for exchange.
Nevertheless, we will be entitled to accept for exchange Net Perceptions
common stock that you tender prior to receipt of the rights certificates
required to be tendered with such Net Perceptions common stock or a book-entry
confirmation with respect to such rights and either (a) subject to complying
with applicable rules and regulations of the SEC, withhold payment for such Net
Perceptions common stock pending receipt of the rights certificates or a
book-entry confirmation for those rights or (b) exchange Net Perceptions common
stock accepted for exchange pending receipt of the rights certificates or a
book-entry confirmation for such rights in reliance upon the guaranteed delivery
procedures described below. In addition, after expiration of the rights delivery
period, we may instead elect to reject as invalid a tender of Net Perceptions
common stock with respect to which rights certificates or a book-entry
confirmation for an equal number of rights have not been received by the
exchange agent. Any determination by us to make payment for Net Perceptions
common stock in reliance upon such guaranteed delivery procedure or, after
expiration of the rights delivery period, to reject a tender as invalid, shall
be made, subject to applicable law, in our sole and absolute discretion.
BOOK-ENTRY DELIVERY
The exchange agent will establish accounts with respect to the shares of
Net Perceptions common stock at DTC for purposes of the exchange offer, and any
financial institution that is a participant in DTC will be able to make
book-entry delivery of the shares of Net Perceptions common stock by causing DTC
to transfer the shares of Net Perceptions common stock into the exchange agent's
account in accordance with DTC's procedure for that transfer. However, although
delivery of shares of Net Perceptions common stock may be effected through
book-entry delivery at DTC, the letter of transmittal, with any required
signature guarantees, or an agent's message in connection with a book-entry
transfer, and any other required documents, must, in any case, be received by
the exchange agent prior to the expiration date, or the guaranteed delivery
procedures described below must be followed. We cannot assure you, however, that
book-entry delivery of rights will be available. If book-entry delivery of
rights is not available, you must tender rights by means of delivery of rights
certificates or pursuant to the guaranteed delivery procedure set forth below.
SIGNATURES
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which shares of Net Perceptions common stock are
tendered either by a registered holder of shares of Net Perceptions common stock
who has not completed the box entitled "Special Issuance Instructions" on the
letter of transmittal or for the account of an eligible institution.
If the certificates for shares of Net Perceptions common stock or rights,
if any, are registered in the name of a person other than the person who signs
the letter of transmittal, or if certificates for unexchanged shares of Net
Perceptions common stock or rights, if any, are to be issued to a person other
than the registered holder(s), the certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name or names
of the registered owner or owners appear on the certificates, with the
signature(s) on the certificates or stock powers guaranteed in the manner we
have described above.
METHOD OF DELIVERY
The method of delivery of share certificates and all other required
documents, including delivery through DTC, is at your option and risk, and the
delivery will be deemed made only when actually received by the exchange
32
agent. If delivery is by mail, we recommend registered mail with return receipt
requested, properly insured. In all cases, shareholders should allow sufficient
time to ensure timely delivery.
SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to proceeds
received pursuant to the exchange offer, you must provide the exchange agent
with your correct taxpayer identification number and certify whether you are
subject to backup withholding of federal income tax by completing the substitute
Form W-9 included in the letter of transmittal. Some Net Perceptions
shareholders including, among others, all corporations and some foreign
individuals, are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalty of
perjury, attesting to that individual's exempt status.
GUARANTEED DELIVERY
If you wish to tender shares of Net Perceptions common stock and preferred
stock purchase rights, if any, pursuant to the exchange offer, and your
certificates are not immediately available, or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration date or cannot complete the procedure for book-entry transfer on a
timely basis, your shares of Net Perceptions common stock or preferred stock
purchase rights, if any, may nevertheless be tendered, so long as all of the
following conditions are satisfied:
o you make their tender by or through an eligible institution (see
"Withdrawal Rights" above),
o the exchange agent receives, as provided below, a properly completed
and duly executed notice of guaranteed delivery, substantially in the
form we make available, on or prior to the expiration date, and
o the exchange agent receives, within three NASDAQ National Market
trading days after the date of execution of the notice of guaranteed
delivery, the certificates for all tendered shares of Net Perceptions
common stock, or rights, if any, or a confirmation of a book-entry
transfer of such securities into the exchange agent's account at DTC
as described above, in proper form for transfer, together with a
properly completed and duly executed letter of transmittal with any
required signature guarantees or, in the case of a book-entry
transfer, an agent's message, and all other documents required by the
letter of transmittal.
You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail to the exchange agent, and you must include a
guarantee by an eligible institution in the form set forth in that notice.
In all cases, we will exchange shares of Net Perceptions common stock
tendered and accepted for exchange pursuant to the exchange offer only after
timely receipt by the exchange agent of certificates for shares of Net
Perceptions common stock or rights, if any, or timely confirmation of a
book-entry transfer of those securities into the exchange agent's account at DTC
as described above, properly completed and duly executed letter(s) of
transmittal, or an agent's message in connection with a book-entry transfer, and
any other required documents.
APPOINTMENT OF PROXIES
By executing a letter of transmittal as set forth above, you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, to the full extent of your rights with respect to your
shares of Net Perceptions common stock tendered and accepted for exchange by us
and with respect to any and all other shares of Net Perceptions common stock and
other securities issued or issuable in respect of the tendered and accepted
shares of Net Perceptions common stock on or after December 15, 2003. That
appointment is effective, and voting rights will be affected, when and only to
the extent that we accept your shares for exchange and deposit with the exchange
agent our common stock and the cash with respect to fractional shares that
comprise the exchange offer consideration with respect to the shares of Net
Perceptions common stock that shareholders have tendered. All proxies shall be
considered coupled with an interest in the tendered shares of Net Perceptions
common stock and therefore shall not be revocable once the appointment is
effective. Upon the effectiveness of the appointment, all prior proxies that you
have given will be revoked, and you may not give any subsequent proxies, and, if
given, they will not be deemed effective. Our designees will, with respect to
the shares of Net Perceptions common stock for which the appointment is
effective, be empowered, among other things, to exercise all of the Net
Perceptions shareholders' voting and other rights as they, in their sole
discretion, deem proper at any annual, special or
33
adjourned meeting of Net Perceptions shareholders or otherwise. We reserve the
right to require that, for shares of Net Perceptions common stock to be deemed
validly tendered, immediately upon our acceptance for exchange of those shares
of Net Perceptions common stock, we must be able to exercise full voting rights
with respect to those shares of Net Perceptions common stock. However, prior to
acceptance for exchange by us in accordance with terms of the exchange offer,
the appointment will not be effective, and we will have no voting rights as a
result of the tender of shares of Net Perceptions common stock.
VALIDITY OF TENDERS
We will determine questions as to the validity, form, eligibility,
including time of receipt, and acceptance for exchange of any tender of shares
of Net Perceptions common stock or rights, if any, in our sole discretion, and
our determination shall be final and binding. We reserve the absolute right to
reject any and all tenders of shares of Net Perceptions common stock that we
determine are not in proper form or the acceptance of, or exchange for, which
may, in the opinion of our counsel, be unlawful. We also reserve the absolute
right to waive any of the conditions of our exchange offer, other than the
condition relating to the absence of an injunction and the condition relating to
the effectiveness of the registration statement for our shares to be issued in
the exchange offer, or to waive any defect or irregularity in the tender of any
shares of Net Perceptions common stock. No tender of shares of Net Perceptions
common stock will be deemed to have been validly made until all defects and
irregularities in tenders of shares of Net Perceptions common stock have been
cured or waived. None of Obsidian Enterprises, the dealer manager, the exchange
agent, the information agent, or any other person will be under any duty to give
notification of any defects or irregularities in the tender of any shares of Net
Perceptions common stock or rights, if any, or will incur any liability for
failure to give any notification. Our interpretation of the terms and conditions
of the exchange offer, including the letter of transmittal and its instructions,
will be final and binding.
The tender of shares of Net Perceptions common stock and preferred stock
purchase rights, if any, pursuant to any of the procedures described above will
constitute a binding agreement between us and the tendering shareholders upon
the terms and subject to the conditions of our exchange offer and the letter of
transmittal.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER AND THE
PROPOSED MERGER
Our counsel, Barnes & Thornburg LLP, has issued a tax opinion with respect
to the exchange offer and the proposed merger. That opinion has been filed with
the SEC as an exhibit to the registration statement on Form S-4 in connection
with the exchange offer. That opinion concludes that the exchange of shares of
Net Perceptions common stock for cash and shares of our common stock pursuant to
the exchange offer and the proposed merger (1) will be treated for federal
income tax purposes as component parts of an integrated transaction pursuant to
a plan, but that (2) the integrated transaction will nevertheless, more likely
than not, fail to satisfy the requirements of reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
by reason of the failure to satisfy the continuity of business enterprise
requirements of Treas. Reg. ss. 1.368-1(d). As a result, the consummation of the
exchange offer and proposed merger will be a fully taxable transaction to both
the holders of Net Perceptions common stock and to Net Perceptions itself.
LIMITATIONS OF DISCUSSION
The following discussion summarizes the material U.S. federal income tax
considerations that are generally applicable to holders of Net Perceptions
common stock who exchange their Net Perceptions common stock in the exchange
offer and the proposed merger for cash and shares of our common stock. This
discussion is based on currently existing provisions of the Code, existing and
proposed Treasury Regulations thereunder and current administrative rulings and
court decisions, all of which are subject to change. Any such change, which may
or may not be retroactive, could alter the tax consequences of the exchange
offer and the merger that are described below. You should be aware that this
discussion does not deal with all federal income tax considerations that may be
relevant to particular Net Perceptions shareholders in light of their individual
circumstances, such as Net Perceptions shareholders who:
o are dealers in securities,
o are subject to the alternative minimum tax provisions of the Code,
o are foreign persons,
34
o do not hold their shares of Net Perceptions common stock as capital
assets,
o acquired their shares of Net Perceptions common stock in connection
with stock option or stock purchase plans or in other compensatory
transactions,
o hold their shares of Net Perceptions common stock as part of an
integrated investment (including a "straddle") comprised of shares of
Net Perceptions common stock and one or more other positions, or
o are subject to the constructive sale or constructive ownership
provisions of the Code under Sections 1259 or 1260, respectively, with
respect to their Net Perceptions common stock.
In addition, the following discussion does not address the tax consequences
of the exchange offer and the proposed merger to any person under foreign, state
or local tax laws.
TREATMENT AS AN INTEGRATED TRANSACTION
Steps of an integrated transaction will be aggregated in determining the
overall tax consequences of the transaction. See Revenue Ruling 2001-26 (merger
preceded by a tender offer), Revenue Ruling 2001-46, Revenue Ruling 67-274,
Revenue Ruling 90-95, King Enterprises, Inc. v. United States, 418 F.2d 511 (Ct.
Cl., 1969); J.F. Seagram Corp. v. Commissioner, 104 T.C. 75 (1995).
CONTINUITY OF BUSINESS ENTERPRISE REQUIREMENT
Transactions otherwise satisfying the statutory requirements as to form for
a qualifying reorganization will nevertheless fail to qualify for reorganization
treatment under the Code if the requisite continuity of business enterprise
requirement, described in Treas. Reg. ss. 1.368-1(d), is not satisfied. To meet
the continuity of business enterprise requirement, the issuing corporation, or
members of a qualified group of connected through qualifying ownership to the
issuing corporation, must either continue the target corporation's historic
business or use a significant portion of the target corporation's historic
business assets in a business. If the continuity of business enterprise
requirement is not satisfied, reorganization treatment under Section 368 will
not be accorded to the transaction.
Obsidian Enterprises was unable to represent to Barnes & Thornburg LLP that
either the remaining business of Net Perceptions will be continued or that the
remaining business assets of Net Perceptions will be deployed in a trade or
business following the tender offer and proposed merger. Moreover, based on
disclosures made in Net Perceptions' Form 10-Q for the quarter ended September
30, 2003, it is unlikely that the remaining activities of Net Perceptions would
qualify as its "historic business" in any event. Under these circumstances the
continuity of business enterprise requirement, more likely than not, will not be
satisfied and, as a result, reorganization treatment under Section 368 will not
apply to the exchange offer and proposed merger.
EFFECT OF FAILURE TO QUALIFY AS A REORGANIZATION TO NET PERCEPTIONS SHAREHOLDERS
Because the exchange offer, combined with the proposed merger, will
constitute an integrated transaction, but nevertheless, more likely than not,
will fail to qualify as a reorganization, the exchange offer and proposed merger
will result in the recognition of taxable gain or loss to each exchanging Net
Perceptions shareholder measured by the difference between the sum of the cash
and the fair market value of our common stock received in the exchange offer and
proposed merger, compared with the exchanging Net Perceptions shareholder's tax
basis for the shares of Net Perceptions common stock surrendered in the exchange
offer and proposed merger. The shareholder would receive a tax basis for our
common stock received in the exchange offer and proposed merger equal to the
fair market value of the common stock at the time of its receipt and would start
a new holding period for such shares.
EFFECT OF FAILURE TO QUALIFY FOR REORGANIZATION TREATMENT TO NET PERCEPTIONS
Net Perceptions will recognize taxable gain or loss on the transfer of its
assets to either us or our subsidiary measured by the difference between (A) the
sum of the fair market value of our common stock and the value of the
liabilities of Net Perceptions assumed by the acquiring entity and (B) the sum
of the tax basis of the assets and cash transferred by Net Perceptions in the
proposed merger.
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Net Perceptions' net operating losses and net operating loss carryforwards
will be able to be used to offset any gain recognized by Net Perceptions in the
proposed merger, but any remaining net operating losses or net operating loss
carryforwards will be extinguished as a result of the exchange offer and
proposed merger.
EFFECT ON OBSIDIAN ENTERPRISES OR OUR SUBSIDIARY
Neither we nor our subsidiary will recognize gain or loss. Section 1032 of
the Code; Treas. Reg.ss.1.1032-3.
THE FOREGOING DISCUSSION IS NOT A COMPLETE ANALYSIS OR LISTING OF ALL
POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER AND THE
PROPOSED MERGER. YOU ARE URGED TO CONSULT YOUR TAX ADVISORS CONCERNING THE U.S.
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES IN YOUR PARTICULAR
CIRCUMSTANCES OF PARTICIPATION IN THE EXCHANGE OFFER AND/OR THE PROPOSED MERGER
TO YOU.
EFFECT OF THE EXCHANGE OFFER ON THE MARKET FOR NET PERCEPTIONS SHARES;
REGISTRATION UNDER THE EXCHANGE ACT
REDUCED LIQUIDITY; POSSIBLE DELISTING
If the proposed merger occurs, Net Perceptions will no longer be publicly
owned, and its common stock will no longer be publicly traded.
Even if the proposed merger does not occur, Net Perceptions may not
continue to be publicly traded. The minimum bid price for shares of Net
Perceptions has been less than $1 since its $1.50 per share distribution to
shareholders as of September 3, 2003. As a result, Net Perceptions is unlikely
to meet the requirements for continued inclusion on NASDAQ. While the shares of
Net Perceptions might trade in the over the counter markets if they are no
longer traded on NASDAQ, if we purchase a large portion of the outstanding
shares of Net Perceptions common stock in the exchange offer, there may be so
few remaining Net Perceptions stockholders that Net Perceptions may cease making
filings with the SEC or cease being required to comply with the SEC rules
relating to publicly held companies. As a result, there may not be a public
trading market for shares of Net Perceptions common stock.
Further, Net Perceptions has also disclosed in its public filings that if
its stockholders approve and adopt the proposed Plan of Liquidation, it expects
to terminate registration of its common stock under the Exchange Act, which will
substantially reduce publicly available information about Net Perceptions.
STATUS AS MARGIN SECURITIES
The shares of Net Perceptions common stock are presently margin securities
under the regulations of the Federal Reserve Board, which has the effect, among
other things, of allowing brokers to extend credit on the collateral of shares
of Net Perceptions common stock. Depending on factors similar to those described
above with respect to listing and market quotations, following completion of the
exchange offer, the shares of Net Perceptions common stock may no longer
constitute margin securities for the purposes of the Federal Reserve Board's
margin regulations, in which event the shares of Net Perceptions common stock
would be ineligible as collateral for margin loans made by brokers.
REGISTRATION UNDER THE EXCHANGE ACT
The shares of Net Perceptions common stock are currently registered under
the Exchange Act. Net Perceptions can terminate that registration upon
application to the SEC if the outstanding shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of shares
of Net Perceptions common stock. Termination of registration of the shares of
Net Perceptions common stock under the Exchange Act would reduce the information
that Net Perceptions must furnish to its shareholders and to the SEC and would
make some provisions of the Exchange Act, including the short-swing profit
recovery provisions of Section 16(b) and the requirement of furnishing a proxy
statement in connection with shareholders meetings pursuant to Section 14(a) and
the related requirement of furnishing an annual report to shareholders, no
longer applicable with respect to shares of Net Perceptions common stock.
Furthermore, the ability of Net Perceptions affiliates and persons holding
restricted securities of Net Perceptions to dispose of securities pursuant to
Rule 144 under the Securities Act of 1933 (the "Securities Act")may be impaired
or eliminated. If registration of the shares of Net Perceptions common stock
under the Exchange Act were terminated, shares of Net Perceptions common stock
would no longer be eligible for
36
NASDAQ National Market listing or for continued inclusion on the Federal Reserve
Board's list of margin securities.
PURPOSE OF THE EXCHANGE OFFER; THE PROPOSED MERGER
THE PURPOSE OF THE EXCHANGE OFFER IS TO ACQUIRE VOTING CONTROL OF NET
PERCEPTIONS
We are making the exchange offer in order to acquire voting control of, and
ultimately the entire equity interest in, Net Perceptions. The exchange offer is
intended to facilitate the acquisition of all shares of Net Perceptions common
stock. Net Perceptions shareholders will not have dissenters' appraisal rights
as a result of the completion of the exchange offer.
UPON COMPLETION OF THE EXCHANGE OFFER WE INTEND TO PROMPTLY PROCEED WITH THE
PROPOSED MERGER
As soon as practicable after the completion of the exchange offer and
receipt of any additional regulatory approvals that may be required, we intend
to merge Net Perceptions with Obsidian Enterprises or our subsidiary. The
purpose of the proposed merger is to acquire all shares of Net Perceptions
common stock not tendered and exchanged pursuant to the exchange offer. In the
proposed merger, each then-outstanding share of Net Perceptions common stock,
except for treasury shares of Net Perceptions and shares we beneficially own
directly or indirectly for our own account, will be converted into the same
consideration per Net Perceptions share offered in the exchange offer, subject
to dissenters' appraisal rights under Delaware law.
If we become the owners of at least 90% of the outstanding shares of Net
Perceptions common stock, the proposed merger may be completed pursuant to
Section 253 of the Delaware General Corporation Law. Under Section 253, a parent
corporation owning at least 90% of the outstanding shares of each class of a
domestic subsidiary corporation may merge the subsidiary corporation into itself
without the approval of the shareholders of the subsidiary corporation but with
the approval of the board of directors of the surviving corporation.
DISSENTERS' APPRAISAL RIGHTS
No dissenters' rights are available in connection with the exchange offer.
Holders of Net Perceptions common stock who do not wish to accept the same
amount of consideration in the proposed merger as was paid in the exchange
offer, and who still hold their shares of Net Perceptions common stock at the
effective time of the proposed merger, will have the right to seek an appraisal
and to be paid the "fair value" of their shares of Net Perceptions common stock
if they properly demand appraisal of their shares. The amount each holder
receives will be judicially determined by the Delaware Court of Chancery and
paid to such holder, provided it complies with the provisions of Section 262 of
the Delaware General Corporation Law.
This summary is not intended to be complete. You should read the entire
text of Section 262, which is set forth in Annex B to this prospectus. If you
are considering demanding appraisal in connection with the proposed merger, we
advise you to consult legal counsel. Appraisal rights, if any, will not be
available unless and until the proposed merger or a similar business combination
is consummated. Net Perceptions shareholders of record who desire to exercise
their appraisal rights must fully satisfy all of the applicable conditions
summarized below.
If we acquire at least 90% of Net Perceptions common stock in the exchange
offer, then the proposed merger will be effected as a short-form merger pursuant
to Section 253 of the Delaware General Corporation Law, which does not require
any vote by the Net Perceptions shareholders. In such a case, we, as the
corporation surviving the proposed merger, must mail a notice of merger to the
Net Perceptions shareholders within ten days after the date the proposed merger
is effective. The notice of merger must specify that the proposed merger has
become effective and that appraisal rights are available, and must include a
copy of Section 262 and any other information required by Section 262. Any Net
Perceptions shareholder wishing to exercise appraisal rights must mail a written
demand for appraisal within 20 days after the date on which the notice of merger
was sent.
If we fail to acquire at least 90% of Net Perceptions common stock in the
exchange offer, the proposed merger will be effected as a long-form merger,
which requires a shareholder vote on the approval and adoption of the merger
agreement. A Net Perceptions shareholder wishing to dissent in a long-form
merger must deliver a written demand for appraisal to the Secretary of Net
Perceptions before the taking of the shareholder vote or within 20 days of
receipt of notice of the taking of such action by written consent. This written
demand for appraisal must
37
be in addition to and separate from any proxy or vote abstaining from or voting
against the approval and adoption of the merger agreement. Merely voting
against, abstaining from voting, or failing to vote on the merger agreement will
not by itself constitute a demand for appraisal within the meaning of Section
262. In the case of a long-form merger, any Net Perceptions shareholder seeking
appraisal rights must hold the Net Perceptions common stock for which appraisal
is sought on the date the Net Perceptions shareholder makes demand and must
continuously hold such Net Perceptions common stock through the effective time
of the proposed merger, and otherwise comply with the provisions of Section 262.
In the case of both a short-form merger and a long-form merger, a demand
for appraisal must be executed by or for the Net Perceptions shareholder of
record, fully and correctly, as such shareholder's name appears on the stock
certificates. If shares of Net Perceptions common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, such demand
must be executed by the fiduciary. If shares of Net Perceptions common stock are
owned of record by more than one person, as in a joint tenancy or tenancy in
common, such demand must be executed by all joint owners. An authorized agent,
including an agent for two or more joint owners, may execute the demand for
appraisal for a shareholder of record; provided, however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, he is acting as agent for the record owner. A record owner, such as
a broker, who holds Net Perceptions common stock as a nominee for others, may
exercise appraisal rights with respect to the Net Perceptions common stock held
for all or less than all beneficial owners of Net Perceptions common stock as to
which the holder is the record owner. In such case the written demand must set
forth the number of shares of Net Perceptions common stock covered by such
demand. Where the number of shares is not expressly stated, the demand will be
presumed to cover all shares of Net Perceptions common stock outstanding in the
name of such record owner. Beneficial owners who are not record owners and who
intend to exercise appraisal rights should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of any meeting of Net Perceptions shareholders
called to approve the proposed merger in the case of a long-form merger and
within 20 days following the mailing of the notice of the proposed merger in the
case of a short-form merger.
Net Perceptions shareholders who elect to exercise appraisal rights must
mail or deliver their written demands to Net Perceptions. The written demand for
appraisal should specify the shareholder's name and mailing address, the number
of shares of Net Perceptions common stock covered by the demand and that the
shareholder is thereby demanding appraisal of such shares. In the case of a
short-form merger, Net Perceptions must, within ten days after the effective
time of the proposed merger, provide notice of the effective time of the
proposed merger to all shareholders who have complied with Section 262 and have
not voted for approval and adoption of the merger agreement. In the case of a
long-form merger, Net Perceptions shareholders electing to exercise their
appraisal rights under Section 262 must not have voted for the approval and
adoption of the merger agreement or consented thereto in writing. Voting in
favor of the approval and adoption of the merger agreement, or delivering a
proxy in connection with the Net Perceptions shareholders meeting called to
approve the merger agreement (unless the proxy votes against, or expressly
abstains from the vote on, the approval and adoption of the merger agreement),
will constitute a waiver of the shareholder's right of appraisal and will
nullify any written demand for appraisal submitted by the shareholder.
Regardless of whether the proposed merger is effected as a long-form merger or a
short-form merger, within 120 days after the effective time of the proposed
merger, any Net Perceptions shareholder who has complied with the required
conditions of Section 262 and who is otherwise entitled to appraisal rights may
file a petition in the Delaware Court of Chancery demanding a determination of
the fair value of the shares of the dissenting Net Perceptions shareholders. We
are under no obligation to and have no present intention to file a petition.
Accordingly, it is the obligation of the holders of Net Perceptions common stock
to initiate all action to perfect their appraisal rights in respect of their
shares within the time prescribed in Section 262.
Within 120 days after the effective time of the proposed merger, any holder
of Net Perceptions common stock who has complied with the requirements for
exercise of appraisal rights will be entitled, upon written request, to receive
from the surviving corporation a statement setting forth the aggregate number of
shares not voted in favor of the adoption of the proposed merger and with
respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. The statement must be mailed ten days after a
written request therefor has been received by Net Perceptions or within ten days
after the expiration of the period for delivery of demands for appraisal,
whichever is later.
If a petition for an appraisal is timely filed, and a copy thereof is
served upon it, Net Perceptions will then be obligated within 20 days to file
with the Delaware Register in Chancery a duly verified list containing the names
and addresses of all Net Perceptions shareholders who have demanded an appraisal
of their shares and with whom
38
agreements as to the value of their shares have not been reached. After notice
to those shareholders as required by the Court, the Delaware Court of Chancery
is empowered to conduct a hearing on the petition to determine which
shareholders are entitled to appraisal rights. The Court may require the holders
of the shares of Net Perceptions common stock who demanded payment for their
shares to submit their stock certificates to the Register in Chancery for
notation thereon the pendency of the appraisal proceeding; and if any
shareholder fails to comply with that direction, the Court may dismiss the
proceedings as to that shareholder. After determining the holders of Net
Perceptions common stock entitled to appraisal, the Court will appraise the Net
Perceptions common stock owned by such Net Perceptions shareholders, determining
the fair value of such common stock, together with a fair rate of interest to be
paid, if any, upon the amount determined to be the fair value.
In determining fair value, the Delaware Court of Chancery is to take into
account all relevant factors. In Weinberger v. UOP, Inc., et al., 457 A.2d 701,
712-713 (Del. 1983), the Delaware Supreme Court discussed the factors that could
be considered in determining fair value in an appraisal proceeding, stating that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered and that a "fair price obviously requires consideration of all
relevant factors involving the value of a company." Further, the Delaware
Supreme Court stated that in making this determination of fair value a court
must consider "market value, asset value, dividends, earnings prospects, the
nature of the enterprise and any other facts which were known or which could be
ascertained as of the date of merger which throw any light on future prospects
of the merged corporation." The Delaware Supreme Court has further construed
Section 262 to mean that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation, may be considered." However, the Court noted
that Section 262 provides that fair value is to be determined "exclusive of any
element of value arising from the accomplishment or expectation of the merger."
Net Perceptions shareholders who in the future consider seeking appraisal
should consider that the fair value of their Net Perceptions common stock
determined under Section 262 could be more than, the same as, or less than the
consideration paid for the common stock in the exchange offer if they do seek
appraisal of their Net Perceptions common stock, and that opinions of investment
banking firms as to fairness from a financial point of view are not necessarily
opinions as to fair value under Section 262. Moreover, we may argue in any
appraisal proceeding that, for purposes thereof, the "fair value" of the Net
Perceptions common stock is less than that paid in the exchange offer. The cost
of the appraisal proceeding may be determined by the Delaware Court of Chancery
and taxed upon the parties as the Delaware Court of Chancery deems equitable in
the circumstances. Upon application of a dissenting shareholder, the Delaware
Court of Chancery may order that all or a portion of the expenses incurred by
any dissenting shareholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts, be charged pro rata against the value of all Net
Perceptions common stock entitled to appraisal. In the absence of such a
determination or assessment, each party bears its own expenses. Any Net
Perceptions shareholder who has duly demanded appraisal in compliance with
Section 262 will not, after the effective time of the proposed merger, be
entitled to vote for any purpose the Net Perceptions common stock subject to
such demand or to receive payment of dividends or other distributions on such
Net Perceptions common stock, except for dividends or other distributions
payable to shareholders of record at a date prior to the effective time of the
proposed merger.
At any time within 60 days after the effective time of the proposed merger,
any former holder of Net Perceptions common stock will have the right to
withdraw his or her demand for appraisal and to accept the consideration paid
for the Net Perceptions common stock in the exchange offer. After this period,
such holder may withdraw his or her demand for appraisal only with our consent
as the corporation surviving the proposed merger. If no petition for appraisal
is filed with the Delaware Court of Chancery within 120 days after the effective
time of the proposed merger, shareholders' rights to appraisal shall cease and
all Net Perceptions shareholders shall be entitled to receive the consideration
paid for the same class or series of the exchange offer. Inasmuch as Net
Perceptions has no obligation to file such a petition, and we have no present
intention to cause or permit Net Perceptions to do so, any Net Perceptions
shareholder who desires such a petition to be filed is advised to file it on a
timely basis. However, no petition timely filed in the Delaware Court of
Chancery demanding appraisal may be dismissed as to any Net Perceptions
shareholder without the approval of the Delaware Court of Chancery, and such
approval may be conditioned upon such terms as the Delaware Court of Chancery
deems just. Failure to take any required step in connection with the exercise of
appraisal rights may result in the termination or waiver of such rights.
Appraisal rights cannot be exercised at this time.
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The information set forth above is for informational purposes only with
respect to alternatives available to stockholders if the proposed merger is
consummated. Net Perceptions shareholders who will be entitled to appraisal
rights in connection with the proposed merger will receive additional
information concerning appraisal rights and the procedures to be followed in
connection therewith before such shareholders have to take any action relating
thereto. Net Perceptions shareholders who exchange Net Perceptions common stock
in the exchange offer will not be entitled to exercise appraisal rights in
connection with the exchange offer but, rather, will receive the consideration
paid in the exchange offer for such shares. The foregoing summary of appraisal
rights of objecting shareholders under the Delaware General Corporation Law does
not purport to be a complete statement of the procedures to be followed by Net
Perceptions shareholders desiring to exercise any available appraisal rights.
The foregoing summary is qualified in its entirety by reference to Section 262.
The preservation and exercise of appraisal rights require strict adherence to
the applicable provisions of the Delaware General Corporation Law. See Annex B
attached to this prospectus for the full text of the dissenters' appraisal
rights provisions of Delaware law.
CONDITIONS TO THE EXCHANGE OFFER
The exchange offer is also subject to a number of conditions, all of which
must be satisfied or waived by us prior to the expiration of the exchange offer.
These conditions are described below:
MINIMUM TENDER CONDITION
We cannot consummate the exchange offer unless, prior to the expiration of
the exchange offer, there have been validly tendered and not withdrawn the
number of shares of Net Perceptions common stock which represent at least 51% of
the total number of outstanding shares of Net Perceptions common stock on a
fully diluted basis. On a fully diluted basis means that the total number of
outstanding shares is determined as though all options or other securities
convertible into or exercisable or exchangeable for shares of Net Perceptions
common stock had been so converted, exercised or exchanged as of the date that
we accept the shares of Net Perceptions common stock for exchange pursuant to
the exchange offer.
RIGHTS CONDITION
See "Comparison of Rights of Holders of Obsidian Enterprises Common Stock
and Net Perceptions Common Stock" for a description of the Net Perceptions
Rights Agreement. We cannot consummate the exchange offer unless the board of
directors of Net Perceptions shall have taken action which would cause the
preferred stock purchase rights to be inapplicable to the offer and the proposed
merger, or we have been satisfied, in our reasonable discretion, that the
preferred stock purchase rights have been invalidated or are otherwise
inapplicable to the exchange offer and the proposed merger. This condition may
be satisfied in a number of ways, including the following:
o we could file litigation and be successful in seeking, among other
things, invalidation of the rights or the Net Perceptions Rights
Agreement, or an injunction requiring the Net Perceptions board of
directors to redeem the rights. We have not yet filed such litigation.
o Net Perceptions shareholders could demonstrate significant support for
the exchange offer and proposed merger and convince the current board
of Net Perceptions to redeem the rights, or the shareholders could
replace the Net Perceptions board of directors with new directors who
would, subject to fiduciary duties and successful challenges to the
Net Perceptions Rights Agreement, take such actions as may be
necessary with respect to the share purchase rights so that the share
purchase rights would not be triggered by the exchange offer or the
proposed merger, or
o the board of Net Perceptions may otherwise determine that the Net
Perceptions Rights Agreement is inconsistent with fulfilling their
fiduciary duties and redeem the rights or amend the Net Perceptions
Rights Agreement so the rights would not be triggered by the
consummation of the exchange offer and the proposed merger.
SECTION 203 CONDITION
Consummation of the exchange offer is conditioned upon our being satisfied,
in our reasonable discretion, that Section 203 of the Delaware General
Corporation Law is inapplicable to the exchange offer and the proposed merger.
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In general, Section 203 prevents an "interested stockholder" (generally, a
stockholder owning 15% or more of a corporation's outstanding voting stock or an
affiliate or associate thereof) from engaging in a "business combination"
(defined to include a merger or consolidation and certain other transactions)
with a Delaware corporation for a period of three years following the time on
which such stockholder became an interested stockholder unless (i) prior to such
time the corporation's board of directors approved either the business
combination or the transaction which resulted in such stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which resulted
in such stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the corporation's voting stock outstanding at
the time the transaction commenced (excluding shares owned by certain employee
stock plans and persons who are directors and also officers of the corporation)
or (iii) at or subsequent to such time the business combination is approved by
the corporation's board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock not owned by the interested
stockholder.
The provisions of Section 203 do not apply to a Delaware corporation if,
among other things, (i) such corporation amends its certificate of incorporation
or bylaws to elect not to be governed by Section 203 by the affirmative vote of
a majority of the shares entitled to vote (in addition to any other required
vote); provided that such amendment would not be effective until 12 months after
its adoption and would not apply to any business combination between such
corporation and any person who became an interested stockholder on or prior to
its adoption, (ii) such corporation does not have a class of voting stock that
is listed on a national securities exchange, authorized for quotation on NASDAQ
or held of record by more than 2,000 stockholders, unless any of the foregoing
results from action taken, directly or indirectly, by an interested stockholder
or from a transaction in which a person becomes an interested stockholder, or
(iii) the business combination is proposed by an interested stockholder prior to
the consummation or abandonment of, and subsequent to the earlier of the public
announcement or the notice required under Section 203 of, any one of certain
proposed transactions which is with or by a person who was not an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of the corporation's board of directors and is
approved or not opposed by a majority of the board of directors then in office
who were directors prior to any person becoming an interested stockholder during
the previous three years or were recommended for election to succeed such
directors by a majority of such directors.
The exchange offer is subject to satisfaction of the Section 203 Condition,
which will be satisfied if, among other things, (i) prior to the acceptance for
exchange of shares of Net Perceptions common stock pursuant to the exchange
offer, the Net Perceptions board of directors approves the exchange offer or the
proposed merger or (ii) there are validly tendered prior to the expiration date
and not withdrawn a number of shares of Net Perceptions common stock which,
together with any then owned by us, would represent at least 85% of the shares
of Net Perceptions common stock outstanding on the date hereof (excluding shares
of Net Perceptions common stock owned by certain employee stock plans and
persons who are directors and also officers of Net Perceptions).
We reserve the right to waive the Section 203 Condition, although there can
be no assurance that we will do so, and we have not determined whether we would
be willing to do so under any circumstances. If we waive the Section 203
Condition and exchange shares of Net Perceptions common stock pursuant to the
exchange of Net Perceptions common stock or otherwise, and Section 203 is
applicable, we may nevertheless seek to consummate a merger or other business
combination with Net Perceptions. We believe we would be able to cause the
consummation of such a merger or other business combination if we own a majority
of the outstanding shares of Net Perceptions common stock and (i) such merger or
other business combination is approved by the board of directors of Net
Perceptions and authorized at an annual or special meeting of shareholders of
Net Perceptions, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding shares of Net Perceptions common stock not owned by
us or our affiliates and associates; or (ii) such merger or other business
combination occurs after the expiration of three years following the date we
became an interested stockholder.
On the other hand, if we waive the Section 203 Condition and exchange
shares of Net Perceptions common stock pursuant to the exchange offer or
otherwise and are prevented by Section 203 from consummating a merger or other
business combination with Net Perceptions, we may (i) determine not to seek to
consummate such a merger or other business combination, (ii) seek to acquire
additional shares of Net Perceptions common stock in the open market, pursuant
to privately negotiated transactions or otherwise, at prices that may be higher,
lower or the same as the value of our shares of common stock that we are
offering to exchange or (iii) seek to effect one or more alternative
transactions with or by Net Perceptions. We have not determined whether we would
take any of the actions described above under such circumstances.
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We are hereby requesting that the board of directors of Net Perceptions
approves the exchange offer and takes any other action necessary to render
Section 203 inapplicable to the proposed merger or other business combination
with Net Perceptions. There can be no assurance that the board of directors of
Net Perceptions will grant such approval or take such other action.
OTHER CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange or exchange any tendered shares of Net
Perceptions common stock, may postpone the acceptance for exchange or exchange
of any tendered shares of Net Perceptions common stock, and may, in our sole
discretion, terminate or amend the exchange offer as to any shares of Net
Perceptions common stock not then exchanged, if at the expiration date, any of
the Minimum Tender Condition, the Rights Condition, the Section 203 Condition or
any of the other conditions to the exchange offer set forth in clauses (a)
through (k) below has not been satisfied or, in the case of any condition other
than the conditions set forth in clauses (a) or (b) below, waived.
The other conditions to the exchange offer are as follows:
(a) the registration statement of which this prospectus is a part shall
have become effective under the Securities Act, and no stop order
suspending the effectiveness of the registration statement or a
proceeding seeking a stop order shall have been issued nor shall there
have been proceedings for that purpose initiated or threatened by the
SEC, and we shall have received all necessary state securities law or
blue sky authorizations;
(b) no temporary restraining order, preliminary or permanent injunction or
other order or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
completion of the exchange offer, the proposed merger or any of the
other transactions contemplated by the exchange offer shall be in
effect, and no statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any
court, administrative agency or commission or other governmental
authority or instrumentality which prohibits, restricts or makes
illegal the completion of the exchange offer or the proposed merger;
(c) there shall not be pending or threatened any suit, action or
proceeding by any governmental entity (i) challenging the exchange
offer, seeking to restrain or prohibit the completion of the exchange
offer or seeking to obtain from Net Perceptions or us any damages that
are material in relation to Net Perceptions and its subsidiaries taken
as a whole or us and our subsidiaries taken as a whole, (ii) seeking
to prohibit or limit the ownership or operation by Net Perceptions or
its subsidiaries or us or any of our subsidiaries of any material
portion of the business or assets of Net Perceptions or its
subsidiaries or us or any of our subsidiaries or to compel Net
Perceptions or its subsidiaries or any of our subsidiaries to dispose
of or hold separate any material portion of the business or assets of
Net Perceptions or its subsidiaries or us or any of our subsidiaries
as a result of our exchange offer, (iii) seeking to prohibit us from
effectively controlling in any material respect the business or
operations of Net Perceptions or (iv) which otherwise is reasonably
likely to have a material adverse effect on us or Net Perceptions;
(d) the class action lawsuit filed against Net Perceptions, its current
directors and unnamed defendants in the District Court, Fourth
Judicial District, of the State Of Minnesota, County of Hennepin
captioned Don Blakstad, on Behalf of Himself and All others Similarly
Situated, vs. Net Perceptions, Inc., John F. Kennedy, Ann L. Winblad,
John T. Riedl and Does 1-25, inclusive, File No. 03-17820 shall have
been resolved to our reasonable satisfaction;
(e) no change shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, shareholders' equity,
condition (financial or otherwise), operations, licenses or
franchises, results of operations or prospects of Net Perceptions or
any of its subsidiaries that, in our reasonable judgment, is or is
reasonably likely to have a materially adverse effect to Net
Perceptions or any of its subsidiaries, nor shall we have become aware
of any facts that, in its our reasonable judgment, have or are
reasonably likely to have material adverse significance with respect
to either the value of Net Perceptions or any of its subsidiaries or
the value of the common stock of Net Perceptions to us;
42
(f) there shall not have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on
any national securities exchange or in the over-the-counter market in
the United States, (ii) any extraordinary or material adverse change
in the financial markets or major stock exchange indices in the United
States or abroad or in the market price of the shares of Net
Perceptions common stock, (iii) any change in the general political,
market, economic or financial conditions in the U.S. or abroad that
could, in our reasonable judgment, have a material adverse effect upon
the business, properties, assets, liabilities, capitalization,
shareholders equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of Net
Perceptions or any of its subsidiaries, (iv) any material change in
U.S. currency exchange rates or any other currency exchange rates or a
suspension of, or limitation on, the markets therefor, (v) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (vi) any limitation, whether or
not mandatory, by any government, domestic, foreign or supranational,
or governmental entity on, or other event that, in our reasonable
judgment, might affect, the extension of credit by banks or other
lending institutions, (vii) a commencement of war or armed hostilities
or other national or international calamity directly or indirectly
involving the U.S., or (viii) in the case of any of the foregoing
existing at the time of the commencement of the exchange offer, a
material acceleration or worsening thereof;
(g) Net Perceptions shall not have entered into or effectuated any other
agreement or transaction with any person or entity having the effect
of impairing our ability to acquire Net Perceptions or otherwise
diminishing the expected economic value to us of the exchange offer
and the proposed merger, including, but not limited to, any material
issuance of new securities of Net Perceptions, the declaration of any
extraordinary dividend, or any other transaction not in the ordinary
course of Net Perceptions' business.
(h) (i) no tender or exchange offer for some or all of the shares of Net
Perceptions common stock has been publicly proposed to be made or has
been made by another person (including Net Perceptions or any of its
subsidiaries or affiliates), or has been publicly disclosed, or we
shall otherwise learn that any person or "group" (as defined in
Section 13(d)(3) of the Exchange Act) has acquired or proposes to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of Net Perceptions (including the Net Perceptions common
stock), through the acquisition of stock, the formation of a group or
otherwise, or is granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 5% of any
class or series of capital stock of Net Perceptions (including the Net
Perceptions common stock) other than acquisitions for bona fide
arbitrage purposes only and other than as disclosed in a Schedule 13D
or 13G on file with the SEC prior to December 15, 2003, (ii) any such
person or group which, prior to December 15, 2003, had filed such a
Schedule with the SEC shall not have acquired or proposes to acquire
beneficial ownership of additional shares of any class or series of
capital stock of Net Perceptions, through the acquisition of stock,
the formation of a group or otherwise, constituting 1% or more of any
such class or series, or is granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of
additional shares of any class or series of capital stock of Net
Perceptions constituting 1% or more of any such class or series, (iii)
no person or group shall have entered into a definitive agreement or
an agreement in principle or made a proposal with respect to a tender
or exchange offer or a merger, consolidation or other business
combination with or involving Net Perceptions or (iv) no person shall
have made a public announcement reflecting an intent to acquire Net
Perceptions or any assets or securities of Net Perceptions;
(i) Neither Net Perceptions nor any of its subsidiaries has (i) split,
combined or otherwise changed, or authorized or proposed the split,
combination or other change of, the shares of Net Perceptions common
stock or its capitalization, (ii) acquired or otherwise caused a
reduction in the number of, or authorized or proposed the acquisition
or other reduction in the number of, outstanding shares of Net
Perceptions common stock or other securities, (iii) issued or sold, or
authorized or proposed the issuance or sale of, any additional shares
of Net Perceptions common stock, shares of any other class or series
of capital stock, other voting securities or any securities
convertible into, or options, rights or warrants, conditional or
otherwise, to acquire, any of the foregoing (other than the issuance
of shares of Net Perceptions common stock pursuant to and in
accordance with the terms in effect on December 15, 2003, of employee
stock options outstanding prior to such date), or any other securities
or rights in
43
respect of, in lieu of, or in substitution or exchange for any shares
of its capital stock, (iv) permitted the issuance or sale of any
shares of any class of capital stock or other securities of any
subsidiary of Net Perceptions, (v) declared, paid or proposed to
declare or pay any dividend or other distribution on any shares of
capital stock of Net Perceptions, (vi) altered or proposed to alter
any material term of any outstanding security, issued or sold, or
authorized or proposed the issuance or sale of, any debt securities or
otherwise incurred or authorized or proposed the incurrence of any
debt other than in the ordinary course of business (other than to
amend the Net Perceptions Rights Agreement to make the share purchase
rights inapplicable to the exchange offer and the proposed merger),
(vii) authorized, recommended, proposed, announced its intent to enter
into or entered into an agreement with respect to or effected any
merger, consolidation, business combination, acquisition of assets,
disposition of assets or relinquishment of any material contract or
other right of Net Perceptions or any of its subsidiaries or any
comparable event not in the ordinary course of business, (viii)
authorized, recommended, proposed, announced its intent to enter into
or entered into any agreement or arrangement with any person or group
that, in our judgment, has or may have material adverse significance
with respect to either the value of Net Perceptions or any of its
subsidiaries or affiliates or the value of the shares of Net
Perceptions common stock to us or any of our subsidiaries or
affiliates, (ix) entered into or amended any employment, severance or
similar agreement, arrangement or plan with any of its employees other
than in the ordinary course of business or entered into or amended any
such agreements, arrangements or plans so as to provide for increased
benefits to employees as a result of or in connection with the making
of the exchange offer, the acceptance for payment of or payment for
some of or all the shares of Net Perceptions common stock by us or our
consummation of any merger or other similar business combination
involving Net Perceptions, (x) except as may be required by law, taken
any action to terminate or amend any employee benefit plan (as defined
in Section 3(2) of the Employee Retirement Income Security Act of
1974) of Net Perceptions or any of its subsidiaries, or we shall have
become aware of any such action which was not previously announced,
(xi) taken any action in connection with the liquidation or
dissolution of Net Perceptions beyond the actions of its board of
directors taken on or before March 9, 2004, or (xi) amended, or
authorized or proposed any amendment to, its certificate of
incorporation or bylaws (or other similar constituent documents) or we
shall become aware that Net Perceptions or any of its subsidiaries
shall have amended, or authorized or proposed any amendment to, its
certificate of incorporation or bylaws (or other similar constituent
documents) which has not been previously disclosed (in each case,
other than to amend the Net Perceptions Rights Agreement to make the
share purchase rights inapplicable to the exchange offer and the
proposed merger); or
(j) we become aware (i) that any material contractual right of Net
Perceptions or any of its subsidiaries has been impaired or otherwise
adversely affected or that any material amount of indebtedness of Net
Perceptions or any of its subsidiaries has been accelerated or has
otherwise become due or become subject to acceleration prior to its
stated due date, in each case with or without notice or the lapse of
time or both, as a result of or in connection with the exchange offer
or the consummation by us or any of our subsidiaries or affiliates of
a merger or other similar business combination involving Net
Perceptions or (ii) of any covenant, term or condition in any
instrument or agreement of Net Perceptions or any of its subsidiaries
that, in our reasonable judgment, has or may have material adverse
significance with respect to either the value of Net Perceptions or
any of its affiliates or the value of the shares of Net Perceptions
common stock to us or any of our affiliates (including, without
limitation, any event of default that may ensue as a result of or in
connection with the exchange offer, the acceptance for payment of or
payment for some or all of the shares of Net Perceptions common stock
by us or our consummation of a merger or other similar business
combination involving the Net Perceptions); or
(k) Net Perceptions or any of its subsidiaries shall have (i) granted to
any person proposing a merger or other business combination with or
involving Net Perceptions or any of its subsidiaries or the purchase
of securities or assets of Net Perceptions or any of its subsidiaries
any type of option, warrant or right which, in our judgment,
constitutes a "lock-up" device (including, without limitation, a right
to acquire or receive any shares of Net Perceptions common stock or
other securities, assets or business of Net Perceptions or any of its
subsidiaries) or (ii) paid or agreed to pay any cash or other
consideration to any party in connection with or in any way related to
any such business combination or purchase; which, in our judgment, in
any such case, and regardless of the circumstances (including any
action or
44
omission by us) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The conditions listed above are solely for our benefit and we may assert
them regardless of the circumstances giving rise to any of the conditions
(including any action or inaction by us). We may waive any of these conditions
in whole or in part (other than the conditions set forth in clauses (a) and (b)
above). The determination as to whether any condition has been satisfied shall
be in our reasonable judgment and will be final and binding on all parties. The
failure by us at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any right and each right shall be deemed a continuing right
which may be asserted at any time and from time to time prior to the expiration
of the exchange offer.
CERTAIN RELATIONSHIPS WITH NET PERCEPTIONS
Except as set forth in this prospectus under "Background of the Exchange
Offer" on page 23, neither we nor, to the best of our knowledge, any of our
directors, executive officers or other affiliates has entered into any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of Net Perceptions, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations.
Except as described in this prospectus, there have been no negotiations,
transactions or material contacts since January 1, 2001, and no past, present or
proposed material contracts, arrangements, understandings, relationships,
negotiations or transactions during the past two years, between us or, to the
best of our knowledge, any of our directors, executive officers or other
affiliates on the one hand, and Net Perceptions or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, a tender offer for or
other acquisition of any Net Perceptions securities, an election of Net
Perceptions' directors, or a sale or other transfer of a material amount of
assets of Net Perceptions. Neither we, nor, to the best of our knowledge, any of
our directors, executive officers or other affiliates has, since January 1,
2001, had any transaction with Net Perceptions or any of its executive officers,
directors or affiliates where the aggregate value of the transaction exceeded
$60,000.
As of the date of this prospectus, neither we nor any of our executive
officers, directors or affiliates beneficially own for our own account any
shares of Net Perceptions common stock.
Neither we nor any of our subsidiaries, nor, to the best of our knowledge,
any of our executive officers, directors and associates, have been party to any
transactions in Net Perceptions common stock during the past 60 days.
FEES AND EXPENSES
We have retained Acclaim Financial Group Venture III LLC ("AFGIII") to act
as our strategic advisor in connection with the acquisition of Net Perceptions.
If we consummate a business combination with Net Perceptions, AFGIII will
receive a fee of $250,000 in the aggregate in compensation for these services
and will be reimbursed for out-of-pocket expenses, including reasonable expenses
of counsel and other advisors. We have agreed to indemnify AFGIII and related
persons against various liabilities and expenses in connection with its services
as the strategic advisor, including various liabilities and expenses under the
United States federal securities laws.
We have retained Innisfree M&A Incorporated as information agent in
connection with our exchange offer. The information agent may contact holders of
shares of Net Perceptions common stock by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee
shareholders to forward material relating to our exchange offer to beneficial
owners of shares of Net Perceptions common stock. We will pay Innisfree M&A
Incorporated an aggregate fee of approximately $25,000 for these services and
for acting as our proxy solicitor in addition to reimbursing it for its
reasonable out-of-pocket expenses. We have agreed to indemnify the information
agent against various liabilities and expenses in connection with our exchange
offer, including various liabilities under the United States federal securities
laws.
In addition, we have retained StockTrans, Inc. as our exchange agent. We
will pay the exchange agent an aggregate fee of approximately $9,600 for its
services in connection with our exchange offer, reimburse the exchange agent for
its reasonable out-of-pocket expenses and indemnify the exchange agent against
various liabilities and expenses, including various liabilities under the United
States federal securities laws.
45
We have also retained Multiple Financial Services, Inc. as our dealer
manager. We will pay the dealer manager one and one quarter percent (1.25%) of
the value of the shares of Net Perceptions acquired by us in our exchange offer
for its services in connection with our exchange offer, reimburse the dealer
manager for all out-of-pocket expenses incurred in connection with the exchange
offer, and indemnify the dealer manager against various liabilities and
expenses, including various liabilities under the United States federal
securities laws.
We will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of shares of Net Perceptions common stock pursuant
to our exchange offer. We will reimburse brokers, dealers, commercial banks and
trust companies and other nominees, upon request, for customary clerical and
mailing expenses incurred by them in forwarding offering materials to their
customers.
ACCOUNTING TREATMENT
The proposed merger will be accounted for using the "purchase" method of
accounting under United States generally accepted accounting principles. Net
Perceptions will be treated as the acquired corporation for such purposes. Net
Perceptions' assets and liabilities will be adjusted to their estimated fair
value on the closing date of the proposed merger and combined with the
historical book values of our assets and liabilities. Applicable income tax
effects of such adjustments will be included as a component of the combined
entity's deferred tax asset or liability. The difference between the estimated
fair value of the assets and liabilities (adjusted as discussed above) and the
purchase price will be recorded as intangible assets, including goodwill. For
further information concerning the amount of intangible assets to be recorded in
connection with the proposed merger and any applicable amortization thereof,
refer to the Notes to the Unaudited Pro Forma Condensed Combined Balance Sheets.
REGULATORY APPROVALS
GENERAL
Based on our examination of publicly available information filed by Net
Perceptions with the SEC and other publicly available information concerning Net
Perceptions, we are not aware of any governmental license or regulatory permit
that appears to be material to Net Perceptions' business that might be adversely
affected by our acquisition of shares pursuant to the exchange offer or, except
as set forth below, of any approval or other action by any government or
governmental administrative or regulatory authority or agency, domestic or
foreign, that would be required for our acquisition or ownership of shares
pursuant to the exchange offer. Should any such approval or other action be
required or desirable, we currently contemplate that we would seek such approval
or other action. We have, however, no current intent to delay the purchase of
shares tendered pursuant to the exchange offer pending the outcome of any such
matter. There can be no assurance that any such approval or other action, if
needed, would be obtained (with or without substantial conditions) or that if
such approvals were not obtained or such other actions were not taken adverse
consequences might not result to Net Perceptions' business or certain parts of
Net Perceptions' business might not have to be disposed of, any of which could
cause us to elect to terminate the exchange offer without the purchase of shares
thereunder. Our obligation under the offer to accept for exchange and exchange
shares is subject to the conditions set forth in "The Exchange Offer--Conditions
to the Exchange Offer".
STATE TAKEOVER STATUTES
A number of states have adopted laws which purport, to varying degrees, to
apply to attempts to acquire corporations that are incorporated in, or which
have substantial assets, stockholders, principal executive offices or principal
places of business or whose business operations otherwise have substantial
economic effects in, such states. Net Perceptions conducts business in a number
of states throughout the United States, some of which have enacted such laws.
Except a described in this prospectus, we do not know whether any of these laws
will, by their terms, apply to the exchange offer or the proposed merger or any
other business combination between us or any of our affiliates and Net
Perceptions, and we have not complied with any such laws. To the extent that
certain provisions of these laws purport to apply to the exchange offer or the
proposed merger or any other business combination, we believe that there are
reasonable bases for contesting such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of
46
America, the Supreme Court held that the State of Indiana could, as a matter of
corporate law, constitutionally disqualify a potential acquiror from voting
shares of a target corporation without the prior approval of the remaining
stockholders where, among other things, the corporation is incorporated, and has
a substantial number of stockholders, in the state. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a U.S. federal district court in Oklahoma
ruled that the Oklahoma statutes were unconstitutional as applied to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a U.S. federal district court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit. In December 1988, a U.S. federal district court
in Florida held in Grand Metropolitan PLC v. Butterworth that the provisions of
the Florida Affiliated Transactions Act and the Florida Control Share
Acquisition Act were unconstitutional as applied to corporations incorporated
outside of Florida.
If any government official or third party seeks to apply any state takeover
law to the exchange offer or the proposed merger or any other business
combination between us or any of our affiliates and Net Perceptions, we will
take such action as then appears desirable, which action may include challenging
the applicability or validity of such statute in appropriate court proceedings.
If it is asserted that one or more state takeover statutes is applicable to the
exchange offer or any such merger or other business combination and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the offer or any such merger or other business combination, we might
be required to file certain information with, or to receive approvals from, the
relevant state authorities or holders of shares, and we may be unable to accept
for payment or pay for shares tendered pursuant to the exchange offer, or be
delayed in continuing or consummating the offer or any such merger or other
business combination. In such case, we may not be obligated to accept for
payment or pay for any tendered shares. See "The Exchange Offer".
FEDERAL SECURITIES LAWS
The proposed merger or any other similar business combination that we
propose would also have to comply with any applicable United States federal law.
In particular, unless the shares were deregistered under the Exchange Act prior
to such transaction, if the proposed merger or any other business combination
were consummated more than one year after termination of the exchange offer or
did not provide for Net Perfections shareholders to receive cash for their
shares in an amount at least equal to the price paid in the exchange offer, we
may be required to comply with Rule 13e-3 under the Exchange Act. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
concerning Net Perceptions and certain information relating to the fairness of
the proposed transaction and the consideration offered to minority shareholders
in such a transaction be filed with the SEC and distributed to such shareholders
prior to consummation of the transaction.
OVER THE COUNTER BULLETIN BOARD
Our common stock trades on the OTC Bulletin Board. Following the exchange
we intend to apply for inclusion on the NASDAQ SmallCap Market. While we believe
that we will satisfy the requirements for inclusion, NASDAQ exercises broad
discretion when determining whether to include a security in its markets. NASDAQ
may not approve our listing application.
COMPARATIVE MARKET PRICE INFORMATION
The following table lists the closing prices of the stock of Obsidian
Enterprises (adjusted for the 1 for 50 reverse stock split) and Net Perceptions
on November 12, 2003, the last trading day before we announced the offer.
Obsidian Net
Enterprises Perceptions
----------------- ------------------
November 12, 2003 $15.00 $0.39
The table below sets forth the high and low last sale prices for our common
stock (adjusted for the 1 for 50 reverse stock split) and Net Perceptions'
common stock for the periods indicated. Our fiscal year ends October 31 and Net
Perceptions' fiscal year ends December 31.
47
Obsidian Enterprises Net Perceptions
------------------------------ ---------------------------------
Year Quarter Ended High Low High Low
------------------------- ---------------------- --------------- -------------- ---------------- ----------------
2001 March 31 $9.50 $3.50 $3.75 $.88
June 30 14.50 7.00 2.25 .88
September 30 19.50 4.50 1.90 .85
December 31 12.50 6.00 1.97 1.03
2002 March 31 18.00 5.50 2.28 1.32
June 30 13.50 5.00 1.63 1.02
September 30 10.00 5.00 1.19 .76
December 31 13.50 5.50 1.47 .78
2003 March 31 13.00 8.00 1.50 1.30
June 30 12.00 5.00 1.66 1.43
September 30 25.00 5.00 1.84 .39
December 31 20.00 10.00 .50 .34
2004 March 31 (through 20.00 5.50 .43 .39
March 10, 2004)
You can obtain current stock price quotations for our common stock and Net
Perceptions common stock from a newspaper, on the Internet or by calling your
broker.
DESCRIPTION OF OBSIDIAN ENTERPRISES CAPITAL STOCK
The following description of the terms of our capital stock is not meant to
be complete and is qualified by reference to our Certificate of Incorporation
and certain Certificates of the Designations, Preferences, Rights and
Limitations of preferred stock, which are incorporated by reference in this
prospectus. See "Where Can I Find More Information?" beginning on page 56.
Obsidian Enterprises is currently authorized to issue 10,000,000 shares of
common stock, par value $0.0001 per share and 5,000,000 shares of preferred
stock, par value $0.01 per share. As a result of the reverse stock split
effective for trading purposes as of February 18, 2004 and the conversion of our
Series C Preferred Stock and Series D Preferred Stock that followed the reverse
split, approximately 2,939,170 shares of our common stock are outstanding. Our
outstanding shares of common stock are fully paid and nonassessable, which means
that the stockholders have paid their purchase price in full and we may not ask
them for additional funds. No Series C Preferred Stock or Series D Preferred
Stock remains outstanding.
DIVIDEND RIGHTS
The Delaware General Corporation Law provides that dividends may be paid on
our common stock and on any class of stock entitled to participate with the
common stock as to dividends, but only when and as declared by our board of
directors.
VOTING RIGHTS
The Delaware General Corporation Law entitles each common stockholder to
one vote for each share of common stock held by a stockholder of record. Holders
of our common stock do not have the right of cumulative voting for the election
of directors or for any other purpose.
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LIQUIDATION RIGHTS
Pursuant to the Delaware General Corporation Law, if Obsidian Enterprises
liquidates, dissolves or winds up its business, holders of our common stock are
entitled to receive all remaining assets available for distribution to
shareholders after satisfaction of our liabilities.
PREEMPTION RIGHT AND SINKING FUND OR REDEMPTION
Holders of common stock have no preemptive rights to purchase or subscribe
for shares of any class, or series thereof, of stock of Obsidian Enterprises.
The common stock and both series of preferred stocks are not entitled to any
sinking fund or redemption provisions.
CONVERSION PROVISIONS
Our common stock is not entitled to any conversion rights.
ANTI-TAKEOVER PROVISIONS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a business combination with an interested
stockholder for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of Section 203, a
business combination includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder. Under Section
203, an interested stockholder generally is defined as a person who, together
with affiliates and associates, owns (or within the three prior years did own)
15% or more of the corporation's outstanding voting stock.
Additionally, our board may, without further actions by our shareholders,
from time to time, direct the issuance of additional preferred stock in series
and may, at the time of issuance, determine the rights, preferences and
limitations of each series. Satisfaction of any dividend preferences of
outstanding preferred stock would reduce the amount of funds available for the
payment of dividends on our common stock. Holders of preferred stock may be
entitled to receive a preference payment in the event of any liquidation,
dissolution or winding up of Obsidian Enterprises before any payment is made to
the holders of our common stock. The issuance of preferred stock may render more
difficult or tend to discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of our securities or the
removal of incumbent management. The board, without shareholder approval, may
issue preferred stock with voting and conversion, exchange or other special
rights, which could adversely affect the holders of our common stock.
Delaware law and the ability of the board to issue additional preferred
stock may have the effect of deterring hostile takeovers or delaying changes in
control of our management, which could depress the trading price of our common
stock.
COMPARISON OF RIGHTS OF HOLDERS
OF OBSIDIAN ENTERPRISES COMMON STOCK AND
NET PERCEPTIONS COMMON STOCK
Upon completion of the exchange offer and proposed merger, Net Perceptions
shareholders will become shareholders of Obsidian Enterprises, rather than
shareholders of Net Perceptions. Since both Obsidian Enterprises and Net
Perceptions are Delaware corporations, the rights of the shareholders of
Obsidian Enterprises and Net Perceptions are governed by the applicable laws of
the State of Delaware, including the Delaware General Corporation Law, and by
each company's respective certificate of incorporation, as amended, and bylaws,
as amended.
The following summary discusses some of the material differences between
the current rights of Obsidian Enterprises shareholders and Net Perceptions
shareholders under our certificate of incorporation and bylaws and Net
Perceptions' certificate of incorporation and Net Perceptions'
49
bylaws. The statements in this section are qualified in their entirety by
reference to, and are subject to, the detailed provisions of the Delaware
General Corporation Law, our certificate of incorporation, our bylaws, Net
Perceptions' certificate of incorporation and Net Perceptions' bylaws. Copies of
our certificate of incorporation and bylaws and Net Perceptions' certificate of
incorporation and bylaws are incorporated by reference in the Annual Report and
Net Perceptions Annual Reports, respectively, which are being delivered to Net
Perceptions shareholders along with this prospectus. See "Where Can I Find More
Information?" beginning on page 56.
CORPORATE GOVERNANCE
OBSIDIAN ENTERPRISES
The rights of our shareholders are governed by Delaware corporate law and
our certificate of incorporation and bylaws.
NET PERCEPTIONS
The rights of Net Perceptions shareholders are governed by Delaware
corporate law and Net Perceptions' certificate of incorporation and bylaws.
AUTHORIZED CAPITAL STOCK
OBSIDIAN ENTERPRISES
The authorized capital stock of Obsidian Enterprises consists of 15,000,000
shares of capital stock consisting of (i) 10,000,000 shares of common stock, par
value $0.0001 per share and (ii) 5,000,000 shares of preferred stock, par value
$0.001 per share.
NET PERCEPTIONS
The authorized capital stock of Net Perceptions currently consists of
105,000,000 shares of capital stock consisting of (i) 10,000,000 shares of
common stock, par value $0.0001 per share and (ii) 5,000,000 shares of preferred
stock, par value $0.0001 per share.
NUMBER, CLASSIFICATION AND ELECTION OF BOARD OF DIRECTORS
OBSIDIAN ENTERPRISES
Our bylaws provide that the board of directors shall have not less than
three members, who shall be elected at the annual meeting of our shareholders,
in the manner described in our bylaws. Our bylaws provide that the maximum
number of directors will be nine. As of March 1, 2004, our board consisted of 7
directors.
Our certificate of incorporation expressly disallows cumulative voting for
the election of directors.
NET PERCEPTIONS
Net Perceptions' certificate of incorporation and bylaws provide that the
number of directors shall be fixed from time to time by a majority of Net
Perceptions' board.
Neither Net Perceptions' certificate of incorporation nor Net Perceptions'
bylaws provide for or expressly disallow cumulative voting for the election of
directors.
REMOVAL OF DIRECTORS
The Delaware General Corporation Law provides that, where a corporation's
certificate of incorporation and bylaws provide for neither cumulative voting
nor division of a board into classes, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors.
OBSIDIAN ENTERPRISES
Under our bylaws, directors may be removed with or without cause, by the
shareholders or the board of directors, provided that such director may be
removed by the shareholders only at a meeting of the shareholders and,
50
provided that there is a quorum present, by the affirmative vote of a majority
of shares of shareholders of record present in person or by proxy.
NET PERCEPTIONS
Under Net Perceptions' bylaws, subject to the rights of the holders of any
series of preferred stock or any other series or class of stock as set forth in
the certificate of incorporation to remove or elect additional directors under
specified circumstances, any director, or the entire board of directors, may be
removed from office at any time, with or without cause, by affirmative vote of
the holders of sixty-six and two-thirds (66 2/3%) of the voting power of the
then outstanding voting stock, voting together as a single class.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
The Delaware General Corporation Law provides that any vacancy occurring in
any office of the corporation by death, resignation, removal or otherwise, shall
be filled as the bylaws provide. In the absence of such provision, the vacancy
shall be filled by the board of directors or other governing body.
OBSIDIAN ENTERPRISES
Our bylaws state that any vacancies caused by removal, resignation, death
or other capacity, or increase in the number of directors may be filled by a
majority vote of the remaining members of the board of directors until the next
annual meeting or special meeting of shareholders at which directors are
elected.
NET PERCEPTIONS
Net Perceptions' bylaws provide that, subject to certain rights of
stockholders set forth in Net Perceptions' certificate of incorporation,
vacancies cause by death, resignation, retirement, disqualification, removal
from office or other cause and newly created directorships resulting from any
increase in the authorized number of directors, may be filled only by
affirmative vote of a majority of the remaining directors, though less than a
quorum of the board. Net Perceptions' bylaws further provide that directors so
elected shall only hold office until the next annual meeting of stockholders at
which time such directors' successors shall be duly elected.
QUORUM OF THE BOARD
OBSIDIAN ENTERPRISES
Our bylaws provide that a majority of all the directors of the board shall
constitute a quorum.
NET PERCEPTIONS
Net Perceptions' bylaws provide that a whole number of directors equal to
at least a majority of the board shall constitute a quorum.
VOTING
The Delaware General Corporation Law provides that unless otherwise
provided in the certificate of incorporation, each stockholder shall be entitled
to one vote for each share of capital stock held by such stockholder.
OBSIDIAN ENTERPRISES
Each share of our common stock entitles the holder to one vote which may be
voted in person or by proxy duly executed in writing.
NET PERCEPTIONS
Each share of Net Perceptions common stock entitles the holder to one vote
which may be voted in person or by proxy duly executed in writing.
51
ANNUAL MEETINGS OF SHAREHOLDERS
The Delaware General Corporation Law provides that meetings of stockholders
may be held at such place, either within or without of Delaware, as may be
designated by or in the manner provided in the certificate of incorporation or
bylaws, or if not so designated, as determined by the board of directors.
OBSIDIAN ENTERPRISES
Our bylaws provide that the annual meeting of shareholders shall be held at
the office of the corporation in either the State of Delaware or the State of
Indiana or at such other place within or without the State of Delaware, and on
such date in each fiscal year as may be determined by the board of directors.
NET PERCEPTIONS
Net Perceptions' bylaws provide that the annual meeting of stockholders
shall be held at such date, place and/or time as may be fixed by resolution of
the board of directors, in a place designated by the board of directors, or, if
no such designation is made, at the principal office of the corporation.
SPECIAL MEETINGS OF SHAREHOLDERS
The Delaware General Corporation Law provides that special meetings of the
stockholders may be called by the board of directors or by such person or
persons as may be authorized by the certificate of incorporation or by the
bylaws.
OBSIDIAN ENTERPRISES
Our bylaws provide that special meetings of the shareholders may be called
at any time by the chairman of the board of directors or the president and shall
be called by the chairman of the board or the president upon a written request
to the secretary of a majority of the board of directors, or by shareholders
holding of record at least twenty-five percent (25%) of all the shares of stock
outstanding and entitled to vote.
NET PERCEPTIONS
Net Perceptions' bylaws provide that, unless otherwise required by law, a
special meeting of the stockholders may only be called by (i) the chairman of
the board, (ii) the president, (iii) any vice president, (iv) the secretary, or
(v) any assistant secretary and shall be called by any such officer at the
request in writing of a majority of the board of directors.
QUORUM OF THE SHAREHOLDERS
OBSIDIAN ENTERPRISES
Our bylaws provide that the presence, in person or by proxy, of the holders
of a majority of the outstanding shares entitled to vote shall constitute a
quorum.
NET PERCEPTIONS
Net Perceptions' bylaws provide that, unless otherwise provided by law or
the certificate of incorporation, the holders of a majority of the voting power
of the outstanding shares of the corporation entitled to vote generally to elect
directors, represented in person or by proxy, shall constitute a quorum;
however, if specified business is to be voted on by a class or series voting
separately as a class or series, the holders of a majority of the voting power
of the shares of such class or series shall constitute a quorum for the purposes
of transacting such business.
SHAREHOLDER ACTION BY WRITTEN CONSENT
OBSIDIAN ENTERPRISES
Our bylaws provide for action by unanimous written consent of the
shareholders in lieu of a meeting.
52
NET PERCEPTIONS
Net Perceptions' certificate of incorporation and bylaws specifically state
that, unless otherwise provided by law, any action required or permitted to be
taken by the stockholders must be taken at an annual or special meeting of such
stockholders and may not be effected by any written consent.
SPECIAL VOTING REQUIREMENTS
The Delaware General Corporation Law provides that an agreement of merger
or consolidation shall be submitted to the stockholders of each constituent
corporation at an annual or special meeting for the purpose of acting on the
agreement, and further provides that due notice of the time, place and purpose
of the meeting shall be mailed to each holder of stock, whether voting or
nonvoting, of the corporation at the stockholder's address as it appears on the
records of the corporation, at least 20 days prior to the date of the meeting.
The notice shall contain a copy of the agreement or a brief summary thereof, as
the directors shall deem advisable. At the meeting, the agreement shall be
considered and a vote taken for its adoption or rejection. If a majority of the
outstanding stock of the corporation entitled to vote thereon shall be voted for
the adoption of the agreement, that fact shall be certified on the agreement by
the secretary or assistant secretary of the corporation.
OBSIDIAN ENTERPRISES
Our certificate of incorporation is silent regarding approval of plans of
merger or share exchange.
NET PERCEPTIONS
Net Perceptions' certificate of incorporation is silent regarding approval
by holders of common stock of plans of merger or share exchange.
AMENDMENTS OF CERTIFICATE OF INCORPORATION
The Delaware General Corporation Law provides that after a corporation has
received payment for any of its capital stock, it may amend its certificate of
incorporation, from time to time, in any and as many respects as may be desired,
so long as its certificate of incorporation as amended would contain only such
provisions as it would be lawful and proper to insert in an original certificate
of incorporation filed at the time of the filing of the amendment; and, if a
change in stock or the rights of stockholders, or an exchange, reclassification,
subdivision, combination or cancellation of stock or rights of stockholders is
to be made, such provisions as may be necessary to effect such change, exchange,
reclassification, subdivision, combination or cancellation.
OBSIDIAN ENTERPRISES
Our certificate of incorporation is silent regarding requirements for
amending Obsidian Enterprises' certificate of incorporation.
NET PERCEPTIONS
Net Perceptions' certificate of incorporation requires that the affirmative
vote of the holders of at least 75% of the voting power of all of the then
outstanding shares of the capital stock of Net Perceptions, voting together as a
single class, to amend or repeal any provision of the Net Perceptions'
certificate of incorporation, except that only a majority of voting power is
required to approve an amendment or repeal of the articles of Net Perceptions
certificate of incorporation related to the corporation's name, address and
nature or business purpose.
AMENDMENTS OF BYLAWS
OBSIDIAN ENTERPRISES
Our certificate of incorporation provides that the board of directors is
authorized to alter amend or repeal the bylaws or to adopt new bylaws. Our
bylaws further provide that shareholders entitled to vote in the election of
directors may amend or repeal the bylaws or adopt new bylaws, and may amend or
repeal any bylaws adopted by the board of directors.
53
NET PERCEPTIONS
Net Perceptions' bylaws provide that the bylaws may be amended, altered,
added to, rescinded or repealed at any meeting of the board of directors or of
the stockholders, provided that notice of the proposed change was given in the
notice of the meeting and, in the case of a meeting of the board of directors,
in a notice given no less than twenty-four (24) hours prior to the meeting;
provided, however, that notwithstanding any other provisions of the bylaws or
any provision of law which might otherwise permit a lesser vote or a no vote,
but in addition to any affirmative vote of the holders of any particular class
or series of the stock required by the law, the certificate of incorporation or
the bylaws, the affirmative vote of the holders of at least eighty percent (80%)
of the voting power of the then outstanding voting stock, voting together as a
single class, shall be required in order for the stockholders to alter, amend or
repeal any provision of the bylaws or to adopt any additional bylaw.
EXERCISABILITY OF NET PERCEPTIONS' PREFERRED STOCK PURCHASE RIGHTS
The following description of the preferred stock purchase rights is based
upon publicly available documents. This description is not complete. You should
read the entire Net Perceptions Rights Agreement, which is filed as Exhibit 1 to
Net Perceptions' registration statement on Form 8-A12G, filed with the SEC on
June 6, 2001, as amended by Amendment No. 1, which is filed as Exhibit 4.1 to
the Form 8-K filed with the SEC on December 23, 2003 ("Amendment No. 1").
On June 1, 2001, Net Perceptions' board of directors declared a dividend
distribution of one preferred stock purchase right for each outstanding share of
Net Perceptions common stock (the "Rights"). The dividend was paid to
stockholders of record at the close of business on June 14, 2001. As described
in the Net Perceptions Rights Agreement, each Right entitled the registered
holder to purchase from Net Perceptions a unit consisting of one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $0.0001
per share (the "Series A Preferred Stock"). The Rights issued were registered
pursuant to Section 12(g) of the Exchange Act on a Registration Statement Form
8-A12G filed with the SEC on June 6, 2001.
The Rights will be evidenced by Net Perceptions common stock certificates
and not by separate certificates ("Rights Certificates") until the earlier of:
(i) the close of business on the tenth business day after the first public
announcement that a person or group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the outstanding Net Perceptions
common stock (an "Acquiring Person") or (ii) the close of business on the tenth
business day following (a) the date of a tender or exchange offer by any person
for less than all outstanding of the shares of Net Perceptions common stock is
commenced, or (b) the date that an exchange offer commenced for all outstanding
shares of Net perceptions common stock is "amended or supplemented" such that
the exchange offer is for less than all of the Net Perceptions common stock, if,
upon the consummation thereof, such person would become an Acquiring Person. The
earlier of such dates is referred to as the "Distribution Date."
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of Net Perceptions common stock
as of the close of business on the Distribution Date, and such separate Rights
Certificates alone will evidence the Rights as of and after the Distribution
Date. The Rights will expire on the earliest of (i) June 14, 2011 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as described
below, or (iii) the time at which Net Perceptions' board of directors orders the
exchange of the Rights.
Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $15.00 per Right (adjusted from time to time as
described below, the "Purchase Price"), one one-thousandth of a share of the
Series A Preferred Stock.
Unless the Rights are earlier redeemed, following any person becoming an
Acquiring Person other than pursuant to a Qualified Offer or a Qualified
Transaction as described below, each holder of a Right which has not theretofore
been exercised (other than Rights beneficially owned by the Acquiring Person,
which will thereafter be void) will thereafter upon exercise at the then-current
Purchase Price have the right to receive, in lieu of one one-thousandth of a
share of the Series A Preferred Stock, Net Perceptions common stock (or, in
certain circumstances as determined by the Net Perceptions board of directors,
cash, other property or securities) having a value equal to the then current
Purchase Price multiplied by the number of one one-thousandths of a share of
Series A Preferred Stock to which that person would have been entitled
immediately prior to the occurrence of a person becoming an Acquiring Person and
divided by 50% of the current market price, calculated by taking the average of
the daily closing prices per share of such Net Perceptions common stock for the
thirty (30) consecutive trading days
54
immediately prior to such date. Notwithstanding the foregoing, the Rights shall
not be exercisable, following a person becoming an Acquiring Person, until Net
Perceptions' right of redemption has expired, as described below.
Similarly, unless the Rights are earlier redeemed, in the event that, after
the Share Acquisition Date (as defined below), (i) Net Perceptions is acquired
in a merger or other business combination transaction other than pursuant to a
Qualified Offer or a Qualified Transaction as described below, or (ii) 50% or
more of Net Perceptions' consolidated assets, cash flow or earning power are
sold, Net Perceptions will make proper provision so that each holder of a Right
which has not theretofore been exercised (other than Rights beneficially owned
by the Acquiring Person, which will thereafter be void) will thereafter have the
right to receive, upon exercise at the then-current Purchase Price, shares of
common stock of the acquiring company having a value equal to the then-current
Purchase Price multiplied by the number of one one-thousandths of a share of
Series A Preferred Stock to which that person would have been entitled
immediately prior to the occurrence of a person becoming an Acquiring Person and
divided by 50% of the current market price, calculated by taking the average of
the daily closing prices per share of such common stock of the acquiring company
for the thirty (30) consecutive trading days immediately prior to such date.
The above special exercise rights will not be available in the event that
an exchange offer or tender offer is a Qualified Offer or a Qualified
Transaction within the meaning of the Rights Agreement and Amendment No. 1
thereto. An offer is a Qualified Offer if it is an acquisition of shares of Net
Perceptions common stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Net Perceptions common stock at a price or on terms
determined by a majority of independent members of the Net Perceptions board of
directors to be (1) at a fair and adequate price and (2) otherwise in the best
interests of Net Perceptions and Net Perceptions shareholders. A "Qualified
Transaction" is an acquisition of shares of Net Perceptions common stock
pursuant to a tender offer or an exchange offer for all of the outstanding
shares of Net Perceptions common stock, the consummation of which results in the
offeror becoming the beneficial owner of at least 85% of the shares of Net
Perceptions common stock outstanding.
At any time after the acquisition by an Acquiring Person of 15% or more of
the outstanding shares of Net Perceptions' common stock and prior to the
acquisition by such Acquiring Person of 50% or more of the outstanding shares of
Net Perceptions common stock, the Net Perceptions board of directors may
exchange the Rights (other than Rights owned by the Acquiring Person) in whole
or in part, at an exchange ratio of one share of Net Perceptions common stock
per Right.
At any time on or prior to the earlier of (i) the close of business on the
tenth day following the date of the first public announcement that an Acquiring
Person has become such (the "Stock Acquisition Date") or (ii) the Final
Expiration Date, Net Perceptions may redeem the Rights in whole, but not in
part, at a redemption price of $0.01 per Right.
The Purchase Price, the number of Rights, and the number of shares of
Series A Preferred Stock or other securities or property issuable upon exercise
of the Rights are subject to adjustment from time to time, in connection with
the dilutive issuance by Net Perceptions as set forth in the Net Perceptions
Rights Agreement. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price.
No fractional portion of less than integral multiples of one share of Net
Perceptions common stock will be issued upon exercise of a Right, and in lieu
thereof, an adjustment in cash will be made based on the market price of the Net
Perceptions common stock on the last trading date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of Net Perceptions (other than any rights resulting from
such holder's ownership of Net Perceptions common stock), including, without
limitation, the right to vote or to receive dividends.
The provisions of the Net Perceptions Rights Agreement may be supplemented
or amended in any manner prior to the close of business on the Distribution Date
without the approval of the Rights holders. After the Distribution Date, the
provisions of the Rights Agreement may be amended without the approval of Rights
holders only in order to cure any ambiguity, defect or inconsistency, to make
changes which do not adversely affect the interests of the Rights holders
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
lengthen the time period governing redemption shall be made at such time as the
Rights are not redeemable. Notwithstanding anything in the Net
55
Perceptions Rights Agreement to the contrary, the Rights Agreement may not be
amended at a time when the Rights are not redeemable.
Series A Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Series A Preferred Stock will be entitled to a
cumulative dividend equal to the greater of $0.01 or 1,000 times the dividend on
Net Perceptions common stock. In the event of liquidation, the holders of the
Series A Preferred Stock will be entitled to a minimum preferential liquidation
payment equal to $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon. Each share of Series A Preferred Stock will
have 1,000 votes, voting together with the Net Perceptions common stock. In the
event of any merger, consolidation or other transaction in which the shares of
Net Perceptions common stock are charged or exchanged, each share of Series A
Preferred Stock will be entitled to receive 1,000 times the amount received per
share of Net Perceptions common stock.
Because of the nature of the dividend, liquidation and voting rights of the
shares of Series A Preferred Stock, the value of one one-thousandth interest in
a share of Series A Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Net Perceptions common stock.
The exchange offer is conditioned upon, among other things, Net
Perceptions' board or directors taking such action which would cause the Rights
to be inapplicable to the exchange offer and the proposed merger or our being
satisfied, in our reasonable discretion, that the Rights have been invalidated
or are otherwise inapplicable to the exchange offer and the proposed merger.
Unless the Rights Condition is satisfied, Net Perceptions shareholders will
be required to tender one Right (or, if the Right has been exercised, one
one-thousandth of a share of Series A Preferred Stock) for each share of Common
Stock tendered in order to effect a valid tender of Shares in accordance with
the procedures set forth in "The Exchange Offer--Procedure for Tendering"
beginning on page 31 of this prospectus. Unless the Distribution Date occurs, a
tender of Net Perceptions common stock will also constitute a tender of the
Rights.
We believe that, under the circumstances of the exchange offer and under
applicable law, the Net Perceptions board of directors has a fiduciary
obligation to redeem the Rights (or amend the Net Perceptions Rights Agreement
such that the exchange offer will not result in our becoming an Acquiring Person
or otherwise trigger a Stock Acquisition Date), and we are hereby requesting
that the Net Perceptions board of directors do so. However, there can be no
assurance that the Net Perceptions board of directors will redeem the Rights (or
amend the Net Perceptions Rights Agreement).
ADDITIONAL INFORMATION
Net Perceptions is subject to the informational requirements of the
Exchange Act and in accordance with the Exchange Act files periodic reports,
proxy statements and other information with the SEC relating to its business,
financial condition and other matters. Net Perceptions is required to disclose
in such proxy statements certain information, as of particular dates, concerning
Net Perceptions' directors and officers, their remuneration, stock options
granted to them, the principal holders of Net Perceptions' securities and any
material interest of such persons in transactions with Net Perceptions. See
"Where Can I Find More Information?" below to find out how to obtain copies of
such reports, proxy statements and other information.
WHERE CAN I FIND MORE INFORMATION?
We and Net Perceptions file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our commission file number is
000-17430, and Net Perceptions' commission file number is 000-25781. You may
read and copy this information at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet site that contains reports, proxy
statements and other information about issuers like us and Net Perceptions that
file electronically with the SEC. The address of that site is
http://www.sec.gov.
We filed a registration statement on Form S-4 with the SEC under the
Securities Act to register our common stock to be issued in this exchange offer
and the proposed merger. This prospectus is a part of that registration
statement. As allowed by SEC rules, this prospectus does not contain all the
information you can find in
56
the registration statement or the exhibits to the registration statement.
Shareholders may obtain copies of the Form S-4 and our Schedule TO, and any
amendments to those documents, in the manner described above.
The SEC allows us to incorporate by reference information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus
or in any subsequently filed document that is deemed to be incorporated by
reference into this document. Any statement so modified or superseded will not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
This prospectus incorporates by reference the documents listed below that
we and Net Perceptions have previously filed with the SEC. These documents
contain important information about us and Net Perceptions and their business,
financial condition and results of operations.
The following documents filed by us with the SEC accompany this prospectus
and are incorporated by reference:
o Annual Report on Form 10-K, for the fiscal year ended October 31,
2003.
The following documents filed by Net Perceptions with the SEC accompany
this prospectus and are incorporated by reference:
o Annual Report on Form 10-K for the fiscal year ended December 31,
2002; and
o Quarterly Reports on Form 10-Q for the quarters ended September 30,
2003 and December 31, 2003.
NET PERCEPTIONS INFORMATION
While we have included in this prospectus information concerning Net
Perceptions known to us based on publicly available information (primarily
filings by Net Perceptions with the SEC), we are not affiliated with Net
Perceptions, and Net Perceptions has not permitted us to have access to their
books and records. Therefore, non-public information concerning Net Perceptions
was not available to us for the purpose of preparing this prospectus, and we
were not involved in the preparation of that information. We have no knowledge
that would indicate that statements relating to Net Perceptions contained or
incorporated by reference in this prospectus are inaccurate or incomplete.
We have requested that Net Perceptions provide us with information required
for complete disclosure regarding the businesses, operations, financial
condition and management of Net Perceptions. We will amend or supplement this
prospectus to provide any and all information we receive from Net Perceptions,
if we receive the information before our exchange offer expires and we consider
it to be material, reliable and appropriate.
We requested the consent of the auditor of Net Perceptions to the use in
the registration statement of which this prospectus is a part of the audit
report included in the Net Perceptions Annual Report. Net Perceptions
independent auditors, Price Waterhouse Coopers ("PWC"), informed us that they
will not provide consent. We have applied to the SEC to dispense with their
consent pursuant to Rule 437 under the Securities Act. The absence of that
consent may limit your recovery on certain claims. In particular, and without
limitation, you will not be able to assert claims against Net Perceptions'
auditors under Section 11 of the Securities Act for any untrue statement of a
material fact contained in Net Perceptions' consolidated financial statements
which appear in the Net Perceptions Annual Report or any omission to state a
material fact required to be stated therein.
LEGAL MATTERS
The legality of our common stock offered by this exchange offer will be
passed upon by Barnes & Thornburg LLP, Indianapolis, Indiana.
EXPERTS
The consolidated financial statements of Obsidian Enterprises, Inc. and
subsidiaries as of October 31, 2003 and 2002, and for each of the periods in the
three year period ended October 31, 2003, have been incorporated by reference in
this prospectus in reliance upon the reports of McGladrey & Pullen, LLP,
independent auditors,
57
incorporated by reference in this prospectus, and upon the authority of said
firm as experts in accounting and auditing.
We requested the consent of Net Perceptions' auditor to the use in the
registration statement of which this prospectus is a part of the audit report
included in the Net Perceptions Annual Report. Net Perceptions independent
auditors, PWC, informed us that they will not provide consent. We have applied
to the SEC to dispense with their consent pursuant to Rule 437 under the
Securities Act. The absence of that consent may limit your recovery on certain
claims. In particular, and without limitation, you will not be able to assert
claims against Net Perceptions' auditors under Section 11 of the Securities Act
for any untrue statement of a material fact contained in Net Perceptions'
consolidated financial statements which appear in the Net Perceptions Annual
Report or any omission to state a material fact required to be stated therein
58
UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following selected unaudited condensed pro forma balance sheet is
derived from the balance sheets of Obsidian Enterprises, Inc. as of October 31,
2003 and Net Perceptions as of September 30, 2003. The unaudited pro forma
balance sheet reflects our purchase of Net Perceptions using the purchase method
of accounting and assumes that such acquisition was consummated as of October
31, 2003. The following unaudited condensed pro forma combined statements of
operations for the year ended October 31, 2003 give effect to the acquisition of
Net Perceptions as if it occurred at the beginning of the periods presented.
The adjustments necessary to fairly present the unaudited condensed pro
forma combined financial data have been made based on available information and
in the opinion of management are reasonable. Assumptions underlying the pro
forma adjustments are described in the accompanying notes, which should be read
in conjunction with this unaudited condensed pro forma combined financial data.
The unaudited condensed pro forma combined financial data is for
comparative purposes only and does not purport to represent what our financial
position or results of operations would actually have been had the events noted
above in fact occurred on the assumed dates or to project our financial position
or results of operations for any future date or future period. The unaudited
condensed pro forma combined financial data should be read in conjunction with
the notes hereto and other information included elsewhere in this prospectus.
Because no determination has been made by our management to either continue
operating the remaining business of Net Perceptions or to dispose of it, two
separate pro forma presentations of operating data have been prepared. Because
we have not been able to perform any due diligence regarding the fair value of
Net Perceptions' operating assets, the pro forma balance sheets under either
course of action are not materially different at this time. Therefore, only one
pro forma balance sheet has been presented. However, upon completing such due
diligence and determining the value of such operating assets, the pro forma
balance sheets for either course of action will most likely be materially
different. Furthermore, once the final determination is made of the fair values
acquired and the final purchase price allocation is made, the pro forma
operating data as presented will change and such change could be material.
Net Perceptions currently has certain pending legal matters. Net
Perceptions has stated in its public filings that it believes the various items
alleged in the lawsuits are without merit. However, these lawsuits are in their
initial stages and, therefore, the outcome or ultimate effect on Net
Perceptions' financial condition or the financial condition of the combined
companies following the exchange offer and proposed merger cannot be predicted.
The outcome of these lawsuits may adversely affect the pro forma operating data
presented.
F-1
OBSIDIAN ENTERPRISES, INC. AND NET PERCEPTIONS, INC.
UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET
OCTOBER 31, 2003
(in thousands)
Historical
Obsidian Net Pro Forma Pro Forma
Enterprises Perceptions Adjustments Combined
---------------- ---------------- --------------- ---------------
October 31, September 30,
2003 2003
---------------- ----------------
Assets
Current assets:
Cash and cash equivalents $ 1,148 $ 12,187 $ (850) (E) $ 6,155
(701) (D)
(5,629) (B)
Marketable Securities 114 - - 114
Accounts receivable, net 3,665 153 - 3,818
Accounts receivable, related parties 52 - - 52
Inventories, net 7,455 - - 7,455
Prepaid expenses & other current assets 1,081 792 - 1,873
-------- -------- ------- --------
Total Current Assets 13,515 13,132 (7,180) 19,467
Plant, Property & Equipment, net 24,480 90 - 24,570
Goodwill and other intangibles 7,878 - 3,623 (C) 11,501
Other Assets 9 336 - 345
-------- -------- ------- --------
Total Assets $ 45,882 $ 13,558 $ (3,557) $ 55,883
========= ========= =========== =========
See page F-4 for Notes to Unaudited Condensed Pro Forma Combined Balance Sheet.
F-2
Historical
Obsidian Net Pro Forma Pro Forma
Enterprises Perceptions Adjustments Combined
---------------- ---------------- --------------- ---------------
October 31, September 30,
2003 2003
---------------- ----------------
Liabilities and Stockholders' Equity
Current Liabilities:
Current Portion of Long term debt $ 2,379 $ - $ - $ 2,379
Accounts Payable and accrued expenses 4,254 332 - 4,586
Accounts Payable, related parties 837 - - 837
Deferred Revenue - 626 (426) (F) 200
-------- -------- ------- --------
Total Current Liabilities 7,470 958 (426) 8,002
Long-term debt, related parties 13,937 - - 13,937
Long-term debt, net of current portion 24,765 - - 24,765
Deferred income tax liabilities 651 - - 651
Minority Interest 172 - - 172
Mandatory redeemable stock 2,140 - - 2,140
Stockholders' Equity:
Common Stock 3 2 (2) (A) 3
Preferred stock 5 - (5) (B) -
Additional Paid-in-Capital 11,743 233,760 (233,760) (A) 21,918
10,175 (B)
Accumulated Deficit (15,004) (221,162) 221,162 (A) (15,705)
(701) (D)
-------- -------- ------- --------
Total Stockholders' Equity (3,253) 12,600 (3,131) 6,216
-------- -------- ------- --------
Total Liabilities and Stockholders' Equity $ 45,882 $ 13,558 $ (3,557) $ 55,883
========= ======== ========= ========
See page F-4 for Notes to Unaudited Condensed Pro Forma Combined Balance Sheet.
F-3
OBSIDIAN ENTERPRISES, INC. AND NET PERCEPTIONS, INC.
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET
OCTOBER 31, 2003
(in thousands)
(A) Represents the elimination of equity of Net Perceptions in purchase
accounting.
(B) Represents the purchase price for Net Perceptions based on the ten day
trading average of Obsidian Enterprises stock and an exchange price of
approximately 3/100 share of Obsidian Enterprises for each share of
Net Perceptions.
Total shares Net
Perceptions as of
9/30/03 28,145
Exchange ratio .03
--------
Shares Obsidian issued 844
Average price Obsidian $ 12.05
--------
10,170
Cash at $0.20 per share 5,629
-----
$ 15,799
========
Obsidian Enterprises recently completed the conversion of all Series C
and Series D preferred stock to common stock.
The addition to paid in capital is based on the following:
Market value of stock issued $ 10,170
Reclassification from preferred stock
to reflect conversion 5
--------
Net addition to paid in capital $ 10,175
--------
Should the share price of Obsidian Enterprises fluctuate, the effect
on the purchase price of Net Perceptions would be as follows:
Total shares to be issued
by Obsidian Enterprises, as
calculated above 844 844
Assumed average share price
of Obsidian Enterprises $11.00 $13.00
------ -------
$9,284 $10,972
In addition, based on Net Perceptions' recent proxy statement filed
January 16, 2004, Net Perceptions had options outstanding for 1,446
shares at an average exercise price of $1.50. Of this total, options
for approximately 1,313 shares at a weighted average price of $.284
could potentially be exercised based on the exercise price compared to
the price of Obsidian. The option plans of Net Perceptions provide
that immediately prior to a "Change in Control" all unvested options
will become fully vested and exercisable. Should the holders of these
options elect to exercise options prior to the purchase, Net
Perceptions would receive approximately $373 of cash. Obsidian
Enterprises would issue an additional 39 shares and pay an additional
$263 in cash consideration representing additional purchase price of
approximately $737.
F-4
(C) For purposes of this pro forma presentation, the net assets of Net
Perceptions are assumed to reflect the estimated fair value of the
respective assets and liabilities. Accordingly, the cost of
acquisition in excess of net assets acquired is presented as goodwill.
Until Obsidian Enterprises has opportunity to complete due diligence
and determine the fair value of the assets and liabilities, no
objective determination can be made regarding the classification of
the excess. Such determination, when complete, most likely will differ
materially from the pro forma presentation. For purposes of the pro
forma, goodwill has been calculated as follows:
Issuance of shares of Obsidian
Enterprises common stock $ 10,170
Estimated transaction costs 850
Cash at $0.20/share 5,629
--------
Estimated purchase price $ 16,649
Identifiable assets and
liabilities acquired
Current assets (13,132)
Property and equipment (90)
Other assets (336)
Current liabilities 532
-------
Estimated goodwill $ 3,623
=======
(D) Represents Net Perceptions' estimate for payment of bonuses and
severance pay for Net Perceptions' current employees and officers,
based on the amended proxy statement filed by Net Perceptions on
January 16, 2004.
(E) Represents payment of estimated transaction costs.
(F) Based on the amended proxy statement filed by Net Perceptions on
January 16, 2004, adjustments represent the possibility that customers
that have prepaid for certain support and consulting services may
demand a refund of a pro rata or other portion of these amounts.
F-5
OBSIDIAN ENTERPRISES, INC. AND NET PERCEPTIONS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
ASSUMING CONTINUATION OF NET PERCEPTIONS BUSINESS
FOR THE YEAR ENDED OCTOBER 31, 2003
(in thousands, except per share data)
Historical
Obsidian Net Pro Forma Pro Forma
Enterprises Perceptions Adjustments Combined
------------- ----------------- --------------- ----------------
October 31, September 30,
2003 2003
------------- -----------------
Net Sales $ 59,295 $ 2,860 $ - $ 62,155
Cost of Sales 51,736 1,000 - 52,736
-------- ------- ------- --------
Gross Profit 7,559 1,860 - 9,419
Selling, general & administrative expenses (8,537) (9,222) (701) (A) (19,210)
(750) (C)
Loss on asset impairment - (6,546) - (6,546)
Insurance recovery - - - -
-------- ------- ------- --------
Loss from operations (978) (13,908) (1,451) (16,337)
Other income (expense):
Interest expense (3,547) (24) - (3,571)
Interest income 17 2,718 - 2,735
Other income (expense) (81) (1,412) - (1,493)
-------- ------- ------- --------
Loss before income taxes from
continuing operations (4,589) (12,626) (1,451) (18,666)
Income tax benefit from continuing operations 937 - - 937
-
Minority interest (172) - - (172)
-------- ------- ------- --------
Loss from continuing operations $ (3,824) $(12,626) $(1,451) $ (17,901)
======== ========= ======= ==========
Loss per share from continuing operations
Basic and diluted (D) $ (5.87) $ (0.46) $ - $ (11.70)
Weighted average common and common equivalent
shares outstanding
Basic and diluted (D) 720 27,605 - 1,564
Pro Forma (loss) per share from continuing
operations after conversion of Series C and D
preferred shares
Basic and diluted (E) $ (1.47) $ - $ - $ (4.93)
Pro Forma weighted average common and common
equivalent shares outstanding (E) 2,866 - - 3,710
See F-8 for Notes to Unaudited Pro Forma Condensed Statements of Operations.
F-6
OBSIDIAN ENTERPRISES, INC. AND NET PERCEPTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
ASSUMING NO CONTINUATION OF NET PERCEPTIONS' BUSINESS
FOR THE YEAR ENDED OCTOBER 31, 2003
(in thousands, except per share data)
Historical
Obsidian Net Pro Forma Pro Forma
Enterprises Perceptions Adjustments Combined
-------------- -------------- --------------- -----------------
October 31, September 30,
2003 2003
-------------- --------------
Net Sales $ 59,295 $ 2,860 $ (2,860) (B) $ 59,295
Cost of Sales 51,736 1,000 (1,000) (B) 51,736
-------- -------- --------- --------
Gross Profit 7,559 1,860 (1,860) 7,559
Selling, general & administrative expenses (8,537) (9,222) (701) (A) (13,664)
6,971 (B)
(2,175) (C)
Loss on asset impairment - (6,546) - (6,546)
-------- -------- --------- --------
Loss from operations (978) (13,908) 2,235 (12,651)
Other income (expense):
Interest expense (3,547) (24) 24 (B) (3,547)
Interest income 17 2,718 (2,474) (B) 261
Other income (expense) (81) (1,412) 1,412 (B) (81)
-------- -------- --------- --------
Loss before income taxes from
continuing operations (4,589) (12,626) 1,197 (16,018)
Income tax benefit from continuing operations 937 - - 937
Minority interest (172) - - (172)
-------- -------- --------- --------
Loss from continuing operations $ (3,824) $(12,626) $ 1,197 $ (15,253)
========= ========= ======== ===========
Loss per share from continuing operations
Basic and diluted (D) $ (5.87) $ (0.46) $ - $ (10.01)
Weighted average common and common equivalent
shares outstanding
Basic and diluted (D) 720 27,605 - 1,564
Pro Forma (loss) per share from continuing
operations after conversion of Series C and D
preferred shares
Basic and diluted (E) $ (1.47) $ - $ - $ (4.22)
Pro Forma weighted average common and common
equivalent shares outstanding (E) 2,866 - - 3,710
See F-8 for Notes to Unaudited Pro Forma Condensed Statement of Operations.
F-7
OBSIDIAN ENTERPRISES, INC. AND NET PERCEPTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2003
(in thousands, except per share data)
(A) Represents Net Perceptions' estimate for payment of bonuses and
severance pay for Net Perceptions' current employees and officers,
based on the amended proxy statement filed by Net Perceptions on
January 16, 2004.
(B) Represents removal of Net Perceptions' operating activity under the
option that Obsidian Enterprises would not operate the business of Net
Perceptions on an ongoing basis. Accordingly, all operating activity
with the exception of costs associated with ongoing litigation, wind
down and interest income that is assumed to be related to the Net
Perceptions investment portfolio have been eliminated. In addition,
the restructuring charges Net Perceptions incurred during the twelve
months ended September 30, 2003 are also assumed to be incurred,
regardless of whether Net Perceptions continues.
(C) Represents Net Perceptions' estimate of costs to be incurred to settle
on-going litigation and estimate of unanticipated costs, as described
in its recent proxy statement filed on January 16, 2004. Costs
amounting to $750 relate to an insurance deductible for the
stockholder class action lawsuit filed on October 29, 2003 and a
contingency amount of $500 for unanticipated costs. In addition,
should the Net Perceptions' business not continue, an estimated $1,425
of additional costs are anticipated, related to legal and accounting
costs associated with the wind-down of operations and legal costs
associated with the lawsuit against Net Perceptions regarding their
initial public offering.
(D) Loss per share, basic and diluted, and weighted average common and
common equivalent shares outstanding for Obsidian Enterprises'
historical amounts have been adjusted for the 1 to 50 reverse stock
split and the conversion of Series C and Series D preferred shares.
(E) Pro forma loss per share, basic and diluted, and pro forma weighted
average common and common equivalent shares outstanding have been
calculated as follows:
F-8
OBSIDIAN ENTERPRISES, INC. AND NET PERCEPTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2003 AND
(in thousands, except per share data)
Assuming Continuation of Net Perceptions Business
Year ended October 31, 2003
---------------------------
Pro Forma
Historical Combined
---------- ----------
Loss from continuing operations $(3,824) $ (17,901)
Change in fair value of mandatory redeemable
preferred stock (403) (403)
--------- ---------
Loss attributable to common shareholders from continuing
operations $(4,227) $ (18,304)
Weighted average common and common equivalent
shares outstanding 720 720
Issuance of Obsidian Enterprises common shares
to Net Perceptions - 844
--------- ---------
Pro forma weighted average existing common
shares outstanding 720 1,564
Pro forma loss per share from continuing operations $(5.87) $(11.70)
======= ========
Conversion of weighted average outstanding
Series C preferred stock to common stock at a
rate of .4 shares to 1 share 1,748 1,748
Conversion of weighted average shares
outstanding Series D preferred stock to common
stock at a rate of 3.50 shares to 1 share 398 398
--------- ---------
Pro forma weighted average common shares
outstanding resulting from conversion of Series
C and D preferred shares to common shares 2,146 2,146
Pro forma weighted average existing common
shares outstanding 720 1,564
--------- ---------
Total pro forma weighted average common and
common equivalent shares outstanding after
conversion of Series C and D preferred shares 2,866 3,710
====== =====
Pro forma loss per share from continuing operations
after conversion of Series C and D preferred stock,
basic and diluted $ (1.47) $(4.93)
======== =======
F-9
Assuming No Continuation of Net Perceptions Business
Year ended October 31, 2003
---------------------------
Pro Forma
Historical Combined
---------- ---------
Loss from continuing operations $(3,824) $(15,253)
Change in fair value of mandatory redeemable
preferred stock (403) (403)
--------- ---------
Loss attributable to common shareholders from continuing
operations $(4,277) $(15,656)
Weighted average common and common equivalent
shares outstanding 720 720
Issuance of Obsidian Enterprises common shares
to Net Perceptions - 844
--------- ---------
Pro forma weighted average existing common
shares outstanding 720 1,564
Pro forma loss per share from continuing operations $(5.87) $(10.01)
======= ========
Conversion of weighted average outstanding
Series C preferred stock to common stock at a
rate of .4 shares to 1 share 1,748 1,748
Conversion of weighted average shares
outstanding Series D preferred stock to common
stock at a rate of 3.50 shares to 1 share 398 398
--------- ---------
Pro forma weighted average common shares
outstanding resulting from conversion of Series
C and D preferred shares to common shares 2,146 2,146
Pro forma weighted average existing common
shares outstanding 720 1,564
--------- ---------
Total pro forma weighted average common and
common equivalent shares outstanding after
conversion of Series C and D preferred shares 2,866 3,710
===== =====
Pro forma loss per share from continuing operations $ (1.47) $(4.22)
======== =======
F-10
ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS OF OBSIDIAN ENTERPRISES
The name, current principal occupation or employment and material
occupations, positions, offices or employment for the past five years of each
director and executive officer of Obsidian Enterprises are set forth below. The
business address of each director and officer is 111 Monument Circle, Suite
4800, Indianapolis, Indiana 46204. None of the directors and officers of
Obsidian Enterprises listed below has, during the past five years, (i) been
involved in a criminal proceeding or (ii) been a party to any judicial or
administrative proceeding that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, U.S. federal or state securities laws, or a finding or any violation
of U.S. federal or state securities laws. All directors and officers listed
below are citizens of the United States. Directors are identified by an
asterisk.
----------------------------- -------------- -----------------------------------------------------------------------
NAME AGE BUSINESS EXPERIENCE AND SERVICE AS A DIRECTOR
----------------------------- -------------- -----------------------------------------------------------------------
Timothy S. Durham* 41 Mr. Durham has served as the Chief Executive Officer and Chairman of
the Board and as a director of Obsidian Enterprises since June 2001.
He has served as a Managing Member and Chief Executive Officer of
Obsidian Capital Company LLC, which is the general partner of
Obsidian Capital Partners LP, since April 2000. Beginning in 1998,
Mr. Durham founded and maintained a controlling interest in several
investment funds, including Durham Capital Corporation, Durham
Hitchcock Whitesell and Company LLC, and Durham Whitesell &
Associates LLC. From 1991 to 1998, Mr. Durham served in various
capacities at Carpenter Industries, Inc., including as Vice Chairman,
President and Chief Executive Officer. Mr. Durham also serves as a
director of National Lampoon, Inc. Mr. Durham is Mr. Osler's
brother-in-law.
----------------------------- -------------- -----------------------------------------------------------------------
Daniel S. Laikin* 41 Mr. Laikin has served as a director of Obsidian Enterprises since
September 2001. Mr. Laikin is Chief Operating Officer and a director
of National Lampoon, Inc. He has been a Managing Member of Fourleaf
Management LLC, a management company of an investment fund that
invests in technology related entities, since 1999. Mr. Laikin
served as the Chairman of the Board of Biltmore Homes from 1993 to
1998.
----------------------------- -------------- -----------------------------------------------------------------------
D. Scott McKain* 48 Mr. McKain has been a director of Obsidian Enterprises and Vice
Chairman of the Board since September 2001. He has served as the
Chairman of McKain Performance Group since 1981. Mr. McKain also has
been the Vice Chairman of Durham Capital Corporation since 1999.
From 1983 to 1998, Mr. McKain was a broadcast journalist and
television commentator. Mr. McKain also has authored several books
and is a keynote speaker who presents high content workshops across
the nation.
----------------------------- -------------- -----------------------------------------------------------------------
Jeffrey W. Osler* 35 Mr. Osler has served as the Executive Vice President, Secretary and
Treasurer and as a director of Obsidian Enterprises since June 2001.
He also is a Managing Member of Obsidian Capital Company LLC and has
served as Senior Vice President at Durham Whitesell & Associates LLC
and Durham Capital Corporation since September 1998. Prior to that
time, Mr. Osler served as the General Manager of Hilton Head
National Golf Club. Mr. Osler is Mr. Durham's brother-in-law.
----------------------------- -------------- -----------------------------------------------------------------------
A-1
----------------------------- -------------- -----------------------------------------------------------------------
Anthony P. Schlichte 48 Mr. Schlichte has served as Executive Vice President, Corporate
Finance of Obsidian Enterprises since March 2003. Mr. Schlichte's
responsibilities at Obsidian Enterprises include securing senior
and mezzanine debt for various subsidiary and affiliated
companies, as well as identifying new acquisitions to compliment
and/or diversify existing holdings. Mr. Schlichte has more than 25
years of commercial lending experience. Past posts include vice
president and senior lending officer positions at First Indiana
Bank, Bank One, American Fletcher National Bank (now Bank One),
Indiana National Bank (now Bank One). Mr. Schlichte holds a B.S.
from Indiana University and an M.B.A. from Butler University.
----------------------------- -------------- -----------------------------------------------------------------------
John A. Schmit* 35 Mr. Schmit has been a director since July 2001. Mr. Schmit joined
Renaissance Capital Group, Inc. in 1997 and is Vice
President--Investments. Prior to joining Renaissance Capital Group,
Mr. Schmit practiced law with the law firm of Gibson, Ochsner &
Adkins in Amarillo, Texas from September 1992 to September 1994.
Between August 1994 and May 1996, Mr. Schmit attended Georgetown
University where he earned his L.L.M. in International and
Comparative Law.
----------------------------- -------------- -----------------------------------------------------------------------
Goodhue W. Smith, III* 53 Mr. Smith has been a director of Obsidian Enterprises since 1997.
Mr. Smith founded Duncan-Smith Investments, Co., an investment
banking firm in San Antonio, Texas, in 1978 and since that time has
served as its Secretary and Treasurer. Mr. Smith also is a
director of Citizens National Bank of Milam County.
----------------------------- -------------- -----------------------------------------------------------------------
Rick D. Snow 40 Mr. Snow has been Executive Vice President and Chief Financial
Officer of Obsidian Enterprises since March 2003. Mr. Snow also
serves as Chief Financial Officer for Fair Finance, a company
located in Akron, Ohio, of which Timothy S. Durham, Chairman and
C.E.O. of Obsidian Enterprises, is C.E.O. At Fair Finance, Mr. Snow
oversees the financial management of the company, including
financial reporting, tax compliance, systems implementation and
strategic planning. Mr. Snow came to Fair Finance in 2002 with
several years of experience at Grant Thornton, a national accounting
firm, and Brockman, Coats, Gedelian & Co., a regional accounting
firm, where he worked as Senior Manager to oversee business and
assurance services and business advisory services. His background
also includes extensive experience in mergers and acquisitions.
----------------------------- -------------- -----------------------------------------------------------------------
Terry G. Whitesell* 64 Mr. Whitesell has served as the President and Chief Operating
Officer and as a director of Obsidian Enterprises since June 2001.
Prior to that time he co-founded several entities with Mr. Durham,
including Obsidian Capital Company, LLC, Durham Hitchcock Whitesell
and Company LLC and Durham Whitesell & Associates LLC. Mr. Whitesell
also is a Managing Member of Obsidian Capital Company LLC. From
April 1992 until September 1998, Mr. Whitesell served as Executive
Vice President of Carpenter Industries, Inc.
----------------------------- -------------- -----------------------------------------------------------------------
A-2
ANNEX B
DISSENTERS' APPRAISAL RIGHTS
DELAWARE GENERAL CORPORATION LAW
Section 262 of the Delaware General Corporation Law states:
sec. 262 Appraisal Rights
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to sec. 228 of this title will be entitled to an appraisal
by the Court of Chancery of the fair value of the stockholder's shares of
stock under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a
nonstock corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or membership
interest of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights will be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
sec. 251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec.
263 or sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this section will be
available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote
at the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or (ii) held of record by more than 2,000 holders; and
further provided that no appraisal rights will be available for any
shares of stock of the constituent corporation surviving a merger if
the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection
(f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section will be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation
pursuant to sec. 251, 252, 254, 257, 258, 263 and 264 of this title to
accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts
in respect thereof) or depository receipts at the effective date
of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
B-1
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c.
of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned
by the parent corporation immediately prior to the merger, appraisal
rights will be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section will be available for
the shares of any class or series of its stock as a result of an
amendment to its certificate of incorporation, any merger or
consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those
set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted
for approval at a meeting of stockholders, the corporation,
not less than 20 days prior to the meeting, shall notify
each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c)
hereof that appraisal rights are available for any or all of
the shares of the constituent corporations, and will include
in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's
shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand
for appraisal of such stockholder's shares. Such demand will
be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a
separate written demand as herein provided. Within 10 days
after the effective date of such merger or consolidation,
the surviving or resulting corporation will notify each
stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec.
228 or sec. 253 of this title, then either a constituent
corporation before the effective date of the merger or
consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders
of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal
rights are available for any or all shares of such class or
series of stock of such constituent corporation, and shall
include in such notice a copy of this section. Such notice
may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholder
of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days
after the date of mailing of such notice, demand in writing
from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to
demand the appraisal of such holder's shares. If such
B-2
notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before
the effective date of the merger or consolidation notifying
each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation
or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days
prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger
or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which
the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d)
hereof and who is otherwise entitled to appraisal rights,
may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time
within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to
accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written
request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with
respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such
written statement will be mailed to the stockholder within
10 days after such stockholder's written request for such a
statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period
for delivery of demands for appraisal under subsection (d)
hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof will be made upon the surviving or
resulting corporation, which shall within 20 days after such
service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing
the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements
as to the value of their shares have not been reached by the
surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list.
The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of
such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such
notice shall also be given by one or more publications at
least one week before the day of the hearing, in a newspaper
of general circulation published in the City of Wilmington,
Delaware or such publication as the Court deems advisable.
The forms of the notices
B-3
by mail and by publication shall be approved by the Court,
and the costs thereof shall be borne by the surviving or
resulting corporation.
(g) At the hearing on such petition, the Court shall determine
the stockholders who have complied with this section and who
have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the
appraisal proceedings; and if any stockholder fails to
comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal,
the Court shall appraise the shares, determining their fair
value exclusive of any element of value arising from the
accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if
any, to be paid upon the amount determined to be the fair
value. In determining such fair value, the Court shall take
into account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving
or resulting corporation would have had to pay to borrow
money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to
trial upon the appraisal prior to the final determination of
the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or
resulting corporation pursuant to subsection (f) of this
section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such
is required, may participate fully in all proceedings until
it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon
the surrender to the corporation of the certificates
representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a
corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the
Court may order all or a portion of the expenses incurred by
any stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney's fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an
appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal
rights as provided in subsection (d) of this section shall
be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock
(except dividends or other distributions payable to
stockholders of record at a date which is prior to the
effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or
resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of
the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the
written approval of the corporation, then the right of such
stockholder to an appraisal
B-4
will cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery will be dismissed as to
any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have
been converted had they assented to the merger or
consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
B-5
OBSIDIAN ENTERPRISES, INC.
Offer to Exchange
Each Outstanding Share
of Common Stock
of
Net Perceptions, Inc.
for
Shares of Common Stock of
Obsidian Enterprises, Inc.
The Information Agent for the Offer is:
------------------------------------------------------
INNISFREE
------------------------------------------------------
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
The Exchange Agent for the Offer is:
STOCKTRANS
By Mail: By Facsimile Transmission: By Hand/Overnight Delivery:
StockTrans, Inc. (For Eligible Institutions Only) StockTrans, Inc.
Attn: Obsidian Exchange Offer (610) 649-7302 Attn: Obsidian Exchange Offer
44 West Lancaster Avenue 44 West Lancaster Avenue
Ardmore, PA 19003 Ardmore, PA 19003
Confirm Facsimile Transmission:
By Telephone Only:
(610) 649-7300
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law allows for
indemnification of any person who has been made, or threatened to be made, a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that he or she is or was serving as a director, officer, employee or agent of
the registrant or by reason of the fact that he or she is or was serving at the
request of the registrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. In certain
circumstances, indemnity may be provided against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement if the person acted in
good faith and in the manner reasonably believed by him to be in, or not opposed
to, the best interests of the registrant and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. In any proceeding by or in the right of the registrant, no
indemnification may be made if the person is found to be liable to the
corporation, unless and only to the extent the court in which the proceeding is
brought or the Delaware Court of Chancery orders such indemnification.
Section 102(b)(7) of the Delaware Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Certificate of Incorporation of Obsidian Enterprises provides that we
will, to the fullest extent permitted by the Delaware General Corporation Law,
as the same exists or may hereafter be amended, indemnify any and all persons we
have the power to indemnify under such law from and against any and all of the
expenses, liabilities or other matters referred to in or covered by such law.
Such indemnification may be provided pursuant to any Bylaw, agreement vote of
stockholders or disinterested directors or otherwise, both as to action in his
director or officer capacity and as to action in another capacity while holding
such office, will continue as to a person who has ceased to be a director,
officer, employee or agent, and will inure to the benefit of the heirs,
executors and administrators of such a person.
If a claim under the preceding paragraph is not paid in full by Obsidian
Enterprises within 30 days after a written claim has been received by us, the
claimant may at any time thereafter bring suit against us to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant will be
entitled to be paid also the expense of prosecuting such claim. It will be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to us) that the claimant has not met the standards of conduct that make
it permissible under the laws of the State of Delaware for us to indemnify the
claimant for the amount claimed, but the burden of proving such defense will be
on Obsidian Enterprises. Neither our failure (including our board of directors,
independent legal counsel, or our stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the laws of the State of Delaware nor an actual
determination by us (including our board of directors, independent legal
counsel, or our stockholders) that the claimant has not met such applicable
standard of conduct, will be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
To the fullest extent permitted by the laws of the State of Delaware as the
same exist or may hereafter be amended, a director of Obsidian Enterprises will
not be liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director.
Obsidian Enterprises has a directors and officers liability insurance
policy that will reimburse Obsidian Enterprises for any payments that it shall
make to directors and officers pursuant to law or the indemnification provisions
of its Restated Certificate of Incorporation and that will, subject to certain
exclusions contained in the policy, further pay any other costs, charges and
expenses and settlements and judgments arising from any proceeding involving any
director or officer of Obsidian Enterprises in his or her past or present
capacity as such, and for which he may be liable, except as to any liabilities
arising from acts that are deemed to be uninsurable.
II-1
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Obsidian Enterprises pursuant to the foregoing provisions, Obsidian Enterprises
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable.
The foregoing statements are specifically made subject to the detailed
provisions of the Delaware General Corporation Law and the Certificate of
Incorporation of Obsidian Enterprises.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS:
EXHIBIT NO. DESCRIPTION INCORPORATED BY REFERENCE/ATTACHED
2.1 Acquisition Agreement and Plan of Reorganization, dated Incorporated by reference to Exhibit
June 21, 2001, by and among Registrant, Danzer Industries, 2.1 to the Registrant's Report on Form
Inc., Pyramid Coach, Inc., Champion Trailer, Inc., United 8-K filed on August 15, 2001
Acquisition, Inc., U.S. Rubber Reclaiming, Inc., Obsidian
Capital Partners, L.P. and Timothy S. Durham
2.2 Memorandum of Agreement, dated October 30, 2002, between Incorporated by reference to Exhibit
Champion Trailer, Inc. and Timothy S. Durham and Terry G. 2.1 to the Registrant's Report on Form
Whitesell 8-K filed on November 6, 2002
2.3 Agreement for the Purchase and Sale of Business Assets of Incorporated by reference to Exhibit
Champion Trailer, Inc., dated January 31, 2003, among 2.2 to the Registrant's Current Report
Obsidian Enterprises, Inc., Champion Trailer, Inc. and on Form 8-K filed February 11, 2003
Champion Trailer Acquisition Company, LLC, and related
Assumption Agreement
3.1 Amended Certificate of Incorporation Attached*
3.2(a) Certificate of Designations, Preferences, Rights and Incorporated by reference to Exhibit
Limitations of Series C Preferred Stock 3.2 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
3.2(b) Amended Certificate of Designations, Preferences, Rights Attached*
and Limitations of Series C Preferred Stock
3.3 Bylaws of the Registrant (Restated Effective as of Incorporated by reference to Exhibit
September 27, 2002) 3.3 to the Registrant's Annual Report
on Form 10-K/A for the Year Ended
October 31, 2002
3.4(a) Certificate of Designations, Preferences, Rights and Incorporated by reference to Exhibit
Limitations of Series D Preferred Stock 3.4 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2002
3.4(b) Amended Certificate of Designations, Preferences, Rights Attached*
and Limitations of Series D Preferred Stock
4.1 Registration Rights Agreement, dated June 21, 2001 Incorporated by reference to Exhibit
4.1 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
4.2 Amendment and Joinder to Registration Rights Agreement, Incorporated by reference to Exhibit
dated July 27, 2001 4.2 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
II-2
4.3 8.00% Convertible Debenture Issued by Registrant on July Incorporated by reference to Exhibit 2
19, 2001 to HSBC Global Custody Nominee Due July 19, 2008 to Schedule 13D filed September 20,
2001 by Russell Cleveland, Renaissance
Capital Group, Inc.
4.4 8.00% Convertible Debenture Issued by Registrant on July Incorporated by reference to Exhibit 3
19, 2001 to Renaissance US Growth & Income Trust PLC Due to Schedule 13D filed September 20,
July 19, 2008 2001 by Russell Cleveland, Renaissance
Capital Group, Inc.
4.5 Convertible Loan Agreement, dated July 19, 2001, Among Incorporated by reference to Exhibit
Registrant, BFSUS Special Opportunities Trust PLC, 4.5 to the Registrant's Annual Report
Renaissance US Growth & Income Trust PLC and Renaissance on Form 10-K for the Year Ended
Capital Group, Inc. October 31, 2001
5.1 Legal Opinion of Barnes & Thornburg LLP Attached
8.1 Tax Opinion of Barnes & Thornburg LLP Attached
10.1 2001 Long Term Incentive Plan Incorporated by reference to Appendix
E to the Registrant's Proxy Statement
filed on September 18, 2001
10.2 Asset Purchase Agreement, dated April 20, 2000, between Incorporated by reference to Exhibit
Champion Trailer Company, L.P. and Harold Peck, Mary Peck, 10.2 to the Registrant's Annual Report
Champion Trailer, Ltd. (f/k/a) Champion Trailer, LLC, on Form 10-K for the Year Ended
Champion Collision, Ltd. (f/k/a) Champion Collision, October 31, 2001
L.L.C. and Brandonson, Inc.
10.3 Stock and Asset Purchase Agreement, dated December 20, Incorporated by reference to Exhibit
1999, among Timothy S. Durham, Terry Whitesell, DW 10.3 to the Registrant's Annual Report
Leasing, LLC, Bobby Michael, Becky Michael, Jennifer on Form 10-K for the Year Ended
George, Pyramid Coach, Inc., Precision Coach, Inc., October 31, 2001
American Coach Works, Inc., Transport Trailer Service,
Inc., Rent-A-Box, Inc. and LBJ, LLC
10.4 Assumption Agreement and Second Amendment to Credit Incorporated by reference to Exhibit
Agreement, dated June 18, 2001, among Bank One, Indiana, 10.4 to the Registrant's Annual Report
N.A., Champion Trailer, Inc. and Champion Trailer Company, on Form 10-K for the Year Ended
L.P. October 31, 2001
10.5 Credit Agreement, dated December 29, 2000, between USRR Incorporated by reference to Exhibit
Acquisition Corp. and Bank One, Indiana, N.A. 10.5 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
10.6 First Amendment to Credit Agreement, dated June 20, 2001, Incorporated by reference to Exhibit
between U.S. Rubber Reclaiming, Inc. and Bank One, 10.6 to the Registrant's Annual Report
Indiana, N.A. on Form 10-K for the Year Ended
October 31, 2001
10.7 Note Purchase Agreement, dated May 2, 2000, between Incorporated by reference to Exhibit
Champion Trailer, Inc. and Markpoint Equity Growth Fund, 10.7 to the Registrant's Annual Report
J.V., and Related Documents on Form 10-K for the Year Ended
October 31, 2001
10.8 Warrant, dated May 2, 2000, from Champion Trailer Company, Incorporated by reference to Exhibit
LP to Markpoint Equity Growth Fund, J.V. 10.8 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
II-3
10.9 Management Agreement, dated December 29, 2000, between Incorporated by reference to Exhibit
Obsidian Capital Company, LLC and USRR Acquisition Corp. 10.9 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
10.10 Management Agreement, dated June 16, 2001, between Incorporated by reference to Exhibit
Pyramid, Inc. and D.W. Leasing 10.10 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.11 Promissory Note, dated June 1, 2001, from Obsidian Capital Incorporated by reference to Exhibit
Company, LLC to U.S. Rubber Reclaiming, Inc. 10.11 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.12 Promissory Note, dated June 11, 2001, from Champion Incorporated by reference to Exhibit
Trailer, Inc. to Obsidian Capital Partners, LP 10.12 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.13 Purchase Agreement, dated June 5, 2001, between United Incorporated by reference to Exhibit
Expressline, Inc., United Acquisition, Inc., J.J.M. 10.13 to the Registrant's Annual
Incorporated and the Shareholders of United Expressline, Report on Form 10-K for the Year Ended
Inc. and J.J.M. Incorporated October 31, 2001
10.14 Promissory Note, dated July 27, 2001, from United Incorporated by reference to Exhibit
Acquisition, Inc. to United Expressline, Inc. 10.14 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.15 Credit Agreement, dated July 27, 2001, between United Incorporated by reference to Exhibit
Acquisition, Inc. and First Indiana Bank 10.15 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.16 Loan and Security Agreement, dated January 21, 2000, Incorporated by reference to Exhibit
between Danzer Industries, Inc. and Banc of America 10.16 to the Registrant's Annual
Commercial Finance Corp. Report on Form 10-K for the Year Ended
October 31, 2001
10.17 Warrant, dated August 1997, by Danzer Corp. to Incorporated by reference to Exhibit
Duncan-Smith Co. and Letter Agreement, dated June 21, 10.17 to the Registrant's Annual
2001, between Danzer Corp. and Duncan-Smith Co. Report on Form 10-K for the Year Ended
October 31, 2001
10.18 Stock Purchase Agreement, dated December 29, 2000, between Incorporated by reference to Exhibit
USRR Acquisition Corp. and SerVaas, Inc. 10.18 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.19 Subordinated Secured Promissory Note, dated December 29, Incorporated by reference to Exhibit
2000, from USRR Acquisition Corp. to SerVaas, Inc. 10.19 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.20 Supply and Consignment Agreement, dated December 29, 2000, Incorporated by reference to Exhibit
between U.S.R.R. Acquisition and SerVaas, Inc. 10.20 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.21 Form of Installment Loan from Edgar County Bank & Trust Incorporated by reference to Exhibit
Co. to DW Leasing Company, LLC, Related Documents and 10.21 to the Registrant's Annual
Schedule Identifying Material Details Report on Form 10-K for the Year Ended
October 31, 2001
II-4
10.22 Loan Agreement, dated December 10, 1999, between Old Incorporated by reference to Exhibit
National Bank and DW Leasing Company, LLC, and Related 10.22 to the Registrant's Annual
Documents Report on Form 10-K for the Year Ended
October 31, 2001
10.23 Form of Promissory Note from DW Leasing Company, LLC, to Incorporated by reference to Exhibit
Former Shareholders of Pyramid Coach, Inc., Related 10.23 to the Registrant's Annual
Security Agreement, and Schedule Identifying Material Report on Form 10-K for the Year Ended
Details October 31, 2001
10.24 Form of Promissory Note from DW Leasing Company, LLC to Incorporated by reference to Exhibit
Star Financial Bank, Related Documents and Schedule 10.24 to the Registrant's Annual
Identifying Material Details Report on Form 10-K for the Year Ended
October 31, 2001
10.25 Form of Lock-Up Agreement, dated July 19, 2001, and Incorporated by reference to Exhibit
Schedule Identifying Material Details 10.25 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.26 Master Lease Agreement, dated May 17, 2000, between Old Incorporated by reference to Exhibit
National Bank and DW Leasing Company, LLC, and Related 10.26 to the Registrant's Annual
Documents Report on Form 10-K for the Year Ended
October 31, 2001
10.27 Loan Agreement, dated June 1, 2000, between DW Leasing Incorporated by reference to Exhibit
Company LLC and Regions Bank and Security Agreement 10.27 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.28 Business Loan Agreement (Asset Based), dated August 15, Incorporated by reference to Exhibit
2001, between Danzer Industries, Inc. and Bank of America, 10.28 to the Registrant's Annual
N.A. Report on Form 10-K for the Year Ended
October 31, 2001
10.29 1999 Stock Option Plan Incorporated by reference to Exhibit
10.29 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.30 Amendment to Acquisition Agreement and Plan of Incorporated by reference to Exhibit
Reorganization, dated December 28, 2001, between 10.30 to the Registrant's Annual
Registrant and Obsidian Leasing Company, Inc. Report on Form 10-K for the Year Ended
October 31, 2001
10.31 Agreement and Plan of Reorganization and Corporate Incorporated by reference to Exhibit
Separation, dated December 28, 2001, between DW Leasing 10.31 to the Registrant's Annual
LLC and Obsidian Leasing Company, Inc. Report on Form 10-K for the Year Ended
October 31, 2001
10.32 Assignment and Assumption Agreement, dated February 19, Incorporated by reference to Exhibit
2002, between Champion Trailer, Inc. and DW Leasing, LLC 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.33 Assignment and Assumption Agreement, dated February 20, Incorporated by reference to Exhibit
2002, between DW Leasing, LLC and Fair Holdings, Inc. 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
II-5
10.34 Agreement to Purchase Subordinated Secured Promissory Note Incorporated by reference to Exhibit
and Supply and Consignment Agreement, dated February 26, 10.3 to the Registrant's Quarterly
2002, among SerVaas, Inc., the Beurt SerVaas Revocable Report on Form 10-Q for the Quarter
Trust, U.S. Rubber Reclaiming, Inc., Obsidian Enterprises, Ended April 30, 2002
Inc. and DC Investments, LLC
10.35 Replacement Promissory Note, dated February 26, 2002, from Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to Fair Holdings, Inc. in the 10.35 to the Registrant's Annual
principal amount of $700,000 due March 1, 2007 Report on Form 10-K/A or the Year
Ended October 31, 2002
10.36 Promissory Note from Obsidian Enterprises, Inc. in favor Incorporated by reference to Exhibit
of Fair Holdings, Inc. in the principal amount of $570,000 10.5 to the Registrant's Quarterly
due February 1, 2007 Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.37 Subscription Agreement of Fair Holdings, Inc. for 186,324 Incorporated by reference to Exhibit
shares of Series C Preferred Stock 10.6 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.38 Subscription Agreement of Obsidian Capital Partners, LP Incorporated by reference to Exhibit
for 402,906 shares of Series C Preferred Stock 10.7 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.39 Second Amendment to Credit Agreement, dated August 28, Incorporated by reference to Exhibit
2002, between United Expressline, Inc. and First Indiana 10.1 to the Registrant's Quarterly
Bank, N.A. Report on Form 10-Q filed for the
Quarter Ended July 31, 2002
10.40 Promissory Note, dated January 17, 2002, from DW Leasing Incorporated by reference to Exhibit
Company, LLC, to Fair Holdings, Inc. 10.40 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.41 Promissory Note, dated September 3, 2002, from Obsidian Incorporated by reference to Exhibit
Enterprises, Inc., to Fair Holdings, Inc. 10.41 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.42 Promissory Note, dated January 9, 2002, from Obsidian Incorporated by reference to Exhibit
Enterprises, Inc. to Fair Holdings, Inc. 10.42 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.43 Credit Agreement, dated October 31, 2002, between Obsidian Incorporated by reference to Exhibit
Leasing Company, Inc. and Old National Bank, N.A. and 10.43 to the Registrant's Annual
Related Documents Report on Form 10-K/A for the Year
Ended October 31, 2002
10.44 Stock Purchase Agreement, dated July 27, 2001, between Incorporated by reference to Exhibit A
Danzer Corporation and The Huntington Capital Investment to the Schedule 13G filed by The
Company. Huntington Capital Investment Company on
August 6, 2001.
10.45 Loan Agreement, dated September 24, 2002, between Edgar Incorporated by reference to Exhibit
County Bank & Trust Co. and Obsidian Leasing Company, Inc. 10.45 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
II-6
10.46 Term Promissory Note, dated September 26, 2002, from Incorporated by reference to Exhibit
Obsidian Leasing Company, Inc. to Fair Holdings, Inc. 10.46 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.47 Note Purchase Agreement, dated July 27, 2001, between Incorporated by reference to Exhibit
United Acquisition, Inc. and The Huntington Capital 10.47 to the Registrant's Annual
Investment Company. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.48 Limited Forbearance Agreement, dated October 14, 2002, Incorporated by reference to Exhibit
among Danzer Industries, Inc., Obsidian Enterprises, Inc. 10.48 to the Registrant's Annual
and Bank of America, N.A. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.49 Revolving Credit, Term Loan and Security Agreement, dated Incorporated by reference to Exhibit
October 25, 2002, between PNC Bank, N.A. and U.S. Rubber 10.49 to the Registrant's Annual
Reclaiming, Inc. and Related Documents Report on Form 10-K/A for the Year
Ended October 31, 2002
10.50 Term Promissory Note, dated October 31, 2002, from DW Incorporated by reference to Exhibit
Leasing Company, LLC to Fair Holdings, Inc. 10.50 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.51 Rental Agreement, dated October 1, 2002, between DW Incorporated by reference to Exhibit
Trailer, LLC and Danzer Industries, Inc. 10.51 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.52 Commercial Equipment Lease Agreement, dated August 1, Incorporated by reference to Exhibit
2002, between Fair Holdings, Inc. and Danzer Industries, 10.52 to the Registrant's Annual
Inc. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.53 Commercial Equipment Lease Agreement, dated August 1, Incorporated by reference to Exhibit
2002, between Fair Holdings, Inc. and Obsidian 10.53 to the Registrant's Annual
Enterprises, Inc. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.54 Promissory Term Note, dated November 18, 2002, from Incorporated by reference to Exhibit
Obsidian Leasing Company, Inc. to Fair Holdings, Inc. 10.1 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.55 Third Amendment to Credit Agreement, dated December 26, Incorporated by reference to Exhibit
2002, between United Expressline, Inc. and First Indiana 10.2 to the Registrant's Quarterly
Bank, N.A. Report for the Quarter Ended January
31, 2003
10.56 Credit Agreement, dated December 18, 2002, between DC Incorporated by reference to Exhibit
Investments Leasing, LLC and First Indiana Bank, N.A. and 10.3 to the Registrant's Quarterly
Related Documents. Report for the Quarter Ended January
31, 2003
10.57 Term Promissory Note, dated January 3, 2003, from Obsidian Incorporated by reference to Exhibit
Leasing, Inc. to Fair Holdings, Inc. 10.4 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.58 Stock Purchase Warrant, dated January 24, 2003, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to Frost National Bank, 10.5 to the Registrant's Quarterly
Custodian, FBO Renaissance US Growth Investment Trust PLC Report for the Quarter Ended January
Trust No. WOO740100 31, 2003
II-7
10.59 Stock Purchase Warrant, dated January 24, 2003, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to HSBC Global Custody Nominee 10.6 to the Registrant's Quarterly
(UK) Limited, FBO BFS US Special Opportunities Trust PLC Report for the Quarter Ended January
31, 2003
10.60 Second Limited Forbearance Agreement, dated February 28, Incorporated by reference to Exhibit
2003, between Danzer Industries, Inc. and Obsidian 10.7 to the Registrant's Quarterly
Enterprises, Inc. Report for the Quarter Ended January
31, 2003
10.61 Form of Letter Amending Stock Options and Schedule Incorporated by reference to Exhibit
Identifying Material Details 10.8 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.62 First Amendment to Promissory Note, dated January 2, 2003 Incorporated by reference to Exhibit
10.9 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.63 Sublease, effective as of January 1, 2003, between Fair Incorporated by reference to Exhibit
Holdings, Inc. and Obsidian Enterprises, Inc. 10.10 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.64 Commercial Equipment Lease Agreement, commencing November Incorporated by reference to Exhibit
20, 2002, between Fair Holdings, Inc. and United 10.11 to the Registrant's Quarterly
Expressline, Inc. Report for the Quarter Ended January
31, 2003
10.65 Assignment Agreement, dated May 12, 2003, between Obsidian Incorporated by reference to Exhibit
Enterprises, Inc. and Fair Holdings, Inc. 10.1 to the Registrant's Quarterly
Report for the Quarter Ended April 30,
2003
10.66 Assignment of Note and Other Loan Documents, dated March Incorporated by reference to Exhibit
28, 2003, between Bank of America, N.A. and Fair Holdings, 10.2 to the Registrant's Quarterly
Inc. Report for the Quarter Ended April 30,
2003
10.67 First Amendment to Business Loan Agreement and Promissory Incorporated by reference to Exhibit
Note (Line of Credit), dated March 28, 2003, between 10.3 to the Registrant's Quarterly
Danzer Industries, Inc. and Fair Holdings, Inc. Report for the Quarter Ended April 30,
2003
10.68 Second Amendment to Promissory Note (Line of Credit), Incorporated by reference to Exhibit
dated April 1, 2003, between Obsidian Enterprises, Inc. 10.4 to the Registrant's Quarterly
and Fair Holdings, Inc. Report for the Quarter Ended April 30,
2003
10.69 Employment Agreement, dated April 30, 2003, between Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. and Rick D. Snow 10.1 to the Registrant's Quarterly
Report for the Quarter ended July 31,
2003
10.70 Third Amendment to Promissory Note (Line of Credit), dated Incorporated by reference to Exhibit
February 2, 2004, between Obsidian Enterprises, Inc. and 10.70 to the Registrant's Annual
Fair Holdings, Inc. Report for the Year Ended October 31,
2003
10.71 Term Promissory Note, dated September 19, 2003, from DC Incorporated by reference to Exhibit
Investments Leasing, LLC to Fair Holdings, Inc. 10.71 to the Registrant's Annual
Report for the Year Ended October 31,
2003
II-8
10.72 Promissory Note, dated August 31, 2003, from DC Incorporated by reference to Exhibit
Investments, Inc. to Fair Holdings, Inc. 10.72 to the Registrant's Annual
Report for the Year Ended October 31,
2003
10.73 Second Amendment to Revolver Promissory Note, dated Incorporated by reference to Exhibit
September 30, 2003, between Danzer Industries, Inc. and 10.73 to the Registrant's Annual
Fair Holdings, Inc. Report for the Year Ended October 31,
2003
10.74 Stock Purchase Warrant, dated February 9, 2004, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to HSBC Global Custody Nominee 10.74 to the Registrant's Annual
(UK) Limited, FBO BFS US Special Opportunities Trust PLC Report for the Year Ended October 31,
2003
10.75 Stock Purchase Warrant, dated February 9, 2004, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to Frost National Bank, 10.75 to the Registrant's Annual
Custodian, FBO Renaissance US Growth Investment Trust PLC, Report for the Year Ended October 31,
Trust No. W00740100 2003
10.76 Fourth Amendment to Promissory Note (Line of Credit), dated Attached
March 10, 2004, between Obsidian Enterprises, Inc. and
Fair Holdings, Inc.
21 List of Subsidiaries Incorporated by reference to Exhibit
21 to the Registrant's Annual Report
on Form 10-K/A for the year ended
October 31, 2002
23.1 Consent of McGladrey & Pullen, LLP Attached
23.2 Consent of Barnes & Thornburg LLP (included in Attached
Exhibits 5.1 and 8.1)
24 Power of Attorney Attached*
99.1 Letter of Transmittal Attached
99.2 Exchange Agent Agreement Attached*
99.3 Information Agent Agreement Attached*
99.4 Notice of Guaranteed Delivery Attached
99.5 Form of Letter to Brokers, Dealers, etc. Attached
99.6 Form of Letter to Clients Attached
99.7 Strategic Advisor Agreement Attached
99.8 Dealer Manager Agreement Attached
-------------------------
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(A)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which
II-9
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(B) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(C) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of
this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(D) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration
statement when it became effective.
(E) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(F) That every prospectus: (i) that is filed pursuant to paragraph (E)
immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, or
the Securities Act, the registrant has duly caused Amendment No. 2 to this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Indianapolis, State of Indiana, on March 10,
2004.
OBSIDIAN ENTERPRISES, INC.
By:/s/ Timothy S. Durham
---------------------------------
Timothy S. Durham, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, Amendment No. 1 to this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
(1) Principal Executive Officer
/s/ Timothy S. Durham
------------------------------- Chairman and Chief Executive
Timothy S. Durham Officer March 10, 2004
(2) Principal Financial Officer &
Principal Accounting Officer
/s/ Rick D. Snow
------------------------------- Executive Vice President &
Rick D. Snow Chief Financial Officer March 10, 2004
(3) Majority of the Board of Directors
/s/ Timothy S. Durham
-------------------------------
Timothy S. Durham Director March 10, 2004
* /s/ Timothy S. Durham
-------------------------------
D. Scott McKain Director March 10, 2004
* /s/ Timothy S. Durham
-------------------------------
John A. Schmit Director March 10, 2004
/s/ Terry G. Whitesell
-------------------------------
Terry G. Whitesell Director March 10, 2004
* /s/ Daniel S. Laikin
-------------------------------
Daniel S. Laikin Director March 10, 2004
* /s/ Timothy S. Durham
-------------------------------
Jeffrey W. Osler Director March 10, 2004
* /s/ Goodhue W. Smith, III
-------------------------------
Goodhue W. Smith, III Director March 10, 2004
*By /s/ Timothy S. Durham
-------------------------------
Timothy S. Durham,
Attorney in Fact
II-11
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION INCORPORATED BY REFERENCE/ATTACHED
2.1 Acquisition Agreement and Plan of Reorganization, dated Incorporated by reference to Exhibit
June 21, 2001, by and among Registrant, Danzer Industries, 2.1 to the Registrant's Report on Form
Inc., Pyramid Coach, Inc., Champion Trailer, Inc., United 8-K filed on August 15, 2001
Acquisition, Inc., U.S. Rubber Reclaiming, Inc., Obsidian
Capital Partners, L.P. and Timothy S. Durham
2.2 Memorandum of Agreement, dated October 30, 2002, between Incorporated by reference to Exhibit
Champion Trailer, Inc. and Timothy S. Durham and Terry G. 2.1 to the Registrant's Report on Form
Whitesell 8-K filed on November 6, 2002
2.3 Agreement for the Purchase and Sale of Business Assets of Incorporated by reference to Exhibit
Champion Trailer, Inc., dated January 31, 2003, among 2.2 to the Registrant's Current Report
Obsidian Enterprises, Inc., Champion Trailer, Inc. and on Form 8-K filed February 11, 2003
Champion Trailer Acquisition Company, LLC, and related
Assumption Agreement
3.1 Amended Certificate of Incorporation Attached*
3.2(a) Certificate of Designations, Preferences, Rights and Incorporated by reference to Exhibit
Limitations of Series C Preferred Stock 3.2 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
3.2(b) Amended Certificate of Designations, Preferences, Rights Attached*
and Limitations of Series C Preferred Stock
3.3 Bylaws of the Registrant (Restated Effective as of Incorporated by reference to Exhibit
September 27, 2002) 3.3 to the Registrant's Annual Report
on Form 10-K/A for the Year Ended
October 31, 2002
3.4(a) Certificate of Designations, Preferences, Rights and Incorporated by reference to Exhibit
Limitations of Series D Preferred Stock 3.4 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2002
3.4(b) Amended Certificate of Designations, Preferences, Rights Attached*
and Limitations of Series D Preferred Stock
4.1 Registration Rights Agreement, dated June 21, 2001 Incorporated by reference to Exhibit
4.1 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
4.2 Amendment and Joinder to Registration Rights Agreement, Incorporated by reference to Exhibit
dated July 27, 2001 4.2 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
4.3 8.00% Convertible Debenture Issued by Registrant on July Incorporated by reference to Exhibit 2
19, 2001 to HSBC Global Custody Nominee Due July 19, 2008 to Schedule 13D filed September 20,
2001 by Russell Cleveland, Renaissance
Capital Group, Inc.
4.4 8.00% Convertible Debenture Issued by Registrant on July Incorporated by reference to Exhibit 3
19, 2001 to Renaissance US Growth & Income Trust PLC Due to Schedule 13D filed September 20,
July 19, 2008 2001 by Russell Cleveland, Renaissance
Capital Group, Inc.
II-12
4.5 Convertible Loan Agreement, dated July 19, 2001, Among Incorporated by reference to Exhibit
Registrant, BFSUS Special Opportunities Trust PLC, 4.5 to the Registrant's Annual Report
Renaissance US Growth & Income Trust PLC and Renaissance on Form 10-K for the Year Ended
Capital Group, Inc. October 31, 2001
5.1 Legal Opinion of Barnes & Thornburg LLP Attached
8.1 Tax Opinion of Barnes & Thornburg LLP Attached
10.1 2001 Long Term Incentive Plan Incorporated by reference to Appendix
E to the Registrant's Proxy Statement
filed on September 18, 2001
10.2 Asset Purchase Agreement, dated April 20, 2000, between Incorporated by reference to Exhibit
Champion Trailer Company, L.P. and Harold Peck, Mary Peck, 10.2 to the Registrant's Annual Report
Champion Trailer, Ltd. (f/k/a) Champion Trailer, LLC, on Form 10-K for the Year Ended
Champion Collision, Ltd. (f/k/a) Champion Collision, October 31, 2001
L.L.C. and Brandonson, Inc.
10.3 Stock and Asset Purchase Agreement, dated December 20, Incorporated by reference to Exhibit
1999, among Timothy S. Durham, Terry Whitesell, DW 10.3 to the Registrant's Annual Report
Leasing, LLC, Bobby Michael, Becky Michael, Jennifer on Form 10-K for the Year Ended
George, Pyramid Coach, Inc., Precision Coach, Inc., October 31, 2001
American Coach Works, Inc., Transport Trailer Service,
Inc., Rent-A-Box, Inc. and LBJ, LLC
10.4 Assumption Agreement and Second Amendment to Credit Incorporated by reference to Exhibit
Agreement, dated June 18, 2001, among Bank One, Indiana, 10.4 to the Registrant's Annual Report
N.A., Champion Trailer, Inc. and Champion Trailer Company, on Form 10-K for the Year Ended
L.P. October 31, 2001
10.5 Credit Agreement, dated December 29, 2000, between USRR Incorporated by reference to Exhibit
Acquisition Corp. and Bank One, Indiana, N.A. 10.5 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
10.6 First Amendment to Credit Agreement, dated June 20, 2001, Incorporated by reference to Exhibit
between U.S. Rubber Reclaiming, Inc. and Bank One, 10.6 to the Registrant's Annual Report
Indiana, N.A. on Form 10-K for the Year Ended
October 31, 2001
10.7 Note Purchase Agreement, dated May 2, 2000, between Incorporated by reference to Exhibit
Champion Trailer, Inc. and Markpoint Equity Growth Fund, 10.7 to the Registrant's Annual Report
J.V., and Related Documents on Form 10-K for the Year Ended
October 31, 2001
10.8 Warrant, dated May 2, 2000, from Champion Trailer Company, Incorporated by reference to Exhibit
LP to Markpoint Equity Growth Fund, J.V. 10.8 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
10.9 Management Agreement, dated December 29, 2000, between Incorporated by reference to Exhibit
Obsidian Capital Company, LLC and USRR Acquisition Corp. 10.9 to the Registrant's Annual Report
on Form 10-K for the Year Ended
October 31, 2001
10.10 Management Agreement, dated June 16, 2001, between Incorporated by reference to Exhibit
Pyramid, Inc. and D.W. Leasing 10.10 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
II-13
10.11 Promissory Note, dated June 1, 2001, from Obsidian Capital Incorporated by reference to Exhibit
Company, LLC to U.S. Rubber Reclaiming, Inc. 10.11 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.12 Promissory Note, dated June 11, 2001, from Champion Incorporated by reference to Exhibit
Trailer, Inc. to Obsidian Capital Partners, LP 10.12 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.13 Purchase Agreement, dated June 5, 2001, between United Incorporated by reference to Exhibit
Expressline, Inc., United Acquisition, Inc., J.J.M. 10.13 to the Registrant's Annual
Incorporated and the Shareholders of United Expressline, Report on Form 10-K for the Year Ended
Inc. and J.J.M. Incorporated October 31, 2001
10.14 Promissory Note, dated July 27, 2001, from United Incorporated by reference to Exhibit
Acquisition, Inc. to United Expressline, Inc. 10.14 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.15 Credit Agreement, dated July 27, 2001, between United Incorporated by reference to Exhibit
Acquisition, Inc. and First Indiana Bank 10.15 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.16 Loan and Security Agreement, dated January 21, 2000, Incorporated by reference to Exhibit
between Danzer Industries, Inc. and Banc of America 10.16 to the Registrant's Annual
Commercial Finance Corp. Report on Form 10-K for the Year Ended
October 31, 2001
10.17 Warrant, dated August 1997, by Danzer Corp. to Incorporated by reference to Exhibit
Duncan-Smith Co. and Letter Agreement, dated June 21, 10.17 to the Registrant's Annual
2001, between Danzer Corp. and Duncan-Smith Co. Report on Form 10-K for the Year Ended
October 31, 2001
10.18 Stock Purchase Agreement, dated December 29, 2000, between Incorporated by reference to Exhibit
USRR Acquisition Corp. and SerVaas, Inc. 10.18 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.19 Subordinated Secured Promissory Note, dated December 29, Incorporated by reference to Exhibit
2000, from USRR Acquisition Corp. to SerVaas, Inc. 10.19 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.20 Supply and Consignment Agreement, dated December 29, 2000, Incorporated by reference to Exhibit
between U.S.R.R. Acquisition and SerVaas, Inc. 10.20 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.21 Form of Installment Loan from Edgar County Bank & Trust Incorporated by reference to Exhibit
Co. to DW Leasing Company, LLC, Related Documents and 10.21 to the Registrant's Annual
Schedule Identifying Material Details Report on Form 10-K for the Year Ended
October 31, 2001
10.22 Loan Agreement, dated December 10, 1999, between Old Incorporated by reference to Exhibit
National Bank and DW Leasing Company, LLC, and Related 10.22 to the Registrant's Annual
Documents Report on Form 10-K for the Year Ended
October 31, 2001
10.23 Form of Promissory Note from DW Leasing Company, LLC, to Incorporated by reference to Exhibit
Former Shareholders of Pyramid Coach, Inc., Related 10.23 to the Registrant's Annual
Security Agreement, and Schedule Identifying Material Report on Form 10-K for the Year Ended
Details October 31, 2001
II-14
10.24 Form of Promissory Note from DW Leasing Company, LLC to Incorporated by reference to Exhibit
Star Financial Bank, Related Documents and Schedule 10.24 to the Registrant's Annual
Identifying Material Details Report on Form 10-K for the Year Ended
October 31, 2001
10.25 Form of Lock-Up Agreement, dated July 19, 2001, and Incorporated by reference to Exhibit
Schedule Identifying Material Details 10.25 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.26 Master Lease Agreement, dated May 17, 2000, between Old Incorporated by reference to Exhibit
National Bank and DW Leasing Company, LLC, and Related 10.26 to the Registrant's Annual
Documents Report on Form 10-K for the Year Ended
October 31, 2001
10.27 Loan Agreement, dated June 1, 2000, between DW Leasing Incorporated by reference to Exhibit
Company LLC and Regions Bank and Security Agreement 10.27 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.28 Business Loan Agreement (Asset Based), dated August 15, Incorporated by reference to Exhibit
2001, between Danzer Industries, Inc. and Bank of America, 10.28 to the Registrant's Annual
N.A. Report on Form 10-K for the Year Ended
October 31, 2001
10.29 1999 Stock Option Plan Incorporated by reference to Exhibit
10.29 to the Registrant's Annual
Report on Form 10-K for the Year Ended
October 31, 2001
10.30 Amendment to Acquisition Agreement and Plan of Incorporated by reference to Exhibit
Reorganization, dated December 28, 2001, between 10.30 to the Registrant's Annual
Registrant and Obsidian Leasing Company, Inc. Report on Form 10-K for the Year Ended
October 31, 2001
10.31 Agreement and Plan of Reorganization and Corporate Incorporated by reference to Exhibit
Separation, dated December 28, 2001, between DW Leasing 10.31 to the Registrant's Annual
LLC and Obsidian Leasing Company, Inc. Report on Form 10-K for the Year Ended
October 31, 2001
10.32 Assignment and Assumption Agreement, dated February 19, Incorporated by reference to Exhibit
2002, between Champion Trailer, Inc. and DW Leasing, LLC 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.33 Assignment and Assumption Agreement, dated February 20, Incorporated by reference to Exhibit
2002, between DW Leasing, LLC and Fair Holdings, Inc. 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.34 Agreement to Purchase Subordinated Secured Promissory Note Incorporated by reference to Exhibit
and Supply and Consignment Agreement, dated February 26, 10.3 to the Registrant's Quarterly
2002, among SerVaas, Inc., the Beurt SerVaas Revocable Report on Form 10-Q for the Quarter
Trust, U.S. Rubber Reclaiming, Inc., Obsidian Enterprises, Ended April 30, 2002
Inc. and DC Investments, LLC
10.35 Replacement Promissory Note, dated February 26, 2002, from Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to Fair Holdings, Inc. in the 10.35 to the Registrant's Annual
principal amount of $700,000 due March 1, 2007 Report on Form 10-K/A or the Year
Ended October 31, 2002
II-15
10.36 Promissory Note from Obsidian Enterprises, Inc. in favor Incorporated by reference to Exhibit
of Fair Holdings, Inc. in the principal amount of $570,000 10.5 to the Registrant's Quarterly
due February 1, 2007 Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.37 Subscription Agreement of Fair Holdings, Inc. for 186,324 Incorporated by reference to Exhibit
shares of Series C Preferred Stock 10.6 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.38 Subscription Agreement of Obsidian Capital Partners, LP Incorporated by reference to Exhibit
for 402,906 shares of Series C Preferred Stock 10.7 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter
Ended April 30, 2002
10.39 Second Amendment to Credit Agreement, dated August 28, Incorporated by reference to Exhibit
2002, between United Expressline, Inc. and First Indiana 10.1 to the Registrant's Quarterly
Bank, N.A. Report on Form 10-Q filed for the
Quarter Ended July 31, 2002
10.40 Promissory Note, dated January 17, 2002, from DW Leasing Incorporated by reference to Exhibit
Company, LLC, to Fair Holdings, Inc. 10.40 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.41 Promissory Note, dated September 3, 2002, from Obsidian Incorporated by reference to Exhibit
Enterprises, Inc., to Fair Holdings, Inc. 10.41 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.42 Promissory Note, dated January 9, 2002, from Obsidian Incorporated by reference to Exhibit
Enterprises, Inc. to Fair Holdings, Inc. 10.42 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.43 Credit Agreement, dated October 31, 2002, between Obsidian Incorporated by reference to Exhibit
Leasing Company, Inc. and Old National Bank, N.A. and 10.43 to the Registrant's Annual
Related Documents Report on Form 10-K/A for the Year
Ended October 31, 2002
10.44 Stock Purchase Agreement, dated July 27, 2001, between Incorporated by reference to Exhibit A
Danzer Corporation and The Huntington Capital Investment to the Schedule 13G filed by The
Company. Huntington Capital Investment Company on
August 6, 2001.
10.45 Loan Agreement, dated September 24, 2002, between Edgar Incorporated by reference to Exhibit
County Bank & Trust Co. and Obsidian Leasing Company, Inc. 10.45 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.46 Term Promissory Note, dated September 26, 2002, from Incorporated by reference to Exhibit
Obsidian Leasing Company, Inc. to Fair Holdings, Inc. 10.46 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.47 Note Purchase Agreement, dated July 27, 2001, between Incorporated by reference to Exhibit
United Acquisition, Inc. and The Huntington Capital 10.47 to the Registrant's Annual
Investment Company. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.48 Limited Forbearance Agreement, dated October 14, 2002, Incorporated by reference to Exhibit
among Danzer Industries, Inc., Obsidian Enterprises, Inc. 10.48 to the Registrant's Annual
and Bank of America, N.A. Report on Form 10-K/A for the Year
Ended October 31, 2002
II-16
10.49 Revolving Credit, Term Loan and Security Agreement, dated Incorporated by reference to Exhibit
October 25, 2002, between PNC Bank, N.A. and U.S. Rubber 10.49 to the Registrant's Annual
Reclaiming, Inc. and Related Documents Report on Form 10-K/A for the Year
Ended October 31, 2002
10.50 Term Promissory Note, dated October 31, 2002, from DW Incorporated by reference to Exhibit
Leasing Company, LLC to Fair Holdings, Inc. 10.50 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.51 Rental Agreement, dated October 1, 2002, between DW Incorporated by reference to Exhibit
Trailer, LLC and Danzer Industries, Inc. 10.51 to the Registrant's Annual
Report on Form 10-K/A for the Year
Ended October 31, 2002
10.52 Commercial Equipment Lease Agreement, dated August 1, Incorporated by reference to Exhibit
2002, between Fair Holdings, Inc. and Danzer Industries, 10.52 to the Registrant's Annual
Inc. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.53 Commercial Equipment Lease Agreement, dated August 1, Incorporated by reference to Exhibit
2002, between Fair Holdings, Inc. and Obsidian 10.53 to the Registrant's Annual
Enterprises, Inc. Report on Form 10-K/A for the Year
Ended October 31, 2002
10.54 Promissory Term Note, dated November 18, 2002, from Incorporated by reference to Exhibit
Obsidian Leasing Company, Inc. to Fair Holdings, Inc. 10.1 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.55 Third Amendment to Credit Agreement, dated December 26, Incorporated by reference to Exhibit
2002, between United Expressline, Inc. and First Indiana 10.2 to the Registrant's Quarterly
Bank, N.A. Report for the Quarter Ended January
31, 2003
10.56 Credit Agreement, dated December 18, 2002, between DC Incorporated by reference to Exhibit
Investments Leasing, LLC and First Indiana Bank, N.A. and 10.3 to the Registrant's Quarterly
Related Documents. Report for the Quarter Ended January
31, 2003
10.57 Term Promissory Note, dated January 3, 2003, from Obsidian Incorporated by reference to Exhibit
Leasing, Inc. to Fair Holdings, Inc. 10.4 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.58 Stock Purchase Warrant, dated January 24, 2003, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to Frost National Bank, 10.5 to the Registrant's Quarterly
Custodian, FBO Renaissance US Growth Investment Trust PLC Report for the Quarter Ended January
Trust No. WOO740100 31, 2003
10.59 Stock Purchase Warrant, dated January 24, 2003, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to HSBC Global Custody Nominee 10.6 to the Registrant's Quarterly
(UK) Limited, FBO BFS US Special Opportunities Trust PLC Report for the Quarter Ended January
31, 2003
10.60 Second Limited Forbearance Agreement, dated February 28, Incorporated by reference to Exhibit
2003, between Danzer Industries, Inc. and Obsidian 10.7 to the Registrant's Quarterly
Enterprises, Inc. Report for the Quarter Ended January
31, 2003
10.61 Form of Letter Amending Stock Options and Schedule Incorporated by reference to Exhibit
Identifying Material Details 10.8 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
II-17
10.62 First Amendment to Promissory Note, dated January 2, 2003 Incorporated by reference to Exhibit
10.9 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.63 Sublease, effective as of January 1, 2003, between Fair Incorporated by reference to Exhibit
Holdings, Inc. and Obsidian Enterprises, Inc. 10.10 to the Registrant's Quarterly
Report for the Quarter Ended January
31, 2003
10.64 Commercial Equipment Lease Agreement, commencing November Incorporated by reference to Exhibit
20, 2002, between Fair Holdings, Inc. and United 10.11 to the Registrant's Quarterly
Expressline, Inc. Report for the Quarter Ended January
31, 2003
10.65 Assignment Agreement, dated May 12, 2003, between Obsidian Incorporated by reference to Exhibit
Enterprises, Inc. and Fair Holdings, Inc. 10.1 to the Registrant's Quarterly
Report for the Quarter Ended April 30,
2003
10.66 Assignment of Note and Other Loan Documents, dated March Incorporated by reference to Exhibit
28, 2003, between Bank of America, N.A. and Fair Holdings, 10.2 to the Registrant's Quarterly
Inc. Report for the Quarter Ended April 30,
2003
10.67 First Amendment to Business Loan Agreement and Promissory Incorporated by reference to Exhibit
Note (Line of Credit), dated March 28, 2003, between 10.3 to the Registrant's Quarterly
Danzer Industries, Inc. and Fair Holdings, Inc. Report for the Quarter Ended April 30,
2003
10.68 Second Amendment to Promissory Note (Line of Credit), Incorporated by reference to Exhibit
dated April 1, 2003, between Obsidian Enterprises, Inc. 10.4 to the Registrant's Quarterly
and Fair Holdings, Inc. Report for the Quarter Ended April 30,
2003
10.69 Employment Agreement, dated April 30, 2003, between Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. and Rick D. Snow 10.1 to the Registrant's Quarterly
Report for the Quarter ended July 31,
2003
10.70 Third Amendment to Promissory Note (Line of Credit), dated Incorporated by reference to Exhibit
February 2, 2004, between Obsidian Enterprises, Inc. and 10.70 to the Registrant's Annual
Fair Holdings, Inc. Report for the Year Ended October 31,
2003
10.71 Term Promissory Note, dated September 19, 2003, from DC Incorporated by reference to Exhibit
Investments Leasing, LLC to Fair Holdings, Inc. 10.71 to the Registrant's Annual
Report for the Year Ended October 31,
2003
10.72 Promissory Note, dated August 31, 2003, from DC Incorporated by reference to Exhibit
Investments, Inc. to Fair Holdings, Inc. 10.72 to the Registrant's Annual
Report for the Year Ended October 31,
2003
10.73 Second Amendment to Revolver Promissory Note, dated Incorporated by reference to Exhibit
September 30, 2003, between Danzer Industries, Inc. and 10.73 to the Registrant's Annual
Fair Holdings, Inc. Report for the Year Ended October 31,
2003
10.74 Stock Purchase Warrant, dated February 9, 2004, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to HSBC Global Custody Nominee 10.74 to the Registrant's Annual
(UK) Limited, FBO BFS US Special Opportunities Trust PLC Report for the Year Ended October 31,
2003
II-18
10.75 Stock Purchase Warrant, dated February 9, 2004, issued by Incorporated by reference to Exhibit
Obsidian Enterprises, Inc. to Frost National Bank, 10.75 to the Registrant's Annual
Custodian, FBO Renaissance US Growth Investment Trust PLC, Report for the Year Ended October 31,
Trust No. W00740100 2003
10.76 Fourth Amendment to Promissory Note (Line of Credit), dated Attached
March 10, 2004, between Obsidian Enterprises, Inc. and
Fair Holdings, Inc.
21 List of Subsidiaries Incorporated by reference to Exhibit
21 to the Registrant's Annual Report
on Form 10-K/A for the year ended
October 31, 2002
23.1 Consent of McGladrey & Pullen, LLP Attached
23.2 Consent of Barnes & Thornburg LLP (included in Attached
Exhibits 5.1 and 8.1)
24 Power of Attorney Attached*
99.1 Letter of Transmittal Attached
99.2 Exchange Agent Agreement Attached*
99.3 Information Agent Agreement Attached*
99.4 Notice of Guaranteed Delivery Attached
99.5 Form of Letter to Brokers, Dealers, etc. Attached
99.6 Form of Letter to Clients Attached
99.7 Strategic Advisor Agreement Attached
99.8 Dealer Manager Agreement Attached
-------------------------
* Previously filed.
II-19