EXHIBIT 99.7
[LOGO OMITTED]
ACCLAIM FINANCIAL GROUP
November 12,2003
Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Re: Strategic Advisory Services
Gentlemen:
This Letter agreement ("Agreement") confirms the agreement of Obsidian
Enterprises, Inc. (the "Company") to engage Acclaim Financial Group Venture III,
LLC ("LLC" or "AFG") to provide certain services to the Company on the following
terms and conditions:
1. Nature of Services. At the direction of the Company, LLC will provide
services to the Company limited to the following items ("Services"):
A. Introductions to Net Perceptions, Inc. (the "Target Entity") regarding
a potential strategic transaction involving the
acquisition/disposition of all or substantially all the assets or
stock, a tender offer, merger and/or other business combination
Involving Net Perceptions and the Company (a "Strategic Transaction");
B. At the direction of the Company, assist in coordinating with the
various legal, accounting and other advisors to the Company with
respect to the Strategic Transaction (it being understood LLC assumes
no responsibility for the advice given or action taken by the Company
based on the advice or recommendations of such advisors); and
X. Xxxx additional services as may be reasonably requested by the Company
and agreed in writing to be provided by LLC.
The Company and LLC shall cooperate with each other to facilitate the
consummation of a Strategic Transaction on terms acceptable to the Company (in
its sole discretion). Each party shall provide accurate and reliable information
and other resources to the other as are necessary for that purpose. The Services
will be provided by LLC from such locations, and at such times, as LLC shall
reasonably determine in consultation with the Company.
The Company shall have no obligation to consummate a Strategic Transaction, on
any terms except those acceptable to it in its sole discretion. The Company may
abandon pursuit of a Strategic Transaction with the Target Entity for any reason
or for no reason without incurring liability to LLC for any fee.
LLC has agreed to provide the Services to the best of its reasonable abilities;
LLC does not guarantee a particular outcome. The Company and LLC have agreed
that any decision to proceed with a strategy, transaction or relationship with
any entity will be solely the decision of the Company. The Company will seek
separate advice, and will not rely on LLC to provide, legal, accounting, tax or
other similar advice or services.
References in this Agreement to "Resulting Entity" shall mean the surviving,
merged or consolidated entity after the effectiveness of the Strategic
Transaction.
2. Compensation. As consideration for LLC to enter into this Agreement and to
provide the Services, the Company shall compensate LLC as follows:
A. If them is a "Consummation" of the Strategic Transaction with the
Target Entity either during the term of this Agreement or during a
period of 12 months after the expiration or termination of this
Agreement:
(i) Not Excess Cash. The Company shall pay LLC upon Consummation the
greater of (i) $250,000 in cash and (ii) an amount in cash equal
to 50% of the "Net Excess Cash at Consummation." "Consummation"
shall be deemed to occur upon the completion of all the material
contemplated parts of the Strategic Transaction. For example, in
the case of merger, consummation would be deemed to occur, upon
the earlier of public announcement of consummation of the merger
or the filing of the certificate of merger with the appropriate
state authority. "Net Excess Cash at Consummation" shall be an
amount equal to: (y) Cash, Cash Equivalents and Investments of
the Target Entity as of the date of Consummation; less (z)(i)
amounts paid in cash to shareholders of the Target Entity in
connection with the Strategic Transaction; (ii) Target Entity and
Company transaction expenses associated with the Strategic
Transaction; (iii) cash severance payable to employees of the
Target Entity as a result of the Strategic Transaction; and (iv)
the implied cash value of the Company common stock (valued at the
average closing bid price for the 10 trading days prior to the
date of Consummation) paid to shareholders of the Target Entity
in connection with the Strategic Transaction.
(ii) Gross Excess Cash. The Company shall pay LLC upon Consummation an
amount in cash equal to 5% of the "Gross Excess Cash at
Consummation" (the "Gross Cash Fee"). "Gross Excess Cash at
Consummation shall be an amount equal to: (y) Cash, Cash
Equivalents and Investments of the Target Entity as of the date
of Consummation; less (z)(i) amounts paid in cash to shareholders
of the Target Entity in connection with the Strategic
Transaction; (ii) Target Entity and Company transaction expenses
associated with the Strategic Transaction; and (iii) cash
severance payable to employees of the Target Entity as a result
of the Strategic Transaction.
(iii) Warrant. The Company shall also grant to LLC a warrant
("Warrant") having a ten year term from the date of Consummation
("Expiration Date") to acquire a number of common shares of the
Company equal to the quotient of the Gross Cash Fee divided by
the average closing bid price for the common shares for the 10
trading days after the date of Consummation, at an exercise price
equal to $0.01 per share. The Warrant will contain customary
terms and provisions, including adjustments to reflect stock
splits, stock dividends and other similar capital adjustments and
piggyback registration rights.
B. If the Strategic Transaction with the Target Entity does not occur and
the Target Entity pays a break-up fee to the Company, then the Company
shall pay LLC an amount equal to 50% of the difference between; (i)
the break-up fee and any reimbursed expenses received from the Target
Entity; and (ii) the expenses incurred by the Company in connection
with the Strategic Transaction.
3. Expenses. The Company shall promptly reimburse LLC for reasonable travel and
lodging and all other reasonable out of pocket expanses ("Transaction Expenses")
incurred in connection with the Strategic Transaction through the consummation
of the Strategic Transaction, which reimbursement shall not exceed $2,500 per
month without the prior consent of the Company.
4. Indemnification. The Company shall indemnify, hold harmless and reimburse LLC
and its and their respective affiliates directors, officers, controlling
persons, employees and agents ("Indemnified Persons") to the fullest extent
lawful against any and all claims, losses, damages, liabilities, expenses,
costs, actions, joint or several, of any nature or type whatsoever ("Expenses"),
relating to or arising from the transactions contemplated by this Agreement or
any other matter whatsoever relating to or involving the Indemnified Persons in
connection with the contemplated Strategic Transaction involving the Target
Entity, except to the extent (and only to the extent) that a court of competent
jurisdiction finally determines that such Expenses arose exclusively from such
Indemnified Person's reckless or willful misconduct or from conduct prior to the
date of this Agreement. The Company shall control the defense of any matter as
to which It has an indemnification obligation hereunder and any Indemnified
Person may participate in that defense at its own expense.
5. Term. This Agreement shall terminate on November 12, 2004, and may be
terminated earlier by either party upon 30 days written notice to the other
party; provided, however, (i) Sections 2, 3 and 4 of this Agreement shall
survive any termination of this Agreement and survive until the obligations
thereunder are satisfied and completed and (ii) Sections 6 and 7 of this
Agreement shall survive any termination of this Agreement and survive until the
expiration of the applicable statute of limitations.
6. Miscellaneous. LLC is being retained by the Company to perform the Services,
not as an agent or advisor of any other person, and the Company. Engagement of
LLC will not confer on any other person not a party to this Agreement any rights
or any nature or kind whatsoever. LLC will act as an independent contractor and
any duties arising out this engagement shall be owed solely to the Company.
Neither party is a fiduciary for the other. LLC is now, and may in the future
be, engaged by other entities engaged in businesses similar to and competitive
with the Company. The Company has assessed the risks of these conflict and
potential conflicts and determined that the benefit of engaging an advisor with
relevant experience outweighs the risks of these conflicts and potential
conflicts. There are no third-party beneficiaries under this Agreement other
than Indemnified Persons. This Agreement shall be binding on and inure to the
benefit of the Company, LLC and their respective successors, assigns, heirs and
representatives. This Agreement may only be modified or amended by a written
agreement signed by both parties. This Agreement constitutes the entire
agreement between the parties and supercedes any prior written or oral
agreements or understandings between the parties hereto. LLC and the Company
agree that this Agreement shall be governed by and construed under the laws of
the State of Indiana. Any disputes relating to or arising from this Agreement by
or among the parties shall be resolved exclusively by arbitration to be
conducted exclusively in Indianapolis, Indiana in accordance with the Commercial
Rules of the American Arbitration Association. Any court of competent
jurisdiction shall be authorized to enforce the provisions of the previous
sentence and enforce the remedies imposed by such arbitration.
7. Confidential Information: Non-Circumvention. Both LLC and the Company shall
take reasonable actions to preserve the confidential nature of any information
obtained from any party during the course of this engagement. Each party
understands and acknowledges that the laws of the United States may impose
certain limits on their ability to trade public securities or disclose
information with respect to this engagement and that prior to engaging in any
securities trading activities they will consult counsel. Neither party shall
take any action that may directly or indirectly circumvent the benefits that are
intended to accrue to either party hereunder. Each party shall act in a
reasonable manner so as to preserve the goodwill and reputation of each of the
parties.
[Remainder of page intentionally blank]
* ** * * *
If the foregoing correctly sets forth our understanding, please sign below and
return an executed copy of this Agreement to LLC. We look forward to working
with you.
Regards,
ACCLAIM FINANCIAL GROUP VENTURE III, LLC
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------
Duly Authorized
Accepted and Agreed to:
OBSIDIAN ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Duly Authorized
[LOGO OMITTED]
ACCLAIM FINANCIAL GROUP
November 25, 2003
Obsidian Enterprises, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Re: Strategic Advisory Services Engagement Letters
Gentlemen:
This letter confirms that the only effective engagement letter between Obsidian
Enterprises, Inc. (the Company") and Acclaim Financial Group Venture III, LLC
("LLC") is the engagement letter, dated November 12, 2003, which was executed
and delivered by the Company and LLC on November 25, 2003 (the "November 25,
2003 Engagement Letter"). Upon execution and delivery of the November 25, 2003
Engagement Letter, all other engagement letters executed prior to the date
hereof between the Company and LLC are terminated.
If the foregoing correctly sets forth our understanding, please sign below and
return an executed copy of this Agreement to LLC. We look forward to working
with you.
Regards,
ACCLAIM FINANCIAL GROUP VENTURE III, LLC
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------
Duly Authorized
Accepted and Agreed to:
OBSIDIAN ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Duly Authorized
PRIVATE AND CONFIDENTIAL
