[Explanatory Note: The following proxy materials were previously filed by
Obsidian Enterprises, Inc. as revised preliminary proxy soliciting materials
(submission type PRER14A) and are now being filed as revised non-management
preliminary proxy soliciting materials for contested solicitations (submission
type PRRN14A).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-12
NET PERCEPTIONS, INC.
(Name of Registrant as Specified in its Charter)
OBSIDIAN ENTERPRISES, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Preliminary Copy; Subject to Completion
Dated March ___, 2004
PROXY STATEMENT
OF
OBSIDIAN ENTERPRISES, INC.
FOR THE
SPECIAL MEETING OF STOCKHOLDERS
OF
NET PERCEPTIONS, INC.
TO BE HELD ON MARCH 12, 2004
INTRODUCTION
This proxy statement is provided by Obsidian Enterprises, Inc. and not by
the board of directors of Net Perceptions, Inc.
We, Obsidian Enterprises, Inc., a Delaware corporation, are soliciting your
proxy for use in connection with the special meeting of stockholders of Net
Perceptions to be held at 10:00 a.m. Central Standard Time on March 12, 2004, at
Net Perceptions' headquarters at 7700 France Avenue South, Edina, Minnesota, and
all adjournments or postponements of the meeting. The record date for the
special meeting is January 13, 2004.
This proxy statement and the accompanying BLUE proxy card are first being
furnished to Net Perceptions stockholders on or about March ___, 2004.
At the special meeting, stockholders will consider and vote on Net
Perceptions' board of directors' proposal to approve and adopt a plan of
complete liquidation and dissolution (the "Plan of Liquidation"), which is
further described under "Questions and Answers about the Proposal and Voting
Procedures -- What is the Plan of Liquidation Proposal?" below.
We urge you to use the enclosed BLUE proxy card to vote AGAINST the Plan of
Liquidation.
We have commenced an exchange offer, as it may be amended from time to
time, to acquire all outstanding shares of Net Perceptions common stock.
Pursuant to the exchange offer, we are offering each Net Perceptions stockholder
the right to exchange each share of common stock of Net Perceptions for 1/25
share of Obsidian Enterprises common stock. If the Plan of Liquidation is
approved and adopted, one of the conditions to our exchange offer will not have
been met.
Your vote AGAINST the Plan of Liquidation proposal is not an approval of
the exchange offer. We believe that your vote AGAINST the Plan of Liquidation
proposal will tell Net Perceptions' board of directors that you believe that the
Plan of Liquidation does not maximize the value of your shares of Net
Perceptions common stock.
Your vote AGAINST the Plan of Liquidation proposal removes one important
obstacle to our acquisition of shares of Net Perceptions common stock pursuant
to the exchange offer by assuring that one condition is not breached. Other
major obstacles include the Net Perceptions Rights Agreement, or "poison pill",
which must be redeemed or deemed to be inapplicable, Section 203 of the Delaware
General Corporation Law, which we must be satisfied, in our reasonable
discretion, is inapplicable to our acquisition of Net Perceptions and the
requirement that 51% of the shares be tendered for exchange.
Your vote AGAINST the Plan of Liquidation does not guarantee that we will
complete the exchange offer. One of the conditions to our exchange offer is that
shares of Net Perceptions common stock representing at least 51% of Net
Perceptions outstanding shares of common stock on a fully diluted basis have
been validly tendered and not withdrawn. As of the close of business on February
20, 2004, the date upon which our exchange offer was set to expire, 1,117,962
shares of Net Perceptions common stock had been deposited pursuant to our
exchange offer. We decided to extend the exchange offer until March 17, 2004,
because the conditions to the exchange offer had not been met and we wished to
provide additional time within which the conditions could be met.
On December 15, 2003, we filed with the Securities and Exchange Commission
("SEC"), a Registration Statement on Form S-4 (as amended from time to time, the
"Registration Statement"), including a preliminary prospectus, and a Tender
Offer Statement on Schedule TO (as amended from time to time, the "Tender Offer
Statement"). On December 17, 2003, we filed Amendment No. 1 to our Registration
Statement. We have also filed the following amendments to our Tender Offer
Statement: Amendment No. 1 on December 17, 2003, Amendment No. 2 on December 23,
2003, Amendment No. 3 on January 21, 2004, Amendment No. 4 on February 17, 2004,
Amendment No. 5 on February 20, 2004, and Amendment No. 6 on February 27, 2004.
We are not asking you to tender your shares for exchange pursuant to these proxy
materials. We are only seeking shares for exchange by means of and pursuant to
the preliminary prospectus and the related letter of transmittal filed as an
exhibit to the Registration Statement and the Tender Offer Statement.
Please refer to the preliminary prospectus in our Registration Statement
for further details regarding the terms of the exchange offer, including the
conditions that must be met.
HELP US SEND A MESSAGE TO YOUR BOARD OF DIRECTORS. APPROVAL OF THE
LIQUIDATION PROPOSAL WILL EFFECTIVELY TERMINATE OUR EXCHANGE OFFER. WE URGE YOU
TO VOTE AGAINST OR ABSTAIN ON OUR BLUE PROXY CARD OR TO SIMPLY NOT VOTE AT ALL.
WE BELIEVE THAT THE NET PERCEPTIONS' BOARD OF DIRECTORS COULD AND SHOULD
TAKE ALL NECESSARY ACTIONS TO REMOVE IMPEDIMENTS TO THE CONSUMMATION OF OUR
PROPOSED ACQUISITION OF NET PERCEPTIONS COMMON STOCK PURSUANT TO THE EXCHANGE
OFFER SO THAT STOCKHOLDERS HAVE THE OPPORTUNITY TO TAKE ADVANTAGE OF OUR OFFER.
IF YOU BELIEVE THAT YOU (AND NOT NET PERCEPTIONS' MANAGEMENT) SHOULD HAVE
THE OPPORTUNITY TO DECIDE THE FUTURE OF YOUR COMPANY AND THAT YOU SHOULD HAVE
THE OPPORTUNITY TO CONSIDER THE EXCHANGE OFFER, WE URGE YOU TO COMPLETE, SIGN
AND RETURN THE ENCLOSED BLUE PROXY CARD AND VOTE AGAINST THE PLAN OF LIQUIDATION
PROPOSAL. OTHERWISE, ONE OF THE CONDITIONS TO OUR EXCHANGE OFFER WILL NOT BE
MET.
IF YOU HAVE ALREADY SENT A PROXY CARD TO THE NET PERCEPTIONS' DIRECTORS,
YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE PLAN OF LIQUIDATION PROPOSAL BY
SIGNING, DATING AND RETURNING THE ENCLOSED BLUE PROXY CARD. THE LATEST DATED
PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO
THE SPECIAL MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER
DATED PROXY FOR THE SPECIAL MEETING TO INNISFREE M&A INCORPORATED OR TO THE
SECRETARY OF NET PERCEPTIONS, OR BY VOTING IN PERSON AT THE SPECIAL MEETING. SEE
"QUESTIONS AND ANSWERS ABOUT THE PROPOSAL AND VOTING PROCEDURES" BELOW.
This is your opportunity to vote AGAINST the Plan of Liquidation proposal.
You can vote AGAINST or ABSTAIN on our BLUE proxy card or on Net Perceptions'
proxy card. In the alternative, if you have not yet returned any proxy cards,
you can refuse to vote at all, which will have the effect of a vote against the
Plan of Liquidation. You can also vote in person at the special meeting.
By voting AGAINST the Plan of Liquidation proposal discussed in this proxy
statement, you are not prohibited from later voting against any proposed
acquisition of Net Perceptions by Obsidian Enterprises or from deciding not to
exchange your shares in the exchange offer.
Whether or not you plan to attend the special meeting, we urge you to vote
AGAINST the Plan of Liquidation proposal described in this proxy statement by
signing and returning the accompanying BLUE proxy card in the enclosed
postage-paid envelope. Please act now to support our proposal.
The method for counting votes and the effects of abstaining from voting at
the special meeting and "broker non-votes" are described below in the section
entitled "Questions and Answers about the Proposal and Voting Procedures" below.
We urge you NOT to sign the proxy card previously sent by Net Perceptions
or ANY other proxy card sent by Net Perceptions.
If you deliver a revocation of a proxy to the Secretary of Net Perceptions,
please also send a copy of the notice of revocation to:
Obsidian Enterprises, Inc.
c/o Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
If you have questions about voting your shares of Net Perceptions common
stock or the Plan of Liquidation proposal, please call Innisfree M&A
Incorporated, toll free at (888) 750-5834.
TABLE OF CONTENTS
Questions and Answers about the Proposal and Voting Procedures....................................................5
What is the purpose of the special meeting?....................................................................5
What is the Plan of Liquidation proposal?......................................................................5
How does Obsidian Enterprises recommend I vote on the proposal?................................................5
Who is entitled to vote?.......................................................................................5
What if my shares are held in "street name" by a broker?.......................................................5
How do I vote?.................................................................................................6
What do I do if I receive a proxy card that is not BLUE?.......................................................6
Can I change my vote after I submit my proxy?..................................................................6
What if I submit a proxy but do not specify how my shares are to be voted?.....................................6
What is required for a quorum?.................................................................................6
How many votes are required to authorize and approve the Plan of Liquidation?..................................6
What if other matters are presented at the meeting?............................................................7
What will happen to the exchange offer if the Plan of Liquidation is not approved?.............................7
What will happen to the exchange offer if the Plan of Liquidation is approved?.................................7
What will happen if I have already tendered my Net Perceptions shares pursuant to the exchange offer
prior to the special meeting?.............................................................................7
Do your interests differ from mine?............................................................................7
Who can I call if I have questions?............................................................................7
Background of the Solicitation....................................................................................7
Reasons for the Solicitation.....................................................................................10
The Proposed Plan of Liquidation Involves Risks and Uncertainties.............................................11
The Plan of Liquidation does not Maximize the Value of Your Shares............................................13
Solicitation of Proxies..........................................................................................14
Information about Obsidian Enterprises, Inc......................................................................14
Information about Net Perceptions, Inc...........................................................................15
Stockholder Proposals for Net Perceptions' 2004 Annual Meeting...................................................16
Other Information................................................................................................16
Schedule I--Information Concerning Persons Who May Solicit Proxies
Schedule II--Beneficial Ownership of Shares of Net Perceptions Common Stock
THIS PROXY STATEMENT RELATES SOLELY TO THE SOLICITATION OF PROXIES WITH RESPECT
TO THE PLAN OF LIQUIDATION PROPOSAL. IT IS NEITHER A REQUEST FOR THE TENDER OF
SHARES OF NET PERCEPTIONS COMMON STOCK NOR AN OFFER OF SHARES OF OBSIDIAN
ENTERPRISES COMMON STOCK. THE EXCHANGE OFFER IS BEING MADE ONLY BY MEANS OF THE
PROSPECTUS AND LETTER OF TRANSMITTAL WHICH HAVE BEEN SEPARATELY MAILED TO NET
PERCEPTIONS STOCKHOLDERS.
QUESTIONS AND ANSWERS ABOUT THE PROPOSAL AND VOTING PROCEDURES
What is the purpose of the special meeting?
At the special meeting, stockholders will consider and vote on a proposal
to approve and adopt the Plan of Liquidation, which is further described under
"What is the Plan of Liquidation Proposal?" below.
What is the Plan of Liquidation proposal?
On October 21, 2003, Net Perceptions announced that its board of directors
had unanimously approved the Plan of Liquidation. Net Perceptions filed a
preliminary proxy statement on Schedule 14A relating to the Plan of Liquidation
with the Securities and Exchange Commission on November 4, 2003, and filed
revised preliminary proxy materials on January 6, 2004 and January 29, 2004. Net
Perceptions filed its definitive proxy statement with the SEC on February 12,
2004 and filed a supplement to the definitive proxy statement on February 24,
2004.
The key features of the Plan of Liquidation are:
o 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;
o winding up its affairs, including selling its remaining non-cash
assets (including the sale of its patent portfolio to Thalveg Data
Flow LLC ("Thalveg"), as discussed below), 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;
o paying its creditors;
o terminating any of its remaining commercial agreements, relationships
or outstanding obligations;
o resolving its outstanding litigation;
o establishing a contingency reserve for payment of its expenses and
liabilities; and
o preparing to make distributions to its stockholders.
According to Net Perceptions' public filings, on December 30, 2003, Net
Perceptions entered into a patent purchase agreement with Thalveg to sell its
patent portfolio to Thalveg for $1.8 million in cash. Closing on the sale of the
patent portfolio to Thalveg is contingent upon stockholder approval, among other
closing conditions. Stockholder approval and adoption of the Plan of Liquidation
will also constitute approval of the sale of the patent portfolio to Thalveg.
How does Obsidian Enterprises recommend I vote on the proposal?
Obsidian Enterprises recommends that you vote AGAINST approval and adoption
of the Plan of Liquidation.
Who is entitled to vote?
As stated in Net Perceptions' proxy materials, Net Perceptions' board of
directors has set January 13, 2004 as the record date for the special meeting.
Only stockholders of record at the close of business on that date are entitled
to vote at the special meeting. As stated in Net Perceptions' proxy materials,
at the close of business on the record date there were 28,145,338 shares of Net
Perceptions common stock outstanding.
What if my shares are held in "street name" by a broker?
If you are the beneficial owner of shares held in "street name" (i.e.,
registered in the name of a brokerage firm or bank or other nominee), your
broker, as the record holder of the shares, is required to vote those shares in
accordance with your instruction. If you do not give instructions to your
broker, your broker will not be permitted to vote your shares with respect to
the Plan of Liquidation and a "broker non-vote" will occur, which will have the
same effect as a vote AGAINST the proposal.
How do I vote?
You may vote by mail. If your shares are held in street name, only your
bank or broker can give a proxy with respect to your shares. You should receive
a proxy card from your bank or broker which you must return in the envelope
provided to have your shares voted. If you have not received a proxy card from
your bank or broker, you may contact it directly to provide it with instructions
on how you wish to vote. If you need assistance in dealing with your bank or
broker, please contact our information agent, Innisfree M&A Incorporated,
toll-free at (888) 750-5834.
If your shares are registered directly in your name as the holder of
record, you may vote your shares by marking, signing, dating and mailing the
BLUE proxy card in the postage-paid envelope that we have provided. To vote your
shares in accordance with your instructions at the special meeting, we must
receive your proxy as soon as possible, but, in any event, we must receive it
prior to the special meeting.
You may vote in person. If you are a registered stockholder and attend the
special meeting, you may deliver your completed BLUE proxy card in person. If
your shares are held in street name, and you wish to vote in person at the
special meeting, you will need to obtain a "legal proxy" form from the broker or
bank that holds your shares of record and you must bring that document to the
special meeting. If you need assistance, please contact our information agent,
Innisfree M&A Incorporated, toll-free at (888) 750-5834.
What do I do if I receive a proxy card that is not BLUE?
If you submit a proxy to us by signing and returning the enclosed BLUE
proxy card, do NOT sign or return the proxy card you received from Net
Perceptions or follow any voting instructions provided by Net Perceptions' board
of directors unless you intend to change your vote, because only your
latest-dated proxy will be counted. If you submit a new proxy with a later date,
any earlier proxy will be revoked.
Can I change my vote after I submit my proxy?
You may revoke your proxy and change your vote at any time before the proxy
has been exercised at the special meeting by:
o signing another proxy with a later date,
o giving written notice of the revocation of your proxy to Net
Perceptions' Secretary prior to the special meeting, or
o voting in person at the meeting.
What if I submit a proxy but do not specify how my shares are to be voted?
If you sign, date and return the enclosed BLUE proxy card, but do not mark
the proxy card to indicate how your shares are to be voted, your shares will be
voted AGAINST approval and adoption of the Plan of Liquidation.
What is required for a quorum?
According to Net Perceptions' proxy statement, a majority of Net
Perceptions' outstanding shares must be present in person or by proxy for there
to be a quorum. Proxies marked as abstentions and any broker non-votes will be
included as shares present for purposes of determining whether there is a
quorum. According to Net Perceptions' proxy statement, under Net Perceptions'
bylaws, the chairman of the meeting has the power to adjourn the meeting for any
purpose, including to solicit additional proxies if there are not sufficient
votes to approve the plan of liquidation, whether or not a quorum is present.
How many votes are required to authorize and approve the Plan of Liquidation?
According to Net Perceptions' proxy statement, approval and adoption of the
Plan of Liquidation requires the affirmative vote of the holders of a majority
of the outstanding shares of Net Perceptions' common stock.
If a stockholder abstains from voting or does not vote, either in person or
by proxy, it will have the effect of a vote AGAINST approval and adoption of the
Plan of Liquidation. If your broker or bank holds your shares in its name, your
broker or bank may not vote your shares on the proposal to approve and adopt the
Plan of Liquidation unless it has instructions from you. A broker non-vote has
the same effect as a vote AGAINST approval and adoption of the Plan of
Liquidation.
What if other matters are presented at the meeting?
We have no reason to believe that any proposal other than the Plan of
Liquidation proposal described in this proxy statement will come before Net
Perceptions stockholders at the special meeting. However, if other proposals are
introduced at the special meeting, the proxies named in the accompanying BLUE
proxy cards will vote shares represented by BLUE proxies on any such other
matters in their discretion.
What will happen to the exchange offer if the Plan of Liquidation is not
approved?
If the Plan of Liquidation is not approved and adopted at the special
meeting, we currently intend to proceed with our pending exchange offer. We are
not asking you to tender your shares for exchange pursuant to these proxy
materials. We are only seeking shares for exchange by means of and pursuant to
the preliminary prospectus and the related letter of transmittal, as filed by us
with the SEC with our Registration Statement and Tender Offer Statement.
What will happen to the exchange offer if the Plan of Liquidation is approved?
If the Plan of Liquidation is approved and adopted by Net Perceptions'
stockholders, and Net Perceptions files a certificate of dissolution with the
Secretary of State of the State of Delaware, one of the conditions to our offer
will not be met.
What will happen if I have already tendered my Net Perceptions shares pursuant
to the exchange offer prior to the special meeting?
We cannot accept any tendered Net Perceptions shares prior to the
expiration of our exchange offer. Currently, our exchange offer is scheduled to
expire on March 17, 2004, five days after the scheduled date for the special
meeting. If you have tendered your shares pursuant to our exchange offer, you
are still entitled to vote those shares at the special meeting. We do not have
proxy rights to vote those shares on behalf of tendering stockholders. We urge
you to vote those shares against the Plan of Liquidation. If you have tendered
shares, we urge you to vote AGAINST the Plan of Liquidation by using the
enclosed BLUE proxy card.
Do your interests differ from mine?
Yes but we believe they are consistent. When making your decision
concerning the Plan of Liquidation you should take into account that our
interest is in consummating our exchange offer for your shares. We believe this
is consistent with what we believe should be your goal--the maximization of the
value of your shares of Net Perceptions common stock--but our interests differ
from yours.
Who can I call if I have questions?
If you have additional questions about the matters discussed in this proxy
statement, please call our information agent, Innisfree M&A Incorporated,
toll-free at (888) 750-5834. Our public filings, including our Tender Offer
Statement and our Registration Statement, and any amendments to those documents,
can be accessed at the SEC's website at www.sec.gov.
BACKGROUND OF THE SOLICITATION
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. Net Perceptions either did not
respond to or rejected each of these proposals. During this period, Mr. Durham
held conversations with AFGIII regarding providing financing for AFGIII to
complete a transaction with Net Perceptions. The formal proposals made by AFGIII
were:
o May 23, 2003, a formal written bid package proposing a fully financed
all cash transaction in the range of $1.95-2.05 per share;
o June 13, 2003, a written confirmation of a proposal to acquire Net
Perceptions by merger for aggregate cash consideration of $58.7
million;
o July 27, 2003, a written proposal of a single step cash merger at
$1.80 per share; and
o October 14, 2003, a verbal offer of $0.34 cents per share.
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 discussed
above under "Questions and Answers about the Proposal and Voting Procedures --
What is the Plan of Liquidation Proposal?" above.
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 stockholders 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.
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 stockholders 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 stockholders, 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 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 attempted to negotiate what we viewed as customary and
reasonable resolution of these issues. Barnes & Thornburg proposed to Skadden
Arps restructing 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 stockholders were aware of the offer.
After we delivered this letter on December 8, 2003, Candlewood and Skadden
Arps informed AFGIII and Barnes & Thornburg 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 stockholders. The press release indicated that we would offer Net
Perceptions stockholders 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 the Registration Statement and the 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 stockholder 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 stockholders not tender
their shares of Net Perceptions common stock to us. Net Perceptions stated that,
absent a definitive agreement with a potential acquiror for a transaction that
would provide higher realizable value to its stockholders 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 (the "Thalveg Agreement").
As stated in Net Perceptions' press release, the Thalveg 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 (the "License Agreement") 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
its 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.
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 set forth
above, 1/25 share of our stock for each share of Net Perceptions common stock,
reflects the reverse 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 disclosing:
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
management's proxy card and to wait until they have received our proxy materials
before making a voting decision regarding the Plan of Liquidation.
REASONS FOR THE SOLICITATION
We have commenced our exchange offer to acquire all outstanding shares of
Net Perceptions common stock. Our exchange offer provides the Net Perceptions
stockholders the opportunity to acquire our shares at a discount to historical
trading values and, for this reason, we believe that our exchange offer provides
superior value to Net Perceptions stockholders over the uncertain amount and
timing of the Plan of Liquidation. 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) for the quarters indicated.
Year Quarter Ended High Low
2001 March 31 $9.50 $3.50
June 30 14.50 7.00
September 30 19.50 4.50
December 31 12.50 6.00
2002 March 31 18.00 5.50
June 30 13.50 5.00
September 30 10.00 5.00
December 31 13.50 5.50
2003 March 31 13.00 8.00
June 30 12.00 5.00
September 30 25.00 5.00
December 31 20.00 10.00
2004 March 31 (through 20.00 10.00
February 27, 2004)
You can obtain current stock price quotations for our common stock from a
newspaper, on the Internet or by calling your broker.
When making your decision concerning the Plan of Liquidation you should
take into account that our interest is in consummating our exchange offer for
your shares. We believe this is consistent with what we believe should be your
goal--the maximization of the value of your shares of Net Perceptions common
stock--but our interests differ from yours.
IF THE PLAN OF LIQUIDATION IS APPROVED AND ADOPTED, A CONDITION TO THE
EXCHANGE OFFER WILL NOT HAVE BEEN MET.
Your vote AGAINST the Plan of Liquidation proposal is not an approval of
the exchange offer. However, we believe that your vote AGAINST the Plan of
Liquidation proposal will tell Net Perceptions' board of directors that you
believe that the Plan of Liquidation does not maximize the value of your shares
of Net Perceptions common stock.
The Proposed Plan of Liquidation Involves Risks and Uncertainties.
Net Perceptions has stated in its proxy materials that, based on a
liquidation analysis prepared by Candlewood, it estimates that total liquidating
distributions to stockholders will range from approximately $0.41 to $0.45 per
share, or approximately $41 to $45 for each 100 shares. The timing and amount of
these distributions is uncertain. As stated in its proxy materials, at its
December 30, 2003 meeting, the board of directors of Net Perceptions concluded
that "assuming there were no developments, events or circumstances which would
result in an adverse change to the results of Candlewood's liquidation analysis,
and assuming the cash consideration payable under the [Thalveg Agreement and the
License Agreement] is received by [Net Perceptions] as reflected in Candlewood's
liquidation analysis, an initial cash distribution estimated to be approximately
$0.40 per share could be made to stockholders shortly after stockholder approval
and adoption of the plan of liquidation" (emphasis added).
In its proxy materials, Net Perceptions identifies the following risks
associated with the Plan of Liquidation:
o stockholders will not know the precise timing or amount of liquidating
distributions at the time of the special meeting;
o stockholders could be liable to the extent of liquidating
distributions, possibly including the special cash distribution in
September 2003, if reserves are not sufficient to pay any liabilities
remaining after paying the known liabilities reflected on Net
Perceptions' balance sheet;
o securities class actions or other litigation, and Net Perceptions'
incurrence of additional fees and expenses in connection with revised
or additional acquisition proposals, including our pending exchange
offer or other unsolicited exchange or tender offers, may delay
distributions or deplete the proceeds that might otherwise be
available to stockholders;
o anticipated timing of the liquidation may not be achieved;
o stockholders may not be able to recognize a loss for federal income
tax purposes until they receive a final distribution from Net
Perceptions;
o stockholders will not be able to sell their shares after a certificate
of dissolution is filed with the Secretary of State of Delaware,
which, if the Plan of Liquidation is approved and adopted by the
stockholders, Net Perceptions expects would occur relatively soon
after such approval and adoption but Net Perceptions has stated that
it will recognize assignments by stockholders of their beneficial
interests and rights to receive proceeds after dissolution upon
presentation of documents reasonably satisfactory to Net Perceptions
evidencing such assignments;
o if stockholders approve and adopt the Plan of Liquidation, after such
approval and adoption Net Perceptions expects to terminate
registration of the Net Perceptions common stock under the Securities
Act of 1934, which will substantially reduce publicly available
information about Net Perceptions; and
o if stockholders approve and adopt the Plan of Liquidation, after such
approval and adoption no further stockholder approval would be
required for sales or other disposition of assets or other actions.
As we have previously disclosed in the preliminary prospectus in our
Registration Statement, our exchange offer also carries certain risks, including
the following:
o if Net Perceptions has liabilities that are not fully reflected on its
balance sheet, the cash available for our operations following the
exchange offer and proposed merger may be less than we expect;
o resales of our common stock following the offer to exchange may cause
the market price of our stock to fall;
o the trading price of our common stock may be affected by factors
different from those affecting the price of Net Perceptions common
stock;
o actions by the current board of directors and management of Net
Perceptions could substantially increase the costs of the contemplated
transactions; and
o if we do not consider Net Perceptions' business, the goodwill
resulting from our acquisition of Net Perceptions may become
materially impaired.
As we have also disclosed in the preliminary prospectus in our Registration
Statement, there are certain risks related to our business including the
following:
o we may not be able to obtain credit to operate our business;
o an increase in interest rates would increase our interest expense;
o we may not be able to successfully compete with other companies in our
lines of business;
o 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;
o if the price of crude oil falls, we may experience lower revenues and
lower profits in our butyl rubber reclaiming operations;
o decreases in consumer spending during recessionary periods and
unavailability of quality drivers may decrease revenues and reduce
profits in our coach leasing operations;
o competitive factors in the trailer business may require continued
discounting, which may reduce our revenues and our profits;
o 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;
o we may be unable to retain personnel who are key to our businesses;
o we may not be successful in executing on our acquisition strategy; and
o 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.
We urge you to read the detailed disclosures concerning these matters in the
preliminary prospectus in our Registration Statement.
The Plan of Liquidation does not Maximize the Value of Your Shares.
We do not believe that the Plan of Liquidation maximizes the value of your
Net Perceptions shares.
It is a plan proposed by a board of directors that has presided over the
dismal financial performance of Net Perceptions since its original public
offering in April 1999. Since that date its shares have declined from their
original public offering price of $14 per share and high of $66.50 per share in
early 2000 to $0.41 on February 27, 2004. Even if the distribution of $1.50 per
share made in September 2003 is taken into account, this is a decline of 97%
from the high per share price and 86% from the initial public offering price. At
September 30, 2003, Net Perceptions has an accumulated deficit of $221 million.
It is a plan that is the result of what we believe is a flawed process.
o The current management and board of directors of Net Perceptions have
been attempting without success to sell Net Perceptions for over a
year. According to Net Perceptions' proxy materials, in February 2002,
Net Perceptions publicly announced that it retained US Bancorp Piper
Jaffray Inc. "to act as [Net Perceptions'] financial advisor in
connection with the sale of the Company." According to Net
Perceptions' proxy materials, even as early as April 2001, Net
Perceptions had "retained J.P. Morgan Securities, Inc. as [its]
financial advisor to explore strategic alternatives and solicit
proposals from parties with an interest in pursuing a business
combination with [Net Perceptions]."
o The current management and board of directors of Net Perceptions have
never disclosed why J.P. Morgan Securities, Inc. was replaced with US
Bancorp Piper Jaffray, Inc.
o Net Perceptions states that Piper Jaffray said that they resigned
"because the board of directors had approved the plan of liquidation."
o Net Perceptions has stated that it retained Candlewood Partners, Inc.
in November 2003, but has not stated whether it considered reengaging
Piper Jaffray.
o The current management and board of directors of Net Perceptions have
declined or failed to negotiate proposals that would have resulted in
the prompt payment of higher consideration to you than the payments
contemplated under the current board's Plan of Liquidation. The
rejected offers include a bid from AGFIII of $1.95-2.05 per share in
May of 2003.
SOLICITATION OF PROXIES
In addition to this solicitation by mail, our directors and employees may
solicit proxies by in person or by telephone. No director or employee will
receive additional compensation for such solicitations. We will request banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
of our solicitation materials to the beneficial owners of shares of Net
Perceptions common stock they hold of record. We will reimburse these record
holders for customary clerical and mailing expenses incurred by them in
forwarding these materials to their customers.
We have retained Innisfree M&A Incorporated as our solicitation agent in
connection with this solicitation and as our information agent in connection
with the exchange offer. Innisfree M&A will be paid an aggregate fee of
approximately $25,000 for acting as solicitation agent and information agent in
connection with this proxy statement and in connection with the exchange offer.
We have also agreed to reimburse Innisfree M&A for its reasonable out-of-pocket
expenses and to indemnify Innisfree M&A against certain liabilities and
expenses, including liabilities and expenses under U.S. federal securities laws.
Innisfree M&A will solicit proxies from individuals, brokers, banks, bank
nominees and other institutional holders.
We have also retained Acclaim Financial Group Venture III LLC ("AFGIII") to
act as our strategic advisor in connection with our proposed acquisition of Net
Perceptions. AFGIII will receive a success based fee of $200,000 in the
aggregate in compensation for these services and will be reimbursed for
out-of-pocket expanses, including reasonable expenses of counsel and other
advisors. In addition, we have agreed to indemnify AFGIII and certain related
persons against certain liabilities, including various liabilities and expenses
under the U.S. federal securities laws. In connection with AFGIII's engagement
as strategic advisor, we anticipate that certain employees of AFGIII may
communicate in person, by telephone or by other electronic means with a limited
number of institutions, brokers or other persons who are Net Perceptions
stockholders for the purpose of assisting in the solicitation of proxies for the
special meeting. AFGIII will not receive any fee for or in connection with such
solicitation activities apart from the fees that it is otherwise entitled to
receive as described above.
The entire expense of soliciting proxies for the special meeting is being
borne by us. We will not seek reimbursement for such expenses from Net
Perceptions. Costs incidental to this solicitation include expenditures for
printing, postage, legal and related expenses and are expected to be
approximately $100,000. Total costs incurred to date in furtherance of or in
connection with this solicitation are approximately $25,000.
If we should materially amend the terms of the exchange offer prior to the
special meeting, we will disseminate information regarding such changes to Net
Perceptions stockholders and, in appropriate circumstances, will provide Net
Perceptions stockholders with a reasonable opportunity, as possible, to revoke
their proxies prior to the special meeting.
INFORMATION ABOUT OBSIDIAN ENTERPRISES, INC.
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,
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, operating as United
Expressline and Southwest Trailers, a manufacturer 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 and pursuant to an Acquisition Agreement and Plan of
Reorganization 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 Corp. and then to Danzer Corporation.
INFORMATION ABOUT NET PERCEPTIONS, INC.
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. The key
features of the Plan of Liquidation are described above in "Plan of Liquidation
Proposal -- xx."
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.
The information concerning Net Perceptions contained in this proxy
statement has been taken from or is based upon documents and records on file
with the SEC and other publicly available information. We have no knowledge that
would indicate that statements relating to Net Perceptions contained in this
proxy statement in reliance upon publicly available information are inaccurate
or incomplete. We, however, have not been given access to the books and records
of Net Perceptions, were not involved in the preparation of such information and
statements, and are not in a position to verify, or make any representation with
respect to the accuracy or completeness of, any such information or statements.
STOCKHOLDER PROPOSALS FOR NET PERCEPTIONS' 2004 ANNUAL MEETING
The following information has been taken from Net Perceptions' proxy
materials filed with the SEC.
Net Perceptions expects that its 2004 Annual Meeting of Stockholders will
be held only if the Plan of Liquidation is not approved. Under the rules and
regulations of the SEC, stockholder proposals intended to be presented in Net
Perceptions' proxy statement and form of proxy for its 2004 Annual Meeting of
Stockholders, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
must be received at the principal executive offices of Net Perceptions no later
than December 31, 2003, in order to be considered for inclusion in the Company's
proxy statement for that meeting and must otherwise satisfy the conditions
established by the SEC.
In accordance with Net Perceptions' amended and restated bylaws, proposals
of stockholders intended for presentation at Net Perceptions' 2004 Annual
Meeting of Stockholders (but not intended to be included in the Net Perceptions'
proxy statement for that meeting) may be made by a stockholder of record who has
given written notice of the proposal to the Secretary of Net Perceptions at its
principal executive offices not earlier than January 30, 2004, and no later than
February 29, 2004. The notice must contain information as specified in Net
Perceptions' amended and restated bylaws. Any such proposal received after
February 29, 2004, will be considered untimely for purposes of Rule 14a-4(c)(1),
and the proxies designated by Net Perceptions for such meeting will have
discretionary authority to vote with respect to any such proposal.
All notices of proposals by stockholders, whether or not intended for
inclusion in Net Perceptions' proxy materials, should be sent to Net
Perceptions, Inc., 7700 France Avenue South, Edina, MN 55435, Attention:
Secretary.
OTHER INFORMATION
Certain of our directors and executive officers and other representatives
who may assist Innisfree M&A Incorporated in soliciting the proxies, as listed
on the attached Schedule I, are participants in the solicitation. Obsidian
Enterprises holds no shares of Net Perceptions common stock. None of Obsidian
Enterprises' principal shareholders or management holds any shares of Net
Perceptions common stock.
This proxy statement is not a request for you to tender or exchange your
Net Perceptions shares. We are making our exchange offer only by means of the
offer to purchase and letter of transmittal, as filed with the SEC.
SCHEDULE I
INFORMATION CONCERNING PERSONS WHO MAY SOLICIT PROXIES
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. 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.
-------------------------- ---------- ------------------------------------------------------------------------------
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.
-------------------------- ---------- ------------------------------------------------------------------------------
Other Representatives of Obsidian Who May Also Solicit Proxies
Although neither AFGIII nor Innisfree M&A Incorporated admits that it or
any of its directors, officers, employees or affiliates are a "participant" as
defined in Schedule 14A promulgated by the SEC under the Securities Exchange Act
of 1934, or that Schedule 14A requires disclosure of certain information
concerning them, employees of AFGIII or Innisfree M&A Incorporated may
communicate with Net Perceptions stockholders in a manner that could involve or
be deemed to be assisting Obsidian Enterprises in soliciting proxies from Net
Perceptions stockholders.
--------------------------------------------------------------------------------
SCHEDULE II
BENEFICIAL OWNERSHIP OF SHARES OF NET PERCEPTIONS COMMON STOCK
The following table, which is derived from Net Perceptions proxy materials
and a Schedule 13G filed by Messrs. Marxe and Greenhouse, sets forth information
regarding the beneficial ownership of Net Perceptions common stock as of
December 31, 2003, except as otherwise noted, by:
o each person who is known by Net Perceptions to beneficially own more
than five percent of the outstanding shares of Net Perceptions common
stock;
o each of Net Perceptions' directors and executive officers; and
o all of Net Perceptions' directors and executive officers as a group.
Net Perceptions based this information upon information it received from or
on behalf of the individuals or entities named below, except as otherwise noted.
Net Perceptions determined beneficial ownership in accordance with the
rules of the SEC. Unless otherwise noted below, the address of each beneficial
owner listed in the table is c/o Net Perceptions, Inc., 7700 France Avenue
South, Edina, Minnesota 55435. Except as indicated in the footnotes below, Net
Perceptions believes, based on information furnished or otherwise available to
it, that each person or entity named in the table has sole voting and investment
power with respect to all shares of Net Perceptions common stock shown as
beneficially owned by it, subject to applicable community property laws. Except
as otherwise noted below, the percentage of beneficial ownership set forth below
is based upon 28,145,338 shares of common stock outstanding as of the close of
business on December 31, 2003. In computing the number of shares of common stock
beneficially owned by a person and the percentage ownership of that person,
shares of common stock that are subject to options held by that person that are
currently exercisable or exercisable within 60 days of December 31, 2003, were
deemed outstanding. These shares were not, however, deemed outstanding for the
purpose of computing the percentage ownership of any other person.
Number of
Number of Shares Subject
Name and Address of Beneficial Shares to Options (1) Percent
Owner
--------------------------------- ----------------- ---------------- -----------
S. Muoio & Co., LLC 3,885,487 -- 13.81%
509 Madison Ave., Suite 406
New York, NY 10022
Austin W. Marxe &
David M. Greenhouse (2)
153 East 53rd St., 51st Floor
New York, NY 10022 1,546,200 -- 5.5%
John F. Kennedy 65,000 65,806 *
Ann L. Winblad 311,204 218,388 1.88%
John T. Riedl (3) 915,704 32,903 3.37%
William Lansing (4) 112,000 62,903 *
Thomas M. Donnelly 303,951 304,511 2.16%
James S. Hanlon (5) 81,840 102,647 *
Teresa J. Dery 6,091 9,792 *
----------
All directors and executive
officers as a group (seven
persons) 1,795,790 796,950 9.21%
* Indicates less than 1% of the total number of outstanding shares of common
stock.
(1) Reflects the number of shares issuable upon the exercise of options
exercisable within 60 days of December 31, 2003.
(2) Information derived from Schedule 13G filed by Messrs. Marxe and Greenhouse
on February 13, 2004.
(3) Includes 359,043 shares held by a revocable trust of which Mr. Reidl is
sole trustee, 78,375 shares held in three irrevocable trusts of which Mr.
Reidl and his spouse are the trustees and 463,286 shares held by a
revocable trust of which Mr. Reidl's spouse is the sole trustee.
(4) Mr. Lansing resigned from the board of directors on August 22, 2003. His
business address is ShopNBC, 6740 Shady Oak Road, Eden Prairie, MN 55344.
(5) Includes 2,033 shares held jointly by Mr. Hanlon and his spouse and 1,107
shares held by Mr. Hanlon's spouse. Mr. Hanlon's employment with Net
Perceptions was terminated on January 15, 2004.
PRELIMINARY COPY
PROXY
THIS PROXY IS SOLICITED BY
OBSIDIAN ENTERPRISES, INC.
FOR THE SPECIAL MEETING OF STOCKHOLDERS
OF NET PERCEPTIONS, INC.
The undersigned hereby appoints Timothy S. Durham, and Terry G. Whitesell,
and each of them, with full power of substitution, the proxies of the
undersigned to vote all of the outstanding shares of common stock, par value
$0.0001 per share, of Net Perceptions, Inc. ("Net Perceptions") that the
undersigned is entitled to vote at the special meeting of Net Perceptions
stockholders to be held on March 12, 2004 (the "Special Meeting"), or at any
adjournment or postponement of the Special Meeting, on the following matters:
OBSIDIAN ENTERPRISES, INC. RECOMMENDS A VOTE
"AGAINST" THE PLAN OF LIQUIDATION PROPOSAL AS SET FORTH BELOW
1. Proposal to Approve and Adopt a Plan of Complete Liquidation and
Dissolution.
|_| FOR |_| AGAINST |_| ABSTAIN
In their discretion, the proxies named above are authorized to vote upon
such other matters (other than with respect to the election of Net Perceptions
directors) as may properly come before the special meeting. This proxy is not
intended to, and does not, grant any discretionary or other authority to vote
the shares represented by this proxy in any election of Net Perceptions
directors.
[PROXY CONTINUED ON REVERSE]
This proxy when properly executed will be voted as directed above. If no
directions are given, this proxy will be voted "AGAINST" the Plan of Liquidation
proposal. The undersigned hereby acknowledges receipt of the proxy statement of
Obsidian Enterprises, Inc. dated , 2004, soliciting proxies for the Special
Meeting.
All previous proxies given by the undersigned to vote at the Special
Meeting or at any adjournment or postponement thereof are hereby revoked.
Dated , 2004
_____________________________________
(Signature)
_____________________________________
(Name/Title)
_____________________________________
(Signature, if jointly held)
_____________________________________
(Name/Title)
Please sign your name exactly as you print it on the line immediately below the
signature line.
If shares are held by joint tenants or otherwise jointly held, both parties
should sign.
If you are signing as an attorney, executor, administrator, trustee or guardian,
please specify your title.
If the holder is a corporation, please sign in the full corporate name by the
President or other authorized officer.
If the holder is a partnership, please sign in the partnership name by an
appropriate authorized person.
Please complete, sign, date and promptly mail your proxy in the enclosed postage
paid envelope to:
OBSIDIAN ENTERPRISES, INC.
c/o Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022