SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934 (Amendment No._______)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-12
OBSIDIAN ENTERPRISES, INC.
(Name of Registrant as Specified in Its Charter)
(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:
DEFINITIVE PROXY SOLICITATION MATERIALS -
INTENDED TO BE RELEASED TO STOCKHOLDERS
ON OR ABOUT AUGUST 30, 2002
[Obsidian Enterprises, Inc. Letterhead]
August 30, 2002
Dear Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders of
Obsidian Enterprises, Inc. to be held at the Company's offices, 111 Monument
Circle, Suite 4800, Indianapolis, Indiana 46204 on Friday, September 27, 2002,
at 10:00 a.m. (local time). To ensure that a quorum will be represented at the
meeting, we encourage you to complete, sign, date and return the enclosed proxy
card promptly in the enclosed postage prepaid envelope. This will not limit your
right to attend the meeting and vote in person.
The enclosed Notice of Annual Meeting and the Proxy Statement cover the business
to come before the meeting, which will include the election of directors. We
urge you to read these materials carefully.
Your management team has decided not to print a separate annual report but,
instead, to use our annual report on Form 10-K for the year ending October 31,
2001, that was filed with the SEC earlier this year. Utilizing this format
allowed Obsidian to take advantage of significant cost saving measures, while
allowing us to provide you with important information you need in order to cast
your vote at the Annual Meeting. The Annual Report is not to be considered part
of the Proxy Statement.
We look forward to meeting our stockholders and welcome the opportunity to
discuss the business of your company with you.
Timothy S. Durham
Chairman and Chief Executive Officer
[Obsidian Enterprises, Inc. Letterhead]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
The Annual Meeting of Stockholders of Obsidian Enterprises, Inc. (the "Company")
will be held on Friday, September 27, 2002, 10:00 a.m. (local time), at the
Company's offices, 111 Monument Circle, Suite 4800, Indianapolis, Indiana 46204,
for the purpose of considering and voting upon the following matters:
1) The election of seven directors to hold office until the 2003 Annual
Meeting of Stockholders and until their successors are elected and
have qualified.
2) To ratify the appointment of McGladrey & Pullen, LLP as the
independent auditors of the Company for the fiscal year ending October
31, 2002.
3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only Stockholders of record at the close of business on August 20, 2002, the
record date fixed by the Board of Directors, are entitled to notice of and to
vote at the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement and Proxy.
Even if you plan to attend the meeting, please mail your Proxy promptly so that
there may be proper representation at the meeting. You are urged to complete,
sign, date and return the enclosed Proxy in the envelope provided. No postage is
required if mailed in the United States.
By Order of the Board of Directors
Jeffrey W. Osler
Secretary
August 30, 2002
PROXY STATEMENT
OBSIDIAN ENTERPRISES, INC.
ANNUAL MEETING OF STOCKHOLDERS
September 27, 2002
This Proxy Statement is furnished to the stockholders of Obsidian Enterprises,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of proxies to be voted at the Annual
Meeting of Stockholders of the Company to be held on Friday, September 27, 2002,
at 10:00 a.m. (local time), and at any adjournment thereof. The meeting will be
held at the Company's offices, 111 Monument Circle, Suite 4800, Indianapolis,
Indiana 46204. This Proxy Statement and accompanying form of proxy have been
mailed to stockholders on or about August 30, 2002.
GENERAL INFORMATION
Who can vote at the Annual Meeting?
Only stockholders of record as of August 20, 2002, are entitled to notice of,
and to vote at, the Annual Meeting. The holders of the Company's Common Stock
and the holders of the Company's Series C Preferred Stock will vote together as
a class on the matters to be considered. Each share of the Company's Common
Stock is entitled to one vote and each share of Series C Preferred Stock is
entitled to 20 votes on the matters to be voted on at the Annual Meeting.
How do I vote by proxy?
The enclosed proxy is designed to permit each stockholder of record of the
Company's Common Stock at the close of business on August 20, 2002, to vote at
the Annual Meeting. All properly executed proxies delivered pursuant to this
solicitation will be voted at the meeting in accordance with the instructions of
the stockholders given in the proxies. In the absence of such instructions, the
shares of the Company's Common Stock represented by proxy will be voted FOR the
election of the seven nominees for director and FOR the ratification of the
appointment of the independent auditors. The named proxies will vote the proxy
in their discretion on other matters that may properly come before the meeting.
A proxy may be revoked any time before the meeting by delivering to the
Company's Secretary a written notice of revocation or a later-dated proxy. A
stockholder of record also may revoke a proxy by voting in person at the
meeting.
What will the stockholders vote on at the Annual Meeting?
The only items of business will be the election of directors and the
ratification of the appointment of the independent auditors.
Will there be any other items of business to vote on?
Management is not aware of any other matters to be presented at the meeting and
has not received notice from any stockholders requesting that other matters be
considered.
What constitutes a quorum?
A majority of the outstanding shares of the Company entitled to vote at the
meeting, present or represented by proxy, constitutes a quorum for the Annual
Meeting. As of August 20, 2002, the record date, 36,007,855 shares of the
Company's Common Stock, and 4,425,274 shares of the Company's Series C Preferred
Stock (having 20 votes per share), were issued and outstanding.
How many votes are required for the election of directors?
The nominees for election as directors of the Company named in the Proxy
Statement will be elected by a plurality of the votes cast. Abstentions are
counted for purposes of determining the presence or absence of a quorum but are
not considered votes cast. Brokerage firms generally have authority to vote
customers' shares held in street name for the election of directors and on other
matters that are considered "routine." Shares held by brokers in street name and
for which the brokers do not have discretion to vote are called "broker
non-votes." Broker non-votes are counted to determine if a quorum is present but
are not considered votes cast. Broker non-votes will not affect the
determination of whether a nominee has received a plurality of the votes cast.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors consists of seven members. The members of the
Board of Directors are elected to serve one-year terms. Each director serves
until the next Annual Meeting of Stockholders or until the director's successor
has been elected and has qualified. The following table presents biographical
information on the seven nominees.
The Board of Directors unanimously recommends that the
stockholders vote FOR the election of the seven nominees.
--------------------------------------------------------------------------------------------------------------------
BOARD OF DIRECTORS
--------------------------------------------------------------------------------------------------------------------
----------------------------- ---------- ---------------------------------------------------------------------------
Name Age Business Experience and Service as a Director
----------------------------- ---------- ---------------------------------------------------------------------------
----------------------------- ---------- ---------------------------------------------------------------------------
Timothy S. Durham 40 Mr. Durham has served as the Chief Executive Officer and Chairman of the
Board and as a director of the Company 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 J2 Communications. Mr. Durham is Mr. Osler's
brother-in-law.
----------------------------- ---------- ---------------------------------------------------------------------------
----------------------------- ---------- ---------------------------------------------------------------------------
Daniel S. Laikin 40 Mr. Laikin has served as a director of the Company since September
2001. Mr. Laikin is Chief Operating Officer and a director of J2
Communications, the owner of the "National Lampoon" trademark and
engaged in the entertainment business. 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 47 Mr. McKain has been a director of the Company 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 has also authored several books
and is a keynote speaker who presents high content workshops across the
nation.
----------------------------- ---------- ---------------------------------------------------------------------------
Jeffrey W. Osler 33 Mr. Osler has served as the Executive Vice President, Secretary and
Treasurer and as a director of the Company 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.
----------------------------- ---------- ---------------------------------------------------------------------------
----------------------------- ---------- ---------------------------------------------------------------------------
John A. Schmit 34 John A. Schmit has been a director since July 2001. Mr. Schmit joined
Renaissance Capital Group, Inc. in 1997 and is a 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 52 Mr. Smith has been a director of the Company 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, and Ray Ellison Mortgage Acceptance Co.
----------------------------- ---------- ---------------------------------------------------------------------------
Terry G. Whitesell 62 Mr. Whitesell has served as the President and Chief Operating Officer
and as a director of the Company 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.
----------------------------- ---------- ---------------------------------------------------------------------------
Each of the nominees has agreed to serve the term for which he has been
nominated. It is intended that the proxies solicited by the Board of Directors
will be voted for the nominees named above. If any nominee is unable to stand
for election, the Board of Directors may designate a substitute nominee or adopt
a resolution reducing the number of members on the Board. If a substitute
nominee is designated, shares represented by proxy would be voted for the
substituted nominee.
Nomination of Directors
The Company's Board of Directors does not have a nominating committee. The
functions customarily performed by a nominating committee are performed by the
Board as a whole.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During fiscal 2001, the Company's Board of Directors held five meetings and took
action by unanimous consent on two occasions. All the Company's directors
attended 75% or more of the aggregate of the meetings of the Board of the
Company and all committees upon which the Directors served except that Mr.
Laikin and Mr. Smith were unable to attend the only meeting that was held in
fiscal 2001 after their election to the Board. The Company has two standing
committees, the Audit Committee and the Compensation Committee.
THE AUDIT COMMITTEE
The Audit Committee members for fiscal 2001 were Messrs. Russell Cleveland and
Goodhue W. Smith, III through October 5, 2001 and Messrs. Goodhue W. Smith, III,
John A. Schmit and Daniel S. Laikin thereafter. The Audit Committee met one time
in fiscal 2001. The Audit Committee aids management in the establishment and
supervision of the Company's financial controls, evaluates the scope of the
annual audit, reviews audit results, makes recommendations to the Board
regarding the selection of independent auditors, consults with management and
the independent auditors prior to the presentation of financial statements to
stockholders and, as appropriate, initiates inquiries into aspects of the
Company's financial affairs. The members of the Audit Committee are independent
as defined by the National Association of Securities Dealers' ("NASD") listing
standards. The Company's Board of Directors adopted a written charter for the
Audit Committee in 2001. A copy of the Audit Committee Charter was attached as
Appendix A to last year's proxy statement.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information concerning the compensation
paid or accrued by the Company for services rendered during the Company's past
three fiscal years ended October 31, 2001 by the Company's Chief Executive
Officer.
------------------------- --------------------------------------------------- -------------------- -----------------
Long-Term
Annual Compensation Compensation Awards
------------------------- --------------------------------------------------- -------------------- -----------------
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
Name and Securities All Other
Principal Position Year Salary Bonus Underlying Compensation
------------------ ---- ------ ----- ------------
Options/SARs
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
Timothy S. Durham, 2001 $27,404 $0 $0 $0
Chief Executive 2000 N/A N/A N/A N/A
Officer(1) 1999 N/A N/A N/A N/A
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
M. E. Williams, 2001 $110,000 $12,824 0 0
Chief Executive 2000 $107,609 $9,375 0 $3,125
Officer(2) 1999 $105,000 $8,386 0 0
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
(1) Mr. Durham was elected Chief Executive Officer and Chairman of the Board on
June 21, 2001.
(2) Mr. Williams resigned as Chief Executive Officer on June 21, 2001.
Option/SAR Grants in Last Fiscal Year
No grants were made during fiscal 2001 pursuant to the Company's 1999 Stock
Option Plan or the Company's 2001 Long Term Incentive Plan.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth information for 2001 with respect to Option/SAR
exercises by the executive officers named in the Summary Compensation Table and
the value of unexercised options and SARs as of October 31, 2001.
------------------------- ------------------------- --------------------------
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money
Year-End (#) Options/SARs at Fiscal
Year-End ($)
------------------------- ------------------------- --------------------------
------------------------- ------------------------- --------------------------
Name Exercisable/ Exercisable/
Unexercisable Unexercisable
------------------------- ------------------------- --------------------------
------------------------- ------------------------- --------------------------
M. E. Williams 882,000/0 $138,550/0(1)
------------------------- ------------------------- --------------------------
(1) Represents the difference between the last reported sales price per share
of the Company's common stock as reported on the OTC Bulletin Board on
October 31, 2001, and the exercise price of the option.
EMPLOYMENT AND CONTROL AGREEMENTS
The Company currently does not have any employment agreements with any of the
Company's executive officers.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are entitled to a board meeting
attendance fee of $750 plus reimbursement of expenses.
REPORT OF THE AUDIT COMMITTEE
This report is being provided to inform stockholders of the Audit Committee's
oversight with respect to the Company's financial reporting.
The Audit Committee has reviewed and discussed with management the Company's
audited consolidated financial statements for the year ended October 31, 2001.
The Audit Committee also has discussed with the Company's independent auditors,
McGladrey & Pullen, LLP, the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU ss.380). The Audit
Committee has received from McGladrey & Pullen, LLP, the written report, the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and has
reviewed, evaluated and discussed with McGladrey & Pullen, LLP its independence.
The Audit Committee also has discussed with management and with McGladrey &
Pullen, LLP, such other matters and received such assurances from them as the
Audit Committee has deemed appropriate.
In reliance upon the reviews and discussions referred to above, the Audit
Committee recommended to the Company's Board of Directors that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended October 31, 2001, that was filed with the
Securities and Exchange Commission.
This Report is submitted by the members of the Audit Committee:
Goodhue W. Smith, III
John A. Schmit
Daniel S. Laikin
COMPENSATION COMMITTEE
REPORT OF THE COMPENSATION COMMITTEE
October 31, 2001
Compensation Policies and Determination of Compensation Subsequent to the
Reorganization
In connection with the change of control and reorganization of the Company that
occurred on June 21, 2001 (the "Reorganization"), Timothy S. Durham became Chief
Executive Officer and Chairman of the Board of the Company. Mr. Durham replaced
M.E. Williams, who resigned as Chief Executive officer on that date. The other
executive officers of the Company also were replaced in the Reorganization. In
addition, Mr. Durham and the other new executive officers acquired in the
Reorganization beneficial ownership of more than a majority of the voting power
of the Company's capital stock. Given the Reorganization, his beneficial
ownership interest and the Company's financial concerns, Mr. Durham recommended
to the Compensation Committee that he and the other new executive officers
receive only nominal salaries for the 2001 fiscal year and that no bonuses or
other incentive compensation packages be approved for fiscal 2001. The
Compensation Committee adopted Mr. Durham's recommendations. As a consequence,
Mr. Durham's total compensation for the more than four months that he served
during the 2001 fiscal year was only $27,404 and none of the other new executive
officers received compensation in an amount requiring the compensation to be
reported in the Summary Compensation Table.
Compensation Policies and Determination of Compensation Prior to the
Reorganization
As mentioned above, M.E. Williams, the Company's former Chief Executive Officer,
served in that capacity until June 21, 2001. Mr. Williams' compensation for the
2001 fiscal year was based on the compensation policies in place prior to the
Reorganization. Those prior compensation policies were focused on integrating
annual base compensation with bonuses based upon a variety of factors that could
include the Company's operating performance and an individual's initiative and
performance. In measuring operating performance, the Compensation Committee
could consider, among other things, the Company's attainment of gross margin,
operating profit and growth targets, limits on corporate general and
administrative expenses, net income and earnings per share targets and debt to
capital ratio levels. The Compensation Committee did not apply a formula that
assigned specific weights to any such factors.
Prior to the Reorganization, the compensation of the Company's executive
officers generally consisted of base salary, annual cash bonuses and long-term
incentive compensation in the form of stock options. In determining salaries for
the executive officers for fiscal 2001, the Compensation Committee took into
account the individual experience and performance of its executive officers. In
determining whether to make stock option grants for the executive officers, the
Board evaluated a number of criteria, including the recipient's level of cash
compensation, years of service and position with the Company. Based on these
policies and considerations, Mr. Williams received for the nearly eight months
he served as Chief Executive Officer during fiscal 2001 the amount of $110,000
as salary and the amount $12,824 as a bonus. Mr. Williams was not granted any
stock options during fiscal 2001.
This report is submitted by the members of the Compensation Committee:
John A. Schmit
D. Scott McKain
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
On August 1, 1997, Danzer Industries, Inc., ("DII"), a subsidiary of the
Company, entered into a loan agreement with Duncan-Smith Investments, Co.
Goodhue Smith, is a founder and officer of Duncan-Smith Investments, Co. The
terms of the $650,000 loan included an interest rate of 11% with payments due
quarterly and a final payment on June 15, 2002. Duncan-Smith Investments, Co.
received a cash fee of $32,500 and a warrant to purchase 650,000 shares of
common stock at $0.25 per share with an expiration date of August 2002. In
February 1999, Duncan-Smith Investments, Co. agreed to temporarily defer
principal repayments on the note for February and May 1999. In consideration,
the interest rate was increased to 13% until such time as the original payment
schedule became current. Effective January 21, 2000, DII entered into a loan
with Banc of America Commercial Finance Corporation ("BACFC") and repaid the
indebtedness to Duncan-Smith Investments, Co. in full. However, as an
accommodation to the Company, Duncan-Smith Investments, Co. pledged a
certificate of deposit for $150,000 to BACFC to secure the loan. During 2001,
DII paid a fee to Duncan-Smith Investments, Co. of $2,812.50 for providing this
collateral and the pledge was released in August 2001. In June 2001,
Duncan-Smith Investments, Co.'s warrant to purchase 650,000 shares of common
stock at $0.25 per share was exchanged for a warrant to purchase 10,000 shares
of Series C preferred stock at $2.00 per share.
A number of related party transactions occurred in connection with the change in
control and reorganization of the Company in 2001. The reorganization
transactions occurred in two parts:
o On June 21, 2001, the Company acquired from Obsidian Capital Partners,
L.P., Mr. Durham and certain other shareholders all of the shares of
Pyramid Coach, Inc.("Pyramid"); Champion Trailer, Inc. ("Champion") and
U.S. Rubber Reclaiming, Inc. ("U.S. Rubber").
o On July 31, 2001, the Company acquired from Obsidian Capital Partners, L.P.
and Mr. Durham substantially all of the assets of United Acquisition, Inc.,
which the Company now operates as United Expressline, Inc. ("United").
Prior to these transactions, U.S. Rubber and United had incurred fees due to
Obsidian Capital Company, a company controlled by Messrs. Durham and Whitesell,
in connection with the transactions by which those companies were acquired by
Obsidian Capital Partners, LP. In addition, Danzer incurred a fee to Obsidian
Capital Company in connection with the reorganization transactions. The fees for
the acquisition and financing of the Danzer transaction was $600,000. The fee
for the U.S. Rubber transaction was $760,000. The fee for the United acquisition
was $600,000.
At October 31, 2001, the Company owed Obsidian Capital Partners, LP, the
majority shareholder of the Company, the approximate amount of $2,170,000. The
advances made to the Company by Obsidian Capital Partners, LP were comprised of
$1,222,000 in advances to provide working capital and to fund losses of
Champion, $279,806 to fund the professional fees with respect to the Forms 8-K
and 10-Q that were filed with the SEC in connection with the reorganization,
$363,919 to pay the cost of closing the reorganization transactions on June 21,
2001, and $293,652 to complete the closing of the purchase of United .
At October 31, 2001, the Company owed Obsidian Capital Company $624,317 for
funds advanced to Champion to fund the completion of trailers for resale to
third party customers.
DW Leasing owed Messrs. Durham, Whitesell and Osler, officers and directors of
the Company, the total amount of approximately $300,000 at October 31, 2001.
These amounts were advanced by them to DW Leasing prior to the purchase by the
Company of Pyramid and the DW Leasing coach assets.
United advanced Obsidian Capital Company $216,000, as a part of the closing of
the purchase of the United transaction. The amount was paid back to United
subsequent to year-end.
For the year ended October 31, 2001, the Company paid Obsidian Capital Company
rent expense of $15,000 for the use of office space.
COMMON STOCK OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information with respect to beneficial ownership
of common stock as of August 20, 2002, by (i) all persons known to the Company
to be the beneficial owners of five percent or more of the common stock, (ii)
each director of the Company, (iii) the chief executive officer and each of the
Company's other most highly compensated executive officers whose total annual
compensation for 2001, based on salary and bonus earned during 2001, exceeded
$100,000 (the "named executive officers"); (iv) the current executive officers;
and (v) all Company directors and executive officers as a group. This table does
not include shares of common stock that may be purchased pursuant to options not
exercisable within 60 days of the record date. All persons listed have sole
voting and investment power with respect to their shares unless otherwise
indicated.
Common Stock Series C Preferred Stock
Percentage Number of Percentage
of Shares Shares of Shares
Name and Address of Number of Shares Beneficially Beneficially Beneficially
Beneficial Owner Beneficially Owned Owned Owned Owned
---------------- ------------------ ----- ----- -----
Executive Officers and Directors:
Timothy S. Durham (1) 88,267,469 76.9% 3,942,193 89.1%
Terry G. Whitesell (2) 82,030,360 73.8% 3,755,869 84.9%
D. Scott McKain 810,100 2.2% -- --
Jeffrey W. Osler (3) 75,944,580 68.3% 3,755,869 84.9%
Goodhue W. Smith, III (4) 298,334 * 5,000 *
John A. Schmit (5) 5,000,000 13.9% -- --
All current officers and directors as a
group (6) 102,088,943 88.8% 3,947,193 89.2%
Former Chief Executive Officer:
M. E. Williams (7) 971,206 2.6% 44,125 *
Other 5% Shareholders:
Obsidian Capital Partners, L.P. (8) -- -- 3,755,869 84.9%
Richard W. Snyder 1,946,667 5.4% -- --
Huntington Capital Investment Company (9) -- -- 386,206 8.7%
---------
*less than one percent
(1) Includes 7,308,103 shares of common stock directly owned by Mr. Durham;
2,088,366 shares held by Diamond Investments, LLC, for which Mr. Durham
serves as Managing Member and for which shares Mr. Durham may be deemed to
share voting and dispositive power; 3,755,869 shares of Series C preferred
stock over which Mr. Durham shares voting and dispositive power and that
may be deemed to be beneficially owned by Mr. Durham due to his position as
a managing member of Obsidian Capital Company, LLC, which is the general
partner of Obsidian Capital Partners, LP, which directly owns such shares;
186,324 shares of Series C preferred stock over which Mr. Durham shares
voting and dispositive power and that may be deemed to be beneficially
owned by Mr. Durham due to his position as Chairman and fifty percent owner
of Fair Holdings, Inc.; and 27,140 shares of common stock over which Mr.
Durham shares voting and dispositive power and that may be deemed to be
beneficially owned by Mr. Durham due to his position as a managing member
of Durham Whitesell and Associates, LLC, which directly owns such shares.
The address of Mr. Durham is 111 Monument Circle, Suite 4800, Indianapolis,
Indiana 46204.
(2) Includes 6,889,840 shares of common stock directly owned by Mr. Whitesell;
3,755,869 shares of Series C preferred stock over which Mr. Whitesell
shares voting and dispositive power and that may be deemed to be
beneficially owned by Mr. Whitesell due to his position as a managing
member of Obsidian Capital Company, LLC, which is the general partner of
Obsidian Capital Partners, LP, which directly owns such shares; and 27,140
shares of common stock over which Mr. Whitesell shares voting and
dispositive power and that may be deemed to be beneficially owned by Mr.
Whitesell due to his position as a managing member of Durham Whitesell and
Associates, LLC, which directly owns such shares. The address of Mr.
Whitesell is 111 Monument Circle, Suite 4800, Indianapolis, Indiana 46204.
(3) Includes 827,200 shares of common stock directly owned by Mr. Osler; and
3,755,869 shares of Series C preferred stock over which Mr. Osler shares
voting and dispositive power and that may be deemed to be beneficially
owned by Mr. Osler due to his position as a managing member of Obsidian
Capital Company, LLC, which is the general partner of Obsidian Capital
Partners, LP, which directly owns such shares. The address of Mr. Osler is
111 Monument Circle, Suite 4800, Indianapolis, Indiana 46204.
(4) Includes 81,667 shares of common stock directly owned by Mr. Smith; 116,667
shares of common stock owned by Duncan-Smith Investments, Inc., of which
Mr. Smith is an owner; and 5,000 shares of Series C preferred stock
directly owned by Mr. Smith. The address is Mr. Smith is 711 Navarro, Suite
740, San Antonio, Texas 78205.
(5) Consists of shares that may be acquired pursuant to convertible debentures
issued by the Company on July 19, 2001, to two trusts of which Renaissance
Capital Group, Inc., serves as investment manager and investment advisor.
Mr. Schmit is an executive officer of Renaissance Capital Group, Inc. He
disclaims beneficial ownership of any securities of Registrant held by
Renaissance Capital Group, Inc. The address of Mr. Schmit is 8080 North
Central Expressway, Suite 210, Dallas, Texas 75206.
(6) Includes 3,755,869 shares of Series C preferred stock over which Obsidian
Capital Company, LLC shares voting and dispositive power and that may be
deemed to be beneficially owned by Obsidian Capital Company, LLC due to its
position as the general partner of Obsidian Capital Partners, LP, which
directly owns such shares; and 186,324 shares of Series C preferred stock
directly owned by Fair Holdings, Inc.
(7) Includes 88,706 shares of common stock directly owned by Mr. Williams; and
44,125 shares of Series C preferred stock owned by Mr. Williams. Mr.
Williams resigned as Chief Executive Officer on June 21, 2001.
(8) Includes 3,755,869 shares of Series C preferred stock directly owned by
Obsidian Capital Partners, LP. Voting and dispositive power over the shares
of Series C preferred stock may be deemed to be held by Obsidian Capital
Partners, LP, Obsidian Capital Company, LLC and the managing members of
Obsidian Capital Company LLC, which include Messrs. Durham, Whitesell and
Osler.
(9) Based on the information reported in a Schedule 13G filed with the SEC on
August 6, 2001.
PERFORMANCE GRAPH
The Securities and Exchange Commission requires the Company to include in this
Proxy Statement a line graph comparing the Company's cumulative five-year total
stockholder returns on Common Stock with market and industry returns over the
past five years. The following chart compares the yearly percentage change in
the cumulative total shareholder return on the common stock from October 31,
1997 through October 31, 2001, with the cumulative total return on the Nasdaq
Stock Market and issuers with similar market capitalizations. The Company does
not believe it is feasible to provide a comparison against a group of peer
companies on an industry or line-of-business basis, as there is an insufficient
number of similar publicly traded companies with businesses comparable to the
Company's business. The comparison assumes $100 was invested immediately prior
to such period in common stock and in each of the foregoing indices and assumes
reinvestment of dividends. Dates on the following chart represent the last day
of the indicated fiscal year. The Company paid no dividends during the period.
[Graph Not Included in Edgar Filing]
Base Years Ending
Period
Company Name / Index Oct96 Oct97 Oct98 Oct99 Oct00 Oct01
-----------------------------------------------------------------------------------------------------------------------
OBSIDIAN ENTERPRISES INC 100 40.06 27.24 19.23 67.31 80.13
NASDAQ INDEX COMPOSITE 100 130.46 145.02 242.85 275.86 138.37
PEER GROUP 100 96.72 49.55 37.79 37.03 5.71
CHANGE IN INDEPENDENT ACCOUNTANT
As previously reported in a Current Report Form 8-K filed on November 13, 2001,
the Audit Committee of the Company's Board of Directors decided on November 7,
2001, to dismiss Linton, Shafer & Company, P.A. ("Linton Shafer") as the
Company's independent auditors. The audit reports of Linton Shafer on the
consolidated financial statements of the Company as of and for the years ended
October 31, 2000 and 1999 did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles. During the fiscal years ended October 31, 2000 and 1999
and the period following October 31, 2000, there were no disagreements between
the Company and Linton Shafer on any matter regarding accounting principles or
practices, financial statement disclosure, or auditing scope or procedure. A
letter from Linton Shafer confirming the statements set forth in this Item 9 was
attached as Exhibit 16 to the Current Report on Form 8-K filed on November 13,
2001.
On November 7, 2001, the Board of Directors engaged McGladrey & Pullen, LLP
("McGladrey") as the Company's new independent auditors. During the fiscal years
ended October 31, 2000 and 1999 and during the period following October 31,
2000, the Company did not consult McGladrey regarding either (i) the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
financial statements, and neither a written report was provided to the Company
nor oral advice provided that McGladrey concluded was an important factor
considered by the Company in reaching a decision as to an accounting, auditing
or financial reporting issue; or (ii) any matter that was either the subject of
a disagreement or a reportable event.
McGladrey & Pullen LLP's fees for the calendar year 2001 audit, other audit work
in connection with other filings with the Securities and Exchange Commission,
and review of Forms 10-Q were $407,371 all of which has been paid. McGladrey &
Pullen, LLP did not render any services related to financial systems design and
implementation or any other non-audit services for the year ended October 31,
2001.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
selected McGladrey & Pullen, LLP as the Company's independent auditors for the
fiscal year ending October 31, 2002. This selection is being presented to the
Stockholders for their approval at the Annual Meeting. If the stockholders do
not approve this selection, the Board of Directors will reconsider its choice.
Representatives of McGladrey & Pullen, LLP will be present at the Annual Meeting
to respond to appropriate questions and to make such statements as they may
desire.
The Board of Directors Recommends that stockholders vote For the ratification
of the appointment of McGladrey & Pullen, LLP as the Company's
independent auditors for fiscal year 2002.
ADDITIONAL INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers and directors of the Company and owners of more than 10
percent of the Company's Common Stock are required to file reports of their
ownership and changes in their ownership of the Company's Common Stock with the
Securities and Exchange Commission. Copies of these reports also must be
furnished to the Company. Based solely upon a review of copies furnished to the
Company through the date of this Proxy Statement or written representations that
no reports were required, the Company believes that its executive officers,
directors and 10% stockholders complied with the 2001 filing requirements except
that the Form 3 Initial Statement of Beneficial Ownership of Securities for Mr.
Schmit was filed late.
EXPENSES
In addition to solicitation by mail, proxies may be solicited personally or by
telephone or facsimile or electronic mail, by certain directors, officers and
employees of the Company, who will not be specially compensated for such
solicitation. No solicitation of proxies will be made by paid solicitors. The
Company will bear all expenses in connection with the solicitation of proxies.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Any stockholder who wishes to have a proposal considered for inclusion in the
Company's Proxy Statement for the fiscal 2003 annual meeting of stockholders
must submit the proposal in writing so that the Company receives it by May 2,
2003. Proposals should be addressed to the Company's Secretary, 111 Monument
Circle, Suite 4800, Indianapolis, Indiana 46204. Stockholders who wish to bring
proposals before the annual meeting without having the proposals considered for
inclusion in the proxy statement must submit the proposals in writing to the
Company's Secretary no later than July 17, 2003.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended October 31,
2001 accompanies this Proxy Statement. The Annual Report includes the audited
balance sheets of the Company and its subsidiaries on a consolidated basis for
the fiscal years ended October 31, 2000 and 2001, and the audited statements of
income and cash flow for the fiscal years ended October 31, 1999, 2000 and 2001,
and the report thereon of the independent auditors.
OTHER MATTERS
Management knows of no matters, other than those reported above, that are to be
brought before the Annual Meeting. The enclosed proxy confers discretionary
authority on the proxies to vote on any other business that may properly come
before the meeting. It is the intention of the persons named in the proxy to
vote in their discretion on any such matter.
We strongly urge you to complete, sign, date and return the enclosed Proxy at
the earliest possible date even if you plan to attend the meeting. If you attend
the meeting, you may withdraw your Proxy and vote in person.
Jeffrey W. Osler
Secretary
Indianapolis, Indiana
August 30, 2002
OBSIDIAN ENTERPRISES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
September 27, 2002
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Terry G. Whitesell and Jeffrey W. Osler, and
each of them, with full power of substitution, as proxies to represent the
undersigned and to vote all of the shares of Common Stock the undersigned is
entitled to vote at the 2002 Annual Meeting of Stockholders of Obsidian
Enterprises, Inc. (the "Company"), to be held at the Company's offices, 111
Monument Circle, Suite 3680, Indianapolis, Indiana 46204, on Friday, September
27, 2002 at 10:00 A.M. (local time), and at any adjournment, postponement or
continuation thereof, as follows:
1. Election of Seven (7) Directors.
FOR all nominees listed below (EXCEPT as marked to the contrary below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line
through such nominee's name in the following list:
Timothy S. Durham Daniel S. Laikin D. Scott McKain
Jeffrey W. Osler John A. Schmit Goodhue W. Smith, III
Terry G. Whitesell
WITHHOLD AUTHORITY to vote for ALL nominees listed above.
2. Ratification of McGladrey & Pullen, LLP as the Company's independent
auditors for the fiscal year ending October 31, 2002.
[ ]FOR [ ]AGAINST
[ ]ABSTAIN
3. In their discretion, on any other matters properly coming before the
meeting and any adjournment, postponement or continuation thereof.
This proxy will be voted as directed. If this proxy card is properly signed and
returned but no directions are specified, this proxy will be voted FOR the
election of the nominees for director listed above and FOR Proposal 2. This
proxy card, if properly executed and delivered in a timely manner, will revoke
all prior proxies.
Dated____________________________, 2002
---------------------------------
Signature
---------------------------------
Signature
Please sign EXACTLY as name or names appear hereon. When signing
as attorney, executor, trustee, administrator or guardian, please
give your full title. If a corporation, please sign in full
corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
Please complete, date, sign and mail promptly in the enclosed
envelope which requires no postage.
OBSIDIAN ENTERPRISES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
September 27, 2002
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Terry G. Whitesell and Jeffrey W. Osler, and
each of them, with full power of substitution, as proxies to represent the
undersigned and to vote all of the shares of Series C Preferred Stock the
undersigned is entitled to vote at the 2002 Annual Meeting of Stockholders of
Obsidian Enterprises, Inc. (the "Company"), to be held at the Company's offices,
111 Monument Circle, Suite 3680, Indianapolis, Indiana 46204, on Friday,
September 27, 2002 at 10:00 A.M. (local time), and at any adjournment,
postponement or continuation thereof, as follows:
1. Election of Seven (7) Directors.
FOR all nominees listed below (EXCEPT as marked to the contrary below)
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through such nominee's
name in the following list:
Timothy S. Durham Daniel S. Laikin D. Scott McKain
Jeffrey W. Osler John A. Schmit Goodhue W. Smith, III
Terry G. Whitesell
WITHHOLD AUTHORITY to vote for ALL nominees listed above.
2. Ratification of McGladrey & Pullen, LLP as the Company's independent
auditors for the fiscal year ending October 31, 2002.
[ ]FOR [ ]AGAINST
[ ]ABSTAIN
3. In their discretion, on any other matters properly coming before the
meeting and any adjournment, postponement or continuation thereof.
This proxy will be voted as directed. If this proxy card is properly signed and
returned but no directions are specified, this proxy will be voted FOR the
election of the nominees for director listed above and FOR Proposal 2. This
proxy card, if properly executed and delivered in a timely manner, will revoke
all prior proxies.
Dated____________________________, 2002
---------------------------------
Signature
---------------------------------
Signature
Please sign EXACTLY as name or names appear hereon. When
signing as attorney, executor, trustee, administrator or
guardian, please give your full title. If a corporation,
please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
Please complete, date, sign and mail promptly in the
enclosed envelope which requires no postage.
[Obsidian Enterprises, Inc. Letterhead]
[Cover Letter Accompanying 2001 Annual Report on Form 10-K]
August 30, 2002
Dear Obsidian Enterprises Shareholder,
Fiscal 2001 was a monumental year in the history of Obsidian Enterprises, Inc.
On June 21, 2001, Danzer completed a share exchange with Obsidian Capital
Partners, L.P. ("Partners") for Partners' stock in two operating entities,
Champion Trailer, Inc., a Dallas, Texas based manufacturer of top line racing
transporters, and US Rubber Reclaiming, Inc., of Vicksburg, Mississippi, the
sole North American producer of reclaimed butyl rubber. Additionally, several
affiliated parties of Partners exchanged their stock in Pyramid Coach, Inc. for
Danzer Corporation stock. Pyramid Coach of Nashville, Tennessee, operates and
leases celebrity tour coaches to corporate clients and rock, pop and country
musicians, such as the Gold Channel, Janet Jackson, Bob Dylan, Chicago, Alan
Jackson, Reba McIntire, Sara Evans, Brad Paisley and hundreds of other
entertainers.
Then in July 2001, Partners completed the acquisition of the assets of United
Expressline, Inc., a trailer manufacturer with operations in Bristol, Indiana
and White Pigeon, Michigan. Partners then exchanged its shares in United for
additional Danzer Corporation stock, resulting in Partners and its affiliates
owning a majority of the issued and outstanding voting shares of Danzer
Corporation.
Also in 2001, the shareholders approved a name change from Danzer Corporation to
Obsidian Enterprises, Inc. We completed fiscal 2001 with five operating entities
(including Danzer Industries). These entities had combined gross revenues on a
pro forma basis for the ten-month period ended October 31, 2001 exceeding $53
million.
The details for the 2001 fiscal year are shown in the Form 10-K that we filed
with the Securities and Exchange Commission, which is attached.
In addition to the change of our official headquarters to Indianapolis, Indiana
and the continued service of our senior management team, we have added Barry S.
Baer as our EVP/Chief Financial Officer to ensure we meet the rapidly evolving
fiscal reporting requirements. The entire Obsidian Enterprises team is dedicated
to profitably growing your company and enhancing shareholder value.
To achieve this goal, we have put in place a number of management tools to
monitor individual operating entity progress and fully utilize the assets
available to us. We are also in the process of refinancing our companies to put
them on a stronger long-term financial footing.
We are excited about the prospects for the continuing growth of all of our
operating subsidiaries. While continuing to focus on the growth and
profitability of these Companies, we will also focus on new acquisitions that
are compatible with our existing operations and on identifying acquisitions in
new industries.
We look forward to our collective future and are hopeful we will see you at our
Shareholder Meeting in Indianapolis, Indiana on September 27, 2002.
Sincerely,
Obsidian Enterprises, Inc.
Timothy S. Durham
Chairman and CEO