Edgar Filing: OBSIDIAN ENTERPRISES INC

SCHEDULE 14A INFORMATION
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _______)

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Filed by a Party other than the Registrant [ ]

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[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 to ss. 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)

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[ ] Fee paid previously with preliminary materials.

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PRELIMINARY PROXY SOLICITATION MATERIALS -
DEFINITIVE PROXY SOLICITATION MATERIALS
INTENDED TO BE RELEASED TO STOCKHOLDERS
ON OR ABOUT SEPTEMBER 19, 2003

[Obsidian Enterprises, Inc. Letterhead]

September 19, 2003

Dear Stockholder:

You are cordially invited to attend the 2003 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 Thursday, October 16, 2003,
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 and the
amendment of the Company's Certificate of Incorporation to effect a reverse
stock split. 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,
2002, as amended, that was filed with the SEC. 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 Thursday, October 16, 2003, 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 2004 Annual
Meeting of Stockholders and until their successors are elected and have
qualified.

2) The amendment of the Certificate of Designation for the Company's Series C
Preferred Stock to provide for proportionate adjustments to reflect any
increases and decreases in the Company's common stock.

3) The amendment of the Certificate of Designation for the Company's Series D
Preferred Stock to provide for proportionate adjustments to reflect any
increases and decreases in the Company's common stock.

4) The amendment of the Company's Certificate of Incorporation to effect a
50-to-1 reverse stock split.

5) The amendment of the Company's Certificate of Incorporation following
effectiveness of the reverse stock split to decrease the number of shares
of authorized capital stock from 45,000,000 to 15,000,000 shares,
consisting of 10,000,000 shares of common stock and 5,000,000 shares of
preferred stock.

6) The ratification of the appointment of McGladrey & Pullen, LLP as the
independent auditors of the Company for the fiscal year ending October 31,
2003.

7) The transaction of 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 29, 2003, 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

September 19, 2003

PROXY STATEMENT

OBSIDIAN ENTERPRISES, INC.
ANNUAL MEETING OF STOCKHOLDERS
October 16, 2003

This Proxy Statement is furnished to the stockholders of Obsidian Enterprises,
Inc., a Delaware corporation (the "Company" or "we"), 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 Thursday, October 16, 2003,
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 September 19, 2003.

GENERAL INFORMATION

Who can vote at the Annual Meeting?

Only stockholders of record as of the close of business on August 29, 2003 (the
"Record Date"), are entitled to notice of, and to vote at, the Annual Meeting.
The holders of the Company's Common Stock, Series C Preferred Stock and Series D
Preferred Stock will vote together as a class on the election of directors
(Proposal 1) and the ratification of the independent auditors (Item 6) and also
will vote as separate classes on the reverse stock split (Proposal 4) and the
decrease in authorized shares (Proposal 5). The holders of the Company's Common
Stock, Series C Preferred Stock and Series D Preferred Stock will vote together
as a class on the amendment to the Certificate of Designation of the Series C
Preferred Stock (Proposal 2) and on the amendment to the Certificate of
Designation of the Series D Preferred Stock (Proposal 3). In addition, the
holders of the Series C Preferred Stock will vote as a separate class on
Proposal 2 and the holders of Series D Preferred will vote as a separate class
on Proposal 3. (The Series C Preferred Stock and Series D Preferred Stock are
referred to collectively as the "Preferred Stock"). Each share of Common Stock
is entitled to one vote on each matter. The shares of Preferred Stock are
convertible into shares of Common Stock and are entitled to vote on an
as-converted basis on each matter to be voted on at the Annual Meeting, with
each share of Series C Preferred Stock being entitled to 20 votes and each share
of Series D Preferred Stock being entitled to 175 votes.

How do I vote by proxy?

The enclosed proxy is designed to permit each stockholder of record of the
Common Stock or the Preferred Stock on the Record Date 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 represented by proxy will be voted "FOR" the election of the seven
nominees for director, "FOR" the approval of the reverse stock split and
subsequent decrease in the number of authorized shares of capital stock 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?

Stockholders will be voting on the following proposals:

* Election of seven directors to hold office until the next Annual Meeting of
Stockholders or until their successors are elected and have qualified.

* Amendment of the Certificate of Designation for the Company's Series C
Preferred Stock to provide for proportionate adjustment to the Series C
Preferred Stock to reflect any increases and decreases in the Company's
Common Stock.

* Amendment of the Certificate of Designation for the Company's Series D
Preferred Stock to provide for proportionate adjustment to the Series D
Preferred Stock to reflect any increases and decreases in the Company's
Common Stock.

* Amendment of the Company's Certificate of Incorporation to effect a 50-to-1
reverse stock split.

* Amendment of the Company's Certificate of Incorporation immediately
following the reverse stock split to decrease the number of authorized
shares of capital stock.

* Ratification of the appointment of McGladrey & Pullen, LLP as the
independent auditors for the Company for the fiscal year ending October 31,
2003.

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 the Record Date, 36,007,925 shares of Common Stock, 4,368,399
shares of Series C Preferred Stock (having 20 votes per share) and 104,402
shares of Series D Preferred Stock (having 175 votes per share), were issued and
outstanding. Thus, a total of 141,646,255 votes are entitled to be cast at the
Annual Meeting, and 70,823,123 votes will constitute a quorum.

How many votes are required for the election of directors and the other
proposals?

The nominees for election as directors of the Company (Proposal 1) named in the
Proxy Statement will be elected by a plurality of the votes cast. The
affirmative vote of the holders of a majority of the outstanding shares of the
Common Stock, Series C Preferred Stock (on an as-converted basis) and Series D
Preferred Stock (on an as-converted basis) is required for Proposals 2 and 3
and, in addition, the affirmative vote of the Series C Preferred Stock, voting
as separate class is required for Proposal 2 and of the Series D Preferred Stock
Voting as a separate class is required for Proposal 3. The affirmative vote of
the holders of a majority of the outstanding shares of the Common Stock, Series
C Preferred Stock (on an as-converted basis) and Series D Preferred Stock (on an
as-converted basis) voting as a combined class and as separate classes is
required to approve the proposed amendments to the Company's Certificate of
Incorporation for the reverse stock split (Proposal 4) and to decrease the
number of authorized shares of capital stock (Proposal 5). The affirmative vote
of a majority of the votes present, in person or represented by proxy and
entitled to vote on the matter, is required to ratify the appointment of the
independent auditors (Proposal 6).

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." Abstentions and instructions to withhold
authority will result in a nominee for director (Proposal 1) receiving fewer
votes but will not count as votes "against" the nominee. Abstentions and broker
non-votes will affect the determination of the approval of the changes to the
Certificates of Designation of the Series C Preferred Stock and Series D
Preferred Stock (Proposals 2 and 3, respectively), the reverse stock split
(Proposal 4) and the decrease in authorized shares of capital stock (Proposal
5). Abstentions will have the effect of a vote against the ratification of the
independent auditors (Proposal 6) but broker non-votes will have no effect.

The Company's executive officers and directors who hold, or have the power to
direct the voting of, shares of Common Stock and Preferred Stock eligible to
vote at the meeting have indicated that they intend to vote for all of the
proposals. As of the Record Date, those executive officers and directors held or
had the power to direct 106,567,819 (80.1%) of the votes (which includes the
right to vote (on a converted basis) 3,947,193 shares (90.4%) of the Series C
Preferred Stock and 104,402 shares (100%) of the Series D Preferred Stock).
Therefore, they hold sufficient shares to approve all of the proposals and it is
anticipated that all of the proposals will be approved.

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 41 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 National Lampoon, Inc. Mr. Durham is Mr. Osler's
brother-in-law.
----------------------------- ---------- ---------------------------------------------------------------------------
Daniel S. Laikin 41 Mr. Laikin has served as a director of the Company 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 the Company 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 has also 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 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 35 John A. 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 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.
----------------------------- ---------- ---------------------------------------------------------------------------
Terry G. Whitesell 64 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 2002, the Company's Board of Directors held two meetings and took
action by unanimous consent on six 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. The Company has two
standing committees, the Audit Committee and the Compensation Committee.

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, 2002 by the Company's Chief Executive
Officer. (No executive officers of the Company received a salary and bonus for
fiscal 2002 in excess of $100,000 so as to require their inclusion in the
table.)

Long-Term
Annual Compensation Compensation Awards
------------------------- --------------------------------------------------- -------------------- -----------------
Name and Securities All Other
Underlying
Principal Position Year Salary Bonus Options/SARs Compensation
------------------------- ---------- ------------------- -------------------- -------------------- -----------------

Timothy S. Durham, 2002 $75,000 $0 $0 $0
Chief Executive 2001 $27,404 $0 $0 $0
Officer(1) 2000 N/A N/A N/A N/A
------------------------- ---------- ------------------- -------------------- -------------------- -----------------

(1) Mr. Durham was elected Chief Executive Officer and Chairman of the Board on
June 21, 2001.

Option/SAR Grants in Last Fiscal Year

No grants were made during fiscal 2002 pursuant to the Company's 1999 Stock
Option Plan or the 2001 Long Term Incentive Plan.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values

No executive officer named in the Summary Compensation Table held unexercised
options or SARs as of October 31, 2002 or exercised options during fiscal 2002.

EMPLOYMENT AND CONTROL AGREEMENTS

The Company did not have any employment agreements with any of the executive
officers named in the Summary Compensation Table as of the end of fiscal 2002.

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.

THE AUDIT COMMITTEE

The Audit Committee members for fiscal 2002 were Mr. John A. Schmit, who served
as Chair, and Messrs. Goodhue W. Smith, III and Daniel S. Laikin. The Audit
Committee met three times in fiscal 2002. 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 the proxy statement for the 2001 Annual Meeting of
Stockholders.

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, 2002.
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, 2002, as amended, that has been filed
with the Securities and Exchange Commission.

This Report is submitted by the members of the Audit Committee:

John A. Schmit
Goodhue W. Smith, III
Daniel S. Laikin

COMPENSATION COMMITTEE

D. Scott McKain, who served as Chair, and John A. Schmit served as the members
of the Compensation Committee for fiscal 2002. The Compensation Committee met
once in fiscal 2002. The Committee reviews all salary and employee benefit
issues relating to employees and directors of the Company and makes
recommendations to the Board regarding the compensation of executive officers.
The Compensation Committee also is responsible for the administration of the
1999 Stock Compensation Plan and 2001 Long Term Incentive Plan.

REPORT OF THE COMPENSATION COMMITTEE

October 31, 2002

Compensation Policies

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, replacing the former
Chief Executive Officer, who resigned 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.

Mr. Durham made similar recommendations concerning compensation for fiscal 2002
as he had made for fiscal 2001 and the Compensation Committee again adopted his
recommendations. Consequently, Mr. Durham received a salary of $75,000 and no
bonus for fiscal 2002 and none of the other executive officers received
compensation in an amount that would require their inclusion in the Summary
Compensation Table. The amount of compensation paid to Mr. Durham and the other
executive officers was not based on the Company's performance.

This report is submitted by the members of the Compensation Committee:

D. Scott McKain
John A. Schmit

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

A number of related party transactions occurred in connection with the
Reorganization 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, DW Leasing, LLC ("DW Leasing"), a company owned by
Messrs. Durham and Whitesell had entered into a number of transactions with
Pyramid whereby coaches owned by DW Leasing were operated by Pyramid and the
debt on these coaches were cross guaranteed by DW Leasing and Pyramid. Although
the Company does not own any interest in DW Leasing, the accounts of DW Leasing
are included in the financial statements of the Company.

The agreements entered into at the time of the Reorganization contemplated that
the coaches and related debt would be promptly transferred by DW Leasing to the
Company's subsidiary, Obsidian Leasing Co., Inc. ("Obsidian Leasing"). Twenty
seven coaches were transferred by DW Leasing to Obsidian Leasing in November
2001 in consideration of the assumption of the related debt. Pyramid continues
to operate the remaining seven coaches for DW Leasing pursuant to a management
agreement. Prior to the Reorganization described above, DW Leasing and Pyramid
were privately owned and structured in a tax-efficient manner. Because of the
nature of this structure, transfer of the remaining seven coaches owned by DW
Leasing would have adverse tax consequences to the owners of DW Leasing which
were not contemplated in the Reorganization. Accordingly, the Company has agreed
to continue to operate these coaches through DW Leasing. During 2002, the
Company received gross revenue of $674,000 from the coaches operated by Pyramid
for DW Leasing and paid fees of $538,000 to DW Leasing for the use of the
coaches.

During 2002 and 2001, Obsidian Capital Partners, LP, the majority shareholder of
the Company, advanced funds to the Company. These funds were advanced to fund
losses of Champion and to fund the professional fees with respect to the filings
with the Securities and Exchange Commission ("SEC") in connection with the
reorganization in 2001, and closing costs in connection with the reorganization
and the closing of the purchase of United. The maximum amount outstanding during
2002, related to funding of Champion losses and funding professional fees was
$1,290,000 and $1,275,000 respectively. On April 25, 2002, $1,290,000 of the
amounts advanced was converted to Series C Preferred Stock.. On October 24,
2002, $1,275,000 of the amounts advanced was converted to Series D Preferred
Stock.

During 2002, Fair Holdings, Inc. advanced funds to the Company to fund a debt
reduction at Champion and to fund certain professional fees with respect to the
filing with the SEC. The maximum amount outstanding in 2002 to Fair Holdings
related to debt restructuring at Champion and funding certain professional fees
was $596,000 and $270,000, respectively. On April 25, 2002, $596,000 of the
amounts advanced was converted to Series C Preferred Stock. On October 24, 2002,
$270,000 of the amounts advanced was converted to Series D Preferred Stock.

In addition to the advances, during the fiscal year ended October 31, 2002, Fair
Holdings, Inc. provided a $5,000,000 line of credit to the Company. The maximum
amount outstanding in 2002 was $1,798,000. The line of credit is unsecured,
bears interest at 10% per annum and matures in January 2005.

Fair Holdings, Inc. also has leased certain computer equipment to the Company on
a short-term basis commencing on August 1, 2002. The rental paid in 2002 was
$1,000.

Fair Holdings, Inc. lent Obsidian Leasing an aggregate of $1,588,000 in
connection with the refinancing of coaches. The maximum amount outstanding
during 2002 for this refinancing was $1,588,000. The loans are ten-year,
interest-only loans, subordinate to the bank debt on the coaches and bear
interest at 14% per annum.

The Company subleases its headquarters space from Fair Holdings, Inc. under a
sublease with a monthly rental of $3,675. Prior to the sublease with Fair
Holdings, Inc., the Company sublet space from Obsidian Capital Company and paid
$56,000 to Obsidian Capital Company for its space in 2002.

Fair Holdings, Inc. leased certain computer equipment to Danzer under a twelve
month lease effective August 1, 2002. The aggregate rental due under the twelve
month lease is $8,000.

DW Trailer, LLC, a company owned by Messrs. Durham and Whitesell, has leased a
forklift to Danzer under a 38 month lease at $1,000 per month.

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 in
2002.

DC Investments, a company controlled by Mr. Durham, lent U.S. Rubber $700,000
pursuant to a subordinated note which bears interest at 15% per annum with the
principal payable in March 2007. The loan was made to permit the Company to
complete the elimination of the interest of SerVass, Inc. in U.S. Rubber.

During 2002, DC Investments purchased the senior secured loans to Champion from
the bank which held them. The maximum amount outstanding to DC Investments in
2002 was $602,000. The loans bear interest at 5.5%.

On October 30, 2002, the Company entered into a Memorandum of Agreement with
Messrs. Durham and Whitesell pursuant to which Champion agreed to sell all of
its assets to an entity to be designated by Messrs. Durham and Whitesell subject
to the payment by Messrs. Durham and Whitesell of $1.00 and the assumption by
the entity acquiring the assets of all of the liabilities of Champion except for
the liability of Champion to Markpoint Equity Growth Fund IV, which was settled
by the Company. This transaction closed on January 30, 2003.

Management believes that the transactions described above were on terms no less
favorable to the Company and its subsidiaries than would have been the case for
transactions with unrelated third parties.

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 29, 2003, by (i) all persons known to the Company
to be the beneficial owner 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 2002 based on salary and bonus earned during 2002 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 Series D Preferred Stock
------------ ------------------------ ------------------------
Number of Percentage of Number of Percentage of Number of Percentage of
Shares Shares Shares Shares Shares Shares
Name and Address of Beneficially Beneficially Beneficially Beneficially Beneficially Beneficially
-
Beneficial Owner Owned Owned Owned Owned Owned Owned
---------------- ----- ----- ----- ----- ----- -----
Executive Officers and
Directors:

Timothy S. Durham (1) 106,567,819 80.1% 3,942,193 90.2% 104,402 100.0%
0
D. Scott McKain 810,10 2.2% -- -- -- --
Jeffrey W. Osler (2) 88,701,905 71.6% 3,755,869 86.0% 72,899 69.8%
0
John A. Schmit (3) 5,016,00 13.9% -- -- -- --
Goodhue W. Smith, III (4) 298,334 * 5,000 * -- --
Terry G. Whitesell (5) 94,787,685 76.5% 3,755,869 86.0% 72,899 69.8%
Daniel S. Laikin -- -- -- -- -- --
Barry Baer(6) 10,000 * -- -- -- --
Rick D. Snow(7) -- -- -- -- -- --
Anthony P. Schlichte(8) -- -- -- -- -- --
All current officers and 3
directors as a group (9
persons) 120,405,29 90.4% 3,947,193 90.4% 104,402 100.0%
Other 5% Owners:
Fair Holdings, Inc.(9) 9,239,505 20.4% 186,324 4.3% 31,503 30.2%
Huntington Capital 6
Investment Company (10) 7,724,12 17.7% 386,206 8.8% -- --
Obsidian Capital Partners, 5
L.P. (11) 87,874,70 70.9% 3,755,869 86.0% 72,899 69.8%
7
Richard W. Snyder(12) 1,946,66 5.4% -- -- -- --

The number of shares of Common Stock above also includes the Preferred Stock
converted to Common Stock equivalents.

---------
*less than one percent

(1) Includes 7,338,103 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; 3,942,193 shares of Series C preferred
stock and 104,402 shares of Series D 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 and 31,503 shares of Series D 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 an executive
officer and shareholder of Fair Holdings, Inc. which directly owns such
shares; 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 827,200 shares of common stock directly owned by Mr. Osler; and
3,755,869 shares of Series C preferred stock and 72,899 shares of Series D
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.

(3) Represents shares that may be acquired pursuant to convertible debentures
issued by the Company on July 19, 2001, to Renaissance US Growth Investment
Trust PLC ("RUSGIT") and BFSUS Special Opportunities Trust PLC ("BFS") and
pursuant to warrants issued on January 24, 2003, in consideration of a
waiver granted in connection with the convertible debentures. Mr. Schmit is
Vice President of Renaissance Capital Group, Inc., the investment manager
of RUSGIT and BFS. Mr. Schmit disclaims beneficial ownership as to the
shares beneficially owned by RUSGIT and BFS. The address of Mr. Schmit is
8080 North Central Expressway, Suite 210, Dallas, Texas 75206.

(4) Includes 81,667 shares of common stock and 5,000 shares of Series C
Preferred Stock directly owned by Mr. Smith. The address of Mr. Smith is
711 Navarro, San Antonio, Texas 78205.

(5) Includes 6,885,840 shares of common stock directly owned by Mr. Whitesell;
3,755,869 shares of Series C preferred stock and 72,899 shares of Series D
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.

(6) Mr. Baer completed his term of employment with the Company in April 2003.

(7) Mr. Snow was named Executive Vice President and Chief Financial Officer in
April 2003. He continues to serve as Chief Financial Officer for Fair
Finance, Inc., a company for which Mr. Durham, the Company's Chairman and
Chief Executive Officer, also serves as Chief Executive Officer. Prior to
joining Fair Finance, Inc., in 2002, Mr. Snow had served as Senior Manager
of Brockman, Coats, Gedelian & Co., a regional accounting firm. Prior to
joining Brockman, Coats, Gedelian & Co., he was an accountant with Grant
Thornton LLP.

(8) Mr. Schlichte has served as Executive Vice President of Corporate Finance
since April 2003. Previously he held vice president and senior lending
officer positions at First Indiana Bank.

(9) Consists of 186,324 shares of Series C preferred stock and 15,431 shares of
Series D preferred stock directly owned by Fair Holdings, Inc.

(10) Based on the information reported in a Schedule 13G filed with the SEC on
August 6, 2001.

(11) Consists of 3,755,869 shares of Series C preferred stock and 72,899 shares
of Series D preferred stock directly owned by Obsidian Capital Partners,
L.P. Voting and dispositive power over the shares 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.

(12) Based on the information reported in a Schedule 13D filed with the SEC on
September 9, 1996.

PERFORMANCE GRAPH

The SEC 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 (prepared by Standard & Poor's) compares the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock from
October 31, 1998 through October 31, 2002, with the cumulative total return of
the Nasdaq U.S. Index and of a peer group of issuers with similar market
capitalizations. Because there is an insufficient number of publicly traded
companies with businesses comparable to the Company's business, the peer group
has been selected on the basis of similar market capitalization rather than on
an industry or a line-of-business basis. 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 OMITTED IN EDGAR FILING]

*The peer group consists of the following issuers: 21st Century Holding Co;
Arrhythmia Research Technology; Avalon Holdings Corp; Bio Imaging Technologies,
Inc.; C-3d Digital, Inc.; Coram Healthcare Corp.; Cubic Energy, Inc.; Elmers
Restaurants, Inc.; Emergency Filtration Products, Inc.; Evolve Software, Inc.;
IIS Intelligent Information Systems, Ltd.; Knowledgemax Inc.; Merchant Capital
Group, Inc; Movie Star, Inc.; Systemone Technologies Inc.; TAT Technologies,
Ltd.; Vialink Co.; VLPS Lighting Services International; WTC Industries, Inc.;
and Zoom Technologies, Inc.

INDEXED RETURNS
Base Years Ending
Period
Company Name / Index Oct97 Oct98 Oct99 Oct00 Oct01 Oct02
--------------------------------------------------------------------------------------------------------------------

OBSIDIAN ENTERPRISES INC 100 68.00 48.00 168.00 200.00 208.00
NASDAQ U.S. INDEX 100 111.87 188.83 213.11 107.07 84.95
PEER GROUP 100 51.23 39.07 38.29 5.91 6.08

CHANGE IN INDEPENDENT ACCOUNTANT

As previously reported the 2002 Proxy Statement and 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.

INTRODUCTION TO PROPOSALS 2, 3, 4 and 5

We are asking our stockholders to vote on four separate proposals to amend the
Company's current Certificate of Incorporation. Stockholders may vote for all,
some or none of Proposals 2, 3, 4 and 5; stockholders should note, however, that
the Board will not implement Proposal 5 unless the stockholders first approve
Proposal 4.

The 2001 reorganization and change in control of the Company (the
"Reorganization") was made pursuant to an Acquisition Agreement and Plan of
Reorganization (the "Reorganization Agreement"). Since the Company did not have
a sufficient number of authorized and unissued shares of Common Stock, the
Company issued shares of the Company's Series C Preferred Stock as consideration
for the companies acquired in the Reorganization. The Company also has issued
shares of Series D Preferred Stock.

Proposal 2 would amend the Certificates of the Designations, Preferences, Rights
and Limitations of Series C Preferred Stock and Proposal 3 would amend the
Certificate of the Designations, Preferences, Rights and Limitations of Series D
Preferred Stock. The amendments made by Proposals 2 and 3 are the same: each
amendment would add a new subsection to provide for the proportionate increase
or decrease in the number of shares of Series C Preferred and Series D
Preferred, respectively, to reflect an increase or decrease in the shares of
outstanding Common Stock.

In the Reorganization Agreement, the Company agreed that, following the
effective date of the Reorganization, it would seek stockholder approval of the
authorization of sufficient shares to permit conversion of the Series C
Preferred Stock into Common Stock and to effect a reverse stock split. The
Reorganization Agreement also obligated the persons who had acquired the shares
of Series C Preferred Stock to convert those shares into shares of Common Stock
within 30 days after that stockholder approval. The Company has been unable
until now to seek stockholder approval of the reverse stock split and change in
authorized Common Stock because of the need to comply with certain SEC financial
statement requirements relating to the Reorganization. On August 28, 2003, the
SEC granted the Company a waiver of those financial statement requirements.

To provide sufficient authorized shares of Common Stock for the conversion of
the Preferred Stock, we propose to reduce the number of outstanding shares by
the reverse stock split in Proposal 4. Following the reverse stock split,
720,158 shares of Common Stock would be outstanding. The reverse stock split
would not affect the number of shares of Common Stock that are authorized, so we
are proposing in Proposal 5 to reduce the Company's authorized shares of Common
Stock from 40,000,000 to 10,000,000.

PROPOSAL 2

AMENDMENT OF SERIES C PREFERRED STOCK
CERTIFICATE OF DESIGNATION

The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Certificate of Desigation for the Series C Preferred Stock. The
preferences, rights and limitations of the Series C Preferred Stock are set
forth in the Certificate of Designation for the Series C Preferred Stock, which
is part of the Company's Certificate of Incorporation filed with the Delaware
Secretary of State. The Certificate of Incorporation authorizes the Company to
issue 5,000,000 shares of preferred stock and 4,600,000 of those shares of
preferred stock are designated Series C Preferred Stock. As of the record date,
4,368,399 shares of Series C Preferred Stock were issued and outstanding. Each
share of Series C Preferred Stock is convertible, at the option of the holder,
into twenty shares of Common Stock and votes with the shares of Common Stock on
an as-converted basis.

The proposed amendment would amend Section 4, "Conversion, Adjustments and
Registration Rights," of the Certificate of Desigation for the Series C
Preferred to add a new subsection (h) to provide that, if the Company divides
its number of shares of Common Stock in to a greater number of shares or
combines its number of shares of Common Stock into a lesser number of shares,
the number of shares of Common Stock issuable upon conversion of the Series C
Preferred Stock into shares of Common Stock would be proportionately increased
or decreased. The exact text of the new subsection (h) of Section 4 is as
follows:

"(h) In the event the Corporation shall at any time subdivide (by any
stock split, stock dividend or otherwise) its outstanding shares of
Common Stock, into a greater number of shares, the number of shares of
Common Stock issuable hereunder upon conversion of shares of Series C
Preferred shall be proportionately increased, and, conversely, in the
event the outstanding shares of Common Stock shall be combined into a
fewer number of shares (by reverse stock split or otherwise), the
number of shares of Common Stock issuable hereunder upon conversion of
shares of Series C Preferred shall be proportionately decreased."

This proposal must be approved by a majority of the holders of Common Stock,
Series C Preferred Stock (on an as-converted basis) and Series D Preferred Stock
(on an as-converted basis) voting as a class and also by the holders of the
Series C Preferred Stock voting as a separate class. The description of the
Certificate of Designation and the proposed amendment set forth above is only a
summary and is qualified in its entirety by reference to the full text of the
Certificate of the Amendment to the Certificate of Designation, which is
attached to this Proxy Statement as Appendix A. The amendment to the Certificate
of Designation will become effective at the time specified in the Certificate of
Amendment filed with the Delaware Secretary of State.

The Board of Directors recommends a vote "For" the proposed amendment to the
Certificate of Designation for the Series C Preferred Stock.

PROPOSAL 3

AMENDMENT OF SERIES D PREFERRED STOCK
CERTIFICATE OF DESIGNATION

The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Certificate of Desigation for the Series D Preferred Stock. The
preferences, rights and limitations of the Series D Preferred Stock are set
forth in the Certificate of Designation for the Series C Preferred Stock, which
is part of the Company's Certificate of Incorporation filed with the Delaware
Secretary of State. The Certificate of Incorporation authorizes the Company to
issue 5,000,000 shares of preferred stock and 200,000 of those shares of
preferred stock are designated Series D Preferred Stock. As of the record date,
104,402 shares of Series D Preferred Stock were issued and outstanding. Each
share of Series D Preferred Stock is convertible, at the option of the holder,
into 175 shares of Common Stock and votes with the shares of Common Stock on an
as-converted basis.

The proposed amendment would amend Section 4, "Conversion, Adjustments and
Registration Rights," of the Certificate of Desigation for the Series D
Preferred to add a new subsection (h) to provide that, if the Company divides
its number of shares of Common Stock in to a greater number of shares or
combines its number of shares of Common Stock into a lesser number of shares,
the number of shares of Common Stock issuable upon conversion of the Series D
Preferred Stock into shares of Common Stock would be proportionately increased
or decreased. The exact text of the new subsection (h) of Section 4 is as
follows:

"(h) In the event the Corporation shall at any time subdivide (by any stock
split, stock dividend or otherwise) its outstanding shares of Common Stock,
into a greater number of shares, the number of shares of Common Stock
issuable hereunder upon conversion of shares of Series D Preferred shall be
proportionately increased, and, conversely, in the event the outstanding
shares of Common Stock shall be combined into a fewer number of shares (by
reverse stock split or otherwise), the number of shares of Common Stock
issuable hereunder upon conversion of shares of Series D Preferred shall be
proportionately decreased."

This proposal must be approved by a majority of the holders of Common Stock,
Series C Preferred Stock (voting on an as-converted basis) and Series D
Preferred Stock (voting on an as-converted basis) voting as a class and also by
the holders of the Series D Preferred Stock voting as a separate class. The
description of the Certificate of Designation and the proposed amendment set
forth above is only a summary and is qualified in its entirety by reference to
the full text of the Certificate of the Amendment to the Certificate of
Designation, which is attached to this Proxy Statement as Appendix B. The
amendment of the Certificate of Designation will become effective at the time
specified in the Certificate of Amendment filed with the Delaware Secretary of
State.

The Board of Directors recommends a vote "For" the proposed Amendment to the
Certificate of Designation for the Series D Preferred Stock.

PROPOSAL 4

REVERSE STOCK SPLIT

General

The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Certificate of Incorporation to effect a reverse
50-to-1 split of the issued and outstanding shares of Common Stock. The reverse
stock split would combine each 50 shares of outstanding Common Stock into one
share of Common Stock, thus reducing the number of outstanding shares. As a
result, the number of shares of our Common Stock owned by each stockholder would
be reduced in the same proportion as the reduction in the total number of shares
outstanding, so the percentage of the outstanding shares owned by each
stockholder would remain unchanged. The reverse stock split will be effective
upon the filing of the Certificate of Amendment with the Delaware Secretary of
State.

The text of the proposed amendment is provided in Appendix C to this Proxy
Statement. The text of the proposed amendment is subject of modifications to
include such changes as may be required by the office of the Secretary of State
of Delaware or as our Board of Directors deems necessary and advisable to effect
the reverse stock split.

Reasons for Board Recommendation

As discussed above in the Introduction to Proposals 2, 3, 4 and 5, the Company
is now able to seek stockholder approval of the transactions that will enable
the conversion of the Preferred Stock to Common Stock as it is obligated to do
under the Reorganization Agreement. The approval of the reverse stock split will
allow the holders of shares of Preferred Stock to convert those shares into
shares of Common Stock.

If the reverse stock split is approved, it would have the following effects:

o the number of issued and outstanding shares of Common Stock would be
reduced by the 50-to-1 ratio;

o proportionate adjustments would be made to the per share exercise price and
the number of shares issuable upon the exercise of all outstanding options
and warrants entitling the holders thereof to purchase shares of Common
Stock, which will result in approximately the same aggregate price being
required to be paid in cash for such options or warrants upon exercise of
such options and warrants immediately preceding the effectiveness of the
reverse stock split;

o the number of shares into which each share of Series C Preferred Stock and
Series D Preferred Stock is convertible will be proportionately adjusted to
reflect the 50-for-1 ratio; and

o the number of shares reserved for issuance under the Company's existing
stock option plans will be proportionately reduced to reflect the 50-to-1
ratio.

The reverse stock split will not affect the par value of our Common Stock. The
reverse stock split also will not change the proportionate equity interests of
our stockholders, or the voting and other rights of stockholders, except for
possible immaterial changes due to fractional shares as described below. Our
issued Common Stock will remain fully paid and non-assessable. We will continue
to be subject to the periodic reporting requirements of the Securities Exchange
Act of 1934, as amended. Effect of the Reverse Stock Split On the Authorized But
Unissued Shares of Common Stock

Upon effectiveness of the reverse stock split, the number of authorized shares
of Common Stock that are not issued or outstanding would increase to reflect the
50-to-1 decrease in the issued and outstanding shares. As a result of the
reverse stock split, the number of authorized shares of Common Stock remaining
available for issuance would increase from 3,992,075 to 39,279,842. The
additional authorized shares of Common Stock will be used for the conversion of
the Series C Preferred Stock and Series D Preferred Stock. Although the increase
in the number of remaining authorized but unissued shares resulting from the
reverse stock split could, under certain circumstances, have an anti-takeover
effect (for example, by permitting issuances which would dilute the stock
ownership of a person seeking to effect a change in the composition of our Board
or contemplating a tender offer or other transaction for the combination of our
Company with another company), the reverse stock split is not being proposed in
response to any effort of which we are aware to accumulate shares of Common
Stock or obtain control of the Company and also is not part of a plan by
management to recommend a series of similar amendments to our Board and
stockholders. Other than the reverse stock split proposal and Proposal 5, which
would decrease the number of shares of authorized capital stock subsequent to
the reverse stock split, the Board does not currently contemplate recommending
the adoption of any other amendments to our Certificate of Incorporation that
could be construed to affect the ability of third parties to take over or change
control of the Company.

Potential Disadvantages to the Reverse Stock Split

Generally, a reduction of outstanding shares of Common Stock in a reverse stock
split results in a proportionate increase in the market price of the Common
Stock. We cannot assure you, however, that the reverse stock split in the
Company's Common Stock will increase the market price of the Common Stock equal
to the 50-to-1 ratio of the reverse stock split. We also cannot assure you that
the market price of our Common Stock immediately after the effective date of the
proposed reverse stock split will be maintained for any period of time or that
the ratio of post- and pre-split shares will remain the same after the reverse
stock split is effected or that the reverse stock split will not have an adverse
effect on our stock price due to the reduced number of shares outstanding after
the reverse stock split. A reverse stock split may be viewed negatively by the
market and, consequently, could lead to a decrease in our overall market
capitalization. If the per share price does not increase proportionately as a
result of the reverse stock split, then our overall market capitalization will
be reduced.

Fractional Shares

Implementation of the reverse stock split would result in some stockholders
owning fractional shares of Common Stock. For example, following a 50-to-1
reverse stock split, a holder of 90 shares would hold 1.8 shares. All shares of
Common Stock held by a stockholder after the reverse stock split will be
aggregated and a certificate for the number of whole shares after the
aggregation will be issued to the stockholder. Stockholders that would otherwise
be entitled to receive a fractional share of our Common Stock as a consequence
of the reverse stock split will receive instead a cash amount, without interest,
determined by multiplying (i) the fractional share interest to which the holder
would otherwise be entitled by (ii) the average closing sale price of shares of
common stock (on a post-split basis) for the 20 trading days immediately prior
to the effective date of the reverse stock split or, if no sale takes place on
those days, the average of the closing highest asked and lowest bid prices for
those days (on a post-split basis), in each case as reported by the OTC Bulletin
Board.

Each stockholder that owns 50 shares or more of our Common Stock prior to the
reverse stock split would continue to own one or more shares after the reverse
stock split and would continue to share in our assets and any future growth as a
stockholder. The shares of any stockholder that owns fewer than 50 shares of
record (a "Small Stockholder") would receive cash in place of the fractional
share. As a result, the interest of such Small Stockholder in the Company would
be terminated and such Small Stockholder would have no right to share in the
Company's assets or any future growth.

Exchange of Stock Certificates

Promptly following the effective date of the reverse stock split, the Company
will send letters of transmittal to all stockholders of record to be used to
transmit Common Stock certificates to the Company's Transfer Agent. Upon proper
completion and execution of a letter of transmittal and its return to the
Transfer Agent, together with certificates, each stockholder who will have an
interest of at least one whole share will receive a new stock certificate. After
the Effective Date, each certificate representing shares of Common Stock
outstanding prior to the Effective Date and held by a stockholder who is not a
Small Stockholder, until surrendered and exchanged for a new certificate, will
be deemed for all corporate purposes to evidence ownership of such number of
shares as is set forth on the face of the certificate divided by 50. A
stockholder will not be entitled to payment of any dividends declared on shares
of Common Stock subsequent to the reverse stock split until all certificates for
the shares have been reissued to reflect the reverse stock split.

After the reverse stock split and until surrendered, each outstanding
certificate held by a Small Stockholder will be deemed for all purposes to
represent only the right to receive the amount of cash to which the holder is
entitled for the Small Stockholder's fractional share. If the Company is unable
to locate a Small Stockholder, funds otherwise payable to such holders pursuant
to the reverse stock split will be held until proper claim therefore is made,
subject to applicable escheat laws.

Effect of Reverse Stock Split On Options and Warrants

The number of shares subject to outstanding options to purchase shares of our
Common Stock also would automatically be reduced in the same 50-to-1 ratio as
the reduction in the outstanding shares. Correspondingly, the per share exercise
price of those options will be increased in direct proportion to the reverse
stock split ratio, so that the aggregate dollar amount payable for the purchase
of the shares subject to the options will remain unchanged.

The agreements governing the outstanding warrants to purchase shares of our
Common Stock include provisions requiring adjustments to both the number of
shares issuable upon exercise of such warrants, and the exercise prices of such
warrants, in the event of a reverse stock split.

No Appraisals Rights

Under the Delaware General Corporation Law and our Certificate of Incorporation
and Bylaws, you are not entitled to appraisal rights with respect to the reverse
stock split.

Material Federal Income Tax Consequences

The following description of the material federal income tax consequences of the
reverse stock split is based on the Internal Revenue Code as amended, applicable
Treasury Regulations promulgated under the Code, judicial authority and current
administrative rulings and practices as in effect on the date of this proxy
statement. Changes to the laws could alter the tax consequences described below,
possibly with retroactive effect. We have not sought and will not seek an
opinion of counsel or a ruling from the Internal Revenue Service regarding the
federal income tax consequences of the proposed reverse stock split. This
discussion is for general information only. It does not discuss the tax
consequences that may apply to special classes of taxpayers or that may be
relevant to you because of special circumstances (including, without limitation,
certain financial institutions, insurance companies, partnerships, "S"
corporations, non-resident aliens, brokers or dealers). The state and local tax
consequences of the reverse stock split may vary significantly as to each
stockholder, depending upon the jurisdiction in which such stockholder resides.
We urge stockholders to consult their own tax advisors to determine the
particular consequences to them.

Sale or Exchange.

If your receipt of cash in lieu of a fractional share is treated as a sale or
exchange (as defined below) of such shares for U.S. federal income tax purposes,
you will recognize capital gain or loss equal to the difference between the cash
payment you receive for the fractional share interest and the adjusted tax basis
in the pre-reverse-stock-split shares purchased. The gain or loss would be
long-term capital gain or loss if the holding period for the shares exceeded one
year. Your receipt of cash will be treated as a sale or exchange for U.S.
federal income tax purposes if it:

o is "not essentially equivalent to a dividend" with respect to you under
section 302(b)(1) of the Code;

o is a "substantially disproportionate" redemption with respect to you under
section 302(b)(2) of the Code; or

o results in a "complete termination" of your stock interest in the Company
under section 302(b)(3) of the Code.

In determining whether any of these tests has been met, you must take into
account not only shares you actually own, but also shares you constructively own
within the meaning of section 318 of the Code.

A distribution will be treated as "not essentially equivalent to a dividend" if
it results in a "meaningful reduction" in your stock interest in the Company.
Whether your receipt of cash will result in a meaningful reduction of your
proportionate interest will depend on your particular facts and circumstances.
If your are a stockholder whose relative stock interest (actual or constructive)
in the Company is minimal and who exercises no control over corporate affairs
and you suffer a reduction in your proportionate interest in the Company
(including any ownership of shares constructively owned), you generally should
be regarded as having suffered a meaningful reduction in your interest in the
Company.

Satisfaction of the "complete termination" and "substantially disproportionate"
exceptions is dependent upon compliance with the respective objective tests set
forth in section 302(b)(3) section 302(b)(2) of the Code. A distribution to you
will result in a "complete termination" if either (1) all of the shares actually
and constructively owned by you are exchanged for cash pursuant to the reverse
stock split or (2) all of the shares actually owned by you are exchanged for
cash pursuant to the reverse stock split and you are eligible to waive, and
effectively waive, the attribution of shares constructively owned by you in
accordance with the procedures described in section 302(c)(2) of the Code.

A distribution to you will be "substantially disproportionate" if the percentage
of our outstanding voting stock actually and constructively owned by you
immediately following the payment of cash for a post-reverse-stock-split
fractional share (treating shares resulting in fractional shares pursuant to the
reverse stock split as not outstanding) is less than 80% of the percentage of
our outstanding voting stock actually and constructively owned by you
immediately before the reverse stock split (treating shares resulting in
fractional shares pursuant to the reverse stock split as outstanding), and
immediately following the exchange you actually and constructively own less than
50% of the total combined voting power of the Company.

Contemporaneous dispositions or acquisitions of stock by a shareholder or
related individuals or entities may be deemed to be part of a single integrated
transaction and may be taken into account in determining whether any of the
three tests under section 302(b) of the Code has been satisfied.

Dividend.

If your exchange of shares for cash does not constitute a sale or exchange, the
receipt of cash by you for your fractional share interest will be treated as a
dividend, taxable as ordinary income, to the extent of our current or
accumulated earnings and profits, as determined under federal income tax
principles. To the extent that the amount of the distribution exceeds our
current and accumulated earnings and profits, the excess first will be treated
as a return of capital that will reduce your tax basis in the
pre-reverse-stock-split shares representing a post-reverse-stock-split
fractional interest. Any remaining amount after your tax basis has been reduced
to zero will be taxable as capital gain (which will be long-term capital gain if
you have held the shares for more than one year at the time of the exchange).
Your tax basis (after the adjustment described in the previous sentence)
generally will be transferred to any of your remaining stock in the Company. If
you do not retain any actual stock ownership in the Company (having a stock
interest only constructively), you may lose the benefit of your adjusted tax
basis in your shares, as such adjusted tax basis will be transferred to the
shares owned constructively. A dividend received by a corporate stockholder may
be (1) eligible for a dividends-received deduction (subject to applicable
exceptions and limitations) and (2) subject to the "extraordinary dividend"
provisions of section 1059 of the Code.

The recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003 has
reduced the rate applicable to long term capital gains to 15% and reduced the
maximum tax rate on dividends to 15%.

We will not recognize any gain or loss as a result of the reverse stock split.

Stockholder Approval and Board Recommendation

The amendment of the Company's Certificate of Incorporation to effect the
reverse stock split requires the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock, Series C Preferred Stock (on an
as-converted basis) and Series D Preferred Stock (on an as-converted basis)
voting as a combined class and as separate classes. If approved, the reverse
stock split will become effective at the time specified in the Certificate of
Amendment filed with the Delaware Secretary of State.

The Board of Directors unanimously recommends that stockholders vote "FOR" the
proposed amendment to the Certificate of Incorporation to effect the reverse
stock split (Proposal 4).

PROPOSAL 5

AMENDMENT TO CERTIFICATE OF INCORPORATION TO DECREASE
AUTHORIZED SHARES OF CAPITAL STOCK

The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Company's Certificate of Incorporation to decrease the
Company's authorized number of shares of capital stock from 45,000,000 to
15,000,000.

The Company's current Certificate of Incorporate authorizes 45,000,000 shares of
capital stock, with 40,000,000 being shares of Common Stock and 5,000,000 being
shares of preferred stock. The approval of the reverse stock split in Proposal 2
would not change the number of authorized shares. Therefore, the decrease in the
number of outstanding shares of Common Stock pursuant to the reverse stock split
in Proposal 2 would result in an increase in the number of authorized shares
remaining unissued and available for grant. Even after the conversion of the
Preferred Stock into Common Stock, approximately 37,167,076 shares of Common
Stock would remain authorized but unissued.

The Board of Directors believes that it is in the best interests of the Company
to decrease the authorized number of shares of Common Stock remaining after the
effectiveness of the reverse stock and the conversion of the Preferred Stock.
The Board is proposing in Proposal 3 to amend the Company's Certificate of
Incorporate to decrease the authorized number of shares of the capital stock
from 45,000,000 to 15,000,000, with a reduction of shares of authorized Common
Stock from 40,000,000 to 10,000,000 but no change in the 5,000,000 shares of
preferred stock currently authorized.

The text of the proposed amendment is provided in Appendix A. The text of the
proposed amendment is subject of modifications to include such changes as may be
required by the office of the Secretary of State of Delaware or as our Board of
Directors deems necessary and advisable to effect the reverse stock split. If
Proposal 5 is approved, the Board will implement the decrease in authorized
Common Stock only if Proposal 4 also has been approved. If approved by the
stockholders, the decrease in authorized Common Stock would become effective
upon the filing with the Secretary of State of the State of Delaware of a
Certificate of Amendment to the Company's Certificate of Incorporation.

STOCKHOLDER APPROVAL AND BOARD RECOMMENDATION

The amendment of the Company's Certificate of Incorporation to decrease the
number of authorized shares of Common Stock requires requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock,
Series C Preferred Stock (on an as-converted basis) and Series D Preferred Stock
(on an as-converted basis) voting as a combined class and as separate classes If
approved, the decrease in the number of authorized shares of capital stock will
become effective at the time specified in the Certificate of Amendment filed
with the Delaware Secretary of State.

The Board of Directors unanimously recommends that stockholders vote "FOR" the
proposed amendment to the Certificate of Incorporation to decrease the number of
authorized shares of capital stock from 45,000,000 to 15,000,000 shares
(Proposal 5).

PROPOSAL 6

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, 2003. 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 2003 (Proposal 6).

ADDITIONAL INFORMATION

INDEPENDENT PUBLIC ACCOUNTANTS

McGladrey & Pullen, LLP ("McGladrey & Pullen") served as the Company's
independent auditors for 2002. The services performed by McGladrey & Pullen in
this capacity included conducting an examination in accordance with generally
accepted auditing standards of, and expressing an opinion on, the Company's
consolidated financial statements. The Board of Directors has selected McGladrey
& Pullen as the independent public accountants for the year ending October 31,
2003.

Audit Fees

McGladrey & Pullen's fees for professional services rendered in connection with
the audit and review of Forms 10-Q and all other SEC regulatory filings were
$326,100 for the 2002 fiscal year and $389,216 for the 2001 fiscal year. All of
such fees have been paid.

Audit-Related Fees

McGladrey & Pullen's fees for audit related services rendered in connection with
the audit of a subsidiary's defined contribution plan were $6,955 and none for
the 2002 and 2001 fiscal years, respectively. All of such fees have been paid.

Tax Fees

McGladrey & Pullen's fees for the 2002 and 2001 fiscal years related to
management advisory services were $19,666 and none respectively. All of such
fees have been paid.

All Other Fees

McGladrey & Pullen did not render services other than the services disclosed
above under Audit Fees for the 2002 and 2001 fiscal years.

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
SEC. 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 2002 filing requirements except that Mr. Smith was late in reporting
the exercise of a warrant.

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 2004 ANNUAL MEETING

Any stockholder who wishes to have a proposal considered for inclusion in the
Company's Proxy Statement for the fiscal 2004 annual meeting of stockholders
must submit the proposal in writing so that the Company receives it by May 21,
2004. 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 August 5, 2004.

ANNUAL REPORT

The Company's Annual Report on Form 10-K for the fiscal year ended October 31,
2002, as amended, 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, 2002 and 2001, and the audited
statements of income and cash flow for the fiscal years ended October 31, 2002,
2001 and 2000, and the report thereon of the independent auditors.

INCORPORATION BY REFERENCE

In our filings with the SEC, information is sometimes incorporated by reference
to information that we have filed separately with the SEC. This proxy statement
incorporates by reference the Financial Statements and Supplementary Data,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Quantitative and Qualitative Disclosures About Market Risk from
the Company's Quarterly Report on Form 10-Q for the Quarter ended April 30,
2003, Quarterly Report on Form 10-Q for the quarter ended January 31, 2003, as
amended, and Annual Report on Form 10-K for the year ended October 31, 2002, as
amended.

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
September 19, 2003

A-2
APPENDIX A

CERTIFICATE OF AMENDMENT

CERTIFICATE OF DESIGNATIONS, PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES C
PREFERRED STOCK

Obsidian Enterprises, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST: That at a meeting of the Board of Directors of Obsidian Enterprises, Inc.
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Designations, Preferences, Rights and Limitations of Series C
Preferred Stock of said corporation, declaring said amendment to be advisable
and directing that said amendment be considered at the next annual meeting of
the stockholders of said corporation. The resolution setting forth the proposed
amendment is as follows:

RESOLVED, that the Certificate of Designations, Preferences, Rights
and Limitations of Series C Preferred Stock of this corporation be amended
by adding a new subsection to Section 4 thereof such that the following
shall be a new subsection, subsection (h), of said Section 4 and read as
follows:

"(h) In the event the Corporation shall at any time subdivide (by
any stock split, stock dividend or otherwise) its outstanding shares
of Common Stock, into a greater number of shares, the number of shares
of Common Stock issuable hereunder upon conversion of shares of Series
C Preferred shall be proportionately increased, and, conversely, in
the event the outstanding shares of Common Stock shall be combined
into a fewer number of shares (by reverse stock split or otherwise),
the number of shares of Common Stock issuable hereunder upon
conversion of shares of Series C Preferred shall be proportionately
decreased."

SECOND: That thereafter, pursuant to resolution of its Board of Directors, an
annual meeting of the stockholders of said corporation was duly called and held
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.

THIRD: That the amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.

FOURTH: That this Certificate of Amendment of the Certificate of Designations
shall be effective on ___________, 2003.

IN WITNESS WHEREOF, said Obsidian Enterprises, Inc. has caused this certificate
to be signed by ________, its ______________, this ____ day of _______, 2003.

OBSIDIAN ENTERPRISES, INC.

By: _______________________________

Printed: __________________________

Title: ____________________________

B-2
APPENDIX B

CERTIFICATE OF AMENDMENT

CERTIFICATE OF DESIGNATIONS, PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES D
PREFERRED STOCK

Obsidian Enterprises, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST: That at a meeting of the Board of Directors of Obsidian Enterprises, Inc.
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Designations, Preferences, Rights and Limitations of Series D
Preferred Stock of said corporation, declaring said amendment to be advisable
and directing that said amendment be considered at the next annual meeting of
the stockholders of said corporation. The resolution setting forth the proposed
amendment is as follows:

RESOLVED, that the Certificate of Designations, Preferences,
Rights and Limitations of Series D Preferred Stock of this corporation
be amended by adding a new subsection to Section 4 thereof such that
the following shall be a new subsection, subsection (h), of said
Section 4 and read as follows:

"(h) In the event the Corporation shall at any time
subdivide (by any stock split, stock dividend or otherwise) its
outstanding shares of Common Stock, into a greater number of
shares, the number of shares of Common Stock issuable hereunder
upon conversion of shares of Series D Preferred shall be
proportionately increased, and, conversely, in the event the
outstanding shares of Common Stock shall be combined into a fewer
number of shares (by reverse stock split or otherwise), the
number of shares of Common Stock issuable hereunder upon
conversion of shares of Series D Preferred shall be
proportionately decreased."

THIRD: That the amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.

FOURTH: That this Certificate of Amendment of the Certificate of Designations
shall be effective on ___________, 2003.

IN WITNESS WHEREOF, said Obsidian Enterprises, Inc. has caused this certificate
to be signed by ________, its ______________, this ____ day of _______, 2003.

OBSIDIAN ENTERPRISES, INC.

By: _______________________________

Printed: __________________________

Title: ____________________________

C-2
APPENDIX C

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

Obsidian Enterprises, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST: That at a meeting of the Board of Directors of Obsidian Enterprises, Inc.
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and directing that said amendment be considered at the next annual
meeting of the stockholders of said corporation. The resolution setting forth
the proposed amendment is as follows:

RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Fourth Article thereof so that, as amended, said
Article shall be and read as follows:

"Fourth. The aggregate number of shares of capital stock that the
Corporation will have authority to issue is 15,000,000, 10,000,000 of
which will be shares of common stock, having a par value of $.0001 per
share, and 5,000,000 of which will be shares of preferred stock,
having a par value of $.001 per share.

Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), every 50 shares of the Corporation's common stock, par value
$.0001 per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one share of common stock, par
value $.0001 per share, of the Corporation (the "New Common Stock").

No fractional shares of New Common Stock shall be issued to the
holders of record of Old Common Stock in connection with the foregoing
reclassification of shares of Old Common Stock. In lieu thereof, all
shares of common stock so split that are held by a stockholder will be
aggregated subsequent to the reverse stock split. A certificate for
the number of whole shares after the aggregation shall be issued to
the stockholder. In lieu of any interest in a fractional share of
common stock after the aggregation to which a stockholder would
otherwise be entitled as a result of the reverse stock split, the
Corporation shall pay to the holder a cash amount, without interest,
determined by multiplying (i) the fractional share interest to which
the holder would otherwise be entitled by (ii) the average closing
sale price of shares of common stock (on a post-split basis) for the
20 trading days immediately prior to the Effective Time or, if no sale
takes place on those days, the average of the closing highest asked
and lowest bid prices for those days (on a post-split basis), in each
case as reported by the OTC Bulletin Board. All certificates for
outstanding shares of common stock shall be returned to the
Corporation for reissuance and, until certificates for the outstanding
shares of common stock have been reissued, the stockholder shall not
be entitled to payment of any dividends declared on the shares.

Preferred stock may be issued in one or more series as may be
determined from time to time by the Board of Directors. All shares of
any one series of preferred stock will be identical except as to the
dates of issue and the dates from which dividends on shares of the
series issued on different dates will cumulate, if cumulative.
Authority is hereby expressly granted to the Board of Directors to
authorize the issuance of one or more series of preferred stock, and
to fix by resolution or resolutions providing for the issue of each
such series the voting powers, designations, preferences, and
relative, participating, optional, redemption, conversion, exchange or
other special rights, qualifications, limitations or restrictions of
such series, and the number of shares in each series, to the full
extent now or hereafter permitted by law."

THIRD: That the amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.

FOURTH: That this Certificate of Amendment of the Certificate of Incorporation
shall be effective on ___________, 2003.

IN WITNESS WHEREOF, said Obsidian Enterprises, Inc. has caused this certificate
to be signed by ________, its ______________, this ____ day of _______, 2003.

OBSIDIAN ENTERPRISES, INC.

By: _______________________________

Printed: __________________________

Title: ____________________________

OBSIDIAN ENTERPRISES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
October 16, 2003

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 2003 Annual Meeting of Stockholders of Obsidian
Enterprises, Inc. (the "Company"), to be held at the Company's offices, 111
Monument Circle, Suite 4800, Indianapolis, Indiana 46204, on Thursday, October
16, 2003 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. Amendment of Certificate of Designation for Series C Preferred Stock

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Amendment of Certificate of Designation for Series D Preferred Stock

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. Amendment of Certificate of Incorporation to effect a 50-to-1 reverse stock
split

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. Amendment of Certificate of Incorporation to decrease number of shares of
authorized capital stock from 45,000,000 to 15, 000,000 shares

[ ] FOR [ ] AGAINST [ ] ABSTAIN

6. Ratification of McGladrey & Pullen, LLP as the Company's independent auditors
for the fiscal year ending October 31, 2003

[ ] FOR [ ] AGAINST [ ] ABSTAIN

7. 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 Proposals 2, 3, 4, 5
and 6. This proxy card, if properly executed and delivered in a timely manner,
will revoke all prior proxies.

Dated____________________________, 2003

---------------------------------
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.

PROXY CARD FOR
SERIES C PREFERRED
STOCKHOLDERS

OBSIDIAN ENTERPRISES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
October 16, 2003

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 2003 Annual Meeting of Stockholders of
Obsidian Enterprises, Inc. (the "Company"), to be held at the Company's offices,
111 Monument Circle, Suite 4800, Indianapolis, Indiana 46204, on Thursday,
October 16, 2003 at 10:00 A.M. (local time), and at any adjournment,
postponement or continuation thereof, as follows:

1. Election of Seven (7) Directors.

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. Amendment of Certificate of Designation for Series C Preferred Stock

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Amendment of Certificate of Designation for Series D Preferred Stock

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. Amendment of Certificate of Incorporation to effect a 50-to-1 reverse stock
split

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. Amendment of Certificate of Incorporation to decrease number of shares of
authorized capital stock from 45,000,000 to 15, 000,000 shares

[ ] FOR [ ] AGAINST [ ] ABSTAIN

6. Ratification of McGladrey & Pullen, LLP as the Company's independent auditors
for the fiscal year ending October 31, 2003

[ ] FOR [ ] AGAINST [ ] ABSTAIN

7. In their discretion, on any other matters properly coming before the meeting
and any adjournment, postponement or continuation thereof.

Dated____________________________, 2003

---------------------------------
Signature

Please complete, date, sign and mail promptly in the enclosed envelope which
requires no postage.

PROXY CARD FOR
SERIES D PREFERRED
STOCKHOLDERS

OBSIDIAN ENTERPRISES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
October 16, 2003

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 d Preferred Stock the
undersigned is entitled to vote at the 2003 Annual Meeting of Stockholders of
Obsidian Enterprises, Inc. (the "Company"), to be held at the Company's offices,
111 Monument Circle, Suite 4800, Indianapolis, Indiana 46204, on Thursday,
October 16, 2003 at 10:00 A.M. (local time), and at any adjournment,
postponement or continuation thereof, as follows:

1. Election of Seven (7) Directors.

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. Amendment of Certificate of Designation for Series C Preferred Stock

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Amendment of Certificate of Designation for Series D Preferred Stock

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. Amendment of Certificate of Incorporation to effect a 50-to-1 reverse stock
split

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. Amendment of Certificate of Incorporation to decrease number of shares of
authorized capital stock from 45,000,000 to 15, 000,000 shares

[ ] FOR [ ] AGAINST [ ] ABSTAIN

6. Ratification of McGladrey & Pullen, LLP as the Company's independent auditors
for the fiscal year ending October 31, 2003

[ ] FOR [ ] AGAINST [ ] ABSTAIN

7. In their discretion, on any other matters properly coming before the meeting
and any adjournment, postponement or continuation thereof.

Dated____________________________, 2003

---------------------------------
Signature

Please complete, date, sign and mail promptly in the enclosed envelope which
requires no postage.