SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
C2, INC.
(Name of Registrant as Specified in its Charter)
---------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
C2, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 26, 2001
NOTICE IS HEREBY GIVEN, that the annual meeting of shareholders of C2,
Inc., a Wisconsin corporation, will be held on Thursday, April 26, 2001, at 1:00
p.m., local time, at the Galleria Conference Room, Firstar Center, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin, for the following purposes:
1. To elect six directors to hold office until the 2002 annual meeting of
the shareholders and until their successors are duly elected and qualified.
2. To consider and act upon such other business as may properly come
before the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 2, 2001, as
the record date for the determination of the shareholders entitled to notice of,
and to vote at, the annual meeting or any adjournment or postponement thereof.
A proxy for the annual meeting and a proxy statement are enclosed.
By Order of the Board of Directors
C2, Inc.
/s/ David E. Beckwith
David E. Beckwith
Secretary
March 28, 2001
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE FILL IN, SIGN AND PROMPTLY
MAIL BACK THE ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF
DIRECTORS. IF, FOR ANY REASON, YOU SUBSEQUENTLY CHANGE YOUR PLANS, YOU MAY, OF
COURSE, REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS ACTUALLY VOTED.
C2, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 26, 2001
This proxy statement is being furnished to shareholders by the Board of
Directors (the "Board") of C2, Inc. (the "Company") beginning on or about March
28, 2001, in connection with a solicitation of proxies by the Board for use at
the annual meeting of shareholders to be held on Thursday, April 26, 2001, at
1:00 p.m., local time, at the Galleria Conference Room, Firstar Center, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin and all adjournments or postponements
thereof (the "Annual Meeting") for the purposes set forth in the attached Notice
of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will not affect
a shareholder's right to attend the Annual Meeting and to vote in person.
Presence at the Annual Meeting of a shareholder who has signed a proxy does not
in itself revoke a proxy. Any shareholder giving a proxy may revoke it at any
time before it is exercised by giving notice thereof to the Company in writing
or in open meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Company and not revoked will be voted in accordance with the instructions
contained therein. The shares represented by executed but unmarked proxies will
be voted FOR the six persons nominated for election as directors and on such
other business or matters which may properly come before the Annual Meeting in
accordance with the best judgment of the persons named as proxies in the
enclosed form of proxy. Other than the election of directors, the Board has no
knowledge of any matters to be presented for action by the shareholders at the
Annual Meeting.
Only holders of record of the Company's common stock (the "Common Stock")
at the close of business on March 2, 2001, are entitled to vote at the Annual
Meeting. On that date, the Company had outstanding and entitled to vote
5,081,864 shares of Common Stock, each of which is entitled to one vote per
share.
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect six directors, each to
hold office until the 2002 annual meeting of shareholders and until his
successor is duly elected and qualified. Set forth below are the Board's
nominees to serve as directors of the Company. Unless shareholders otherwise
specify, the shares represented by the proxies received will be voted in favor
of the election as directors of the six persons named as nominees herein. The
Board has no reason to believe that any of the listed nominees will be unable or
unwilling to serve as a director if elected. However, in the event that any
nominee should be unable to serve or for good cause will not serve, the shares
represented by proxies received will be voted for another nominee selected by
the Board.
The following sets forth certain information, as of March 2, 2001, about
the Board's nominees for election at the Annual Meeting. Except as otherwise
noted, each nominee has engaged in the principal occupation or employment and
has held the offices shown for more than the past five years.
John A. Becker, 58, has been a director of the Company since May 31, 2000.
Mr. Becker served as Vice Chairman and Chief Operating Officer of Firstar
Corporation (bank holding company) from January 1990 until his retirement in
December 1999. Mr. Becker is also a director of Northwestern Mutual Trust
Company.
Nicholas F. Brady, 70, has been a director of the Company since March 1998.
Mr. Brady has served as Chairman of the Board of Darby Advisors, Inc. since
February 1993; Chairman of Darby Overseas Investments, Ltd. since February 1994;
Chairman of Darby Emerging Markets Investments LDC since November 1994; Chairman
of Darby Chile Fund, LLC and Darby Chile Holdings, Ltd. since February 1996; and
as Secretary of the United States Department of Treasury from September 1988
until January 1993. Mr. Brady is also a director of Amerada Hess Corporation, H.
J. Heinz Company and various Templeton mutual funds.
William T. Donovan, 49, has been a director of the Company since December
1997, and has served as President and Chief Executive Officer of the Company
since July 24, 2000. Prior thereto, he served as Chairman and Chief Financial
Officer of the Company since December 1997. Mr. Donovan has been a principal of
Lubar & Co. (venture capital and investments) located in Milwaukee, Wisconsin
since 1980. Mr. Donovan is also a director of Grey Wolf, Inc.
William H. Lacy, 56, has been a director of the Company since February
2000. Mr. Lacy served as Chairman and Chief Executive Officer of Mortgage
Guaranty Insurance Corporation, a subsidiary of MGIC Investment Corporation
(secondary mortgage market activities), located in Milwaukee, Wisconsin from
1996 to 1999 and as its President from 1987 to 1996. Mr. Lacy also served as
Chairman and Chief Executive Officer of MGIC Investment Corporation located in
Milwaukee, Wisconsin from 1987 to 1999. Mr. Lacy is also a director of Johnson
Controls, Inc.
David J. Lubar, 46, has been a director of the Company since November 1997
and Chairman of the Company since July 24, 2000. Prior thereto, he served as
President of
2
the Company since December 1997. Mr. Lubar has been a principal of Lubar & Co.
(venture capital and investments) located in Milwaukee, Wisconsin since 1983.
Sheldon B. Lubar, 71, has been a director of the Company since December
1997. Mr. Lubar is also the Chairman and a principal of Lubar & Co. (venture
capital and investments) located in Milwaukee, Wisconsin. Mr. Lubar is also a
director of Weatherford International, Inc., U.S. Bancorp, Massachusetts Mutual
Life Insurance Co., Jefferies Group, Inc., MGIC Investment Corporation and
various private industrial companies.
Sheldon B. Lubar is the father of David J. Lubar and the father-in-law of
Oyvind Solvang, Vice President of the Company.
Directors will be elected by a majority of the votes cast at the Annual
Meeting (assuming a quorum is present). An abstention from voting will be
tabulated as a vote withheld on the election, and will be included in computing
the number of shares present for purposes of determining the presence of a
quorum, but will not be considered in determining whether each of the nominees
has received a majority of the votes cast at the Annual Meeting. A broker or
nominee holding shares registered in its name, or the name of its nominee, which
are beneficially owned by another person and for which it has not received
instructions as to voting from the beneficial owner, has the discretion to vote
the beneficial owner's shares with respect to the election of directors.
THE BOARD RECOMMENDS THE FOREGOING NOMINEES FOR ELECTION AS DIRECTORS AND URGES
EACH SHAREHOLDER TO VOTE "FOR" ALL NOMINEES. SHARES OF COMMON STOCK REPRESENTED
BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED "FOR" ALL NOMINEES.
BOARD OF DIRECTORS
General
The Company's Board or Directors held five meetings in 2000. The Company
has Audit, Compensation and Finance Committees of the Board.
The Audit Committee consists of Nicholas F. Brady (Chairperson) and Messrs.
Becker and Lacy. The principal functions performed by the Audit Committee, which
met twice in 2000, are to meet with the Company's independent public accountants
before the annual audit to review procedures and the scope of the audit; to
review the results of the audit; to review the financial control mechanisms used
by the Company and the adequacy of the Company's accounting and financial
controls; and to recommend annually to the Board a firm of independent public
accountants to serve as the Company's auditors.
The Compensation Committee consists of John A. Becker (Chairperson) and
Messrs. Brady and S. Lubar. The principal functions of the Compensation
Committee, which met once in 2000, are to administer the Company's deferred and
incentive compensation plans; to annually evaluate salary grades and ranges; to
establish guidelines concerning average compensation increases; and to establish
compensation of all officers, directors and subsidiary or division presidents.
3
The Finance Committee consists of Messrs. Donovan, D. Lubar and S. Lubar.
The principal function of the Finance Committee, which met once in 2000, is to
review prospective acquisition candidates, the structure, financing and terms of
prospective acquisitions and the financing arrangements of the Company and its
subsidiaries.
The Company does not have a nominating committee to consider persons
recommended by shareholders to become nominees. Recommendations for
consideration by the Company should be sent to the Secretary of the Company in
writing together with appropriate biographical information concerning any
proposed nominee.
Director Compensation
Under the Company's 1998 Equity Incentive Plan (the "Incentive Plan"), the
Company is authorized to grant to each person first elected as a non-employee
director of the Company an option for 12,000 shares of Common Stock. Options
granted to non-employee directors under the Incentive Plan have an exercise
price per share equal to 100% of the market value of a share of Common Stock on
the date of grant as determined by the Board of Directors and become exercisable
ratably at 20% per year over a period of five years from the date of grant.
On February 8, 2000, upon being named a director of the Company, Mr. Lacy
received an option for 12,000 shares of Common Stock at an exercise price of
$5.00 per share, in accordance with the terms of the Incentive Plan.
On May 31, 2000, upon being named a director of the Company, Mr. Becker
received an option for 12,000 shares of Common Stock at an exercise price of
$5.25 per share, in accordance with the terms of the Incentive Plan.
The Company reimburses directors for reasonable out-of-pocket expenses
incurred in connection with their attending meetings of the Board of Directors
and committees on which they serve.
4
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 2, 2001, by: (i) each director and
nominee; (ii) each of the executive officers named in the Summary Compensation
Table set forth below; (iii) all of the directors, nominees and executive
officers (including the executive officers named in the Summary Compensation
Table) as a group; and (iv) each person or other entity known by the Company to
own beneficially more than 5% of the class of Common Stock. Except as otherwise
indicated in the footnotes, each of the holders listed below has sole voting and
investment power over the shares beneficially owned. The beneficial ownership
set forth below is based on information provided to the Company by the
beneficial owners.
Number of Shares
Name and Address Beneficially Owned (1) Percent of Class
- ------------------------ ---------------------- ----------------
Sheldon B. Lubar 1,087,043 (2) 21.4%
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
David J. Lubar 974,164 (3) 19.2
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
0yvind Solvang 687,086 (4) 13.5
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Susan Lubar Solvang 687,086 (5) 13.5
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Kristine Lubar MacDonald 638,914 (6) 12.6
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Joan P. Lubar 584,973 (7) 11.5
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Marianne S. Lubar 423,927 (8) 8.3
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Nicholas F. Brady 303,100 6.0
1133 Connecticut Ave. NW,
Suite 200
Washington, DC 20036
5
William T. Donovan 207,816 (9) 4.1
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
William H. Lacy 2,400 --
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
John A. Becker 0 --
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
All directors and 3,261,609 64.2
executive officers as
a group (7 persons).
(1) Includes shares of Common Stock issuable upon the exercise of stock options
exercisable within 60 days of March 2, 2001.
(2) Shares reported by Sheldon B. Lubar include 182,000 shares held by various
Lubar family minor childrens' trusts over which Sheldon B. Lubar may be
deemed to share voting power and investment power as a trustee. Of these
shares, 50,000 shares are also included as beneficially owned by David J.
Lubar. Shares reported by Sheldon B. Lubar also include 415,615 shares held
directly by Sheldon Lubar's wife and 8,312 shares held by the Lubar Family
Foundation for which she may be deemed to have voting power and investment
power as a director. The remaining 481,116 shares are held directly by Mr.
Lubar or his retirement plans.
(3) Shares reported by David J. Lubar include 501,628 shares over which he may
be deemed to share voting power and investment power as a trustee. David J.
Lubar shares voting and investment power over 423,250 shares held by
various Lubar family minor childrens' trusts. Of these shares, 50,000 are
also included as beneficially owned by Sheldon Lubar and 78,378 represent
shares for which David J. Lubar's wife shares voting and investment power.
The remaining 472,536 shares are held by David J. Lubar directly.
(4) Shares reported by 0yvind Solvang include 50,000 shares over which he may
be deemed to share voting power and investment power as trustee, 433,086
shares held directly by his wife (Susan L. Solvang), and 143,000 shares
over which his wife may be deemed to share voting power and investment
power as a trustee. The remaining 61,000 shares are held by 0yvind Solvang
directly.
(5) Shares reported by Susan L. Solvang include 433,086 shares held by her
directly, 46,000 shares held directly by her husband (0yvind Solvang),
143,000 shares for which she may be deemed to share voting power and
investment power as a trustee, and 50,000 shares for which her husband may
be deemed to share voting power and investment power as a trustee.
(6) Shares reported by Kristine L. MacDonald include 425,546 shares held by her
directly and 213,368 shares for which she may be deemed to share voting
power and investment power as a trustee.
(7) Shares reported by Joan P. Lubar include 441,973 shares held by her
directly and 143,000 shares for which she may be deemed to share voting
power and investment power as a trustee.
6
(8) Shares reported by Marianne S. Lubar include 415,615 shares held by her
directly and 8,312 shares held by the Lubar Family Foundation for which she
may be deemed to have voting power and investment power as a director.
(9) Shares reported by William T. Donovan include 20,000 shares held by a
partnership in which Mr. Donovan is a general partner. Mr. Donovan
disclaims beneficial interest in 15,935 of these shares.
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information concerning the
compensation earned for each of the last two fiscal years by the Company's Chief
Executive Officer and each of the Company's most highly compensated executive
officers whose total cash compensation exceeded $100,000 in the fiscal year
ended December 31, 2000. The persons named in the table are sometimes referred
to herein as the "named executive officers."
Summary Compensation Table
Annual Long Term
Compensation Compensation
----------------------------------------- ------------
Securities
Underlying
Name and Other Annual Stock All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Options(#) Compensation($)
------------------ ---- --------- -------- ------------------ ---------- ---------------
William T. Donovan 2000 $188,000 $0 -- 0 $2,400 (4)
President and Chief 1999 155,000 0 -- 100,000 2,320 (4)
Executive Officer(2)
David J. Lubar 2000 $133,000 $0 -- 0 $1,911 (4)
Chairman(3) 1999 106,000 0 -- 100,000 1,610 (4)
Oyvind Solvang 2000 $122,000 $0 -- 0 $1,789 (4)
Vice President 1999 106,000 14,000 -- 60,000 1,760 (4)
(1) Certain personal benefits provided by the Company and its subsidiaries to
the named executive officers are not included in the table. The aggregate
amount of such personal benefits for each named executive officer in each
year reflected in the table did not exceed the lesser of $50,000 or 10% of
the sum of such officer's salary and bonus in each respective year.
(2) Mr. Donovan served as the Company's Chairman and Chief Financial Officer
until being named President and Chief Executive Officer on July 24, 2000.
(3) Mr. Lubar served as the Company's President until being named Chairman on
July 24, 2000.
(4) The amount includes matching contributions made under the Company's 401(k)
plan.
7
Stock Options
The Company maintains an Incentive Plan pursuant to which options to
purchase Common Stock may be granted to officers and other key employees of the
Company and its subsidiaries. No executive officer was granted options in fiscal
2000. The following table summarizes options exercised during 2000 and presents
the value of unexercised options held by the named executive officers at
December 31, 2000.
Aggregated Option Exercises in 2000 Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End (#) Fiscal Year-End ($)(1)
--------------------------- ---------------------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
William T. Donovan -- -- 40,000 60,000 $160,000 $240,000
David J. Lubar -- -- 40,000 60,000 160,000 240,000
Oyvind Solvang -- -- 24,000 36,000 96,000 144,000
- ------------
(1) The dollar values are calculated by determining the difference between the fair market value of the
underlying Common Stock and the exercise price of the options at exercise or fiscal year-end, as
the case may be.
Report on Executive Compensation
General. The Company's approach to compensating its executive officers is
different from that of many public corporations. The Chairman of the
Compensation Committee (John A. Becker) makes his recommendations for salaries
and bonuses for the executive officers, including the Chief Executive Officer,
to the Compensation Committee and those recommendations are generally approved
by the Committee. To date, the factors considered by the Chairman have been the
financial performance of the Company or the operating unit for which the
executive has responsibility and the achievement of non-financial goals in the
business plan or developed during the fiscal year. Financial performance is
measured by actual operating cash flow and net income compared to the amounts
included in the business plan developed prior to the beginning of the fiscal
year, but any developments affecting performance which may have occurred during
the fiscal year are considered. The Chairman has not given any specific weight
to any one factor.
Stock Options. The Incentive Plan is designed, among other things, to
encourage ownership of Common Stock by key executives, thereby promoting a close
identity of interests between the Company's management and its shareholders. The
Incentive Plan is designed to motivate and reward executives for long-term
strategic management and the enhancement of shareholder value. The Compensation
Committee has determined that stock
8
option grants to the Company's key executive officers is consistent with the
Company's best interest and the Company's overall compensation program.
In determining the number of stock options to be granted, the Compensation
Committee considers a variety of factors, including each key executive's level
of responsibility and relative contribution to the Company. Stock options are
granted with an exercise price equal to the market value of a share of Common
Stock on the date of grant. While earlier stock option grants to key executives
vested over a period of years, stock options granted in January 2001 to key
executives were fully vested at the time of grant.
Section 162(m) Limitation. The Company anticipates that all 2001
compensation to executives will be fully deductible under Section 162(m) of the
Internal Revenue Code. Therefore, the Compensation Committee determined that a
policy with respect to qualifying compensation paid to executive officers for
deductibility is not necessary.
C2, Inc.
COMPENSATION COMMITTEE
John A. Becker
Sheldon B. Lubar
William H. Lacy
Report of the Audit Committee
The Audit Committee of the Board of Directors is composed of three
independent directors, each of whom is independent as defined in the National
Association of Securities Dealers' listing standards. The Committee operates
under a written charter, a copy of which is attached to this proxy statement as
Appendix A, which was adopted by the Board. The Committee recommends to the
Board the selection of the Company's independent auditors.
The Company's management ("management") is responsible for the Company's
internal controls and the financial reporting process, including the system of
internal controls. The Company's independent auditors are responsible for
expressing an opinion on the conformity of the Company's audited consolidated
financial statements with generally accepted accounting principles. The
Committee has reviewed and discussed the audited consolidated financial
statements with management and the independent auditors. The Committee has
discussed with the independent auditors matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication With Audit Committees).
The Company's independent auditors have provided to the Committee the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent auditors their independence. The
Committee considered whether the independent auditors provision of non-audit
services is compatible with maintaining the independent auditors' independence.
The fees paid to the independent auditors for 2000 were as follows:
9
Audit Fees $92,700
Services and Design and Implementation
Fees (primarily tax preparation and
consultation fees) $103,500
All Other Fees (primarily transaction
related fees) $50,400
The Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, the evaluation of the
Company's internal controls and overall quality of the Company's financial
reporting.
Based on the Committee's reviews and discussions with management, the
internal auditors and the independent auditors referred to above, the Committee
recommended to the Board that the audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000, for filing with the Securities and Exchange Commission.
C2, Inc.
AUDIT COMMITTEE
Nicholas F. Brady
John A. Becker
William H. Lacy
10
PERFORMANCE INFORMATION
The following graph compares on a cumulative basis changes since March 5,
1999 (the date on which the Common Stock was first publicly traded) in (a) the
total shareholder return on the Common Stock with (b) the total return on the
Nasdaq Index and (c) the total return on the Russell 2000 Index. Due to the
nature of the Company's business, no published industry or line-of-business
index exists and, the Company does not believe it can reasonably identify a peer
group for comparison. The changes have been measured by dividing (i) the sum of
(A) the amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the price per share at the end of
and the beginning of the measurement period, by (ii) the price per share at the
beginning of the measurement period. The graph assumes $100 was invested on
March 5, 1999, in Common Stock, the Nasdaq Index and the Russell 2000 Index.
[PERFORMANCE GRAPH OMITTED]
March 5, December 31, December 31,
1999 1999 2000
-------- ------------ ------------
C2, Inc. $100 $ 82.29 $133.33
Nasdaq Index 100 174.12 105.71
Russell 2000 Index 100 126.82 121.49
11
Certain Transactions
The Lubar family, Lubar & Co. Incorporated, Venture Capital Fund, L.P., a
fund managed by Lubar & Co., and William T. Donovan own 5.3%, 0.8%, 6.0% and
0.7%, respectively, of Emmpak Foods, Inc., a customer of Total Logistic Control,
LLC, a wholly-owned subsidiary of the Company. During the Company's 2000 fiscal
year, Emmpak Foods, Inc. accounted for approximately $3.5 million in gross
revenue for Total Logistic Control, LLC. David J. Lubar serves as a director of
Emmpak Foods, Inc.
Sheldon B. Lubar and David J. Lubar are officers and directors of Lubar &
Co. Incorporated, and each own 50% of its capital stock. The Company's
headquarters shares offices with Lubar & Co. Incorporated. The office building
is owned by 700 North Water LLC, which is owned primarily by Sheldon B. Lubar,
David J. Lubar and the Lubar family (90%) and William T. Donovan (5%). The
Company pays its pro rata share of the rent, utilities and other expenses of
these premises. These expenses are approximately $6,000 per month.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports concerning their ownership of
Company equity securities with the Securities and Exchange Commission and the
Company. Based solely upon information provided to the Company by individual
directors and executive officers, the Company believes that during the fiscal
year ended December 31, 2000, all its directors and executive officers complied
with the Section 16(a) filing requirements.
MISCELLANEOUS
Independent Auditors
Arthur Andersen LLP acted as the independent auditors for the Company in
2000, and it is anticipated that such firm will be similarly appointed to act in
2001. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they so desire. Such
representatives are also expected to be available to respond to appropriate
questions.
Shareholder Proposals
Proposals that shareholders of the Company intend to present at and have
included in the Company's proxy statement for the 2002 annual meeting of
shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
as amended ("Rule 14a-8"), must be received by the Company by the close of
business on November 29, 2001. Additionally, if the Company receives notice of a
shareholder proposal submitted otherwise than pursuant to Rule 14a-8 (i.e., a
proposal a shareholder intends to raise at the 2002 annual meeting of
shareholders but does not intend to have included in the Company's proxy
statement for such meeting) after February 12, 2002, the persons named in
proxies
12
solicited by the Board for the 2002 annual meeting of shareholders may exercise
discretionary voting power with respect to such proposal.
Other Matters
The cost of soliciting proxies will be borne by the Company. In addition to
soliciting proxies by mail, proxies may be solicited personally and by telephone
by certain officers and regular employees of the Company. The Company will
reimburse brokers and other nominees for their reasonable expenses in
communicating with the persons for whom they hold Common Stock.
By Order of the Board of Directors
C2, Inc.
/s/ David E. Beckwith
David E. Beckwith
Secretary
March 28, 2001
13
APPENDIX A
C2, Inc.
Charter
Of The Audit Committee
Of The
Board of Directors
(As initially adopted May 31, 2000)
I. Purpose
The Audit Committee is a standing committee of the Board of Directors (the
"Board") of C2, Inc, a Wisconsin corporation (the "Company"). Its primary
function is to assist the Board in fulfilling its oversight responsibilities by:
o Reviewing the financial reports and other financial information
provided by the Company to any governmental body or the public;
o Reviewing the Company's system of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board
have established; and the Company's auditing, accounting and financial
reporting processes generally;
o Reviewing the audit efforts of the Company's independent auditors; and
o Provide an open avenue of communication among the independent
auditors, financial and senior management, and the Board.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. Composition
The Audit Committee shall be comprised of three directors, each of whom
shall be independent directors, and free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee.
Directors with any of the following relationships will not be considered
independent:
o a director being employed by the Company or any of its affiliates for
the current year or any of the past three years;
A-1
o a director accepting any compensation from the Company or any of its
affiliates in excess of $60,000 during the previous fiscal year, other
than compensation for Board service or benefits under a tax-qualified
retirement plan or non-discretionary compensation;
o a director being a member of the immediate family of an individual who
is, or has been in any of the past three years, employed by the
Company or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, and anyone who resides in such person's
home;
o a director being a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which
the Company made, or from which the Company received, payments (other
than those arising solely from investments in the Company's
securities) that exceed 5% of the Company's or the business
organization's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or
o a director being employed as an executive of another company where any
of the Company's executives serves on that company's compensation
committee.
A director who is not independent and is not a current employee or an
immediate family member of such employee may be appointed to the Audit Committee
if the Board, under exceptional and limited circumstances, determines that
membership on the Audit Committee by the individual is required by the best
interest of the Company and its shareholders, and the Company discloses, in the
next annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination.
All members of the Committee shall be able to read and understand
fundamental financial statements, including the Company's balance sheet, income
statement, and cash flow statement, or will be able to do so within a reasonable
period of time after appointment of the Committee. Committee members may enhance
their familiarity with finance and accounting by participating in educational
programs conducted by the Company or an outside consultant. At least one member
of the Committee shall have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board, and shall serve on the Committee for a term
coinciding with their Board term. If a Chair of the Committee is not appointed
by the Board, the Committee shall itself elect a Chair.
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III. Meetings
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. The purpose of the two scheduled meetings of the audit
committee is to review and approve the annual financial results of the Company
prior to release and to review and approve the scope of the annual audit to be
performed by the Company's independent auditors. As part of its job to foster
open communication, the Committee should meet at least annually with management
and the independent auditors in separate executive sessions to discuss any
matters that the Committee and each of these groups believe should be discussed
privately. In addition, when appropriate the Committee or at least its Chair
should meet with the independent auditors and management to review the Company's
financial statements consistent with IV.4 below. Whenever the word "meet" or
"meeting" is used in this Charter, it shall include any form of meeting
permitted for directors of a Wisconsin corporation, including a telephonic
meeting complying with the statutory requirements.
IV. Responsibilities and Duties
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and reassess the adequacy of this Charter annually and report
to the Board any recommended changes to this Charter. The Committee
shall submit the Charter to the full Board for approval and have the
document published at least every three years in accordance with the
rules and regulations of the Securities and Exchange Commission
("SEC").
2. Review the Company's annual audited financial statements and any
reports or other financial information prior to filing with, or
distribution to, the SEC, any governmental body, or the public,
including any certification, report, opinion, or review rendered by
the independent auditors. The review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, estimates and judgments.
3. In consultation with management and the independent auditors, consider
the integrity of the Company's financial reporting processes and
controls. Discuss significant financial risk exposures and the steps
management has taken to monitor, control and report such exposures.
The Committee should also review significant findings prepared by the
independent auditors, with management's responses, the status of
management's responses to previous recommendations from the
independent auditors and the status of any previous instructions to
management from the Committee.
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4. When appropriate, review with financial management and the independent
auditors the Company's quarterly financial results prior to the
release of earnings and/or the Company's quarterly financial
statements prior to filing with the SEC or distribution to persons
outside the Company. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with SAS 61 (see item 10). The
Chair of the Committee may represent the entire Audit Committee for
purposes of this review.
5. Review with independent auditors the recommendations included in their
management letter, if any, and their informal observations regarding
the competence and adequacy of financial and accounting procedures of
the Company. On the basis of this review, make recommendations to the
Board for any changes that seem appropriate.
V. Independent auditors
6. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence and performance of the independent auditors and
annually recommend to the Board the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant.
7. Approve the fees and other significant compensation to be paid to the
independent auditors.
8. On an annual basis, the Audit Committee should review and discuss with
the independent auditors all significant relationships they have with
the Company that could impair the auditors' independence.
9. Review the independent auditors audit plan - discuss scope, staffing,
locations, reliance upon management, and internal audit and general
audit approach.
10. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS
61.
11. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
Legal Compliance
12. On at least an annual basis, review with the Company's counsel and
legal matters that could have a significant impact on the Company's
financial statements, the
Company's compliance with applicable laws and regulations, and
inquiries received from regulators or governmental agencies.
Other Matters
13. Annually prepare a report to shareholders as required by the SEC. The
report should be included in the Company's annual proxy statement.
14. Perform any other activities consistent with this Charter, the
Company's bylaws, and governing law as the Committee or the Board
deems necessary or appropriate.
15. Review financial and accounting personnel succession planning with the
Company.
16. Annually review policies and procedures as well as audit results
associated with directors' and officers' expense accounts and
perquisites. Annually review a summary of directors' and officers'
related party transactions and potential conflicts of interest.
17. Annually consult with the independent auditors out of the presence of
management about internal controls and the completeness and accuracy
of the Company's financial statements.
18. Maintain minutes of meetings and periodically report to the Board on
significant results of the foregoing activities.
A-5
C2, INC.
Proxy for Annual Meeting of Shareholders to be held April 26, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF C2, INC.
The undersigned constitutes and appoints WILLIAM T. DONOVAN and DAVID
E. BECKWITH, or either of them, the true and lawful proxies of the undersigned,
with full power of substitution, to vote as designated below, all shares of C2,
Inc. which the undersigned is entitled to vote at the annual meeting of
shareholders of such corporation to be held at the Galleria Conference Room,
Firstar Center, 777 East Wisconsin Avenue, Milwaukee, Wisconsin on April 26,
2001, at 1:00 P.M., Central Time, and at all adjournments or postponements
thereof.
The shares represented by this proxy when properly executed will be
voted in the manner directed herein by the undersigned shareholder, but, if no
direction is indicated, this proxy will be voted FOR Item 1.
THE UNDERSIGNED HEREBY REVOKES ANY OTHER PROXY HERETOFORE EXECUTED BY
THE UNDERSIGNED FOR THE MEETING AND ACKNOWLEDGES RECEIPT OF NOTICE OF THE ANNUAL
MEETING AND THE PROXY STATEMENT.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
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C2, INC. 2001 ANNUAL MEETING
1. ELECTION 1-Nicholas F. Brady 2-William T. Donovan [ ] FOR all [ ] WITHHOLD
OF 3-David J. Lubar 4-Sheldon B. Lubar nominees AUTHORITY
DIRECTORS. 5-William H. Lacy 6-John A. Becker listed to to vote
the left for all
(except as nominees
specified listed to
below). the left.
_______________________
(Instructions: To withhold authority to vote [ ]
for any indicated nominee(s), write the number(s) [ ]
of the nominee(s) in the box provided to the right). [_______________________]
2. In their discretion upon all such other business as may properly come before said
meeting.
Check appropriate box Date _______________, 2001 NO. OF SHARES
Indicate change below: _______________________
[ ]
Address Change? [ ] Name Change? [ ] [ ]
[_______________________]
Signature(s) in Box
Please sign exactly as
your name appears on your
stock certificate. Joint
owners should each sign
personally. A corporation
should sign full
corporate name by a duly
authorized officer and
affix corporate seal.
When signing as attorney,
executor, administrator,
trustee or guardian,
please give full title as
such.
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