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 to ss. 240.14a-11(c) or ss. 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 23, 2002
NOTICE IS HEREBY GIVEN, that the annual meeting of shareholders of C2,
Inc., a Wisconsin corporation, will be held on Tuesday, April 23, 2002, at 9:00
A.M., Central 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 2003 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 February 26,
2002, 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 15, 2002
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 23, 2002
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
15, 2002, in connection with a solicitation of proxies by the Board for use at
the annual meeting of shareholders to be held on Tuesday, April 23, 2002, at
9:00 A.M., Central 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 February 26, 2002, 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 2003 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 February 26, 2002,
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, 59, 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, 71, 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; 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, 50, 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, 57, 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, 47, 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, 72, 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., Grant Prideco, Inc., U.S. Bancorp,
Massachusetts Mutual Life Insurance Co., Jefferies Group, Inc., and MGIC
Investment Corporation.
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 of Directors held four meetings in 2001. The
Company's Board has Audit, Compensation and Finance Committees.
The Audit Committee consists of John A. Becker (Chairperson) and Messrs.
Brady and Lacy. The principal functions performed by the Audit Committee, which
met twice in 2001, 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 William H. Lacy (Chairperson) and
Messrs. Becker and S. Lubar. The principal functions of the Compensation
Committee, which met once in 2001, are to administer the Company's deferred and
incentive compensation plans; to annually evaluate salary grades and ranges; to
establish guidelines concerning average
3
compensation increases; and to establish compensation of all officers, directors
and subsidiary or division presidents.
The Finance Committee consists of Messrs. Donovan, D. Lubar and S. Lubar.
The principal function of the Finance Committee 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.
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 February 26, 2002, 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 1,092,743 (2) 21.5%
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
David J. Lubar 994,164 (3) 19.6
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Oyvind Solvang 699,086 (4) 13.8
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
Susan Lubar Solvang 699,086 (5) 13.8
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
5
Number of Shares
Name and Address Beneficially Owned (1) Percent of Class
- ----------------------- -------------------------- ---------------------
Nicholas F. Brady 305,500 6.0
1133 Connecticut Ave. NW,
Suite 200
Washington, DC 20036
William T. Donovan 228,656 (9) 4.5
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
William H. Lacy 4,800 0.1
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
John A. Becker 2,400 --
700 N. Water Street
Suite 1200
Milwaukee, WI 53202
All directors and
executive officers 3,327,349 65.5
as a group (7 persons).
(1) Includes shares of Common Stock issuable upon the exercise of stock options
exercisable within 60 days of February 26, 2002.
(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 486,816 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 492,536 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 73,000 shares are held by 0yvind Solvang
directly.
(5) Shares reported by Susan L. Solvang include 433,086 shares held by her
directly, 73,000 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
(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.
(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 three 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 $100,000 in the fiscal
year ended December 31, 2001. The persons named in the table are sometimes
referred to herein as the "named executive officers."
Summary Compensation Table
Annual Long Term
Compensation Compensation
------------------------------------------- ----------------
Securities
Underlying
Name and Other Annual Stock All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Options(#) Compensation($)
------------------ ---- --------- -------- ------------------ ---------- ---------------
William T. Donovan 2001 $215,000 $0 -- 20,000 $2,800 (4)
President and Chief 2000 188,000 0 -- 0 2,400 (4)
Executive Officer (2) 1999 155,000 0 -- 100,000 2,320 (4)
David J. Lubar 2001 $150,000 $0 -- 15,000 $2,001 (4)
Chairman (3) 2000 133,000 0 -- 0 1,911 (4)
1999 106,000 0 -- 100,000 1,610 (4)
Oyvind Solvang 2001 $135,000 $0 -- 15,000 $1,800 (4)
Vice President 2000 122,000 0 -- 0 1,789 (4)
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
$50,000 or 10% of the sum of such officer's salary and bonus in each respective year.
(2) Mr. Donovan served as the Company's Chairman and Chief Financial Officer until being named
President and Chief Executive Officer on July 24, 2000.
7
(3) Mr. Lubar served as the Company's President until being named Chairman on July 24, 2000.
(4) The amount includes matching contributions made under the Company's 401(k) plan.
Stock Options
The Company has in effect the Incentive Plan pursuant to which options to
purchase Common Stock may be granted to officers and other key employees of the
Company and its subsidiaries. The following table presents certain information
as to grants of stock options made during fiscal 2001 to William T. Donovan,
David J. Lubar and Oyvind Solvang. No other executive officer was granted
options in fiscal 2001.
Option Grants in 2001 Fiscal Year
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation For
Individual Grants Option Term (2)
--------------------------------------------------- -----------------------------
% of Total
Options Options Exercise At 5% Annual At 10% Annual
Granted Granted to Price Expiration Growth Growth
Name (#)(1) Employees ($/Share) Date Rate Rate
- ---- ------ --------- ---------- ------------ ------------ -------------
William T. Donovan....... 20,000 40.0% $7.25 1/25/11 $91,200 $231,000
David J. Lubar........... 15,000 30.0 7.25 1/25/11 68,400 173,250
Oyvind Solvang........... 15,000 30.0 7.25 1/25/11 68,400 173,250
- ------------
(1) The options reflected in the table were granted on January 25, 2001, and became fully vested
at the time of the grant.
(2) This presentation is intended to disclose the potential value which would accrue to the
optionee if the option were exercised the day before it would expire and if the per share
value had appreciated at the compounded annual rate indicated in each column. The assumed
rates of appreciation of 5% and 10% are prescribed by the rules of the Securities and
Exchange Commission regarding disclosure of executive compensation. The assumed annual rates
of appreciation are not intended to forecast possible future appreciation, if any, with
respect to the price of the Common Stock.
8
The Company maintains the Incentive Plan pursuant to which options to
purchase Common Stock may be granted to officers and other key employees of the
Company and its subsidiaries. The following table summarizes options exercised
during 2001 and presents the value of unexercised options held by the named
executive officers at December 31, 2001.
Aggregated Option Exercises in 2001 Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Shares Year-End (#) Fiscal Year-End ($)(1)
Acquired ------------------------------ ------------------------------
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
William T. Donovan -- -- 80,000 40,000 $195,000 $130,000
David J. Lubar -- -- 75,000 40,000 195,000 130,000
Oyvind Solvang -- -- 51,000 24,000 117,000 78,000
- ------------
(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
9
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 since
January 2001 to key executives were fully vested at the time of grant.
Section 162(m) Limitation. The Company anticipates that all 2002
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
William H. Lacy
John A. Becker
Sheldon B. Lubar
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 which was adopted by the Board on May 31, 2000. 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).
In its meetings with representatives of the independent auditors, the
Committee asks them to address and discuss their responses to several questions
that the Committee believes are particularly relevant to its oversight. The
questions include:
10
o Are there any significant accounting judgments made by management
in preparing the financial statements that would have been made
differently had the auditors themselves prepared and been
responsible for the financial statements?
o Based on the independent auditors' experience, and their knowledge
of the Company, do the Company's financial statements fairly
present to investors with clarity and completeness the Company's
financial position and performance for the reporting period in
accordance with generally accepted accounting principles and the
Securities and Exchange Commission disclosure requirements?
o Based on the independent auditors' experience, and their knowledge
of the Company, has the Company implemented internal controls and
internal audit procedures that are appropriate for the Company?
The Committee believes that, by focusing its discussions with the
independent auditors on these questions, it can promote a meaningful dialogue
that provides a basis for its oversight judgments.
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 2001 were as follows:
Audit Fees $86,000
Services and Design and Implementation Fees $0
All Other Fees:
Audit Related (primarily benefit plan and
due diligence fees) $33,500
Tax Related (primarily tax preparation and
consulting fees) $135,700
The Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Committee meets with
the 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
11
Annual Report on Form 10-K for the year ended December 31, 2001, for filing with
the Securities and Exchange Commission.
C2, Inc.
AUDIT COMMITTEE
John A. Becker
Nicholas F. Brady
William H. Lacy
12
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
Comparison of Cumulative Returns: 3/15/1999 to 12/31/2001
[graphic omitted]
March 5, December 31, December 31, December 31,
1999 1999 2000 2001
-------- ------------ ------------ -------------
C2, Inc. $100 $ 82.29 $133.33 $122.08
Nasdaq Index 100 174.12 105.71 83.45
Russell 2000 Index 100 126.82 121.49 122.74
13
CERTAIN TRANSACTIONS
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 $7,000 per month. Certain
officers and employees of the Company also provide services to Lubar & Co.,
Incorporated. An allocation of compensation for services is based on an
allocation of time spent on the respective entity and is periodically reviewed.
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, 2001, all its directors and
executive officers complied with the Section 16(a) filing requirements, except
that Form 5 filings required with respect to the receipt of options to purchase
Common Stock by David J. Lubar, William T. Donovan and Oyvind Solvang were not
timely filed.
MISCELLANEOUS
Independent Auditors
Arthur Andersen LLP acted as the independent auditors for the Company in
2001, and it is anticipated that such firm will be similarly appointed to act in
2002. 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 2003 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 15, 2002. 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 2003 annual meeting of
shareholders but does not intend to have included in the Company's proxy
statement for such meeting) after January 29, 2003, the persons named in proxies
solicited by the Board for the 2003 annual meeting of shareholders may exercise
discretionary voting power with respect to such proposal.
14
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 15, 2002
15
C2, INC.
Proxy for Annual Meeting of Shareholders to be held April 23, 2002
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 23,
2002, at 9:00 A.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
C2, INC. 2002 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1-Nicholas F. Brady 2-William T. Donovan
3-David J. Lubar 4-Sheldon B. Lubar
5-William H. Lacy 6-John A. Becker
[ ] FOR all [ ] WITHHOLD
nominees listed AUTHORITY to
to the left vote for all
(except as nominees
specified listed to the
below). 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.
Date______________________, 2002 NO. OF SHARES
Check appropriate
box 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.