SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UTOPIA MARKETING, INC.
(FORMERLY SAM & LIBBY, INC.)
(Name of Registrant as Specified In Its Charter)
UTOPIA MARKETING, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
(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: 1,806,314
(5) Total fee paid: $362
[ ] 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:
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[Utopia Marketing, Inc. Letterhead]
________ __, 1999
Dear Shareholder:
The Company will hold a special meeting of shareholders on ________ __,
1999 to consider and vote on a proposal to liquidate all of the assets of the
Company, satisfy all known Company obligations and liabilities, and distribute
the remaining cash pro-rata to the shareholders. The members of the Board of
Directors have unanimously approved the liquidation proposal. The Board
unanimously recommends that you vote FOR the liquidation proposal.
Under the liquidation proposal, the Board of Directors will file Articles
of Dissolution for the Company with the Florida Secretary of State, wind-up
the Company's affairs, pay from Company funds all Company liabilities, and
distribute all Company assets in one or more distributions to the Company's
shareholders. The first distribution is estimated to be made on or about
_____________ __, 1999 and is expected to be approximately all of the funds
available for distribution to the Company's shareholders after payment of
Company obligations and liabilities. If additional Company funds are
available for distribution, the Company will make a second or final
distribution at the end of 1999.
The pre-tax aggregate amount of cash estimated to be available for
distribution to the Company's shareholders is $1,806,314, which, based on the
number of shares of Company common stock outstanding on January 13, 1999, is
approximately $.13 per share.
The meeting will begin promptly at 10:00 a.m. local time at 301 Clematis
Street, Suite 205, West Palm Beach, FL 33401. The only business on the
agenda is the liquidation proposal. The official Notice of Special Meeting,
Proxy Statement and form of proxy are included with this letter.
The liquidation proposal will be approved only if shareholders holding a
majority of the shares of the Company's common stock vote in favor of the
liquidation. The vote of every shareholder is particularly important for this
special meeting. Mailing your completed proxy will not prevent you from
voting in person at the meeting if you elect to do so.
Please sign, date and promptly mail your proxy. Your cooperation is
greatly appreciated.
Sincerely,
_______________________________________
Samuel L. Edelman
Chairman of the Board of Directors,
Chief Executive Officer
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UTOPIA MARKETING, INC.
301 Clematis Street, Suite 205
West Palm Beach, Florida 33401
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ________ __, 1999
A Special Meeting of Shareholders (the "Special Meeting") of Utopia
Marketing, Inc., a Florida corporation (the "Company"), will be held on
________ __, 1999 at 10:00 a.m., local time, at 301 Clematis Street, Suite
205, West Palm Beach, FL 33401 for purpose of:
1. adopting a plan to liquidate the Company and distribute its assets
to Company shareholders (the "Liquidation Proposal"); and
2. transacting such other business as may properly come before the
Special Meeting and any and all adjournments and postponements thereof.
The Liquidation Proposal provides that the Company will be dissolved and
that the Board of Directors will convert all or substantially all of the
assets of the Company into cash, wind-up the Company's affairs, pay or
adequately provide for the payment of all Company obligations and liabilities,
and distribute pro-rata to or for the benefit of Company shareholders, in one
more distributions, all of the Company's remaining cash. The Liquidation
Proposal will be approved only if shareholders holding a majority of the
shares of the Company's common stock vote in favor of adopting the Liquidation
Proposal.
The close of business on the date before the mailing of this Proxy
Statement and Proxy, which is anticipated to be on _______ __, 1999, is the
record date for the determination of shareholders entitled to notice of and to
vote at the Special Meeting and any adjournment or postponement thereof. The
enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Special Meeting. A
complete list of the shareholders entitled to vote at the Special Meeting will
be available during ordinary business hours for examination by any
shareholder, for any purpose relevant to the Special Meeting, for a period of
at least ten days prior to the Special Meeting, at the Company's corporate
offices, 301 Clematis Street, Suite 205, West Palm Beach, Florida 33401. The
Board of Directors urges you to complete, sign, date and return the enclosed
proxy card promptly. You are cordially invited to attend the Special Meeting
in person. The return of the enclosed proxy card will not affect your right to
revoke your proxy or to vote in person if you do attend the Special Meeting.
By order of the Board of Directors,
________________________
Secretary
West Palm Beach, Florida
_______ __, 1999
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD
DATE. PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD,
DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED
FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN
ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION,
WE ASK YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE>
UTOPIA MARKETING, INC.
(formerly SAM & LIBBY, INC.)
301 Clematis Street, Suite 205
West Palm Beach, Florida 33401
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PROXY STATEMENT
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THE SPECIAL MEETING
This Proxy Statement is furnished to shareholders on or about _______ __,
1999 in connection with the solicitation of proxies by and on behalf of the
Board to be voted at a Special Meeting of the Shareholders (the "Special
Meeting") of Utopia Marketing, Inc. (the "Company") to be held on ________ __,
1999 (the "Special Meeting Date") at 301 Clematis Street, Suite 205, West Palm
Beach, FL 33401. The Special Meeting will be convened at approximately 10:00
a.m. local time, and any adjournment or postponement thereof will be announced
at such meeting.
THE PROXIES SOLICITED BY THE COMPANY PURSUANT TO THIS PROXY STATEMENT ARE
SOLICITED FOR USE AT THE SPECIAL MEETING WHEN CONVENED ON THE SPECIAL MEETING
DATE AND ANY SUBSEQUENT ADJOURNMENTS OR POSTPONEMENTS THEREOF AND MAY NOT BE
USED FOR ANY PURPOSE, INCLUDING THE DETERMINATION OF WHETHER A QUORUM IS
PRESENT, PRIOR TO THE SPECIAL MEETING DATE. THEREFORE, IT IS ANTICIPATED THAT
THE BUSINESS OF THE COMPANY TO BE CONSIDERED AT THE SPECIAL MEETING, WITH
RESPECT TO WHICH PROXIES ARE SOLICITED PURSUANT TO THIS PROXY STATEMENT, WILL
BE ADDRESSED ON THE SPECIAL MEETING DATE.
Purpose of the Special Meeting
The Special Meeting is being held to consider and adopt a proposal to
liquidate and distribute the Company's assets and dissolve the Company (the
"Liquidation Proposal"). The Liquidation Proposal, if approved by the
Company's shareholders, will result in a complete liquidation of all of the
Company's assets. If the Liquidation Proposal is approved, the Board will
file Articles of Dissolution with the Florida Secretary of State, wind-up the
Company's affairs, pay or endeavor to adequately provide for the payment of
all of the Company's known obligations and liabilities and distribute pro-rata
in one or more liquidating distributions to or for the benefit of
shareholders, as of the applicable record date, all of the Company's cash.
Shareholders are encouraged to read the Liquidation Proposal, attached as
Exhibit A to this Proxy Statement, in its entirety.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE LIQUIDATION PROPOSAL. THE COMPANY'S
SHAREHOLDERS, DEPENDING ON THEIR TAX BASIS IN THEIR SHARES, MAY BE REQUIRED TO
RECOGNIZE GAIN FOR TAX PURPOSES UPON RECEIPT OF DISTRIBUTIONS IN LIQUIDATION.
SEE "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
This Proxy Statement contains certain forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, including
statements based on the Board's estimate of the values of the Company's assets
and the Board's belief that the liquidation value per share of the Shares in
the hands of the shareholders is likely to exceed its probable trading value
in the foreseeable future absent the proposed liquidation. Without limiting
the foregoing, words such as "anticipates,"
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"believes," "estimates," "expects," "intends," "plans," and similar
expressions are intended to identify forward-looking statements. These
statements are subject to a number of risks and uncertainties. Actual results
could differ materially from those projected in the forward-looking
statements. The Company undertakes no obligation to update these
forward-looking statements to reflect future events or circumstances. See
"Certain Considerations."
Voting Rights and Proxy Information.
The cost of solicitation of proxies for use at the Special Meeting will
be borne by the Company. Solicitations will be made primarily by mail or by
facsimile, but regular employees or members of the Board of Directors of the
Company may solicit proxies personally or by telephone. Upon request, the
Company will reimburse banks, brokers, nominees and related fiduciaries for
reasonable expenses incurred by them in sending the proxy materials to
beneficial owners of Shares to the extent required by Rule 14a-13(a-b) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The shares represented by properly executed proxies in the accompanying
form received by the Board on or before the Special Meeting Date will be voted
at the Special Meeting. Shares not represented by properly executed proxies
will not be voted. Broker non-votes (shares not voted by brokers due to the
absence of instructions from street name holders) are not considered voted,
present or represented and, therefore, will have the same effect as votes
against the Liquidation Proposal. Where a shareholder specifies a choice in a
proxy with respect to any matter to be acted upon, the shares represented by
such proxy will be voted as specified. When a shareholder does not specify a
choice, in an otherwise properly executed proxy, the shares represented by
such proxy will be voted FOR the Liquidation Proposal.
Any proxy may be revoked at any time prior to its exercise by attending
the Special Meeting and voting in person, by notifying the Secretary of the
Company of such revocation in writing or by delivering a duly executed proxy
bearing a later date, provided that such notice or proxy is actually received
by the Company prior to the taking of any vote at the Special Meeting.
The close of business on the date before the mailing of this Proxy
Statement and Proxy, which is anticipated to be on _______ __, 1999 (the
"Record Date"), is the record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting and any adjournment
or postponement thereof. On the Record Date, there are expected to be
14,216,367 shares of Common Stock of the Company, par value $.01 per share
("Common Stock"), outstanding and entitled to vote. Each share of Common
Stock is entitled to one vote per share on each matter properly brought before
the Special Meeting. Shares can be voted at the Special Meeting only if the
shareholder is present in person or is represented by proxy. The presence, in
person or by proxy, at the Special Meeting of shares of Common Stock
representing at least a majority of the total number of shares of Common Stock
outstanding on the Record Date will constitute a quorum for purposes of the
Special Meeting.
The affirmative vote of a majority of the issued and outstanding Shares
of the Company (whether present in person or represented by proxy) is required
for the adoption of the Liquidation Proposal. Votes may be cast in favor,
against or withheld; votes that are withheld will have the same effect as
votes against the Liquidation Proposal. Broker non-votes (shares not voted by
brokers due to the absence of instructions from street name holders) are not
considered voted, present or represented and, therefore, will have the same
effect as votes against the Liquidation Proposal.
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Under the Florida Business Corporation Act, shareholders do not have any
appraisal or similar rights of dissenters with respect to the matters to be
considered at the Special Meeting.
The mailing address of the principal executive offices of the Company is
301 Clematis Street, Suite 205, West Palm Beach, Florida 33401.
The Board of Directors knows of no matters which are to be brought before
the Special Meeting other than those set forth in the accompanying Notice of
Special Meeting of Shareholders. If any other matters properly come before
the Special Meeting, the persons named in the enclosed proxy card, or their
duly appointed substitutes acting at the Special Meeting, will be authorized
to vote or otherwise act thereon in accordance with their judgment on such
matters. If the enclosed proxy card is properly executed and returned prior
to voting at the Special Meeting, the shares represented thereby will be voted
in accordance with the instructions marked thereon. In the absence of
instructions, shares represented by executed proxies will be voted as
recommended by the Board of Directors.
LIQUIDATION PROPOSAL
Recommendation of Board of Directors
The Company's Board of Directors unanimously recommends that the
shareholders approve adoption of the plan for dissolution and liquidation of
the Company. By Resolution dated November 30, 1998, the Board of Directors
approved the Plan of Liquidation (a copy of which is attached to this Proxy
Statement as Appendix A). The Plan of Liquidation is herein referred to as
the "Plan". The Plan is subject to the approval of the shareholders of the
Company. The summary description of the Plan and its effects set forth
hereafter is qualified in its entirety by reference to the Plan itself. The
Plan generally provides that upon adoption by the shareholders, the Company
will be dissolved and its corporate existence terminated in accordance with
Florida law.
Reasons for Liquidation
The Board of Directors' recommendation to dissolve and liquidate the
Company is based on its determination that no reasonable business alternatives
exist for the Company. Since May, 1996, when the Company began negotiations
with Maxwell Shoe Company for the sale of the Company's trademarks and
effective termination of its then present business, the Company's management
has spent considerable time and effort seeking suitable business opportunities
for the Company, including possible acquisitions or mergers, and exploring
start-up ventures. These efforts have included meetings with established
companies in the shoe business and other businesses, as well as investment
bankers. The Company has evaluated dozens of potential business transactions,
all of which the Company rejected for one or more of the following reasons:
(i) management believed that the Company's assets would not be sufficient to
allow the merged entities to succeed without additional substantial dilution
to the Company's shareholders; (ii) the Company's equity ownership interest
would not be significant; (iii) the expected multiple of earnings for the
merged entities would have diminished the Company's value; and/or (iv) the
need for cash required a strategic partner or such heavy debt that the risk of
failure of the merged entities appeared to be an unacceptable risk for the
Company's shareholders. The Board elected not to pursue a merger or other
combination of the Company with another company, based on the belief that the
interests of the Company's shareholders would more likely be better served by
the distribution of the Company's cash to its shareholders rather
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than by offering, in effect, a new investment alternative that holds no
guarantee of success. None of the business opportunities considered
resulted in formal business combination discussions or documentation.
In light of the failure of these efforts and requests received by the
Board of Directors from a representative of a number of the Company's
shareholders to consider dissolution and liquidation of the Company, the
Board of Directors has determined that it is in the best interests of the
Company's shareholders at this time to discontinue the pursuit of new
business ventures for the Company.
If the Company were to continue in existence, it would continue to incur
accounting, legal and other expenses in connection with its required filings
with the Securities and Exchange Commission, and its day to day operations.
The Board has determined that the present benefit to the Company's
shareholders of receiving cash pursuant to liquidation of the Company
outweighs any potential for future development of a profitable business
opportunity by the Company.
Description of the Company's Assets
The Company's assets currently consist primarily of cash and cash
equivalents.
Description of the Company's Known Liabilities
As of January 13, 1999, the Company did not have any significant accounts
payable. On such date, the Company did not have any other known liabilities.
Estimated Amounts Available for Distribution
As of January 13, 1999, the Company had cash, cash equivalents and other
receivables in the aggregate amount of approximately $1,993,000. The Company
estimates that it will have $1,806,314 of pre-tax cash available for
distribution to the Company's shareholders, which, based on the number of
shares of Company common stock outstanding on January 13, 1999, is
approximately $.13 per share after allowing for the Company's satisfaction of
its known liabilities and obligations and its payment of liquidation
expenses. However, the Company is unable to estimate with certainty the
amount or nature of any currently unknown liabilities or obligations that may
be asserted against the Company. The Company does not anticipate that it will
realize a significant amount of cash for distribution to its shareholders from
the liquidation of the Company's non-cash assets.
To estimate the amount that may be available for distribution to the
Company's shareholders in connection with the liquidation, the Board estimated
selling costs of the non-cash assets and estimated appropriate reserves for
the outstanding liabilities and obligations of the Company. The Board also
estimated general and administrative costs for the Company during the
liquidation process, including administrative costs, accounting and legal
fees. There can be no assurance that the Company's actual obligations,
liabilities, and expenses will not exceed the Company's estimates. Such
amounts could exceed the Company's estimates if, for example, persons assert
claims against the Company that are currently unknown to the Company or the
Company encounters complicating circumstances that cause its administrative
expenses to increase. The estimates contained in this section are
forward-looking statements. In addition to the cautionary statements set
forth above, the accuracy of such estimates could be affected by the factors
identified in the "Certain Considerations" section of this Proxy Statement.
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The Liquidation Proposal contemplates a disposition of all of the assets
of the Company and distribution of the net proceeds to the Company's
shareholders. Because the Company does not currently own any significant
assets, other than cash and cash equivalents, that will result in a material
increase in the amounts available for distribution to the Company's
shareholders, the Company has concluded that pro forma financial information
concerning the Liquidation Proposal would not be meaningful to the Company's
shareholders. The financial statements furnished in the Company's (i) Annual
Report on Form 10-K, as amended, for the year ended January 3, 1998; (ii)
Quarterly Report on Form 10-Q for the period ended March 28, 1998; (iii)
Quarterly Report on Form 10-Q for the period ended July 4, 1998; and (iv)
Quarterly Report on Form 10-Q for the period ended October 3, 1998, are
incorporated herein by reference. See "Incorporation of Certain Documents by
Reference."
Certificate of Dissolution and Notice
Upon shareholder approval of the Liquidation Proposal, Articles of
Dissolution will be filed with the Florida Department of State dissolving the
Company (the "Articles of Dissolution"). The dissolution of the Company will
become effective, in accordance with the Florida Business Corporation Act at
the time the Articles of Dissolution are accepted for filing by the Florida
Department of State or at the time specified in the Articles of Dissolution,
which will not be more than 90 days after the filing. The Company's corporate
existence will continue after the dissolution becomes effective solely for the
purpose of liquidating the Company's non-cash assets, winding up its business
affairs and distributing its assets to the Company's shareholders.
Description of the Plan of Liquidation
The following is a summary of the Plan of Liquidation (the "Plan") and is
qualified in its entirety by the terms of the Plan, attached as Appendix A.
The Plan will become effective only upon its adoption by the affirmative vote
of a majority of the Company's shareholders. The Plan provides that the
Company will be dissolved and the Board will wind-up the Company's affairs,
endeavor to convert all of the non-cash assets of the Company into cash, pay
or adequately provide for the payment of all known Company obligations and
liabilities and distribute pro-rata to or for the benefit of the Company's
shareholders all of the Company's cash in a preliminary distribution and, to
the extent additional funds are available, a final distribution.
Provision for Liabilities and Claims
The Board of Directors is not aware of any contingent liabilities of the
Company. In the event the Company becomes aware of contingent liabilities of
the Company or claims against the Company, it is likely that the Company will
be required to escrow or otherwise set aside amounts to assure satisfaction of
such claims. The reservation of such amounts would reduce the amount of cash
available for distribution to the Company's shareholders in the preliminary
distribution. Any reserved amounts that are not used satisfy such contingent
liabilities or claims would be distributed to the Company's shareholders at a
future date.
The Company plans to satisfy all of its liabilities and obligations prior
to making any distribution to its shareholders. The Company will nevertheless
reserve cash in an amount determined by the Board to be appropriate to provide
for the Company's unsatisfied liabilities and obligations and liquidation
expenses. Under the Florida Business Corporation Act, the Company will offer
any claimant whose claim is contingent or conditional security that the Board
of Directors deems
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sufficient to provide compensation tothe claimant if its claim matures. Each
contingent claimant has the right to reject the form of security offered by
the Company within 120 days following receipt by the claimant of the Company's
offer for security. Upon such a rejection, the Company must petition the
appropriate court in Palm Beach County to determine the amount and form of
security that will be sufficient to compensate the claimant that has rejected
the Company's offer for security. The Company is not currently aware of any
contingent claims against the Company.
The Company will use reasonable efforts to deliver sufficient notice to
known actual and potential creditors, and to the extent of the Company's
assets, satisfy the claims or provide sufficient security for those
creditors. However, if the Company were held by a court to have failed to
make adequate provision for its expenses, obligations and liabilities or if
the amount ultimately required to be paid in respect of such liabilities
exceeded the amount set aside in the Company's contingency reserve, a creditor
of the Company could seek an injunction against the payment of distributions
under the Plan on the basis that the cash to be distributed to shareholders is
required to provide for the payment of the Company's expenses, obligations and
liabilities. Any such action could delay for indefinite periods of time or
substantially diminish the amount of cash distributions to be made to
shareholders or both.
FURTHERMORE, UNDER THE FLORIDA BUSINESS CORPORATION ACT, IN THE EVENT THE
COMPANY FAILS TO CREATE AN ADEQUATE CONTINGENCY RESERVE FOR PAYMENT OF ITS
EXPENSES, OBLIGATIONS AND LIABILITIES, OR SHOULD SUCH CONTINGENCY RESERVE BE
EXCEEDED BY THE AMOUNT ULTIMATELY FOUND TO BE PAYABLE IN RESPECT OF THE
COMPANY'S EXPENSES AND LIABILITIES, EACH SHAREHOLDER COULD BE HELD LIABLE FOR
THE PAYMENT TO THE COMPANY'S CREDITORS OF SUCH SHAREHOLDER'S PRO-RATA SHARE OF
SUCH EXCESS, LIMITED TO THE AMOUNTS RECEIVED BY SUCH SHAREHOLDER FROM THE
COMPANY. IN SUCH EVENT, A SHAREHOLDER COULD BE REQUIRED TO RETURN ALL
DISTRIBUTIONS PREVIOUSLY RECEIVED, AND THUS WOULD RECEIVE NOTHING FROM THE
COMPANY AS A RESULT OF THE LIQUIDATION OF THE COMPANY IN ACCORDANCE WITH THE
PLAN. MOREOVER, IN THE EVENT A SHAREHOLDER HAS PAID TAXES ON AMOUNTS ALREADY
RECEIVED, A REPAYMENT OF ALL OR A PORTION OF SUCH AMOUNT COULD RESULT IN A
SITUATION IN WHICH A SHAREHOLDER MAY INCUR A NET TAX COST IF THE REPAYMENT OF
THE AMOUNT DISTRIBUTED DOES NOT CAUSE A REDUCTION IN TAXES PAYABLE IN AN
AMOUNT EQUAL TO THE AMOUNT OF THE TAXES PAID ON AMOUNTS PREVIOUSLY
DISTRIBUTED. ALTHOUGH THE POSSIBILITY OF THE OCCURRENCES SET FORTH ABOVE
CANNOT BE EXCLUDED, AFTER A REVIEW OF ITS ASSETS AND LIABILITIES, THE COMPANY
BELIEVES THAT ANY CONTINGENCY RESERVE WILL BE ADEQUATE AND THAT A RETURN OF
AMOUNTS PREVIOUSLY DISTRIBUTED WILL NOT BE REQUIRED.
Distributions to Shareholders
The Plan provides that the assets of the Company, after paying or
providing for the payment of the Company's expenses, obligations and
liabilities, will be distributed to the Company's shareholders at such time as
will be determined by the Board of Directors in its sole discretion. The
amount and timing of these distributions will depend upon claims filed against
the Company during the claim periods established by law and under the Plan,
the amounts deemed necessary or
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appropriate to provide for the satisfaction of Company liabilities, and the
expenses of liquidating the Company.
In order to receive distributions under the Plan, shareholders will be
required to surrender their common stock certificates for cancellation.
The Company will close its stock transfer books and discontinue recording
transfers of Shares on the record date fixed by the Board of Directors for
determining shareholders entitled to participate in the distribution of the
Company's assets (the "Distribution Record Date"). Thereafter, Shares will
not be assignable or transferable on the books of the Company except by will,
intestate succession or operation of law, and the Company will not issue any
new stock certificates. All liquidating distributions from the Company on or
after the Distribution Record Date will be made to shareholders according to
their shareholdings as reflected on the books of the Company on such date.
No distribution will be made to a shareholder until such shareholder
surrenders to the Company or its agent the certificate representing the shares
held by such shareholder. All amounts payable by the Company to shareholders
will be held in trust by the Transfer Agent, without interest, pending
distribution. If a shareholder's certificate has been lost, stolen or
destroyed, the Shareholder may be required to furnish the Company or the
Transfer Agent with satisfactory evidence of the loss, theft or destruction
thereof, together with a surety bond or indemnity, as a condition to the
receipt of any distribution. No interest will be paid or accrued on the cash
or other assets payable upon surrender Company stock certificates. The
shareholders of the Company will be notified of each date on which a
distribution will be made and will be advised as to the procedure for
surrender of their certificates in exchange for portion of the distribution to
which they are entitled.
A preliminary distribution and, to the extent additional funds are
available, additional distributions will be paid pro-rata to the holders of
record of shares of the Company's common stock at the close of business on the
dates determined by the Board. No distributions will be made unless, in the
opinion of the Board, an adequate reserve has been established for all
contingent liabilities and for payment of all of the known debts and
liabilities of the Company, including liquidation expenses, has been made. If
distributions cannot be made to a shareholder because mail is not deliverable
to the last known address of that shareholder on the shareholders list
maintained by the Company, such funds will be held by the Transfer Agent
subject to the "unclaimed funds" or escheat statutes of the appropriate
state. If funds are not claimed within the statutory periods, they may
escheat to such state.
SHAREHOLDERS SHOULD NOT FORWARD THEIR SHARE CERTIFICATES TO THE COMPANY
OR THE TRANSFER AGENT BEFORE RECEIVING INSTRUCTIONS TO DO SO.
Required Vote of Shareholders
Florida law requires that the Plan be approved by vote of the holders of
a majority of the Company's outstanding shares of common stock. The Company's
largest shareholder, beneficially owning approximately 38% of the outstanding
shares of the Company's Common Stock, has indicated that he intends to vote in
favor of the Liquidation Proposal. The Company has not adopted a contingency
plan in the event that the holders of a majority of the Company's common stock
do not vote in favor of the Plan.
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Directors, Officers and Indemnification
It is anticipated that the Company will continue to pay compensation to
certain officers and directors who have served the Company and continue to
provide services to the Company during the period of its liquidation pursuant
to the Plan. However, the Company will not pay a salary to its chief
executive officer, Mr. Edelman, who has not received a salary from the Company
since December 3, 1997. In addition, the Company anticipates that it will
acquire a tail insurance policy insuring the Company, its directors and
officer against certain liabilities. Such compensation and the cost of such
insurance will reduce the amount otherwise available for distribution to the
Company's shareholders.
The Plan provides for indemnification of the directors, officers,
employees or agents of the Company against all liabilities and expenses in
connection with the liquidation or any other affairs of the Company. In the
event the Company's assets are insufficient to satisfy these liabilities and
expenses, the shareholders may be required to indemnify the persons entitled
to indemnification to the extent that distributions received by the
shareholders exceed the amount which properly should have been distributed.
CERTAIN CONSIDERATIONS
General Effects of the Liquidation Proposal
Under the Plan, the Company's shareholders are entitled to receive, in
exchange for the cancellation of their shares of the Company's common stock, a
pro-rata share of the assets, if any, remaining after the payment of all the
Company's liabilities and appropriate provision for the Company's contingent
and unknown liabilities. There is no assurance that any amounts will be
available for distribution to the Company's shareholders or that any amounts
received in liquidating distributions will not ultimately be claimed by the
Company's creditors. In addition, even if a distribution were to occur, it
could be delayed indefinitely pending the resolution of unknown contingent
liabilities.
Loss of Public Entity Value
Once the shareholders vote to dissolve the Company, the Company will be
wound-up and ultimately cease to exist as a legal entity. This would preclude
the Company's ability to pursue other business opportunities and will result
in the loss of any value attributable to the Company's status as a publicly
held company.
Loss of Tax Loss Carryforwards
The dissolution of the Company will result in the loss of certain loss
carryforwards of the Company. As of December 31, 1998, the tax loss
carryforwards amounted to approximately $22,000,000.
8
<PAGE>
Sales of Assets Not Subject to Further Shareholder Approval
Although only nominal non-cash assets exist, upon the approval of the
Liquidation Proposal, the Board will have the authority to sell all of the
Company's assets on such terms as the Board determines appropriate. The
shareholders will have no subsequent opportunity to vote on such matters and
will, therefore, have no right to approve or disapprove the terms of any such
sale or the amount of any distribution.
Dissenters' Rights
Under Florida law, shareholders who vote against the Liquidation Proposal
will not be entitled to exercise any dissenters' rights or similar appraisal
rights.
Trading of Shares
The Company will close its stock transfer books and discontinue recording
transfers of shares of the Company's common stock on the Distribution Record
Date and thereafter certificates representing such shares will not be
assignable or transferable on the books of the Company except by will,
intestate succession or operation of law. After the Distribution Record Date,
the Company will not issue any new stock certificates.
Federal Income Tax Consequences
General. The following summary of the anticipated federal income tax
consequences to the Company and to its shareholders of the proposed sale of
assets and liquidation is not intended as tax advice and is not intended to be
a complete description of the federal income tax consequences of the proposed
transactions. This summary is based upon the Internal Revenue Code of 1986
(the "Code"), as presently in effect, the rules and regulations promulgated
thereunder, current administrative interpretations and court decisions. No
assurance can be given that future legislation, regulations, administrative
interpretations or court decisions will not significantly change these
authorities, possibly with retroactive effect.
No rulings have been requested or received from the Internal Revenue
Service ("IRS") as to the matters discussed and there is no intent to seek any
such ruling. Accordingly, no assurance can be given that the IRS will not
challenge the tax treatment of certain matters discussed or, if it does
challenge the tax treatment, that it will not be successful.
The discussion of federal income tax consequences set forth below is
directed primarily toward individual taxpayers who are citizens or residents
of the United States. However, because of the complexities of federal, state
and local income tax laws, it is recommended that the Company's shareholders
consult their own tax advisors concerning the federal, state and local tax
consequences of the proposed transactions to them. Further, persons who are
trusts, tax-exempt entities, corporations subject to specialized federal
income tax rules (for example, insurance companies) or non-U.S. citizens or
residents are particularly cautioned to consult their tax advisors in
considering the tax consequences of the proposed transactions.
9
<PAGE>
Federal Income Tax Consequences to the Company. Because all of the
Company's assets are in the form of cash or cash equivalents, the Company does
expect to incur any material tax consequences as a result of the Liquidation.
Federal Income Tax Consequences to Shareholders upon Liquidation.
Generally, upon the complete liquidation of a corporation, the shareholders
recognize gain or loss as measured by the difference between their amount
realized and their basis in the liquidating corporation's stock.
For Company shareholders who hold common stock as a capital asset, their
gain or loss recognized on the liquidation will be treated as a capital gain
or loss. In the case of a corporate shareholder, capital losses are allowed
only to the extent of capital gains. In the case of a noncorporate
shareholder, capital losses are allowed only to the extent of capital gains
plus the lesser of (i) $3,000 ($1,500 in the case of a married individual
filing a separate return) or (ii) the excess of such losses over such gains.
Generally, a corporation may carry its excess capital loss back three years or
forward five years, subject to the limitations in the Code. In the case of a
noncorporate taxpayer, excess capital losses may be carried forward
indefinitely, and used each year to offset capital gains and other income,
subject to the $3,000 limitation ($1,500 in the case of a married individual
filing a separate return), and subject to other limitations as
provided in the Code.
10
<PAGE>
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of shares of the Company's common stock as of December
31, 1998 by: (i) each director of the Company; (ii) each executive officer of
the Company; (iii) each person that is known by the Company to beneficially
own more than 5% of the outstanding shares of the Company's capital stock; and
(iv) all directors and executive officers of the Company as a group. The
shareholders named below have sole voting and investment power with respect to
the shares shown as beneficially owned by them, except as noted.
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address of Beneficial Owner Beneficially Owned Of Class
<S> <C> <C>
Samuel L. Edelman (1)
301 Clematis Street, Suite 205
West Palm Beach, FL 33401 5,459,482 38%
Louise B. Edelman (2)
301 Clematis Street, Suite 205
West Palm Beach, FL 33401 5,459,482 38%
Joel Solomon
301 Clematis Street, Suite 205
West Palm Beach, FL 33401 __ __
Bruce Oberfest
301 Clematis Street, Suite 205
West Palm Beach, FL 33401 __ __
Lane International Trading, Inc.
31284 San Antonio Street
Hayward, CA 94544 1,358,608 10%
Braha Industries, Inc.
1 East 33rd Street
New York, NY 10016 1,339,260 9%
Stuart Kreisler
301 Clematis Street, Suite 205
West Palm Beach, FL 33401 1,165,500 8%
All Directors and Executive Officers
as a Group (4 persons) 5,459,482 38%
</TABLE>
(1) Includes 2,538,250 shares owned by Louise B. Edelman over which Mr.
Edelman shares control, and 400,160 shares owned by Mr. Edelman's
relatives.
(2) Includes 2,521,072 shares owned by Samuel L. Edelman over which Ms.
Edelman shares control, and 400,160 shares owned by Ms. Edelman's
relatives.
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and regulations of the Commission
thereunder require the Company's executive officers and directors and persons
who own more than 10% of the Company's stock, as well as certain affiliates of
such persons, to file initial reports of ownership and changes in ownership
with the Commission. Executive officers, directors and persons owning more
than 10% of the Company's stock are required by the Commission's regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it and
written representations that no other reports were required for those persons,
the Company believes that, during the year ended December 31, 1998, all
persons subject to Section 16(a) were in compliance with all Section 16(a)
filing requirements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference herein:
1. Annual Report on Form 10-K, as amended, for the year ended January 3,
1998.
2. Quarterly Report on Form 10-Q for the period ended March 28, 1998.
3. Quarterly Report on Form 10-Q for the period ended July 4, 1998.
4. Quarterly Report on Form 10-Q for the period ended October 3, 1998.
The Company will provide without charge to each person to whom a copy of
this Proxy Statement is delivered, on the written or oral request of any such
person, by first class mail or other equally prompt means within one business
day of receipt of such request, a copy of any or all of the foregoing
documents incorporated herein by reference (other than any exhibits to such
documents which are not specifically incorporated herein or into such
documents by reference). Requests should be directed to the attention of the
Company's Chief Financial Officer at 301 Clematis Street, Suite 205, West Palm
Beach, Florida 33401; telephone (561) 835-9998.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the date of the Special Meeting or any adjournment or
postponement thereof shall be deemed to be incorporated by reference herein.
Any statements contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes hereof to the extent that
a statement contained herein (or in any other subsequently filed document that
also is incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall be deemed to
constitute a part hereof except as so modified or superseded.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
No Annual Meeting of the Company's shareholders will take place in 1999
if the Liquidation Proposal is adopted by the Company's shareholders. In the
event such a meeting is held, pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, shareholders may present proper proposals
for inclusion in the Company's proxy statement and for consideration at such
Annual Meeting by submitting such proposals to the Company in a timely
manner. In order to be so included for the 1999 Annual Meeting, if any,
shareholder proposals must be received by the Company within
12
<PAGE>
30 days following the Special Meeting and must otherwise comply with the
requirements of Rule 14a-8.
OTHER MATTERS
The Board of Directors does not intend to bring before the meeting any
business other than as set forth in this Proxy Statement, and does not know of
any other matters to be submitted at the meeting. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy card to vote the shares they represent as the
Board of Directors may recommend.
13
<PAGE>
APPENDIX A
(Plan of Liquidation)
1. The officers of the Company are authorized and directed to proceed
promptly to wind up the Company's affairs by collecting all of its assets and
paying or providing for the payment of all of its liabilities.
2. As soon as practicable, the officers shall wind up the affairs of the
Company; pay or provide for the payment of its liabilities; establish a
reserve in a reasonable amount to meet any known liabilities and liquidating
expenses and estimated unascertained or contingent liabilities and contingent
expenses, if they deem such a reserve to be desirable; and distribute to the
shareholders of the Company in cancellation of their shares, any remaining
assets of the Company.
3. If a reserve is established to meet claims against the Company, the
officers shall arrange for the distribution of any unused balance of the
reserve to the shareholders as soon as practicable.
4. The officers of the Company shall file, or have counsel for the Company
file, all appropriate forms and documents with the Internal Revenue Service.
5. The officers of the Company shall file all other forms and documents
required by the State of Florida, including Articles of Dissolution, and the
federal government, including tax returns, as soon as possible after
distribution of the Company's assets.
A-1
<PAGE>
UTOPIA MARKETING, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR SPECIAL MEETING ON ________ __, 1999
PROXY
The undersigned shareholder hereby appoints Bruce Oberfest or Vance
Kistler or either of them, attorneys and proxies for the undersigned with
power of substitution in each to act for and to vote, as designated below,
with the same force and effect as the undersigned, all shares of Utopia
Marketing, Inc. Common Stock standing in the name of the undersigned at the
Special Meeting of Shareholders to be held at 301 Clematis Street, Suite 205,
West Palm Beach, Florida at 10:00 a.m. on ________ __, 1999 and at any
adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL GRANT AUTHORITY TO THE PROXY HOLDERS TO VOTE ON BEHALF OF THE UNDERSIGNED
SHAREHOLDER AND WILL BE VOTED "FOR" THE PROPOSAL TO DISSOLVE UTOPIA MARKETING,
INC. AND LIQUIDATE ITS ASSETS.
(continued on reverse side)
IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF. THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE PROXY HOLDERS' BEST
JUDGMENT AS TO ANY OTHER MATTER.
ADOPTING THE PLAN TO LIQUIDATE THE COMPANY AND DISTRIBUTE ITS ASSETS TO ITS
SHAREHOLDERS.
/ / FOR
/ / AGAINST
/ / ABSTAIN
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
/ / MARK HERE IF YOU PLAN TO ATTEND THE MEETING
Dated: ___________, 1999
_________________________________
SIGNATURE
_________________________________
SIGNATURE (for joint owner)
Please mark, date and sign exactly as your name appears hereon. Joint owners
should each sign. If the signer is a corporation, please sign in full
corporate name by a duly authorized officer. Executors, administrators,
trustees etc. should give full title as such.
