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EXHIBIT 2
Amendment No. 1
to the
Merger Agreement and Plan of Reorganization
dated May 16, 2000 by and between
Advatex Associates, Inc., Logical Acquisition Corp.,
Color Acquisition Corp., Logical Imaging Solutions, Inc., and
Color Image, Inc.
dated June 15, 2000
WHEREAS, Advatex Associates, Inc., a Delaware corporation (Advatex),
Logical Acquisition Corp., a Delaware corporation (LAC), Color Acquisition
Corp., a Delaware corporation (CAC), Logical Imaging Solutions, Inc., a
California corporation (Logical), and Color Image, Inc., a Georgia corporation
(Color) (collectively the Parties) entered into a Merger Agreement and Plan of
Reorganization on May 16, 2000 (the Merger Agreement); and
WHEREAS, the Parties agree that the completion of the 1 for 6.07778 reverse
stock split by Advatex (the Reverse Split) and change of name from Advatex to
Color Imaging, Inc. (Name Change) should no longer be a condition precedent to
the effectuation of the Mergers; and
WHEREAS, the Parties desire to amend the Merger Agreement so as to proceed
with the transaction notwithstanding the fact that Advatex may not obtain
shareholder approval for the Reverse Split or the Name Change and the Reverse
Split and the Name Change may not have taken place at the Effective Date.
NOW, THEREFORE, in consideration of the premises, covenants and conditions
hereof, the Parties mutually agree to amend the Merger Agreement as follows:
1. Section 3(e) of the Merger Agreement is hereby deleted in its entirety and
replaced to read as follows:
(e) Except for the consent and approval of the stockholders of Logical and
Color, and the filing of the Certificate of Merger, no consents or approvals of,
or filings or registrations with, any third party or any public body or
authority are necessary in connection with (i) the execution and delivery by LAC
or CAC of this Agreement and (ii) the consummation by LAC or CAC of the Mergers
and the other transactions contemplated hereby.
2. Section 4(a) of the Merger Agreement is deleted in its entirety and
replaced to read as follows:
4. Representations and Warranties of Advatex. Advatex warrants and
represents as follows:
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Amendment No. 1 to
the Merger Agreement
Page 2
(a) Advatex is a duly organized and validly existing corporation in good
standing under the laws of the State of Delaware, authorized to issue an
aggregate of 20,000,000 shares of Advatex Common Stock. On the Effective Date,
giving effect to the Reverse Split, there will be issued and outstanding
approximately 900,000 shares of Advatex Common Stock, all of which such issued
and outstanding shares will be validly issued, fully paid and nonassessable. In
the event the stockholders do not approve the Reverse Stock Split and the
Reverse Stock Split has not occurred, on the Effective Date there will be issued
and outstanding no more than 6,685,556 (including any shares reserved for
issuance or issuable to G-V) shares of Advatex Common Stock, all of which such
issued and outstanding shares will be validly issued, fully paid and
nonassessable. On the Effective Date, the total liabilities of Advatex,
including but not limited to, legal, accounting and all other fees and expenses
incurred by Advatex in connection with this Agreement, shall not exceed $75,000.
On the Effective Date, Advatex shall have cash on hand in an amount equal to or
greater than the sum of $950,000 and the amount of all of its liabilities.
Except as contemplated by this Agreement, on the Effective Date there will be no
issued or outstanding options, warrants or other rights, or commitments or
agreements of any kind, contingent or otherwise, to purchase or otherwise
acquire shares of Advatex Common Stock or any issued or outstanding securities
of any nature convertible into shares of Advatex Common Stock. There is no proxy
or any other agreement, arrangement or understanding of any kind authorized or
outstanding which restricts, limits or otherwise affects the right to vote any
shares of Advatex Common Stock.
3. Section 4(s) of the Merger Agreement is deleted in its entirety and
replaced to read as follows:
(s) Except for the consent and approval of the Board of Directors of
Advatex to the Mergers and the filing of the Certificate of Merger, no consents
or approvals of, or filings or registrations with, any third party or any public
body or authority are necessary in connection with (i) the execution and
delivery by Advatex of this Agreement and (ii) the consummation of the Mergers
and the other transactions contemplated hereby. Advatex has, and on the
Effective Date will have, full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been, or will be prior to the Effective
Date, duly approved by the Board of Directors of Advatex. This Agreement has
been duly executed and delivered by Advatex and constitutes the legal, valid and
binding obligation of Advatex enforceable against it in accordance with the
terms hereof except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of rights hereunder or general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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Amendment No. 1 to
the Merger Agreement
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4. Section 7 of the Merger Agreement is deleted in its entirety and replaced
to read as follows:
7. Treatment of Shares of Constituent Corporations. The terms and
conditions of the Mergers, the mode of carrying the same into effect, and the
manner and basis of converting the securities of each of the Constituent
Corporations are as follows:
(a) The equity interests in Logical shall be converted by virtue of the
Logical Merger, and at the Effective Date, into approximately 3,000,000 newly
issued shares of Advatex Common Stock (Advatex Common Shares), on the basis of
1.84843 Advatex Common Shares for each one share of common stock of Logical,
without any action on the part of the holders thereof. The actual number of
Advatex Common Shares to be issued to each Logical stockholder shall be rounded
to the nearest whole number. The equity interests in Color shall be converted by
virtue of the Color Merger, and at the Effective Date, into approximately
3,000,000 newly issued Advatex Common Shares, on the basis of 15 Advatex Common
Shares for each one share of common stock of Color, without any action on the
part of the holders thereof. The actual number of Advatex Common Share to be
issued to each Color stockholder shall be rounded to the nearest whole number.
After the Effective Date, each holder of a common equity interest in Logical
prior to the Logical Merger shall be entitled upon surrender to receive from LAC
a certificate representing the number of Advatex Common Shares to which such
holder shall be entitled, which certificate shall contain any appropriate
restrictive legend concerning the resale of such Advatex Common Shares. After
the Effective Date, each holder of a common equity interest in Color prior to
the Color Merger shall be entitled upon surrender to receive from CAC a
certificate representing the number of Advatex Common Shares to which such
holder shall be entitled, which certificate shall contain any appropriate
restrictive legend concerning the resale of such Advatex Common Shares. Until so
surrendered, any outstanding certificates or other documentation which, prior to
the Effective Date, represented a common equity interest in either Logical or
Color shall be deemed for all corporate purposes to evidence ownership of
Advatex Common Shares into which such common equity interests shall have been
converted. Upon such surrender, the equity interests of Logical and Color so
surrendered shall be owned of record and beneficially by Advatex. Upon
conversion, any fractional shares resulting from conversion shall be rounded to
the nearest whole number of Advatex Common Shares.
In the event the Reverse Split has not taken place at the Effective Date:
(i) the equity interests in Logical shall be converted by virtue of the Logical
Merger at the Effective Date into approximately 18,233,338 shares of Advatex
common stock, on the basis of 11.2343425 shares of Advatex common stock for each
one share of common stock of Logical, without any action on the part of the
holders thereof, and (ii) the equity interests in Color shall be converted by
virtue of the Color
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Amendment No. 1 to
the Merger Agreement
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Merger at the Effective Date into approximately 18,233,338 shares of Advatex
common stock, on the basis of 91.1667 shares of Advatex common stock for each
one share of common stock of Color, without any action on the part of the
holders thereof. In the event the Reverse Split has not taken place on or before
the Effective Date, the conversion of Logical and Color shares into common stock
of Advatex shall be performed in accordance with this subparagraph, and the
shares of Advatex common stock issuable to Logical and Color shareholders shall
be issued as follows: (1) as soon as practicable after the Effective Date,
Advatex shall cause to be issued to Logical and Color shareholders a total of
11,662,996 shares of common stock, 5,831,498 shares to Logical shareholders and
5,831,498 to Color shareholders, and (2) thereafter, Advatex shall use its best
efforts to: (A) obtain stockholder approval to amend its certificate of
incorporation to increase the authorized shares of common stock so as to permit
the additional share issuance and reservation required by this subparagraph, and
(B) cause to be issued to Logical and Color shareholders an additional
24,803,680 shares of common stock, 12,401,840 shares to be issued to Logical
shareholders and 12,401,840 shares to be issued to Color shareholders and
1,651,448 shares to be reserved for issuance pursuant to Section 7(c) below. The
actual amount of shares of common stock of Advatex to be issued to each Logical
and Color shareholder shall be rounded to the nearest whole number.
(b) Following the effectiveness of the Reverse Split, there shall be no
change in the ownership of the outstanding Advatex Common Shares from that in
existence immediately prior to the Mergers.
(c) If the Reverse Split has taken place on or before the Effective Date,
the 147,000 currently existing warrants of Logical, exercisable at $5.00 per
share of the common stock of Logical shall be replaced by 271,719 warrants to
purchase Advatex Common Shares at $ 2.70 per share, with such other terms as the
Parties shall deem appropriate.
In the event the Reverse Split has not taken place on or before the
Effective Date, the 147,000 currently existing warrants of Logical, exercisable
at $5.00 per share shall be replaced by 1,651,448 warrants to purchase Advatex
Common Stock at $0.44, with such other terms as the Parties shall deem
appropriate.
(d) The separate existence and corporate organization of LAC and CAC,
except insofar as they may be continued by statute, shall cease on Effective
Date, and Logical and Color each shall become a wholly owned subsidiary of
Advatex.
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Amendment No. 1 to
the Merger Agreement
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5. Section 10(j) of the Merger Agreement is hereby deleted in its entirety and
replaced to read as follows:
(j) INTENTIONALLY OMITTED.
6. Section 10 of the Merger Agreement is hereby amended to add the following
provision as Section 10(p):
"(p) Kings Brothers, LLC and each of Dr. Sue-Ling Wang, Jerry Wang, J.H.
Wang and J.K. Wang ("Kings Parties") shall have entered into an
intercreditor agreement, in form and substance satisfactory to Advatex,
with Color and Advatex with respect to all indebtedness owed to, or
guaranteed to, South Trust Bank National Association by King's Brothers,
LLC and Color ("Debt") and including, without limitation, provisions (a)
requiring the Kings Parties to use their best efforts to give Advatex and
Color a security interest in the real property owned by Kings Brothers, LLC
("Property") within 30 days after closing, (b) acknowledging each party's
portion of the Debt and indemnification of the others for failure to pay,
(c) a guaranty and indemnification by all Kings Parties of all portions of
the Debt owed by Kings Brothers and (d) the covenant of the Kings Parties
to use their best efforts to sell or refinance the Property as soon as
practicable following any default by a Kings Party with respect to any
portion of the Debt."
7. Except as modified herein, the terms and conditions of the Merger Agreement
shall remain unmodified and in full force and effect.
8. In the event the Reverse Split has not taken place on or before the
Effective Date, the Parties agree to amend the G-V Agreement to provide
that (a) the shares issuable to G-V in connection with the Merger be
increased to 607,778 and (b) the number of shares of Common Stock issuable
pursuant to the warrant to be issued to G-V in connection with the Merger
be increased to 607,778.
9. Terms not defined herein shall have the meaning ascribed to them in the
Merger Agreement.
10. Attached hereto is the revised Schedule A from the Merger Agreement-Logical
Imaging Solutions, Inc. Common Stockholders list.
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Amendment No. 1 to
the Merger Agreement
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IN WITNESS WHEREOF, the Parties hereto have made and executed this
Amendment No.1 to the Merger Agreement as of the day and year first above
written.
ADVATEX ASSOCIATES, INC.
By:
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Joseph P. Donnolo, Chairman,
President and Chief Executive Officer
LOGICAL ACQUISITION CORP.
By:
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Joseph P. Donnolo, President
COLOR ACQUISITION CORP.
By:
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Joseph P. Donnolo, President
LOGICAL IMAGING SOLUTIONS, INC.
By:
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Michael W. Brennan, President
COLOR IMAGE, INC.
By:
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Dr. Sue-Ling Wang, President