SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Section 240.14a-11(c) or
Section 240.14a-12
<PAGE>
ADVATEX ASSOCIATES, 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)(1) 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:
<PAGE>
ADVATEX ASSOCIATES, INC.
605 WEST 48TH STREET
NEW YORK, NEW YORK 10036
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 19, 2000
NOTICE IS HEREBY GIVEN, that a Special Meeting of the Stockholders of
Advatex Associates, Inc. (the "Company") will be held at 36 West 44th Street,
Suite 1201, New York, New York 10036 on June 19, 2000 at 10:00 a.m. local time,
for the purpose of considering and acting upon the following, all to be
effective upon the consummation of certain transactions described herein:
1. The approval of an amendment to the Company's Certificate of
Incorporation (i) to change the name of the Company to "Color Image,
Inc."; and (ii) to effect a reverse stock split whereby each issued and
outstanding share of Common Stock, $.01 par value per share ("Common
Stock"), will be converted into .164534 of a share of Common Stock; and
2. Any and all matters that may properly come before the meeting and
any adjournment thereof.
The Board of Directors has fixed the close of business on May 26, 2000,
as the record date for determining the stockholders entitled to vote at the
meeting, or any adjournment thereof, and only the holders of Common Stock of the
Company of record at such date will be entitled to notice of and to vote at the
meeting. Such stockholders may vote in person or by proxy.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR
NOT YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
/s/ Joseph P. Donnolo
Joseph P. Donnolo
President
New York, New York
June 2, 2000
<PAGE>
ADVATEX ASSOCIATES, INC.
605 WEST 48TH STREET
NEW YORK, NEW YORK 10036
PROXY STATEMENT
GENERAL INFORMATION CONCERNING SOLICITATION
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of Advatex Associates,
Inc. (the "Company"), to be held at 36 West 44th Street, Suite 1201, New York,
New York 10036 on June 19, 2000 at 10:00 a.m. local time, or any adjournments
thereof. This Proxy Statement and accompanying proxy card are first being sent
to the stockholders of the Company on or about June 2, 2000.
Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to the Secretary, Advatex Associates,
Inc., 605 West 48th Street, New York, New York 10036, or by attending the
meeting and electing to vote in person. Proxies received in such form will be
voted as therein set forth at the meeting, or any adjournment thereof, but if no
instructions are given, such shares will be voted for (i) the approval of an
amendment to the Company's Certificate of Incorporation (a) to change the name
of the Company to "Color Image, Inc.," (b) to effect a reverse stock split
whereby each issued and outstanding share of Common Stock, $.01 par value per
share ("Common Stock"), will be converted into .164534 of a share of Common
Stock (the "Reverse Stock Split"); and (ii) the transacting of such other
business as may properly come before the meeting or any adjournment thereof. The
effective date of all such proposals approved of at the meeting shall be the
consummation of certain transactions described under "The Transaction" herein.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has selected the close of business on May 26,
2000 as the record date for determining the stockholders entitled to notice of,
and to vote at, the meeting or any adjournment thereof. The number of shares of
Common Stock of the Company outstanding on May 26, 2000 ("Record Date") was
5,470,000. Stockholders present or represented and entitled to vote on any
matter at the meeting or any adjournment thereof will be entitled to one vote on
such matter for each share of Common Stock held by them as of the record date.
<PAGE>
THE TRANSACTION
THE MERGERS
The Company intends to acquire the business and assets of Logical
Imaging Solutions, Inc. ("Logical") and Color Image, Inc. ("Color"). Logical is
a corporation incorporated under the laws of the state of California and Color
is a corporation incorporated under the laws of the state of Georgia. Logical
Acquisition Corp., a wholly-owned subsidiary of the Company ("LAC"), will merge
with and into Logical, while Color Acquisition Corp., also a wholly-owned
subsidiary of the Company ("CAC"), will merge with and into Color (each merger
is collectively referred to herein as the "Merger" and collectively as the
"Mergers"). Each Merger shall be conducted in exchange for shares of Common
Stock of the Company, with Logical and Color as the surviving corporations.
Following the Mergers, both Color and Logical will be wholly-owned subsidiaries
of the Company. Each Merger is contingent, among other things, on the
consummation of the other Merger.
The Merger will be completed pursuant to the Merger Agreement and Plan
of Reorganization, dated as of May 16, 2000, by and among the Company, LAC, CAC,
Logical and Color (the "Merger Agreement"), pursuant to which LAC and CAC,
respectively, will merge with and into Logical and Color in a tax free
reorganization within the meaning of Sections 351 and/or 368 of the Internal
Revenue Code of 1986, as amended. Stockholders of Logical and Color will
exchange their respective shares of common stock for an aggregate of 6,000,000
shares of Common Stock of the Company. In addition, approximately 147,000
warrants of Logical will be converted into 271,719 Company warrants.
See "Certain Relationships and Related Transactions" below for certain
obligations being undertaken by certain officers, members and affiliates of the
Company in connection with the Merger.
CHANGE IN CONTROL OF THE COMPANY
Giving effect to the Merger and the Reverse Stock Split, the Company's
current stockholders will own an aggregate of approximately 900,000 shares of
Common Stock (excluding options for 100,000 shares to be held by or purchasable
by G-V Capital Corp. and 100,000 shares to be owned by G-V Capital Corp. and its
affiliates), or approximately 14.92% of the outstanding voting securities of the
Company on a fully diluted basis.
APPROVAL OF PROPOSALS REQUIRED TO EFFECT THE MERGER
The approval of each of the proposals contained herein is a condition
precedent to, or is otherwise in connection with, the consummation of the
Mergers. Assuming approval by stockholders, the proposals contained in this
Proxy Statement shall be effective concurrent with the consummation of the
Mergers.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 1, 1995 the Company canceled its month to month lease for
office space in a building located in midtown Manhattan. The Company relocated
its office to another building owned by the Company's controlling stockholder,
president and chief executive officer, Joseph P. Donnolo. This space has been
leased on a month to month basis at a base rent of $500 per month through
December 31, 1998. Lease payments have been waived effective January 1, 1999
since the Company's use of this space is minimal.
Effective June 15, 1999, the Company entered into a Consulting
Agreement (the "Consulting Agreement") with G-V Capital Corp., a New York-based
investment banking firm ("G-V"). Pursuant to the Consulting Agreement, G-V
agreed to assist the Company in introducing potential business opportunities to
the Company, including possible acquisitions of operating businesses by the
Company. The Consulting Agreement expired on December 31, 1999, but, by its
terms, was automatically renewed for three-month periods thereafter, and may be
terminated by either party on 30 days' notice. Through the date of filing of
this Schedule 14A, neither party has terminated the Consulting Agreement. As
compensation for its services, G-V was to receive (although this provision was
amended, see below) five percent (5%) of the fully diluted outstanding common
stock of the Company, par value $.01 per share ("Common Stock") following a
transaction pursuant to which the Company acquires, directly or indirectly, the
assets or business operation of an operating business, whether or not introduced
by G-V (a "Transaction"). G-V is also reimbursed for certain business expenses.
In addition, at the same time as the Consulting Agreement, G-V, the
Company and Joseph P. Donnolo, the Company's President ("Donnolo"), entered into
a stock purchase Agreement (the "Purchase Agreement") pursuant to which Mr.
Donnolo sold 546,999 shares of Common Stock (prior to the effectiveness of the
Reverse Stock Split) to designees of G-V at a purchase price of $.183 per share,
or $100,000 in the aggregate. If the Consulting Agreement is terminated prior to
consummation of a Transaction, Mr. Donnolo is obligated to repurchase these
shares from the G-V designees at the price they were sold, unless the designees
shall have transferred the shares prior thereto. As part of the Purchase
Agreement, the Company agreed not to issue any shares of Common Stock or other
securities without G-V's prior written consent, which consent shall not be
unreasonably withheld or delayed.
As compensation for services rendered in connection with the Mergers,
the Consulting Agreement was amended to provide that the Company will issue to
G-V or its designees, upon consummation of the Mergers and following the
effectiveness of the Reverse Stock Split, 100,000 shares of Common Stock (the
"G-V Shares"). The G-V Shares shall be held in escrow by counsel for the Company
for a period of 120 days following the closing of the Mergers. Upon confirmation
from the Chairman of the Company that, in his sole and absolute discretion, he
is satisfied with the Mergers and the post-Merger operations of the Company, the
G-V Shares shall be released from escrow to G-V. If, 120 days following the
closing of the Mergers, the Chairman of the Company shall indicate, in his sole
and absolute discretion, dissatisfaction with the Mergers and the post-Merger
operations of the Company, the G-V Shares shall be released from escrow to the
Company and such shares shall be returned to the Company treasury. The
Consulting Agreement was further amended to eliminate G-V's right to consent to
issuances of securities.
<PAGE>
As compensation for services to be rendered following the Mergers, the
Company will issue to G-V or its designees, upon consummation of the Mergers and
following the effectiveness of the Reverse Stock Split, a warrant, exercisable
for a period of five (5) years from the date of issuance, to purchase up to
100,000 shares of Common Stock at a purchase price of $2.00 per share, subject
to adjustment for any stock split, stock dividend or recapitalization (the
"Warrant"). In exchange for the Warrant, G-V and the Company agree that for a
period of one year from the date of consummation of the Mergers, G-V shall act
as investment banker for the Company.
As a condition to the Mergers, Donnolo and certain other major
stockholders ("Major Stockholders") of the Company shall enter into lock-up
agreements wherein each such Major Stockholder agrees until such time as the
earlier of (i) the date the Mergers are abandoned or (ii) 270 days following the
consummation of the Mergers, the Major Stockholders will not offer, pledge,
sell, hypothecate, contract to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any securities of the Company
which are beneficially owned by them (collectively referred to as the
"Securities") (the "Lock-Up"). The Lock-Up shall not apply to any private sale
of any Securities, provided that the transferee of such Securities shall
purchase such shares subject to the Lock-Up. The Lock-Up shall terminate at such
time as any former director, officer or five percent (5%) stockholder of Logical
or Color, or officer, director or five percent (5%) stockholder of the Company,
following the Mergers, shall have any shares of Company Common Stock
beneficially owned by him or her registered with the Securities and Exchange
Commission for resale or shall otherwise be permitted to sell shares of Company
Common Stock beneficially owned by him or her into the public market, whether
under Rule 144, under the Securities Exchange Act of 1934, as amended, or
otherwise.
Effective upon consummation of the Merger, each of the current
directors and officers are expected to resign from their positions, to be
replaced by nominees of both Logical and Color.
EXECUTIVE COMPENSATION
The summary compensation table is omitted because no compensation for
services in all capacities to the Company was awarded, earned by or paid to the
President of the Company for the fiscal years ended December 31, 1999, 1998 or
1997, and no other executive officer of the Company received salary and bonus in
excess of $100,000 during the fiscal years ended December 31, 1999, 1998 or
1997.
No director or officer has received compensation for services rendered
during 1997, 1998 or 1999. Directors do not currently receive fees or other
remuneration from the Company.
<PAGE>
PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT
The following table sets forth certain information as of May 12, 2000,
regarding (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock, (ii) each director,
nominee and executive officer of the Company and (iii) all officers and
directors as a group.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE
NAME & ADDRESS OF OF BENEFICIAL PERCENTAGE
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- - ----------------------- ------------------------------ ------------------------ --------------------
<S> <C> <C> <C>
Common Stock Joseph P. Donnolo 3,303,075 (1) 60%
c/o Advatex Associates, Inc.
605 West 48th Street
New York, New York 10036
Common Stock Frank J. Fitzsimmons 3,900 (2) *
c/o Advatex Associates, Inc.
605 West 48th Street
New York, New York 10036
All Officers and Directors as a Group (2 Individuals) 3,306,975 60%
<FN>
* Represents less than 1% of outstanding shares of the common stock of the
Company.
(1) Includes 4,000 shares controlled by Mr. Donnolo and certain of his
affiliates.
(2) Includes shares held in an IRA account for Mr. Fitzsimmons and shares held
in an IRA account for Mr. Fitzsimmon's wife.
</FN>
</TABLE>
Giving effect to the consummation of the Mergers and the Reverse Stock
Split, the current stockholders of the Company will collectively own
approximately 14.92% of the outstanding voting securities of the Company, on a
diluted basis (excluding options for 100,000 shares to be held by or purchasable
by G-V and 100,000 shares to be owned by G-V). Concurrent with the closing of
the Mergers, the incumbent officers and directors of the Company will be
replaced by the officers and directors selected by Logical and Color.
<PAGE>
PROPOSAL 1--AMENDMENT TO THE CERTIFICATE OF INCORPORATION ("AMENDMENT") (A) TO
CHANGE THE NAME OF THE COMPANY TO "COLOR IMAGE, INC.", AND (B) TO EFFECT A
REVERSE STOCK SPLIT WHEREBY EACH ISSUED AND OUTSTANDING SHARE OF COMMON STOCK,
$.01 PAR VALUE PER SHARE, WILL BE CONVERTED INTO .164534 OF A SHARE OF COMMON
STOCK.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
otherwise in their proxy.
DESCRIPTION
A. CHANGE OF NAME
Logical and Color have requested that the Company's name be changed to
"Color Image, Inc." such that, upon the completion of the Mergers, the Company's
name reflect its business as a successor to the business of Logical and Color.
B. REVERSE STOCK SPLIT
REASON FOR REVERSE STOCK SPLIT; DILUTION
The consummation of the Mergers is contingent upon each share of Common
Stock issued and outstanding, without any action on the part of any holder
thereof, being converted into .164534 of a share of Common Stock. Stockholders
holding shares of Common Stock in an amount not divisible by .164534 will
receive, in lieu thereof, one full additional share.
The Reverse Stock Split would apply to all shares of the Company's
Common Stock outstanding on the date immediately prior to the closing of the
Mergers, but will not be effective until the consummation of the Mergers. Giving
effect to the consummation of the Mergers, the holders of Common Stock will
collectively own approximately 14.92% of the outstanding voting securities of
the Company on a fully diluted basis (excluding options for 100,000 shares to be
held by or purchasable by G-V and 100,000 shares to be owned by G-V).
The principal purpose of the Reverse Stock Split is to fulfill the
provisions and requirements of the Merger Agreement, which provides that the
Company's currently outstanding Common Stock be reduced to approximately 900,000
shares.
<PAGE>
EXCHANGE OF STOCK CERTIFICATES
Assuming the Reverse Stock Split is approved by the stockholders,
stockholders will be required to exchange their stock certificates for new
certificates representing the shares of Common Stock after giving effect to the
Reverse Stock Split. Stockholders will be furnished with the necessary materials
and instructions for the surrender and exchange of stock certificates at the
appropriate time by the Company's transfer agent. Stockholders will not be
required to pay a transfer or other fee in connection with the exchange of
certificates. STOCKHOLDERS SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO
DO SO.
FEDERAL INCOME TAX CONSEQUENCES OF REVERSE STOCK SPLIT
The following description of Federal income tax consequences is based
upon the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences which may apply to special classes of taxpayers (e.g., non-resident
aliens, brokers-dealers or insurance companies). Stockholders are urged to
consult their own tax advisors to determine the particular consequences to them.
The exchange of shares of Common Stock for shares of Common Stock after
giving effect to the Reverse Stock Split will not result in recognition of gain
or loss. The holding period of the shares of new Common Stock will include the
stockholder's holding period for the shares of Common Stock exchanged therefor,
provided that the shares of Common Stock were held as a capital asset. The
adjusted basis of the shares of new Common Stock will be the same as the
adjusted basis of the shares of Common Stock exchanged therefor.
The proposed Certificate of Amendment to the Company's Certificate of
Incorporation is attached hereto as Exhibit A.
OTHER BUSINESS
The Board of Directors of the Company knows of no other matters to be
presented at the Special Meeting of Stockholders. However, if any other matters
properly come before the meeting, or any adjournment thereof, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
<PAGE>
COST OF SOLICITATION
Solicitation other than by mail may be made personally and by telephone
by officers and employees of the Company who will not be additionally
compensated therefor. The Company will request brokers, dealers, banks or voting
trustees, or their nominees, who hold stock in their names for others or hold
stock for others who have the right to give voting instructions, to forward
proxy materials to their principals and request authority for the execution of
the proxy card and will reimburse such institutions for their reasonable
expenses in so doing. The total cost of soliciting proxies will be borne by the
Company.
It is important that your shares be represented at the meeting. If you
are unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope as
promptly as possible.
By Order of the Board of Directors,
Joseph P. Donnolo
President
New York, New York
June 2, 2000
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT OF
THE CERTIFICATE OF INCORPORATION
OF ADVATEX ASSOCIATES, INC.
It is hereby certified that:
1. The name of the corporation (the "Corporation") is Advatex
Associates, Inc.
2. The certificate of incorporation of the Corporation is hereby
amended by striking out Article First thereof and by substituting in lieu of
said Article the following new Article:
"ARTICLE FIRST: The name of the corporation is Color Image, Inc.
(the "Corporation")."
3. The certificate of incorporation of the Corporation is hereby
amended by adding to Article Fourth the following:
"ARTICLE FOURTH: Issued Shares. There shall be a change in the
previously authorized and issued 5,470,000 shares of common stock,
$.01 par value per share, into approximately 900,000 shares of
common stock, $.01 par value per share, in the ratio of .164534
share for each share of common stock."
4. The amendments of the certificate of incorporation herein certified
have been duly adopted and written consent has been given in accordance with the
provisions of Sections 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed this ____ day of ____, 2000.
By:_______________________
Joseph P. Donnolo
Chief Executive Officer
<PAGE>
ADVATEX ASSOCIATES, INC.
PROXY - SPECIAL MEETING OF STOCKHOLDERS
JUNE 19, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Joseph P. Donnolo and Rohullah Lodin as
Proxies, each with the power to appoint and substitute, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of Common
Stock, $.01 par value per share, of Advatex Associates, Inc. held of record by
the undersigned on May 26, 2000, at the Special Meeting of Stockholders to be
held on June 19, 2000, or any adjournment thereof.
1. Authorization of an amendment to the Company's Certificate of
Incorporation, as described in the accompanying Proxy
Statement.
/ / / / / /
FOR AGAINST ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
This proxy statement is solicited on behalf of the Board of Directors.
This proxy when properly executed will be voted in the manner directed on the
face hereof. If no direction is made, this proxy will be voted FOR the amendment
to the Company's Certificate of Incorporation.
<PAGE>
Please date, sign and return the proxy card promptly in the
accompanying envelope. No postage is required. If you furnish a proxy and
subsequently attend the Special Meeting in person, you may vote in person.
--------------------------
Signature of Stockholder
---------------------------
Signature of Stockholder
Dated: , 2000
NOTE: PLEASE SIGN EXACTLY AS THE NAME APPEARS HEREON. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE FURNISH FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY THE PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
