Warrant To Purchase Stock

EXHIBIT 10.23





NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE ON EXERCISE OF THIS- WARRANT (TOGETHER, THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAW, AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE ENCUMBERED, PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREFOR UNDER SAID ACT AND QUALIFICATION UNDER SAID LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY AND REASONABLY CONCURRED IN BY THE COMPANY'S COUNSEL TO THE EFFECT THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.



JETFAX, INC.



WARRANT TO PURCHASE STOCK

Void After 5:00 P.M., Pacific Time, on October 4, 1999



NO. OF SHARES FOR WHICH THIS WARRANT IS

INITIALLY EXERCISABLE: 388,500



THIS WARRANT (the "WARRANT") dated as of December 31, 1994 is issued by

------- JetFax, Inc., a Delaware corporation ("Company"), for the benefit of Ailicec International Enterprises Limited, a Hong Kong corporation ("PURCHASER").

---------





WHEREAS, the Company and Purchaser have entered into that certain Purchase and Debt Restructuring Agreement dated as of August 3, 1994 (the "RESTRUCTURING

------------- AGREEMENT"), under which the Company has agreed to issue a Warrant to Purchaser - --------- representing the right to purchase a number of shares of Series E Preferred Stock, par value $.01 per share, of the Company ("PREFERRED STOCK");

---------------



NOW THEREFORE, in consideration of the premises and of the agreements herein contained, the parties hereto agree as follows:



ARTICLE I



Exercise and Expiration

-----------------------



1.01. Number of Shares and Initial Warrant Price. This Warrant shall entitle

------------------------------------------ Purchaser, subject to the provisions hereof, to purchase from the Company 388,500 shares of Preferred Stock, or if on any date after the date of issuance of this Warrant there ceases to be outstanding any shares of Preferred Stock, a corresponding number of shares of Common Stock, par value $.01 per share, of the Company (the "COMMON STOCK"),

------------ (such shares, whether Preferred Stock or Common Stock, as the case may be, being herein described as "UNDERLYING STOCK") at the price of $2.75 per share, subject

---------------- to adjustment as provided herein, payable in full at the time of purchase. The term "WARRANT PRICE" as used herein refers to the foregoing price per share, as

------------- adjusted, in effect at any time.



1.02. Manner of Exercise: Expiration. (a)(i) In order to exercise all or any

------------------------------ of this Warrant, Purchaser must surrender this Warrant to the Company at its principal office, with the form of exercise on the last page of this Warrant properly completed and duly executed and with such other information and investment representations as may be reasonably requested by the Company for the purpose of complying with applicable securities laws, together with payment in full of the Warrant Price as then in effect for each share of Underlying Stock to which the holder is entitled as to which with this Warrant is submitted for exercise. Any such payment of the Warrant Price is to be (A) in cash or (B) by certified or official bank or bank cashier's check or by bank wire transfer payable to the order of the Company (or the Acquiring Company in the case of a Transaction (as such terms are defined in Paragraph 2.01(b)), except as provided in Section 1.03 below.



(ii) If this Warrant is to be exercised for less than all the shares of Underlying Stock for which this Warrant may be exercised, this Warrant shall be surrendered and a new Warrant of the same tenor and for the number of remaining shares of Preferred Stock shall be executed by the Company and be delivered to the person entitled to receive the same. Upon surrender of this Warrant in conformity with the foregoing provisions, the Company (or the Acquiring Company in the case of a Transaction) shall transfer to Purchaser appropriate evidence of ownership of any shares of Underlying Stock to which the Purchaser is entitled and shall deliver such evidence of ownership to the Purchaser. If more than one warrant (including this Warrant) shall be surrendered for exercise at one time by Purchaser, the total number of full shares of Underlying Stock to which Purchaser is entitled which shall be deliverable upon tender thereof shall be computed on the basis of the aggregate number of shares of Underlying Stock to which the aggregate tendered warrants are to be exercised. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of the surrender for such exercise of this



Warrant and the Purchaser shall, as between such Purchaser and the Company (or the Acquiring Company in the case of a Transaction), be deemed to be the holder of such shares of Underlying Stock of record as of the close of business on such date.



(iii) Without limiting the foregoing, if, at the date referred to above, the transfer books for the shares of Underlying Stock purchasable upon the exercise of this Warrant shall be closed, the certificates for the shares of Underlying Stock in respect of which this Warrant is then exercised, shall be transferred when such transfer book shall next be opened and until such date the Company (or the Acquirer in the case of a Transaction) shall be under no duty to deliver any certificates for such shares of Underlying Stock; provided, however, that the transfer books of record, unless required by law, shall not be closed at any time for a period longer than 20 days.



(iv) The initial issuance of certificates of Underlying Stock upon the exercise of this Warrant shall be made without charge to Purchaser for any tax in respect of the issuance of such stock certificates, and such stock certificates shall be issued in the name of Purchaser, or (subject to compliance with applicable securities laws) in such name or names as may be directed by Purchaser; provided, however, that the Company shall not be required to issue or deliver such certificates unless and until the person or persons requesting the issuance thereof shall have established to the satisfaction of the Company that such tax, if any, has been paid.



(b) In the event this Warrant has not been exercised in accordance with the provisions of this Warrant by surrender in proper form to the Company by 5:00 P.M., Pacific time, on October 4, 1999 (the "EXPIRATION DATE"), this

--------------- Warrant shall expire and all rights of the holder thereof shall terminate and cease as of such time.



1.03 Net Exercise.

------------



(a) In the event all (or the remaining balance) of the purchase rights represented by this Warrant are exercised by the Purchaser pursuant to Section 1.02 above, in lieu of payment of the Warrant Price pursuant to Section 1.02(a)(i) the Purchaser may elect to receive a number of shares of Underlying Stock to which the Purchaser is entitled computed using the following formula:





X=Y(A-B)

-----



where: X= the number of shares of Underlying Stock to be issued to the

Purchaser,



Y= the number of shares of Underlying Stock purchasable under

this Warrant,



A= the Fair Market Value (as defined below) of one share of

Underlying Stock to which the Purchaser is entitled, and



B= the Warrant Price.



(b) Determination of Fair Market Value. As used herein, the term "FAIR

---------------------------------- ---- MARKET VALUE" of a share of Underlying Stock to which the Purchaser is entitled - ------------ as of a particular date (the "DETERMINATION DATE") shall mean:

------------------



(i) if the shares of Underlying Stock to which the Purchaser is entitled are traded on an exchange or are quoted on the National Association of Securities Dealers, Inc. automated quotation ("NASDAQ") National Market System,

------ the average of the closing or last sale price, respectively, of such stock as reported for the ten (10) trading days immediately preceding the Determination Date;



(ii) if the Underlying Stock to which the Purchaser is entitled is not traded on an exchange or on the NASDAQ National Market System but is traded in the over-the-counter market, then the average of the mean of the closing bid and asked prices for a share of such stock reported for the ten (10) trading days immediately preceding the Determination Date; and



(iii) if the Underlying Stock to which the Purchaser is entitled is not publicly traded, then as determined in good faith by the Company's Board of Directors as being the highest price per share which the Company could reasonably obtain from a willing buyer (who is not an employee or director) for authorized but unissued shares of Underlying Stock to which the Purchaser is entitled.



(c) Limits on Exercise of Conversion Right. The rights under this Section

-------------------------------------- 1.03 may only be exercised if the value



of A minus B (where "A" and "B" are as defined in Section 1.03(a) above) is a positive number.



1.04. No Fractional Shares to Be Issued. Notwithstanding anything to the

--------------------------------- contrary contained in this Warrant, the Company shall not be required to issue any fraction of a share of Underlying Stock or to distribute stock certificates that evidence fractional shares of Underlying Stock. If warrants (including this Warrant) evidencing the right to purchase a number of shares of stock shall be surrendered for exercise at one time by Purchaser, the number of full shares which shall be issuable upon exercise thereof shall be computed on the basis of the aggregate number of shares to be so issued. Purchaser, by its acceptance of this Warrant, expressly waives its right to receive any fraction of a share of Underlying Stock or a stock certificate representing a fraction of a share of Underlying Stock.



1.05. Covenant to Reserve Shares for Issuance on Exercise. The Company

--------------------------------------------------- covenants that it will at all times reserve and keep available out of its authorized Preferred Stock and Common Stock, solely for the purpose of issue upon exercise of this Warrant (or conversion of the Preferred Stock so issuable), the full number of shares of Underlying Stock, if any, then issuable if this Warrant were to be exercised. The Company covenants that all shares of Underlying Stock, upon issuance, shall be duly and validly issued and fully paid and nonassessable. The Company hereby authorizes and directs its current and future transfer agents for the Underlying Stock at all times to reserve such number of authorized shares as shall be requisite for such purpose. After the Expiration Date, no shares need continue to be reserved in respect of this Warrant.



1.06. Compliance with Governmental Requirements. Before taking any action

----------------------------------------- that would cause an adjustment reducing the Warrant Price below the then par value of any of the shares of Underlying Stock issuable upon exercise of this Warrant, the Company will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Underlying Stock at such adjuste ...