<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement [_CONFIDENTIAL,]FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
JETFAX, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
JETFAX, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1998
TO THE STOCKHOLDERS OF JETFAX, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of JETFAX,
INC. (the "Company"), a Delaware corporation, will be held at 2:00 p.m., local
time, on May 13, 1998, at the Stanford Park Hotel, 100 El Camino Real, Menlo
Park, California 94025, for the following purposes:
1. To elect eight (8) directors to serve for the ensuing year and until
their successors are elected.
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the year ending December 31, 1998.
3. To transact such other business as may properly come before the meeting
or any postponements or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 31, 1998 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person; however, to ensure your representation at the meeting you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage prepaid envelope enclosed for that purpose. YOU MAY REVOKE YOUR
PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME
BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER ATTENDING THE
ANNUAL MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A PROXY.
By Order of the Board of Directors,
Allen K. Jones
Secretary
Menlo Park, California
April 13, 1998
<PAGE>
JETFAX, INC.
PROXY STATEMENT FOR THE
1998 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of JETFAX, INC. (the "Company")
for use at the Annual Meeting of Stockholders to be held on May 13, 1998 at
2:00 p.m., local time, or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held at the Stanford Park Hotel, 100
El Camino Real, Menlo Park, California 94025. The telephone number at that
location is (650) 322-1234. When proxies are properly dated, executed, and
returned, the shares they represent will be voted at the meeting in accordance
with the instructions of the stockholder. If no specific instructions are
given, the shares will be voted for the election of the nominees for directors
set forth herein, for the ratification of the appointment of Deloitte & Touche
LLP as independent auditors as set forth herein and at the discretion of the
proxy holders upon such other business as may properly come before the meeting
or any adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to Stockholders for
the year ended December 31, 1997, including financial statements, were first
mailed on or about April 13, 1998, to all stockholders entitled to vote at the
meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 31, 1998 are
entitled to notice of and to vote at the meeting. At the record date,
11,742,238 shares of the Company's Common Stock, $0.01 par value, were issued
and outstanding. No shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company at or before the taking of the vote at the
Annual Meeting a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to JETFAX, INC. at 1378 Willow Road,
Menlo Park, California 94025, Attention: Secretary, or hand-delivered to the
Secretary of the Company at or before the taking of the vote at the Annual
Meeting.
VOTING AND SOLICITATION
On all matters, each share has one vote.
The cost of soliciting proxies will be borne by the Company and is estimated
to be $500. The Company has retained American Stock Transfer & Trust Company,
to assist in its solicitation of proxies from brokers, nominees, institutions
and individuals. Arrangements will also be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation materials to beneficial
owners of shares held of record by such custodians, nominees and fiduciaries.
The Company will reimburse such custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith. In addition, proxies may
be solicited by directors, officers and employees of the Company in person or
by telephone, telegram or other means of communication. No additional
compensation will be paid for such services.
1
<PAGE>
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST," or "WITHHELD FROM" on a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote against the proposal.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that, while broker non-votes should be counted for purpose of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Accordingly, the Company intends to treat
broker non-votes in this manner. Thus, a broker non-vote will not affect the
outcome of the voting on a proposal.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Company currently intends to hold its 1999 Annual Meeting of
Stockholders in early May 1999 and to mail Proxy Statements relating to such
meeting in early-April 1999. The date by which stockholder proposals must be
received by the Company for inclusion in the Proxy Statement and form of proxy
for its 1999 Annual Meeting of Stockholders, is December 11, 1998. Such
stockholder proposals should be submitted to JETFAX, INC. at 1378 Willow Road,
Menlo Park, California 94025, Attention: Secretary.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company currently has eight directors. A board of eight (8) directors is
to be elected at the Annual Meeting. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for management's eight (8)
nominees named below, all of whom are presently directors of the Company. In
the event that any management nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for a
nominee who shall be designated by the present Board of Directors to fill the
vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in
such a manner as will assure the election of as many of the nominees listed
below as possible, and, in such event, the specific nominees to be voted for
will be determined by the proxy holders. The Company is not aware of any
nominee who will be unable or will decline to serve as a director. The term of
office for each person elected as a director will continue until the next
annual meeting of the stockholders or until such director's successor has been
duly elected and qualified.
VOTE REQUIRED
The eight nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected to the Board of Directors. An
abstention will have the same effect as a vote withheld for the election of
directors, and pursuant to Delaware law, a broker non-vote will not be treated
as voting in person or by proxy on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES
LISTED BELOW.
The names of the nominees and certain information about them as of March 1,
1998 are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY SINCE
- --------------- --- ---------------------------- --------
<S> <C> <C> <C>
Rudy Prince............. 40 President, Chief Executive Officer and Chairman of the Board 1988
Thomas B. Akin (1) (2).. 45 Director 1996
Douglas Y. Bech (1)
(2)(3)................. 52 Director 1988
Steven J. Carnevale
(2)(3)................. 42 Director 1996
Chung Chiu.............. 64 Director 1991
Edward R. Prince, Jr.
(1)(3)................. 68 Director 1988
Lon B. Radin............ 47 Vice President of Engineering and Director 1988
Albert E. Sisto......... 48 Director 1998
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
RUDY PRINCE co-founded the Company and has served as its President and Chief
Executive Officer and a member of the Board of Directors since August 1988.
Mr. Prince was appointed as the Chairman of the Board of Directors in October
1996. From June 1985 to February 1988, Mr. Prince was the Vice President of
Sales and Marketing at Entropic Speech, Inc., a manufacturer of
telecommunications products. Prior to that, Mr. Prince served as Sales Manager
with Digicon, Inc., a geophysical contractor ("Digicon"), from March 1980 to
June 1985. From August 1978 to March 1980, Mr. Prince served as a marketing
representative with the Data Processing Division of International Business
Machines Corporation. Mr. Prince holds a B.S. in Mechanical Engineering from
the University of Texas at Austin. Mr. Prince is the son of Edward R. Prince,
Jr., a director of the Company.
3
<PAGE>
THOMAS B. AKIN has served as a director of the Company since July 1996.
Since October 1995, Mr. Akin has served as a Managing General Partner of
Talkot Partners II, LLC, an investment firm. From November 1981 to February
1994, Mr. Akin served in various capacities, most recently as the Managing
Director of Western Regional Sales for Merrill Lynch & Co. Mr. Akin was on a
leave of absence from Merrill Lynch & Co. from February 1994 until his
retirement in April 1997. Mr. Akin holds a B.A. in Biology from the University
of California at Santa Cruz and an M.B.A. from the University of California at
Los Angeles.
DOUGLAS Y. BECH has served as a director of the Company since August 1988.
Since January 1998, Mr. Bech has served as the Chairman of Club Regina
Resorts, Inc., a company that owns and operates luxury vacation ownership
resorts. Mr. Bech was a founding partner of and, since August 1994, has served
as a Managing Director of Raintree Capital Company, LLC, a merchant banking
firm. In addition, from October 1994 to October 1997, Mr. Bech was a partner
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., a law firm. From May 1993
through July 1994, Mr. Bech was a partner of Gardere & Wynne, L.L.P., a law
firm. From September 1970 to May 1993. Mr. Bech was associated with or a
partner of the law firm Andrews & Kurth L.L.P. Mr. Bech holds a B.A. in
Political Science from Baylor University and a J.D. from The University of
Texas Law School. Mr. Bech is a director of Wainoco Oil Corporation, Pride
Companies, L.P. and several private companies.
STEVEN J. CARNEVALE has served as a director of the Company since July 1996.
In July 1996, Mr. Carnevale became a General Partner in Talkot Capital, LLC,
an investment firm. From August 1992 to July 1996, Mr. Carnevale was a General
Partner of Endeavor Capital Management, an investment firm. From November 1990
to August 1992, Mr. Carnevale was the owner and Chief Executive Officer of
Orca Industries, a specialty computer manufacturer. Mr. Carnevale holds a B.S.
in Engineering from the University of Michigan.
CHUNG CHIU has served as a director of the Company since August 1991. Since
October 1978, Mr. Chiu has served as the Managing Director of Ailicec
International Enterprises Limited, a textile, electronics and machineries
conglomerate with operations largely in the Peoples Republic of China.
EDWARD R. PRINCE, JR. has served as a director of the Company since August
1988. Since August 1994, Mr. Prince has served as the Vice Chairman of Zydeco
Exploration, Inc. and Zydeco Energy, Inc., oil and gas exploration companies.
Prior to that from November 1970 to May 1994, Mr. Prince served in various
capacities, most recently as the Chairman and Chief Executive Officer of
Digicon. Mr. Prince holds a B.S. from the United States Military Academy at
West Point and an M.S. in Applied Mathematics from North Carolina State
College. Mr. Prince is the father of Rudy Prince, the Company's Chairman of
the Board, Chief Executive Officer and President. Mr. Prince is a director of
Geoscience Corporation and Zydeco Energy, Inc.
LON B. RADIN co-founded the Company and serves as the Vice President of
Engineering and a member of the Board of Directors of the Company. Dr. Radin
also served as the Chairman of the Board of Directors from August 1988 to
October 1996. From 1986 to 1988, Dr. Radin was the sole proprietor of L-Tel
Laboratories, a developer of digital fax telephone devices. From 1981 to 1986,
Dr. Radin served in various positions, most recently as the Director of
Software and Manager of Research with Time & Space Processing, Inc., a
software developer of telecommunications products for the defense industry.
Prior to that Dr. Radin served as a software services consultant for The
Systems Group, an engineering consulting firm from 1976 to 1981. Dr. Radin
holds a B.S. in Physics and Mathematics from the University of Michigan and a
Ph.D. and an M.A. in Mathematics from the University of California at
Berkeley.
ALBERT E. SISTO has served as a director of the Company since February 1998.
Since November 1997, Mr. Sisto has served as the Chief Operating Officer of
RSA Data Security, a wholly owned subsidiary of Security Dynamics
Technologies, Inc., a supplier of software components that secure electronic
data. From October 1994 to November 1997, Mr. Sisto was Chairman of the Board
and President of DocuMagix, Inc., a supplier of electronic file cabinet
software which was acquired by the Company in December 1997. Prior to that Mr.
Sisto was President and Chief Executive Officer of Pixel Craft (formerly
BarelyScan) from 1989 to September 1994. Mr. Sisto holds a B.E. in Materials
from the Stevens Institute of Technology.
4
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
1997. No directors attended fewer than 75% of the total of number of meetings
of the Board of Directors or committees of the Board of Directors held in 1997
during which such directors were members of the Board of Directors except for
Mr. Chiu who attended four of the seven meetings. The Board of Directors has
an Audit Committee, a Compensation Committee and a Nominating Committee.
In 1997, the Audit Committee consisted of Messrs. Akin, Bech and Carnevale
and met one time. This committee is primarily responsible for approving the
services performed by the Company's independent auditors and for reviewing and
evaluating the Company's accounting principles and its systems of internal
accounting controls. Messrs. Akin, Bech and Carnevale will continue serving as
the Audit Committee for 1998.
In 1997, the Compensation Committee consisted of Messrs. Akin, Bech, Shelley
Harrison and Edward R. Prince, Jr. and met one time. Mr. Harrison resigned
from the Board and the Compensation Committee in February 1998. The committee
reviews and approves the Company's executive compensation policy and plan.
Messrs. Akin, Bech, and Edward R. Prince, Jr. will continue serving as the
Compensation Committee for 1998.
In 1997, the Nominating Committee consisted of Messrs. Bech, Carnevale and
Edward R. Prince, Jr. and did not met. This committee is primarily responsible
for approving the nominations of persons to serve as members of the Board of
Directors of the Company. Messrs. Bech, Carnevale and Edward R. Prince, Jr.
will continue serving as the Nominating Committee for 1998.
BOARD COMPENSATION
Directors do not receive any cash compensation for their services as members
of the Board of Directors, although they are reimbursed for their expenses in
attending out-of-town meetings. Officers are appointed by and serve at the
discretion of the Board of Directors. There are no family relationships
between directors and executive officers of the Company except that Mr. Edward
R. Prince, Jr., is the father of Rudy Prince the Company's Chairman of the
Board, Chief Executive Officer and President. Nonemployee directors are
automatically granted an initial option on the date on which such person first
becomes a director to purchase 20,000 shares of the Company's Common Stock (an
"Initial Grant") and thereafter annual grants to purchase 5,000 shares of the
Company's Common Stock on the date of the annual meeting of the stockholders
each year thereafter (an "Annual Grant") pursuant to the terms of the
Company's 1997 Directors' Stock Option Plan (the "Directors' Plan"). Pursuant
to the Directors' Plan, Mr. Sisto was granted a option to purchase 20,000
shares on February 11, 1998 at an exercise price of $4.625. One-fourth of each
Initial Grant will vest on each year over a four-year period and the Annual
Grants will vest in full on the four year anniversary of the date of grant.
Each option will expire ten years from the date of grant unless terminated
sooner pursuant to the provisions of the Directors' Plan.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the consolidated financial statements of the Company for
the fiscal year ending December 31, 1998, and recommends that stockholders
vote for ratification of such appointment. In the event of a negative vote on
such ratification, the Board of Directors will reconsider its selection.
Deloitte & Touche LLP has audited the Company's financial statements since
1988. Its representatives are expected to be present at the Annual Meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned in each of the two
years in the period ended December 31, 1997 by the Chief Executive Officer and
each of the other four most highly compensated executive officers of the
Company (collectively the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ ------------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION
- ------------------ ---- --------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Rudy Prince............ 1997 $140,000 -- -- 175,000 --
President, Chief 1996 102,995(1) -- -- 100,000 --
Executive Officer and
Chairman of the Board
Michael Crandell....... 1997 110,000 -- -- -- --
Vice President of 1996 45,525(1) -- -- 187,500 --
Software
John H. Harris......... 1997 110,000 -- -- 50,000 --
Vice President of 1996 81,641(1) 50,000 --
International
Operations
Allen K. Jones......... 1997 120,000 -- -- 100,000 --
Vice President of 1996 70,298(1) -- -- 60,000 --
Finance, Chief
Financial Officer and
Secretary
Lon B. Radin........... 1997 125,000 -- -- 75,000 --
Vice President of 1996 92,604(1) -- -- 100,000 --
Engineering
</TABLE>
- --------
(1) The salaries and bonus set forth in the table for 1996 are given for the
fiscal year ended December 31, 1996, which is a nine-month period. For the
twelve-month period ended December 31, 1996, the salaries earned by each
Named Executive Officer were as follows: Rudy Prince, $129,245; Michael
Crandell, $45,525 (Mr. Crandell joined the Company as an executive officer
in July 1996); John H. Harris, $105,489; Allen K. Jones, $70,298 (Mr.
Jones joined the Company as an executive officer in May 1996); and Lon B.
Radin, $118,854.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
year ended December 31, 1997 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF EXERCISE AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS OR BASE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM (4)
OPTIONS EMPLOYEES IN ($/SH) EXPIRATION ---------------------------
NAME GRANTED(#)(1) FISCAL YEAR (2) (3) DATE 5% ($) 10% ($)
- ---- ------------- --------------- -------- ---------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Rudy Prince(5).......... 175,000 18.9% $8.00 11/05/07 $ 880,425 $ 2,231,250
Michael Crandell(5)..... -- -- -- -- -- --
John H. Harris(5)....... 50,000 5.4 8.00 11/05/07 251,550 637,500
Allen K. Jones(5)....... 100,000 10.8 8.00 11/05/07 503,100 1,275,000
Lon B. Radin(5)......... 75,000 8.1 8.00 11/05/07 377,325 956,250
</TABLE>
- --------
(1) The Company granted options to employees to purchase 927,100 shares of
Common Stock during the year ended December 31, 1997.
(2) The exercise price may be paid in cash, check, promissory note or shares
of the Company's Common Stock through a cashless exercise procedure
involving same-day sale of the purchased shares or by any combination of
such methods.
(3) Options may terminate before their expiration date if the optionee's
status as an employee or consultant is terminated or upon optionees'
death.
(4) In accordance with the rules of the Securities and Exchange Commission
(the "Commission"), shown are the gains or "Option spreads" that would
exist for the respective options granted. These gains are based on the
assumed rates of annual compound stock price appreciation of 5% and 10%
from the date the option was granted over the full option term. These
assumed annual compound rates of stock price appreciation are mandated by
the rules of the Commission and do not represent the Company's estimate or
projection of future Common Stock prices.
(5) Each option vests at the rate of 1/4th of the shares subject to the option
at the end of twelve months and 1/48th of the shares subject to the option
at the end of each monthly period thereafter as long as such optionee's
employment has not terminated.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES.
The following table provides certain information concerning the exercises of
options by each of the Named Executive Officers during the year ended December
31, 1997, including the aggregate value of gains on the date of exercise:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NO. OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(2):
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rudy Prince............. -- -- 41,666 233,334 $249,996 $350,004
Michael Crandell........ -- -- 66,406 121,094 411,717 750,783
John H. Harris.......... 16,666 $164,577 4,167 79,167 25,836 180,835
Allen K. Jones.......... 21,250 160,156 2,500 136,250 15,500 224,750
Lon B. Radin............ -- -- 41,666 133,334 249,996 350,004
</TABLE>
- --------
(1) Calculated by determining the difference between the closing price of the
Company's Common Stock on the Nasqaq National Market on the date of
exercise and the exercise price.
(2) Calculated by determining the difference between the closing price of the
Company's Common Stock on the Nasdaq National Market at year-end ($6.50)
and the exercise price of the in-the-money options. Such numbers do not
reflect amounts actually realized upon sale of the shares by such
officers.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Company,
describing the compensation policies and rationale applicable to the Company's
executive officers with respect to the compensation paid to such executive
officers for the year ended December 31, 1997. The information contained in
the report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission nor shall such information be
incorporated by reference into any future filing under the Securities Act of
1933, as amended (the "Securities Act") or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates it by reference into such filing.
TO: Board of Directors
The Compensation Committee of the Board of Directors of JetFax, Inc. is
charged with the responsibility of administering all aspects of the
Company's executive compensation programs. The members of the Committee for
the year ended December 31, 1997 were Messrs. Akin, Bech, Harrison and
Edward R. Prince, Jr., who were all nonemployee Directors of the Company.
Mr. Harrison resigned from the Board and the Compensation Committee in
February 1998.
COMPENSATION OBJECTIVES
The objectives of the compensation program are: (1) to provide a means
for the Company to attract and retain high-quality executives; (2) to tie
executive compensation directly to the Company's business and performance
objectives; and (3) to reward outstanding individual performance that
contributes to the long-term success of the Company.
COMPENSATION VEHICLES
The Company uses a simple total compensation program that consists of
cash and equity compensation. Having a compensation program that allows the
Company to successfully attract and retain key employees permits it to
provide useful products and services to customers, enhance stockholder
value, stimulate technological innovation, foster Company values and
adequately reward employees. The vehicles are:
CASH COMPENSATION
Salary
The Committee considers specifically the following factors in determining
base compensation: (1) a comparison of the Company's growth and financial
performance relative to the performance of competitors; (2) salary levels
for comparable positions in companies in the software industry; and (3)
each executive's responsibility level and financial and strategic
objectives for the subsequent year.
Bonus
No bonus plan has been utilized for executive compensation in either 1996
or 1997.
EQUITY PARTICIPATION
The Company has adopted a stock option plan to provide employees with
additional incentives to work to maximize stockholder value. The stock
option plan utilizes vesting periods to encourage key employees to continue
in the employ of the Company. Stock options have been awarded to the
majority of the Company's employees. The Company believes that options
align the interests of executive officers closely with the interests of
other stockholders because of the direct benefits executive officers
receive through improved stock performance.
8
<PAGE>
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. Mr. Prince's base
compensation for fiscal 1997 was established by the Compensation Committee
in April 1996.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors of JetFax, Inc.
Compensation Committee
Thomas B. Akin
Douglas Y. Bech
Edward R. Prince, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Please see "Certain Transactions With Management" below for information
regarding reportable transactions between the Company and members of the
Compensation Committee. During the year ended December 31, 1997, Messrs. Akin,
Bech, Harrison and Edward R. Prince, Jr. served as the Compensation Committee
of the Company's Board of Directors. Mr. Harrison resigned from the Board and
the Compensation Committee in February 1998. During the year ended December
31, 1997, no interlocking relationship existed between any member of the
Company's Compensation Committee and any other member of the Company's Board
of Directors. Mr. Edward R. Prince, Jr. is the father of Rudy Prince, the
Company's Chairman of the Board, Chief Executive Officer and President.
9
<PAGE>
COMPANY PERFORMANCE
The following line graph compares the cumulative total return to stockholders
on the Company's Common Stock since June 10, 1997 the date the Company first
became subject to the reporting requirements of the Exchange Act). The graph
compares stockholder return on the Company's Common Stock with the same
cumulative total return on the Hambrecht & Quist Technology Index and the
Nasdaq Stock Market U.S. Index. The information contained in the Performance
Graph shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act or the Exchange
Act, except to the extent that the Company specifically incorporates it by
reference into such filing.
The graph assumes that $100 was invested on June 10, 1997 in the Company's
Common Stock at the initial public offering price of $8.00 per share and in the
index, and that all dividends were reinvested. No dividends have been declared
or paid on the Company's Common Stock. Stockholder returns over the period
indicated should not be considered indicative of future stockholder returns.
JETFAX, INC.
HAMBRECHT & QUIST TECHNOLOGY INDEX
NASDAQ STOCK MARKET U.S. INDEX
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG JETFAX, INC., H&Q TECHNOLOGY AND NASDAQ STOCK MARKET--U.S.
<TABLE>
<CAPTION>
Measurement Period H&Q NASDAQ STOCK
(Fiscal Year Covered) JETFAX, INC. TECHNOLOGY MARKET--U.S.
- ------------------- ------------ ---------- ------------
<S> <C> <C> <C>
Measurement Pt-06/10/97 $100.00 $100.00 $100.00
FYE 06/97 $ 96.88 $104.13 $103.01
FYE 07/97 $123.44 $120.88 $113.88
FYE 08/97 $123.44 $121.23 $113.71
FYE 09/97 $106.25 $126.20 $120.43
FYE 10/97 $101.56 $112.72 $114.17
FYE 11/97 $ 87.50 $111.54 $114.74
FYE 12/97 $ 81.25 $108.69 $113.75
</TABLE>
10
<PAGE>
CERTAIN TRANSACTIONS WITH MANAGEMENT
In March 1997, the Company entered into an agreement with Rudy Prince,
President, Chief Executive Officer and Chairman of the Board of the Company,
and Lon B. Radin, Vice President of Engineering and a director of the Company,
granting each of them piggy-back registration rights with respect to the
shares of the Company's Common Stock held by them.
In connection with the Crandell Acquisition in July 1996, the Company
acquired substantially all of the assets of the Crandell Group in exchange for
a cash payment of $250,000, a non-interest bearing promissory note of the
Company in the amount of $250,000 payable in July 1997 and an agreement to
make certain ongoing royalty payments to the Crandell Group. Payment of the
promissory note and the ongoing royalty payments were secured pursuant to the
terms of a Security Agreement. In addition, the Company entered into
employment agreements with Michael Crandell and Larry Crandell, the principals
of the Crandell Group. The Company also issued options to purchase an
aggregate of 280,000 shares of the Company's Common Stock to certain former
employees of the Crandell Group who were hired by the Company, including
187,500 shares to Michael Crandell and 62,500 shares to Larry Crandell, at an
exercise price of $0.30 per share (the estimated fair market value of the
Company's Common Stock at the grant date), subject to vesting over 4 year
periods (except for a 2 year vesting period as to Larry Crandell). In December
1996, the Company and the Crandell Group entered into an amendment agreement
(the "Amendment Agreement") providing that the obligation of the Company to
make certain ongoing royalty payments would terminate upon the Company's
initial public offering in exchange for a single lump sum payment provided
such offering occurs prior to July 31, 1998. Pursuant to the Amendment
Agreement, the Company issued warrants, exercisable at $1.75 per share (the
estimated fair market value of the Company's Common Stock at the grant date),
to Michael Crandell and to Larry Crandell to purchase 75,000 shares and 25,000
shares of the Company's Common Stock, respectively, such warrants exercisable
upon the effectiveness of the Company's initial public offering. Michael
Crandell is the Company's Vice President of Software.
In December 1994, pursuant to an Inkjet License and Supply Agreement (the
"Inkjet Agreement"), the Company granted certain licenses and sublicenses to
Ailicec (B.V.1.) Limited, an affiliate of Ailicec International Enterprises
Limited ("Ailicec International"), with respect to certain technology
developed by the Company and by Xerox Corporation in connection with an inkjet
product and agreed to supply Ailicec (B.V.I.) Limited with such products and
related components and consumables. Ailicec (B.V.I.) Limited purchased
products, components and consumables from the Company under the Inkjet
Agreement in an aggregate amount of approximately $12,000 during the two
twelve month periods ended December 31, 1996 and December 31, 1997. Ailicec
International is a principal stockholder of the Company. Chung Chiu, a
director of the Company, is the Managing Director of Ailicec International.
The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by Delaware law.
The Company acquired DocuMagix, Inc. through a merger which was accounted
for as a pooling of interests in December 1997. As part of the transaction,
the principal DocuMagix stockholders requested representation on the JetFax
Board of Directors until the 900,000 shares of JetFax Common Stock issued to
the DocuMagix stockholders in the merger are registered with the Securities
and Exchange Commission, which is anticipated to occur in the third quarter of
1998. Albert E. Sisto, previously the Chairman and Chief Executive Officer of
DocuMagix, Inc., was appointed to the Company's Board of Directors in February
1998. Mr. Sisto has been nominated for the Board for the forthcoming election
at the May 13, 1998, Annual Meeting of Stockholders. Whether Mr. Sisto will
continue to serve on the Board after registration of the shares issued to the
DocuMagix stockholders has not yet been determined.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1998 (except as noted in the
footnotes) certain information with respect to the beneficial ownership of the
Company's Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Company, (iii) each of the Named Executive Officers and (iv)
all directors and executive officers as a group. Except as indicated in the
footnotes to this table the persons and entities named in the table have sole
voting and investment power with respect to all shares of Common Stock shown
as beneficially owned by them, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
---------------------------
PERCENTAGE
NAME OF BENEFICIAL OWNER(2) NUMBER OWNERSHIP
--------------------------- ------------- -------------
<S> <C> <C>
Thomas B. Akin (3) .................................. 2,281,093 19.4%
c/o Talkot Partners II, LLC
2400 Bridgeway, Suite 200
Sausalito, CA 94965
Talkot Partners II, LLC (4).......................... 2,131,110 18.1%
2400 Bridgeway, Suite 200
Sausalito, CA 94965
Ailicec International Enterprises Ltd. (5)........... 823,732 6.8%
2nd Floor Kaiser Estate Phase 1 41
Man Yue Street
Hunghom, Kowloon Hong Kong
Chung Chiu (6)....................................... 833,732 6.9%
c/o Ailicec International Enterprises Ltd.
2nd Floor Kaiser Estate Phase 1 41
Man Yue Street
Hunghom, Kowloon Hong Kong
Rudy Prince (7)...................................... 369,583 3.1%
Steven J. Carnevale (8).............................. 333,831 2.8%
Lon B. Radin (9)..................................... 227,083 1.9%
John H. Harris (10).................................. 134,374 1.1%
Douglas Y. Bech (11)................................. 90,492 *
Edward R. Prince, Jr. (12)........................... 91,333 *
Michael Crandell (13)................................ 157,031 1.3%
Allen K. Jones (14).................................. 75,909 *
Albert E. Sisto...................................... -- *
All directors and executive officers as a group,
(14 persons) (15)................................... 4,683,029 36.6%
</TABLE>
*Less than 1%.
(1) Percentage ownership is based on 11,742,238 shares of Common Stock
outstanding as of March 31, 1998.
(2) Except as otherwise indicated in the footnotes to this table and pursuant
to applicable community property laws, the persons named in the table
have sole voting and investment power with respect to all shares of
Common Stock.
(3) Mr. Akin holds 22,791 shares jointly with his wife, Karen Akin; includes
83,720 shares of Common Stock held by his minor children; and includes
2,131,110 shares of Common Stock held by Talkot Partners II, LLC. Mr.
Akin is a Managing General Partner of Talkot Partners II, LLC and
disclaims beneficial ownership of these shares except as to the
pecuniary interest that he will derive from these shares. Includes
options and warrants to purchase an aggregate of 43,472 shares of Common
Stock exercisable within sixty days of March 31, 1998.
12
<PAGE>
(4) Mr. Akin is a Managing General Partner of Talkot Partners II, LLC and
disclaims beneficial ownership of these shares except as to the
pecuniary interest he will derive from these shares.
(5) Includes a warrant to purchase 388,500 shares of Common Stock.
(6) Includes an option to purchase 10,000 shares of Common Stock exercisable
within sixty days of March 31, 1998; and also includes a warrant to
purchase 388,500 shares of Common Stock and 435,232 shares of Common
Stock held by Ailicec International Enterprises, Ltd. Mr. Chiu is the
Managing Director of Ailicec International Enterprises, Ltd. and
disclaims beneficial ownership of these shares.
(7) Includes options to purchase 52,083 shares of Common Stock exercisable
within sixty days of March 31, 1998.
(8) Includes options and warrants to purchase an aggregate of 270,265 shares
of Common Stock exercisable within sixty days of March 31, 1998 and
includes 30,233 shares of Common Stock held by Mr. Carnevale's wife.
(9) Includes options to purchase 52,083 shares of Common Stock exercisable
within sixty days of March 31, 1998.
(10) Includes options to purchase 9,375 shares of Common Stock exercisable
within sixty days of March 31, 1998.
(11) Includes options to purchase 10,000 shares of Common Stock exercisable
within sixty days of March 31, 1998.
(12) Includes options to purchase 10,000 shares of Common Stock exercisable
within sixty days of March 31, 1998.
(13) Includes options and warrants to purchase an aggregate of 157,031 shares
of Common Stock exercisable within sixty days of March 31, 1998.
(14) Includes options to purchase 8,750 shares of Common Stock exercisable
within sixty days of March 31, 1998.
(15) Includes options and warrants in the aggregate of 784,084 shares of
Common Stock exercisable within sixty days of March 31, 1998.
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and regulations of the Securities and
Exchange Commission (the "SEC") thereunder require the Company's executive
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of initial ownership
and changes in ownership with the SEC. Based solely on its review of copies of
such forms received by the Company, or on written representations from certain
reporting persons that no other reports were required for such persons, the
Company believes that, during or with respect to the period from June 10, 1997
to December 31, 1997, all of the Section 16(a) filing requirements applicable
to its executive officers, directors and 10% stockholders were complied with
except that Ailicec International Enterprises, Ltd., filed a Form 4 to report
the conversion of preferred stock into common stock upon the closing of the
Company's initial public offering, 1 day late.
OTHER MATTERS
The Company knows of no other matters to be brought before the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying proxy to vote the shares represented as the
Board of Directors may recommend.
THE BOARD OF DIRECTORS
Allen K. Jones
Secretary
Dated: April 13, 1998
14
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JETFAX, INC.
1998 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of JetFax, Inc., a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 13, 1998, and hereby appoints
Rudy Prince and Allen K. Jones, or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned to represent the undersigned at the 1998 Annual Meeting
of Stockholders of JetFax, Inc. to be held on May 13, 1998, at 2:00 p.m. local
time, at Stanford Park Hotel, 100 El Camino Real, Menlo Park, California, and at
any adjournment(s) thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF
--- ---
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
(Continued and to be signed on reverse side)
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. To elect eight (8) directors of the Company for the ensuing year and until
their successors are elected:
Nominees: Rudy Prince, Thomas B. Akin, Douglas Y. Bech, Steven J. Carnevale,
Chung Chiu, Edward R. Prince, Jr., Lon B. Radin, Albert E. Sisto
____________________________________________________________________________
all nominees except as noted above
[_] FOR [_] WITHHELD
2. To ratify the appointment of Deloitte & Touche LLP as independent auditors
of the Company for the year ending December 31, 1998.
[_] FOR [_] WITHHELD [_] ABSTAIN
3. To transact such other business as may properly come before the meeting or
any postponements or adjournments thereof.
[_] Mark here for address change
and note at left.
Signature(s):_________________________________________________Date:_____________
NOTE: (This proxy should be marked, dated, signed by the stockholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons in a fiduciary capacity should so indicate, if shares are held
by joint tenants or as community property, both should sign.)
