<PAGE>
As filed with the Securities and Exchange Commission on May 24, 1999
Registration No. 333-78481
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM F-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
CREO PRODUCTS INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Canada 3555 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
3700 Gilmore Way
Burnaby, British Columbia, Canada
V5G 4M1
(604) 451-2700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
CT Corporation System
1633 Broadway
New York, New York 10019
(212) 664-1666
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
Douglas H. Collom, Esq. Robert B. Knauss, Esq.
Christopher J. Ozburn, Esq. Lisa M. Wiens-Sinko, Esq.
Jon P. Layman, Esq. Munger, Tolles & Olson LLP
Priya Cherian Huskins, Esq. 355 South Grand Avenue
Wilson Sonsini Goodrich & Rosati 35th Floor
Professional Corporation Los Angeles, California 90071
650 Page Mill Road (213) 683-9100
Palo Alto, California 94304
(650) 493-9300
</TABLE>
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
please check the following box.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Proposed Maximum
Proposed Maximum Aggregate
Title of Each Class of Securities to Amount to be Offering Price Offering Amount of
be Registered Registered(1) Per Share(2) Price(1)(2) Registration Fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, without par value... 5,750,000 shares $15.00 86,250,000 $23,978(3)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes (i) Common Shares that are to be offered and sold in the
United States, (ii) Common Shares that are to be offered and sold
outside the United States in transactions that are not subject to
registration under the Securities Act of 1933, as amended, but that may
be resold from time to time in the United States during the
distribution, and (iii) an aggregate of 750,000 Common Shares that the
underwriters have the option to purchase from the selling shareholders
to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities
Act of 1933, as amended.
(3) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
EXPLANATORY NOTE
The primary purpose of this Amendment No. 1 to Creo Products Inc.'s
Registration Statement on Form F-1 (File No. 333-78481) is to file certain
exhibits.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by Creo in connection with the sale of the
Common Shares being registered. All of the amounts shown are estimates except
for the SEC registration fee, the NASD filing fee and the Nasdaq National
Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 23,978
NASD Filing Fee.................................................. 9,125
Nasdaq National Market Listing Fee............................... 95,000
The Toronto Stock Exchange Listing Fee........................... 45,000
Blue Sky Qualification Fees and Expenses......................... 5,000
Printing and Engraving Expenses.................................. 150,000
Legal Fees and Expenses.......................................... 350,000
Accounting Fees and Expenses..................................... 125,000
Transfer Agent and Registrar Fees................................ 20,000
Miscellaneous.................................................... 26,897
--------
Total.......................................................... $850,000
========
</TABLE>
Item 14. Indemnification of Directors and Officers
Section 124 of the Canada Business Corporations Act, as amended, provides as
follows:
(1) Indemnification. Except with respect to an action by or on behalf of the
corporation or body corporate to procure a judgment in its favor, a
corporation may indemnify a director or officer of the corporation, a
former director or officer of the corporation or a person who acts or acted
at the corporation's request as a director or officer of a body corporate
of which the corporation is or was a shareholder or creditor, and his heirs
and legal representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him with respect to any civil, criminal or
administrative action or proceeding to which he is made a party by reason
of being or having been a director or officer of such corporation or body
corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
(2) Indemnification in derivative actions. A corporation may with the approval
of a court indemnify a person referred to in sub-section (1) with respect
to an action by or on behalf of the corporation or body corporate to
procure a judgment in its favor, to which he is made a party by reason of
being or having been a director or an officer of the corporation or body
corporate, against all costs, charges and expenses reasonably incurred by
him in connection with such action if he fulfils the conditions set out in
paragraphs (1)(a) and (b).
(3) Indemnity as of right. Notwithstanding anything in this section, a person
referred to in subsection (1) is entitled to indemnity from the corporation
with respect to all costs, charges and expenses reasonably incurred by him
in connection with the defense of any civil, criminal or administrative
action or
II-1
<PAGE>
proceeding to which he is made a party by reason of being or having been a
director or officer of the corporation or body corporate, if the person
seeking indemnity:
(a) was substantially successful on the merits in his defence of the
action or proceeding; and
(b) fulfils the conditions set out in paragraphs (1)(a) and (b).
(4) Directors' and officers' insurance. A corporation may purchase and maintain
insurance for the benefit of any person referred to in subsection (1)
against any liability incurred by him
(a) in his capacity as a director or officer of the corporation, except
where the liability relates to his failure to act honestly and in good
faith with a view to the best interests of the corporation; or
(b) in his capacity as a director or officer of another body corporate
where he acts or acted in that capacity at the corporation's request,
except where the liability relates to his failure to act honestly and
in good faith with a view to the best interests of the body corporate.
(5) Application to court. A corporation or a person referred to in subsection
(1) may apply to a court for an order approving an indemnity under this
section and the court may so order and make any further order it thinks
fit.
(6) Notice to director. An applicant under subsection (5) shall give the
Director notice of the application and the Director is entitled to appear
and be heard in person or by counsel.
(7) Other notice. On an application under subsection (5), the court may order
notice to be given to any interested person and such person is entitled to
appear and be heard in person or by counsel.
Section 7.02 of Bylaw No. 1 of Creo provide as follows:
7.02. Indemnity. Subject to the limitations contained in the Act, the
Corporation shall indemnify a director or officer, a former director or
officer, or a person who acts or acted at the Corporation's request as
a director or officer of a body corporate of which the Corporation is
or was a shareholder or creditor (or a person who undertakes or has
undertaken any liability on behalf of the Corporation or any such body
corporate), and his heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or
satisfy a judgement, reasonably incurred by him with respect to any
civil, criminal or administrative action or proceeding to which he is
made a party by reason of being or having been a director or officer of
the Corporation or such body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
Creo carries liability insurance which provides for coverage for officers and
directors of Creo and its subsidiaries, subject to certain deductibles.
On various dates in 1998 and 1999, Creo entered into indemnification
agreements with its directors and officers providing for limitations on a
director's and officer's liability for judgments, settlements, penalties,
fines, and expenses of defense (including attorneys' fees, bonds and costs of
investigation) arising out of or in any way related to acts of omissions as a
director or an officer, or in any other capacity in which services are rendered
to Creo. Creo believes its indemnification agreements will assist it in
attracting and retaining qualified individuals to serve as directors and
officers. The agreements provide that a director or officer is not entitled to
indemnification under such agreements among other cases (i) if the director or
officer is not relieved of liability
II-2
<PAGE>
under applicable law, (ii) for violations of certain securities laws, or (iii)
for certain claims initiated by the officer or director. In addition,
indemnification may not be available to directors or officers under Canadian
law if any act or omission by a director or officer amounted to a failure to
act honestly and in good faith with a view to the best interests of Creo and,
in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, if the director or officer did not have
reasonable grounds for believing that his conduct was lawful. Due to the lack
of applicable case law, it is not clear whether indemnification is available in
the case of a breach of securities laws of the United States.
Insofar as indemnification for liabilities arising under the U.S. Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the United States Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities
The following is a summary of transactions by Creo during the last three
years preceding the date hereof involving sales of the Company's securities
that were not registered under the Securities Act:
(a) Between January 6, 1996 and November 21, 1997, Creo issued 18,826
Common Shares to 7 U.S. residents and 133,878 Common Shares to 36 non-
U.S. residents at a price of C$0.0005 per share. These shares were
issued in consideration of these individuals' services to Creo.
(b) On May 29, 1997, Creo issued 2,668,802 Common Shares to 27 U.S.
residents and 664,532 Common Shares to 15 non-U.S. residents at a price
of $7.50 per share.
(c) Between January 1, 1998 and the date hereof, 8 U.S. residents have
exercised options to purchase 2,963,572 Common Shares and 26 non-U.S.
residents have exercised options to purchase 104,146 Common Shares, at
prices ranging from C$3.75 to C$17.50 per share.
(d) On November 20, 1998, entities affiliated with The Goldman Sachs group,
Inc. exercised warrants to purchase 2,962,962 Common Shares at an
exercise price of $6.75 per share.
The issuances to U.S. residents described in Items 15(a) and 15(b) were
deemed to be exempt from registration under the Securities Act in reliance on
Section 4(2) under the U.S. Securities Act as transactions by an issuer not
involving a public offering. The issuances to U.S. residents described in Item
15(c) were deemed exempt from registration under the Securities Act in reliance
on Rule 701 promulgated thereunder in that they were offered or sold either
pursuant to a written contract relating to compensation, as provided by Rule
701. In addition, such issuances were deemed to be exempt from registration
under Section 4(2) of the Securities Act as transactions by an issuer not
involving a public offering. The issuances described in Item 15(d) were deemed
to be exempt from registration under the Securities Act as transactions by an
issuer not involving a public offering. Each of the securities listed above but
not otherwise described in this paragraph was sold to persons who were neither
nationals nor residents of the United States and no facilities or
instrumentalities of U.S. interstate commerce were used in connection with any
offer or sale thereof.
Item 16. Exhibits and Financial Statement Schedules
(a)Exhibits
<TABLE>
<C> <S>
*1.1 Form of Underwriting Agreement
+3.1 Certificate of Incorporation of the Registrant, as Amended
+3.2 By-laws of the Registrant
+4.1 Form of Stock Certificate
**5.1 Opinion and Consent of Getz Prince Wells
+10.1 Agreement dated as at May 4, 1998, between Creo and Heidelberger
Druckmaschinen AG
+10.2 Form of Indemnification Agreement between Creo and each of its
directors and officers
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
+10.3 1996 Stock Option Plan and form of Notice of Stock Option Grant and
Option Agreement thereunder (for U.S. and Canadian employees)
+10.4 Shareholders Agreement dated as at April 24, 1994, between Creo and
certain shareholders, with amendments dated as at November 21, 1994;
June 30, 1995; November 2, 1995; March 22, 1996; June 1, 1997
+10.5 Profit Sharing Plan
**11.1 Statement Regarding Computation of Per Share Earnings
**21.1 Subsidiaries of the Company
+23.1 Consent of KPMG LLP, Chartered Accountants
+23.2 Consent of Price Waterhouse, Chartered Accountants
**23.3 Consent of Getz Prince Wells
**23.4 Consent of Thorsteinssons, Tax Lawyers
**23.5 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
**24.1 Power of Attorney
</TABLE>
- --------
+ Filed herewith.
* To be filed by amendment.
** Previously filed.
(b)Financial Statement Schedules
Schedules have been omitted because the information required to be set forth
therein is not applicable or is shown in the Consolidated Financial Statements
or the Notes thereto.
Item 17. Undertakings
(a) The Registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (Securities Act) may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(c) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as at the time it was declared effective; and
(ii) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the U.S. Securities Act of 1933, as amended
(the U.S. Securities Act), the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form F-1
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Burnaby, Province of
British Columbia, on the 24th day of May, 1999.
CREO PRODUCTS INC.
/s/ AMOS MICHELSON
By __________________________________
Amos Michelson
Chief Executive Officer
Pursuant to the requirements of the U.S. Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
Chief Executive Officer and
/s/ AMOS MICHELSON Director May 24, 1999
- ------------------------ (Principal-Executive-Officer)
Amos-Michelson
* THOMAS A. KORDYBACK Vice President, Finance, Chief May 24, 1999
----------------------- Financial Officer and Secretary
Thomas A. Kordyback (Principal Financial and
Accounting Officer)
* DANIEL GELBART President and Director May 24, 1999
-----------------------
Daniel Gelbart
* RAPHAEL H. AMIT Chair of the Board and Director May 24, 1999
-----------------------
Raphael H. Amit
* DAVID A. BENNETT Director May 24, 1999
-----------------------
David A. Bennett
* THOMAS D. BERMAN Director May 24, 1999
-----------------------
Thomas D. Berman
* JOHN J. BU Authorized Representative in the May 24, 1999
----------------------- United States, Director
John J. Bu
* DOUGLAS H. RICHARDSON Director May 24, 1999
-----------------------
Douglas H. Richardson
* KENNETH A. SPENCER Director May 24, 1999
-----------------------
Kenneth A. Spencer
*By: /s/ AMOS MICHELSON
_____________________
Amos Michelson
(Attorney-in-fact)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
<C> <S> <C>
*1.1 Form of Underwriting Agreement
+3.1 Certificate of Incorporation of the Registrant, as
Amended
+3.2 By-laws of the Registrant
+4.1 Form of Stock Certificate
**5.1 Opinion and Consent of Getz Prince Wells
+10.1 Agreement dated as at May 4, 1998, between Creo and
Heidelberger Druckmaschinen AG
+10.2 Form of Indemnification Agreement between Creo and each
of its directors and officers
+10.3 1996 Stock Option Plan and form of Notice of Stock
Option Grant and Option Agreement thereunder (for U.S.
and Canadian employees)
+10.4 Shareholders Agreement dated as at April 24, 1994,
between Creo and certain shareholders, with amendments
dated as at November 21, 1994; June 30, 1995; November
2, 1995; March 22, 1996; June 1, 1997
+10.5 Profit Sharing Plan
**11.1 Statement Regarding Computation of Per Share Earnings
**21.1 Subsidiaries of the Company
+23.1 Consent of KPMG LLP, Chartered Accountants
+23.2 Consent of Price Waterhouse, Chartered Accountants
**23.3 Consent of Getz Prince Wells
**23.4 Consent of Thorsteinssons, Tax Lawyers
**23.5 Consent of Wilson Sonsini Goodrich & Rosati,
Professional Corporation
**24.1 Power of Attorney
</TABLE>
- --------
+ Filed herewith.
* To be filed by amendment.
** Previously filed.
<PAGE>
EXHIBIT 3.1
[FLAG] Industry Canada Industrie Canada
Certificate Certificat
Of Amendment De Modification
Canada Business Loi Canadienne sur
Corporations Act les societes par actions
- --------------------------------------------------------------------------------
CREO PRODUCTS INC. 193890-8
- ----------------------------------- ---------------------------------------
Name of corportion-Denomination de Corporation number-Numero de la societe
la societe
I hereby certify that the articles Je certifie que les statuts de la
of the above-named corporation societe susmentionnee ont ete modifies:
were amended
a) under section 13 of the Canada a) en vertu de l'article 13 de la Loi
Business Corporations Act in [_] canadienne sur les societes par
accordance with the attached notice; actions, conformement a l'avis
ci-joint;
b) under section 27 of the Canada [_] b) en vertu de l'article 27 de la Loi
Business Corporations Act as set canadienne sur les societes par
out in the attached articles of actions, tel qu'il est indique dans les
amendment designating a series clauses modificatrices ci-jointes
of shares; designant une serie d'actions;
c) under section 179 of the Canada [X] c) en vertu de l'article 179 de la Loi
Business Corporations Act as set canadienne sur les societes par
out in the attached articles of actions, tel qu'il est indique dans les
amendment; clauses modificatrices ci-jointes;
d) under section 191 of the Canada [_] d) en vertu de l'article 191 de la Loi
Business Corporations Act as set canadienne sur les societes par
out in the attached articles of actions, tel qu'il est indique dans les
reorganization; clauses de reorganisation ci-jointes;
/s/ SIGNATURE May 7, 1999 / le 7 mai 1999
Director- Directeur Date of Amendment- Date de modification
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FORM 4 FORMULE 4
Canada Business Loi Regissant les societes ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES
Corporations Act par actions de regime federal (SECTIONS 27 AND 177) (ARTICLES 27 OU 177)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 - Name of Corporation - Denomination de la societe 2 - Corporation No. - No de la societe
CREO PRODUCTS INC. 193890-8
- --------------------------------------------------------------------------------------------------------------------------
3 - The articles of the above-named corporation are amended as Les statuts de la societe mentionnea ci-desses sont
follows: modifies de la facon suivante:
</TABLE>
"RESOLVED, as a special resolution, that the Articles of the Corporation be
amended by subdividing all of the 14,036,091 issued and outstanding common
shares without par value on a 2 for 1 basis into 28,072,182 common shares
without par value."
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date Signature Title - Titre
May 6, 1999 /s/ SIGNATURE Director/Officer
-------------------------
- --------------------------------------------------------------------------------
FOR DEPARTMENT USE ONLY
A L'USAGE DU MINISTERE
SEULEMENT
Filed - Deposee
MAY - 7 1999
<PAGE>
[FLAG] Industry Canada Industrie Canada
<TABLE>
Certificate Certificat
of Amendment de modification
Canada Business Loi canadienne sur
Corporations Act les societes par actions
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CREO PRODUCTS INC. 193890-8
______________________________________________ __________________________________________
Name of corporation-Denomination de la societe Corporation number-Numero de la societe
I hereby certify that the articles of the above- Je certifie que les statuts de la societe
named corporation were amended susmentionnee ont ete modifies:
(a) under section 13 of the Canada Business [_] a) en vertu de l'article 13 de la Loi
Corporations Act in accordance with the attached canadienne sur les societes par actions,
notice; conformement a l'avis ci-joint;
(b) under section 27 of the Canada Business [_] b) en vertu de l'article 27 de la Loi
Corporations Act as set out in the attached articles canadienne sur les societes par actions, tel
of amendment designating a series of shares; qu'il est indique dans les clauses
modificatrices ci-jointes designant une serie
d'actions;
(c) under section 179 of the Canada Business [X] c) en vertu de l'article 179 de la Loi
Corporations Act as set out in the attached articles canadienne sur les societes par actions, tel
of amendment; qu'il est indique dans les clauses
modificatrices ci-jointes;
(d) under section 179 of the Canada Business [_] d) en vertu de l'article 191 de la Loi
Corporations Act as set out in the attached articles canadienne sur les societes par actions, tel
of reorganization. qu'il est indique dans les clauses de
reorganisation ci-jointes.
/s/ SIGNATURE
-----------------------
February 19, 1996/le 19 fevrier 1996
Director - Directeur Date of Amendment - Date de modification
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CANADA BUSINESS CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177)
________________________________________________________________________________
1 - Name of Corporation 2 - Corporation No.
CREO PRODUCTS INC. 193890-8
________________________________________________________________________________
3 - The articles of the above-named corporation are amended as follows:
RESOLVED AS A SPECIAL RESOLUTION THAT the Articles of Incorporation be amended
as follows:
(a) by amending section 4 thereof to read:
Until such time as any of the securities of the Corporation are part of a
distribution to the public within the meaning of section 2(7) of the Act no
shares of the Corporation shall be transferred without approval of the
board of directors.
(b) to increase the number of authorized directors from 7 to 9 as per the terms
of the November 22nd amended Shareholders Agreement by amending section 5
thereof to read:
"not less than 2 nor more than 9"
(c) by deleting the following provisions of Schedule 1 thereto:
"The number of shareholders is limited to fifty (50) not including persons
who are in the employment of the Corporation and persons, who, having been
formerly in the employment of the Corporation, were, while in that
employment, and have continued after the termination of that employment to
be shareholders of the Corporation, two or more persons holding one or more
shares jointly being counted as a single shareholder.
Any invitation to the public to subscribe for any shares or debentures of
the Corporation is prohibited."
________________________________________________________________________________
Date Signature Description of Office
January 31 1996 /s/ SIGNATURE CFO & Secretary
________________________________________________________________________________
<PAGE>
[FLAG OF CANADA APPEARS HERE]
Certificate of Incorporation Cerfificat de constitution
Canada Business Loi sur les societes
Corporations Act commerciales canadiennes
- --------------------------------------------------------------------------------
CREO PROUDUCTS INC. 193890-8
- ---------------------------------------- ----------------------
Name of Corporation - Denomination de la Number - Numero
sociate
I hereby certify that the above- Je certifie par les presentes Que
mentioned Corporation, the Articles la societe mentionnee ci-haut, dont
of Incorporation of which are les status constitutifs sont joints,
attached, was incorporated under a ete constituee en societe en vertu
the Canada Business Corporations de la Loi sur les societes
Act. commerciales canadiennes.
/s/ SIGNATURE May 30, 1985
le 30 mai 1985
Director - Directeur Date of incorporation - Date de
constitution
- --------------------------------------------------------------------------------
<PAGE>
Consumer and Consommation
Corporate Affairs Canada et Corporations Canada
Corporations Corporations
Phase II, 4/th/ floor Phase II. 4/e/ etage
Place du Portage Place du Portage
Ottawa-Hull K1 A 0C9 Ottawa-Hull K1A 0C9
Your file Votre reference
Our file Notre reference
RE/SUJET: Creo Products Inc.
Enclosed herewith, is the document Vous trouverez ci-inclus le document
issued in the above matter. emis dans l'affaire precitee.
A notice of issuance of CBCA Un avis de !'emission de documents en
documents will be published in the vertu de la L.S.C.C. sera publie dans
Canada Corporations Bulletin. A le Bulletin des corporations
notice of issuance of CCA documents canadiennes. Un avis d'emission de
will be published in the Canada documents en vertu de la L.C.C. sera
Corporations Bulletin and the Canada publie dans le Bulletin des
Gazette. corporations canadiennes et dans la
Gazette du Canada.
IF A NAME OR CHANGE OF NAME IS S'IL EST QUESTION D'UNE DENOMINATION
INVOLVED, THE FOLLOWING CAUTION SOCIALE OU D'UN CHANGEMENT DE
SHOULD BE OBSERVED: DENOMINATION SOCIALE, L'AVERTISSEMENT
SUIVANT DOIT ETRE RESPECTE:
This name is available for use as a Cette denomination sociale est
corporate name subject to and disponible en au-tant que les
conditional upon the applicants requerants assument toute
assuming fuli responsibility for respon-sabilite de risque de
any risk of confusion with confusion avec toutes denominations
existing business names and trade commerciales et toutes marques de
marks (including those set out in commerce existantes (y compris celles
the relevant NUANS search qui sont citees dans le(s) rapport(s)
report(s)). Acceptance of such de recherches de NUANS pertinent(s)).
responsibility will comprise an Cette acceptation de responsabilite
obligation to change the name to a comprend l'obligation de changer la
dissimilar one in the event that denomination de la societe en une
representations are made and denomination differente advenant le
established that confusion is cas ou des represen-tations sont
likely to occur. The use of any faites etablissant qu'il y a une
name granted is subject to the probabilite de confusion.
laws of the jurisdiction where the L'utilisation de tout nom octroye est
company carries on business. sujette a toute ici de la juridiction
ou la societe exploite son entreprise.
For the Director, Corporations Branch
Pour le Directeur, Direction des corporations
<PAGE>
CANADA BUSINESS LOI SUR LES SOCIETES
CORPORATIONS ACT COMMERCIALIES CANADIENNES
FORM 1 FORMULE 1
ARTICLES OF INCORPORATION STATUTS CONSTITUTIFS
(SECTION 6) (ARTICLE 6)
- --------------------------------------------------------------------------------
1 - Name of Corporation Denomination de la societe
CREO PRODUCTS INC.
- --------------------------------------------------------------------------------
2 - The place in Canada where the Lieu au Canada ou doit etre situe
registered office is to be situated le siege social
209-10151 No.3 Road,
Richmond, B.C. V7A 4R6
- --------------------------------------------------------------------------------
3 - The classes and any maximum number Categories et tout nombre maximal
of shares that the corporation d'actions que la societe est
authorized to issue autorisee a emettre
THE CORPORATION IS AUTHORIZED TO ISSUE AN UNLIMITED NUMBER
OF COMMON SHARES WITHOUT PAR VALUE, ALL SHARES TO BE OF
ONE CLASS.
Certified a true copy
MAR 9 1994
/S/ SIGNATURE
-------------------------
Solicitor
- --------------------------------------------------------------------------------
4 - Restrictions if any on share transfers Restrictions sur le transfert de
actions s'il y a lieu
NO SHARES OF THE CORPORATION SHALL BE TRANSFERRED
WITHOUT APPROVAL OF THE BOARD OF DIRECTORS.
Amended Feb 19/96
- --------------------------------------------------------------------------------
5 - Number (or minimum and maximum Nombre (ou nombre minimum et maximum)
number) of directors d'administrateurs
NOT LESS THAN 2 OR MORE THAN 7.
- --------------------------------------------------------------------------------
6 - Restrictions if any on business the Limites imposees quant aux activites
corporation may carry on commerciales que la societe peut
exploiter, s'il y a lieu.
N/A
- --------------------------------------------------------------------------------
7 - Other provisions if any Autres dispositions s'il y a lieu
THE ANNEXED SCHEDULE I IS INCORPORATED IN THIS FORM.
Amended Feb 19/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
8 - Incorporators Fondateurs Signature
- ----------------------------------------------------------------------------------------------
Names - Noms Address (include postal code) Signature
Adresse (inclure le code postal
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
M. PHILLIP TONSTAD 103 - 2145 York Street, Vancouver,
B.C. /s/ SIGNATURE
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY A L'USAGE DU MINNISTERE SEULEMENT
- ---------------------------------------------------------------------------------------------
Corporation No - No de la 193890-8 Filed - Deposee Jun 5 1985
societe
</TABLE>
<PAGE>
SCHEDULE 1
The number of shareholders is limited to fifty (50) not including
persons who are in the employment of the Corporation and persons, who, having
been formerly in the employment of the Corporation, were, while in that
employment, and have continued after the termination of that employment to be
shareholders of the Corporation, two or more persons holding one or more shares
jointly being counted as a single shareholder. [Deleted by February 19, 1996
Amendment]
Any invitation to the public to subscribe for any shares or debentures
of the Corporation is prohibited. [Deleted by February 19, 1996 Amendment]
Without in any way limiting the powers conferred upon the Corporation
and its directors by the Canada Business Corporations Act, the directors may,
from time to time, in such amounts and on such terms as they deem expedient,
charge, mortgage, hypothecate, pledge, or grant any form of security interest
in, all or any of the currently owned or subsequently acquired property of the
Corporation, real or personal, moveable or immoveable, including its
undertaking, book debts, rights, powers and franchises, to secure any debt
obligation or any money borrowed or other debt or liability of the Corporation.
<PAGE>
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA
[LOGO]
Province of British Columbia
Ministry of Consumer and Corporate Affairs
REGISTRAR OF COMPANIES
COMPANY ACT
Certified a true copy
Certificate Mar 9, 1994
/s/ SIGNATURE
---------------------------
Solicitor
I HEREBY CERTIFY THAT
CREO PRODUCTS INC.
HAS THIS DAY BEEN REGISTERED AS AN EXTRA PROVINCIAL COMPANY
UNDER THE COMPANY ACT
GIVEN UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA,
[SEAL APPEARS HERE]
THIS 25TH DAY OF NOVEMBER, 1985
/S/ SIGNATURE
---------------------------
M.A. JORRE DE ST JORRE
REGISTRAR OF COMPANIES
<PAGE>
[FLAG OF CANADA APPEARS HERE]
Certified a true copy
MAR 9 1994
/s/ SIGNATURE
-------------------------
Solicitor
Certificate of Incorporation Cerfificat De Constitution
Canada Business Loi sur les societes
Corporations Act commerciales canadiennes
- --------------------------------------------------------------------------------
CREO PRODUCTS INC. 193890-8
------------------------------------------------- ------------------
Name of Corporation - Donomination de la societe Number - Numero
I hereby certify that the above- Je certifie par les presentes que
mentioned Corporation, the la societe mentionee ci-haut,
Articles of Incorporation of which dont les statuts constituee en
are attached, was incorporated societe en vertu de la Loi sur les
under the Canada Business societes commerciales canadiennes.
Corporations Act.
May 30, 1985
/s/ SIGNATURE le 30 mai 1985
---------------------------
Director - Directeur Date of Incorporation - Date de constitution
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CANADA BUSINESS LOI SUR LES SOCIETES
CORPORATIONS ACT COMMERCIALIES CANADIENNES
FORM 1 FORMULE 1
ARTICLES OF INCORPORATION STATUTS CONSTITUTIFS
(SECTION 6) (ARTICLE 6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1 - Name of Corporation Denornination de la societe
CREO PRODUCTS INC.
- ------------------------------------------------------------------------------------------------------------------------------------
2 - The place in Canada where the registered olfice is to be situated Lieu au Canada ou doit etre situe le siege social
209-10151 No.3 Road,
Richmond, B.C. V7A 4R6
- ------------------------------------------------------------------------------------------------------------------------------------
3 - The classes and any maximum number of shares that the corporation Categories et tout nombre maximal d'actions que
is authorized to issue la societe est autorisee a emettre
THE CORPORATION IS AUTHORIZED TO ISSUE AN UNLIMITED NUMBER OF COMMON SHARES WITHOUT PAR VALUE, ALL
SHARES TO BE OF ONE CLASS.
Certified a true copy
Mar 9, 1994
/s/ SIGNATURE
-----------------------------------
Solicitor
- ------------------------------------------------------------------------------------------------------------------------------------
4 - Restrictions if any on share transfers Restrictions sur le transfert de actions s'il y a
lieu
NO SHARES OF THE CORPORATION SHALL BE TRANSFERRED WITHOUT APPROVAL OF THE BOARD OF DIRECTORS
[Deleted by Amendment February 19, 1996]
- ------------------------------------------------------------------------------------------------------------------------------------
5 - Number (or minimum and maximum number) of directors Nombre (ou nombre minimum et maximum)
d'administrateurs
NOT LESS THAN 2 OR MORE THAN 7.
- ------------------------------------------------------------------------------------------------------------------------------------
6 - Restrictions if any on business the corporation may carry on Limites imposees quant aux activites commerciales
que la socie- te peut exploiter, s'il y a lieu.
N/A
- ------------------------------------------------------------------------------------------------------------------------------------
7 - Other provisions if any Autres dispositions s'il y a lieu
THE ANNEXED SCHEDULE I IS INCORPORATED IN THIS FORM.
[Amended February 19, 1996]
- ------------------------------------------------------------------------------------------------------------------------------------
8 - Incorporators Fondateurs
- ------------------------------------------------------------------------------------------------------------------------------------
Names - Noms Address (include postal code) /s/ SIGNATURE
Adresse (inclure le code postal
- ------------------------------------------------------------------------------------------------------------------------------------
M. PHILLIP TONSTAD 103 - 2145 York Street, Vancouver, /s/ M.P. Tonstad
B.C.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY A L'USAGE DU MINNISTERE SEULEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Corporation No. - No de la 193890-8 Filed - Deposee Jun 5, 1995
Societe
</TABLE>
<PAGE>
SCHEDULE 1
The number of shareholders is limited to fifty (50) not including
persons who are in the employment of the Corporation and persons, who, having
been formerly in the employment of the Corporation, were, while in that
employment, and have continued after the termination of that employment to be
shareholders of the Corporation, two or more persons holding one or more shares
jointly being counted as a single shareholder. [Deleted by Amendment February
19, 1996]
Any invitation to the public to subscribe for any shares or debentures
of the Corporation is prohibited. [Deleted by Amendment February 19, 1996]
Without in any way limiting the powers conferred upon the Corporation
and its directors by the Canada Business Corporations Act, the directors may,
from time to time, in such amounts and on such terms as they deem expedient,
charge, mortgage, hypothecate, pledge, or grant any form of security interest
in, all or any of the currently owned or subsequently acquired property of the
Corporation, real or personal, moveable or immoveable, including its
undertaking, book debts, rights, powers and franchises, to secure any debt
obligation or any money borrowed or other debt or liability of the Corporation.
<PAGE>
CREO PRODUCTS INC.
------------------
BY-LAW NO. 1
A by-law relating generally to the transaction of the business and
affairs of Creo Products Inc. (the "Corporation").
Contents
--------
One - Interpretation
Two - Business of the Corporation
Three - Borrowing and Securities
Four - Directors
Five - Committees
Six - Officers
Seven - Protection of Directors,
Officers and Others
Eight - Shares
Nine - Dividends and Rights
Ten - Meetings of Shareholders
Eleven - Divisions and Departments
Twelve - Notices
Thirteen - Effective Date
BE IT ENACTED as a by-law of the Corporation as follows:
<PAGE>
-2-
Section One
INTERPRETATION
1.01 Definitions - In the by-laws of the Corporation, unless the
context otherwise requires:
"Act" means the Canada Business Corporations Act, and any statute that
may be substituted therefor, as from time to time amended;
"appoint" includes "elect" and vice versa;
"articles" means the articles attached to the certificate of
incorporation dated May 30, 1985, of the Corporation as from time to
time amended or restated;
"board" means the board of directors of the Corporation;
"by-laws" means this by-law and all other by-laws of the Corporation
from time to time in force and effect;
"Corporation" means the corporation incorporated by certificate of
incorporation under the Act and named CREO PRODUCTS INC.;
"meeting of the shareholders" means an annual meeting of shareholders
and a special meeting of shareholders;
"non-business day" means Saturday, Sunday and any other day that is a
holiday as defined in the Interpretation Act (Canada);
"recorded address" means in the case of a shareholder his address as
recorded in the securities register; and in the case of joint
shareholders the address appearing in the securities register in
respect of such joint holding or the first address so appearing if
there are more than one; and in the case of a director, officer,
auditor or member of a committee of the board, his latest address as
recorded in the records of the Corporation;
"signing officer" means, in relation to any instrument, any person
authorized by section 2.04 to sign the same on behalf of the
Corporation or by a resolution passed pursuant thereto;
<PAGE>
-3-
"special meeting of shareholders" means a special meeting of all
shareholders entitled to vote at an annual meeting of shareholders;
"unanimous shareholder agreement" means a written agreement among all
the shareholders of the Corporation, or among all such shareholders
and a person who is not a shareholder, that restricts, in whole or in
part, the powers of the directors to manage the business and affairs
of the Corporation, as from time to time amended;
save as aforesaid, words and expressions defined in the Act have the
same meanings when used herein; and
words importing the singular number include the plural and vice versa;
words importing gender include the masculine, feminine and neuter
genders; and words importing persons include individuals, bodies
corporate, partnerships, trusts and unincorporated organizations.
Section Two
BUSINESS OF THE CORPORATION
2.01 Registered Office - The registered office of the Corporation
shall be at such location in Canada as the board may from time to time
determine.
2.02 Corporate Seal - Until changed by the Board, the corporate seal
of the Corporation shall be in the form impressed.
2.03 Financial Year - The financial year of the Corporation shall be
as determined from time to time by the Board.
2.04 Execution of Instruments - Deeds, transfers, assignments,
contracts, obligations, certificates and other instruments may be signed on
behalf of the Corporation by two persons, one of whom holds the office of
chairman of the board, president, managing director, vice-president, secretary,
or director and the other of whom holds one of the said offices, or by such
other per son or per sons as may be determined by the Board from time to time by
resolution. In addition, the board may from time to time direct the manner in
which the person or persons by whom any particular instrument or class of
instruments may or shall be signed. Any signing officer may affix the corporate
seal to any instrument requiring the same.
<PAGE>
-4-
2.05 Banking Arrangements - The banking business of the Corporation
including, without limitation, the borrowing of money and the giving of security
therefor, shall be transacted with such banks, trust companies or other bodies
corporate or organizations as may from time to time be designated by or under
the authority of the board. Such banking business or any part thereof shall be
transacted under such agreements, instructions and delegations of powers as the
board may from time to time prescribe or authorize.
2.06 Voting Rights in Other Bodies Corporate - The signing officers of
the Corporation may execute and deliver proxies and arrange for the issuance of
voting certificates or other evidence of the right to exercise the voting rights
attaching to any securities held by the Corporation. Such instruments,
certificates or other evidence shall be in favour of such person or persons as
may be determined by the officers executing such proxies or arranging for the
issuance of voting certificates or such other evidence of the right to exercise
such voting rights. In addition, the board may, from time to time, direct the
manner in which, and the person or persons by whom, any particular voting rights
or class of voting rights may or shall be exercised.
2.07 Withholding Information from Shareholders - Subject to the
provisions of the Act, no shareholder shall be entitled to discovery of any
information respecting any details or conduct of the Corporation's business
which, in the opinion of the board, it would be inexpedient in the interests of
the shareholders or the Corporation to communicate to the public. The board may
from time to time determine whether and to what extent and at what time and
place and under what conditions or regulations the accounts, records and
documents of the Corporation or any of them shall be open to the inspection of
the shareholders and no shareholder shall have any right of inspecting any
account, record or document of the Corporation except as conferred by the Act or
authorized by the board or by resolution passed at a general meeting of
shareholders.
Section Three
BORROWING AND SECURITIES
3.01 Borrowing Power - Without limiting the borrowing powers of the
Corporation as set forth in the Act, the board may from time to time:
(a) borrow money upon the credit of the Corporation;
(b) issue, reissue, sell or pledge bonds, debentures, notes or other
evidence of indebtedness or guarantee of the Corporation, whether
secured or unsecured; and
<PAGE>
-5-
(c) mortgage, hypothecate, pledge or otherwise create an interest in
or charge upon all or any property (including the undertaking and
rights) of the Corporation, owned or subsequently acquired, by way or
mortgage, hypothec, pledge or otherwise, to secure payment of any such
evidence of indebtedness or guarantee of the Corporation.
Nothing in this section limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
3.02 Delegation - The board may from time to time delegate to such one
or more of the directors and officers of the Corporation as may be designated by
the board all or any of the powers conferred on the board by section 3.01 or by
the Act to such extent and in such manner as the board shall determine at the
time of each such delegation.
Section Four
DIRECTORS
4.01 Number of Directors and Quorum - Until changed in accordance with
the Act, the Board shall consist of not fewer than Two (2) and not more than
Seven (7) directors. Subject to section 4.08, the quorum for the transaction of
business at any meeting of the board shall consist of a majority of the number
of directors of the Corporation at that time, or such greater number of
directors as the board may from time to time determine.
4.02 Qualification - No person shall be qualified for election as a
director if he is less than 18 years of age; if he is of unsound mind and has
been so found by a court in Canada or elsewhere; if he is not an individual; or
if he has the status of a bankrupt. A director need not be a shareholder. A
majority of the directors shall be resident Canadians.
4.03 Election and Term - The election of directors shall take place at
the first meeting of shareholders and at each annual meeting of shareholders and
all the directors then in office shall retire but, if qualified, shall be
eligible for re-election. The number of directors to be elected at any such
meeting shall be the number of directors then in office unless the directors or
the shareholders otherwise determine. The election shall be by resolution. If an
election of directors is not held at the proper time, the incumbent directors
shall continue in office until their successors are elected.
<PAGE>
-6-
4.04 Removal of Directors - Subject to the provisions of the Act, the
shareholders may be resolution passed at a special meeting remove any director
from office and the vacancy created by such removal may be filled at the same
meeting failing which it may be filled by the board.
4.05 Vacation of Office - A director ceases to hold office when: he
dies; he is removed from office by the shareholders; he ceases to be qualified
for election as a director; or his written resignation is sent or delivered to
the Corporation, or if a time is specified in such resignation, at the time so
specified, whichever is later.
4.06 Vacancies - Subject to the Act, a quorum of the board may fill a
vacancy in the board, except a vacancy resulting from an increase in the minimum
number of directors or from a failure of the shareholders to elect the minimum
number of directors. In the absence of a quorum of the board, or if the vacancy
has arisen from a failure of the shareholders to elect the minimum number of
directors, the board shall forthwith call a special meeting of shareholders to
fill the vacancy. If the board fails to call such meeting or if there are no
such directors then in office, any shareholder may call the meeting.
4.07 Action by the Board - The board shall manage the business and
affairs of the Corporation. Subject to section 4.08 and 4.09, the powers of the
board may be exercised by resolution passed at a meeting at which a quorum is
present or by resolution in writing signed by all the directors entitled to vote
on that resolution at a meeting of the board. Where there is a vacancy in the
board, the remaining directors may exercise all the powers of the board so long
as a quorum remains in office. Where the Corporation has only one director, that
director may constitute the meeting.
4.08 Canadian Majority - The board shall not transact business at a
meeting, other than filling a vacancy in the board, unless a majority of the
directors present are resident Canadians, except where:
(a) a resident Canadian director who is unable to be present approves
in writing or by telephone or other communications facilities the
business transacted at the meeting; and
(b) a majority of resident Canadians would have been present had that
director been present at the meeting.
4.09 Meetings by telephone - If all the directors consent, a director
may participate in a meeting of the board or
<PAGE>
-7-
of a committee of the board by means of such telephone or other communications
facilities as permit all persons participating in the meeting to hear each
other, and a director participating in such a meeting by such means is deemed to
be present at the meeting. Any such consent shall be effective whether given
before or after the meeting to which it relates and may be given with respect to
all meetings of the board and of committees of the board held while a director
holds office.
4.10 Place of Meetings - Meetings of the board may be held at any
place in or outside Canada.
4.11 Calling of Meetings - Meetings of the board shall be held from
time to time and at such place as the board, the chairman of the board, the
president or any two directors may determine.
4.12 Notice of Meeting - Notice of the time and place of each meeting
of the board shall be given in the manner provided in section 12.01 to each
director not less than 48 hours before the time when the meeting is to be held.
A notice of a meeting of directors need not specify the purpose of or the
business to be transacted at the meeting except where the Act requires such
purpose or business to be specified, including any proposal to:
(a) submit to the shareholders any question or matter requiring
approval of the shareholders;
(b) fill a vacancy among the directors or in the office of auditor;
(c) issue securities;
(d) declare dividends;
(e) purchase, redeem or otherwise acquire shares of the Corporation;
(f) pay a commission for the sale of shares;
(g) approve a management proxy circular;
(h) approve a take-over bid circular or directors' circular;
(i) approve any annual financial statements; or
(j) adopt, amend or repeal by-laws.
A director may in any manner waive notice or otherwise consent to a meeting of
the board.
<PAGE>
-8-
4.13 First Meeting of New Board - Provided a quorum of directors is
present, each newly elected board may without notice hold its first meeting
immediately following the meeting of shareholders at which such board is
elected.
4.14 Adjourned Meeting - Notice of an adjourned meeting of the board
is not required if the time and place of the adjourned meeting is announced at
the original meeting.
4.15 Regular Meetings - The board may appoint a day or days in any
month or months for regular meetings of the board at a place and hour to be
named. A copy of any resolution of the board fixing the place and time of such
regular meetings shall be sent to each director forthwith after being passed,
but no other notice shall be required for any such regular meeting except where
the Act requires the purpose thereof or the business to be transacted thereat to
be specified.
4.16 Chairman - The chairman of any meeting of the board shall be the
first mentioned of such of the following officers as have been appointed and who
is a director and is present at the meeting: chairman of the board, president,
or a vice-president who is a director. If no such officer is present, the
directors present shall choose one of their number to be chairman.
4.17 Vote to Govern - At all meetings of the board every question
shall be decided by a majority of the votes cast on the question. In case of an
equality of votes the chairman of the meeting shall not be entitled to a second
or casting vote.
4.18 Conflict of Interest - A director or officer who is a party to,
or who is a director or officer of or has a material interest in any person who
is a party to, a material contract or proposed material contract with the
Corporation shall disclose the nature and extent of his interest at the time and
in the manner provided by the Act. Any such contract or proposed contract shall
be referred to the board or shareholders for approval even if such contract is
one that in the ordinary course of the Corporation's business would not require
approval by the board or shareholders, and a director interested in a contract
so referred to the board shall not vote on any resolution to approve the same
except as provided by the Act.
4.19 Remuneration and Expenses - Subject to any unanimous shareholder
agreement, the directors shall be paid such remuneration for their services as
the board may from time to time determine. The directors shall also be entitled
to be reimbursed for travelling and other expenses properly incurred by them in
attending meetings of the board or any committee
<PAGE>
-9-
thereof. Nothing herein contained shall preclude any director from serving the
Corporation in any other capacity and receiving remuneration therefor.
Section Five
COMMITTEES
5.01 Committee of Directors - The board may appoint a committee of
directors, however designated, and delegate to such committee any of the powers
of the board except those which, under the Act, a committee of directors has no
authority to exercise. A majority of the members of such committee shall be
resident Canadians.
5.02 Transaction of Business - Subject to the provisions of section
4.09, the powers of a committee of directors may be exercised by a meeting at
which a quorum is present or by resolution in writing signed by all the members
of such committee who would have been entitled to vote on that resolution at a
meeting of the committee. Meetings of such committee may be held at any place in
or outside Canada.
5.03 Advisory Committees - The board may from time to time appoint
such other committees as it may deem advisable, but the functions of any such
other committees shall be advisory only.
5.04 Procedure - Unless otherwise determined by the board, each
committee shall have the power to fix its quorum at not less than a majority of
its members, to elect its chairman and to regulate its procedure.
Section Six
OFFICERS
6.01 Appointment - Subject to any unanimous shareholder agreement, the
board may from time to time appoint a president, one or more vice-presidents (to
which title may be added words indicating seniority or function), a secretary,
a treasurer and such other officers as the board may determine, including one or
more assistants to any of the officers so appointed. The board may specify the
duties of and, in accordance with this by-law and subject to the provisions of
the Act, delegate to such officers powers to manage the business and affairs of
the Corporation. Subject to sections 6.02 and 6.03, an officer may but need not
be a director and one person may hold more than one office.
<PAGE>
-10-
6.02 Chairman of the Board - The board may from time to time also
appoint a chairman of the board who shall be a director. If appointed, the board
may assign to him any of the powers and duties that are by any provisions of
this by-law assigned to the president; and he shall, subject to the provisions
of the Act, have such other powers and duties as the board may specify. During
the absence or disability of the chairman of the board, his duties shall be
performed and his powers exercised by the president.
6.03 President - The president shall be a resident Canadian and a
director. He shall be the chief executive officer and operating officer and,
subject to the authority of the board, shall have general supervision of the
business and affairs of the Corporation; and he shall, subject to the provisions
of the Act, have such other powers and duties as the board may specify.
6.04 Vice-President - A vice-president shall have such powers and
duties as the board or the President may specify.
6.05 Secretary - The secretary shall attend and be the secretary of
all meetings of the board, shareholders and committees of the board and shall
enter or cause to be entered in records kept for that purpose minutes of all
proceedings thereat; he shall give or cause to be given, as and when instructed,
all notices to shareholders, directors, officers, auditors and members of
committees of the board; he shall be the custodian of the stamp or mechanical
device generally used for affixing the corporate seal of the Corporation and of
all books, papers, records, documents and instruments belonging to the
Corporation, except when some other officer or agent has been appointed for that
purpose; and he shall have such other powers and duties as the board or the
President may specify.
6.06 Treasurer - The treasurer shall keep proper accounting records in
compliance with the Act and shall be responsible for the deposit of money, the
safekeeping of securities and the disbursement of the funds of the Corporation;
he shall render to the board whenever required an account of all his
transactions as treasurer and of the financial position of the Corporation; and
he shall have such other powers and duties as the board or the President may
specify.
6.07 Powers and Duties of Other Officers - The powers and duties of
all other officers shall be such as the terms of their engagement call for or as
the board or the President may specify. Any of the powers and duties of an
officer to whom an assistant has been appointed may be exercised and performed
by such assistant, unless the board or the President otherwise directs.
<PAGE>
-11-
6.08 Variation of Powers and Duties - The board may from time to time
and subject to the provisions of the Act, vary, add to or limit the powers and
duties of any officer.
6.09 Term of Office - The board, in its discretion, may remove any
officer of the Corporation, without prejudice to such officer's rights under any
employment contract. Otherwise each officer appointed by the board shall hold
office until his successor is appointed or his employment is terminated by
death, incapacity or resignation.
6.10 Terms of Employment and Remuneration - The terms of employment
and remuneration of officers appointed by the board shall be settled by it from
time to time.
6.11 Conflict of Interest - An officer shall disclose his interest in
any material contract or proposed material contract with the Corporation in
accordance with section 4.18.
6.12 Agents and Attorneys - The board shall have power from time to
time to appoint agents or attorneys for the Corporation in or outside Canada
with such powers of management or otherwise (including the power to sub-
delegate) as may be thought fit.
6.13 Fidelity Bonds - The board may require such officers, employees
and agents of the Corporation as the board deems advisable to furnish bonds for
the faithful discharge of their powers and duties, in such form and with such
surety as the board may from time to time determine.
Section Seven
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 Limitation of Liability - No director or officer shall be liable
for the acts, receipts, neglects or defaults of any other director or officer or
employee, or for joining in any receipt or other act for conformity, or for any
loss, damage or expense happening to the Corporation through the insufficiency
or deficiency of title to any property acquired for or on behalf of the
Corporation, or for the insufficiency or deficiency of any security in or upon
which any of the monies of the Corporation shall be invested, or for any loss or
damage arising from the bankruptcy, insolvency or tortious acts of any person
with whom any of the monies, securities or effects of the Corporation shall be
deposited, or for any loss occasioned by any error of judgment or oversight on
his part, or for any other loss, damage or misfortune whatever which shall
happen in the execution of the duties of his office or in relation thereto,
<PAGE>
-12-
unless the same are occasioned by his own willful neglect or default; provided
that nothing herein shall relieve any director or officer from the duty to act
in accordance with the Act and the regulations thereunder or from liability for
any breach thereof.
7.02 Indemnity - Subject to the limitations contained in the Act, the
Corporation shall indemnify a director or officer, a former director or officer,
or a person who acts or acted at the Corporation's request as a director or
officer of a body corporate of which the Corporation is or was a shareholder or
creditor (or a person who undertakes or has undertaken any liability on behalf
of the Corporation or any such body corporate) and his heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director or officer of
the Corporation or such body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
7.03 Insurance - Subject to the limitations contained in the Act, the
Corporation may purchase and maintain such insurance for the benefit of its
directors and officers as such, as the board may from time to time determine.
Section Eight
SHARES
8.01 No shareholder shall be entitled to a pre-emptive right or first
offer to acquire any shares of the authorized unissued shares of the Company and
the board may, from time to time, allot or issue or agree to allot or issue the
whole or any part of the authorized and unissued shares of the Corporation at
such times and to such persons and for such consideration as the board shall
determine without notice to or any entitlement of existing shareholders to
participate in such allotment or issue and without pre-emptive rights to the
existing shareholders, provided that no share shall be issued until it is fully
paid as prescribed by the Act.
<PAGE>
-13-
8.02 Allotment - The board may from time to time allot or grant
options to purchase the whole or any part of the authorized and unissued shares
of the Corporation at such times and to such persons and for such consideration
as the board shall determine, provided that no share shall be issued until it is
fully paid as prescribed by the Act.
8.03 Commissions - The board may from time to time authorize the
Corporation to pay a commission to any person in consideration of his purchasing
or agreeing to purchase shares of the Corporation, whether from the Corporation
or from any other person, or procuring or agreeing to procure purchasers for any
such shares.
8.04 Registration of Transfer - Subject to the provisions of the Act,
no transfer of shares shall be registered in a securities register except upon
presentation of the certificate representing such shares with a transfer
endorsed thereon or delivered therewith duly executed by the registered holder
or by his attorney or successor duly appointed, together with such reasonable
assurance or evidence of signature, identification and authority to transfer as
the board may from time to time prescribe, upon payment of all applicable taxes
and any fees prescribed by the board, upon compliance with such restrictions on
transfer as are authorized by the articles and upon satisfaction of any lien
referred to in section 8.06.
8.05 Transfer Agents and Registrars - The board may from time to time
appoint a registrar to maintain the securities register and transfer agent to
maintain the register of transfers and may also appoint one or more branch
registrars to maintain branch securities registers and one or more branch
transfer agents to maintain branch registers of transfers, but one person may be
appointed both registrar and transfer agent. The board may at any time terminate
any such appointment.
8.06 Lien for Indebtedness - If the articles provide that the
Corporation shall have a lien on shares registered in the name of a shareholder
indebted to the Corporation, such lien may be enforced, subject to any other
provision of the articles and to any unanimous shareholder agreement, by the
sale of the shares thereby affected or by any other action, suit, remedy or
proceeding authorized or permitted by law or by equity and, pending such
enforcement, may refuse to register a transfer of the whole of any part of such
shares.
8.07 Non-recognition of Trusts - Subject to the provisions of the Act,
the Corporation shall treat as absolute owner of any share the person in whose
name the share is registered in the securities register as if that person had
full
<PAGE>
-14-
legal capacity and authority to exercise all rights of ownership, irrespective
of any indication to the contrary through knowledge or notice or description in
the Corporation's records or on the share certificate.
8.08 Share Certificates - Every holder of one or more shares of the
Corporation shall be entitled, at his option, to a share certificate, or to a
non-transferable written acknowledgment of his right to obtain a share
certificate, stating the number and class or series of shares held by him as
shown on the securities register. Share certificates and acknowledgments of a
shareholder's right to a share certificate, respectively, shall be in such form
as the board shall from time to time approve. Any share certificate shall be
signed in accordance with section 2.04 and need not be under the corporate seal
provided that, unless the board otherwise determines, certificates representing
shares in respect of which a transfer agent and/or registrar has been appointed
shall not be valid unless countersigned by or on behalf of such transfer agent
and/or registrar. The signature of one of the signing officers or, in the case
of share certificates which are not valid unless countersigned by or on behalf
of a transfer agent and/or registrar, the signatures of both signing officers,
may be printed or mechanically reproduced in facsimile upon share certificates
and every such facsimile signature shall for all purposes be deemed to be the
signature of the officer whose signature it reproduces and shall be binding upon
the Corporation. A share certificate executed as aforesaid shall be valid
notwithstanding that one or both of the officers whose facsimile signature
appears thereon no longer holds office at the date of issue of the certificate.
8.09 Replacement of Share Certificates - The board or any officer or
agent designated by the board may in its or his discretion direct the issue of a
new share certificate in lieu of and upon cancellation of a share certificate
that has been mutilated or in substitution for a share certificate claimed to
have been lost, destroyed or wrongfully taken on payment of such fee, not
exceeding $3, and on such terms as to indemnity, reimbursement of expenses and
evidence of loss and of title as the board may from time to time prescribe,
whether generally or in any particular case.
8.10 Joint Shareholders - If two or more persons are registered as
joint holders of any share, the Corporation shall no be bound to issue more than
one certificate in respect thereof, and delivery of such certificate to one of
such persons shall be sufficient delivery to all of them. Any one of such
persons may give effectual receipts for the certificate issued in respect
thereof or for any dividend, bonus, return of capital or other money payable or
warrant issuable in respect of such share.
<PAGE>
-15-
8.11 Deceased Shareholders - In the event of the death of a holder, or
of one of the joint holders, of any share, the Corporation shall not be required
to make any entry in the securities register in respect thereof or to make
payment of any dividends thereon except upon production of all such documents as
may be required by law and upon compliance with the reasonable requirements of
the Corporation and its transfer agents.
Section Nine
DIVIDENDS AND RIGHTS
9.01 Dividends - Subject to the provisions of the Act, the board may
from time to time declare dividends payable to the shareholders according to
their respective rights and interests in the Corporation. Dividends may be paid
in money or property or by issuing fully paid shares of the Corporation.
9.02 Dividend Cheques - A dividend payable in cash shall be paid by
cheque drawn on the Corporation's bankers or one of them to the order of each
registered holder of shares of the class or series in respect of which it has
been declared and mailed by prepaid ordinary mail to such registered holder at
his recorded address, unless such holder otherwise directs. In the case of joint
holders the cheque shall, unless such joint holders otherwise direct, be made
payable to the order of all of such joint holders and mailed to them at their
recorded address. The mailing of such cheque as aforesaid, unless the same is
not paid on due presentation, shall satisfy and discharge the liability for the
dividend to the extent of the sum represented thereby plus the amount of any tax
which the Corporation is required to and does withhold.
9.03 Non-receipt of Cheques - In the event of non-receipt of any
dividend cheque by the person to whom it is sent as aforesaid, the Corporation
shall issue to such person a replacement cheque for a like amount on such terms
as to indemnity, reimbursement or expenses and evidence of non-receipt and of
title as the board may from time to time prescribe, whether generally or in any
particular case.
9.04 Record Date for Dividends and Rights - The board may fix in
advance a date, preceding by not more than 50 days the date for the payment of
any dividend or the date for the issue of any warrant or other evidence of right
to subscribe for securities of the Corporation, as a record date for the
determination of the persons entitled to receive payment of such dividend or to
exercise the right to subscribe for such securities, provided that notice of any
such record date is
<PAGE>
-16-
given, not less than 14 days before such record date, by newspaper advertisement
in the manner provided in the Act. Where no record date is fixed in advance as
aforesaid, the record date for the determination of the persons entitled to
receive payment of any dividend or to exercise the right to subscribe for
securities of the Corporation shall be at the close of business on the day on
which the resolution relating to such dividend or right to subscribe is passed
by the board.
9.05 Unclaimed Dividends - Any dividend unclaimed after a period of 6
years from the date on which the same has been declared to be payable shall be
forfeited and shall revert to the Corporation.
9.06 Rights Attached to Shares - The Shares of the Corporation shall
have attached to them the respective rights described in the Articles of
Incorporation of the Corporation and as may be amended from time to time in
accordance with the Act.
Section Ten
MEETINGS OF SHAREHOLDERS
10.01 Annual Meetings - The annual meeting of shareholders shall be
held at such time in each year and, subject to section 10.03, at such place as
the board, the chairman of the board, or the president may from time to time
determine, for the purpose of considering the financial statements and reports
required by the Act to be placed before the annual meeting, electing directors,
appointing auditors and for the transaction of such other business as may
properly be brought before the meeting.
10.02 Special Meetings - the board, the chairman of the board, or the
president shall have power to call a special meeting of shareholders at any
time.
10.03 Place of Meetings - Meetings of shareholders shall be held at
the registered office of the Corporation or elsewhere in the municipality in
which the registered office is situate or, if the board shall so determine, at
some other place in Canada or, if all the shareholders entitled to vote at the
meeting so agree, at some place outside Canada.
10.04 Notice of Meetings - Notice of the time and place of each
meeting of shareholders shall be given in the manner provided in section 12.01
not less than 21 nor more than 50 days before the date of the meeting to each
director, to the auditor and to each shareholder who at the close of business on
<PAGE>
-17-
the record date, if any, for notice is entered in the securities register as the
holder of one or more shares carrying the right to vote at the meeting. Notice
of a meeting of shareholders called for any purpose other than consideration of
the financial statements and auditor's report, election of directors and
reappointment of the incumbent auditor shall state the nature of such business
in sufficient detail to permit the shareholder to form a reasoned judgment
thereon and shall state the text of any special resolution to be submitted to
the meeting. A shareholder may in any manner waive notice of or otherwise
consent to a meeting of shareholders.
10.05 List of Shareholders Entitled to Notice - For every meeting of
shareholders, the Corporation shall prepare a list of shareholders entitled to
receive notice of the meeting, arranged in alphabetical order and showing the
number of shares entitled to vote at the meeting held by each shareholder. If a
record date for the meeting is fixed pursuant to section 10.06, the shareholders
listed shall be those registered at the close of business on the day immediately
preceding the day on which notice of the meeting is given, or where no such
notice is given, the day on which the meeting is held. The list shall be
available for examination by any shareholder during usual business hours at the
registered office of the Corporation or at the place where the securities
register is kept and at the place where the meeting is held.
10.06 Record Date for Notice - The board may fix in advance a record
date, preceding the date of any meeting of shareholders by not more than 50 days
and not less than 21 days, for determination of the shareholders entitled to
notice of the meeting, provided that notice of any such record date is given not
less than 14 days before such record date, by newspaper advertisement in the
manner provided in the Act. If no record date is so fixed, the record date for
the determination of the shareholders entitled to notice of the meeting shall be
the close of business on the day immediately preceding the day on which the
notice is given.
10.07 Meetings without Notice - A meeting of shareholders may be held
without notice at any time and place permitted by the Act (a) if all the
shareholders entitled to vote thereat are present in person or represented by
proxy or if those not present or represented by proxy waive notice of or
otherwise consent to such meeting being held, and (b) if the auditors and the
directors are present or waive notice of or otherwise consent to such meeting
being held. At such a meeting any business may be transacted which the
Corporation at a meeting of shareholders may transact. If the meeting is held at
a place outside Canada, shareholders not present or represented
<PAGE>
-18-
by proxy, but who have waived notice of or otherwise consented to such meeting,
shall also be deemed to have consented to the meeting being held at such place.
10.08 Chairman, Secretary and Scrutineers - The chairman of any
meeting of shareholders shall be the first mentioned of such of the following
officers as have been appointed and who is present at the meeting: president,
chairman of the board, or a vice-president who is a shareholder. If no such
officer is present within 15 minutes from the time fixed for holding the
meeting, the persons present and entitled to vote shall choose one of their
number to be chairman. If the secretary of the Corporation is absent, the
chairman shall appoint some person, who need not be a shareholder, to act as
secretary of the meeting. If desired, one or more scrutineers, who need not be
shareholders, may be appointed by a resolution or by the chairman with the
consent of the meeting.
10.09 Persons Entitled to be Present - the only persons entitled to be
present at a meeting of shareholders shall be those entitled to vote thereat,
the directors and auditors of the Corporation and others who, although not
entitled to vote, are entitled or required under any provision of the Act or the
articles or by-laws to be present at the meeting. Any other person may be
admitted only on the invitation of the chairman of the meeting or with the
consent of the meeting.
10.10 Quorum - A quorum for the transaction of business at any meeting
of shareholder shall be two persons present in person, each being a shareholder
entitled to vote thereat or a duly appointed proxy for an absent shareholder so
entitled.
10.11 Right to Vote - Subject to the provisions of the Act as to
authorized representatives of any other body corporate, at any meeting of
shareholders in respect of which the Corporation has prepared the list referred
to in section 10.05, every person who is named in such list shall be entitled to
vote the shares shown thereon opposite his name except, where the Corporation
has fixed a record date in respect of such meeting pursuant to section 10.06, to
the extent that such person has transferred any of his shares after such record
date and the transferee, upon producing properly endorsed certificates
evidencing such shares or otherwise establishing that he owns such shares,
demands not later than 10 days before the meeting that his name be included to
vote the transferred shares at the meeting. In the absence of a list prepared as
aforesaid in respect of a meeting of shareholders, every person
<PAGE>
-19-
shall be entitled to vote at the meeting who at the time is entered in the
securities register as the holder of one or more shares carrying the right to
vote at such meeting.
10.12 Proxies - Every shareholder entitled to vote at a meeting of
shareholders may appoint a proxyholder, or one or more alternate proxyholders,
who need not be shareholders, to attend and act at the meeting in the manner and
to the extent authorized and with the authority conferred by the proxy. A proxy
shall be in writing executed by the shareholder or his attorney and shall
conform with the requirements of the Act.
10.13 Time for Deposit of Proxies - The board may specify in a notice
calling a meeting of shareholders a time, preceding the time of such meeting by
not more than 48 hours exclusive of non-business days, before which time proxies
to be used at such meeting must be deposited. A proxy shall be acted upon only
if, prior to the time so specified, it shall have been deposited with the
Corporation or an agent thereof specified in such notice or, if no such time is
specified in such notice, unless it has been received by the secretary of the
Corporation or by the chairman of the meeting or any adjournment thereof prior
to the time of voting.
10.14 Joint Shareholders - Where there are joint members registered in
respect of any share, any one of the joint members may vote at any meeting,
either personally or by proxy, in respect of the share as if he were solely
entitled to it. If more than one of the joint members is present at the meeting,
personally or by proxy, the joint member present whose name stands first on the
register in respect of the share shall alone be entitled to vote in respect of
that share.
10.15 Votes to Govern - At any meeting of shareholders every question
shall, unless otherwise required by the articles or by-laws or by law, be
determined by the majority of the votes cast on the question. In case of an
equality of votes either upon a show of hands or upon a poll, the chairman of
the meeting shall not be entitled to a second or casting vote.
10.16 Show of Hands - Subject to the provisions of the Act, any
question at a meeting of shareholders shall be decided by a show of hands unless
a ballot thereon is required or demanded as hereinafter provided. Upon a show of
hands every person who is present and entitled to vote shall have one vote.
Whenever a vote by show of hands shall have been taken upon a question, unless a
ballot thereon is so required or demanded, a declaration by the chairman of the
meeting that the vote upon the question has been carried or carried by a
particular majority or not carried and an entry to that effect in the
<PAGE>
-20-
minutes of the meeting shall be prima facie evidence of the fact without proof
of the number or proportion of the votes recorded in favour of the said
question, and the result of the vote so taken shall be the decision of the
shareholders upon the said question.
10.17 Ballots - On any question proposed for consideration at a
meeting of shareholders, and whether or not a show of hands has been taken
thereon, any shareholder or proxyholder entitled to vote at the meeting may
require or demand a ballot. A ballot so required or demanded shall be taken in
such manner as the chairman shall direct. A requirement or demand for a ballot
may be withdrawn at any time prior to the taking of the ballot. If a ballot is
taken each person present shall be entitled, in respect of the shares which he
is entitled to vote at the meeting upon the question, to that number of votes
provided by the Act or the articles, and the result of the ballot so taken shall
be the decision of the shareholders upon the said question.
10.18 Adjournment - If a meeting of shareholders is adjourned for less
than 30 days, it shall not be necessary to give notice of the adjourned meeting,
other than by announcement at the earliest meeting that is adjourned. If a
meeting of shareholders is adjourned by one or more adjournments for an
aggregate of 30 days or more, notice of the adjourned meeting shall be given as
for an original meeting.
10.19 Resolution in Writing - A resolution in writing signed by all
the shareholders entitled to vote on that resolution at a meeting of
shareholders is as valid as if it had been passed at a meeting of the
shareholders unless a written statement with respect to the subject matter of
the resolution is submitted by a director or the auditors in accordance with the
Act.
10.20 Only One Shareholder - Where the Corporation has only one
shareholder or only one holder of any class or series of shares, the shareholder
present in person or by proxy constitutes a meeting.
Section Eleven
DIVISIONS AND DEPARTMENTS
11.01 Creation and Consolidation of Divisions - The board may cause
the business and operations of the Corporation or any part thereof to be divided
or to be segregated into one or more divisions upon such basis, including
without limitation, character or type or operation, geographical territory,
product
<PAGE>
-21-
manufactured or service rendered, as the board may consider appropriate in each
case. The board may also cause the business and operations of any Such division
to be further divided into sub-units and the business and operations of any such
divisions or sub-units to be consolidated upon such basis as the board may
consider appropriate in each case.
11.02 Name of Division - Any division or its sub-units may be
designated by such name as the board may from time to time determine and may
transact business, enter into contracts, sign cheques and other documents of any
kind and do all acts and things under such name. Any such contract, cheque or
document shall be binding upon the Corporation as if it had been entered into or
signed in the name of the Corporation.
11.03 Officers of Divisions - From time to time the board or, if
authorized by the board, the President, may appoint one or more officers for any
division, prescribe their powers and duties and settle their terms of employment
and remuneration. The board or, if authorized by the board, the President, may
remove at its or his pleasure any officer so appointed, without prejudice to
such officer's right under any employment contract. Officers of divisions or
their sub-units shall not, as such, be officers of the Corporation.
Section Twelve
NOTICES
12.01 Method of Giving Notices - Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered or
served) pursuant to the Act, the regulations thereunder, the articles, the by-
laws or otherwise to a shareholder, director, officer, auditor or member of a
committee of the board shall be sufficiently given if delivered personally to
the person to whom it is to be given or if delivered to his recorded address or
if mailed to him at his recorded address by prepaid ordinary or air mail or if
sent to him at his recorded address by any means of prepaid transmitted or
recorded communication. A notice so delivered shall be deemed to have been given
when it is delivered personally or to the recorded address as aforesaid; a
notice so mailed shall be deemed to have been given when deposited in a post
office or public letter box; and a notice so sent by any means of transmitted or
recorded communication shall be deemed to have been given when dispatched or
delivered to the appropriate communication company or agency or its
representative for dispatch. The secretary may change or cause to be changed the
recorded address of any shareholder, director, officer, auditor or member of a
committee of the board in accordance with any information believed by him to be
reliable.
<PAGE>
-22-
12.02 Notice to Joint Shareholders - If two or more persons are
registered as joint holders of any share, any notice shall be addressed to all
of such joint holders but notice to one of such persons shall be sufficient
notice to all of them.
12.03 Computation of Time - In computing the date when notice must be
given under any provision requiring a specified number of days' notice of any
meeting or other event, the date of giving the notice shall be excluded and the
date of the meeting or other event shall be included.
12.04 Undelivered Notices - If any notice given to a shareholder
pursuant to section 12.01 is returned on three consecutive occasions because he
cannot be found, the Corporation shall not be required to give any further
notices to such shareholder until he informs the Corporation in writing of his
new address.
12.05 Omissions and Errors - The accidental omission to give any
notice to any shareholder, director, officer, auditor or member of a committee
of the board or the non-receipt of any notice by any such person or any error in
any notice not affecting the substance thereof shall not invalidate any action
taken at any meeting held pursuant to such notice or otherwise founded thereon.
12.06 Persons Entitled by Death or Operation of Law -Every person who,
by operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share, shall be bound by every notice
in respect of such share which shall have been duly given to the shareholder
from whom he derives his title to such share prior to his name and address being
entered on the securities register (whether such notice was given before or
after the happening of the event upon which he became so entitled) and prior to
his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.
12.07 Waiver of Notice - Any shareholder (or his duly appointed
proxyholder) , director, officer, auditor or member of a committee of the board
may at any time waive any notice, or waive or abridge the time for any notice,
required to be given to him under any provision of the Act, the regulations
thereunder, the articles, the by-laws or otherwise and such waiver or
abridgement shall cure any default in the giving or in the time of such notice,
as the case may be. Any such waiver or abridgement shall be in writing except a
waiver of notice of a meeting of shareholders or of the board which may be given
in any manner.
<PAGE>
-23-
Section Thirteen
EFFECTIVE DATE
13.01 Effective Date - This by-law shall come into force when
confirmed by the shareholders in accordance with the Act.
ENACTED by the board the 30th day of May, 1985.
/s/ Kenneth Albert Spencer
-----------------------------
KENNETH ALBERT SPENCER
Director/President/Secretary
/s/ Daniel Gelbart
-----------------------------
DANIEL GELBART
Director/Vice-President
CONFIRMED by the shareholders in accordance with the Act the 30th day
of May, 1985.
/s/ Kenneth Albert Spencer
-----------------------------
KENNETH ALBERT SPENCER
/s/ Daniel Gelbart
-----------------------------
DANIEL GELBART
<PAGE>
CREO PRODUCTS INC.
------------------
BY-LAW NO. 2
A by-law respecting the borrowing of money by CREO PRODUCTS INC.
(hereinafter called the "Corporation").
BY IT ENACTED AND IT IS HEREBY ENACTED as a by-law of the Corporation
as follows-
1. The directors may from time to time:
(a) borrow money upon the credit of the Corporation;
(b) issue, reissue, sell or pledge debt obligations of the
Corporation; and
(c) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any property of the Corporation, owned or
subsequently acquired, to secure any debt obligations of the
Corporation.
The words "debt obligations" as used in this paragraph mean bonds,
debentures, notes or other evidences oft indebtedness or guarantees of the
Corporation, whether secured or unsecured.
2. The directors may from time to time by resolution delegate to the
President, Secretary and Vice President or to any two individuals (including the
President Secretary or Vice President) each of whom is an officer of the
Corporation all or any of the powers conferred on the directors by paragraph 1
of this by-law to the full extent thereof or such lesser extent as the directors
may in any such resolution provide.
3. The powers hereby conferred shall be deemed to be in supplement
of and not in substitution for any powers to borrow money for the purposes of
the Corporation possessed by its directors or officers independently of a
borrowing by-law.
ENACTED this 30th day of May, 1985.
/s/ Kenneth Albert Spencer /s/ Daniel Gelbart
- -------------------------------- ------------------------------------
KENNETH ALBERT SPENCER DANIEL GELBART
Director/Shareholder Director/Shareholder
President/Secretary Vice President
<PAGE>
EXHIBIT 4.1
Number Shares
C00000
[LOGO]
CREO PRODUCTS INC.
INCORPORATED UNDER THE CANADA BUSINESS CORPORATIONS ACT
[Figure of a woman appears to the right]
This certifies that
Is the registered holders of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES WITHOUT PAR VALUE IN THE CAPITAL
OF
CREO PRODUCTS INC.
CUSIP 225606 10 2
Registration of the transfer of the shares represented by this certificate may
be made only in a securities register of the Corporation upon presentation of
this certificate properly endorsed, subject to compliance with the requirements
of the laws governing the Corporation. This certificate shall not be valid
until countersigned by the Transfer Agent and registered by the Registrar.
In Witness Whereof the said Corporation has caused this certificate to be
signed by its duly authorized officers.
Dated,
The shares represented by this Certificate are transferable at the offices of
Montreal Trust Company of Canada, Vancouver, B.C., Toronto, Ont. or American
Securities Transfer and Trust, Inc., Denver, CO.
COUNTERSIGNED AND REGISTERED
MONTREAL TRUST COMPANY OF CANADA Vancouver
TRANSFER AGENT AND REGISTRAR Toronto
AMERICAN SECURITIES TRANSFER AND TRUST, INC. Denver
TRANSFER AGENT AND REGISTRAR
By: SPECIMEN
-----------------------------------------------
Authorized Signature
<PAGE>
[The text appearing on the back of the certificate follows]
The Corporation will furnish to any shareholder without charge upon request
to the Transfer Agent named on the face of this Certificate a statement of the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of shares or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT -- as tenants by the entireties ---------------------
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act ______________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL INSURANCE OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------------------------------
-----------------------------------------------------
________________________________________________________________________________
(Name and address of transferor)
________________________________________________________________________________
shares
________________________________________________________________________________
registered in the name of the undersigned on the books of the Corporation named
on the face of this Certificate and represented hereby, and irrevocably
constitutes and appoints
______________________________________________________________________ the
attorney of the undersigned to transfer the said shares on the register of the
transfers and books of the Corporation with full power of substitution
hereunder.
DATED:
_________________________________ _________________________________
(Signature of Witness) (Signature of Shareholder)
<PAGE>
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever, and must be guaranteed
by a bank, trust company or a member of a recognized stock exchange.
The signature(s) must be guaranteed by an eligible Institution (Bank,
Stockbroker, Savings and Loan Associations and Credit Unions with
membership in an approved signature guarantee Medallion Program), pursuant
to S.E.C. Rule 17 Ad-15.
SIGNATURE GUARANTEED BY:__________________________________________________
<PAGE>
EXHIBIT 10.1
CREO/ HEIDELBERG JOINT VENTURE AGREEMENT
AND APPENDICES
INDEX
<TABLE>
<CAPTION>
Document Pages
<S> <C>
MAIN AGREEMENT 2 - 16
Appendix "A" - DEFINITIONS 17 - 21
Appendix "B" - LIST OF JV PRODUCTS 22
Appendix "C" - RESEARCH AND DEVELOPMENT FOR JV CTP PRODUCTS 23
Appendix "D" - MANUFACTURE OF TS PRODUCTS 24 - 26
Appendix "E" - DISTRIBUTION AND MARKETING OF JV PRODUCTS 27 - 29
Appendix "F" - WORKFLOW AND RIP COMPONENTS AND MODULES 30 - 34
Appendix "G" - INTELLECTUAL PROPERTY LICENSING PRINCIPLES 35 - 36
Appendix "H" - NAFTA DISTRIBUTION 37 - 38
</TABLE>
Important Note:
This document is a composite of the Original Agreement and all of the Appendices
(which were separate Word documents). The Index, which does not form part of the
Original Agreement, has been added to assist finding a particular Appendix.
FINAL
<PAGE>
AGREEMENT
THIS AGREEMENT made as of the 4th day of May, 1998
BETWEEN:
CREO PRODUCTS INC., a Canadian company with its business offices at
3700 Gilmore Way, Burnaby, British Columbia, Canada V5G 4M1
("CREO")
AND:
HEIDELBERGER DRUCKMASCHINEN AG, a German company with its business
offices at Kurfursten-Anlage 52-60, D-69115 Heidelberg, Germany
("HD")
BACKGROUND
A. CREO and HD possess complementary strengths and abilities in the
development, manufacture, marketing, distribution and servicing of pre-
press equipment hardware and software;
B. In recognition of their respective complementary strengths and abilities
and with a view to their mutual advantage, CREO and HD have formed a joint
undertaking (the "Joint Venture") for the purposes of (i) developing,
manufacturing, marketing and distributing CTP output devices that were
formerly developed, manufactured, marketed and distributed by each of them
separately, and (ii) cooperating in the development, manufacture, marketing
and distribution of CWR.
C. In forming the Joint Venture and in conducting its activities since its
formation, CREO and HD have been pursuing certain agreed objectives (the
"Agreed Objectives") and have been acting on certain agreed principles (the
"Agreed Principles").
D. The Agreed Objectives are:
(i) over the long-term, to maximise profitability and customer
satisfaction;
(ii) to create an open industry standard in imaging and Workflow
technologies; and
(iii) to achieve the highest market share, measured by revenue, from JV CTP
Products in both NAFTA and Europe, and to be a significant supplier
of JV CTP Products in all other markets.
E. The Agreed Principles are:
(i) to conduct the business of the Joint Venture with regard to the
achievement of the Agreed Objectives, it being acknowledged that
these are more likely to be achieved cooperatively through the Joint
Venture than by either CREO or HD separately;
(ii) all profits or losses generated by the sale of JV Products will be
shared equally between CREO and HD, regardless of the actual entity
where these profits or losses were recorded. It is the intention of
the Joint Venture that both CREO and HD should provide goods and
services to the JVCO at Cost;
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(iii) consistent with the Agreed Objectives, but subject to the terms
of this Agreement, to use suppliers of goods and services to the
Joint Venture, whether CREO, HD, another Person or any
combination of the foregoing, that are the most productive and
efficient suppliers of such goods and services; and
(iv) to review the product offerings included within JV Products, and
from time to time to make changes to the JV Products that are
necessary to achieve the Agreed Objectives.
F. CREO and HD each have a 50% interest in the Joint Venture.
So, CREO and HD agree as follows:
1. TRANSITIONAL PROVISIONS
1.1. JVCO
CREO and HD agree that:
1.1.1 the Joint Venture should be formalized by the creation of a business
organization, which may include a corporation, partnership or other
form of business organization (the "JVCO"), in a jurisdiction to be
agreed upon through which the business of the Joint Venture shall be
carried on; and
1.1.2 subject to complying with any requirements of the Governing Law,
JVCO shall have a structure and method of operation that is
consistent with the provisions of this Agreement.
1.2. Conduct of Joint Venture
Until such time as the JVCO is created, CREO and HD will conduct the Joint
Venture, and their interests in the Joint Venture will be held, on and
subject to this Agreement, and references in this Agreement to JVCO will,
unless the context requires otherwise, include the Joint Venture. Following
the creation of JVCO, CREO and HD will amend this Agreement to the extent
necessary to satisfy any procedural or legal requirements of the Governing
Law.
2. GENERAL
2.1. Schedules
The following Schedules are incorporated into and form part of this
Agreement:
Schedule A Definitions and Interpretation
Schedule B List of JV Products
Schedule C Research and Development for CTP Products
Schedule D Manufacture of JV Products
Schedule E Distribution and Marketing of JV Products
Schedule F Workflow and RIP
Schedule G Intellectual Property Licensing Principles
Schedule H CREO/Heidelberg USA (HUS) Distribution Summary
Schedule I Committees of the Board of Directors
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2.2. Headings
The division of this Agreement into Sections and the insertion of headings
are for convenience of reference only and shall not affect the construction
or interpretation of this Agreement. The terms "this Agreement", "hereof",
"herein", "hereunder" and similar expressions refer to this Agreement and
not to any particular Article, Section or other portion hereof and include
any agreement supplemental hereto. Unless something in the subject matter
or context is inconsistent therewith, references herein to Articles and
Sections are to Articles and Sections of this Agreement.
2.3. Extended Meanings
In this Agreement, unless the context otherwise indicates, words importing
the singular number only shall include the plural and vice versa, and words
importing the masculine gender shall include the feminine and neuter
genders and vice versa.
2.4. Currency
All references to currency herein are to United States dollars.
2.5. Legislation
Any reference to a provision in any legislation is a reference to that
provision as now enacted, and as amended, re-enacted or replaced from time
to time, and in the event of such amendment, re-enactment or replacement
any reference to that provision shall be read as referring to such amended,
re-enacted or replaced provision.
2.6. Accounting
Concurrently with the creation of JVCO, CREO and HD will provide each other
with an accounting of all Costs incurred on behalf of the Joint Venture and
a determination of any income earned in relation to the Joint Venture from
the 1st October, 1997 to the date of creation of JVCO based on the
principles outlined in Section 6. Following such accounting, the parties
will settle any differences between them so that the amounts contributed or
earned by each of them to that date will be equal.
3. TRANSFER OF SHARES OF JVCO
3.1. Restrictions on Transfer of Shares
3.1.1. Except as provided in Section 3.1.2 or with the prior written consent of
the other Shareholder, neither Shareholder may Transfer any of its Shares.
3.1.2. Notwithstanding Section 3.1.1, a Shareholder may Transfer all, but not
less than all, of its Shares to a wholly-owned Affiliate of such
Shareholder, provided that prior to any such Transfer, the Shareholder and
such Affiliate enter into an agreement with the other parties to this
Agreement, in form and content acceptable to such parties, which provides
that:
3.1.2.1. all of the Shareholder's Shares will be transferred to the
Affiliate;
3.1.2.2. the Affiliate will remain a wholly-owned Affiliate of the
Shareholder for so long as it holds the Shares;
3.1.2.3. prior to the Affiliate ceasing to be a wholly-owned Affiliate of
the Shareholder, the Affiliate will Transfer all its Shares to the
Shareholder or to another wholly-owned Affiliate of the
Shareholder, and where the Shares are Transferred to another
wholly-owned Affiliate, this Section 3.1.2 will again apply to and
will be a condition of such Transfer;
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3.1.2.4. the Affiliate will otherwise be bound by and have the benefit of
the provisions of this Agreement; and
3.1.2.5. the obligations of the original Shareholder hereunder shall not
in any way be released and shall continue in full force and
effect.
4. CONDUCT OF THE AFFAIRS OF JVCO
4.1. Name
JVCO will carry on business under such name as the Shareholders may
agree.
4.2. Scope of Relationship
4.2.1. JVCO may not carry on any business other than as contemplated by this
Agreement and such other business as the Shareholders may agree.
4.2.2. The rights, duties, obligations and liabilities of the Shareholders in
their capacity as shareholders in respect of the relationship created by
this Agreement will be limited to those rights, duties, obligations and
liabilities contemplated by this Agreement. Nothing in this Agreement is
to be construed to create any relationship between the parties that
extends beyond the scope of the business of JVCO, and with respect to
such business, only those relationships that are expressly contemplated
by this Agreement.
4.3. Composition of Board of Directors
The Board of Directors of JVCO shall at all times be comprised of two
natural persons, one of whom shall be nominated by CREO and one of whom
shall be nominated by HD.
4.4. Initial Directors
The initial Directors of JVCO shall be Amos Michelson as the nominee of
CREO and Bernhard Schreier as the nominee of HD.
4.5. Alternate Directors
CREO and HD are each entitled to appoint a natural person to be an
alternate to their respective nominees as Directors. Written notice of
any such appointment shall be given by the party making it to the other
party, and shall state the name and address of the person appointed.
4.6. Authority of Alternate Directors
Each Director and alternate Director shall be entitled to receive notice
of meetings of the Board of Directors, and in the absence of the Director
for whom a person is an alternate, the alternate Director will have all
the powers of such Director, including the right to attend and vote at
meetings of the Board of Directors.
4.7. Removal of Directors and Alternate Directors
Each of CREO and HD may at any time by written notice to the other remove
and replace any Director or alternate Director appointed by it and upon
the giving of such notice such Director or alternate Director shall cease
to hold office as such, and shall be replaced by the natural person
nominated to hold office in place of such Director or alternate Director.
Any notice given pursuant to this Section 4.7 shall set out the name and
address of the natural person nominated to replace any Director or
alternate Director. Copies of any notice given pursuant to this Section
4.7 shall be given to the Director, the alternate Director, and any
persons named to replace any Director or alternate Director.
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4.8. Resignation of Directors and Alternate Directors
A Director or alternate Director may at any time resign by notice in
writing addressed to the Board of Directors and to the party who
appointed such Director or alternate Director. A resignation if not
effective immediately becomes effective in accordance with its terms.
4.9. Powers and Duties of Board of Directors
Subject to the provisions of this Agreement and the Governing Law, the
Board of Directors shall manage or supervise the management of the
business and affairs of JVCO.
4.10. Discharge of Duties of Directors
4.10.1. A Director shall be required to devote only such time and
attention to the business and affairs of JVCO as is reasonably
necessary for the proper performance of the duties of that
Director.
4.10.2. Each Shareholder agrees to waive any claim that such Shareholder
might have, directly or indirectly, against the director
nominated by the other Shareholder, arising out of any conflict
between the duty of that director to act in the best interests
of JVCO and the interests of the other Shareholder.
4.11. Compensation of Directors
A Director or alternate Director shall not be entitled to receive any
fees, salaries, commissions or other compensation from JVCO for acting as
such, but may be compensated for so acting by the party appointing such
Director or alternate Director.
4.12. Committees of the Board of Directors
4.12.1. Committees
The Board of Directors shall establish a Product Steering Committee to
which shall be referred all questions which relate to product
specifications, product positioning, product plans, sales argumentation
and recommendations, sales training, and marketing communications, and
any other matters that the Board of Directors deems appropriate, and
shall establish such other committees as it considers necessary or
desirable including, without limitation, the committees identified on
Schedule I. The committees shall meet at regular intervals and shall
report to the Board of Directors. Subject to the overriding authority of
the Board of Directors, such committees may establish their own rules and
procedures. Except as otherwise determined by the Board of Directors,
each party shall pay for its own expenses in relation to the Product
Steering Committee and all of the other Committees, and nothing shall be
charged to JVCO.
4.13. JVCO to become a party to this Agreement
The Shareholders shall, as soon as reasonably practicable following its
creation, cause JVCO to become a party to this Agreement to be bound by
and entitled to the benefit of the provisions hereof to the same extent
as if it had been an original party hereto.
4.14. Meetings of Directors
4.14.1. Meetings of the Board of Directors shall be held not less frequently
than once in each calendar quarter.
4.14.2. Directors may attend any meeting of the Board of Directors in person or
by telephone or other communications facilities that permit the
Directors to hear one another.
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4.14.3. Either Director may by not less than five Business Days' notice in
writing to the other call a meeting of the Board of Directors. Such
notice must contain a statement as to the business to be transacted at
the meeting.
4.14.4. A quorum for the transaction of business at any meeting of the Board of
Directors shall be two Directors.
4.14.5. Minutes shall be kept of all meetings of the Board of Directors.
4.14.6. A resolution in writing signed by each Director shall be as valid and
effectual as if passed at a meeting of Directors.
4.15. Officers
The Board of Directors shall appoint such officers as may be required
by the Governing Law, and such other officers as may be convenient or
necessary for the conduct of the business and affairs of JVCO, and may
define the duties and responsibilities of such officers.
4.16. Fiscal Year End
The fiscal year end of JVCO shall be March 31.
4.17. Bank and Bank Signing Authorities
The Board of Directors shall determine JVCO's bank and the signing
authorities on all bank accounts of JVCO.
4.18. Periodic Review of Achievement of Agreed Objectives
Commencing on March 31, 1999, and at intervals of not less than 6
months thereafter, the Board of Directors shall review the progress of
JVCO in achieving and maintaining the Agreed Objectives, and if they
have not been achieved or maintained, the Board of Directors shall
decide, subject to the rights of CREO and HD set out in Section 8.1.1,
what steps, if any, are necessary or desirable to achieve or maintain,
as the case may be, the Agreed Objectives and take such steps or cause
them to be taken.
4.19. Business Plan
The Board of Directors will develop annually for review and approval by
the Shareholders an operating plan and budget (an "Approved Business
Plan") for JVCO for the next fiscal year, which is to include a budget
for expenditures on research and development and a plan for the
operation of JVCO generally.
5. FINANCIAL MATTERS
5.1. Books and Records
5.1.1. JVCO will keep at all times accurate and complete books, records and
accounts of its operations and financial condition, and will establish
internal accounting controls sufficient to provide reasonable
assurances that transactions are executed and recorded as necessary for
the purpose of the preparation by each Shareholder of its financial
statements in accordance with generally accepted accounting principles
respectively applicable thereto and, if applicable, the Governing Law.
5.2. Financial and Tax Information
JVCO will prepare in a timely manner and provide to the Shareholders
regular monthly financial and tax information reasonably required by
the Shareholders for the purpose of their respective financial
statement reporting requirements and their respective ongoing
monitoring of the financial performance of JVCO and for the purposes of
preparing and filing tax returns and, to the extent applicable,
contesting any assessment or reassessment in respect thereof.
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5.3. Business Records
JVCO will retain in a businesslike fashion all financial, business and
tax books and records for a fiscal year which might reasonably be
requested by a Shareholder in connection with any future audit,
assessment, reassessment or appeal with respect to taxes relating to
JVCO and its activities in such fiscal year, whether or not such audit,
assessment, reassessment or appeal is underway, expected or
anticipated, until the later of (i) the expiry of all relevant
statutory periods for assessment, reassessment and appeal with respect
to such fiscal year and (ii) 10 years after the end of such fiscal year
period.
5.4. Participation in Audits and Regulatory Matters
JVCO will provide notice to each Shareholder of any audit inquiries
made by, discussions with or representations proposed to be made to,
any taxing authority or any governmental authority relating to JVCO or
its affairs or relating to the Shareholders or their affairs in
connection with JVCO.
6. ALLOCATIONS AND DISTRIBUTIONS
6.1. Principle of Equal Allocation of Income
It is the intention of the Shareholders that, while each of them or
their respective Affiliates may derive revenue, as determined under
Section 6.5, from the provision of goods or services at above its Cost
for such goods or services, the net economic effect should be that each
Shareholder and its Affiliates has dealt with JVCO at Cost.
Accordingly, CREO and HD acknowledge that if in any case either of them
or their respective Affiliates provides goods or services to JVCO at
greater than Cost, this will result in the party so supplying such
goods and services (the "Supplier") receiving income ("Outside Income")
outside JVCO, which would otherwise be included in JVCO income.
Accordingly, it is agreed that, in any such case, the JVCO income shall
be allocated as follows:
6.1.1. first, to the extent of the Outside Income, received by
the Supplier, to the party who is not the Supplier; and
6.1.2. second, to CREO and HD equally
6.2. Contribution towards Deficits
Each of CREO and HD covenants and agrees with the other that it will
contribute one half of any amount required to make up any cash
deficiency with respect to the operation, maintenance, and management
of JVCO in accordance with an Approved Business Plan. Such contribution
shall be made within fifteen days after receipt of a written request
therefor from JVCO.
6.3. Distributions of Distributable Cash
JVCO will distribute to CREO and HD, on a quarterly basis, any
Distributable Cash available for distribution. Distributions of
Distributable Cash shall be made in the form of dividends, fees or such
other form as shall be agreed from time to time between CREO and HD,
and failing such agreement, shall be in the manner determined by the
auditors of CREO and HD so as to be most tax effective to both of them.
Distributable Cash shall be distributed as follows:
6.3.1. first, to the extent of the Outside Income received by the
Supplier, to the party who is not the Supplier; and
6.3.2. second, to CREO and HD equally
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6.4. Disputes as to JVCO Income and Distributable Cash
Any dispute as to the determination of JVCO income pursuant to Section 6.1, or
an amount payable by either CREO or HD pursuant to Section 6.2, or the
distribution of Distributable Cash under Section 6.3 shall be settled by the
Shareholders. If the Shareholders are not able to settle the matter within
thirty (30) days after either Shareholder notifies the other of any such
dispute, they shall refer the dispute to the auditors of CREO and HD for their
determination as experts. In making a determination they must have regard to
this Agreement and to any other considerations they determine jointly to be
relevant. The determination of such auditors shall be conclusive and binding on
the parties and no appeal may be made therefrom.
6.5. JVCO Revenue
For the purposes of this Agreement, JVCO Revenue shall include all revenue from
the sale and licensing of JV Products, including revenue derived from
Consumables. Revenue derived from Consumables shall include the following:
6.5.1. all royalties paid by media vendors to CREO or HD or their Affiliates
for Consumables imaged on JV Products;
6.5.2. all revenues generated by the sales of Consumables imaged on JV CTP
Products whose supply was negotiated by CREO or HD Prepress Business
Unit or JVCO and those consumables are distributed through the CREO SSUs
or HD SSUs or any other distribution channel chosen by JVCO; and
6.5.3. any special discount (in excess of the normal discount given by media
vendors to their distributors) that is generated by the HD SSUs on
Consumables used on JV CTP Products or on CREO products that are not JV
Products distributed by the HD SSUs.
7. REPRESENTATIONS AND WARRANTIES
7.1. Representations and Warranties by Shareholders
7.1.1. Each Shareholder represents and warrants that:
7.1.1.1. it owns beneficially 50% of the outstanding Shares, those
Shares are not subject to any mortgage, lien, charge, pledge,
encumbrance, security interest or adverse claim and no Person
has any right to any interest in any of those Shares;
7.1.1.2. it is duly incorporated and validly existing under the laws of
its jurisdiction of incorporation and has the corporate power
and capacity to enter into and perform its obligations under
this Agreement;
7.1.1.3. this Agreement has been duly authorized, executed and
delivered by it, and constitutes its valid and binding
obligation, enforceable against it in accordance with its
terms, subject to the usual exceptions as to bankruptcy,
insolvency or other laws affecting the enforcement of
creditors' rights generally and the availability of equitable
remedies being discretionary;
7.1.1.4. the execution, delivery and performance of its obligations
under this Agreement does not contravene or result in a breach
of or default under its articles, by-laws, constating
documents or other organizational documents or any agreement,
indenture, agreement or other instrument to which it is a
party or by which it may be bound or any law, regulation, rule
or judgment or court order applicable to it or by which it may
be bound; and
7.1.1.5. except with respect to any competition law filings or
approvals and consents of third parties holding intellectual
property rights, no permit, consent, approval or authorization
of, or
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declaration or filing with, any governmental authority
or any other Person is required in connection with the
execution, delivery or performance by it of this Agreement.
7.1.2. Each Shareholder will ensure that the representations and warranties in
Section 7.1.1 applicable to it will continue to be true and correct as
long as it remains a Shareholder of JVCO or bound by this Agreement.
8. TERMINATION
8.1. Grounds for Termination
8.1.1. If:
8.1.1.1. by March 31, 1999 there has been a demonstrable failure by
JVCO to achieve the Competitive Position in both NAFTA and
Europe. Competitive Position means, for any such region, the
achievement of the highest revenue from sales of JV CTP
Products in that region (determined by comparing JVCO revenue
in that region from such sales in the preceding 12-month
period, with any revenue derived by any third party in that
region from the sale of products comparable to or competitive
with JV CTP Products) ; or
8.1.1.2. at any month end thereafter, JVCO fails to achieve or to
maintain the Competitive Position,
each of CREO and HD shall have the right, in its sole discretion, to
give notice to the other and to JVCO that this Agreement shall terminate
upon the date specified in the notice, which may not be earlier than 90
days following the date of receipt of the notice.
8.1.2. If:
8.1.2.1. there is a Change of Control of either Shareholder within the
meaning of Section 1.2 of Schedule A;
8.1.2.2. there is a Bankruptcy of CREO or HD;
8.1.2.3. either CREO or HD is reasonably of the opinion that the other
has demonstrated an unwillingness to commit to the achievement
of the Agreed Objectives in accordance with the Agreed
Principles solely by reason of a failure to apply sales and
marketing resources, manufacturing resources, field support
resources, or engineering resources to development projects
related to JV Products, or by consistently missing key
milestones; or
8.1.2.4. either CREO or HD fails to perform, or is otherwise in breach
of, a material obligation under this Agreement;
then
8.1.2.5. in the case referred to in Section 8.1.2.1, CREO or HD, as the
case may be, shall have the right, in its sole discretion, to
give notice of termination of this Agreement to the other and
to JVCO in which case termination shall be effective
immediately;
8.1.2.6. in the case referred to in Section 8.1.2.2, CREO or HD, as the
case may be, shall have the right, in its sole discretion, to
give notice of termination of this Agreement to the other and
to JVCO in which case termination shall be deemed to be
effective on the day preceding the date of commencement of the
Bankruptcy;
8.1.2.7. in the case referred to in Section 8.1.2.3, CREO or HD, as the
case may be, shall have the right, in its sole discretion, to
give notice to the other and to JVCO that if the failure is
not remedied within
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90 days from the date of the notice, this Agreement shall
terminate upon the expiry of that ninety (90) day period; and
8.1.2.8. in the case referred to in Section 8.1.2.4, CREO or HD, as the
case may be, shall have the right, in its sole discretion, to
give notice to the other and to JVCO specifying the nature of
the failure or breach and that if the failure or breach is not
remedied within forty-five (45) days from the date of the
notice, this Agreement shall terminate upon the expiry of that
forty-five (45) day period.
8.1.3. In addition to termination pursuant to the provisions of Section 8.1.1
and 8.1.2, this Agreement shall terminate:
8.1.3.1. on the election of either CREO or HD, exercisable in its sole
discretion, if the parties are unable to agree on any
amendment to this Agreement (including any change to any of
the Schedules to this Agreement) which may alter or modify the
rights and obligations of CREO, HD or JVCO or on any other
matter to which agreement is necessary for the Joint Venture
to continue to function and to achieve the Agreed Objectives;
8.1.3.2. upon the agreement of the parties;
8.1.3.3. upon either party acquiring the Shares of JVCO owned by the
other party; or
8.1.3.4. upon the Bankruptcy of JVCO.
8.2. Consequences of Termination
Subject to any specific provisions in this Agreement to the contrary, on
termination of this Agreement, the following will apply:
8.2.1. the Shareholders will cause JVCO to be wound up and dissolved as soon as
practicable in accordance with the Governing Law;
8.2.2. in the case of research and development obligations of CREO and HD under
Schedules C and F (or the agreements (if any) that replace them), CREO
and HD will continue to fund existing programs that have been approved
by JVCO and then publicly announced, or where continued funding is
necessary to satisfy an existing obligation of any party made with the
approval of JVCO to another Person, including a customer;
8.2.3. CREO will license HD to manufacture and to distribute TS Products sold
through the HD distribution channels for two (2) years following
termination of this Agreement. If the TS Products are manufactured by
HD, HD will pay CREO a licence fee equal to the fair OEM price that
would be paid by a distributor of TS Products, less the Cost of
manufacturing such TS Products at the date of termination of this
Agreement. In such a case, CREO will provide thermal imaging heads to HD
at the Cost for such heads at the date of termination. If the TS
Products are manufactured by CREO, HD will pay CREO a licence fee equal
to the fair OEM price that would be paid by a distributor of TS
Products;
8.2.4. HD will, at CREO's request, sell TS Products to CREO for two (2) years
following termination of this Agreement. CREO will pay HD the Cost of
manufacturing such TS Products at the date of termination of the
Agreement plus a fair mark-up for the manufacturing services;
8.2.5. in the case of Workflow and RIPs, each party will, at the request of the
other party, sell and licence the components and modules, not including
the DSIs for non JV Products to which it holds the Intellectual Property
(i.e. non Joint Intellectual Property), to the other party for up to
three (3) years at fair OEM price that would be paid by a distributor of
such products, and both parties shall have a free and unrestricted right
to the Joint Intellectual Property;
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8.2.6. in the case of distribution and marketing of non-JV Products, CREO will
have the right to use HD's distribution, marketing and field support
services for non-JV Products of CREO in accordance with Schedule E (or
the agreement (if any) that replaces it) for two (2) years following
termination;
8.2.7. CREO shall be entitled to all royalties and revenues, as determined
under Section 6.5, from Consumables imaged on JV Products installed
prior to the date of termination and situated in NAFTA or Japan; HD
shall be entitled to all royalties and revenues, as determined under
Section 6.5, from Consumables imaged on JV Products installed prior to
the date of termination in Europe or ROW; and
8.2.8. if this Agreement is terminated pursuant to Section 8.1.2.2 (Bankruptcy
of CREO or HD), the Bankrupt party will be deemed to have granted the
other party a licence to the Intellectual Property of the Bankrupt party
at a reasonable licence fee for a period of two (2) years so as to
permit the other party to satisfy the obligations of JVCO or the
Bankrupt party under this Agreement and to continue to receive the
rights to which it is entitled under this Agreement.
8.3. Escrow
CREO shall, within sixty (60) days of the execution of this Agreement, deposit
in escrow a complete set of all engineering manufacturing drawing which are
sufficient to enable a reasonably skilled party to reproduce or manufacture, as
applicable, those models of CREO's thermal exposure head which forms part of the
JV Products for which CREO is responsible. CREO shall ensure that the materials
it deposits in escrow are current by revising the escrow materials on a regular
basis. JVCO shall be responsible for all costs associated with the escrow of
these materials. The terms of the escrow, including the escrow agent, must be
acceptable to HD, acting reasonably.
8.4. Cooperation on Termination
If this Agreement is terminated, each Shareholder agrees to co-operate with the
other to ensure that each has access to products that were JV Products, and to
the manufacturing, service and distribution channels for a period of up to two
years, in accordance with the provisions of Section 8.2, so as to enable each
Shareholder to develop the capability to provide for its own account the
functions provided by the other party to JVCO.
9. COSTS AND OTHER MATTERS
9.1. Costs
9.1.1. Unless provided otherwise in this Agreement, each Shareholder will
provide and cause its Affiliates to provide all goods and services
subject to this Agreement to or on behalf of JVCO at Cost.
9.1.2. If either HD or CREO provides Consumables to the JVCO, on which the
development was not funded by JVCO, those Consumables will be provided
to JVCO at fair market price to a distributor.
9.2. Support Services
CREO will provide all service and support functions in NAFTA for JV Products
designed exclusively by CREO. CREO will provide all service and support
functions for all CWRs at all NAFTA sites where a JV CTP Product, or a CREO
non JV Product, is installed. HD will provide all service and support functions
for JV Products distributed outside NAFTA and Japan except for CREO's 8 page
Automatic Platesetters and the Workflow and RIP modules and components attached
to them. In Japan, the JVCO selected distributor will provide service and
support for all JV Products. Both CREO and HD will ensure an adequate supply of
spare parts for the other at Cost. The service and support functions are not
contemplated to be part of JVCO and any revenue earned by CREO or HD from such
functions will be solely for its account. CREO will provide service and support
functions for all CREO designed Workflow and RIP products and the CWR sold in
conjunction with CREO products that are not JV Products throughout the world.
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9.3. Labeling
9.3.1. The JV Products, including their related documentation and advertising
material will be co-labeled in such a way so as to indicate to third
parties (including customers) that CREO and HD are equal partners on
such products. Each party may label its DSIs to non-JV Products as it
sees fit.
10. DISPUTE RESOLUTION
10.1. Negotiations
10.1.1. It is the intention of the parties that any difference or dispute
("Dispute") arising under this Agreement, whether relating to the
interpretation of this Agreement, the operation or management of JVCO
or any other matter, shall be resolved by agreement between the
Shareholders.
10.1.2. Subject to Section 10.1.3, if a Dispute arises and the Board of
Directors is unable to resolve it within ten (10) days after the date
on which the Dispute was first presented to it, either Shareholder may
by written notice to the other and to JVCO, submit the Dispute for
resolution by the Chief Executive Officer of each Shareholder. The
notice shall set out a brief statement of the position of the
Shareholder's providing the notice, and a summary of the supporting
arguments. The other Shareholder shall have ten (10) Business Days from
receipt of such notice to provide a written response including a brief
statement of its position and a summary of the supporting arguments.
The response shall be provided to the first Shareholder, and to the
Chief Executive Officer of each Shareholder, who shall meet, in person
or by any other means satisfactory to them, and attempt to resolve the
Dispute.
10.1.3. Section 10.1.2 does not apply to a Dispute arising under Section 6.4.
10.1.4. If the Dispute cannot be resolved by agreement between the two Chief
Executive Officers within thirty (30) days (or such longer period as
they may agree upon), then provided that it relates solely to the
interpretation of this Agreement and the rights and obligations of the
parties as defined in this Agreement, either Shareholder may refer the
Dispute to arbitration. For greater certainty, a dispute which relates
to the operation or management of JVCO shall not be arbitrable pursuant
to Section 10.2.
10.1.5. Except to the extent provided in Section 6.4 and in Section 10.1.4 , if
the Shareholders cannot settle a Dispute by agreement through the
procedure described in Section 10.1.2, either Shareholder will be
entitled to exercise its rights, if any, under Section 8.1.
10.2. Arbitration of Disputes under ICC
Subject to Section 10.1, any Dispute will be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce (other
than the Rules of Optional Conciliation) by one arbitrator appointed by the
Shareholders, if they are able to agree on a single arbitrator within thirty
(30) days of commencement of the arbitration, or by the International Chamber of
Commerce, if the Shareholders are unable to agree. For the purpose of those
rules, the arbitration will be held in New York and conducted in English and the
Governing Law of this Agreement will apply to the arbitration.
10.3. Characterization of Negotiations
Except to the extent required by law, each Shareholder will keep confidential
the Dispute and any arbitration proceedings to settle the Dispute.
10.4. Legal Proceedings
10.4.1. Each party will comply with any award made or order issued in a
proceeding that has become final and consents to the entry of a
judgment in any jurisdiction on any award rendered or order issued in a
proceeding that has become final. The arbitrator will be instructed to
render a decision within thirty (30)
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days after the final submissions of the parties in writing or in a
hearing before the arbitrator. Each arbitration award that becomes
final will be conclusive and binding on the parties and may not be
appealed. Attorneys fees, costs and other out-of-pocket expenses may be
awarded by the arbitrator in the discretion of the arbitrator to the
party that prevails in the arbitration, but if there is no prevailing
party, the arbitrator may award such fees, costs and expenses in any
manner the arbitrator sees fit. Pending any such award, or if no such
award is made, each Shareholder will pay its own expenses of the
arbitration.
10.4.2. Nothing in this Article will preclude any Shareholder from seeking
interim or permanent injunctive relief, specific performance or other
equitable remedies in relation to a Dispute involving Confidential
Information where a Shareholder reasonably believes that such relief is
necessary to prevent irreparable harm that cannot be calculated or
fully or adequately compensated by recovery of damages.
11. MISCELLANEOUS AND GENERAL
11.1. Application
This Agreement shall apply, without further act or formality, with any necessary
changes to any new class or number of securities to which any Shares may be
changed by virtue of any reorganization or recapitalization of JVCO, its
consolidation, amalgamation or merger into or with another corporation, or after
a consolidation, sub-division or other change in the Shares or capital of JVCO.
11.2. International GAAP
All matters relating to the allocation of income of JVCO and the allocation of
the Distributable Cash shall be determined in accordance with the international
GAAP.
11.3. Further Assurances
The parties shall execute or cause to be executed such further documents and
shall do or cause to be done such further acts and things as may be necessary or
desirable to give full effect to the provisions of this Agreement, the intent
embodied in them and, without limitation, the Agreed Objectives and the Agreed
Principles, and shall make available to JVCO all information that is material to
its business. The foregoing is subject to obligations of confidentiality in
favour of any Person (including for greater certainty, CREO or HD or any
division or business unit of either).
11.4. Entire Agreement and Amendment
11.4.1. This Agreement:
11.4.1.1. contains the entire agreement between the parties concerning its
subject matter, and supersedes all previous expectations,
understandings, communications, representations and agreements,
whether verbal or written, in that regard except where
specifically otherwise provided; and
11.4.1.2. may be amended only by an agreement in writing signed by all of
the parties.
11.5. Interest
Unless otherwise expressly provided for in this Agreement, if any party to this
Agreement is required by this Agreement to pay money to any other party, such
money shall bear interest at the Prime Rate plus 2% per annum calculated monthly
until payment is made.
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11.6. Severability
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, it shall be modified rather than voided or read restrictively, if
possible, to give effect to the interests of the parties to the extent possible
having regard to the Agreed Objectives and the Agreed Principles, and if not
possible, it must be severed. In any event, all other provisions of this
Agreement are valid and enforceable to the extent such result is not
inequitable.
11.7. Notices
Any notice or other communication required or permitted to be given under this
Agreement by any party shall be in writing and deemed to have been given if sent
by telecopier or delivered at the address of the other party as follows:
If to CREO:
CREO Products Inc.
3700 Gilmore Way
Burnaby British Columbia
Canada V5G 4M1
Attention: Tom Kordyback
Chief Financial Officer
Fax: (604) 437-9891
If to HD:
Heidelberger Druckmaschinen AG
Siemenswall
24107 Kiel, Germany
Attention: Head of Business Unit Pre-Press
Fax: 011-49-431-386-2009
With a copy to:
Heidelberger Druckmaschinen AG
Kurfursten-Anlage 52-60,
D-69115 Heidelberg, Germany
Attention: General Counsel
Fax: 011-49-6221-92-40-69
or at such other address as any party may from time to time direct in writing.
Any such notice shall be deemed to have been received, if sent by facsimile, on
the first Business Day following dispatch, and if delivered, on the date of
delivery, if a Business Day, and if not a Business Day, on the next ensuing
Business Day.
11.8. Time of the Essence
Time is of the essence of this Agreement.
11.9. Governing Law
This Agreement is governed by and must be construed in accordance with the laws
of the Province of Ontario, Canada, and each of the parties irrevocably submits
to the non-exclusive jurisdiction of the courts of such jurisdiction and agrees
that service on it at its address in Section 11.7 will constitute valid service
for any proceeding in the courts of such jurisdiction.
11.10. Constating Documents
If any of the provisions of this Agreement conflict with the constating
documents of JVCO, the provisions of this Agreement shall prevail to the extent
of each such conflict, and the parties shall, if reasonably possible, cause the
constating documents to be amended so as to eliminate such conflict.
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11.11. Consent to Transfer of Shares
Each of CREO and HD shall vote their Shares so as to ensure that the Directors
of JVCO consent to all transfers of Shares made in accordance with this
Agreement.
11.12. Enurement
This Agreement shall enure to the benefit of and be binding upon CREO, HD and
JVCO and their respective, successors and permitted assigns.
THE PARTIES, intending to be contractually bound, have executed this Agreement
as of the date set out on the first page.
CREO PRODUCTS INC. HEIDELBERGER DRUCKMASCHINEN AG
by its duly authorized signatory by its duly authorized signatories
/s/ AMOS MICHELSON /s/ B. SCHMIER
- --------------------------------- ----------------------------------
Amos Michelson, CEO Bernhard Schmier, Member of
Mgmt Board
/s/ SIGNATURE
----------------------------------
General Counsel
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SCHEDULE A
DEFINITIONS AND INTERPRETATION
1.1 Unless there is something in the subject matter or context inconsistent
therewith, the following terms shall have the following meanings wherever
used in this Agreement and in any Schedule to this Agreement:
(a) "Affiliate" means with respect to any Person, any Person which,
directly or indirectly, Controls or is Controlled by or is under
common Control with such Person;
(b) "Approved Business Plan" has the meaning set out in Section 4.19 of
the Agreement;
(c) "Bankruptcy" with respect to any Person means that such Person:
(i) is dissolved (other than pursuant to a consolidation,
amalgamation or merger);
(ii) becomes insolvent or is unable to pay its debts or fails or
admits in writing its inability generally to pay its debts as
they become due;
(iii) makes a general assignment, arrangement or composition with or
for the benefit of its creditors;
(iv) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under
any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for
its winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it,
such proceeding or petition:
(1) results in a judgment of insolvency or bankruptcy or the
entry of an order for relief or the making of an order
for its winding-up or liquidation; or
(2) is not dismissed, discharged, stayed or restrained in
each case within thirty (30) days of the institution or
presentation thereof;
(v) has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a
consolidation, amalgamation or merger);
(vi) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all
or substantially all its assets;
(vii) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued
on or against all or substantially all its assets and such
secured party maintains possession, or any such process is not
dismissed, discharged, stayed or restrained, in each case
within thirty (30) days thereafter;
(viii) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an
analogous effect to any of the event specified in clauses (i)
to (vii) (inclusive); or
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(ix) takes any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the foregoing
acts;
(d) "Bilateral NDA" means the Omnibus Bilateral Non-Disclosure Agreement
between the parties and dated for reference the 1st June, 1997;
(e) "Board of Directors", until the creation of JVCO, means the managing
committee of the Joint Venture, and following the creation of the
JVCO, means the board of directors or its equivalent under the
Governing Law and "Director" means a member of the Board of
Directors;
(f) "Business Day" means any day, other than a Saturday, Sunday or
statutory or bank holiday in Vancouver, Canada or Heidelberg,
Germany;
(g) "Competitor of CREO" means any Person that directly or indirectly
through Affiliates of that Person manufactures, markets or
distributes CTP output devices;
(h) "Competitor of HD" means any Person that directly or indirectly
through Affiliates of that Person manufactures, markets or
distributes printing machines;
(i) "Confidential Information" means information defined as such in the
Bilateral NDA;
(j) "Consumables" means all products used in the Pre-press process for
offset printing which require replacement or replenishing from time
to time, including, but not limited to, plates, film and proofing
media. Consumable revenue is defined in Section 6.5 of the Agreement;
(k) "Control" with respect to any Person means beneficial ownership,
directly or indirectly, of, or the ability to exercise control or
direction over:
(i) securities of such Person to which are attached more than 50% of
the votes that may be cast to elect directors or other comparable
managers of such Person; or
(ii) where a Person has more than one class of securities outstanding,
more than 50% of that class of securities that has the right to
elect a majority of such directors or other such managers;
and "Controlled" and "Controls" have corresponding meanings;
(l) "Costs" of a party providing a service or goods to JVCO means that
party's direct out of pocket expenses for material and labour
(including the related expenses of providing benefits), together with
an overhead expense charged to the provision of the service or goods
on a basis that reflects a reasonable allocation of the actual
overhead expenses (including depreciation) incurred which represents
the incremental costs of providing goods (including a reasonable
amount representing the cost of capital) and services to JVCO, all as
determined in accordance with international GAAP;
(m) "CR" (common RIP) means the specific RIP components and modules
listed in Section 3.1 of Schedule "F", excluding DSI's, developed by
CREO or HD Prepress Business Unit for the purpose of CWR. The CR is
a product capable of functioning independently of CW and CWR;
(n) "CREO Intellectual Property" means Intellectual Property owned by
CREO, and by third parties who have licensed their Intellectual
Property to CREO;
(o) "CREO SSU" means an SSU which is Controlled by CREO;
(p) "CTF" (computer-to-film) means the transfer of digital data directly
to film;
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(q) "CTP" (computer-to-plate) means the transfer of digital data directly
on to a metal offset plate;
(r) "CW" (common workflow) means the specific Workflow components and
modules developed by CREO or HD Prepress Business Unit for the
purpose of CWR;
(s) "CWR" (common workflow and RIP) means the CW and CR based
specifically on PDF and Adobe Extreme(TM) architecture and changes
and enhancements made by CREO or HD Prepress Business Unit to CWR
components and modules, and Workflow that by agreement of the Board
of Directors is designated as CWR;
(t) "Distributable Cash" in respect of any period means JVCO's cash or
cash equivalents on hand at the end of that period less any amounts
required to be expended during the following quarter, including
anticipated working capital requirements of JVCO, and any other
amounts as may be determined by the Board of Directors;
(u) "DOP" (digital offset press) means a press in which the plates or the
plate cylinder are imaged on the press itself directly from the
digital data;
(v) "DSI" (device specific interface) means the software and hardware
components and modules included in the RIP which are required to
connect the RIP to an output device (including a CTP output device)
and to operate and drive that output device;
(w) "Europe" means the member countries of the European Union;
(x) "FCS" means the first shipment to a customer of a product after that
product has finished beta testing;
(y) "GAAP" means generally accepted accounting principles;
(z) "Governing Law" means, on matters concerning the incorporation of
JVCO, the law of the jurisdiction of incorporation of JVCO, and for
all other matters, the laws of the Province of Ontario, Canada;
(aa) "HD Intellectual Property" means Intellectual Property owned by HD,
and by third parties who have licensed their Intellectual Property
to HD;
(bb) "HD Independent Distributor" means an SSU that is subject to a
contractual arrangement with HD for the distribution or products but
that is not an HD SSU;
(cc) "HD SSU" means an SSU which is Controlled by HD;
(dd) "Intellectual Property" means inventions, patents, patent
applications, , copyrights, copyright registrations, copyright
applications, trade secrets, know-how, Confidential Information, and
all other types of intellectual property (excluding trademarks and
like trade identifiers) now or hereafter recognised, which are
necessary for the manufacture and distribution of JV Products in the
manner contemplated by this Agreement;
(ee) "Joint Intellectual Property" means Intellectual Property in the CR
and CW components and modules listed or contemplated by Section
5.1.1 of Schedule "F";
(ff) "JVCO" has the meaning set out in Section 1.1.1 of the Agreement;
(gg) "JV Products" means the products listed in Schedule B and any other
products designated as JV Products by the Board of Directors;
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(hh) " JV CTP Product" means the CTP products listed in Section 1 of
Schedule B and any other CTP output device designated as JV CTP
Products by agreement of the Board of Directors;
(ii) "NAFTA" means the countries that are parties to the North American
Free Trade Agreement;
(jj) "NIP Agreement" means the agreement dated the 20th February, 1998
between Eastman Kodak Company and HD under which they agreed to
undertake the research, development and commercialization (including
the promotion, manufacture, distribution, marketing, sale, support,
and service) of a non-impact printing system designed to be used in
the field of commercial printing and all agreements between Eastman
Kodak Company and HD or their respective Affiliates related to non-
impact printing;
(kk) "OEM" (original equipment manufacturer) means the licensor or
supplier of a product which is incorporated in, or provided along
with, the products of another manufacturer;
(ll) "Outside Income" has the meaning set out in Section 6.3 of the
Agreement;
(mm) "Person" include individuals, partnerships, associations, trusts,
unincorporated organizations, corporations, governments and
governmental or regulatory bodies and agencies;
(nn) "Pre-press" means the first of three phases of the offset printing
process, which includes the steps leading to the creation of a set
of plates, including assembling text, images and line art work into
the right colours, and burning the printing plates, but which does
not include editing and manipulating images and layouts;
(oo) "Prime Rate" means the rate of interest charged by the Vancouver,
British Columbia main branch of Royal Bank of Canada, or its
successor, and designated by it as its United States prime rate;
(pp) "RIP" (raster image processor) means the software and hardware
components and modules, including the DSI, which accept digital
data, converts the data into raster data, screens the raster data
and interfaces that screened data to an output device;
(qq) "ROOM" means RIP once, output many;
(rr) "ROW" means the countries of the world other than NAFTA, Europe and
Japan;
(ss) "Shareholders" means CREO and HD and their successors and permitted
assignees of their Shares;
(tt) "Shares" until the creation of JVCO means the undivided ownership
interests in the Joint Venture and after the creation of JVCO means
the outstanding shares (or its equivalent) of JVCO;
(uu) "Significant Interest" in relation to the securities of CREO and HD
means beneficial ownership, directly or indirectly, of, or the
ability to exercise Control or direction over, voting or equity
securities of any class of CREO or HD, as applicable, equal to or
greater than 25% of the aggregate of all issued and outstanding
voting or equity securities of CREO or HD, as applicable;
(vv) "SSU" means a sales and service unit;
(ww) "Transfer" means any sale, exchange, lease, sale, sale and lease
back, disposition, mortgage, lien, charge, pledge, encumbrance or
security interest or other arrangement by which legal title or
beneficial ownership passes from one Person to another, or to the
same Person in a different capacity, whether by operation of law or
otherwise;
(xx) "TS Products" has the meaning attributed to that term in Section 1.1
of Schedule B; and
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(yy) "Workflow" means software and hardware capable of receiving
information in a digital format, processing this information and
sending the data stream to a RIP.
Change of Control
1.2 For the purpose of this Agreement, a "Change of Control" will be deemed
to occur:
(a) in the case of CREO,
(i) if a Person, which is a Competitor of HD, acquires or holds a
Significant Interest in CREO; or
(ii) if it sells all or a substantial part of its assets or the assets
used in relation to the JV CTP Products or in performing its
obligations under this Agreement; and
(b) in the case of HD,
(i) if a Person, which is a Competitor of CREO, acquires or holds a
Significant Interest in HD; or
(ii) it sells all or a substantial part of its assets or the assets
used in performing its obligations under this Agreement.
1.3 A Change of Control will be deemed not to have occurred in the case of
an acquisition of a Significant Interest if, at the time of acquisition
by a Competitor of HD of a Significant Interest in CREO or by a
Competitor of CREO of a Significant Interest in HD, as applicable,
another Person holds a greater Significant Interest in CREO or HD, as
applicable, than that acquired by the Competitor of HD or the Competitor
of CREO, as applicable.
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SCHEDULE B
LIST OF JV PRODUCTS
1. JV CTP Products include the following:
1.1. all CREO's 4 page and 8 page Trendsetters, and their options, parts
and future derivatives ("TS Products");
1.2. CREO's 8 page Automatic Platesetter except for Automatic Platesetters
sold in Japan and the twelve (12) named key accounts set out in
Schedule "H". The CREO 8 page Automatic Platesetter will be
manufactured, serviced and supported by CREO and its manufacture,
service and support are not subject to the terms of this Agreement;
and
1.3. all HD's 4 page and 8 page CTP output devices, and their options and
parts.
2. Until the time of the FCS of the CWR, all Workflow and RIP components and
modules of CREO or HD sold within three months before the sale of JV CTP
Products or any time thereafter where the sale is made with the intention
that these Workflow or RIP components and modules drive the JV CTP
Products.
3. The CWR after FCS of the CWR.
4. All Workflow and RIP components and modules developed by CREO or HD
Prepress Business Unit which are sold after the FCS of the CWR, except as
set out in Sections 4.1, 4.2, 10.1 and 11.1 of Schedule "F".
5. Consumables.
FINAL 22
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SCHEDULE C
RESEARCH AND DEVELOPMENT FOR JV CTP PRODUCTS
1. JVCO will retain CREO on an exclusive basis to provide JVCO with all
research and development for all JV CTP Products and related Consumables.
2. CREO shall charge JVCO for its Costs of such research and development.
3. In order to conduct research and development, CREO will maintain a
production facility in Vancouver which will also serve as a backup
manufacturing facility and will also be used for manufacturing Cost
comparison purposes.
4. Subject to CREO being the supplier of laser heads for JV Products under
Section 6.1 of Schedule D, JVCO's Cost for research and development of
laser heads will be calculated by dividing the number of laser heads
supplied to JVCO by CREO by the total number of like or similar laser heads
produced by CREO and multiplying such fraction by the total Cost of such
research.
5. CREO will make the necessary research and development capacity available to
JVCO in order to maintain its technological leadership in JV CTP Products.
6. Intellectual Property belongs to the party who does the research and
development.
FINAL 23
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SCHEDULE D
MANUFACTURE OF TS PRODUCTS
This Schedule reflects the rights and obligations of the parties with respect to
the manufacture of TS Products.
1. Manufacture of TS Products during the First Year of this Agreement.
1.1 During the period from the date of this Agreement to the first
anniversary of this Agreement, JVCO will retain:
(a) HD to manufacture, and HD will manufacture, at its facility in Kiel,
Germany (the "Kiel facility"), all TS Products for sale by JVCO in
Europe, ROW and, to the extent reflected in the most recent
production schedule, a copy of which is attached to this schedule as
Exhibit 1, NAFTA; and
(b) CREO to manufacture, and CREO will manufacture, at its facility in
Vancouver, Canada (the "Vancouver facility"), all TS Products for
sale by JVCO in Japan pursuant to the Dainippon Sales Agreement and,
to the extent reflected in Exhibit 1, NAFTA.
2. Assessment of Cost Competitiveness
2.1 JVCO will appoint a team, consisting of one representative nominated by
each of CREO and HD, to monitor on a regular basis the relative
competitiveness of the Kiel facility and the Vancouver facility.
2.2 Following the first anniversary of this Agreement, that team will assess
the relative competitiveness of the Kiel facility and the Vancouver
facility and, following that assessment, determine the facility in which
TS Products will be manufactured.
2.3 Following the initial assessment under Section 2.2, the team will assess
every six months the relative competitiveness of the Kiel facility and
the Vancouver facility.
3. Criteria for Determining Competitiveness
3.1 For the purpose of this Schedule, competitiveness will be determined on
a product by product basis using the following criteria:
(a) for Europe, competitiveness will be determined by comparing the Cost
to manufacture a TS Product in the Kiel facility with the Total
Landed Cost into Frankfurt of a TS Product manufactured in the
Vancouver facility;
(b) for NAFTA, competitiveness will be determined by comparing the Cost
to manufacture a TS Product in the Vancouver facility with the Total
Landed Cost into the United States (to any location designated by HD)
of a TS Product manufactured in the Kiel facility;
(c) for ROW and Japan, competitiveness will be determined by comparing
the Total Landed Cost into a major city in the particular country of
a TS Product manufactured in:
(i) the Vancouver facility; and
(ii) the Kiel facility; and
(d) in determining the Cost to manufacture a TS Product in the Kiel
facility or the Vancouver facility, overhead expense for the facility
with the lower production volume will be determined by assuming
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that the production volume at that facility is equivalent to the
production volume at the facility with the higher production volume.
4. Determination of Costs
4.1 For the purpose of determining the Cost to manufacture under Section 3,
Cost and Total Landed Cost will be expressed in United States dollars
based on the rate of exchange for Deutschmarks (or when applicable, the
EURO) and Canadian dollars on the date of determination by the team. The
Cost and Total Landed Cost, expressed in United States Dollars, will
remain fixed and in force for the next six (6) month period.
4.2 For the purpose of this Schedule, "Total Landed Cost" means Cost, DDP
(INCO Terms 1990) at the destination being used for comparative
purposes.
5. Future Production
5.1 The manufacturer of TS Products must manufacture those products to a
quality level acceptable to the Product Steering Committee.
5.2 Subject to subsections 5.3, 5.4, and 5.5, following the team's
assessment under Section 2, JVCO will retain HD to manufacture in the
Kiel facility all TS Products for sale in Europe, NAFTA, ROW and Japan,
(a) if the Cost to manufacture TS Products for sale in a particular
region or country, as applicable, is equal to or less than the Cost
to manufacture TS Products in the Vancouver facility (using the same
criteria as in section 3); or
(b) if HD is not competitive under clause (a) for any region or country,
as applicable, HD subsidizes the Cost to manufacture TS Products for
sale in that region or country, as applicable, so that the Cost to
manufacture is equal to or less than the Cost to manufacture TS
Products in the Vancouver facility for the same jurisdiction.
5.3 Despite Section 5.2, CREO reserves the right to manufacture a monthly
production volume of ten (10) TS Products (or such greater number as may
be determined by agreement of CREO and HD or as may be required by DS
under the Dainippon Sales Agreement). CREO will ensure that the Cost to
JVCO of manufacturing those TS Products will not be more than it would
be (using the same criteria as in Section 3) if those TS Products were
manufactured by HD in the Kiel facility.
5.4 If HD is not competitive under Section 5.2(a) or it elects not to
subsidize production under Section 5.2(b) in any region or country, JVCO
will retain CREO to manufacture in the Vancouver facility TS Products
for sale in those regions or countries where its Cost is less than that
of the Kiel facility. Thereafter, if the Cost to manufacture TS Products
in the Vancouver facility for sale in any particular region or country
is not competitive, CREO may continue nevertheless to manufacture TS
Products in the Vancouver facility for sale in that region or country if
it subsidizes the Cost to manufacture those TS Products so that the Cost
is less than the Cost to manufacture TS Products in the Kiel facility
(using the same criteria as in Section 3).
5.5 HD or CREO may give notice to the other and to JVCO at any time to the
effect that it does not wish to continue to subsidize the Cost to
manufacture TS Products under Section 5.2 or 5.4, respectively. In that
case, its obligation to subsidize will end ninety (90) days following
the date of receipt of the notice by JVCO, at which time the other will
be entitled to manufacture TS Products for sale in the relevant
jurisdictions.
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6. Laser Heads
6.1 CREO shall manufacture all laser heads and transfer them to the
manufacturer of the TS Products at Cost. If more competitive laser heads
are available in the market (equal performance at better terms, or
better performance at equal or better terms), CREO shall have the right
to continue the supply of laser heads to JVCO on the basis that CREO
shall subsidize the Cost of manufacturing at its Vancouver facility so
that the Cost to JVCO is the same as it would be if the laser heads were
purchased from the supplier of the more competitive laser heads.
7. General
7.1 Both CREO's and HD's production personnel will be involved in all stages
of the development process.
FINAL
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SCHEDULE E
DISTRIBUTION AND MARKETING OF JV PRODUCTS
This Schedule reflects the rights and obligations of the parties with respect to
the distribution (which, for greater certainty, includes the sale of JV
Products) and marketing of JV Products.
1. Distribution and Marketing Rights
1.1 JVCO will retain HD on an exclusive basis to distribute and market JV
Products in Europe and ROW through the HD SSUs and HD Independent
Distributors. In NAFTA and Japan, JVCO will distribute and market JV
Products as defined in Schedule H and in Section 1.3 of this Schedule.
CREO's right to sell to the corporate accounts defined in Section 2.1(a)
of Schedule H includes cases where such corporate accounts buy the JV
Product for delivery to an outside NAFTA site or subsidiary, provided
however, that any such sale shall be made in coordination with the
relevant HD SSU. In cases where the relevant local HD SSU sells a JV
Product to an outside NAFTA subsidiary of one of the said corporate
accounts, it shall coordinate such sale with CREO.
1.2 Schedule H will apply to the distribution and marketing of JV Products
in NAFTA.
1.3 In the case of the distribution and marketing of JV Products in Japan,
HD acknowledges that, under the Dainippon Sales Agreement, CREO is
obligated until the expiry of that agreement on the30th April, 2000 to
distribute 8 page and larger CTP output devices and related Workflow
products of CREO (but, for greater certainty, not other JV Products) in
Japan solely through Dainippon Screen. Although the 8 page CTPs will be
labeled CREO only and invoiced directly by CREO to Dainippon Screen,
revenue from the sale of these 8 page Trendsetter products and
associated Workflow and RIPs will be for the account of JVCO. All other
JV Products (including the next generation 4-page Trendsetters)
distributed in Japan will be labeled HD only until 30th April, 2000 and
will be distributed by HD through the HD SSUs and HD Independent
Distributors. Prior to the expiry of the Dainippon Sales Agreement, the
parties will review the arrangements under that agreement and the
economics of distributing JV and non JV Products in Japan, with a view
to granting to the HD SSUs and the HD Independent Distributors the
exclusive right to distribute and market JV Products and products
produced by CREO that are not JV Products in Japan.
1.4 CREO confirms that there no other distribution agreements or agency
agreements in effect other than those mentioned above, or for which
notice of termination has not already been given to the other party.
2. Loss of Distribution and Marketing Rights
2.1 If at any time JVCO determines that any HD SSU or HD Independent
Distributor or (if at that time a CREO SSU is distributing and marketing
JV Products) a CREO SSU, is not performing efficiently (which, for this
purpose, means that it is not maintaining its market share for JV
Products at a competitive street price in its market or is not generally
achieving customer satisfaction, or its cost of distribution is not
competitive), it may give notice to HD or CREO, as applicable, to that
effect. The notice must specify in reasonable detail the basis on which
JVCO has determined that the particular SSU or distributor is not
performing efficiently. HD or CREO, as applicable, will have a period of
ninety (90) days from the date of receipt of that notice to take
whatever action it deems necessary to remedy the deficiency. If at the
end of that ninety (90) day period JVCO determines that the deficiency
has not been remedied to its satisfaction, acting reasonably, then it
may require HD or CREO, as applicable, to terminate its arrangement with
the SSU and JVCO will be entitled to retain another person to distribute
and market the JV Products previously distributed and marketed by the
terminated SSU.
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3. Non-JV Products
3.1 CREO may distribute CTP output devices that are not JV Products through
HD SSUs and HD Independent Distributors provided that they are not
directly competitive with any JV Products, as determined by the Board of
Directors of JVCO. For such CTP non-JV Products , CREO shall retain the
HD SSUs, HD Independent Distributors, CREO SSUs or any combination of
the foregoing. However, prior to the distribution of any such non-JV
Products through HD SSUs and HD Independent Distributors, CREO must
obtain the approval of HD, as represented by its pre-press business
unit. If HD refuses to distribute such CTP output devices on terms at
least as favorable generally to those available from third parties, CREO
may distribute those products through a third party other than HD. HD
acknowledges that it has granted its approval for the distribution
through the HD SSUs and the HD Independent Distributors of CREO's VLF
Platesetters and VLF Trendsetters, and related Workflow components sold
in conjunction with those products. To the extent that it has not
already done so, HD will notify the HD SSUs and HD Independent
Distributors of its agreement to permit distribution of those products.
3.2 CREO may distribute products that are neither JV Products nor CTP output
devices through HD SSUs and HD Independent Distributors provided those
products are not directly competitive with any JV Products, as
determined by the Board of Directors. However, prior to the distribution
of any such products, through HD SSUs and HD Independent Distributors,
CREO must obtain the approval of HD, as represented by its pre-press
business unit. HD acknowledges that it has granted its approval for the
distribution through the HD SSUs and the HD Independent Distributors of
CREO's Renaissance Scanner, dedicated thermal halftone proofer and
Workflow components sold in conjunction with those products. To the
extent that it has not already done so, HD will notify the HD SSUs and
HD Independent Distributors of its agreement to permit distribution of
those products.
4. Sales Incentives
4.1 In order to align the incentives of the HD SSUs and HD Independent
Distributors in selling CTF products and JV CTP Products and Workflow
and RIP components and modules designed by HD Prepress Business Unit or
CREO, HD will use its best efforts to ensure that:
(a) the commission rate percentage to which sales persons of a HD SSU or
a HD Independent Distributor are entitled will be the same for JV
CTP Products and CTF products and for both Workflow and RIP
components and modules designed by HD Prepress Business Unit or
CREO; and
(b) the HD SSUs and HD Independent Distributors will set a combined
quota only for both JV CTP Products and CTF products, and a combined
quota only for both Workflow and RIP components and modules designed
by HD Prepress Business Unit or CREO, so that the HD SSUs and HD
Independent Distributors will not have an incentive to sell the
products of one party in preference to those of the other.
4.2 If conflicts arise in the sale of JV CTP Products and CTF products, JVCO
will resolve that conflict with the relevant HD SSU or HD Independent
Distributor.
4.3 The Board of Directors will analyse the incentive plans of the HD SSUs
and HD Independent Distributors and develop for implementation by HD,
which will use all reasonable efforts to implement, a proposal under
which the HD SSUs and HD Independent Distributors will be motivated to
sell JV Products.
5. Marketing Strategy
5.1 CREO and HD, through the Product Steering Committee, will co-ordinate
the world-wide marketing message and communications strategy of CREO and
HD with respect to the distribution and sale of JV Products. The parties
intend that, through the Product Steering Committee, CREO and HD will
jointly
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develop product specifications, product positioning, product plans,
sales tools, arguments and recommendations, sales training and marketing
communication for JV Products.
6. Implementation of Marketing Strategy
6.1 HD will implement the marketing communications strategy developed by the
Product Steering Committee for JV Products. HD will prepare annually,
for submission to and approval by the Board of Directors of JVCO, a
budget for the marketing communications for JV Products. Approved
marketing communications will be provided to JVCO at Cost.
7. Distribution Channels
7.1 HD will direct and execute the channel management for JV Products. CREO
will have free access to the sales channels for the purpose of JV
Product education, sales support and market feedback. CREO must keep HD
informed to ensure that there are no conflicts with HD's channel
management and that all information is shared with HD.
8. NAFTA Sales
8.1 In the distribution and marketing of JV Products in NAFTA, HD will use
its best efforts to cause Heidelberg USA to continue to co-operate with
CREO on the execution of marketing communications, sales strategy, and
sales support for JV Products in NAFTA as set out in Schedule H.
8.2 Budgets for these activities shall be jointly prepared and agreed to by
CREO and Heidelberg USA. Heidelberg USA shall pay for all such budgeted
expenses.
9. Sales and Marketing Information
9.1 For products produced by CREO that are not JV Products and which are
distributed through HD SSUs and HD Independent Distributors, CREO will
provide sales support and marketing information directly to them. CREO
will endeavour to prevent any conflict with HD's channel management by
freely sharing any such information with HD.
10. Sales of Workflow and RIP Components and Modules
10.1 Each of CREO and HD may distribute separately (and not through its SSUs
or independent distributors) to third parties Workflow and RIP
components and modules in conjunction with its own products that are not
JV Products.
11. Limitations on Sales of CTP Products
11.1 Subject to Section 11.2, during the continuance of its retainer by
JVCO, HD SSUs and HD Independent Distributors may not sell CTP output
devices other than (i) JV Products or (ii) CTP output devices of CREO.
11.2 Each of CREO and HD may distribute its 2-page CTP output devices as
each sees fit.
12. Pricing
12.1 Product Steering Committee, in consultation with the relevant SSUs, will
determine the product positioning and "street pricing" of JV Products in
each country. JVCO will sell all JV Products to the SSUs at a price to
be determined by HD (through its pre-press business unit). For the
purpose of Sections 6.1 and 6.3 of this Agreement,HD SSUs' or CREO SSUs'
cost for sales and marketing in each country will be based on its actual
Costs of selling JV Products in each country.
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SCHEDULE F
WORKFLOW AND RIP COMPONENTS AND MODULES
This Schedule reflects the rights and obligations of the parties with respect to
Workflow and RIP components and modules.
1. Research and Development
1.1. JVCO shall contract both CREO and HD to undertake research and
development for CW and CR components and modules to be part of CWR
and CR.
1.2. Research and development for the CWR shall be contracted from HD and
CREO at the JVCO agreed Cost, beginning with approval of the first
CWR product development project by the Board of Directors which was
granted on the 1st December, 1997. JVCO shall use its best efforts to
contract CREO and HD for research and development on the basis that
the development time spent by each is equivalent to that of the
other. Research and development shall be carried out in accordance
with the decisions of the Board of Directors through the Product
Steering Committee.
1.3. All research and development of Workflow and RIP components and
modules, which are not part of the CWR, will be conducted by both
parties at their own expense, until the FCS of the CWR.
1.4. Both parties will use their best efforts to structure their source
code and utilize Application Programming Interfaces ("APIs") so that
the other party can enhance or adapt the modules without the
necessity of accessing the source code of the other party. Each party
will provide to the other party access to the first party's source
code and other technical information, but only to the extent
necessary for the development of CWR as agreed by both parties.
2. CWR
2.1. The parties are committed to introducing CWR based on PDF and Adobe
Extreme(TM) architecture as soon as possible. The CWR has to offer a
ROOM fallback feature at the time of FCS of the CWR (a minimum
solution is the interface of the CWR to the Delta System available at
that time).
2.2. JVCO shall make its best effort to develop CWR to run on existing
customers' hardware components for a reasonable period of time.
2.3. The CWR shall be used as the basis for all future CTP and CTF output
device specific Workflow and RIP implementations for JVCO, CREO or
HD. CREO and HD shall use the CWR for their respective output devices
(not including any non-impact printing product) that are not CTP or
CTF output devices where the CWR is competitive in price and
performance with any other Workflow or RIP.
3. CR
3.1. The CR includes the following components and modules, and such other
elements which by agreement of the Board of Directors are designated
as CR:
3.1.1. core Postscript Level 3/PDF engine (e.g. Adobe Extreme and
Printer JTP extensions);
3.1.2. basic common user interface and queuing mechanism (e.g. PMIM
as defined in Section 5.1.1);
3.1.3. common PPD (printer control file);
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3.1.4. common screening engine including, amongst others, super cell,
irrational and stochastic screening except as specifically set
out below;
3.1.5. calibration engine (e.g. Harmony for CR); and
3.1.6. API for DSIs.
4. DSI
4.1. The following components do not belong to the CR but shall be
implemented in the DSI:
4.1.1. customized user interface;
4.1.2. PPDs for specific devices;
4.1.3. device specific screening, only if not included in the CR;
4.1.4. machine/ device control and device drivers;
4.1.5. device specific functions; and
4.1.6. specialized hardware if different from CR hardware.
4.2. Only the DSI for JV Products shall be a JV Product. JVCO shall
contract both CREO and HD to undertake research and development for
DSIs for JV CTP Products. Except as otherwise agreed, DSIs for all
CREO or HD non-JV Products shall be developed independently by CREO
and HD, respectively, and shall not be a JV Product.
5. Intellectual Property
5.1. All Intellectual Property relating to Workflow and RIP components and
modules shall be owned as follows:
5.1.1. The Joint Intellectual Property shall consist of the Intellectual
Property relating to the following functional areas, regardless
of which party contributed to or funded the development of that
Joint Intellectual Property:
5.1.1.1. PMIM for Direct Output RIP ("DO-RIP") which includes
the following: OPI-sampler, Spool and Queue Manager;
and Extreme Job Submission client;
5.1.1.2. DO-RIP comprising: CWR Printer JTP and API for DSI;
5.1.1.3. CWR Job-Ticket Editor;
5.1.1.4. CWR DSIs for Proofers;
5.1.1.5. Generation of information for CIP3 applications from
Prepess applications;
5.1.1.6. Harmony and all output calibration for CR applications;
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5.1.1.7. any CR function not specified in Section 5.1.1,
excluding those functions specified in 5.1.2 and 5.1.3
and subject to Section 5.2 and
5.1.1.8 any CW function not specified in Section 5.1.2
or 5.1.3.
5.1.2. HEIDELBERG shall own all right, title and interest in and to
the Intellectual Property relating to the following functional
areas, regardless of which party contributed to or funded the
development of that Intellectual Property:
5.1.2.1. Delta RIP (e.g. Delta RIP SW and tower);
5.1.2.2. Delta Base;
5.1.2.3. Lino Server;
5.1.2.4. Delta Technology and extensions (e.g. Delta Trap, Delta
Proof Open);
5.1.2.5. Delta side of Delta Bridge;
5.1.2.6. Signastation;
5.1.2.7. Colour Management developed by HD;
5.1.2.8. Screening developed by HD (e.g. IS, HQS, DS);
5.1.2.9. DaVinci;
5.1.2.10. CWR Acrobat Trapper Plug-ins and JTPs developed by HD
based upon DaVinci technology; and
5.1.2.11. DSIs for HD devices.
5.1.3. CREO shall own all right, title and interest in and to the
Intellectual Property relating to the following functional areas,
regardless of which party contributed to or funded the
development of that Intellectual Property:
5.1.3.1. CWR Server Infrastructure (e.g. database, meta-layers,
component layer, logging software, administration and
security, load balancing, distribution, communication);
5.1.3.2. CWR Client Infrastructure (e.g. prepress workshop
client software, Exchange plug-in for page viewer);
5.1.3.3. CWR Infrastructure for Control and Configuration of
Extreme (e.g., xJTP, xGRM, trapping support, control
and configuration of tasks, services and Job Tickets,
task template server);
5.1.3.4. CWR Extreme extensions (e.g. extensions to Normalizer,
OPI customization, File Format Converters (e.g. Scitex
CT, HP RTL, JPEG));
5.1.3.5. CWR Archiving;
5.1.3.6. DSIs for CREO devices;
5.1.3.7. CREO's Virtual Proofing System product (VPS);
5.1.3.8. Harmony and all output calibration for non-CR
applications; and
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5.1.3.9. CREO Screening (AM and FM).
5.2. Both parties will endeavour to develop CR components and modules in
such as way as to not require the use of technology listed in 5.1.2
and 5.1.3, unless the use, ownership or license can be agreed to by
both parties. If functions provided for in 5.1.2 or 5.1.3 are
necessary for the development of CR components and modules, but
agreement cannot be reached between the two parties, then the JV
Product Steering Committee will authorize and fund development of new
technology to provide the necessary CR functions and this technology
will become Joint Intellectual Property
5.3 The Intellectual Property set out in Section 5.1 shall be licensed
without charge to JVCO in accordance with the provisions of Schedule
"G".
6. Revenues from Sale of Workflow and RIP Components and Modules with non-JV
Products
6.1. Following FCS of CWR, JVCO's revenue from the sale and licensing of
Workflow and RIP components and modules (software and hardware if
included) provided with or in conjunction with an output device that
is not a JV Product shall be equal to the average transfer price,
including licence fee of such components and modules (software, and
hardware if included) to the European HD Independent Distributors
minus the cost of all hardware included, and minus the value of the
DSI software, as determined below (unless this DSI software was
developed by JVCO). The value of the DSI software shall be determined
by the Product Steering Committee and shall be based on the transfer
licence fee of the above components and modules multiplied by the
ratio of the relative development time required for the DSI, divided
by the development time required for the total Workflow and RIP
component and modules licensed, including the DSI.
7. Cost of Workflow and RIP Components and Modules
7.1. The Cost to JVCO of all Workflow and RIP components and modules shall
be the actual cost of any third party licensing fees and (if
applicable) hardware costs. There shall be no mark up on software or
hardware developed or provided by either party.
8. Non-Impact Printing
8.1. JVCO shall not be involved in any development of software or hardware
in connection with non-impact printing development. However, HD or
the HD / Kodak joint venture or CREO may license and distribute
Workflow and RIP components and modules from the JVCO at the royalty
determined under Section 6.1 in the development of that party's own
non impact printing products.
9. Restrictions on Licensing
9.1. Neither CREO nor JVCO may license, distribute or sell CWR components
or modules to any Competitor of HD during the term of this Agreement
without HD's prior written consent. However, in any event CREO may
sell RIP components and modules to any Person in conjunction with
CREO's DOP products, and CWR components and modules to any Person in
conjunction with CREO's non-impact printing products.
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10. Colour Management, Screening and Scan Software
10.1 HD's and CREO's colour management, screening modules and scan
software will not be included as CWR source code modules and all
intellectual property rights will remain with the developer.
Nevertheless, these modules will be an integral part of the CWR and
will be licensed to the JVCO free of charge.
11. Development not Approved by JVCO
11.1 If at any time, CREO or HD Prepress Business Unit has developed a
certain Workflow or RIP module or component and decides that it wants
to continue future development of that Workflow or RIP module or
component and JVCO is not willing to fund such development, then that
party may develop and distribute such module or component
independently of JVCO and for its own account, provided that such
module or component is not competitive to the Workflow or RIP modules
or components of JVCO, as determined by the Board of Directors.
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SCHEDULE G
INTELLECTUAL PROPERTY LICENSING PRINCIPLES
1. Retention of Intellectual Property Rights
1.1 Except for the licences granted by CREO and HD to JVCO in Section 2,
CREO, for itself and any third parties acting through it, shall retain
all right, title and interest in and to all CREO Intellectual Property,
and HD, for itself and any third parties acting through it, shall retain
all right, title and interest in and to all HD Intellectual Property
1.2 Except as set out in Section 5.1.1 of Schedule "F", CREO and HD will
conduct all of their activities under this Agreement such that they do
not create or acquire any Intellectual Property which is jointly owned
by CREO and HD.
2. License of Intellectual Property by the Parties to JCVO.
2.1 The licenses granted by the parties in this Section 2 are subject to any
existing obligations to third party licensees which each party may have
incurred prior to the date of this Agreement. Any licence fees or other
revenues to which CREO or HD or any division thereof is entitled from
such licences will not form a part of JVCO revenue.
2.2 Subject to Sections 2.3 and 3 and the rights of any third party
licensors of Intellectual Property, effective the date of execution of
this Agreement, CREO and HD each grant to JVCO an irrevocable (except in
accordance with Section 3.1), non-transferable, royalty-free, world-
wide:
(a) exclusive right under, respectively, the CREO Intellectual Property,
the HD Intellectual Property and the Joint Intellectual Property to
use and resell, but not to make, and to grant the right to third
parties to use and resell, but not to make, the JV Products
(excluding, respectively, CREO's colour management, screening modules
and scanning software, and HD's colour management, screening modules
and scanning software); and
(b) non-exclusive right under, respectively, the CREO Intellectual
Property and the HD Intellectual Property to use and sell, but not to
make, and to grant the right to third parties to use and resell, but
not to make, respectively, the CREO colour management, screening
modules and scanning software, and the HD colour management,
screening modules and scanning software, as part of the CWR for use
in connection with the Workflow and RIP components and modules.
2.3 Application modules specific to HD press and post-press, shall not be JV
Products and HD Intellectual Property pertaining to such modules shall
only be licensed to JVCO at the option of HD.
3. Termination of Licences
3.1 The rights granted by the parties in Section 2 shall terminate
immediately on the date of dissolution of JVCO following a termination
of this Agreement.
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4. Use of Intellectual Property Generally by JVCO
4.1 Subject to Section10.1 of Schedule F and Section5, JVCO may grant a
revocable, non-transferable, sub-license of the CREO Intellectual
Property, the HD Intellectual Property, and the Joint Intellectual
Property:
(a) to end-user customers solely in connection with their use, and where
permitted, servicing and maintenance, of JV Products;
(b) to CREO for any purpose; and
(c) to HD for any purpose.
5. Sub-licence Requirements
5.1 JVCO may provide JV Products or separately the CREO Intellectual
Property, the HD Intellectual Property or the Joint Intellectual
Property to sub-licensees, including CREO and HD, only if JVCO first
enters into a written sub-licence with each sub-licensee.
5.2 The parties agree that JVCO shall, at the written request of CREO or HD,
provide it with a copy of each sub-licence agreement that JVCO has
entered into, and each sub-sub-licence that a sub-licensee of JVCO has
entered into with a sub-sub-licensee.
CREO and HD agree to provide the other, at the written request of the
other, with a copy of each sub-licence agreement) relating to the CREO
Intellectual Property, the HD Intellectual Property, and the Joint
Intellectual Property that, respectively, CREO or HD has entered, or
shall enter, into.
6. Sub-Licence Fee.
6.1 Where JVCO grants a sub-licence under Section 4.1(b) or (c) to CREO or
HD it shall charge, and the sub-licensee shall pay, a royalty,
determined by the Product Steering Committee, on terms no less
favourable than those available in the marketplace for comparable
competing products.
7. Intellectual Property Claim
7.1 JVCO will be responsible for any costs, losses, damages, liabilities,
claims and demands arising out of or resulting from a claim that the JV
Products or non JV Products provided by JVCO infringe the intellectual
property rights of any Person (an "Intellectual Property Claim") except
where the Intellectual Property Claim arises from the wilfull
misconduct, bad faith or gross negligence of CREO or HD, in which case
CREO or HD will be solely responsible for the Intellectual Property
Claim
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SCHEDULE H
NAFTA DISTRIBUTION
1. Goal
1.1 It is the goal of the JVCO to set up a sales and support structure
which will be capable of achieving 60% market share in NAFTA for JV
Products. It is agreed that in order to achieve this 60% market share
goal, the CREO SSUs and HD SSUs in NAFTA must work together in an
effective and coordinated manner.
2. Distribution Channel
2.1 The HD SSUs and CREO SSUs will share distribution responsibilities for
JV Products as follows:
(a) CREO will sell direct on CREO paper to the following corporate
accounts:
(i) R.R. Donnelley and Sons
(ii) Moore Corporation
(iii) Quebecor Printing
(iv) World Color Press
(v) Banta Corporation
(vi) Quad Graphics
(vii) Shorewood
(viii) Cadmus Communications
(ix) American Mail Well
(x) Courier
(xi) Judds
(xii) Mack Printing Group
2.2 HD SSUs and CREO SSUs will sell directly to all other accounts. All
activities must be coordinated between HD SSU regional managers and
their counterparts in CREO to avoid conflicts. All sales will be
written on HD paper, unless the customer requests the order to be
written on CREO paper.
2.3 CREO SSU sales and support personnel will serve as NAFTA system sales
specialists for JV Products, and will be involved in sales of JV
Products whenever required.
3. Distribution of non-JV Products
3.1 CREO's non JV Products will be sold directly by CREO. CREO will have
the right to use HD SSUs as a distributor.
4. Incentive Alignment
4.1 In order to align the incentives of the HD SSU and the CREO SSU sales
people, the NAFTA SSUs management of both parties will agree on a
formula to compensate the HD SSU pre-press people and the CREO SSU
sales people in a consistent fashion. The goal is to achieve no more
than 7.5% average discount for JV Products, while giving the sales
people in the field the maximum freedom to operate.
4.2 The commission rate percentage to HD SSU sales people will be the same
for both JV CTP Products and CTF products and for both Workflow and RIP
components and modules designed by HD and CREO.
4.3 HD SSU will set a combined quota only for both JV CTP Products and CTF
products and a combined
<PAGE>
quota only for both Workflow and RIP components and modules designed by
HD and CREO.
4.4 If conflicts are generated between CTP and CTF sales, the JVCO will
find a way to resolve the conflict.
5. Service & Support
5.1 CREO will provide all service and support functions in NAFTA for JV
Products designed exclusively by CREO. CREO will provide all service
and support functions for all CWRs at all NAFTA sites where a JV CTP
Product, or a CREO non JV Product, is installed, and for the corporate
accounts listed in Section 2.1(a). All service and support of JV
Products designed exclusively by HD will be provided by HD SSUs. HD
will provide all service and support functions for all CWR's in all
NAFTA sites except for sites where a JV CTP Product, or a CREO non JV
Product, is installed. Customer interaction with HD SSUs and CREO SSUs
is defined in the attached service agreement of September 3, 1997
(Appendix III) between CREO SSUs and HD SSUs.
6. Transfer Pricing
6.1 Transfer price from the JVCO to HD SSU, except for the corporate
accounts listed in Section 2.1(a), will be negotiated with the HD pre-
press business unit. For all JV Products designed by CREO, including
the CWR, but excluding the Automatic Platesetter, HD SSU will pay CREO
SSU CREO's Cost, estimated at 12.5% of USA list price, to cover CREO's
sales, installation, training and warranty expenses. For Automatic
Platesetters sold other than to the corporate accounts listed in
Section 2.1(a), HD SSU will pay CREO SSU CREO's Cost, estimated at
17.5% of USA list price, in each case to cover CREO's sales,
installation, training and warranty expenses. For all JV Products
designed by HD, HD SSU will pay CREO SSU CREO's Cost, estimated at 5%
of USA list price, to cover CREO's sales expenses.
6.2 Transfer price from the JVCO to CREO for sales of JV Products, for the
corporate accounts listed in Section 2.1(a), will be the actual selling
price of the products minus CREO's Cost, estimated at 12.5% of the USA
list price, to cover sales, installation, training and warranty
expenses.
7. Operations Review
7.1 HD SSU and CREO SSU will have a quarterly meeting to review the success
of the combined NAFTA operation, with the objective of increasing
product sales, margins and customer satisfaction, while reducing the
cost of selling and services.
<PAGE>
EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of this _____ day
of __________, 199 by and between Creo Products Inc. a Canadian corporation (the
"Company"), and_________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
---------------
(a) Third-Party Proceedings. The Company shall indemnify
-----------------------
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of:
(i) the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company,
(ii) any action or inaction on the part of Indemnitee while an
officer or director of the Company or,
(iii) the fact that Indemnitee is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
<PAGE>
against expenses (including legal fees), judgments, fines and amounts
paid in settlement (if such settlement is approved in advance by the Company,
which approval shall not be unreasonably withheld) actually and reasonably
incurred by Indemnitee in connection with such action or proceeding if
Indemnitee acted honestly and in good faith and with a view to the best
interests of the Company, and, with respect to any criminal or administrative
action or proceeding that is enforced by monetary penalty, if Indemnitee had
reasonable grounds for believing Indemnitee's conduct was lawful. The
termination of any action or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
---------------
itself, create a presumption that (A) Indemnitee did not act honestly, in good
faith and with a view to the best interests of the Company, or (B) with respect
to any criminal or administrative action or proceeding that is enforced by
monetary penalty, Indemnitee did not have reasonable grounds for believing that
Indemnitee's conduct was lawful.
(b) Proceedings By or in the Right of the Company. The Company shall
---------------------------------------------
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of:
(i) the fact that Indemnitee is or was a director, officer, employee
or agent of the Company, or any subsidiary of the Company,
(ii) any action or inaction on the part of Indemnitee while an
officer or director of the Company or
(iii) the fact that Indemnitee is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
against expenses (including legal fees) and, to the fullest extent
permitted by law, amounts paid in settlement, in each case to the extent
actually and reasonably incurred by Indemnitee in connection with the defence or
settlement of such action or proceeding if Indemnitee acted honestly and in good
faith and with a view to the best interests of the Company, and, with respect to
any criminal or administrative action or proceeding that is enforced by monetary
penalty, had reasonable grounds for believing Indemnitee's conduct was lawful,
and such indemnification is approved by a court of competent jurisdiction in
accordance with applicable law.
(c) Tax Gross-Up. If Indemnitee is required by law to pay any tax on
------------
account of receipt of any amount under this Agreement, the Company shall
increase the amount payable to Indemnitee such that the amount received by
Indemnitee, after deduction of all applicable taxes, is equal to the amount that
Indemnitee would have received under this Agreement had such tax not been
payable, provided that Indemnitee takes all reasonable steps to minimize the
amount of such tax
-2-
<PAGE>
and provides the Company with evidence satisfactory to the Company, acting
reasonably, that such steps have been taken.
2. Expenses; Indemnification Procedure.
-----------------------------------
(a) Advancement of Expenses. The Company shall advance all expenses
-----------------------
incurred by Indemnitee in connection with the investigation, defence, settlement
or appeal of any civil or criminal action or proceeding referenced in Section
1(a) or (b) hereof (but not amounts actually paid in settlement of any such
action or proceeding). Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the Company to
Indemnitee within 20 days following delivery of a written request therefor by
Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
--------------------------------
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). Notice shall be deemed received 3 business days after the date
postmarked if sent by registered mail, properly addressed; otherwise notice
shall be deemed received when such notice shall actually be received by the
Company. In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.
(c) Procedure. Any indemnification provided for in Section 1 shall be
---------
made no later than 45 days after receipt of the written request of Indemnitee.
If a claim under this Agreement, under any statute, or under any provision of
the Company's Articles of Incorporation or By-laws providing for
indemnification, is not paid in full by the Company within 45 days after a
written request for payment thereof has first been received by the Company,
Indemnitee may, but need not, at any time thereafter bring an action against the
Company to recover the unpaid amount of the claim and, subject to Section 13 of
this Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including legal fees) of bringing such action. It shall be a defence to any
such action (other than an action brought to enforce a claim for expenses
incurred in connection with any action or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify Indemnitee for the
amount claimed but the burden of proving such defence shall be on the Company,
and Indemnitee shall be entitled to receive interim payments of expenses
pursuant to Subsection 2(a) unless and until such defence may be finally
adjudicated by court order or judgment from which no further right of appeal
exists. It is the parties' intention that if the Company contests Indemnitee's
right to indemnification, the question of Indemnitee's right to indemnification
shall be for the court to decide, and neither the failure of the Company
(including
-3-
<PAGE>
its Board of Directors, any committee or subgroup of the Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its shareholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of
------------------
a claim pursuant to Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
under Section 2(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defence
of such proceeding, with counsel approved by Indemnitee, which approval shall
not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i) Indemnitee shall have the right to employ his counsel in any
such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defence
or (C) the Company shall not, in fact, have employed counsel to assume the
defence of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
3. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------
(a) Scope. Notwithstanding any other provision of this Agreement, the
-----
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's By-laws or by statute. In the event of any change,
after the date of this Agreement, in any applicable law, statute or rule which
expands the right of a Canadian corporation to indemnify a member of its board
of directors, an officer or other corporate agent, such changes shall be, ipso
----
facto, within the purview of Indemnitee's rights and Company's obligations under
- -----
this Agreement. In the event of any change in any applicable law, statute, or
rule which narrows the right of a Canadian corporation to indemnify a member of
its Board of Directors, an officer, or other corporate agent, such changes,
-4-
<PAGE>
to the extent not otherwise required by such law, statute, or rule to be applied
to this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its By-laws, any agreement, any
vote of shareholders or disinterested directors, the Canada Business
Corporations Act, as amended, or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding such
office. The indemnification provided under this Agreement shall continue as to
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though he may have ceased to serve in such capacity at the time of
any action or other covered proceeding.
4. Partial Indemnification. If Indemnitee is entitled under any provision
-----------------------
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by him
in the investigation, defence, appeal or settlement of any civil or criminal
action or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
5. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
----------------------
that in certain instances, applicable law or public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the United States
Securities and Exchange Commission to submit the question of indemnification to
a court in certain circumstances for a determination of the Company's right
under public policy to indemnify Indemnitee.
6. Directors' and Officers' Liability Insurance. The Company shall, from time
--------------------------------------------
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all
policies of directors' and officers' liability insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if
Indemnitee is not a director of the Company but is an officer; or of the
Company's key employees, if Indemnitee is not an officer or director but is a
key employee. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain such insurance if the Company determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, if
the coverage provided by such insurance is limited by
-5-
<PAGE>
exclusions so as to provide an insufficient benefit, or if Indemnitee is covered
by similar insurance maintained by a subsidiary or parent of the Company.
7. Severability. Nothing in this Agreement is intended to require or
------------
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 7. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
8. Exceptions. Any other provision herein to the contrary
-----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Excluded Acts. To indemnify Indemnitee for any acts or omissions
-------------
or transactions from which a director may not be relieved of liability under the
Canada Business Corporations Act, as amended.
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defence, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any law or, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board of
Directors has approved the initiation or bringing of such suit; or
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
------------------
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(d) Insured Claims. To indemnify Indemnitee for expenses or
--------------
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, taxes or penalties, and amounts paid in settlement) which have been paid
directly to Indemnitee by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company; or
(e) Claims Under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the United States Securities
Exchange Act of 1934, as amended, or any similar successor statute.
-6-
<PAGE>
9. Effectiveness of Agreement. This Agreement shall be effective as of the
--------------------------
date set forth on the first page and may apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, at the time such act or
omission occurred.
10. Construction of Certain Phrases.
-------------------------------
(a) For purposes of this Agreement, references to the "Company" shall
also include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that if Indemnitee is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "serving at the
request of the Company" shall include any service as a director, officer,
employee or agent of the Company which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee
benefit plan, its participants, or beneficiaries.
11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, which together shall constitute one agreement.
12. Successors and Assigns. This Agreement shall be binding upon the
----------------------
Company and its successors and assigns, and shall enure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. Legal Fees. In the event that any action is instituted by Indemnitee
----------
under this Agreement to enforce or interpret any of the terms hereof, Indemnitee
shall be entitled to be paid all costs and expenses, including reasonable legal
fees, incurred by Indemnitee with respect to such action, unless as a part of
such action, a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement or to enforce or interpret any of
the terms of this Agreement, Indemnitee shall be entitled to be paid all costs
and expenses, including reasonable legal fees, incurred by Indemnitee in defence
of such action (including with respect to Indemnitee's counterclaims and
-7-
<PAGE>
cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee's material defences to such action were made
in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications under
-------
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by registered mail with postage prepaid, on the third
business day after the date postmarked. Addresses for notice to either party
are as shown on the signature page of this Agreement, or as subsequently
modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
------------------------
irrevocably consent to the jurisdiction of the courts of the Province of British
Columbia for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be brought only in the courts of the Province of
British Columbia.
16. Choice of Law. This Agreement shall be governed by and its provisions
-------------
construed in accordance with the laws of the Province of British Columbia.
THE PARTIES, intending to be contractually bound, have executed this
Indemnification Agreement as of the date set out on the first page.
CREO PRODUCTS INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Address: Creo Products Inc.
3700 Gilmore Way
Burnaby, BC V5G 4M1
-8-
<PAGE>
AGREED TO AND ACCEPTED:
INDEMNITEE:
Address:
------------------------------
-9-
<PAGE>
EXHIBIT 10.3
CREO PRODUCTS INC.
1996 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan are to attract
--------------------
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options (as
defined under Section 422 of the Code) or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall apply:
-----------
a) "Administrator" means the Board or any of its Committees appointed
-------------
pursuant to Section 4 of the Plan.
b) "Board" means the Board of Directors of the Company.
-----
c) "Code" means the United States Internal Revenue Code of 1986, as
----
amended.
d) "Committee" means a Committee appointed by the Board of Directors in
---------
accordance with Section 4 of the Plan.
e) "Common Shares" means the common shares in the capital of the Company.
-------------
f) "Company" means Creo Products Inc., a Canadian corporation.
-------
g) "Consultant" means any person who is engaged by the Company or any
----------
Parent or Subsidiary to render consulting or advisory services and is
compensated for such services. The term Consultant shall not include
directors who are not compensated for their services or are paid only a
director's fee by the Company.
h) "Continuous Status as an Employee or Consultant" means that the
----------------------------------------------
employment or consulting relationship with the Company or any Parent or
Subsidiary is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of:
(i) any leave of absence approved by the Company, including sick leave,
military leave, or any other personal leave; provided, however, that for
purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon the expiration of such leave is guaranteed by
contract (including certain Company policies) or statute; provided, further,
that on the ninety-first (91st) day of any such leave (where reemployment is
not guaranteed by contract or statute) the Optionee's
<PAGE>
Incentive Stock Option shall cease to be treated as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option;
or (ii) transfers between locations of the Company or between the Company,
its Parent, its Subsidiaries or its successor.
i) "Employee" means any person, including Officers and directors, employed
--------
by the Company or any Parent or Subsidiary of the Company. The payment of a
director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
j) "Exchange Act" means the United States Securities Exchange Act of 1934,
------------
as amended.
k) "Fair Market Value" means, as of any date, the value of Common Shares
-----------------
determined as follows:
i) If the Common Shares are listed on any established stock exchange or
a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if no sales
were reported, as quoted on such exchange or system for the last market
trading day prior to the time of determination) as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;
ii) If the Common Shares are quoted on the NASDAQ System (but not on
the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high bid and low asked prices for
the Common Shares or;
iii) In the absence of an established market for the Common Shares,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.
l) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code.
m) "IPO" means an initial public offering in any jurisdiction of
---
securities of the Company.
n) "Nonstatutory Stock Option" means an Option not intended to qualify as
-------------------------
an Incentive Stock Option.
<PAGE>
o) "Officer" means a person who is an officer of the Company within the
-------
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
p) "Option" means a stock option granted pursuant to the Plan.
------
q) "Optioned Shares" means the Common Shares subject to an Option.
---------------
r) "Optionee" means an Employee or Consultant who receives an Option.
--------
s) "Parent" means a "parent corporation", whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
t) "Plan" means this 1996 Stock Option Plan.
----
u) "Share" means a Common Share, as adjusted in accordance with Section 12
-----
below.
v) "Subsidiary" means a "subsidiary corporation", whether now or hereafter
----------
existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the
-------------------------
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 4,000,000 Common Shares. The shares may be authorized, but
unissued, or reacquired Common Shares.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan; provided, however, that Shares that have actually been
issued under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if unvested Shares
are repurchased by the Company at their original purchase price, and the
original purchaser of such Shares did not receive any benefits of ownership of
such Shares, such Shares shall become available for future grant under the Plan.
For purposes of the preceding sentence, voting rights shall not be considered a
benefit of Share ownership.
4. Administration of the Plan.
--------------------------
a) Plan Procedure.
--------------
i) Administration with Respect to Directors and Officers. With
-----------------------------------------------------
respect to grants of Options to Employees who are also Officers or
directors of the Company, the Plan shall be administered by (A) the
Board if the Board may administer the Plan in compliance with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-
3") with respect to a plan intended to qualify thereunder as a
discretionary plan, or (B) a
<PAGE>
Committee designated by the Board to administer the Plan, which
Committee shall be constituted in such a manner as to permit the Plan to
comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by
the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with
or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Rule 16b-3 with respect to a plan intended to qualify thereunder as a
discretionary plan.
ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
------------------------------
Plan may be administered by different bodies with respect to directors,
non-director Officers and Employees who are neither directors nor
Officers.
iii) Administration With Respect to Consultants and Other Employees.
--------------------------------------------------------------
With respect to grants of Options to Employees or Consultants who are
neither directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the
Board, which committee shall be constituted in such a manner as to
satisfy all applicable legal requirements relating to the administration
of incentive stock option plans, including, without limitation, those of
the Code, and of any applicable stock exchange (the "Applicable Laws").
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused, and
remove all members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by the Applicable Laws.
b) Powers of the Administrator. Subject to the provisions of the Plan and, in
---------------------------
the case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority, in its discretion:
i) to determine the Fair Market Value of the Common Shares, in
accordance with Section 2(k) of the Plan;
ii) to select the Consultants and Employees to whom Options may from
time to time be granted hereunder;
iii) to determine whether and to what extent Options are granted
hereunder;
<PAGE>
iv) to determine the number of Common Shares to be covered by each
such award granted hereunder;
v) to approve forms of agreement for use under the Plan;
vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time
or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or
the Common Shares relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;
vii) to determine whether and under what circumstances an Option may be
settled in cash under subsection 9(f) instead of Common Shares;
viii) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Shares covered
by such Option has declined since the date the Option was granted;
ix) to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan;
x) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
xi) to modify or amend each Option (subject to Section 13(b) of the
Plan), including the discretionary authority to extend the post-
termination exercisability period of options longer than is otherwise
provided for in the Plan;
xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously granted
by the Administrator;
xiii) to determine, and make rules and restrictions regarding, the
transferability of Options; and
xiv) to make all other determinations deemed necessary or advisable for
administering the Plan.
c) Effect of Administrator's Decision. All decisions, determinations and
----------------------------------
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.
<PAGE>
5. Eligibility.
-----------
a) Nonstatutory Stock Options may be granted to Employees and Consultants.
Incentive Stock Options may be granted only to Employees. An Employee or
Consultant who has been granted an Option may, if otherwise eligible, be
granted additional Options.
b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair
Market Value of the Shares underlying Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) in excess of
$100,000, such excess shall be treated as Nonstatutory Stock Options.
c) For purposes of Section 5(b), Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.
d) The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company's right
to terminate his or her employment or consulting relationship at any time,
with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to occur of
------------
its adoption by the Board of Directors or its approval by the shareholders of
the Company, as described in Section 17 of the Plan. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 11 of
the Plan.
7. Term of Option. The term of each Option shall be the term stated in the
--------------
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five years from the date of grant thereof or such shorter term
as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
a) The per share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
i) In the case of an Incentive Stock Option
<PAGE>
A. granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on the
date of grant.
B. granted to any Employee other than an Employee described in the
preceding paragraph, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.
ii) In the case of a Nonstatutory Stock Option, the per Share exercise price
shall be determined by the Administrator
b) The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator.
8. Exercise of Option.
------------------
a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
-----------------------------------------------
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the
terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Shares,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
<PAGE>
b) Termination of Employment or Consulting Relationship. If an Optionee's
----------------------------------------------------
Continuous Status as an Employee or Consultant terminates (but not in
the event of a change of status from Employee to Consultant (in which
case an Employee's Incentive Stock Option shall automatically convert to
a Nonstatutory Stock Option on the date three months and one day from
the date of such change of status) or from Consultant to Employee),
other than upon the Optionee's death or disability, the Optionee may
exercise his or her Option, but only to the extent that the Optionee was
entitled to exercise it at the date of termination and in no event later
than the expiration of the term of such Option. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire
Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
c) Disability of Optionee. In the event of termination of an Optionee's
----------------------
consulting relationship or Continuous Status as an Employee as a result
of his or her disability, Optionee may, but only within six months from
the date of such termination if such termination occurs after completion
by the Company of an IPO (and in no event later than the expiration date
of the term of such Option as set forth in the Option Agreement),
exercise the Option to the extent otherwise entitled to exercise it at
the date of such termination; provided, however, that if the Company
completes an IPO after such termination such Option shall terminate on
the date which is the later of the date of the IPO and the 180th day
after the date of termination of Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability.
If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option
such Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option on the day three months and one day following
such termination. To the extent that Optionee is not entitled to
exercise the Option at the date of termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time, but only within twelve (12) months
following the date of death where such date is after completion by the
Company of an IPO (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent that the Optionee was
entitled to exercise the Option at the date of death; provided, however,
that if the Company completes an IPO
<PAGE>
after such death such Option shall terminate on the date which is the
later of the date of the IPO and the first anniversary of the date of
death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the
Plan. If, after death, the Optionee's estate or a person who acquired
the right to exercise the Option by bequest or
<PAGE>
inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
e) Rule 16b-3. Options granted to persons subject to Section 16(b) of
----------
the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder
to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
f) Buyout Provisions. The Administrator may at any time offer to buy
-----------------
out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer
is made.
9. Non-Transferability of Options. Subject to any rules to the contrary
------------------------------
established by the Administrator, Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization or Merger.
----------------------------------------------------
a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of Common Shares covered by each
outstanding Option, and the number of Common Shares which have been
authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Common Share covered by
each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Common Shares resulting from a
share subdivision or consolidation, stock dividend, combination or
reclassification of the Common Shares, or any other increase or decrease in
the number of issued Common Shares effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of any class, or securities convertible into shares of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Common Shares subject to an Option.
b) Dissolution or Liquidation. In the event of the proposed dissolution or
--------------------------
liquidation of the Company, to the extent that an Option has not been
previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Administrator may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the
<PAGE>
Administrator and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Shares, including shares as to which
the Option would not otherwise be exercisable.
c) Merger. In the event of a merger of the Company with or into another
------
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If, in such event, the Option is not assumed or
substituted, the Option shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger, the option confers the right to purchase,
for each Optioned Share subject to the Option immediately prior to the
merger, the consideration (whether stock, cash, or other securities or
property) received in the merger by holders of Common Shares for each Common
Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Common Shares); provided, however,
that if such consideration received in the merger was not solely common
stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration
to be received upon the exercise of the Option for each Optioned Share
subject to the Option to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Shares in the merger.
11. Time of Granting Options. The date of grant of an Option shall, for all
------------------------
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
12. Amendment and Termination of the Plan.
-------------------------------------
a) Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend or discontinue, or terminate the Plan. To the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act or with Section
422 of the Code (or any other applicable law or regulation, including the
requirements of any exchange or quotation system on which the Common Shares
are listed or quoted), the Company shall obtain shareholder approval of any
Plan amendment in such a manner and to such a degree as required by the
applicable law, rule or regulation.
b) Effect of Amendment or Termination. Any such amendment or termination
----------------------------------
of the Plan shall not affect Options already granted, and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed
<PAGE>
otherwise between the Optionee and the Administrator, which agreement must
be in writing and signed by the Optionee and the Company.
13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
----------------------------------
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all applicable
laws, including, without limitation, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any applicable
laws, rules or regulations.
14. Reservation of Shares. The Company, during the term of this Plan, will at
---------------------
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
If the Optioned Shares covered by an Option exceeds, as of the date of
grant, the number of Shares which may be issued under the Plan without
additional shareholder approval, such Option shall be void with respect to such
excess Optioned Shares, unless shareholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 13(a) of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
15. Agreements. Options shall be evidenced by written agreements in such form
----------
as the Administrator shall approve from time to time.
16. Shareholder Approval.Continuance of the plan shall be subject to approval
--------------------
by the shareholders of the Company within twelve months before or after the date
the Plan is adopted. Such shareholder approval shall be obtained in the degree
and manner required under applicable law and the rules of any stock exchange
upon which the Common Shares are listed.
<PAGE>
CREO PRODUCTS INC.
NOTICE OF STOCK OPTION GRANT
Dear (FirstName) (LastName):
You have been granted an option (the "Option") to purchase common
shares of Creo Products Inc. (the "Company") as follows:
<TABLE>
<S> <C>
Date of Grant: (Date)
Exercise Price: (Price)
Number of Shares Granted: (No of Shares)
Option Number: (Option_Number)
Type of Option: Incentive Stock Option
Term/Expiration Date: Five years from Date of Grant
Exercise Schedule: The Option shall be exercisable at any time
prior to expiration or earlier termination.
Termination Period: Except as set out in Section 6 of the Stock
Option Agreement, if termination occurs
prior to the Company completing an IPO, the
Option shall be exercisable at any time
prior to the Expiration Date; provided that
if after such termination the Company
completes an IPO, the Option shall be
exercisable until the 30th day following
the date of completion of the IPO. If such
termination occurs after the Company
completes an IPO, the Option may be
exercised for up to 30 days after
termination of employment relationship
except as set out in Section 6 of the Stock
Option Agreement (but in no event later
than the Expiration Date).
</TABLE>
<PAGE>
THE OPTIONEE REPRESENTS THAT HE OR SHE IS CURRENTLY AN EMPLOYEE OF THE
COMPANY OR IS UNDER A CONTRACT TO PROVIDE SERVICES TO THE COMPANY. THE OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL
CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OR STATUS AS A
CONSULTANT OR OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY
WITH THE OPTIONEE'S OR THE COMPANY'S RIGHT TO TERMINATE THE OPTIONEE'S STATUS AS
A CONSULTANT OR EMPLOYMENT RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the Company's 1996 Stock Option Plan and the Stock
Option Agreement, all of which are attached and made a part of this document.
OPTIONEE: CREO PRODUCTS INC.
By:
- ------------------------ ----------------------------------
<FirstName> <LastName> Tom Kordyback
Date: Title: Chief Financial Officer
------------------- -----------------------
Date:
---------------
<PAGE>
CREO PRODUCTS INC.
NOTICE OF STOCK OPTION GRANT TO U.S. RESIDENT
Dear <FirstName> <LastName>:
You have been granted an option (the "Option") to purchase common shares of
Creo Products Inc. (the "Company") as follows:
<TABLE>
<S> <C>
Date of Grant: [DATE]
Exercise Price: [PRICE-PER-SHARE] CAD per share
Number of Shares Granted: <NoofShares>
Option Number <Option_Number>
Type of Option: Incentive Stock Option
Term/Expiration Date: Five years from Date of Grant
Exercise Schedule: The Option shall be exercisable at any time
prior to expiration or earlier termination.
Termination Period: Except as set out in Section 7 of the Stock
Option Agreement, if termination occurs
prior to the Company completing an IPO, the
Option shall be exercisable at any time
prior to the Expiration Date; provided that
if after such termination the Company
completes an IPO, the Option shall be
exercisable until the 30th day following the
date of completion of the IPO. If such
termination occurs after the Company
completes an IPO, the Option may be
exercised for up to 30 days after
termination of employment relationship
except as set out in Section 7 of the Stock
Option Agreement (but in no event later than
the Expiration Date).
</TABLE>
<PAGE>
THE OPTIONEE REPRESENTS THAT HE OR SHE IS CURRENTLY AN EMPLOYEE OF THE
COMPANY OR IS UNDER A CONTRACT TO PROVIDE SERVICES TO THE COMPANY. THE OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL
CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OR STATUS AS A
CONSULTANT OR OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY
WITH THE OPTIONEE'S OR THE COMPANY'S RIGHT TO TERMINATE THE OPTIONEE'S STATUS AS
A CONSULTANT OR EMPLOYMENT RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the Company's 1996 Stock Option Plan and the Stock
Option Agreement, all of which are attached and made a part of this document.
OPTIONEE: CREO PRODUCTS INC.
By:
- ------------------------ ------------------------------
<FirstName> <LastName> Tom Kordyback
Date: Title: Chief Financial Officer
------------------- -----------------------
Date:
---------------
<PAGE>
CREO PRODUCTS INC.
STOCK OPTION AGREEMENT
1. Grant of Option. CREO PRODUCTS INC. a Canadian corporation (the "Company"),
---------------
hereby grants to the Optionee named in the Notice of Grant (the "Optionee"), an
option (the "Option") to purchase a total number of Common Shares (the "Shares")
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price") subject to the terms, definitions and
provisions of the 1996 Stock Option Plan (the "Plan") adopted by the Company,
which is incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Option.
To the extent there is any inconsistency between the terms of this Agreement and
the terms of the Plan, the terms of the Plan shall govern.
If designated an Incentive Stock Option, this Option is intended to qualify as
an Incentive Stock Option as defined in Section 422 of the Code.
2. Exercise of Option. This Option shall be exercisable during its term in
------------------
accordance with the Exercise Schedule set out in the Notice of Grant and with
the provisions of Section 9 of the Plan as follows:
(i) Right to Exercise.
-----------------
(a) This Option may not be exercised for a fraction of a share.
(b) In the event of Optionee's death, disability or other termination
of employment, the exercisability of the Option is governed by Section 7
below, subject to the limitation contained in subsection 2(i)(c).
(c) In no event may this Option be exercised after the date of
expiration of the term of this Option, as set forth in the Notice of
Grant.
(ii) Method of Exercise. This Option shall be exercisable by written
------------------
notice in the form attached as Exhibit A which shall state the election
to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements
as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The written notice shall be accompanied by
payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied
by the Exercise Price.
<PAGE>
No Shares will be issued pursuant to the exercise of this Option unless such
issuance and such exercise complies with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall
be considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable pursuant to
--------------------------
the exercise of this Option have not been registered under the United States
Securities Act of 1933, as amended, at the time this Option is exercised, the
Optionee shall, concurrently with the exercise of all or any portion of this
Option, deliver to the Company his or her Investment Representation Statement in
the form attached to the Notice of Exercise.
4. Method of Payment. Payment of the Exercise Price shall be by cash or
-----------------
cheque.
5. Restrictions on Exercise. This Option may not be exercised until such time
------------------------
as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the United States Code of Federal Regulations as
promulgated by the United States Federal Reserve Board. As a condition to the
exercise of this Option, the Company may require the Optionee to make any
representation and warranty to the Company as may be required by any applicable
law or regulation.
6. Adjustments for Stock Splits, Recapitalizations.
-----------------------------------------------
(a) The Exercise Price and number of Shares subject to this Option (as
set forth on the Notice of Grant) shall be subject to adjustment as
follows: If the Company at any time (i) subdivides (by any stock split,
stock dividend or otherwise) the common shares of the Company into a
greater number of shares, the Exercise Price in effect immediately prior
to such subdivision will be proportionately decreased and the number of
Shares issuable shall be proportionately increased, or (ii) combines (by
consolidation or otherwise) the common shares of the Company into a
smaller number of shares, the Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of
Shares issuable shall be proportionately decreased.
(b) If at any time while this Option is outstanding there shall be any
reclassification or conversion of the common shares into the another
class of securities (other than a subdivision or combination of shares
provided for in the preceding paragraph), the Optionee shall thereafter
be entitled to receive, during the term hereof and upon payment of the
Exercise Price, the number of shares to which a holder of the common
-2-
<PAGE>
shares would have been entitled upon such reclassification or conversion
had the Optionee exercised this Option immediately prior to such
reclassification or conversion.
7. Termination of Option.
---------------------
(a) Upon Dissolution, Liquidation or Merger. In the event of the
---------------------------------------
proposed dissolution, liquidation or merger of the Company, the Board
shall notify the Optionee at least 15 days prior to such proposed
action. To the extent it has not been previously exercised, the Option
will terminate immediately prior to the consummation of such proposed
action.
(b) Upon Termination of Employment or Status as a Consultant. In the
--------------------------------------------------------
event of termination of Optionee's Continuous Status as an Employee or a
Consultant for any reason, including, without limitation, total and
permanent disability (as defined in Section 22(e)(3) of the Code), the
Optionee may, to the extent otherwise so entitled at the date of such
termination (the "Termination Date"), exercise this Option during the
Termination Period set out in the Notice of Grant. To the extent that
the Optionee was not entitled to exercise this Option at the date of
such termination, or if the Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
(c) Death of Optionee. In the event of the death of the Optionee,
-----------------
the Option may be exercised at any time, but only within 12 months
following the date of death where such date is after completion by the
Company of an IPO (but in no event later than the date of expiration of
this Option), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the
extent the Optionee could exercise the Option at the date of death;
provided, however, that if the Company completes an IPO after such death
such Option shall terminate on the date which is the later of the date
of the IPO and the first anniversary of the date of death.
8. Non-Transferability of Option. Subject to any rules to the contrary
-----------------------------
established by the Administrator, this Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
9. Restriction on Transfer.
-----------------------
(a) The Optionee agrees that following the date of the exercise of this
Option, he or she shall not effect any sale or transfer of the Shares
issued pursuant to such exercise without first obtaining the prior
written consent
-3-
<PAGE>
of the Board of Directors of the Company (or any committee designated
therefor), which consent shall be in the sole discretion of the Board.
(b) All transferees of Shares or any interest therein shall be required
as a condition of such transfer to agree in writing in the form
satisfactory to the Company that they will receive and hold such Shares
or interests subject to the provisions of this Stock Option Agreement
(the "Agreement"), including, insofar as applicable, the restriction on
resale set forth in this Section 9. Any sale or transfer of the
Company's Shares shall be void unless the provisions of this Agreement
are met.
(c) The restriction on resale imposed by this Section 9 shall terminate
on the second anniversary of the date of exercise of this Option. Upon
termination of the restriction, at the Optionee's request the Company
shall issue a new certificate representing the Shares without a legend
referring to such restriction.
10. Legends. Optionee understands and agrees that the Company shall cause the
-------
legends set forth below or legends substantially equivalent thereto, to be
placed upon any certificate(s) evidencing ownership of the Shares together with
any other legends that may be required by state or federal securities laws:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933".
"TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
PURSUANT TO THE ARTICLES OF THE COMPANY."
11. Term of Option. This Option may be exercised only within the term set out
--------------
in the Notice of Grant, and may be exercised during such term only in accordance
with the Plan and the terms of this Option. The limitations set out in Section 7
of the Plan regarding Options designated as Incentive Stock Options and Options
granted to more than ten percent (10%) shareholders shall apply to this option.
-4-
<PAGE>
12. Miscellaneous.
-------------
(i) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Province of British Columbia, and each of
the parties hereby submits to the non-exclusive jurisdiction of the courts
of that province.
(ii) Severability. Should any provision of this Agreement be determined by
------------
a court of law to be illegal or unenforceable, the other provisions shall
nevertheless remain effective and shall remain enforceable.
-5-
<PAGE>
EXHIBIT A
---------
EXERCISE NOTICE
---------------
CREO PRODUCTS INC.
3700 Gilmore Way
Burnaby, British Columbia
V5G 4M1
1. Exercise of Option. Effective as of today,_______________ , 19____, the
------------------
undersigned ("the Optionee") hereby elects to exercise the Optionee's option to
purchase _____________ common shares (the "Shares") in the capital of Creo
Products Inc. (the "Company") under and pursuant to the Company's 1996 Stock
Plan (the "Plan") and the Stock Option Agreement dated
_____________________
(the "Option Agreement").
2. Representations of the Optionee.
-------------------------------
(a) The Optionee acknowledges that the Optionee has received, read and
understood the Plan and the Option Agreement and agrees to abide by and be
bound by their terms and conditions.
(b) In the event the Shares being purchased pursuant to the exercise of
this Option have not been registered under the United States Securities Act
of 1933, as amended, at the time this Option is exercised, the Optionee
shall, concurrently with the exercise of all or any portion of this Option,
deliver to the Company his or her Investment Representation Statement in the
form attached hereto.
3. Rights as Shareholder. Subject to the terms and conditions of this
---------------------
Agreement, the Optionee shall have all of the rights of a shareholder of the
Company with respect to the Shares acquired hereunder from and after the date
that the Optionee delivers full payment of the Exercise Price until such time as
the Optionee disposes of the Shares.
4. Tax Consultation. The Optionee understands that the Optionee may suffer
----------------
adverse tax consequences as a result of the Optionee's purchase or disposition
of the Shares. The Optionee represents that the Optionee has consulted with any
tax consultants the Optionee deems advisable in connection with the purchase or
disposition of the Shares and that the Optionee is not relying on the Company
for any tax advice.
5. Successors and Assigns. The Company may assign any of its rights under this
----------------------
Agreement to single or multiple assignees, and this Agreement shall enure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
the Optionee and his or her heirs, executors, administrators, successors and
assigns.
<PAGE>
6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Province of British Columbia, and each of the
parties irrevocably submits to the non-exclusive jurisdiction of the courts of
that province.
7. Severability. Should any provision of this Agreement be determined by a
------------
court of law to be illegal or unenforceable, the other provisions shall
nevertheless remain effective and shall remain enforceable.
8. Further Instruments. The parties agree to execute such further instruments
-------------------
and to take such further action as may be reasonably necessary to carry out the
purposes and intent of this Agreement.
9. Delivery of Payment. The Optionee herewith delivers to the Company the full
-------------------
Exercise Price for the Shares.
10. Entire Agreement. The Plan, Notice of Grant/Option Agreement and, if
----------------
applicable, Investment Representation Statement are incorporated herein by
reference. This Agreement, the Plan, the Notice of Grant/Option Agreement and,
if applicable, Investment Representation Statement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and the Optionee with respect to the subject
matter hereof.
Submitted by:
Accepted by:
OPTIONEE: CREO PRODUCTS INC.
- --------------------------
Signature
By:
--------------------------
Its:
- -------------------------- --------------------------
Print Name
Address:
- -------
Address:
-------
- -------------------------- 3700 Gilmore Way
- -------------------------- Burnaby, B.C., V5G 4M1
-2-
<PAGE>
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : CREO PRODUCTS INC.
SECURITY : COMMON SHARES
AMOUNT :
DATE :
In connection with the purchase of the above-listed Shares, the undersigned the
Optionee represents to the Company the following:
(a) The Optionee is an employee of the Company or is under a contract
to provide services to the Company. The Optionee is aware of the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire the
Shares. The Optionee is acquiring the Shares for investment for the Optionee's
own account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the United States Securities Act of
1933, as amended (the "Securities Act").
(b) The Optionee understands that the Shares have not been registered
under the Securities Act, that no market presently exists for Shares, and that
the Shares may not be sold or transferred unless and until registered under the
Securities Act or unless, in the opinion of counsel, such transfer is exempt
from the registration requirements of the Securities Act.
(c) The Optionee acknowledges and understands that the Shares
constitute "restricted securities" under the Securities Act and have been issued
in reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of the Optionee's investment intent as
expressed herein. In this connection, the Optionee understands that, in the view
of the United States Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if the Optionee's representation was predicted
solely upon a present intention to hold these Shares for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Shares, or for a period of one
year or any other fixed period in the future. The Optionee further understands
that the Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. The Optionee further acknowledges and understands that the Company is
under no obligation to register the Shares.
<PAGE>
(d) The Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a nonpublic offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the Optionee,
such exercise will be exempt from registration under the Securities Act. In the
event the Company later becomes subject to the reporting requirements of Section
13 or 15(d) of the United States Securities Exchange Act of 1934, 90 days
thereafter securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144, including among
other things: (1) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the United States Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, and the amount of securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), if
applicable.
If the Company does not qualify under Rule 701 at the time of exercise
of the Option, then the Shares may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires among other things: (1)
the resale occurring not less than two years after the party has purchased, and
made full payment for, within the meaning of Rule 144, the securities to be
sold; and, in the case of an affiliate, or of a non-affiliate who has held the
securities less than three years, (2) the availability of certain public
information about the Company, (3) the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a "market
maker" (as that term is defined under the Securities Exchange Act of 1934), and
(4) the amount of securities being sold during any three month period not
exceeding the specified limitations stated therein, if applicable.
(e) The Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. The Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.
(f) The Optionee agrees, in connection with the Company's initial
public offering of the Company's securities, (1) not to sell, make short sale
of, loan, grant any options for the purchase of, or otherwise dispose of any
shares of capital
-2-
<PAGE>
stock of the Company held by the Optionee (other than those shares included in
the registration) without the prior written consent of the Company or the
underwriters at the time of the public offering; provided, however, that the
-------- -------
Optionees shall be relieved of the foregoing obligation unless
the officers and directors of the Company who own shares of the Company also
agree to similar restrictions. The Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records
(g) The Optionee understands and agrees that the Company shall cause
the legends set forth below or legends substantially equivalent thereto, to be
placed upon any certificate(s) evidencing ownership of the Shares together with
any other legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
(h) Stop-Transfer Notices. The Optionee agrees that, in order to
---------------------
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
-3-
<PAGE>
(i) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement the Company's Articles of
Incorporation or the Company's Bylaws or (ii) to treat as owner of such Shares
or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.
OPTIONEE
-----------------------
Signature
Date: , 19
----------- --
-4-
<PAGE>
EXHIBIT 10.4
Shareholders' Agreement
Creo Products Inc.
Dated April 29, 1994
As Amended:
November 21, 1994
June 30, 1995
November 2, 1995
March 22, 1996
May 1997
<PAGE>
THIS SHAREHOLDERS AGREEMENT made as of 29/th/ day of April, 1994.
AMONG:
CREO PRODUCTS INC., a company duly incorporated under the laws of Canada,
registered extraprovincially in the Province of British Columbia, and
having an office at 3700 Gilmore Way, Burnaby, British Columbia
(herein called the "Company")
OF THE FIRST PART
AND:
FEDERAL BUSINESS DEVELOPMENT BANK, incorporated by special Act of
Parliament of Canada, having its head office in the City of Montreal, in
the Province of Quebec
(herein called "FBDB")
OF THE SECOND PART
AND:
DANIEL GELBART AND KENNETH A. SPENCER
(herein collectively referred to as the "Founding Shareholders" and
individually referred to as "Gelbart" and Spencer", respectively)
OF THE THIRD PART
AND:
AMOS MICHELSON
(herein called "Michelson")
OF THE FOURTH PART
AND:
DAVID PRITCHARD
(herein called "Pritchard"; the Founding Shareholders, Michelson and
Pritchard are herein collective referred to as the "Management
Shareholders")
OF THE FIFTH PART
AND:
SVE STAR VENTURES ENTERPRISES NO. II LIMITED PARTNERSHIP (herein called
"STAR II"), SVE STAR VENTURES ENTERPRISES NO. III LIMITED PARTNERSHIP
(herein called "STAR III". SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED
PARTNERSHIP (herein called "STAR IIIA"), INTERSTOCK ANSTALT FUR VERMOGENS
UND TRUST VEWALTUNGEN (herein called "Interstock"), and UNICYCLE TRADING
COMPANY (herein called "Unicycle") (STAR II, STAR III, STAR IIIA,
Interstock, Unicycle and Shoham are herein called "STAR").
OF THE SIXTH PART
<PAGE>
-2-
W H ER E A S:
A. FBDB, the Management Shareholders and STAR are Shareholders of the Company.
B. The Company will carry on the business of manufacturing high technology,
advanced imaging products for commercial printers and mass data storage users;
C. The Company, FBDB, and the Management Shareholder, with the exception of
Michelson and Pritchard, entered into a Shareholder's Agreement on the 6th day
of September 1989 to govern the rights and obligations of the principal
Shareholders of the Company (the "FBDB Agreement");
D. On or about the 30th day of January, 1992, the Company entered into an
Agreement with Michelson to govern the rights and obligations of Michelson as a
principal Shareholder of the Company the(Michelson Agreement);
E. The parties hereto desire to determine how affairs of the Company will be
conducted and to record their respective rights and obligations.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the mutual covenants and agreements hereinafter set forth and
other good and valuable consideration (the receipt and adequacy of which are
hereby acknowledged), the parties hereto agree each with the other as follows:
ARTICLE 1
1.1 Definitions
Wherever used in this Agreement, the following words and terms will have
the meanings respectively ascribed to them as follows:
1.1.1 "Act" means the Canada Business Corporations Act, R.S.C. 1985, c. C-
44;
1.1.2 "Affiliate" means, with respect to any Shareholder which is a natural
person, any corporation (a) which is directly or indirectly Controlled by that
Shareholder, (b) which is wholly owned (beneficially and of record) and financed
(directly or indirectly) solely by such Shareholder and such Shareholder's
Family Members, and (c) as to which such Shareholder is the sole Person with the
right to vote as a shareholder, which right is not subject to any agreements or
promises of any kind by such Shareholder with or to any other Person:
1.1.3 "Agreement" means this Shareholder Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof;
<PAGE>
-3-
1.1.4 "Auditors" means the auditors of the Company from time to time, or
where the Company does not have auditors, its independent accountant;
1.1.5 "Average Shareholders Equity" means an amount as determined in
accordance with GAAP, by an unqualified opinion of the auditors of the Company,
for a fiscal year of the Company, which is the sum of:
(i) at the beginning of the applicable fiscal year, the total of:
(A) contributed surplus,
(B) share capital,
(C) retained earnings; and
(ii) the amount of the additional share capital issued prior to the
date of the determination and the end of the applicable fiscal
year, weighted to reflect the number of months the additional
share capital was issued during the fiscal year:
1.1.6 "Bank" means the banker of the Company from time to time;
1.1.7 "Board" means the board of directors of the Company from time to
time:
1.1.8 "Business Day" means a day other than a Saturday, Sunday or any day
on which the principal office of the Bank located in Vancouver, British
Columbia, is not open for business during normal banking hours;
1.1.9 "By-Laws" means the by-laws of the Company, as amended from time to
time;
1.1.10 "Ceo" means the chief executive officer of the Company;
1.1.11 "Control" or "Controls" means any of:
(i) the right to exercise a majority of the votes which may be
exercised at a general meeting of a corporation, including
votes which are exercisable only upon the occurrence of a
contingency where such contingency has occurred and is
continuing;
(ii) the right to elect or appoint directly or indirectly a
majority of the directors of the corporation or other persons
who have the right to manage or supervise the management of
the affairs and business of the corporation; or
(iii) the right, directly or indirectly, by contract or otherwise,
to manage or supervise all of the affairs and the business of
a Person.
<PAGE>
-4-
1.1.12 "Current Market Value" means the highest price available in an open
and unrestricted market between informed and prudent parties acting at arm's
length and under no compulsion to transact, expressed in terms of money or
money's worth;
1.1.13 "Employee Bonus" means a payment made to an employee of the
Company, other than Gelbart, Spencer, or Michelson, pursuant to Section 4.1.
1.1.14 "Employee Reserved Shares" means the 1,267,963 common shares in the
capital of the Company reserved or allotted for distribution to employees of the
Company and its subsidiaries as an incentive to productivity and performance;
1.1.15 "Excusable Delay" means any delay in the performance or observance
by any party of any obligation of such party hereunder which occurs as a
consequence of or is attributable to any circumstance which is beyond the
reasonable control of such party and which is not caused by any default or act
of commission or omission of such party and is not avoidable by the exercise of
reasonable effort or foresight by such party (excluding financial inability, but
including without limiting the generality of the foregoing, strikes or labor or
industrial disturbances, civil disturbances, acts, orders, legislation,
regulations or directives of any governmental or other public authorities, acts
of public enemies, war, riots, sabotage, blockades, embargoes, shortages of
materials and suppliers, shortages of labor, lightening, earthquakes, fire,
storms, hurricanes, floods, wash-outs, explosions, acts of God and delays caused
by any other party);
1.1.16 "Family Member" means a child, sibling or former spouse of the
applicable Shareholder or any person of the opposite sex to whom that person is
married or with whom that person is living in a conjugal relationship outside of
marriage;
1.1.17 "Fully Diluted Shares" means the issued and outstanding common
shares of the Company, including the Employee Reserved Shares, whether issued or
not';
1.1.18 "FBDB Agreement" means the agreement described in paragraph C to
the recital of this Agreement;
1.1.19 "GAAP" means those accounting principles which are recognized as
being generally acceptable in Canada from time to time as set forth in the
Handbook published by The Canadian Institute of Chartered Accountants;
1.1.20 "Investment" means all the right, title and interest of a
Shareholder in and to all of the Shares owned by such Shareholder.
1.1.21 "Investment Purchase Price" means the sum of the Share Purchase
Price for each kind and class of shares of the Company owned by a Shareholder;
1.1.22 "Michelson Agreement" means the agreement described in paragraph D
to the recital to this Agreement;
<PAGE>
-5-
1.1.23 "Net Profit" means the net profit of the Company for a fiscal year,
as determined in accordance with GAAP, by an unqualified opinion of the auditors
of the Company, provided that the following are fully expended during that
fiscal year:
(i) research and development costs,
(ii) interest costs, and
(iii) the aggregate of all Employee Bonuses declared that fiscal
year;
1.1.24 "Operating Profit" means Net Profit, plus:
(i) taxes (but excluding tax credits),
(ii) Employee Bonuses, and
(iii) extraordinary items;
1.1.25 "Person" means any individual, corporation, partnership, trustee or
trust or unincorporated association;
1.1.26 "Policies" means the life insurance policies owned from time to
time by the Company on the lives of the Management Shareholders;
1.1.27 "Related Companies" means subsidiaries of the Company and companies
directly or indirectly Controlled by or under common Control with the Company;
1.1.28 "Secretary" means at the relevant time the secretary of the
Company;
1.1.29 "Share Purchase Price" means, in relation to the shares of a
particular kind and class of shares of the Company owned by a Shareholder, the
amount which is the product of the number of shares of the particular kind and
class registered in the name of the Shareholder multiplied by the Current Market
Value per issued and outstanding share of the particular kind and class as of
the Valuation Date and which shall be based on the latest financial statements
of the Company, and determined by the Auditors in accordance with the following
principles:
(i) subject to the following subparagraphs of this definition,
GAAP will be consistently applied;
(ii) value attributed to goodwill will be zero;
(iii) no reduction or premium will be included as a result of a
minority or majority position;
(iv) declared but unpaid dividends will be included;
<PAGE>
-6-
(v) upon the death of a Management Shareholder, the life
insurance proceeds (if any) so received by the Company will
not be taken into account in the valuation of the
Shareholder's Common Share Purchase Price; and
(vi) the determination of the Auditors will be final and
conclusive;
1.1.30 "Shareholder" means FBDB, each of the Management Shareholders, and
each of the Persons comprising STAR, and the respective successors or permitted
assigns of each of the foregoing, and "Shareholders" means all of such entities
collectively; provided, however, that all of the Persons comprising STAR and any
---------
and all STAR Transferees (together with any Person or Persons (the "Other
Investors") purchasing shares of the Company or any Related Company pursuant to
Section 4.3 of the Share Purchase Agreement) shall be deemed to be a single
Person and their ownership of Shares (including any shares of the Company which
the Other Investors have acquired, or have a right to acquire, pursuant to
Section 4.3 of the Share Purchase Agreement) shall be aggregated for purposes of
this Section 1.1.30;
1.1.31 "Share Purchase Agreement" means that certain Share Subscription
and Purchase Agreement dated as of April __, 1994, by and among the Company and
STAR;
1.1.32 "Shares" means at the relevant time the common shares and the
preference shares in the capital of the Company issued and outstanding;
1.1.33 "STAR Transferee" means any Person which controls, is controlled
by, or is under common control with STAR II, STAR III, or STAR IIIA, or which is
managed by the Manager. The "Manager" means the Person which makes investment
decisions for STAR II, STAR III, or STAR IIIA, or any Person which controls, is
controlled by, or is under common control with, such Person. In addition to the
foregoing, for a period of six (6) months from the date of this Agreement, "STAR
Transferee" shall include (solely as to 20% of the Shares owned by STAR) any
Person or Persons engaged in the business of venture capital financing, which
Person or Persons shall be subject to the prior approval of the Company, such
approval not to be unreasonably withheld.
1.1.34 "Valuation Date" means with respect to the determination of a
Shareholder's Investment Purchase Price the last day of the month immediately
preceding the date of a Default as defined in Section 10.1.
1.2 Internal Reference
The terms "hereof", "hereto" and "hereunder" are similar expressions, mean
and refer to this Agreement and not to any particular Article or Section of this
Agreement.
<PAGE>
-7-
1.3 Including
The word "including", when following any general statement, term or matter,
shall not be construed to limit such general statement, term or matter to the
specified item or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as "without
limitation" or "but not limited to" or word of similar import) is used with
reference thereto but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of such
general statement, term or matter.
1.4 Computation of Time Periods
In this Agreement and any notice or other document delivered hereunder,
except where expressly otherwise provided, in the computation of a period of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to but
excluding".
1.5 Currency
Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in Canadian funds.
1.6 Headings
The index to this Agreement and the headings of the Articles hereof are
included for convenience only and do not form a part of this Agreement, nor are
they intended to be full or accurate descriptions of, or to interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof and
they will not affect its construction.
1.7 Accounting Terms
All accounting terms not defined in this Agreement will have those meanings
generally ascribed to them in accordance with GAAP, applied consistently.
1.8 Applicable Laws and Attornment
This Agreement will in all respects be governed by and be construed in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable in the Province of British Columbia. Each of the parties
hereto hereby irrevocably attorns to the jurisdiction of the courts of the
Province of British Columbia.
1.9 Number and Gender
Wherever the singular or the masculine is used herein the same will be
deemed to include the plural or the feminine or the body politic or corporate.
<PAGE>
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ARTICLE 2
THE FBDB AGREEMENT AND THE MICHELSON AGREEMENT
2.1 FBDB Agreement
The Company, FBDB and the Management Shareholders agree that this Agreement
shall be deemed to amend and replace the FBDB Agreement in its entirety, and
that the FBDB Agreement is terminated and of no further force or effect, from
and after the date of this Agreement.
2.2 Michelson Agreement
The Company, FBDB and the Management Shareholders agree that this Agreement
shall be deemed to amend and replace paragraphs 6, 7, 8, 9, 11, 14, 23, and 25
of the Michelson Agreement in their entirety, and that such paragraphs of the
Michelson Agreement are terminated and of no further force or effect, from and
after the date of this Agreement.
ARTICLE 3
CONDUCT OF THE AFFAIRS OF THE COMPANY
3.1 Implementation
Each Shareholder will vote an act at all times in its capacity as such, and
will use its best endeavours and take all such steps as may be reasonably within
its powers, so as to cause the Company to act in the manner contemplated by the
provisions of this Agreement and so as to implement fully the provisions of this
Agreement and to the extent, if any, which may be permitted by law, will cause
their nominees as directors of the Company so to act.
3.2 Composition of the Board
Notwithstanding any provisions of the Company's Certificate or Articles of
Incorporation or By Laws, each Shareholder will vote its Shares at all meetings
of shareholders at which it is represented so that the Board will be comprised
of six directors and so that one nominee of each of Spencer, Gelbart, Michelson,
FBDB, STAR, and the employees that hold shares granted from the Employee
Reserved Shares, is a director of the Company; provided, however, that the
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Shareholders may by unanimous agreement increase the number of directors to
seven or to eight and by unanimous agreement nominate directors to occupy the
vacancies so created. If a position on the Board is open for any reason
whatsoever, only the party (or parties) whose nominee formerly occupied that
position will be entitled to nominate a new director to fill that vacancy.
Notwithstanding the foregoing. If any party to this Agreement owns less that 3%
of the issued common shares, it will not have a right to nominate a director (or
to participate in the nomination of a director nominated by all of the
Shareholders), and in such case the number of directors on the Board will be
correspondingly reduced; provided, however, that for purposes of this Article 3,
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the
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shareholdings of STAR II, STAR III, STAR IIIA, Interstock, Unicycle, Shoham, and
any STAR Transferee (together with the shares which any Other Investor (as
defined in Section 1.1.30 hereof) has acquired, or has a right to acquire,
pursuant to Section 4.3 of the Share Purchase Agreement) shall be aggregated and
STAR II, STAR III, STAR IIIA, Interstock, Unicycle, Shoham, and any STAR
Transferee (along with such Other Investor) shall together be deemed to be a
single Shareholder. Whether or not FBDB nominates a Director to the Board of
Directors of the Company, during any time when FBDB is entitled to so nominate a
Director, FBDB shall have the right to send an additional Representative to
meetings of the Board of Directors, which Representative(s) shall be invited to
attend all Board meetings and shall receive all information and material
presented to the Board, as would a director. Notwithstanding anything in this
Section 3.2, in the event that a Management Shareholder is terminated as an
employee of the Company for Cause (as defined below), or voluntarily terminates
his employment with the Company, then he shall only be entitled to act as a
Director of the Company with the consent of a majority of the other Directors of
the Company, but in the absence of such consent he shall retain the right to
nominate a person other than himself to serve as a Director of the Company;
provided, however, that the nominee of such Management Shareholder to serve as a
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Director of the Company shall be subject to the approval of a majority of the
other Directors of the Company, such approval not to be unreasonably withheld.
For purposes of this Section 3.2, "Cause" shall mean (1) a breach of trust,
including for example, but without limitation, acts of moral turpitude, theft,
embezzlement, self-dealing; (2) a material breach by a Management Shareholder of
the terms of his employment agreement; or (3) any act of, or omission by, a
Management Shareholder which, in the reasonable judgment of the directors of the
Company, amounts to a serious failure by such Management Shareholder to perform
his responsibilities or functions or in the exercise of his authority, which
failure, in the reasonable judgment of the directors of the Company, rises to a
level of gross nonfeasance, misfeasance or malfeasance.
3.3 Removal of Director
If a director fails to vote and act as a director to carry out the
provisions of this Agreement, then the Shareholders will exercise their right as
shareholders of the Company and in accordance with the Articles remove that
nominee from the Board. The party (or parties) whose nominee formerly occupied
that position will be entitled to nominate a new director to fill that vacancy.
3.4 BY-laws
Unless otherwise provided herein, the conduct of the business of the
Company will be governed in accordance with the By-laws.
3.5 Quorum and Directors' Meetings
A quorum required for the transaction of business at a meeting of the Board
will be four directors (of which one must be a nominee either of FBDB or of
STAR), and there shall be a minimum of four Board meetings held at approximately
three month intervals during each fiscal year that this Agreement remains in
force.
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3.6 FBDB and STAR Directors Consent
The following matters will only be undertaken by the Company with the
consent of a majority of the directors of the Company which majority includes
the directors of the Company nominated by FBDB and STAR:
3.6.1 any increase or reduction in the capital of the Company or any
alteration of the Company's capital structure;
3.6.2 the declaration of dividends on the shares of the Company;
3.6.3 the redemption or purchase for cancellation or other retirement of
any of its securities;
3.6.4 any alteration of the Articles of Incorporation or By-laws of the
Company.
3.7 FBDB or STAR Directors Consent
The following matters will only be undertaken by the Company with the
consent of a majority of the directors of the Company which majority includes
either the director of the Company nominated by FBDB or the director of the
Company nominated by STAR:
3.7.1 the hiring or termination of the CEO, the President or any vice-
president of the Company;
3.7.2 any increase in the remuneration of any officers or directors of the
Company.
3.7.3 the issue of shares by the Company, with the exception of issuances
of Employee Reserved Shares to employees other than the Management Shareholders;
3.7.4 the consolidation, merger or amalgamation of the Company with any
other company, association, partnership or legal entity;
3.7.5 any transaction out of the ordinary course of the business of the
Company;
3.7.6 the incorporation of a Related Company;
3.7.7 any increase in the number of directors of the Company, except an
increase made to appoint a nominee of a Person who makes an investment in the
Company of not less than $500,000;
3.7.8 the expenditure by the Company of any amount in excess of $100,000
aggregate in any calendar year for the repurchase of shares of the Company.
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3.8 Allotments
Subject to the provisions of the applicable provincial or federal statutes
for such offering, the Company shall offer to each Shareholder a pro rata right
to purchase future shares allotted, provided the foregoing does not apply to any
allotment pursuant to:
3.8.1 rights of exchange or conversion attached to shares or other
securities of the Company;
3.8.2 an amalgamation;
3.8.3 a compromise or arrangement;
3.8.4 a dividend payable in shares;
3.8.5 the allotment of shares made pursuant to the terms of any agreement
between the Company and any employee or Director thereof (in the case of a
Director, only so long as such allotment is part of such Director's
compensation) effective during the period of employment or appointment and or at
the termination of the employment or the appointment of any such employee or
Director;
3.8.6 an allotment of any of the Employee Reserved Shares; or
3.8.7 an allotment of any shares issued pursuant to Section 6.4 of that
certain Share Subscription and Purchase Agreement of even date herewith by and
among the Company and STAR (the "Purchase Agreement") or pursuant to Section 4.3
of the Purchase Agreement.
3.9 Confidentiality of Private Affairs
No Shareholder will (while a Shareholder of or employed by the Company or
at any time thereafter) disclose to any Person not a Shareholder at the time of
disclosure, the private affairs of the Company or any of its Related Companies,
contracts or agreements of the Company or its Related Companies, the financial
position of the Company or its Related Companies (except that FBDB and STAR may,
in good faith, disclose the financial position of the Company to a creditor of
the Company, if acting in good faith FBDB or STAR forms the view that such
disclosure is in the best interests of the Company, or to a prospective
purchaser of its interest in the Company), any prospects of business of the
Company or its Related Companies which is not public knowledge and will not
(either while such Shareholder is a Shareholder of or employed by the Company or
at any time thereafter) use for its own purposes (except that FBDB and STAR
shall have the right to refer to their investment in the Company in their
publications and promotional material) or for any purposes other than those of
the Company and information he may acquire in relation to the business of the
Company or its Related Companies.
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3.10 Intellectual Property
The Company will cause each of the persons, whether employees of the
Company or consultants, as may from time to time be engaged by the Company to
assign to the Company any and all rights, patents and inventions arising out of
the work of such employees or consultants or arising out of the use of funds,
materials or facilities of the Company together with any product, process or
technique, the development of which arises directly or indirectly from the
development of the above-mentioned products.
3.11 Trade Secrets and Secret Information
All trade secrets and secret information (including trade secrets and
secret information discovered or developed by the Company or its Related
Companies) which the Shareholders or any of them may acquire respecting any
process, formula, plan, skill, research, equipment or method of doing business,
developed or being developed or used by or known to the Company or its Related
Companies while they are Shareholders of the Company or during their term of
employment with the Company shall at all times (both while they are Shareholders
of or employed by the Company and at all times thereafter) and for all purposes
be held for the Company in a fiduciary capacity and solely for the benefit of
the Company and the Shareholders and each of them covenants and agrees with each
of the parties hereto not to use (either while they are Shareholders of or
employed by the Company or at any time thereafter) for their own purposes any
trade secret or secret information aforesaid or disclose, divulge or communicate
orally, in writing or otherwise to any person or persons any trade secret or
secret information aforesaid. The CEO, in his discretion, shall determine which
of the employees of the Company shall be required to enter into an appropriate
formal secrecy agreement with respect to the trade secrets and secret
information of the Company.
3.12 Non-Competition
No Shareholder will, while a Shareholder of the Company, or at any time
during the period of two years from the date that such Shareholder ceases to be
a Shareholder of the Company, directly or indirectly, as principal, agent,
trustee, or through the agency of any incorporation, partnership, association or
agent or agency, within North America, Europe, or Japan:
3.12.1 solicit, encourage or suggest to any Shareholder or Shareholders or
employee or employees or agent or agents of the Company or its Related Companies
that such Shareholder or Shareholders or employee or employees or agent or
agents or any of them leave the employ of the Company or its Related Companies
or cease to act as its agent;
3.12.2 other than FBDB or STAR, engage in a line of business that is
competitive with the business now, or at any time while such Shareholder is
employed by or acts as a director of the Company, carried on by the Company; or
3.12.3 canvass or solicit any business, if doing so would in any way,
directly or indirectly, be detrimental to the business or best interest of the
Company, from any person
<PAGE>
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who shall at any time while such Shareholder was a Shareholder, have been a
client or customer of the Company or any of its Related Companies.
3.13 Books and Records
The Company shall at all times maintain at its head office proper books of
account, which shall contain accurate and complete records of all transactions,
receipts, expenses, assets and liabilities of the Company.
3.14 Reporting to the Board
The Company shall, and the Board of Directors shall cause the officers of
the Company to, prepare and provide to the Board, FBDB, and STAR:
3.14.1 within 30 days before the end of each fiscal year and at other
times as it may be prepared, a budget for the forthcoming 12-month period
comprising projected statement of income and expenses, cash flow projections and
pro forma balance sheet for the coming year;
3.14.2 within 30 days of the end of each month, unaudited financial
statements including a balance sheet as at the end of such month and statements
of income or loss, with comparatives to the preceding fiscal year and the budget
for the corresponding period;
3.14.3 within 90 days of the end of each fiscal year, audited financial
statements including without limitation a balance sheet prepared as at the end
of such year, and statements of income or loss, changes in financial position
and changes in retained earnings for such fiscal year, with comparatives to
the previous fiscal year;
3.14.4 within 30 days of each fiscal quarter, unaudited financial
statements including without limitation a balance sheet prepared as at the end
of such quarter, and statements of income or loss, changes in financial position
and changes in retained earnings for such fiscal quarter, with comparatives to
the previous fiscal quarter;
3.14.5 from time to time, as required by the Board a strategic plan for
the forthcoming 12-month period, within 60 days of receipt of a request for such
plan from the Board;
3.14.6 such other information, accounts, data and projections as any
director may reasonably request from time to time.
Each of FBDB and STAR reserves the right to receive additional information from
the Company and its auditors, which is reasonably required to understand better
the affairs of the Company. Any director in a representative capacity may pass
that and all other information received by him to the Shareholder he represents.
<PAGE>
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3.15 Notice of Shareholders Meetings
The Company will provide to all Shareholders not less than 21 days notice
in writing of any meeting of the Shareholders will be entitled to copies of
minutes of proceedings at Shareholders meetings.
3.16 Membership on Committees
3.16.1 The nominee director of STAR shall be appointed to the Compensation
Committee of the Company (the "Compensation Committee") and, if such Committee
is established, to any Finance Committee of the Company.
3.16.2 The nominee director of FBDB shall be appointed to the Compensation
Committee, the audit committee of the Company and, if such committee is
established, to any finance committee of the Company.
3.17 Boards Of Subsidiaries
The Board of Directors of any subsidiary of the Company which conducts, or
which is proposed to conduct, a material portion of the Company's business shall
be identical to the Board of Directors of the Company as from time to tome
constituted. The decision whether a subsidiary is conducting, or is proposed to
conduct, a material portion of the Company's business shall be made form time to
time by a majority of the Board of Directors of the Company which majority shall
include either the director nominated by FBDB or the director nominated by STAR.
The Board of Directors of any other subsidiary of the Company shall be comprised
as determined by the Board of Directors of the Company from time to time and
shall report quarterly to the Board of Directors of the Company.
ARTICLE 4
COMPENSATION COMMITTEE
4.1 Distribution of Bonuses and Employee Reserved Shares
The Company may pay an Employee Bonus to employees of the Company and its
subsidiaries, in such aggregate amount as the Company deems appropriate, and may
issue all or any portion of the Employee Reserved Shares, provided:
4.1.1 the Employee Bonus shall only be paid from funds which constitute
the Operating Profit for the applicable fiscal year;
4.1.2 the aggregate of all Employee Bonuses declared for the applicable
fiscal year shall not exceed 12% of the Base Amount (as defined below) and shall
be determined as follows:
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(a) Employee Bonuses shall be paid to all employees of the Company,
other than Spencer, Gelbart, and Michelson, in an aggregate amount which is 9%
of the Base Amount;
(b) Employee Bonuses may, at the sole discretion of the Company's
management, be paid to any employees of the Company, other than Spencer,
Gelbart, and Michelson, in an aggregate amount which is no greater than 3% of
the Base Amount;
(c) for purposes of this Section 4.1.2, the Base Amount in any fiscal
year shall be an amount equal to:
(i) Operating Profit, less
(ii) 12% of Average Shareholders Equity.
4.1.3 the Employee Reserved Shares may only be allotted and issued with
the consent of a majority of the Company's Board of Directors.
4.2 Limitation
No Employee Bonus may be declared to Spencer, Gelbart or Michelson, and no
Employee Reserved Shares may be issued to Spencer, Gelbart or Michelson by the
Company without the prior, written approval of the Compensation Committee which
approval must include the affirmative vote of the STAR nominee or the FBDB
nominee.
ARTICLE 5
RESTRICTIONS ON TRANSFER/RIGHT OF FIRST REFUSAL
5.1 Right of First Refusal
Except as otherwise expressly permitted in this Agreement, a Shareholder
wishing to sell, transfer or otherwise dispose of any of his Investment (the
"Offeror") will first offer to each of the other Shareholders (the "Others") by
notice in writing (the "Offer") delivered to the Others, the prior right to
purchase, receive or otherwise acquire such portion of the Investment of the
Offeror.
5.2 Contents of Offer
The Offer will state that the Offeror has determined to avail himself of
the provisions of this Article 5 and will set forth:
(a) the portion of the Investment offered for sale (the "Offered
Portion");
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(b) the price at which the Offeror offers to sell the Offered Portion;
(c) the terms and conditions of the sale;
(d) that the offer must either be accepted in its entirety or not at all
and that it is open for acceptance by the others for a period of 30
days after receipt of the Offer (the "Preliminary Period");
(e) in the event of a third party offer, a copy of such offer.
5.3 Pro Rata Acceptance of Offer
The Offer must initially be open for acceptance by the Others for a
Preliminary Period of 30 days after receipt of the Offer (the "Preliminary
Period"), within which they may elect to accept the Offer pro rata in accordance
with their respective shareholdings in the Company of the kind and class of
Shares included in the Offer.
5.4 Notice of Acceptance During Preliminary Period
Acceptance of the Offer by any of the Others during the Preliminary Period
will be by notice to the Offeror and by such acceptance an Other may specify any
additional portion of the Offered Portion offered for sale that such Other is
prepared to purchase in the event that any of the other; Others fails to accept
their pro rata proportion of the Offer (his "Specified Additional Portion").
5.5 Notice of Expiry of Preliminary Period
The Offeror will forthwith advise each of the Others by notice of the
extent to which the Offer has not been accepted upon the expiration of the
Preliminary Period.
5.6 Additional Acceptance Following Preliminary Period
To the extent the Offer has not been accepted in its entirety by the
Others within the Preliminary Period, such of the Others as have in their notice
of acceptance of the Offer specified a Specified Additional Portion (the
"Eligible Others") will be entitled prior to the expiration of an additional 30
days (the "Offering Period"), to accept such portion of the Investment as is
then available by notice to the Secretary. The portion of the Offered Portion
not accepted during the Preliminary Period will be divided between the Eligible
Others as may be agreed between them, and failing agreement, will be divided pro
rata as provided in Section 5.3 except that no Eligible Other may accept more
than his Specified Additional Portion of the Offered Portion except with the
unanimous consent of the Eligible Others. In the event that the pro rata share
of an Eligible Other is limited by his Specified Additional Portion as
aforesaid, that portion of his pro rata share in excess of his Specified
Additional Portion will be divided among the remaining Eligible Others where pro
rata shares do not exceed their Specified Additional Portions pro rata as
provided in Section 5.3.
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5.7 Notice to Offeror
Upon the expiration of the Offering Period, the Offeror will advise the
Offerees whether the Offer has been accepted in its entirety and if so, by whom.
5.8 Closing
5.8.1 In the event that the Offer has been accepted in its entirety, the
closing of the purchase and sale of the Offered Portion to the other
Shareholders shall take place promptly following the expiration of the Offering
Period.
5.8.2 Subject to Section 5.11, if the Offer is not wholly accepted within
the Offering Period, the Offeror may, within 90 days after the expiry of the
Offering Period, sell, transfer, or otherwise dispose of the Offered Portion to
any other Person (a "Third Party") for not less than the price and on no better
terms and conditions than as set out in the Offer. If a sale to a Third Party is
not completed within 90 days after expiry of the Offering Period, the provisions
of Sections 5.1 to 5.7 will again become applicable to any sale, transfer or
other disposition of the Offeror's Investment.
5.9 Agreement Binding on Third Party
No sale, transfer or disposition of an Investment permitted by Sections
5.8, 5.10, 5.11, or 5.12 will be made unless the Third Party (or other
transferee as described in such sections) has entered into an agreement with the
Others and the Company under which the Third Party agrees to be bound by and
will be entitled to the benefit of the provisions of this Agreement.
5.10 Transfer to Affiliate
Notwithstanding Section 5.1, any Shareholder may transfer or otherwise
dispose of the whole of its investment to any of its Affiliates, provided that
the Shareholder and the Affiliate enter into an agreement with the other
Shareholders and the Company to the effect that:
(a) the Affiliate will remain such so long as the Affiliate holds the
Investment or any part thereof;
(b) the Affiliate will otherwise be bound by and have the benefit of the
provisions of this Agreement as a Shareholder;
(c) prior to the Affiliate ceasing to be such, the Affiliate will transfer
its Investment back to the Shareholder or to another Affiliate of the
Shareholder (provided that the transferee Affiliate enters into an agreement
with the other Shareholders and the Company to the same effect as that entered
into by the transferor Affiliate).
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5.11 Transfers by Management Shareholders
(a) Except as provided in this Section 5.11, the Management Shareholders
may not sell, transfer or otherwise dispose of their Investment to any third
party except a Shareholder.
(b) In the event that STAR sells more than 50% of its Investment to third
parties other than STAR Transferees, the Management Shareholders may transfer
their Investments without regard to this Section 5.11, subject to the rights of
first refusal described above and to Article 6 hereof.
(c) In the event that the Company terminates without Cause (as defined in
Section 3.2 above) the employment of any management Shareholder, he may transfer
all of his Investment, subject to the rights of first refusal described above,
upon approval by the Company of the intended transferee, such approval not to be
unreasonably withheld. This Section 5.11 (c) shall not apply in the event that
the Company terminates with Cause the employment of any Management Shareholder
or in the event that any Management Shareholder voluntarily leaves the
employment of the Company.
(d) Notwithstanding the provisions of Section 5.11 (a), each Management
Shareholder may for a period of five (5) years from the date hereof transfer
Shares representing up to 20% of the number of Shares held by him on the date
hereof, and may during the period beginning two (2) years from the date hereof
and ending five (5) years from the date hereof transfer Shares representing up
to an additional 10% of the number of Shares held by him on the date hereof, and
may during the period beginning four (4) years from the date hereof and ending
five (5) years from the date hereof transfer Shares representing up to an
additional 10% of the number of Shares held by him on the date hereof, subject
in any such case to the rights of first refusal described above and to Article 6
hereof; provided, however, that the transfer under this Section 5.11 (d) of the
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first 6.7% of the number of Shares held by each Management Shareholder shall not
be subject to Article 6 hereof.
(e) Notwithstanding anything else set forth in this Agreement, each of the
Management Shareholders may freely sell, transfer or otherwise dispose of any of
the Investment to a Family Member, provided, however, that any such transfer
shall be subject to the voting rights of and for his shares remaining with and
being exercised solely by such Management Shareholder, and each of the
Management Shareholders covenant and agree to do such things and execute such
further assurances as may be necessary to assure compliance by such Family
Member of the provisions of this Section 5.11 (e); and provided further, that
-----------------
such Family Member shall be bound by all of the terms and conditions of this
Agreement as if he or she were a party hereto. Each of the Management
Shareholders agree that upon any such transfer, the Company shall have the
unfettered liberty to recognize only such Management Shareholder as having the
right to exercise the vote or votes attached to the transferred shares.
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(f) In the event that a Management Shareholder's Investment is transferred
upon his death to his heirs, such heirs shall be entitle to sell, transfer or
otherwise dispose of any portion of such Investment without regard to this
Section 5.11, but subject to the rights of first refusal described above.
(g) Each Management Shareholder agrees that this Section 5.11 applies to
Family Members and Affiliates to which any portion of a Management Shareholder's
Investment was transferred, sold, or otherwise disposed prior to the date of
this Agreement as if such transfer, sale, or other disposition took place after
the date of this Agreement.
(h) This Section 5.11 shall terminate upon the Company's initial public
offering of shares.
5.12 Transfers by Star
Notwithstanding anything else set forth in this Agreement, STAR may freely
sell, transfer or otherwise dispose of any of STAR's Investment to a STAR
Transferee.
5.13 Prohibition on Encumbrances
Except as specifically provided herein, no Shareholder will mortgage,
pledge, charge, hypothecate or otherwise encumber his Investment or any part
thereof without the prior written consent thereto of the Board.
5.14 Prohibition on Transfer by Defaulting Shareholder
Notwithstanding any other provision of this Agreement, no Shareholder will
be entitled to sell, transfer or otherwise dispose of any of his Investment in
accordance with Sections 5.1 to 5.13 of he is at such time a Defaulting
Shareholder as defined in Article 7, unless prior to or concurrent with such
sale, transfer or other disposition he ceases to be a Defaulting Shareholder.
5.15 FBDB
If FBDB is required by law to sell, transfer or otherwise dispose of all
or substantially all of its assets, FBDB may transfer or otherwise dispose of
all shares of the Company held by FBDB to any person provided that:
(a) such person has become party to this Agreement; and
(b) neither such person nor any of its associates or affiliates is engaged
in a business which competes with the business of the Company as then
constituted.
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5.16 Share Endorsement
Each of the Shareholders shall authorize and instruct the Company to
endorse on the face of each certificate the following:
"The shares represented by this certificate are transferable only in compliance
with and pursuant to the terms of an agreement among the Shareholders of CREO
Products Inc., made as of the 29/th/ day of April 1994."
5.17 Voting Rights
The endorsement of share certificates under Section 5.16 will not affect
the right of any Shareholder to vote the Shares held by him, to receive any
dividends paid thereon or to receive any amounts paid by the Company as a return
of capital or otherwise.
ARTICLE 6
PIGGYBACK
6.1 Subject to the procedures relating to the rights of first refusal
described in Article 5 above, if any Shareholder other than STAR (the "Seller")
shall wish to sell, exchange or transfer any of its shares (the "Subject
Shares") to any person other than a Shareholder (the "Buyer"), the Seller shall
give to the other Shareholders (including STAR) an equal right respectively, to
sell to the Buyer all or an equivalent portion, as the case may be, of their
shares at the same price and terms as are applicable to the Subject Shares.
6.2 The Seller shall give the other Shareholders 30 days written notice (the
"Piggyback Notice") of any intended sale, stating the Buyer, the number of
shares and the price and terms. Any other Shareholder may by written notice
(the "Acceptance") to the Seller not later than 20 days after receipt of the
Piggyback Notice elect to participate in such sale and include therein his
respective portion of the Subject Shares at the same price and on the same terms
specified in the Piggyback Notice. The Seller shall be free to sell the Subject
Shares to the Buyer at no lesser price and on no less favorable terms than
stated in the notice, provided that the Buyer must concurrently purchase any
Shares as to which the Seller has received an Acceptance, at the same price and
on the same terms applicable to the Subject Shares.
ARTICLE 7
REGISTRATION RIGHTS
7.1 Incidental Registration. If the Company shall elect to offer any of its
securities to the public, it shall give notice to the Shareholders of such
intention, and shall include in such offering a portion of the Shareholders'
Shares in each case equal to the total amount of shares registered, multiplied
by an amount derived by dividing the number of Shares held by such Shareholder,
by the total number of shares outstanding at that time. In the event the public
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offering involves an underwriting, the rights of the Shareholders hereunder
shall be conditional upon the underwriter's determination as to marketing
factors requiring the limitation of such right, and the underwriter may preclude
from the offering any or all securities which could have otherwise been included
in the offering.
7.2 Demand Registration. At any time commencing one year following the closing
of the Company's initial public offering, and for a period of five (5) years
thereafter, a Shareholder or Shareholders holding, in either case in the
aggregate at least 3% may request in writing that all or part of the requesting
parties' Shares shall be registered for trading on any securities exchange;
provided, however, that such request must cover Shares representing a market
- --------
value at the time of such request equal to a minimum of C$5,000,000. Within 20
days after receipt of any such request, the Company shall give written notice of
such request to the other Shareholders and shall include in such registration
all Shares held by them with respect to which the Company receives written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. Thereupon, the Company shall use its best efforts to affect the
registration of all Shares (as to which it has received requests for
registration) for trading on the securities exchange specified in the request
for registration. In the event the registration involves an underwriting, the
rights of the Shareholders hereunder shall be conditional upon the underwriter's
determination as to marketing factors requiring the limitation of such right,
and the underwriter may preclude from the offering any or all securities which
could have otherwise been included in the offering.
7.3 Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Shares pursuant to Section 7.1 shall be
selected by the Company, and the managing underwriters for any offering of
Shares pursuant to Section 7.2 shall be selected by the Shareholder delivering
the request for registration.
7.4 Expenses. All expenses incurred in connection with a registration under
Section 7.2 shall be borne by the selling Shareholders participating in such
registration on a pro rata basis; provided, however, that the Company shall pay
--------
any expenses associated with such registration which the Company would have
incurred in the ordinary course of business. All expenses incurred in
connection with a registration under Section 7.1 shall be borne by the Company;
provided, however, that each of the Shareholders participating in such
- --------
registration shall pay its pro rata portion of the fees, discounts or
commissions payable to any underwriter.
7.5 No Inconsistent Agreements. The Company will not hereafter enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Shareholders in this Article 7.
7.6 Indemnification. In the event any of the Shareholders' Shares are included
in a registration statement under this Article 7:
7.6.1 The Company will indemnify each Shareholder, each of its officers and
directors and partners and such Shareholder's separate legal counsel and
independent accountants, and each person Controlling such Shareholder, and each
underwriter, if any, and
<PAGE>
-22-
each person who Controls any underwriter, against all expenses (including legal
and accounting expenses), claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of any rule or regulation applicable to the Company in connection with
any such registration.
7.6.2 Each Shareholder will, if Shares held by such Shareholder are
included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers and its legal counsel
and independent accountants, each underwriter, if any, of the Company's shares
covered by such a registration statement, each person who Controls the Company
or such underwriter, and each other such Shareholder, each of its officers and
directors and each person Controlling such Shareholder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the obligations of each
Shareholder hereunder shall be limited to an amount equal to the proceeds to
each such Shareholder of shares sold as contemplated in this Article 7.
ARTICLE 8
INSURANCE POLICIES
8.1 Insurance on Shareholders
The Company will to the extent he is insurable, own and maintain the
Policies, which shall be payable to the Company, on the life of each of the
Management Shareholders (except Pritchard), each totalling not less than
$2,000,000 in amount, and may own and maintain Policies on the life of other
Shareholders who are natural persons for an initial term of two years. Within a
reasonable time prior to the expiration of the two year term, the Board will
determine whether or not to renew the Policies on such terms and for such
periods as the Board may deem advisable.
8.2 Maintain Policies
The Company will pay the premiums on the Policies as they become due and
maintain the Policies in good standing and in full force and effect so long as
the Shareholder remains such. If any premium is not paid by the Company within
thirty days after its due date, the Shareholder whose life (or whose
Representative's life) is insured under the Policy on which
<PAGE>
-23-
that premium is due will have the right to pay such premium and be reimbursed
therefor by the Company on demand.
8.3 Policy Information
The Company will authorize and direct the insurer under any of the Policies
to give the insured Shareholder or Representative, upon his written request, any
information he may request with respect to any Policy on his life.
8.4 No Dealing with Policies
The Company may apply dividends (if any) on the Policies toward the payment
of premiums thereon. Subject thereto, the Company will not, without the prior
written consent of the Shareholders, modify or impair any rights or values of
the Policies, or exercise any right of ownership in such Policies, except to
collect the death benefits thereof.
8.5 Sale of Policies
If, for any reason, this Agreement is terminated while the Shareholders or
any of them are still living, then each Shareholder will have the right to
purchase from the Company any of the Policies on his life maintained by the
Company for a purchase price equal to the cash surrender value of such Policies
and if there is no cash surrender value, the Policies may be purchased for a
purchase price of $1.00.
ARTICLE 9
DEATH OF A MANAGEMENT SHAREHOLDER
9.1 Nomination of Director
Each of the Shareholders agrees that, subject to Section 9.2, upon the
death of a Management Shareholder, the right of such Management Shareholder to
nominate a director shall devolve to the heir or heirs of such Management
Shareholder who become the owner or owners of such Management Shareholder's
shares of the Company; provided, however, that the nominee of such heir or heirs
--------
to serve as a Director of the Company shall be subject to the approval of a
majority of the other Directors of the Company, such approval not to be
unreasonably withheld.
9.2 Heirs Bound by this Agreement
Each of the Management Shareholders agree that the rights described in
Section 9.1 may not be exercised until such heir or heirs agree in writing to be
bound by all of the terms and conditions of this Agreement.
<PAGE>
-24-
ARTICLE 10
10.1 Events of Default
It is an event of a default (a "Default") if any Shareholder (the
"Defaulting Shareholder"):
10.1.1 fails to observe, perform or carry out any of his obligations
hereunder and such failure continues for 30 days after any of the Shareholders
not in default (the "Non-Defaulting Shareholder" individually and the "Non-
Defaulting Shareholders" collectively) has, by notice in writing delivered to
the Secretary and the Defaulting Shareholder (the "Default Notice"), demanded
that such failure be cured;
10.1.2 fails to take reasonable actions to prevent or defend assiduously,
any action or proceeding brought against him to effect the seizure, execution or
attachment of his Investment (or part thereof) or which claims any right to
possess, sell, foreclose, appoint a receiver or receiver-manager, or forfeit or
terminate any part of his Investment, and such failure continues for 30 days
after a Non-Defaulting Shareholder has in writing demanded that such reasonable
actions be taken or Defaulting Shareholder fails to defend successfully any such
action or proceeding; or
10.1.3 becomes a bankrupt, commits an act of bankruptcy, makes an
assignment for the benefit of creditors or otherwise has appointed a receiver or
receiver-manager of its assets.
10.2 Remedies for Default
In the event of a Default under Section 10.1, the Non-Defaulting
Shareholder(s) may by two-thirds majority agreement of the Non-Defaulting
Shareholders do any one or more of the following:
10.2.1 pursue any remedy available to them in law or equity, it being
acknowledged by each of the Shareholders that specific performance, injunctive
relief (mandatory or otherwise) or other equitable relief may be the only
adequate remedy for a Default;
10.2.2 take all actions in their own names or in the name of the Defaulting
Shareholder, the Shareholders or the Company as may reasonably be required to
cure the Default, in which event all payments, costs and expenses incurred
therefor will be payable by the Defaulting Shareholder to the Non-Defaulting
Shareholder(s) on demand with interest at the rate of interest quoted by the
Royal Bank of Canada as its prime rate (at the beginning of each quarter) plus
1%.
10.2.3 implement the buy-sell procedure set out in Section 10.3;
10.2.4 waive the Default provided, however, that any waiver of a particular
Default will not operate as a waiver of any subsequent or continuing Default.
<PAGE>
-25-
10.3 Buy-sell Procedure
If the event of Default under Section 10.1 is unremedied 30 days after
receipt of the Default Notice, then on such date the Defaulting Shareholder is
deemed to offer to sell to the Non-Defaulting Shareholders (the "Default Offer")
all (or such portion as to which Non-Defaulting Shareholders accept such offer)
of his Investment on the following terms and conditions:
10.3.1 The price payable for the Investment of the Defaulting Shareholder
will be the Investment Purchase Price, to be paid at closing, by certified
cheque or wire transfer to the Defaulting Shareholder.
10.3.2 Each Shareholder shall initially be entitled to purchase its pro
rata share of the Defaulting Shareholder's Shares.
10.3.3 Prior to a date which is 60 days after the date of the Default
Notice (the "Preliminary Period"), any Shareholder may notify the Defaulting
Shareholder and the Secretary in writing whether it intends to purchase its pro
rata share of the Defaulting Investor's Shares and may specify any additional
portion thereof that such Shareholder is prepared to purchase in the event that
any of the other Shareholders fails to accept their pro rata proportion of the
Offer (his "Specified Additional Portion").
10.3.4 Notice of Expiry of Preliminary Period
The Secretary will forthwith advise each of the Shareholders by notice of
the extent to which the Default Offer has not been accepted upon the expiration
of the Preliminary Period.
10.3.5 Additional Acceptance Following Preliminary Period
To the extent the Default Offer has not been accepted in its entirety by
the Shareholders within the Preliminary Period, such of the Shareholders as have
in their notice of acceptance of the Default Offer specified a Specified
Additional Portion (the "Eligible Others") will be entitled prior to the
expiration of an additional 30 days (the "Offering Period"), to accept such
portion of the Defaulting Shareholder's Shares as is then available by notice to
the Secretary. The portion of the Investment not accepted during the Preliminary
Period will be divided between the Eligible Others as may be agreed between
them, and failing agreement, will be divided pro rata, except that no Eligible
Other may accept more than his Specified Additional Portion of the Investment
except with the unanimous consent of the Eligible Others. In the event the pro
rata share of an Eligible Other is limited by his Specified Additional Portion
as aforesaid, that portion of his pro rata share in excess of his Specified
Additional Portion will be divided among the remaining Eligible Others where pro
rata shares do not exceed their Specified Additional Portions pro rata as
provided in Section 5.3.
<PAGE>
-26-
10.4 Acceptance Procedure
The closing of the purchase of the Investment, or any portion thereof, of
the Defaulting Shareholder will occur on the 30th day following the date of the
last acceptance in respect to the Offer, or, if that day is not a Business Day,
then on the next ensuing Business Day (or such other date as the parties thereto
may agree), at which time the Defaulting Shareholder will deliver his
resignation to the Board and as an officer, if applicable, the appropriate
parties will execute and deliver such certified cheques, promissory notes, share
certificates, instruments, conveyances, assignments, escrow agreements and
releases as may be reasonably required to effect and complete the sale.
ARTICLE 11
GENERAL PROVISIONS
11.1 Termination
This Agreement will terminate, except as provided in Section 11.2;
11.1.1 if the Company is dissolved or has a receiving order made against
it, goes into bankruptcy either voluntarily or involuntarily or makes a proposal
to its creditors;
11.1.2 if all the parties mutually consent in writing to its termination;
or
11.1.3 upon the listing of the Company's shares on a recognized public
stock exchange.
11.2 Continuing Obligations
The termination of this Agreement will not affect the obligations of any
Shareholder or the Company arising pursuant hereto prior to the date of
termination to make payment of any balance owing on the purchase price in
respect of any Investment as may have been agreed upon pursuant to this
Agreement.
11.3 Former Shareholders
Any Shareholder who has disposed of all of his Interest in compliance with
the provisions of this Agreement will be entitled to the benefit of and be bound
by only the rights and obligations which arose pursuant to this Agreement prior
to such disposition.
11.4 Further Assurances
The Shareholders will execute such further assurances and other documents
and instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.
<PAGE>
-27-
11.5 Entire Agreement, Modification and Waiver
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties with the exception of paragraphs 1, 2, 3, 4, 5, 10, 12, 13, 15, 16, 17,
18, 19, 20, 21, 22, and 24 of the Michelson Agreement. Except for such
paragraphs of the Michelson Agreement, there are no warranties, representations
or other agreements between the parties in connection with the subject matter
hereof except as specifically set forth herein. No supplement, modification or
waiver or termination of this Agreement shall be deemed or shall constitute a
waiver of any other provisions (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. Any
indulgence by or delay or omission by a party to exercise any right arising from
any default or omission will not affect or impair the rights of that party as to
any future default or omission.
11.6 No Partnership
Nothing in this Agreement shall be deemed in any way or for any purpose to
constitute any party a partner of any other party to this Agreement in the
conduct of any business or otherwise as a member of a joint venture or joint
enterprise with any other party to this Agreement.
11.7 Notices
Any notice required to be given hereunder shall be in writing and shall be
effectively given if (i) delivered personally, (ii) sent by prepaid courier
service, or (iii) sent by facsimile transmission, addressed as follows:
11.7.1 if to STAR
SMV STAR Ventures Management
Leopoldstr 28A
80802 Munich
Germany
Fax: 49-89-381-70555
Attention: Managing Director
-----------------------------
with a copy to:
Goldfarb, Levy, Eran & Co.
Beit Eliahu
2 Ibn Gvirol
Tel Aviv 64077
Israel
Fax: 972-3-695-4344
Attention: Oded Eran, Adv.
---------------------------
<PAGE>
-28-
11.7.2 if to the Company:
CREO Products Inc.
3700 Gilmore Way
Burnaby, B.C.
V5G 4M1
Fax: 604-437-9891
Attention: the Chief Executive Officer
---------------------------------------
11.7.3 if to FBDB:
Federal Business Development Bank
700 - 601 West Hastings Street
Vancouver, BC
V6B 5G9
Fax: 604-666-7650
Attention: Senior Manager
---------- --------------
Venture Capital Division
------------------------
with a copy to:
Federal Business Development Bank
4600 - 800 Victoria Square
Montreal, Quebec
H4Z 1L4
Fax: 514-283-7675
Attention: Legal Counsel
---------- -------------
Venture Capital Division
------------------------
11.7.4 if to Gelbart:
Daniel Gelbart
4987 Marguerite Street
Vancouver, BC
V5M 3J9
11.7.5 if to Spencer:
Kenneth A. Spencer
7432 Tamarind Drive
Vancouver, BC
V5S 3Z9
<PAGE>
-29-
11.7.6 if to Michelson:
Amos Michelson
2697 West 34th Street
Vancouver, BC
V6N 2J3
11.7.7 if to Pritchard:
David Pritchard
c/o CREO Products Inc.
3700 Gilmore Way
Burnaby, B.C., V5G 4M1
Fax: 604-437-9891
Any notice so given shall be deemed conclusively to have been given and received
when so personally delivered, on the second day following the sending thereof by
courier, or upon electronic confirmation of receipt of a facsimile transmission.
Any party hereto may change any particulars of its address for notice by notice
to the others in the manner aforesaid.
11.8 Time
Time will be of the essence hereof.
11.9 Enurement
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
11.10 Severability
If any one or more of the provisions contained in this Agreement is
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision or provisions will not
in any way be affected or impaired thereby in any other jurisdiction and the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.
11.11 Excusable Delay
Where a party is delayed in performing or observing a covenant or
obligation hereunder which is to be performed or observed by a specified date or
within a particular time by reason of Excusable Delay, the date or period of
time by or within which such party is to perform or observe such covenant or
obligation will be extended by a period of time equal to the duration of the
Excusable Delay.
<PAGE>
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11.12 Assignment
Except as expressly provided in this Agreement, no party may assign its
rights or obligations under this Agreement without the consent in writing of
each other party.
11.13 Counterparts
This Agreement may be executed by the parties in separate counterparts
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
11.14 Further Assurances
The parties hereto shall with reasonable diligence do all such things and
provide all such reasonable assurances as are required to consummate any
transaction contemplated hereby, and each party shall provide such further
documents or instruments reasonably required by any other party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions.
[Remainder of page intentionally left blank.]
<PAGE>
-31-
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first hereinabove set forth.
CREO PRODUCTS INC.
/s/ SIGNATURE
- -------------------------
Authorized Signatory
_________________________
Authorized Signatory
SVE STAR VENTURES
ENTERPRISES NO. II
LIMITED PARTNERSHIP
/s/ SIGNATURE
- -------------------------
Authorized Signatory
_________________________
Authorized Signatory
SVE STAR VENTURES
ENTERPRISES NO. III
LIMITED PARTNERSHIP
/s/ SIGNATURE
- -------------------------
Authorized Signatory
_________________________
Authorized Signatory
SVE STAR VENTURES
ENTERPRISES NO. IIIA
LIMITED PARTNERSHIP
/s/ SIGNATURE
- -------------------------
Authorized Signatory
_________________________
Authorized Signatory
<PAGE>
-32-
INTERSTOCK ANSTALT
FUR VERMOGENS UND
TRUST VEWALTUNGEN
/s/ SIGNATURE
- -------------------------
Authorized Signatory
UNICYCLE TRADING
COMPANY
/s/ SIGNATURE
- -------------------------
Authorized Signatory
/s/ DANIEL GELBART
- -------------------------
DANIEL GELBART
/s/ KENNETH A. PRITCHARD
- -------------------------
KENNETH A. SPENCER
/s/ AMOS MICHELSON
- -------------------------
AMOS MICHELSON
/s/ DAVID PRITCHARD
- -------------------------
DAVID PRITCHARD
FEDERAL BUSINESS
DEVELOPMENT BANK
/s/ SIGNATURE
- -------------------------
Authorized Signatory
_________________________
Authorized Signatory
<PAGE>
THIS AMENDMENT TO SHAREHOLDERS AGREEMENT made as of the 21st day of
November, 1994.
AMONG: CREO PRODUCTS INC., a company duly incorporated under the laws of
Canada, registered extraprovincially in the Province of British
Columbia, and having an office at 3700 Gilmore Way, Burnaby, British
Columbia (herein called the "Company")
OF THE FIRST PART
AND: FEDERAL BUSINESS DEVELOPMENT BANK, incorporated by special Act of
Parliament of Canada, having its head office in the City of Montreal,
in the Province of Quebec (herein called "FBDB")
OF THE SECOND PART
AND: DANIEL GELBART AND KENNETH A. SPENCER
(herein collectively referred to as the "Founding Shareholders" and
individually referred to as "Gelbart" and "Spencer", respectively)
OF THE THIRD PART
AND: AMOS MICHELSON
(herein called "Michelson")
OF THE FOURTH PART
AND: DAVID PRITCHARD
(herein called "Pritchard"; the Founding Shareholders, Michelson and
Pritchard are herein collectively referred to as the "Management
Shareholders")
OF THE FIFTH PART
AND: SVE STAR VENTURES ENTERPRISES NO. II LIMITED PARTNERSHIP (herein
called "STAR II"), SVE STAR VENTURES ENTERPRISES NO. III LIMITED
PARTNERSHIP (herein called "STAR III"), SVE STAR VENTURES ENTERPRISES
NO IIIA LIMITED PARTNERSHIP (herein called "STAR IIIA"), INTERSTOCK
ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN (herein called
"Interstock"), and UNICYCLE TRADING COMPANY (herein called
"Unicycle"),(STAR II, STAR III, STAR IIIA, Interstock, Unicycle and
Shoham are herein called "STAR"),
OF THE SIXTH PART
AND: EVERGREEN INTERNATIONAL INVESTMENTS N.V. (herein called "Evergreen"),
YAROK AZ Ltd. (herein called Yarok Az"), EVERGREEN CAPITAL MARKETS
LTD. (herein called "Capital Markets"), EVERGREEN CANADA-ISRAEL
MANAGEMENT LTD. (herein called "ECIM")(Evergreen, Yarok Az, Capital
Markets and ECIM are herein called the "Evergreen Group")
OF THE SEVENTH PART
<PAGE>
-2-
AND: GILDE INVESTMENT FUND B.V. (herein called "Gilde Investments") and
GILDE IV (herein called "Gilde IV") ( Gilde Investments and Gilde IV
are herein called "Gilde")
OF THE EIGHTH PART
AND MARIN INVESTMENTS LIMITED (herein called "Marin"), RAPHAEL AMIT
(herein called "Amit") and KENNETH MACCRIMMON and MARILYN MACCRIMMON
(herein jointly called "MacCrimmon")(Marin, Amit and MacCrimmon are
herein called the "Marin Group")
OF THE NINTH PART
W H E R E A S:
A. FBDB, the Management Shareholders, STAR,the Evergreen Group, Gilde and the
Marin Group are Shareholders of the Company.
B. The Company, FBDB, the Management Shareholders, and STAR entered into a
Shareholder Agreement on the 29th day of April 1994 to govern the rights and
obligations of the principal Shareholders of the Company (the "Shareholders
Agreement");
C. The parties hereto desire to make certain amendments to the Shareholders
Agreement to reflect the fact that the Evergreen Group, Gilde and the Marin
Group have become Shareholders of the Company.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the mutual covenants and agreements hereinafter set forth and
other good and valuable consideration (the receipt and adequacy of which are
hereby acknowledged), the parties hereto agree each with the other as follows;
1. Each of Evergreen, Yarok Az, Capital Markets, ECIM, Gilde Investments,
Gilde IV, Marin, Amit and MacCrimmon is hereby made a party to the Shareholders
Agreement as of the date of the Amendment to Shareholders Agreement, and each
of such parties agrees to be bound by all of the provisions of the Shareholders
Agreement to the extent such provisions are not amended hereby. The Company,
FBDB, the Management Shareholders, and STAR, agree that this Amendment of
Shareholders Agreement shall be deemed to amend the Shareholders Agreement as
more fully set forth herein. All of the parties to this Amendment to
Shareholders Agreement agree that, except to the extent it is amended hereby,
the Shareholders Agreement shall remain in full force and effect. All references
in the Shareholders Agreement to "the Agreement" or to "this Agreement" shall be
deemed to refer to the Shareholders Agreement as amended by this Amendment to
Shareholders Agreement.
2. Section 1.1.30 of the Shareholders Agreement is deleted, and in its
place is inserted the following language, subject to Section 14 of this
Amendment to Shareholders Agreement:
<PAGE>
-3-
1.1.30 "Shareholder" means FBDB, each of the Management
Shareholder, each of the Persons comprising STAR, each of the Persons
comprising the Evergreen Group, each of the Persons comprising
Gilde,each of the Persons comprising the Marin Group, and the
respective successors or permitted assigns of each of the foregoing,
and "Shareholders" means all of such entities collectively; provided,
--------
however, that all of the Persons comprising STAR and any and all STAR
Transferees (together with any Person or Persons (the "Other
Investors") purchasing shares of the Company or any Related Company
pursuant to Section 4.3 of the Share Purchase Agreement) shall be
deemed to be a single Person and their ownership of Shares (including
any shares of the Company which the Other Investors have acquired, or
have a right to acquire, pursuant to Section 4.3 of the Share Purchase
Agreement) shall be aggregated for purposes of this Section 1.1.3; and
provided further, however, all of the Persons comprising the Evergreen
--------
Group and all Permitted Transferees (as defined in Section 1.35) of
such Persons shall be deemed to be a single Person and their ownership
of Shares shall be aggregated for purposes of this Section 1.1.30; and
provided further, however, all of the Persons comprising Gilde and all
--------
Permitted Transferees of such Persons shall be deemed to be a single
Person and their ownership of Shares shall be aggregated for purposes
of this Section 1.1.30.
3. The following new section is added after Section 1.1.34 of the
Shareholders Agreement;
1.1.35 "Permitted Transferee" means any Person which controls, is
controlled by, or is under common control with any of the Persons
comprising the Evergreen Group or Gilde, or which is managed by the
Evergreen Manager or the Gilde Manager, provided, however, that
--------
"Permitted Transferees" shall include (a) as to not more than 18,080
Shares Morgan Holland Ventures Corp., and (b) as to not more than
18.080 Shares, any Person for which investment decisions are made by
Alan Adler. The "Evergreen Manager" means the Person which makes
investments decisions for Evergreen, Yarok Az, Capital Markets or
ECIM, or any Person which controls, is controlled by, or is under
common control with, such Person. The "Gilde Manager" means the Person
which makes investment decisions for Gilde, or any Person which
controls, is controlled by, or is under common control with, such
Person.
4. The following additional sentences are added at the end of
Section 3.2 of the Shareholder Agreement:
<PAGE>
-4-
Each of the Evergreen Group,Gilde, and the Marin Group shall have the
right to send a Representative of alternate to meetings of the Board
of Directors, which Representatives shall be invited to attend all
Board meetings and shall receive all information and material
presented to the Board as would a director. A Representative appointed
by FBDB, the Evergreen Group, Gilde or the Marin Group pursuant to
this Section 3.2 shall be known herein as a "Representative". A
Representative shall be bound by the same rules, obligations and
consequences as a Director respecting confidentiality, conflict of
interest and insider information. A Representative shall be entitled
to attend and observe all meetings of the Board of Directors. A
Representative shall have no votes at such meetings. A Representative
shall not be entitled to make representations on behalf of the Company
solely by virtue of his appointment as a Representative.
5. In Section 3.9 of the Shareholders Agreement, the words "the
Evergreen Group, Gilde, the Marin Group" are inserted following the word "FBDB"
in the fifth, sixth and eleventh lines of such Section.
6. In Section 3.12.2 of the Shareholders Agreement, the words "the
Evergreen Group, Gilde, the Marin Group," are inserted after the words "other
than FBDB".
7. In the preamble to Section 3.14 of the Shareholders Agreement, the
words "the Evergreen Group, Gilde, the Marin Group" are inserted after the words
"to the Board, FBDN".
8. The last two sentences of Section 3.14 of the Shareholders
Agreement (reading "Each of FBDB and Star reserves the right to receive
additional information from the Company and its auditors, which is reasonably
required to understand better the affairs of the Company. Any director in a
representative capacity may pass that and all other information received by him
to the Shareholder e represents,") are deleted and in their place is inserted
the following language:
Each of FBDB, the Evergreen Group, Gilde, the Marin Group, and STAR
reserves the right to receive additional information from the Company
and its auditors, which is reasonably required to understand better
the affairs of the Company. Any director and any Representative is a
representative capacity may pass that and all other information
received by him to the Shareholders he represents.
9. At the end of the first sentence of Section 3.17 of the
Shareholders Agreement, the following language is inserted:
(including the rights of the Representatives to attend meetings of
such Board of Directors and receive all information and material
presented to the Board)
<PAGE>
-5-
10. Section 5.11(b) of the Shareholders Agreement is deleted, and in its
place is inserted the following language:
(b) In the event that all of (a) STAR sells more than 50% of its
Investment to third parties other than STAR Transferees and (b) the
Evergreen Group sells more than 50% of its Investment to third parties
other than Permitted Transferees and (c) Gilde sells more than 50% of its
Investment to third parties other than Permitted Transferees and (d) the
Marin Group sells more than 50% of its Investment to third parties, the
Management Shareholders may transfer their Investments without regard to
this Section 5.11, subject to the rights of first refusal described above
and to Article 6 hereof.
11. In Section 5.16, the words "the 29th of April" are deleted and in
their place are inserted the words "the 21st of November".
12. The following new Sections are inserted following Section 5.17 of the
Shareholders Agreement:
5.18 Transfers by the Evergreen Group and Gilde
Notwithstanding anything else set forth in this Agreement, any Person
that is a member of the Evergreen Group or Gilde may freely sell, transfer
or otherwise dispose of any of its Investment to an Permitted Transferee.
5.19 Transfers by the Marin Group
Notwithstanding anything else set forth in this Agreement, any Person
that is a member of the Marin Group may freely sell, transfer or otherwise
dispose of any of its Investment to another member of the Marin Group.
13. In the second line of Section 6.1 of the Shareholders Agreement,
following the words "other than STAR" the following language is inserted: "the
Evergreen Group, Gilde, or the Marin Group", and in the fourth line of Section
6.1 of the Shareholders Agreement, following the words "including STAR", the
following language is inserted inside the parentheses:- "the Evergreen Group,
Gilde, and the Marin Group".
14. This Amendment to Shareholders Agreement shall be deemed to be in full
force and effect as of the date first hereinabove set forth as to all of the
parties hereto with the exception of Marin, and shall become effective as to
Marin upon Marin's execution and delivery of a counterpart hereof.
15. Following Section 11.7.7 of the Shareholders Agreement, three new
Sections are inserted as follows:
<PAGE>
-6-
11.7.8 If Evergreen, Yarok Az, Capital Markets, or ECIM:
Evergreen International Investments Ltd, N.V.
Top Tower, 20th Floor
Dizengoff Centre
Tel Aviv 64332 Isreal
Fax 972-3-525-5356
Attention: Directors
with a copy to:
Goldfarb, Levy, Eran & Co.
Belt Elahu
21bn Gvirel
Tel Aviv 64077 Isreal
Fax 972-3-695-4344
Attention: Oded Eran, Adv.
11.7.9 If to Glide
Glide Investments Funds
Newtonlaan 91
3584 BP Utrecht The Netherlands
Fax 31-30-54-00-04
Attention: Investment Director
11.7.10 If to Marin, Amit, or MacCrimmon
Marin Investments Limited
Suite 1950
700 West Georgia Street
Vancouver, BC, Canada
Fax (804) 681-5187
Attention: The President
with a copy to
Messrs, Ladner Downs
900 Waterfront Centre
200 Burrard Street
P.O. Box 48600
Vancouver, BC, Canada
V7X 1T1
Fax (604)687-1415
Attention: Tim Sehmer
<PAGE>
-7-
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the first hereinabove set forth.
CREO PRODUCTS INC.
/s/ SIGNATURE
- ---------------------
Authorized Signatory
/s/ DANIEL GELBART
- ---------------------
DANIEL GELBART
/s/ KENNET A. SPENCER
- ---------------------
KENETH A. SPENCER
/s/ AMOS MICHELSON
- ---------------------
AMOS MICHELSON
/s/ DAVID PRITCHARD
- -------------------
DAVID PRITCHARD
MARIN INVESTMENTS
LIMITED
/s/ SIGNATURE
- ---------------------
Authorized Signatory
/s/ RAFAEL AMIT
- ---------------------
RAFAEL AMIT
/s/ KENNETH A. MACCRIMMON
- -------------------------
KENETH A. MACCRIMMON
/s/ MARILYN MCCRIMMON
- ---------------------
MARILYN MACCRIMMON
FEDERAL BUSINESS
DEVELOPMENT BANK
- ---------------------
Authorized Signory
<PAGE>
THIS AMENDMENT TO SHAREHOLDERS AGREEMENT made as of the 30th day of
June, 1995,
AMONG:
CREO PRODUCTS INC., a company duly incorporated under the laws of
-------------------
Canada, registered extraprovincially in the Province of British
Columbia, and having an office at 3700 Gilmore Way, Burnaby, British
Columbia
(the "Company")
OF THE FIRST PART
AND:
FEDERAL BUSINESS DEVELOPMENT BANK, incorporated by special Act of
----------------------------------
Parliament of Canada, having its head office in the City of Montreal,
in the Province of Quebec
("FBDB")
OF THE SECOND PART
AND:
DANIEL GELBART
--------------
("Gelbart")
OF THE THIRD PART
AND:
KENNETH A. SPENCER
------------------
("Spencer")
OF THE FOURTH PART
AND:
AMOS MICHELSON
--------------
("Michelson")
OF THE FIFTH PART
-1-
<PAGE>
AND:
DAVID PRITCHARD
---------------
("Pritchard" and together with Gelbart and Michelson, the "Management
Shareholders")
OF THE SIXTH PART
AND:
SVE STAR VENTURES ENTERPRISES NO. II LIMITED
--------------------------------------------
PARTNERSHIP
-----------
("STAR II")
and
SVE STAR VENTURES ENTERPRISES NO. III LIMITED PARTNERSHIP
---------------------------------------------------------
("STAR III")
and
SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
----------------------------------------------------------
("STAR IIIA")
and
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST
------------------------------------------
VEWALTUNGEN
-----------
("Interstock")
and
UNICYCLE TRADING COMPANY
------------------------
("Unicycle")
and
D.G. DAN-GAL LTD.
-----------------
("Dan-gal")
-2-
<PAGE>
and
YOZMA VENTURE CAPITAL LTD.
--------------------------
("Yozma")
and
CASPAR SEEMAN
-------------
("Seeman")
and
FRITJOF REGEHR
--------------
("Regehr")
and
EDWARD R. GOLDBERG
------------------
("Goldberg")
and
JOCHEN MACKENRODT
-----------------
("Mackenrodt")
and
PRINZ MICHAEL VON LICHTENSTEIN
------------------------------
("Von Lichtenstein")
and
SOTIRIS TSOTOURAS
-----------------
("Tsotouras")
(STAR II, STAR III, STAR IIIA, Interstock, Unicycle, Dan-Gal, Yozma,
Seeman, Regehr, Goldberg, Mackenrodt, von Lichtenstein and Tsotouras
are herein called "STAR")
OF THE SEVENTH PART
-3-
<PAGE>
AND:
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
----------------------------------------
("Evergreen")
and
YAROK AZ LTD.
-------------
("Yarok Az")
and
EVERGREEN CAPITAL MARKETS LTD.
------------------------------
("Capital Markets")
and
FLB INVESTMENTS LTD.
--------------------
("FLB")
(Evergreen, Yarok Az, Capital Markets and FLB are herein
called the "Evergreen Group")
OF THE EIGHTH PART
AND:
GILDE INVESTMENT FUND B.V.
--------------------------
("Gilde Investments")
and
GILDE IV
--------
("Gilde IV")
(Gilde Investments and Gilde IV are herein called "Gilde")
OF THE NINTH PART
-4-
<PAGE>
AND:
MARIN INVESTMENTS LIMITED
-------------------------
("Marin")
and
RAPHAEL AMIT
------------
("Amit")
and
KENNETH MACCRIMMON and MARILYN MACCRIMMON
------------------ ------------------
(jointly called "MacCrimmon")
(Marin, Amit and MacCrimmon are herein called the "Marin
Group")
OF THE TENTH PART
AND:
QUALITY INVESTMENTS L.L.C.
--------------------------
("Quality")
OF THE ELEVENTH PART
WHEREAS:
A. The Company, FBDB, Spencer, the Management Shareholders and STAR
entered into a shareholders agreement on the 29th day of April, 1994 to govern
the rights and obligations of the principal shareholders of the Company, which
agreement was amended and additional parties added as of November 21, 1994 (such
agreement, as amended, is hereinafter referred to as the "Shareholders
Agreement");
B. The parties hereto desire to make certain amendments to the
Shareholders Agreement to reflect the resignation of Spencer from employment
with and management of the Company and to make certain other amendments;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the mutual covenants and agreements hereinafter set forth and
other good and valuable consideration (the receipt and adequacy of which are
hereby acknowledged), the parties hereto agree each with the other as follows:
-5-
<PAGE>
1. Parties
-------
The listing and description of the parties to the Shareholders
Agreement is amended to be identical to the listing and description of the
parties to this Agreement, and the changes are more specifically described as
follows:
(a) Gelbart and Spencer are referred to individually as the parties of the
Third Part and the Fourth Part, respectively, and the definition of
"Founding Shareholders" is deleted;
(b) The definition of "Management Shareholders" is amended to be limited
to Pritchard, Gelbart and Michelson;
(c) Dan-Gal, Yozma, Seeman, Regehr, Goldberg, Mackenrodt, von Lichtenstein
and Tsotouras are added as a part of the party of the Seventh Part;
(d) FLB is substituted as a party in the place of Evergreen Canada-Israel
Management Ltd.; and
(e) Quality is added as the party of the Eleventh Part.
2. New Parties
-----------
Each of Dan-Gal, Yozma, Seeman, Regehr, Goldberg, Mackenrodt, von
Lichtenstein, Tsotouras, FLB and Quality is hereby made a party to the
Shareholders Agreement as of the date of this Amendment to Shareholders
Agreement, and each of such parties agrees to be bound by all of the provisions
of the Shareholders Agreement to the extent such provisions are not amended
hereby. All of the original parties to the Shareholders Agreement agree that
this Amendment to Shareholders Agreement shall be deemed to amend the
Shareholders Agreement as more fully set forth herein. All of the parties to
this Amendment to Shareholders Agreement agree that, except to the extent it is
amended hereby, the Shareholders Agreement shall remain in full force and
effect. All references in the Shareholders Agreement to "the Agreement" or to
"this Agreement" shall be deemed to refer to the Shareholders Agreement as
amended by this Amendment to Shareholders Agreement.
3. Section 1.1.30
--------------
Section 1.1.30 of the Shareholders Agreement is amended:
(a) By adding the word "Spencer," after "FBDB," in the first line; and
(b) By adding the word "Quality," after "Marin Group," in line 5;
so that Section 1.1.30 now reads as follows:
-6-
<PAGE>
"1.1.30 "Shareholder" means FBDB, Spencer, each of the
Management Shareholders, each of the Persons comprising
STAR, each of the Persons comprising the Evergreen
Group, each of the Persons comprising Gilde, each of
the Persons comprising the Marin Group, Quality, and
the respective successors or permitted assigns of each
of the foregoing, and "Shareholders" means all of such
entities collectively; provided, however, that all of
--------
the Persons comprising STAR and any and all STAR
Transferees (together with any Person or Persons (the
"Other Investors") purchasing shares of the Company or
any Related Company pursuant to Section 4.3 of the
Share Purchase Agreement) shall be deemed to be a
single Person and their ownership of Shares (including
any shares of the Company which the Other Investors
have acquired, or have a right to acquire, pursuant to
Section 4.3 of the Share Purchase Agreement) shall be
aggregated for purposes of this Section 1.1.30; and
provided further, however, all of the Persons
--------
comprising the Evergreen Group and all Permitted
Transferees (as defined in Section 1.35) of such
Persons shall be deemed to be a single Person and their
ownership of Shares shall be aggregated for purposes of
this Section 1.1.30; and provided further, however, all
--------
of the Persons comprising Gilde and all Permitted
Transferees of such Persons shall be deemed to be a
single Person and their ownership of Shares shall be
aggregated for purposes of this Section 1.1.30."
4. Section 1.1.33
--------------
Section 1.1.33 of the Shareholders Agreement is deleted and in its
place is inserted the following language:
"1.1.33 "STAR Transferee" means:
(a) Any Person which Controls, is controlled
by, or is under common control with STAR
I1, STAR III, STAR IIIA or Dan-Gal;
(b) Any Person which is managed by a Manager;
and
(c) As to not more than 84,810 Shares, Seeman,
Regehr, Goldberg, Mackenrodt, Unicycle, yon
Lichtenstein, Tsotouras and/or Interstock.
A "Manager" means a Person which makes investment
decisions for any of STAR II, STAR III, STAR IIIA, Dan-
Gal or any Person which controls, is controlled by, or
is under common control with, such Person. As to
transfers by Yozma, a STAR
-7-
<PAGE>
Transferee shall also include STAR Management of
Investments (1993) Limited Partnership ("STAR Israel")
and the holders of partnership interests in STAR
Israel."
5. Section 1.1.35
--------------
Section 1.1.35 of the Shareholders Agreement is deleted and in its
place is inserted the following language:
"1.1.35 "Permitted Transferee" means any Person
which controls, is controlled by, or is under common
control with any of the Persons comprising the
Evergreen Group or Gilde, or which is managed by the
Evergreen Manager or the Gilde Manager; provided,
--------
however, that "Permitted Transferee" shall include (a)
as to note more than 18,080 Shares, Morgan Holland
Ventures Corp., (b) as to not more than 18,080 Shares,
any Person for which investment decisions are made by
Alan Adler, and (c) Tzina Investments Ltd. The
"Evergreen Manager" means the Person which makes
investment decisions for Evergreen, Yarok Az, Capital
Markets or FLB, or any person which controls, is
controlled by, or is under common control with, such
Person. The "Gilde Manager" means the Person which
makes investment decisions for Gilde, or any Person
which controls, is controlled by, or is under common
control with such Person."
6. Section 3.2
-----------
Section 3.2 of the Shareholders Agreement is amended by deleting the
word "Shoham" and adding the words "Dan-Gal and Yozma" after the word "Unicycle"
in lines 15/16 and line 19 so that Section 3.2 now reads as follows:
"3.2 Composition Of The Board
Notwithstanding any provisions of the Company's
Certificate or Articles of Incorporation or By Laws,
each Shareholder will vote its Shares at all meetings
of shareholders at which it is represented so that the
Board will be comprised of six directors and so that
one nominee of each of Spencer, Gelbart, Michelson,
FBDB, STAR, and the employees that hold shares granted
from the Employee Reserved Shares, is a director of the
Company; provided, however, that the Shareholders may
--------
by unanimous agreement increase the number of directors
to seven or to eight and by unanimous agreement
nominate directors to occupy the vacancies so created.
If a position on the Board is open for any reason
whatsoever, only the party (or parties)whose nominee
formerly
-8-
<PAGE>
occupied that position will be entitled to nominate a new
director to fill that vacancy. Notwithstanding the
foregoing, if any party to this Agreement owns less than 3%
of the issued common shares, it will not have a right to
nominate a director (or to participate in the nomination of
a director nominated by all of the Shareholders), and in
such case the number of directors on the Board will be
correspondingly reduced; provided, however, that for
--------
purposes of this Article 3, the shareholdings of STAR II,
STAR III, STAR IIIA, Interstock, Unicycle, Dan-Gal, Yozma,
Seeman, Regehr, Goldberg, Mackenrodt, yon Lichtenstein,
Tsotouras and any STAR Transferee (together with the shares
which any Other Investor (as defined in Section 1.1.30
hereof) has acquired, or has a right to acquire, pursuant to
Section 4.3 of the Share Purchase Agreement) shall be
aggregated and STAR II, STAR III, STAR IIIA, Interstock
Unicycle, Dan-Gal, Yozma, Seeman, Regehr, Goldberg,
Mackenrodt, yon Lichtenstein, Tsotouras and any STAR
Transferee (along with such Other Investor) shall together
be deemed to be a single Shareholder. Whether or not FBDB
nominates a Director to the Board of Directors of the
Company, during any time when FBDB is entitled to so
nominate a Director, FBDB shall have the right to send an
additional Representative to meetings of the Board of
Directors, which Representative(s) shall be invested to
attend all Board meetings and shall receive all information
and material presented to the Board, as would a director.
Notwithstanding anything in this Section 3,2, in the event
that a Management Shareholder is terminated as an employee
of the Company for Cause (as defined below), or voluntarily
terminates his employment with the Company, then he shall
only be entitled to act as a Director of the Company with
the consent of a majority of the other Directors of the
Company, but in the absence of such consent he shall retain
the right to nominate a person .other than himself to serve
as a Director of the Company; provided, however, that the
--------
nominee of such Management Shareholder to serve as a
Director of the Company shall be subject to the approval of
a majority of the other Directors of the Company, such
approval not to be unreasonably withheld. For purposes of
this Section 3.2, "Cause" shall mean (1) a breach of trust,
including for example, but without limitation, acts of moral
turpitude, theft, embezzlement, self-dealing; (2) a material
breach by a Management Shareholder of the terms of his
employment agreement; or (3) any act of, or omission by, a
Management Shareholder which, in the reasonable judgment of
the directors of the Company, amounts to a serious failure
by such Management Shareholder to perform his
responsibilities or
-9-
<PAGE>
functions or in the exercise of his authority, which
failure, in the reasonable judgment of the directors of the
Company, rises to a level of gross nonfeasance, misfeasance
or malfeasance. Each of the Evergreen Group, Gilde, and the
Mar/n Group shall have the right to send a Representative or
alternate to meetings of the Board of Directors, which
Representatives shall be invited to attend all Board
meetings and shall receive all information and material
presented to the Board as would a director. A Representative
appointed by FBDB, the Evergreen Group, Gilde or the Marin
Group pursuant to this Section 3.2 shall be known herein as
a "Representative". A Representative shall be bound by the
same rules, obligations and consequences as a Director
respecting confidentiality, conflict of interest and insider
information. A Representative shall be entitled to attend
and observe all meetings of the Board of Directors, and
shall be permitted to participate in a meeting of the Board
of Directors. A Representative shall have no vote at such
meetings. A Representative shall not be entitled to make
representations on behalf of the Company solely by virtue of
his appointment as a Representative."
7. SECTION 3.14
------------
The last sentence of Section 3.14 of the Shareholders Agreement shall
become a separate paragraph so that the last part of Section 3.14 (after Section
3.14.6) reads as follows:
"Each of FBDB, the Evergreen Group, Gilde, the Marin Group,
and STAR reserves the right to receive additional
information from the Company and its auditors, which is
reasonably required to understand better the affairs of the
Company.
Any director and any Representative in a representative
capacity may pass that and .all other information received
by him to the Shareholders he represents."
8. SECTION 5.16
------------
In Section 5.16, the words "the 21st of November, 1994" are deleted
and in their place are inserted the words "April 29, 1994 as amended by
agreements dated November 21, 1994 and June 30, 1995".
9. SECTION 5.18
------------
In Section 5.18, the word "an" is deleted and the word "a" is inserted
in its place.
-10-
<PAGE>
10. SECTION 5.19
------------
In Section 5.19, the word "Martin" is deleted and the word "Marin"
inserted in its place.
11. SECTION 5.20
------------
A new Section 5.20 is added to the Shareholders Agreement as follows:
"5.20 WAIVER
Notwithstanding any other provision of this Article 5,
each of the Others may waive by notice in writing delivered
to the Secretary of the Company the prior right to purchase;
receive or otherwise acquire such portion of the Investment
of the Offeror set out in Section 5.1."
12. SECTION 6.1
-----------
Section 6.1 of the Shareholders Agreement is deleted and in its place
is inserted the following language:
"6.1 Subject to the procedures relating to the rights of
first refusal described in Article 5 above, if any
Shareholder other than FBDB, STAR, the Evergreen Group,
Gilde, the Marin Group or Spencer (the "Seller") shall wish
to sell, exchange or transfer any of its shares (the
"Subject Shares") to any person other than a Shareholder
(the "Buyer"), the Seller shall give to the other
Shareholders (including FBDB, STAR, the Evergreen Group,
Gilde, the Marin Group and Spencer) an equal right
respectively, to sell to the Buyer all or an equivalent
portion, as the case may be, of their shares at the same
price and terms as are applicable to the Subject Shares.".
13. ARTICLE 9
---------
Sections 9.1 and 9.2 are deleted in their entirety and in their place
is inserted the following language:
"9.1 NOMINATION OF DIRECTOR
Each of the Shareholders agrees that, subject to
Section 9.2, upon the death of a Management Shareholder or
Spencer, the right of such Management Shareholder or Spencer
(as the case may be) to nominate a director shall devolve to
the heir or heirs of such Management Shareholder or Spencer
(as the case may be)who become the owner or owners of such
-11-
<PAGE>
deceased Shareholders' shares of the Company; provided,
--------
however, that the nominee of such heir or heirs to serve as
a Director of the Company shall be subject to the approval
of a majority of the other Directors of the Company, such
approval not to be unreasonably, withheld.
9.2 Heirs Bound by this Agreement
Each of the Management Shareholders and Spencer agrees
that the rights described in Section 9.1 may not be
exercised until such heir or heirs agree in writing to be
bound by all of the terms and conditions of this Agreement."
14. SECTION 11.7.1
--------------
Section 11.7.1 is amended by adding the following language:
"SVM STAR Venture Capital Management Ltd.
25 Lechi St.
Bnei Brak 52100
Israel
Fax: 972-3-618-0748
after the words "with a copy to:".
15. SECTION 11.7.8
--------------
Section 11.7.8 is amended by deleting "ECIM" in the first line and
inserting "FIB" in its place.
16. SECTION 11.7.10
---------------
Section 11.7.10 is amended by deleting "V7X 1T1", being the postal
code for Ladner Downs, and inserting "V7X 1T2" in its place.
17. SECTION 11.7.11
---------------
A new Section 11.7.11 is added to the Shareholders Agreement as
follows:
-12-
<PAGE>
"11.7.11 if to Quality:
Quality Investments L.L.C.
2746 Front Street N.E.
Salem, Oregon U.S.A.
97303
Attention: Mr. Richard Faith"
-----------------------------
18. SIGNATORIES
-----------
The signatories to the Shareholders Agreement are amended to be
identical to the signatories to this Agreement, which includes adding Dan-Gal,
Yozma, FLB and Quality as signatories and deleting Evergreen Canada-Israel
Management Ltd., as a signatory.
19. EFFECTIVE DATE
--------------
This Amendment to Shareholders Agreement shall be deemed to be in full
force and effect as of June 30, 1995 as to all of the parties hereto.
20. FACSIMILE COUNTERPARTS
----------------------
This Amendment to Shareholders Agreement may be executed in facsimile
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which facsimile counterparts together shall constitute the
same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
CREO PRODUCTS INC.
/s/ SIGNATURE
- ----------------------------------
Authorized Signatory
FEDERAL BUSINESS DEVELOPMENT BANK
__________________________________
Authorized Signatory
/s/ DANIEL GELBART
- ----------------------------------
DANIEL GELBART
-13-
<PAGE>
"11.7.11 if to Quality:
Quality Investments L.L.C.
2746 Front Street N.E.
Salem, Oregon U.S.A.
97303
Attention: Mr. Richard Faith"
-----------------------------
18. SIGNATORIES
-----------
The signatories to the Shareholders Agreement are amended to be
identical to the signatories to this Agreement, which includes adding Dan-Gal,
Yozma, FLB and Quality as signatories and deleting Evergreen Canada-Israel
Management Ltd., as a signatory.
19. EFFECTIVE DATE
--------------
This Amendment to Shareholders Agreement shall be deemed to be in full
force and effect as of June 30, 1995 as to all of the parties hereto.
20. FACSIMILE COUNTERPARTS
----------------------
This Amendment to Shareholders Agreement may be executed in facsimile
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which facsimile counterparts together shall constitute the
same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
CREO PRODUCTS INC.
_________________________________
Authorized Signatory
FEDERAL BUSINESS DEVELOPMENT BANK
/s/ Livia Mahler
- ---------------------------------
Authorized Signatory
_________________________________
DANIEL GELBART
-13-
<PAGE>
THIS AMENDMENT TO SHAREHOLDERS AGREEMENT made as of the 2nd day of
November, 1995,
AMONG:
CREO PRODUCTS INC., a company duly incorporated under
-------------------
the laws of Canada registered extraprovincially in the
Province of British Columbia, and having an office at
3700 Gilmore Way, Burnaby, British Columbia
(The "Company")
OF THE FIRST PART
AND:
BUSINESS DEVELOPMENT BANK OF CANADA, FORMERLY KNOWN AS
------------------------------------------------------
FEDERAL BUSINESS DEVELOPMENT BANK. incorporated by
---------------------------------
special Act of Parliament of Canada having its head
office in the City of Montreal, in the Province of
Quebec
("FBDB")
OF THE SECOND PART
AND:
DANIEL GELBART
--------------
("Gelbert")
OF THE THIRD PART
AND:
KENNETH A. SPENCER
------------------
("Spencer")
OF THE FOURTH PART
AND:
AMOS MICHELSON
--------------
("Michelson")
OF THE FIFTH PART
AND:
DAVID PRITCHARD
---------------
("Pritchard" and together with Gelbart and Michelson,
the "Management Shareholders")
OF THE SIXTH PART
AND:
SVE STAR VENTURES ENTERPRISES NO. II LIMITED PARTNERSHIP
--------------------------------------------------------
("STAR II")
and
SVE STAR VENTURES ENTERPRISES NO. III LIMITED PARTNERSHIP
---------------------------------------------------------
("STAR III"
1
<PAGE>
and
SVE STAR. VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
------------------------------------------------------------
("STAR IIIA")
and
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN
------------------------------------------------------
("Interstock")
and
UNICYCLE TRADING COMPANY
------------------------
("Unicycle")
and
D.G. DAN-GAL LTD.
-----------------
("Dan-Gal")
and
YOZMA VENTURE CAPITAL LTD.
-------------------------
("Yozma")
And
SVM STAR VENTURES MANAGEMENT GMBH NO. 3,
---------------------------------------
("Star Management")
and
CASPAR SEEMAN
-------------
("Seeman")
and
FRITJOF REGEHR
--------------
("Regehr")
and
2
<PAGE>
EDWARD R. GOLDBERG
------------------
("Goldberg")
and
JOCHEN MACKENRODT
-----------------
("Mackenrodt")
and
PRINZ MICHAEL VON LICHTENSTEIN
------------------------------
("Von Lichtenstein")
and
SOTIRIS TSOTOURAS
-----------------
("Tsotouras")
(STAR II, STAR III, STAR IIIA, Interstock,' Unicycle,
Dan-Gal, Yozma, Star Management, Seeman, Regehr,
Goldberg, Mackenrodt, von Lichtenstein and Tsotouras
are herein called "STAR")
OF THE SEVENTH PART
AND:
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
----------------------------------------
("Evergreen")
and
YAROK AZ LTD,
-------------
("Yarok Az")
and
EVERGREEN CAPITAL MARKETS LTD.
------------------------------
("Capital Markets")
and
3
<PAGE>
FLB INVESTMENTS LTD.
--------------------
("FLB")
(Evergreen, Yarok Az, Capital Markets and FLB are
herein called the "Evergreen Group")
OF THE EIGHTH PART
AND
GILDE INVESTMENT FUND B.V.
--------------------------
("Gilde Investments")
and
GILDE IV. B.V.
--------------
("Gilde Iv")
(Gilde Investments and Gilde IV are herein called
"Gilde")
OF THE NINTH PART
AND:
MARIN INVESTMENTS LIMITED
-------------------------
("Marin")
and
RAPHAEL AM1T
------------
("Amit")
and
KENNETH MACCRIMMON AND MARILYN MACCRIMMON
------------------- ------------------
(jointly called "Maccrimmon")
(Marin, Amit and MacCrimmon are herein called the
"Marin Group")
OF THE TENTH PART
AND:
QUALITY INVESTMENTS L.L.C.
--------------------------
("Quality")
OF THE ELEVENTH PART
4
<PAGE>
AND
G S CAPITAL PARTNERS II L.P.
----------------------------
("G S Capital")
and
G S CAPITAL PARTNERS II OFFSHORE, L.P.
--------------------------------------
("G S Offshore")
and
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
-------------------------------------
("Goldman Gmbh")
and
STONE STREET FUND 1995, L.P.
----------------------------
("Stone Street")
and
BRIDGE STREET FUND 1995, L.P.
-----------------------------
("Bridge Street")
(G S Capital, G S Offshore, Goldman Gmbh, Stone Street and Bridge
Street are herein called the "Goldman Sachs Group")
OF THE TWELFTH PART
WHEREAS:
A. The Company, FBDB, Spencer, the Management Shareholders and
STAR entered into a shareholders agreement on the 29th day of April,
1994 to govern the rights and obligations of the principal
shareholders of the Company, which agreement was amended and
additional parties added as of November 21, 1994 and which was
subsequently amended and additional parties added as of June 30, 1995
(such agreement, as amended, is hereinafter referred to as the
"Shareholders Agreement");
B. The parties hereto desire to make certain amendments to the
Shareholders Agreement to reflect the fact that Star Management and
the Goldman Sachs Group have become Shareholders of the Company.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the premises and of the mutual covenants and agreements hereinafter
set forth and other good and valuable consideration (the receipt and
adequacy of which are hereby acknowledged), the parties hereto agree
each with the other as follows:
5
<PAGE>
1. Parties
-------
The listing and description of the parties to the Shareholders
Agreement is amended to be identical to the listing and description of the
parties to this Agreement, and the changes are more specifically described as
follows:
(a) The name "Federal Business Development Bank" is changed to "Business
Development Bank of Canada;
(b) Star Management is added as a part of the party of the Seventh Part;
and
(c) Goldman Sachs Group is added as the party of the Twelfth Part.
2. New Parties
-----------
Each of Star Management, G S Capital, G S Offshore, Goldman Gmbh,
Stone Street and Bridge Street is hereby made a party to the Shareholders
Agreement as of the date of this Amendment to Shareholders Agreement, and each
of such parties agrees to be bound by all of the provisions of the Shareholders
Agreement to the extent such provisions are not amended hereby. All of the
original parties to the Shareholders Agreement agree that this Amendment to
Shareholders Agreement shall be deemed to amend the Shareholders Agreement as
more fully set forth herein. All of the parties to this Amendment to
Shareholders Agreement agree that, except to the extent it is amended hereby,
the Shareholders Agreement shall remain in full force and effect. All references
in the Shareholders Agreement to "the Agreement" or to "this Agreement" shall be
deemed to refer to the Shareholders Agreement as amended by this Amendment to
Shareholders Agreement.
3. Section 1.1.2
-------------
Section 1.1.2 of the Shareholders Agreement is deleted and the
following substituted:
"Affiliate" means
(i) with respect to any Shareholder which is a
natural person, any corporation (a) which is
directly or indirectly Controlled by that
Shareholder, (b) which is wholly owned
(beneficially and of record) and financed
(directly or indirectly) solely by such
Shareholder and such Shareholder's Family Members,
and (c) as to which such Shareholder is the sole
Person with the right to vote as a shareholder,
which right is not subject to any agreements or
promises of any kind by such Shareholder with or
to any other Person; and
(ii) with respect to any Shareholder which is a
body corporate, as defined in the Act, trust, or
partnership, a Person that directly, or indirectly
through one or more intermediaries, controls or is
controlled by, or is under common control with,
the Shareholder.
6
<PAGE>
4. Section 1.1.14
--------------
The Shareholders Agreement is amended by deleting section 1.1.14 and
substituting the following:
"Employee Reserved Shares" means the 2,136,090 common
shares in the capital of the Company distributed to the
employees of the Company and its subsidiaries as an
incentive to productivity and performance, and the
60,000 common shares which the Board of Directors has,
at the date of this Agreement, agreed to issue to
employees of the Company and its subsidiaries as an
incentive to productivity and performance."
5. Section 1.1.17
--------------
The Shareholders Agreement is amended by deleting section 1.1.17.
6. Section 1.1.30
--------------
The Shareholders Agreement is amended by deleting section 1.1.30 and
substituting the following:
"1.1.30 "Shareholder" means FBDB, Spencer, each of
the Management Shareholders, each of the Persons
comprising STAR, each of the Persons Comprising the
Evergreen Group, each of the Persons comprising Gilde,
each of the Persons comprising the Marin Group,
Quality, each of the Persons comprising the Goldman
Sachs Group, and the respective successors or permitted
assigns of each of the foregoing; provided, however,
that all of the Persons comprising STAR and any and all
STAR Transferees (together with any Person or Persons
(the "Other Investors") purchasing shares of the
Company or any Related Company pursuant to section 4.3
of the Share Purchase Agreement) shall be deemed a
single Person and their ownership of Shares (including
any shares of the Company which the Other Investors
have acquired, or have a right to acquire, pursuant to
Section 4.3 of the Share Purchase Agreement) shall be
aggregated for the purposes of this Section 1.130; and
provided further, however, all of the Persons
comprising the Evergreen Group and all Permitted
Transferees (as defined in Section 1.35) of such
Persons shall be deemed to be a single Person and their
ownership of Shares shall be aggregated for the
purposes of this Section 1.1.30; and provided further,
however, all of the Persons comprising Gilde and all
Permitted Transferees of such Persons shall be deemed
to be a single Person and their ownership of Shares
shall be aggregated for purposes of this Section
1.1.30."
7. Section 1.1.33
--------------
Section 1.1.33 of the Shareholders Agreement is amended by inserting
the words "Star Management" after the words "STAR III A" in paragraph (a), and
the words "STAR Management," after the words "STAR III A" in the definition of
"Manager".
7
<PAGE>
8. Section 3.2
-----------
Section 3.2 of the Shareholders Agreement is deleted and the following
substituted:
"3.2.1 Notwithstanding any provisions of the Company's
Certificate or Articles of Incorporation or By Laws, each
Shareholder will vote its Shares at the meeting of
shareholders of the Company next following the date of
execution of this Agreement in favour of all resolutions
required to amend the Articles of the Company to
3.2.1.1 increase the maximum number of
directors to nine; and
3.2.1.2 authorize the directors to appoint up
to two directors who shall hold office for a
term expiring not later than the close of the
next annual meeting of the shareholders of the
Company.
3.2.2 From the date of execution of this Agreement until
the maximum number of directors has been increased to nine
the board of directors:
3.2.2.1 shall be comprised of seven directors,
who shall include a nominee of each of Spencer,
Gelbart, Michelson, FBDB, STAR, and the
employees that hold shares granted from the
Employee Reserved Shares.
3.2.2.2 shall not, nor shall any Committee of
the Board, consider, authorise, approve or
decide upon any matter affecting the business,
assets, finances or undertaking of the Company,
the terms of employment or compensation of any
senior officer, or any other matter falling
within the jurisdiction of the board of
directors or any Committee thereof (other than
the approval of the financial statements of the
Company for the year ended September 30, 1995
and, provided that unless a nominee of the
Goldman Sachs Group is at the time a director,
a representative of the Goldman Sachs Group has
participated in the discussion preceding any
such approval, and has agreed thereto, any
consideration at a board meeting and, if
appropriate, approval by the directors, of
transfers of not more than 725,000 common
shares as part of a possible secondary offering
by existing shareholders) or in respect of
which specific provision is made in this
Agreement, unless the board of directors has
first been reconstituted so as to include one
nominee of the Goldman Sachs Group; provided,
however, that nothing in this section 3.2.2.2
shall limit the authority of the management of
the Company to manage the business and affairs
of the Company in the ordinary course, or to
implement decisions made by the board of
directors prior to the date of execution of
this Agreement, and included in the Minutes of
the Board of Directors.
3.2.3 Notwithstanding any provisions of the Company's
Certificate or Articles of Incorporation or By Laws, each
Shareholder will vote its Shares at the annual meeting of
the Company next following the date of
8
<PAGE>
execution of this Agreement, to be held on or
before January 31, 1996 (the "Next Annual
Meeting") and at all meetings of shareholders
thereafter, so that the board of directors elected
at such meeting(s) shall, subject to sections
3.2.4, 3.2.6 and 3.2.9, be comprised of seven
directors, and so that one nominee of each of
Spencer, Gelbart, Michelson, FBDB, STAR, the
Goldman Sachs Group, and the employees that hold
shares granted from the Employee Reserved Shares
is a director of the Company.
3.2.4 If at any time following the Next Annual
Meeting the board of directors resolves pursuant
to the authority conferred upon it by reason of
the amendment of the Articles provided for in
section 3.2.1.2 to appoint an eighth director, the
parties agree to cause their nominees to the board
of directors to appoint a person who shall have
been agreed upon by the Company and the Goldman
Sachs Group; and if at any time the board of
directors resolves to appoint a ninth director,
the parties-agree to cause their nominees to the
board of directors to appoint a person who shall
have been agreed upon by a majority of the
directors.
3.2.5 If a position on the Board is open for any
reason whatsoever, the director to be appointed to
replace the person who has ceased to be a director
shall be appointed in the same manner as the
director who has ceased to be a director.
3.2.6 The provisions of Section 3.2.3 shall not
apply to any of the parties describe in this
Agreement as the parties of the second to the
twelfth parts inclusive at any time if, at that
time, the aggregate number of Shares owned by the
Persons comprising such parties and by any
Affiliate of any such Person to whom any of such
Persons has, in accordance with the provisions of
this Agreement, transferred Shares, is less than 3
% of the issued common shares, and in such case
the number of directors will be correspondingly
reduced.
3.2.7 Whether or not FBDB nominates a Director to
the Board of Directors of the Company, during any
time when FBDB is entitled to so nominate a
Director, FBDB shall have the right to send an
additional Representative to meetings of the Board
of Directors, which Representative(s) shall be
invited to attend all Board meetings and shall
receive all information and material presented to
the Board, as would a director.
3.2.8 Whether or not the Goldman Sachs Group
nominates a Director to the Board of Directors of
the Company it shall have the right to send an
additional Representative to meetings of the Board
of Directors, which Representative(s) shall be
invited to attend all Board meetings and shall
receive all information and material presented to
the Board, as would a director.
3.2.9 Notwithstanding anything in this Section
3.2, in the event that a Management Shareholder is
terminated as an employee of the Company for Cause
(as defined below), or voluntarily terminates his
employment with the Company, then he shall only be
entitled to act as a Director of the Company with
the consent of a majority of the other Directors
of the Company, but in the absence of such consent
he shall retain the right to
9
<PAGE>
nominate a person other than himself to serve as a
Director of the Company; provided, however, that
--------
the nominee of such Management Shareholder to
serve as a Director of the Company shall be
subject to the approval of a majority of the other
Directors of the Company, such approval not to be
unreasonably withheld. For purposes of this
Section 3.2.8, "Cause" shall mean (1) a breach of
trust, including for example, but without
limitation, acts of moral turpitude, theft,
embezzlement, self-dealing; (2) a material breach
by a Management Shareholder of the terms of his
employment agreement; or (3) any act of, or
omission by, a Management Shareholder which, in
the reasonable judgment of the directors of the
Company, amounts to a serious failure by such
Management Shareholder to perform his
responsibilities or functions or in the exercise
of his authority, which failure, in the reasonable
judgment of the directors of the Company, rises to
a level of gross nonfeasance, misfeasance or
malfeasance.
3.2.10 Each of the Evergreen Group, Gilde, and
the Marin Group shall have the right to send a
Representative or alternate to meetings of the
Board of Directors, which Representatives shall be
invited to attend all Board meetings and shall
receive all information and material presented to
the Board as would a director.
3.2.11 A Representative appointed by FBDB, the
Evergreen Group, Gilde, the Goldman, Sachs Group
or the Marin Group pursuant to this Section 3.2
shall be known herein as a "Representative". A
Representative shall be bound by the same roles,
obligations and consequences as a Director
respecting confidentiality, conflict of interest
and insider information. A Representative shall be
entitled to attend and observe all meetings of the
Board of Directors, and shall be permitted to
participate in a meeting of the Board of
Directors. A Representative shall have no vote at
such meetings. A Representative shall not be
entitled to make representations on behalf of the
Company solely by virtue of his appointment as a
Representative.
3.2.12 The Company and the Shareholders agree
that none of them will:
3.2.12.1 at any time while the board is
constituted as provided in section 3.2.2.1 or
section 3.2.3, call (in the case of the Company)
or requisition (in the case of any Shareholder)
a special meeting of shareholders for the
purpose of removing any of the directors who is
a nominee of any Person identified therein; or
3.2.12.2 at any time while the board is
constituted as provided in section 3.2.4, call
(in the case of the Company) or requisition (in
the case of any Shareholder) a special meeting
of shareholders for the purpose of removing any
of the directors appointed pursuant to section
3.2.2.1 or section 3.2.3 who is a nominee of
any Person identified therein.
10
<PAGE>
3.2.13 The Shareholders agree that if:
3.2.13.1 at any time while the board is
constituted as provided in section 3.2.2.2 or
section 3.2.3, or
3.2.13.2 at any time while the board is
constituted as provided in section 3.2.4
a resolution is proposed at a meeting of
shareholders to remove a director appointed
pursuant to section 3.2.2.1. or 3.2.3 who is a
nominee of any Person identified therein, they
will vote or cause their Shares to be vote against
such resolution."
9. Section 3.5
-----------
Section 3.5 of the Shareholders Agreement is deleted and the following
substituted:
"3.5.1 For so long as the Board is comprised of
seven directors, a quorum for the transaction of
business at a meeting of the Board will be five
directors; provided that four directors may
constitute a quorum if two of them are nominees of
FBDB, or of the Goldman Sachs Group, or of STAR).
3.5.2 If the Board is comprised of eight or nine
directors, a quorum for the transaction of
business at a meeting of the Board will be seven
directors, provided that six directors may
constitute a quorum if two of them are nominees of
FBDB, or the Goldman Sachs Group, or of STAR.
3.5.3 There shall be a minimum of four Board
meetings held at approximately three month
intervals during each fiscal year that this
Agreement remains in force."
10. Section 3.6
-----------
Section 3.6 of the Shareholders Agreement is amended by the addition
of the words ", the Goldman Sachs Group," after the word "FBDB".
11. Section 3.7
-----------
Section 3.7 of the Shareholders Agreement is amended by:
(a) renumbering it section 3.7.1, and renumbering paragraphs 3.7.1 to 3.7.8
inclusive, paragraphs 3.7.1.1 to 3.7.1.8 inclusive;
(b) adding the words "or the director of the Company nominated by the Goldman
Sachs Group" after the word "STAR" in the third line; and
11
<PAGE>
(c) adding a new section 3.7.2 as follows:
"3.7.2 Notwithstanding any provision of the Act,
the Articles of Incorporation of the Company, or
the Bylaws, no director shall be counted in the
quorum, or vote, on any matter relating primarily
to his employment, remuneration or other
compensation as an officer, employee or agent of
the Company or any Affiliate of the Company."
12. Section 3.8
-----------
The Shareholders Agreement is amended by deleting section 3.8.7 and
substituting the following:
"3.8.7 an allotment of any shares issued pursuant
to those certain Subscription Agreements of even
date herewith between the Company and each of the
Persons comprising the Goldman Sachs Group, or
pursuant to any right granted to any such Person
by or in connection with the entering into of such
Subscription Agreement."
13. Section 3.9
-----------
Section 3.9 of the Shareholders Agreement is deleted, and the
following substituted:
"3.9 Confidentiality of Private Affairs
No Shareholder will (while a Shareholder of or
employed by the Company or at any time thereafter)
disclose to any person not a Shareholder at the
time of disclosure, the private affairs of the
company or any of its Related Companies, contracts
or agreements of the Company or its Related
Companies, the financial position of the Company
or its Related Companies (except that the Goldman
Sachs Group may disclose such matters to and
consult thereon with its advisor, Goldman, Sachs &
Co., and FBDB, the Evergreen Group, Gilde, the
Marin Group, STAR and the Goldman Sachs Group may,
in good faith, disclose the financial position of
the Company to a creditor of the Company, if
acting in good faith FBDB, the Evergreen Group,
Gilde, the Marin Group, STAR or the Goldman Sachs
Group forms the view that such disclosure is in
the best interests of the Company, or to a
prospective purchaser of its interest in the
Company), any prospects of business of the Company
or its Related Companies which is not public
knowledge and will not (either while such
Shareholder is a Shareholder of or employed by the
Company or at any time thereafter) use for its own
purposes (except that FBDB, the Evergreen Group,
Gilde, the Marin Group, STAR, the Goldman Sachs
Group and Goldman, Sachs & Co. shall have the
right to refer to their investment in the Company
in their publications and promotional material) or
for any purposes other than those of the Company
any information he may acquire in relation to the
business of the Company or its Related Companies.
Notwithstanding the above, Goldman Sachs Group and
its advisor, Goldman, Sachs & Co., may disclose
information if pursuant to a subpoena, Civil
Investigative Demand (or similar process), order,
statute, rule or other legal requirement
promulgated or imposed by a court or by a
judicial, regulatory, self-regulatory or
legislative body,
12
<PAGE>
organization, agency or committee or otherwise in
connection with any judicial or administrative
proceeding (including, in response to oral
questions, interrogatories or requests for
information or documents) in which Goldman, Sachs
& Co. or its Affiliates is involved."
14. Section 3.11
------------
Section 3.11 of the Shareholders Agreement
is amended by:
(a) renumbering it section 3.11.1, and
(b) adding a new section 3.11.2, as follows-
"3.11.2 Section 3.11.1 does not apply and shall
not be construed or interpreted to restrict the
right of the Goldman Sachs Group or its advisor,
Goldman, Sachs & Co. or any of its Affiliates, to
use, information acquired by any of them in the
ordinary course of their investment banking
business, and otherwise than by reason of being a
Shareholder or a party to this Agreement;
provided, however, that nothing in this section
3.11.2 shall operate to relieve the Goldman Sachs
Group or its advisor, Goldman, Sachs & Co., or any
of its Affiliates, or any director nominated by
the Goldman Sachs Group, from any duty or
obligation which it may owe to the Company in law
or in equity."
15. Section 3.12
------------
Section 3.12 of the Shareholders Agreement is amended
(a) by the addition of the words ", the Goldman Sachs Group" after the words
"the Marin Group" in section 3.12.2; and
(b) by the addition, after the words "Related Companies" in section 3.12.3, of
the words:
"; provided that nothing in this Section 3.12.3
shall be construed or interpreted to restrict the
right of Goldman, Sachs & Co. or any Affiliate of
Goldman, Sachs & Co., to carry on the business of
investment banking with or for such person."
16. Section 3.14
------------
Section 3.14 of the Shareholders Agreement is amended by inserting the
words ", the Goldman Sachs Group" after the words "the Marin Group" in the
preamble.
The second to the last paragraph of Section 3.14 of the Shareholders Agreement
shall have inserted after "the Marin Group," the words "the Goldman Sachs
Group," to read as follows:
"Each of FBDB, the Evergreen Group, Gilde, the
Marin Group, the Goldman Sachs Group, Spencer and
STAR reserves the right to receive additional
information from the Company and its auditors,
which is reasonably required to understand better
the affairs of the Company.
13
<PAGE>
Any director and any Representative in a
representative capacity may pass that and all
other information received by him to the
Shareholders he represents."
17. Section 3.16
Section 3.16 of the Shareholders Agreement is amended by the addition
of section 3.16.3, as follows:
"3.16.3 Upon the nominee of the Goldman Sachs
Group being elected or appointed a director, such
nominee shall be appointed to the Compensation
Committee, the audit committee, and the finance
committee if such committee is established, and
shall have the right to be appointed to any other
committee established by the Board of Directors."
18. Section 3.17
------------
Section 3.17 of the Shareholders Agreement is amended by the addition
of the words "or the director nominated by the Goldman Sachs Group" in the
eighth line.
19. SECTION 3.18
------------
The Shareholders Agreement is amended by the addition of a new section
after section 3.17, as follows:
"3.18 Special Event
3.18.1 If at any time after two years from the
date of execution of this Agreement, and provided
that the Company has not completed an initial
public offering of Shares, a majority of the
directors nominated by FBDB, STAR, Spencer, the
Goldman Sachs Group, and the employees that hold
shares granted from the Employee Reserved Shares
(together, the "Special Directors") consider that
the Company is significantly underperforming, they
may so declare by notice in writing (a "Special
Event Notice") to the Company.
3.18.2 If, within 90 days of a Special Event
Notice, the Company does not complete a sale of
Shares to a Person who deals with the Company at
arm's length at a price of not less than US$14.00
per share (net of the value of any other
securities issued or other consideration granted
or which may be acquired by such Person pursuant
to a right granted at the time of such sale), for
aggregate gross proceeds of not less than
US$5,000,000, a majority of the Special Directors
may, in their discretion, elect and have the right
to
(a) terminate the appointment of the CEO then
holding office and appoint a new CEO; or
(b) seek a buyer for the assets and undertaking of
the Company and any subsidiary of the Company; or
(c) seek a buyer for the common shares of the
Company then issued and outstanding.
14
<PAGE>
3.18.3 If A Majority Of The Special Directors Make An
Election Pursuant To Section 3.18.2 (B) Or (C) They Shall
Have The Authority To Negotiate The Terms Of Any Such Sale
And If Agreement Is Reached,
(a) with respect to a sale pursuant to section 3.18.2
(b), each Shareholder shall be bound to vote its Shares in
favour of any resolution of holders of Shares that may be
required in order to implement the agreement and carry it
into effect;
(b) with respect to a sale pursuant to section 3.18.2 (c),
each Shareholder shall be bound to sell its Shares at the
price and on the terms set out in the agreement, and the
provisions of Articles 5 and 6 of this Agreement shall not
apply to any such sale; provided, however, that no
Shareholder shall be bound to sell such Shareholder's Shares
at a price or on terms which are different from those
applicable to a sale by any other Shareholder."
20. Section 4.1
-----------
Section 4.1 of the Shareholders Agreement is amended:
(a) by deleting the word "shall" in the first line of section 4.1.2 (a) and
substituting the word "may";
(b) by deleting the word "in an aggregate amount which is 9% of the Base Amount
in section 4.1.2 (a)," and substituting the words "in such amount, not exceeding
in the aggregate 9% of the Base Amount, as the Board of Directors may
determine"; and
(c) by adding a new subsection 4.1.4, as follows:
"4.1.4 any decisions made pursuant to the Employee Bonus and
the Employee Reserved Shares plans for a particular fiscal
year shall not be subsequently changed within the applicable
fiscal year."
21. Section 4.2
-----------
Section 4.2 of the Shareholders Agreement is amended by the addition
of the words "or the Goldman Sachs Group nominee" after the words "FBDB nominee"
22. Section 5.16
------------
Section 5.16 of the Shareholders Agreement is amended by the addition,
after the words "June 30, 1995", of the words "and November 2, 1995".
15
<PAGE>
23. Section 5.21
------------
A new Section 5.21 is added to the Shareholders Agreement as
follows :
"5.21 Waiver
5.21.1 Notwithstanding any other provision of this
Agreement, any Person that is a member of the Goldman Sachs
Group may freely sell, transfer or otherwise dispose of any
of its Investment to another member of the Goldman Sachs
Group or to an Affiliate of any such Person or, in the case
of a Person that is a partnership, to the partners thereof
and in the case of a Person that is a corporation, to the
shareholders thereof provided that any such transferee shall
have agreed to be bound by the provisions of this
Agreement."
24. Section 5.22
------------
A new section 5.22 is added to the Shareholders Agreement as
follows :
"5.22 No sale, transfer or other disposition of any
Investment may be made pursuant to any of Section 5.10,
5.11, 5.12, 5.15, 5.18, 5.19 or 5.21 that will have the
effect of violating the limitation on the number of
shareholders of the Company that is set out in the Articles
of the Company."
25. Section 6.1
-----------
In Section 6.1 of the Shareholders Agreement, the words," the Goldman
Sachs Group" are inserted after the words "the Marin Group" in two locations.
26. Article 7
---------
Article 7 of the Shareholders Agreement is deleted in its entirety and
the following substituted :
ARTICLE 7
REGISTRATION RIGHTS
In this Article 7
"Offering Expenses" means all expenses incidental to the
Company's performance of, or compliance with, section 7
including, without limitation, all registration and filing
fees, all fees and expenses of complying with the Securities
Laws, all printing and translation expenses, all reasonable
fees and disbursements of counsel to the Selling
Shareholders, all reasonable fees and disbursements of
counsel for the Company and its auditors, including the
expenses of any special audits required by or incidental to
such performance and compliance, but excluding any
underwriting fees and commissions and applicable transfer
taxes, if any, which shall be borne by the Selling
Shareholders, pro rata in proportion to the number of Shares
being sold by each Selling Shareholder.
16
<PAGE>
"Securities Laws" means the securities laws of the United
States or any state, territory, or political subdivision
thereof and of any of the provinces of Canada.
For the purposes of this Section 7, the Persons comprising
the Goldman Sachs Group, together with any Affiliates of
such Persons, shall be deemed to be a single Shareholder.
7.1 Incidental Registration If the Company at any time
proposes to qualify and/or register any of its securities
(the "Offered Securities") under the Securities Laws,
whether or not for sale for its own account, in a form and
manner which would permit distribution to the public under
any of the Securities Laws of any of the Company's
securities, it will give prompt written notice (the
"Offering Notice") to the Shareholders of its intention to
do so. Upon the written request of any Shareholders (each
such Shareholder being a "Selling Shareholder"; if more than
one, collectively the "Selling Shareholders") delivered to
the Company within 15 days after the giving of any such
notice (which request shall specify the Shares intended to
be disposed of by that Shareholder and the intended method
or methods of disposition thereof), the Company will use
reasonable commercial efforts to effect the qualification
and registration under the applicable Securities Laws of,
subject to section 7.7, that number of Shares of each
Selling Shareholder (the "Selling Shareholder's Shares") as
is equal to the product of (a) the number of Offered
Securities and (b) the quotient obtained by dividing the
number of Shares held by that Selling Shareholder by the
aggregate number of outstanding Shares as at the date of
such request, provided that:
7.1.1 if, at any time after giving the Offering Notice
and prior to the effective date of the prospectus or
registration statement filed in connection with such
qualification or registration, the Company determines after
consultation with the underwriters not to register such
securities, the Company may, at its election, give written
notice of such determination to the Selling Shareholders and
thereupon shall be relieved of its obligation to register
any Shares in connection with such qualification or
registration (but not from its obligation to pay the
Offering Expenses in connection therewith as provided
below), without prejudice, however, to the rights of the
Selling Shareholders under Section 7.4;
7.1.2 if:
(i) the qualification or registration of the Offered
Securities relates to an underwritten offering of the
securities (on a firm commitment basis) by or through one or
more underwriters, whether or not for the account of the
Company;
(ii) all or part of the Selling Shareholder's Shares are
not also to be included in such underwritten offering
(either because the Company has not received a request
pursuant to section 7.7 or, having received such a request,
it has been unable so to include such Shares after using
reasonable efforts to do so as provided in section 7.7) and
17
<PAGE>
(iii) the managing underwriter or underwriters of such
underwritten offering advises the Company in writing of its
opinion (together with the reasons therefor), that the
distribution of all or a specified portion of such Selling
Shareholder's Shares concurrently with the Offered
Securities by such underwriters will materially and
adversely affect the distribution of such Offered Securities
by such underwriters,
the Company will promptly furnish the Selling Shareholders
with a copy of such opinion and may, by written notice to
the Selling Shareholders accompanying such opinion, require
that the distribution of all or a specified portion of such
Selling Shareholder's Shares be deferred until the
completion of the distribution of such securities by such
underwriters, but in no event for a period extending beyond
the earlier of the 180th day following the effective date of
such registration or qualification and the date expiration
of the last to expire lock-up agreement, if any, entered
into by any Shareholder of the Company at the request of
such underwriters.
7.2 Limitation On Rights. The Company shall not be
obligated to effect any registration of any Selling
Shareholder's Shares under section 7.1 incidental to the
qualification and registration of any of its securities in
connection with any acquisitions, securities exchange
offers, dividend reinvestment plans or stock option or other
employee benefit plans.
7.3 Offering Expenses. No registration or qualification of
Shares effected under section 7.1 shall relieve the Company
of its obligations pursuant to section 7.4. The Company will
pay all Offering Expenses in connection with each
registration of Securities requested pursuant to this
section 7.1, provided that the Company shall not be
responsible for the reasonable fees and expenses of more
than one separate legal firm for all Selling Shareholders.
7.4 Registration On Request Upon receipt of a written
request (a "Shareholder Request") from a Shareholder or
Shareholders holding in aggregate at the date thereof not
less than 3 % of the then outstanding common shares of the
Company and having a Current Market Value of not less than
Cdn.$5,000,000, to effect the qualification and registration
under the Securities Laws of all or part of the Shares
beneficially owned by such Shareholder and specifying the
intended method or methods of disposition of such Shares,
the Company will:
7.4.1 within 20 days thereafter provide a copy of such
Shareholder Request to all other Shareholders (the "Other
Shareholders"); and
7.4.2 use reasonable commercial efforts to effect (at
the earliest practicable date) the qualification and
registration under the Securities Laws of, subject to
section 7.7, the Shares to which the Shareholder Request
relates, provided such Shares have a Current Market Value
(calculated as of the date of the Shareholder Request) of
not less than Cdn.$5,000,000, and such Shares, if any, held
by the
18
<PAGE>
Other Shareholders in respect of which such Other
Shareholders request registration and qualification,
provided such request is in writing and received by the
Company within 15 days of the date on which the Shareholder
Request is sent to the Other Shareholders.
The rights of Shareholders under this section 7.4 shall
become effective and commence on the earlier of (a) the
180th day following the date of completion of the Company's
initial public offering (the "IPO") and (b) the third
anniversary of the date hereof if the Company's IPO has not
completed by such third anniversary; and shall continue
indefinitely in the event the Company does not complete an
IPO and, if the Company completes an IPO, shall continue
until the sixth anniversary of such IPO, whereupon such
rights shall terminate. No Shareholder Request may be made
within 180 days of the most recent prior Shareholder
Request.
7.5 Offering Expenses. All Offering Expenses in connection
with the qualification and/or registration of Shares
effected pursuant to section 7.4 shall be borne by the
Shareholders holding Shares being so qualified and/or
registered, pro rata based upon the number of Shares of such
Shareholder that are qualified and/or registered, except
that such Shareholders shall not be responsible for any
expenses and costs incurred by the Company in the ordinary
course of its business or in the ordinary course of
complying with applicable securities laws.
7.6 Registration Procedures If and whenever the Company is
required to use reasonable commercial efforts to effect the
qualification and registration of any Shares under any of
the Securities Laws as provided in sections 7.1 and 7.4, the
Company will as expeditiously as possible:
7.6.1 prepare and file (in any event within 60 days
after requests for qualification and registration have been
delivered to the Company) the preliminary prospectus,
registration statement or, similar document required under
each of the applicable Securities Laws together with such
other related documents as may be necessary or appropriate
for the purposes of the proposed distribution and shall, as
soon as possible, prepare and file under the applicable
Securities Laws a (final) prospectus, registration statement
or similar document and cause such (final) prospectus,
registration statement or similar document to become
effective as soon as possible and shall take all other steps
and proceedings that may be necessary in order to qualify
the Shares for distribution in accordance with such
Securities Laws;
7.6.2 prepare and file with the applicable securities
regulatory authorities such amendments and supplements to
such preliminary prospectus, (final) prospectus,
registration statement and similar documents as may be
necessary to comply with the provisions of the applicable
Securities Laws with respect to the distribution of all
Shares and other securities covered thereby until the
earlier of such time , as all of such Shares and other
securities have been disposed of and the expiration of 4
months after the filing of such (final) prospectus;
19
<PAGE>
7.6.3 furnish to the Selling Shareholders such number
of commercial copies of any documents prepared or filed
pursuant to sections 7.6.1 or 7.6.2 (including all exhibits
thereto and all documents incorporated therein by reference)
as the Selling Shareholders may reasonably request;
7.6.4 furnish to the Selling Shareholders:
(A) an opinion of counsel for the Company addressed
to the Selling Shareholders and dated the effective date of
such (final) prospectus or registration statement; and
(B) if applicable, a "comfort" letter addressed to
such underwriter or underwriters as may be participating in
the qualification and registration of Shares, dated the
effective date of such (final) prospectus or registration
statement and the closing date, signed by the auditors of
the Company;
and, in each case, covering substantially the same matters
as are customarily covered in such documents and such other
matters as the Selling Shareholders may request, acting
reasonably; and
7.6.5 immediately notify the Selling Shareholders of
the happening of any event as a result of which the
preliminary prospectus, the (final) prospectus or any
registration statement, as then in effect, would include a
misrepresentation (within the meaning of applicable
securities laws), and at the request of the Selling
Shareholders prepare and furnish to the Selling Shareholders
a reasonable number of commercial copies of a supplement to
or an amendment of the preliminary prospectus, the (final)
prospectus and any registration statement as may be
necessary so that, as thereafter delivered to the purchasers
of such Shares or other securities, such document shall not
include a misrepresentation (within the meaning of
applicable securities laws).
7.7 Underwriting Agreement. If requested by any underwriter
for any underwritten offering of Shares on behalf of Selling
Shareholders pursuant to a Shareholder Request, the Company
will enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such
other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary
distributions, including, without limitation, rights of
indemnity and contribution substantially to the effect and
to the extent provided in section 7.10. If such underwriter
is unwilling to underwrite all of the Shares entitled to
registration and qualification under subsection 7.4.2, such
registration entitlement shall be modified such that each
Shareholder of such Shares shall be entitled to registration
and qualification of a number of Shares equal to the product
obtained by multiplying the number of Shares the underwriter
is prepared to underwrite by the quotient obtained by
dividing number of Shares in respect of which such
Shareholder is seeking registration by the aggregate number
of Shares sought to be registered under subsection
20
<PAGE>
7.4.2. If the Company at any time proposes to register
or qualify any of its securities under any of the Securities
Laws (other than pursuant to a request made under section
7.4), whether or not for sale for its own account, and such
securities are to be distributed by or through one or more
underwriters, the Company will make reasonable efforts, if
requested by the Selling Shareholders in connection
therewith pursuant to section 7.1, to arrange for such
underwriters to include such Shares among those securities
to be distributed by or through such underwriters; provided
that, for the purposes hereof, reasonable efforts shall not
require the Company or any other seller of the securities
proposed to be distributed by or through such underwriters
to reduce the amount or sale price of such securities
proposed to be so distributed from the levels they would be
if there were no distribution of Shares held by Selling
Shareholders. If such underwriter is unwilling to underwrite
all of the Shares entitled to registration and qualification
under section 7.1, such registration entitlement shall be
modified such that each Selling Shareholder shall be
entitled to registration and qualification of a number of
Shares equal to the product obtained by multiplying the
number of Selling Shareholder Shares the underwriter is
prepared to underwrite by the quotient obtained by dividing
number of Selling Shareholder Shares held by such Selling
Shareholder by the aggregate number of Selling Shareholder
Shares.
7.8 Selection of Managing Underwriter. Whenever a
registration requested pursuant to section 7.4 is for an
underwritten offering, the Selling Shareholders shall have
the right to select the managing underwriter or agent to
administer the offering subject to the approval of the
Company, such approval not to be unreasonably withheld. The
Company hereby grants its continuing approval of Goldman,
Sachs & Co. (or any of its affiliates) to serve as managing
underwriter for any underwritten or agency offerings
pursuant to section 7.4.
7.9 Preparation; Reasonable Investigation In connection
with the preparation and filing of any preliminary
prospectus, (final) prospectus, registration statement or
similar document as herein contemplated, the Company will
give the Selling Shareholders and their underwriters, if
any, and their respective counsel, auditors and other
representatives, the opportunity to participate in the
preparation of such documents and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and auditors
as shall be necessary in the opinion of the Selling
Shareholders, such underwriters and their respective
counsel, all acting reasonably, and to conduct all due
diligence which the Selling Shareholders, such underwriters
and their respective counsel may reasonably require in order
to conduct a reasonable investigation for purposes of
establishing a due diligence defence as contemplated by the
Securities Laws and in order to enable such underwriters to
execute the certificate required to be executed by them at
the end of each such document.
7.10 Indemnification Of Selling Shareholders. In the event
of any qualification or registration of any Shares
hereunder, the Company will
21
<PAGE>
indemnify and hold harmless the Selling Shareholders, each
person, if any, who participates as an underwriter in the
offering or sale of such Shares, for and on behalf of
themselves and for and on behalf of and in trust for each
of their respective officers and directors, and each other
person, if any, who controls a Selling Shareholder or any
such underwriter or agent within the meaning of the United
States Securities Act of 1933, from and against any and all
losses, claims, damages, liabilities (whether arising under
applicable Securities Laws or otherwise), costs or expenses
(but not including loss of profit) caused or incurred:
7.10.1 by reason of or arising out of any information or
statement contained in the preliminary prospectus, (final)
prospectus, registration statement, similar document or any
amendment or supplement thereto (the "Disclosure
Documents"), which is or is alleged to be a
misrepresentation (within the meaning of applicable
securities laws) in the Disclosure Documents; and/or
7.10.2 by reason of or arising out of the omission or
alleged omission to state in the Disclosure Documents, any
material fact; and/or
7.10.3 by reason of or arising out of any misrepresentation
or alleged misrepresentation contained in the Disclosure
Documents.
Notwithstanding section 7.10, the indemnification contained
in section 7.10 shall not apply in respect of any losses,
claims, damages, liabilities, costs or expenses caused or
incurred by reason of or arising out of any statement,
omission, misrepresentation or other matter or thing
referred to in section 7.10 which is based upon or results
from any information relating solely to a Selling
Shareholder in the Disclosure Documents.
7.11 Notification Of Claim. In the event that any claim,
action, suit or proceeding, including, without limiting the
generality, of the foregoing, any inquiry or investigation
(whether formal or informal) is brought or instituted
against any of the persons or corporations in respect of
which indemnification is or might reasonably be considered
to be provided for in section 7.10, such person or
corporation (the "Indemnified Party") shall promptly notify
the Company and the Company shall promptly retain counsel
who shall be reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party in such claim,
action, suit or proceeding and the Company shall pay all of
the reasonable fees and disbursements of such counsel
relating to such claim, action, suit or proceeding .
7.12 Retention Of Counsel. In any such claim, action,
suit or proceeding, the Indemnified Party shall have the
right to retain other counsel to act on his or its behalf,
provided that the fees and disbursements of such other
counsel shall be paid by the Indemnified Party unless,
subject to section 7.13
7.12.1 the Company and the Indemnified Party shall
have mutually agreed to the retention of such other counsel;
or
22
<PAGE>
7.12.2 the named parties to any such claim, action,
suit or proceeding (including any added, third or impleaded
parties) include both the Company and the Indemnified Party
and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing
interests between them.
7.13 Single Counsel. If other counsel is retained as
provided for in section 7.12 and the Company is responsible
for the fees and disbursements of such counsel, the Company
shall not, in connection with any such claim, action, suit
or proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate legal
firm for all persons or corporations in respect of which
indemnification is or might reasonably be considered to be
provided for in section 7.10.
7.14 Settlements. Notwithstanding anything contained in
this Agreement, neither the Company nor the Selling
Shareholders shall agree to any settlement of any such
claim, action, suit or proceeding unless the other has
consented in writing thereto, and the Company shall not be
liable for any settlement of any such claim, action, suit or
proceeding unless it has consented in writing thereto.
7.15 Contribution. The Company agrees to provide
provision for contribution relating to such indemnity as
shall be reasonably requested by the Selling Shareholders or
the underwriters.
7.16 Indemnification Of The Company. The Company may
require, in connection with any distribution of Shares as
herein contemplated, that the Company shall have received an
undertaking satisfactory to it from the Selling Shareholders
to indemnify and hold harmless (in the same manner and to
the same extent as set forth in subsection 7.10) the Company
for and on behalf of itself and for and on behalf of and in
trust for each director and officer of the Company and each
other person, if any, who controls the Company within the
meaning of the United States Securities Act of 1933 with
respect to any statement, omission, misrepresentation or
other matter or thing referred to in section 7.10 which is
based upon or results from any information relating solely
to a Selling Shareholder in the Disclosure Documents.
27. Section 11.2
------------
Section 11.2 is deleted and the following is substituted:
11.2 Continuing Obligations
The termination of this Agreement will not affect:
(a) the obligations of any Shareholder or the Company
arising pursuant hereto prior to the date of termination to
make payment of any balance owing on the purchase price of
any Investment as may have been agreed upon pursuant to this
Agreement;
23
<PAGE>
(b) the provisions of sections 3.9 and 3.11, which shall
continue in force notwithstanding such termination; or
(c) the rights granted to any Shareholder by Article 7 of
this Agreement.
28. Section 11.7.3
--------------
Section 11.7.3 of the Shareholders Agreement is amended by deleting
the words "Federal Business Development Bank" wherever they appear, and
substituting the words "Business Development Bank of Canada".
29. Section 11,7.12
---------------
A new Section 11.7.12 is added to the Shareholders Agreement
as follows:
"11.7.12if to Star Management:
SVM Star Ventures Management GMBH No.3
Leopoldstr 28A
80802 Munich
Germany
Fax: 49-89-381-70555
Attention: Managing Director
----------------------------
with a copy to:
SVM Star Ventures Management GMBH No.3
25 Lechi St.
Bnei Brak 52100
Israel
Fax: 972-3-618-0748
and with a copy to:
Goldfarb, Levy, Eran & Co.
Beit Eliahu
2 Ibn Gvirol
Tel Aviv 64077
Israel
Fax: 972-3-695-4344
Attention: Oded Eran, Adv."
--------------------------
24
<PAGE>
30. Section 11.7.13
---------------
A new Section 11.7.13 is added to the Shareholders Agreement
as follows:
"11.7.13 if to G S Capital:
G S Capital Partners II, L.P.
85 Broad Street
New York, New York
U.S.A., 10004
Fax: 212-902-3000
Attention: Carla Skodinski (for administrative matters)
John Bu (for all other matters)"
31. Section 11.7.14
---------------
A new Section 11.7.14 is added to the Shareholders Agreement
as follows:
"11.7.14 if to G S Offshore'
G S Capital Partners II Offshore, L.P.
85 Broad Street
New York, New York
U.S.A., 10004
Fax: 212-902-3000
Attention: Carla Skodinski (for administrative matters)
John Bu (for all other matters)"
32. Section 11.7.15
---------------
A new Section 11.7.15 is added to Shareholders Agreement
as follows:
11.7.15 if to Goldman Gmbh:
Goldman, Sachs & Co. Verwaltungs Gmbh
85 Broad Street
New York, New York
U.S.A., 10004
Fax: 212-902-3000
Attention: Carla Skodinski (for administrative matters)
John Bu (for all other matters)"
25
<PAGE>
33. Section 11.7.16
---------------
A new Section 11.7.16 is added to the Shareholders Agreement
as follows:
"11.7.16 if to Stone Street:
Stone Street Fund 1995, L.P.
85 Broad Street
New York, New York
U.S.A., 10004
Fax: 212-902-3000
Attention: Carla Skodinski (for administrative matters)
John Bu (for all other matters)"
34. Section 11.7.17
---------------
A new Section 11.7.17 is added to the Shareholders Agreement
as follows:
"11.7.17 if to Bridge Street:
Bridge Street Fund 1995, L.P.
85 Broad Street
New York, New York
U.S.A., 10004
Fax: 212-902-3000
Attention: Carla Skodinski (for administrative matters)
John Bu (for all other matters)"
35. Signatories
-----------
The signatories to the Shareholders Agreement are amended to be
identical to the signatories to this Agreement.
36. Effective Date
--------------
This Amendment to Shareholders Agreement shall be deemed to be in full
force and effect as of November 2, 1995 as to all of the parties hereto.
37. Facsimile Counterparts
----------------------
This Amendment to Shareholders Agreement may be executed in facsimile
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which facsimile counterparts together shall constitute the
same agreement.
26
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
27
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
CREO PRODUCTS INC.
___________________________________
Authorized Signatory
BUSINESS DEVELOPMENT BANK OF CANADA
/s/ LIVIA MAHLER
- -----------------------------------
Authorized Signatory
/s/ DANIEL GELBART
- -----------------------------------
DANIEL GELBART
/s/ KENNETH A. SPENCER
___________________________________
KENNETH A. SPENCER
/s/ AMOS MICHELSON
- -----------------------------------
AMOS MICHELSON
/s/ DAVID PRITCHARD
- -----------------------------------
DAVID PRITCHARD
- -----------------------------------
Authorized Signatory
By: SVM Star Ventures Managementgesellschaft mbH No. 3 (Mamaging Partner)
By: Dr. Meir Barel (Managing Partner)
SVE STAR VENTURES ENTERPRISES NO.II LIMITED PARTNERSHIP
___________________________________
Authorized Signatory
By: SVM Star Ventures Managementgesellschaft mbH No. 3 (Managing Partner)
By: Dr. Meir Barel (Managing Partner)
28
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
CREO PRODUCTS INC.
/s/ AMOS MICHELSON
- -----------------------------------
Authorized Signatory
BUSINESS DEVELOPMENT BANK OF CANADA
___________________________________
Authorized Signatory
___________________________________
DANIEL GELBART
___________________________________
KENNETH A. SPENCER
___________________________________
AMOS MICHELSON
___________________________________
DAVID PRITCHARD
SVE STAR VENTURES ENTERPRISES NO.II LIMITED PARTNERSHIP
/s/ MEIR BAREL
- -----------------------------------
Authorized Signatory
By: SVM Star Ventures Managementgesellschaft mbH No. 3 (Mamaging Partner)
By: Dr. Meir Barel (Managing Partner)
SVE STAR VENTURES ENTERPRISES NO.II LIMITED PARTNERSHIP
/s/ MEIR BAREL
___________________________________
Authorized Signatory
By: SVM Star Ventures Managementgesellschaft mbH No. 3 (Managing Partner)
By: Dr. Meir Barel (Managing Partner)
32
<PAGE>
SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
/s/ Meir Barel
- -----------------------------------
Authorized Signatory
By: SVM Star Ventures Managementgesellschaft mbH No. 3 (Managing Partner)
By: Dr. Meir Barel (Managing Partner)
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN
/s/ Signature
- -----------------------------------
Authorized Signatory
UNICYCLE TRADING COMPANY
/s/ SIGNATURE
___________________________________
Authorized Signatory
D.G. DAN-GAL LTD.
/s/ SIGNATURE
___________________________________
Authorized Signatory
YOZMA VENTURE CAPITAL LTD.
/s/ SIGNATURE
___________________________________
Authorized Signatory
/s/ CASPAR SEEMAN
___________________________________
CASPAR SEEMAN
/s/ FRITJOF REGEHR
___________________________________
FRITJOF REGEHR
/s/ EDWARD R. GOLDBERG
___________________________________
EDWARD R. GOLDBERG
/s/ JOCHEN MACKENRODT
___________________________________
JOCHEN MACKENRODT
___________________________________
PRINZ MICHAEL VON LICHTENSTEIN
33
<PAGE>
/s/ SOTIRIS TSOTOURAS
- -------------------------
SOTIRIS TSOTOURAS
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
/s/ SIGNATURE
_________________________
Authorized Signatory
YAROK AZ LTD.
/s/ SIGNATURE
_________________________
Authorized Signatory
EVERGREEN CAPITAL MARKETS LTD.
/s/ SIGNATURE
_________________________
Authorized Signatory
FLB INVESTMENTS LTD.
/s/ SIGNATURE
_________________________
Authorized Signatory
GILDE INVESTMENT FUND B.V.
/s/ SIGNATURE
_________________________
Authorized Signatory
GILDE IV
/s/ SIGNATURE
_________________________
Authorized Signatory
MARIN INVESTMENTS LIMITED
/s/ SIGNATURE
_________________________
Authorized Signatory
30
<PAGE>
/s/ R. AMIT
- -------------------------
RAPHAEL AMIT
/s/ KENNETH MACCRIMMON
_________________________
KENNETH MACCRIMMON
/s/ MARILYN MACCRIMMON
_________________________
MARILYN MACCRIMMON
QUALITY INVESTMENTS L.L.C
/s/ SIGNATURE
_________________________
Authorized Signatory
SVM STAR VENTURES MANAGEMENT GMBH NO.3
/s/ MEIR BAREL
_________________________
Authorized Signatory
By: Dr. Meir Barel (Managing Partner)
31
<PAGE>
_____________________
KENNETH MACCRIMMON
_____________________
MARILYN MACCRIMMON
QUALITY INVESTMENTS L.L.C
_____________________
Authorized Signatory
SVM STAR VENTURES MANAGEMENT GMBH NO.3
_____________________
Authorized Signatory
GS CAPITAL PARTNERS II, L.P.
BY: GS Advisors, L.P.
Its General Partner
BY: GS Advisors, Inc.
Its General Partner
BY: /s/ RICHARD FRIEDMAN
-----------------------------------
Name: Richard A. Friedman
Title: President
GS CAPITAL PARTNERS II, OFFSHORE, L.P.
BY: GS Advisors, L.P.
Its General Partner
BY: GS Advisors, Inc.
Its General Partner
BY: /s/ RICHARD FRIEDMAN
-----------------------------------
Name: Richard Friedman
Title: President
31
<PAGE>
THIS AMENDMENT TO SHAREHOLDERS AGREEMENT made as of the 22nd day of March,
1996,
AMONG:
CREO PRODUCTS INC., a company duly incorporated under the laws of
------------------
Canada, registered extraprovincially in the Province of British
Columbia, and having an office at 3700 Gilmore Way, Burnaby, British
Columbia
(the "COMPANY")
OF THE FIRST PART
AND:
BUSINESS DEVELOPMENT BANK OF CANADA. formerly KNOWN AS FEDERAL
--------------------------------------------- ----------------
BUSINESS DEVELOPMENT BANK, incorporated by special Act of
-------------------------
Parliament: of Canada, having its head office in the City of Montreal,
in the Province of Quebec
("FBDB")
OF THE SECOND PART
AND:
DANIEL GELBART
--------------
("Gelbart")
OF THE THIRD PART
AND:
KENNETH A. SPENCER
------------------
("Spencer")
OF THE FOURTH PART
AND:
AMOS MICHELSON
--------------
("Michelson")
OF THE FIFTH PART
AND:
DAVID PRITCHARD
---------------
("Pritchard" and together with Gelbart and Michelson, the "Management
Shareholders")
OF THE SIXTH PART
AND:
SVE STAR VENTURES ENTERPRISES NO. II LIMITED PARTNERS
-----------------------------------------------------
("STAR II")
and
SVE STAR VENTURES ENTERPRISES NO. III LIMITED PARTNERSHIP
---------------------------------------------------------
("STAR III")
<PAGE>
and
SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
----------------------------------------------------------
("STAR IIIA")
and
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN
------------------------------------------------------
("Interstock")
and
UNICYCLE TRADING COMPANY
------------------------
("Unicycle")
and
D.G. DAN-GAL LTD,
-----------------
("Dan-Gal")
and
YOZMA VENTURE CAPITAL LTD.
--------------------------
("Yozma")
and
SVM STAR VENTURES MANAGEMENT GMBH NO. 3
---------------------------------------
("Star Management")
and
CASPAR SEEMAN
-------------
("Seeman")
and
FRITJOF REGEHR
--------------
("Regehr")
and
2
<PAGE>
EDWARD R. GOLDBERG
------------------
("Goldberg")
and
JOCHEN MACKENRODT
-----------------
("Mackenrodt")
and
PRINZ MICHAEL VON LICHTENSTEIN
------------------------------
("von Lichtenstein")
and
SOTIRIS TSOTOURAS
-----------------
("Tsotouras")
(STAR II, STAR III, STAR IIIA, Interstock, Unicycle, Dan-Gal, Yozma,
Star Management, Seeman, Regehr, Goldberg, Mackenrodt, von
Lichtenstein and Tsotouras are herein called "STAR")
OF THE SEVENTH PART
AND:
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
----------------------------------------
("Evergreen")
and
YAROK AZ LTD.
-------------
("Yarok Az")
and
EVERGREEN CAPITAL MARKETS LTD.
------------------------------
("Capital Markets")
and
3
<PAGE>
FLB INVESTMENTS LTD.
--------------------
("FLB")
(Evergreen, Yarok Az, Capital Markets and FLB are herein called the
"Evergreen Group")
OF THE EIGHTH PART
AND:
GILDE INVESTMENT FUND B.V.
--------------------------
("Gilde Investments")
and
GILDE IV, B.V.
--------------
("Gilde IV")
(Gilde Investments and Gilde IV are herein called "GILDE")
OF THE NINTH PART
AND:
MARIN INVESTMENTS, LIMITED
--------------------------
("Marin")
and
RAPHAEL AMIT
------------
("Amit")
and
KENNETH MACCRIMMON and MARILYN MACCRIMMON
-----------------------------------------
(jointly called "MACCRIMMON")
(Marin, Amit and MacCrimmon are herein called the "MARIN GROUP")
OF THE TENTH PART
AND:
QUALITY INVESTMENTS L.L.C,
--------------------------
("Quality")
OF THE ELEVENTH PART
4
<PAGE>
AND:
G S CAPITAL PARTNERS II, L.P.
-----------------------------
("G S Capital")
and
G S CAPITAL PARTNERS II OFFSHORE, L.P.
--------------------------------------
("G S Offshore")
and
GOLDMAN. SACHS & CO. VERWALTUNGS GMBH
-------------------------------------
("Goldman Gmbh")
and
STONE STREET FUND 1995, L,P.
----------------------------
("Stone Street")
and
BRIDGE STREET FUND 1995. L.P.
-----------------------------
("Bridge Street")
(G S Capital, G S Offshore, Goldman Gmbh, Stone Street and Bridge
Street are herein called the "GOLDMAN SACHS GROUP")
OF THE TWELFTH PART
AND:
HANCOCK INTERNATIONAL PRIVATE EQUITY PARTNERS II - DIRECT FUND LP
-----------------------------------------------------------------
("HIPEP")
OF THE THIRTEENTH PART
AND:
TECHNOLOGY CROSSOVER VENTURES, L.P.
-----------------------------------
("TCVLP")
and
5
<PAGE>
TECHNOLOGY CROSSOVER VENTURES, C.V.
-----------------------------------
("TCVCV")
and
VAL VADEN
---------
("VADEN")
and
MICHAEL SOLOMON
---------------
("SOLOMON")
(TCVLP, TCVCV, VADEN and SOLOMON are herein called the "TCV GROUP")
OF THE FOURTEENTH PART
WHEREAS:
A. The Company, FBDB, Spencer, the Management Shareholders and STAR
entered into a shareholders agreement on the 29th day of April, 1994 to govern
the rights and obligations of the principal shareholders of the Company, which
agreement was mended and additional parties added as of November 21, 1994, as of
June 30, 1995, and as of November 2, 1995 (such agreement, as amended, is
hereinafter referred to as the "SHAREHOLDERS AGREEMENT");
B. The parties hereto desire to make certain amendments to the
Shareholders Agreement to reflect the fact that HIPEP and the TCV Group have
become Shareholders of the Company.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and of the mutual covenants and agreements hereinafter set forth and
other good and valuable consideration (the receipt and adequacy of which are
hereby acknowledged), the parties hereto agree each with the other as follows:
1. Parties
-------
The listing and description of the parties to the Shareholders
Agreement is amended to be identical to the listing and description of the
parties to this Agreement, and the changes are more specifically described as
follows:
(a) HIPEP is added as the parry of the Thirteenth Part; and;
(b) TCV Group is added as the party of the Fourteenth Part..
6
<PAGE>
2. New Parties
-----------
Each of HIPEP, TCVLP, TCVCV, Vaden and Solomon is hereby made a party
to the Shareholders Agreement as of the date of this Amendment to Shareholders
Agreement, and each of such parties agrees to be bound by all of the provisions
of the Shareholders Agreement to the extent such provisions are not mended
hereby. All of the original parties to the Shareholders Agreement agree that
this Amendment to Shareholders Agreement shall be deemed to amend the
Shareholders Agreement as more fully set forth herein. All of the parties to
this Amendment to Shareholders Agreement agree that, except to the extent it is
amended hereby, the Shareholders Agreement shall remain in full force and
effect. All references in the Shareholders Agreement to "the Agreement" or to
"this Agreement" shall be deemed to refer to the Shareholders Agreement as
amended by this Amendment to Shareholders Agreement.
3. Section 1.1.30
--------------
The Shareholders Agreement is amended by deleting section 1.1.30 and
substituting the following-
"1.1.30 "Shareholder" means FBDB, Spencer, each of the
Management Shareholders, each of the Persons comprising
STAR, each of the Persons Comprising the Evergreen Group,
each of the Persons comprising Gilde, each of the Persons
comprising the Marin Group, Quality, each of the Persons
comprising the Goldman Sachs Group, HIPEP, and each of the
Persons comprising the TCV Group, and the , respective
successors or permitted assigns of each of the foregoing;
provided, however, that all of the Persons comprising STAR
and any and all STAR Transferees (together with any Person
or Persons (the "Other Investors") purchasing shares of the
Company or any Related Company pursuant to section 4.3 of
the Share Purchase Agreement) shall be deemed a single
Person and their ownership of Shares (including any shares
of the Company which the Other Investors have acquired, or
have a right to acquire, pursuant to Section 4.3 of the
Share Purchase Agreement) shall be aggregated for the
purposes of this Section 1.130; and provided further,
however, all of the Persons comprising the Evergreen Group
and all Permitted Transferees (as defined in Section 1.35)
of such Persons shall be deemed to be a single Person and
their ownership of Shares shall be aggregated for the
purposes of this Section 1.1.30; and provided further
however, all of the Persons comprising Gilde and all
Permitted Transferees of such Persons shall be deemed to be
a single Person and their ownership of Shares shall be
aggregated for purposes this Section 1.1.30, and provided
further that each of the Persons comprising the TCV Group
and all Permitted Transferees of such Persons shall be
deemed to be a single Person and their ownership of shall be
aggregated for purpose of this Section 1.1.30."
4. Section 3.9
-----------
Section 3.9 of the Shareholders Agreements is deleted, and the
following substituted:
7
<PAGE>
"3.9 Confidentiality of Private Affairs
No Shareholder will (while a Shareholder of or employed by
the Company or at any time thereafter) disclose to any
person not a Shareholder at the time of disclosure, the
private affairs of the company or any of its Related
Companies, contracts or agreements of the Company or its
Related Companies, the financial position of the Company or
its Related Companies (except that the Goldman Sachs Group
may disclose such matters to and consult thereon with its
advisor, Goldman, Sachs & Co., and FBDB, the Evergreen
Group, Gilde, the Marin Group, STAR, and the Goldman Sachs
Group may, in good faith, disclose the financial position of
the Company to a creditor of the Company, if acting in good
faith FBDB, the Evergreen Group, Gilde, the Marin Group,
STAR or the Goldman Sachs Group forms the view that such
disclosure is in the best interests of the Company, or to a
prospective purchaser of its interest in the Company), any
prospects of business of the Company or its Related
Companies which is not public knowledge and will not (either
while such Shareholder is a Shareholder of or employed by
the Company or at any time thereafter) use for its own
purposes (except that FBDB, the Evergreen Group, Gilde, the
Marin Group, STAR, the Goldman Sachs Group and Goldman,
Sachs & Co., HIPEP, and the TCV Group (other than Vaden and
Solomon) shall have the right to refer to their investment
in the Company in their publications and promotional
material) or for any purposes other than those of the
Company any information he may acquire in relation to the
business of the Company or its Related Companies.
Notwithstanding the above, Goldman Sachs Group and its
advisor, Goldman, Sachs & Co., HIPEP and the TCV Group
(other than Vaden or Solomon) may disclose information if
pursuant to a subpoena, Civil Investigative Demand (or
similar process), order, statute, rule or other legal
requirement promulgated or imposed by a court or by a
judicial, regulatory, self-regulatory or legislative body,
organization, agency or committee or otherwise in connection
with any judicial or administrative proceeding (including,
in response to oral questions, interrogatories or requests
for information or documents) in which Goldman, Sachs & Co.
or its Affiliates, HIPEP, or the TCV Group (other than Vaden
and Solomon) is involved."
5. Section 3.11.2
--------------
Section 3.11.2 of the Shareholders Agreement is deleted
and the following substituted:
"3.11.2 Section 3.11.1 does not apply and shall not be
construed or interpreted to restrict the right of the
Goldman Sachs Group or its advisor, Goldman, Sachs & Co. or
any of its Affiliates, or HIPEP or the TCV Group (other than
Vaden or Solomon) to use, information acquired by any of
them in the ordinary course of their investment banking
business, and otherwise than by reason of being a
Shareholder or a party to this Agreement; provided, however,
that nothing in this section 3.11.2 shall operate to relieve
the Goldman Sachs Group or its advisor, Goldman, Sachs &
Co., or any of its Affiliates, or any director nominated by
the Goldman Sachs Group, or HIPEP or the
8
<PAGE>
TCV Group or any of their respective Affiliates, from any
duty or obligation which it may owe to the Company in law or
in equity."
6. Section 3.12
------------
Section 3.12 of the Shareholders Agreement is
amended by the addition of the words " - HIPEP, or the TCV
Group" after the words "the Goldman Sachs Group in section
3.12.2.
7. Section 3.14
------------
Section 3.14 of the Shareholders Agreement is amended by inserting the
words ", HIPEP or the TCV Group (other than Vaden or Solomon) after the words
"the Marin Group" in the preamble.
The second to the last paragraph of Section 3.14 of the Shareholders Agreement
shall have inserted after "the Marin Group," the words ", HIPEP, the TCV Group
(other than Vaden and Solomon)" after the words "the Goldman Sachs Group," to
read as follows:
"Each of FBDB, the Evergreen Group, Gilde, the Marin Group,
HIPEP, the TCV Group (other than Vaden and Solomon), the
Goldman Sachs Group, Spencer and STAR reserves the right to
receive additional information from the Company and its
auditors, which is reasonably required to understand better
the affairs of the Company.
Any director and any Representative in a representative
capacity may pass that and all other information received by
him to the Shareholders he represents."
8. Section 5.21
------------
Section 5.21 of the Shareholders Agreement is amended to
read as follows:
"5.21 Waiver
5.21.1 Notwithstanding any other provision of this
Agreement, any Person that is a member of the Goldman Sachs
Group, HIPEP, and any member of the TCV Group (other than
Vaden and Solomon) may freely sell, transfer or otherwise
dispose of any of its Investment to another member of its
respective Group (other than, in the case of the TCV Group,
Vaden or Solomon) or to an Affiliate of any such Person
(other than, in the case of Vaden or Solomon, an Affiliate
of either) or, in the case of a Person that is a
partnership, to the partners thereof and in the case of a
Person that is a corporation, to the shareholder's thereof
provided that any such transferee shall have agreed to be
bound by the provisions of this Agreement."
9. Section 6.1
-----------
Section 6.1 of the Shareholders Agreement is amended by the
addition of the words "HIPEP, the TCV Group," after the
words "Goldman Sachs Group" wherever they appear.
9
<PAGE>
10. Section 11.7.18
---------------
A new Section 11.7.18 is added to the Shareholders Agreement
as follows:
"11.7.18 if to HIPEP:
Hancock International Private Equity Partners II - Direct
Fund,L.P.
1 Financial Centre, 44th Floor
Boston, Mass 02111
Attention: Surya Chadha/Ofer Nemirovsky
Phone: (617)348-3713
Fax: (617)350-0305
11. Section 11.7.19
---------------
A new Section 11.7.19 is added to the Shareholders Agreement
as follows:
"11.7.19 if to TCVLP:
Technology Crossover Ventures, L.P.
101 Eisenhower Parkway
Roseland, NJ 07068
Attention: Robert C. Bensky
Phone: (201) 228-2234
Fax: (201) 228-2206
Technology Crossover Ventures,L.P.
575 High Street, Suite 400
Palo Alto, CA 94301
Phone: (415) 614-8210
Fax: (415) 614-8222
12. Section 11.7.20
---------------
A new Section 11.7.20 is added to the Shareholders Agreement
as follows:
"11.7.20 if to TCVCV:
Technology Crossover Ventures, L.P.
101 Eisenhower Parkway
Roseland, NJ 07068
Attention: Robert C. Bensky
Phone: (201) 228-2234
Fax: (201) 228-2206
10
<PAGE>
13. Section 11.7.21
---------------
A new Section 11.7.21 is added to the Shareholders Agreement
as follows :
"11.7.21 if to VADEN:
Val Vaden
2480 Sand Hill Road
Menlo Park, CA 94025
Phone: (415) 854-8180
Fax: (415) 854-8183
14. Section 11.7.22
---------------
A new Section 11.7.22 is added to the Shareholders Agreement as
follows:
"11.7.22 if to SOLOMON:
Michael Solomon
One Winding Way
Ross, CA 94957
Phone: (415) 454-1076
Fax: (415) 454-1076
15. Signatories
-----------
The signatories to the Shareholders Agreement are amended to be
identical to the signatories to this Agreement.
16. Effective Date
--------------
This Amendment to Shareholders Agreement shall be deemed to be in full
force and effect as of February , 1996 as to all of the parties hereto.
11
<PAGE>
17. Facsimile Counterparts
----------------------
This Amendment to Shareholders Agreement may be executed in facsimile
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which facsimile counterparts together shall constitute the
same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
CREO PRODUCTS INC.
/s/ TOM KORDYBACK
___________________________
Authorized Signatory
BUSINESS DEVELOPMENT BANK OF CANADA
/s/ SIGNATURE
___________________________
Authorized Signatory
/s/ DANIEL GELBART
___________________________
DANIEL GELBART
/s/ KENNETH A. SPENCER
___________________________
KENNETH A. SPENCER
/s/ AMOS MICHELSON
___________________________
AMOS MICHELSON
/s/ DAVID PRITCHARD
___________________________
DAVID PRITCHARD
SVE STAR VENTURES ENTERPRISES NO. II LIMITED PARTNERSHIP
/s/ MEIR BAREL
___________________________
Authorized Signatory
By: SVM Star Ventures Managementgeselschaft mbH Nr.3 (Managing Partner)
By: Dr. Meir Barel (Managing Partner)
SVE STAR VENTURES ENTERPRISES NO. III LIMITED PARTNERSHIP
/s/ MEIR BAREL
- ------------------------------
Authorized Signatory
By: SVM Star Ventures Managementgeselschaft mbH Nr.3 (Managing Partner)
By: Dr. Meir Barel
SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
/s/ MEIR BAREL
- -------------------------------
Authorized Signatory
By: SVM Star Ventures Managementgeselschaft mbH Nr.3 (Managing Partner)
By: Dr. Meir Barel (Managing Partner)
<PAGE>
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN
/s/ PRINZ MICHAEL VON LIECHTENSTEIN
- ----------------------------------------
Prinz Michael Von Liechtenstein
Authorized Signatory Director
UNICYCLE TRADING COMPANY
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
D.G. DAN-GAL LTD.
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
YOZMA VENTURE CAPITAL LTD.
/s/ SIGNATURE
________________________________________
Authorized Signatory
/s/ MEIR BAREL
- ----------------------------------------
CASPAR SEEMAN
By: SVM Star Ventures Managementgesellschaft mbH Nr. 3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
- ----------------------------------------
FRITJOF REGEHR
By: SVM Star Ventures Managementgesellschaft mbH Nr. 3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
- ----------------------------------------
EDWARD R. GOLDBERG
By: SVM Star Ventures Managementgesellschaft mbH Nr. 3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
- ----------------------------------------
JOCHEN MACKENRODT
By: SVM Star Ventures Managementgesellschaft mbH Nr. 3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
- ----------------------------------------
PRINZ MICHAEL VON LICHTENSTEIN
By: SVM Star Ventures Managementgesellschaft mbH Nr. 3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
- ----------------------------------------
SOTIRIS TSOTOURAS
By: SVM Star Ventures Managementgesellschaft mbH Nr. 3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
<PAGE>
YAROK AZ LTD.
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
EVERGREEN CAPITAL MARKETS LTD.
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
FLB INVESTMENTS LTD.
/s/ SIGNATURE
- -----------------------------------------
Authorized Signatory
GILDE INVESTMENT FUND B.V.
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
GILDE IV
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
MARIN INVESTMENTS LIMITED
/s/ SIGNATURE
- ----------------------------------------
Authorized Signatory
/s/ R. AMIT
________________________________________
RAPHAEL AMIT
/s/ KENNETH R. MACCRIMMON
________________________________________
KENNETH MACCRIMMON
/s/ MARILYN MACCRIMMON
________________________________________
MARILYN MACCRIMMON
<PAGE>
QUALITY INVESTMENTS L.L.C.
/s/ SIGNATURE
- ---------------------------
Authorized Signatory
SVM STAR VENTURES MANAGEMENT GMBH NO. 3
/s/ MEIR BAREL
___________________________
Authorized Signatory
By: Dr. Meir Barel (Managing Partner)
G S CAPITAL PARTNERS II, L.P.
___________________________
Authorized Signatory
G S CAPITAL PARTNERS II OFFSHORE, L.P.
___________________________
Authorized Signatory
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
___________________________
Authorized Signatory
STONE STREET FUND 1995, L.P.
___________________________
Authorized Signatory
BRIDGE STREET FUND 1995, L.P.
___________________________
Authorized Signatory
15
<PAGE>
QUALITY INVESTMENTS L.L.C.
___________________________
Authorized Signatory
SVM STAR VENTURES MANAGEMENT GMBH NO. 3
___________________________
Authorized Signatory
G S CAPITAL PARTNERS II, L.P.
by: GS ADVISORS, INC.
GENERAL PARTNERS
GS ADVISORS, LP.
GENERAL PARTNER
/s/ SIGNATURE
- ----------------------
Authorized Signatory
by: /s/ C. H. Skodinski
C. H. Skodinski, V.P.
G S CAPITAL PARTNERS II OFFSHORE, L.P.
by: GS ADVISORS, INC.
GENERAL PARTNER,
GS ADVISORS, (Cayman) L.P.
GENERAL PARTNER
/s/ SIGNATURE
- ----------------------
Authorized Signatory
by: /s/ C.H. Skodinski
C.H. Skodinski, V.P.
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
/s/ RICHARD FRIEDMAN and /s/ C.H. SKODINSKI
- ----------------------
Authorized Signatory C.H. Skodinski,
Richard A.Friedman Registered Agent
Managing Director
STONE STREET FUND 1995, L.P.
by: STONE STREET Value CORP.
GENERAL PARTNER
/s/ SIGNATURE
- ----------------------
Authorized Signatory
by: /s/ C.H. Skodinski
C.H. Skodinski, V.P.
BRIDGE STREET FUND 1995, L.P.
by: STONE STREET Value CORP.
Managing GENERAL PARTNER
/s/ SIGNATURE
- ------------------------
Authorized Signatory
by: /s/ C.H. Skodinski
C.H. Skodinski, V.P.
<PAGE>
HANCOCK INTERNATIONAL PRIVATE EQUITY PARTNERS II - DIRECT FUND LP
By: Back Bay Partners XVI L.P.
By: Hancock Venture Partners, Inc.
/s/ SIGNATURE
By: _______________________________
Authorized Signatory
TECHNOLOGY CROSSOVER VENTURES, L.P.
By: Technology Crossover Management, L.L.C.,
General Partner
By: ROBERT C. BENSKY
-------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES, C.V.
By: Technology Crossover Management, L.L.C.,
Investment General Partner
By: ROBERT C. BENSKY
-------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
/s/ VAL E. VADEN
_________________________
VAL VADEN
/s/ MICHAEL SOLOMON
_________________________
MICHAEL SOLOMON
16
<PAGE>
THIS AMENDMENT TO SHAREHOLDERS AGREEMENT made as of the ___ day of May,
1997,
AMONG:
CREO PRODUCTS INC., a company duly incorporated under
------------------
the laws of Canada, registered extraprovincially in
the Province of British Columbia, and having an office
at 3700 Gilmore Way, Burnaby, British Columbia
(the "Company")
OF THE FIRST PART
AND
BUSINESS DEVELOPMENT BANK OF CANADA, formerly
--------------------------------------------
known AS FEDERAL BUSINESS DEVELOPMENT BANK.
-------------------------------------------
incorporated by special Act of Parliament of Canada, having its
head office in the City of Montreal, in the Province of Quebec
("FBDB")
OF THE SECOND PART
AND:
DANIEL GELBART
--------------
("Gelbart")
OF THE THIRD PART
AND:
KENNETH A. SPENCER
-----------------
("Spencer")
OF THE FOURTH PART
AND:
AMOS MICHELSON
--------------
("Michelson")
(Gelbart and. Michelson, together, being the "Management
Shareholders")
OF THE FIFTH PART
AND:
DAVID PRITCHARD
---------------
("Pritchard")
OF THE SIXTH PART
AND:
SVE STAR VENTURES ENTERPRISES NO. II LIMITED
------------------------------------------------
PARTNERSHIP
-----------
("STAR II")
and
<PAGE>
SVE STAR VENTURES NO. III LIMITED PARTNERSHIP
---------------------------------------------
("STAR III")
and
SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
-----------------------------------------------------------------
("STAR IIIA")
and
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN
------------------------------------------------------
("Interstock")
and
UNICYCLE TRADING COMPANY
------------------------
("Unicycle")
and
D.G. DAN-GAL LTD.
----------------
("Dan-Gal")
and
YOZMA VENTURE CAPITAL LTD.
-------------------------
("Yozma")
and
SVM STAR VENTURES MANAGEMENT GMBH NO. 3
--------------------------------------
("Star Management")
and
CASPAR SEEMAN
-------------
("Seeman")
and
FRITJOF REGEHR
--------------
("Regehr")
and
2
<PAGE>
EDWARD R. GOLDBERG
------------------
("Goldberg")
and
JOCHEN MACKENRODT
-----------------
("Mackenrodt")
and
PRINZ MICHAEL VON LICHTENSTEIN
------------------------------
("von Lichtenstein")
and
SOTIRIS TSOTOURAS
-----------------
("Tsotouras")
and
ALBERT BULL
-----------
("Bull")
(STAR II, STAR III, STAR IIIA, Interstock, Unicycle,
Dan-Gal, Yozma, Star Management, Seeman, Regebr,
Goldberg, Mackenrodt, von Lichrenstein, Tsotouras and
---
Bull are herein called "STAR")
----
OF THE SEVENTH PART
AND:
EVERGREEN INTERNATIONAL INVESTMENTS N.Y
---------------------------------------
("Evergreen")
and
YAROK AZ LTD).
------------
("Yarok Az")
and
EVERGREEN CAPITAL MARKETS LTD.
------------------------------
("Capital Markets")
3
<PAGE>
and
FLB INVESTMENTS LTD.
-------------------
("FLB")
and
EVERGREEN CANADA-ISRAEL MANAGEMENT LTD.
--------------------------------------
("Canada-Israel")
and
PERISCOPE FUND LLT
------------------
("Periscope")
and
SEYMOUR BRAUN
-------------
("Braun")
(Evergreen, Yarok Az, Capital Markets, FLB,
Canada-Israel, Periscope and Braun are herein called
----------------------------------
the "Evergreen Group")
OF THE EIGHTH PART
AND:
GILDE INVESTMENT FUND B.V.
-------------------------
("Gilde Investments")
and
GILDE IV,B.V.
-------------
("Gilde IV")
(Gilde Investments and Gilde IV are herein called "Gilde")
OF THE NINTH PART
AND:
MARIN INVESTMENTS LIMITED
-------------------------
("Marin")
and
4
<PAGE>
RAPHAEL AMIT
------------
("Amit")
and
KENNETH MACCRIMMON and MARILYN MACCRIMMON
------------------ ------------------
jointly called "MacCrimmon")
(Marin, Amit and MacCrimmon are herein called the "Marin
Group")
OF THE TENTH PART
AND:
QUALITY INVESTMENTS L.L.C.
-------------------------
("Quality")
OF THE ELEVENTH PART
AND:
G S CAPITAL PARTNERS II. L.P.
----------------------------
("G S Capital")
and
G S CAPITAL PARTNERS II OFFSHORE L.P.
-------------------------------------
("G S Offshore")
and
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
-------------------------------------
("Goldman Gmbh")
and
STONE STREET FUND 1995. L.P.
----------------------------
("Stone Street")
and
5
<PAGE>
BRIDGE STREET FUND 1995.L.P.
----------------------------
("Bridge Street")
(G S Capital, G S Offshore, Goldman Gmbh. Stone Street
and Bridge Street are herein called the "Goldman Sachs
Group")
OF THE TWELFTH PART
AND:
HANCOCK INTERNATIONAL PRIVATE EQUITY PARTNERS
---------------------------------------------
II-DIRECT FUND LP.
-----------------
("HIPEP")
OF THE THIRTEENTH PART
AND:
TECHNOLOGY CROSSOVER VENTURES. L.P.
-----------------------------------
("TCVLP")
and
TECHNOLOGY CROSSOVER VENTURES. C.V.
----------------------------------
("TCVCV")
and
VAL YADEN
---------
("VADEN")
and
MICHAEL SOLOMON
---------------
("SOLOMON")
(TCVLP, TCVCV, VADEN and SOLOMON are herein called the "TCV
Group")
OF THE FOURTEENTH PART
AND
VIRGINIA RETIREMENT SYSTEM
--------------------------
("VRS")
and
6
<PAGE>
BRINSON VENTURE CAPITAL FUND III, LP
------------------------------------
("BVCF")
and
BRINSON MAP VENTURE CAPITAL FUND III TRUST
------------------------------------------
(BVCFT")
(VRS, BVC and BVCFT are herein called the "Brinson Group")
OF THE FIFTEENTH PART
AND
JOHN S. STAFFORD. JR.
---------------------
("Stafford")
OF THE SIXTEENTH PART
WHEREAS:
A. The Company, FBDB, Spencer, the Management Shareholders
and STAR entered into a shareholders agreement on the 29th day of April, 1994 to
govern the rights and obligations of the principal shareholders of the Company,
which agreement was amended and additional parties added as of November 21,
1994, as of June 30, 1995, as of November 2, 1995, and as of March 22, 1996,
-------------------------
(such agreement, as amended, is hereinafter referred to as the "Shareholders
Agreement"):
B. The parties hereto desire to make certain amendments to the
Shareholders Agreement for the purpose, among other things, of reflecting the
-------------------------------------------------
fact that certain additional Persons have become Shareholders of the Company.
--------------------------
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the premises and of the mutual covenants and agreements hereinafter set
forth and other good and valuable consideration (the receipt and adequacy of
which are hereby acknowledged), the parties hereto agree each with the other as
follows:
1. Parties
-------
The listing and description of the parties to the
Shareholders Agreement is amended to be identical to the listing and description
of the parties to this Agreement, and the changes are more specifically
described as follows:
(a) the description of the Management Shareholders is amended
to be identical with this Agreement:
(a) Brinson Group is added as the party of the Fifteenth Part
and
(C) Stafford is added as the party of the Sixteenth Part.
7
<PAGE>
2. New Parties
-----------
Each of Bull, Canada-Israel. Periscope. Braun, VRS, BVC. BVCFT, and
-------------------------------------------------------------------
Stafford is hereby made a party to the Shareholders Agreement as of the date
- --------
of this Amendment to Shareholders Agreement, and each of such parties agrees to
be bound by all of the provisions of the Shareholders Agreement to the extent
such provisions are not amended hereby. All of the original parties to the
Shareholders Agreement agree that this Amendment to Shareholders Agreement shall
be deemed to amend the Shareholders Agreement as more fully set forth herein.
All of the parties to this Amendment to Shareholders Agreement agree that,
except to the extent it is amended hereby, the Shareholders Agreement shall
remain in full force and affect. All references in the Shareholders Agreement
to "the Agreement" or to "this Agreement" shall be deemed to refer to the
Shareholders Agreement as amended by this Amendment to Shareholders Agreement.
3. Section 1.1.16
--------------
The Shareholders Agreement is amended by deleting section 1.1.16 and
substituting the following:
"Family Member" means:
(i) A child (whether natural or adopted) sibling or former
--------------------------
spouse of the applicable Shareholder or any person
of the opposite sex to whom that person is married
or with whom that person is living in a conjugal
relationship outside of marriage; and
---
(ii) a trust all of the beneficiaries of which are
---------------------------------------------
either Shareholders or Family Members within the
------------------------------------------------
meaning of paragraph (1) hereof.
-------------------------------
4. Section 1.1.30
--------------
The Shareholders Agreement is amended by deleting
section 1.1.30 and substituting the following:
1.1.30 "Shareholder" means FBDB, Spencer, each of the
Management Shareholders, each of the Persons
comprising STAR, each of the Persons Comprising
the Evergreen Group, each of the Persons
comprising Gilde, each of the Persons comprising
the Marin Group. Quality, each of the Persons
comprising the Goldman Sachs Group, HIPEP, each of
the Persons comprising the TCV Group, each of the
-----------
Persons comprising the Brinson Group, Stafford and
----------------------------------------------
the respective successors or permitted assigns of
each of the foregoing; provided, however, that:
(a) all of the Persons comprising STAR and any and all
STAR Transferees (together with any Person or
Persons (the "Other Investors") purchasing shares
of the Company or any Related Company pursuant to
section 4.3 of the Share Purchase Agreement) shall
be deemed a single Person and their ownership of
Shares (including any shares of the Company which
the Other Investors have acquired, or have a right
to acquire, pursuant to Section 4.3 of the Share
Purchase
8
<PAGE>
Agreement) shall be aggregated for the
purposes of this Section 1.30;
(b) all of the Persons comprising the Evergreen
Group and all Permitted Transferees (as
defined in Section 1.35) of such Persons shall
be deemed to be a single Person and their
ownership of Shares shall be aggregated for
the purposes of this Section 1.1.30:
(c) all of the Persons comprising Gilde and all
Permitted Transferees of such Persons shall be
deemed to be a single Person and their
ownership of Shares shall be aggregated for
purposes of this Section 1.1.30, and
(d) each of the Persons comprising the TCV Group
and all Permitted Transferees of such Persons
shall be deemed to be a single Person and their
ownership of Shares shall be aggregated for purposes
of this Section 1.1.30.
5. Section 3.2.4
-------------
The Shareholders Agreement is amended by deleting section
3.2.4 and substituting the following:
3.2.4 If at any time following the Next Annual Meeting the
board of directors resolves pursuant to the authority
conferred upon it by reason of the amendment of the
Articles provided for in section 3.2.1.2 to appoint an
eighth director, the parties agree to cause their
nominees to the board of directors to appoint a person
who shall have agreed upon by the Company and the
Goldman Sachs Group; and if at any time the board of
directors appoints a ninth director, the parties agree
to cause their nominees to the board of directors to
appoint a person who shall be a nominee of the Brinson
---------------------------------
Group.
-----
6. Section 3.2.6
-------------
The Shareholders Agreement is amended by deleting
section 3.2.6 and substituting the following:
3.2.6 The provisions of Sections 3.2.1 and 3.2.4
shall not at any time apply to any of the
parties described in this Agreement as the
parties of the second to the twelfth parts
inclusive or to the Brinson Group if, at that
------------------------
time, the aggregate number of Shares owned by
the Persons comprising such parties and by any
Affiliate of any such Person to whom any
of such Person has, in accordance with the
provisions of this Agreement, transferred
Shares, is less than 3% of the issued common
shares, and in such case the number of
directors will be correspondingly reduced.
9
<PAGE>
7. Section 3.6
-----------
Section 3.6 of the Shareholders Agreement is deleted,
and the following substituted:
The following matters will only be undertaken by the
Company with the consent of a majority of the directors of
the Company which majority includes the directors of the
Company nominated by FBDB, the Goldman Sachs Group, the
---
Brinson Group and STAR:
-------------
3.6.1 any increase or reduction in the capital of the
Company or any alteration of the Company's capital
structure.
3.6.2 the declaration of dividends on the shares of the
Company.
3.6.3 the redemption or purchase for c??tion or other
retirement of any of its securities.
3.6.4 any alteration of the Articles of Incorporation or
By-laws of the Company.
8. Section 3.7
Section 3.7 of the Shareholders Agreement is deleted,
and the following substituted:
3.7.1 The following matters will only be undertaken by
the Company with the consent of a majority of the
directors of the Company which includes either the
director of the Company nominated by FBDB or the
director of the Company nominated by STAR or the
director of the Company nominated by the Goldman
Sachs Group or the director of the Company
------------------------------
nominated by the Brinson Group:
------------------------------
3.7.1.1 the hiring or termination of the CEO, the
President or any vice-president of the Company.
3.7.1.2 any increase in the remuneration of any officers
or directors of the Company.
3.7.1.3 the issue of shares by the Company, with the
exception of issuances of Employee Reserved Shares
to employees other than the Management
Shareholders.
3.7.1.4 the consolidation, merger or amalganation of the
Company with any other company, association,
partnership or legal entity.
3.7.1.5 any transaction out of the ordinary course of the
business of the Company.
3.7.1.6 the incorporation of a Related Company.
10
<PAGE>
3.7.1.7 any increase in the number of directors of the
Company, except an increase made to appoint a
nominee of a Person who makes an investment in
the Company of not less than $500,000.
3.7.1.8 the expenditure by the Company of any amount
in excess of $100,000 aggregate in any
calendar year for the repurchase of shares
of the Company.
3.7.2 Notwithstanding any provision of the Act, the
Articles of Incorporation of the Company, or
The Bylaws, no director shall be counted in
the quorum, or vote, on any matter relating
primarily to his employment, remuneration or
other compensation as an officer, employee or
agent of the Company or any Affiliate of the
Company.
9. Section 3.8.
------------
Section 3.8 of the Shareholders Agreement is deleted,
and the following substituted:
Subject to the provisions of the applicable provincial or
federal states for such offering, the Company shall
offer to each Shareholder a pro rata right to purchase
future shares allotted, provided the foregoing does not
apply to any allotment pursuant to:
3.8.1 rights of exchange or conversion attached to
shares or other securities of the Company;
3.8.2 an amalgamation;
3.8.3 a compromise or arrangement;
3.8.4 a dividend payable in shares;
3.8.5 the allotment of shares made pursuant to the
terms of any agreement between the Company and
any employee or Director thereof (in the case
of a Director, only so long as such allotment
is part of such Director's compensation)
effective during the period of employment or
appointment and or at the termination of the
employment or the appointment of any such
employee or Director;
3.8.6 an allotment of any of the Employee Reserved
Shares; or
3.8.7 an allotment of any shares issued pursuant to
rights granted to each of the Persons
comprising the Goldman Sachs Group;
or
3.8.8 an allotment of any shares issued pursuant to
those certain Subscription Agreements of even date
herewith between the Company and various persons
providing for the allotment of an aggregate
of 1,666,667 shares; or
11
<PAGE>
3.8.9 an allotment of any shares issued to a
right hereto granted to Montgomery Securities
pursuant to an agreement of even date herewith
between the Company and Montgomery Securities.
10. SECTION 3.9
-----------
Section 3.9 of the Shareholders Agreement is deleted, and the
following substituted:
No Shareholder will (while a Shareholder of or employed by
the Company or at any time thereafter) disclose to any
person not a Shareholder at the time of disclosure, the
private affairs of the company or any of its Related
Companies, contracts or agreements of the Company or its
Related Companies, the financial position of the Company or
its Related Companies (except that the Goldman Sachs Group
and the Brinson Group may disclose such matters to and
---------------------
consult thereon with their respective advisors, Goldman,
----------------
Sachs & Co. and Brinson Partners, Inc., and FBDB, the
-------------------------
Evergreen Group, Glide, the Marin Group, STAR, the Goldman
Sachs Group and the Brinson Group may, in good faith,
---------------------
disclose the financial position of the Company to a creditor
of the Company, if acting in good faith FRDB, the Evergreen
Group, Gilde, the Marin Group, STAR, the Goldman Sachs Group
or the Brinson Group forms the view that such disclosure is
--------------------
in the best interests of the Company, or to a prospective
purchaser of its interest in the Company), any prospects of
business of the Company or its Related Companies which is
not public knowledge and will not (either while such
Shareholder is a Shareholder of or employed by the Company
or at any time thereafter) use for its own purposes (except
that FBDB, the Evergreen Group, Gilde, the Marin Group,
STAR, the Goldman Sachs Group and Goldman, Sachs & Co. and
---
the Brinson Group and Brinson Partners, Inc. shall have the
-------------------------------------------
right to refer to their investment in the Company in their
publications and promotional material) or for any purposes
other than those of the Company any information any of them
-----------
may acquire in relation to the business of the Company or
its Related Companies.
Notwithstanding the above, Goldman Sachs Group and its
advisor, Goldman, Sachs & Co., and the Brinson Group and its
-----------------------------
advisor, Brinson Partners, Inc. respectively may disclose
------------------------------
information if pursuant to a subpoena, Civil Investigative
Demand (or similar process), order, statute, rule or other
legal requirement promulgated or imposed by a court or by a
judicial, regulatory, self-regulatory or legislative body,
organisation, agency or committee or otherwise in connection
with any judicial or administrative proceeding (including,
in response to oral questions, interrogatories or requests
for information or documents) in which Goldman, Sachs & Co.
or its Affiliates is involved or in which Brinson Partners,
----------------------------
Inc. or its Affiliates is involved, respectively.
------------------------------------------------
12
<PAGE>
11. Section 3.11
------------
Section 3.11.2 of the Shareholders Agreement is deleted, and
the following substituted:
Section 3.11.1 does not apply and shall not be construed or
interpreted to restrict the right of the Goldman Sachs Group
or its advisor, Goldman, Sachs & Co. or any of its
Affiliates, or the Brinson Group or its advisor, Brinson
--------------------------------------------
Partners Inc., or HIPEP or the TCV Group (other than Vaden
------------
and Solomon) to use information acquired by any of them in
the ordinary course of their investment banking business,
and otherwise than by reason of being a Shareholder or a
party to this Agreement; provided, however, that nothing in
this Section 3.11.2 shall operate to relieve the Goldman
Sachs Group or its advisor, Goldman Sachs & Co., or any of
its Affiliates, or any director nominated by the Goldman
Sachs Group, or the Brinson Group or its advisor, Brinson
--------------------------------------------
Partners, Inc., or any of its Affiliates, or any director
---------------------------------------------------------
nominated by the Brinson Group, or HIPEP or the TCV Group
------------------------------
from any duty or obligation which it may owe to the Company
in law or in equity."
12. Section 3.12
------------
Section 3.12 of the Shareholders Agreement is deleted, and
the following substituted:
No Shareholder will, while a Shareholder of the Company, or
at any time during the period of two years from the date
that such Shareholder ceases to be a shareholder of the
Company, directly or indirectly, as principal, agent,
trustee, or through the agency of any incorporation,
partnership, association or agent or agency, within North
America, Europe or Japan:
3.12.1 solicit, encourage or suggest to any Shareholder
or Shareholders or employee or employees or agent
or agents of the Company or its Related Companies
that such Shareholder or Shareholders or employee
or employees or agent or agents or any of them
leave the employ of the Company or its Related
Companies or cease to act as its agent;
3.12.2 other than FBDB, the Evergreen Group, GLide, the
Marin Group, the Goldman Sachs Group, the Brinson
-----------
Group or STAR, engage in a line of business that
-----
is competitive with the business now, or at any
time while such Shareholder is employed by or acts
as a director of the Company, carried on by the
Company
3.12.3 canvass or solicit any business, if doing so would
in any way, directly or indirectly, be detrimental
to the business or best interest of the Company,
from any person, who shall at any time while such
Shareholder was a Shareholder, have been a client
or customer of the Company or any of its Related
Companies provided that nothing in this Section
3.12.3 shall be construed or interpreted to
restrict the right of Goldman, Sachs & Co. or
--
Brinson Partners, Inc. or any Affiliate of either
---------------------- ------
of
--
13
<PAGE>
them to carry on the business of investment
----
banking or money management with or for such
----------------
person.
13. Section 3.14
------------
Section 3.14 of the Shareholders Agreement is deleted, and the
following substituted:
3.14.1 The Company shall, and the Board of Directors
shall cause the officers of the Company to,
prepare and provide to the Board, FBDB, the
Evergreen Group, Gilde, the Marin Group, HIPEP,
the TCV Group (other than Vaden and Solomon), the
Goldman Sachs Group, the Brinson Group, Spencer
-----------------
and STAR:
3.14.1.1 within 30 days before the end of each fiscal year
and at other times as it may be prepared, a budget
for the forthcoming 12-month period comprising
projected statement of income and expenses cash
flow projections and pro forma balance sheet for
the coming year;
3.14.1.2 within 30 days of the end of each month, unaudited
financial statements including a balance sheet as
at the end of such month and statements of income
or loss, with comparatives to the proceeding
fiscal year and the budget for the corresponding
period;
3.14.1.3 within 90 days of the end of each fiscal year,
audited financial statements including without
limitation a balance sheet prepared as at the end
of such year, and statements of income or loss,
change in financial position and changes in
retained earnings for such fiscal year, with
comparatives to the previous fiscal year;
3.14.1.4 within 30 days of the end of each fiscal quarter,
unaudited financial statements including without
limitation a balance sheet prepared as at the end
of such quarter, and statements of income or loss,
changes in financial position and changes in
retained earnings for such fiscal quarter, with
comparatives to the previous fiscal quarter;
3.14.1.5 from time to time, as required by the Board a
strategic plan for the forthcoming 12-month
period, within 60 days of receipt of a request for
such plan from the Board;
3.14.1.6 such other information, accounts, data and
projections as any director may reasonably request
from time to time.
3.14.2 Each of FBDB, the Evergreen Group, Gilde, the
Marin Group, HIPEP, the TCV Group (other than
Vaden and Solomon), the Goldman Sachs Group,
Spencer, the Brinson Group and STAR reserves the
-----------------
right to receive additional information from the
Company and its auditors, which is reasonably
required to understand better the affairs of the
Company. Any director
14
<PAGE>
and any Representative in a representative
capacity may pass that and all other information
received by such director or Representative to the
----------------------------------
Shareholders represented by such director or
-------------------
Representative
--------------
14. Section 3.16
------------
Section 3.16.3 of The Shareholders Agreement is deleted, and
the following substituted:
3. 16.3 Upon the nominee of the Goldman Sachs Group
being elected or appointed a director, such nominee shall be
appointed to the Compensation Committee, the audit
committee, and the finance committee if such committee is
established, and shall have the right to be appointed to any
other committee established by the Board of Directors, and
---
upon the nominee of the Brinson Group being elected or
------------------------------------------------------
appointed a director, such nominee shall be appointed to the
------------------------------------------------------------
Compensation Committee.
----------------------
15. Section 3.17
------------
Section 3.17 of the Shareholders Agreement is deleted, and the
following substituted:
The Board of Directors of any subsidiary of the Company
which conducts, or which is proposed to conduct, a material
portion of the Company's business shall be identical to the
Board of Directors of the Company as from time to time
constituted (including the rights of the Representatives to
attend meetings of such Board of Directors and receive all
information and materials presented to the Board). The
decision whether a subsidiary is conducting, or is proposed
to conduct, a material portion of the Company's business
shall be made from time to time by, a majority of the Board
of Directors of the Company which majority shall include
either the director nominated by FBDB or the director
nominated by STAR or the director nominated by the Goldman
Sachs Group or the director nominated by the Brinson Group.
----------------------------------------------
The Board of Directors of any other subsidiary of the
Company shall be comprised as determined by the Board of
Directors of the Company from time to time and shall report
quarterly to the Board of Directors of the Company.
16. Section 3.18
------------
Section 3.18 of the Shareholders Agreement is deleted, and
the following substituted:
3.18.1 If at any time after November 2, 1997, and
----------------
provided that the Company has not completed an
initial public offering of Shares, a majority of
the directors nominated by FBDB, STAR, Spencer,
the Goldman Sachs Group, the Brinson Group and the
-----------------
employees that hold shares granted from the
Employee Reserved Shares (together, the "Special
Directors") consider that the Company is
significantly
15
<PAGE>
underpeforming, they may so declare by notice in
writing (a "Special Event Notice") to the Company.
3.18.2 If, within 90 days of a Special Event Notice, the
Company does not complete a sale of Shares to a
Person who deals with the Company at arm's length
as a price of not less than US$14.00 per share
(net of the value of any other securities issued
or other consideration granted or which may be
acquired by such person pursuant to a right
granted at the time of such sale), for aggregate
gross proceeds of not less than US$5,000,000, a
majority of the Special Directors may, in their
discretion, elect and have the right to
(a) terminate the appointment of the CEO then
holding office and appoint a new CEO; or
(b) seek a buyer for the assets and undertaking
of the Company and any subsidiary of the
Company; or
(c) seek a buyer for the common shares of the
Company then issued and outstanding.
3.18.3 If a majority of the Special Directors make an
election pursuant to section 3.18.2 (b) or (c)
they shall have the authority to negotiate the
terms of any such sale and if agreement is
reached,
(a) with respect to a sale pursuant to section
3.18.2 (b), each Shareholder shall be bound
to vote its Shares in favour of any
resolution of holders of Shares that may be
required in crater to implement the agreement
and carry it into effect;
(b) with respect to a sale pursuant to section
3.18.2 (c), each Shareholder shall be bound
to sell its Shares at the price and on the
terms set out in the agreement, and the
provisions of Article 5 and 6 of this
Agreement shall not apply to any such sale;
provided, however, that no Shareholder shall
be bound to sell such Shareholder's Shares at
a price or on terms which are different from
those applicable to a sale by any other
Shareholder.
17. Section 4.2
-----------
Section 4.2 of the Shareholders Agreement is deleted, and
the following substituted:
No Employee Bonus may be declared to Spencer,
Gelbart or Michelson, and no Employee Restated
Shares may be issued to Spencer, Gelbart or
Michelson by the Company without the prior written
approval of the Compensation Committee which
approval must include the affirmative vote of the
STAR
16
<PAGE>
nominee or the FBDB nominee or the Goldman Sachs
nominee or the nominee of the Brinson Group.
-----------------------------------
18. Sections 5.20, 5.21 and 5.22
-----------------------------
Sections 5.20, 5.21 and 5.22 of the Shareholders Agreement
are deleted, and the following substituted:
5.20 Transfers pursuant to certain agreements made as of
July 18, 1995 among Gelbart, Spencer and Summit Labuan
Trust and transfers to Family Members
The provisions of this Article 5 shall not apply to any
-------------------------------------------------------
sale, transfer or other disposition of any Investment:
-----------------------------------------------------
(a) pursuant to those certain agreements made as of
July 18, 1995 among Gelbert, Spencer and Summit
Labuan Trust, or,
(b) by a Shareholder to a Family Member.
5.21 Transfers by Persons in Goldman Sachs Group, HIPEP,
---------------------------------------------------
TCV Group and Brinson Group
---------------------------
Notwithstanding any other provision of this Agreement, any
Person that is a member of the Goldman Sachs Group, HIPEP, A
-
the TCV Group (other than Vaden and Solomon), or the Brinson
--- --------------
Group may freely sell, transfer or otherwise dispose of any
-----
of its Investment to another number of its respective Group
(other than, in the case of the TCV Group, Vaden or Solomon)
or to an Affiliate of any such Person (other than, in the
case of Vaden or Solomon, an Affiliate of either) or, in the
case of a Person that is a partnership, to the partners
thereof, and in the case of a Person that is a corporation,
to the shareholders thereof, and in the case of a Person
---------------------------
that is a Trust, to the beneficiaries thereof, provided that
---------------------------------------------
any such transferee shall have agreed to be bound by the
provisions of this Agreement."
5.22 Waiver
------
Notwithstanding any other provision of this Article 5, each
of the Others may waive by notice in writing delivered to
the Secretary of the Company the prior right to purchase,
receive or otherwise acquire such portion of the Investment
of the Offeror set out in Section 5.1.
Section 5.23
-------------
No sale, transfer or other disposition of any Investment may
be made pursuant to any of Section 5.10, 5.11, 5.12, 5.15.
5.18, 5.19 or 5.21 that will have the effect of violating
the limitation on the number of shareholders of the Company
that is set out in the Articles of the Company.
17
<PAGE>
19. Section 6.1.
------------
Section 6.1 of the Shareholders Agreement is deleted and the
following is substituted:
6.1 Subject to the procedures relating to the rights of
first refusal described in Article 5 above, if any,
Shareholder other than FBDB, STAR, the Evergreen Group,
Gilde, the Marin Group, the Goldman Sachs Group, HIPEP,
the TCV Group, the Brinson Group or Spencer (the
-----------------
"Seller") shall wish to sell, exchange or transfer any
of its shares (the "Subject Shares) to any person other
than a Shareholder (the "Buyer"), the Seller shall give
to the other Shareholders (including FBDB, STAR, the
Evergreen Group, Glide, the Marin Group, the Goldman
Sachs Group, HIPEP, the TCV Group, the Brinson Group
-----------------
and Spencer) an equal right respectively, to sell to the
Buyer all or an equivalent portion, as the case may be,
of their shares at the same price and terms as are
applicable to the Subject Shares.
20. Section 7.16
------------
Section 6.1 of the Shareholders Agreement is deleted and
the following is substituted:
7.16 Indemnification of the Company. The Company may
require, in connection with any distribution of Shares as
herein contemplated, that the Company shall have received an
undertaking satisfactory to it from the Selling Shareholders
to indemnify and hold harmless (in the same manner and to
the same extent as set forth in subsection 7.10) the Company
for and on behalf of itself and for and on behalf of and in
trust for each director and officer of the Company and each
other person, if any, who controls the Company within the
meaning of the United States Securities Act of 1933 with
respect to any statement, omission, misrepresentation or
other matter or thing referred to in section 7.10 which is
based upon or results from any information relating solely
to a Selling Shareholder in the Disclosure Documents.
Provided, however, that the Company may upon the advice of
----------------------------------------------------------
counsel, and upon such conditions as the Company may
----------------------------------------------------
determine, waive the foregoing requirements in respect of
---------------------------------------------------------
any Selling Shareholder.
-----------------------
21. Section 11
----------
Section 11 of the Shareholders Agreement is amended by the
addition of the following provisions
11.7.23 if to BULL:
18
<PAGE>
11.7.24 if to Canada-Israel:
11.7.25 if to Periscope:
11.7.26 if to Braun:
11.7.27 if to any of VRS, BVCF, and BVCFT:
in care of Brinson Partners Inc.
209 South La Salle Street
Chicago, IL 60604
Attention: Robert D. Blank
Telephone: (312) 220-7182
Fax: (312) 220-7110
11.7.28 if to Stafford:
22, Signatories
-----------
The signatories to the Shareholders Agreement are amended to be
identical to the signatories to this Agreement.
23. Effective Date
--------------
This Amendment to Shareholders Agreement shall be deemed to be in
full force and effect as of May _, 1997 as to all of the parties hereto.
19
<PAGE>
24. Facsimile Counterparts
----------------------
This Amendment to Shareholders Agreement may be executed in facsimile
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which facsimile counterparts together shall constitute the
same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
CREO PRODUCTS INC.
/s/ TOM KORDYBACK
_______________________
Authorized Signatory
BUSINESS DEVELOPMENT BANK OF CANADA
/s/ LISA MAHLER
_______________________
Authorized Signatory
/s/ DANIEL GELBART
_______________________
DANIEL GELBART
/s/ KENNETH SPENCER
_______________________
KENNETH A. SPENCER
/s/ AMOS MICHELSON
_______________________
AMOS MICHELSON
/s/ TOM KORDYBACK,
Attorney in Fact
_______________________
DAVID PRITCHARD
SVE STAR VENTURES ENTERPRISES NO. II LIMITED PARTNERSHIP
/s/ MEIR BAREL
_______________________
Authorized Signatory
SVE STAR VENTURES ENTERPRISES NO. III LIMITED PARTNERSHIP
/s/ MEIR BAREL
_______________________
Authorized Signatory
SVE STAR VENTURES ENTERPRISES NO. IIIA LIMITED PARTNERSHIP
/s/ MEIR BAREL
_______________________
Authorized Signatory
20
<PAGE>
INTERSTOCK ANSTALT FUR VERMOGENS UND TRUST VEWALTUNGEN
/s/ PRINZ MICHAEL VON LIECHTENSTEIN,
DIRECTOR
___________________________________
Authorized Signatory
UNICYCLE TRADING COMPANY
_______________________
Authorized Signatory
D.G. DAN-GAL LTD.
/s/ MEIR BAREL
_______________________
Authorized Signatory
By: Dr. Meir Barel
YOZMA VENTURE CAPITAL LTD.
/s/ MEIR BAREL
_______________________
Authorized Signatory
/s/ MEIR BAREL
_______________________
CASPAR SEEMAN
By: SVM Star Ventures Managementgesellschaft mbH Nr.3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
_______________________
FRITJOF REGEHR
By: SVM Star Ventures Managementgesellschaft mbH Nr.3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
_______________________
EDWARD R. GOLDBERG
By: SVM Star Ventures Managementgesellschaft mbH Nr.3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
_______________________
JOCHEN MACKENRODT
By: SVM Star Ventures Managementgesellschaft mbH Nr.3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ PRINZ MICHAEL VON LICHTENSTEIN
__________________________________
PRINZ MICHAEL VON LICHTENSTEIN
By: SVM Star Ventures Managementgesellschaft mbH Nr.3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
/s/ MEIR BAREL
_______________________
SOTIRIS TSOTOURAS
By: SVM Star Ventures Managementgesellschaft mbH Nr.3 (Trustee)
By: Dr. Meir Barel (Managing Partner)
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
/s/ SIGNATURE
_______________________
Authorized Signatory
21
<PAGE>
YAROK AZ LTD.
/s/ SIGNATURE
______________________________
Authorized Signatory
EVERGREEN CAPITAL MARKETS LTD.
/s/ SIGNATURE
______________________________
Authorized Signatory
FLB INVESTMENTS LTD.
/s/ SIGNATURE
______________________________
Authorized Signatory
GILDE INVESTMENT FUND B.V.
/s/ LJ VAN DRIEL
______________________________
Authorized Signatory
GILDE IV
/s/ LJ VAN DRIEL
______________________________
Authorized Signatory
MARIN INVESTMENTS LIMITED
/s/ SIGNATURE
______________________________
Authorized Signatory
/s/ R. AMIT
______________________________
RAPHAEL AMIT
/s/ KENNETH MACCRIMMON
______________________________
KENNETH MACCRIMMON
/s/ MARILYN MACCRIMMON
______________________________
MARILYN MACCRIMMON
22
<PAGE>
QUALITY INVESTMENTS L.L.C.
/s/ SIGNATURE
______________________________
Authorized Signatory
SVM STAR VENTURES MANAGEMENT GMBH NO. 3
/s/ MEIR BAREL
______________________________
Authorized Signatory
As Trustee for: Caspar Seemann, Fritjof Regehr, Edward R. Goldberg,
Jochen Mackenrodt, Prinz Michael v. Lichtenstein, Sotiris Tsotouras
By: Dr. Meir Barel
Managing Partner
G S CAPITAL PARTNERS II L.P.
/s/ SIGNATURE
______________________________
Authorized Signatory
G S CAPITAL PARTNERS II OFFSHORE, L.P.
/s/ SIGNATURE
______________________________
Authorized Signatory
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
/s/ SIGNATURE
______________________________
Authorized Signatory
STONE STREET FUND 1995, L.P.
/s/ SIGNATURE
______________________________
Authorized Signatory
BRIDGE STREET FUND 1995, L.P.
/s/ SIGNATURE
______________________________
Authorized Signatory
23
<PAGE>
HANCOCK INTERNATIONAL PRIVATE EQUITY PARTNERS II - DIRECT FUND LP
By: Back Bay Partners XVI L.P.
By: Hancock Venture Partners, Inc.
By: /s/ SIGNATURE
________________________________
Authorized Signatory
TECHNOLOGY CROSSOVER VENTURES, L.P.,
By: Technology Crossover Management, L.L.C.,
General Partner
By: /s/ SIGNATURE
________________________________
Name: Robert Bensky
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES, C.V.
By: Technology Crossover Management, L.L.C.,
Investment General Partner
By: /s/ SIGNATURE
________________________________
Name: Robert Bensky
Title: Chief Financial Officer
/s/ SIGNATURE
_______________________________
VAL VADEN
/s/ MICHAEL SOLOMON
_______________________________
MICHAEL SOLOMON
/s/ SIGNATURE
_______________________________
ALBERT BULL
EVERGREEN CANADA-ISRAEL MANAGEMENT LTD.
By: /s/ SIGNATURE
Authorized Signatory
EVERGREEN INTERNATIONAL INVESTMENTS N.V.
By: /s/ SIGNATURE
Authorized Signatory
PERISCOPE FUND LLT
By: Weiss Peck & Greer, LLC, its agent
By: /s/ SIGNATURE
/s/ SIGNATURE
_______________________________
SEYMOUR BRAUN
YARDSWORTH CORPORATION, N.V.
By: _______________________________
Its:
THE PERISCOPE I. FUNDS, L.P.
By: Robertson Stephens & Co. Group LLC, its agent
By: /s/ SIGNATURE
_______________________________
24
<PAGE>
VIRGINIA RETIREMENT SYSTEM
By: Brinson Partners, Inc. under Power of Attorney
By: /s/ SIGNATURE
___________________________________
Its: PARTNER
BRINSON VENTURE CAPITAL FUND III, LP
By: BRINSON PARTNERS, INC.,, a Delaware corporation
By: /s/ SIGNATURE
___________________________________
Its: PARTNER
BRINSON TRUST COMPANY AS TRUSTEE FOR THE BRINSON MAP VENTURE CAPITAL
FUND III TRUST, a group collective investment trust
By: /s/ SIGNATURE
___________________________________
Its: PARTNER
/s/ SIGNATURE
____________________________________
JOHN S. STAFFORD, JR.
25
<PAGE>
EXHIBIT 10.5
Creo Products Inc. Employee Profit Sharing Plan
- -----------------------------------------------
Creo Products Inc. Employee Profit Sharing Plan was approved by the Board of
Directors on November 20/21, 1997 by the following resolution:
On a motion by Colin Evans, seconded by Amos Michelson and approved unanimously,
it was RESOLVED THAT the resolution below (Resolution No. R9 - November 20/21,
1997) regarding the Employee Profit Sharing Plan be approved and confirmed.
(Resolution No. R9 - November 20/21, 1997)
RESOLVED that the Company adopt, in respect of any fiscal year following the
termination of the Shareholders' Agreement (as amended) (the "Shareholders'
Agreement") an Employee Profit Sharing Plan embodying the same terms and
conditions as those presently contained in Articles 4.1 and 4.2 of the
Shareholders' Agreement, with such modifications, if any, as the Compensation
Committee, together with the Chief Financial Officer, consider appropriate.
The Articles 4.1 And 4.2 of the Shareholders' Agreement dated April 29/th/, 1994
and as amended November 2/nd/, 1995 and May 1997 are as follows:
4.1 Distribution of Bonuses and Employee Reserved Shares
The Company may pay an Employee Bonus to employees of the Company and its
subsidiaries, in such aggregate amount as the Company deems appropriate, and may
issue all or any portion of the Employee Reserved Shares, provided:
4.1.1 the Employee Bonus shall only be paid from funds which constitute the
Operating Profit for the applicable fiscal year;
4.1.2 the aggregate of all Employee Bonuses declared for the applicable fiscal
year shall not exceed 12% of the Base Amount (as defined below) and shall
be determined as follows:
(a) Employee Bonuses may be paid to all employees of the Company, other
than Spencer, Gelbart, and Michelson, in such amount, not exceeding
in the aggregate 9% of the Base Amount, as the Board of Directors
may determine;
(b) Employee Bonuses may, at the sole discretion of the Company's
management be paid to any employees of the Company, other than
Spencer, Gelbart, and Michelson, in an aggregate amount which is no
greater than 3% of the Base Amount;
(c) for purposes of this Section 4.1.2. the Base Amount in any fiscal
year shall be an amount equal to:
(i) Operating Profit, less
(ii) 12% of Average Shareholders Equity
4.1.3 the Employee Reserved Shares may only be allocated and issued with the
consent of the Company's Board of Directors.
4.1.4 any decisions made pursuant to the Employee Bonus and the Employee
Reserved Shares plans for a particular fiscal year shall not be
subsequently changed within the applicable fiscal year.
4.2 Limitation
No Employee Bonus may be declared to Spencer, Gelbart of Michelson, and
no Employee Reserved Shares may be issued to Spencer, Gelbart of Michelson by
the Company without the prior written approval of the Compensation Committee
which approval must include the affirmative vote of the STAR nominee or the FBDB
nominee or the Goldman Sachs nominee or the nominee of the Brinson Group.
<PAGE>
EXHIBIT 23.1
[KPMG LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Creo Products Inc.
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in this registration statement of Form F-
1.
/s/ KPMG LLP
Chartered Accountants
Vancouver, Canada
May 24, 1999
<PAGE>
EXHIBIT 23.2
[PriceWaterhouse Letterhead]
May 24, 1999
Consent of Independent Accountants
We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form F-1 of our report dated November 20, 1997, which
appears in such prospectus. We also consent to the references to us under the
headings "Experts" in such prospectus.
/s/ Price Waterhouse
Chartered Accountants
Vancouver, British Columbia
