INDEX

EXHIBIT 10.1

CREO/ HEIDELBERG JOINT VENTURE AGREEMENT
AND APPENDICES

INDEX

Document Pages

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

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

AGREEMENT

THIS AGREEMENT made as of the 4th day of May, 1998

BETWEEN:

CREO PRODUCTS INC., a Canadian company with its business offices at
0000 Xxxxxxx Xxx, Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0

("CREO")

AND:

HEIDELBERGER DRUCKMASCHINEN AG, a German company with its business
offices at Xxxxxxxxxx-Xxxxxx 00-00, X-00000 Xxxxxxxxxx, Xxxxxxx

("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;

(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

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;

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 XXXX and one of whom
shall be nominated by HD.

4.4. Initial Directors

The initial Directors of JVCO shall be Xxxx Xxxxxxxxx as the nominee of
CREO and Xxxxxxxx Xxxxxxxx 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.

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 XXXX 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.

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.

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

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

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
XXXX 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, XXXX 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

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;

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.

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)

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.

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.
0000 Xxxxxxx Xxx
Xxxxxxx Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0

Attention: Xxx Xxxxxxxxx
Chief Financial Officer

Fax: (000) 000-0000

If to HD:

Xxxxxxxxxxxx Druckmaschinen AG
Xxxxxxxxxxx
00000 Xxxx, Xxxxxxx

Attention: Head of Business Unit Pre-Press
Fax: 000-00-000-000-0000

With a copy to:

Xxxxxxxxxxxx Druckmaschinen AG
Kurfursten-Anlage 52-60,
D-69115 Heidelberg, Germany

Attention: General Counsel

Fax: 000-00-0000-00-00-00

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.

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. XXXXXXXXXXXX DRUCKMASCHINEN AG
by its duly authorized signatory by its duly authorized signatories

/s/ XXXX XXXXXXXXX /s/ X. XXXXXXX
--------------------------------- ----------------------------------
Xxxx Xxxxxxxxx, CEO Xxxxxxxx Xxxxxxx, Member of
Mgmt Board

/s/ SIGNATURE
----------------------------------
General Counsel

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;

(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

(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;

(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;

(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 Xxxxxxx 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 Xxxxxxx
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

(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.

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. XXXX'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

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

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

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.

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

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.

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

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
XXXX 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.

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);

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;

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. Xxxx 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

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.

10. Colour Management, Screening and Scan Software

10.1 HD's and XXXX'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.

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.

4. Use of Intellectual Property Generally by XXXX

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

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

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) X.X. Xxxxxxxxx and Sons
(ii) Xxxxx Corporation
(iii) Quebecor Printing
(iv) World Color Press
(v) Xxxxx Corporation
(vi) Quad Graphics
(vii) Shorewood
(viii) Cadmus Communications
(ix) American Mail Well
(x) Courier
(xi) Judds
(xii) Xxxx 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

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.

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