X-Rite, Incorporated

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Certain Relationships and Related TransactionsXR Ventures, LLC is a joint venture between the Company and Peter M. Banks and James A. Knister. Themain focus of XR Ventures was to find, acquire, develop, and operate interests in businesses or technologiesimportant to the growth of new markets for the Company. Prior to December 2003, Mr. Banks and Mr. Knister wereresponsible for the day-to-day operations of XR Ventures with input from the Company. The Company funded allacquisitions made by XR Ventures and, in exchange, will receive its investment back in full before any distributionsare made. The Company will receive 80 percent of the gains on investments. Dr. Banks and Mr. Knister will receive 20percent of the gains on investments. Mr. Banks and Mr. Knister are reimbursed for their expenses, but receive nosalary or additional Board fees relating to XR Ventures. The Company reached the XR Ventures arrangement with Mr.Banks and Mr. Knister through arms-length negotiation, in which the Company was represented by it regular counseland Mr. Banks and Mr. Knister were represented by separate counsel. In December of 2003, the Company, Mr.Banks and Mr. Knister amended the XR Ventures, LLC agreement, and Mr. Banks and Mr. Knister resigned asmanaging members in XR Ventures, LLC. Mr. Banks and Mr. Knister remain members of XR Ventures, LLC, but haveno formal day to day operating duties.The Company entered into a five year lease on October 2, 2000 on a facility owned by a partnership in whichStanley W. Cheff is a fifty percent partner. The Company paid $237,895 of rent during 2003 for this facility. The leaseagreement was reached through arms-length negotiation with the partnership which was represented by its owncounsel. The Board of Directors believes the terms of this lease are at least as favorable to the Company as couldhave been obtained from unrelated parties.Shareholder Proposals – Annual MeetingAny proposal of a shareholder intended to be presented at the 2005 Annual Meeting of Shareholders of theCompany must be received by the Company at its headquarters, 3100 44 th Street, S.W., Grandville, Michigan 49418,no later than December 9, 2004. Shareholders who wish to submit a proposal not intended to be included in theCompany’s Proxy Statement relating to the 2005 Annual Meeting, but to be presented at that meeting, and whopropose to nominate a director for election at that meeting, are required by the Company’s Articles of Incorporationand Bylaws to provide notice of such proposal or nomination to the Company. Nominations for directors must bereceived not later than thirty days prior to the date of the Annual Meeting (or within seven days after the Companymails, or otherwise gives notice of the date of such meeting, if such notice is given less than forty days prior to themeeting date). All other proposals must be received not less than sixty nor more than ninety days prior to thescheduled meeting date, provided, that if less than seventy days notice, or prior public disclosure of the date of ascheduled meeting is given or made, notice by the shareholder to be timely must be received not later than the closeof business on the tenth day following the earlier of the day on which such notice of the date of the scheduled meetingwas mailed or the day on which such public disclosure was made. This notice must contain the information requiredby the Company's Articles Incorporation and Bylaws and must be submitted in accordance with the proceduresoutlined therein.MiscellaneousThe Company’s Annual Report to Shareholders including financial statements, as well as the Company’sannual report on Form 10-K, is being mailed to shareholders with this Proxy Statement.Management is not aware of any matters to be presented for action at the Annual Meeting other than as setforth in this Proxy Statement. If other business should come before the meeting, the persons named as proxy holdersin the accompanying Proxy intend to vote the shares in accordance with their judgment, and discretionary authority todo so is included in the Proxy.SHAREHOLDERS ARE URGED TO PROMPTLY DATE, SIGN, AND RETURNTHE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.By Order of the Board of DirectorsMary E. ChowningSecretaryApril 7, 2004Grandville, Michigan20
Appendix AX-RITE, INCORPORATEDAMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN(Adopted February 10, 2004)1. Purpose. The purpose of this X-Rite, Incorporated Amended and Restated Employee StockPurchase Plan is to provide employees of the Company with a further inducement to continue their employment withthe Company and to encourage those employees to increase their efforts to promote the best interests of theCompany. The Plan allows Eligible Employees to purchase Stock at a price less than the market price under Section423 of the Internal Revenue Code of 1986, as amended (the "Code").2. Definitions. The following words and phrases shall have the following meanings as used in this Plan:a. "Authorization" means the payroll deduction direction specified in Section 7 of this Plan.b. "Board" means the Board of Directors of X-Rite, Incorporated.c. "Committee" means the committee appointed by the Board to administer the Plan.d. "Company" means X-Rite, Incorporated, as well as any subsidiary corporation that is morethan fifty percent (50%) controlled by X-Rite, Incorporated, directly or indirectly, and which has been approved by theBoard for inclusion in the Plan.e. "Eligible Employee" means a person meeting the requirements of Section 4 of this Plan.f. "Market Value" means the closing sale price reported in the Nasdaq Stock Market or, if suchvalue is not available, such other estimate of fair market value as the Committee shall determine.g. "Participant" means an Eligible Employee who has elected to participate in this Plan.Plan.8 of this Plan.h. "Plan" means this X-Rite, Incorporated Amended and Restated Employee Stock Purchasei. "Purchase Account" means the account established for a Participant as provided in Sectionj. "Purchase Period" means each fiscal quarter of the Company.k. "Stock" means the common stock of X-Rite, Incorporated, par value $0.10 per share.3. Administration.a. The Plan shall be administered by a Committee appointed by the Board as the Board shalldetermine from time to time. A majority of members of the Committee shall constitute a quorum for the transaction ofbusiness. The Committee shall be responsible to the Board for the operation of the Plan, and the interpretation andconstruction of any provision of the Plan by the Committee shall be final and binding, unless otherwise determined bythe Board of Directors. No member of the Board of Directors or the Committee shall be liable for any action ordetermination made in good faith with respect to the Plan.b. The Committee shall consist entirely of members who are Non-Employee Directors as suchterm is defined in Rule 16b-3 promulgated by the Securities and Exchange Commission.c. Each person who is or shall have been a member of the Committee shall be indemnified andheld harmless by the Company, to the maximum extent permitted by law, from and against any cost, liability, orexpense imposed or incurred in connection with such persons taking or failing to take any action under the Plan.4. Eligibility. All active employees of the Company shall be Eligible Employees, entitled to participateunder the Plan, except: (a) employees who have been continuously employed by the Company for less than oneyear; (b) employees whose customary employment by the Company is for less than 20 hours per week; and (c)employees whose customary employment by the Company is not for more than five months in a calendar year. Nooption rights shall be granted under the Plan to any person who is not an Eligible Employee, and no Eligible Employee21
Page 1 and 2: X-Rite, IncorporatedNOTICE OF ANNUA
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X-Rite, Incorporated

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