Exhibit 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) executed on
December 29, 2008 and effective for all purposes as of January 14, 2008 (the
“Effective Date”), is entered into by and between CONSOLIDATED GRAPHICS, INC., a
Texas corporation having its principal place of business in Houston, Harris
County, Texas (“CGX”), and JON C. BIRO (the “Executive”); other capitalized
terms used in this Agreement are defined and shall have the meanings set forth
in Section 17 or elsewhere herein.
W I T N E S S E T H:
WHEREAS, Executive is employed as Executive Vice President and Chief Financial
and Accounting Officer of CGX, and has been or will be appointed to such other
offices as may be deemed appropriate by the Board of Directors of CGX, including
Treasurer and Secretary of CGX, and as an officer of its subsidiaries;
WHEREAS, in connection with his employment, Executive has been or will be
provided by CGX with specialized training and given access to confidential
information with respect to CGX, its Affiliates and their Customers;
WHEREAS, CGX and Executive are parties to that certain Employment Agreement,
effective as of January 14, 2008 (the “Prior Employment Agreement”); and
WHEREAS, the Company and the Executive desire to amend and restate the Prior
Employment Agreement solely to incorporate such terms as are deemed necessary by
the parties to comply with Section 409A of the Internal Revenue Code, as
amended, and the regulations issued thereunder, and to make certain ministerial
clarifications;
NOW, THEREFORE, in consideration of the premises, representations and mutual
covenants hereinafter set forth, the parties hereby covenant and agree as
follows:
1. Employment. Subject to and conditioned upon the express terms set forth in
Section 25, CGX hereby employs Executive, and Executive hereby accepts
employment with CGX, on the terms and conditions set forth in this Agreement.
2. Employment Period. The term of Executive’s employment (the “Employment
Period”) pursuant to the terms of this Agreement shall commence upon the
Effective Date and shall continue until August 31, 2013, unless earlier
terminated in accordance with Section 15(a) below.
3. Duties. Executive shall (i) serve under the direction of the Board and the
Chief Executive Officer of CGX (the “CEO”) as the Executive Vice President and
Chief Financial and Accounting Officer of CGX, and will be appointed to such
other offices as may be deemed appropriate by the Board of Directors of CGX,
including Treasurer and Secretary of CGX, and as an officer of its subsidiaries;
(ii) have all the rights, powers and duties associated with his positions; and
(iii) faithfully, to the best of Executive’s ability, perform the duties and
other reasonably related services assigned to Executive by the Board and/or CEO
from time to time (the ”Duties”). Executive shall be subject to, and shall
comply with, CGX insider trading policies (a copy of which has been delivered to
Executive) and the other policies of CGX in effect from time to time
(collectively, the “CGX

 

 

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Policies”); provided, however, that to the extent such CGX Policies may
contradict the express provisions of this Agreement, the provisions of this
Agreement shall govern. Executive shall devote his full business time, efforts
and attention to the business of CGX during the Employment Period consistent
with past practice and, without the prior written consent of the Board,
Executive shall not during the Employment Period render any services of a
business, commercial or professional nature, to any person or organization other
than CGX and the Affiliates or be engaged in any other business activity, other
than those activities described in Section 12 below. Executive represents and
warrants that Executive is not a party to or bound by any agreement or contract
or subject to any restrictions, including without limitation in connection with
any previous employment, which might prevent Executive from entering into and
performing Executive’s obligations under this Agreement.
4. Compensation. During the Employment Period, Executive shall be compensated
for Executive’s services as follows:
(a) Executive shall be paid a base monthly salary of not less than $20,833.33,
subject to any and all customary payroll deductions, including deductions for
the Federal Insurance Contributions Act and other federal, state and local
taxes.
(b) Except to the extent such policies may contradict the express provisions of
this Agreement, in which case the provisions of this Agreement shall govern,
Executive shall be eligible to receive fringe benefits on the same basis as
other management employees of CGX pursuant to CGX Policies in effect from time
to time, including holiday time and paid vacation; provided, however, that
earned but unused vacation or other compensated absences shall not be carried
forward for use or payment in subsequent periods.
(c) Executive shall be eligible to participate, to the extent that Executive
meets all eligibility requirements of general application, in each of the
employee benefit plans maintained by CGX or in which employees of CGX generally
are eligible to participate, including as of the date hereof, group
hospitalization, medical, dental, and short and long term disability and life
plans.
5. Bonus. In addition to the other compensation set forth herein, Executive may
receive an annual cash bonus payment in an amount to be determined in the sole
discretion of the CEO and approved by the Board or the Compensation Committee of
the Board. Any such bonus shall be paid in accordance with CGX’s customary
practice, subject to all customary payroll deductions, including deductions for
the Federal Insurance Contributions Act and other federal, state and local
taxes.
6. Stock Options. In addition to the other compensation set forth herein,
Executive has previously been provided with an option to purchase 50,000 shares
of CGX common stock pursuant to the terms of the Prior Employment Agreement.

 

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7. Executive Expenses. During the Employment Period, Executive shall be entitled
to be reimbursed for reasonable normal business expenses directly incurred in
the performance of the Duties hereunder and in accordance with CGX Policies in
effect from time to time; provided, however, that documentation supporting such
expenses must be submitted to and approved by the CEO or the Board before such
reimbursement is paid to Executive.
8. No Competing Business. In consideration for the benefits received by
Executive pursuant to this Agreement, during the Noncompetition Period,
Executive shall not, except as permitted by Section 12 of this Agreement,
directly or indirectly own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate (whether as a proprietor,
partner, employee, stockholder, member, director, officer, executive, joint
venturer, investor, consultant, agent, sales representative, broker or other
participant) in any Competitive Business operating in or soliciting business
from CGX’s Market, without regard to: (i) whether the Competitive Business has
its office or other business facilities within CGX’s Market; (ii) whether any of
the activities of Executive referred to above occur or are performed within
CGX’s Market; or (iii) whether Executive resides, or reports to an office,
within CGX’s Market.
9. No Interference with the Business. In consideration for the benefits received
by Executive pursuant to this Agreement, during the Noncompetition Period,
Executive shall not:
(a) directly or indirectly solicit, induce or intentionally influence any third
party sales representative, agent, supplier, lender, lessor or any other person
which has a business relationship with CGX and/or any Affiliate or which had on
the date of this Agreement a business relationship with CGX and/or any Affiliate
to discontinue, reduce the extent of, discourage the development of or otherwise
harm such relationship with CGX and/or any Affiliate;
(b) directly or indirectly (i) attempt to communicate with or solicit business
from any Customer or its representatives for any reason, except on behalf of CGX
and/or any Affiliate, (ii) attempt to induce any known Customer or its
representatives to terminate any contract or otherwise divert from CGX and/or
any Affiliate any trade or business being conducted by any such Customer with
CGX and/or any Affiliate or (iii) attempt to solicit, induce or intentionally
influence any prospective or past Customer of CGX and/or any Affiliate to
discontinue, reduce the extent of, or not conduct business with CGX and/or any
Affiliate;
(c) directly or indirectly recruit, solicit, induce or influence any executive,
employee or sales agent of CGX and/or any Affiliate to discontinue such sales,
employment or agency relationship with CGX and/or any such Affiliate;
(d) employ, seek to employ or cause any other person or entity to employ or seek
to employ as a sales representative or Executive any person who is then (or was
at any time since the Effective Date) employed by CGX and/or any of the
Affiliates; or
(e) directly or indirectly denigrate or in any manner undertake to discredit
CGX, any Affiliate or any successor thereof or any person, operation or entity
associated with CGX or any Affiliate.

 

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10. Consideration for Restrictions. Executive acknowledges that the restrictions
imposed under Sections 3, 8, 9, and 11 are supported by the consideration to be
received by Executive pursuant to the terms of this Agreement.
11. No Disclosure of Confidential Information. During Executive’s employment
with CGX, CGX shall provide Executive with certain Confidential Information.
Executive shall not, during the Employment Period or thereafter, directly or
indirectly knowingly disclose to anyone or use or otherwise exploit for
Executive’s own benefit or for the benefit of anyone other than CGX and/or any
of the Affiliates any Confidential Information. Upon termination of Executive’s
employment hereunder or at any other time that the CEO so requests, Executive
shall promptly deliver to CGX all materials containing any Confidential
Information, and all copies of such materials and other materials of CGX or any
Affiliate which are in Executive’s possession or under Executive’s control, and
Executive shall not make or retain any copies or extracts of such materials. If
a disclosure is required by law or legal process, Executive shall provide CGX
with prompt notice thereof so that CGX may seek an appropriate protective order
at its cost or otherwise waive compliance with the terms of this covenant, and
in the event CGX cannot obtain such protective order or it waives compliance
with the terms of this covenant, Executive may disclose that portion of the
Confidential Information that CGX’s legal counsel has advised may be disclosed.
12. Permitted Activities. The restrictions set forth in Sections 3, 8 and 9 of
this Agreement shall not apply to Permitted Activities (as defined below).
13. Consideration for Restrictions; Reduction of Restrictions by Court Action.
Executive acknowledges that the restrictions and obligations imposed under
Sections 3, 8, 9, and 11 of this Agreement are supported by: (i) CGX’s agreement
to provide Executive with access to and the right to use its Confidential
Information, and the right to develop relationships with its Executives based
upon such Confidential Information; (ii) the consideration and benefits to be
received by Executive pursuant to this Agreement, including issuance of the
stock option set forth in Section 6 above; (iii) the training methodology and
proprietary information to be shared by CGX with Executive pursuant hereto; and
(vi) Executive’s continued employment (pursuant to the terms of this Agreement)
and his acknowledgment that compliance with the restrictions and obligations set
forth herein was material in employing the Executive and that such restrictions
and obligations are necessary to protect the business and goodwill of CGX and
its Affiliates. If, however, the length of time, type of activity, geographic
area or other restrictions set forth in the restrictions of Sections 3, 8, 9, or
11 are deemed unreasonable in any court proceeding, the parties hereto agree
that the court may reduce such restrictions to ones it deems reasonable to
protect the substantial investment of CGX and the Affiliates in their businesses
and the goodwill attached thereto.
14. Remedies. Executive understands that CGX and the Affiliates will not have an
adequate remedy at law for the breach or threatened breach by Executive of any
one or more of the covenants set forth in this Agreement and agrees that in the
event of any such breach or threatened breach, CGX or any Affiliate may, in
addition to the other remedies which may be available to it, file a suit in
equity to enjoin Executive from the breach or threatened breach of such
covenants. In the event either party commences legal action to enforce its or
his rights under this Agreement, the prevailing party in such action shall be
entitled to recover all of the costs and expenses in connection therewith,
including reasonable attorney’s fees. All covenants and restrictions of
Executive contained in this Agreement shall be construed as agreements
independent of any other provision of this Agreement, and the existence of any
claim or cause of action by Executive against CGX or vice versa, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by CGX of such covenants and restrictions.

 

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15. Termination.
(a) The “Termination Date” shall mean the date in which the first of the
following occur:
(i) August 31, 2013;
(ii) Executive’s death;
(iii) the Disability (as defined below) of Executive;
(iv) termination by CGX of Executive for Cause (as defined below);
(v) termination by CGX of Executive without Cause;
(vi) the resignation of Executive for any reason (other than Good Reason (as
defined below)), which shall take effect immediately upon CGX’s receipt of such
resignation;
(vii) the resignation of Executive for Good Reason, which shall take effect
immediately upon CGX’s receipt of such resignation; or
(viii) a Change in Control (as defined in the Change in Control Agreement).
(each of subparagraph (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) are
referred to herein as a “Termination”). Notwithstanding anything in this Section
15(a) to the contrary, in the case of any payment or benefit provided pursuant
to clause (iii), (v) or (vii) that is subject to Section 409A of the Code,
“Termination” shall mean Executive’s “separation from service” with CGX within
the meaning of Section 409A(2)(A)(i) of the Code and the corresponding
“Termination Date” shall be the date Executive incurs such separation from
service.
(b) If a Termination occurs pursuant to subparagraphs (v), or (vii), then
(i) Executive shall receive, within five business days after the Termination
Date, a lump sum payment equal to Executive’s base monthly salary for one (1)
year, determined based on Executive’s base monthly salary in effect immediately
prior to the Termination; and (ii) during the Severance Period (as defined
below), Executive shall continue to receive and/or be able to elect to receive
benefits under CGX welfare plans or substantially equivalent welfare plans at
CGX’s expense, including but not limited to, medical/hospital, dental, life, and
disability, in accordance with the terms of such plans in effect at the time;
provided, however, that Executive shall be responsible for the costs of such
benefits to the same extent he was responsible (or would have been responsible
had he then been a participant) for such costs prior to the Termination Date.

 

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(c) If a Termination occurs pursuant to subparagraphs (i), (ii), (iii), (iv),
(vi) or (viii), then Executive or Executive’s estate shall receive:
(i) Executive’s monthly salary in effect immediately prior to the Termination in
accordance with Section 4(a) through the date of such Termination; and (ii) any
other amounts earned, accrued or owing as of such Termination Date, but not yet
paid by CGX to Executive.
(d) Termination of employment hereunder shall not relieve Executive of his
obligations under Sections 8 and 9 hereof, notwithstanding the termination of
Executive’s compensation or the termination of the other terms and conditions of
this Agreement. In addition, termination of employment hereunder shall not
relieve Executive of his obligations under Section 11 hereof which are intended
to continue indefinitely, notwithstanding the termination of Executive’s
compensation or the termination of the other terms and conditions of this
Agreement. Executive’s violation of any of his obligations under Sections 8, 9
or 11 hereof shall relieve CGX of its obligation to pay any of the benefits as
contemplated in this Section 15.
(e) In addition to all other compensation due to Executive hereunder, the
following shall occur immediately prior to the occurrence of a Termination
pursuant to subparagraphs (ii), (iii) or (vii) of Section 15:
(i) all CGX stock options held by Executive prior to such a Termination shall
become exercisable, regardless of whether or not the vesting/performance
conditions set forth in the relevant agreements shall have been satisfied in
full;
(ii) all restrictions on any restricted securities granted by CGX to Executive
prior to such a Termination shall be removed and the securities shall become
fully vested and freely transferable, regardless of whether the
vesting/performance conditions set forth in the relevant agreements shall have
been satisfied in full;
(iii) Executive (or Executive’s estate) shall have an immediate right to receive
all performance shares or bonuses granted prior to such a Termination, and such
performance shares and bonuses shall become fully vested and freely transferable
or payable without restrictions, regardless of whether or not specific
performance goals set forth in the relevant agreements shall have been attained;
(iv) all performance units granted to Executive prior to such a Termination
shall become immediately payable in cash or common stock, at Executive’s sole
option (or at the sole option of the executor of the Executive’s estate),
regardless of whether or not the relevant performance cycle has been completed,
and regardless of whether any other terms and conditions of the relevant
agreements shall have been satisfied in full; and

 

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(v) provided, that if the terms of any plan or agreement providing for such
options, restricted securities, performance shares or bonuses, performance units
or equity based grants do not allow such acceleration or payment as described
above, CGX shall take or cause to be taken any action required to allow such
acceleration or payment or to separately pay the value of such benefits.
(f) Notwithstanding any provision of this Agreement to the contrary, if
Executive incurs a separation from service with CGX (other than by reason of
death) and is deemed on his date of separation from service to be a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then, to
the extent required under Section 409A(a)(2)(B)(i) of the Code, the payments and
benefits under this Agreement shall commence or be made or provided as soon as
practicable but not prior to the later of (A) the payment date set forth in this
Agreement or (B) the date that is the earliest of: (i) the expiration of the
six-month period measured from the date of separation from service; or (ii) the
date of Executive’s death, in either case without interest for such delay.
(g) To the extent any reimbursements or in-kind benefits provided to Executive
pursuant to this Agreement are subject to Section 409A of the Code, including
without limitation any health plan benefits subject to Section 409A of the Code,
then in accordance with Section 409A of the Code: (A) the amount of expenses
eligible for reimbursement or in-kind benefits provided during Executive’s
taxable year shall not affect the expenses eligible for reimbursement or in-kind
benefits provided in any other taxable year; (B) the reimbursement must be made
on or before the last day of Executive’s taxable year following the taxable year
in which the expense was incurred; and (C) the right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another benefit.
16. Gross-Up.
(a) Anything in this Agreement to the contrary notwithstanding, in the event a
public accounting firm selected by Executive (the “Accounting Firm”) shall
determine that any payment, benefit, or distribution by CGX to Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of Section 15 of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 16) (each a “Payment”) is
subject to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then CGX shall pay to Executive
an additional payment (a “Gross-Up Payment”) in an amount such that after
payment by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto), and the Excise
Tax imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

 

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(b) Subject to the provisions of Section 16(c) below, all determinations
required to be made under this Section 16, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the
Accounting Firm which shall provide detailed supporting calculations both to CGX
and Executive as soon as possible following a request made by Executive or CGX.
All fees and expenses of the Accounting Firm shall be borne solely by CGX. Any
Gross-Up Payment, as determined pursuant to this Section 16, shall be paid by
CGX to Executive within five (5) days of the receipt of the Accounting Firm’s
determination and in no event later than December 31st of the year following the
year during which Executive remits the related taxes. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion that failure to report the Excise Tax on
Executive’s applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon CGX and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by CGX should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. If CGX exhausts its remedies pursuant to Section 16(c) below and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by CGX to or for the benefit of
Executive.
(c) Executive shall notify CGX in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by CGX of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than ten (10) business days after Executive is informed in writing of such claim
and shall set forth in reasonable detail the nature of such claim and the date
on which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the ten (10)-day period following the date on which
Executive gives such notice to CGX (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If CGX notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give CGX any information reasonably requested by CGX relating to such claim,
(ii) take such action in connection with contesting such claim as CGX shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
selected by CGX,
(iii) cooperate with CGX in good faith to effectively contest such claim, and

 

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(iv) permit CGX to participate in any proceedings relating to such claim;
provided, however, that CGX shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 16(c),
CGX shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as CGX shall determine; provided further, that if CGX directs
Executive to pay such claim and sue for a refund, CGX shall advance the amount
of such payment to Executive on an interest-free basis and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and provided further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, CGX’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by CGX pursuant to
this Section 16, Executive becomes entitled to receive, and receives, any refund
with respect to such claim, Executive shall (subject to CGX’s complying with the
requirements of this Section 16) promptly pay to CGX the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Executive of any amount advanced by CGX
pursuant to Section 16, a determination is made that Executive shall not be
entitled to any refund with respect to such claim and CGX does not notify
Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
17. Definitions. As used in this Agreement, terms defined in the preamble and
recitals of or elsewhere in this Agreement shall have the meanings set forth
therein and the following terms shall have the meanings set forth below:
(a) Affiliate or Affiliates shall mean and refer to any direct or indirect
subsidiaries of CGX, or any other entity or entities through which CGX or any
subsidiary of CGX may conduct CGX’s Line of Business.

 

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(b) Cause shall mean and include without limitation: (i) the inability of
Executive to perform his Duties hereunder due to a legal impediment, including
without limitation, the entry against Executive of an injunction, restraining
order or other type of judicial judgment, decree or order which would prevent or
hinder Executive from performing his Duties; (ii) the willful failure by
Executive to follow material CGX Policies or the willful disregard of the
reasonable and material instructions of the CEO with respect to the performance
of Executive’s Duties, other than any failure not occurring in bad faith that is
remedied by Executive promptly after receipt of notice thereof from CGX;
(iii) excessive absenteeism, flagrant neglect of work, indictment or conviction
of a felony or fraud; or (iv) the failure of Executive to devote substantially
all of his full working time and attention to performance of his Duties for CGX.
(c) Change in Control Agreement shall mean that certain Change in Control
Agreement, effective as of January 14, 2008, between CGX and Executive.
(d) CGX’s Line of Business shall mean general commercial printing services,
including digital imaging and printing, offset lithography (sheet fed and web),
composition, electronic prepress, flexography, binding, kitting and finishing
services, fulfillment of printed materials, direct mail services, and includes
any other products or services manufactured, developed or distributed, including
electronic products and services, at any time by CGX and/or the Affiliates
before or after the Effective Date.
(e) CGX’s Market shall mean the United States and Canada;
(f) Competitive Business shall mean any person or entity engaged in a business
that produces any of the products or performs any of the services comprising
CGX’s Line of Business.
(g) Confidential Information shall mean trade secrets; customer and supplier
lists; marketing arrangements; business plans; projections; financial
information; training manuals; pricing manuals; product and service development
plans; market strategies; internal performance statistics; all information about
any Customer, including their facilities, requirements, purchasing preferences
or needs, their past purchasing histories, and all records relating to
transactions or communications of any kind between the Executive and any
Customer; all information about CGX’s employees, including their compensation,
resumes, experience, capabilities, work histories, and performance evaluations;
information about CGX’s consultants, vendors or suppliers; information acquired
from CGX’s employees or inspection of CGX’s property; information disclosed to
CGX by third parties, concerning CGX’s and its Affiliate’s products, services,
marketing programs, bids or bidding processes, staffing specifications, service
contracts or servicing schedules or procedures, or business practices and other
competitively sensitive information belonging to and concerning CGX and/or any
of the Affiliates and not generally known by or available to the public, whether
or not in written or tangible form, as the same may exist at any time during the
Employment Period. For purposes hereof, CGX and Executive agree that
Confidential Information includes current, updated and future data, information,
reports, evaluations and analyses of CGX, its financial performance and results,
Customers and employees, including their compensation, performance or
evaluation, and includes information, data, reports and evaluations:
(i) provided to Executive before and after the date hereof; (ii) those which the
Executive created, in whole or in part; (iii) those to which or for which
Executive provides input and information; and (iv) those which the Executive
uses for the purpose of making decisions relating to CGX’s business, its
Customers or employees.

 

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(h) Customer shall mean any person or entity with which CGX and/or its
Affiliates has a contract (oral or written) or to which the CGX and/or its
Affiliates has provided goods or services during the term of Executive’s
employment with CGX (irrespective of whether it occurred prior to or after the
Effective Date), or to which CGX and/or an Affiliate has made a bid or proposal
to provide goods or services.
(i) Disability shall mean any illness, disability or incapacity of such a
character as to render Executive unable to perform his Duties (which
determination shall be made by the CEO) for a total period of ninety (90) days,
whether or not such days are consecutive, during any consecutive twelve
(12) month period.
(j) Effective Date shall mean the effective date set forth in the introductory
paragraph of this Agreement.
(k) Employment Period shall mean that period of time set forth in Section 2 of
this Agreement.
(l) Good Reason shall mean: (i) the material breach of this Agreement by CGX
other than any failure not occurring in bad faith that is remedied by CGX within
thirty (30) days after receipt of notice thereof from Executive; (ii) the
implementation by CGX of a condition to Executive’s continued employment with
CGX that Executive’s principal place of work be changed to any location outside
of the Houston metropolitan area; and (iii) a material diminution in the
Executive’s Duties or cash compensation.
(m) Noncompetition Period shall mean a period beginning on the Effective Date
and continuing through the Employment Period and for the period of one (1) year
after any Termination pursuant to Section 15(a)(i), (iii), (iv), (v), (vi) or
(vii).
(n) Permitted Activities shall mean: (i) owning not more than 1% of the
outstanding shares of a publicly-held Competitive Business which has shares
listed for trading on a securities exchange registered with the Securities and
Exchange Commission or through the automated quotation system of a registered
securities association; (ii) owning capital stock of CGX; or (iii) those
activities or actions undertaken by Executive, to the extent, but only to the
extent, such activities or actions are expressly approved in writing by the CEO.
(o) Severance Period shall mean that period of time equal to one (1) year
following Termination.

 

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18. Notices. All notices, demands or other communications required or provided
hereunder shall be in writing and shall be deemed to have been given and
received when delivered in person or transmitted by facsimile transmission
(telecopy), cable or telex to the respective parties (with confirmation of
successful transmission) or seven (7) days after dispatch by registered or
certified mail, postage prepaid, addressed to the parties at the addresses set
forth below or at such other addresses as such parties may designate by notice
to the other parties:

         
 
  If to CGX:   Consolidated Graphics, Inc.
 
      5858 Westheimer, Suite 200
 
      Houston, Texas 77057
 
      Attention: Joe R. Davis
 
       
 
  with a copy (which shall not    
 
  constitute notice) to:   Ricardo Garcia-Moreno
 
      Haynes and Boone LLP
 
      1 Houston Center
 
      1221 McKinney Ave, Suite 2100
 
      Houston, Texas 77010
 
       
 
  If to Executive:   Jon C. Biro
 
      5858 Westheimer, Suite 200

 
      Houston, Texas 77057

19. Assignment. CGX, but not Executive, may assign or delegate any of its rights
or obligations hereunder; provided, further, that an assignment made in
accordance with this section shall not constitute a termination of employment
for purposes of this Agreement. This Agreement shall be binding upon and inure
to the benefit of any assignee thereof and any such assignee shall be deemed
substituted for CGX under the terms of this Agreement and all references to
“CGX” shall be deemed to mean such assignee. As used in this Agreement, the term
“assignee” shall include any Affiliate or person, firm, partnership, corporation
or CGX which at any time, whether by merger, purchase or otherwise, acquires all
of the capital stock or substantially all of the assets or business of CGX, and
any assignee or successor thereof.
20. No Mitigation Obligation. CGX hereby acknowledges that it will be difficult,
and may be impossible, for Executive to find reasonably comparable employment
following the Termination Date and that the noncompetition covenants contained
in Sections 8, 9 and 11 hereof will further limit the employment opportunities
for Executive. Accordingly, the parties hereto expressly agree that the payment
of the severance compensation and benefits by CGX to Executive in accordance
with the terms of this Agreement will be liquidated damages, and that Executive
shall not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor shall any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of Executive
hereunder or otherwise, except to the extent Executive receives comparable
welfare benefits from another employer during the Severance Period.
21. Amendment and Modification. No amendment or modification of the terms of
this Agreement shall be binding upon either party unless reduced to writing and
signed by Executive and a duly appointed officer of CGX.

 

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22. Governing Law. This Agreement and all rights and obligations hereunder,
including matters of construction, validity and performance, shall be governed
by the laws of the State of Texas, without giving effect to the principles of
conflicts of laws thereof.
23. Counterparts. This Agreement may be executed in two or more counterparts,
any one of which shall be deemed the original without reference to the others.
24. Severability. If any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
25. Waiver. The failure of either party to insist, in any one or more instances,
upon performance of the terms or conditions of this Agreement shall not be
construed as a waiver or relinquishment of any right granted hereunder or of the
future performance of any such term, covenant or condition.
26. Construction of Agreement. Headings of the sections in this Agreement are
for reference purposes only and shall not be deemed to have any substantive
effect. Unless the contents of this Agreement otherwise clearly requires,
references to the plural include the singular and the singular include the
plural. Whenever the context here requires, the masculine shall refer to the
feminine, the neuter shall refer to the masculine or feminine, the singular
shall refer to the plural, and vice versa.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

                  EXECUTIVE:                
 
  /s/ JON C. BIRO                   JON C. BIRO    
 
                CGX:    
 
                CONSOLIDATED GRAPHICS, INC.    
 
           
 
  By:   /s/ Joe R. Davis
 
Joe R. Davis    
 
      Chairman and Chief Executive Officer    

 

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