Exhibit 10.6

 

CHANGE IN CONTROL AGREEMENT

 

This EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT (“Agreement”), effective as of
March 1, 2002, by and between CONSOLIDATED GRAPHICS, INC., a Texas corporation
(the “Company”), and G. CHRISTOPHER COLVILLE (the “Executive”), evidences that;

 

WHEREAS, the Executive is a senior executive of the Company and has made and/or
is expected to make or continue to make significant contributions to the
profitability, growth and financial strength of the Company;

 

WHEREAS, the Company desires to assure itself of both present and future
continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights with
respect to its key senior executives, including the Executive, applicable in the
event of a Change in Control;

 

WHEREAS, the Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties upon a Change in Control;

 

WHEREAS, this Agreement is not intended to alter materially the compensation and
benefits which the Executive could reasonably expect to receive from the Company
absent a Change in Control and, accordingly, although effective and binding as
of the date hereof, this Agreement shall become operative only upon the
occurrence of a Change in Control; and

 

WHEREAS, the Executive is willing to render services to the Company on the terms
and subject to the conditions set forth in this Agreement;

 

NOW, THEREFORE, the Company and the Executive agree as follows:

 

1.                                       OPERATION OF AGREEMENT:

 

(A)                                  SECTIONS 1 AND 8 THROUGH 21 OF THIS
AGREEMENT SHALL BE EFFECTIVE AND BINDING AS OF THE EFFECTIVE DATE, BUT, ANYTHING
IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, SECTIONS 2, 3, 4, 5, 6 AND 7
OF THIS AGREEMENT SHALL NOT BE EFFECTIVE AND BINDING UNLESS AND UNTIL THERE
SHALL HAVE OCCURRED A CHANGE IN CONTROL.  FOR PURPOSES OF THIS AGREEMENT, A
“CHANGE IN CONTROL” WILL BE DEEMED TO HAVE OCCURRED IF AT ANY TIME DURING THE
TERM (AS HEREINAFTER DEFINED) ANY OF THE FOLLOWING EVENTS SHALL OCCUR:

 

(I)                                     THE COMPANY IS MERGED, CONSOLIDATED,
CONVERTED OR REORGANIZED INTO OR WITH ANOTHER CORPORATION OR OTHER LEGAL ENTITY,
AND AS A RESULT OF SUCH MERGER, CONSOLIDATION, CONVERSION OR REORGANIZATION LESS
THAN A MAJORITY OF THE COMBINED VOTING POWER OF THE THEN OUTSTANDING SECURITIES
OF THE COMPANY OR SUCH CORPORATION OR OTHER LEGAL ENTITY IMMEDIATELY AFTER SUCH
TRANSACTION ARE HELD IN THE AGGREGATE BY THE HOLDERS OF VOTING STOCK (AS
HEREINAFTER DEFINED) OF THE COMPANY IMMEDIATELY PRIOR TO SUCH TRANSACTION AND/OR
SUCH

 

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VOTING POWER IS NOT HELD BY SUBSTANTIALLY ALL OF SUCH HOLDERS IN SUBSTANTIALLY
THE SAME PROPORTIONS RELATIVE TO EACH OTHER;

 

(II)                                  THE COMPANY SELLS (DIRECTLY OR INDIRECTLY)
ALL OR SUBSTANTIALLY ALL OF ITS ASSETS (INCLUDING, WITHOUT LIMITATION, BY MEANS
OF THE SALE OF THE CAPITAL STOCK OR ASSETS OF ONE OR MORE DIRECT OR INDIRECT
SUBSIDIARIES OF THE COMPANY) TO ANY OTHER CORPORATION OR OTHER LEGAL ENTITY, OF
WHICH LESS THAN A MAJORITY OF THE COMBINED VOTING POWER OF THE THEN OUTSTANDING
VOTING SECURITIES (ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR
PERSONS PERFORMING SIMILAR FUNCTIONS ON BEHALF OF SUCH OTHER CORPORATION OR
LEGAL ENTITY) OF SUCH OTHER CORPORATION OR LEGAL ENTITY IS HELD IN THE AGGREGATE
BY THE HOLDERS OF VOTING STOCK OF THE COMPANY IMMEDIATELY PRIOR TO SUCH SALE
AND/OR SUCH VOTING POWER IS NOT HELD BY SUBSTANTIALLY ALL OF SUCH HOLDERS IN
SUBSTANTIALLY THE SAME PROPORTIONS RELATIVE TO EACH OTHER;

 

(III)                               ANY PERSON (AS THE TERM “PERSON” IS USED IN
SECTION 13(D)(3) OR SECTION 14(D)(2) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE “EXCHANGE ACT”)) BECOMES (SUBSEQUENT TO THE EFFECTIVE DATE) THE
BENEFICIAL OWNER (AS THE TERM “BENEFICIAL OWNER” IS DEFINED UNDER RULE 13D–3 OR
ANY SUCCESSOR RULE OR REGULATION PROMULGATED UNDER THE EXCHANGE ACT) OF
SECURITIES REPRESENTING FIFTY PERCENT (50%) OR MORE OF THE COMBINED VOTING POWER
OF THE THEN–OUTSTANDING SECURITIES ENTITLED TO VOTE GENERALLY IN THE ELECTION OF
DIRECTORS OF THE COMPANY (“VOTING STOCK”);

 

(IV)                              THE COMPANY FILES A REPORT OR PROXY STATEMENT
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE EXCHANGE ACT
DISCLOSING IN RESPONSE TO FORM 8–K, SCHEDULE 14A OR SCHEDULE 14C (OR ANY
SUCCESSOR SCHEDULE, FORM OR REPORT OR ITEM THEREIN) THAT A CHANGE IN CONTROL OF
THE COMPANY HAS OCCURRED;

 

(V)                                 IF DURING ANY ONE (1)–YEAR PERIOD,
INDIVIDUALS WHO AT THE BEGINNING OF ANY SUCH PERIOD CONSTITUTE THE DIRECTORS OF
THE COMPANY CEASE FOR ANY REASON TO CONSTITUTE AT LEAST A MAJORITY THEREOF,
UNLESS THE ELECTION, OR THE NOMINATION FOR ELECTION BY THE COMPANY’S
SHAREHOLDERS, OF EACH DIRECTOR OF THE COMPANY FIRST ELECTED DURING SUCH PERIOD
WAS APPROVED BY A VOTE OF AT LEAST TWO–THIRDS OF (I) THE DIRECTORS OF THE
COMPANY THEN STILL IN OFFICE WHO WERE DIRECTORS OF THE COMPANY AT THE BEGINNING
OF ANY SUCH PERIOD OR (II) DIRECTORS REFERENCED IN CLAUSE (I) IMMEDIATELY
PRECEDING PLUS DIRECTORS OF THE COMPANY WHOSE NOMINATION AND/OR ELECTION WAS
APPROVED BY THE DIRECTORS REFERENCED IN CLAUSE (I) IMMEDIATELY PRECEDING; OR

 

(VI)                              THE SHAREHOLDERS OF THE COMPANY APPROVE A PLAN
CONTEMPLATING THE LIQUIDATION OR DISSOLUTION OF THE COMPANY.

 

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Notwithstanding the foregoing provisions of Subsection 1(a)(iii) or 1(a)(iv)
hereof, a “Change in Control” shall not be deemed to have occurred for purposes
of this Agreement solely because (i) the Company, (ii) a corporation or other
legal entity in which the Company directly or indirectly beneficially owns 100%
of the voting securities of such entity, or (iii) any employee stock ownership
plan or any other employee benefit plan of the Company or any wholly–owned
subsidiary of the Company, either files or becomes obligated to file a report or
a proxy statement under or in response to Schedule 13D, Schedule 14D–1,
Form 8–K, Schedule 14A or Schedule 14C (or any successor schedule, form or
report or item therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of Voting Stock, or because the Company reports that a change in
control of the Company has occurred by reason of such beneficial ownership.

 

(B)                                 UPON OCCURRENCE OF A CHANGE IN CONTROL AT
ANY TIME DURING THE TERM, SECTIONS 2, 3, 4, 5, 6 AND 7 OF THIS AGREEMENT SHALL
BECOME IMMEDIATELY BINDING AND EFFECTIVE.

 

(C)                                  THE PERIOD DURING WHICH THIS AGREEMENT
SHALL BE IN EFFECT (THE “TERM”) SHALL COMMENCE AS OF THE DATE HEREOF AND SHALL
EXPIRE AS OF THE LATER OF (I) THE CLOSE OF BUSINESS ON THE THIRD ANNIVERSARY OF
THE DATE HEREOF, OR (II) THE EXPIRATION OF THE PERIOD OF EMPLOYMENT (AS
HEREINAFTER DEFINED); PROVIDED, HOWEVER, THAT (A) SUBJECT TO SECTION 9 HEREOF,
IF, PRIOR TO A CHANGE IN CONTROL, THE EXECUTIVE CEASES FOR ANY REASON TO BE AN
EMPLOYEE OF THE COMPANY (OR A PARENT OR SUBSIDIARY THEREOF), THEREUPON THE TERM
SHALL BE DEEMED TO HAVE EXPIRED AND THIS AGREEMENT SHALL IMMEDIATELY TERMINATE
AND BE OF NO FURTHER EFFECT AND (B) COMMENCING ON THE FIRST ANNIVERSARY OF THE
DATE HEREOF AND EACH ANNIVERSARY THEREAFTER, THE TERM OF THIS AGREEMENT SHALL
AUTOMATICALLY BE EXTENDED FOR AN ADDITIONAL YEAR.

 

2.                                       EMPLOYMENT; PERIOD OF EMPLOYMENT:

 

(A)                                  SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, UPON THE OCCURRENCE OF A CHANGE IN CONTROL, THE COMPANY SHALL
CONTINUE THE EXECUTIVE IN ITS EMPLOY AND THE EXECUTIVE SHALL REMAIN IN THE
EMPLOY OF THE COMPANY FOR THE PERIOD SET FORTH IN SUBSECTION 2(B) HEREOF (THE
“PERIOD OF EMPLOYMENT”), IN THE POSITION AND WITH SUBSTANTIALLY THE SAME DUTIES
AND RESPONSIBILITIES THAT THE EXECUTIVE HAD IMMEDIATELY PRIOR TO THE CHANGE IN
CONTROL, OR TO WHICH THE COMPANY AND THE EXECUTIVE MAY HEREAFTER MUTUALLY AGREE
IN WRITING.  THROUGHOUT THE PERIOD OF EMPLOYMENT, THE EXECUTIVE SHALL DEVOTE
SUBSTANTIALLY ALL OF THE EXECUTIVE’S TIME DURING NORMAL BUSINESS HOURS (SUBJECT
TO VACATIONS, SICK LEAVE AND OTHER ABSENCES IN ACCORDANCE WITH THE POLICIES OF
THE COMPANY AS IN EFFECT FOR SENIOR EXECUTIVES IMMEDIATELY PRIOR TO THE CHANGE
IN CONTROL) TO THE BUSINESS AND AFFAIRS OF THE COMPANY, BUT NOTHING IN THIS

 

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AGREEMENT SHALL PRECLUDE THE EXECUTIVE FROM DEVOTING REASONABLE PERIODS OF TIME
DURING NORMAL BUSINESS HOURS TO (I) SERVING AS A DIRECTOR, TRUSTEE OR MEMBER OF
OR PARTICIPANT IN ANY ORGANIZATION OR BUSINESS SO LONG AS SUCH ACTIVITY WOULD
NOT CONSTITUTE COMPETITIVE ACTIVITY (AS HEREINAFTER DEFINED) IF CONDUCTED BY THE
EXECUTIVE AFTER THE EXECUTIVE’S TERMINATION DATE (AS HEREINAFTER DEFINED),
(II) ENGAGING IN CHARITABLE AND COMMUNITY ACTIVITIES, OR (III) MANAGING THE
EXECUTIVE’S PERSONAL INVESTMENTS.

 

(B)                                 THE PERIOD OF EMPLOYMENT SHALL COMMENCE ON
THE DATE ON WHICH A CHANGE IN CONTROL OCCURS AND, SUBJECT ONLY TO THE PROVISIONS
OF SECTION 4 HEREOF, SHALL CONTINUE UNTIL THE EXPIRATION OF THE SECOND
ANNIVERSARY OF THE OCCURRENCE OF THE CHANGE IN CONTROL.

 

3.                                       COMPENSATION DURING PERIOD OF
EMPLOYMENT:

 

(A)                                  DURING THE PERIOD OF EMPLOYMENT, THE
EXECUTIVE SHALL RECEIVE (I) ANNUAL BASE SALARY AT A RATE NOT LESS THAN THE
EXECUTIVE’S HIGHEST  ANNUAL FIXED OR BASE COMPENSATION PAID DURING OR PAYABLE
WITH RESPECT TO ANY CALENDAR YEAR DURING THE THREE CALENDAR YEARS IMMEDIATELY
PRECEDING THE YEAR IN WHICH THE CHANGE IN CONTROL OCCURRED, OR SUCH HIGHER RATE
AS MAY BE DETERMINED FROM TIME TO TIME BY THE BOARD OF DIRECTORS OF THE COMPANY
(THE “BOARD”) OR THE COMPENSATION COMMITTEE THEREOF (THE “COMMITTEE”) (WHICH
BASE SALARY AT SUCH RATE IS HEREIN REFERRED TO AS “BASE PAY”) AND (II) AN ANNUAL
AMOUNT EQUAL TO NOT LESS THAN THE HIGHEST AGGREGATE ANNUAL BONUS, INCENTIVE OR
OTHER PAYMENTS OF CASH COMPENSATION PAID TO THE EXECUTIVE IN ADDITION TO THE
AMOUNTS REFERRED TO IN CLAUSE (I) ABOVE MADE OR TO BE MADE IN OR WITH RESPECT TO
ANY CALENDAR YEAR DURING THE THREE CALENDAR YEARS IMMEDIATELY PRECEDING THE YEAR
IN WHICH THE CHANGE IN CONTROL OCCURRED PURSUANT TO ANY BONUS, INCENTIVE,
PROFIT–SHARING, PERFORMANCE, DISCRETIONARY PAY OR SIMILAR POLICY, PLAN, PROGRAM
OR ARRANGEMENT OF THE COMPANY (“INCENTIVE PAY”) WHICH CONTEMPLATES CASH PAYMENTS
OTHER THAN EMPLOYEE BENEFITS (AS HEREINAFTER DEFINED); PROVIDED, HOWEVER, THAT
IN NO EVENT SHALL ANY INCREASE IN THE EXECUTIVE’S AGGREGATE CASH COMPENSATION OR
ANY PORTION THEREOF IN ANY WAY DIMINISH ANY OTHER OBLIGATION OF THE COMPANY
UNDER THIS AGREEMENT.  THE EXECUTIVE’S BASE PAY SHALL BE PAYABLE MONTHLY.  THE
EXECUTIVE’S INCENTIVE PAY SHALL BE PAID ANNUALLY AS SOON AS REASONABLY
PRACTICABLE FOLLOWING DETERMINATION OF THE AMOUNT PAYABLE BUT IN NO EVENT LATER
THAN THE DATE WHICH IS SIXTY (60) DAYS FOLLOWING THE LAST DAY OF THE FISCAL YEAR
DURING WHICH SUCH INCENTIVE PAY IS DEEMED EARNED.

 

(B)                                 DURING THE PERIOD OF EMPLOYMENT THE
EXECUTIVE SHALL, ON THE SAME BASIS AS THE EXECUTIVE PARTICIPATED THEREIN
IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL, BE A FULL PARTICIPANT IN, AND SHALL
BE ENTITLED TO THE PERQUISITES, BENEFITS AND SERVICE CREDIT FOR BENEFITS AS
PROVIDED UNDER ANY AND ALL EMPLOYEE RETIREMENT INCOME AND WELFARE BENEFIT
POLICIES, PLANS, PROGRAMS OR ARRANGEMENTS IN WHICH SENIOR EXECUTIVES OF THE
COMPANY AND/OR ANY

 

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PARENT OR SUBSIDIARY PARTICIPATE GENERALLY, INCLUDING WITHOUT LIMITATION ANY
STOCK OPTION, STOCK PURCHASE, STOCK APPRECIATION, SAVINGS, PENSION, SUPPLEMENTAL
EXECUTIVE RETIREMENT OR OTHER RETIREMENT INCOME OR WELFARE BENEFIT, DEFERRED
COMPENSATION, INCENTIVE COMPENSATION, GROUP AND/OR EXECUTIVE LIFE, ACCIDENT,
HEALTH, DENTAL, MEDICAL/HOSPITAL OR OTHER INSURANCE (WHETHER FUNDED BY ACTUAL
INSURANCE OR SELF–INSURED BY THE COMPANY), DISABILITY, SALARY CONTINUATION,
EXPENSE REIMBURSEMENT AND OTHER EMPLOYEE BENEFIT POLICIES, PLANS, PROGRAMS OR
ARRANGEMENTS THAT MAY EXIST IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL OR ANY
EQUIVALENT SUCCESSOR POLICIES, PLANS, PROGRAMS OR ARRANGEMENTS THAT MAY BE
ADOPTED THEREAFTER BY THE COMPANY AND/OR ANY PARENT OR SUBSIDIARY (COLLECTIVELY,
“EMPLOYEE BENEFITS”); PROVIDED, HOWEVER, THAT, EXCEPT AS SET FORTH IN SECTION
5(A)(V) HEREOF, THE EXECUTIVE’S RIGHTS THEREUNDER SHALL BE GOVERNED BY THE TERMS
THEREOF AND SHALL NOT BE ENLARGED HEREUNDER OR OTHERWISE AFFECTED HEREBY. 
SUBJECT TO THE PROVISO IN THE IMMEDIATELY PRECEDING SENTENCE, IF AND TO THE
EXTENT SUCH PERQUISITES, BENEFITS OR SERVICE CREDIT FOR BENEFITS ARE NOT PAYABLE
OR PROVIDED UNDER ANY SUCH POLICY, PLAN, PROGRAM OR ARRANGEMENT AS A RESULT OF
THE AMENDMENT OR TERMINATION THEREOF SUBSEQUENT TO OR AFTER A CHANGE IN CONTROL,
THEN THE COMPANY SHALL ITSELF PAY OR PROVIDE SUCH EMPLOYEE BENEFITS.  NOTHING IN
THIS AGREEMENT SHALL PRECLUDE IMPROVEMENT OR ENHANCEMENT OF ANY SUCH EMPLOYEE
BENEFITS, PROVIDED THAT NO SUCH IMPROVEMENT SHALL IN ANY WAY DIMINISH ANY OTHER
OBLIGATION OF THE COMPANY UNDER THIS AGREEMENT.

 

(C)                                  THE COMPANY HAS DETERMINED THAT THE AMOUNTS
PAYABLE PURSUANT TO THIS SECTION 3 CONSTITUTE REASONABLE COMPENSATION. 
ACCORDINGLY, NOTWITHSTANDING ANY OTHER PROVISION HEREOF, UNLESS SUCH ACTION
WOULD BE EXPRESSLY PROHIBITED BY APPLICABLE LAW, IF ANY AMOUNT PAID OR PAYABLE
PURSUANT TO THIS SECTION 3 IS SUBJECT TO THE EXCISE TAX IMPOSED BY SECTION 4999
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THE COMPANY WILL
PAY TO THE EXECUTIVE AN ADDITIONAL AMOUNT IN CASH EQUAL TO THE AMOUNT NECESSARY
TO CAUSE THE AGGREGATE REMUNERATION RECEIVED BY THE EXECUTIVE UNDER THIS 
SECTION 3, INCLUDING SUCH ADDITIONAL CASH PAYMENT (NET OF ALL FEDERAL, STATE AND
LOCAL INCOME AND OTHER TAXES AND ALL TAXES PAYABLE AS THE RESULT OF THE
APPLICATION OF SECTIONS 280G AND 4999 OF THE CODE) TO BE EQUAL TO THE AGGREGATE
REMUNERATION THE EXECUTIVE WOULD HAVE RECEIVED UNDER THIS SECTION 3, EXCLUDING
SUCH ADDITIONAL PAYMENT (NET OF ALL FEDERAL, STATE AND LOCAL INCOME AND OTHER
TAXES), AS IF SECTIONS 280G AND 4999 OF THE CODE (AND ANY SUCCESSOR PROVISIONS
THERETO) HAD NOT BEEN ENACTED INTO LAW.

 

4.                                       TERMINATION FOLLOWING A CHANGE IN
CONTROL:

 

(A)                                  IN THE EVENT OF THE OCCURRENCE OF A CHANGE
IN CONTROL, THIS AGREEMENT MAY BE TERMINATED BY THE COMPANY DURING THE PERIOD OF
EMPLOYMENT ONLY UPON THE OCCURRENCE OF ONE OR MORE OF THE FOLLOWING EVENTS:

 

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(I)                                     IF THE EXECUTIVE IS UNABLE TO PERFORM
THE ESSENTIAL FUNCTIONS OF THE EXECUTIVE’S JOB (WITH OR WITHOUT REASONABLE
ACCOMMODATION) BECAUSE THE EXECUTIVE HAS BECOME PERMANENTLY DISABLED WITHIN THE
MEANING OF, AND ACTUALLY BEGINS TO RECEIVE DISABILITY BENEFITS PURSUANT TO, A
LONG–TERM DISABILITY PLAN MAINTAINED BY OR ON BEHALF OF THE COMPANY FOR SENIOR
EXECUTIVES GENERALLY OR, IF APPLICABLE, EMPLOYEES OF THE COMPANY IMMEDIATELY
PRIOR TO THE CHANGE IN CONTROL; OR

 

(II)                                  FOR “CAUSE,” WHICH FOR PURPOSES OF THIS
AGREEMENT SHALL MEAN THAT, PRIOR TO ANY TERMINATION PURSUANT TO SUBSECTION 4(B)
HEREOF, THE EXECUTIVE SHALL HAVE COMMITTED:

 

(A)                              AN INTENTIONAL ACT OF MATERIAL FRAUD,
EMBEZZLEMENT OR THEFT IN CONNECTION WITH THE EXECUTIVE’S DUTIES OR IN THE COURSE
OF THE EXECUTIVE’S EMPLOYMENT WITH THE COMPANY;

 

(B)                                INTENTIONAL, WRONGFUL DAMAGE TO MATERIAL
PROPERTY OF THE COMPANY;

 

(C)                                INTENTIONAL, WRONGFUL DISCLOSURE OF MATERIAL
SECRET PROCESSES OR CONFIDENTIAL INFORMATION OF THE COMPANY; OR

 

(D)                               INTENTIONAL WRONGFUL ENGAGEMENT IN ANY
COMPETITIVE ACTIVITY;

 

and any such act shall have been materially harmful to the Company.  For
purposes of this Agreement, no act, or failure to act, on the part of the
Executive shall be deemed “intentional” if it was due primarily to an error in
judgment or negligence, but shall be deemed “intentional” only if done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive’s action or omission was in the best interest of the
Company.  Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for “Cause” hereunder unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three–quarters of the Board then in office at
a meeting of the Board called and held for such purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive has committed an act set forth above
in this Subsection 4(a)(ii) and specifying the particulars thereof in detail. 
Nothing herein shall limit the right of the Executive or the Executive’s
beneficiaries to contest the validity or propriety of any such determination.

 

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(B)                                 IN THE EVENT OF THE OCCURRENCE OF A CHANGE
IN CONTROL, THIS AGREEMENT MAY BE TERMINATED BY THE EXECUTIVE DURING THE PERIOD
OF EMPLOYMENT WITH THE RIGHT TO BENEFITS AS PROVIDED IN SECTION 5 HEREOF UPON
THE OCCURRENCE OF ONE OR MORE OF THE FOLLOWING EVENTS AS DETERMINED BY THE
EXECUTIVE IN THE SOLE DISCRETION OF THE EXECUTIVE:

 

(I)                                     ANY TERMINATION BY THE COMPANY OF THE
EMPLOYMENT OF THE EXECUTIVE FOR ANY REASON OTHER THAN FOR CAUSE OR AS A RESULT
OF THE DEATH OF THE EXECUTIVE OR BY REASON OF THE EXECUTIVE’S DISABILITY AND THE
ACTUAL RECEIPT OF DISABILITY BENEFITS IN ACCORDANCE WITH SUBSECTION 4(A)(I)
HEREOF; OR

 

(II)                                  TERMINATION BY THE EXECUTIVE OF THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY (OR ANY SUCCESSOR TO OR AFFILIATE
THEREOF) DURING THE PERIOD OF EMPLOYMENT UPON THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:

 

(A)                              FAILURE TO ELECT OR REELECT THE EXECUTIVE TO
THE OFFICE(S) WHICH THE EXECUTIVE HELD IMMEDIATELY PRIOR TO A CHANGE IN CONTROL,
OR FAILURE TO ELECT OR REELECT THE EXECUTIVE AS A DIRECTOR OF THE COMPANY (OR
ANY SUCCESSOR TO PARENT ENTITY THEREOF) OR THE REMOVAL OF THE EXECUTIVE AS A
DIRECTOR OF THE COMPANY (OR ANY SUCCESSOR THERETO), IF THE EXECUTIVE SHALL HAVE
BEEN A DIRECTOR OF THE COMPANY IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL;

 

(B)                                AN ADVERSE CHANGE IN THE NATURE OR SCOPE OF
THE AUTHORITIES, POWERS, FUNCTIONS, RESPONSIBILITIES OR DUTIES ATTACHED TO THE
POSITION(S) WHICH THE EXECUTIVE HELD IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL;
A REDUCTION IN THE EXECUTIVE’S BASE PAY AND/OR INCENTIVE PAY RECEIVED FROM THE
COMPANY; OR THE TERMINATION OF THE EXECUTIVE’S RIGHTS TO ANY EMPLOYEE BENEFITS
TO WHICH THE EXECUTIVE WAS ENTITLED IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL
OR A REDUCTION IN SCOPE OR VALUE THEREOF WITHOUT THE PRIOR WRITTEN CONSENT OF
THE EXECUTIVE, ANY OF WHICH IS NOT REMEDIED WITHIN TEN (10) CALENDAR DAYS AFTER
RECEIPT BY THE COMPANY OF WRITTEN NOTICE FROM THE EXECUTIVE OF SUCH CHANGE,
REDUCTION OR TERMINATION, AS THE CASE MAY BE;

 

(C)                                A DETERMINATION BY THE EXECUTIVE THAT,
FOLLOWING A CHANGE IN CONTROL, AS A RESULT OF A CHANGE IN CIRCUMSTANCES
SIGNIFICANTLY AFFECTING THE EXECUTIVE’S POSITION(S), INCLUDING WITHOUT
LIMITATION, A CHANGE IN THE SCOPE OF THE BUSINESS OR OTHER ACTIVITIES FOR WHICH
THE EXECUTIVE WAS RESPONSIBLE IMMEDIATELY PRIOR TO A CHANGE IN CONTROL, THE
EXECUTIVE HAS BEEN RENDERED SUBSTANTIALLY UNABLE TO CARRY OUT, HAS

 

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BEEN SUBSTANTIALLY HINDERED IN THE PERFORMANCE OF, OR HAS SUFFERED A SUBSTANTIAL
REDUCTION IN ANY OF THE AUTHORITIES, POWERS, FUNCTIONS, RESPONSIBILITIES OR
DUTIES ATTACHED TO THE POSITION(S) HELD BY THE EXECUTIVE IMMEDIATELY PRIOR TO
THE CHANGE IN CONTROL, WHICH SITUATION IS NOT REMEDIED WITHIN TEN (10) CALENDAR
DAYS AFTER WRITTEN NOTICE TO THE COMPANY FROM THE EXECUTIVE OF SUCH
DETERMINATION;

 

(D)                               THE LIQUIDATION, DISSOLUTION, MERGER,
CONSOLIDATION OR REORGANIZATION OF THE COMPANY OR TRANSFER OF ALL OR A
SIGNIFICANT PORTION OF ITS BUSINESS AND/OR ASSETS (INCLUDING, WITHOUT
LIMITATION, BY MEANS OF THE SALE OF THE CAPITAL STOCK OR ASSETS OF ONE OR MORE
DIRECT OR INDIRECT SUBSIDIARIES OF THE COMPANY), UNLESS THE SUCCESSOR (BY
LIQUIDATION, MERGER, CONSOLIDATION, REORGANIZATION OR OTHERWISE) TO WHICH ALL OR
A SIGNIFICANT PORTION OF ITS BUSINESS AND/OR ASSETS HAVE BEEN TRANSFERRED
(DIRECTLY OR BY OPERATION OF LAW) SHALL HAVE ASSUMED ALL DUTIES AND OBLIGATIONS
OF THE COMPANY UNDER THIS AGREEMENT PURSUANT TO SECTION 11 HEREOF (IN WHICH
CASE, SUCH ENTITY SHALL BE DEEMED TO BE THE “COMPANY” HEREUNDER);

 

(E)                                 THE COMPANY SHALL REQUIRE (I) THAT THE
PRINCIPAL PLACE OF WORK OF THE EXECUTIVE OR THE APPROPRIATE PRINCIPAL EXECUTIVE
OFFICE OF THE COMPANY OR THE COMPANY’S OPERATING DIVISION OR SUBSIDIARY FOR
WHICH THE EXECUTIVE PERFORMED THE MAJORITY OF HIS SERVICES DURING THE TWELVE
(12) – MONTH PERIOD PRECEDING THE CHANGE IN CONTROL BE CHANGED TO ANY LOCATION
WHICH IS IN EXCESS OF FORTY (40) MILES FROM THE LOCATION THEREOF IMMEDIATELY
PRIOR TO THE CHANGE IN CONTROL OR (II) THAT THE EXECUTIVE TRAVEL AWAY FROM THE
EXECUTIVE’S OFFICE IN THE COURSE OF DISCHARGING THE EXECUTIVE’S RESPONSIBILITIES
OR DUTIES HEREUNDER MORE (IN TERMS OF EITHER CONSECUTIVE DAYS OR AGGREGATE DAYS
IN ANY CALENDAR YEAR) THAN WAS REQUIRED OF THE EXECUTIVE PRIOR TO THE CHANGE IN
CONTROL, WITHOUT, IN EITHER CASE, THE EXECUTIVE’S PRIOR CONSENT; OR

 

(F)                                 ANY MATERIAL BREACH OF THIS AGREEMENT BY THE
COMPANY OR ANY SUCCESSOR THERETO.

 

(C)                                  A TERMINATION BY THE COMPANY PURSUANT TO
SUBSECTION 4(A) HEREOF OR BY THE EXECUTIVE PURSUANT TO SUBSECTION 4(B) HEREOF
SHALL NOT AFFECT ANY RIGHTS WHICH THE EXECUTIVE MAY HAVE PURSUANT TO ANY
AGREEMENT, POLICY, PLAN, PROGRAM OR ARRANGEMENT OF THE COMPANY PROVIDING
EMPLOYEE BENEFITS, WHICH RIGHTS SHALL BE GOVERNED BY THE TERMS THEREOF.  IF THIS
AGREEMENT OR THE EMPLOYMENT OF THE EXECUTIVE IS TERMINATED UNDER CIRCUMSTANCES
IN

 

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WHICH THE EXECUTIVE IS NOT ENTITLED TO ANY PAYMENTS UNDER SECTIONS 3 OR 5
HEREOF, THEN NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE EXECUTIVE
SHALL HAVE NO FURTHER OBLIGATION OR LIABILITY TO THE COMPANY HEREUNDER WITH
RESPECT TO THE EXECUTIVE’S PRIOR OR ANY FUTURE EMPLOYMENT BY THE COMPANY.

 

5.                                       SEVERANCE COMPENSATION:

 

(A)                                  IF, FOLLOWING THE OCCURRENCE OF A CHANGE IN
CONTROL, (X) THE COMPANY SHALL TERMINATE THE EXECUTIVE’S EMPLOYMENT DURING THE
PERIOD OF EMPLOYMENT OTHER THAN PURSUANT TO SUBSECTION 4(A) HEREOF, OR (Y) THE
EXECUTIVE SHALL TERMINATE THE EXECUTIVE’S EMPLOYMENT DURING THE PERIOD OF
EMPLOYMENT PURSUANT TO SUBSECTION 4(B) HEREOF, OR (Z) THE EXECUTIVE DIES DURING
THE PERIOD OF EMPLOYMENT, THE COMPANY SHALL PAY TO THE EXECUTIVE (OR THE
EXECUTIVE’S ESTATE, AS APPLICABLE) THE AMOUNT SPECIFIED IN SUBSECTION 5(A)(I)
HEREOF WITHIN FIVE BUSINESS DAYS AFTER THE DATE (THE “TERMINATION DATE”) THAT
THE EXECUTIVE’S EMPLOYMENT IS TERMINATED (THE EFFECTIVE DATE OF WHICH SHALL BE
THE DATE OF TERMINATION OR DEATH, OR SUCH OTHER DATE THAT MAY BE SPECIFIED BY
THE EXECUTIVE IF THE TERMINATION IS PURSUANT TO SUBSECTION 4(B) HEREOF):

 

(I)                                     IN LIEU OF ANY FURTHER PAYMENTS UNDER
SUBSECTION 3(A) TO THE EXECUTIVE FOR PERIODS SUBSEQUENT TO THE TERMINATION DATE,
BUT WITHOUT AFFECTING THE RIGHTS OF THE EXECUTIVE REFERRED TO IN SUBSECTION 5(B)
HEREOF, A LUMP SUM PAYMENT (THE “SEVERANCE PAYMENT”) IN AN AMOUNT EQUAL TO A
MULTIPLE OF TWO (2) TIMES THE SUM OF (A) THE EXECUTIVE’S BASE PAY (AT THE
HIGHEST RATE IN EFFECT DURING THE TERM PRIOR TO THE TERMINATION DATE), PLUS (B)
THE EXECUTIVE’S INCENTIVE PAY (BASED UPON THE GREATEST AMOUNT OF INCENTIVE PAY
PAID OR PAYABLE TO THE EXECUTIVE FOR ANY YEAR DURING THE TERM PRIOR TO THE
TERMINATION DATE).

 

(II)                                  (A) FOR THE REMAINDER OF THE PERIOD OF
EMPLOYMENT THE COMPANY SHALL ARRANGE TO PROVIDE THE EXECUTIVE WITH EMPLOYEE
BENEFITS IDENTICAL TO THOSE WHICH THE EXECUTIVE WAS RECEIVING OR ENTITLED TO
RECEIVE IMMEDIATELY PRIOR TO THE TERMINATION DATE (AND IF AND TO THE EXTENT THAT
SUCH BENEFITS SHALL NOT OR CANNOT BE PAID OR PROVIDED UNDER ANY POLICY, PLAN,
PROGRAM OR ARRANGEMENT OF THE COMPANY SOLELY DUE TO THE FACT THAT THE EXECUTIVE
IS NO LONGER AN OFFICER OR EMPLOYEE OF THE COMPANY, THEN THE COMPANY SHALL
ITSELF PAY TO THE EXECUTIVE AND/OR THE EXECUTIVE’S DEPENDENTS AND BENEFICIARIES,
SUCH EMPLOYEE BENEFITS) AND (B) WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE REMAINDER OF THE PERIOD OF EMPLOYMENT SHALL BE CONSIDERED SERVICE
WITH THE COMPANY FOR THE PURPOSE OF SERVICE CREDITS UNDER THE COMPANY’S
RETIREMENT INCOME, SUPPLEMENTAL EXECUTIVE RETIREMENT AND OTHER BENEFIT PLANS
APPLICABLE TO THE EXECUTIVE AND/OR THE EXECUTIVE’S DEPENDENTS AND BENEFICIARIES

 

9

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IMMEDIATELY PRIOR TO THE TERMINATION DATE.  WITHOUT OTHERWISE LIMITING THE
PURPOSES OR EFFECT OF SECTION 6 HEREOF, EMPLOYEE BENEFITS PAYABLE TO THE
EXECUTIVE PURSUANT TO THIS SUBSECTION 5(A)(II) BY REASON OF ANY “WELFARE BENEFIT
PLAN” OF THE COMPANY (AS THE TERM “WELFARE BENEFIT PLAN” IS DEFINED IN
SECTION 3(1) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED)
SHALL BE REDUCED TO THE EXTENT COMPARABLE WELFARE BENEFITS ARE ACTUALLY RECEIVED
BY THE EXECUTIVE FROM ANOTHER EMPLOYER DURING SUCH PERIOD FOLLOWING THE
EXECUTIVE’S TERMINATION DATE UNTIL THE EXPIRATION OF THE PERIOD OF EMPLOYMENT.

 

(III)                               IN ADDITION TO ALL OTHER COMPENSATION DUE TO
THE EXECUTIVE HEREUNDER, THE FOLLOWING SHALL OCCUR IMMEDIATELY PRIOR TO THE
OCCURRENCE OF A CHANGE IN CONTROL:

 

(A)                              ALL COMPANY STOCK OPTIONS HELD BY THE EXECUTIVE
PRIOR TO A CHANGE IN CONTROL SHALL BECOME EXERCISABLE, REGARDLESS OF WHETHER OR
NOT THE VESTING/PERFORMANCE CONDITIONS SET FORTH IN THE RELEVANT AGREEMENTS
SHALL HAVE BEEN SATISFIED IN FULL;

 

(B)                                ALL RESTRICTIONS ON ANY RESTRICTED SECURITIES
GRANTED BY THE COMPANY TO THE EXECUTIVE PRIOR TO A CHANGE IN CONTROL 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;

 

(C)                                THE EXECUTIVE SHALL HAVE AN IMMEDIATE RIGHT
TO RECEIVE ALL PERFORMANCE SHARES OR BONUSES GRANTED PRIOR TO A CHANGE IN
CONTROL, 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; AND

 

(D)                               ALL PERFORMANCE UNITS GRANTED TO THE EXECUTIVE
PRIOR TO A CHANGE IN CONTROL SHALL BECOME IMMEDIATELY PAYABLE IN CASH OR COMMON
STOCK, AT THE EXECUTIVE’S SOLE OPTION, 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;

 

provided, that if the terms of any plan or agreement providing for such options,
restricted securities, performance shares or bonuses, or performance units do
not allow such acceleration or payment as described above, the Company shall
take or cause to be taken any

 

10

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action required to allow such acceleration or payment or to separately pay the
value of such benefits.

 

(B)                                 (I)            ANYTHING IN THIS AGREEMENT TO
THE CONTRARY NOTWITHSTANDING, IN THE EVENT A PUBLIC ACCOUNTING FIRM SELECTED BY
THE EXECUTIVE (THE “ACCOUNTING FIRM”) SHALL DETERMINE THAT ANY PAYMENT, BENEFIT,
OR DISTRIBUTION BY THE COMPANY TO THE EXECUTIVE (WHETHER PAID OR PAYABLE OR
DISTRIBUTED OR DISTRIBUTABLE PURSUANT TO THE TERMS OF THIS AGREEMENT OR
OTHERWISE, BUT DETERMINED WITHOUT REGARD TO ANY ADDITIONAL PAYMENTS REQUIRED
UNDER THIS SUBSECTION 5(B) (A “PAYMENT”) IS SUBJECT TO THE EXCISE TAX IMPOSED BY
SECTION 4999 OF THE CODE, OR ANY INTEREST OR PENALTIES ARE INCURRED BY THE
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 THE COMPANY SHALL PAY TO THE EXECUTIVE AN ADDITIONAL PAYMENT
(A “GROSS–UP PAYMENT”) IN AN AMOUNT SUCH THAT AFTER PAYMENT BY THE 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, THE EXECUTIVE RETAINS AN AMOUNT OF THE GROSS–UP PAYMENT EQUAL
TO THE EXCISE TAX IMPOSED UPON THE PAYMENTS.

 

(II)                                  SUBJECT TO THE PROVISIONS OF
SUBSECTION 5(B)(III), ALL DETERMINATIONS REQUIRED TO BE MADE UNDER THIS
SUBSECTION 5(B), 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 THE COMPANY AND THE EXECUTIVE
AS SOON AS POSSIBLE FOLLOWING A REQUEST MADE BY THE EXECUTIVE OR THE COMPANY. 
IN THE EVENT THAT THE ACCOUNTING FIRM IS SERVING AS ACCOUNTANT OR AUDITOR FOR
THE INDIVIDUAL, ENTITY OR GROUP EFFECTING THE CHANGE IN CONTROL, THE EXECUTIVE
SHALL APPOINT ANOTHER NATIONALLY RECOGNIZED PUBLIC ACCOUNTING FIRM TO MAKE THE
DETERMINATIONS REQUIRED HEREUNDER (WHICH ACCOUNTING FIRM SHALL THEN BE REFERRED
TO AS THE ACCOUNTING FIRM HEREUNDER).  ALL FEES AND EXPENSES OF THE ACCOUNTING
FIRM SHALL BE BORNE SOLELY BY THE COMPANY. ANY GROSS–UP PAYMENT, AS DETERMINED
PURSUANT TO THIS SUBSECTION 5(B), SHALL BE PAID BY THE COMPANY TO THE EXECUTIVE
WITHIN FIVE (5) DAYS OF THE RECEIPT OF THE ACCOUNTING FIRM’S DETERMINATION. IF
THE ACCOUNTING FIRM DETERMINES THAT NO EXCISE TAX IS PAYABLE BY THE EXECUTIVE,
IT SHALL FURNISH THE EXECUTIVE WITH A WRITTEN OPINION THAT FAILURE TO REPORT THE
EXCISE TAX ON THE 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 THE

 

11

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COMPANY AND THE 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 THE COMPANY SHOULD HAVE BEEN MADE (“UNDERPAYMENT”), CONSISTENT
WITH THE CALCULATIONS REQUIRED TO BE MADE HEREUNDER.  IN THE EVENT THAT THE
COMPANY EXHAUSTS ITS REMEDIES PURSUANT TO SUBSECTION 5(B)(III) AND THE 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 THE COMPANY TO OR FOR THE BENEFIT OF THE
EXECUTIVE.

 

(III)                               THE EXECUTIVE SHALL NOTIFY THE COMPANY IN
WRITING OF ANY CLAIM BY THE INTERNAL REVENUE SERVICE THAT, IF SUCCESSFUL, WOULD
REQUIRE THE PAYMENT BY THE COMPANY OF THE GROSS–UP PAYMENT.  SUCH NOTIFICATION
SHALL BE GIVEN AS SOON AS PRACTICABLE BUT NO LATER THAN TEN (10) BUSINESS DAYS
AFTER THE EXECUTIVE IS INFORMED IN WRITING OF SUCH CLAIM AND SHALL APPRISE THE
COMPANY OF THE NATURE OF SUCH CLAIM AND THE DATE ON WHICH SUCH CLAIM IS
REQUESTED TO BE PAID.  THE EXECUTIVE SHALL NOT PAY SUCH CLAIM PRIOR TO THE
EXPIRATION OF THE TEN (10)–DAY PERIOD FOLLOWING THE DATE ON WHICH THE EXECUTIVE
GIVES SUCH NOTICE TO THE COMPANY (OR SUCH SHORTER PERIOD ENDING ON THE DATE THAT
ANY PAYMENT OF TAXES WITH RESPECT TO SUCH CLAIM IS DUE).  IF THE COMPANY
NOTIFIES THE EXECUTIVE IN WRITING PRIOR TO THE EXPIRATION OF SUCH PERIOD THAT IT
DESIRES TO CONTEST SUCH CLAIM, THE EXECUTIVE SHALL:

 

(A)                              GIVE THE COMPANY ANY INFORMATION REASONABLY
REQUESTED BY THE COMPANY RELATING TO SUCH CLAIM,

 

(B)                                TAKE SUCH ACTION IN CONNECTION WITH
CONTESTING SUCH CLAIM AS THE COMPANY SHALL REASONABLY REQUEST IN WRITING FROM
TIME TO TIME, INCLUDING, WITHOUT LIMITATION, ACCEPTING LEGAL REPRESENTATION WITH
RESPECT TO SUCH CLAIM BY AN ATTORNEY REASONABLY SELECTED BY THE COMPANY,

 

(C)                                COOPERATE WITH THE COMPANY IN GOOD FAITH TO
EFFECTIVELY CONTEST SUCH CLAIM, AND

 

(D)                               PERMIT THE COMPANY TO PARTICIPATE IN ANY
PROCEEDINGS RELATING TO SUCH CLAIM;

 

provided, however, that the Company 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 the Executive harmless, on an
after–tax basis, for any Excise

 

12

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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 Subsection 5(b)(iii), the
Company 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 the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the 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 the Company shall determine; provided further, that if
the Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest–free basis and shall indemnify and hold the 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 the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount. 
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which a Gross–Up Payment would be payable hereunder and the
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.

 

(IV)                              IF, AFTER THE RECEIPT BY THE EXECUTIVE OF AN
AMOUNT ADVANCED BY THE COMPANY PURSUANT TO THIS SUBSECTION 5(B), THE EXECUTIVE
BECOMES ENTITLED TO RECEIVE, AND RECEIVES, ANY REFUND WITH RESPECT TO SUCH
CLAIM, THE EXECUTIVE SHALL (SUBJECT TO THE COMPANY’S COMPLYING WITH THE
REQUIREMENTS OF THIS SUBSECTION 5(B)) PROMPTLY PAY TO THE COMPANY THE AMOUNT OF
SUCH REFUND (TOGETHER WITH ANY INTEREST PAID OR CREDITED THEREON AFTER TAXES
APPLICABLE THERETO).  IF, AFTER THE RECEIPT BY THE EXECUTIVE OF ANY AMOUNT
ADVANCED BY THE COMPANY PURSUANT TO SUBSECTION 5(B), A DETERMINATION IS MADE
THAT THE EXECUTIVE SHALL NOT BE ENTITLED TO ANY REFUND WITH RESPECT TO SUCH
CLAIM AND THE COMPANY DOES NOT NOTIFY THE 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.

 

13

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(C)                                  THERE SHALL BE NO RIGHT OF SET–OFF OR
COUNTERCLAIM IN RESPECT OF ANY CLAIM, DEBT OR OBLIGATION AGAINST ANY PAYMENT TO
OR BENEFIT (INCLUDING EMPLOYEE BENEFITS) OF THE EXECUTIVE PROVIDED FOR IN THIS
AGREEMENT.

 

(D)                                 WITHOUT LIMITING THE RIGHTS OF THE EXECUTIVE
AT LAW OR IN EQUITY, IF THE COMPANY FAILS TO MAKE ANY PAYMENT REQUIRED TO BE
MADE HEREUNDER ON A TIMELY BASIS, THE COMPANY SHALL PAY INTEREST ON THE AMOUNT
THEREOF (AND ON ANY INTEREST ACCRUED HEREUNDER) AT AN ANNUALIZED RATE OF
INTEREST EQUAL TO THE HIGHEST LAWFUL RATE AS HEREAFTER DEFINED.  “HIGHEST LAWFUL
RATE” MEANS, AT ANY TIME AND WITH RESPECT TO THE EXECUTIVE, THE MAXIMUM RATE OF
INTEREST UNDER APPLICABLE LAW THAT THE EXECUTIVE MAY CHARGE THE COMPANY.  THE
HIGHEST LAWFUL RATE SHALL BE CALCULATED IN A MANNER THAT TAKES INTO ACCOUNT ANY
AND ALL FEES, PAYMENTS, AND OTHER CHARGES IN RESPECT OF THIS AGREEMENT THAT
CONSTITUTE INTEREST UNDER APPLICABLE LAW.  EACH CHANGE IN ANY INTEREST RATE
PROVIDED FOR HEREIN BASED UPON THE HIGHEST LAWFUL RATE RESULTING FROM A CHANGE
IN THE HIGHEST LAWFUL RATE SHALL TAKE EFFECT WITHOUT NOTICE TO THE COMPANY AT
THE TIME OF SUCH CHANGE IN THE HIGHEST LAWFUL RATE.  FOR PURPOSES OF DETERMINING
THE HIGHEST LAWFUL RATE UNDER TEXAS LAW, THE APPLICABLE RATE CEILING SHALL BE
THE INDICATED RATE CEILING DESCRIBED IN, AND COMPUTED IN ACCORDANCE WITH, THE
TEXAS FINANCE CODE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN,
NO PROVISIONS OF THIS AGREEMENT SHALL REQUIRE THE PAYMENT OR PERMIT THE
COLLECTION OF INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE.  IF ANY EXCESS OF
INTEREST IN SUCH RESPECT IS HEREIN PROVIDED FOR, OR SHALL BE ADJUDICATED TO BE
SO PROVIDED, IN THIS AGREEMENT OR OTHERWISE IN CONNECTION WITH THIS LOAN
TRANSACTION, THE PROVISIONS OF THIS PARAGRAPH SHALL GOVERN AND PREVAIL, AND
NEITHER THE COMPANY NOR THE SURETIES, GUARANTORS, SUCCESSORS OR ASSIGNS OF THE
COMPANY SHALL BE OBLIGATED TO PAY THE EXCESS AMOUNT OF SUCH INTEREST, OR ANY
OTHER EXCESS SUM PAID FOR THE USE, FORBEARANCE OR DETENTION OF SUMS LOANED
PURSUANT HERETO.  IF FOR ANY REASON INTEREST IN EXCESS OF THE HIGHEST LAWFUL
RATE SHALL BE DEEMED CHARGED, REQUIRED OR PERMITTED BY ANY COURT OF COMPETENT
JURISDICTION, ANY SUCH EXCESS SHALL BE APPLIED AS A PAYMENT AND REDUCTION OF THE
PRINCIPAL OF INDEBTEDNESS EVIDENCED BY THIS AGREEMENT; AND, IF THE PRINCIPAL
AMOUNT HEREOF HAS BEEN PAID IN FULL, ANY REMAINING EXCESS SHALL FORTHWITH BE
PAID TO THE COMPANY.  IN DETERMINING WHETHER OR NOT THE INTEREST PAID OR PAYABLE
EXCEEDS THE HIGHEST LAWFUL RATE, THE COMPANY AND THE EXECUTIVE SHALL, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, (A) CHARACTERIZE ANY NON–PRINCIPAL PAYMENT
AS AN EXPENSE, FEE, OR PREMIUM RATHER THAN AS INTEREST, (B) EXCLUDE VOLUNTARY
PREPAYMENTS AND THE EFFECTS THEREOF, AND (C) AMORTIZE, PRORATE, ALLOCATE, AND
SPREAD IN EQUAL OR UNEQUAL PARTS THE TOTAL AMOUNT OF INTEREST THROUGHOUT THE
ENTIRE CONTEMPLATED TERM OF THE INDEBTEDNESS EVIDENCED BY THIS AGREEMENT SO THAT
THE INTEREST FOR THE ENTIRE TERM DOES NOT EXCEED THE HIGHEST LAWFUL RATE.

 

6.             NO MITIGATION OBLIGATION:  THE COMPANY HEREBY ACKNOWLEDGES THAT
IT WILL BE DIFFICULT, AND MAY BE IMPOSSIBLE, FOR THE EXECUTIVE TO FIND
REASONABLY COMPARABLE EMPLOYMENT

 

14

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FOLLOWING THE TERMINATION DATE AND THAT THE NONCOMPETITION COVENANT CONTAINED IN
SECTION 7 HEREOF WILL FURTHER LIMIT THE EMPLOYMENT OPPORTUNITIES FOR THE
EXECUTIVE.  ACCORDINGLY, THE PARTIES HERETO EXPRESSLY AGREE THAT THE PAYMENT OF
THE SEVERANCE COMPENSATION AND BENEFITS BY THE COMPANY TO THE EXECUTIVE IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT WILL BE LIQUIDATED DAMAGES, AND THAT
THE 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
THE EXECUTIVE HEREUNDER OR OTHERWISE, EXCEPT AS EXPRESSLY PROVIDED IN
SUBSECTION 5(A)(II) HEREOF.

 

7.             COMPETITIVE ACTIVITY:  DURING A PERIOD ENDING ONE YEAR FOLLOWING
THE TERMINATION DATE (OR, IF LESS, A PERIOD EQUAL TO THE REMAINING PERIOD OF
EMPLOYMENT AND BEGINNING ON THE TERMINATION DATE), IF THE EXECUTIVE SHALL HAVE
RECEIVED OR SHALL BE RECEIVING BENEFITS UNDER SUBSECTION 5(A) HEREOF, THE
EXECUTIVE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT BY THE COMPANY, DIRECTLY
OR INDIRECTLY ENGAGE IN ANY “COMPETITIVE BUSINESS” (AS HEREINAFTER DEFINED)
WITHIN ANY METROPOLITAN AREA SERVED BY THE COMPANY DURING THE TWELVE (12)–MONTH
PERIOD IMMEDIATELY PRECEDING TERMINATION OF THE EXECUTIVE’S EMPLOYMENT WITH THE
COMPANY NOR WILL THE EXECUTIVE ENGAGE, WITHIN SUCH GEOGRAPHICAL AREA(S), IN THE
DESIGN, DEVELOPMENT, DISTRIBUTION, MANUFACTURE, ASSEMBLY OR SALE OF A PRODUCT OR
SERVICE IN COMPETITION WITH ANY PRODUCT OR SERVICE MARKETED OR PLANNED BY THE
COMPANY IMMEDIATELY PRIOR TO THE TERMINATION DATE, THE PLANS, DESIGNS OR
SPECIFICATIONS OF WHICH HAVE BEEN REVEALED TO THE EXECUTIVE (“COMPETITIVE
ACTIVITY”).  THE EXECUTIVE ACKNOWLEDGES THAT THESE LIMITED PROHIBITIONS ARE
REASONABLE AS TO TIME, GEOGRAPHICAL AREA AND SCOPE OF ACTIVITIES TO BE
RESTRAINED AND THAT THE LIMITED PROHIBITIONS DO NOT IMPOSE A GREATER RESTRAINT
THAN IS NECESSARY TO PROTECT THE COMPANY’S GOODWILL, PROPRIETARY INFORMATION AND
OTHER BUSINESS INTERESTS.  “COMPETITIVE ACTIVITY” SHALL NOT INCLUDE (I) THE MERE
OWNERSHIP OF A DE MINIMIS AMOUNT OF SECURITIES IN ANY SUCH ENTERPRISE AND
EXERCISE OF RIGHTS APPURTENANT THERETO OR (II) PARTICIPATION IN MANAGEMENT OF
ANY SUCH ENTERPRISE OR BUSINESS OPERATION THEREOF OTHER THAN IN CONNECTION WITH
THE COMPETITIVE OPERATION OF SUCH ENTERPRISE.  FOR PURPOSES OF THIS SECTION 7,
THE TERM “COMPETITIVE BUSINESS” MEANS ANY PERSON OR ENTITY ENGAGED IN A BUSINESS
THAT PRODUCES ANY OF THE FOLLOWING PRODUCTS OR PERFORMS ANY OF THE FOLLOWING
SERVICES: GENERAL COMMERCIAL PRINTING SERVICES, INCLUDING DIGITAL IMAGING,
OFF–SET LITHOGRAPHY, BINDING AND FINISHING SERVICES AND FULFILLMENT OF PRINTED
MATERIALS, INCLUDING ANY PRODUCTS OR SERVICES MANUFACTURED, DEVELOPED, OR
DISTRIBUTED DURING THE TERM AND THE TERM OF EMPLOYMENT BY THE COMPANY AND/OR ITS
AFFILIATES, PREDECESSORS, OR SUCCESSORS.

 

8.             LEGAL FEES AND EXPENSES:  IT IS THE INTENT OF THE COMPANY THAT
THE EXECUTIVE NOT BE REQUIRED TO INCUR THE EXPENSES ASSOCIATED WITH THE
ENFORCEMENT OF THE EXECUTIVE’S RIGHTS UNDER THIS AGREEMENT BY LITIGATION OR
OTHER LEGAL ACTION BECAUSE THE COST AND EXPENSE THEREOF WOULD SUBSTANTIALLY
DETRACT FROM THE BENEFITS INTENDED TO BE EXTENDED TO THE EXECUTIVE HEREUNDER. 
ACCORDINGLY, IF IT SHOULD APPEAR TO THE EXECUTIVE THAT THE COMPANY HAS FAILED TO
COMPLY WITH ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR IN THE EVENT THAT THE
COMPANY OR ANY OTHER PERSON TAKES ANY ACTION TO DECLARE THIS AGREEMENT VOID OR
UNENFORCEABLE, OR INSTITUTES ANY LITIGATION DESIGNED TO DENY, OR TO RECOVER
FROM, THE EXECUTIVE THE BENEFITS INTENDED TO BE PROVIDED TO THE EXECUTIVE
HEREUNDER, THE COMPANY IRREVOCABLY AUTHORIZES THE EXECUTIVE FROM TIME TO TIME TO
RETAIN COUNSEL OF THE EXECUTIVE’S CHOICE, AT THE EXPENSE OF THE COMPANY AS
HEREAFTER PROVIDED, TO REPRESENT THE EXECUTIVE IN CONNECTION WITH THE LITIGATION
OR DEFENSE OF ANY LITIGATION OR OTHER LEGAL ACTION, WHETHER BY OR AGAINST THE
COMPANY OR ANY DIRECTOR, OFFICER, SHAREHOLDER OR OTHER

 

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PERSON AFFILIATED WITH THE COMPANY, IN ANY JURISDICTION.  NOTWITHSTANDING ANY
EXISTING OR PRIOR ATTORNEY–CLIENT RELATIONSHIP BETWEEN THE COMPANY AND SUCH
COUNSEL, THE COMPANY IRREVOCABLY CONSENTS TO THE EXECUTIVE’S ENTERING INTO AN
ATTORNEY–CLIENT RELATIONSHIP WITH SUCH COUNSEL, AND IN CONNECTION THEREWITH THE
COMPANY AND THE EXECUTIVE AGREE THAT A CONFIDENTIAL RELATIONSHIP SHALL EXIST
BETWEEN THE EXECUTIVE AND SUCH COUNSEL.  THE COMPANY SHALL PAY OR CAUSE TO BE
PAID AND SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL ATTORNEYS’ AND RELATED FEES
AND EXPENSES INCURRED BY THE EXECUTIVE AS A RESULT OF THE COMPANY’S FAILURE TO
PERFORM THIS AGREEMENT OR ANY PROVISION THEREOF OR AS A RESULT OF THE COMPANY OR
ANY PERSON CONTESTING THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION THEREOF AS AFORESAID.

 

9.             EMPLOYMENT RIGHTS:  NOTHING EXPRESSED OR IMPLIED IN THIS
AGREEMENT SHALL CREATE ANY RIGHT OR DUTY ON THE PART OF THE COMPANY OR THE
EXECUTIVE TO HAVE THE EXECUTIVE REMAIN IN THE EMPLOYMENT OF THE COMPANY PRIOR TO
ANY CHANGE IN CONTROL; PROVIDED, HOWEVER, THAT ANY ACTUAL OR CONSTRUCTIVE
TERMINATION OF EMPLOYMENT OF THE EXECUTIVE OR REMOVAL OF THE EXECUTIVE AS AN
OFFICER OF THE COMPANY FOLLOWING THE COMMENCEMENT OF ANY DISCUSSION WITH OR
RECEIPT OF AN OFFER FROM A THIRD PERSON THAT ULTIMATELY RESULTS IN A CHANGE IN
CONTROL SHALL BE DEEMED TO BE A TERMINATION OR REMOVAL OF THE EXECUTIVE AFTER A
CHANGE IN CONTROL FOR PURPOSES OF THIS AGREEMENT.

 

10.           WITHHOLDING OF TAXES:  THE COMPANY MAY WITHHOLD FROM ANY AMOUNTS
PAYABLE UNDER THIS AGREEMENT ALL FEDERAL, STATE, CITY OR OTHER TAXES AS SHALL BE
REQUIRED PURSUANT TO ANY LAW OR GOVERNMENT REGULATION OR RULING.

 

11.                                 SUCCESSORS AND BINDING AGREEMENT:

 

(A)                                  THE COMPANY SHALL REQUIRE ANY SUCCESSOR
(WHETHER DIRECT OR INDIRECT, BY PURCHASE, MERGER, CONSOLIDATION, REORGANIZATION
OR OTHERWISE) TO ALL OR SUBSTANTIALLY ALL OF THE BUSINESS AND/OR ASSETS OF THE
COMPANY, TO EXPRESSLY ASSUME AND AGREE TO PERFORM THIS AGREEMENT IN THE SAME
MANNER AND TO THE SAME EXTENT THE COMPANY WOULD BE REQUIRED TO PERFORM IF NO
SUCH SUCCESSION HAD TAKEN PLACE.  THIS AGREEMENT SHALL BE BINDING UPON AND INURE
TO THE BENEFIT OF THE COMPANY AND ANY SUCCESSOR TO THE COMPANY, INCLUDING
WITHOUT LIMITATION ANY PERSONS ACQUIRING DIRECTLY OR INDIRECTLY ALL OR
SUBSTANTIALLY ALL OF THE BUSINESS AND/OR ASSETS OF THE COMPANY WHETHER BY
PURCHASE, MERGER, CONSOLIDATION, REORGANIZATION OR OTHERWISE (AND SUCH SUCCESSOR
SHALL THEREAFTER BE DEEMED THE “COMPANY” FOR THE PURPOSES OF THIS AGREEMENT). 
THIS AGREEMENT SHALL NOT OTHERWISE BE ASSIGNABLE, TRANSFERABLE OR DELEGABLE BY
THE COMPANY.

 

(B)                                 THIS AGREEMENT SHALL INURE TO THE BENEFIT OF
AND BE ENFORCEABLE BY THE EXECUTIVE’S PERSONAL OR LEGAL REPRESENTATIVES,
EXECUTORS, ADMINISTRATORS, SUCCESSORS, HEIRS, DISTRIBUTEES AND/OR LEGATEES.

 

(C)                                  THIS AGREEMENT IS PERSONAL IN NATURE AND
NEITHER OF THE PARTIES HERETO SHALL, WITHOUT THE CONSENT OF THE OTHER, ASSIGN,
TRANSFER OR DELEGATE THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER
EXCEPT AS EXPRESSLY PROVIDED IN SUBSECTION 11(A) HEREOF.  WITHOUT LIMITING THE
GENERALITY OF

 

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THE FOREGOING, THE EXECUTIVE’S RIGHT TO RECEIVE PAYMENTS HEREUNDER SHALL NOT BE
ASSIGNABLE, TRANSFERABLE OR DELEGABLE, WHETHER BY PLEDGE, CREATION OF A SECURITY
INTEREST OR OTHERWISE, OTHER THAN BY A TRANSFER BY THE EXECUTIVE’S WILL OR BY
THE LAWS OF DESCENT AND DISTRIBUTION AND, IN THE EVENT OF ANY ATTEMPTED
ASSIGNMENT OR TRANSFER CONTRARY TO THIS SUBSECTION 11(C), THE COMPANY SHALL HAVE
NO LIABILITY TO PAY ANY AMOUNT SO ATTEMPTED TO BE ASSIGNED, TRANSFERRED OR
DELEGATED.

 

(D)                                 THE COMPANY AND THE EXECUTIVE RECOGNIZE THAT
EACH PARTY WILL HAVE NO ADEQUATE REMEDY AT LAW FOR BREACH BY THE OTHER OF ANY OF
THE AGREEMENTS CONTAINED HEREIN AND, IN THE EVENT OF ANY SUCH BREACH, THE
COMPANY AND THE EXECUTIVE HEREBY AGREE AND CONSENT THAT THE OTHER SHALL BE
ENTITLED TO A DECREE OF SPECIFIC PERFORMANCE, MANDAMUS OR OTHER APPROPRIATE
REMEDY TO ENFORCE PERFORMANCE OF THIS AGREEMENT.

 

12.           APPLICABLE LAW.   THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAW
PRINCIPLES OF ANY STATE) AND THE LAWS OF THE UNITED STATES OF AMERICA AND WILL,
TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO CALL FOR PERFORMANCE IN HARRIS
COUNTY, TEXAS.  COURTS WITHIN THE STATE OF TEXAS WILL HAVE JURISDICTION OVER ANY
AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING
OUT OF OR RELATING TO THIS AGREEMENT.  THE PARTIES CONSENT TO AND AGREE TO
SUBMIT TO THE JURISDICTION OF SUCH COURTS.  VENUE IN ANY SUCH DISPUTE, WHETHER
IN FEDERAL OR STATE COURT, WILL BE LAID IN HARRIS COUNTY, TEXAS. EACH OF THE
PARTIES HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND SUCH
PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (III)
ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

 

13.           NOTICES.   ALL NOTICES, DEMANDS, REQUESTS OR OTHER COMMUNICATIONS
THAT MAY BE OR ARE REQUIRED TO BE GIVEN, SERVED OR SENT BY EITHER PARTY TO THE
OTHER PARTY PURSUANT TO THIS AGREEMENT WILL BE IN WRITING AND WILL BE MAILED BY
FIRST–CLASS, REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE
PREPAID, OR TRANSMITTED BY HAND DELIVERY, TELEGRAM OR FACSIMILE TRANSMISSION
ADDRESSED AS FOLLOWS:

 

(a)

If to the Company:

 

 

Consolidated Graphics, Inc.

 

 

 

 

5858 Westheimer, Suite 200

 

 

 

 

Houston, Texas  77057

 

 

 

 

Facsimile No.: (713) 787–0974

 

 

 

 

Attn: Joe R. Davis

 

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with a copy (which will not constitute notice) to:

 

Winstead Sechrest & Minick P.C.

 

 

 

 

910 Travis Street, Suite 2400

 

 

 

 

Houston, Texas  77002–5895

 

 

 

 

Facsimile No.: (713) 650–2400

 

 

 

 

Attn: R. Clyde Parker, Jr., Esq.

 

(b)

If to the Executive:

 

 

G. Christopher Colville

 

 

 

 

5906 Masters Drive

 

 

 

 

Houston, Texas  77069

 

Either party may designate by written notice a new address to which any notice,
demand, request or communication may thereafter be given, served or sent.  Each
notice, demand, request or communication that is mailed, delivered or
transmitted in the manner described above will be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a facsimile transmission) the answer back being
deemed conclusive evidence of such delivery or at such time as delivery is
refused by the addressee upon presentation.

 

14.           GENDER.   WORDS OF ANY GENDER USED IN THIS AGREEMENT WILL BE HELD
AND CONSTRUED TO INCLUDE ANY OTHER GENDER, AND WORDS IN THE SINGULAR NUMBER WILL
BE HELD TO INCLUDE THE PLURAL, UNLESS THE CONTEXT OTHERWISE REQUIRES.

 

15.           AMENDMENT.   THIS AGREEMENT MAY NOT BE AMENDED OR SUPPLEMENTED
EXCEPT PURSUANT TO A WRITTEN INSTRUMENT SIGNED BY THE PARTIES HERETO.  NOTHING
CONTAINED IN THIS AGREEMENT WILL BE DEEMED TO CREATE ANY AGENCY, JOINT VENTURE,
PARTNERSHIP OR SIMILAR RELATIONSHIP BETWEEN THE PARTIES TO THIS AGREEMENT. 
NOTHING CONTAINED IN THIS AGREEMENT WILL BE DEEMED TO AUTHORIZE EITHER PARTY TO
THIS AGREEMENT TO BIND OR OBLIGATE THE OTHER PARTY.

 

16.           COUNTERPARTS.   THIS AGREEMENT MAY BE EXECUTED IN MULTIPLE
COUNTERPARTS, EACH OF WHICH WILL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH
WILL BE DEEMED TO BE A SINGLE AGREEMENT.  THIS AGREEMENT WILL BE CONSIDERED
FULLY EXECUTED WHEN ALL  PARTIES HAVE EXECUTED AN IDENTICAL COUNTERPART,
NOTWITHSTANDING THAT ALL SIGNATURES MAY NOT APPEAR ON THE SAME COUNTERPART.

 

17.           SEVERABILITY.   IF ANY OF THE PROVISIONS OF THIS AGREEMENT ARE
DETERMINED TO BE INVALID OR UNENFORCEABLE, SUCH INVALIDITY OR UNENFORCEABILITY
WILL NOT INVALIDATE OR RENDER UNENFORCEABLE THE REMAINDER OF THIS AGREEMENT, BUT
RATHER THE ENTIRE AGREEMENT WILL BE CONSTRUED AS IF NOT CONTAINING THE
PARTICULAR INVALID OR UNENFORCEABLE PROVISION OR PROVISIONS, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES WILL BE CONSTRUED AND ENFORCED ACCORDINGLY.  THE
PARTIES ACKNOWLEDGE THAT IF ANY PROVISION OF THIS AGREEMENT IS DETERMINED TO BE
INVALID OR UNENFORCEABLE, IT IS THEIR DESIRE AND INTENTION THAT SUCH PROVISION
BE REFORMED AND CONSTRUED IN SUCH MANNER THAT IT WILL, TO THE MAXIMUM EXTENT
PRACTICABLE, BE DEEMED TO BE VALID AND ENFORCEABLE.

 

18.           THIRD PARTIES.  EXCEPT AS EXPRESSLY SET FORTH OR REFERRED TO IN
THIS AGREEMENT, NOTHING IN THIS AGREEMENT IS INTENDED OR WILL BE CONSTRUED TO
CONFER UPON OR GIVE TO ANY PARTY

 

18

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OTHER THAN THE PARTIES TO THIS AGREEMENT AND THEIR SUCCESSORS AND PERMITTED
ASSIGNS, IF ANY, ANY RIGHTS OR REMEDIES UNDER OR BY REASON OF THIS AGREEMENT.

 

19.           WAIVER.   NO FAILURE OR DELAY IN EXERCISING ANY RIGHT HEREUNDER
WILL OPERATE AS A WAIVER THEREOF, NOR WILL ANY SINGLE OR PARTIAL EXERCISE
THEREOF PRECLUDE ANY OTHER OR FURTHER EXERCISE OR THE EXERCISE OF ANY OTHER
RIGHT.

 

20.           PRIOR AGREEMENTS:   THIS AGREEMENT IS VOLUNTARILY ENTERED INTO AND
UPON THE OCCURRENCE OF A CHANGE IN CONTROL WILL SUPERSEDE AND TAKE THE PLACE OF
ANY PRIOR CHANGE IN CONTROL AGREEMENTS BETWEEN THE PARTIES HERETO.  THE PARTIES
HERETO EXPRESSLY AGREE AND HEREBY DECLARE THAT ANY AND ALL PRIOR CHANGE IN
CONTROL AGREEMENTS BETWEEN THE PARTIES ARE TERMINATED AND OF NO FORCE OR EFFECT.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.

 

 

COMPANY:

 

 

 

 

 

CONSOLIDATED GRAPHICS, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Joe R. Davis

 

 

 

Joe R. Davis,

 

 

 

Chairman and Chief Executive Officer

 

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

/s/ G. Christopher Colville 

 

 

G. Christopher Colville

 

 

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