Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) effective as of September 19, 2012
(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 currently 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 from time to time 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 Amended and Restated
Employment Agreement, effective as of January 14, 2008 (the “Prior Employment
Agreement”), which shall be superseded by this Agreement; and

 

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 initial term of
Executive’s employment pursuant to the terms of this Agreement shall commence
upon the Effective Date and expire on the five (5) year anniversary of the
Effective Date, and shall thereafter automatically renew for successive one year
periods unless and until CGX or Executive provides written notice to the other
party of its intent to not extend the employment term upon no less than ninety
(90) days written notice prior to the end of the initial term or the then
applicable renewal term (the initial term and renewal terms, if any, are
collectively referred to herein as the “Employment Period”), unless earlier
terminated in accordance with Section 15(a) below.  For avoidance of doubt, an
election by (i) CGX to not extend the Employment Period shall not in and of
itself be deemed to constitute a termination by CGX with or without Cause, and
(ii) Executive to not extend the Employment Period shall not in and of itself be
deemed to constitute a resignation by Executive with or without Good Reason.

 

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 from
time to time by the Board of Directors of CGX,

 

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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 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 $27,083.33, subject to any and all customary payroll
deductions, including deductions for the Federal Insurance Contributions Act and
other federal, state and local taxes, and such base monthly salary shall be
retroactive to September 1, 2012.

 

(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 of up to $200,000 as 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.

 

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6.                                      Stock Option.  In addition to the other
compensation set forth herein, the Executive is entitled to receive a stock
option grant to purchase 100,000 shares of CGX common stock.  Executive
acknowledges that such obligation has been satisfied by CGX as the CGX
Compensation Committee has recently awarded him a stock option to purchase
100,000 shares of CGX common stock, which vests in equal installments over a
five (5) year period.  Such option was issued under a CGX long-term incentive
plan, and the exercise price thereof was the closing trading price of CGX common
stock on The New York Stock Exchange on the date of grant of such option by the
CGX Compensation Committee.

 

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

 

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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.

 

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

 

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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.

 

15.                               Termination.

 

(a)                                 The “Termination Date” shall mean the date
in which the first of the following occur:

 

(i)             the expiration of the Employment Period in accordance with the
terms of Section 2;

 

(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

 

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(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
Internal Revenue Code of 1986, as amended (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
(A) Executive’s base monthly salary for one (1) year, determined based on
Executive’s base monthly salary in effect immediately prior to the Termination
plus (B) an amount equal to not less than the highest aggregate annual bonus,
incentive or other payment of cash compensation paid to Executive during his
employment with the Company; 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.

 

(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

 

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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

 

(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;

 

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and (C) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

 

16.                               Section 280G.  Notwithstanding anything in
this Agreement to the contrary, in the event that any severance and other
benefits provided to or for the benefit of the Executive or his legal
representatives and dependents pursuant to this Agreement and any other
agreement, benefit, plan, or policy of CGX (this Agreement and such other
agreements, benefits, plans, and policies collectively being referred to herein
as the “Change of Control Arrangements”) constitute “parachute payments” within
the meaning of Section 280G(b)(2) of the Code (such severance and other benefits
being referred to herein as the “Change of Control Payments”) that would be
subject to the excise tax imposed by Section 4999 of the Code (such excise tax
referred to in this Agreement as the “Excise Tax”), then CGX will provide the
Executive with a computation of (A) the maximum amount of Change of Control
Payments that could be made under the Change of Control Arrangements, without
the imposition of the Excise Tax (said maximum amount being referred to as the
“Capped Amount”); (B) the value of all Change of Control Payments that could be
made pursuant to the terms of the Change in Control Arrangements (all said
payments, distributions and benefits being referred to as the “Uncapped
Payments”); (C) the dollar amount of Excise Tax which the Executive would become
obligated to pay pursuant to Section 4999 of the Code as a result of receipt of
the Uncapped Payments; and (D) the net value of the Uncapped Payments after
reduction by (1) the amount of the Excise Tax, (2) the estimated income taxes
payable by the Executive on the difference between the Uncapped Payments and the
Capped Amount, assuming that the Executive is paying the highest marginal tax
rate for state, local and federal income taxes, and (3) the estimated hospital
insurance taxes payable by the Executive on the difference between the Uncapped
Payments and the Capped Amount based on the hospital insurance tax rate under
Section 3101(b) of the Code (the “Net Uncapped Amount”).  If the Capped Amount
is greater than the Net Uncapped Amount, the Executive shall be entitled to
receive or commence to receive the Change of Control Payments equal to the
Capped Amount; or if the Net Uncapped Amount is greater than the Capped Amount,
the Executive shall be entitled to receive or commence to receive the Change of
Control Payments equal to the Uncapped Payments.  If the Executive receives the
Uncapped Payments, then the Executive shall be solely responsible for the
payment of the Excise Tax due from the Executive and attributable to such
Uncapped Payments, with no right of additional payment from CGX as reimbursement
for such taxes.  Unless CGX and the Executive otherwise agree in writing, any
determination required under this Section 16 shall be made in writing by tax
counsel or by an independent public accounting firm agreed to by CGX and the
Executive (the “Auditor”), whose determination shall be conclusive and binding
upon CGX and the Executive.  For purposes of making the calculations required by
this Section 16, the Auditor may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code.  CGX and the Executive shall furnish to the Auditor such information and
documents as the Auditor may reasonably request in order to make a determination
under this Section 16.  CGX shall bear all costs the Auditor may reasonably
incur in connection with any calculations contemplated by this Section 16.

 

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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.

 

(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, dated effective as of September 19, 2012,
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,

 

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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.

 

(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

 

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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.

 

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
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

 

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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.

 

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.

 

27.                               Entire Agreement.  This Agreement and any
attachments hereto, if any, constitute the entire agreement between the parties
and supersede all prior representations, understandings and agreements between
the parties hereto (including the Prior Employment Agreement) relating to the
subject matter hereof, all of which the parties expressly disclaim reliance on.
No change, waiver or discharge hereof will be valid unless it is in writing and
is executed by an authorized representative of CGX and Executive.

 

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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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