**Exhibit 10.1**

 

**CONSOLIDATED GRAPHICS, INC.**

STOCK OPTION AGREEMENT

 

**[DATE]**

 

Consolidated Graphics, Inc. (the “Company”) hereby grants,effective as of **[DATE]** (the “Grant Date”) to **[NAME]**(the “Optionee”),an employee of the Company or any of its subsidiaries, the Option (the “Option”)to purchase from the Company up to, but not exceeding in the aggregate, **[NUMBER]** shares of the Company’s Common Stock, par value$.01 per share, (the “Stock”), at a price per share equal to the closing priceper share of Stock as reported by the New York Stock Exchange on the lasttrading day immediately preceding the Grant Date (the “Exercise Price”), suchnumber of shares and such price per share being subject to adjustment asprovided in paragraph 14(b) of the Consolidated Graphics, Inc. Long-TermIncentive Plan, as amended from time to time (the “Plan”), and further subjectto the following terms and conditions:

 

1.                                       ThisOption is issued in accordance with and subject to all of the terms, conditionsand provisions of the Plan and administrative interpretations, if any, whichhave been duly adopted and are in effect on the date hereof. Except as definedherein, capitalized terms shall have the same meanings ascribed to them underthe Plan.

 

2.                                       (a)           ThisOption shall be exercisable as follows:

 

(i)                                     Providedthat Optionee has provided continuous service as an employee of the Company orany of its subsidiaries since the Grant Date, this Option shall be exercisable fromand after **[DATE]**for any number of shares up to and including, but not inexcess of, 20% of the aggregate number of shares subject to this Option;

 

(ii)                                  Providedthat Optionee has provided continuous service as an employee of the Company orany of its subsidiaries since the Grant Date, this Option shall be exercisable fromand after **[DATE]**for any number of shares up to and including, but not inexcess of, 40% of the aggregate number of shares subject to this Option;

 

(iii)                               Providedthat Optionee has provided continuous service as an employee of the Company orany of its subsidiaries since the Grant Date, this Option shall be exercisable fromand after **[DATE]**for any number of shares up to and including, but not inexcess of, 60% of the aggregate number of shares subject to this Option;

 

(iv)                              Providedthat Optionee has provided continuous service as an employee of the Company orany of its subsidiaries since the Grant Date, this Option shall be exercisable fromand after **[DATE]**for any number of shares up to and including, but not inexcess of, 80% of the aggregate number of shares subject to this Option; and

 

(v)                                 Providedthat Optionee has provided continuous service as an employee of the Company orany of its subsidiaries since the Grant Date; this Option shall be fullyexercisable from and after **[DATE]**;

 

Provided that the number of shares as to which this Option becomesexercisable shall, in each case, be reduced by the number of shares previouslypurchased pursuant to the terms hereof; and provided further that no additionalinstallments shall become exercisable after the Option terminates pursuant to Section 2(b) or3 hereof.

 

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(b)                                 Inthe event of termination of Optionee’s status as an employee of the Company or anyof its subsidiaries during the period following the Grant Date to **[DATE]**forany reason, this Option shall immediately terminate and be of no force andeffect.

 

3.                                       Unlessearlier terminated pursuant to Section 2(b) hereof, the Option herebygranted shall terminate and be of no force and effect with respect to anyshares not previously purchased by the Optionee upon the earlier of (a) the**[NUMBER]** anniversary of the Grant Date or (b) the expiration of **[NUMBER]** months after termination of the Optionee’s statuswith the Company or any of its subsidiaries.

 

Notwithstanding the foregoing, if death of the Optionee occurs (i) afterthe Optionee’s completion of 30 days of continued service as an employee of theCompany or any of its subsidiaries**,**following theGrant Date and (ii) before the termination of this Option (whether beforeor after termination of the Optionee’s status with the Company or any of its subsidiaries),the Option shall not terminate, but shall be exercisable by the Optionee’sheirs, estate or personal representatives, until the earlier of (a) the [NUMBER]anniversary of the Grant Date or (b) one year following the death of theOptionee, whereupon the Option shall terminate and be of no force and effectwith respect to any shares not previously purchased hereunder.

 

4.                                       Subjectto the limitations set forth herein and in the Plan, this Option may be exercisedby written notice provided to the Company as set forth in Section 5. Suchwritten notice shall (a) state the number of shares with respect to whichthe Option is being exercised and (b) be accompanied by a check, cash ormoney order payable to Consolidated Graphics, Inc. in the full amount ofthe purchase price for any shares being acquired. In addition, unless theoptions and shares covered by the Plan have been registered pursuant to theSecurities Act of 1933, as amended, the Company may, at its election, requirethe Optionee to give a representation in writing in form and substancesatisfactory to the Company to the effect that he/she is acquiring such sharesfor his/her own account for investment and not with a view to, or for sale inconnection with, the distribution of such shares or any part thereof.

 

If any law or regulation requires the Company to take any action withrespect to the shares specified in such notice, the time for delivery thereof,which would otherwise be as promptly as possible, shall be postponed for theperiod of time necessary to take such action.

 

5.                                       Noticeof exercise of the Option must be made in the following manner, using suchforms as the Company may from time to time provide:

 

(a)                                  byregistered or certified United States mail, postage prepaid, to ConsolidatedGraphics, Inc.. Attention: Chief Financial Officer, 5858 Westheimer, Suite 200,Houston, Texas 77057, in which case the date of exercise shall be the date ofmailing; or

 

(b)                                 byhand delivery, fax or otherwise to Consolidated Graphics, Inc.,Attention:  Chief Financial Officer, 5858Westheimer, Suite 200, Houston, Texas 77057, in which case the date ofexercise shall be the date when receipt is acknowledged by the Company.

 

6.                                       TheOptionee’s rights under the Plan and this Stock Option Agreement are personal;no assignment or transfer of the Optionee’s rights under and interest in thisOption may be made by the Optionee otherwise than by will or by the laws ofdescent and distribution; and this Option is exercisable during his/herlifetime only by the Optionee.

 

7.                                       Nocertificates representing shares of Stock purchased hereunder shall bedelivered to or in respect of an Optionee unless the amount of all federal,state and other governmental withholding tax requirements imposed upon theCompany with respect to the issuance of such Stock has been remitted to theCompany or unless provisions to pay such withholding requirements have beenmade to the satisfaction of the Committee pursuant to Section 10 of thePlan. The Committee may make such provisions as it may deem appropriate for thewithholding of any taxes which it determines is required in connection withthis Option.

 

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With the Committee’s approval, the Optionee may pay all or any portionof the taxes required to be withheld by the Company or paid by the Optionee inconnection with the exercise of all or any portion of this Option by electingto have the Company withhold shares of stock, or by delivering previously ownedshares of Stock, having a fair market value determined in accordance withparagraph 10 of the Plan, equal to the amount required to be withheld orpaid.  The Optionee must make theforegoing election on or before the date that the amount of tax to be withheldis determined.

 

8.                                       TheOption is intended to qualify as an “incentive stock option” within the meaningof Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),except where prior stock option grants to Optionee make incentive stock optionstatus unavailable and provided that nothing in this Agreement shall beinterpreted as a  representation,guarantee, or other understanding on the part of the Company that the Option isor will be determined to be an “incentive stock option” within the meaning ofthat or any other section of the Code. Optionee shall notify the Company (i) of any “disqualifyingdisposition” (within the meaning of Section 421 of the Code) of the Stockacquired upon exercise of the Option (specifically, a sale of such Stock withintwo years from the date the Option was granted or within one year from the datethe Option was exercised) and (ii) of such other events or circumstancesrelating to the Option or the Stock as are specified by the Committee. Suchnotice(s) shall be provided at such time and in such manner as is specified bythe Committee.

 

9.                                       Notwithstandinganything in this Stock Option Agreement to the contrary, immediately prior tothe occurrence of a Change in Control, this Option to the extent not previouslyexercised or terminated shall become fully vested and immediatelyexercisable.  For purposes of this******Stock Option Agreement, a “Changein Control” will be deemed to have occurred if at any time any of the followingevents shall occur:

 

(a)                                  theCompany is merged, consolidated, converted or reorganized into or with anothercorporation or other legal entity, and as a result of such merger,consolidation, conversion or reorganization less than a majority of thecombined voting power of the then outstanding securities of the Company or suchcorporation or other legal entity immediately after such transaction are heldin the aggregate by the holders of Voting Stock (as hereinafter defined) of theCompany immediately prior to such transaction and/or such voting power is notheld by substantially all of such holders in substantially the same proportionsrelative to each other;

 

(b)                                 theCompany sells (directly or indirectly) all or substantially all of its assets(including, without limitation, by means of the sale of the capital stock orassets of one or more direct or indirect subsidiaries of the Company) to anyother corporation or other legal entity, of which less than a majority of thecombined voting power of the then outstanding voting securities (entitled tovote generally in the election of directors or persons performing similarfunctions on behalf of such other corporation or legal entity) of such othercorporation or legal entity is held in the aggregate by the holders of VotingStock of the Company immediately prior to such sale and/or such voting power isnot held by substantially all of such holders in substantially the sameproportions relative to each other;

 

(c)                                  anyperson (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”) becomes(subsequent to the Grant Date) the beneficial owner (as the term “beneficialowner” is defined under Rule 13d-3 or any successor rule orregulation promulgated under the Exchange Act) of securities representing fiftypercent (50%) or more of the combined voting power of the then-outstandingsecurities entitled to vote generally in the election of directors of theCompany (“Voting Stock”);

 

(d)                                 theCompany files a report or proxy statement with the Securities and ExchangeCommission pursuant to the Exchange Act disclosing in response to Form 8-K,Schedule 14A or Schedule 14C (or any successor schedule, form orreport or item therein) that a change in control of the Company has occurred;

 

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(e)                                  ifduring any one (1)-year period, individuals who at the beginning of any suchperiod constitute the directors of the Company cease for any reason toconstitute at least a majority thereof, unless the election, or the nominationfor election by the Company’s shareholders, of each director of the Companyfirst elected during such period was approved by a vote of at least two-thirdsof (i) the directors of the Company then still in office who weredirectors of the Company at the beginning of any such period or (ii) directorsreferenced in clause (i) immediately preceding plus directors of  the Company whose nomination and/or electionwas approved by the directors referenced in clause (i) immediatelypreceding; or

 

(f)                                    theshareholders of the Company approve a plan contemplating the liquidation ordissolution of the Company.

 

Notwithstanding the foregoing provisions of Subsection 9(c) or9(d) hereof, a “Change in Control” shall not be deemed to have occurredfor purposes of this Agreement solely because (i) the Company, (ii) acorporation or other legal entity in which the Company directly or indirectlybeneficially owns 100% of the voting securities of such entity, or (iii) anyemployee stock ownership plan or any other employee benefit plan of the Companyor any wholly-owned subsidiary of the Company, either files or becomesobligated 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 ExchangeAct, disclosing beneficial ownership by it of shares of Voting Stock, whetherin excess of fifty percent (50%) or otherwise, or because the Company reportsthat a change in control of the Company has occurred by reason of suchbeneficial ownership.

 

10.                                 ThisAgreement shall be governed by, construed and enforced in accordance with thelaws of the State of Texas.

 
|                         | CONSOLIDATED GRAPHICS, INC.           |
|------------------------------|---------------------------------------|
|                         | COMPENSATION COMMITTEE                |
|                         |                                  |
|                         |                                  |
| Effective Date of Grant      | By                                    |   |   |
| **[DATE]**                   |                                  |
| Exercise Price**: [$PRICE]** | Joe R. Davis, Chief Executive Officer |
|                         | Authorized Representative             |

 

 

This Option has been accepted as of the above date by the undersigned,subject to the terms and provisions of the Plan and administrativeinterpretations thereof referred to above. I also hereby acknowledge receipt of the memorandum regarding Notice ofDisqualifying Dispositions and the Consolidated Graphics, Inc. Prospectusdated October 22, 1998.

 
|   |                |   |
|--------|---------------------|--------|
|   | Name**:****[NAME]** |

 

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