**Exhibit10.6**

 

**CHANGEIN CONTROL AGREEMENT**

 

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

 

**WHEREAS**, the Executive is a seniorexecutive of the Company and has made and/or is expected to make or continue tomake significant contributions to the profitability, growth and financialstrength of the Company;

 

**WHEREAS**, the Company desires to assureitself of both present and future continuity of management in the event of aChange in Control (as defined hereafter) and desires to establish certainminimum compensation rights with respect to its key senior executives, includingthe Executive, applicable in the event of a Change in Control;

 

**WHEREAS**, the Company wishes to ensure thatits senior executives are not practically disabled from discharging theirduties upon a Change in Control;

 

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

 

**WHEREAS**, the Executive is willing to renderservices to the Company on the terms and subject to the conditions set forth inthis Agreement;

 

**NOW, THEREFORE**, the Company and theExecutive agree as follows:

 

# 1.                                       Operationof Agreement:

 

## (a)                                  Sections 1and 8 through 21 of this Agreement shall be effective and binding as of theEffective Date, but, anything in this Agreement to the contrarynotwithstanding, Sections 2, 3, 4, 5, 6 and 7 of this Agreement shallnot be effective and binding unless and until there shall have occurred aChange in Control.  For purposes of thisAgreement, a “Change in Control” will be deemed to have occurred if atany time during the Term (as hereinafter defined) any of the following eventsshall occur:

 

### (i)                                     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 the combinedvoting 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 

 

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### voting power is not heldby substantially all of such holders in substantially the same proportionsrelative to each other;

 

### (ii)                                  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;

 

### (iii)                               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 Effective Date) the beneficial owner (as the term“beneficial owner” 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”);

 

### (iv)                              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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### (v)                                 Ifduring any one (1)–year period, individuals who at the beginning of anysuch period 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 were directorsof the Company at the beginning of any such period or (ii) directorsreferenced in clause (i) immediately preceding plus directors of the Companywhose nomination and/or election was approved by the directors referenced inclause (i) immediately preceding; or

 

### (vi)                              Theshareholders of the Company approve a plan contemplating the liquidation ordissolution of the Company.

 

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Notwithstanding the foregoing provisions ofSubsection 1(a)(iii) or 1(a)(iv) hereof, a “Change in Control” shall not bedeemed to have occurred for purposes of this Agreement solely because (i) theCompany, (ii) a corporation or other legal entity in which the Companydirectly or indirectly beneficially owns 100% of the voting securities of suchentity, or (iii) any employee stock ownership plan or any other employeebenefit plan of the Company or any wholly–owned subsidiary of theCompany, either files or becomes obligated to file a report or a proxystatement under or in response to Schedule 13D, Schedule 14D–1,Form 8–K, Schedule 14A or Schedule 14C (or any successorschedule, form or report or item therein) under the Exchange Act, disclosingbeneficial ownership by it of shares of Voting Stock, or because the Companyreports that a change in control of the Company has occurred by reason of suchbeneficial ownership.

 

## (b)                                 Uponoccurrence 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 andeffective.

 

## (c)                                  Theperiod during which this Agreement shall be in effect (the “Term”) shallcommence as of the date hereof and shall expire as of the later of (i) theclose of business on the third anniversary of the date hereof, or (ii) theexpiration of the Period of Employment (as hereinafter defined); provided,however, that (A) subject to Section 9 hereof, if, prior to aChange in Control, the Executive ceases for any reason to be an employee of theCompany (or a parent or subsidiary thereof), thereupon the Term shall be deemedto have expired and this Agreement shall immediately terminate and be of nofurther effect and (B) commencing on the first anniversary of the datehereof and each anniversary thereafter, the Term of this Agreement shall automaticallybe extended for an additional year.

 

# 2.                                       Employment;Period of Employment:

 

## (a)                                  Subjectto the terms and conditions of this Agreement, upon the occurrence of a Changein Control, the Company shall continue the Executive in its employ and theExecutive shall remain in the employ of the Company for the period set forth inSubsection 2(b) hereof (the “Period of Employment”), in theposition and with substantially the same duties and responsibilities that theExecutive had immediately prior to the Change in Control, or to which theCompany and the Executive may hereafter mutually agree in writing.  Throughout the Period of Employment, theExecutive shall devote substantially all of the Executive’s time during normalbusiness hours (subject to vacations, sick leave and other absences inaccordance with the policies of the Company as in effect for senior executivesimmediately prior to the Change in Control) to the business and affairs of theCompany, but nothing in this 

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## Agreement shall precludethe Executive from devoting reasonable periods of time during normal businesshours to (i) serving as a director, trustee or member of or participant in anyorganization or business so long as such activity would not constituteCompetitive Activity (as hereinafter defined) if conducted by the Executiveafter the Executive’s Termination Date (as hereinafter defined),(ii) engaging in charitable and community activities, or (iii) managingthe Executive’s personal investments.

 

## (b)                                 ThePeriod of Employment shall commence on the date on which a Change in Controloccurs and, subject only to the provisions of Section 4 hereof,shall continue until the expiration of the second anniversary of the occurrenceof the Change in Control.

 

# 3.                                       CompensationDuring Period of Employment:

 

## (a)                                  Duringthe Period of Employment, the Executive shall receive (i) annual base salary ata rate not less than the Executive’s highest annual fixed or base compensation paid during or payable with respect toany calendar year during the three calendar years immediately preceding theyear in which the Change in Control occurred, or such higher rate as may bedetermined from time to time by the Board of Directors of the Company (the “Board”)or the Compensation Committee thereof (the “Committee”) (which basesalary at such rate is herein referred to as “Base Pay”) and (ii) anannual amount equal to not less than the highest aggregate annual bonus,incentive or other payments of cash compensation paid to the Executive inaddition to the amounts referred to in clause (i) above made or to be madein or with respect to any calendar year during the three calendar yearsimmediately preceding the year in which the Change in Control occurred pursuantto any bonus, incentive, profit–sharing, performance, discretionary payor similar policy, plan, program or arrangement of the Company (“IncentivePay”) which contemplates cash payments other than Employee Benefits (ashereinafter defined); provided, however, that in no event shall any increase inthe Executive’s aggregate cash compensation or any portion thereof in any waydiminish 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 paidannually as soon as reasonably practicable following determination of theamount payable but in no event later than the date which is sixty (60) daysfollowing the last day of the fiscal year during which such Incentive Pay isdeemed earned.

 

## (b)                                 Duringthe Period of Employment the Executive shall, on the same basis as theExecutive participated therein immediately prior to the Change in Control, be afull participant in, and shall be entitled to the perquisites, benefits andservice credit for benefits as provided under any and all employee retirementincome and welfare benefit policies, plans, programs or arrangements in whichsenior executives of the Company and/or any 

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## parent or subsidiary participategenerally, including without limitation any stock option, stock purchase, stockappreciation, savings, pension, supplemental executive retirement or otherretirement income or welfare benefit, deferred compensation, incentivecompensation, group and/or executive life, accident, health, dental,medical/hospital or other insurance (whether funded by actual insurance or self–insuredby the Company), disability, salary continuation, expense reimbursement andother employee benefit policies, plans, programs or arrangements that may existimmediately prior to the Change in Control or any equivalent successorpolicies, plans, programs or arrangements that may be adopted thereafter by theCompany 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 andshall not be enlarged hereunder or otherwise affected hereby.  Subject to the proviso in the immediatelypreceding sentence, if and to the extent such perquisites, benefits or servicecredit for benefits are not payable or provided under any such policy, plan,program or arrangement as a result of the amendment or termination thereofsubsequent to or after a Change in Control, then the Company shall itself payor provide such Employee Benefits. Nothing in this Agreement shall preclude improvement or enhancement ofany such Employee Benefits, provided that no such improvement shall in any waydiminish any other obligation of the Company under this Agreement.

 

## (c)                                  TheCompany has determined that the amounts payable pursuant to this Section 3constitute reasonable compensation. Accordingly, notwithstanding any other provision hereof, unless suchaction would be expressly prohibited by applicable law, if any amount paid orpayable pursuant to this Section 3 is subject to the excise taximposed by Section 4999 of the Internal Revenue Code of 1986, as amended(the “Code”), the Company will pay to the Executive an additional amountin cash equal to the amount necessary to cause the aggregate remunerationreceived by the Executive under this  Section 3,including such additional cash payment (net of all federal, state and localincome and other taxes and all taxes payable as the result of the applicationof Sections 280G and 4999 of the Code) to be equal to the aggregateremuneration the Executive would have received under this Section 3,excluding such additional payment (net of all federal, state and local incomeand other taxes), as if Sections 280G and 4999 of the Code (and anysuccessor provisions thereto) had not been enacted into law.

 

# 4.                                       TerminationFollowing a Change in Control:

 

## (a)                                  Inthe event of the occurrence of a Change in Control, this Agreement may beterminated by the Company during the Period of Employment only upon theoccurrence of one or more of the following events:

 

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### (i)                                     Ifthe Executive is unable to perform the essential functions of the Executive’sjob (with or without reasonable accommodation) because the Executive has becomepermanently disabled within the meaning of, and actually begins to receivedisability benefits pursuant to, a long–term disability plan maintainedby or on behalf of the Company for senior executives generally or, ifapplicable, employees of the Company immediately prior to the Change inControl; or

 

### (ii)                                  For“Cause,” which for purposes of this Agreement shall mean that, prior toany termination pursuant to Subsection 4(b) hereof, the Executiveshall have committed:

 

#### (A)                              anintentional act of material fraud, embezzlement or theft in connection with theExecutive’s duties or in the course of the Executive’s employment with theCompany;

 

#### (B)                                intentional,wrongful damage to material property of the Company;

 

#### (C)                                intentional,wrongful disclosure of material secret processes or confidential information ofthe Company; or

 

#### (D)                               intentionalwrongful engagement in any Competitive Activity;

 

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

 

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## (b)                                 Inthe event of the occurrence of a Change in Control, this Agreement may beterminated by the Executive during the Period of Employment with the right tobenefits as provided in Section 5 hereof upon the occurrence of oneor more of the following events as determined by the Executive in the solediscretion of the Executive:

 

### (i)                                     Anytermination by the Company of the employment of the Executive for any reasonother than for Cause or as a result of the death of the Executive or by reasonof the Executive’s disability and the actual receipt of disability benefits inaccordance with Subsection 4(a)(i) hereof; or

 

### (ii)                                  Terminationby the Executive of the Executive’s employment with the Company (or anysuccessor to or affiliate thereof) during the Period of Employment upon theoccurrence of any of the following events:

 

#### (A)                              Failureto elect or reelect the Executive to the office(s) which the Executive heldimmediately prior to a Change in Control, or failure to elect or reelect theExecutive as a director of the Company (or any successor to parent entitythereof) or the removal of the Executive as a director of the Company (or anysuccessor thereto), if the Executive shall have been a director of the Companyimmediately prior to the Change in Control;

 

#### (B)                                Anadverse change in the nature or scope of the authorities, powers, functions,responsibilities or duties attached to the position(s) which the Executive heldimmediately prior to the Change in Control; a reduction in the Executive’s BasePay and/or Incentive Pay received from the Company; or the termination of theExecutive’s rights to any Employee Benefits to which the Executive was entitledimmediately prior to the Change in Control or a reduction in scope or valuethereof without the prior written consent of the Executive, any of which is notremedied within ten (10) calendar days after receipt by the Company of writtennotice from the Executive of such change, reduction or termination, as the casemay be;

 

#### (C)                                A determinationby the Executive that, following a Change in Control, as a result of a changein circumstances significantly affecting the Executive’s position(s), includingwithout limitation, a change in the scope of the business or other activitiesfor which the Executive was responsible immediately prior to a Change inControl, the Executive has been rendered substantially unable to carry out, has

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#### been substantiallyhindered in the performance of, or has suffered a substantial reduction in anyof the authorities, powers, functions, responsibilities or duties attached tothe position(s) held by the Executive immediately prior to the Change inControl, which situation is not remedied within ten (10) calendar days afterwritten notice to the Company from the Executive of such determination;

 

#### (D)                               Theliquidation, dissolution, merger, consolidation or reorganization of theCompany or transfer of all or a significant portion of its business and/orassets (including, without limitation, by means of the sale of the capitalstock or assets of one or more direct or indirect subsidiaries of the Company),unless the successor (by liquidation, merger, consolidation, reorganization orotherwise) to which all or a significant portion of its business and/or assetshave been transferred (directly or by operation of law) shall have assumed allduties and obligations of the Company under this Agreement pursuant to Section 11hereof (in which case, such entity shall be deemed to be the “Company”hereunder);

 

#### (E)                                 TheCompany shall require (I) that the principal place of work of the Executive orthe appropriate principal executive office of the Company or the Company’soperating division or subsidiary for which the Executive performed the majorityof his services during the twelve (12) – month period preceding theChange 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 courseof discharging the Executive’s responsibilities or duties hereunder more (interms of either consecutive days or aggregate days in any calendar year) thanwas required of the Executive prior to the Change in Control, without, ineither case, the Executive’s prior consent; or

 

#### (F)                                 Anymaterial breach of this Agreement by the Company or any successor thereto.

 

## (c)                                  Atermination by the Company pursuant to Subsection 4(a) hereof or bythe Executive pursuant to Subsection 4(b) hereof shall not affectany rights which the Executive may have pursuant to any agreement, policy,plan, program or arrangement of the Company providing Employee Benefits, whichrights shall be governed by the terms thereof. If this Agreement or the employment of the Executive is terminated undercircumstances in 

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## which the Executive isnot entitled to any payments under Sections 3 or 5 hereof, thennotwithstanding anything herein to the contrary, the Executive shall have nofurther obligation or liability to the Company hereunder with respect to theExecutive’s prior or any future employment by the Company.

 

# 5.                                       SeveranceCompensation:

 

## (a)                                  If,following the occurrence of a Change in Control, (x) the Company shallterminate the Executive’s employment during the Period of Employment other thanpursuant to Subsection 4(a) hereof, or (y) the Executive shallterminate the Executive’s employment during the Period of Employment pursuantto Subsection 4(b) hereof, or (z) the Executive dies duringthe Period of Employment, the Company shall pay to the Executive (or theExecutive’s estate, as applicable) the amount specified in Subsection5(a)(i) hereof within five business days after the date (the “TerminationDate”) that the Executive’s employment is terminated (the effective date ofwhich shall be the date of termination or death, or such other date that may bespecified by the Executive if the termination is pursuant to Subsection 4(b)hereof):

 

### (i)                                     Inlieu of any further payments under Subsection 3(a) to the Executive forperiods subsequent to the Termination Date, but without affecting the rights ofthe Executive referred to in Subsection 5(b) hereof, a lump sumpayment (the “Severance Payment”) in an amount equal to a multiple oftwo (2) times the sum of (A) the Executive’s Base Pay (at the highest ratein effect during the Term prior to the Termination Date), plus (B) theExecutive’s Incentive Pay (based upon the greatest amount of Incentive Pay paidor payable to the Executive for any year during the Term prior to theTermination Date).

 

### (ii)                                  (A)for the remainder of the Period of Employment the Company shall arrange toprovide the Executive with Employee Benefits identical to those which theExecutive was receiving or entitled to receive immediately prior to theTermination Date (and if and to the extent that such benefits shall not orcannot be paid or provided under any policy, plan, program or arrangement ofthe Company solely due to the fact that the Executive is no longer an officeror employee of the Company, then the Company shall itself pay to the Executiveand/or the Executive’s dependents and beneficiaries, such Employee Benefits)and (B) without limiting the generality of the foregoing, the remainder of thePeriod of Employment shall be considered service with the Company for thepurpose of service credits under the Company’s retirement income, supplementalexecutive retirement and other benefit plans applicable to the Executive and/orthe Executive’s dependents and beneficiaries 

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### immediately prior to theTermination Date.  Without otherwiselimiting the purposes or effect of Section 6 hereof, Employee Benefitspayable to the Executive pursuant to this Subsection 5(a)(ii) by reasonof any “welfare benefit plan” of the Company (as the term “welfare benefitplan” is defined in Section 3(1) of the Employee Retirement IncomeSecurity Act of 1974, as amended) shall be reduced to the extent comparablewelfare benefits are actually received by the Executive from another employerduring such period following the Executive’s Termination Date until theexpiration of the Period of Employment.

 

### (iii)                               Inaddition to all other compensation due to the Executive hereunder, thefollowing shall occur immediately prior to the occurrence of a Change inControl:

 

#### (A)                              allCompany stock options held by the Executive prior to a Change in Control shallbecome exercisable, regardless of whether or not the vesting/performanceconditions set forth in the relevant agreements shall have been satisfied infull;

 

#### (B)                                allrestrictions on any restricted securities granted by the Company to theExecutive prior to a Change in Control shall be removed and the securitiesshall become fully vested and freely transferable, regardless of whether thevesting/performance conditions set forth in the relevant agreements shall havebeen satisfied in full;

 

#### (C)                                theExecutive shall have an immediate right to receive all performance shares orbonuses granted prior to a Change in Control, and such performance shares andbonuses shall become fully vested and freely transferable or payable withoutrestrictions, regardless of whether or not specific performance goals set forthin the relevant agreements shall have been attained; and

 

#### (D)                               allperformance units granted to the Executive prior to a Change in Control shallbecome immediately payable in cash or Common Stock, at the Executive’s soleoption, regardless of whether or not the relevant performance cycle has beencompleted, and regardless of whether any other terms and conditions of therelevant agreements shall have been satisfied in full;

 

provided, that if the terms of any plan or agreementproviding for such options, restricted securities, performance shares orbonuses, or performance units do not allow such acceleration or payment asdescribed above, the Company shall take or cause to be taken any 

 

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

 

## (b)                                 (i)            Anything in this Agreement to thecontrary notwithstanding, in the event a public accounting firm selected by theExecutive (the “Accounting Firm”) shall determine that any payment,benefit, or distribution by the Company to the Executive (whether paid orpayable or distributed or distributable pursuant to the terms of this Agreementor otherwise, but determined without regard to any additional payments requiredunder this Subsection 5(b) (a “Payment”) is subject to theexcise tax imposed by Section 4999 of the Code, or any interest or penaltiesare incurred by the Executive with respect to such excise tax (such excise tax,together with any such interest and penalties, are hereinafter collectivelyreferred to as the “Excise Tax”), then the Company shall pay to theExecutive an additional payment (a “Gross–Up Payment”) in anamount such that after payment by the Executive of all taxes (including anyinterest or penalties imposed with respect to such taxes), including, withoutlimitation, any income taxes (and any interest and penalties imposed withrespect thereto), and the Excise Tax imposed upon the Gross–Up Payment,the Executive retains an amount of the Gross–Up Payment equal to theExcise Tax imposed upon the Payments.

 

### (ii)                                  Subjectto the provisions of Subsection 5(b)(iii), all determinationsrequired to be made under this Subsection 5(b), including whetherand when a Gross–Up Payment is required and the amount of such Gross–UpPayment and the assumptions to be utilized in arriving at such determination,shall be made by the Accounting Firm which shall provide detailed supportingcalculations both to the Company and the Executive as soon as possiblefollowing a request made by the Executive or the Company.  In the event that the Accounting Firm isserving as accountant or auditor for the individual, entity or group effectingthe Change in Control, the Executive shall appoint another nationallyrecognized public accounting firm to make the determinations required hereunder(which accounting firm shall then be referred to as the Accounting Firmhereunder).  All fees and expenses ofthe Accounting Firm shall be borne solely by the Company. Any Gross–UpPayment, as determined pursuant to this Subsection 5(b), shall bepaid by the Company to the Executive within five (5) days of the receipt of theAccounting Firm’s determination. If the Accounting Firm determines that noExcise Tax is payable by the Executive, it shall furnish the Executive with awritten opinion that failure to report the Excise Tax on the Executive’sapplicable federal income tax return would not result in the imposition of anegligence or similar penalty.  Anydetermination by the Accounting Firm shall be binding upon the

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### Company and theExecutive.   As a result of theuncertainty in the application of Section 4999 of the Code at the time of theinitial determination by the Accounting Firm hereunder, it is possible thatGross–Up Payments which will not have been made by the Company shouldhave been made (“Underpayment”), consistent with the calculations required tobe made hereunder.  In the event thatthe 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 hasoccurred and any such Underpayment shall be promptly paid by the Company to orfor the benefit of the Executive.

 

### (iii)                               TheExecutive shall notify the Company in writing of any claim by the InternalRevenue Service that, if successful, would require the payment by the Companyof the Gross–Up Payment.  Suchnotification 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 andshall apprise the Company of the nature of such claim and the date on whichsuch claim is requested to be paid.  TheExecutive shall not pay such claim prior to the expiration of the ten (10)–dayperiod following the date on which the Executive gives such notice to theCompany (or such shorter period ending on the date that any payment of taxeswith respect to such claim is due).  Ifthe Company notifies the Executive in writing prior to the expiration of suchperiod that it desires to contest such claim, the Executive shall:

 

#### (A)                              givethe Company any information reasonably requested by the Company relating tosuch claim,

 

#### (B)                                takesuch action in connection with contesting such claim as the Company shallreasonably request in writing from time to time, including, without limitation,accepting legal representation with respect to such claim by an attorneyreasonably selected by the Company,

 

#### (C)                                cooperatewith the Company in good faith to effectively contest such claim, and

 

#### (D)                               permitthe Company to participate in any proceedings relating to such claim;

 

provided, however,that the Company shall bear and pay directly all costs and expenses (includingadditional interest and penalties) incurred in connection with such contest andshall indemnify and hold the Executive harmless, on an after–tax basis,for any Excise 

 

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Tax or income tax (including interest and penaltieswith respect thereto) imposed as a result of such representation and payment ofcosts and expenses.  Without limitationon the foregoing provisions of this Subsection 5(b)(iii), the Companyshall control all proceedings taken in connection with such contest and, at itssole option, may pursue or forgo any and all administrative appeals,proceedings, hearings and conferences with the taxing authority in respect ofsuch claim and may, at its sole option, either direct the Executive to pay thetax claimed and sue for a refund or contest the claim in any permissiblemanner, and the Executive agrees to prosecute such contest to a  determination before any administrativetribunal, in a court of initial jurisdiction and in one or more appellatecourts, as the Company shall determine; provided further, that if the Companydirects the Executive to pay such claim and sue for a refund, the Company shalladvance the amount of such payment to the Executive on an interest–freebasis and shall indemnify and hold the Executive harmless, on an after–taxbasis, from any Excise Tax or income tax (including interest or penalties withrespect thereto) imposed with respect to such advance or with respect to anyimputed income with respect to such advance; and provided further, thatany extension of the statute of limitations relating to payment of taxes forthe taxable year of the Executive with respect to which such contested amountis claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of thecontest shall be limited to issues with respect to which a Gross–UpPayment would be payable hereunder and the Executive shall be entitled tosettle or contest, as the case may be, any other issue raised by the InternalRevenue Service or any other taxing authority.

 

### (iv)                              If,after the receipt by the Executive of an amount advanced by the Companypursuant to this Subsection 5(b), the Executive becomes entitled toreceive, and receives, any refund with respect to such claim, the Executiveshall (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 anyinterest paid or credited thereon after taxes applicable thereto).  If, after the receipt by the Executive ofany amount advanced by the Company pursuant to Subsection 5(b), adetermination is made that the Executive shall not be entitled to any refundwith respect to such claim and the Company does not notify the Executive inwriting of its intent to contest such denial of refund prior to the expirationof thirty (30) days after such determination, then such advance shall beforgiven and shall not be required to be repaid and the amount of such advanceshall offset, to the extent thereof, the amount of Gross–Up Paymentrequired to be paid.

 

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## (c)                                  Thereshall be no right of set–off or counterclaim in respect of any claim,debt or obligation against any payment to or benefit (including EmployeeBenefits) of the Executive provided for in this Agreement.

 

## (d)                                 Withoutlimiting the rights of the Executive at law or in equity, if the Company failsto make any payment required to be made hereunder on a timely basis, theCompany shall pay interest on the amount thereof (and on any interest accruedhereunder) at an annualized rate of interest equal to the Highest Lawful Rateas hereafter defined.  “HighestLawful Rate” means, at any time and with respect to the Executive, themaximum rate of interest under applicable law that the Executive may charge theCompany.  The Highest Lawful Rate shallbe calculated in a manner that takes into account any and all fees, payments,and other charges in respect of this Agreement that constitute interest underapplicable law.  Each change in anyinterest rate provided for herein based upon the Highest Lawful Rate resultingfrom a change in the Highest Lawful Rate shall take effect without notice tothe Company at the time of such change in the Highest Lawful Rate.  For purposes of determining the HighestLawful Rate under Texas law, the applicable rate ceiling shall be the indicatedrate ceiling described in, and computed in accordance with, the Texas FinanceCode.  Notwithstanding anything to thecontrary contained herein, no provisions of this Agreement shall require thepayment or permit the collection of interest in excess of the Highest LawfulRate.  If any excess of interest in suchrespect is herein provided for, or shall be adjudicated to be so provided, in thisAgreement or otherwise in connection with this loan transaction, the provisionsof this paragraph shall govern and prevail, and neither the Company nor thesureties, guarantors, successors or assigns of the Company shall be obligatedto pay the excess amount of such interest, or any other excess sum paid for theuse, forbearance or detention of sums loaned pursuant hereto.  If for any reason interest in excess of theHighest Lawful Rate shall be deemed charged, required or permitted by any courtof competent jurisdiction, any such excess shall be applied as a payment andreduction of the principal of indebtedness evidenced by this Agreement; and, ifthe principal amount hereof has been paid in full, any remaining excess shallforthwith be paid to the Company.  Indetermining whether or not the interest paid or payable exceeds the HighestLawful Rate, the Company and the Executive shall, to the extent permitted byapplicable law, (a) characterize any non–principal payment as anexpense, fee, or premium rather than as interest, (b) exclude voluntaryprepayments and the effects thereof, and (c) amortize, prorate, allocate,and spread in equal or unequal parts the total amount of interest throughoutthe entire contemplated term of the indebtedness evidenced by this Agreement sothat the interest for the entire term does not exceed the Highest Lawful Rate.

 

# 6.             No Mitigation Obligation:  The Company hereby acknowledges that it willbe difficult, and may be impossible, for the Executive to find reasonablycomparable employment

#  

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# following the TerminationDate and that the noncompetition covenant contained in Section 7 hereofwill further limit the employment opportunities for the Executive.  Accordingly, the parties hereto expresslyagree that the payment of the severance compensation and benefits by theCompany to the Executive in accordance with the terms of this Agreement will beliquidated damages, and that the Executive shall not be required to mitigatethe amount of any payment provided for in this Agreement by seeking otheremployment or otherwise, nor shall any profits, income, earnings or otherbenefits from any source whatsoever create any mitigation, offset, reduction orany 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 followingthe Termination Date (or, if less, a period equal to the remaining Period ofEmployment and beginning on the Termination Date), if the Executive shall havereceived or shall be receiving benefits under Subsection 5(a)hereof, the Executive shall not, without the prior written consent by theCompany, directly or indirectly engage in any “Competitive Business” (ashereinafter defined) within any metropolitan area served by the Company duringthe twelve (12)–month period immediately preceding termination of theExecutive’s employment with the Company nor will the Executive engage, withinsuch geographical area(s), in the design, development, distribution,manufacture, assembly or sale of a product or service in competition with anyproduct or service marketed or planned by the Company immediately prior to theTermination Date, the plans, designs or specifications of which have beenrevealed to the Executive (“Competitive Activity”).  The Executive acknowledges that theselimited prohibitions are reasonable as to time, geographical area and scope ofactivities to be restrained and that the limited prohibitions do not impose agreater restraint than is necessary to protect the Company’s goodwill,proprietary information and other business interests.  “Competitive Activity” shall not include (i) the mere ownershipof a de minimis amount of securities in any such enterprise and exerciseof rights appurtenant thereto or (ii) participation in management of any suchenterprise or business operation thereof other than in connection with thecompetitive operation of such enterprise. For purposes of this Section 7, the term “CompetitiveBusiness” means any person or entity engaged in a business that producesany of the following products or performs any of the following services:general commercial printing services, including digital imaging, off–setlithography, binding and finishing services and fulfillment of printedmaterials, including any products or services manufactured, developed, ordistributed during the Term and the Term of Employment by the Company and/orits affiliates, predecessors, or successors.

 

# 8.             Legal Fees and Expenses:  It is the intent of the Company that theExecutive not be required to incur the expenses associated with the enforcementof the Executive’s rights under this Agreement by litigation or other legalaction because the cost and expense thereof would substantially detract fromthe benefits intended to be extended to the Executive hereunder.  Accordingly, if it should appear to theExecutive that the Company has failed to comply with any of its obligationsunder this Agreement or in the event that the Company or any other person takesany action to declare this Agreement void or unenforceable, or institutes anylitigation designed to deny, or to recover from, the Executive the benefitsintended to be provided to the Executive hereunder, the Company irrevocablyauthorizes the Executive from time to time to retain counsel of the Executive’schoice, at the expense of the Company as hereafter provided, to represent theExecutive in connection with the litigation or defense of any litigation orother legal action, whether by or against the Company or any director, officer,shareholder or other

#  

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# person affiliated withthe Company, in any jurisdiction. Notwithstanding any existing or prior attorney–client relationshipbetween the Company and such counsel, the Company irrevocably consents to theExecutive’s entering into an attorney–client relationship with suchcounsel, and in connection therewith the Company and the Executive agree that aconfidential relationship shall exist between the Executive and suchcounsel.  The Company shall pay or causeto be paid and shall be solely responsible for any and all attorneys’ andrelated fees and expenses incurred by the Executive as a result of theCompany’s failure to perform this Agreement or any provision thereof or as aresult of the Company or any person contesting the validity or enforceabilityof this Agreement or any provision thereof as aforesaid.

 

# 9.             Employment Rights:  Nothing expressed or implied in thisAgreement shall create any right or duty on the part of the Company or theExecutive to have the Executive remain in the employment of the Company priorto any Change in Control; provided, however, that any actual or constructivetermination of employment of the Executive or removal of the Executive as anofficer of the Company following the commencement of any discussion with orreceipt of an offer from a third person that ultimately results in a Change inControl shall be deemed to be a termination or removal of the Executive after aChange in Control for purposes of this Agreement.

 

# 10.           Withholding of Taxes:  The Company may withhold from any amountspayable under this Agreement all federal, state, city or other taxes as shallbe required pursuant to any law or government regulation or ruling.

 

# 11.                                 Successorsand Binding Agreement:

 

## (a)                                  TheCompany shall require any successor (whether direct or indirect, by purchase,merger, consolidation, reorganization or otherwise) to all or substantially allof the business and/or assets of the Company, to expressly assume and agree toperform this Agreement in the same manner and to the same extent the Companywould be required to perform if no such succession had taken place.  This Agreement shall be binding upon andinure to the benefit of the Company and any successor to the Company, includingwithout limitation any persons acquiring directly or indirectly all orsubstantially all of the business and/or assets of the Company whether bypurchase, merger, consolidation, reorganization or otherwise (and suchsuccessor shall thereafter be deemed the “Company” for the purposes of thisAgreement).  This Agreement shall nototherwise be assignable, transferable or delegable by the Company.

 

## (b)                                 ThisAgreement shall inure to the benefit of and be enforceable by the Executive’spersonal or legal representatives, executors, administrators, successors,heirs, distributees and/or legatees.

 

## (c)                                  ThisAgreement is personal in nature and neither of the parties hereto shall,without the consent of the other, assign, transfer or delegate this Agreementor any rights or obligations hereunder except as expressly provided in Subsection 11(a)hereof.  Without limiting the generalityof

##  

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## the foregoing, theExecutive’s right to receive payments hereunder shall not be assignable,transferable or delegable, whether by pledge, creation of a security interestor otherwise, other than by a transfer by the Executive’s will or by the lawsof descent and distribution and, in the event of any attempted assignment ortransfer contrary to this Subsection 11(c), the Company shall haveno liability to pay any amount so attempted to be assigned, transferred ordelegated.

 

## (d)                                 TheCompany and the Executive recognize that each Party will have no adequateremedy at law for breach by the other of any of the agreements contained hereinand, in the event of any such breach, the Company and the Executive herebyagree and consent that the other shall be entitled to a decree of specificperformance, mandamus or other appropriate remedy to enforce performance ofthis Agreement.

 

# 12.           Applicable Law.   **THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAWPRINCIPLES 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 HARRISCOUNTY, TEXAS.  COURTS WITHIN THE STATEOF TEXAS WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIESHERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THISAGREEMENT.  THE PARTIES CONSENT TO ANDAGREE 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, ANDAGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BYAPPLICABLE LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THEJURISDICTION OF SUCH COURTS, (ii) SUCH PARTY AND SUCH PARTY’S PROPERTY ISIMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY LITIGATIONCOMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM**.

 

# 13.           Notices.   All notices, demands, requests or othercommunications that may be or are required to be given, served or sent byeither party to the other party pursuant to this Agreement will be in writingand will be mailed by first–class, registered or certified mail, returnreceipt requested, postage prepaid, or transmitted by hand delivery, telegramor 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 anynotice, demand, request or communication may thereafter be given, served orsent.  Each notice, demand, request orcommunication that is mailed, delivered or transmitted in the manner describedabove will be deemed sufficiently given, served, sent and received for allpurposes at such time as it is delivered to the addressee with the returnreceipt, the delivery receipt, the affidavit of messenger or (with respect to afacsimile transmission) the answer back being deemed conclusive evidence ofsuch delivery or at such time as delivery is refused by the addressee uponpresentation.

 

# 14.           Gender.   Words of any gender used in this Agreementwill be held and construed to include any other gender, and words in thesingular number will be held to include the plural, unless the contextotherwise requires.

 

# 15.           Amendment.   This Agreement may not be amended orsupplemented except pursuant to a written instrument signed by the partieshereto.  Nothing contained in thisAgreement will be deemed to create any agency, joint venture, partnership orsimilar relationship between the parties to this Agreement.  Nothing contained in this Agreement will bedeemed to authorize either party to this Agreement to bind or obligate theother party.

 

# 16.           Counterparts.   This Agreement may be executed in multiplecounterparts, each of which will be deemed to be an original and all of whichwill be deemed to be a single agreement. This Agreement will be considered fully executed when all  parties have executed an identicalcounterpart, notwithstanding that all signatures may not appear on the samecounterpart.

 

# 17.           Severability.   If any of the provisions of this Agreementare determined to be invalid or unenforceable, such invalidity orunenforceability will not invalidate or render unenforceable the remainder ofthis Agreement, but rather the entire Agreement will be construed as if notcontaining the particular invalid or unenforceable provision or provisions, andthe rights and obligations of the parties will be construed and enforcedaccordingly.  The parties acknowledgethat if any provision of this Agreement is determined to be invalid orunenforceable, it is their desire and intention that such provision be reformedand 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 toin this Agreement, nothing in this Agreement is intended or will be construedto confer upon or give to any party 

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# other than the parties tothis Agreement and their successors and permitted assigns, if any, any rightsor remedies under or by reason of this Agreement.

 

# 19.           Waiver.   No failure or delay in exercising any righthereunder will operate as a waiver thereof, nor will any single or partialexercise thereof preclude any other or further exercise or the exercise of anyother right.

 

# 20.           Prior Agreements:   This Agreement is voluntarily entered intoand upon the occurrence of a Change in Control will supersede and take theplace of any prior change in control agreements between the partieshereto.  The parties hereto expresslyagree and hereby declare that any and all prior change in control agreementsbetween the parties are terminated and of no force or effect.

 

**[REMAINDEROF PAGE INTENTIONALLY LEFT BLANK]**

 

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**IN WITNESS WHEREOF**, the parties have causedthis Agreement to be duly executed and delivered as of the date first abovewritten.

 
|   | **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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