Document:

Filed by Bowne Pure Compliance

 

Exhibit 4.1

	SPECIMEN STOCK CERTIFICATE
PURE CYCLE CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO
Certificate
number
 _____ 

shares
-0-
CUSIP 746228 30 3
this certifies that
is the owner of
fully-paid and non-assessable shares of common stock, 1/3 of $.01 par value per
share, of PURE CYCLE CORPORATION
transferable only on the books of the Corporation by the holder hereof, in person or by duly
authorized attorney, upon
surrender of this Certificate properly endorsed or accompanied by a proper assignment.
In Witness Whereof, the said Corporation has caused this Certificate to be executed by the
facsimile signatures of
its duly authorized officers and to be sealed with the facsimile of the Corporation.
Dated: President
 _____ 

pure cycle corporaiton
COUNTERSIGNED AND REGISTERED
SEAL
 _____ 

COMPUTERSHARES TRUST COMPANY, N.A.
denver
1979 transfer agent and registrar
Secretary
 _____ 

Colorado
By:
Authorized Signature

 

 

 

	transfer fee: $25.00 per certificate issued
Pure Cycle Corporation
the corporation will furnish to any shareholder upon request and without charge a full
statement of the powers, designations, preferences and relative, participating, optional or other
special rights, of each class of stock or series thereof authorized to be issued and the
qualifications, limitations or restrictions of such preferences and/or rights.
the following abbreviations, when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full according to applicable laws or
regulations:
TEN COM — as tenants in common UNIF GIFT MIN ACT — ....Custodian......
(cust) (minor)
TEN ENT —  as tenants by the entireties
 _____ 

under Uniform Gifts to Minors Act .....
(state)
JT TEN — as joint tenants with right of survivorship UNIF TRF MIN ACT — .Custodian (until
age .).
and not as tenants in common (state)
under Uniform Transfers to Minors Act
(state)
Additional abbreviations may also be used though not in the above list.
For value received,
 _____ 

hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(please print or typewrite name and address, including postal zip code, of assignee)
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute
and appoint
to transfer the said stock on the books of the within-named Corporation with full power of
substitution in the premises.
Dated: 20 Signature:
Signature(s) Guaranteed:
By: Signature:
the signatures should be guaranteed by an eligible
 _____ 

NOTICE: the signature to this assignment must correspond
guarantor institution (banks, stockbrokers, savings and with the name as written upon
the face of the certificate, in loan associations and credit unions) with membership in
an every particular, without alteration or enlargement or
approved signature guarantee medallion program, any change whatever.
pursuant to sec rule 17Ad-15.
SECURITY INSTRUCTIONS
this is watermarked paper. do not accept without noting
watermark. hold to light to verify watermark.Filed by Bowne Pure Compliance

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT
AGREEMENT (the “Agreement”) executed on December 17
, 2007 but effective as of 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 to be employed as Executive Vice President and Chief Financial and
Accounting Officer of CGX, and will be appointed to such other offices as may be deemed appropriate
by the Board of Directors of CGX, including Treasurer and Secretary of CGX, and as an officer of
its subsidiaries;

WHEREAS, in connection with his employment, Executive will be provided by CGX with specialized
training and given access to confidential information with respect to CGX, its Affiliates and their
Customers;

WHEREAS, it is the desire of the Board of Directors of CGX (the “Board”) to engage Executive
as an executive officer of CGX and its subsidiaries pursuant to the terms of this Agreement; and

WHEREAS, Executive is desirous of committing himself to serve CGX on the terms herein
provided.

NOW, THEREFORE, in consideration of the premises, representations and mutual covenants
hereinafter set forth, the parties hereby covenant and agree as follows:

1. Employment. Subject to and conditioned upon the express terms set forth in Section
25, CGX hereby employs Executive, and Executive hereby accepts employment with CGX, on the terms
and conditions set forth in this Agreement.

2. Employment Period. The term of Executive’s employment (the “Employment Period”)
pursuant to the terms of this Agreement shall commence upon the Effective Date and shall continue
until August 31, 2013, unless earlier terminated in accordance with Section 15(a) below.

3. Duties. Executive shall (i) serve under the direction of the Board and the Chief
Executive Officer of CGX (the “CEO”) as the Executive Vice President and Chief Financial and
Accounting Officer of CGX, and will be appointed to such other offices as may be deemed appropriate
by the Board of Directors of CGX, including Treasurer and Secretary of CGX, and as an officer of
its subsidiaries, (ii) have all the rights, powers and duties associated with his positions, and
(iii) faithfully, to the best of Executive’s ability, perform the duties and other reasonably
related services assigned to Executive by the Board and/or CEO from time to time (the “Duties”).
Executive shall be subject to, and shall comply with, CGX insider trading policies (a copy of which
has been delivered to Executive) and the other policies of CGX in

 

 

 

effect from time to time (collectively, the “CGX Policies”); provided, however, that to the
extent such CGX Policies may contradict the express provisions of this Agreement, the provisions of
this Agreement shall govern. Executive shall devote his full business time, efforts and attention
to the business of CGX during the Employment Period consistent with past practice and, without the
prior written consent of the Board, Executive shall not during the Employment Period render any
services of a business, commercial or professional nature, to any person or organization other than
CGX and the Affiliates or be engaged in any other business activity, other than those activities
described in Section 12 below. Executive represents and warrants that Executive is not a
party to or bound by any agreement or contract or subject to any restrictions, including without
limitation in connection with any previous employment, which might prevent Executive from entering
into and performing Executive’s obligations under this Agreement.

4. Compensation. During the Employment Period, Executive shall be compensated for
Executive’s services as follows:

(a) Executive shall be paid a base monthly salary of not less than $20,833.33, subject
to any and all customary payroll deductions, including deductions for the Federal Insurance
Contributions Act and other federal, state and local taxes.

(b) Except to the extent such policies may contradict the express provisions of this
Agreement, in which case the provisions of this Agreement shall govern, Executive shall be
eligible to receive fringe benefits on the same basis as other management employees of CGX
pursuant to CGX Policies in effect from time to time, including holiday time and paid
vacation; provided, however, that earned but unused vacation or other compensated absences
shall not be carried forward for use or payment in subsequent periods.

(c) Executive shall be eligible to participate, to the extent that Executive meets all
eligibility requirements of general application, in each of the employee benefit plans
maintained by CGX or in which employees of CGX generally are eligible to participate,
including as of the date hereof, group hospitalization, medical, dental, and short and long
term disability and life plans.

5. Bonus. In addition to the other compensation set forth herein, Executive may
receive an annual cash bonus payment in an amount to be determined in the sole discretion of the
CEO and approved by the Board or the Compensation Committee of the Board. Any such bonus shall be
paid in accordance with CGX’s customary practice, subject to all customary payroll deductions,
including deductions for the Federal Insurance Contributions Act and other federal, state and local
taxes.

6. Stock Options. In addition to the other compensation set forth herein, Executive
shall be provided with an option to purchase 50,000 shares of CGX common stock to be granted
effective as of the Effective Date at an exercise price equal to the closing price per share of CGX
common stock as reported on the New York Stock Exchange on the day immediately preceding the
Effective Date. The stock option granted pursuant to the terms of this Agreement shall be granted
pursuant to and subject to the terms of the form CGX Stock Option Agreement attached hereto as
Exhibit “A”.

 

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7. Executive Expenses. During the Employment Period, Executive shall be entitled to
be reimbursed for reasonable normal business expenses directly incurred in the performance of the
Duties hereunder and in accordance with CGX Policies in effect from time to time; provided,
however, that documentation supporting such expenses must be submitted to and approved by the CEO
or the Board before such reimbursement is paid to Executive.

8. No Competing Business. In consideration for the benefits received by Executive
pursuant to this Agreement, during the Noncompetition Period, Executive shall not, except as
permitted by Section 12 of this Agreement, directly or indirectly own, manage, operate,
control, invest or acquire an interest in, or otherwise engage or participate (whether as a
proprietor, partner, employee, stockholder, member, director, officer, executive, joint venturer,
investor, consultant, agent, sales representative, broker or other participant) in any Competitive
Business operating in or soliciting business from CGX’s Market, without regard to (i) whether the
Competitive Business has its office or other business facilities within CGX’s Market, (ii) whether
any of the activities of Executive referred to above occur or are performed within CGX’s Market or
(iii) whether Executive resides, or reports to an office, within CGX’s Market.

9. No Interference with the Business. In consideration for the benefits received by
Executive pursuant to this Agreement, during the Noncompetition Period, Executive shall not:

(a) directly or indirectly solicit, induce or intentionally influence any third party
sales representative, agent, supplier, lender, lessor or any other person which has a
business relationship with CGX and/or any Affiliate or which had on the date of this
Agreement a business relationship with CGX and/or any Affiliate to discontinue, reduce the
extent of, discourage the development of or otherwise harm such relationship with CGX and/or
any Affiliate;

(b) directly or indirectly (i) attempt to communicate with or solicit business from any
Customer or its representatives for any reason, except on behalf of CGX and/or any
Affiliate, (ii) attempt to induce any known Customer or its representatives to terminate any
contract or otherwise divert from CGX and/or any Affiliate any trade or business being
conducted by any such Customer with CGX and/or any Affiliate or (iii) attempt to solicit,
induce or intentionally influence any prospective or past Customer of CGX and/or any
Affiliate to discontinue, reduce the extent of, or not conduct business with CGX and/or any
Affiliate;

(c) directly or indirectly recruit, solicit, induce or influence any executive,
employee or sales agent of CGX and/or any Affiliate to discontinue such sales, employment or
agency relationship with CGX and/or any such Affiliate;

(d) employ, seek to employ or cause any other person or entity to employ or seek to
employ as a sales representative or Executive any person who is then (or was at any time
since the Effective Date) employed by CGX and/or any of the Affiliates; or

(e) directly or indirectly denigrate or in any manner undertake to discredit CGX, any
Affiliate or any successor thereof or any person, operation or entity associated with CGX or
any Affiliate.

 

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10. Consideration for Restrictions. Executive acknowledges that the restrictions
imposed under Sections 3, 8, 9, and 11 are supported by the consideration to be received by
Executive pursuant to the terms of this Agreement.

11. No Disclosure of Confidential Information. During Executive’s employment with
CGX, CGX shall provide Executive with certain Confidential Information. Executive shall not,
during the Employment Period or thereafter, directly or indirectly knowingly disclose to anyone or
use or otherwise exploit for Executive’s own benefit or for the benefit of anyone other than CGX
and/or any of the Affiliates any Confidential Information. Upon termination of Executive’s
employment hereunder or at any other time that the CEO so requests, Executive shall promptly
deliver to CGX all materials containing any Confidential Information, and all copies of such
materials and other materials of CGX or any Affiliate which are in Executive’s possession or under
Executive’s control, and Executive shall not make or retain any copies or extracts of such
materials. If a disclosure is required by law or legal process, Executive shall provide CGX with
prompt notice thereof so that CGX may seek an appropriate protective order at its cost or otherwise
waive compliance with the terms of this covenant, and in the event CGX cannot obtain such
protective order or it waives compliance with the terms of this covenant, Executive may disclose
that portion of the Confidential Information that CGX’s legal counsel has advised may be disclosed.

12. Permitted Activities. The restrictions set forth in Sections 3, 8 and 9
of this Agreement shall not apply to Permitted Activities (as defined below).

13. Consideration for Restrictions; Reduction of Restrictions by Court Action.
Executive acknowledges that the restrictions and obligations imposed under Sections 3, 8, 9,
and 11 of this Agreement are supported by (i) CGX’s agreement to provide Executive with access
to and the right to use its Confidential Information, and the right to develop relationships with
its Executives based upon such Confidential Information, (ii) the consideration and benefits to be
received by Executive pursuant to this Agreement, including issuance of the stock option set forth
in Section 6 above, (iii) the training methodology and proprietary information to be shared
by CGX with Executive pursuant hereto and (vi) Executive’s continued employment (pursuant to the
terms of this Agreement) and his acknowledgment that compliance with the restrictions and
obligations set forth herein was material in employing the Executive and that such restrictions and
obligations are necessary to protect the business and goodwill of CGX and its Affiliates. If,
however, the length of time, type of activity, geographic area or other restrictions set forth in
the restrictions of Sections 3, 8, 9, or 11 are deemed unreasonable in any court
proceeding, the parties hereto agree that the court may reduce such restrictions to ones it deems
reasonable to protect the substantial investment of CGX and the Affiliates in their businesses and
the goodwill attached thereto.

14. Remedies. Executive understands that CGX and the Affiliates will not have an
adequate remedy at law for the breach or threatened breach by Executive of any one or more of the
covenants set forth in this Agreement and agrees that in the event of any such breach or threatened
breach, CGX or any Affiliate may, in addition to the other remedies which may be available to it,
file a suit in equity to enjoin Executive from the breach or threatened breach of such covenants.
In the event either party commences legal action to enforce its or his rights under this Agreement,
the prevailing party in such action shall be entitled to recover all of the

 

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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) August 31, 2013;

(ii) Executive’s death;

(iii) the Disability (as defined below) of Executive;

(iv) termination by CGX of Executive for Cause (as defined below);

(v) termination by CGX of Executive without Cause;

(vi) the resignation of Executive for any reason (other than Good Reason (as
defined below)), which shall take effect immediately upon CGX’s receipt of such
resignation;

(vii) the resignation of Executive for Good Reason, which shall take effect
immediately upon CGX’s receipt of such resignation; or

(viii) a Change in Control (as defined in the Change in Control Agreement).

(each of subparagraph (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) are referred to herein as
a “Termination”).

(b) If a Termination occurs pursuant to subparagraphs (v), or (vii), then
during the Severance Period (as defined below), (i) Executive shall receive Executive’s
monthly salary in effect immediately prior to the Termination in accordance with Section
4(a) and (ii) Executive shall continue to receive and/or be able to elect to receive
benefits under CGX welfare plans or substantially equivalent welfare plans at CGX’s expense,
including but not limited to, medical/hospital, dental, life, and disability, in accordance
with the terms of such plans in effect at the time; provided, however, that Executive shall
be responsible for the costs of such benefits to the same extent he was responsible (or
would have been responsible had he then been a participant) for such costs prior to the
Termination Date.

 

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(c) If a Termination occurs pursuant to subparagraphs (i), (ii), (iii), (iv), (vi) or
(viii), then Executive or Executive’s estate shall receive (i) Executive’s monthly salary
in effect immediately prior to the Termination in accordance with Section 4(a)
through the date of such Termination and (ii) any other amounts earned, accrued or owing as
of such Termination Date, but not yet paid by CGX to Executive.

(d) Termination of employment hereunder shall not relieve Executive of his obligations
under Sections 8 and 9 hereof, notwithstanding the termination of Executive’s
compensation or the termination of the other terms and conditions of this Agreement. In
addition, termination of employment hereunder shall not relieve Executive of his obligations
under Section 11 hereof which are intended to continue indefinitely, notwithstanding
the termination of Executive’s compensation or the termination of the other terms and
conditions of this Agreement. Executive’s violation of any of his obligations under
Sections 8, 9 or 11 hereof shall relieve CGX of its obligation to pay any of the
benefits as contemplated in this Section 15.

(e) In addition to all other compensation due to Executive hereunder, the following
shall occur immediately prior to the occurrence of a Termination pursuant to
subparagraphs (ii), (iii) or (vii) of Section 15:

(i) all CGX stock options held by Executive prior to such a Termination shall
become exercisable, regardless of whether or not the vesting/performance conditions
set forth in the relevant agreements shall have been satisfied in full;

(ii) all restrictions on any restricted securities granted by CGX to Executive
prior to such a Termination shall be removed and the securities shall become fully
vested and freely transferable, regardless of whether the vesting/performance
conditions set forth in the relevant agreements shall have been satisfied in full;

(iii) Executive (or Executive’s estate) shall have an immediate right to
receive all performance shares or bonuses granted prior to such a Termination, and
such performance shares and bonuses shall become fully vested and freely
transferable or payable without restrictions, regardless of whether or not specific
performance goals set forth in the relevant agreements shall have been attained;

(iv) all performance units granted to Executive prior to such a Termination
shall become immediately payable in cash or common stock, at Executive’s sole option
(or at the sole option of the executor of the Executive’s estate), regardless of
whether or not the relevant performance cycle has been completed, and regardless of
whether any other terms and conditions of the relevant agreements shall have been
satisfied in full; and

(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.

 

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16. Gross-Up.

(a) Anything in this Agreement to the contrary notwithstanding, in the event a public
accounting firm selected by Executive (the “Accounting Firm”) shall determine that any
payment, benefit, or distribution by CGX to Executive (whether paid or payable or
distributed or distributable pursuant to the terms of Section 15 of this Agreement
or otherwise, but determined without regard to any additional payments required under this
Section 16) (each a “Payment”) is subject to the excise tax imposed by Section 4999
of the Code, or any interest or penalties are incurred by Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then CGX shall pay to Executive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed with respect
thereto), and the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

(b) Subject to the provisions of Section 16(c) below, all determinations
required to be made under this Section 16, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Accounting Firm which shall
provide detailed supporting calculations both to CGX and Executive as soon as possible
following a request made by Executive or CGX. All fees and expenses of the Accounting Firm
shall be borne solely by CGX. Any Gross-Up Payment, as determined pursuant to this
Section 16, shall be paid by CGX to Executive within five (5) days of the receipt of
the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion that failure to
report the Excise Tax on Executive’s applicable federal income tax return would not result
in the imposition of a negligence or similar penalty. Any determination by the Accounting
Firm shall be binding upon CGX and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by CGX should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. If CGX exhausts its remedies pursuant to Section
16(c) below and Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by CGX to or for the benefit of Executive.

(c) Executive shall notify CGX in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by CGX of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten (10) business days
after Executive is informed in writing of such claim and shall set forth in reasonable
detail the nature of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the ten (10)-day period
following the date on which Executive gives such notice to CGX (or such shorter period ending on the date that any payment of taxes with respect to such claim
is due). If CGX notifies Executive in writing prior to the expiration of such period that
it desires to contest such claim, Executive shall:

 

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(i) give CGX any information reasonably requested by CGX relating to such
claim,

(ii) take such action in connection with contesting such claim as CGX shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney selected by
CGX,

(iii) cooperate with CGX in good faith to effectively contest such claim, and

(iv) permit CGX to participate in any proceedings relating to such claim;
provided, however, that CGX shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 16(c), CGX
shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as CGX shall
determine; provided further, that if CGX directs Executive to pay such claim and sue
for a refund, CGX shall advance the amount of such payment to Executive on an
interest-free basis and shall indemnify and hold Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, CGX’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.

 

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(d) If, after the receipt by Executive of an amount advanced by CGX pursuant to this
Section 16, Executive becomes entitled to receive, and receives, any refund with
respect to such claim, Executive shall (subject to CGX’s complying with the requirements of
this Section 16) promptly pay to CGX the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by Executive of any amount advanced by CGX pursuant to Section 16, a
determination is made that Executive shall not be entitled to any refund with respect to
such claim and CGX does not notify Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

17. Definitions. As used in this Agreement, terms defined in the preamble and
recitals of or elsewhere in this Agreement shall have the meanings set forth therein and the
following terms shall have the meanings set forth below:

(a) Affiliate or Affiliates shall mean and refer to any direct or
indirect subsidiaries of CGX, or any other entity or entities through which CGX or any
subsidiary of CGX may conduct CGX’s Line of Business.

(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 December 17, 2007 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.

 

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(g) Confidential Information shall mean trade secrets; customer and supplier
lists; marketing arrangements; business plans; projections; financial information; training
manuals; pricing manuals; product and service development plans; market strategies; internal
performance statistics; all information about any Customer, including their facilities, requirements, purchasing preferences or needs, their past purchasing
histories, and all records relating to transactions or communications of any kind between
the Executive and any Customer; all information about CGX’s employees, including their
compensation, resumes, experience, capabilities, work histories, and performance
evaluations; information about CGX’s consultants, vendors or suppliers; information acquired
from CGX’s employees or inspection of CGX’s property; information disclosed to CGX by third
parties, concerning CGX’s and its Affiliate’s products, services, marketing programs, bids
or bidding processes, staffing specifications, service contracts or servicing schedules or
procedures, or business practices and other competitively sensitive information belonging to
and concerning CGX and/or any of the Affiliates and not generally known by or available to
the public, whether or not in written or tangible form, as the same may exist at any time
during the Employment Period. For purposes hereof, CGX and Executive agree that
Confidential Information includes current, updated and future data, information, reports,
evaluations and analyses of CGX, its financial performance and results, Customers and
employees, including their compensation, performance or evaluation, and includes
information, data, reports and evaluations (i) provided to Executive before and after the
date hereof, (ii) those which the Executive created, in whole or in part, (iii) those to
which or for which the 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 date that Executive officially commences work
at CGX’s principal offices in Houston, Texas, which date shall be confirmed in writing by
Executive and CGX.

(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.

 

10

 

(m) Noncompetition Period shall mean a period beginning on the Effective Date
and continuing through the Employment Period and for the period of one (1) year after any
Termination pursuant to Section 15(a)(i), (iii), (iv), (v), (vi) or (vii).

(n) Permitted Activities shall mean (i) owning not more than 1% of the
outstanding shares of a publicly-held Competitive Business which has shares listed for
trading on a securities exchange registered with the Securities and Exchange Commission or
through the automated quotation system of a registered securities association; (ii) owning
capital stock of CGX; or (iii) those activities or actions undertaken by Executive, to the
extent, but only to the extent, such activities or actions are expressly approved in writing
by the CEO.

(o) Severance Period shall mean that period of time equal to one (1) year
following Termination.

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:
	 	R. Clyde Parker, Jr., Esq.
	 

	 	 	 	Winstead PC
	 

	 	 	 	1100 JP Morgan Chase Tower
	 

	 	 	 	600 Travis Street
	 

	 	 	 	Houston, Texas 77002 
	 
	 	 	 	 
	 

	 	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.

 

11

 

20. No Mitigation Obligation. CGX hereby acknowledges that it will be difficult, and
may be impossible, for Executive to find reasonably comparable employment following the Termination
Date and that the noncompetition covenants contained in Sections 8, 9 and 11 hereof will
further limit the employment opportunities for Executive. Accordingly, the parties hereto
expressly agree that the payment of the severance compensation and benefits by CGX to Executive in
accordance with the terms of this Agreement will be liquidated damages, and that Executive shall
not be required to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other obligation on the part of
Executive hereunder or otherwise, except to the extent Executive receives comparable welfare
benefits from another employer during the Severance Period.

21. Amendment and Modification. No amendment or modification of the terms of this
Agreement shall be binding upon either party unless reduced to writing and signed by Executive and
a duly appointed officer of CGX.

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. Effective Date. This Agreement shall become effective only upon and as of the
Effective Date, it being expressly acknowledged and agreed by the parties hereto that this
Agreement shall not be binding on the parties until the Executive officially commences work with
CGX at its principal offices in Houston, Texas (currently expected to be in January 2008 or
before), provided, however, that if Executive does not commence work with CGX by January 31, 2008,
this Agreement shall be null and void for all purposes, and neither party shall have any liability
to the other party hereunder.

26. 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.

27. 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.

 

12

 

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

SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

S-1

 

 

 

EXHIBIT A

FORM OF STOCK OPTION AGREEMENT

 

 

 

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 price per share of Stock as reported by the New York Stock Exchange
on the last trading day immediately preceding the Grant Date (the “Exercise Price”), such number of
shares and such price per share being subject to adjustment as provided in paragraph 14(b) of the
Consolidated Graphics, Inc. Long-Term Incentive Plan, as amended from time to time (the “Plan”),
and further subject to the following terms and conditions:

	1.	 	This Option is issued in accordance with and subject to all of the terms, conditions and
provisions of the Plan and administrative interpretations, if any, which have been duly
adopted and are in effect on the date hereof. Except as defined herein, capitalized terms
shall have the same meanings ascribed to them under the Plan.

	 
	2.	 	(a) This Option shall be exercisable as follows:

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

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

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

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

 

 

 

	 	(v)	 	Provided that Optionee has provided continuous service as an employee
of the Company or any of its subsidiaries since the Grant Date; this Option
shall be fully exercisable from and after [DATE];

Provided that the number of shares as to which this Option becomes exercisable
shall, in each case, be reduced by the number of shares previously purchased
pursuant to the terms hereof; and provided further that no additional installments
shall become exercisable after the Option terminates pursuant to Section 2(b) or 3
hereof.

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

	3.	 	Unless earlier terminated pursuant to Section 2(b) hereof, the Option hereby granted shall
terminate and be of no force and effect with respect to any shares 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 status with the Company or
any of its subsidiaries.

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

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

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

 

2

 

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

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

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

	6.	 	The Optionee’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 this Option may be made
by the Optionee otherwise than by will or by the laws of descent and distribution; and this
Option is exercisable during his/her lifetime only by the Optionee.

	 
	7.	 	No certificates representing shares of Stock purchased hereunder shall be delivered to or in
respect of an Optionee unless the amount of all federal, state and other governmental
withholding tax requirements imposed upon the Company with respect to the issuance of such
Stock has been remitted to the Company or unless provisions to pay such withholding
requirements have been made to the satisfaction of the Committee pursuant to Section 10 of the
Plan. The Committee may make such provisions as it may deem appropriate for the withholding of
any taxes which it determines is required in connection with this Option.

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

	 
	8.	 	The Option is intended to qualify as an “incentive stock option” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), except where prior
stock option grants to Optionee make incentive stock option status unavailable and provided
that nothing in this Agreement shall be interpreted as a representation, guarantee, or other
understanding on the part of the Company that the Option is or will be determined to be an
“incentive stock option” within the meaning of that or any other section of the Code.
Optionee shall notify the Company (i) of any “disqualifying disposition” (within the meaning
of Section 421 of the Code) of the Stock acquired upon exercise of the Option (specifically, a
sale of such Stock within two years from the date the Option was granted or within one year
from the date the Option was exercised) and (ii) of such other events or circumstances
relating to the Option or the
Stock as are specified by the Committee. Such notice(s) shall be provided at such time and
in such manner as is specified by the Committee.

 

3

 

	9.	 	Notwithstanding anything in this Stock Option Agreement to the contrary, immediately prior to
the occurrence of a Change in Control, this Option to the extent not previously exercised or
terminated shall become fully vested and immediately exercisable. For purposes of this Stock
Option Agreement, a “Change in Control” will be deemed to have occurred if at any time any of
the following events shall occur:

	 	(a)	 	the Company is merged, consolidated, converted or reorganized into or with
another corporation or other legal entity, and as a result of such merger,
consolidation, conversion or reorganization less than a majority of the combined voting
power of the then outstanding securities of the Company or such corporation or other
legal entity immediately after such transaction are held in the aggregate by the
holders of Voting Stock (as hereinafter defined) of the Company immediately prior to
such transaction and/or such voting power is not held by substantially all of such
holders in substantially the same proportions relative to each other;

	 
	 	(b)	 	the Company sells (directly or indirectly) all or substantially all of its
assets (including, without limitation, by means of the sale of the capital stock or
assets of one or more direct or indirect subsidiaries of the Company) to any other
corporation or other legal entity, of which less than a majority of the combined voting
power of the then outstanding voting securities (entitled to vote generally in the
election of directors or persons performing similar functions on behalf of such other
corporation or legal entity) of such other corporation or legal entity is held in the
aggregate by the holders of Voting Stock of the Company immediately prior to such sale
and/or such voting power is not held by substantially all of such holders in
substantially the same proportions relative to each other;

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

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

	 
	 	(e)	 	if during any one (1)-year period, individuals who at the beginning of any such
period constitute the directors of the Company cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for election by
the Company’s shareholders, of each director of the Company first elected during
such period was approved by a vote of at least two-thirds of (i) the directors of
the Company then still in office who were directors of the Company at the beginning
of any such period or (ii) directors referenced in clause (i) immediately preceding
plus directors of the Company whose nomination and/or election was approved by the
directors referenced in clause (i) immediately preceding; or

 

4

 

	 	(f)	 	the shareholders of the Company approve a plan contemplating the liquidation or
dissolution of the Company.

Notwithstanding the foregoing provisions of Subsection 9(c) or 9(d) hereof, a “Change in
Control” shall not be deemed to have occurred for purposes of this Agreement solely because
(i) the Company, (ii) a corporation or other legal entity in which the Company directly or
indirectly beneficially owns 100% of the voting securities of such entity, or (iii) any
employee stock ownership plan or any other employee benefit plan of the Company or any
wholly-owned subsidiary of the Company, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K,
Schedule 14A or Schedule 14C (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of Voting Stock,
whether in excess of fifty percent (50%) or otherwise, or because the Company reports that a
change in control of the Company has occurred by reason of such beneficial ownership.

	10.	 	This Agreement shall be governed by, construed and enforced in accordance with the laws of
the State of Texas.

	 	 	 	 	 
	 	 	CONSOLIDATED GRAPHICS, INC.

COMPENSATION COMMITTEE
	 
	 	 	 	 
	Effective Date of Grant

	 	By:	 	 
	 

	 	 	 	 
	[DATE]	 	Joe R. Davis, Chief Executive Officer
	Exercise Price: [$PRICE]	 	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 administrative interpretations thereof referred to above. I also hereby
acknowledge receipt of the memorandum regarding Notice of Disqualifying Dispositions and the
Consolidated Graphics, Inc. Prospectus dated October 22, 1998.

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	Name: [NAME]

 

5

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