Document:

EMPLOYMENT AGREEMENT

Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

This

EMPLOYMENT AGREEMENT (the “Agreement”), dated effective as of March 1, 2002, 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 G.

CHRISTOPHER COLVILLE (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, Chief Financial

Officer and Secretary of CGX;

 

WHEREAS,

in connection with his employment, Executive will be provided by CGX with

specialized training and given access to confidential information;

 

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. 

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 the

Termination Date (as defined below).

 

3.             Duties. 

Executive shall (i) serve under the direction of the Board and

Joe R. Davis, the Chief Executive Officer of CGX (the “CEO”), as Executive Vice-President, Chief

Financial Officer and Secretary of CGX, (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.  Such monthly salary shall be increased

during the Employment Period at the same time and on at least as favorable a

basis as other officers of CGX.

 

(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 (i) 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 (ii) three (3) weeks 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; and provided, further,  that

CGX will act reasonably to continue in effect comparable medical benefits to

those currently in effect at the Company.

 

(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.  CGX agrees to reimburse Executive for his

hospitalization and medical insurance premiums paid under the Consolidated

Omnibus Budget Reconciliation Act of 1986 until Executive is able to

participate fully under the CGX sponsored hospitalization and medical plan

provided that such reimbursement shall not exceed, on a monthly basis, that

amount which would have been paid by CGX for such preimums for such month under

the CGX sponsored plan

 

5.             Bonus. 

In addition to the other compensation set forth herein, Executive shall

be entitled to 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; provided, however, that the sum of

Executive’s annual base salary (as paid monthly pursuant to Section 4(a)

hereof) plus annual cash bonus payment shall equal or exceed the sum of the

annual base salary plus annual cash bonus of each CGX employee working at CGX’s

corporate headquarters other than that of the CEO and President.

 

6.             Stock Options.  In addition to the other compensation set forth herein, Executive

shall be provided with options to purchase CGX shares as follows:

 

2

 

(a)           200,000 shares 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 preceding the Effective Date; and

 

(b)           25,000 shares on

each anniversary date of the Effective Date during the Employment Period; such

options shall have an exercise price equal to the closing price per share of

CGX common stock as reported on the New York Stock Exchange (or other

applicable national exchange on which the common stock of CGX is then listed) on

the day immediately preceding the effective date of the grant of such option.

 

All options 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”.

 

7.             Executive Expenses.  During the Employment Period, Executive shall be entitled to be

reimbursed for reasonable normal business expenses incurred in the performance

of the Duties hereunder 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 attempt to induce any known customer 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 directly or

indirectly attempt to solicit, induce or intentionally influence any

prospective or past customer of CGX and/or any Affiliate to 

 

3

 

discontinue, reduce the extent of, or not

conduct business with CGX and/or any Affiliate;

 

(c)           directly

or indirectly recruit, solicit, induce or influence any executive, employee or

sales agent of CGX and/or any Affiliate to discontinue such sales, employment

or agency relationship with CGX and/or any such Affiliate;

 

(d)           employ,

seek to employ or cause any other person or entity to employ or seek to employ

as a sales representative or Executive any person who is then (or was at any

time since the Effective Date) employed by CGX and/or any of the Affiliates; or

 

(e)           directly

or indirectly denigrate or in any manner undertake to discredit CGX, any

Affiliate or any successor thereof or any person, operation or entity

associated with CGX or any Affiliate.

 

10.           Consideration for Restrictions.  Executive acknowledges that the restrictions

imposed under Sections 3, 8, 9, and 11 are supported by the

consideration to be received by Executive pursuant to the terms of this

Agreement.

 

11.           No Disclosure of Confidential Information.  Executive shall not 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.  Executive

shall not disclose the terms of this Agreement to anyone other than a

representative or agent of Executive.

 

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.           Reduction of Restrictions by Court Action.  If the length of time, type of activity,

geographic area or other restrictions set forth in the restrictions of Sections 3,

8, 9, or 11 are deemed unreasonable in any court proceeding, the parties

hereto agree that the court may reduce such restrictions to ones it deems

reasonable to protect the substantial investment of CGX and the Affiliates in

their businesses and the goodwill attached thereto.

 

14.           Remedies. 

Executive understands that CGX and the Affiliates will not have an

adequate remedy at law for the breach or threatened breach by Executive of any

one or more of the covenants set forth in this Agreement and agrees that in the

event of any such breach or threatened breach, CGX or any Affiliate may, in

addition to the other remedies which may be available to it, file a suit in

equity to enjoin Executive from the breach or threatened breach of such

covenants.  In the event either party

commences legal action to enforce its or his rights under this Agreement, the

prevailing party in such action shall be entitled to recover all of the costs

and expenses in connection therewith, including reasonable attorney’s fees.

 

4

 

15.           Termination.

 

(a)           The

“Termination Date”

shall mean the date in which the first of the following occur:

 

(i)                                     the

fifth anniversary of the Effective Date or any date subsequent thereto provided

one party has given notice to the other at least one (1) year in advance of

such date of his/its election to terminate this Agreement on such date;

 

(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 (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.

 

(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 

 

5

 

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;

 

(v)                                 provided,

that if the terms of any plan or agreement providing for such options,

restricted securities, performance shares or bonuses, or performance units do

not allow such acceleration or payment as 

 

6

 

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.

 

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.

 

7

 

(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 apprise CGX of 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:

 

(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 reasonably

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 

 

8

 

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.

 

(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, serious misconduct,

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 March 1, 2002 between CGX and Executive.

 

9

 

(d)           CGX’s

Line of Business shall mean general commercial printing services,

including digital imaging, offset lithography, composition, electronic

prepress, binding and finishing services, fulfillment of printed materials and

includes any 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;

 

(f)            Competitive

Business shall mean any person or entity engaged in a business that

produces any of the products or performs any of the services comprising CGX’s

Line of Business.

 

(g)           Confidential

Information shall mean trade secrets, customer and supplier lists,

marketing arrangements, business plans, projections, financial information,

training manuals, pricing manuals, product and service development plans,

market strategies, internal performance statistics 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.

 

(h)           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 one hundred eighty (180) days, whether

or not such days are consecutive, during any consecutive twelve (12) month period.

 

(i)            Effective

Date shall mean the execution date of this Agreement.

 

(j)            Employment

Period shall mean that period of time set forth in Section 2

of this Agreement.

 

(k)           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

promptly 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, (iii) a material diminution in the

Executive’s Duties or cash compensation, (vi) the replacement of Joe R.

Davis as the CEO by any person other than Executive (provided that Executive resigns

his employment citing the replacement as “Good Reason” within sixty (60) days

following the date the Board selects a successor CEO other than Executive), and

(v) the termination by the Executive of the Executive’s employment with CGX

upon the occurrence of any of the events set forth in Section 4(b)(ii)

to the Change of Control Agreement.

 

10

 

(l)            Noncompetition

Period shall mean a period beginning on the Effective Date and

continuing through the Employment Period and for the greater of (i) the period

of one (1) year after any Termination pursuant to Section15(a)(i),  (iii),

(iv) or (vi) or (ii) the Severance Period.

 

(m)          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.

 

(n)           Severance

Period shall mean that period of time equal to the shorter of (i)

either (A), if Joe R. Davis is then the CEO, one (1) year following

Termination or (B), if Joe R. Davis is not then the CEO, two (2)

years following Termination or (ii) the remainder of the Employment Period that

would have been applicable pursuant to Section 15(a)(i) but for the

early Termination, if at the time of such Termination either of the parties had

notified the other of its election to terminate the Employment Period pursuant

to Section 15(a)(i).

 

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 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 Sechrest & Minick P.C.

  
	

   

  	

   

  	

  910 Travis, Suite 2400

  
	

   

  	

   

  	

  Houston, Texas 77002

  
	

   

  	

   

  	

   

  
	

  If to Executive:

  	

   

  	

  G. Christopher Colville

  
	

   

  	

   

  	

  5906 Masters Drive

  
	

   

  	

   

  	

  Houston, Texas 77069

  

 

19.           Assignment.  CGX,

but not Executive, may assign or delegate any of its rights or obligations

hereunder; provided,

however, that without the consent of Executive, CGX shall not be

relieved of any of its obligations hereunder as a result of any assignment to a

third party; 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 

 

11

 

upon and inure to the benefit

of any assignee thereof and any such assignee shall be deemed substituted for

CGX under the terms of this Agreement and all references to “CGX” shall be

deemed to mean such assignee.  As used

in this Agreement, the term “assignee” shall include any Affiliate or person,

firm, partnership, corporation or CGX which at any time, whether by merger,

purchase or otherwise, acquires all of the capital stock or substantially all

of the assets or business of CGX, and any assignee or successor thereof.

 

20.           No

Mitigation Obligation. 

CGX hereby acknowledges that it will be difficult, and may be

impossible, for Executive to find reasonably comparable employment following

the Termination Date and that the noncompetition covenants contained in Sections

8 and 9 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 actually 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.

 

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 

 

12

 

shall refer to the feminine,

the neuter shall refer to the masculine or feminine, the singular shall refer

to the plural, and vice versa.

 

IN WITNESS WHEREOF,

the parties hereto have executed this Agreement as of the date first written

above.

 

	

   

  	

   

  	

   

  	

   

  	

  EXECUTIVE:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  /s/ G.

  Christopher Colville

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  G. CHRISTOPHER COLVILLE

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  CGX:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  CONSOLIDATED GRAPHICS, INC.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  By:

  	

   

  	

  /s/ Joe R. Davis

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Joe R. Davis, Chief Executive Officer

  

 

13

 

EXHIBIT A

 

 

CGX 1/31/00 Master          CONSOLIDATED GRAPHICS, INC.

Form                                      

STOCK OPTION AGREEMENT

«Date»

Consolidated Graphics,

Inc. (the “Company”) hereby grants, effective as of «Date»  (the “Grant

Date”) to «Optionee»  (the “Optionee”), an employee of the Company or

one of its subsidiaries, the Option (the “Option”) to purchase from the Company

up to, but not exceeding in the aggregate, «Shares» 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 on the Grant Date as reported by

the New York Stock Exchange (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 thereunder, if any, which have been adopted by

the Committee thereunder 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 not be exercisable until after one year of the Optionee’s

continued employment with the Company or any subsidiary of the Company

immediately following the Grant Date, and thereafter shall be exercisable as

follows:

(i)                                     From and after the first anniversary of

the Grant Date, this Option shall be exercisable 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)                                  From and after the second anniversary of

the Grant Date, this Option shall be exercisable 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)                               From and after the third anniversary of

the Grant Date, this Option shall be exercisable 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)                              From and after the fourth anniversary of

the Grant Date, this Option shall be exercisable 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)                                 From and after the fifth anniversary of

the Grant Date; this Option shall be fully exercisable;

 

14

 

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 employment

with the Company and its subsidiaries during the one year immediately following

the Grant 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 tenth anniversary of the Grant Date or (b)

the expiration of 180 days after the Optionee’s termination of employment with

the Company or any subsidiary.

Notwithstanding

the foregoing, if death of the Optionee occurs (i) after the Optionee’s

completion of 30 days of continued employment with the Company or any

subsidiary following the Grant Date and (ii) before the termination of this

Option (whether before or after the Optionee’s termination of employment with

the Company or any subsidiary), the Option shall not terminate, but shall be

exercisable by the Optionee’s heirs, estate or personal representatives, until

the earlier of (a) the tenth 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 is

acquiring such shares for his 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.

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:

 

15

 

(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 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.

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:

 

16

 

(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 twenty percent (20%) 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 of the Company whose nomination and/or election

was approved by the directors referenced in clause (i) immediately preceding;

or

 

17

 

(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 twenty percent (20%) 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

  	

   

  
	

  «Date1», 2000

  	

  By

  	

   

  
	

   

  	

  Joe R. Davis, Chief Executive Officer

  
	

  Exercise Price: $«Price1»

  	

  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:  «Optionee»

 

 

18CHANGE IN CONTROL AGREEMENT

Exhibit

10.6

 

CHANGE

IN CONTROL AGREEMENT

 

This EMPLOYMENT AND CHANGE IN CONTROL AGREEMENT (“Agreement”),

effective as of March 1, 2002, by and between CONSOLIDATED GRAPHICS, INC., a

Texas corporation (the “Company”), and G. CHRISTOPHER COLVILLE (the “Executive”),

evidences that;

 

WHEREAS, the Executive is a senior

executive of the Company and has made and/or is expected to make or continue to

make significant contributions to the profitability, growth and financial

strength of the Company;

 

WHEREAS, the Company desires to assure

itself of both present and future continuity of management in the event of a

Change in Control (as defined hereafter) and desires to establish certain

minimum compensation rights with respect to its key senior executives, including

the Executive, applicable in the event of a Change in Control;

 

WHEREAS, the Company wishes to ensure that

its senior executives are not practically disabled from discharging their

duties upon a Change in Control;

 

WHEREAS, this Agreement is not intended to

alter materially the compensation and benefits which the Executive could

reasonably expect to receive from the Company absent a Change in Control and,

accordingly, although effective and binding as of the date hereof, this

Agreement shall become operative only upon the occurrence of a Change in

Control; and

 

WHEREAS, the Executive is willing to render

services to the Company on the terms and subject to the conditions set forth in

this Agreement;

 

NOW, THEREFORE, the Company and the

Executive agree as follows:

 

1.                                       Operation

of Agreement:

 

(a)                                  Sections 1

and 8 through 21 of this Agreement shall be effective and binding as of the

Effective Date, but, anything in this Agreement to the contrary

notwithstanding, Sections 2, 3, 4, 5, 6 and 7 of this Agreement shall

not be effective and binding unless and until there shall have occurred a

Change in Control.  For purposes of this

Agreement, a “Change in Control” will be deemed to have occurred if at

any time during the Term (as hereinafter defined) any of the following events

shall occur:

 

(i)                                     The

Company is merged, consolidated, converted or reorganized into or with another

corporation or other legal entity, and as a result of such merger,

consolidation, conversion or reorganization less than a majority of the combined

voting power of the then outstanding securities of the Company or such

corporation or other legal entity immediately after such transaction are held

in the aggregate by the holders of Voting Stock (as hereinafter defined) of the

Company immediately prior to such transaction and/or such 

 

 

voting power is not held

by substantially all of such holders in substantially the same proportions

relative to each other;

 

(ii)                                  The

Company sells (directly or indirectly) all or substantially all of its assets

(including, without limitation, by means of the sale of the capital stock or

assets of one or more direct or indirect subsidiaries of the Company) to any

other corporation or other legal entity, of which less than a majority of the

combined voting power of the then outstanding voting securities (entitled to

vote generally in the election of directors or persons performing similar

functions on behalf of such other corporation or legal entity) of such other

corporation or legal entity is held in the aggregate by the holders of Voting

Stock of the Company immediately prior to such sale and/or such voting power is

not held by substantially all of such holders in substantially the same

proportions relative to each other;

 

(iii)                               Any

person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of

the Securities Exchange Act of 1934, as amended (the “Exchange Act”))

becomes (subsequent to the Effective Date) the beneficial owner (as the term

“beneficial owner” is defined under Rule 13d–3 or any successor rule or

regulation promulgated under the Exchange Act) of securities representing fifty

percent (50%) or more of the combined voting power of the then–outstanding

securities entitled to vote generally in the election of directors of the

Company (“Voting Stock”);

 

(iv)                              The

Company files a report or proxy statement with the Securities and Exchange

Commission pursuant to the Exchange Act disclosing in response to Form 8–K,

Schedule 14A or Schedule 14C (or any successor schedule, form or

report or item therein) that a change in control of the Company has occurred;

 

(v)                                 If

during any one (1)–year period, individuals who at the beginning of any

such period constitute the directors of the Company cease for any reason to

constitute at least a majority thereof, unless the election, or the nomination

for election by the Company’s shareholders, of each director of the Company

first elected during such period was approved by a vote of at least two–thirds

of (i) the directors of the Company then still in office who were directors

of the Company at the beginning of any such period or (ii) directors

referenced in clause (i) immediately preceding plus directors of the Company

whose nomination and/or election was approved by the directors referenced in

clause (i) immediately preceding; or

 

(vi)                              The

shareholders of the Company approve a plan contemplating the liquidation or

dissolution of the Company.

 

2

 

Notwithstanding the foregoing provisions of

Subsection 1(a)(iii) or 1(a)(iv) hereof, a “Change in Control” shall not be

deemed to have occurred for purposes of this Agreement solely because (i) the

Company, (ii) a corporation or other legal entity in which the Company

directly or indirectly beneficially owns 100% of the voting securities of such

entity, or (iii) any employee stock ownership plan or any other employee

benefit plan of the Company or any wholly–owned subsidiary of the

Company, either files or becomes obligated to file a report or a proxy

statement under or in response to Schedule 13D, Schedule 14D–1,

Form 8–K, Schedule 14A or Schedule 14C (or any successor

schedule, form or report or item therein) under the Exchange Act, disclosing

beneficial ownership by it of shares of Voting Stock, or because the Company

reports that a change in control of the Company has occurred by reason of such

beneficial ownership.

 

(b)                                 Upon

occurrence of a Change in Control at any time during the Term, Sections 2,

3, 4, 5, 6 and 7 of this Agreement shall become immediately binding and

effective.

 

(c)                                  The

period during which this Agreement shall be in effect (the “Term”) shall

commence as of the date hereof and shall expire as of the later of (i) the

close of business on the third anniversary of the date hereof, or (ii) the

expiration of the Period of Employment (as hereinafter defined); provided,

however, that (A) subject to Section 9 hereof, if, prior to a

Change in Control, the Executive ceases for any reason to be an employee of the

Company (or a parent or subsidiary thereof), thereupon the Term shall be deemed

to have expired and this Agreement shall immediately terminate and be of no

further effect and (B) commencing on the first anniversary of the date

hereof and each anniversary thereafter, the Term of this Agreement shall automatically

be extended for an additional year.

 

2.                                       Employment;

Period of Employment:

 

(a)                                  Subject

to the terms and conditions of this Agreement, upon the occurrence of a Change

in Control, the Company shall continue the Executive in its employ and the

Executive shall remain in the employ of the Company for the period set forth in

Subsection 2(b) hereof (the “Period of Employment”), in the

position and with substantially the same duties and responsibilities that the

Executive had immediately prior to the Change in Control, or to which the

Company and the Executive may hereafter mutually agree in writing.  Throughout the Period of Employment, the

Executive shall devote substantially all of the Executive’s time during normal

business hours (subject to vacations, sick leave and other absences in

accordance with the policies of the Company as in effect for senior executives

immediately prior to the Change in Control) to the business and affairs of the

Company, but nothing in this 

 

3

 

Agreement shall preclude

the Executive from devoting reasonable periods of time during normal business

hours to (i) serving as a director, trustee or member of or participant in any

organization or business so long as such activity would not constitute

Competitive Activity (as hereinafter defined) if conducted by the Executive

after the Executive’s Termination Date (as hereinafter defined),

(ii) engaging in charitable and community activities, or (iii) managing

the Executive’s personal investments.

 

(b)                                 The

Period of Employment shall commence on the date on which a Change in Control

occurs and, subject only to the provisions of Section 4 hereof,

shall continue until the expiration of the second anniversary of the occurrence

of the Change in Control.

 

3.                                       Compensation

During Period of Employment:

 

(a)                                  During

the Period of Employment, the Executive shall receive (i) annual base salary at

a rate not less than the Executive’s highest 

annual fixed or base compensation paid during or payable with respect to

any calendar year during the three calendar years immediately preceding the

year in which the Change in Control occurred, or such higher rate as may be

determined from time to time by the Board of Directors of the Company (the “Board”)

or the Compensation Committee thereof (the “Committee”) (which base

salary at such rate is herein referred to as “Base Pay”) and (ii) an

annual amount equal to not less than the highest aggregate annual bonus,

incentive or other payments of cash compensation paid to the Executive in

addition to the amounts referred to in clause (i) above made or to be made

in or with respect to any calendar year during the three calendar years

immediately preceding the year in which the Change in Control occurred pursuant

to any bonus, incentive, profit–sharing, performance, discretionary pay

or similar policy, plan, program or arrangement of the Company (“Incentive

Pay”) which contemplates cash payments other than Employee Benefits (as

hereinafter defined); provided, however, that in no event shall any increase in

the Executive’s aggregate cash compensation or any portion thereof in any way

diminish any other obligation of the Company under this Agreement.  The Executive’s Base Pay shall be payable monthly.  The Executive’s Incentive Pay shall be paid

annually as soon as reasonably practicable following determination of the

amount payable but in no event later than the date which is sixty (60) days

following the last day of the fiscal year during which such Incentive Pay is

deemed earned.

 

(b)                                 During

the Period of Employment the Executive shall, on the same basis as the

Executive participated therein immediately prior to the Change in Control, be a

full participant in, and shall be entitled to the perquisites, benefits and

service credit for benefits as provided under any and all employee retirement

income and welfare benefit policies, plans, programs or arrangements in which

senior executives of the Company and/or any 

 

4

 

parent or subsidiary participate

generally, including without limitation any stock option, stock purchase, stock

appreciation, savings, pension, supplemental executive retirement or other

retirement income or welfare benefit, deferred compensation, incentive

compensation, group and/or executive life, accident, health, dental,

medical/hospital or other insurance (whether funded by actual insurance or self–insured

by the Company), disability, salary continuation, expense reimbursement and

other employee benefit policies, plans, programs or arrangements that may exist

immediately prior to the Change in Control or any equivalent successor

policies, plans, programs or arrangements that may be adopted thereafter by the

Company and/or any parent or subsidiary (collectively, “Employee Benefits”);

provided, however, that, except as set forth in Section 5(a)(v) hereof,

the Executive’s rights thereunder shall be governed by the terms thereof and

shall not be enlarged hereunder or otherwise affected hereby.  Subject to the proviso in the immediately

preceding sentence, if and to the extent such perquisites, benefits or service

credit for benefits are not payable or provided under any such policy, plan,

program or arrangement as a result of the amendment or termination thereof

subsequent to or after a Change in Control, then the Company shall itself pay

or provide such Employee Benefits. 

Nothing in this Agreement shall preclude improvement or enhancement of

any such Employee Benefits, provided that no such improvement shall in any way

diminish any other obligation of the Company under this Agreement.

 

(c)                                  The

Company has determined that the amounts payable pursuant to this Section 3

constitute reasonable compensation. 

Accordingly, notwithstanding any other provision hereof, unless such

action would be expressly prohibited by applicable law, if any amount paid or

payable pursuant to this Section 3 is subject to the excise tax

imposed by Section 4999 of the Internal Revenue Code of 1986, as amended

(the “Code”), the Company will pay to the Executive an additional amount

in cash equal to the amount necessary to cause the aggregate remuneration

received by the Executive under this  Section 3,

including such additional cash payment (net of all federal, state and local

income and other taxes and all taxes payable as the result of the application

of Sections 280G and 4999 of the Code) to be equal to the aggregate

remuneration the Executive would have received under this Section 3,

excluding such additional payment (net of all federal, state and local income

and other taxes), as if Sections 280G and 4999 of the Code (and any

successor provisions thereto) had not been enacted into law.

 

4.                                       Termination

Following a Change in Control:

 

(a)                                  In

the event of the occurrence of a Change in Control, this Agreement may be

terminated by the Company during the Period of Employment only upon the

occurrence of one or more of the following events:

 

5

 

(i)                                     If

the Executive is unable to perform the essential functions of the Executive’s

job (with or without reasonable accommodation) because the Executive has become

permanently disabled within the meaning of, and actually begins to receive

disability benefits pursuant to, a long–term disability plan maintained

by or on behalf of the Company for senior executives generally or, if

applicable, employees of the Company immediately prior to the Change in

Control; or

 

(ii)                                  For

“Cause,” which for purposes of this Agreement shall mean that, prior to

any termination pursuant to Subsection 4(b) hereof, the Executive

shall have committed:

 

(A)                              an

intentional act of material fraud, embezzlement or theft in connection with the

Executive’s duties or in the course of the Executive’s employment with the

Company;

 

(B)                                intentional,

wrongful damage to material property of the Company;

 

(C)                                intentional,

wrongful disclosure of material secret processes or confidential information of

the Company; or

 

(D)                               intentional

wrongful engagement in any Competitive Activity;

 

and any such act shall have been materially harmful to

the Company.  For purposes of this

Agreement, no act, or failure to act, on the part of the Executive shall be

deemed “intentional” if it was due primarily to an error in judgment or

negligence, but shall be deemed “intentional” only if done, or omitted to be

done, by the Executive not in good faith and without reasonable belief that the

Executive’s action or omission was in the best interest of the Company.  Notwithstanding the foregoing, the Executive

shall not be deemed to have been terminated for “Cause” hereunder unless and

until there shall have been delivered to the Executive a copy of a resolution

duly adopted by the affirmative vote of not less than three–quarters of

the Board then in office at a meeting of the Board called and held for such

purpose (after reasonable notice to the Executive and an opportunity for the

Executive, together with the Executive’s counsel, to be heard before the

Board), finding that, in the good faith opinion of the Board, the Executive has

committed an act set forth above in this Subsection 4(a)(ii) and

specifying the particulars thereof in detail. 

Nothing herein shall limit the right of the Executive or the Executive’s

beneficiaries to contest the validity or propriety of any such determination.

 

6

 

(b)                                 In

the event of the occurrence of a Change in Control, this Agreement may be

terminated by the Executive during the Period of Employment with the right to

benefits as provided in Section 5 hereof upon the occurrence of one

or more of the following events as determined by the Executive in the sole

discretion of the Executive:

 

(i)                                     Any

termination by the Company of the employment of the Executive for any reason

other than for Cause or as a result of the death of the Executive or by reason

of the Executive’s disability and the actual receipt of disability benefits in

accordance with Subsection 4(a)(i) hereof; or

 

(ii)                                  Termination

by the Executive of the Executive’s employment with the Company (or any

successor to or affiliate thereof) during the Period of Employment upon the

occurrence of any of the following events:

 

(A)                              Failure

to elect or reelect the Executive to the office(s) which the Executive held

immediately prior to a Change in Control, or failure to elect or reelect the

Executive as a director of the Company (or any successor to parent entity

thereof) or the removal of the Executive as a director of the Company (or any

successor thereto), if the Executive shall have been a director of the Company

immediately prior to the Change in Control;

 

(B)                                An

adverse change in the nature or scope of the authorities, powers, functions,

responsibilities or duties attached to the position(s) which the Executive held

immediately prior to the Change in Control; a reduction in the Executive’s Base

Pay and/or Incentive Pay received from the Company; or the termination of the

Executive’s rights to any Employee Benefits to which the Executive was entitled

immediately prior to the Change in Control or a reduction in scope or value

thereof without the prior written consent of the Executive, any of which is not

remedied within ten (10) calendar days after receipt by the Company of written

notice from the Executive of such change, reduction or termination, as the case

may be;

 

(C)                                A determination

by the Executive that, following a Change in Control, as a result of a change

in circumstances significantly affecting the Executive’s position(s), including

without limitation, a change in the scope of the business or other activities

for which the Executive was responsible immediately prior to a Change in

Control, the Executive has been rendered substantially unable to carry out, has

 

7

 

been substantially

hindered in the performance of, or has suffered a substantial reduction in any

of the authorities, powers, functions, responsibilities or duties attached to

the position(s) held by the Executive immediately prior to the Change in

Control, which situation is not remedied within ten (10) calendar days after

written notice to the Company from the Executive of such determination;

 

(D)                               The

liquidation, dissolution, merger, consolidation or reorganization of the

Company or transfer of all or a significant portion of its business and/or

assets (including, without limitation, by means of the sale of the capital

stock or assets of one or more direct or indirect subsidiaries of the Company),

unless the successor (by liquidation, merger, consolidation, reorganization or

otherwise) to which all or a significant portion of its business and/or assets

have been transferred (directly or by operation of law) shall have assumed all

duties and obligations of the Company under this Agreement pursuant to Section 11

hereof (in which case, such entity shall be deemed to be the “Company”

hereunder);

 

(E)                                 The

Company shall require (I) that the principal place of work of the Executive or

the appropriate principal executive office of the Company or the Company’s

operating division or subsidiary for which the Executive performed the majority

of his services during the twelve (12) – month period preceding the

Change in Control be changed to any location which is in excess of forty (40)

miles from the location thereof immediately prior to the Change in Control or

(II) that the Executive travel away from the Executive’s office in the course

of discharging the Executive’s responsibilities or duties hereunder more (in

terms of either consecutive days or aggregate days in any calendar year) than

was required of the Executive prior to the Change in Control, without, in

either case, the Executive’s prior consent; or

 

(F)                                 Any

material breach of this Agreement by the Company or any successor thereto.

 

(c)                                  A

termination by the Company pursuant to Subsection 4(a) hereof or by

the Executive pursuant to Subsection 4(b) hereof shall not affect

any rights which the Executive may have pursuant to any agreement, policy,

plan, program or arrangement of the Company providing Employee Benefits, which

rights shall be governed by the terms thereof. 

If this Agreement or the employment of the Executive is terminated under

circumstances in 

 

8

 

which the Executive is

not entitled to any payments under Sections 3 or 5 hereof, then

notwithstanding anything herein to the contrary, the Executive shall have no

further obligation or liability to the Company hereunder with respect to the

Executive’s prior or any future employment by the Company.

 

5.                                       Severance

Compensation:

 

(a)                                  If,

following the occurrence of a Change in Control, (x) the Company shall

terminate the Executive’s employment during the Period of Employment other than

pursuant to Subsection 4(a) hereof, or (y) the Executive shall

terminate the Executive’s employment during the Period of Employment pursuant

to Subsection 4(b) hereof, or (z) the Executive dies during

the Period of Employment, the Company shall pay to the Executive (or the

Executive’s estate, as applicable) the amount specified in Subsection

5(a)(i) hereof within five business days after the date (the “Termination

Date”) that the Executive’s employment is terminated (the effective date of

which shall be the date of termination or death, or such other date that may be

specified by the Executive if the termination is pursuant to Subsection 4(b)

hereof):

 

(i)                                     In

lieu of any further payments under Subsection 3(a) to the Executive for

periods subsequent to the Termination Date, but without affecting the rights of

the Executive referred to in Subsection 5(b) hereof, a lump sum

payment (the “Severance Payment”) in an amount equal to a multiple of

two (2) times the sum of (A) the Executive’s Base Pay (at the highest rate

in effect during the Term prior to the Termination Date), plus (B) the

Executive’s Incentive Pay (based upon the greatest amount of Incentive Pay paid

or payable to the Executive for any year during the Term prior to the

Termination Date).

 

(ii)                                  (A)

for the remainder of the Period of Employment the Company shall arrange to

provide the Executive with Employee Benefits identical to those which the

Executive was receiving or entitled to receive immediately prior to the

Termination Date (and if and to the extent that such benefits shall not or

cannot be paid or provided under any policy, plan, program or arrangement of

the Company solely due to the fact that the Executive is no longer an officer

or employee of the Company, then the Company shall itself pay to the Executive

and/or the Executive’s dependents and beneficiaries, such Employee Benefits)

and (B) without limiting the generality of the foregoing, the remainder of the

Period of Employment shall be considered service with the Company for the

purpose of service credits under the Company’s retirement income, supplemental

executive retirement and other benefit plans applicable to the Executive and/or

the Executive’s dependents and beneficiaries 

 

9

 

immediately prior to the

Termination Date.  Without otherwise

limiting the purposes or effect of Section 6 hereof, Employee Benefits

payable to the Executive pursuant to this Subsection 5(a)(ii) by reason

of any “welfare benefit plan” of the Company (as the term “welfare benefit

plan” is defined in Section 3(1) of the Employee Retirement Income

Security Act of 1974, as amended) shall be reduced to the extent comparable

welfare benefits are actually received by the Executive from another employer

during such period following the Executive’s Termination Date until the

expiration of the Period of Employment.

 

(iii)                               In

addition to all other compensation due to the Executive hereunder, the

following shall occur immediately prior to the occurrence of a Change in

Control:

 

(A)                              all

Company stock options held by the Executive prior to a Change in Control shall

become exercisable, regardless of whether or not the vesting/performance

conditions set forth in the relevant agreements shall have been satisfied in

full;

 

(B)                                all

restrictions on any restricted securities granted by the Company to the

Executive prior to a Change in Control shall be removed and the securities

shall become fully vested and freely transferable, regardless of whether the

vesting/performance conditions set forth in the relevant agreements shall have

been satisfied in full;

 

(C)                                the

Executive shall have an immediate right to receive all performance shares or

bonuses granted prior to a Change in Control, and such performance shares and

bonuses shall become fully vested and freely transferable or payable without

restrictions, regardless of whether or not specific performance goals set forth

in the relevant agreements shall have been attained; and

 

(D)                               all

performance units granted to the Executive prior to a Change in Control shall

become immediately payable in cash or Common Stock, at the Executive’s sole

option, regardless of whether or not the relevant performance cycle has been

completed, and regardless of whether any other terms and conditions of the

relevant agreements shall have been satisfied in full;

 

provided, that if the terms of any plan or agreement

providing for such options, restricted securities, performance shares or

bonuses, or performance units do not allow such acceleration or payment as

described above, the Company shall take or cause to be taken any 

 

10

 

action required to allow such acceleration or payment

or to separately pay the value of such benefits.

 

(b)                                 (i)            Anything in this Agreement to the

contrary notwithstanding, in the event a public accounting firm selected by the

Executive (the “Accounting Firm”) shall determine that any payment,

benefit, or distribution by the Company to the Executive (whether paid or

payable or distributed or distributable pursuant to the terms of this Agreement

or otherwise, but determined without regard to any additional payments required

under this Subsection 5(b) (a “Payment”) is subject to the

excise tax imposed by Section 4999 of the Code, or any interest or penalties

are incurred by the Executive with respect to such excise tax (such excise tax,

together with any such interest and penalties, are hereinafter collectively

referred to as the “Excise Tax”), then the Company shall pay to the

Executive an additional payment (a “Gross–Up Payment”) in an

amount such that after payment by the Executive of all taxes (including any

interest or penalties imposed with respect to such taxes), including, without

limitation, any income taxes (and any interest and penalties imposed with

respect thereto), and the Excise Tax imposed upon the Gross–Up Payment,

the Executive retains an amount of the Gross–Up Payment equal to the

Excise Tax imposed upon the Payments.

 

(ii)                                  Subject

to the provisions of Subsection 5(b)(iii), all determinations

required to be made under this Subsection 5(b), including whether

and when a Gross–Up Payment is required and the amount of such Gross–Up

Payment and the assumptions to be utilized in arriving at such determination,

shall be made by the Accounting Firm which shall provide detailed supporting

calculations both to the Company and the Executive as soon as possible

following a request made by the Executive or the Company.  In the event that the Accounting Firm is

serving as accountant or auditor for the individual, entity or group effecting

the Change in Control, the Executive shall appoint another nationally

recognized public accounting firm to make the determinations required hereunder

(which accounting firm shall then be referred to as the Accounting Firm

hereunder).  All fees and expenses of

the Accounting Firm shall be borne solely by the Company. Any Gross–Up

Payment, as determined pursuant to this Subsection 5(b), shall be

paid by the Company to the Executive within five (5) days of the receipt of the

Accounting Firm’s determination. If the Accounting Firm determines that no

Excise Tax is payable by the Executive, it shall furnish the Executive with a

written opinion that failure to report the Excise Tax on the Executive’s

applicable federal income tax return would not result in the imposition of a

negligence or similar penalty.  Any

determination by the Accounting Firm shall be binding upon the

 

11

 

Company and the

Executive.   As a result of the

uncertainty in the application of Section 4999 of the Code at the time of the

initial determination by the Accounting Firm hereunder, it is possible that

Gross–Up Payments which will not have been made by the Company should

have been made (“Underpayment”), consistent with the calculations required to

be made hereunder.  In the event that

the Company exhausts its remedies pursuant to Subsection 5(b)(iii)

and the Executive thereafter is required to make a payment of any Excise Tax,

the Accounting Firm shall determine the amount of the Underpayment that has

occurred and any such Underpayment shall be promptly paid by the Company to or

for the benefit of the Executive.

 

(iii)                               The

Executive shall notify the Company in writing of any claim by the Internal

Revenue Service that, if successful, would require the payment by the Company

of the Gross–Up Payment.  Such

notification shall be given as soon as practicable but no later than ten (10)

business days after the Executive is informed in writing of such claim and

shall apprise the Company of the nature of such claim and the date on which

such claim is requested to be paid.  The

Executive shall not pay such claim prior to the expiration of the ten (10)–day

period following the date on which the Executive gives such notice to the

Company (or such shorter period ending on the date that any payment of taxes

with respect to such claim is due).  If

the Company notifies the Executive in writing prior to the expiration of such

period that it desires to contest such claim, the Executive shall:

 

(A)                              give

the Company any information reasonably requested by the Company relating to

such claim,

 

(B)                                take

such action in connection with contesting such claim as the Company shall

reasonably request in writing from time to time, including, without limitation,

accepting legal representation with respect to such claim by an attorney

reasonably selected by the Company,

 

(C)                                cooperate

with the Company in good faith to effectively contest such claim, and

 

(D)                               permit

the Company to participate in any proceedings relating to such claim;

 

provided, however,

that the Company shall bear and pay directly all costs and expenses (including

additional interest and penalties) incurred in connection with such contest and

shall indemnify and hold the Executive harmless, on an after–tax basis,

for any Excise 

 

12

 

Tax or income tax (including interest and penalties

with respect thereto) imposed as a result of such representation and payment of

costs and expenses.  Without limitation

on the foregoing provisions of this Subsection 5(b)(iii), the Company

shall control all proceedings taken in connection with such contest and, at its

sole option, may pursue or forgo any and all administrative appeals,

proceedings, hearings and conferences with the taxing authority in respect of

such claim and may, at its sole option, either direct the Executive to pay the

tax claimed and sue for a refund or contest the claim in any permissible

manner, and the Executive agrees to prosecute such contest to a  determination before any administrative

tribunal, in a court of initial jurisdiction and in one or more appellate

courts, as the Company shall determine; provided further, that if the Company

directs the Executive to pay such claim and sue for a refund, the Company shall

advance the amount of such payment to the Executive on an interest–free

basis and shall indemnify and hold the Executive harmless, on an after–tax

basis, from any Excise Tax or income tax (including interest or penalties with

respect thereto) imposed with respect to such advance or with respect to any

imputed income with respect to such advance; and provided further, that

any extension of the statute of limitations relating to payment of taxes for

the taxable year of the Executive with respect to which such contested amount

is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the

contest shall be limited to issues with respect to which a Gross–Up

Payment would be payable hereunder and the Executive shall be entitled to

settle or contest, as the case may be, any other issue raised by the Internal

Revenue Service or any other taxing authority.

 

(iv)                              If,

after the receipt by the Executive of an amount advanced by the Company

pursuant to this Subsection 5(b), the Executive becomes entitled to

receive, and receives, any refund with respect to such claim, the Executive

shall (subject to the Company’s complying with the requirements of this Subsection 5(b))

promptly pay to the Company the amount of such refund (together with any

interest paid or credited thereon after taxes applicable thereto).  If, after the receipt by the Executive of

any amount advanced by the Company pursuant to Subsection 5(b), a

determination is made that the Executive shall not be entitled to any refund

with respect to such claim and the Company does not notify the Executive in

writing of its intent to contest such denial of refund prior to the expiration

of thirty (30) days after such determination, then such advance shall be

forgiven and shall not be required to be repaid and the amount of such advance

shall offset, to the extent thereof, the amount of Gross–Up Payment

required to be paid.

 

13

 

(c)                                  There

shall be no right of set–off or counterclaim in respect of any claim,

debt or obligation against any payment to or benefit (including Employee

Benefits) of the Executive provided for in this Agreement.

 

(d)                                 Without

limiting the rights of the Executive at law or in equity, if the Company fails

to make any payment required to be made hereunder on a timely basis, the

Company shall pay interest on the amount thereof (and on any interest accrued

hereunder) at an annualized rate of interest equal to the Highest Lawful Rate

as hereafter defined.  “Highest

Lawful Rate” means, at any time and with respect to the Executive, the

maximum rate of interest under applicable law that the Executive may charge the

Company.  The Highest Lawful Rate shall

be calculated in a manner that takes into account any and all fees, payments,

and other charges in respect of this Agreement that constitute interest under

applicable law.  Each change in any

interest rate provided for herein based upon the Highest Lawful Rate resulting

from a change in the Highest Lawful Rate shall take effect without notice to

the Company at the time of such change in the Highest Lawful Rate.  For purposes of determining the Highest

Lawful Rate under Texas law, the applicable rate ceiling shall be the indicated

rate ceiling described in, and computed in accordance with, the Texas Finance

Code.  Notwithstanding anything to the

contrary contained herein, no provisions of this Agreement shall require the

payment or permit the collection of interest in excess of the Highest Lawful

Rate.  If any excess of interest in such

respect is herein provided for, or shall be adjudicated to be so provided, in this

Agreement or otherwise in connection with this loan transaction, the provisions

of this paragraph shall govern and prevail, and neither the Company nor the

sureties, guarantors, successors or assigns of the Company shall be obligated

to pay the excess amount of such interest, or any other excess sum paid for the

use, forbearance or detention of sums loaned pursuant hereto.  If for any reason interest in excess of the

Highest Lawful Rate shall be deemed charged, required or permitted by any court

of competent jurisdiction, any such excess shall be applied as a payment and

reduction of the principal of indebtedness evidenced by this Agreement; and, if

the principal amount hereof has been paid in full, any remaining excess shall

forthwith be paid to the Company.  In

determining whether or not the interest paid or payable exceeds the Highest

Lawful Rate, the Company and the Executive shall, to the extent permitted by

applicable law, (a) characterize any non–principal payment as an

expense, fee, or premium rather than as interest, (b) exclude voluntary

prepayments and the effects thereof, and (c) amortize, prorate, allocate,

and spread in equal or unequal parts the total amount of interest throughout

the entire contemplated term of the indebtedness evidenced by this Agreement so

that the interest for the entire term does not exceed the Highest Lawful Rate.

 

6.             No Mitigation Obligation:  The Company hereby acknowledges that it will

be difficult, and may be impossible, for the Executive to find reasonably

comparable employment

 

14

 

following the Termination

Date and that the noncompetition covenant contained in Section 7 hereof

will further limit the employment opportunities for the Executive.  Accordingly, the parties hereto expressly

agree that the payment of the severance compensation and benefits by the

Company to the Executive in accordance with the terms of this Agreement will be

liquidated damages, and that the Executive shall not be required to mitigate

the amount of any payment provided for in this Agreement by seeking other

employment or otherwise, nor shall any profits, income, earnings or other

benefits from any source whatsoever create any mitigation, offset, reduction or

any other obligation on the part of the Executive hereunder or otherwise,

except as expressly provided in Subsection 5(a)(ii) hereof.

 

7.             Competitive Activity:  During a period ending one year following

the Termination Date (or, if less, a period equal to the remaining Period of

Employment and beginning on the Termination Date), if the Executive shall have

received or shall be receiving benefits under Subsection 5(a)

hereof, the Executive shall not, without the prior written consent by the

Company, directly or indirectly engage in any “Competitive Business” (as

hereinafter defined) within any metropolitan area served by the Company during

the twelve (12)–month period immediately preceding termination of the

Executive’s employment with the Company nor will the Executive engage, within

such geographical area(s), in the design, development, distribution,

manufacture, assembly or sale of a product or service in competition with any

product or service marketed or planned by the Company immediately prior to the

Termination Date, the plans, designs or specifications of which have been

revealed to the Executive (“Competitive Activity”).  The Executive acknowledges that these

limited prohibitions are reasonable as to time, geographical area and scope of

activities to be restrained and that the limited prohibitions do not impose a

greater restraint than is necessary to protect the Company’s goodwill,

proprietary information and other business interests.  “Competitive Activity” shall not include (i) the mere ownership

of a de minimis amount of securities in any such enterprise and exercise

of rights appurtenant thereto or (ii) participation in management of any such

enterprise or business operation thereof other than in connection with the

competitive operation of such enterprise. 

For purposes of this Section 7, the term “Competitive

Business” means any person or entity engaged in a business that produces

any of the following products or performs any of the following services:

general commercial printing services, including digital imaging, off–set

lithography, binding and finishing services and fulfillment of printed

materials, including any products or services manufactured, developed, or

distributed during the Term and the Term of Employment by the Company and/or

its affiliates, predecessors, or successors.

 

8.             Legal Fees and Expenses:  It is the intent of the Company that the

Executive not be required to incur the expenses associated with the enforcement

of the Executive’s rights under this Agreement by litigation or other legal

action because the cost and expense thereof would substantially detract from

the benefits intended to be extended to the Executive hereunder.  Accordingly, if it should appear to the

Executive that the Company has failed to comply with any of its obligations

under this Agreement or in the event that the Company or any other person takes

any action to declare this Agreement void or unenforceable, or institutes any

litigation designed to deny, or to recover from, the Executive the benefits

intended to be provided to the Executive hereunder, the Company irrevocably

authorizes the Executive from time to time to retain counsel of the Executive’s

choice, at the expense of the Company as hereafter provided, to represent the

Executive in connection with the litigation or defense of any litigation or

other legal action, whether by or against the Company or any director, officer,

shareholder or other

 

15

 

person affiliated with

the Company, in any jurisdiction. 

Notwithstanding any existing or prior attorney–client relationship

between the Company and such counsel, the Company irrevocably consents to the

Executive’s entering into an attorney–client relationship with such

counsel, and in connection therewith the Company and the Executive agree that a

confidential relationship shall exist between the Executive and such

counsel.  The Company shall pay or cause

to be paid and shall be solely responsible for any and all attorneys’ and

related fees and expenses incurred by the Executive as a result of the

Company’s failure to perform this Agreement or any provision thereof or as a

result of the Company or any person contesting the validity or enforceability

of this Agreement or any provision thereof as aforesaid.

 

9.             Employment Rights:  Nothing expressed or implied in this

Agreement shall create any right or duty on the part of the Company or the

Executive to have the Executive remain in the employment of the Company prior

to any Change in Control; provided, however, that any actual or constructive

termination of employment of the Executive or removal of the Executive as an

officer of the Company following the commencement of any discussion with or

receipt of an offer from a third person that ultimately results in a Change in

Control shall be deemed to be a termination or removal of the Executive after a

Change in Control for purposes of this Agreement.

 

10.           Withholding of Taxes:  The Company may withhold from any amounts

payable under this Agreement all federal, state, city or other taxes as shall

be required pursuant to any law or government regulation or ruling.

 

11.                                 Successors

and Binding Agreement:

 

(a)                                  The

Company shall require any successor (whether direct or indirect, by purchase,

merger, consolidation, reorganization or otherwise) to all or substantially all

of the business and/or assets of the Company, to expressly assume and agree to

perform this Agreement in the same manner and to the same extent the Company

would be required to perform if no such succession had taken place.  This Agreement shall be binding upon and

inure to the benefit of the Company and any successor to the Company, including

without limitation any persons acquiring directly or indirectly all or

substantially all of the business and/or assets of the Company whether by

purchase, merger, consolidation, reorganization or otherwise (and such

successor shall thereafter be deemed the “Company” for the purposes of this

Agreement).  This Agreement shall not

otherwise be assignable, transferable or delegable by the Company.

 

(b)                                 This

Agreement shall inure to the benefit of and be enforceable by the Executive’s

personal or legal representatives, executors, administrators, successors,

heirs, distributees and/or legatees.

 

(c)                                  This

Agreement is personal in nature and neither of the parties hereto shall,

without the consent of the other, assign, transfer or delegate this Agreement

or any rights or obligations hereunder except as expressly provided in Subsection 11(a)

hereof.  Without limiting the generality

of

 

16

 

the foregoing, the

Executive’s right to receive payments hereunder shall not be assignable,

transferable or delegable, whether by pledge, creation of a security interest

or otherwise, other than by a transfer by the Executive’s will or by the laws

of descent and distribution and, in the event of any attempted assignment or

transfer contrary to this Subsection 11(c), the Company shall have

no liability to pay any amount so attempted to be assigned, transferred or

delegated.

 

(d)                                 The

Company and the Executive recognize that each Party will have no adequate

remedy at law for breach by the other of any of the agreements contained herein

and, in the event of any such breach, the Company and the Executive hereby

agree and consent that the other shall be entitled to a decree of specific

performance, mandamus or other appropriate remedy to enforce performance of

this Agreement.

 

12.           Applicable Law.   THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN

ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAW

PRINCIPLES OF ANY STATE) AND THE LAWS OF THE UNITED STATES OF AMERICA AND WILL,

TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO CALL FOR PERFORMANCE IN HARRIS

COUNTY, TEXAS.  COURTS WITHIN THE STATE

OF TEXAS WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES

HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS

AGREEMENT.  THE PARTIES CONSENT TO AND

AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.  VENUE IN ANY SUCH DISPUTE, WHETHER IN FEDERAL OR STATE COURT,

WILL BE LAID IN HARRIS COUNTY, TEXAS. EACH OF THE PARTIES HEREBY WAIVES, AND

AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY

APPLICABLE LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE

JURISDICTION OF SUCH COURTS, (ii) SUCH PARTY AND SUCH PARTY’S PROPERTY IS

IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY LITIGATION

COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

 

13.           Notices.   All notices, demands, requests or other

communications that may be or are required to be given, served or sent by

either party to the other party pursuant to this Agreement will be in writing

and will be mailed by first–class, registered or certified mail, return

receipt requested, postage prepaid, or transmitted by hand delivery, telegram

or facsimile transmission addressed as follows:

 

	

  (a)

  	

  If to the Company:

  	

   

  	

   

  	

  Consolidated Graphics,

  Inc.

  
	

   

  	

   

  	

   

  	

   

  	

  5858 Westheimer, Suite

  200

  
	

   

  	

   

  	

   

  	

   

  	

  Houston, Texas  77057

  
	

   

  	

   

  	

   

  	

   

  	

  Facsimile No.: (713)

  787–0974

  
	

   

  	

   

  	

   

  	

   

  	

  Attn: Joe R. Davis

  

 

17

 

	

  with a copy (which will

  not constitute notice) to:

  	

   

  	

  Winstead Sechrest &

  Minick P.C.

  
	

   

  	

   

  	

   

  	

   

  	

  910 Travis Street,

  Suite 2400

  
	

   

  	

   

  	

   

  	

   

  	

  Houston, Texas  77002–5895

  
	

   

  	

   

  	

   

  	

   

  	

  Facsimile No.: (713)

  650–2400

  
	

   

  	

   

  	

   

  	

   

  	

  Attn: R. Clyde Parker,

  Jr., Esq.

  

 

	

  (b)

  	

  If to the Executive:

  	

   

  	

   

  	

  G. Christopher Colville

  
	

   

  	

   

  	

   

  	

   

  	

  5906 Masters Drive

  
	

   

  	

   

  	

   

  	

   

  	

  Houston, Texas  77069

  

 

Either party may designate by written notice a new address to which any

notice, demand, request or communication may thereafter be given, served or

sent.  Each notice, demand, request or

communication that is mailed, delivered or transmitted in the manner described

above will be deemed sufficiently given, served, sent and received for all

purposes at such time as it is delivered to the addressee with the return

receipt, the delivery receipt, the affidavit of messenger or (with respect to a

facsimile transmission) the answer back being deemed conclusive evidence of

such delivery or at such time as delivery is refused by the addressee upon

presentation.

 

14.           Gender.   Words of any gender used in this Agreement

will be held and construed to include any other gender, and words in the

singular number will be held to include the plural, unless the context

otherwise requires.

 

15.           Amendment.   This Agreement may not be amended or

supplemented except pursuant to a written instrument signed by the parties

hereto.  Nothing contained in this

Agreement will be deemed to create any agency, joint venture, partnership or

similar relationship between the parties to this Agreement.  Nothing contained in this Agreement will be

deemed to authorize either party to this Agreement to bind or obligate the

other party.

 

16.           Counterparts.   This Agreement may be executed in multiple

counterparts, each of which will be deemed to be an original and all of which

will be deemed to be a single agreement. 

This Agreement will be considered fully executed when all  parties have executed an identical

counterpart, notwithstanding that all signatures may not appear on the same

counterpart.

 

17.           Severability.   If any of the provisions of this Agreement

are determined to be invalid or unenforceable, such invalidity or

unenforceability will not invalidate or render unenforceable the remainder of

this Agreement, but rather the entire Agreement will be construed as if not

containing the particular invalid or unenforceable provision or provisions, and

the rights and obligations of the parties will be construed and enforced

accordingly.  The parties acknowledge

that if any provision of this Agreement is determined to be invalid or

unenforceable, it is their desire and intention that such provision be reformed

and construed in such manner that it will, to the maximum extent practicable,

be deemed to be valid and enforceable.

 

18.           Third Parties.  Except as expressly set forth or referred to

in this Agreement, nothing in this Agreement is intended or will be construed

to confer upon or give to any party 

 

18

 

other than the parties to

this Agreement and their successors and permitted assigns, if any, any rights

or remedies under or by reason of this Agreement.

 

19.           Waiver.   No failure or delay in exercising any right

hereunder will operate as a waiver thereof, nor will any single or partial

exercise thereof preclude any other or further exercise or the exercise of any

other right.

 

20.           Prior Agreements:   This Agreement is voluntarily entered into

and upon the occurrence of a Change in Control will supersede and take the

place of any prior change in control agreements between the parties

hereto.  The parties hereto expressly

agree and hereby declare that any and all prior change in control agreements

between the parties are terminated and of no force or effect.

 

[REMAINDER

OF PAGE INTENTIONALLY LEFT BLANK]

 

19

 

IN WITNESS WHEREOF, the parties have caused

this Agreement to be duly executed and delivered as of the date first above

written.

 

	

   

  	

  COMPANY:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  CONSOLIDATED GRAPHICS, INC.

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Joe R. Davis

  	

   

  
	

   

  	

   

  	

  Joe R. Davis,

  	

   

  
	

   

  	

   

  	

  Chairman and Chief Executive Officer

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  EXECUTIVE:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  /s/ G. Christopher Colville  

  	

   

  
	

   

  	

  G. Christopher Colville

  	

   

  

 

20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]