exv4w2
Exhibit 4.2
2004 LONG-TERM INCENTIVE PLAN
OF ENNIS, INC.
(As Amended and Restated Effective May 14, 2008)
RECITALS
ARTICLE I. ESTABLISHMENT AND PURPOSE
1.1 Establishment. The Ennis Business Forms, Inc. 1998 Option and Restricted Stock Plan was
originally approved by the Board of Directors of Ennis, Inc. (formerly known as Ennis Business
Forms, Inc.), a Texas corporation, on March 2, 1998. In furtherance of the purposes of said plan
and in order to amend said plan in certain respects, effective June 17, 2004, the Ennis Business
Forms, Inc. 1998 Option and Restricted Stock Plan was amended and restated in its entirety and
renamed the Ennis, Inc. 2004 Long-Term Incentive Plan (the “Plan”). Ennis now wishes to amend and
restate the Plan in its entirety to (a) add provisions for the grant of Performance Awards, (b)
allow net exercises of certain Options, (c) add provisions related to compliance with Code Section
409A and the regulations and other guidance thereunder, and (d) make certain other changes.
1.2 Purpose. The purposes of the Plan are to attract able persons to enter the employ of the
Company, to encourage Employees to remain in the employ of the Company and to provide motivation to
Employees to put forth maximum efforts toward the continued growth, profitability and success of
the Company, by providing incentives to such persons through the ownership and/or performance of
the Common Stock of Ennis. A further purpose of the Plan is to provide a means through which the
Company may attract able persons to become directors of Ennis and to encourage such persons to
remain directors of Ennis, by providing such persons with incentive and reward opportunities.
Toward these objectives, Awards may be granted under the Plan to Employees and Outside Directors on
the terms and subject to the conditions set forth in the Plan.
1.3 Effectiveness and Term. This amended and restated Plan shall become effective as of May
14, 2008 (the “Restatement Effective Date”), provided it is approved by the holders of at least a
majority of the shares of Common Stock present or represented and entitled to vote at the 2008
annual meeting of the stockholders of Ennis duly held in accordance with applicable law. The Plan
shall terminate upon the earlier of (a) the termination of the Plan by the Board or (b) April 15,
2014, the tenth anniversary of the date of the Plan’s adoption by the Board. The effective date of
the Plan was June 17, 2004 (the “Effective Date”).
ARTICLE II. DEFINITIONS
2.1 Affiliate. “Affiliate” means a “parent corporation” or a “subsidiary corporation” of
Ennis, as those terms are defined in Section 424(e) and (f) of the Code.
2.2 Award. “Award” means an award granted to a Participant in the form of an Option, Phantom
Option, Restricted Stock, Restricted Unit, SAR, Performance Award or Other Incentive Award, whether
granted singly, in combination or in tandem. All Awards shall be granted by, confirmed by, and
subject to the terms of, an Award Agreement.
2.3 Award Agreement. “Award Agreement” means a written agreement between Ennis and a
Participant that sets forth the terms, conditions, restrictions and/or limitations applicable to an
Award.
2.4 Board. “Board” means the Board of Directors of Ennis.
2.5 Cause. “Cause” means the termination of a Participant’s employment or service by reason
of fraud, dishonesty, any unauthorized use or disclosure by the Participant of any confidential
information or trade secrets of Ennis, or the performance of other acts detrimental to Ennis or an
Affiliate, as determined by the Committee in its absolute discretion.
2.6 Change of Control. A “Change of Control” shall be deemed to have taken place if one or
more of the following occurs:
(a) Any entity or person, as that term is used in Section 13(d) and 14(d)(2) of the
Exchange Act (other than a qualified benefit plan of Ennis or an Affiliate), becomes or is
discovered to be a beneficial owner (as defined in Rule 13d-3 under the Exchange Act as in
effect on the Effective Date) directly or indirectly of securities of Ennis representing 30%
or more of the combined voting power of Ennis’ then outstanding securities (unless such
person is already such a beneficial owner on the Effective Date);
(b) Individuals who, as of the Effective Date, constitute the Board cease for any reason to
constitute at least a majority of the Board, unless any such change is approved by a
unanimous vote of the Board in office immediately prior to such cessation;
(c) Ennis or its Affiliates shall (in a single transaction or a series of related
transactions) issue shares, sell or purchase assets, engage in a merger or engage in any
other transaction immediately after which securities of Ennis representing 50% or more of
the combined voting power of the then outstanding securities of Ennis shall be ultimately
owned by person(s) who shall not have owned such securities prior to such transaction or who
shall be a party to such transaction;
(d) Ennis and its Affiliates shall sell or dispose of (in a single transaction or series of
related transactions) business operations which generated a majority of the consolidated
revenues (determined on the basis of Ennis’ four most recently completed fiscal quarters for
which reports have been filed under the Exchange Act) of Ennis and its Affiliates
immediately prior thereto;
(e) The Board shall approve the distribution to Ennis’ shareholders of all or substantially
all of Ennis’ net assets or shall approve the dissolution of Ennis; or
(f) Any other transaction or series of related transactions occur which have substantially
the effect of the transactions specified in any of the preceding provisions of this
subsection.
2.7 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.
2.8 Committee. “Committee” means (i) with respect to the application of this Plan to
Employees, the Compensation Committee of the Board or such other committee of the Board as may be
designated by the Board to administer the Plan, which committee shall consist of two or more
non-employee directors, each of whom is both a “non-employee director” under Rule 16b-3 of the
Exchange Act and an “outside director” under Section 162(m) of the Code, and (ii) with respect to
the application of this Plan to an Outside Director, the Board. To the extent that no Committee
exists that has the authority to administer the Plan, the functions of the Committee shall be
exercised by the Board. If for any reason the appointed Committee does not meet the requirements
of Rule 16b-3 or Section 162(m) of the Code, such noncompliance with such requirements shall not
affect the validity of Awards, grants, interpretations or other actions of the Committee.
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2.9 Common Stock. “Common Stock” means the common stock, $2.50 par value per share, of
Ennis, or any stock or other securities hereafter issued or issuable in substitution or exchange
for the Common Stock.
2.10 Company. “Company” means Ennis and its Affiliates.
2.11 DER. “DER” means a contingent right, granted in tandem with a specific Restricted Unit,
to receive an amount in cash equal to the cash distributions made by the Company with respect to a
share of Common Stock during the period such Restricted Unit is outstanding.
2.12 Effective Date. “Effective Date” means the date this Plan became effective as provided
in Section 1.3.
2.13 Ennis. “Ennis” means Ennis, Inc. (formerly known as Ennis Business Forms, Inc.), a
Texas corporation, or any successor thereto.
2.14 Employee. “Employee” means an employee of Ennis or of an Affiliate of Ennis; provided,
however, that the term “Employee” does not include an Outside Director or an individual performing
services for Ennis or an Affiliate who is treated for tax purposes as an independent contractor at
the time of performance of the services.
2.15 Exchange Act. “Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.16 Fair Market Value. “Fair Market Value” means (a) the closing price per share on a given
date on the New York Stock Exchange or such other national securities exchange or market on which
the Common Stock may be listed or traded on such date, as reported in The Wall Street Journal or
such other source as the Committee may select, or if no shares of Common Stock were traded on such
date, then on the next preceding date on which shares of Common Stock were traded, or (b) if the
Common Stock is not listed or traded on a national securities exchange or market, such price as
determined by the Committee in good faith and in accordance with applicable laws and regulations.
2.17 Grant Date. “Grant Date” means the date an Award is granted by the Committee.
2.18 Incentive Stock Option. “Incentive Stock Option” means an Option that is intended to
meet the requirements of Section 422(b) of the Code.
2.19 Nonqualified Stock Option. “Nonqualified Stock Option” means an Option that is not an
Incentive Stock Option.
2.20 Option. “Option” means an option to purchase shares of Common Stock granted to a
Participant pursuant to Article VII. An Option may be either an Incentive Stock Option or a
Nonqualified Stock Option, as determined by the Committee.
2.21 Other Incentive Award. “Other Incentive Award” means an incentive award granted to a
Participant pursuant to Article XIII.
2.22 Outside Director. “Outside Director” means a “non-employee director” of the Company, as
defined in Rule 16b-3.
2.23 Participant. “Participant” means an Employee or Outside Director to whom an Award has
been granted under the Plan.
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2.24 Performance Award. “Performance Award” means an Award granted to a Participant pursuant
to Article XII to receive cash or Common Stock conditioned in whole or in part upon the
satisfaction of specified performance criteria.
2.25 Person. “Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association, government agency or
political subdivision thereof or other entity.
2.26 Phantom Option. “Phantom Option” means a fictional option granted to a Participant
pursuant to Article VIII.
2.27 Plan. “Plan” means this Ennis, Inc. 2004 Long-Term Incentive Plan, as in effect from
time to time.
2.28 Restatement Effective Date. “Restatement Effective Date” means the date this amended
and restated Plan becomes effective as provided in Section 1.3.
2.29 Restricted Period. “Restricted Period” means the period established by the Committee
with respect to an Award of Restricted Stock or a Restricted Unit during which the Award remains
subject to forfeiture and is not payable to the Participant.
2.30 Restricted Stock. “Restricted Stock” means a share of Common Stock granted to a
Participant pursuant to Article IX, which is subject to such restrictions as may be determined by
the Committee. Restricted Stock shall constitute issued and outstanding shares of Common Stock for
all corporate purposes.
2.31 Restricted Unit. “Restricted Unit” means a fictional share of Common Stock granted to a
Participant pursuant to Article X, which is subject to such restrictions as may be determined by
the Committee.
2.32 Rule 16b-3. “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time to time.
2.33 SAR. “SAR” means a stock appreciation right granted to a Participant pursuant to
Article XI.
2.34 Superseded Plan. “Superseded Plan” means the Ennis Business Forms, Inc. 1998 Option and
Restricted Stock Plan, as in effect prior to the Effective Date.
ARTICLE III. PLAN ADMINISTRATION
3.1 Plan Administrator. The Plan shall be administered by the Committee. The Committee may
delegate some or all of its power to the Chief Executive Officer or such other executive officer of
the Company as the Committee deems appropriate; provided, that (i) the Committee may not delegate
its power with regard to the grant of an Award to any person who is a “covered employee” within the
meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a
covered employee at any time during the period an Award to such employee would be outstanding, and
(ii) the Committee may not delegate its power with regard to the selection for participation in the
Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions
concerning the timing, pricing or amount of an Award to such an officer or other person.
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3.2 Authority of Administrator. The Committee shall have total and exclusive responsibility
to control, operate, manage and administer the Plan in accordance with its terms. The Committee
shall have all the authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right to: (i) interpret the Plan and the Award
Agreements executed hereunder; (ii) determine eligibility for participation in the Plan; (iii)
decide all questions concerning eligibility for, and the amount of, Awards granted under the Plan;
(iv) construe any ambiguous provision of the Plan or any Award Agreement; (v) prescribe the form of
the Award Agreements embodying Awards granted under the Plan; (vi) correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award Agreement; (vii) issue
administrative guidelines as an aid to administering the Plan and make changes in such guidelines
as the Committee from time to time deems proper; (viii) make regulations for carrying out the Plan
and make changes in such regulations as the Committee from time to time deems proper; (ix)
determine whether Awards should be granted singly, in combination or in tandem; (x) to the extent
permitted under the Plan, grant waivers of Plan terms, conditions, restrictions and limitations;
(xi) accelerate the exercise, vesting or payment of an Award when such action or actions would be
in the best interests of the Company; (xii) grant Awards in replacement of Awards previously
granted under the Plan, the Superseded Plan or any other employee benefit plan of the Company; and
(xiii) take any and all other actions the Committee deems necessary or advisable for the proper
operation or administration of the Plan.
3.3 Discretionary Authority. The Committee shall have full discretionary authority in all
matters related to the discharge of its responsibilities and the exercise of its authority under
the Plan, including, without limitation, its construction of the terms of the Plan and its
determination of eligibility for participation and Awards under the Plan. The decisions of the
Committee and its actions with respect to the Plan shall be final, conclusive and binding on all
persons having or claiming to have any right or interest in or under the Plan, including
Participants and their respective estates, beneficiaries and legal representatives.
3.4 Liability; Indemnification. No member of the Committee nor any person to whom authority
has been delegated, shall be personally liable for any action, interpretation or determination made
in good faith with respect to the Plan or Awards granted hereunder, and each member of the
Committee (or delegatee of the Committee) shall be fully indemnified and protected by Ennis with
respect to any liability he or she may incur with respect to any such action, interpretation or
determination, to the extent permitted by applicable law.
ARTICLE IV. SHARES SUBJECT TO THE PLAN
4.1 Available Shares. Subject to adjustment as provided in Section 4.2, the maximum number
of shares of Common Stock that shall be available for grant of Awards under the Plan shall not
exceed the sum of (i) 500,000 shares of Common Stock; and (ii) 635,900, which is the number of
authorized shares of Common Stock available for issuance under the Superseded Plan as of the
Effective Date; and (iii) any shares of Common Stock that become available under this Plan,
including with respect to Awards outstanding under the Superseded Plan as of the Effective Date, as
a result of cancellation, termination, expiration, forfeiture or lapse of an Award or as otherwise
provided in Section 4.3. The maximum number of shares of Common Stock for which Options, SARs,
Restricted Stock and other Awards may be granted under the Plan to any one Participant during a
calendar year is 100,000. The maximum aggregate number of shares that may be issued pursuant to
Incentive Stock Options is 1,135,900. Shares of Common Stock issued pursuant to the Plan may be
shares of original issuance or treasury shares or a combination of the foregoing, as the Committee,
in its absolute discretion, shall from time to time determine.
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4.2 Adjustments for Recapitalizations and Reorganizations.
(a) The shares with respect to which Awards may be granted under the Plan are shares of
Common Stock as presently constituted, but if, and whenever, prior to the expiration or
satisfaction of an Award theretofore granted, Ennis shall effect a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend on Common Stock
in the form of Ennis Common Stock without receipt of consideration by
Ennis, the number of shares of Common Stock with respect to which such Award may thereafter be exercised or
satisfied, as applicable, (i) in the event of an increase in the
number of outstanding shares, shall be proportionately increased, and the exercise price per share shall be
proportionately reduced, and (ii) in the event of a reduction in
the number of outstanding shares, shall be proportionately reduced, and the exercise price per share shall be
proportionately increased.
(b) If Ennis recapitalizes or otherwise changes its capital structure, thereafter upon any
exercise or satisfaction, as applicable, of an Award theretofore granted the Participant
shall be entitled to (or entitled to purchase, if applicable) under such Award, in lieu of
the number of shares of Common Stock then covered by such Award, the
number and class of shares of stock or other securities to which the Participant would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to such
recapitalization, the Participant had been the holder of record of the number of shares of
Common Stock then covered by such Award.
(c) In the event of changes in the outstanding Common Stock by reason of a reorganization,
merger, consolidation, combination, separation (including a spin-off or other distribution
of stock or property), exchange, or other relevant change in capitalization occurring after
the date of grant of any Award and not otherwise provided for by this Section 4.2, any
outstanding Awards and any Award Agreements evidencing such Awards shall be subject to
adjustment by the Committee in its absolute discretion as to the
number, price and kind of shares or other consideration subject to, and other terms of, such Awards to reflect such
changes in the outstanding Common Stock.
(d) In the event of any changes in the outstanding Common Stock provided for in this
Section 4.2, the aggregate number of shares available for grant of Awards under the Plan may
be equitably adjusted by the Committee, whose determination shall be conclusive.
4.3 Adjustments for Awards. The Committee shall have full discretion to determine the manner
in which shares of Common Stock available for grant of Awards under the Plan are counted. Without
limiting the discretion of the Committee under this Section 4.3, unless otherwise determined by the
Committee, the following rules shall apply for the purpose of determining the number of shares of
Common Stock available for grant of Awards under the Plan:
(a) Options and Restricted Stock. The grant of Options and Restricted Stock shall reduce
the number of shares available for grant of Awards under the Plan by the number of shares
subject to such Award.
(b) SARs, Phantom Options and Restricted Units. The grant of SARs shall not affect the
number of shares available for grant of Awards under the Plan. The grant of Phantom Options
or Restricted Units that may be paid or settled only for cash shall
not affect the number of shares available for grant of Awards under the Plan. The grant of Phantom Options or
Restricted Units that may be paid or settled (i) only in Common Stock or (ii) in either cash
or Common Stock shall reduce the number of shares available for grant of Awards under the
Plan by the number of shares subject to such an Award.
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(c) Performance Awards and Other Incentive Awards. The grant of a Performance Award or
Other Incentive Award in the form of Common Stock or that may be paid or settled (i) only in
Common Stock or (ii) in either Common Stock or cash shall reduce the number of shares
available for grant of Awards under the Plan by the number of shares subject to such an
Award. The grant of a Performance Award or Other Incentive Award that may be paid or
settled only for cash shall not affect the number of shares available for grant of Awards
under the Plan.
(d) Termination. If any Award referred to in paragraphs (a), (b) and (c) above (other than
an Award that may be paid or settled only for cash) is canceled or forfeited, or terminates,
expires or lapses, for any reason (other than the termination of a Related Option (as
defined in Section 11.1) upon exercise of its corresponding SARs), the shares then subject
to such Award shall again be available for grant of Awards under the Plan.
(e) Payment of Exercise Price and Withholding Taxes. If previously acquired shares of
Common Stock are used to pay the exercise price of an Award as contemplated by clause
(ii)(A) or (ii)(B)(I) of Section 7.5(b), the number of shares available for grant of Awards
under the Plan (other than Incentive Stock Options) shall be
increased by the number of shares delivered as payment of such exercise price. If the exercise price of an Option is
paid by the surrender of a portion of the shares with respect to which the Option is
exercisable, as contemplated by clause (ii)(B)(II) of Section 7.5(b), the number of shares
available for grant of Awards under the Plan shall be increased by the number of shares so
surrendered as payment of such exercise price. If previously acquired shares of Common
Stock are used to pay withholding taxes payable upon exercise, vesting or payment of an
Award, or shares of Common Stock that would be acquired upon exercise, vesting or payment of
an Award are withheld to pay withholding taxes payable upon exercise, vesting or payment of
such Award as contemplated by Section 16.5, the number of shares available for grant of
Awards under the Plan (other than Incentive Stock Options) shall be increased by the number
of shares delivered or withheld as payment of such withholding taxes.
(f) Fractional Shares. If any such adjustment would result in a fractional security being
(i) available under the Plan, such fractional security shall be disregarded or (ii) subject
to an Award, Ennis shall pay the holder of such Award, in connection with the first vesting,
exercise or settlement of such Award in whole or in part occurring after such adjustment, an
amount in cash determined by multiplying (x) the fraction of such security (rounded to the
nearest hundredth) by (y) the excess, if any, of the Fair Market Value on the vesting,
exercise or settlement date over the exercise price, if any, of such Award.
ARTICLE V. ELIGIBILITY
All Employees and Outside Directors are eligible to participate in the Plan. The
Committee shall recommend, from time to time, Participants from those Employees and Outside
Directors who, in the opinion of the Committee, can further the Plan’s purposes. Once a
Participant is recommended for an Award by the Committee, the Committee shall determine the type
and size of Award to be granted to the Participant and shall establish in the related Award
Agreement the terms, conditions, restrictions and/or limitations applicable to the Award, in
addition to those set forth in the Plan and the administrative rules and regulations, if any,
established by the Committee.
ARTICLE VI. FORM OF AWARDS AND RESTRICTIONS
6.1 Form of Awards. Awards may, at the Committee’s sole discretion, be granted under the
Plan in the form of Options pursuant to Article VII, Phantom Options pursuant to Article VIII,
Restricted
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Stock pursuant to Article IX, Restricted Units pursuant to Article X, SARs pursuant to Article
XI, Performance Awards pursuant to Article XII and Other Incentive Awards pursuant to Article XIII
or a combination thereof. All Awards shall be subject to the terms, conditions, restrictions and
limitations of the Plan. The Committee may, in its absolute discretion, subject any Award to such
other terms, conditions, restrictions and/or limitations (including, but not limited to, the time
and conditions of exercise, vesting or payment of an Award and restrictions on transferability of
any shares of Common Stock issued or delivered pursuant to an Award), provided they are not
inconsistent with the terms of the Plan. The Committee may, but is not required to, subject an
Award to such conditions as it determines are necessary or appropriate to ensure than an Award
constitutes “qualified performance based compensation” within the meaning of Section 162(m) of the
Code and the regulations thereunder. Awards under a particular Article of the Plan need not be
uniform, and Awards under more than one Article of the Plan may be combined into a single Award
Agreement. Any combination of Awards may be granted at one time and on more than one occasion to
the same Participant.
6.2 No Repricing. Except for adjustments made pursuant to Section 4.2, no Award may be
repriced, replaced, regranted through cancellation or modified without stockholder approval, if the
effect would be to reduce the exercise price for the shares underlying such Award. In addition,
the Committee may not cancel an outstanding Option that is under water for the purpose of granting
a replacement Award of a different type.
6.3 No Reload Rights. Options shall not contain any provision entitling the Participant to
an automatic grant of additional Options in connection with any exercise of the original Option.
6.4 Holding Period. With respect to Awards granted on or after the Restatement Effective
Date, no Participant may sell, pledge or otherwise transfer more than the Specified Percentage of
the shares of Common Stock issued to him or her upon exercise, vesting or other lapse of
restriction periods, or satisfaction of performance goals under an Award until after the expiration
of the Holding Period. For purposes of this Section, “Specified Percentage” means 50% or such
other percentage as may be specified by the Committee, in its discretion, from time to time with
respect to shares of Common Stock issued pursuant to Awards under the Plan or, with respect to
shares of Common Stock issued pursuant to any individual Award, at the time such Award is granted;
and “Holding Period” means a period of time, if any, established by the Committee, in its
discretion, from time to time with respect to shares of Common Stock issued pursuant to Awards
under the Plan or, with respect shares of Common Stock issued pursuant to any individual Award, at
the time such Award is granted. Failure to meet, or in unique circumstances to show sustained
progress toward meeting, any such holding requirement may result in a reduction in future Award
grants under the Plan.
ARTICLE VII. OPTIONS
7.1 General. Awards may be granted to Employees and Outside Directors in the form of
Options. Options granted under the Plan may be Incentive Stock Options or Nonqualified Stock
Options, or a combination of both; provided, however, that Incentive Stock Options may be granted
only to Employees.
7.2 Terms and Conditions of Options. An Option shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee. The price at which a share
of Common Stock may be purchased upon exercise of a Nonqualified Stock Option shall be determined
by the Committee, but such exercise price shall not be less than 85% of the Fair Market Value per
share of Common Stock on the Grant Date. Except as otherwise provided in Section 7.3, the term of
each Option shall be as specified by the Committee; provided, however, that, no Options shall be
exercisable later than ten years from the Grant Date. Options may be granted with respect to
Restricted Stock or shares of Common Stock that are not Restricted Stock, as determined by the
Committee in its absolute discretion.
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7.3 Restrictions Relating to Incentive Stock Options. Options granted in the form of
Incentive Stock Options shall, in addition to being subject to the terms and conditions of Section
7.2, comply with Section 422(b) of the Code. In addition, no Incentive Stock Option shall be
exercisable after the expiration of ten years from the Grant Date. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive Stock Option is
granted) of Common Stock with respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year under all incentive stock option plans of
Ennis and its Affiliates exceeds $100,000, such excess Incentive Stock Options shall be treated as
options which do not constitute Incentive Stock Options. The Committee shall determine, in
accordance with the applicable provisions of the Code, which of a Participant’s Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation and shall notify the
Participant of such determination as soon as practicable after such determination. The price at
which a share of Common Stock may be purchased upon exercise of an Incentive Stock Option shall be
determined by the Committee, but such exercise price shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the Grant Date. No Incentive Stock Option shall be granted to
an Employee under the Plan if, at the time such Option is granted, such Employee owns stock
possessing more than 10% of the total combined voting power of all classes of stock of Ennis or an
Affiliate, within the meaning of Section 422(b)(6) of the Code, unless (i) on the Grant Date of
such Option, the exercise price of such Option is at least 110% of the Fair Market Value of the
Common Stock subject to the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the Grant Date of the Option.
7.4 Additional Terms and Conditions. The Committee may subject any Award of an Option to
such other terms, conditions, restrictions and/or limitations as it determines are necessary or
appropriate, provided they are not inconsistent with the Plan.
7.5 Exercise of Options.
(a) Subject to the terms and conditions of the Plan, Options shall be exercised by the
delivery of a written notice of exercise to Ennis, setting forth the number of shares of
Common Stock with respect to which the Option is to be exercised, accompanied by full
payment for such shares.
(b) Upon exercise of an Option, the exercise price of the Option shall be payable to Ennis
in full either: (i) in cash or an equivalent acceptable to the Committee, (ii) in the
absolute discretion of the Committee and in accordance with any applicable administrative
guidelines established by the Committee (A) with respect to Incentive Stock Options granted
before the Restatement Effective Date, by tendering one or more previously acquired
nonforfeitable, unrestricted shares of Common Stock that have been held by the Participant
for at least six months having an aggregate Fair Market Value at the time of exercise equal
to the total exercise price (including an actual or deemed multiple series of exchanges of
such shares) or (B) with respect to Incentive Stock Options granted on or after the
Restatement Effective Date and Nonqualified Stock Options granted at any time, (I) by
tendering one or more previously acquired nonforfeitable, unrestricted shares of Common
Stock having an aggregate Fair Market Value at the time of exercise equal to the total
exercise price or (II) by surrendering a sufficient portion of the shares with respect to
which the Option is exercised having an aggregate Fair Market Value at the time of exercise
equal to the total exercise price; or (iii) in a combination of the forms of payment
specified in clauses (i) and (ii) above.
(c) During such time as the Common Stock is registered under Section 12 of the Exchange
Act, to the extent permissible under applicable law and Ennis’ governing documents, payment
of the exercise price of an Option may also be made, in the absolute discretion of the
Committee, by delivery to Ennis or its designated agent of an executed irrevocable option
exercise form together with irrevocable instructions to a broker-dealer to sell or margin a
sufficient portion of the shares
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with respect to which the Option is exercised and deliver the sale or margin loan proceeds
directly to Ennis to pay the exercise price and any required withholding taxes.
(d) As soon as reasonably practicable after receipt of written notification of exercise of
an Option and full payment of the exercise price and any required withholding taxes, Ennis
shall (i) deliver to the Participant, in the Participant’s name or the name of the
Participant’s designee, a stock certificate or certificates in an appropriate aggregate
amount based upon the number of shares of Common Stock purchased under the Option or (ii)
cause to be issued in the Participant’s name or the name of the Participant’s designee, in
book-entry form, an appropriate number of shares of Common Stock
based upon the number of shares purchased under the Option.
7.6 Termination of Employment or Service. Each Award Agreement embodying the Award of an
Option shall set forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant’s employment or service with the Company. Such
provisions shall be determined by the Committee in its absolute discretion, need not be uniform
among all Options granted under the Plan and may reflect distinctions based on the reasons for
termination of employment or service. In the event a Participant’s Award Agreement embodying the
award of an Option does not set forth such termination provisions, the following termination
provisions shall apply with respect to such Award:
(a) Death or Disability. If the employment or service of a Participant shall terminate by
reason of death or permanent and total disability (within the meaning of Section 22(e)(3) of
the Code), each outstanding Option held by the Participant may be exercised, to the extent
then vested, until the earlier of (i) the expiration of one year from the date of such
termination of employment or service, or (ii) the expiration of the term of such Option.
(b) Other Termination. If the employment or service of a Participant shall terminate for
any reason other than a reason set forth in paragraph (a) above or paragraph (c) below,
whether on a voluntary or involuntary basis, each outstanding Option held by the Participant
may be exercised, to the extent then vested, until the earlier of (i) the expiration of
three months from the date of such termination of employment or service, or (ii) the
expiration of the term of such Option.
(c) Termination for Cause. Notwithstanding paragraphs (a) and (b) above, if the employment
or service of a Participant is terminated for Cause, all outstanding Options held by the
Participant shall immediately be forfeited to the Company and no additional exercise period
shall be allowed, regardless of the vested status of the Option.
ARTICLE VIII. PHANTOM OPTIONS
8.1 General. Awards may be granted to Employees and Outside Directors in the form of Phantom
Options. Phantom Options shall be awarded in such numbers and at such times as the Committee shall
determine. All Phantom Options shall be evidenced by an Award Agreement as described in Section
8.2 below and any payment or settlement made upon exercise of a Phantom Option shall be made to the
Participant in accordance with the terms and conditions set forth in the Award Agreement. Phantom
Options shall not be granted in conjunction with an Option granted hereunder.
8.2 Award of Phantom Options. Each Award Agreement embodying a Phantom Option granted
pursuant to the Plan shall specify the strike price for each fictional share of Common Stock
subject to the Phantom Option, the number of fictional shares subject to the Phantom Option being
awarded, the manner and timing of the vesting of the Phantom Option and of payments or transfer of
shares to the Participant under such Award and such other terms and conditions not inconsistent
with the provisions of the Plan as may be approved by the Committee in its absolute discretion.
The strike price of
10
a Phantom Option shall be determined by the Committee, but such strike price shall not be less
than 100% of the Fair Market Value per share of Common Stock on the Grant Date of the Phantom
Option. The term of each Phantom Option shall be as specified by the Committee; provided, however,
that unless otherwise designated by the Committee, no Phantom Option shall be exercisable later
than ten years after the Grant Date of the Phantom Option. Except as otherwise provided in an
applicable Award Agreement, Participants holding Phantom Options shall not be entitled to any
dividends, rights upon liquidation or other rights of a holder of shares of Common Stock.
8.3 Exercise. Subject to the terms and conditions of the Plan, Phantom Options shall be
exercised by the delivery of a written notice of exercise to Ennis, setting forth the number of
fictional shares with respect to which the Phantom Option is to be exercised. Subject to the terms
and conditions of this Plan and the applicable Award Agreement, upon exercise each fictional share
subject to a Phantom Option entitles the Participant holding such Phantom Option to receive the
amount, if any, by which the Fair Market Value as of the date of exercise exceeds the strike price,
payable in one or a combination of the following forms, as determined by the Committee in its
absolute discretion: (i) a cash payment or (ii) a whole number of shares of Common Stock (with
cash payable in lieu of fractional shares).
8.4 Termination of Employment or Service. Upon a Participant’s termination of employment or
service with the Company for any reason other than for Cause, the vested portion of such
Participant’s Phantom Option shall be deemed to be exercised pursuant to Section 8.3 above and the
unvested portion of such Phantom Option shall immediately be forfeited to Ennis. If the employment
or service of a Participant shall be terminated for Cause, all outstanding Phantom Options held by
the Participant shall immediately be forfeited to Ennis, regardless of the vested status of such
Phantom Options.
ARTICLE IX. RESTRICTED STOCK
9.1 General. Awards may be granted to Employees and Outside Directors in the form of
Restricted Stock. Restricted Stock shall be awarded in such numbers and at such times as the
Committee shall determine. The Committee shall impose such terms, conditions and restrictions on
Restricted Stock as it may deem advisable, including without limitation providing for vesting upon
the achievement of specified performance goals pursuant to a Performance Award and restrictions
under applicable Federal or state securities laws.
9.2 Restriction Period. At the time an Award of Restricted Stock is granted, the Committee
shall establish a period of time (the “Restriction Period”) applicable to such Restricted Stock.
Each Award of Restricted Stock may have a different Restriction Period, in the discretion of the
Committee. The Restriction Period applicable to a particular Award of Restricted Stock shall not
be changed except as permitted by Article IV or Section 9.3 of this Article.
9.3 Other Terms and Conditions. Restricted Stock awarded to a Participant under the Plan
shall be represented by a stock certificate registered in the name of the Participant or, at the
option of Ennis, in the name of a nominee of Ennis, and shall be issued in book-entry form or
represented by a stock certificate. Subject to the terms and conditions of the Award Agreement, a
Participant to whom Restricted Stock has been awarded shall have the right to receive dividends
thereon during the Restriction Period, to vote the Restricted Stock and to enjoy all other
stockholder rights with respect thereto, except that (i) the Participant shall not be entitled to
possession of the stock certificate, if any, representing the Restricted Stock until the
Restriction Period shall have expired, (ii) Ennis shall retain custody of the Restricted Stock
during the Restriction Period, (iii) the Participant may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the Restricted Stock during the Restriction Period, and (iv) a
breach of the terms and conditions established by the Committee pursuant to the Award of the
Restricted Stock shall cause a forfeiture of the Restricted Stock. At the time of an Award of
Restricted Stock, the Committee may, in its absolute discretion, prescribe additional terms,
conditions, restrictions
11
and/or limitations applicable to the Restricted Stock, including, but not limited to, rules
pertaining to the termination of employment or service (by reason of death, permanent and total
disability, or otherwise) of a Participant prior to expiration of the Restriction Period.
9.4 Payment for Restricted Stock. A Participant shall not be required to make any payment
for Restricted Stock awarded to the Participant, except to the extent otherwise required by the
Committee or by applicable law.
9.5 Miscellaneous. Nothing in this Article shall prohibit the exchange of shares of
Restricted Stock issued under the Plan pursuant to a plan of reorganization for stock or securities
of Ennis or another corporation that is a party to the reorganization, but the stock or securities
so received for shares of Restricted Stock shall, except as provided in Article IV or XIV, become
subject to the restrictions applicable to the Award of such Restricted Stock. Any shares of stock
received as a result of a stock split or stock dividend with respect to shares of Restricted Stock
shall also become subject to the restrictions applicable to the Award of such Restricted Stock.
ARTICLE X. RESTRICTED LIMITS
10.1 General. Awards may be granted to Employees and Outside Directors in the form of
Restricted Units.
10.2 Terms and Conditions. The Committee shall determine the number of Restricted Units to
be granted to a Participant, the conditions under which the Restricted Units may become vested or
forfeited, which may include, without limitation, the accelerated vesting upon the achievement of
specified performance goals, and such other terms and conditions as the Committee may establish
with respect to such Awards, including whether DERs are granted with respect to such Restricted
Units. Upon the lapse of restrictions with respect to each Restricted Unit, the Participant shall
be entitled to receive from the Company one share of Common Stock or an amount of cash equal to the
Fair Market Value of one share of Common Stock, as determined by the Committee in its discretion.
10.3 DERs. To the extent provided by the Committee, in its discretion, a grant of Restricted
Units may include a tandem DER grant, which may provide that such DERs shall be paid directly to
the Participant, be credited to a bookkeeping account (with or without interest in the discretion
of the Committee) subject to the same vesting restrictions as the tandem Award, or be subject to
such other provisions or restrictions as determined by the Committee in its discretion.
10.4 Forfeiture. Except as otherwise provided in the terms of a Restricted Unit grant, upon
termination of a Participant’s employment or service with the Company and its Affiliates for any
reason prior to the lapse of restrictions related to a Restricted Unit, such Restricted Unit shall
be forfeited by the Participant. The Committee may, in its discretion, waive in whole or in part
such forfeiture with respect to a Participant’s Restricted Units.
ARTICLE XI. SARs
11.1 General. The Committee may from time to time grant SARs in conjunction with all or any
portion of any Option (the “Related Option”) either (i) at the time of the initial Option grant
(not including any subsequent modification that may be treated as a new grant of an Incentive Stock
Option for purposes of Section 424(h) of the Code) or (ii) with respect to Nonqualified Stock
Options, at any time after the initial Option grant while the Nonqualified Stock Option is still
outstanding. SARs shall not be granted other than in conjunction with an Option granted hereunder.
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11.2 Terms and Conditions. SARs granted hereunder shall comply with the following
conditions and also with the terms of the Award Agreement governing the Related Option:
(a) The SAR shall expire no later than the expiration of the Related Option.
(b) Upon the exercise of an SAR, the Participant shall be entitled to receive from Ennis or
the appropriate Affiliate an amount in cash equal to the excess of the aggregate Fair Market
Value of the shares of Common Stock with respect to which the SAR is then being exercised
(determined as of the date of such exercise) over the aggregate
purchase price of such shares as provided in the Related Option.
(c) SARs shall be exercisable (i) only at such time or times and only to the extent that
the Related Option shall be exercisable, (ii) only when the Fair Market Value of the shares
subject to the Related Option exceeds the purchase price of the shares as provided in the
Related Option, and (iii) only upon surrender of the Related Option or any portion thereof
with respect to the shares for which the SARs are then being exercised.
(d) Upon the exercise of an SAR, the Related Option shall be deemed to have been terminated
to the extent of the number of shares of Common Stock with respect to which such SARs are
exercised. Upon the exercise or termination of the Related Option, the SARs with respect to
such Related Option shall be deemed to have been terminated to the
extent of the number of shares of Common Stock with respect to which the Related Option was so exercised or
terminated.
11.3 Exercise of SARs. Each exercise of SARs, or a portion thereof, shall be evidenced by a
notice in writing to Ennis.
ARTICLE XII. PERFORMANCE AWARDS
12.1 General. Awards may be granted in the form of Performance Awards that may be payable in
the form of cash, shares of Common Stock or a combination of both, in such amounts and at such
times as the Committee shall determine. Performance Awards shall be conditioned upon the level of
achievement of one or more stated performance goals over a specified performance period that shall
not be shorter than one year. Performance Awards may be combined with other Awards to impose
performance criteria as part of the terms of such other Awards, in which event such other Awards
will be subject to all of the provisions of this Article XII.
12.2 Terms and Conditions. Each Award Agreement embodying a Performance Award shall set
forth (a) the amount, including a target and maximum amount if applicable, a Participant may earn
in the form of cash or shares of Common Stock or a formula for determining such amount, (b) the
performance criteria and level of achievement versus such criteria that shall determine the amount
payable or number of shares of Common Stock to be granted, issued, retained and/or vested, (c) the
performance period over which performance is to be measured, (d) the timing of any payments to be
made, (e) restrictions on the transferability of the Award and (f) such other terms and conditions
as the Committee may determine that are not inconsistent with the Plan.
12.3 Code Section 162(m) Requirements. The Committee shall determine in its sole discretion
whether all or any portion of a Performance Award shall be intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code (the “162(m) Requirements”). The
performance criteria for any Performance Award that is intended to satisfy the 162(m) Requirements
shall be established in writing by the Committee based on one or more performance goals as set
forth in Section 12.4 no later than the earlier to occur of (a) 90 days after the commencement of
the period of service to which the performance goal relates and (b) the lapse of 25% of the period
of service (as
13
scheduled in good faith at the time the goal is established), and in any event while the
outcome is still substantially uncertain. The maximum amount that may be paid in cash pursuant to
Performance Awards granted to a Participant with respect to any fiscal year of Ennis that are
intended to satisfy the 162(m) Requirements is $3,000,000; provided, however, that such maximum
amount with respect to a Performance Award that provides for a performance period longer than one
fiscal year shall be the foregoing limit multiplied by the number of full fiscal years in the
performance period. At the time of the grant of a Performance Award and to the extent permitted
under Code Section 162(m) and regulations thereunder for a Performance Award intended to satisfy
the 162(m) Requirements, the Committee may provide for the manner in which the performance goals
will be measured in light of specified corporate transactions, extraordinary events, accounting
changes and other similar occurrences.
12.4 Performance Goals. The performance measure(s) to be used for purposes of Performance
Awards may be expressed on an absolute and/or relative basis, may be based on or otherwise employ
comparisons based on internal targets, the past performance of the Company, any operating unit or
division of the Company and/or the past or current performance of other companies, and in the case
of earnings-based measures, may use comparisons relating to capital, shareholders’ equity and/or
shares outstanding, or to assets or net assets, may be described in terms of objectives that are
related to the individual Participant or objectives that are Company-wide or related to a
subsidiary, division, department, region, function or business unit of the Company in which the
Participant is employed or with respect to which the Participant performs services, and may consist
of one or more or any combination of the following criteria: (a) earnings before interest, taxes,
depreciation and/or amortization; (b) operating income (pre-tax or after-tax), operating margin or
operating profit; (c) operating efficiencies; (d) return on equity, sales, assets or net assets,
capital, capital employed, or investment; (e) net income; (f) net earnings or book value per share;
(g) net earnings per share growth; (h) customer satisfaction; (i) debt/capitalization ratio; (j)
cash flow(s); (k) total sales or revenues or sales or revenues per employee; (l) sales growth; (m)
production; (n) stock price or total shareholder return; (o) dividends; (p) revenue; (q) economic
value added; and/or (r) strategic business objectives, consisting of one or more objectives based
on meeting specified cost targets, business expansion goals, and goals relating to acquisitions or
divestitures, or any combination thereof. Unless otherwise stated, such a performance goal need
not be based upon an increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting economic losses (measured, in each
case, by reference to specific business criteria). In interpreting Plan provisions applicable to
performance goals for any Performance Award that is intended to satisfy the 162(m) Requirements, it
is the intent of the Plan to conform with the standards of Section 162 (m) of the Code and Treasury
Regulation § 1.162 27(e)(2)(i), and the Committee in establishing such goals and interpreting the
Plan shall be guided by such provisions.
12.5 Certification and Negative Discretion; Payment.
(a) Prior to the payment of any compensation pursuant to a Performance Award that is
intended to satisfy the 162(m) Requirements, the Committee shall certify the extent to which
the performance goals and other material terms of the Award have been achieved or satisfied.
The Committee in its sole discretion shall have the authority to reduce, but not to
increase, the amount payable and the number of shares to be granted, issued, retained or
vested pursuant to a Performance Award.
(b) Except as provided in Article XIV or as otherwise specified in writing by the
Committee, a Participant must be employed by the Company on the last day of the performance
period to be entitled to payment under a Performance Award. Payment of a Performance Award
will be made to the Participant within 21/2 months following the conclusion of the Fiscal Year
in which the performance period ends upon the conditions that (a) the performance goal or
goals specified in
14
the relevant Award Agreement have been achieved and (b) the Committee has reviewed and
approved payment of the Award.
ARTICLE XIII. OTHER INCENTIVE AWARDS
Subject to the terms and provisions of the Plan, Other Incentive Awards may be granted to
Employees and Outside Directors in such amounts, upon such terms and at any time and from time to
time as shall be determined by the Committee in its absolute discretion. Other Incentive Awards
may be granted based upon, payable in or otherwise related to, in whole or in part, shares of
Common Stock if the Committee, in its absolute discretion, determines that such Other Incentive
Awards are consistent with the purposes of the Plan. Each grant of an Other Incentive Award shall
be evidenced by an Award Agreement that shall specify the amount of the Other Incentive Award and
the terms, conditions, restrictions and/or limitations applicable to such Award. Payment of Other
Incentive Awards shall be made at such times and in such form, which may be cash, shares of Common
Stock or other property (or a combination thereof), as established by the Committee, subject to the
terms of the Plan.
ARTICLE XIV. CHANGE OF CONTROL
Immediately prior to a Change of Control, all Awards shall automatically vest and become
payable or exercisable, as the case may be, in full. In this regard, all restriction periods shall
terminate and all performance criteria, if any, shall be deemed to have been achieved at the
maximum level. To the extent that an Option, Phantom Option or SAR is not exercised upon a Change
of Control, the Committee may, in its discretion, cancel any such Award and pay to the Participant
an amount in cash equal to the excess, if any, of the aggregate Fair Market Value of the shares (or
fictional shares) of Common Stock subject to the Award as of the date of the Change of Control over
the aggregate purchase or strike price thereunder, or provide for a replacement Award with respect
to such property and on such terms as it deems appropriate. Notwithstanding the foregoing, with
respect to any Award that consists of deferred compensation within the meaning of Code Section 409A
and the regulations and other guidance thereunder, in the event of a Change of Control that does
not satisfy the requirements for a change in the ownership or effective control of Ennis or a
change in the ownership of a substantial portion of the assets of Ennis within the meaning of Code
Section 409A and the regulations and other guidance thereunder, then delivery of payment with
respect to such Award as provided herein shall be made upon the earliest of (a) the Participant’s
“separation from service” (as defined by Ennis in accordance with Code Section 409A and the
regulations and other guidance thereunder), (b) the Participant’s becoming disabled (within the
meaning of Code Section 409A (a)(2)(C)), (c) the Participant’s death or (d) a Change of Control
that does satisfy the requirements for a change in the ownership or effective control of Ennis or a
change in the ownership of a substantial portion of the assets of Ennis within the meaning of Code
Section 409A and the regulations and other guidance thereunder; provided, however, that payment on
account of separation from service may be subject to delay as provided in Section 16.8(b).
ARTICLE XV. AMENDMENT AND TERMINATION
15.1 Plan Amendment and Termination. The Board may at any time suspend, terminate, amend or
modify the Plan, in whole or in part; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or modification by the
stockholders of Ennis (i) if such amendment or modification increases the maximum number of shares
15
subject to the Plan (except as provided in Article IV) or changes the designation or class of
persons eligible to receive Awards under the Plan, or (ii) if counsel for Ennis determines that
such approval is otherwise required by or necessary to comply with applicable law or the listing
requirements of the New York Stock Exchange or such other exchange or market on which the Common
Stock is then listed or quoted. Upon termination of the Plan, the terms and provisions of the Plan
shall, notwithstanding such termination, continue to apply to Awards granted prior to such
termination. No suspension, termination, amendment or modification of the Plan shall adversely
affect in any material way any Award previously granted under the Plan, without the consent of the
Participant (or the Permitted Transferee) holding such Award.
15.2 Award Amendment and Cancellation. The Committee may amend the terms of any outstanding
Award granted pursuant to this Plan, but no such amendment shall adversely affect in any material
way the Participant’s (or a Permitted Transferee’s) rights under an outstanding Award without the
consent of the Participant (or the Permitted Transferee) holding such Award. The Committee may,
with a Participant’s (or a Permitted Transferee’s) written consent, cancel any outstanding Award
(including an award made under the Superseded Plan) held by such Participant (or Permitted
Transferee) in exchange for a new Award. Notwithstanding the foregoing, the Committee may amend,
without the consent of the Participant (or any Permitted Transferee) holding the Award, any Award
Agreement to be exempt from Code Section 409A or to comply with the requirements of Code Section
409A or to modify any provision that causes an Award that is intended to be classified as an
“equity instrument” under FAS 123R (or any other applicable accounting standard) to be classified
as a liability on Ennis’ financial statements.
ARTICLE XVI. MISCELLANEOUS
16.1 Award Agreements. After the Committee grants an Award under the Plan to a Participant,
Ennis and the Participant shall enter into an Award Agreement setting forth the terms, conditions,
restrictions and/or limitations applicable to the Award and such other matters as the Committee may
determine to be appropriate. The terms and provisions of the respective Award Agreements need not
be identical. All Award Agreements shall be subject to the provisions of the Plan, and in the
event of any conflict between an Award Agreement and the Plan, the terms of the Plan shall govern.
Any provision of this Plan to the contrary notwithstanding, all Options granted under the
Superseded Plan shall be subject to the provisions of the Superseded Plan, and in the event of any
conflict between the terms of an Award Agreement granted under the Superseded Plan and the
Superseded Plan, the terms of the Superseded Plan shall govern.
16.2 Listing Conditions.
(a) As long as the Common Stock is listed on a national securities exchange or market or
system sponsored by a national securities association, the issuance of any shares of Common
Stock pursuant to an Award shall be conditioned upon such shares being listed on such
exchange or system. Ennis shall have no obligation to issue such shares unless and until
such shares are so listed, and the right to exercise any Option or other Award with respect
to such shares shall be suspended until such listing has been effected.
(b) If at any time counsel to Ennis or its Affiliates shall be of the opinion that any sale
or delivery of shares of Common Stock pursuant to an Award is or may in the circumstances be
unlawful or result in the imposition of excise taxes on Ennis or its Affiliates under the
statutes, rules or regulations of any applicable jurisdiction, Ennis or its Affiliates shall
have no obligation to make such sale or delivery, or to make any application or to effect or
to maintain any qualification or registration under the Securities Act of 1933, as amended,
or otherwise, with respect to shares of Common Stock or Awards, and the right to exercise
any Option or other Award shall be
16
suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or
will not result in the imposition of excise taxes on Ennis or its Affiliates.
(c) Upon termination of any period of suspension under this Section, any Award affected by
such suspension which shall not then have expired or terminated shall be reinstated as to
all shares available before such suspension and as to shares which would otherwise have
become available during the period of such suspension, but no such suspension shall extend
the term of any Award.
16.3 Additional Conditions. Notwithstanding anything in the Plan to the contrary: (i) Ennis
may, if it shall determine it necessary or desirable for any reason, at the time of grant of any
Award or the issuance of any shares of Common Stock pursuant to any Award, require the recipient of
the Award or such shares of Common Stock, as a condition to the receipt thereof, to deliver to
Ennis a written representation of present intention to acquire the Award or such shares of Common
Stock for his or her own account for investment and not for distribution; (ii) the certificate for
shares of Common Stock issued to a Participant may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer; and (iii) all certificates for shares of
Common Stock delivered under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations and other
requirements of the SEC, any stock exchange or market upon which the Common Stock is then listed or
quoted, any applicable federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
16.4 Transferability.
(a) All Awards granted to a Participant shall be exercisable during his or her lifetime
only by such Participant, or if applicable, a Permitted Transferee as provided in subsection
c) of this Section; provided, however, that in the event of a Participant’s legal
incapacity, an Award may be exercised by his guardian or legal representative. When a
Participant dies, the personal representative, beneficiary, or other person entitled to
succeed to the rights of the Participant may acquire the rights under an Award. Any such
successor must furnish proof satisfactory to Ennis of the successor’s entitlement to receive
the rights under an Award under the Participant’s will or under the applicable laws of
descent and distribution.
(b) Except as otherwise provided in this Section, no Award shall be subject to execution,
attachment or similar process, and no Award may be sold, transferred, pledged, exchanged,
hypothecated or otherwise disposed of, other than by will or pursuant to the applicable laws
of descent and distribution. Any attempted sale, transfer, pledge, exchange, hypothecation
or other disposition of an Award not specifically permitted by the Plan or the Award
Agreement shall be null and void and without effect.
(c) If provided in the Award Agreement, Nonqualified Stock Options may be transferred by a
Participant to a Permitted Transferee. For purposes of the Plan, “Permitted Transferee”
means (i) a member of a Participant’s immediate family, (ii) any person sharing the
Participant’s household (other than a tenant or an employee of the Participant), (iii)
trusts in which one or more of the persons listed in (i) or (ii) above have more than 50% of
the beneficial interests, (iv) a foundation in which the Participant or one or more of
persons listed in (i) or (ii) above control the management of assets, (v) any other entity
in which the Participant or one or more of the persons listed in (i) or (ii) above own more
than 50% of the voting interests, provided that in the case of the preceding clauses (i)
through (v), any such transfer is made as a bona gift or pursuant to a domestic relations
order and no consideration is provided for the transfer, and (vi) any transferee permitted
under tax laws and the instructions to the Form S-8 registration statement (or any successor
form), as the same may be amended from time to time, as determined by counsel to
17
Ennis. In determining whether a person is a “Permitted Transferee,” immediate family
members shall include a Participant’s child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships.
(d) Incident to a Participant’s divorce, the Participant may request that Ennis agree to
observe the terms of a domestic relations order which may or may not be part of a qualified
domestic relations order (as defined in Code Section 414(p)) with respect to all or a part
of one or more Awards made to the Participant under the Plan. Ennis’ decision regarding
such a request shall be made by the Committee, in its sole and absolute discretion, based
upon the best interests of Ennis. The Committee’s decision need not be uniform among
Participants. As a condition of participation, a Participant agrees to hold Ennis harmless
from any claim that may arise out of Ennis’ observance of the terms of any such domestic
relations order.
16.5 Withholding Taxes. The Company shall be entitled to deduct from any payment made under
the Plan, regardless of the form of such payment, the amount of all applicable income and
employment taxes required by law to be withheld with respect to such payment, may require the
Participant to pay to the Company such withholding taxes prior to and as a condition of the making
of any payment or the issuance or delivery of any shares of Common Stock under the Plan, and shall
be entitled to deduct from any other compensation payable to the Participant any withholding
obligations with respect to Awards under the Plan. In accordance with any applicable
administrative guidelines it establishes, the Committee may allow a Participant to pay the amount
of taxes required by law to be withheld from or with respect to an Award by (i) withholding shares
of Common Stock from any payment of Common Stock due as a result of such Award, or (ii) permitting
the Participant to deliver to the Company previously acquired shares of Common Stock, in each case
having an aggregate Fair Market Value equal to the amount of such required withholding taxes. No
payment shall be made and no shares of Common Stock shall be issued pursuant to any Award unless
and until the applicable tax withholding obligations have been satisfied.
16.6 No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Award granted hereunder, and except as otherwise provided herein, no
payment or other adjustment shall be made in respect of any such fractional share.
16.7 Notices. All notices required or permitted to be given or made under the Plan or any
Award Agreement shall be in writing and shall be deemed to have been duly given or made if (i)
delivered personally, (ii) transmitted by first class registered or certified United States mail,
postage prepaid, return receipt requested, (iii) sent by prepaid overnight courier service, or (iv)
sent by telecopy or facsimile transmission, with confirmation receipt, to the person who is to
receive it at the address that such person has theretofore specified by written notice delivered in
accordance herewith. Such notices shall be effective (i) if delivered personally or sent by
courier service, upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of
five days after deposit in the mail or the date of delivery as shown by the return receipt
therefor, or (iii) if sent by telecopy or facsimile transmission, when the answer back is received.
Ennis or a Participant may change, at any time and from time to time, by written notice to the
other, the address that it or such Participant had theretofore specified for receiving notices.
Until such address is changed in accordance herewith, notices hereunder or under an Award Agreement
shall be delivered or sent (i) to a Participant at his or her address as set forth in the records
of the Company or (ii) to Ennis at the principal executive offices of Ennis clearly marked
“Attention: LTIP Administrator.”
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16.8 Compliance with Law and Stock Exchange or Market Requirements; IRC Section 409A Six
Month Delay in Payment.
(a) In addition, it is the intent of Ennis that Options designated Incentive Stock Options
comply with the applicable provisions of Section 422 of the Code, and that Awards intended
to constitute “qualified performance-based awards” comply with the applicable provisions of
Section 162(m) of the Code and that any deferral of the receipt of the payment of cash or
the delivery of shares of Common Stock that the Committee may permit or require, and all
Awards either be exempt from Code Section 409A or, if not exempt, comply with the
requirements of Code Section 409A. To the extent that any legal requirement of Section 16
of the Exchange Act or Sections 422, 162(m) or 409A of the Code as set forth in the Plan
ceases to be required under Section 16 of the Exchange Act or Sections 422, 162(m) or 409A
of the Code, that Plan provision shall cease to apply. Any provision of this Plan to the
contrary notwithstanding, the Committee may revoke any Award if it is contrary to law,
governmental regulation or stock exchange or market requirements or modify an Award to bring
it into compliance with any applicable law, government regulation or stock exchange or
market requirements. The Committee may agree to limit its authority under this Section.
(b) Any provision of the Plan to the contrary notwithstanding, if an Award provides for a
deferral of compensation under Code Section 409A and the regulations and other guidance
thereunder and the Participant is a “specified employee” (as defined by Ennis in accordance
with Code Section 409A and the regulations and other guidance thereunder) as of the date of
his or her “separation from service” (as defined by Ennis in accordance with Code Section
409A and the regulations and other guidance thereunder), no payment of the Award on account
of the Participant’s separation from service will be made before the date that is six months
after the Participant’s separation from service (or, if earlier than the end of the
six-month period, the date of the Participant’s death). In such case, any payment that
would be made within such six-month period will be accumulated and paid in a single lump sum
on the earliest business day that complies with the requirements of Code Section 409A and
the regulations and other guidance thereunder.
16.9 Binding Effect. The obligations of Ennis under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation or other
reorganization of Ennis, or upon any successor corporation or organization succeeding to all or
substantially all of the assets and business of Ennis. The terms and conditions of the Plan shall
be binding upon each Participant and his or her heirs, legatees, distributees and legal
representatives.
16.10 Severability. If any provision of the Plan or any Award Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining
provisions of the Plan or such agreement, as the case may be, but such provision shall be fully
severable and the Plan or such agreement, as the case may be, shall be construed and enforced as if
the illegal or invalid provision had never been included herein or therein.
16.11 No Restriction of Corporate Action. Nothing contained in the Plan shall be construed
to prevent Ennis or any Affiliate from taking any corporate action (including any corporate action
to suspend, terminate, amend or modify the Plan) that is deemed by Ennis or such Affiliate to be
appropriate or in its best interest, whether or not such action would have an adverse effect on the
Plan or any Awards made or to be made under the Plan. No Participant or other person shall have
any claim against Ennis or any Affiliate as a result of such action.
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16.12 Governing Law. The Plan shall be governed by and construed in accordance with the
internal laws (and not the principles relating to conflicts of laws) of the State of Texas except
as superseded by applicable federal law.
16.13 No Right, Title or Interest in Company Assets. No Participant shall have any rights as
a stockholder of Ennis as a result of participation in the Plan until the date of issuance of
Common Stock in his name and, in the case of Restricted Stock, unless and until such rights are
granted to the Participant pursuant to the Plan. To the extent any person acquires a right to
receive payments from the Company under the Plan, such rights shall be no greater than the rights
of an unsecured general creditor of the Company, and such person shall not have any rights in or
against any specific assets of the Company. All of the Awards granted under the Plan shall be
unfunded.
16.14 Risk of Participation. Nothing contained in the Plan shall be construed either as a
guarantee by Ennis or its Affiliates, or their respective stockholders, directors, officers or
employees, of the value of any assets of the Plan or as an agreement by Ennis or its Affiliates, or
their respective stockholders, directors, officers or employees, to indemnify anyone for any
losses, damages, costs or expenses resulting from participation in the Plan.
16.15 No Guarantee of Tax Consequences. No person connected with the Plan in any capacity,
including, but not limited to, Ennis and the Affiliates and their respective directors, officers,
agents and employees, makes any representation, commitment or guarantee that any tax treatment,
including, but not limited to, federal, state and local income, estate and gift tax treatment, will
be applicable with respect to any Awards or payments thereunder made to or for the benefit of a
Participant under the Plan or that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.
16.16 Continued Employment or Service. Nothing contained in the Plan or in any Award
Agreement shall confer upon any Participant the right to continue in the employ or service of the
Company, or interfere in any way with the rights of the Company to terminate a Participant’s
employment or service at any time, with or without cause.
16.17 Miscellaneous. Headings are given to the articles and sections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction of the Plan or any provisions hereof. The use of the masculine gender
shall also include within its meaning the feminine. Wherever the context of the Plan dictates, the
use of the singular shall also include within its meaning the plural, and vice versa.
IN WITNESS WHEREOF, this Plan has been executed on this 26 day of June 2008 to be
effective as of the Restatement Effective Date.
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ENNIS, INC.
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/s/ Keith Walters
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By: Keith Walters, President and CEO |
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