Exhibit 4.1
2004 LONG-TERM INCENTIVE PLAN
OF ENNIS, INC.
(As Established Effective June 17th, 2004)
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 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,
the Ennis Business Forms, Inc. 1998 Option and Restricted Stock
Plan is hereby amended and restated in its entirety and renamed
the Ennis, Inc. 2004 Long-Term Incentive Plan (the "Plan"), as
set forth in this document.
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 June 17, 2004, the date of its
approval by the holders of at least a majority of the shares of
Common Stock present or represented and entitled to vote at the
2004 annual meeting of the stockholders of Ennis duly held in
accordance with applicable law. This Plan shall be unlimited in
duration and, in the event of plan termination, shall remain in
effect as long as any Awards under it are outstanding; provided,
however, that no Awards of Incentive Stock Options shall be made
after June 16, 2014.
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, 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 person or entity, as that term is used in
Section 13(d) and 14(d)(2) of the 1934 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 1934 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 the 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 or 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 1934 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.
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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.
2.9 Common Stock. "Common Stock" means the common stock,
$2.50 par value per share, of Ennis, or any stock or other
securities of Ennis 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 becomes 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 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) if
the Common Stock is listed on a national securities exchange, the
closing price per share on a given date; (b) if the Common Stock
is traded on an exchange or market in which prices are reported
on a bid and asked price, the average of the mean between the bid
and asked price for a share on a given date; and (c) if the
Common Stock is not publicly traded at the time a determination
of fair market
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value is required to be made hereunder, the determination of fair
market value shall be made in good faith by the Committee.
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
XII.
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.
2.24 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.
2.25 Phantom Option. "Phantom Option" means a fictional
option granted to a Participant pursuant to Article VIII.
2.26 Plan. "Plan" means this Ennis, Inc. 2004 Long-Term
Incentive Plan, as in effect from time to time.
2.27 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.
2.28 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.
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2.29 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.
2.30 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.
2.31 SAR. "SAR" means a stock appreciation right granted to
a Participant pursuant to Article XI.
2.32 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.
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
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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
and SARs may be granted under the Plan to any one Participant
during a calendar year is 50,000. 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.
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
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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) Other Incentive Awards. The grant of an Other
Incentive Award in the form of Common Stock or that may be
paid or settled only in Common Stock shall reduce the number
of shares available for grant of Awards under the Plan by
the number of shares subject to such Award. The grant of an
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. The grant of an Other
Incentive Award that may be paid or settled 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 Award.
(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, 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
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, 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.
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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
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 Stock
pursuant to Article IX, Restricted Units pursuant to Article X,
SARs pursuant to Article XI, and Other Incentive Awards pursuant
to Article XII, 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. An Award Agreement may
provide that a Participant may elect to defer receipt of income
attributable to the exercise or vesting of an Award.
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;
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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.
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. Accordingly, no
Incentive Stock Options shall be granted later than ten years
from the date of adoption of the Plan by the Board. 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, or
(ii) in the absolute discretion of the Committee and in
accordance with any applicable administrative guidelines
established by the Committee, 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
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multiple series of exchanges of such shares), 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, 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 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 deliver to the Participant, in the
Participant's name, a stock certificate or certificates in
an appropriate amount based upon the number of shares of
Common Stock 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.
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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 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.
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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.
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. 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 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
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 XII, 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.
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ARTICLE X. RESTRICTED UNITS
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.
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.
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(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. 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 XIII. CHANGE OF CONTROL
Immediately prior to a Change or 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
15
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.
ARTICLE XIV. AMENDMENT AND TERMINATION
14.1 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 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. 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.
14.2 Award Amendment and Cancellation. The Board 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 Board 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.
ARTICLE XV. MISCELLANEOUS
15.1 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
15.2 Listing Conditions.
(a) As long as the Common Stock is listed on a
national securities exchange 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 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.
15.3 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 upon which the
Common Stock is then quoted, any applicable federal or state
securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
15.4 Transferability. No Award shall be subject to
execution, attachment or similar process. No Award of Incentive
Stock Options or Restricted Stock during its Restricted Period
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. If provided in the
Award Agreement, all other Awards may be transferred by a
Participant to a Permitted Transferee. Any
17
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. All Awards granted to a Participant under the Plan shall
be exercisable during his or her lifetime only by such
Participant, or if applicable, a Permitted Transferee. In the
event of the Participant's legal incapacity, an Award may be
exercised by his or her guardian or legal representative. 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 employee of the
Participant), (iii) trusts in which a person listed in (i) or
(ii) above has more than 50% of the beneficial interest, (iv) a
foundation in which the Participant or a person listed in (i) or
(ii) above controls the management of assets, (v) any other
entity in which the Participant or a person listed in (i) or (ii)
above owns more than 50% of the voting interests, provided that
no consideration is provided for the transfer, and (vi) any
transferee permitted under applicable securities and tax laws as
determined by counsel for 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.
15.5 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 a 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.
15.6 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.
15.7 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, answer back
requested, 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
18
<PAGE
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."
15.8 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.
15.9 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.
15.10 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.
15.11 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.
15.12 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
a stock certificate in his or her 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.
15.13 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
19
their respective stockholders, directors, officers or employees,
to indemnify anyone for any losses, damages, costs or expenses
resulting from participation in the Plan.
15.14 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.
15.15 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.
15.16 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 as of this
17th day of June 2004.
ENNIS, INC.
By:/s/ Keith S. Walters
-------------------------------
Keith S. Walters, President and
CEO
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