Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is entered into effective as of the 21st
day of April 2006 by and between Ennis, Inc. (“Ennis” or “Company”), a Texas
Company, and Michael Magill (“Employee”).
     WHEREAS, Ennis desires to continue to have the benefits of Employee’s
knowledge and experience as a full time senior executive without distraction by
employment-related uncertainties and considers such employment a vital element
to protecting and enhancing the best interests of Ennis, and its subsidiaries
and shareholders, and Employee desires to continue to be employed full time with
Ennis; and
     WHEREAS, Ennis and Employee desire to enter into an agreement reflecting
the terms under which Employee will be employed by Ennis for a minimum three
(3) year period commencing on the Effective Date (subject to the provision of
Sections 5, 6 and 7 below);
     NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and other good and valuable consideration, the parties agree as follows:
     1. Term. Ennis hereby agrees to employ Employee for a minimum three-year
period commencing on April 21, 2006 (the “Effective Date”) and ending on the
third anniversary thereof, unless sooner terminated as provided in Sections 5
and 6 or unless extended by the mutual consent of the parties prior to the end
of the term. The term of Employee’s employment with Ennis herein shall be
automatically extended at each anniversary date for an additional one-year
period beyond the initial minimum three-year period or, if sooner, until the
earlier of Employee’s attainment of age 65 or when Employee begins to receive
distribution of benefits from a retirement plan sponsored by Ennis, unless
either party hereto delivers to the other party a written notice of its or his
election to terminate such employment as of any such three-year anniversary not
less than 60 days prior to any anniversary date.
     2. Duties. Employee shall serve as the Executive Vice President and
Treasurer of Ennis, shall exercise the authority and assume the responsibilities
of an executive officer of a Company of the size and nature of Ennis, and shall
assume such other duties as the Chief Executive Officer and/or Board of
Directors of Ennis may prescribe consistent with duties of an executive officer
of a company of such size as Ennis including without limitation such positions
and duties with Ennis’s subsidiaries as assigned by the Chief Executive Officer
and/or Board of Directors of Ennis. Employee agrees to devote substantially all
his full time, attention and best efforts to the performance of his duties. The
Company may from time to time designate Employee as an officer of any current or
future subsidiary and, in such event, shall use its best efforts to fairly
allocate Employee’s compensation among itself and such subsidiary or
subsidiaries either through multiple direct payroll checks to Employee or by
inter-Company reimbursements, in any case consistent with any applicable
regulations or regulatory policies.
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Executive Employment Agreement
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     3. Compensation. Ennis shall compensate Employee for the services rendered
under this Agreement as follows:
          (a) A base annual salary determined by the Chief Executive Officer
and/or Board of Directors of Ennis consistent with its practices for executive
officers of Ennis, but not less than $400,000 per year, payable in equal
bi-weekly installments (less applicable withholding) in accordance with the
customary payroll practices of Ennis for the payment of executive officers.
          (b) Such bonuses under the Executive Annual Incentive Plan or
subsequent plan, if any, as shall be determined by the Chief Executive Officer
and/or Board of Directors of Ennis consistent with its practices for executive
officers of Ennis.
          (c) If Employee’s base annual salary is increased at any time, it
shall not thereafter be decreased during the term of this Agreement, unless such
decrease is the result of a general reduction affecting the base salaries of
substantially all other executive officers of Ennis.
          (d) The Chief Executive Officer and/or Board of Directors may from
time to time grant stock options or other forms of long-term incentive
compensation arrangements to the Employee. The privilege to participate in these
grants is at the discretion of the Chief Executive Officer and/or Board of
Directors and the stipulations regarding the granting of these awards and their
exercise by the Employee will be defined in the Long-Term Incentive Plan or in
other plans or actions of the Chief Executive Officer and/or Board of Directors.
          (e) Employee shall be entitled to reimbursement of reasonable out of
pocket expenses relating to Ennis business in accordance with policies in effect
for executive officers generally.
          (f) Employee shall not be entitled to directors fees for his service
on any Board of Directors for Ennis or any of its subsidiaries.
     4. Employee Benefits.
          (a) Employee shall be entitled to full participation, on a basis
commensurate with his position with Ennis, in all plans of life, accident,
medical payment, health and disability insurance, stock option, restricted
stock, stock ownership, retirement, pension, supplemental life and retirement
plans, nonqualified deferred compensation plan, perquisites and other employee
benefit and pension plans which generally are made available to executive
officers of Ennis or its principal subsidiaries, except for such plans which the
Chief Executive Officer and/or Board of Directors, in its sole discretion, shall
adopt for select employees to compensate them for special or extenuating
circumstances. If Employee becomes totally disabled, in the determination of the
Board of Directors, the Company will continue to pay the installments of
Employee’s base annual salary, as described in Section 3(a) hereof, in effect at
the time of disability, for a period of twelve (12) months after the occurrence
of the event of disability.
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Executive Employment Agreement
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          (b) Employee shall be entitled to an annual vacation leave at full pay
as may be provided for by Ennis’s vacation policies applicable to executive
officers, but in any event such paid vacation shall not be less than three weeks
in the aggregate. Employee may carry over no more than one week of accrued
vacation to the next year.
          (c) Employee shall be entitled to an annual car allowance of $8,000.
          (d) Nothing in this Agreement shall limit in any way Employee’s
participation in any other benefit plans or arrangements as are from time to
time approved by Ennis.
     5. Termination by Ennis. Except for a termination pursuant to Section 1,
upon the expiration of the scheduled initial term or any other term of this
Agreement, Employee’s employment hereunder may be terminated by Ennis without
any breach of this Agreement only under the following circumstances:
          (a) Death, Total Disability or Retirement. Employee’s employment shall
terminate upon his death or retirement. If, as a result of his incapacity
resulting from physical or mental illness or disease which is likely to be
permanent, Employee shall have been unable to perform his duties hereunder for a
period of more than 120 consecutive days during any twelve-month period, Ennis
may terminate his employment hereunder. The Chief Executive Officer and/or Board
of Directors will determine if the Employee’s termination is due to total and
permanent disability, according to any long-term disability plan then in effect
for senior executives of Ennis and otherwise in good faith consistent with
generally prevailing practices of employers subject to the provision of 4(a)
with respect to benefits.
          (b) Cause. Ennis may terminate Employee’s employment hereunder for
cause, which for purposes of this Agreement shall be defined to mean (i) the
willful and continued failure by Employee to follow the reasonable instructions
of the Chief Executive Officer and/or Board of Directors of Ennis which is not
cured within ten (10) days of receipt by Employee of written notice from the
Company specifying such failure, (ii) the willful commission by Employee of acts
that are dishonest or inconsistent with local normal standards and demonstrably
and materially injurious to Ennis or its subsidiaries, monetarily or otherwise,
(iii) the commission by Employee of a felonious act, (iv) ongoing alcohol/drug
addiction and a failure by Employee to successfully complete a recovery program,
(v) intentional wrongful disclosure of confidential information of the Company,
(vi) intentional wrongful engagement in any competitive activity, or (vii) gross
neglect of his duties by Employee which is not cured within ten (10) days of
employee’s receipt of written notice from the Company specifying such failure,
or in the event the failure is not curable within the ten (10)-day period,
Employee shall have a longer period of up to thirty (30) days to cure the
failure so long as he is diligently pursuing a cure.
          (c) Termination Without Cause. The termination of Employee’s
employment by Ennis for any reasons other than those specified above shall be
deemed to be a Termination
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Executive Employment Agreement
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Without Cause. No breach or default by Employee shall be deemed to have occurred
hereunder unless written notice thereof shall have been given by Ennis to
Employee.
     6. Termination by Employee. Employee shall be entitled to terminate his
employment (i) in the event a Change of Control (as defined in Section 7(c)
below) occurs after the Effective Date, (ii) for Good Reason or (iii) pursuant
to the provisions contained in Section 1 hereof. Termination for “Good Reason”
is defined as Employee’s resignation except in connection with his termination
pursuant to Section 5, caused by and within ninety (90) days of the following:
          (a) Without the express written consent of Employee, any duties that
are assigned which are materially inconsistent with Employee’s position, duties
and status with Ennis as contemplated by this Agreement;
          (b) Any action by Ennis which results in a material diminution in the
position, duties or status of Employee with Ennis as contemplated by this
Agreement or any transfer or proposed transfer of Employee for any extended
period to a location outside Dallas or Ellis County, Texas without his consent,
except for strategic reallocations of the personnel reporting to Employee;
          (c) The base annual salary of Employee, as the same may hereafter be
increased from time to time, is reduced;
          (d) Without limiting the generality or effect of the foregoing, Ennis
fails to materially comply with any of its obligations hereunder; or
          (e) Termination by Employee of his employment with Ennis pursuant to
clause (i) or (ii) of the first sentence of this Section 6 shall be deemed to be
termination of Employee’s employment by Ennis without cause.
     7. Severance Payment after Change of Control.
          (a) If a Change of Control (as defined in subsection (c) below) shall
occur, in addition to any compensation due to Employee pursuant to Section 3(a)
and (b) above, Employee shall be entitled to the lump sum severance payment
provided in subsection (b) below upon any termination (including voluntary
termination) of his employment within 90 days prior to and two (2) years after
then Change of Control, unless such termination is the result of action taken by
Ennis for cause as defined in Section 5 above.
          (b) The lump sum severance payment payable to Employee under
subsection (a) above shall be equal to the lesser of (i) one times (1x) the
Employee’s “Base Amount” as defined in Section 280G of the Internal Revenue Code
of 1986, as amended, and a severance bonus equivalent to one times (1x) the
bonus earned or paid for the previous fiscal year pursuant to Section 3 (a) and
3 (b), and, (ii) the maximum amount of severance payment which is permitted
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Executive Employment Agreement
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to be deducted as compensation expense by the Company and to be received by the
Employee without liability for the assessment of an excise tax on such payment
under the applicable provisions of the Internal Revenue Code. In the event of
any disagreement between the parties regarding the determination of the amount
indicated by clause (i) or (ii) above, the legal opinion of Ennis’ outside
general counsel shall be deemed conclusive. This severance payment shall be made
immediately and shall not be discounted by reason of the fact that the time of
payment is accelerated in advance of the ordinary course of payments under this
Agreement.
          (c) If a Change of Control (as defined in Subsection (d) below) shall
occur, Employee shall have immediate vesting of all stock options granted to
Employee and full vesting in all other employee benefit plans and compensation
plans.
          (d) For the purposes of this Agreement, a “Change of Control” of Ennis
shall be deemed to have taken place if one or more of the following occurs:
               (i) Any person or entity other, as that term is used in Section
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, (other than a
qualified benefit plan of Ennis or an affiliate of Ennis) becomes or is
discovered to be a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act as in effect on the date hereof) directly or indirectly of securities of
Ennis representing 30% or more of the combined voting power of Ennis’s then
outstanding securities (unless such person is known by Employee to be already
such beneficial owner on the date of this Agreement);
               (ii) Individuals who, as of the Effective Date hereof, constitute
the Board of Directors of Ennis cease for any reason to constitute at least a
majority of the respective Board of Directors, unless any such change is
approved by a unanimous vote of the respective Board of Directors in office
immediately prior to such cessation;
               (iii) The Company or any of 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 the Company representing 50% or more of the combined voting
power of the then outstanding securities of the Company 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;
               (iv) The Company 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’s four most recently completed fiscal quarters for which reports have
been filed under the Exchange Act) of Ennis and its subsidiaries immediately
prior thereto;
               (v) The Company’s Board of Directors shall approve the
distribution to the Company’s shareholders of all or substantially all of
Ennis’s net assets or shall approve the dissolution of the Company;
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Executive Employment Agreement
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               (vi) Any other transaction or series of related transactions
occur which have substantially the effect of the transactions specified in any
of the preceding clauses in this sentence; or
               (vii) Employee is terminated by the Company without cause within
the period of 90 days before an occurrence of or anticipation of a Change of
Control as defined in Section 7(c) or the execution of a contract intended to
effect a Change of Control.
               (e) If Employee’s employment is not terminated during the two
year period provided for in Section 7(a), then the rights and obligations of the
parties for the balance of the term of this Agreement shall be governed by this
Agreement exclusive of the provisions contained in this Section 7 except
Section 7 shall continue and become applicable for the term of this Agreement if
a subsequent Change of Control occurs.
     8. Other Severance Benefits.
          (a) Notwithstanding the minimum term provided for in Section 1 of this
Agreement, either the Company or Employee may terminate this Agreement at any
time upon 30 days notice to the other party, subject to the rights of Employee
to any payment due under this Agreement in that circumstance. If at any time
during the term of this Agreement, Employee is Terminated Without Cause, then
Employee shall be entitled to be paid a Severance Payment equal to (i) one times
(1x) employee’s Base Annual salary rate and (ii) a Severance Bonus equivalent to
one times (1x) the bonus earned or paid for the previous fiscal year pursuant to
Section 3 (a) and 3 (b). For Termination With Cause, Employee shall be eligible
for a severance payment equal to one-half times (.5x) employee’s Highest Base
Annual salary rate during the term of this Agreement.
          (b) If at any time during the term of this Agreement, Employee is
Terminated Without Cause, or Employee is terminated in the event of a Change of
Control as defined in Section 7, or Employee resigns for Good Reason as defined
in Section 6 of this Agreement, then Employee shall be entitled to continuation
of basic employee group benefits, as defined in Section 4(a), provided by Ennis
to Employee for the lesser of three months after termination or until the
Employee secures new employment without remuneration to Ennis.
          (c) If at any time during the term of this Agreement, Employee is
Terminated Without Cause, or Employee is terminated in the event of a Change of
Control as defined in Section 7, or Employee resigns for Good Reason as defined
in Section 6 of this Agreement, Ennis shall promptly (and in any event within
five business days after a request by the Employee therefor) either pay or
reimburse the Employee for the costs and expenses of any executive outplacement
firm selected by the Employee; provided, however, that Ennis’s liability
hereunder shall be limited to such expenses, as is customary and reasonable in
the Dallas area for the executive’s level of responsibility, incurred by the
Employee. The Employee shall provide Ennis with reasonable documentation of the
incurrence of such outplacement costs and expenses.
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Executive Employment Agreement
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          (d) The Employee’s outstanding stock options and any other long-term
incentive award shall vest according to the terms of the Long-Term Incentive
Plan.
     9. Timing of Payment. Unless otherwise provided in this Agreement, any
severance or other payment payable to Employee under this Agreement shall be
paid within thirty (30) days after the event causing such payment or at such
other date as the parties agree.
     10. Other Benefits. The provisions of Section 7 and 8 shall not affect
Employee’s participation in, or termination of distributions and vested rights
under, any pension, profit sharing, insurance, performance unit plan or other
employee benefit plan of Ennis to which Employee is entitled pursuant to the
terms of such plans except for the acceleration of vested benefits in certain
employee benefits pursuance to Section 7(c) and the provisions pursuant to
Section 8(b) and Section 8(d).
     11. No Duty to Mitigate Damages. In the event of termination of this
Agreement by Employee after a Change of Control as defined in Section 7 above,
or as a result of the breach by Ennis of any of its obligations hereunder, or in
the event of the termination of Employee’s employment by Ennis in breach of this
Agreement, or as a result of Employee’s Termination Without Cause, or
resignation for Good Reason, Employee shall not be required to seek other
employment in order to mitigate his damages hereunder, and no compensation
employee does earn after any termination shall be considered to mitigate damages
Employee has incurred or to reduce any payment Ennis is obligated to make to
Employee pursuant to this Agreement.
     12. No Right to Set Off. Ennis shall not be entitled to set off against the
amount payable to Employee any amounts earned by Employee from other employment
after termination of his employment with Ennis or any amounts which might have
been earned by Employee in other employment had he sought such other employment.
The amounts payable to Employee under this Agreement shall not be treated as
damages but as severance compensation to which Employee is entitled by reason of
termination of this employment in the circumstances contemplated by this
Agreement.
     13. Non-Compete and Non-Disclosure of Information.
          (a) For so long as Employee is employed by Ennis and continuing after
the termination of such employment for two years:
               (i) Employee will not accept a position as an officer, director,
employee, agent, consultant, representative of any other competitive company
with its principal office or a branch in any country in which any subsidiary of
Ennis operates and will not make or fail to dispose of any stock in any business
then in competition with Ennis or any of its subsidiaries in any metropolitan
market in which Ennis, or any of its subsidiaries, are then conducting business
in Texas except investments equal to less than 2% of the outstanding stock of
any class issued by any publicly traded company.
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Executive Employment Agreement
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               (ii) Additionally, Employee will not, directly or indirectly,
either as an officer, director, employee, consultant, independent contractor,
agent or representative, for Employee’s own benefit or for the benefit of any
other person or entity, solicit, divert or take away any employees, agents,
representatives, customers or suppliers of the Company of any prospective
employees, agents, representatives, customers or suppliers of the Company with
whom the Company has discussed (in person, by telephone or in writing) possible
business relationship during the twelve (12) month period prior to the end of
the period of Employee’s employment; or
               (iii) Except in the performance of Employee’s obligations to
Ennis or one of its subsidiaries, Employee shall not, directly or indirectly,
use or permit the use of any confidential or other proprietary information of a
special unique nature and value to Ennis or one of its subsidiaries (the
“Confidential Information”), including, but not limited to, trade secrets,
systems, procedures, manuals, confidential reports, customer lists, sales or
distribution methods, patentable information and data as well as financial
information concerning Ennis or one of its subsidiaries, and information with
respect to the nature and type of other services rendered by Ennis or one of its
subsidiaries, which Confidential Information has been used by Ennis or one of
its subsidiaries to date or during the term of this Agreement and has been made
known (whether or not with the knowledge and permission of Ennis, and whether or
not developed, devised or otherwise created in whole or in part by the efforts
of Employee) to Employee by reason of his activities on behalf of Ennis or one
of its subsidiaries. Employee shall not reveal, divulge or make known any
Confidential Information to any individual partnership, firm, Company or other
business organization whatsoever except in performance of Employee’s obligations
to Ennis or with the express permission of the Chief Executive Officer and/or
Board of Directors of Ennis or as otherwise required by operation of law.
          (b) Employee confirms that all Confidential Information is the
exclusive property of Ennis. All business records, papers and documents kept or
made by Employee relating to the business of Ennis shall be and remains the
property of Ennis and shall remain in the possession of Ennis during the term
and at all times thereafter. Upon the termination of his employment with Ennis
or upon the request of Ennis at any time, Employee shall promptly deliver to
Ennis, and shall retain no copies of, any written materials, records and
documents made by Employee or coming into his possession concerning the business
or affairs of Ennis.
          (c) Without intending to limit the remedies available to Ennis,
Employee acknowledges that a breach of any of the convenants contained in this
Section 13 may result in material irreparable injury to Ennis or one of its
subsidiaries for which there is not adequate remedy at law, that it may not be
possible to measure damages for such injuries precisely, and that in the event
of such a breach or threat thereof, may be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
Employee from engaging in activities prohibited by this Section 13 or such other
relief as may be required to specifically enforce any of the covenants in such
Section. Employee by execution hereof agrees to submit to the jurisdiction of
the State of Texas.
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Executive Employment Agreement
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     14. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Dallas
County, Texas in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award in
any court having jurisdiction. Each party shall bear his or its own costs of
arbitration, but if Employee is the prevailing party in such arbitration, he
shall be entitled to recover from Ennis as part of any award entered his
reasonable expenses for attorneys’ fees and disbursements.
     15. Notices. All notices, requests, demands and other communication called
for or contemplated hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally or when mailed by United States
certified or registered mail, postage prepaid, addressed to the parties, their
successors in interest or assignees at the following addresses or such other
addresses as the parties may designate by notice in the manner aforesaid:

         
 
  If to Ennis:   Ennis, Inc.
 
      2441 Presidential Parkway
 
      Midlothian, TX 76065
 
      Attention: Chief Executive Officer
 
       
 
  If to Employee:   2405 Bluffview Ct.
 
      Arlington, TX 76011
 
      Attention: Michael Magill

     16. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to any
principle of conflict-of-laws that would require the application of the law of
any other jurisdiction.
     17. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
     18. Entire Agreement. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof, superseding all
negotiations, prior discussions and preliminary agreements, and further
superseding any and all employment arrangements between Employee and Ennis or
any of Ennis’s subsidiaries, affiliates or other related entities. This
Agreement may not be amended except in a writing executed by the parties hereto.
     19. Effect on Successors in Interest. This Agreement shall inure to the
benefit of and be binding upon the heirs, administrators, executors and
successors of each of the parties hereto.
     20. Effectiveness. This Agreement shall be effective upon the Effective
Date.
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Executive Employment Agreement
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     21. Survival of Section. The provisions of Section 13 of this Agreement
shall survive the termination of this Agreement for the period provided for
therein.
     22. Servability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, the legality, validity and enforceability of the remaining provisions of
this Agreement shall not be affected hereby, and in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a part
of this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be legal, valid and enforceable.
     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.

                  ENNIS, INC.   EMPLOYEE    
 
               
BY:
      BY:        
 
               
 
  Keith S. Walters       Michael D. Magill    
 
  Chief Executive Officer              
 
               
 
 
 
Witness            

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