(c) If Employee’s base annual salary is increased at any time, it shall not thereafter bedecreased during the term of this Agreement, unless such decrease is the result of a generalreduction affecting the base salaries of substantially all other executives of Ennis.          (d) The Chief Executive Officer and/or Board of Directors may from time to time grant stockoptions or other forms of long-term incentive compensation arrangements to the Employee. Theprivilege to participate in these grants is at the discretion of the Chief Executive Officer and/orBoard of Directors and the stipulations regarding the granting of these awards and their exerciseby the Employee will be defined in the Long-Term Incentive Plan or in other plans or actions of theChief Executive Officer and/or Board of Directors.          (e) Employee shall be entitled to reimbursement of reasonable out of pocket expenses relatingto Ennis business in accordance with policies in effect.          (f) Employee shall not be entitled to directors fees for his service on any Board ofDirectors for Ennis or any of its subsidiaries.     **4. Employee Benefits.**          (a) Employee shall be entitled to full participation, on a basis commensurate with hisposition with Ennis, in all plans of life, accident, medical payment, health and disabilityinsurance, stock option, restricted stock, stock ownership, retirement, pension, supplemental lifeand retirement plans, nonqualified deferred compensation plan, perquisites and other employeebenefit and pension plans which generally are made available to executive officers of Ennis or itsprincipal subsidiaries, except for such plans which the Chief Executive Officer and/or Board ofDirectors, in its sole discretion, shall adopt for select employees to compensate them for specialor extenuating circumstances. If Employee becomes totally disabled, in the determination of theBoard of Directors, the Company will continue to pay the installments of Employee’s base annualsalary, as described in Section 3(a) hereof, in effect at the time of disability, for a period oftwelve (12) months after the occurrence of the event of disability.          (b) Employee shall be entitled to an annual vacation leave at full pay as may be provided for byEnnis vacation policies applicable to executives, but in any event such paid vacation shall not beless than three weeks in the aggregate. Employee may carry over no more than one week of accruedvacation to the next year.          (c) Nothing in this Agreement shall limit in any way Employee’s participation in any otherbenefit 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 expirationof the scheduled initial or any other term of this Agreement, Employee’s employment hereunder maybe 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 hisdeath or retirement. If, as a result of his incapacity resulting from physical or mental illnessor disease which is likely to be permanent, Employee shall have been unable to perform his dutieshereunder for a period of more than 120 consecutive days during any twelve-month period, Ennis mayterminate his employment hereunder. The Chief Executive Officer and/or Board of Directors willdetermine if the Employee’s termination is due to total and permanent disability, according to anylong-term disability plan then in effect for senior executives of Ennis and otherwise in good faithconsistent with generally prevailing practices of employers subject to the provision of 4(a) withrespect to benefits.          (b) Cause. Ennis may terminate Employee’s employment hereunder for cause, which for purposesof this Agreement shall be defined to mean (i) the willful and continued failure by Employee tofollow the reasonable instructions of the Chief Executive Officer and/or Board of Directors ofEnnis which is not cured within ten (10) days of receipt by Employee of written notice from theCompany specifying such failure, (ii) the willful commission by Employee of acts that are dishonestor inconsistent with local normal standards and demonstrably and materially injurious to Ennis orits 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 recoveryprogram, (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 curedwithin ten (10) days of employee’s receipt of written notice from the Company specifying suchfailure, or in the event the failure is not curable within the ten (10)-day period, Employee shallhave a longer period of up to thirty (30) days to cure the failure so long as he is diligentlypursuing a cure.          (c) Termination Without Cause. The termination of Employee’s employment by Ennis for anyreasons other than those specified above shall be deemed to be a Termination Without Cause. Nobreach or default by Employee shall be deemed to have occurred hereunder unless written noticethereof shall have been given by Ennis to Employee.     **6. Termination by Employee.**Employee shall be entitled to terminate his employment (i) in theevent 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 terminationpursuant 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 arematerially inconsistent with Employee’s position, duties and status with Ennis as contemplated bythis Agreement;          (b) Any action by Ennis which results in a material diminution in the position, duties orstatus of Employee with Ennis as contemplated by this Agreement;          (c) The base annual salary of Employee, as the same may hereafter be increased from time totime, is reduced; or          (d) Without limiting the generality or effect of the foregoing, Ennis fails to materiallycomply with any of its obligations hereunder; or          (e) Termination by Employee of his employment with Ennis pursuant to clause (i) or (ii) ofthe first sentence of this Section 6 shall be deemed to be termination of Employee’s employment byEnnis 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 toany compensation due to Employee pursuant to Section 3 (a) and (b) above, Employee shall beentitled 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 afterthen Change of Control, unless such termination is the result of action taken by Ennis for cause asdefined in Section 5 above.          (b) The lump sum severance payment payable to Employee under subsection (a) above shall beequal to the lesser of (i) one times (1x) the Employee’s “Base Amount” as defined in Section 280Gof 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 to be deducted as compensationexpense by the Company and to be received by the Employee without liability for the assessment ofan excise tax on such payment under the applicable provisions of the Internal Revenue Code. In theevent of any disagreement between the parties regarding the determination of the amount indicatedby clause (i) or (ii) above, the legal opinion of Ennis’ outside general counsel shall be deemedconclusive. This severance payment shall be made immediately and shall not be discounted by reasonof the fact that the time of payment is accelerated in advance of the ordinary course of paymentsunder this Agreement.          (c) If a Change of Control (as defined in Subsection (d) below) shall occur, Employee shallhave immediate vesting of all stock options granted to Employee and full vesting in all otheremployee benefit plans and compensation plans.
 

 
          (d) For the purposes of this Agreement, a “Change of Control” of Ennis shall be deemed tohave 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 theSecurities Exchange Act of 1934, (other than a qualified benefit plan of Ennis or an affiliate ofEnnis) becomes or is discovered to be a beneficial owner (as defined in Rule 13d-3 under theExchange Act as in effect on the date hereof) directly or indirectly of securities of Ennisrepresenting 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 thisAgreement);               (ii) Individuals who, as of the Effective Date hereof, constitute the Board of Directors ofEnnis 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 inoffice immediately prior to such cessation;               (iii) The Company or any of its affiliates shall (in a single transaction or a series orrelated transactions) issue shares, sell or purchase assets, engage in a merger or engage in anyother transaction immediately after which securities of the Company representing 50% or more of thecombined voting power of the then outstanding securities of the Company shall be ultimately ownedby person(s) who shall not have owned such securities prior to such transaction or who shall be aparty to such transaction;               (iv) The Company and its affiliates shall sell or dispose of (in a single transaction orseries of related transactions) business operations which generated a majority of the consolidatedrevenues (determined on the basis of Ennis’s four most recently completed fiscal quarters for whichreports have been filed under the Exchange Act) of Ennis and its subsidiaries immediately priorthereto;               (v) The Company’s Board of Directors shall approve the distribution to the Company’sshareholders of all or substantially all of Ennis’s net assets or shall approve the dissolution ofthe Company;               (vi) Any other transaction or series of related transactions occur which have substantiallythe 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 beforean occurrence of or anticipation of a Change of Control as defined in Section 7(c) or the executionof a contract intended to effect a Change of Control.          (e) If Employee’s employment is not terminated during the two year period provided for inSection 7(a), then the rights and obligations of the parties for the balance of the term of thisAgreement shall be governed by this Agreement exclusive of the provisions contained in this Section7 except Section 7 shall continue and become applicable for the term of this Agreement if asubsequent Change of Control occurs.     **8. Other Severance Benefits.**          (a) Notwithstanding the minimum term provided for in Section 1 of this Agreement, either theCompany or Employee may terminate this Agreement at any time upon 30 days notice to the otherparty, subject to the rights of Employee to any payment due under this Agreement in thatcircumstance. If at any time during the term of this Agreement, Employee is Terminated WithoutCause, 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) thebonus earned or paid for the previous fiscal year pursuant to Section 3 (a) and 3 (b). ForTermination 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 Employeeresigns for Good Reason as defined in Section 6 of this Agreement, then Employee shall be entitledto continuation of basic employee group benefits, as defined in Section 4(a), provided by Ennis toEmployee for the lesser of three months after termination or until the Employee secures newemployment 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 Employeeresigns for Good Reason as defined in Section 6 of this Agreement, Ennis shall promptly (and in anyevent within five business days after a request by the Employee therefor) either pay or reimbursethe Employee for the costs and expenses of any executive outplacement firm selected by theEmployee; provided, however, that Ennis’s liability hereunder shall be limited to such expenses, asis 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 theincurrence of such outplacement costs and expenses.          (d) The Employee’s outstanding stock options and any other long-term incentive award shallvest according to the terms of the Long-Term Incentive Plan.     **9. Timing of Payment**. Unless otherwise provided in this Agreement, any severance or otherpayment payable to Employee under this Agreement shall be paid within thirty (30) days after theevent 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’sparticipation in, or termination of distributions and vested rights under, any pension, profitsharing, insurance, performance unit plan or other employee benefit plan of Ennis to which Employeeis entitled pursuant to the terms of such plans except for the acceleration of vested benefits incertain employee benefits pursuance to Section 7(c) and the provisions pursuant to Section 8(b) andSection 8(d).     **11. No Duty to Mitigate Damages**. In the event of termination of this Agreement by Employeeafter a Change of Control as defined in Section 7 above, or as a result of the breach by Ennis ofany of its obligations hereunder, or in the event of the termination of Employee’s employment byEnnis in breach of this Agreement, or as a result of Employee’s Termination Without Cause, orresignation for Good Reason, Employee shall not be required to seek other employment in order tomitigate his damages hereunder, and no compensation employee does earn after any termination shallbe considered to mitigate damages Employee has incurred or to reduce any payment Ennis is obligatedto 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 toEmployee any amounts earned by Employee from other employment after termination of his employmentwith Ennis or any amounts which might have been earned by Employee in other employment had hesought such other employment. The amounts payable to Employee under this Agreement shall not betreated as damages but as severance compensation to which Employee is entitled by reason oftermination 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 suchemployment 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 anycountry in which any subsidiary of Ennis operates and will not make or fail to dispose of any stockin any business then in competition with Ennis or any of its subsidiaries in any metropolitanmarket in which Ennis, or any of its subsidiaries, are then conducting business except investmentsequal to less than 2% of the outstanding stock of any class issued by any publicly traded company.               (ii) Additionally, Employee will not, directly or indirectly, either as an officer, director,employee, consultant, independent contractor, agent or representative, for Employee’s own benefitor 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) monthperiod 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 itssubsidiaries, Employee shall not, directly or indirectly, use or permit the use of any confidentialor other proprietary information of a special unique nature and value to Ennis or one of itssubsidiaries (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 itssubsidiaries, and information with respect to the nature and type of other services rendered byEnnis or one of its subsidiaries, which Confidential Information has been used by Ennis or one ofits subsidiaries to date or during the term of this Agreement and has been made known (whether ornot with the knowledge and permission of Ennis, and whether or not developed, devised or otherwisecreated in whole or in part by the efforts of Employee) to Employee by reason of his activities onbehalf of Ennis or one of its subsidiaries. Employee shall not reveal, divulge or make known anyConfidential Information to any individual partnership, firm, Company or other businessorganization whatsoever except in performance of Employee’s obligations to Ennis or with theexpress permission of the Chief Executive Officer and/or Board of Directors of Ennis or asotherwise 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 ofEnnis shall be and remains the property of Ennis and shall remain in the possession of Ennis duringthe term and at all times thereafter. Upon the termination of his employment with Ennis or uponthe request of Ennis at any time, Employee shall promptly deliver to Ennis, and shall retain nocopies of, any written materials, records and documents made by Employee or coming into hispossession concerning the business or affairs of Ennis.          (c) Without intending to limit the remedies available to Ennis, Employee acknowledges that abreach of any of the covenants contained in this Section 12 may result in material irreparableinjury to Ennis or one of its subsidiaries for which there is not adequate remedy at law, that itmay not be possible to measure damages for such injuries precisely, and that in the event of such abreach or threat thereof, may be entitled to obtain a temporary restraining order and/or apreliminary or permanent injunction restraining Employee from engaging in activities prohibited bythis Section 12 or such other relief as may be required to specifically enforce any of thecovenants in such Section. Employee by execution hereof agrees to submit to the jurisdiction ofthe State of Texas.     **14. ****Arbitration**. Any dispute or controversy arising under or in connection with thisAgreement shall be settled exclusively by arbitration in Dallas County, Texas in accordance withthe rules of the American Arbitration Association then in effect. Judgment may be entered on thearbitrator’s award in any court having jurisdiction. Each party shall bear his or its own costs ofarbitration, but if Employee is the prevailing party in such arbitration, he shall be entitled torecover from Ennis as part of any award entered his reasonable expenses for attorneys’ fees anddisbursements.     **15. ****Notices**. All notices, requests, demands and other communication called for orcontemplated hereunder shall be in writing and shall be deemed to have been duly given whendelivered 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 orsuch other addresses as the parties may designate by notice in the manner aforesaid:       If to Ennis: Ennis, Inc.