MULTI COLOR Corp (Form: 10-Q, Received: 02/09/2018 15:49:33)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-16148

Multi-Color Corporation

(Exact name of Registrant as specified in its charter)


OHIO		31-1125853
(State or Other Jurisdiction of		(IRS Employer
Incorporation or Organization)		Identification No.)

4053 Clough Woods Dr.

Batavia, Ohio 45103

(Address of Principal Executive Offices)

Registrant’s Telephone Number – (513) 381-1480

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):


Large accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common shares, no par value – 20,442,779 (as of January 31, 2018)

MULTI-COLOR CORPORATION

FORM 10-Q

CONTENTS


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)

	Condensed Consolidated Statements of Income for the Three and Nine Months Ended December 31, 2017 and 2016		4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2017 and 2016		5

	Condensed Consolidated Balance Sheets at December 31, 2017 and March 31, 2017		6

	Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended December 31, 2017		7

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2017 and 2016		8

	Notes to Condensed Consolidated Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34

Item 4.	Controls and Procedures		34

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors		35

Item 5.	Other Information		35

Item 6.	Exhibits		36

Signatures			37

Forward-Looking Statements

This report contains certain statements that are not historical facts that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and that are intended to be covered by the safe harbors created by that Act. All statements contained in this Form 10-Q other than statements of historical fact are forward-looking statements. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “may,” “continue,” “estimate,” “intend,” “plan,” “will,” “believe,” “project,” “expect,” “anticipate” and similar expressions (as well as the negative versions thereof) may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. With respect to the forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Such forward-looking statements speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made.

Statements concerning expected financial performance, on-going business strategies, and possible future actions which the Company intends to pursue in order to achieve strategic objectives constitute forward-looking information. Implementation of these strategies and the achievement of such financial performance are each subject to numerous conditions, uncertainties and risk factors. Factors which could cause actual performance by the Company to differ materially from these forward-looking statements include, without limitation: factors discussed in conjunction with a forward-looking statement; changes in global economic and business conditions; changes in business strategies or plans; raw material cost pressures; availability of raw materials; availability to pass raw material cost increases to our customers; interruption of business operations; changes in, or the failure to comply with, government regulations, legal proceedings and developments, including, but not limited to, tax law changes; acceptance of new product offerings, services and technologies; new developments in packaging; our ability to effectively manage our growth and execute our long-term strategy; our ability to manage foreign operations and the risks involved with them, including compliance with applicable anti-corruption laws; currency exchange rate fluctuations; our ability to manage global political uncertainty; terrorism and political unrest; increases in general interest rate levels and credit market volatility affecting our interest costs; competition within our industry; our ability to consummate and successfully integrate acquisitions; our ability to recognize the benefits of acquisitions, including potential synergies and cost savings; failure of an acquisition or acquired company to achieve its plans and objectives generally; risk that proposed or consummated acquisitions may disrupt operations or pose difficulties in employee retention or otherwise affect financial or operating results; risk that some of our goodwill may be or later become impaired; the success and financial condition of our significant customers; dependence on information technology; our ability to market new products; our ability to maintain an effective system of internal control; ongoing claims, lawsuits and governmental proceedings, including environmental proceedings; availability, terms and developments of capital and credit; dependence on key personnel; quality of management; our ability to protect our intellectual property and the potential for intellectual property litigation; employee benefit costs; and risk associated with significant leverage. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition to the factors described in this paragraph and Part II, Item 1A of this Quarterly Report on Form 10-Q, Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2017 contains a list and description of uncertainties, risks and other matters that may affect the Company.

PART I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (unaudited)

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share data)


	Three Months Ended						Nine Months Ended
	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Net revenues	$	352,699		$	210,658		$	851,173		$	679,292
Cost of revenues		295,397			169,441			692,640			536,029

Gross profit		57,302			41,217			158,533			143,263
Selling, general and administrative expenses		41,519			20,408			90,308			62,798
Facility closure expenses		761			393			890			607

Operating income		15,022			20,416			67,335			79,858
Interest expense		21,624			6,141			34,628			19,118
Other (income) expense, net		9,702			(1,125	)		8,225			(1,685	)

Income (loss) before income taxes		(16,304	)		15,400			24,482			62,425
Income tax expense (benefit)		(36,815	)		3,205			(25,361	)		17,786

Net income		20,511			12,195			49,843			44,639
Less: Net income (loss) attributable to noncontrolling interests		(21	)		69			15			365

Net income attributable to Multi-Color Corporation	$	20,532		$	12,126		$	49,828		$	44,274

Weighted average shares and equivalents outstanding:
Basic		19,319			16,908			17,765			16,863
Diluted		19,446			17,039			17,914			17,007

Basic earnings per common share	$	1.06		$	0.72		$	2.80		$	2.63
Diluted earnings per common share	$	1.06		$	0.71		$	2.78		$	2.60
Dividends per common share	$	0.05		$	0.05		$	0.15		$	0.15

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands)


	Three Months Ended						Nine Months Ended
	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Net income	$	20,511		$	12,195		$	49,843		$	44,639
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss) (1)		31,213			(24,937	)		61,227			(37,150	)
Unrealized gain (loss) on derivative contracts, net of tax (2)		(8,452	)		—			(13,008	)		196

Total other comprehensive income (loss)		22,761			(24,937	)		48,219			(36,954	)

Comprehensive income		43,272			(12,742	)		98,062			7,685
Less: Comprehensive income (loss) attributable to noncontrolling interests		1,314			(55	)		1,284			131

Comprehensive income (loss) attributable to Multi-Color Corporation	$	41,958		$	(12,687	)	$	96,778		$	7,554

(1)

The amounts for the three months ended December 31, 2017 and 2016 include tax impacts of $(33) and $181, respectively, related to the settlement of foreign currency denominated intercompany loans. The amounts for the nine months ended December 31, 2017 and 2016 include tax impacts of $(485) and $427, respectively, related to the settlement of foreign currency denominated intercompany loans.

(2)	Amounts are net of tax of $4,097 for the three months ended December 31, 2017 and $6,955 and $(133) for the nine months ended December 31, 2017 and 2016, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share data)


	December 31, 2017			March 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	79,514		$	25,229
Accounts receivable, net of allowance of $2,459 and $2,273 at December 31, 2017 and March 31, 2017, respectively		265,619			141,211
Other receivables		29,558			7,871
Inventories, net		157,739			63,995
Prepaid expenses		33,422			12,187
Other current assets		11,180			3,253

Total current assets		577,032			253,746
Property, plant and equipment, net of accumulated depreciation of $222,053 and $190,915 at December 31, 2017 and March 31, 2017, respectively		492,980			247,261
Goodwill		1,178,955			412,550
Intangible assets, net		588,366			169,220
Other non-current assets		7,961			6,365
Deferred income tax assets		3,078			2,848

Total assets	$	2,848,372		$	1,091,990

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	20,994		$	2,093
Accounts payable		185,379			88,475
Accrued expenses and other liabilities		90,745			53,758

Total current liabilities		297,118			144,326
Long-term debt		1,586,912			479,408
Deferred income tax liabilities		164,213			65,761
Other liabilities		82,095			20,675

Total liabilities		2,130,338			710,170
Commitments and contingencies
Stockholders’ equity:
Preferred stock, no par value, 1,000 shares authorized, no shares outstanding		—			—
Common stock, no par value, stated value of $0.10 per share; 40,000 shares authorized, 20,748 and 17,254 shares issued at December 31, 2017 and March 31, 2017, respectively		1,403			1,054
Paid-in capital		401,214			158,399
Treasury stock, 306 and 302 shares at cost at December 31, 2017 and March 31, 2017, respectively		(11,492	)		(11,168	)
Retained earnings		363,564			316,461
Accumulated other comprehensive loss		(39,069	)		(85,795	)

Total stockholders’ equity attributable to Multi-Color Corporation		715,620			378,951
Noncontrolling interests		2,414			2,869

Total stockholders’ equity		718,034			381,820

Total liabilities and stockholders’ equity	$	2,848,372		$	1,091,990

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)


														Accumulated
	Common Stock													Other
	Shares Issued			Amount		Paid-In Capital		Treasury Stock			Retained Earnings			Comprehensive Loss			Noncontrolling Interests			Total
March 31, 2017		17,254		$	1,054	$	158,399	$	(11,168	)	$	316,461		$	(85,795	)	$	2,869		$	381,820
Net income												49,828						15			49,843
Other comprehensive income															46,950			1,269			48,219
Constantia Labels acquisition		3,383			338		237,482											1,100			238,920
Issuance of common stock		105			11		2,792														2,803
Restricted stock grant		9																			—
Restricted stock forfeitures		(3	)																		—
Stock-based compensation							2,541														2,541
Shares acquired under employee plans									(324	)											(324	)
Common stock dividends												(2,725	)								(2,725	)
Sale of Southeast Asian durables business															(231	)		(2,484	)		(2,715	)
Acquisition of noncontrolling interest															7			(76	)		(69	)
Dividends paid to noncontrolling interests																		(279	)		(279	)

December 31, 2017		20,748		$	1,403	$	401,214	$	(11,492	)	$	363,564		$	(39,069	)	$	2,414		$	718,034

See accompanying Notes to Condensed Consolidated Financial Statements.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine Months Ended
	December 31, 2017			December 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	49,843		$	44,639
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		30,723			24,853
Amortization of intangible assets		15,559			10,835
Loss on sale of Southeast Asian durables business		512			—
Loss on write-off of deferred financing fees		660			—
Amortization of deferred financing costs		1,898			1,269
Net (gain)/loss on disposal of property, plant and equipment		995			(429	)
Net (gain)/loss on derivative contracts		4,258			103
Stock-based compensation expense		2,541			2,445
Excess tax benefit from stock-based compensation		—			(1,245	)
Deferred income taxes, net		(30,793	)		(405	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		7,680			10,925
Inventories		5,317			(2,784	)
Prepaid expenses and other assets		(14,213	)		(3,686	)
Accounts payable		(15,902	)		(7,070	)
Accrued expenses and other liabilities		(17,341	)		(8,088	)

Net cash provided by operating activities		41,737			71,362

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(44,126	)		(34,055	)
Investment in acquisitions, net of cash acquired		(1,033,981	)		(11,369	)
Net proceeds from sale of Southeast Asian durables business		3,620			—
Proceeds from sale of property, plant and equipment		566			1,284

Net cash used in investing activities		(1,073,921	)		(44,140	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving lines of credit		386,110			211,073
Payments under revolving lines of credit		(520,495	)		(233,152	)
Borrowings of long-term debt		1,250,000			2,092
Repayment of long-term debt		(4,560	)		(5,436	)
Payment of acquisition related deferred payments		(899	)		(1,784	)
Buyout of non-controlling interest		—			(514	)
Proceeds from issuance of common stock		2,495			2,575
Excess tax benefit from stock-based compensation		—			1,245
Debt issuance costs		(26,628	)		—
Dividends paid		(3,000	)		(3,030	)

Net cash provided by/(used in) financing activities		1,083,023			(26,931	)

Effect of foreign exchange rate changes on cash		3,446			(2,732	)

Net increase/(decrease) in cash and cash equivalents		54,285			(2,441	)
Cash and cash equivalents, beginning of period		25,229			27,709

Cash and cash equivalents, end of period	$	79,514		$	25,268

See accompanying Notes to Condensed Consolidated Financial Statements.

See Note 14 for supplemental cash flow disclosures.

MULTI-COLOR CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(in thousands, except for statistical data, per share data and percentages)

1. Description of Business and Significant Accounting Policies

The Company

Multi-Color Corporation (Multi-Color, MCC, we, us, our or the Company), headquartered near Cincinnati, Ohio, is a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in North, Central and South America, Europe, China, Southeast Asia, Australia, New Zealand and South Africa with a comprehensive range of the latest label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer.

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Although certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures are adequate to make the information presented not misleading. A description of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2017 (the “2017 10-K”). These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2017 10-K.

The information furnished in these condensed consolidated financial statements reflects all estimates and adjustments which are, in the opinion of management, necessary to present fairly the results for the interim periods reported.

The condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain prior period balances have been reclassified to conform to

current year classifications.

Use of Estimates in Financial Statements

In preparing financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which improves the hedge accounting model to facilitate financial reporting that more closely reflects a company’s risk management activities. The FASB’s new guidance will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. This update is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. Early adoption is permitted in any interim period after issuance of the update. The Company elected to early adopt this update in the second quarter of fiscal 2018. See Note 7 for additional information on the Company’s derivative and hedging activities.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other,” which simplifies the accounting for goodwill impairments. This update removes step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, which for the Company is any annual or interim goodwill impairment tests performed after April 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of this update on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations,” which revises the definition of a business. The FASB’s new framework will assist entities in evaluating whether a set (integrated set of assets and activities) should be accounted for as an acquisition of a business or a group of assets. The framework adds an initial screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not a business. This update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2018. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this update on its consolidated financial statements, but it is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The specific issues addressed include debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination and separately identifiable cash flows and application of the predominance principle. This update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2018. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of this update on its consolidated financial statements, but it is not expected to have a material impact on the Company’s condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several areas of accounting for employee share-based payments, including the accounting for income taxes, forfeitures, and the classification on the statement of cash flows. This update is effective prospectively for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this standard on April 1, 2017. As a result of this adoption, the Company recorded $83 and $1,631 of excess tax benefits from share-based payments in income tax expense as a discrete item for the three and nine months ended December 31, 2017, respectively. These amounts may not necessarily be indicative of future amounts that may be recognized as any excess tax benefits recognized will be dependent on future stock price, employee exercise behavior and applicable tax rates. Prior to April 1, 2017, excess tax benefits were recognized in additional paid-in capital. Additionally, excess tax benefits are now included in net operating cash flows rather than net financing cash flows in the Company’s condensed consolidated statements of cash flows. The treatment of forfeitures has not changed, as the Company elected to continue the current process of estimating forfeitures at the time of grant. The Company had no unrecognized excess tax benefits from prior periods to record upon the adoption of this ASU.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires that lessees recognize almost all leases on the balance sheet as right-of-use assets and lease liabilities. For income statement purposes, leases will be classified as either finance leases or operating leases. This update is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, which for the Company is the fiscal year beginning April 1, 2019. This update should be applied at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of this standard on its consolidated financial statements, which will include an increase in both assets and liabilities relating to its leasing activities.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. This update does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. Prior to issuance of this ASU, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and a floor of net realizable value less normal profit margin). For inventory within the scope of the new guidance, entities are required to compare the cost of inventory to only its net realizable value, and not to the three measures required by current guidance. This update was effective prospectively for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, which for the Company was the fiscal year beginning April 1, 2017. This update was applied prospectively to all lower of cost and net realizable value assessments performed by the Company after the effective date. The adoption did not have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which provides revised guidance for revenue recognition. The standard’s core principle is that an entity should recognize revenue for transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance provides five steps that should be applied to achieve that core principle. In 2016 and 2017, the FASB issued accounting standard updates to address implementation issues and to clarify the guidance for identifying performance obligations, licenses and determining if a company is the principal or agent in a revenue arrangement. This standard and its clarifying updates are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is the fiscal year beginning April 1, 2018. This standard can be applied retrospectively to each period presented or as a cumulative-effect adjustment (modified retrospective) as of the date of adoption. The Company plans to adopt on April 1, 2018, using the modified retrospective approach.

The Company’s assessment efforts to date have included reviewing current accounting policies, processes, and system requirements, as well as assigning internal resources and engaging third-party consultants to assist in the process. We are in the process of standardizing sales Terms and Conditions across the organization. At this time, we do not anticipate significant changes to our systems or processes will be necessary for implementation of the standard. The Company anticipates that adoption will change the timing of revenue recognition from “point-in-time” to “over time” for most customer arrangements. This change will accelerate revenue recognition from time of shipment to time of production. We anticipate the amount of accelerated revenue will approximate the balance of finished goods inventory on-hand at period end. However, the Company will not be able to make a complete determination about the impact of the standard on its consolidated financial statements until the time of adoption based upon outstanding contracts at that time. The new standard will also require additional disclosures regarding our revenue recognition policy. We are still assessing the impact of additional revenue recognition financial disclosures required by the new standard.

No other new accounting pronouncement issued or effective during the nine months ended December 31, 2017 had or is expected to have a material impact on the consolidated financial statements.

Supply Chain Financing

The Company has entered into supply chain financing agreements with certain customers. The receivables for the agreements are sold without recourse to the customers’ banks and are accounted for as sales of accounts receivable. Losses on the sale of these receivables are included in selling, general and administrative expenses in the condensed consolidated statements of income. Losses of $251 and $162 were recorded for the three months ended December 31, 2017 and 2016, respectively, and losses of $716 and $412 were recorded for the nine months ended December 31, 2017 and 2016, respectively.

2. Earnings Per Common Share

Basic earnings per common share (EPS) is computed by dividing net income attributable to Multi-Color Corporation by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Multi-Color Corporation by the sum of the weighted average number of common shares outstanding during the period plus, if dilutive, potential common shares outstanding during the period. Potential common shares outstanding during the period consist of restricted shares, restricted share units, and the incremental common shares issuable upon the exercise of stock options and are reflected in diluted EPS by application of the treasury stock method.

The following is a reconciliation of the number of shares used in the basic EPS and diluted EPS computations:


	Three Months Ended									Nine Months Ended
	December 31, 2017				December 31, 2016					December 31, 2017					December 31, 2016
			Per Share				Per Share					Per Share					Per Share
	Shares		Amount		Shares		Amount			Shares		Amount			Shares		Amount
Basic EPS		19,319	$	1.06		16,908	$	0.72			17,765	$	2.80			16,863	$	2.63
Effect of dilutive securities		127		—		131		(0.01	)		149		(0.02	)		144		(0.03	)

Diluted EPS		19,446	$	1.06		17,039	$	0.71			17,914	$	2.78			17,007	$	2.60

The Company excluded 157 and 175 options to purchase shares in the three months ended December 31, 2017 and 2016, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect. The Company excluded 132 and 171 options to purchase shares in the nine months ended December 31, 2017 and 2016, respectively, from the computation of diluted EPS because these shares would have an anti-dilutive effect.

3. Inventories

The Company’s inventories consisted of the following:


	December 31, 2017			March 31, 2017
Finished goods	$	80,598		$	35,204
Work-in-process		18,172			8,933
Raw materials		68,732			26,862

Total inventories, gross		167,502			70,999
Inventory reserves		(9,763	)		(7,004	)

Total inventories, net	$	157,739		$	63,995

4. Debt

The components of the Company’s debt consisted of the following:


	December 31, 2017									March 31, 2017
	Principal			Unamortized Debt Issuance Costs			Debt Less Unamortized Debt Issuance Costs			Principal			Unamortized Debt Issuance Costs			Debt Less Unamortized Debt Issuance Costs
6.125% Senior Notes (1)	$	250,000		$	(3,317	)	$	246,683		$	250,000		$	(3,822	)	$	246,178
4.875% Senior Notes (1)		600,000			(10,018	)		589,982			—			—			—
New Credit Agreement
Term Loan A Facility (2)		150,000			(4,208	)		145,792			—			—			—
Term Loan B Facility (3)		500,000			(6,495	)		493,505			—			—			—
U.S. Revolving Credit Facility (4)		60,000			(5,730	)		54,270			—			—			—
Australian Revolving Sub-Facility (4)		36,546			(637	)		35,909			—			—			—
Previous credit agreement
U.S. Revolving Credit Facility (5)		—			—			—			198,100			(2,335	)		195,765
Australian Revolving Sub-Facility (5)		—			—			—			31,965			(178	)		31,787
Capital leases		37,145			—			37,145			7,412			—			7,412
Other subsidiary debt		4,620			—			4,620			359			—			359

Total debt		1,638,311			(30,405	)		1,607,906			487,836			(6,335	)		481,501
Less current portion of debt		(20,994	)		—			(20,994	)		(2,093	)		—			(2,093	)

Total long-term debt	$	1,617,317		$	(30,405	)	$	1,586,912		$	485,743		$	(6,335	)	$	479,408

(1)	The 6.125% Senior Notes are due on December 1, 2022. The 4.875% Senior Notes are due on November 1, 2025.

(2)

Under the New Credit Agreement, the Company is required to make mandatory principal payments on the outstanding borrowings under the Term Loan A Facility. The principal payments are due on the last day of March, June, September and December of each year, commencing on March 31, 2018 through the maturity date of October 31, 2022.

(3)

Under the New Credit Agreement, the Company is required to make mandatory principal payments on the outstanding borrowings under the Term Loan B Facility. The principal payments are due on the last day of March, June, September and December of each year, commencing on March 31, 2018 through the maturity date of October 31, 2024.

(4)	Borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility, which were issued under the New Credit Agreement, mature on October 31, 2022.

(5)	Borrowings under the previous credit agreement were repaid on October 31, 2017.

The carrying value of debt approximates fair value. The fair value of long-term debt is based on observable inputs, including quoted market prices (Level 2). The fair values of the 4.875% Senior Notes and 6.125% Senior Notes were approximately $601,500 and $260,625, respectively, as of December 31, 2017.

The following is a schedule of future annual principal payments as of December 31, 2017:


	Debt		Capital Leases		Total
January 2018 - December 2018	$	16,450	$	4,544	$	20,994
January 2019 - December 2019		12,724		4,928		17,652
January 2020 - December 2020		16,429		3,557		19,986
January 2021 - December 2021		20,169		3,006		23,175
January 2022 - December 2022		460,394		2,190		462,584
Thereafter		1,075,000		18,920		1,093,920

Total	$	1,601,166	$	37,145	$	1,638,311

Senior Secured Credit Facility

In conjunction with the Constantia Labels acquisition, effective October 31, 2017 the Company entered into a credit agreement (the “New Credit Agreement”) with various lenders. The New Credit Agreement replaced the Company’s previous credit agreement and consists of (i) a senior secured first lien term loan A facility (the “Term Loan A Facility”) in an aggregate principal amount of $150,000 with a five year maturity, (ii) a senior secured first lien term loan B facility (the “Term Loan B Facility”) in an aggregate principal amount of $500,000 with a seven year maturity, and (iii) a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount up to $400,000, comprised of a $360,000 U.S. revolving credit facility (the “U.S. Revolving Credit Facility“) and a $40,000 U.S. dollar equivalent Australian sub-facility (the “Australian Revolving Sub-Facility”), each with a five year maturity.

The New Credit Agreement contains customary mandatory and optional prepayment provisions and customary events of default. The New Credit Agreement’s Term Loan A Facility, Term Loan B Facility and U.S. Revolving Credit Facility (together, the “U.S. facilities”) are guaranteed by substantially all of the Company’s direct and indirect wholly owned domestic subsidiaries, and such guarantors pledged substantially all their assets as collateral to secure the U.S. facilities. The Australian Revolving Sub-Facility is secured by substantially all of the assets of the Australian borrower and its direct and indirect subsidiaries.

The New Credit Agreement can be used for working capital, capital expenditures and other corporate purposes and to fund permitted acquisitions (as defined in the New Credit Agreement). Loans under the New Credit Agreement bear interest at variable rates plus a margin, based on the Company’s consolidated secured net leverage ratio. The weighted average interest rate on borrowings under the U.S. Revolving Credit Facility was 3.98% at December 31, 2017. The interest rates on borrowings under the Term Loan A Facility, Term Loan B Facility and Australian Revolving Sub-Facility were 3.82%, 3.82% and 3.91%, respectively, at December 31, 2017.

The New Credit Agreement contains customary representations and warranties as well as customary negative and affirmative covenants, which require the Company to maintain the following financial covenants at the end of each quarter: (i) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.50 to 1.00 for the fiscal quarters ended during the period of March 31, 2017 through, and including June 30, 2019 and (ii) the consolidated secured net leverage ratio as of the last day of any fiscal quarter of the Company shall not exceed 4.25 to 1.00 for the fiscal quarters ended during the period of September 30, 2019 and thereafter.

The New Credit Agreement, the indenture governing the 4.875% Senior Notes (the “4.875% Senior Notes Indenture”) and the indenture governing the 6.125% Senior Notes (the “6.125% Senior Notes Indenture” and together with the 4.875% Senior Notes Indenture, the “Indentures”) limit the Company’s ability to incur additional indebtedness. Additional covenants contained in the New Credit Agreement and the Indentures, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, make restricted payments, create liens, make equity or debt investments, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Under the New Credit Agreement and the Indentures, certain changes in control of the Company could result in the occurrence of an Event of Default. In addition, the New Credit Agreement limits the ability of the Company to modify terms of the Indentures. As of December 31, 2017, the Company was in compliance with the covenants in the New Credit Agreement and the Indentures.

Available borrowings under the U.S. Revolving Credit Facility and Australian Revolving Sub-Facility were $299,124 and $3,454, respectively, at December 31, 2017. The Company also has various other uncommitted lines of credit available at December 31, 2017 in the aggregate amount of $22,132.

4.875% Senior Notes

The $600,000 aggregate principal amount of 4.875% Senior Notes due 2025 (the “4.875% Senior Notes”) were issued in October 2017 to fund the acquisition of Constantia Labels. The 4.875% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 4.875% Senior Notes on May 1st and November 1st of each year beginning May 1, 2018 until the maturity date of November 1, 2025. The Company’s obligations under the 4.875% Senior Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries.

6.125% Senior Notes

The $250,000 aggregate principal amount of 6.125% Senior Notes due 2022 (the “6.125% Senior Notes”) were issued in November 2014. The 6.125% Senior Notes are unsecured senior obligations of the Company. Interest is payable on the 6.125% Senior Notes on June 1st and December 1st of each year beginning June 1, 2015 until the maturity date of December 1, 2022. The Company’s obligations under the 6.125% Senior Notes are guaranteed by certain of the Company’s existing direct and indirect wholly-owned domestic subsidiaries.

Debt Issuance Costs

In conjunction with the issuance of the New Credit Agreement, the Company incurred $16,290 in debt issuance costs, which are being deferred and amortized over the term of the Term A Loan Facility, Term Loan B Facility and Revolving Credit Facility. In conjunction with terminating the Company’s prior credit agreement, $660 in unamortized debt issuance costs related to a debt extinguishment were written-off to interest expense during the three months ended December 31, 2017. The remaining unamortized fees under the prior credit agreement related to a debt modification and are being amortized over the term of the Revolving Credit Facility.

The Company incurred $10,338 in debt issuance costs associated with the issuance of the 4.875% Senior Notes, which are being deferred and amortized over the term of the 4.875% Senior Notes.

The Company recorded $1,090 and $423 in interest expense for the three months ended December 31, 2017 and 2016, respectively, in the condensed consolidated statements of income to amortize deferred financing costs. The Company recorded $1,898 and $1,269 in interest expense for the nine months ended December 31, 2017 and 2016, respectively, in the condensed consolidated statements of income to amortize deferred financing costs.

The Company incurred $4,587 in commitment fees related to a senior unsecured bridge facility (the “Bridge Facility”), which were written off to interest expense upon expiration of the availability of the Bridge Facility during the three months ended December 31, 2017.

Capital Leases

The present value of the net minimum payments on the capitalized leases is as follows:


	December 31, 2017			March 31, 2017
Total minimum lease payments	$	49,568		$	8,327
Less amount representing interest		(12,423	)		(915	)

Present value of net minimum lease payments		37,145			7,412
Current portion		(4,544	)		(1,964	)

Capitalized lease obligations, less current portion	$	32,601		$	5,448

The capitalized leases carry interest rates from 0.03% to 23.00% and mature from fiscal 2018 to fiscal 2032.

5. Major Customers

During the three months ended December 31, 2017 and 2016, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 13% and 18%, respectively, of the Company’s consolidated net revenues. All of these sales were made to The Procter & Gamble Company.

During the nine months ended December 31, 2017 and 2016, sales to major customers (those exceeding 10% of the Company’s net revenues in one or more of the periods presented) approximated 15% and 17%, respectively, of the Company’s consolidated net revenues. All of these sales were made to The Procter & Gamble Company.

In addition, accounts receivable balances from The Procter & Gamble Company approximated 3% and 4% of the Company’s total accounts receivable balance at December 31, 2017 and March 31, 2017, respectively. The loss or substantial reduction of the business of this major customer could have a material adverse impact on the Company’s results of operations and cash flows.

6. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, various foreign jurisdictions and various state and local jurisdictions where the statutes of limitations generally range from three to five years. At December 31, 2017, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2015. The Company is no longer subject to state and local examinations by tax authorities for years before fiscal 2012. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. As the Company has a March 31 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of 31.5% for the Company’s fiscal year ending March 31, 2018, and 21% for subsequent fiscal years. The Tax Act eliminates the domestic manufacturing deduction and implements certain transitional impacts to the Company.

As part of the transition to the new territorial tax system, the Tax Act imposes a one-time repatriation tax on deemed repatriation of historical earnings of foreign subsidiaries. In addition, the reduction of the U.S. corporate tax rate will cause the Company to adjust the U.S. deferred tax assets and liabilities to the lower federal base rate of 21%. These transitional impacts resulted in a provisional discrete net benefit of $16,186 for the quarter ended December 31, 2017, comprised of an estimated repatriation tax charge of $2,335, a provisional valuation allowance on certain interest expense carryforwards of $5,291, and an estimated net deferred tax benefit due to the rate change of $23,812.

The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the above estimate, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act,

or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The U.S. Securities and Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

On December 25, 2017, a Belgian tax reform bill was signed into law. The bill revises the future ongoing Belgian corporate income tax by, among other things, lowering the Belgian corporate income tax rates and implementing a group consolidation system. The reduction of the Belgian corporate income tax rate caused us to adjust our Belgian deferred tax assets and liabilities to the newly enacted tax rates. For the quarter ended December 31, 2017, the Company recognized a net deferred tax benefit of $15,409 due to the rate change.

Effective April 1, 2017, the Company adopted ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” As part of the adoption, the Company recognizes excess tax benefits or detriments for share-based payments as a reduction of or add-back to income tax expense. For the three and nine months ended December 31, 2017, the Company recognized $83 and $1,631, respectively, as discrete benefits in income tax expense related to share-based compensation. Due to the nature of share-based payment exercise patterns, the Company will not know all the potential impacts of the update until the end of each quarter.

The benefits of tax positions are not recorded unless it is more likely than not the tax position would be sustained upon challenge by the appropriate tax authorities. Tax benefits that are more likely than not to be sustained are measured at the largest amount of benefit that is cumulatively greater than a 50% likelihood of being realized.

As of December 31, 2017 and March 31, 2017, the Company had liabilities of $4,559 and $5,665, respectively, recorded for unrecognized tax benefits for U.S. federal, state and foreign tax jurisdictions. During the three months ended December 31, 2017 and 2016, the Company recognized $(14) and $(150), respectively, of interest and penalties in income tax expense in the condensed consolidated statements of income. During the nine months ended December 31, 2017 and 2016, the Company recognized $47 and $89, respectively, of interest and penalties in income tax expense in the condensed consolidated statements of income. The liability for the gross amount of interest and penalties at December 31, 2017 and March 31, 2017 was $1,941 and $1,892, respectively. The liability for unrecognized tax benefits is classified in other noncurrent liabilities on the condensed consolidated balance sheets for the portion of the liability where payment of cash is not anticipated within one year of the balance sheet date. During the three and nine months ended December 31, 2017, the Company released $322 and $1,642, respectively, of reserves, including interest and penalties, related to uncertain tax positions for which the statutes of limitations have lapsed or there was a reduction in the tax position related to a prior year. The Company believes that it is reasonably possible that $3,277 of unrecognized tax benefits as of December 31, 2017 could be released within the next 12 months due to the lapse of statute of limitations and settlements of certain foreign and domestic income tax matters. The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate are $3,889.

7. Risk Management Activities and Financial Instruments

The Company is exposed to market risks, both directly and indirectly, such as currency fluctuations and interest rate movement. To the extent the Company deems it to be appropriate, derivative instruments and hedging activities are used as a risk management tool to mitigate the potential impact of certain risks, primarily foreign currency exchange risk and interest rate risk.

The Company uses various types of derivative instruments including, but not limited to, forward contracts and swaps. The Company formally assesses, designates, and documents as a hedge of an underlying exposure each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, the Company assesses, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transactions are effective at offsetting changes in either the fair values or cash flows of the underlying exposures.

Interest Rate Risk Management

The Company uses interest rate swap agreements (the “Swaps”) to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of the underlying notional amounts between the two parties.

The Company had three forward starting non-amortizing Swaps with a total notional amount of $125,000 to convert variable rate debt to fixed rate debt. The Swaps became effective October 2012 and expired in August 2016. The Swaps resulted in interest payments based on an average fixed rate of 1.396% plus the applicable margin per the requirements in the previous credit agreement.

In conjunction with entering into the previous credit agreement on November 21, 2014, the Company de-designated the Swaps as a cash flow hedge. The cumulative loss on the Swaps recorded in accumulated other comprehensive income (AOCI) at the time of de-designation was reclassified into interest expense in the same periods during which the originally hedged transactions affected earnings, as these transactions were still probable of occurring. Subsequent to November 21, 2014, changes in the fair value of the de-designated Swaps were immediately recognized in interest expense.

convert variable rate debt to fixed rate debt. These Swaps will become effective in October 2018 and will expire in October 2022. The Swaps will result in interest payments of 2.1345% plus the applicable margin per the requirements in the New Credit Agreement.

Upon inception, the Swaps were designated as cash flow hedges, with the effective portion of gains and losses, net of tax, measured on an ongoing basis, recorded in accumulated other comprehensive income (loss). If the hedge or a portion thereof is determined to be ineffective, any gains and losses will be recorded in interest expense in the condensed consolidated statements of income.

Foreign Currency Risk Management

Foreign currency exchange risk arises from our international operations as well as from transactions with customers or suppliers denominated in currencies other than the U.S. Dollar. The functional currency of each of the Company’s subsidiaries is generally the currency of the country in which the subsidiary operates or the U.S. Dollar. At times, the Company uses foreign currency forward contracts to minimize the impact of fluctuations in currency exchange rates.

In July 2017, the Company entered into a foreign currency forward contract to fix the Euro cash component of the Constantia Labels purchase price. The notional amount of the foreign currency forward contract was €495,600 with a maturity date of November 2017. Concurrent with the closing of the Company’s purchase of Constantia Labels on October 31, 2017, the Company exited the foreign currency forward contract resulting in a $8,109 net gain. The foreign currency forward contract was not designated as a hedging instrument, and all changes in the fair value of the contract were reported in current period earnings. The fair value of the foreign currency forward contract was determined using forward exchange market rates at the balance sheet date.

The Company periodically enters into foreign currency forward contracts to fix the purchase price of foreign currency denominated firm commitments. In addition, the Company periodically enters into short-term foreign currency forward contracts to fix the U.S. Dollar value of certain intercompany loan payments, which typically settle in the following quarter. During the nine months ended December 31, 2017 and 2016, the Company’s forward contracts were not designated as hedging instruments; therefore, changes in the fair value of the contracts were immediately recognized in other income and expense in the condensed consolidated statements of income.

In November and December 2017, the Company entered into foreign exchange forward contracts to fix the purchase price in U.S. dollars of a foreign currency denominated firm commitment to purchase presses. The forward contracts are designated as fair value hedges and changes in the fair value of the contracts are recorded in other income and expense in the consolidated statements of income in the same period during which the related hedged items affect the consolidated statements of income.

Net Investment Hedging

In September 2017, as a means of managing foreign currency risk related to our significant operations in Europe, the Company executed four fixed-for-fixed cross currency swaps, in which the Company will pay Euros and receive U.S. Dollars with a combined notional amount of €400,000, which have a maturity date of November 2025. This will effectively convert U.S. Dollar denominated debt to Euro denominated debt. The Company designated €205,000 of swap notional as a net investment hedge of the Company’s net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair values of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset the changes in the values of the net investments being hedged.

The remaining €195,000 of swap notional was not designated in an accounting hedge in September 2017. Therefore, changes in fair value of the derivative instruments were recognized in other income and expense in the condensed consolidated statements of income. Subsequently, in November 2017, the Company formally designated the remaining €195,000 of swap notional as a net investment hedge under ASU 2017-12, bringing the total designated notional value to €400,000. Effective November 1, 2017, hedge accounting was applied to the newly designated swap notional of €195,000.

Disclosures about Derivative Instruments

All of the Company’s derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. The Company determines the fair values of its derivatives based on valuation models which project future cash flows and discount the future amounts to a present value using market based observable inputs including interest rate curves, foreign currency rates, futures and basis point spreads, as applicable. The fair values of qualifying and non-qualifying instruments used in hedging transactions as of December 31, 2017 are as follows:


		Fair Value
Derivatives Designated as Hedging Instruments	Balance Sheet Location	December 31, 2017
Assets:
Cross currency swaps (Net investment hedges)	Other current assets	$	6,403
Interest rate swaps (Cash flow hedges)	Other current assets		407
Foreign exchange forward contracts (Fair value hedges)	Other current assets		36
Interest rate swaps (Cash flow hedges)	Other long-term assets		864
Liabilities:
Cross currency swaps (Net investment hedges)	Other long-term liabilities	$	31,789
Interest rate swaps (Cash flow hedges)	Other current liabilities		106

		Fair Value
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	December 31, 2017
Assets:
Foreign exchange forward contracts	Other current assets	$	1,058
Liabilities:
Foreign exchange forward contracts	Other current liabilities	$	2,898

The amounts of gains and (losses) recognized in OCI net of reclassifications into earnings, during the three and nine months ended December 31, 2017 and 2016 are as follows:

Three Months Ended

Nine Months Ended

Derivatives Designated as Hedging Instruments

December 31,
2017

December 31,
2016

December 31,
2017

December 31,
2016

Cross currency swaps (Net investment hedges) (1)

(9,617

)

—

(14,173

)

—

Interest rate swaps (Cash flow hedges)

1,165

—

1,165

—

(1)	The net loss of $(14,173) recognized in OCI as of December 31, 2017 is comprised of an excluded component loss of $(10,335) and an undiscounted spot loss of $(10,793), net of tax of $6,955.

The amounts of gains and (losses) reclassified from AOCI into earnings for the three and nine months ended December 31, 2017 and 2016 are as follows:


	Three Months Ended					Nine Months Ended
Derivatives Designated as Hedging Instruments	December 31, 2017			December 31, 2016		December 31, 2017			December 31, 2016
Cross currency swaps (1)	$	2,140		$	—	$	2,140		$	—
Interest rate swaps (2)		(131	)		—		(131	)		(329	)

(1)	The Company had a $2,140 excluded component gain in AOCI which was recognized into income during the three and nine months ended December 31, 2017.

(2)	During the next 12 months, $300 of gains included in the December 31, 2017 AOCI balance are expected to be reclassified into interest expense.

The amounts of gains and (losses) included in earnings from non-qualifying financial instruments used in hedging transactions for the three and nine months ended December 31, 2017 and 2016 are as follows:


		Three Months Ended						Nine Months Ended
Derivatives Not Designated as Hedging Instruments	Statement of Income Location	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Interest rate swaps	Interest expense	$	—		$	—		$	—		$	225
Foreign currency contract-Constantia purchase price	Other income (expense), net		(1,108	)		—			8,109			—
Foreign currency contracts-Other	Other income (expense), net		(1,834	)		3			(1,550	)		28
Gain (loss) on underlying hedged items	Other income (expense), net		1,539			(53	)		1,264			(128	)
Cross currency swaps	Other income (expense), net		1,553			—			(4,258	)		—

8. Accrued Expenses and Other Liabilities

The Company’s accrued expenses and other liabilities consisted of the following:


	December 31, 2017		March 31, 2017
Accrued payroll and benefits	$	40,434	$	24,286
Accrued income taxes		3,673		5,604
Professional fees		3,240		500
Accrued taxes other than income taxes		2,764		1,616
Accrued interest		3,079		5,178
Customer rebates		2,762		2,672
Deferred payments		13,755		1,068
Deferred revenue		11,003		7,076
Derivative liabilities		3,004		—
Other		7,031		5,758

Total accrued expenses and other liabilities	$	90,745	$	53,758

9. Acquisitions and Divestitures

Constantia Labels Summary

On October 31, 2017, the Company completed its acquisition pursuant to the Sale and Purchase Agreement (as amended) with Constantia Flexibles Germany GmbH, Constantia Flexibles International GmbH, Constantia Flexibles Group GmbH and GPC Holdings B.V. (collectively, “Constantia Flexibles”), acquiring 100% of the Labels Division of Constantia Flexibles (“Constantia Labels”). Constantia Labels, headquartered in Vienna, Austria, is a leader in label solutions serving the food, beverage and consumer packaging goods industries. Constantia Labels has approximately 2,800 employees globally and 23 production plants across 14 countries, with major operations across Europe, Asia and North America. The acquisition included a 75% controlling interest in certain label operations in South Africa.

The Company believes the combination of Constantia Labels’ food & beverage business with Multi-Color’s existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, will create a company with significant scale and geographic, end-market, customer and product diversification and additional growth opportunities. The results of Constantia Labels’ operations were included in the Company’s condensed consolidated financial statements beginning on October 31, 2017.

The preliminary purchase price for Constantia Labels consisted of the following:


Cash from proceeds of borrowings	$	1,057,993
MCC common stock issued		237,820
Deferred payments		3,094
Contingent consideration		9,408

Purchase price, before cash acquired		1,308,315
Net cash acquired		(17,217	)

Total purchase price	$	1,291,098

As of December 31, 2017, the purchase price is subject to change upon finalization of net working capital and other adjustments, which will be settled during the three months ended March 31, 2018.

The Company issued 3,383 shares of its common stock to Constantia Flexibles as part of the consideration for the purchase of Constantia Labels. The Sale and Purchase Agreement provides for restrictions on the transfer of the shares issued to Constantia Flexibles and certain registration rights with respect to the shares. The fair value of the shares issued of $237,820 was calculated using the Company share price of $82.70, which was the closing price on October 31, 2017, discounted to reflect the temporary lack of liquidity.

The cash portion of the purchase price was funded through the 4.875% Senior Notes due 2025 and funds from the New Credit Agreement (see Note 4). The purchase price includes deferred payments with a total fair value of $3,094, estimated as of the acquisition date, which are to be paid out within 90 days after December 31, 2018, 2019 and 2020. In addition, the purchase price includes future performance based earnouts with a total fair value of $9,408, estimated as of the acquisition date. The future value of the earnouts is dependent upon whether the Verstraete in Mould Labels N.V. (Verstraete) business, which was acquired in conjunction with the Constantia Labels’ acquisition,

meets or exceeds certain agreed upon EBITA (earnings before interest, taxes, and amortization) metrics over the three to five year period following the acquisition. The earnouts have a minimum future payout of zero, and the maximum amount of the future payout is based on the amount of EBITA growth achieved relative to calendar 2017. The earnouts may be paid out within 90 days after December 31, 2020, 2021 or 2022. Net cash acquired includes $49,647 of cash acquired less $32,430 of assumed bank debt and capital leases. The Company spent $15,606 in acquisition expenses related to the Constantia Labels acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income as follows: $18 in the third quarter of fiscal 2017, $744 in the first quarter of fiscal 2018, $3,545 in the second quarter of fiscal 2018 and $11,299 in the third quarter of fiscal 2018.

Super Enterprise Holdings Berhad (Super Label) Summary

On August 11, 2015, the Company acquired 90% of the shares of Super Label based in Kuala Lumpur, Malaysia, which was publicly listed on the Malaysian stock exchange. During the second and third quarters of fiscal 2016, the Company acquired the remaining shares and delisted Super Label. Super Label had operations in Malaysia, Indonesia, the Philippines, Thailand and China and produces home & personal care, food and beverage and specialty consumer products labels. This acquisition expanded our presence in China and gave us access to new label markets in Southeast Asia.

The acquisition included an 80% controlling interest in the label operations in Indonesia and a 60% controlling interest in certain legal entities in Malaysia and China (the Southeast Asian durables business). During the third quarter of fiscal 2017, the Company acquired the remaining shares of the label operations in Indonesia for $514. The results of Super Label’s operations were included in the Company’s condensed consolidated financial statements beginning on August 11, 2015.

The purchase price for Super Label consisted of the following:


Cash from proceeds of borrowings	$	39,782
Net cash acquired		(6,035	)

Total purchase price	$	33,747

The cash portion of the purchase price was funded through borrowings under our previous credit agreement. Net cash acquired included $8,152 of cash acquired less $2,117 of bank debt assumed. The Company spent $1,434 in acquisition expenses related to the Super Label acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income as follows: $7 in the first quarter of fiscal 2017, $1 in the fourth quarter of fiscal 2016, $105 in the third quarter of fiscal 2016, $390 in the second quarter of fiscal 2016 and $931 in the first quarter of fiscal 2016.

Sale of Southeast Asian durables business

On July 3, 2017, the Company sold its 60% controlling interest in its Southeast Asian durables business to its minority shareholders for $3,620 in net cash proceeds. The Company recognized a loss of $512 on the sale of the business, which was recognized in other income, net in the condensed consolidated statements of income.

Barat Group (Barat) Summary

On May 4, 2015, the Company acquired 100% of Barat based in Bordeaux, France. Barat operated four manufacturing facilities in Bordeaux and Burgundy, France, and the acquisition gave the Company access to the label market in the Bordeaux wine region and expanded our presence in Burgundy. The acquisition included a 30% minority interest in Gironde Imprimerie Publicité (GIP), which was accounted for under the cost method based upon Multi-Color’s inability to exercise significant influence over the business. The results of Barat’s operations were included in the Company’s condensed consolidated financial statements beginning on May 4, 2015.

The purchase price for Barat consisted of the following:


Cash from proceeds of borrowings	$	47,813
Deferred payment		2,160

Purchase price, before cash acquired		49,973
Net cash acquired		(746	)

Total purchase price	$	49,227

The cash portion of the purchase price was funded through the previous credit agreement. The purchase price included $2,160 due to the seller, which was paid during the three months ended September 30, 2015. Net cash acquired included $4,444 of cash acquired less $3,698 of bank debt assumed related to capital leases. The Company spent $1,500 in acquisition expenses related to the Barat acquisition. These expenses were recorded in selling, general and administrative expenses in the condensed consolidated statements of income as follows: $8 in the second quarter of fiscal 2017, $4 in the first quarter of fiscal 2017, $65 in the second quarter of fiscal 2016, $751 in the first quarter of fiscal 2016, $467 in the fourth quarter of fiscal 2015 and $205 in the third quarter of fiscal 2015.

In conjunction with the acquisition of Barat, the Company recorded an indemnification asset of $1,115, which represented the seller’s obligation under the purchase agreement to indemnify Multi-Color for the outcome of potential contingent liabilities relating to uncertain tax positions. This asset was released during the six months ended September 30, 2017.

Purchase Price Allocation and Other Items

The determination of the purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Constantia Labels. The purchase price allocation may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles, accounts payable, accrued liabilities, debt and non-controlling interests) and the valuation of the related tax assets and liabilities are completed. Based on fair value estimates, the purchase prices for Constantia Labels, Super Label and Barat have been allocated to individual assets acquired and liabilities assumed as follows:


	Constantia Labels			Super Label			Barat
Assets Acquired:
Net cash acquired	$	17,217		$	6,035		$	746
Accounts receivable		118,800			8,479			8,489
Inventories		89,086			4,276			2,863
Property, plant and equipment		215,479			22,002			8,356
Intangible assets		410,000			2,437			21,852
Goodwill		712,162			8,668			23,391
Other assets		19,722			1,984			2,794

Total assets acquired		1,582,466			53,881			68,491

Liabilities Assumed:
Accounts payable		93,800			5,087			3,049
Accrued income taxes payable		8,322			936			355
Accrued expenses and other liabilities		37,512			1,725			7,043
Deferred tax liabilities		133,417			2,874			8,071

Total liabilities assumed		273,051			10,622			18,518

Net assets acquired		1,309,415			43,259			49,973

Noncontrolling interests		(1,100	)		(3,477	)		—

Net assets acquired attributable to Multi-Color Corporation	$	1,308,315		$	39,782		$	49,973

The liabilities assumed in the Constantia Labels acquisition include a contingent liability of $9,671, estimated as of the acquisition date based on the company’s best estimate. The contingent liability is based on future earnings of certain entities acquired and may be payable to the pre-Constantia Flexibles owners of the respective entities.

The fair value of the noncontrolling interests for Constantia Labels and Super Label were estimated based on market valuations performed by an independent third party using a combination of: (i) an income approach based on expected future discounted cash flows; and (ii) an asset approach.

The estimated fair value of identifiable intangible assets acquired and their estimated useful lives are as follows:


	Constantia Labels				Super Label				Barat
	Fair Value		Useful Lives		Fair Value		Useful Lives		Fair Value		Useful Lives
Customer relationships	$	390,000		19 years	$	2,437		15 years	$	20,849		20 years
Non-compete agreements		—		—		—		—		780		2 years
Trademarks		—		—		—		—		223		1 year
Technology		20,000		4 years		—		—		—	$	—

Total identifiable intangible assets	$	410,000			$	2,437			$	21,852

Identifiable intangible assets are amortized over their useful lives based upon a number of assumptions including the estimated period of economic benefit and utilization. The weighted-average amortization period for identifiable intangible assets acquired in the Constantia Labels and Barat acquisitions is 18 and 19 years, respectively.

The goodwill for Constantia Labels is attributable to combining Constantia Labels’ food & beverage business with Multi-Color’s existing platforms, particularly in home & personal care and wine & spirits and emerging position in healthcare, thereby creating additional growth

opportunities for both businesses utilizing the expanded global footprint and the acquired workforce. The goodwill for Super Label is attributable to access to the label markets in Malaysia, Indonesia, the Philippines and Thailand and the acquired workforce. The goodwill for Barat is attributable to access to the label market in the Bordeaux wine region and the acquired workforce. Goodwill arising from the Super Label, Barat and Constantia Labels acquisitions is not deductible for income tax purposes.

The accounts receivable acquired as part of the Constantia Labels acquisition had a fair value of $118,800 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $119,917 and the estimated contractual cash flows that are not expected to be collected are $1,117. The accounts receivable acquired as part of the Super Label acquisition had a fair value of $8,479 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $8,809 and the estimated contractual cash flows not expected to be collected are $330. The accounts receivable acquired as part of the Barat acquisition had a fair value of $8,489 at the acquisition date. The gross contractual value of the receivables prior to any adjustments was $8,679 and the estimated contractual cash flows that are not expected to be collected are $190.

Pro Forma Information

The following table provides the unaudited pro forma results of operations for the three and nine months ended December 31, 2017 and 2016 as if Constantia Labels had been acquired as of the beginning of fiscal year 2017. However, pro forma results do not include any anticipated synergies from the combination of the companies, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates indicated or that may result in the future.


	Three Months Ended				Nine Months Ended
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
Net revenues	$	411,272	$	366,204	$	1,269,185	$	1,183,359
Net income attributable to Multi-Color		24,070		15,855		60,157		51,969
Diluted earnings per share		1.17		0.78		2.93		2.55

The following is a reconciliation of actual net revenues and net income attributable to Multi-Color Corporation to pro forma net revenues and net income:


	Three Months Ended										Nine Months Ended
	December 31, 2017					December 31, 2016					December 31, 2017					December 31, 2016
	Net revenues		Net income attributable to Multi-Color			Net revenues		Net income attributable to Multi-Color			Net revenues		Net income attributable to Multi-Color			Net revenues		Net income attributable to Multi-Color
Multi-Color Corporation actual results	$	352,699	$	20,532		$	210,658	$	12,126		$	851,173	$	49,828		$	679,292	$	44,274
Constantia Labels actual results		58,573		(516	)		155,546		14,577			418,012		23,426			504,067		39,182
Pro forma adjustments		—		4,054			—		(10,848	)		—		(13,097	)		—		(31,487	)

Pro forma results	$	411,272	$	24,070		$	366,204	$	15,855		$	1,269,185	$	60,157		$	1,183,359	$	51,969

The following table identifies the pro forma adjustments:


	Three Months Ended						Nine Months Ended
	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Constantia Labels financing costs	$	1,235		$	3,530		$	9,689		$	11,466
Acquisition transaction costs		11,299			18			15,588			18
Incremental depreciation and amortization costs		(2,127	)		(6,382	)		(14,890	)		(19,145	)
Incremental interest costs		(4,532	)		(12,888	)		(29,368	)		(37,973	)
Tax effect of adjustments		(1,821	)		4,874			5,884			14,147

Pro forma adjustments	$	4,054		$	(10,848	)	$	(13,097	)	$	(31,487	)

Other Acquisition Activity

On October 11, 2017, the Company acquired 100% of TP Label Limited, the labels business of Tanzania Printers Limited (Tanzania Printers), and TP Kenya Limited (collectively, “TP Label”), which is located in Dar es Salaam, Tanzania with a sales and distribution center located in Nairobi, Kenya, for $15,929 less net cash acquired of $397. The purchase price included $9,557, which was retained by MCC at closing and will be used to repay the indebtedness of TP Label Limited and Tanzania Printers during the three months ended March 31, 2018. The purchase price also includes an indemnification holdback of $1,593 to fund certain potential obligations of the sellers with

respect to the transaction, which is deferred for one year after the closing date. TP Label is primarily a pressure sensitive and glue-applied label business, serving customers in the food and beverage market.

On August 3, 2017, the Company acquired 100% of GEWA Etiketten GmbH (GEWA), including the remaining 2.4% of the common shares of GIP (see below), for $21,846 plus net debt assumed of $5,150. Upon closing, $2,185 of the purchase price was deposited into an escrow account and is to be released to the seller on the 18-month anniversary of the closing date in accordance with the purchase agreement. The escrow amount is to fund certain potential indemnification obligations of the seller with respect to the transaction. GEWA is located in Bingen am Rhein, Germany and specializes in producing pressure sensitive labels for the wine and spirits market.

On January 3, 2017, the Company acquired 100% of Graphix Labels and Packaging Pty Ltd. (Graphix) for $17,261. The purchase price included $1,631 that is deferred for two years after the closing date. Graphix is located in Melbourne, Victoria, Australia and specializes in producing labels for both the food & beverage and wine & spirits markets.

In January 2017, the Company acquired an additional 67.6% of the common shares of GIP for $2,084 plus net debt assumed of $862. The purchase price included $208 that is deferred for one year after the closing date. The Company acquired 30% of GIP as part of the Barat acquisition in fiscal 2016, which included a fair value equity interest in GIP of $771. Immediately prior to obtaining a controlling interest in GIP, the Company recognized a gain of $690 as a result of re-measuring the fair value of the equity interest based on the most recent share activity. In August 2017, the Company acquired the remaining 2.4% of the common shares of GIP in conjunction with the GEWA acquisition (see above). GIP is located in the Bordeaux region of France and specializes in producing labels for the wine & spirits market.

The determination of the final purchase price allocation to specific assets acquired and liabilities assumed is incomplete for GEWA, Graphix, GIP and TP Label. The purchase price allocations may change in future periods as the fair value estimates of assets and liabilities (including, but not limited to, accounts receivable, inventory, property, plant and equipment, intangibles and debt) and the valuation of the related tax assets and liabilities are completed.

On July 6, 2016, the Company acquired 100% of Industria Litografica Alessandrina S.r.l. (I.L.A.) for $6,301 plus net debt assumed of $3,547. The purchase price included $819 that is deferred for three years after the closing date. I.L.A. is located in the Piedmont region of Italy and specializes in production of premium self-adhesive and wet glue labels primarily for the wine & spirits market and also services the food industry.

On July 1, 2016, the Company acquired 100% of Italstereo Resin Labels S.r.l. (Italstereo) for $3,342 less net cash acquired of $181. The purchase price included a deferred payment of $201 that was paid in the three months ended September 30, 2017 and a deferred payment of $133 that is due two years after the closing date. Italstereo is located near Lucca, Italy and specializes in producing pressure sensitive adhesive resin coated labels, seals and emblems.

On January 4, 2016, the Company acquired 100% of Cashin Print for $17,487 less net cash acquired of $135 and 100% of System Label for $11,665 less net cash acquired of $2,025. Cashin Print and System Label are located in Castlebar, Ireland and Roscommon, Ireland, respectively. The purchase prices for Cashin Print and System Label included $1,411 and $1,571, respectively, for purchase price adjustments, which were paid to the seller during the three months ended June 30, 2016. In addition, the purchase prices for Cashin Print and System Label include deferred payments of $3,317 and $1,011, respectively. These deferred payments may be paid during the fourth quarter of fiscal 2019. During the third quarter of fiscal 2017, the long-term liabilities related to these deferred payments were reduced based on management’s current estimate of the future payout and $887 was recorded in other income in the condensed consolidated statements of income. The acquired businesses supply multinational customers in Ireland, the United Kingdom and Continental Europe and provide Multi-Color with the opportunity to supply a broader product range to a larger customer base, especially in the healthcare market.

On October 1, 2015, the Company acquired 100% of Supa Stik Labels (Supa Stik) for $6,787 less net cash acquired of $977. Supa Stik is located in Perth, West Australia and services the local wine, food & beverage and healthcare label markets. The purchase price included $622 that is deferred for two years after the closing date.

On May 1, 2015, the Company acquired 100% of Mr. Labels in Brisbane, Queensland Australia for $2,110. The purchase price included $196 that was deferred until the first anniversary of the closing date, which was paid during the first quarter of fiscal 2017. Mr. Labels provides labels primarily to food and beverage customers.

The results of operations of the acquisitions described above within this “Other Acquisitions Activity” section have been included in the condensed consolidated financial statements since the respective dates of acquisition and have been determined to be immaterial for purposes of additional disclosure.

10. Accumulated Other Comprehensive Loss

The changes in the Company’s accumulated other comprehensive loss by component consisted of the following:


	Foreign			Gains and (losses)			Acquisitions			Defined benefit
	currency			on derivative			and			pension
	items			contracts			Divestitures			items			Total
Balance at March 31, 2017	$	(85,593	)	$	—		$	—		$	(202	)	$	(85,795	)
OCI before reclassifications		59,958			(11,703	)		—			—			48,255
Amounts reclassified from AOCI		—			(1,305	)		(224	)		—			(1,529	)

Net current period OCI		59,958			(13,008	)		(224	)		—			46,726

Balance at December 31, 2017	$	(25,635	)	$	(13,008	)	$	(224	)	$	(202	)	$	(39,069	)

The amounts of (gains) and losses reclassified from AOCI into earnings for the three and nine months ended December 31, 2017 and 2016 are as follows:


	Three Months Ended					Nine Months Ended
	December 31, 2017			December 31, 2016		December 31, 2017			December 31, 2016
Gains and losses on cash flow hedges:
Cross currency swaps (1)	$	(2,140	)	$	—	$	(2,140	)	$	—
Interest rate swaps (1)		131			—		131			329
Tax		704			—		704			(133	)

Net of tax	$	(1,305	)	$	—	$	(1,305	)	$	196

(1)	Reclassified from AOCI into interest expense in the condensed consolidated statements of income. See Note 7.

11. Goodwill and Intangible Assets

The changes in the Company’s goodwill consisted of the following:


Balance at March 31, 2017:
Goodwill, gross	$	424,941
Accumulated impairment losses		(12,391	)

Goodwill, net		412,550
Activity during the year:
Acquisitions		726,276
Adjustments to prior year acquisitions		(449	)
Currency translation		41,105
Sale of Southeast Asian durables business		(527	)

Balance at December 31, 2017:
Goodwill, gross		1,192,246
Accumulated impairment losses		(13,291	)

Goodwill, net	$	1,178,955

The Company’s intangible assets consisted of the following:


	December 31, 2017							March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	645,473	$	(78,058	)	$	567,415	$	228,518	$	(61,546	)	$	166,972
Technologies		21,722		(2,331	)		19,391		1,658		(1,368	)		290
Trademarks		97		(40	)		57		1,013		(1,013	)		—
Licensing intangible		—		—			—		1,958		(1,958	)		—
Non-compete agreements		3,892		(2,389	)		1,503		5,063		(3,116	)		1,947
Lease intangible		—		—			—		128		(117	)		11

Total	$	671,184	$	(82,818	)	$	588,366	$	238,338	$	(69,118	)	$	169,220

The amortization expense of intangible assets for the three months ended December 31, 2017 and 2016 was $8,124 and $3,458, respectively. The amortization expense of intangible assets for the nine months ended December 31, 2017 and 2016 was $15,559 and $10,835, respectively.

12. Facility Closures

Merignac, France

During the three months ended September 30, 2017, the Company announced plans to consolidate our manufacturing facility located in Merignac, France into our existing facility in Libourne, France. The transition was substantially completed in the third quarter of fiscal 2018.

Below is a summary of the total contractual termination benefits and exit and disposal costs related to the closure of the Merignac facility:

Total costs
expected to be
incurred

Total costs incurred

Cumulative costs
incurred as of
December 31, 2017

Three Months Ended
December 31, 2017

Nine Months Ended
December 31, 2017

Severance and other termination benefits

500-550

485

Contract termination costs

200-250

—

Other associated costs

300-350

251

Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities.

Below is a reconciliation of the beginning and ending liability balances related to the contractual termination benefits and exit and disposal costs:

Balance at
March 31, 2017

Amounts
Expensed

Amounts
Paid

Balance at
December 31, 2017

Severance and other termination benefits

—

485

(485

)

—

Other associated costs

—

251

(251

)

—

The cumulative costs incurred in conjunction with the closure as of December 31, 2017 are $736, which were recorded in facility closure expenses in the condensed consolidated statements of income.

Dormans, France

During the three months ended June 30, 2017, the Company announced plans to close our manufacturing facility located in Dormans, France. Production at the facility ceased during the first quarter of fiscal 2018.

Below is a summary of the exit and disposal costs related to the closure of the Dormans facility:

Total costs
expected to be
incurred

Total costs incurred

Cumulative costs
incurred as of
December 31, 2017

Three Months Ended
December 31, 2017

Nine Months Ended
December 31, 2017

Severance and other termination benefits

106

—

106

Other associated costs

75-100

—

Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved to other manufacturing facilities.

Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs:


	Balance at March 31, 2017		Amounts Expensed		Amounts Paid			Balance at December 31, 2017
Severance and other termination benefits	$	—		106		(106	)	$	—
Other associated costs		—		23		(23	)		—

During the three months ended December 31, 2017, the Company recorded non-cash impairment charges of $25 to adjust the carrying value of the land and building held for sale at the Dormans facility to their estimated fair value, less costs to sell, which were determined based on a quoted market price. The cumulative costs incurred in conjunction with the closure as of December 31, 2017 are $154, which were recorded in facility closure expenses in the condensed consolidated statements of income.

Sonoma, California

On January 19, 2016, the Company announced plans to consolidate our manufacturing facility located in Sonoma, California into our existing facility in Napa, California. The transition was substantially completed in the third quarter of fiscal 2017.

Below is a summary of the exit and disposal costs related to the closure of the Sonoma facility:


	Total costs expected to be incurred		Total costs incurred				Cumulative costs incurred as of December 31, 2017
	Total costs expected to be incurred		Three Months Ended December 31, 2016		Nine Months Ended December 31, 2016		Cumulative costs incurred as of December 31, 2017
Severance and other termination benefits	$	6	$	—	$	6	$	6
Other associated costs		91		59		59		91

Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs:


	Balance at March 31, 2017		Amounts Expensed		Amounts Paid			Balance at December 31, 2017
Other associated costs	$	24		—		(24	)	$	—

Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved from Sonoma to Napa.

The cumulative costs incurred in conjunction with the closure as of December 31, 2017 are $272, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as non-cash impairment charges of $220 related to property, plant and equipment at the Sonoma facility, which were recorded in facility closure expenses during the three months ended March 31, 2016.

In addition, the Company recorded a net gain on the sale of property, plant and equipment of $185 related to assets in Sonoma that were not transferred to Napa and were sold and wrote-off $140 in property, plant and equipment that was not transferred to Napa and was abandoned, which were recorded in facility closure expenses during the three months ended December 31, 2016.

Glasgow, Scotland

During the three months ended March 31, 2016, the Company began the process to consolidate our two manufacturing facilities located in Glasgow, Scotland into one facility. The transition was substantially completed in the fourth quarter of fiscal 2017.

Below is a summary of the exit and disposal costs related to the closure of the Glasgow facility:

Total costs
expected to be
incurred

Total costs incurred

Cumulative costs
incurred as of
December 31, 2017

Three Months Ended
December 31, 2016

Nine Months Ended
December 31, 2016

Severance and other termination benefits

479

Other associated costs

642-700

642

Below is a reconciliation of the beginning and ending liability balances related to the exit and disposal costs:


	Balance at March 31, 2017		Amounts Paid			Balance at December 31, 2017
Other associated costs	$	99		(60	)	$	39

Other associated costs primarily consist of costs to dismantle, transport and reassemble manufacturing equipment that was moved in order to consolidate our two manufacturing facilities located in Glasgow into one facility.

The cumulative costs incurred in conjunction with the closure as of December 31, 2017 are $859, which were recorded in facility closure expenses in the condensed consolidated statements of income. The cumulative costs incurred include the exit and disposal costs above as well as non-cash impairment charges of $115 related to property, plant and equipment at the closing Glasgow facility, which were recorded in facility closure expenses during the three months ended March 31, 2016. In addition, the Company recorded a net gain on the sale of property, plant and equipment of $377 related to assets that were not transferred to other locations and were sold, which was recorded in facility closure expenses during the three months ended March 31, 2017.

Greensboro, North Carolina

On October 5, 2015, the Company announced plans to consolidate our manufacturing facility located in Greensboro, North Carolina into other North American facilities. The transition was substantially completed in the fourth quarter of fiscal 2016. During the three and nine months ended December 31, 2016, the Company recognized $70 and $119, respectively, in exit and disposal costs related to the closure of the Greensboro facility in facility closure expenses in the condensed consolidated statements of income.

Dublin, Ireland

During the three months ended December 31, 2015, the Company began the process to consolidate our manufacturing facility located in Dublin, Ireland into our existing facility in Drogheda, Ireland (near Dublin). The consolidation was substantially completed in the first quarter of fiscal 2017. During the three and nine months ended December 31, 2016, the Company recognized $196 and $355, respectively, in exit and disposal costs related to the closure of the Dublin facility in facility closure expenses in the condensed consolidated statements of income.

13. Commitments and Contingencies

Litigation

The Company is subject to various legal claims and contingencies that arise out of the normal course of business, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on our financial condition, results of operations and cash flows.

14. Supplemental Cash Flow Disclosures

Supplemental disclosures with respect to cash flow information and non-cash operating, investing and financing activities are as follows:


	Nine Months Ended
	December 31, 2017			December 31, 2016
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	25,058		$	21,647
Income taxes paid, net of refunds		24,915			16,045
Supplemental Disclosures of Non-Cash Activities:
Capital expenditures incurred but not yet paid	$	2,724		$	2,803
Capital lease obligations incurred		—			864
Change in derivative contract fair value—asset position		8,768			—
Change in derivative contract fair value—liability position		(34,793	)		225
Business combinations accounted for as a purchase:
Assets acquired (excluding cash)	$	1,632,049		$	20,841
Liabilities assumed		(335,495	)		(11,553	)
Liabilities for contingent / deferred payments		(23,653	)		2,081
MCC common stock issued		(237,820	)		—
Noncontrolling interest		(1,100	)		—

Net cash paid	$	1,033,981		$	11,369

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information included in this Quarterly Report on Form 10-Q contains certain forward-looking statements that involve potential risks and uncertainties. Multi-Color Corporation’s future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed herein and those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 (the “2017 10-K”). Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date thereof. Results for interim periods may not be indicative of annual results.

Refer to “Forward-Looking Statements” following the index in this Form 10-Q. In the discussion that follows, all amounts are in thousands (both tables and text), except statistical data, per share data and percentages.

Following is a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of the Company’s financial condition and results of operations:

Executive Overview

We are a leader in global label solutions supporting a number of the world’s most prominent brands including leading producers of home & personal care, wine & spirits, food & beverage, healthcare and specialty consumer products. MCC serves international brand owners in North, Central and South America, Europe, China, Southeast Asia, Australia, New Zealand and South Africa with a comprehensive range of the latest label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer.

Results of Operations

Three Months Ended December 31, 2017 compared to the Three Months Ended December 31, 2016:

Net Revenues


					$		%
	2017		2016		Change		Change
Net revenues	$	352,699	$	210,658	$	142,041		67	%

Net revenues increased 67% to $352,699 compared to $210,658 in the prior year quarter. Acquisitions occurring after the beginning of the third quarter of fiscal 2017 accounted for a 57% increase in revenues, net of the sale of the Southeast Asian Durables business. Organic revenues increased 7% and foreign exchange rates, primarily driven by appreciation of the Euro, led to a 3% increase in revenues quarter over quarter.

Cost of Revenues and Gross Profit


							$		%
	2017			2016			Change		Change
Cost of revenues	$	295,397		$	169,441		$	125,956		74	%
% of Net revenues		83.8	%		80.4	%
Gross profit	$	57,302		$	41,217		$	16,085		39	%
% of Net revenues		16.2	%		19.6	%

Cost of revenues increased 74% or $125,956 compared to the prior year quarter. Acquisitions occurring after the beginning of the third quarter of fiscal 2017, net of divestitures, contributed 66% or $111,751. Organic revenue growth, net of operating improvements, increased cost of revenues by 6% or $9,778. The remaining increase of 3% or $4,427 related to the unfavorable effects of foreign exchange.

Gross profit increased 39% or $16,085 compared to the prior year quarter. Acquisitions occurring after the beginning of the third quarter of fiscal 2017 contributed 22% or $9,163 to gross profit, net of divestitures. Improved operating performance in the United Kingdom and North America led to an organic gross profit increase of 14% or $5,963, including a true up of accumulated depreciation impacting depreciation expense in the current period of $1,496. The remaining increase of 2% or $959 related to the favorable effects of foreign exchange. Gross margins were 16.2% of net revenues for the current year quarter including the impact of inventory purchase accounting charges of $5,002, or 1.4% of net revenues, compared to 19.6% in the prior year quarter. Acquisitions during the quarter operated at a lower gross profit, diluting the Company average.

Selling, General and Administrative Expenses and Facility Closure Expenses


	2017			2016			$ Change		% Change
Selling, general and administrative expenses	$	41,519		$	20,408		$	21,111		103	%
% of Net revenues		11.8	%		9.7	%
Facility closure expenses	$	761		$	393		$	368		94	%
% of Net revenues		0.2	%		0.2	%

Selling, general and administrative expenses increased $21,111 compared to the prior year quarter. Acquisitions occurring after the beginning of the third quarter of fiscal 2017, net of divestitures, and unfavorable foreign exchange contributed $8,971 and $494, respectively, to the increase. In the current year quarter, the Company incurred $12,021 of acquisition and integration expenses compared to $372 in the prior year quarter. Acquisition and integration expenses in the current year quarter included $11,697 related to the Constantia Labels acquisition.

Facility closure expenses were $761 in the current year quarter compared to $393 in the prior year quarter. The current quarter expenses primarily related to the consolidation of our manufacturing facility in Merignac, France into our plant in Libourne, France and the closure of our manufacturing facility in Dormans, France. Expenses in the prior year quarter primarily related to the consolidation of our manufacturing facilities in Dublin, Ireland into a single location and consolidation of our manufacturing facilities in Glasgow, Scotland into a single location.

Interest Expense and Other (Income) Expense, Net


	2017		2016			$ Change		% Change
Interest expense	$	21,624	$	6,141		$	15,483		252	%
Other (income) expense, net	$	9,702	$	(1,125	)	$	10,827		(962	%)

Interest expense increased 252% or $15,483 compared to the prior year quarter, primarily due to the increase in debt borrowings to finance the acquisition of Constantia Labels. The Company paid $2,194 in interest on loans prior to the acquisition and $4,587 in fees to access unused bridge loans necessary to secure financing for the acquisition which contributed to the increase in interest expense in the quarter. The Company also wrote off unamortized deferred debt fees related to the prior credit agreement upon execution of the New Credit Agreement in the amount of $660.

Other expense was $9,702 in the current year quarter compared to other income of $1,125 in the prior year quarter. This was primarily related to $9,479 of net foreign currency losses for the acquisition and structuring of Constantia Labels. Income in the prior year quarter primarily related to adjustments of $887 to reconcile certain supplemental purchase price accruals to management’s estimate of the liability. The remaining change in other income primarily related to gains and losses on foreign exchange.

Income Tax Expense


	2017			2016		$ Change			% Change
Income tax expense (benefit)	$	(36,815	)	$	3,205	$	(40,020	)		(1249	%)

Income tax was a benefit of $36,815 in the current year quarter compared to income tax expense of $3,205 in the prior year quarter. The income tax benefit was primarily the result of tax rate changes enacted during the period in the U.S. and Belgium, which resulted in net benefits of $16,228 and $15,409, respectively. These benefits were offset by certain discrete items that reduced income tax expense in the prior year quarter.

Nine Months Ended December 31, 2017 compared to the Nine Months Ended December 31, 2016:

Net Revenues


	2017		2016		$ Change		% Change
Net revenues	$	851,173	$	679,292	$	171,881		25	%

Net revenues increased 25% or $171,881 to $851,173 compared to $679,292 in the nine months ended December 31, 2016. Acquisitions occurring after the beginning of fiscal 2017 accounted for a 20% increase in revenues, net of divestitures. Increased revenues in North America and Europe contributed to an organic revenue increase of 5%. Foreign exchange rates led to a less than 1% increase in revenues year to date.

Cost of Revenues and Gross Profit


	2017			2016			$ Change		% Change
Cost of revenues	$	692,640		$	536,029		$	156,611		29	%
% of Net revenues		81.4	%		78.9	%
Gross profit	$	158,533		$	143,263		$	15,270		11	%
% of Net revenues		18.6	%		21.1	%

Cost of revenues increased 29% or $156,611 compared to the nine months ended December 31, 2016. Acquisitions, net of divestitures, occurring after the beginning of fiscal 2017 contributed 80% or $123,756, organic revenue growth increased cost of revenues by 6% or $28,120, and the unfavorable impact of foreign exchange rates contributed $4,735.

Gross profit increased 11% or $15,270 compared to the nine months ended December 31, 2016. Acquisitions occurring after the beginning of fiscal 2017 contributed 7% or $10,420 to gross profit, net of divestitures. Organic gross profit increase $3,669 due to improved operating performance, primarily in the United Kingdom, and a true up of accumulated depreciation impacting depreciation expense in the current period of $1,496. The remaining increase of 1% or $1,181 related to the favorable effects of foreign exchange. Gross margins were 18.6% of net revenues for the nine months ended December 31, 2017 including the impact of inventory purchase accounting charges of $5,450, or 0.6% of net revenues, compared to 21.1% in the nine months ended December 31, 2016.

Selling, General and Administrative Expenses and Facility Closure Expenses


	2017			2016			$ Change		% Change
Selling, general and administrative expenses	$	90,308		$	62,798		$	27,510		44	%
% of Net revenues		10.6	%		9.2	%
Facility closure expenses	$	890		$	607		$	283		47	%
% of Net revenues		0.1	%		0.1	%

Selling, general and administrative expenses increased $27,510 compared to the nine months ended December 31, 2016. Acquisitions occurring after the beginning of fiscal 2017, net of divestitures, contributed an increase of $10,545 and foreign exchange increased $555. In the nine months ended December 31, 2017, the Company incurred $17,014 of acquisition and integration expenses compared to $806 in the nine months ended December 31, 2016. Acquisition and integration expenses in the current year period included $15,986 related to the Constantia Labels acquisition. The remaining increase of $202 primarily related to compensation expenses.

Facility closure expenses were $890 in the nine months ended December 31, 2017 compared to $607 in the nine months ended December 31, 2016. The current quarter expenses primarily related to the consolidation of our manufacturing facility in Merignac, France into our plant in Libourne, France and the closure of our manufacturing facility in Dormans, France. Expenses in the prior year quarter primarily related to the consolidation of our manufacturing facilities in Dublin, Ireland into a single location and consolidation of our manufacturing facilities in Glasgow, Scotland into a single location.

Interest Expense and Other (Income) Expense, Net


	2017		2016			$ Change		% Change
Interest expense	$	34,628	$	19,118		$	15,510		81	%
Other (income) expense, net	$	8,225	$	(1,685	)	$	9,910		(588	%)

Interest expense increased $15,510 compared to the nine months ended December 31, 2016, primarily due to the increase in debt borrowings to finance the acquisition of Constantia Labels. The Company paid $2,194 in interest on loans prior to the acquisition and $4,587 in fees to access unused bridge loans necessary to secure financing for the acquisition which contributed to the increase in interest expense. The Company also wrote off unamortized deferred debt fees related to the prior credit agreement upon execution of the New Credit Agreement in the amount of $660.

Other expense was $8,225 in the nine months ended December 31, 2017 compared to other income of $1,685 in the nine months ended December 31, 2016 primarily related to $6,468 of net foreign currency losses for the acquisition and structuring of Constantia Labels, the unfavorable impact of the release of a $1,124 foreign indemnification receivable in the current year period, for which an offsetting tax liability was also relieved reducing the current year effective tax rate and gains and losses on foreign exchange, and $512 of loss on the sale of the Southeast Asian durables business. In the prior year period, non-core items of $887 related to adjustments to reconcile certain supplemental purchase price accruals to management’s estimate of the liability.

Income Tax Expense


	2017			2016		$ Change			% Change
Income tax expense (benefit)	$	(25,361	)	$	17,786	$	(43,147	)		(243	%)

Income tax was a benefit of $25,361 in the nine months ended December 31, 2017 compared to income tax expense of $17,786 in the nine months ended December 31, 2016. The income tax benefit was primarily the result of tax rate changes enacted during the period in the U.S. and Belgium, which resulted in net benefits of $16,228 and $15,409, respectively. Tax expense was also impacted by discrete items recognized in the current period that decreased tax expense, including the release of a tax liability related to a foreign indemnification receivable related to previous acquisitions for $1,124 for which there was an offsetting impact in other expense. In addition, the Company adopted a new accounting standard to simplify share based payments during the current period, which decreased tax expense $1,631 compared to the nine months ended December 31, 2016.

Liquidity and Capital Resources

Comparative Cash Flow Analysis

Through the nine months ended December 31, 2017, net cash provided by operating activities was $41,737 compared to $71,362 in the same period of the prior year. Net income adjusted for non-cash expenses consisting primarily of depreciation, amortization and deferred income taxes was $76,196 in the current year compared to $82,065 in the same period of the prior year. Our use of operating assets and liabilities of $34,459 in the current year increased from a use of $10,703 in the prior year.

Through the nine months ended December 31, 2017, net cash used in investing activities was $1,073,921 compared to $44,140 in the same period of the prior year. Capital expenditures, primarily funded by cash flows from operations totaled $44,126 in the current year compared to $34,055 in the same period of the prior year. Proceeds from the sale of property, plant and equipment totaled $566 in the current year compared to $1,284 in the same period of the prior year. The Company used $1,033,981 for acquisitions in the current year compared to $11,369 in the same period of the prior year. The Company received net cash proceeds of $3,620 from the sale of its Southeast Asian durables business in the current year.

Through the nine months ended December 31, 2017, net cash provided by financing activities was $1,083,023, which included $1,111,055 of net debt borrowings, $26,628 in debt issuance costs, dividends paid of $3,000 and $2,495 of proceeds from the issuance of common stock. Dividends paid included $2,720 to shareholders of Multi-Color Corporation and $279 to the minority shareholders of our 60% owned legal entity in Malaysia, which was sold in the second quarter of fiscal 2018. Cash provided by financing activities also included $899 in deferred payments related to the Italstereo and Supa Stik acquisitions.

Through the nine months ended December 31, 2016, net cash used in financing activities was $26,931, which included $25,423 of net debt payments, $1,784 in deferred payments related to the Flexo Print and Mr. Labels acquisitions and dividends paid of $3,030, offset by $3,820 of proceeds from various stock transactions. Dividends paid included $2,532 to shareholders of Multi-Color Corporation and $498 to the minority shareholders of our 60% owned legal entity in Malaysia, which was sold in the second quarter of fiscal 2018.

Capital Resources

Contractual Obligations

The following table summarizes the Company’s contractual obligations as of December 31, 2017:


	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More than 5 years
Long-term debt	$	1,601,166	$	16,450	$	12,724	$	16,429	$	20,169	$	460,394	$	1,075,000
Capital leases		37,145		4,544		4,928		3,557		3,006		2,190		18,920
Interest on long-term debt (1)		451,278		70,801		71,940		70,963		69,309		65,475		102,790
Rent due under operating leases		86,348		23,321		19,887		11,752		9,726		7,161		14,501
Unconditional purchase obligations		39,067		38,357		427		190		87		6		—
Pension and post retirement obligations		439		6		15		22		30		40		326
Unrecognized tax benefits (2)		—		—		—		—		—		—		—
Contingent liability acquired		9,671		—		9,671		—		—		—		—
Deferred purchase price		30,567		13,755		5,396		951		3,996		951		5,518

Total contractual obligations	$	2,255,681	$	167,234	$	124,988	$	103,864	$	106,323	$	536,217	$	1,217,055

(1)	Interest on floating rate debt was estimated using projected forward London Interbank Offered Rate (LIBOR) and Bank Bill Swap Bid Rates (BBSY) as of December 31, 2017.

(2)	The table excludes $4,559 of liabilities related to unrecognized tax benefits as the timing and extent of such payments are not determinable.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We continually evaluate our estimates, including, but not limited to, those related to revenue recognition, bad debts, inventories and any related reserves, income taxes, fixed assets, goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the facts and circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies and estimates are discussed in the “Critical Accounting Policies and Estimates” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2017 10-K. In addition, our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements included in our 2017 10-K.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

(in thousands, except for percentages)

Interest Rate Risk Management

In conjunction with entering into the New Credit Agreement (see Note 4), the Company entered into two spot non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps became effective October 2017 and will expire in October 2018. The Swaps will result in interest payments of 1.5625% plus the applicable margin per the requirements in the New Credit Agreement. The Company also entered into two forward starting non-amortizing Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt that will become effective in October 2018 and will expire in October 2022. The Swaps will result in interest payments of 2.1345% plus the applicable margin per the requirements in the New Credit Agreement.

Foreign Currency Risk Management

Net Investment Hedging

of €400,000, which have a maturity date of November 2025. This will effectively convert U.S. Dollar denominated debt to Euro denominated debt. The Company initially designated €205,000 of swap notional as a net investment hedge of the Company’s net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair values of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset the changes in the values of the net investments being hedged.

See Note 7 for additional details on derivative instruments. There are no other material changes to the market risk disclosures made in the Company’s Annual Report on Form 10-K for the year ended March 31, 2017.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2017. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2017.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A.

Risk Factors

Changes in applicable tax regulations could adversely affect our financial results.

The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the estimates provided elsewhere in this report, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The U.S. Securities and Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

As this and other tax regulations change and as there are updates or changes to our estimates of the transition impacts, our financial results could be adversely impacted.

The Company had no other material changes to the Risk Factors disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2017.

Item 5.

Other Information

Effective February 1, 2018, the Company entered into an Employment Agreement (the “Employment Agreement”) with Michael D. Cook, age 50, whereby he will serve as Chief Operating Officer – Consumer Product Goods. Mr. Cook previously served as President, North American Consumer Product Goods from 2015 to 2017 and as Vice President of Operations, North American Consumer Product Goods from 2011 to 2015. The terms of Mr. Cook’s Employment Agreement include the following:

•

An annual base salary of $400,000;

•

Eligibility to participate in the Company’s annual management incentive compensation program, with a bonus target of 50% of annual base salary and a bonus range between 25% and 75% of annual base salary;

•

Effective April 1, 2018, the Company shall grant Mr. Cook such number of restricted share units of the Company’s stock having a total value equal to $300,000 and such number of common stock (restricted shares) of the Company having a total value equal to $100,000, and such future restricted stock or restricted stock unit grants as may be determined by the Board or its committees from time to time;

•

Eligibility to participate in all savings and retirement plans to the extent applicable generally to other executives of the Company, including 401(k) retirement savings;

•

Eligibility to participate in the Company’s welfare, fringe, incentive and other similar benefit plans to the extent applicable generally to other executives of the Company; and

•

A monthly automobile allowance.

The Employment Agreement continues until terminated in accordance with its terms and may be terminated, at any time, for any reason, by the Company or Mr. Cook. If employment is terminated by the Company for any reason other than for Cause, as a result of the death, disability or retirement of Mr. Cook, or by Mr. Cook for good reason:

•

The Company will pay Mr. Cook’s annual base salary through the date of termination;

•

The Company will pay Mr. Cook any previously deferred compensation and any other non-qualified benefit plan balances in accordance with the terms of deferral or the other non-qualified plan;

•

The Company will pay Mr. Cook an amount equal to one times Mr. Cook’s annual base salary, paid in accordance with the Company’s regular payroll processing cycle, subject to the provisions of the Employment Agreement related to the Separation Pay Exemption Amount;

•

Except as prohibited in the applicable option/incentive plans, all outstanding stock option and restricted stock awards held by Mr. Cook will become immediately exercisable and/or vested, each non-qualified stock option shall remain exercisable through the latest date upon which it could have expired by its original terms, and each incentive stock option shall remain exercisable for 90 days; and

•

The Company will continue to provide the benefits to Mr. Cook and/or his family that would have been provided to them in accordance with the Company’s welfare plans, programs, practices and policies for specified periods after the date of termination.

Item 6.

Exhibits



4.1		Indenture governing the 4.875% Senior Notes due 2025, including the form of the 4.875% Note, by and between Multi-Color Escrow Issuer, LLC and U.S. Bank National Association, as Trustee, dated October 4, 2017 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 4, 2017 and incorporated herein by reference)

4.2		Escrow and Security Agreement by and among Multi-Color Corporation, Multi-Color Escrow Issuer, LLC and U.S. Bank National Association, as Escrow Agent, dated October 4, 2017 (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 4, 2017 and incorporated herein by reference)

4.3		Investors’ Rights Agreement of Multi-Color Corporation, dated as of October 31, 2017, by and between Multi-Color Corporation and each of the Investors whose name appears on the signature pages thereof (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 3, 2017 and incorporated herein by reference)

4.4		Credit Agreement, made and entered into as of October 31, 2017, by and among Multi-Color Corporation, Collotype International Holdings Pty Limited, the Lenders, certain Subsidiaries of Multi-Color Corporation, Bank of America, N.A., Citisecurities Limited., Citicorp International Limited, and Citibank, N.A., Sydney Branch (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 3, 2017 and incorporated herein by reference)

4.5		Supplemental Indenture governing the 4.875% Senior Notes due 2025, including the form of the 4.875% Note, by and between Multi-Color Corporation and U.S. Bank National Association, as Trustee, dated October 31, 2017 (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on November 3, 2017 and incorporated herein by reference)

10.1		Employment Agreement effective as of November 1, 2017 between Multi-Color Corporation and Michael Julian Henry (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 3, 2017 and incorporated herein by reference)

10.2		Service Agreement between Multi-Color Germany Holding GmbH and Dr. Oliver Apel effective as of January 1, 2018

10.3		Employment Agreement between Multi-Color Corporation and Michael D. Cook effective as of February 1, 2018

31.1		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Multi-Color Corporation
	(Registrant)

Date: February 9, 2018	By:	/s/ Sharon E. Birkett
		Sharon E. Birkett
		Vice President, Chief Financial Officer, Secretary

Exhibit 10.2



SERVICE AGREEMENT		ANSTELLUNGSVERTRAG

BETWEEN		ZWISCHEN DER

MULTI-COLOR GERMANY HOLDING GMBH		MULTI-COLOR GERMANY HOLDING GMBH

AND		UND

DR. OLIVER APEL		DR. OLIVER APEL

TABLE OF CONTENTS



1.	Service / Termination of former employment		2

	1.1	Service	2

	1.2	Termination of former employment	2

2.	Term of Agreement		3

3.	Scope of Employment; Location		3

	3.1	Scope of Service	3

	3.2	Duties	3

	3.3	Assumption of Further Functions	4

	3.4	Location and Travel	5

4.	Compensation		5

	4.1	Base Salary	5

	4.2	Bonus	6

	4.3	Restricted Stock Grant; Stock Option and Restricted Stock Awards	7

	4.4	Pension Plan	7

	4.5	Accident Insurance	8

	4.6	Medical Insurance	8

	4.7	Expenses	8

	4.8	Automobile Allowance	8

	4.9	Leave	8

5.	Confidentiality, Non-Competition and Other Covenants		9

	5.1	Non-Disclosure of Confidential Materials, Information and Intellectual Property	9

	5.2	Immunity from Liability for Disclosure	11

	5.3	Non-Solicitation of the Company’s Employees	11

	5.4	Covenant Against Unfair Competition	12

	5.5	Return of Confidential Materials and Information	15

	5.6	Future Employer	15

6.	Termination of Employment		15

	6.1	Termination	15

	6.2	Term and Termination / Notice Period	16

	6.3	Revocation	16

	6.4	Obligations of the Company upon Termination	17


7.	Incapacity for Service due to Illness, Accident or other reason		18

	7.1	Notice	18

	7.2	Incapacity	18

	7.3	Damages Claims	19

8.	Miscellaneous provisions		19

	8.1	Amendment; Waiver	19

	8.2	Entire Agreement	20

	8.3	Exemption from, or Compliance with, Section 409A	21

	8.4	Governing Law	21

	8.5	Headings; Section References; Construction	21

	8.6	Notices	22

	8.7	Policies, Regulations and Guidelines for Executives	23

	8.8	Severability and Reformation of Provisions	23

	8.9	Taxes	24

INHALTSVERZEICHNIS

1.	Anstellung / Aufhebung des Arbeitsverhältnisses		2

	1.1	Anstellung	2

	1.2	Aufhebung des Arbeitsverhältnisses	2

2.	Laufzeit der Vereinbarung		3

3.	Art und Ort der Anstellung		3

	3.1	Art der Anstellung	3

	3.2	Pflichten	3

	3.3	Übernahme weiterer Funktionen	4

	3.4	Anstellungsort und Dienstreisen	5

4.	Vergütung		5

	4.1	Grundgehalt	5

	4.2	Bonus	6

	4.4	Altersversorgung	7

	4.5	Unfallversicherung	8

	4.6	Krankenversicherung	8

	4.7	Aufwendungen	8



	4.8	Dienstwagen	8

	4.9	Urlaub	8

5.	Vertraulichkeit und Wettbewerbsverbote		9

	5.1	Geheimhaltung vertraulicher Materialien, Informationen und geistigen Eigentums	9

	5.2	Haftungsausschluss bei Offenlegung	11

	5.3	Verbot der Abwerbung von Mitarbeitern des Unternehmens	11

	5.4	Nachvertragliches Wettbewerbsverbot	12

	5.5	Rückgabe von vertraulichen Unterlagen und Informationen	15

	5.6	Zukünftiger Arbeitgeber	15

6.	Beendigung des Anstellungsverhältnisses		15

	6.1	Beendigung	15

	6.2	Laufzeit und Kündigung / Kündigungsfrist	16

	6.3	Abberufung und Freistellung	16

	6.4	Pflichten der Gesellschaft bei Beendigung	17

7.	Dienstverhinderung bei Krankheit, Unfall oder aus anderem Grund		18

	7.1	Anzeige	18

	7.2	Dienstverhinderung	18

	7.3	Schadensersatz	19

8.	Schlussbestimmungen		19

	8.1	Schriftformklausel; Verzicht; Ausschlussklausel	19

	8.2	Gesamte Vereinbarung	20

	8.3	Ausschluss und Übereinstimmung mit § 409A	21

	8.4	Anwendbares Recht und Gerichtsstand	21

	8.5	Überschriften, Verweise, Gliederung	21

	8.6	Mitteilungen	22

	8.7	Richtlinien, Regelungen und Leitlinien für Führungskräfte	23

	8.8	Trennbarkeit und Umgestaltbarkeit der Bestimmungen	23

	8.9	Steuern	24



EMPLOYMENT AGREEMENT		ANSTELLUNGSVERTRAG

This Service Agreement (“Agreement”) is entered into by and between Multi-Color Germany Holding GmbH (“Company”), and Dr. Oliver Apel, an individual (“Executive”).		Multi-Color Germany Holding GmbH (die “Gesellschaft”) und Dr. Oliver Apel (der “Geschäftsführer”) schließen hiermit den folgenden Anstellungsvertrag.

R ECITALS :		P RÄAMBEL :

A. The Executive currently serves as the “Finance Director - Labels” of Constantia Labels GmbH on the basis of an employment agreement dated 4 July 2014 (“Employment Agreement”) which was initially entered into by the Executive and Constantia Flexibles Germany GmbH and transferred to Constantia Labels GmbH.		A. Der Geschäftsführer ist derzeit als “Finance Director - Labels” bei Constantia Labels GmbH mit Arbeitsvertrag vom 4. Juli 2014 (der “Arbeitsvertrag”) tätig, der ursprünglich zwischen dem Geschäftsführer und Constantia Flexibles Germany GmbH geschlossen und auf Constantia Labels GmbH übertragen worden war.

B. The Company desires to appoint the Executive as managing director and to retain the services of the Executive as its managing director, whereby the Executive shall also serve as “Chief Operating Officer – Food and Beverage” of Multi-Color Corporation, the holding company of the Company, and the Executive desires to render such services to the Company and Multi-Color Corporation.		B. Die Gesellschaft möchte Herrn Apel zum Geschäftsführer der Gesellschaft ernennen und dessen Dienste als Geschäftsführer beibehalten, wobei der Geschäftsführer zugleich als “Chief Operating Officer – Food and Beverage” – für Multi-Color Corporation, die Konzernobergesellschaft der Gesellschaft tätig wird und der Geschäftsführer möchte diese Dienstleistungen für die Gesellschaft sowie Multi-Color Corporation erbringen.

C. The parties hereto desire to set forth the terms and conditions of the service relationship between the Executive and the Company by entering into this Agreement that shall replace the Employment Agreement.		C. Die Parteien beabsichtigen, die Bedingungen des Anstellungsverhältnisses zwischen dem Geschäftsführer und der Gesellschaft, welches den Arbeitsvertrag ersetzen soll, durch den Abschluss dieser Vereinbarung festzulegen.

D. Where mentioned in this Agreement, “affiliate” refers to an affiliated company in the meaning of sec. 15 AktG (Stock Corporations Act), including Multi-Color Corporation.		D. Soweit in dieser Vereinbarung auf “verbundene Unternehmen” Bezug genommen wird, bezieht sich dies stets auf verbundene Unternehmen im Sinne des § 15 AktG (Aktiengesetz), einschließlich Multi-Color Corporation.



A GREEMENT :		V EREINBARUNG :

N OW , T HEREFORE , the parties hereby agree as follows:		D IE P ARTEIEN VEREINBAREN HIERMIT DIE NACHFOLGENDEN B EDINGUNGEN :

1. S ERVICE / T ERMINATION OF FORMER EMPLOYMENT .		1. A NSTELLUNG / A UFHEBUNG DES A RBEITSVERHÄLTNISSES .

*1.1 Service.* The Company hereby employs the Executive for the “Term” (as defined in Section 2) as its managing director, and the Executive accepts employment by the Company and agrees to serve the Company during the Term, upon the terms and conditions hereinafter set forth.		*1.1 Anstellung* . Die Gesellschaft beschäftigt den Geschäftsführer für die „Laufzeit“ der Vereinbarung (wie in Abschnitt 2 definiert) und der Geschäftsführer willigt in das Anstellungsverhältnis mit der Gesellschaft ein und verpflichtet sich, für die Gesellschaft während der Laufzeit gemäß den nachfolgenden Anstellungsbedingungen tätig zu werden.

*1.2 Termination of former employment* . The Employment Agreement is hereby terminated with effect as of the date on which the appointment of the Executive as managing director of the Company becomes effective and thereafter replaced in its entirety by this Agreement. All years of service rendered under the Employment Agreement (i.e. since 27 September 2004) shall be taken into account.		*1.2 Aufhebung des Arbeitsverhältnisses.* Der Arbeitsvertrag wird zum Zeitpunkt des Wirksamwerdens der Bestellung des Geschäftsführers zum Geschäftsführer der Gesellschaft aufgehoben und in seiner Gesamtheit durch diese Vereinbarung ersetzt. Die unter dem Arbeitsvertrag zurückgelegten Dienstzeiten (d.h. seit 27. Sept. 2004) werden angerechnet.



2. T ERM OF A GREEMENT . Subject to termination as set forth in Section 6, the term of service of the Executive pursuant to this Agreement shall commence the date on which the appointment of the Executive as managing director of the Company becomes effective – which is planned to take place on January 1, 2018 - and shall be indefinite in time thereafter. The “Term” shall refer to the period of time during which the Executive is employed pursuant to this Agreement.		2. L AUFZEIT DER V EREINBARUNG . Vorbehaltlich einer Beendigung gemäß Abschnitt 6 beginnt die Laufzeit des Anstellungsverhältnisses des Geschäftsführers gemäß dieser Vereinbarung zu dem Zeitpunkt, in dem die Bestellung von Herrn Apel zum Geschäftsführer der Gesellschaft wirksam wird – was für den 1. Januar 2018 vorgesehen ist – und ist danach unbefristet. Die “Laufzeit” bezieht sich auf den Zeitraum, in dem der Geschäftsführer gemäß dieser Vereinbarung tätig wird.

3. S COPE OF E MPLOYMENT ; L OCATION .		3. A RT UND O RT DER A NSTELLUNG .

*3.1 Scope of Service.* During the Term of this Agreement, the Executive shall serve as managing director of the Company.		*3.1 Art der Anstellung.* Während der Laufzeit dieser Vereinbarung wird Herr Apel als Geschäftsführer der Gesellschaft tätig.

*3.2 Duties.* The Executive shall devote all of his professional attention and effort, all of his professional expertise and ability and all of his experience to the Company. The Executive shall at all times perform his functions with the due care of a prudent business man and in accordance with the law, in particular in accordance with the German Limited Liability Companies Act (GmbH-Gesetz), with the provisions of the Company’s Articles of Association, the provisions of Agreement, the applicable rules of procedure for the management, the applicable memorandum of association and the instructions from shareholders at shareholders’ meetings. The Executive shall represent the Company in accordance with the German Limited Liability Companies Act (GmbH-Gesetz). The Company may appoint further managing directors at any time and amend the Executive’s power to represent the Company at any time. In the event more than one managing director has been appointed by the Company, the Company is to be managed in consultation with the other managing directors at all times.		*3.2 Pflichten.* Der Geschäftsführer wird seine volle Einsatzbereitschaft und Arbeitsleistung, seine gesamten Fachkenntnisse und beruflichen Fähigkeiten sowie seine gesamte Berufserfahrung in den Dienst der Gesellschaft stellen. Der Geschäftsführer wird sein Amt stets mit der Sorgfalt eines ordentlichen Kaufmannes und nach Maßgabe der Gesetze, insbesondere des GmbH-Gesetzes, der Bestimmungen der Satzung der Gesellschaft, dieses Anstellungsvertrages, der jeweiligen Geschäftsordnung für die Geschäftsführung, des jeweiligen Gesellschaftsvertrags sowie den Weisungen der Gesellschafterversammlung ausüben. Der Geschäftsführer vertritt die Gesellschaft in Übereinstimmung mit dem GmbH-Gesetz. Die Gesellschaft kann jederzeit weitere Geschäftsführer bestellen und die Vertretungsbefugnis des Geschäftsführers jederzeit ändern. Sind mehrere Geschäftsführer bestellt, so hat die Leitung des Unternehmens stets in Abstimmung mit den anderen Geschäftsführern zu erfolgen.



*3.3 Assumption of Further Functions.* Upon the request of the Company, the Executive shall also take on duties and responsibilities at businesses and/or entities that are affiliated with the Company, in particular the duties and responsibilities of a member of a management body or supervisory board or a similar position. The same applies to taking on functions at associations and similar organizations, to the extent that the Company has an interest in same. Subject to a written agreement by and the between the parties or this Agreement stating otherwise, the assumption of any such duties and responsibilities does not give rise to any further service relationships between the parties nor to any separate remuneration rights or entitlements. To the extent that the Executive does indeed receive separate remuneration for taking on said positions and offices, said remuneration shall be offset against the Executive’s remuneration rights and entitlements under this Agreement.		*3.3 Übernahme weiterer Funktionen.* Auf Anfrage der Gesellschaft wird der Geschäftsführer auch Aufgaben und Pflichten bei Unternehmen und Geschäftseinheiten übernehmen, die mit der Gesellschaft verbunden sind, insbesondere die Aufgaben und Pflichten eines Geschäftsführungsorgans oder Aufsichtsrates oder eine ähnliche Position. Dies gilt gleichermaßen für die Übernahme von Funktionen bei Verbänden und ähnlichen Organisationen, soweit die Gesellschaft daran ein Interesse hat. Soweit nicht in einer schriftlichen Vereinbarung der Parteien oder dieser Vereinbarung abweichend bestimmt, erwachsen aus der Übernahme solcher Aufgaben und Pflichten keine weiteren Anstellungsverhältnisse und keine weitergehenden Vergütungsansprüche. Sofern der Geschäftsführer für die Übernahme solcher Ämter und Funktionen tatsächlich eine gesonderte Vergütung erhält, wird diese mit den Vergütungsansprüchen des Geschäftsführers nach dieser Vereinbarung verrechnet.

In particular, the Executive shall also serve as Chief Operating Officer – Food and Beverage of Multi-Color Corporation. The Executive shall have all authority, duties and responsibilities customarily exercised by an individual serving as Chief Operating Officer – Food and Beverage in a corporation of the size and nature of the Multi-Color Corporation and such other authority, duties and responsibilities as are delegated to him by the Board or the Multi-Color Corporation’s Chief Executive Officer from time to time.		Insbesondere wird der Geschäftsführer auch als „Chief Operating Officer – Food and Beverage“ für die Multi-Color Corporation tätig werden. Der Geschäftsführer wird dabei über sämtliche Befugnisse, Pflichten und Verantwortlichkeiten verfügen, die üblicherweise einer Person zustehen, die als „Chief Operating Officer – Food and Beverage“ in einem Unternehmen dieser Art und Größe tätig ist sowie über solche Befugnisse, Pflichten und Verantwortlichkeiten verfügen, die ihm vom Vorstand oder dem Vorstandsvorsitzenden der Multi-Color Corporation zeitweise übertragen werden.

Notwithstanding the foregoing, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, trade association, civic or charitable boards or committees, (B) deliver lectures, fulfil speaking engagements or		Es stellt keinen Verstoß gegen diese Vereinbarung vor, wenn der Geschäftsführer (A) in Fachverbänden, unternehmerischen, bürgerlichen oder wohltätigen Vereinigungen bzw. Ausschüssen tätig ist, (B) Vorlesungen



teach at educational institutions, or (C) manage personal investments and affairs, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.		hält, Vortragsverpflichtungen nachkommt sowie an Bildungseinrichtungen unterrichtet, oder (C) persönlichen Investitionen und Angelegenheiten nachgeht, solange diese Tätigkeiten die Erfüllung der Verantwortlichkeiten des Geschäftsführers gemäß dieser Vereinbarung nicht wesentlich beeinträchtigen.

*3.4 Location and Travel* . During the Term of this Agreement, the Executive shall principally perform his duties at the Company’s offices located in Hannoversch Münden, Germany, except in the event the Executive agrees in writing to another location. Notwithstanding the foregoing, the Company may, as far as it is reasonable and considering the Executive’s interests, relocate the Executive to the principal office located in Frankfurt am Main. However, Multi-Color Corporation is headquartered in Batavia, Ohio, and the Executive shall attend this office from time to time, and undertake such other national and international travel, as may be reasonably necessary for the proper performance of his duties. The Company may request a change in the Executive’s principal place of work to Batavia, Ohio, subject to the Executive consenting to such change. If the Executive’s principal place of work is changed and the Executive agrees to move his principal place of residence, the Company will reimburse the Executive for his reasonable relocation costs, real estate agent and solicitor fees and other incidental expenses associated with his transfer to the United States as well as his repatriation to Germany.		*3.4 Anstellungsort und Dienstreisen.* Während der Laufzeit dieser Vereinbarung nimmt der Geschäftsführer seine Aufgaben grundsätzlich in den Geschäftsräumen der Gesellschaft in Hannoversch Münden wahr, es sei denn, dass der Geschäftsführer einem anderen Ort schriftlich zustimmt. Die Gesellschaft kann, soweit dies angemessen ist und die Interessen des Geschäftsführers berücksichtigt, den Geschäftsführer in die Hauptniederlassung in Frankfurt am Main versetzen. Der Hauptsitz der Multi-Color Corporation befindet sich jedoch in Batavia, Ohio (US) und der Geschäftsführer hat zeitweise diesen Geschäftssitz aufzusuchen und weitere nationale und internationale Geschäftsreisen zu unternehmen, soweit dies für eine ordnungsgemäße Erfüllung seiner Aufgaben angemessen und erforderlich ist. Die Gesellschaft kann den Hauptarbeitsort des Geschäftsführers nach Batavia, Ohio (US), verlegen, sofern der Geschäftsführer einer solchen Änderung zustimmt. Wenn sich der Hauptarbeitsort des Geschäftsführers ändert und dieser bereit ist, seinen (Haupt-)Wohnsitz zu verlegen, erstattet die Gesellschaft dem Geschäftsführer seine die mit seinem Umzug in die USA und ggf. seiner späteren Rückkehr nach Deutschland verbundenen Umzugskosten, Immobilienmakler- und Anwaltskosten sowie andere Nebenkosten in angemessenem Umfang.

4. C OMPENSATION .		4. V ERGÜTUNG .

*4.1 Base Salary.* Effective January 1, 2018, the Executive shall receive a		*4.1 Grundgehalt.* Mit Wirkung zum 1. Januar 2018 erhält der Geschäftsführer ein



beginning Annual Base Salary of €325,000. The Annual Base Salary shall be reviewed annually based upon Executive’s performance, pertinent salary survey information and such other information as the Compensation Committee deems appropriate, but may not be adjusted downward without the Executive’s written consent. The Annual Base Salary shall be payable net of all bank fees in accordance with the Company’s normal payroll practices, and is subject to all proper taxes and withholding. After any such adjustment, the term “Annual Base Salary” as used in this Agreement shall thereafter refer to such amount as adjusted.		jährliches Grundgehalt in Höhe von (zunächst) EUR 325.000 (in Worten: dreihundertfünfundzwanzigtausend) brutto. Das Jahresgrundgehalt wird jährlich überprüft, basierend auf der Leistung des Geschäftsführers, relevanten Gehaltsstrukturdaten und anderen Informationen, die das “Compensation Committee” als relevant erachtet, kann jedoch ohne die schriftliche Zustimmung des Geschäftsführers nicht reduziert werden. Das Jahresgrundgehalt ist zahlbar nach Abzug aller Abgaben gemäß den normalen Gehaltsabrechnungsprozessen der Gesellschaft und unterliegt allen einschlägigen Steuern und Sozialabgaben. Nach einer Anpassung bezieht sich der in diesem Vertrag verwendete Begriff “Jahresgrundgehalt” auf den jeweils angepassten Betrag.

*4.2 Bonus.* Effective April 1, 2018, Executive will be eligible to participate in the Multi-Color Corporation Management Incentive Compensation Program (the “Incentive Plan”), subject to the terms and conditions as specified in the Incentive Plan. The Incentive Plan is based on meeting certain financial targets as established by, and in the sole discretion of, the Board or by the Compensation Committee of the Board of Multi-Color Corporation on an annual basis. The bonus target, as a percent of Annual Base Salary, is 50%, with a bonus range between 25% and 75% of Annual Base Salary. If financial targets are met between the minimum, target and maximum brackets, the payout is calculated on a prorated basis between the two brackets that apply. The Executive shall be paid his Bonus when other executives of the Company are paid their annual bonuses, but in no event beyond the last day on which such payment would qualify as a short-term deferral under Treasury Regulation § 1.409A-1(b)(4). In the event the Agreement is terminated by the Company for good cause (Section 626 German Civil Code (BGB), there shall be no entitlement to a bonus for the		*4.2 Bonus.* Mit Wirkung zum 1. April 2018 ist der Geschäftsführer berechtigt, an dem “Multi-Color Color Corporation Management Incentive Compensation Program” (dem “Incentive Plan”) teilzunehmen, entsprechend der im Incentive Plan festgelegten Bedingungen. Der Incentive Plan basiert auf der Erfüllung bestimmter finanzieller Ziele, die von und nach alleinigem Ermessen des Vorstands oder des “Compensation Committee” des Vorstands der Multi-Color Corporation jährlich bestimmt werden. Der Zielbonus beträgt 50% des Jahresgrundgehalts, wobei der Bonusrahmen zwischen 25% und 75% des Jahresgrundgehalts liegt. Werden die finanziellen Ziele zwischen den Mindest-, Ziel-und Höchstgrenzen erreicht, so erfolgt die Berechnung anteilig zwischen den beiden jeweils einschlägigen Grenzen. Der Geschäftsführer erhält seinen Bonus in dem Zeitpunkt, in dem auch andere Führungskräfte der Gesellschaft ihren Jahresbonus erhalten, jedoch in keinem Falle nach dem Tag, an dem diese Zahlung als “short term deferral” gemäß (US) Treasury Regulation § 1.409A-1(b)(4) gelten würde. Sofern dieser Anstellungsvertrag



relevant financial year. In other cases of a departure in the course of a given year the bonus shall be calculated according to the level of target achievement at the time of departure and in the event said departure is preceded by an irrevocable release of the Executive from duty, it shall be calculated according to the level of target achievement at the time of said release.		durch die Gesellschaft aus wichtigem Grund (§ 626 BGB) gekündigt wird, besteht für das betreffende Geschäftsjahr kein Bonusanspruch. In sonstigen Fällen des unterjährigen Ausscheidens bemisst sich der Bonus nach dem Zielerreichungsgrad zum Zeitpunkt des Ausscheidens und im Falle einer vorhergehenden unwiderruflichen Freistellung des Geschäftsführers nach dem Zielerreichungsgrad zum Zeitpunkt der Freistellung.

*4.3 Restricted Stock Grant; Stock Option and Restricted Stock Awards.* Effective April 1, 2018, the Executive shall participate in a share based bonus program of Multi-Color Corporation and shall be granted a number of restricted share units (RSU’s) of Multi-Color’s stock having a total value equal to US$285,000 and such number of common stock (Restricted Shares) of Multi-Color Corporation having a total value equal to US$95,000, as set forth more fully in that certain Restricted Share Unit Agreement (Performance-Based), and that certain Restricted Share Agreement (Time-Based), each dated April 1, 2018. The Executive may be eligible for future grants during the Term of this Agreement, as determined and subject to the terms set by the Board of Multi-Color Corporation or its committees from time to time.		Mit Wirkung zum 1. April 2018 wird der Geschäftsführer an einem anteilsbasierten Bonus Programm der Multi-Color Corporation teilnehmen und erhält eine Anzahl von “Restricted Stock Units” (“RSUs”) aus dem Aktienbestand der Multi-Color Corporation mit einem Gesamtwert von USD 285.000 sowie eine Anzahl von Aktien (“Restricted Shares”) der Gesellschaft, deren Gesamtwert USD 95.000 entspricht, wie in dem “Restricted Share Unit Agreement” (leistungsabhängig) sowie dem “Restricted Share Agreement” (zeitabhängig), jeweils datierend auf den 1. April 2018, näher geregelt. Der Geschäftsführer kann während der Laufzeit dieser Vereinbarung gegebenenfalls zum Bezug weiterer Zuwendungen berechtigt sein, wobei sich dies nach den Bedingungen richtet, die der Vorstand der Multi-Color Corporation oder seine Ausschüsse festlegen.

*4.4 Pension Plan.* The Company will, if and to the extent that this is permissible from a legal and a tax perspective, continue the existing occupational pension, i.e. the Executive may make an annual pension contribution of up €15,000 gross by way of a salary conversion to an appropriate pension fund and the Company will continue to pay the annual contributions to the existing company direct insurance (plus tax), in the amount of €1,752. In addition, the Company will also make the required contribution to the statutory pension fund.		*4.4 Altersversorgung.* Sofern und soweit gesetzlich und steuerlich zulässig, wird die Gesellschaft die bestehende Altersversorgung fortführen und damit sowohl dem Geschäftsführer ermöglichen, im Wege einer Entgeltumwandlung einen jährlichen Vorsorgebetrag von bis zu EUR 15.000 brutto an eine entsprechende Pensionskasse zu übertragen als auch den Beitrag zur bestehenden Firmendirektversicherung zuzüglich Steuern in Höhe von EUR 1.752 weiter zahlen. Zudem wird die Gesellschaft den vorgeschriebenen Beitrag zur gesetzlichen



		Rentenversicherung leisten.

*4.5 Accident Insurance* The Company shall, if and to the extent that this is legally permissible, continue the existing accident insurance for the Executive. All claims to benefits shall be subject to the terms and conditions of the applicable insurance policy.		*4.5 Unfallversicherung* Die Gesellschaft wird, sofern und soweit gesetzlich zulässig, die zugunsten des Geschäftsführers bestehende Unfallversicherung fortführen. Es gelten die Versicherungsbedingungen in ihrer jeweiligen Fassung.

*4.6 Medical Insurance* . During the Term of this Agreement, if the Executive participates in a private health care policy instead of a mandatory health care policy, the Company will subsidize such private health care policy up to the statutory employer maximum.		*4.6 Krankenversicherung.* Wenn der Geschäftsführer während der Dauer dieser Vereinbarung Beiträge an eine private statt eine gesetzliche Krankenversicherung zahlt, übernimmt die Gesellschaft einen Teil dieser Beitragspflicht bis zur Höhe des Arbeitgeberanteils in der gesetzlichen Krankenversicherung.

*4.7 Expenses.* During the Term of this Agreement, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the Executive in accordance with the Company’s policies, as applicable from time to time, and in compliance with applicable tax laws.		*4.7 Aufwendungen.* Während der Laufzeit dieser Vereinbarung hat der Geschäftsführer Anspruch auf Erstattung der ihm in geschäftlichen Angelegenheiten entstehenden angemessenen Aufwendungen gemäß der jeweils geltenden Richtlinien der Gesellschaft und im Einklang mit den jeweils anwendbaren steuerlichen Vorschriften.

*4.8 Automobile Allowance.* During the Term of this Agreement, the Executive will be provided a leased vehicle in accordance with the Company’s car policy. The leased vehicle may be used for private purposes. Any private use that results in a non-cash benefit will be taxed at a flat-rate according to current tax regulations, or through other tax approaches as permitted by German tax law. This tax is to be borne by the Executive.		*4.8 Dienstwagen.* Während der Laufzeit dieser Vereinbarung wird dem Geschäftsführer ein Dienstwagen entsprechend der Dienstwagenrichtlinie der Gesellschaft (“Company’s Car Policy”) zur Verfügung gestellt. Der Dienstwagen darf für private Zwecke genutzt werden. Jede private Nutzung, die zu einer geldwerten Leistung führt, ist nach den geltenden steuerrechtlichen Vorschriften oder nach sonstigen steuerlichen Ansätzen des deutschen Steuerrechts zu versteuern. Diese Steuer trägt der Geschäftsführer.

*4.9 Leave.* The Executive is entitled to an annual leave of 30 working days per calendar year.. Leave must be scheduled with sufficient advance notice to take into account the Company’s business needs. Days of annual leave of a given calendar must be taken by 31 March of the following year, after		*4.9 Urlaub.* Der Geschäftsführer hat Anspruch auf einen Jahresurlaub von 30 Arbeitstagen. Urlaub muss mit einer ausreichenden Vorlaufzeit geplant werden, um die betrieblichen Erfordernisse der Gesellschaft zu berücksichtigen. Urlaubstage eines Kalenderjahres müssen bis zum 31. März des



which they shall be forfeited with no payment in lieu made.		Folgejahres genommen werden, sonst verfallen sie ohne dass ein finanzieller Ausgleich erfolgt.

5. C ONFIDENTIALITY , N ON -C OMPETITION AND O THER C OVENANTS . In consideration of the Company’s employment of the Executive and such additional consideration as required by applicable law and hereinafter provided, the Executive does covenant and agree with the Company as follows:		5. V ERTRAULICHKEIT UND W ETTBEWERBSVERBOTE . In Ansehung des Anstellungsverhältnisses zwischen dem Geschäftsführer und der Gesellschaft sowie unter Berücksichtigung weiterer Erwägungen gemäß einschlägiger gesetzlicher Bestimmungen, die im Folgenden aufgeführt werden, erkennt der Geschäftsführer die nachfolgenden Verpflichtungen an und kommt mit der Gesellschaft wie folgt überein:

*5.1 Non-Disclosure of Confidential Materials, Information and Intellectual Property.* The Executive acknowledges that as a leader in the highly-competitive businesses of printing labels, including but not limited to, inmold, pressure sensitive, heat transfer, cut and stack and shrink sleeve label technologies, the Company and its affiliates have developed, acquired and implemented confidential intellectual property, materials and information, proprietary strategies and programs, which the Company and its affiliates have taken steps to protect as trade secrets (as defined in Ohio’s Uniform Trade Secrets Act, O HIO R EV . C ODE §§ 1333.61—1333.69) and which include copyrighted materials, patent materials, expansion plans, market research, sales systems, marketing programs, product development strategies, budgets, pricing and cost strategies, identity and requirements of accounts, and other non-public proprietary information regarding customers and employees of the Company and its affiliates or of customers or non-public proprietary information regarding the business of the Company and its affiliates or the business of customers of the Company and its affiliates (collectively “Confidential Materials and Information”). In performing duties for the Company and its affiliates, the Executive		*5.1 Geheimhaltung vertraulicher Materialien, Informationen und geistigen Eigentums.* Dem Geschäftsführer ist bekannt, dass die Gesellschaft sowie die mit ihr verbundenen Unternehmen als führendes Unternehmen im hart umkämpften Bereich des Etikettendrucks, einschließlich, aber nicht beschränkt auf, Inmold-, Haftklebe-, Wärmetransfer-, Zuschnitt-, Stapel- und Schrumpfschlauch-Etikettentechnologien, vertrauliche Immaterialgüter, Materialien und Informationen, sowie urheberrechtlich geschützte Strategien und Programme entwickelt, erworben und implementiert hat, die die Gesellschaft und die mit ihr verbundenen Unternehmen als Geschäftsgeheimnisse (im Sinne des US-amerikanischen Ohio’s Uniform Trade Secrets Act, US-OHIO REV. CODE §§ 1333.61 - 1333.69) schützen lassen und die urheberrechtlich geschützte Güter, Patente, Wachstumspläne, Marktforschungsinformationen, Vertriebssysteme, Marketingprogramme, Produktentwicklungsstrategien, Budgetplanungen, Preis- und Kostenstrategien sowie Kennungen und Anforderungen von Konten und andere nicht öffentlich zugängliche Informationen über Kunden und Mitarbeiter der Gesellschaft und mit ihr


regularly will be exposed to and work with Confidential Materials and Information of the Company and its affiliates. The Executive acknowledges that such Confidential Materials and Information are critical to the success of the Company and its affiliates and that Company and its affiliates have invested substantial money in developing these Confidential Materials and Information. While the Executive is employed by the Company, and after such employment ends for any reason, the Executive will not reproduce, publish, disclose, use, reveal, show, or otherwise communicate to any person or entity any Confidential Materials and Information of the Company and its affiliates, unless specifically assigned or directed by the Company or its affiliates to do so or unless it shall have become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The covenant in this Section 5.1 has no temporal, geographical or territorial restriction or limitation, and it applies wherever the Executive may be located. The engaging by the Executive in any of the activities prohibited by this Section 5.1 shall constitute improper appropriation and/or use of such information. The Executive expressly acknowledges the trade secret status of the confidential information of the Company and its affiliates and that the confidential information constitutes a protectable business interest of the Company and its affiliates .		verbundener Unternehmen oder nicht-öffentlich zugängliche Informationen der Kunden über die Geschäftstätigkeit der Gesellschaft und mit ihr verbundener Unternehmen oder das Geschäft der Kunden der Gesellschaft und mit ihr verbundener Unternehmen (zusammen “vertrauliche Materialien und Informationen”) beinhalten. Bei der Erfüllung seiner Pflichten gegenüber der Gesellschaft und mit ihr verbundener Unternehmen ist der Geschäftsführer regelmäßig mit vertraulichen Materialien und Informationen der Gesellschaft und mit ihr verbundener Unternehmen in Kontakt und arbeitet mit diesen. Der Geschäftsführer erkennt an, dass solche vertraulichen Materialien und Informationen für den Erfolg der Gesellschaft und der mit ihr verbundenen Unternehmen entscheidend sind und dass die Gesellschaft und die mit ihr verbundenen Unternehmen erhebliche Mittel in die Entwicklung der vertraulichen Materialien und Informationen investiert haben. Solange der Geschäftsführer bei der Gesellschaft angestellt ist sowie nach Beendigung dieses Anstellungsverhältnisses, gleich aus welchem Beendigungsgrund, wird der Geschäftsführer keine vertraulichen Materialien und Informationen der Gesellschaft oder mit ihr verbundener Unternehmen reproduzieren, veröffentlichen, zugänglich machen, verwenden, offenlegen, darstellen oder auf andere Weise an eine Person oder ein Unternehmen kommunizieren, es sei denn, dass die Gesellschaft oder ein mit ihr verbundenes Unternehmen dies ausdrücklich zulässt oder anordnet oder dass das vertrauliche Material oder die Information öffentlich bekannt wird (ausgenommen durch Handlungen des Geschäftsführers oder seiner Vertreter). Die Vertraulichkeitsvereinbarung in diesem Abschnitt 5.1 hat keine zeitliche, geografische oder territoriale Beschränkung und gilt überall dort, wo sich der Geschäftsführer befindet. Die Vornahme einer der in Abschnitt 5.1 verbotenen Tätigkeiten durch den Geschäftsführer stellt eine



		unzulässige Aneignung und / oder Verwendung solcher Informationen dar. Der Geschäftsführer anerkennt ausdrücklich den Geschäftsgeheimnisstatus der vertraulichen Informationen der Gesellschaft und mit ihr verbundener Unternehmen an sowie dass diese ein zu schützendes Geschäftsinteresse der Gesellschaft und der mit ihr verbundenen Unternehmen darstellen.

*5.2 Immunity from Liability for Disclosure.* Pursuant to 18 U.S.C § 1833 (b)(3)(A), the Company hereby notifies the Executive of his immunity from criminal or civil liability under Federal or State trade secret laws for disclosure of a trade secret that is made either: (1) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Unless otherwise stated in this Agreement, the preceding sentence and the immunity granted therein does not restrict the Company or one of its affiliates’ right to enforce the confidentially obligations under Section 5.1 or prevent the Company and its affiliates from pursuing a cause of action for a breach of these confidentiality obligations, provided that such cause of action does not arise out of Federal or State trade secret law.		*5.2 Haftungsausschluss bei Offenlegung.* Gemäß 18 U.S.C § 1833 (b) (3) (A) informiert die Gesellschaft hiermit den Geschäftsführer über den Ausschluss von strafrechtlicher oder zivilrechtlicher Haftung nach US-Geheimnisschutzgesetzen für die Offenlegung eines Geschäftsgeheimnisses, welches entweder: (1) vertraulich, direkt oder indirekt an einen Bundes-, Staats- oder lokalen Regierungsbeamten, oder an einen Anwalt mit dem alleinigen Ziel erfolgt, einen mutmaßlichen Gesetzesverstoß zu melden oder zu untersuchen; oder (2) in einer Beschwerde oder einem anderen Dokument erfolgt, das in einer Klage oder einem anderen Verfahren eingereicht wurde, wenn diese Einreichung versiegelt erfolgte. Sofern in dieser Vereinbarung nichts anderes bestimmt ist, schränkt der vorstehende Satz und der darin gewährte Haftungsausschluss das Recht der Gesellschaft oder mit ihr verbundener Unternehmen zur Durchsetzung der Vertraulichkeitsverpflichtungen nach Ziffer 5.1 nicht ein oder hindert die Gesellschaft oder die mit ihr verbundenen Unternehmen nicht daran, Ansprüche wegen Verletzung dieser Geheimhaltungspflichten geltend zu machen, sofern sich der Grund dieser Ansprüche nicht aus US-Geheimnisschutzgesetzen ergibt.

*5.3 Non-Solicitation of the Company’s Employees.* For a period of twenty-four (24) months after the termination of his service relationship, the Executive will not actively solicit, either directly or indirectly through any third person, any other employee of the Company to terminate his or her		*5.3 Verbot der Abwerbung von Mitarbeitern des Unternehmens.* Für einen Zeitraum von vierundzwanzig (24) Monaten nach der Beendigung des Anstellungsverhältnisses wird der Geschäftsführer weder direkt noch indirekt durch eine dritte Person, einen anderen



employment with the respective entity without the written consent of the Company. For each action resulting in the culpable breach of this non-solicitation covenant, the Executive shall pay a contractual penalty equal to one gross monthly salary. This does not limit the Company’s right to claim further damages and take further actions and remedies available to it at law in the event of a breach. The non-solicitation obligation shall also apply to employees of affiliates of the Company.		Angestellten der Gesellschaft dazu bewegen, sein Anstellungsverhältnis mit der jeweiligen Gesellschaft ohne schriftliche Zustimmung der Gesellschaft zu beenden. Für jeden schuldhaften Verstoß gegen dieses Abwerbeverbot hat der Geschäftsführer eine Vertragsstrafe von einen Bruttomonatsgehalt zu zahlen. Dies schränkt das Recht der Gesellschaft zur Geltendmachung weiterer Schäden und zur Ergreifung weiterer Maßnahmen im Falle eines Verstoßes nicht ein. Dieses Abwerbeverbot gilt ebenso für Mitarbeiter verbundener Unternehmen.

*5.4 Covenant Against Unfair Competition*		*5.4 Nachvertragliches Wettbewerbsverbot.*

*(a)* While the Executive is employed by the Company, and for a period of eighteen (18) months after the termination of his employment, the Executive will not, either directly or indirectly: (i) work for any individual or entity – be it as a managing director, an employee, on a self-employed or any other basis-, or own, control, or invest in any entity, that is a direct or indirect competitor of the Company or its affiliates in North America, Germany, Belgium, the United Kingdom, France, Australia, South Africa, Italy, Romania, Poland or Chile (the “Non-Compete Region”); or (ii) call on, solicit or communicate with any customers of the Company or its affiliates or prospects for the purpose of obtaining such customer’s or prospect’s business in violation of the restrictions on competition contained in clause (i) of this Section 5.4, other than for the benefit of the Company or its affiliates. As used in this Agreement, the term “customer” means a business entity (including representatives of such business entity) to which the Company or its affiliates provided goods or services at any time in the prior twenty-four (24) months before the termination or expiration of this Agreement, and the term “prospect” means a business entity (including representatives of such business entity) to which, at any time in		*(a)* Während der Geschäftsführer bei der Gesellschaft angestellt ist und für einen Zeitraum von achtzehn (18) Monaten nach Beendigung seines Anstellungsverhältnisses wird der Geschäftsführer weder direkt noch indirekt: (i) für irgendeine natürliche oder juristische Person als Geschäftsführer, Arbeitnehmer, Selbständiger oder auf andere Weise tätig werden oder ein Unternehmen besitzen, kontrollieren oder in dieses investieren, das ein direkter oder indirekter Wettbewerber der Gesellschaft oder der mit ihr verbundenen Unternehmen in Nordamerika, Deutschland, Belgien, dem Vereinigten Königreich, Frankreich, Australien, Südafrika, Italien, Rumänien, Polen oder Chile (die “Region des Wettbewerbsverbots”) ist; oder (ii) einen Kunden oder Interessenten der Gesellschaft oder der mit ihr verbundenen Unternehmen ersuchen, auffordern oder mit ihm kommunizieren, um das Geschäft dieses Kunden oder Interessenten unter Verletzung der Beschränkung durch dieses in Klausel (i) dieses Abschnitts 5.4 enthaltenen Wettbewerbsverbot, anders als zum Vorteil der Gesellschaft oder mit ihr verbundener Unternehmen, zu erlangen. Im Sinne dieser Vereinbarung bedeutet der Begriff “Kunde” eine wirtschaftliche Einheit (einschließlich Vertretern einer solchen wirtschaftlichen



the previous twenty four (24) months before the termination or expiration of this Agreement, the Company or its affiliates made a written proposal for providing goods or services. Ownership, for personal investment purposes only, of not in excess of two percent (2%) of the voting stock of any publicly held corporation, shall not constitute a violation hereof.		Einheit), der die Gesellschaft oder mit ihr verbundene Unternehmen in den letzten vierundzwanzig (24) Monaten vor Beendigung oder Ablauf dieser Vereinbarung Güter oder Dienstleistungen zur Verfügung gestellt haben und der Begriff “Interessent” bezeichnet eine wirtschaftlichen Einheit (einschließlich Vertretern dieser wirtschaftlichen Einheit), der die Gesellschaft oder mit ihr verbundene Unternehmen in den letzten vierundzwanzig (24) Monaten vor Beendigung oder Ablauf dieser Vereinbarung schriftlich einen Vorschlag für die Bereitstellung von Waren oder Dienstleistungen gemacht haben. Der Erwerb von nicht mehr als zwei Prozent (2%) des Stimmrechtsbestandes einer öffentlich gehaltenen Kapitalgesellschaft, der ausschließlich zu persönlichen Anlagezwecken gehalten wird, stellt keinen Verstoß gegen diese Bestimmung dar.

*(b)* As consideration for the restrictive covenants set forth in this Section 5.4, for the eighteen (18) months following the Date of Termination (the “Post-Contractual Non-Compete Period”), the Executive shall receive an amount that, for every year in which the post-contractual non-compete covenant applies, equals to 50% of the Executive’s total remuneration most recently received by him pursuant to his contract.		*(b)* Als Gegenleistung für die in diesem Abschnitt 5.4 vorgesehenen Wettbewerbsbeschränkungen erhält der Geschäftsführer für einen Zeitraum von achtzehn (18) Monaten seit dem Tag der Beendigung dieser Vereinbarung (“nachvertragliches Wettbewerbsverbot”) einen Betrag, der für jedes Jahr, in dem das nachvertragliche Wettbewerbsverbot gilt, 50% der Gesamtvergütung des Geschäftsführers ausmacht, welche dieser zuletzt gemäß seinem Vertrag erhalten hat.

*(c)* All other income received from the Executive during the Post-Contractual Non-Compete Period are deducted from the compensation payment pursuant to section 74c German Commercial Code (HGB). At the end of each quarter during the Post-Contractual Non-Compete Period, the Executive shall, without being asked to do so, submit a written statement on whether he received income from other sources and if so what amount. If so requested, the Executive shall provide sufficient proof.		*(c)* Sämtliche Einkünfte, die der Geschäftsführer während der Dauer des nachvertraglichen Wettbewerbsverbots erzielt, werden von der Karenzentschädigung nach § 74c HGB abgezogen. Am Ende eines jeden Quartals während der Dauer des nachvertraglichen Wettbewerbsverbots hat der Geschäftsführer unaufgefordert eine schriftliche Erklärung darüber abzugeben, ob und in welcher Höhe er Einnahmen aus anderen Quellen erhalten hat. Auf Verlangen hat der Geschäftsführer hinreichenden


		Nachweis zu erbringen.

*(d)* For each action resulting in the culpable breach of the post-contractual non-compete covenant, the Executive shall pay a contractual penalty equal to the gross monthly salary most recently received by him. Should the breach consist in participating in the capital of a competing undertaking or entering into a contract for the performance of a continuing service (e.g. an employment, service, commercial agent or consultancy agreement), the contractual penalty shall be imposed anew for each month in which the ongoing breach occurs. If individual breaches occur within the scope of an ongoing breach, the contractual penalty owed for the ongoing breach shall cover the penalty for the individual breach. Where several contractual penalties are imposed, the total amount of the penalties to be paid shall be limited to six times the monthly gross salary most recently received by the Executive.		*(d)* Für jede Handlung, die eine schuldhafte Verletzung dieses nachvertraglichen Wettbewerbsverbots zur Folge hat, hat der Geschäftsführer eine Vertragsstrafe in Höhe eines von ihm zuletzt bezogenen Bruttomonatsgehalts zu zahlen. Besteht der Verstoß darin, an einem konkurrierenden Unternehmen beteiligt zu sein oder einen Vertrag über die Erbringung einer fortlaufenden Dienstleistung abgeschlossen zu haben (z. B. einen Anstellungs-, Dienstleistungs-, Handelsvertreter- oder Beratervertrag), so wird die Vertragsstrafe für jeden Monat neu angesetzt, in welchem der fortlaufende Verstoß auftritt. Wenn einzelne Verstöße im Rahmen eines fortlaufenden Verstoßes auftreten, so soll die Vertragsstrafe, die für den fortlaufenden Verstoß geschuldet wird, die Strafe für den individuellen Verstoß mitumfassen. Wenn mehrere Vertragsstrafen verhängt werden, ist der Gesamtbetrag der zu zahlenden Strafen auf das Sechsfache eines Bruttomonatsgehalts, wie es der Geschäftsführer zuletzt erhalten hat, begrenzt.

*(e)* The Company reserves the right to claim further damages and take further actions and remedies available to it at law in the event of a breach (e.g. restrictive injunction).		*(e)* Die Gesellschaft behält sich das Recht vor, im Falle eines Verstoßes weitere Schadensersatzansprüche geltend zu machen und rechtliche Schritte einzuleiten (z.B. eine einstweilige Verfügung zu erwirken).

*(f)* Unless otherwise provided in this section of the Agreement, Section 74 et seqq. German Commercial Code (HGB), in particular Section 74 a (1) HGB (rules on reduction of invalid provisions to preserve validity) and Section 74 c HGB, shall be applicable. The rule under Section 75 a HGB regarding the Company’s option to waive imposition of the post-contractual non-compete obligations shall be applicable with the proviso that the outstanding period following a relevant waiver declaration is reduced to six months. The application of Section 75(2) HGB is hereby excluded.		*(f)* Sofern nicht in diesem Abschnitt anders geregelt, finden die §§ 74 ff. HGB, insbesondere § 74 a Abs. 1 HGB (Vorschriften über die geltungserhaltende Reduktion) und § 74 c HGB, Anwendung. Die Regelung des § 75 a HGB über die Verzichtsmöglichkeit der Gesellschaft auf das nachvertragliche Wettbewerbsverbot findet mit der Maßgabe Anwendung, dass sich der verbleibende Zeitraum seit der Erklärung auf sechs Monate reduziert. Die Anwendung von § 75 Abs. 2 HGB wird ausgeschlossen.



*(g)* The post-contractual non-compete covenant shall not enter into force if the Agreement terminates for the reason that the Executive reaches the statutory retirement age.		*(g)* Das nachvertragliche Wettbewerbsverbot tritt nicht in Kraft, wenn die Vereinbarung endet, weil der Geschäftsführer das gesetzliche Renteneintrittsalter erreicht hat.

*5.5 Return of Confidential Materials and Information.* The Executive agrees that whenever the Executive’s service relationship with the Company ends for any reason, all documents, including information stored in electronic format, containing or referring to Confidential Materials and Information of the Company and its affiliates that may be in the Executive’s possession, or over which the Executive may have control, will be delivered by the Executive to the respective entity immediately, with no request being required.		*5.5 Rückgabe von vertraulichen Unterlagen und Informationen.* Der Geschäftsführer erklärt sich bereit, im Falle der Beendigung des Anstellungsverhältnisses gleich aus welchem Grund, unaufgefordert sämtliche Dokumente, einschließlich elektronisch gespeicherter Informationen, die vertrauliche Materialien und Informationen der Gesellschaft oder mit ihr verbundener Unternehmen enthalten oder sich darauf beziehen und die sich im Besitz des Geschäftsführers befinden oder über die der Geschäftsführer verfügt, sofort an die Gesellschaft zurückzugeben.

*5.6 Future Employer.* If applicable, the Executive shall inform any prospective or future employer of all of the restrictive covenants and agreements contained in this Agreement, and provide such employer with a copy of such provisions, prior to the commencement of that employment.		*5.6 Zukünftiger Arbeitgeber.* Falls einschlägig, hat der Geschäftsführer jeden potenziellen oder zukünftigen Arbeitgeber über alle in dieser Vereinbarung enthaltenen einschränkenden Klauseln und Vereinbarungen zu informieren und dem Arbeitgeber vor Beginn dieser Beschäftigung eine Kopie dieser Bestimmungen zur Verfügung stellen.

6. T ERMINATION OF E MPLOYMENT		6. B EENDIGUNG DES A NSTELLUNGSVERHÄLTNISSES

*6.1 Termination* The Executive’s service relationship with the Company shall end automatically without notice upon the occurrence of the first of the following events:		*6.1 Beendigung.* Das Anstellungsverhältnis mit der Gesellschaft endet automatisch bei Eintritt des ersten der folgenden Ereignisse:

*(a)* Disability. On expiry of the month in which a decision is issued by the responsible social security carrier, stating that the Executive is permanently disabled and that he does not withdraw his application before the expiry of the opposition period or restrict his application to a temporary pension. In any		*(a)* Vollständige Erwerbsminderung. Mit Ablauf des Monats, in dem eine Entscheidung des zuständigen Sozialversicherungsträgers ergeht, in welcher festgestellt wird, dass der Geschäftsführer vollständig erwerbsgemindert ist, sofern er seinen Antrag nicht vor Ablauf der



case, the service relationship will not end automatically prior to the day on which pension payments are made for the first time. If the social security carrier grants only a temporary pension, the service relationship will be suspended for the period for which this pension is granted, but no later than the termination date in accordance with the first sentence. Sentences 1 and 2 do not apply if the Executive is still able, without restrictions, to render the work contractually owed;		Widerspruchsfrist zurückzieht oder auf eine Rente auf Zeit beschränkt. In jedem Fall endet das Arbeitsverhältnis nicht automatisch vor dem Tag, an dem die Rentenzahlungen zum ersten Mal geleistet werden. Wenn der Sozialversicherungsträger nur eine Rente auf Zeit gewährt, so ruht das Arbeitsverhältnis für den Zeitraum, für den diese Rente gewährt wird, längstens jedoch bis zum Beendigungsdatum gemäß Satz 1. Die Sätze 1 und 2 gelten nicht, wenn der Geschäftsführer ohne Einschränkung die vertraglich geschuldete Leistung erbringen kann;

*(b) Retirement* *Age* . On expiry of the month in which the Executive reaches the applicable retirement age of the statutory pension insurance.		*(b) Renteneintrittsalter* . Mit Ablauf des Monats, mit welchem der Geschäftsführer das für ihn geltende gesetzliche Renteneintrittsalter erreicht.

*6.2 Term and Termination / Notice Period* . This Agreement is entered into for an indefinite period in time. This Agreement may be ordinarily terminated by either party subject to a notice period of six months effective as of the end of a calendar month. The right to terminate this Agreement for cause (sec. 626 of the German Civil Code) shall remain unaffected.		*6.2 Laufzeit und Kündigung / Kündigungsfrist.* Diese Vereinbarung wird auf unbestimmte Zeit geschlossen. Sie kann ordentlich mit einer Frist von sechs Monaten zum Ende eines Kalendermonats gekündigt werden. Das Recht zur außerordentlichen Kündigung aus wichtigem Grund (§ 626 BGB) bleibt unberührt.

*6.3 Revocation.* The appointment as managing director may be revoked at any time by a shareholder resolution via a shareholders’ meeting. The revocation shall serve to terminate the present Agreement, with said termination becoming effective as of the earliest possible date pursuant to section 6.2 above. In the event of a revocation of the appointment of the Executive as managing director of the company and in all other cases of the termination of said appointment as well as in the event of a termination of this Agreement by either party, the Company may, under continued payment of the contractual remuneration, for all or part of the applicable notice period, revocably or irrevocably require that the Executive ceases performing any work for the Company. Any unused holiday entitlement will be set off against any period of		*6.3 Abberufung und Freistellung.* Die Bestellung zum Geschäftsführer kann durch Beschluss der Gesellschafterversammlung jederzeit widerrufen werden. Der Widerruf der Bestellung gilt als Kündigung dieses Anstellungsvertrages zum nächstmöglichen Zeitpunkt gemäß Abschnitt 6.2. Die Gesellschaft ist im Falle des Widerrufs der Bestellung sowie in allen anderen Fällen der Beendigung der Bestellung sowie im Falle der Kündigung dieser Vereinbarung durch eine der Parteien berechtigt, den Geschäftsführer unter fortgesetzter Zahlung der vertraglichen Vergütung für die gesamte oder einen Teil der Dauer der Kündigungsfrist widerruflich oder unwiderruflich von seiner Tätigkeit freizustellen. Noch nicht genutzte Urlaubstage werden auf den Freistellungszeitraum



the period of release, whereby unused holiday is granted irrevocably at the beginning of the period of release. Sec. 615 sen. 2 BGB (German Civil Code) shall apply accordingly.		angerechnet, wobei nicht genutzter Urlaub zu Beginn der Freistellung unwiderruflich gewährt wird. § 615 S. 2 BGB bleibt unberührt.

*6.4 Obligations of the Company upon Termination.* If the Executive’s service relationship is terminated (i) by the Company for any reason other than Cause, (ii) by the Executive for Good Reason or (iii) ends as a result of the Executive’s death, disability or retirement age:		*6.4 Pflichten der Gesellschaft bei Beendigung.* Wenn das Anstellungsverhältnis des Geschäftsführers (i) von der Gesellschaft aus anderem als wichtigem Grund, (ii) durch den Geschäftsführer aus wichtigem Grund oder (iii) infolge des Todes, einer vollständigen Erwerbsminderung oder Erreichen des Renteneintrittsalters des Geschäftsführers beendet wird, gilt:

*(a)* The Company shall pay, or commence to pay, as applicable, to the Executive within 30 days after the Date of Termination, the Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid, in a single lump sum in cash;		*(a)* Die Gesellschaft wird dem Geschäftsführer, soweit zutreffend, innerhalb von 30 Tagen nach dem Beendigungszeitpunkt das bis zum Ende der Kündigungsfrist angefallene jährliche Grundgehalt in einem einzigen Betrag insoweit auszahlen, als dieses noch nicht ausgezahlt worden ist;

*(b)* The Company shall pay, or commence to pay, as applicable, to the Executive any compensation previously deferred by the Executive and any other non-qualified benefit plan balances to the extent not previously paid, in accordance with the terms of deferral or the other non-qualified plan, as applicable;		*(b)* Die Gesellschaft wird dem Geschäftsführer, soweit zutreffend, von diesem zurückgestellte Vergütungsbestandteilte („deferred compenation“) sowie Guthaben anderer Leistungspläne in dem Maße, in dem sie zuvor nicht ausgezahlt worden sind, gemäß den Bedingungen des jeweiligen Plans auszahlen;

*(c)* Except as otherwise prohibited in the applicable option/incentive plans, all stock option and restricted stock awards that were outstanding immediately prior to the Date of Termination shall become fully and immediately exercisable and/or vested, as the case may be, with no further restrictions on sale or transferability other than those mandated by law, and each nonqualified stock option (including already vested nonqualified stock options) shall remain exercisable through the latest date upon which the nonqualified stock option could have expired by its original terms, and each incentive stock option		*(c)* Soweit im einschlägigen Options- / Bonusplan nicht abweichend vorgesehen, werden sämtliche Aktienoptionen und „Restricted Stock Awards“, die unmittelbar vor dem Tag der Vertragsbeendigung noch ausstanden, je nach Einschlägigkeit, ohne weitere Einschränkungen für Verkauf oder Übertragbarkeit vollständig und sofort ausübbar und / oder unverfallbar, sofern nicht gesetzlich abweichend vorgeschrieben, und jede Aktienoption (einschließlich bereits unverfallbar gewordener Aktienoptionen) bleibt bis zum letzten Tag, an dem sie zu ihren ursprünglichen Bedingungen



(including already vested incentive stock options) shall remain exercisable for 90 days following the Date of Termination unless such stock option no longer qualifies as an incentive stock option as a result of such accelerated vesting and exercisability, in which case the portion of the such stock option that no longer qualifies shall remain exercisable through the latest date upon which the stock option could have expired by its original terms;		hätte verfallen können, ausübbar und jede Aktienoption (einschließlich bereits unverfallbarer Optionen) bleibt für einen Zeitraum von 90 Tagen nach dem Datum der Beendigung des Anstellungsverhältnisses ausübbar, es sei denn, dass eine solche Aktienoption infolge einer solch beschleunigten Unverfallbarkeit und Ausübbarkeit nicht länger als Incentive Beteiligung gilt, in welchem Fall der Anteil an solchen Aktienoptionen, der nicht länger in diesem Sinne gilt, bis zum letzten Zeitpunkt ausübbar bleibt, zu welchem die Aktienoption nach ihren ursprünglichen Bedingungen verfallen wäre;

*(d)* To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy, contract or agreement of the Company; and		*(d)* Soweit noch nicht gezahlt oder erbracht, wird die Gesellschaft dem Geschäftsführer alle noch ausstehenden Geldbeträge und Leistungen, die dem Geschäftsführer unter einem Plan, Programm, Vertrag oder einer Richtlinie zustehen, zeitnah zahlen bzw. erbringen; und

*(e)* The Company shall pay to the Executive the non-compete payment provided for in Section 5.4(b).		*(e)* Die Gesellschaft wird dem Geschäftsführer die Karenzentschädigung nach Abschnitt 5.4 (b) dieser Vereinbarung zahlen.

7. I NCAPACITY FOR S ERVICE DUE TO I LLNESS , A CCIDENT OR OTHER REASON .		7. D IENSTVERHINDERUNG BEI K RANKHEIT , U NFALL ODER AUS ANDEREM G RUND .

*7.1 Notice.* The Executive is obliged to notify another managing director and the Company’s shareholders’ meeting, without undue delay of any incapacity for service and of the expected duration of said incapacity, stating the reasons for same and indicating any matters that must be urgently attended to, in the event the Executive is incapable of performing his services for a substantial period.		*7.1 Anzeige.* Der Geschäftsführer ist verpflichtet, einem etwaigen weiteren Geschäftsführer und der Gesellschafterversammlung jede Dienstverhinderung und ihre voraussichtliche Dauer unter Angabe von Gründen unverzüglich anzuzeigen sowie auf dringend zu erledigende Aufgaben hinzuweisen, sofern er an der Ausübung seiner Tätigkeit für nicht nur unerhebliche Zeit gehindert ist.

*7.2 Incapacity.* In the event of temporary incapacity due to illness, accident or for another reason for which the Executive is not responsible, the Executive shall retain an		*7.2 Dienstverhinderung.* Im Falle einer vorübergehenden Dienstunfähigkeit, die durch Krankheit, Unfall oder aus einem anderen, vom Geschäftsführer nicht zu



entitlement to receive the remuneration under Section 4 of this service agreement for the relevant period of incapacity, up to a maximum duration of three months, but no longer than until the end of the service relationship. The Executive shall have any sums received from statutory or private insurance companies or from any other social insurance carriers for the period of incapacity offset against the continued remuneration payments to be made by the Company. The Executive is under a duty to notify the Company of his/her own accord of any such sums received in this regard.		vertretenden Grund eintritt, behält der Geschäftsführer Anspruch auf die Bezüge gem. Abschnitt 4 dieser Vereinbarung für die Zeit der Dienstunfähigkeit bis zu einer Dauer von drei Monaten, längstens jedoch bis zum Ende des Anstellungsverhältnisses. Auf die Entgeltfortzahlungsleistungen der Gesellschaft lässt sich der Geschäftsführer dasjenige anrechnen, was er von der gesetzlichen oder von privaten Krankenversicherungen oder sonstigen Sozialversicherungsträgern an Geldbeträgen für die Zeit der Arbeitsunfähigkeit erhält. Diesbezüglich ist der Geschäftsführer gegenüber der Gesellschaft unaufgefordert mitteilungspflichtig.

*7.3 Damages Claims:* Any damages claims against third parties for conduct leading to incapacity for service on the part of the Executive are hereby assigned to the Company by the Executive to the level of continued remuneration paid by the Company pursuant to sub-section 2 above		*7.3 Schadensersatz.* Etwaige Schadensersatzansprüche gegen Dritte für ein Verhalten, welches zu einer Dienstunfähigkeit des Geschäftsführers geführt hat, tritt der Geschäftsführer in Höhe der von der Gesellschaft gem. vorstehendem Absatz 2 geleisteten Gehaltsfortzahlung an diese ab.

8. M ISCELLANEOUS PROVISIONS .		8. S CHLUSSBESTIMMUNGEN .

*8.1 Amendment; Waiver.* This Agreement may be amended, modified or superseded through individual agreement in accordance with sec. 305b German Civil Code without formal requirements. Apart from that, amendments, modifications or supersessions to this Agreement require written form. This also applies to the change of this written form clause. No party shall be deemed to have waived compliance by another party of any provision of this Agreement unless such waiver is contained in a written instrument signed by the waiving party and no waiver that may be given by a party will be applicable except in the specific instance for which it is given. The failure of any party to enforce at any time any of the provisions of this Agreement or to exercise any right or option contained in this Agreement or to require at any time performance of any of the provisions		*8.1 Schriftformklausel; Verzicht; Ausschlussklausel.* Diese Vereinbarung kann durch Individualvereinbarung gem. § 305 BGB ohne Formerfordernisse ergänzt, geändert oder abbedungen werden. Im Übrigen bedürfen Ergänzungen, Änderungen und Abbedingungen der Schriftform. Dies gilt auch für die Änderung dieser Schriftformklausel. Eine Partei kann auf die Einhaltung einer Bedingung dieser Vereinbarung durch die andere Partei nur verzichten, wenn ein solcher Verzicht in einer schriftlichen und von der verzichtenden Partei unterschriebenen Erklärung enthalten ist und ein Verzicht einer Partei geht nicht über den konkreten Einzelfall hinaus, für den er erklärt wurde. Das Versäumnis einer Partei, die Bestimmungen dieser Vereinbarung zu irgendeinem Zeitpunkt durchzusetzen oder ein in dieser Vereinbarung enthaltenes Recht oder eine Option auszuüben



of this Agreement, by any of the other parties shall not be construed to be a waiver of such provisions and shall not affect the validity of this Agreement or any of its provisions or the right of such party thereafter to enforce each provision of this Agreement. No course of dealing shall operate as a waiver or modification of any provision of this Agreement or otherwise prejudice such party’s rights, powers and remedies. All claims arising from the service relationship and the status as a governing body, including claims in tort, shall be asserted in text by the Parties within six months of their maturity; otherwise, they shall extinguish.		oder jederzeit die Erfüllung einer der Bestimmungen dieser Vereinbarung durch eine der anderen Parteien zu verlangen, kann nicht als Verzicht auf solche Bestimmungen verstanden werden und berührt nicht die Gültigkeit dieser Vereinbarung oder einer ihrer Bestimmungen oder das Recht dieser Partei, jede Bestimmung dieser Vereinbarung durchzusetzen. Keine tatsächliche Verhaltensweise kann als Verzicht oder Änderung einer Bestimmung dieser Vereinbarung oder als ein Präjudiz für die Rechte, Befugnisse oder Ersatzansprüche einer Partei verstanden werden. Sämtliche Ansprüche aus dem Anstellungsverhältnis und dem Organverhältnis einschließlich deliktischer Ansprüche sind von den Vertragsparteien innerhalb von sechs Monaten nach Fälligkeit in Textform geltend zu machen; andernfalls sind sie erloschen.

*8.2 Entire Agreement.* This Agreement embodies the entire agreement and understanding of the parties related to the subject matter and supersedes all prior proposals, understandings, agreements, correspondence, arrangements and contemporaneous oral agreements relating to the subject matter of this Agreement. No representation, promise, inducement or statement of intention has been made by any party which has not been embodied in this Agreement. In the event of any inconsistency between any provision of this Agreement and any provision of any plan, employee handbook, personnel manual, program, policy, arrangement or agreement of the Company or any of its affiliates (“Company Documents”), the provisions of this Agreement shall control; provided, however, to the extent any Company Document provides for additional benefits to be afforded the Executive, such additional benefits will also be provided to the Executive in accordance with the terms of such Company Document. The Executive represents and warrants that he is not a party to any agreement or instrument which would prevent him from		*8.2 Gesamte Vereinbarung.* Diese Vereinbarung gibt die Übereinkunft der Parteien betreffend die in ihr geregelten Angelegenheiten vollständig und inhaltlich zutreffend wieder und hebt sämtliche anderen Angebote, Verständigungen, Verträge, Korrespondenzen, Abmachungen und mündliche Vereinbarungen betreffend die in dieser Vereinbarung geregelten Angelegenheiten auf. Keine Partei hat eine Erklärung, Zusage, Offerte oder Absichtserklärung abgegeben, die in dieser Vereinbarung nicht enthalten ist. Widersprechen sich Bestimmungen dieser Vereinbarung und Bestimmungen eines Plans, Mitarbeiterleitfadens, Programms oder einer Richtlinie, Abmachung oder Vereinbarung der Gesellschaft oder eines mit ihr verbundenen Unternehmens (“Dokumente der Gesellschaft”), so gelten die Bestimmungen dieser Vereinbarung, vorausgesetzt, ein Dokument der Gesellschaft stellt dem Geschäftsführer keine zusätzlichen Leistungen in Aussicht, welche dem Geschäftsführer ebenfalls in Übereinstimmungen mit den Bestimmungen des betreffenden Dokuments



entering into or performing his duties in any way under this Agreement.		der Gesellschaft bereitgestellt werden. Der Geschäftsführer erklärt und sichert zu, dass er nicht Partei einer Vereinbarung ist, die ihn an der Erbringung seiner nach dieser Vereinbarung geschuldeten Dienste hindern würde.

*8.3 Exemption from, or Compliance with, Section 409A.* The payment of amounts and the provision of benefits under this Agreement are intended to be exempt from, or compliant with, Section 409A of the Internal Revenue Code. Accordingly, the payment of any amount under this Agreement subject to Section 409A shall be made in strict compliance with the provisions hereof, and no such amounts payable hereunder may be accelerated or deferred beyond the periods provided herein. This Agreement shall be performed and construed in a manner that is consistent with the foregoing intention.		*8.3 Ausschluss und Übereinstimmung mit § 409A.* Die Zahlung von Geldbeträgen und die Erbringung von Leistungen im Rahmen dieser Vereinbarung sind von § 409A des “Internal Revenue Code” ausgenommen oder entsprechen dessen Vorgaben. Dementsprechend muss eine § 409A unterfallende Zahlung eines Geldbetrages im Rahmen dieser Vereinbarung in strikter Übereinstimmung mit den Bestimmungen dieser Vereinbarung erfolgen und es dürfen keine unter diesen Bedingungen zu zahlenden Geldbeträge über die hierin genannten Zeiträume hinaus vorzeitig gezahlt oder zurückgehalten werden. Diese Vereinbarung ist entsprechend der vorgenannten Intention auszulegen und durchzuführen.

*8.4 Governing Law.* This Agreement shall be governed by, and shall be construed, performed and enforced in accordance with, its express terms, and otherwise in accordance with the laws of the Federal Republic of Germany, without regard to the principles of conflicts of law thereof, and venue shall be the courts of Hannoversch Münden, Germany. In the event of any discrepancies between the German and the English version of this service agreement the German version shall prevail and shall be the only binding version.		*8.4 Anwendbares Recht und Gerichtsstand.* Diese Vereinbarung unterliegt deutschem Recht und soll, ohne Rücksicht auf Kollisionsnormen, in Übereinstimmung mit diesem sowie den ausdrücklichen Bestimmungen dieser Vereinbarung ausgelegt und angewendet werden. Gerichtsstand für Streitigkeiten aus dieser Vereinbarung ist Hannoversch Münden, Deutschland. Bei Unstimmigkeiten zwischen der deutschen und der englischen Version dieser Vereinbarung ist die deutsche Version maßgeblich und verbindlich.

*8.5 Headings; Section References; Construction.* Section headings or captions contained in this Agreement are inserted only as a matter of convenience and reference and in no way define, limit, extend or describe the scope of this Agreement, or the intent of any provision hereof. All references herein to		*8.5 Überschriften, Verweise, Gliederung.* Überschriften in dieser Vereinbarung wurden nur aus Gründen der Zweckmäßigkeit eingefügt und definieren, begrenzen, erweitern oder beschreiben den Geltungsbereich dieser Vereinbarung oder einer ihrer Bestimmungen nicht. Alle Verweise



Sections shall refer to Sections of this Agreement unless the context clearly otherwise requires. Unless the context clearly states otherwise, the use of the singular or plural in this Agreement shall include the other and the use of any gender shall include all others. The parties have participated jointly in the negotiation and drafting of this Agreement. If any ambiguity or question of intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.		auf Abschnitte beziehen sich auf Abschnitte dieser Vereinbarung, sofern sich aus dem Zusammenhang nicht zwingend etwas anderes ergibt. Sofern der Kontext nicht eindeutig etwas anderes bestimmt, schließt die Verwendung des Singulars oder des Plural sowie eines Geschlechts in diesem Vertrag das jeweils andere ein. Die Parteien waren gemeinsam an der Aushandlung und Ausarbeitung dieses Vertrages beteiligt. Falls Unklarheiten oder Fragen zu Zweck und Auslegung auftreten, soll keine Vermutung oder Beweislastregel gelten, die eine der Parteien aufgrund der Urheberschaft für eine Bestimmung dieser Vereinbarung begünstigt oder benachteiligt.

*8.6 Notices.* All notices, requests, consents, approvals, waivers, demands and other communications required or permitted to be given or made under this Agreement shall be in textual form. Those communications shall be deemed delivered to the parties (a) on the date of personal delivery against a written receipt, or (b) on the first business day following the date of delivery to a nationally recognized overnight courier service, or (c) on the third business day following the date of deposit in the United States Mail, postage prepaid, by certified mail, in each case addressed as follows, or to such other address, person or entity as any party may designate by notice to the others in accordance herewith:		*8.6 Mitteilungen.* Alle Mitteilungen, Anfragen, Zustimmungen, Genehmigungen, Verzichtserklärungen, Forderungen und sonstigen Meldungen, die gemäß dieser Vereinbarung zulässig oder erforderlich sind, müssen in Textform erfolgen. Solche Mitteilungen gelten als den Parteien zugegangen: (a) Am Tag der persönlichen Zustellung gegen eine schriftliche Quittung oder (b) am ersten Geschäftstag nach dem Tag der Übergabe an einen landesweit anerkannten Nachtkurierdienst oder (c) am dritten Geschäftstag nach dem Datum der Übermittlung an die Post, portofrei und per Einschreiben, jeweils adressiert wie folgt oder an eine andere Adresse, Person oder Organisation, die jede Partei durch Mitteilung an die andere angeben kann:

To Executive to the residence of the Executive as reflected in the Company’s books and records.		An den Geschäftsführer an dessen Wohnsitz, wie er sich aus den Unterlagen der Gesellschaft ergibt.

To Company:		An die Gesellschaft:

Multi-Color Corporation		Multi-Color Corporation

4053 Clough Woods Drive		4053 Clough Woods Drive



Batavia, OH 45103		Batavia, OH 45103

Attention: Chief Executive Officer		Attention: Chief Executive Officer

with a required copy to:		mit einer Kopie an:

Keating Muething & Klekamp PLL		Keating Muething & Klekamp PLL

One East Fourth Street, Suite 1400		One East Fourth Street, Suite 1400

Cincinnati, OH 45202		Cincinnati, OH 45202

Attention: Michael J. Moeddel		Attention: Michael J. Moeddel

*8.7 Policies, Regulations and Guidelines for Executives.* The Company or its affiliates may, from time to time, issue policies, rules, regulations, guidelines, procedures or other informational material, whether in the form of handbooks, memoranda or otherwise, relating to the Company’s Executives. Executive acknowledges and agrees that such materials are general guidelines for Executive’s information and shall not be construed to alter, modify or amend this Agreement for any purpose whatsoever.		*8.7 Richtlinien, Regelungen und Leitlinien für Führungskräfte.* Die Gesellschaft und die mit ihr verbundenen Unternehmen werden von Zeit zu Zeit Richtlinien, Regelungen, Leitlinien, Prozesse oder anderes Informationsmaterial für Führungskräfte der Gesellschaft in verschiedener Form zur Verfügung stellen. Dem Geschäftsführer ist bekannt, dass solche Materialien als generelle Leitlinien für den Geschäftsführer gedacht sind und nicht zu dem Zweck erstellt wurden, diese Vereinbarung in irgendeiner Form zu ändern oder zu ergänzen.

*8.8 Severability and Reformation of Provisions* . If a court in any final, unappealable proceeding holds any provision of this Agreement or its application to any person or circumstance invalid, illegal or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected, and shall be valid, legal and enforceable to the fullest extent permitted by law, but only if and to the extent such enforcement would not materially and adversely frustrate the parties’		*8.8 Trennbarkeit und Umgestaltbarkeit der Bestimmungen.* Wenn ein Gericht in einer endgültigen, nicht mit Rechtsmitteln anfechtbaren Entscheidung eine Bestimmung dieser Vereinbarung oder ihre Anwendung auf eine Person oder einen Umstand für ungültig, rechtswidrig oder nicht durchsetzbar hält, berührt dies den verbleibenden Teil dieser Vereinbarung oder die Anwendung solcher Bestimmungen auf anderen Personen oder Umstände als die, für die dieser als ungültig, rechtswidrig oder nicht durchsetzbar angesehen wurde, nicht und dieser bleibt wirksam, rechtmäßig und


essential objectives as expressed in this Agreement. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties intend that the court add to this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be valid and enforceable, so as to effect the original intent of the parties to the greatest extent possible.		durchsetzbar soweit gesetzlich zulässig, aber nur, wenn und soweit eine solche Durchsetzung die wesentlichen Ziele der Parteien, wie sie in dieser Vereinbarung zum Ausdruck kommen, nicht wesentlich oder nachteilig beeinträchtigt. Darüber hinaus streben die Parteien, anstelle einer ungültigen oder nicht durchsetzbaren Bestimmung, an, dass das Gericht dieser Vereinbarung eine der ungültigen oder nicht durchsetzbaren Bestimmung ähnliche Bestimmung hinzufügt, um den ursprünglichen Zweck, den die Parteien mit dieser Bestimmung verfolgt, bestmöglich zu verwirklichen.

*8.9 Taxes.* The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.		*8.9 Steuern.* Die Gesellschaft kann alle im Rahmen dieser Vereinbarung zu zahlenden Geldbeträge insoweit zurückbehalten, als dies nach bundesstaatlichem, staatlichem, lokalen oder internationalen Steuergesetzen und -vorschriften verpflichtet ist.

THIS AGREEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING EXECUTIVE’S EMPLOYMENT WITH THE COMPANY. SECTION 5 CONTAINS PROVISIONS WHICH AFFECT EXECUTIVE’S ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING THE TERMINATION OF EXECUTIVE’S EMPLOYMENT. EXECUTIVE SHOULD FEEL FREE TO SEEK ADVICE FROM HIS ATTORNEY REGARDING ANY MATTER RELATING TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT, EXECUTIVE IS AFFIRMING THAT THE EXECUTIVE HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH HIS ATTORNEY, THAT EXECUTIVE UNDERSTANDS THE MEANING AND SIGNIFICANCE OF ALL OF ITS PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO EXECUTIVE		DIESE VEREINBARUNG ENTHÄLT WICHTIGE REGELUNGEN BETREFFEND DIE BESCHÄFTIGUNG DES GESCHÄFTSFÜHRERS BEI DER GESELLSCHAFT. ABSCHNITT 5 ENTHÄLT BESTIMMUNGEN, DIE DEN GESCHÄFTSFÜHRER NACH BEENDIGUNG SEINES ANSTELLUNGSVERHÄLTNISSES BEI BESTIMMTEN HANDLUNGEN BEEINTRÄCHTIGEN KÖNNEN. DEM GESCHÄFTSFÜHRER STEHT ES FREI, SICH IN ANSEHUNG DIESER VEREINBARUNG DURCH SEINEN RECHTSANWALT BERATEN ZU LASSEN. MIT DER DURCHFÜHRUNG DIESER VEREINBARUNG BESTÄTIGT DER GESCHÄFTSFÜHRER, DASS ER DIE GELEGENHEIT HATTE, DIESE VEREINBARUNG ZU PRÜFEN UND AUFGRUND RECHTLICHER BERATUNG DEN INHALT UND DIE BEDEUTUNG


REGARDING HIS EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT EXECUTIVE IS FREELY SIGNING THIS AGREEMENT TO CONTINUE HIS EMPLOYMENT WITH THE COMPANY.		ALLER BESTIMMUNGEN DIESER VEREINBARUNG VERSTANDEN HAT, DASS KEINE ERKLÄRUNGEN ODER ZUSAGEN GEGENÜBER DEM GESCHÄFTSFÜHRER IN ANSEHUNG SEINER ANSTELLUNG GEMACHT WURDEN, DIE NICHT IN DIESER VEREINBARUNG ENTHALTEN SIND UND DASS DER GESCHÄFTSFÜHRER DIESE VEREINBARUNG FREIWILLIG UNTERZEICHNET UND SEINE ANSTELLUNG BEI DER GESELLSCHAFT AUFNEHMEN MÖCHTE:

[R EMAINDER OF P AGE I NTENTIONALLY L EFT B LANK - S IGNATURE P AGE TO F OLLOW ]		[LEERE SEITE – UNTERSCHRIFTENZEILEN FOLGEN]


I N W ITNESS W HEREOF , the parties have entered into this service agreement effective as of the date first written above.		D IES BEZEUGEND , haben die Parteien die Geltung dieses Anstellungsvertrages mit Wirkung zum oben genannten Zeitpunkt vereinbart:

M ULTI -C OLOR G ERMANY H OLDING G MB H, REPRESENTED BY ITS SHAREHOLDER ’ S MEETING , WHICH IN TURN IS REPRESENTED BY [ NAME ]		M ULTI -C OLOR G ERMANY H OLDING G MB H, VERTRETEN DURCH DIE G ESELLSCHAFTERVERSAMMLUNG , DIESE HIERBEI VERTRETEN DURCH [ NAME ]

By: /s/ Sharon E. Birkett		Durch: /s/ Talia Shyamnarain
Title: Director		Funktion: Director
Date: January 9, 2018		Datum: January 9, 2018
WITNESS: /s/ Karen Powell		ZEUGE: /s/ Folkert van Asma

With regard to Sec. 1.2: C ONSTANTIA L ABELS G MB H, REPRESENTED BY ITS MANAGING DIRECTOR [ NAME ]		In Bezug auf Abschnitt 1.2: C ONSTANTIA L ABELS G MB H, VERTRETEN DURCH IHREN G ESCHÄFTSFÜHRER [ NAME ]

By:		Durch: /s/ Bernd Schöniger
Title:		Funktion: Managing Director
Date: WITNESS:		ZEUGE: /s/ Authorized Signatory

		Durch: /s/ Günter Lohmann
		Funktion: Prokurist
Dr. Oliver Apel		ZEUGE: /s/ Authorized Signatory

		Dr. Oliver Apel
		/s/ Dr. Oliver Apel
Date:		Datum: December 22, 2017
WITNESS:		ZEUGE: /s/ Andrea Apel

The Executive hereby confirms the receipt of a copy of this service agreement signed by the Company.		Der Geschäftsführer bestätigt mit nachfolgender Unterschrift eine von der Gesellschaft unterschriebene Kopie dieses Anstellungsvertrages erhalten zu haben.

Dr. Oliver Apel		Dr. Oliver Apel
Date:		Datum:
WITNESS:

[Signature Page to Apel Employment Agreement]		[Unterschriftenseite für Oliver Apel]

Exhibit 10.3

EMPLOYMENT AGREEMENT

BETWEEN

MULTI-COLOR CORPORATION

AND

MICHAEL D. COOK

Effective as of February 1, 2018

TABLE OF CONTENTS


	Page

1. E MPLOYMENT		1

2. T ERM OF A GREEMENT		1

3. S COPE OF E MPLOYMENT ; L OCATION		1

4. C OMPENSATION		2

4.1 Base Salary		2

4.2 Bonus		2

4.3 Restricted Stock Grant; Stock Option and Restricted Stock Awards		2

4.4 Retirement Plan		2

4.5 Welfare and Other Benefit Plans		2

4.6 Expenses		3

4.7 Automobile Allowance		3

4.8 Vacation and Holidays		3

4.9 Indemnity		3

5. C ONFIDENTIALITY , N ON - COMPETITION AND O THER C OVENANTS		3

5.1 Non-Disclosure of Confidential Materials, Information and Intellectual Property		3

5.2 Immunity from Liability for Disclosure		4

5.3 Non-Solicitation of the Company’s Employees		4

5.4 Covenant Against Unfair Competition		4

5.5 Return of Confidential Materials and Information		5

5.6 Irreparable Harm		5

5.7 Cumulative Remedies; Enforceability		5

5.8 Reasonableness of Scope and Duration		5

5.9 Future Employer		6

5.10 Time Periods		6

6. T ERMINATION OF E MPLOYMENT		6

6.1 Termination		6

6.2 Date of Termination		9

6.3 Notice of Termination		9

7. O BLIGATIONS OF THE C OMPANY U PON T ERMINATION		9

-i-

TABLE OF CONTENTS

(continued)


	Page

7.1 Termination for Other Than Cause or Due to Executive’s Death or Disability, or for Good Reason		9

7.2 Termination for Cause or Other Than for Good Reason		11

7.3 Termination Due to Executive’s Death		11

7.4 Termination Due to Executive’s Disability		12

8. A RBITRATION		13

9. M ISCELLANEOUS P ROVISIONS		13

9.1 Binding Effect; Delegation of Duties Prohibited; Survival		13

9.2 Amendment; Waiver		13

9.3 Entire Agreement		14

9.4 Exemption from, or Compliance with, Section 409A		14

9.5 Governing Law		14

9.6 Headings; Section References; Construction		14

9.7 Notices		14

9.8 Policies, Regulations and Guidelines for Executives		15

9.9 Severability and Reformation of Provisions		15

9.10 Taxes		15

9.11 Full Settlement		15

-ii-

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is effective the 1 ^st day of February, 2018 by and between Multi-Color Corporation, an Ohio corporation (“Company”), and Michael D. Cook an individual (“Executive”).

R ECITALS :

A. Company desires to retain the services of Executive as its Chief Operating Officer – Consumer Product Goods, and Executive desires to render such services to the Company.

B. The parties hereto desire to set forth the terms and conditions of the employment relationship between the Executive and the Company by entering into this Agreement.

A GREEMENT :

N OW , T HEREFORE , the parties hereby agree as follows:

1. E MPLOYMENT . The Company hereby employs Executive for the “Term” (as defined in Section 2), and Executive accepts employment by the Company and agrees to serve the Company during the Term, upon the terms and conditions hereinafter set forth.

2. T ERM OF A GREEMENT . This Agreement shall commence February 1, 2018, and shall continue until terminated in accordance with this Agreement. This Agreement shall be terminable at will, at any time, by either party, with or without cause, subject to the provisions set forth in Section 5, below. Unless otherwise expressly provided herein, upon the termination of Executive’s employment, the Company shall pay Executive his salary earned through the Termination Date, Executive shall be entitled to all benefits accrued or vested through the Termination Date pursuant to all fringe benefit plans set forth in this Agreement, and the Company shall not be obligated to pay, and Executive shall not be entitled to receive, any other compensation, payments or consideration of any kind or nature. The “Term” shall refer to the period of time during which the Executive is employed pursuant to this Agreement.

3. S COPE OF E MPLOYMENT ; L OCATION . During the Term of this Agreement, Executive shall serve as Chief Operating Officer – Consumer Product Goods of the Company and agrees to devote his full attention and time to the business and affairs of the Company as may be assigned by the Company’s Chief Executive Officer or the Board of Directors (“Board”) and to use the Executive’s best efforts to perform such responsibilities in a professional manner. Executive shall have all authority, duties and responsibilities customarily exercised by an individual serving as Chief Operating Officer – Consumer Product Goods in a corporation of the size and nature of the Company and such other authority, duties and responsibilities as are delegated to him by the Board or the Company’s Chief Executive Officer from time to time. Notwithstanding the foregoing, it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, trade association, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (C) manage personal investments

and affairs, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. During the Term of this Agreement, Executive shall principally perform his duties at the Company’s headquarters’ office located in Batavia, Ohio, except in the event Executive agrees in writing to another location.

4. C OMPENSATION .

4.1 Base Salary . During the Term of this Agreement, the Executive shall receive an Annual Base Salary. Executive’s beginning Annual Base Salary shall be Four Hundred Thousand Dollars (US$400,000). The Annual Base Salary shall be reviewed by the Compensation Committee of the Board annually based upon Executive’s performance, pertinent salary survey information and such other information as the Compensation Committee deems appropriate, but may not be adjusted downward without the Executive’s written consent. After any such adjustment, the term “Annual Base Salary” as used in this Agreement shall thereafter refer to such amount as adjusted.

4.2 Bonus . Executive will continue to be eligible to participate in the Management Incentive Compensation Program, subject to the terms and conditions as specified in the plan. The incentive compensation program is based on meeting certain financial targets as established by, and in the sole discretion of, the Board or by the Compensation Committee of the Board on an annual basis. The bonus target, as a percent of Annual Base Salary, is 50%, with a bonus range between 25% and 75% of Annual Base Salary. If financial targets are met between the minimum, target and maximum brackets, the payout is calculated on a prorated basis between the two brackets that apply. Executive shall be paid his Bonus when other executives of the Company are paid their annual bonuses, but in no event beyond the last day on which such payment would qualify as a short-term deferral under Treasury Regulation § 1.409A 1(b)(4).

4.3 Restricted Stock Grant; Stock Option and Restricted Stock Awards . Effective April 1, 2018, the Company shall grant to Executive such number of restricted share units (RSU’s) of the Company stock having a total value equal to $300,000 and such number of common stock (Restricted Shares) of the Company having a total value equal to $100,000, as set forth more fully in that certain Restricted Share Unit Agreement (Performance-Based), and that certain Restricted Share Agreement (Time-Based), each dated April 1, 2018. The Executive may be eligible for future grants during the Term of this Agreement, as determined and subject to the terms set by the Board or its committees from time to time.

4.4 Retirement Plan . During the Term of this Agreement, the Executive shall be eligible to participate in all savings and retirement plans, practices, policies and programs to the extent applicable generally to other executives of the Company, including, without limitation, 401(k) retirement savings, or any other supplemental retirement compensation plans.

4.5 Welfare and Other Benefit Plans . During the Term of this Agreement, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all other benefits (except for those benefits which have otherwise been provided to Executive herein) under welfare, fringe, incentive and other similar benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, employee life, group life, accidental death and travel

accident insurance plans and programs) to the extent applicable generally to other executives of the Company.

4.6 Expenses . During the Term of this Agreement, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the Executive and documented as required by regulations of the Internal Revenue Service and policies of the Company.

4.7 Automobile Allowance . During the Term of this Agreement, the Executive shall be paid each month an automobile allowance of Five Hundred Dollars ($500.00), which shall cover all automobile-related costs, including automobile payments, gasoline, insurance, maintenance, repairs, taxes and other related costs.

4.8 Vacation . During the Term of this Agreement, the executive shall be entitled to earn and use vacation pursuant to the Company’s vacation policy and in conformance with applicable law as in effect from time to time for executives of the Company.

4.9 Indemnity . The Executive shall be indemnified and held harmless by the Company against claims arising in connection with the Executive’s status as an employee, officer, director or agent of the Company or any of its subsidiaries or affiliates. Such indemnification shall be established to the level of the greatest indemnification permitted by Ohio law for corporate employees, officers or directors, and such indemnification shall continue as to the Executive even if he has ceased to be an employee, officer, director or agent of the Company or other entity and shall inure to the benefit of the Executive’s heirs and legal representatives. In furtherance of this protection, during the Executive’s employment and for a period of at least six years thereafter, the Company shall continue to provide officers’ and directors’ liability insurance covering Executive in at least the amount of coverage provided as of the commencement date of this Agreement for such purposes and in any event provide at least as much coverage for the Executive as the Company provides for its other executives or directors of the Company. Nothing in this Agreement shall operate to limit or extinguish any right to indemnification, advancement of expenses or contribution that the Executive (or his heirs and legal representatives) would otherwise have (including, without limitation, by agreement or under applicable law).

5. C ONFIDENTIALITY , N ON - COMPETITION AND O THER C OVENANTS . In consideration of Company’s employment of Executive, Executive does covenant and agree with the Company as follows:

5.1 Non-Disclosure of Confidential Materials, Information and Intellectual Property . The Executive acknowledges that as a leader in the highly-competitive businesses of printing labels, including but not limited to, inmold, pressure sensitive, heat transfer, cut and stack and shrink sleeve label technologies, the Company has developed, acquired and implemented confidential intellectual property, materials and information, proprietary strategies and programs, which it has taken steps to protect as trade secrets (as defined in Ohio’s Uniform Trade Secrets Act, O HIO R EV . C ODE §§ 1333.61 - 1333.69) and which include copyrighted materials, patent materials, expansion plans, market research, sales systems, marketing programs, product development strategies, budgets, pricing and cost strategies, identity and requirements of accounts, and other non-public proprietary information regarding customers and the employees

of the Company or of its customers or non-public proprietary information regarding the Company’s business or the business of the Company’s customers (collectively “Confidential Materials and Information”). In performing duties for the Company, the Executive regularly will be exposed to and work with the Company’s Confidential Materials and Information. The Executive acknowledges that such Confidential Materials and Information are critical to the Company’s success and that the Company has invested substantial money in developing the Company’s Confidential Materials and Information. While the Executive is employed by the Company, and after such employment ends for any reason, the Executive will not reproduce, publish, disclose, use, reveal, show, or otherwise communicate to any person or entity any Confidential Materials and Information of the Company unless specifically assigned or directed by the Company to do so or unless it shall have become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The covenant in this Section 5.1 has no temporal, geographical or territorial restriction or limitation, and it applies wherever the Executive may be located.

5.2 Immunity from Liability for Disclosure . Pursuant to 18 U.S.C § 1833 (b)(3)(A), the Company hereby notifies the Executive of his immunity from criminal or civil liability under Federal or State trade secret laws for disclosure of a trade secret that is made either: (1) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Unless otherwise stated in this Agreement, the preceding sentence and the immunity granted therein does not restrict the Company’s right to enforce the confidentially obligations under Section 5.1 or prevent the Company from pursuing a cause of action for a breach of these confidentiality obligations, provided that such cause of action does not arise out of Federal or State trade secret law.

5.3 Non-Solicitation of the Company ’ s Employees . For a period of 24 months after the termination of his employment, the Executive will not actively solicit, either directly or indirectly through any third person, any other employee of the Company to terminate his or her employment with the Company without the written consent of the Chairman of the Board.

5.4 Covenant Against Unfair Competition . While the Executive is employed by the Company, and for a period of 12 months after the termination of his employment, the Executive will not, either directly or indirectly: (a) work for any individual or entity, or own, control, or invest in any entity, that provides similar services as the Company or is a competitor of the Company and its businesses; or (b) call on, solicit or communicate with any of the Company’s customers or prospects for the purpose of obtaining such customer’s or prospect’s business in violation of the restrictions on competition contained in clause (a) of this Section 5.4, other than for the benefit of the Company. As used in this Agreement, the term “customer” means a business entity (including representatives of such business entity) to which the Company provided goods or services at any time in the prior 24 months before the termination or expiration of this Agreement, and the term “prospect” means a business entity (including representatives of such business entity) to which, at any time in the 24 months before the termination or expiration of this Agreement, the Company made a written proposal for providing goods or services. Ownership, for personal investment purposes only, of not in excess of two

percent (2%) of the voting stock of any publicly held corporation, shall not constitute a violation hereof.

5.5 Return of Confidential Materials and Information . The Executive agrees that whenever the Executive’s employment with the Company ends for any reason, all documents, including information stored in electronic format, containing or referring to the Company’s Confidential Materials and Information that may be in the Executive’s possession, or over which the Executive may have control, will be delivered by the Executive to the Company immediately, with no request being required.

5.6 Irreparable Harm . The Executive agrees that a breach of any covenant in this Section 5 will cause the Company irreparable injury and damage for which the Company has no adequate monetary remedy, and the Executive further agrees that if the Company claims a breach of any such covenant, the Company will be entitled to seek an immediate restraining order and injunction to prevent such violation or continued violation.

5.7 Cumulative Remedies; Enforceability .

(a) In the event of Executive’s breach or threatened breach of the covenants set forth in this Section 5, the parties acknowledge that the Company will suffer irreparable harm and the Company will be entitled to an injunction restraining Executive from committing such breach. Executive affirmatively waives any requirement that the Company post any bond, demonstrate the likelihood of irreparable harm to the Company, or demonstrate that any actual damages will be suffered by the Company or any other entity seeking enforcement hereof as a result of Executive’s breach of any of the covenants set forth in this Section 5.

(b) The covenants and agreements contained in this Section 5 will be construed as independent of each other, and the existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, will not constitute a defense to the Company’s enforcement of such covenants, and they shall be construed as separate covenants and agreements. If any court shall finally determine that the restraints provided for in any such covenants and agreements exceed the maximum area, activity or time such court deems reasonable and enforceable, said area, activity or time shall be deemed to become and thereafter shall be the maximum area, activity or time which such court deems reasonable and enforceable, and such covenants and agreements shall be enforced as to such reduced area, activity or time.

(c) Nothing herein contained will be construed as prohibiting the Company from pursuing any other remedies available to it at law or in equity for such breach or threatened breach, including the recovery of money damages.

5.8 Reasonableness of Scope and Duration . Executive acknowledges that the restrictions contained in this Section 5 are reasonable and necessary to protect the legitimate interests of the Company and that the Company would not have entered into this Agreement in the absence of such restrictions. Executive understands and agrees that the covenants and agreements contained in this Section 5 are, taken as a whole, reasonable in connection with the activities covered, their geographic scope and duration. Executive understands that the provisions of this Agreement have been carefully designed to restrict Executive’s activities to the

minimum extent which is consistent with the Company’s requirements. Executive has carefully considered these restrictions, and Executive confirms that they will not unduly restrict Executive’s ability to obtain a livelihood.

5.9 Future Employer . If applicable, Executive shall inform any prospective or future employer of all of the restrictive covenants and agreements contained in this Agreement, and provide such employer with a copy of such provisions, prior to the commencement of that employment.

5.10 Time Periods . All time periods set forth in this Section 5 shall be extended by the duration of any period during which Executive is in violation of any provision of this Section 5.

6. T ERMINATION OF E MPLOYMENT

6.1 Termination . Executive’s employment with the Company shall terminate upon the occurrence of the first of the following events:

(a) Death . Upon the death of Executive.

(b) Disability . If the Disability of the Executive has occurred during the Executive’s employment, the Company may give written notice to the Executive in accordance with this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the Disability Commencement Date. As used in this Agreement, “Disability” shall mean that the Executive, (i) in the opinion of a physician, is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company, or (iii) is determined to be totally disabled by the Social Security Administration, or (iv) is determined to be disabled in accordance with a disability insurance program, provided that the definition of disability applied under such disability insurance program complies with the requirements of (i) or (ii) above. Additionally, as used in this Agreement, “Disability Commencement Date” shall be the 30 ^th day after notice is received by Executive pursuant to this Section 6.1(b) that he is under a Disability, provided that, within the 30 days after such receipt, the Executive shall not have returned to perform his duties hereunder.

(c) Cause . The Company terminates the Executive for Cause or for any reason other than for Cause. As used in this Agreement, “Cause” with respect to Executive’s termination from employment, shall mean any of the following:


		*(1)* the Executive’s failure to cure the Executive’s material breach of this Agreement or any Company policy, regulation or guideline;


		*(2)* the Executive’s appropriation of a material business opportunity of the Company, including securing any material personal profit in connection with any transaction entered into on behalf of the Company. This provision shall not include opportunities communicated by the Executive to the Company which were rejected or on which the Company took no timely action;

		*(3)* the Executive’s misappropriation of any of the Company’s funds or property;

		*(4)* the Executive’s conviction of or entering of a guilty plea or a plea of no contest with respect to, a felony, or any other crime which materially and adversely affects the business of the Company or Executive’s ability to carry out his duties hereunder and with respect to which imprisonment for a term in excess of six (6) months is a possible punishment;

		*(5)* the Executive’s conduct, or lack thereof, which results in material economic damage to the Company or its reputation. It is expressly understood that if Executive’s good faith belief was that his conduct or lack thereof was in, or not opposed to, the best interest of the Company, then “Cause” shall not be satisfied hereunder; or

		*(6)* in the event there is a Change in Control (as used in this Agreement, a “Change in Control” shall have the meaning ascribed thereto in the Company’s 2012 Stock Incentive Plan as in effect on the date this Agreement becomes effective), for a period of twelve (12) months following the date of such Change in Control, the term “Cause” shall not include items (1) through (5) above and shall only mean the following:

(A) the Executive materially violates any Company policy, regulation or guideline; or

(B) the Executive’s conviction or entering of a guilty plea or a plea of no contest with respect to fraudulent or illegal activities which are materially injurious to the Company, monetarily or otherwise.

No termination of the Executive’s employment hereunder by the Company for Cause shall be effective as a termination for Cause unless the provisions of this paragraph shall first have been complied with. The Executive shall be given a Notice of Termination by the Board. The Executive shall have 60 days after receipt of such Notice of Termination to cure such alleged violation. If he fails to cure such alleged violation within such 60-day period, the Executive shall then be entitled to a hearing before the Board. If after such hearing, the Board gives a second Notice of Termination to the Executive confirming that a majority of the

members of the Board that are not then employed as employees of the Company voted after the hearing to terminate him for Cause, the Executive’s employment shall thereupon be terminated for Cause.

(d) Good Reason . The Executive terminates employment for Good Reason. As used in this Agreement, “Good Reason” with respect to the termination from employment of Executive shall mean any of the following:


		*(1)* the Company’s material breach of this Agreement;

		*(2)* the Company materially altering or materially impairing the Executive’s authority, duties or responsibilities without his written consent;

		*(3)* any reduction in Executive’s then current Annual Base Salary, reduction in Executive’s target Bonus opportunity to a level below 50% of the then current Annual Base Salary, or material diminution of benefits provided under Company plans which are applicable to Executive without his written consent;

		*(4)* the Company requiring the Executive to be based at any office or location other Batavia, Ohio (or other agreed upon location) without the Executive’s prior written consent; or

		*(5)* in the event there is a Change in Control, for a period of 12 months following the date of such Change in Control, the term “Good Reason” shall include, in addition to items (1) through (4) above, the following:

(A) (i) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive’s position, authority or responsibilities, or (ii) any other material adverse change in such position, including title, authority or responsibilities in each case without the prior written consent of Executive; or

(B) failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of the business or assets of the Company no later than the closing of such transaction, unless such assumption occurs by operation of law.

No termination of the Executive’s employment hereunder by the Executive for Good Reason shall be effective as a termination for Good Reason unless the provisions of this paragraph shall first have been complied with. The Board shall be given a Notice of Termination by the Executive within 90 days of the initial existence of the violation. The Company shall have 60 days after receipt of the Notice of Termination to fully cure such alleged violation.

6.2 Date of Termination . As used in this Agreement, “Date of Termination” means: (i) if the Executive’s employment is terminated by the Company for Cause, the Date of Termination shall be the date on which the Executive receives the Notice of Termination described in Section 6.1(c) that a majority of the members of the Board that are not then employees of the Company voted after the hearing to terminate him for Cause; (ii) if the Executive’s employment is terminated by the Executive for Good Reason, the Date of Termination shall be the date on which the Notice of Termination is received by the Company, or such later date as may be specified therein, unless the Company has fully cured all grounds for such termination within 60 days after the Executive gives such notice; (iii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination; (iv) if the Executive’s employment is terminated by the Executive for other than Good Reason, the Date of Termination shall be the date on which the Company receives the Notice of Termination; and (v) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Commencement Date.

6.3 Notice of Termination . As used in this Agreement, “Notice of Termination” shall mean a written notice which: (i) indicates the specific termination provision in this Agreement relied upon; (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated; and (iii) if the Date of Termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice).

7. O BLIGATIONS OF THE C OMPANY U PON T ERMINATION .

7.1 Termination for Other Than Cause or Due to Executive’s Death or Disability, or for Good Reason . If the Executive’s employment is terminated (i) by the Company for any reason other than Cause or as a result of the Executive’s death or Disability; or (ii) by the Executive for Good Reason:

(a) The Company shall pay, or commence to be paid, as applicable, to the Executive within 30 days after the Date of Termination, Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid, in a single lump sum in cash;

(b) The Company shall pay, or commence to be paid, as applicable, to the Executive any compensation previously deferred by the Executive and any other non-qualified benefit plan balances to the extent not previously paid, in accordance with the terms of deferral or the other non-qualified plan, as applicable;

(c) The Company shall pay an amount, paid in accordance with the Company’s regular payroll processing cycle, commencing on the next payroll date after the Executive’s Date of Termination, equal to one times the Executive’s Annual Base Salary. Notwithstanding the foregoing provisions of this Subsection (c), to the extent the amounts payable under this Subsection do not exceed the Separation Pay Exemption Amount (defined below), such amounts shall be paid in accordance with the foregoing provisions of this

Subsection (c). The amount payable that is in excess of the Separation Pay Exemption Amount shall be paid as follows: (i) no portion of the excess amount may be paid, or commence to be paid, earlier than six (6) months after the date the Executive separates from service, and (ii) the installment payments that would have otherwise been paid during such six (6) month period shall be accumulated and paid on the first day of the seventh month following the date the Executive separates from service and the remaining installments shall be paid in accordance with the foregoing provisions of this Subsection (c). For purposes of this Subsection (c), the term “Separation Pay Exemption Amount” means an amount equal to two (2) times the lesser of (x) the sum of the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the Executive’s taxable year preceding the taxable year in which the Executive separates from service (adjusted for any increase during that year that was expected to continue indefinitely if the Executive had not separated from service); or (y) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which the Executive separates from service. In consideration of Executive’s receipt of severance benefits as described in this Section 7.1(c), Executive agrees, not later than 60 days following the Executive’s Date of Termination, to execute and deliver a separation agreement and release in form and substance reasonably satisfactory to the Company (the “Release”). If Executive fails to execute and deliver the Release, as required, the severance payments provided in this Section 7.1(c) shall cease;

(d) Except as otherwise prohibited in the applicable option/incentive plans, all stock option and restricted stock awards that were outstanding immediately prior to the Date of Termination shall become fully and immediately exercisable and/or vested, as the case may be, with no further restrictions on sale or transferability other than those mandated by law, and each nonqualified stock option (including already vested nonqualified stock options) shall remain exercisable through the latest date upon which the nonqualified stock option could have expired by its original terms, and each incentive stock option (including already vested incentive stock options) shall remain exercisable for 90 days following the Date of Termination unless such stock option no longer qualifies as an incentive stock option as a result of such accelerated vesting and exercisability, in which case the portion of the such stock option that no longer qualifies shall remain exercisable through the latest date upon which the stock option could have expired by its original terms;

(e) For one year after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide those benefits to the Executive and/or the Executive’s family that would have been provided to them in accordance with the welfare plans, programs, practices and policies described in Section 4.5 of this Agreement if the Executive’s employment had not been terminated; provided, however, that the benefits shall be offset by any benefits provided by any subsequent employment of Executive (determined on a benefit-by-benefit basis). Executive agrees to describe all benefits which his subsequent employer has agreed to provide him, including any changes to such benefits during the one year period described in this Subsection 7.1(e). To the extent any of the foregoing benefits are not exempt from the requirements of Section 409A of the Internal Revenue Code, the amount of expenses eligible for reimbursement (other than the reimbursement of expenses referred to in Section 105(b) of the Internal Revenue Code (relating to medical reimbursement arrangements)), or in-kind

benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or the in-kind benefits to be provided, in any other taxable year;

(f) To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy, contract or agreement of the Company.

7.2 Termination for Cause or Other Than for Good Reason . If the Executive’s employment is terminated (i) by the Company for Cause; or (ii) by the Executive without Good Reason, this Agreement shall terminate without further obligations to the Executive other than all of the following:

(a) The Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the Executive’s Annual Base Salary through the Date of Termination;

(c) If the Executive terminates employment without Good Reason through a plan of retirement acceptable to the Company, which will not be unreasonably withheld, except as otherwise prohibited in the applicable option/incentive plans, all stock option and restricted stock awards that were outstanding immediately prior to the Date of Termination shall become fully and immediately exercisable and/or vested, as the case may be, with no further restrictions on sale or transferability other than those mandated by law, and each nonqualified stock option (including already vested nonqualified stock options) shall remain exercisable through the latest date upon which the nonqualified stock option could have expired by its original terms, and each incentive stock option (including already vested incentive stock options) shall remain exercisable for 90 days following the Date of Termination unless such stock option no longer qualifies as an incentive stock option as a result of such accelerated vesting and exercisability, in which case the portion of the stock option that no longer qualifies shall remain exercisable through the latest date upon which the stock option could have expired by its original terms; and

(d) To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy or practice or contract or agreement of the Company.

7.3 Termination Due to Executive’s Death . If the Executive’s employment is terminated by reason of the Executive’s death, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than all of the following:

(a) The Company shall pay to the Executive’s legal representative in a lump sum in cash within 30 days after the Date of Termination the aggregate of Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid;

(b) The Company shall pay, or commence to be paid, as applicable, to the Executive’s legal representative any compensation previously deferred by the Executive and any other non-qualified benefit plan balances to the extent not previously paid, in accordance with the terms of deferral or the other non-qualified plan, as applicable.

(c) Except as otherwise prohibited in the applicable option/incentive plans, all stock option and restricted stock awards that were outstanding immediately prior to the Date of Termination shall become fully and immediately exercisable and/or vested, as the case may be, with no further restrictions on sale or transferability other than those mandated by law, and each stock option (including already vested stock options) shall remain exercisable by Executive’s legal representative for 12 months following the Date of Termination (but in no event beyond the latest date upon which the stock option could have expired by its original terms);

(d) For one year after the Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue to provide those benefits to the Executive’s family that would have been provided to them in accordance with the welfare plans, programs, practices and policies described in Section 4.5 of this Agreement if the Executive’s employment had not been terminated. To the extent any of the foregoing benefits are not exempt from the requirements of Section 409A of the Internal Revenue Code, the amount of expenses eligible for reimbursement (other than the reimbursement of expenses referred to in Section 105(b) of the Internal Revenue Code (relating to medical reimbursement arrangements)), or in-kind benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or the in-kind benefits to be provided, in any other taxable year;

(e) To the extent not previously paid or provided, the Company shall timely pay or provide to the Executive’s applicable beneficiaries any other amounts or benefits required to be paid or provided or which the Executive is entitled to receive under any plan, program, policy or practice or contract or agreement of the Company; and

(f) Any other death benefits then in effect for Company employees or executives and their beneficiaries.

7.4 Termination Due to Executive’s Disability . If the Executive’s employment is terminated by reason of the Executive’s Disability, the Company shall have all of the obligations set forth in the preceding Section 7.3 except that (i) any reference in Section 7.3(a), (b) and (c) to the “Executive’s legal representative” shall refer to the “Executive,” (ii) the reference in Section 7.3(d) to the “Executive’s family” shall refer to the “Executive and/or the Executive’s family,” (iii) the reference in Section 7.3(e) to the “Executive’s applicable beneficiary” shall refer to the “Executive” and (iv) Section 7.3(f) shall read: “Any other long-term disability benefits then in effect for Company employees or executives and their beneficiaries.”

8. A RBITRATION . Except as provided in Section 5 or a party’s right to seek injunctive or other equitable relief, if any dispute shall arise between the Executive and the Company in any way connected to or arising from this Agreement, the dispute shall be exclusively determined, and the dispute shall be settled, by arbitration in accordance with the CPR Rules for Non-Administered Arbitration (or such other independent dispute resolution body to which the parties shall mutually agree) (“Arbitration Forum”). The arbitration shall be held in Cincinnati, Ohio. The arbitration shall be held before a single arbitrator, who shall be chosen from a panel of arbitrators selected by the Arbitration Forum. The arbitrator shall have the authority to provide all types of relief otherwise available under law. The decision of the arbitrator shall be in writing and shall be final and binding upon the Executive and the Company and judgment upon such award may be entered in any court of competent jurisdiction. The costs of the arbitrator and of the arbitration shall be borne equally by each of the parties. The costs of each party’s counsel, accountants, etc., as well as any costs solely for their benefit, shall be borne separately by each party. E ACH OF THE PARTIES HEREBY ACKNOWLEDGES THAT THIS PROVISION CONSTITUTES A WAIVER OF THEIR RIGHT TO COMMENCE A LAWSUIT IN ANY JURISDICTION WITH RESPECT TO THE MATTERS WHICH ARE REQUIRED TO BE SETTLED BY ARBITRATION AS PROVIDED IN THIS S ECTION 8.

9. M ISCELLANEOUS P ROVISIONS .

9.1 Binding Effect; Delegation of Duties Prohibited; Survival . This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs and legal representatives, including any entity with which the Company may merge or consolidate, or to which all or substantially all of its assets may be transferred, provided, the Company may assign this Agreement to any affiliate, but no such assignment shall relieve the Company of its obligations hereunder. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. The duties and covenants of Executive under this Agreement, being personal, may not be delegated, but the Executive’s rights to compensation and benefits provided hereunder may be transferred only by will or operation of law. Except as otherwise set forth in this Agreement, to the extent necessary to carry out the intentions of the parties hereunder the respective rights and obligations of the parties hereunder shall survive any termination of the Executive’s employment.

9.2 Amendment; Waiver . This Agreement may be amended, modified or superseded only by a written instrument that expressly refers to this Agreement and that is signed by all of the parties to this Agreement. No party shall be deemed to have waived compliance by another party of any provision of this Agreement unless such waiver is contained in a written instrument signed by the waiving party and no waiver that may be given by a party will be applicable except in the specific instance for which it is given. The failure of any party to enforce at any time any of the provisions of this Agreement or to exercise any right or option contained in this Agreement or to require at any time performance of any of the provisions of

this Agreement, by any of the other parties shall not be construed to be a waiver of such provisions and shall not affect the validity of this Agreement or any of its provisions or the right of such party thereafter to enforce each provision of this Agreement. No course of dealing shall operate as a waiver or modification of any provision of this Agreement or otherwise prejudice such party’s rights, powers and remedies.

9.3 Entire Agreement . This Agreement embodies the entire agreement and understanding of the parties related to the subject matter and supersedes all prior proposals, understandings, agreements, correspondence, arrangements and contemporaneous oral agreements relating to the subject matter of this Agreement. No representation, promise, inducement or statement of intention has been made by any party which has not been embodied in this Agreement. In the event of any inconsistency between any provision of this Agreement and any provision of any plan, employee handbook, personnel manual, program, policy, arrangement or agreement of the Company or any of its affiliates (“Company Documents”), the provisions of this Agreement shall control; provided, however, to the extent any Company Document provides for additional benefits to be afforded the Executive, such additional benefits will also be provided to the Executive in accordance with the terms of such Company Document.

9.4 Exemption from, or Compliance with, Section 409A . The payment of amounts and the provision of benefits under this Agreement are intended to be exempt from, or compliant with, Section 409A of the Internal Revenue Code. Accordingly, the payment of any amount under this Agreement subject to Section 409A shall be made in strict compliance with the provisions hereof, and no such amounts payable hereunder may be accelerated or deferred beyond the periods provided herein. This Agreement shall be performed and construed in a manner that is consistent with the foregoing intention.

9.5 Governing Law . This Agreement shall be governed by, and shall be construed, performed and enforced in accordance with, its express terms, and otherwise in accordance with the laws of State of Ohio, applicable to contracts to be wholly performed within such state without giving effect to any conflict of law, rule or principle of such state.

9.6 Headings; Section References; Construction . Section headings or captions contained in this Agreement are inserted only as a matter of convenience and reference and in no way define, limit, extend or describe the scope of this Agreement, or the intent of any provision hereof. All references herein to Sections shall refer to Sections of this Agreement unless the context clearly otherwise requires. Unless the context clearly states otherwise, the use of the singular or plural in this Agreement shall include the other and the use of any gender shall include all others. The parties have participated jointly in the negotiation and drafting of this Agreement. If any ambiguity or question of intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

9.7 Notices . All notices, requests, consents, approvals, waivers, demands and other communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed delivered to the parties (a) on the date of personal delivery against a written receipt, or (b) on the first business day following the date of delivery to a nationally recognized overnight courier service, or (c) on the third business day following the date of deposit in the United States Mail, postage prepaid, by certified mail, in each case addressed as

follows, or to such other address, person or entity as any party may designate by notice to the others in accordance herewith:

To Executive to the residence of the Executive as reflected in the Company’s books and records.

To Company:

Multi-Color Corporation

4053 Clough Woods Drive

Batavia, OH 45103

Attention: Chief Executive Officer

with a required copy to:

Keating Muething & Klekamp PLL

One East Fourth Street, Suite 1400

Cincinnati, OH 45202

Attention: Michael J. Moeddel

9.8 Policies, Regulations and Guidelines for Executives . The Company may, from time to time, issue policies, rules, regulations, guidelines, procedures or other informational material, whether in the form of handbooks, memoranda or otherwise, relating to the Company’s Executives. Executive acknowledges and agrees that such materials are general guidelines for Executive’s information and shall not be construed to alter, modify or amend this Agreement for any purpose whatsoever.

9.9 Severability and Reformation of Provisions . If a court in any final, unappealable proceeding holds any provision of this Agreement or its application to any person or circumstance invalid, illegal or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected, and shall be valid, legal and enforceable to the fullest extent permitted by law, but only if and to the extent such enforcement would not materially and adversely frustrate the parties’ essential objectives as expressed in this Agreement. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties intend that the court add to this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be valid and enforceable, so as to effect the original intent of the parties to the greatest extent possible.

9.10 Taxes . The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

9.11 Full Settlement . In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment, except for the offset described in Section 7.1(e).

THIS AGREEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING EXECUTIVE’S EMPLOYMENT WITH THE COMPANY. SECTION 5 CONTAINS PROVISIONS WHICH AFFECT EXECUTIVE’S ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING THE TERMINATION OF EXECUTIVE’S EMPLOYMENT. EXECUTIVE SHOULD FEEL FREE TO SEEK ADVICE FROM HIS ATTORNEY REGARDING ANY MATTER RELATING TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT, EXECUTIVE IS AFFIRMING THAT THE EXECUTIVE HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH HIS ATTORNEY, THAT EXECUTIVE UNDERSTANDS THE MEANING AND SIGNIFICANCE OF ALL OF ITS PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO EXECUTIVE REGARDING HIS EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT EXECUTIVE IS FREELY SIGNING THIS AGREEMENT TO CONTINUE HIS EMPLOYMENT WITH THE COMPANY.

[R EMAINDER OF P AGE I NTENTIONALLY L EFT B LANK - S IGNATURE P AGE TO F OLLOW ]

I N W ITNESS W HEREOF , the parties have entered into this Employment Agreement effective as of the date first written above.


M ULTI -C OLOR C ORPORATION

By:		/s/ Michael J. Henry



Title:		President and Chief Executive Officer

Date:		February 1, 2018



Witness:		/s/ Lesha Spahr



/s/ Michael D. Cook
M ICHAEL D. C OOK

Date:		February 1, 2018



Witness:		/s/ Lesha Spahr

[Signature Page to Michael D. Cook Employment Agreement]

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Henry, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Multi-Color Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Sharon E. Birkett, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Multi-Color Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Henry, President and Chief Executive Officer of Multi-Color Corporation (the “Company”), certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Sharon E. Birkett, Vice President, Chief Financial Officer, Secretary of Multi-Color Corporation (the “Company”), certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	the Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Date: February 9, 2018

/s/ Michael J. Henry

Michael J. Henry

President and Chief Executive Officer