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Exhibit 10.26
EMPLOYMENT AGREEMENT
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AGREEMENT by and between Multi-Color Corporation, an Ohio corporation
(the "Company") and Xxxxx X. Xxxxxx (the "Executive"), dated as of the 16th day
of March, 1998 and until the employment is terminated as set forth in this
Agreement.
A. DEFINITIONS. For the purposes of this Agreement, any
amendments and, where applicable, any attachments, the following terms shall
have the meanings set forth.
1. "Annual Base Salary" shall mean one year of salary at
the then-current rate for the Executive, as set from time to time by
the Board of Directors.
2. "Board of Directors" or "Board" shall mean the duly
elected and serving directors of the Company.
3. "Bonus" shall mean the payment due to Executive over
and above Executive's salary and other benefits as calculated pursuant
to Section C(2)(b).
4. "Cause", with respect to Executive's termination from
employment, shall mean:
(a) the Executive's failure to cure the
Executive's material breach of this Agreement within sixty
(60) days after the Company gives the Executive written notice
of the breach;
(b) 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.
(c) the Executive's misappropriation of any of
the Company's funds or property; or
(d) 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 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. "Change of Control," with respect to the termination
from employment of Executive shall be deemed to have occurred if:
(a) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, other than (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company; or
(ii) Xxxx X. Court or any member of his family; or (iii) Xxxxx
X. Xxxxxxx and his affiliates; or
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(iv) Xxxxxx X. Xxxxxx or his affiliates, becomes the
"beneficial owner" as defined in Rule 13d-3 under such Act,
directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any period of one year after
January 1, 1997, individuals, other than Xxxx X. Court and
Xxxx Xxxxxxxxxx, who at the beginning of such period
constitute the Board of Directors and any new directors who
are elected pursuant to provisions of the Articles of
Incorporation entitling holders of Preferred Stock of the
Company to elect directors and any new director whose election
by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were
Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof;
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals
and entities who were the beneficial owners of the outstanding
Company common stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 50% of the then-outstanding shares of common stock of the
corporation resulting from such Business Combination and (ii)
at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination
were members of the Board of the Company at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.
6. "Commencement Date" shall mean March 16, 1998.
7. "Company" shall mean Multi-Color Corporation, Ohio
Corporate Charter Number 652876, and its successors.
8. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, or by the Executive
for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) 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, (iii) if the
Company notifies the Executive of Non-renewal under Section B, the Date
of Termination shall be the end of the Term then in effect, (iv) 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, and (v) if a Change of Control
occurs, the Date of Termination shall be the date on which such Change
of
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Control occurred, or the date of the subsequent actual cessation of
Executive's duties under terminations occurring thereafter pursuant to
Sections E(1) and E(2), as the case may be.
9. "Disability" shall have the meaning set forth in the
Company's long-term disability plan, if any; and if none then it shall
mean Executive's continued inability for a period of six months to
perform at least 50% of the duties he was performing immediately prior
to his injury or illness which triggered the disability.
10. "Disability Commencement Date" shall be the 30th day
after notice is received by Executive pursuant to Section D(1)
that he is under an extended Disability, provided that, within
the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties.
11. "Good Reason" with respect to the termination from
employment of Executive shall mean:
(a) the Company's failure to cure the Company's
material breach of this Agreement within sixty (60) days after
the Executive gives the Company written notice of the breach;
(b) the Company either filing for bankruptcy or
being placed in receivership or in an involuntary bankruptcy
proceeding;
(c) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement; or
(d) the Company materially altering the
Executive's authority, duties or responsibilities without his
consent.
12. "Non-renewal" shall mean the Company's timely
notification to Executive that it does not desire to have the Agreement
automatically extended under Section B.
13. "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 thirty days after the giving of such
notice). The failure by a party to set forth in the Notice of
Termination specific facts or circumstances as required above shall not
be deemed to waive any rights hereunder.
14. "Term" shall mean the period of employment set forth
in Section B, as extended as set forth therein.
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B. EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to remain in the employ of the Company subject
to the terms and conditions of this Agreement. The initial Term of this
Agreement shall be from its date through June 30, 2000, or until the employment
is terminated as set forth in this Agreement. The Term will be extended
automatically for successive one year periods unless either party gives the
other written notice no less than three (3) months prior to the completion of
the then current Term that it does not desire such automatic extension.
C. TERMS OF EMPLOYMENT.
1. POSITION AND DUTIES.
(a) During the Executive's employment, the
Executive shall serve as Vice President of Operations.
(b) During the Executive's employment, and
excluding any periods of vacation and sick leave to which the Executive
is entitled, the Executive agrees to devote full attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform such
responsibilities in a professional manner. It shall not be a violation
of this Agreement for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage
personal investments, 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.
2. COMPENSATION.
(a) BASE SALARY. During the employment of
Executive, the Executive shall receive an Annual Base Salary.
The beginning Annual Base Salary of Executive shall be
$140,000.00. The Annual Base Salary shall be adjusted annually
each April 1 based upon Executive's performance but shall not
be adjusted below $140,000.00. The Annual Base Salary shall be
paid no less frequently than in equal bi-weekly installments.
(b) BONUS. Beginning April 1, 1998 and during
the Executive's employment, the Executive shall be paid a
bonus (the "Bonus"). It shall be based upon the Executive
Incentive Compensation Plan adopted by the Compensation
Committee of the Board in April 1998, as amended.
(c) STOCK OPTIONS. The Executive shall receive a
grant of the option for 50,000 shares of common stock pursuant
to the Company's 1997 Stock Option Plan. The option shall vest
one-third on the first anniversary of the date of grant, an
additional one-third on the second anniversary of the date of
grant and a final one-third on the third anniversary of the
date of grant. The term of the option shall be five
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years from the date of grant, i.e. the Commencement Date.
During the Executive's employment, Executive shall receive
additional stock options, as determined by the Board or its
committees from time to time. All grants shall provide that if
the Company shall terminate the Executive's employment other
than for Cause during the Executive's employment, or upon the
Executive's death or Disability, or if the Executive shall
terminate employment for Good Reason or if a Change of Control
shall occur at any time during the Executive's employment,
such options shall, if not previously vested, become
immediately vested.
(d) SAVINGS AND RETIREMENT PLANS. During the
Executive's employment, 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) profit sharing retirement savings,
supplemental retirement and deferred compensation plans.
(e) WELFARE AND OTHER BENEFIT PLANS. During the
Executive's employment, the Executive and/or the Executive's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare,
fringe, incentive, vacation 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.
(f) EXPENSES. During the Executive's employment,
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.
(g) FRINGE BENEFITS. During the Executive's
employment the Executive shall be entitled to a car allowance
of $600.00 per month.
(h) VACATION. During the Executive's employment,
the Executive shall be entitled to paid vacation in accordance
with the vacation policy of the Company, but in no event less
than four weeks per year.
(i) INDEMNITY. The Executive shall be
indemnified and saved harmless by the Company against claims
arising in connection with the Executive's status as an
employee, officer, director or agent of the Company. Such
indemnification shall be established to the level of the
greatest indemnification permitted by Ohio law for corporate
employees, officers or directors. In furtherance of this
protection, the Company shall continue to expend for officers'
and directors' liability insurance covering Executive at least
the amount spent in fiscal 1998 for such purposes and in any
event provide at least as much coverage for the Executive as
the Company provides for its other executives.
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D. TERMINATION OF EMPLOYMENT.
1. DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the
Executive's employment. If the Company determines in good faith that
the Disability of the Executive has occurred during the Executive's
employment, it may give to the Executive written notice 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.
2. BY THE COMPANY. At any time during the term hereof,
the Company may terminate the Executive's employment for Cause, as
defined herein, or without Cause.
3. BY THE EXECUTIVE. At any time during the term hereof,
the Executive's employment may be terminated by the Executive for Good
Reason, as defined herein, or without Good Reason, or upon a Change of
Control.
4. NOTICE OF TERMINATION. Any termination by the Company
or by the Executive shall be communicated by Notice of Termination to
the other party hereto given in accordance with this Agreement.
E. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
1. GOOD REASON; OTHER THAN FOR CAUSE. If the Company
terminates the Executive's employment for any reason other than for
Cause, death or Disability, or notifies Executive of Non-renewal of the
Term under Section B, or if the Executive terminates employment for
Good Reason, or if the Executive terminates employment for any reason
within one year of a Change of Control (but prior to the expiration of
the Term as it may be extended from time to time):
(a) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination
the aggregate of:
(i) Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid;
(ii) a bonus of 50% of Annual Base Salary
prorated through the Date of Termination;
(iii) any compensation previously deferred
by the Executive and any other non-qualified benefit
plan balances to the extent not previously paid; and
(iv) an amount equal to 1.0 times
Executive's Annual Base Salary paid over a two year
period in 24 equal monthly installments;
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(b) all stock option awards that were vested
immediately prior to the Date of Termination may be exercised
by Executive within 90 days of the Date of Termination;
(c) 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 benefits to the Executive and/or the
Executive's family at least equal to those which would have
been provided to them in accordance with the welfare plans,
programs, practices and policies described in Section B 2(f)
of this Agreement if the Executive's employment had not been
terminated; 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.
2. CHANGE OF CONTROL. If a Change of Control occurs and
Executive's position is eliminated thereby, or thereafter the Company,
or its successor, as the case may be, terminates Executive's employment
under this Agreement prior to the end of the Term (as it may be
extended from time to time) other than for Cause, the Company shall
have all of the obligations set forth in the preceding paragraph (1)
except that a) the amount in 1(a)(iv) shall be paid in a lump sum and
b) paragraph (b) shall read: "all stock option awards that were
outstanding immediately prior to the Date of Termination shall, if not
previously vested, become immediately vested and/or exercisable, as the
case may be with no further restrictions on sale other than those
mandated by law or by the agreement creating the Change of Control, if
applicable, and all stock option awards that were vested immediately
prior to the Date of Termination may be exercised by Executive within
90 days of the Date of Termination."
3. CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated by the Company for Cause or the
Executive terminates employment without Good Reason during the
Executive's employment, 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 aggregate of:
(i) Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid;
(ii) any compensation previously deferred
by the Executive and any other non-qualified benefit
plan balances to the extent not previously paid; and
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(b) 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.
4. 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:
(i) Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid;
(ii) a Bonus of 50% of Annual Base Salary
prorated through the Date of Termination; and
(iii) any compensation previously deferred
by the Executive and any other non-qualified benefit
plan balances to the extent not previously paid;
(b) all stock option awards that were
outstanding immediately prior to the Date of Termination shall
become immediately vested and/or exercisable, as the case may
be with no further restrictions on sale other than those
mandated by law and all stock option awards that were vested
immediately prior to the Date of Termination may be exercised
by Executive's legal representative within 90 days of the Date
of Termination;
(c) 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 benefits to the Executive and/or the
Executive's family at least equal to those which would have
been provided to them in accordance with the welfare plans,
programs, practices and policies described in Section B 2(f)
of this Agreement if the Executive's employment had not been
terminated;
(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; and
(e) any other death benefits then in effect for
Company employees or executives and their beneficiaries.
5. 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
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paragraph (4) except that subparagraph (e) shall read: "any other
long-term disability benefits then in effect for Company employees or
executives and their beneficiaries."
F. CONFIDENTIAL INFORMATION; NON-COMPETITION.
1. CONFIDENTIAL MATERIALS AND INFORMATION. The Executive
acknowledges that as a leader in the highly-competitive businesses of
printing labels, including inmold labels, and manufacturing and selling
gravure cylinders, the Company has developed, acquired and implemented
confidential, proprietary strategies and programs, which it has taken
steps to protect as trade secrets and which include expansion plans,
market research, sales systems, marketing programs, product development
strategies, budgets, pricing strategies, identity and requirements of
accounts, and other non-public proprietary information regarding
customers and the employees of the Company or of its 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
Paragraph (1) has no temporal, geographical or territorial restriction
or limitation, and it applies wherever the Executive may be located.
2. NON-SOLICITATION OF THE COMPANY'S EMPLOYEES. For a
period of twelve (12) months after the termination of his employment,
the Executive will not actively solicit, either directly or indirectly
through any third person, any other executive of the Company to
terminate his or her employment with the Company without the written
consent of the Chairman of the Board of Directors.
3 COVENANT AGAINST UNFAIR COMPETITION. While the
Executive is employed by the Company, and for twenty-four (24) months
after such employment ends for any reason, the Executive will not,
either directly or indirectly, (a) be employed by, consult for, engage
in any business for, or have any ownership interest in any inmold label
manufacturer, or in any gravure cylinder manufacturer which is using
Think System(TM) technology; or (b) call on, solicit or communicate
with any of the Company's customers or prospects for the purpose of
obtaining such inmold label or gravure cylinder business 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 twenty-four (24) months, and the term "prospect"
means a business entity (including representatives of such business
entity) to which, at any time in the previous twenty-four (24) months,
the Company made a proposal, or had under active consideration for
making a proposal, for providing goods or services. Ownership, for
personal investment
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purposes only, of not in excess of 2% of the voting stock of any
publicly held corporation shall not constitute a violation hereof.
4. RETURN OF CONFIDENTIAL MATERIALS AND INFORMATION. The
Executive agrees that whenever the Executive's employment with the
Company ends for any reason, all documents containing or referring to
the Company's Confidential Materials and Information as 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 IRREPARABLE HARM. The Executive agrees that a breach
of any covenant in this Section F 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, pending or
following arbitration under Section I below, such violation or
continued violation.
G. FULL SETTLEMENT. In the event of a Change of Control, the
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. 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. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
H. SUCCESSORS.
1. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
2. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
3. 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
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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.
I. MISCELLANEOUS.
1. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without reference to
principles of conflict of laws, and any legal action concerning this
Agreement shall be brought and maintained only in the Court of Common
Pleas of Xxxxxxxx County, Ohio. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
2. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company:
Multi-Color Corporation
Attn: President
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
or to such other address as either party shall have furnished to the
other in writing in accord herewith. Notice and communications shall be
effective when actually received by the addressee.
3. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
4. 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.
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5. This Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx 11/9/98
MULTI-COLOR CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, III, President
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Xxxxxx X. Xxxxxxxx, III, President 10/26/98
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