<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 1995
_______________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ________________
Commission File #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.)
4575 Eastern Avenue, Cincinnati, Ohio 45226
_______________________________________________
(Address of principal executive offices)
Registrant's telephone number - 513/321-5381
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 X 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 - 2,172,569 (as of October 24, 1995)
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
MULTI-COLOR CORPORATION
Statements of Operations
(Prepared Without Audit)
(Thousands except per share amounts)
Thirteen Weeks Ended
_____________________
October 1, 1995 October 2, 1994
_______________ ________________
NET SALES $13,158 $15,348
COST OF GOODS SOLD 11,406 13,999
____________ __________
Gross Profit $1,752 $1,349
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,272 1,511
RESTRUCTURING CHARGE (INCOME) - (85)
_________ ___________
Operating Income (Loss) $480 ($77)
OTHER EXPENSE (INCOME) 25 12
INTEREST EXPENSE 337 324
__________ __________
Income (Loss) Before Taxes $118 ($413)
PROVISION (CREDIT) FOR TAXES - (50)
__________ __________
NET INCOME (LOSS) $118 ($363)
_________ __________
NET EARNINGS (LOSS) PER SHARE $0.05 ($0.17)
_________ __________
AVERAGE NUMBER OF SHARES OUTSTANDING 2,173 2,168
__________ __________
__________ __________
The accompanying notes are an integral part of this financial information.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)
MULTI-COLOR CORPORATION
Statements of Operations
(Prepared Without Audit)
(Thousands except per share amounts)
Twenty-Six Weeks Ended
________________________________
October 1, 1995 October 2, 1994
______________ ______________
NET SALES $28,665 $31,411
COST OF GOODS SOLD 24,845 28,608
_________ ________
Gross Profit 3,820 2,803
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,775 3,193
RESTRUCTURING CHARGE (INCOME) - (85)
__________ __________
Operating Income (Loss) $1,045 ($305)
OTHER EXPENSE (INCOME) - 66
INTEREST EXPENSE 714 689
___________ __________
Income (Loss) Before Taxes
and Extraordinary Item $331 ($1,060)
PROVISION (CREDIT) FOR TAXES - (50)
__________ _________
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $331 ($1,010)
__________ __________
Extraordinary Item - Loss on
Extinguishment of Debt - 225
__________ __________
NET INCOME (LOSS) $331 ($1,235)
__________ __________
__________ __________
NET EARNINGS (LOSS) PER SHARE BEFORE
EXTRAORDINARY ITEM $0.15 ($0.47)
__________ __________
EXTRAORDINARY ITEM - ($0.10)
__________ __________
NET EARNINGS (LOSS) PER SHARE $0.15 ($0.57)
__________ __________
__________ __________
AVERAGE NUMBER OF SHARES OUTSTANDING 2,173 2,168
__________ __________
__________ __________
The accompanying notes are an integral part of this financial information.
<PAGE>
Item 1. Financial Statements (Continued)
MULTI-COLOR CORPORATION
Balance Sheets
(Thousands)
ASSETS
______
October 1, 1995 April 2, 1995
________________ ________________
(Prepared (Derived from
Without Audited Financial
Audit) Statements)
CURRENT ASSETS
Cash and Cash Equivalents $ 16 $ 16
Accounts Receivable 4,140 7,635
Note Receivable 103 67
Inventories
Raw Materials 1,405 2,061
Work in Progress 1,377 1,472
Finished Goods 2,785 3,129
Deferred Tax Benefit 604 604
Prepaid Expenses and Supplies 61 114
_________ _________
Total Current Assets $10,491 $15,098
_________ _________
SINKING FUND - IRB $ 1,037 $ 400
_________ _________
PROPERTY, PLANT, AND EQUIPMENT $33,251 $33,398
ACCUMULATED DEPRECIATION (14,411) (13,609)
_________ _________
$18,840 $19,789
_________ _________
DEFERRED CHARGES, net $ 99 $ 149
_________ _________
NOTE RECEIVABLE $ 323 $ 373
_________ _________
NOTE RECEIVABLE FROM OFFICERS/SHAREHOLDERS $ 133 $ 150
_________ _________
$30,923 $35,959
_________ _________
_________ _________
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-Term Debt $ 1,785 $ 4,105
Current portion of long-term debt 938 1,093
Long-Term Debt Subject to Acceleration 14,700 14,700
Accounts Payable 6,795 9,597
Accrued Expenses 2,545 2,634
_________ _________
Total Current Liabilities $26,763 $32,129
_________ _________
LONG-TERM DEBT, excluding current portion $ 7 $ 8
_________ _________
DEFERRED TAXES $ 604 $ 604
_________ _________
PENSION LIABILITY $ 220 $ 220
_________ _________
Total Liabilities $27,594 $32,961
_________ _________
SHAREHOLDERS' EQUITY
Common Stock, no par value $ 9,357 $ 9,357
Accumulated Deficit (5,569) (5,900)
Excess of Additional Pension
Liability Over Unrecognized
Prior Service Cost ( 459) (459)
_________ _________
Total Shareholders' Equity $ 3,329 $ 2,998
_________ _________
$30,923 $35,959
_________ _________
_________ _________
The accompanying notes are an integral part of this financial information.
<PAGE>
Item 1. Financial Statements (Continued)
MULTI-COLOR CORPORATION
Statements of Cash Flows
(Prepared Without Audit)
(Thousands)
Twenty-Six Weeks Ended
________________________________
October 1, 1995 October 2, 1994
_______________ _______________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 331 ($1,235)
Adjustments to reconcile net
income (loss) to net
cash provided by operating activities -
Depreciation and amortization 1,275 1,378
Increase (decrease) in deferred
income taxes -- 108
Increase (decrease) in deferred
compensation -- (288)
(Increase) decrease in notes
receivables 31 (116)
Net (increase) decrease in accounts
receivable, inventories and prepaid
expenses and supplies 4,643 (1,802)
Net increase (decrease) in accounts (2,891) 662
payable and accrued liabilities
Accrual of restructuring liabilities -- (85)
Payment of restructuring liabilities -- (233)
________ ________
Net cash provided by (used in)
operating activities $3,389 ($1,611)
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures, net ($703) ($559)
Marketable Securities sold (purchased)
net 13 --
Proceeds from sale of assets 414 --
________ ________
Net cash used in investing activities ($276) ($559)
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) of revolving loan
including, non-current portion, net ($2,320) $2,368
(Increase) decrease in sinking fund (637) --
Proceeds from issuance of common stock -- 129
Addition (reductions) to long term debt,
including current portion (156) (167)
Capitalized bank fees -- (160)
________ ________
Net cash provided by (used in)
financing activities ($3,113) $2,170
________ ________
Net increase (decrease) in cash and
cash equivalents $ -- $ --
CASH AND CASH EQUIVALENTS,
beginning of period $16 $11
________ ________
CASH AND CASH EQUIVALENTS,
end of period $16 $11
________ ________
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest Paid $713 $689
________ ________
Income Taxes Paid $11 $14
________ ________
The accompanying notes are an integral part of this financial information.
<PAGE>
MULTI-COLOR CORPORATION
Notes to Financial Information
Item 1. Financial Statements
____________________
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and
footnote disclosures, normally included in financial statements prepared
in accordance with generally accepted accounting principles, 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. These condensed financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest Annual Report on Form 10-K.
The information furnished in these 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, and all adjustments and estimates are of a normal recurring
nature.
Restructuring Plan
__________________
In the Second Quarter of fiscal 1994, the Company announced a $1,777,000
restructuring charge which was reported as a separate charge for the
twenty-six weeks ended September 26, 1993. The restructuring charge
primarily included the costs associated with consolidating operations and
closing and disposing of the Lockport, Illinois facility. In August, 1994,
the Company completed the sale of its Lockport facility and the
restructuring plan was essentially completed as of October 2, 1994.
Extraordinary Charge
____________________
The Company entered into a new financing agreement in July, 1994.
Accordingly, the prepayment fees associated with the previous
financing agreement have been expensed.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
____________________________________________________________
Results of Operations
Thirteen Weeks Ended October 1, 1995 Compared to Thirteen Weeks Ended
October 2, 1994
Net sales decreased $2,190,000, or 14.3%, in the second quarter as
compared to the same quarter of the previous year. The decrease in sales
was due primarily to a 31% ($2,231,000) decrease in conventional label
business. The decrease in conventional business was due primarily to lost
business in the gum label and detergent cleaning product areas. The
decline in the conventional label business is expected to continue.
In-mold sales experienced a 1% decline ($78,000) compared to the same
prior year period. The Company is refocusing its marketing efforts to
address the recent sales declines.
Gross profit increased by $403,000 as compared to the previous year and was
favorably impacted by a $300,000 supplier claim settlement coupled with
continued cost cutting within the operations. The Graphics Division's
gross profit was negatively impacted by lower sales.
Cincinnati's performance was favorably impacted by continuing the cost
cutting programs and lower depreciation from the write-down of assets during
the fourth quarter of fiscal 1995.
<PAGE>
Selling, general, and administrative expenses decreased $239,000 as compared
to the same prior year period. The decrease was attributable to implemented
cost cutting initiatives offset by the utilization of an outside consulting
firm to assist with the Company's renegotiation of its loan agreement
($80,000).
Interest expense increased $13,000 as compared to the same prior year. This
was the result of higher interest rates on the Company's IRBs.
The net income for the period was $118,000 [$.05 per share] as compared to a
net loss of $363,000 [$(.17) per share] in the same prior year period.
Twenty-Six Weeks Ended October 1, 1995 Compared to the Twenty-Six Weeks Ended
October 2, 1994
Net sales decreased $2,746,000 or 8.7% during the first six months as compared
to the same prior year period. The decrease in sales was due primarily to a
28% ($4,058,000) decrease in conventional label business offset by a 6.3%
($1,050,000) increase in plastic in-mold sales. The decrease in the
conventional business was due primarily to lost business in the gum label and
detergent cleaning product areas. The decline in the conventional label
business is expected to continue.
Gross profit increased $1,017,000 during the first six months as compared to
the same prior year period. Gross profit was favorably impacted by higher
levels of in-mold sales, improved performance at Scottsburg, a $300,000
supplier claim settlement, and the cost cutting programs initiated at
Cincinnati to handle the expected declines in conventional label sales. The
Graphics Division's gross profit was negatively impacted by lower sales.
Selling, general, and administrative expenses decreased $418,000 compared to
the same prior year period. The decrease was attributable to implemented
cost cutting initiatives offset by the utilization of an outside consulting
firm to assist with the Company's renegotiation of its loan agreement
($213,000).
Interest expense increased $25,000 as compared to the same prior year. This
was the result of higher interest rates on the Company's IRB's.
The net income for the period was $331,000 [$.15 per share] as compared to
a net loss of $1,235,000 [$(.57) per share] in the same prior year period.
Liquidity and Capital Resources
_______________________________
In July 1994, the Company entered into a new Credit Agreement with PNC Bank,
Ohio, National Association, and Star Bank, National Association extending
through July 1997. This agreement was to provide available borrowings under
the revolving line of credit of up to a maximum of $5 million, subject to
certain borrowing base limitations, and to provide for up to an additional
$1.4 million of long-term financing for capital expenditures. During fiscal
1995, the Company was in violation of certain of its financial covenants
and received waivers from its lenders with respect to these violations until
April 2, 1995. In connection with the waivers, the Credit Agreement was
amended to restrict the borrowing base and increase the interest rate and
fees applicable to the borrowings under the Credit Agreement. Additionally,
the $1.4 million term loan and lease lines are available only on a case by
case basis with bank approval. As of October 1, 1995, approximately $700,000
was available for borrowing under the revolving line of credit.
The Company remains in violation of certain covenants; however, management
is continuing negotiations with its lenders to amend or restructure its
financing agreements with the objective agreeing on a long-term agreement.
The of Company has been experiencing the need for additional cash and as
part of an effort to improve the Company's cash and liquidity needs, raised
$500,000 from certain members of the Company's Board of Directors and
another individual through the sale of the Company's Subordinated
Convertible Promissory Notes due March 31, 1996. Said notes are
mandatorily convertible into the Company's Common Stock at a conversion
rate equal to 80% of the value of the Company's Common Stock as measured
at certain dates. The Company is still in need of improvement in its
liquidity position and is exploring other alternatives to enable the
Company to increase its capital available for operations and investment.
In the short-term, management also intends to continue its focus on working
capital management and reducing unprofitable conventional label operations
and other expenses to provide operating liquidity. On a long term basis,
the Company has engaged Hambro America Securities, Inc. to review the
Company's business strategy and capital structure, including the possibility
of privately placing $3,000,000 to $5,000,000 of equity or equity equivalent
securities.
<PAGE>
Through the second quarter ended October 1, 1995, net cash provided by
operating activities was $3,389,000 as compared to ($1,611,000) of net cash
used in operating activities through the second quarter ended October 2,
1994. Net cash provided by operations was favorably impacted by net income
and reductions in accounts receivable and inventory.
At October 1, 1995, the Company's net working capital (deficit) and current
ratio were ($16,272,000) and .39 to 1, respectively, as compared to a net
working capital (deficit) of ($17,031,000) and .47 to 1 as of April 2, 1995.
The deterioration in the negative working capital was primarily attributable
to the classification of the otherwise long-term debt as short-term debt as
a result of the Company's violation of certain covenants as discussed above.
At October 1, 1995, the Company was current in its principal and interest
payments on all debt.
Part II. Other Information
__________________________
Item 3. Defaults Upon Senior Securities
_______________________________
The Company is currently, and was in violation of the Current Ratio, Leverage
Ratio, and Cash Flow Coverage Ratio covenants under the Credit Agreement at
certain measurement dates during the second quarter ending October 1, 1995,
as well as at the end of that fiscal quarter. Accordingly, long-term debt
has been classified as short-term debt.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
Exhibit Number Description
_____________ ___________
4 Subordinated Convertible Promissory Note
Due March 31, 1996.
10 Fourth Amendment dated October 6, 1995
to the Credit Reimbursement and
Security Agreement dated as of July 15, 1994.
27 Financial Data Schedule
(b) Form 8-K was filed on September 14, 1995 announcing the Company engaged
Hambro America Securities, Inc. to review the Company's business strategy and
capital structure, including the possibility of privately placing $3 million
to $5 million of equity or equity equivalent securities.
<PAGE>
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: November 14, 1995 By: /s/William R. Cochran
______________________
William R. Cochran
Vice President,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> OCT-01-1995
<CASH> 16,000
<SECURITIES> 0
<RECEIVABLES> 4,140,000
<ALLOWANCES> 0
<INVENTORY> 5,567,000
<CURRENT-ASSETS> 10,491,000
<PP&E> 33,251,000
<DEPRECIATION> 14,411,000
<TOTAL-ASSETS> 30,923,000
<CURRENT-LIABILITIES> 26,763,000
<BONDS> 0
<COMMON> 9,357,000
0
0
<OTHER-SE> (6,028,000)
<TOTAL-LIABILITY-AND-EQUITY> 30,923,000
<SALES> 13,158,000
<TOTAL-REVENUES> 13,158,000
<CGS> 11,406,000
<TOTAL-COSTS> 12,678,000
<OTHER-EXPENSES> 25,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 337,000
<INCOME-PRETAX> 118,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,000
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
<PAGE>
SUBORDINATED
CONVERTIBLE
PROMISSORY NOTE
$___________ Cincinnati, Ohio
_______________, 1995
FOR VALUE RECEIVED, the undersigned MULTI-COLOR CORPORATION,
an Ohio corporation ("Maker"), hereby promises to pay to the
order of _______________________________________ (the "Payee"),
the principal amount of ___________________________ Dollars
($_______), together with interest thereon as set forth herein.
The principal amount hereof shall be due and payable on the
earlier of (i) March 31, 1996 or (ii) such time as the Maker
accepts subscriptions for at least $3,000,000 in equity capital
through the efforts of Hambro American Securities, Inc.
("Hambro").
Interest on the outstanding principal balance of this Note
will accrue at a rate per annum equal to two percent (2%) in
excess of the interest rate paid by Maker on its Revolving Credit
Facility with its primary lenders, currently PNC Bank, Ohio,
National Association ("PNC") and Star Bank National Association
("Star Bank"). Interest shall be calculated on the basis of a
year of 360 days and charged for the actual number of days
elapsed. Accrued interest shall be due and payable on the due
date of this Note.
Demand, presentment, protest and notice of non-payment and
protest, notice of intent to accelerate and notice of
acceleration are hereby waived by the Maker.
Notwithstanding anything herein to the contrary, the payment
of principal and interest on this Note shall be subordinate and
junior to the prior payment of all indebtedness of Maker under
the Credit, Reimbursement and Security Agreement among Maker and
PNC and Star Bank dated as of July 15, 1994, as amended, together
with all restatements or renewals of the foregoing and any other
indebtedness of the Maker which by its terms is senior to payment
of principal and interest on this Note (the "Senior
Indebtedness"). If any payment or distribution shall be received
in respect of this Note in contravention of the terms of this
paragraph, such payment or distribution shall be held by Payee in
trust for the holders of the Senior Indebtedness and shall be
immediately delivered to such holders in the same form as
received.
Upon the Note becoming due and payable for any reason, all
outstanding principal of this Note and all accrued interest
thereon shall automatically convert as of the due date into such
whole numbers of Shares as is obtained by dividing the sum of all
outstanding principal of this Note and accrued interest thereon by
the lower of eighty percent (80%) of (a) the lower of the average
of the closing sale prices as reported on Nasdaq for the Shares for
the twenty (20) trading days preceding (i) the due date of this Note
or (ii) the date of this Note or (b) the price at which equity
capital had been sold directly or, indirectly through a
convertible security, warrant or other instrument, by Hambro.
The Payee shall surrender the Note to the Maker within the two
(2) business days following the due date and the Maker shall
issue and deliver to the Payee duly executed certificates of
Shares acquired by the Payee.
<PAGE>
Upon conversion of the Note, the rights of the Payee to the
Note being converted shall cease except for the right to receive
the appropriate number of Shares and the Payee shall be treated
for all purposes as having become the record holder of such
Shares at such time.
If, prior to the conversion of the entire outstanding
principal balance of this Note into the Shares, (i) any
recapitalization, reclassification, split-up, consolidation or
exchange of the Maker's outstanding Shares occurs or (ii) any
merger or consolidation involving the Maker occurs, or (iii)
payment of cash or other assets are made or distributed to
Shareholders, or (iv) a sale of all or substantially all of the
assets of the Maker occurs then in such event, the conversion
formula shall be adjusted by the Maker to provide the Payee with
the same economic benefit, substantive rights and proportionate
interest in the Maker as the Payee had prior to the occurrence of
any such event so that the Payee will be entitled to convert this
Note into Shares, other securities or other assets that the Payee
would have owned or been entitled to receive upon such event had
such Note been converted immediately prior to such action.
In connection with the conversion of the Note, no fractional
shares of Common Stock shall be issued, but in lieu thereof the
Maker shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest
multiplied by the applicable conversion price for the Common
Stock as set forth above.
If the Note is converted as set forth herein, the Payee will
have registration rights for the Shares pursuant to the terms of
the Registration Rights Agreement attached hereto as Exhibit 1.
In the event of (i) the filing by the Maker of a voluntary
petition in bankruptcy or application seeking the appointment of
a receiver for it or its assets, or (ii) the filing of an
involuntary petition in bankruptcy against Maker, or (iii) the
sale of substantially all of the Maker's assets other than in the
ordinary course of business, or (iv) the default by the Maker in
a payment of principal or interest on this Note in accordance
with its terms, and such default continues for a period of five
(5) days after notice thereof is delivered to Maker, then upon
the occurrence of any such events the entire amount of principal
and interest remaining unpaid shall, at the option of the Payee, at
once become due and payable and the Note shall be converted into
Shares as set forth above.
<PAGE>
In no event shall the interest rate on this Note exceed the
highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Payee has
received interest and other charges under this Note in excess of
the highest permissible rate applicable hereto, such excess shall
be deemed received on account of, and shall automatically be
applied to reduce the amounts due to Payee from the Maker under
this Note, other than interest. If there are no such amounts
outstanding, Payee shall refund to Maker such excess.
If any payment on this Note becomes due and payable on a day
other than one on which banks in Cincinnati, Ohio are open for
business (a "Business Day"), the maturity thereof shall be
extended to the next Business Day, and interest shall be payable
at the rate specified herein during such extension period.
If any payment of principal or interest of this Note is not
paid when due and thereafter is placed with an attorney for
collection, Maker agrees to pay all costs of collection,
including reasonable attorney's fees and disbursements (including
those of any appellate proceedings), which shall be added to the
principal amount due under this Note and recoverable with the
amount of this Note.
No delay or omission on the part of the Payee or any holder
hereof in exercising any right hereunder shall operate as a
waiver of such right or of any other rights of the Bank or such
holder, nor shall any delay, omission or waiver on any one
occasion be deemed a bar or waiver of the same or any other right
on any future occasion.
The Maker hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this
note, and assents to the extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or
release of collateral or to the addition or release of any other
party or person primarily or secondarily liable.
This Note may not be amended without the consent of PNC.
This Note shall be governed by and construed in accordance
with the internal substantive laws of the State of Ohio. Maker
and Payee agree that the state and federal courts in Hamilton
County, Ohio have exclusive jurisdiction over all matters arising
out of this Note.
IN WITNESS WHEREOF, the undersigned Maker has executed this
Note on the date and year first set forth above.
MULTI-COLOR CORPORATION
By:__________________________
John C. Court
Its: President
<PAGE>
FOURTH AMENDMENT AND WAIVER AGREEMENT
MULTI-COLOR CORPORATION, an Ohio corporation (the
"Company"), PNC BANK, OHIO, NATIONAL ASSOCIATION and STAR BANK,
NATIONAL ASSOCIATION (each individually a "Lender" and
collectively the "Lenders") and PNC BANK, OHIO, NATIONAL ASSOCIA-
TION, as agent for the Lenders (the "Agent"), hereby agree as
follows effective as of _________________________, 1995
("Effective Date"):
1. Recitals.
1.1 On July 15, 1994 the Company, the Lenders and the
Agent entered into a Credit, Reimbursement and Security Agreement
which has been amended by a First, Second and Third Amendment and
Waiver Agreement (as amended, the "Credit Agreement").
Capitalized terms used herein and not otherwise defined herein
will have the meanings given such terms in the Credit Agreement.
1.2 The Company has requested that the Lenders waive
an Event of Default under the Credit Agreement and amend the
Credit Agreement and the Lenders are willing to do so subject to
and in accordance with the terms of this Fourth Amendment and
Waiver Agreement (the "Fourth Amendment").
2. Amendments. The Credit Agreement, the Revolving Credit
Notes and the other Loan Documents are hereby amended as follows:
2.1 Section 1.1.20 of the Credit Agreement is amended
in its entirety to provide:
1.1.20 "Borrowing Base" will equal the lesser
of (a) the sum of eighty percent (80%) of the Eligible
Accounts Receivable plus fifty percent (50%) of
Eligible Inventories less $1,500,000, less the
aggregate face amount of all outstanding Standby
Letters of Credit, or (b) the Total Revolving
Commitment.
If the Company has not provided the Agent with the BKS
Consent and the title endorsement referred to in Sections 5.7 and
5.8 of the Collateral Assignment of Note, Loan Agreement and
Mortgage of even date herewith within 20 calendar days of the
effective date hereof, then Section 1.1.20 of the Credit
Agreement automatically shall be amended in its entirety as
follows:
1.1.20 "Borrowing Base" will equal the lesser
of (a) the sum of eighty percent (80%) of the Eligible
Accounts Receivable plus fifty percent (50%) of
Eligible Inventories less $2,000,000, less the
aggregate face amount of all outstanding Standby
Letters of Credit, or (b) the Total Revolving
Commitment.
<PAGE>
2.2 All references in the Credit Agreement (including
Exhibit A thereto), the Revolving Credit Notes and the other Loan
Documents to the amount of each Revolving Credit Note and/ the
amount of the Revolving Commitment of each Lender is changed from
$2,500,000 to $2,000,000 and all references in such documents to
the amount of the Revolving Credit Facility are changed from
$5,000,000 to $4,000,000.
2.3 Section 10.2 of the Credit Agreement is deleted
and replaced by the following:
10.2 Leases. Enter into or permit to remain
in effect any rental or lease agreement for real
or personal property whose term (including renewal
options) exceeds 72 months or if aggregate annual
rental payments under all lease agreements for
real and personal property on an annual basis
would exceed $400,000.
3. Waivers.
3.1 The Lenders and the Agent hereby waive any Event
of Default or Default that occurred prior to the Effective Date
from the Company's failure to comply with Section 10.2 of the
Credit Agreement.
3.2 The waivers set forth in Section 3.1, above, will
relate only to the specific matter covered by such Section and do
not constitute a waiver of any of the Events of Default covered
by the default letter dated September 15, 1995 sent by Agent to
the Company ("Default Letter"). In no event will the Lenders and
the Agent be under any obligation to provide additional waivers
or enter into any amendments to the Credit Agreement with regard
to those items or any other provision of the Credit Agreement.
4. Representations, Warranties and Covenants of the
Company. To induce the Lenders and the Agent to enter into this
Fourth Amendment, the Company represents and warrants as follows:
4.1 The representations and warranties of the Company
contained in Section 8 of the Credit Agreement are deemed to have
been made again on and as of the date of execution of this Fourth
Amendment and are true and correct as of the date of the
execution of this Fourth Amendment.
4.2 No Event of Default (as such term is defined in
Section 11 of the Credit Agreement) or event or condition which
with the lapse of time or giving of notice or both would
constitute an Event of Default exists on the date hereof, except
for defaults that had been waived in accordance with Section 3,
above and those referred to in the Default Letter.
<PAGE>
4.3 The person executing this Fourth Amendment is a
duly elected and acting officer of the Company and is duly
authorized by the Board of Directors of the Company to execute
and deliver this Fourth Amendment on behalf of the Company.
5. Claims and Release of Claims by the Company. The
Company represents and warrants that the Company does not have
any claims, counterclaims, setoffs, actions or causes of actions,
damages or liabilities of any kind or nature whatsoever whether
at law or in equity, in contract or in tort, whether now accrued
or hereafter maturing (collectively, "Claims") against the
Lenders or the Agent, their respective direct or indirect parent
corporations or any direct or indirect affiliates of such parent
corporation, or any of the foregoing's respective directors,
officers, employees, agents, attorneys and legal representatives,
or the successors or assigns of any of them (collectively,
"Lender Parties") that directly or indirectly arise out of, are
based upon or are in any manner connected with any Prior Related
Event. As an inducement to the Lenders and the Agent to enter
into this Fourth Amendment, the Company on behalf of itself, and
all of its successors and assigns hereby knowingly and
voluntarily releases and discharges all Lender Parties from any
and all Claims, whether known or unknown, that directly or
indirectly arise out of, are based upon or are in any manner
connected with any Prior Related Event. As used herein, the term
"Prior Related Event" means any transaction, event, circumstance,
action, failure to act, occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted
or begun at any time prior to the Effective Date or occurred,
existed, was taken, was permitted or begun in accordance with,
pursuant to or by virtue of any of the terms of the Credit
Agreement or any documents executed in connection with the Credit
Agreement or which was related to or connected in any manner,
directly or indirectly to the Notes or Letter of Credit.
6. Conditions. The Lenders' and Agent's obligations
pursuant to this Fourth Amendment are subject to the following
conditions:
6.1 The Agent shall have been furnished copies,
certified by the Secretary or assistant Secretary of the Company,
of resolutions of the Board of Directors of the Company
authorizing the execution of this Fourth Amendment and all other
documents executed in connection herewith.
<PAGE>
6.2 The representations and warranties of the Company
in Section 4, above, shall be true.
6.3 The Company shall pay all expenses and attorneys
fees incurred by the Lender in connection with the preparation,
execution and delivery of this Fourth Amendment and related
documents.
6.4 The Agent shall have been furnished evidence
satisfactory to it of the deposit into the Company's account at
Agent of the sum of $500,000 in connection with the issuance of
$500,000 in subordinated convertible promissory notes by the
Company to investors, all in form and substance acceptable to
Agent.
6.5 The Agent shall have received a collateral
assignment of the BKS Enterprises, Inc. ("BKS"), Loan Agreement,
Note and Mortgage, all in form and substance acceptable to
Lender. All payments received by Agent under the BKS Note will
be held by Agent in a separate interest bearing account by Agent
and upon receipt of the regular Sinking Fund payment required
under Section 4 of the Credit Agreement, such BKS payment will be
deposited into the Sinking Fund Accounts. The BKS payments will
not reduce the amount of the regular Sinking Fund payment
required under Section 4 of the Credit Agreement.
7. General.
7.1 Except as expressly modified herein, the Credit
Agreement, as amended, is and remains in full force and effect.
7.2 Except as specifically provided in Section 3,
nothing contained herein will be construed as waiving any default
or Event of Default under the Credit Agreement or will affect or
impair any right, power or remedy of the Lenders or the Agent
under or with respect to the Credit Agreement, as amended, or any
agreement or instrument guaranteeing, securing or otherwise
relating to the Credit Agreement.
7.3 This Fourth Amendment will be binding upon and
inure to the benefit of the Company, the Lenders and the Agent
and their successors and assigns.
7.4 All representations, warranties and covenants made
by the Company herein will survive the execution and delivery of
this Fourth Amendment.
7.5 This Fourth Amendment will in all respects be
governed and construed in accordance with the laws of the State
of Ohio.
7.6 This Fourth Amendment may be executed in one or
more counterparts, each of which will be deemed an original and
all of which together will constitute one and the same
instrument.
Executed as of the Effective Date.
MULTI-COLOR CORPORATION,
as Company
By: ____________________
Print Name: ____________
Title: _________________
PNC BANK, OHIO,
NATIONAL ASSOCIATION,
on its own behalf as
Lender and as Agent
By:_____________________
Print Name:_____________
Title:__________________
