INDEMNIFICATION AGREEMENT
This Agreement, dated as of April 22, 1996, is by and between Vari-Lite
International, Inc., a Texas corporation (the "Company"), and Xxxx X.
Xxxxxxxx ("Indemnitee").
WITNESSETH:
WHEREAS, the Company desires to have qualified individuals serving on
its Board of Directors who are willing to make decisions that in their
judgment are in the Company's best interest without any undue threat of
personal liability; and
WHEREAS, the Board of Directors of the Company has elected Indemnitee to
serve as a director of the Company; and
WHEREAS, the Articles of Incorporation (the "Articles of Incorporation")
of the Company require indemnification of each director or officer of the
Company in his capacity as a director or officer and, if serving at the
request of the Company as a director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or
domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise, in each of those capacities,
against any and all liability and reasonable expense that may be incurred by
him in connection with or resulting from (a) any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (collectively, a "Proceeding"),
(b) an appeal in such a Proceeding or (c) any inquiry or investigation that
could lead to such a Proceeding, to the fullest extent permitted by the Texas
Business Corporation Act (the "Act"), as the same exists or hereafter may be
amended; and
WHEREAS, the Company desires to grant to Indemnitee the maximum
indemnification for any Loss (hereinafter defined) permitted under law; and
WHEREAS, developments with respect to the terms and availability of
directors' and officers' liability insurance and with respect to the
application, amendment and enforcement of statutory, charter and bylaw
indemnification provisions generally have raised questions concerning the
adequacy and reliability of the protection afforded to persons intended to be
protected thereunder; and
WHEREAS, in order to resolve such questions and thereby induce
Indemnitee to serve and continue serving as a director of the Company, the
Company has determined and agreed to enter into this Agreement with
Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve and
continue serving as a director of the Company, the parties hereto agree as
follows:
1. INDEMNIFICATION OF INDEMNITEE. The Company shall indemnify
Indemnitee in his capacity as a director of the Company and, if serving at
the request of the Company as a director, officer, trustee, employee, agent
or similar functionary of another foreign or domestic corporation, trust,
partnership, joint venture, sole proprietorship, employee benefit plan or
other enterprise, in each of those capacities, against any and all liability
and reasonable expense that may be incurred by Indemnitee in connection with
or
resulting from (a) any Proceeding, (b) an appeal in any Proceeding or (c) any
inquiry or investigation that could lead to any Proceeding, all to the
fullest extent permitted by Article 2.02-1 of the Act, as the same exists as
of the date of this Agreement or may hereafter be amended to broaden the
indemnification which the Company may grant to its directors. All indemnity
obligations and/or liabilities of the Company hereunder shall be without
limit and without regard to the cause or causes thereof or the negligence or
gross negligence of any person or persons (expressly including Indemnitee),
whether such negligence or gross negligence of Indemnitee be sole, joint or
concurrent, active or passive.
2. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director of the Company and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed
Proceeding, any appeal in any Proceeding and any inquiry or investigation
that could lead to any Proceeding, by reason of the fact that Indemnitee was
serving in any capacity referred to herein.
3. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after
receipt by Indemnitee of notice of any claim against Indemnitee or
the commencement of any Proceeding, Indemnitee will, if a claim in
respect thereof is to be made against the Company under this
Agreement, notify the Company of the assertion of any such claim or
the commencement thereof; but the omission so to notify the Company
will not relieve it from any liability under this Agreement unless
such delay in notification actually prejudiced the Company (and
then only to the extent the Company was actually prejudiced
thereby) and, in addition, the Company shall not be relieved from
any liability which it may have to Indemnitee otherwise than under
this Agreement. With respect to any Proceeding as to which
Indemnitee notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense.
(b) Except as otherwise provided below, to the extent that it may
wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election so to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by Indemnitee in connection with the
defense thereof other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ his
own counsel in such Proceeding, but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the
defense thereof shall be at the expense of Indemnitee unless (i) the
employment of counsel by Indemnitee has been authorized in writing by
the Company, (ii) Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and Indemnitee in the
conduct of the defense of such action or (iii) the Company shall not in
fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of Indemnitee's counsel shall be at
the expense of the Company. The Company shall not be entitled to assume
the defense of any Proceeding brought by or on behalf of the Company or
as to which Indemnitee shall have made the conclusion provided for in
clause (ii) above.
(c) The Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent. Neither
the Company nor Indemnitee will unreasonably withhold their consent to
any proposed settlement.
2
4. ADVANCES OF EXPENSES. Reasonable expenses (other than
judgments, penalties, fines and settlements) incurred by Indemnitee that
are subject to indemnification under this Agreement (and not paid,
reimbursed or advanced by others) shall be paid or reimbursed by the
Company in advance of the final disposition of the Proceeding within 10
days after the Company receives a written request by Indemnitee
accompanied by substantiating documentation of such expenses, a written
affirmation by Indemnitee of his good faith belief that he has met the
standard of conduct necessary for indemnification under this Agreement
and a written undertaking by or on behalf of Indemnitee to repay the
amount paid or reimbursed if it is ultimately determined that he has not
met those requirements or that such reasonable expenses do not
constitute a Loss. The written undertaking described above must be an
unlimited general obligation of Indemnitee but shall not be secured.
Such undertaking shall be without reference to the financial ability of
Indemnitee to make repayment.
5. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION;
PROCEDURE UPON APPLICATION. Upon the written request of Indemnitee to
be indemnified pursuant to this Agreement (other than pursuant to
Section 4 hereof), the Company shall cause the Reviewing Party (as
hereinafter defined) to determine, within 45 days, whether or not
Indemnitee has met the relevant standards for indemnification required
by this Agreement. The termination of a Proceeding by judgment, order,
settlement or conviction, or on a plea of NOLO CONTENDERE or its
equivalent, shall not of itself be determinative that Indemnitee did not
meet the requirements for indemnification under this Agreement. If a
determination of indemnification is to be made by Independent Legal
Counsel (as hereinafter defined), such Independent Legal Counsel shall
render its written opinion to the Company and Indemnitee as to what
extent Indemnitee will be permitted to be indemnified. The Company
shall pay the reasonable fees of Independent Legal Counsel and indemnify
and hold harmless Indemnitee against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or
relating to the engagement of Independent Legal Counsel pursuant hereto
and the written opinion of such Independent Legal Counsel.
6. DEFINITIONS. The terms defined in this Section 6 shall, for
purposes of this Agreement, have the indicated meanings:
(a) "Reviewing Party" means (i) a majority of a quorum of
directors of the Company who at the time of voting upon a determination
of indemnification are not named defendants or respondents in that
particular Proceeding as to which Indemnitee is seeking indemnification,
(ii) if such a quorum cannot be obtained, by a majority vote of a
committee of the Board of Directors of the Company, designated to act as
the Reviewing Party by a majority vote of all directors of the Company,
consisting solely of two or more directors who at the time of such
selection are not parties in that particular Proceeding to which
Indemnitee is seeking indemnification, (iii) Independent Legal Counsel
selected in accordance with clause (i) or (ii) above, or if such a
quorum cannot be obtained and such a committee cannot be established, by
a majority vote of all directors of the Company or (iv) the shareholders
of the Company in a vote that excludes shares held by directors who are
named defendants or respondents in that particular Proceeding.
(b) "Independent Legal Counsel" shall mean an attorney, selected
in accordance with the provisions of Section 6(a) hereof, who shall not
have otherwise performed services for Indemnitee, the Company, any
person that controls the Company or any of the directors of the Company,
within five years preceding the time of such selection (other than in
connection with seeking indemnification under this Agreement).
Independent Legal Counsel shall not be any person who, under the
applicable standards of professional conduct then prevailing, would have
a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee's rights under this Agreement, nor
shall Independent Legal Counsel be any person who
3
has been sanctioned or censured for ethical violations of applicable
standards of professional conduct.
(c) "Loss" shall mean any and all judgments, penalties (including
excise and similar taxes), fines, settlements and reasonable expenses
(including attorneys' fees) actually incurred by Indemnitee, after
realization of or giving effect to all insurance, bonding,
indemnification and other payments or recoveries (i) actually received
by or for the benefit of Indemnitee, directly or indirectly, or (ii) to
which Indemnitee is entitled, directly or indirectly.
7. ENFORCEABILITY. The right to indemnification or advances as
provided by this Agreement shall be enforceable by Indemnitee in any court of
competent jurisdiction. The burden of proving that indemnification is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors or Independent Legal Counsel) to have made
a determination prior to the commencement of an action that indemnification
is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including
its Board of Directors or Independent Legal Counsel) that Indemnitee has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that Indemnitee has not met the applicable standard of
conduct.
8. PARTIAL INDEMNITY; EXPENSES. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion
of the expenses, judgments, fines, and penalties, but not for the total
amount thereof, the Company shall indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any or all Proceedings relating in whole or
in part to an event subject to indemnification hereunder or in defense of any
issue or matter therein, including dismissal without prejudice, Indemnitee
shall be indemnified against expenses incurred for any Loss in connection
with such Proceeding, issue or matter, as the case may be.
9. REPAYMENT OF EXPENSES. Indemnitee shall reimburse the Company for
all reasonable expenses paid by the Company in defending any Proceeding
against Indemnitee in the event and only to the extent that it shall be
ultimately determined that Indemnitee is not entitled to be indemnified by
the Company for such expenses under the provisions of this Agreement.
10. CONSIDERATION. The Company expressly confirms and agrees that it
has entered into this Agreement and assumed the obligations imposed on the
Company hereby in order to induce Indemnitee to serve and continue serving as
a director of the Company, and acknowledges that Indemnitee is relying upon
this Agreement in serving in such capacity.
11. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification and
advancement of expenses provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under any
other agreement, vote of shareholders, as a matter of law or otherwise, but
the indemnification provided for pursuant to the Articles of Incorporation or
Bylaws of the Company is limited to any Loss.
12. SUBROGATION. If a payment is made under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights.
4
13. SEVERABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision thereof shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereto.
14. NOTICE. Any notice, consent or other communication to be given
under this Agreement by any party to any other party shall be in writing and
shall be either (a) personally delivered, (b) mailed by registered or
certified mail, postage prepaid with return receipt requested, (c) delivered
by overnight express delivery service or same-day local courier service or
(d) delivered by telex or facsimile transmission to the address set forth
beneath the signature of the parties below, or at such other address as may
be designated by the parties from time to time in accordance with this
Section. Notices delivered personally, by overnight express delivery service
or by local courier service shall be deemed given as of actual receipt.
Mailed notices shall be deemed given three business days after mailing.
Notices delivered by telex or facsimile transmission shall be deemed given
upon receipt by the sender of the answerback (in the case of a telex) or
transmission confirmation (in the case of a facsimile transmission).
15. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION;
REIMBURSEMENT.
(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Texas.
(b) This Agreement shall be binding upon Indemnitee and his heirs,
executors, administrators, personal representatives and assigns and upon
the Company and its successors and assigns, and shall inure to the
benefit of Indemnitee and his heirs, executors, administrators, personal
representatives and assigns and to the benefit of the Company and its
successors and assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both
parties hereto.
(d) If Indemnitee is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful
in such action, the Company shall reimburse Indemnitee for all of
Indemnitee's reasonable fees and expenses in bringing and pursuing such
action.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
VARI-LITE INTERNATIONAL, INC.
By: /s/ X. X. Xxxxxxxx III
---------------------------------------
X.X. Xxxxxxxx,
Chairman of the Board, Chief
Executive Officer and President
Address of Vari-Lite International, Inc.
000 Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
/s/ J. R. Xxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxx
Address of Indemnitee:
00-000 Xxxxxxx Xxx Xx.
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
6
