EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of August 28,
1995, by and between Vari-Lite Holdings, Inc., doing business at 000 Xxxxx
Xxx, Xxxxxx, Xxxxx 00000 (the "Company") and Xx. Xxx Xxxxx, residing
presently at 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 ("Kinnu").
W I T N E S S E T H:
WHEREAS the Company is engaged in the business of designing and
manufacturing sound, lighting and other entertainment-related equipment and
providing related services; and
WHEREAS Kinnu is experienced and knowledgeable in the management of
business organizations providing technical services and products and has
agreed to work for the Company as its Senior Executive Vice President and
Chief Operating Officer; and
WHEREAS the Company is interested in employing Kinnu and Kinnu is
interested in working for the Company; and
WHEREAS this Agreement will supersede and replace all prior consulting
and/or employment agreements between the Company and Kinnu;
NOW THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT. Kinnu is hereby employed in the position of Senior
Executive Vice President and Chief Operating Officer of the Company
to render services in connection with the management of the Company.
Kinnu hereby accepts such employment and agrees that he will at all
times use his best efforts to discharge his duties and utilize his
skills in the best interests of the Company.
2. DUTIES.
(a) Kinnu will share the day to day responsibility with the
President and Chief Executive Officer for the operation and
management of the Company.
(b) Kinnu will have specific responsibility on behalf of the Company
and at the direction of the Chief Executive Officer of the
Company on behalf of Irideon, Inc. to develop, implement and
manage the four processes: Demand Creation, Develop Product,
Manufacture Product and Service Product to enable the timely and
successful completion of AR5/AR6, Virtuoso and VL7 programs and
other engineering development projects.
(c) Kinnu will perform other duties as assigned by the President and
Chief Executive Officer and by the Company's Board of Directors.
3. LOCATION OF EMPLOYMENT. Kinnu's office and principal place of
business in carrying out his duties hereunder shall be at the
Company's corporate headquarters in Dallas. Kinnu's location of
employment shall not be changed without Kinnu's written consent.
Kinnu will
give reasonable consideration to any proposed change in the location
of his employment if such change would serve the best interests of
the Company. If the Company does relocate Kinnu, it will provide him
with adequate financial compensation to offset his moving expenses
and any losses he incurs due to the relocation.
4. TERM. Kinnu's employment under this Agreement shall be for a term of
three years commencing on August 28, 1995 (the "Commencement Date")
and ending on August 31, 1998. This Agreement may be renewed if 30
days before the termination date of this Agreement the parties agree
in writing to extend the Agreement to a specific date. The period
beginning on the Commencement Date and ending August 31, 1998, or
upon the expiration of any renewal period shall be referred to as the
"Employment Term."
5. COMPENSATION. In consideration for the services to be performed by
Kinnu herein, the Company shall pay Kinnu as follows:
(a) BASE SALARY. The Company shall pay to Kinnu an annual base
salary of $350,000. This salary shall be payable bi-monthly
on the 15th and the last day of each month in equal
installments. The Compensation Committee shall conduct an
annual review of Kinnu's base salary; the first review shall
be conducted on or about November 1, 1996, and the subsequent
reviews shall be conducted on or about November 1 of the
following years of the Employment Term. As part of the annual
review the Compensation Committee shall make a recommendation
to the Board of Directors regarding whether there should be an
increase in Kinnu's base salary. Kinnu shall be entitled to
such increases in his base salary, if any, that may be
determined by the Board of Directors at its sole discretion.
In no event shall Kinnu's base salary be reduced.
(b) ANNUAL INCENTIVE COMPENSATION. In further consideration for
Kinnu's services, Kinnu shall receive Annual Incentive
Compensation in accordance with the established programs for
Officers and Directors of the Company pursuant to the Annual
Incentive Plan administered by Deloitte & Touche, L.L.P. The
incentive compensation that shall be available varies between
10% of base salary and a maximum of 40% of base salary
depending upon the actual year end performance of the Company.
Kinnu shall receive incentive compensation in the amount of
10% of his base salary if the Company reaches threshold
operating income which is defined as 80% of target. Kinnu
shall receive incentive compensation in the amount of 20% of
his base salary if the Company reaches target operating
income. Kinnu shall receive the maximum amount of incentive
compensation, 40% of base salary, if the Company reaches or
exceeds maximum operating income which is defined as 140% of
target operating income. The exact dollar amount of the
incentive compensation will be based on the proportionate
percentage that the Company's operating income exceeds its
threshold operating income as calculated by Deloitte & Touche,
L.L.P.
(c) LONG-TERM INCENTIVE COMPENSATION. In further consideration
for Kinnu's services, Kinnu shall purchase 10,000 shares of
the Company's Class B Common Stock at book value as of July
31, 1995, and execute the Shareholder Buy-Sell Agreement, the
Stock Purchase Promissory Note, and the Stock Pledge
Agreement. The
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forms of these documents are attached to this Agreement as
Exhibit X-0, X-0 xxx X-0, respectively.
(d) TAXES. All compensation paid to Kinnu hereunder shall be
subject to applicable employment and withholding taxes. Kinnu
shall be responsible for any taxes resulting from a
determination that any portion of any benefits supplied to
Kinnu hereunder may be reimbursing personal as well as
business expenses.
6. EMPLOYEE BENEFITS.
(a) BENEFIT PLANS OR OTHER ARRANGEMENTS. Subject to meeting
eligibility provisions, Kinnu shall be entitled to participate
in all employee benefit plans of the Company, and to receive
such other employee benefits as are available to the Company's
officers as such benefits may exist from time to time,
including but not limited to group health, disability and life
insurance benefits and participation in the Showco/Vari-Lite
401K Savings Plan, and the Company's profit sharing, stock
purchase and stock option plans. A copy of the Company's
Welfare Benefit Plan and 401K Savings Plan are attached to
this Agreement as Exhibit B and are by this reference made a
part hereof. Kinnu will be subject to any changes made to the
aforesaid employee benefit plans.
(b) VACATIONS AND SICK LEAVE. Kinnu shall be entitled to receive
the same number of sick leave days as is maintained in the
Company's sick leave plan. In addition, Kinnu will be
entitled to four weeks of paid vacation per year beginning
with the commencement date of this Agreement. Kinnu's
vacation benefit will be a part of his base salary. Kinnu will
earn one additional week of paid vacation for each quarter
beginning on August 28, 1995, and ending on August 28, 1997.
In the event Kinnu's employment terminates under Section 9 of
this Agreement, Kinnu shall be entitled to receive the cash
value of any earned but unused vacation. "Earned but unused
vacation" shall mean one week of vacation for each quarter
actually worked by Kinnu less any vacation actually taken in
excess of four weeks.
7. RELOCATION EXPENSES.
(a) Upon the effective date of this Agreement, the Company will
provide a three-year interest-free loan of $200,000 to Kinnu
as set forth in the Relocation Assistance Loan Promissory Note
to be signed by Kinnu, that will be forgiven in equal amounts
on a monthly basis during the term of this Agreement. The
loan is to assist Kinnu with selling his house in California
and cover other related expenses. A copy of the form of the
"Relocation Assistance Loan Promissory Note" is attached to
this Agreement as Exhibit C and is by this reference made a
part hereof.
(b) The Company will reimburse Kinnu for his family's relocation
expenses listed below subject to a $25,000 maximum for all
expenses listed below. Kinnu's family is defined to include
all current members of his household, which include himself,
his spouse, daughter, grandson and son-in-law. Within 30 days
from the
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signing of this Agreement Kinnu will submit a proposed budget
to the Company for the expenses listed below. The Company
will reimburse Kinnu within 30 days of his presentation to the
Company of receipts reflecting actual expenses for the
following:
(i) Transportation of household goods to Dallas;
(ii) Automobile transportation from California to Dallas;
(iii) Air travel to Dallas from California until move has been
completed; and
(iv) Cost of title policy for purchase of a new house.
8. BUSINESS EXPENSES.
(a) OUT-OF-POCKET EXPENSES. The Company shall reimburse Kinnu for
all reasonable out-of-pocket expenses incurred by Kinnu in the
conduct of the Company's business provided that Kinnu submits
expense reports accompanied by receipts and vouchers within a
month following the expenditures. The Company will reimburse
Kinnu for his expenses within 30 days of its receipt of
Kinnu's expense reports.
(b) FIRST CLASS AIR TRAVEL. In connection with the performance of
his duties hereunder, the Company shall provide Kinnu with
domestic first class air travel via upgrade coupons when
available and business class for overseas air travel.
9. TERMINATION. Kinnu's employment may be terminated during the
Employment Term by either party at any time by giving written
notice to the other party stating the grounds for such termination
in accordance with the provisions of this Section 9. In the event
of such termination, Kinnu's rights and entitlements shall be
determined in accordance with the following provisions.
(a) DISABILITY. The Company shall have the right to terminate
this Agreement if Kinnu incurs a permanent disability during
the Employment Term. For the purpose of this Agreement,
"Permanent Disability" shall mean inability of Kinnu to
perform the services required hereunder due to physical or
mental disability which continues for either (i) a total of
180 working days during any 12-month period or (ii) 150
consecutive working days. In the event that either party
disputes whether Kinnu has a permanent disability, such
dispute shall be submitted to a physician mutually agreed upon
by Kinnu or his legal guardian and the Company. If the
parties are unable to agree on a mutually satisfactory
physician, each shall select a reputable physician, who,
together, shall in turn select a third physician whose
determination of Kinnu's ability to perform his job duties
shall be conclusive and binding to the parties. Evidence of
such disability shall be conclusive notwithstanding that a
disability policy or clause in an insurance policy covering
Kinnu shall contain a different definition of "permanent
disability."
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If Kinnu suffers a permanent disability and the Company
terminates his employment after the appropriate time period as
cited above, the Company will pay to Kinnu the balance of his
base salary under this Agreement pursuant to subsection (g)
below until the end of the Employment Term less any disability
payments which Kinnu is eligible to receive from any insurance
company pursuant to a policy purchased by the Company. Kinnu
also shall receive a prorated bonus under Section 5(b) as of
the date this Agreement is terminated based on the actual
results plus projected results for the Company's operating
income for the current fiscal year end and the cash value of
any earned but unused vacation time.
(b) DEATH. If Kinnu dies during the Employment Term, the Company
will pay to his estate the balance of his base salary under
this Agreement pursuant to subsection (g) below. Kinnu's
estate also shall receive a prorated bonus under Section 5(b)
as of the date of his death based on the actual results plus
projected results for the Company's operating income for the
current fiscal year end and the cash value of any earned but
unused vacation time.
(c) "FOR CAUSE". If the Company terminates this Agreement "For
Cause" as defined in this subsection, Kinnu shall not be
entitled to any damages from the Company or its employees for
such termination. If the Company terminates this Agreement
for cause, Kinnu shall receive his base salary under Section
5(a) only through the date of termination. Kinnu also shall
receive a prorated bonus under Section 5(b) as of the date of
the termination based on the actual results plus projected
results for the Company's operating income for the current
fiscal year and any earned but unused vacation time.
For purposes of this Agreement, "For Cause" shall mean the
willful, continued and material failure by Kinnu to follow the
reasonable and legitimate directions of the Board of Directors
or of the President and Chief Executive Officer in connection
with Kinnu's duties hereunder, but only after (i) the Chairman
and Chief Executive Officer delivers a written notice to Kinnu
specifically setting forth the manner in which he believes
Kinnu has failed to follow such directions and providing at
least 30 days to correct the deficiencies, and (ii) such
willful and material failure to follow directions is not
corrected within the designated time period; conviction of a
felony; embezzlement from the Company; fraud; engaging in
conduct contrary to the best interests of the Company;
habitual absenteeism not related to disability or illness, but
only after written notice from the Board of Directors followed
by a repetition of such habitual absenteeism.
(d) "WITHOUT CAUSE" AND CONSTRUCTIVE TERMINATION. If the Company
terminates this Agreement without Cause or if Kinnu terminates
this Agreement because of Constructive Termination as defined
below, Kinnu shall receive the balance of his base salary
under this Agreement pursuant to subsection (g) below, a
prorated bonus under Section 5(b) as of the termination date
based on the actual results plus projected results for the
Company's operating income for the current fiscal year end and
the cash value of any earned but unused vacation time.
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If Kinnu's employment with the Company terminates pursuant to
this subsection, he shall not be required to mitigate damages
by seeking other employment or otherwise; however, the amount
paid by the Company shall be reduced by any compensation
earned by Kinnu from another employee or through consulting.
For purposes of this Agreement "Constructive Termination"
means the continued and material failure of the Company to
comply with its covenants and obligations under this
Agreement, but only after (i) Kinnu delivers written notice to
the Company specifically setting forth the manner in which he
believes the Company has so failed to comply with its
covenants and obligations and providing at least 30 days to
correct the deficiencies, and (ii) such material failures are
not corrected within the designated time period.
(e) CHANGE OF CONTROL. A Change of Control shall be deemed to
have occurred if any of the following occur: (i) at any time
during any period of 12 consecutive months, at least a
majority of the directors serving on the Board of Directors of
the Company ceases to consist of individuals who have served
continuously on such Board of Directors since the beginning of
such 12-month period, unless the election of directors during
such period, or nomination for election by the shareholders of
the Company, was approved by a vote of at least two-thirds of
the members of such Board of Directors at such time still in
office and who shall have served continuously on such Board of
Directors since the beginning of such 12-month period (in any
case disregarding any vacancy occurring during such 12-month
period by reason of death or disability); or (ii) a merger or
consolidation occurs to which either the Company or Vari-Lite,
Inc. ("Vari-Lite") is a party unless following such merger or
consolidation (1) more than 50% of the then outstanding shares
of voting capital stock of the corporation surviving such
merger or resulting from such consolidation is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the outstanding voting capital stock of
the Company or Vari-Lite, as the case may be, immediately
prior to such merger or consolidation in substantially the
same proportions as their ownership, imediately prior to such
merger or consolidation, of the outstanding voting capital
stock of the Company or Vari-Lite, as the case may be, and (2)
at least a majority of the members of the Board of Directors
of the corporation surviving such merger or resulting from
such consolidation were members of the Board of Directors of
Vari-Lite or the Company, as the case may be, immediately
prior to such merger or consolidation; or (iii) the sale of
all, or substantially all, of the assets of the Company or
Vari-Lite; or (iv) a person or entity who is not an owner of
voting capital stock of the Company or Vari-Lite, as the case
may be, as of the date of this Agreement acquires more than
50% of the voting capital stock of the Company or Vari-Lite,
as the case may be. Notwithstanding the foregoing, however, a
Change of Control shall not be deemed to have occurred upon
the consummation of an Initial Public Offering of the capital
stock of the Company.
If after a Change of Control, as defined above, X.X.
Xxxxxxxx III remains employed by the Company in the position of
Chairman of the Board or Chief Executive Officer, then this
Agreement shall remain in effect until its termination
6
date. If after a Change of Control, as defined above, X.X.
Xxxxxxxx III does not remain in the position of either Chairman
of the Board or Chief Executive Officer, then Kinnu shall have
the right to terminate this Agreement.
If Kinnu exercises his right to terminate his employment
following a Change of Control, he shall receive the balance of
this base salary under this Agreement, a prorated bonus under
Section 5(b) as of the date of termination based on the actual
results plus projected results for the Company's operating
income for the current fiscal year end, and the cash value of
any earned but unused vacation.
(f) RESIGNATION. If Kinnu resigns from his employment during the
Employment Term, he shall receive his base salary through his
date of termination, a prorated bonus under Section 5(b) as of
the date of termination based on the actual results plus
projected results for the Company's operating income for the
current fiscal year end, and the cash value of any earned but
unused vacation.
(g) TIME OF PAYMENT. The Company shall pay any bonuses due to
Kinnu or his heirs under this section within 30 days from the
date of Kinnu's termination. The payment of any balance of
Kinnu's base salary due under this section will be made on the
Company's regularly scheduled pay days through the expiration
date of this Agreement.
10. ADDITIONAL OBLIGATIONS OF EMPLOYEE DURING AND AFTER EMPLOYMENT.
(a) ACKNOWLEDGMENTS. Kinnu acknowledges that, as an officer and
employee of the Company (including its subsidiaries and its
affiliated companies) he will obtain information that derives
independent value from not being generally known to the
public. Kinnu also acknowledges that in addition to all other
consideration being supplied by the Company in this Agreement,
the Company is simultaneously agreeing to convey to Kinnu an
interest in the shares of the Company. Kinnu acknowledges
that part of the consideration for the covenant not to compete
in Section 10 is supported by these factors.
(b) NONCOMPETITION AND NONSOLICITATION. Until 24 months after the
termination of Kinnu's employment hereunder for any reason,
Kinnu will not, directly or indirectly, work for or provide
any services to any employer or other business entity who
competes with the Company. During such period of
noncompetition, Kinnu shall not solicit business from any
party who, on the date of termination of Kinnu's employment
is, or within one year prior thereto was, a customer of the
Company or to whom the Company has made, or from whom the
Company has received, a written sales proposal within 24
months prior to such date of termination. Kinnu understands,
acknowledges, and agrees that such customers are developed and
maintained by the Company through use of confidential,
proprietary, and trade secret information to which Kinnu may
have access during his employment term. The requirement of
this subsection does not extend to geographical locations in
which the Company is no longer doing business. Kinnu also
agrees that until 24 months after the termination of his
employment for any reason, he will not directly or indirectly
attempt to persuade or induce any
7
Company employee to leave his or her employment with the
Company.
(c) RECORDS. All records, files, documents, and the like, or
abstracts, summaries, or copies thereof, relating to the
business of the Company, which the Company or Kinnu shall
prepare or use or come into contact with during his
employment, shall remain the sole property of the Company and
shall not be removed from the premises or disclosed to any
person without written consent of the Company, and Kinnu shall
promptly return all such records in his possession or under
his control to the Company upon termination of his employment.
(d) TRADE SECRETS AND CONFIDENTIALITY. During the course of
Kinnu's employment, he will have access to and become familiar
with various trade secrets and confidential information
belonging to the Company, consisting of but not limited to,
compilations of information, financial and operations records,
technical specifications, sales procedures, customer
requirements, pricing information, customer and supplier
lists, methods of doing business, and business plans. Kinnu
acknowledges that such confidential information and trade
secrets exist and are owned and shall continue to be owned
solely by the Company and that he shall not discuss or
disclose any trade secrets or confidential information
belonging to the Company to any person or entity except as is
required for him to perform his duties under this Agreement.
(e) RELIEF. In addition to its other remedies, the Company shall be
entitled to equitable relief, including provisional and final
injunctive relief, to enforce its rights under this section.
11. NOTICES. All notices required to be given hereunder shall be
personally delivered to the signatories of this Agreement or
shall be given by certified mail, return receipt requested,
addressed to the party to which the notice is to be given at
the address for that party first set forth above.
12. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, except involving matters under
Section 10 of this Agreement which will be resolved in the
Texas State Courts, shall be settled by binding arbitration.
Any such arbitration proceedings shall be conducted as follows:
(a) Any party wishing to pursue a claim or controversy under this
section must give the other party written notice of the claim
or controversy within 180 days after the disputed event
occurred.
(b) Arbitration shall be conducted by three arbitrators, one to be
selected by each of the parties and the third to be designated
by two arbitrators so selected. In the event of their failure
to agree on the third arbitrator, selection shall be made by
the American Arbitration Association in Dallas, Texas where
the arbitration shall take place.
(c) The arbitrators shall follow the Employment Arbitration Rules
of the American Arbitration Association, except as otherwise
provided herein. The arbitrators shall
8
substantially comply with Texas rules of evidence; shall grant
essential but limited discovery; shall provide for the exchange
of witness lists and exhibit copies; shall conduct a pretrial
hearing; and shall consider dispositive motions. Each party
shall have the right to request the arbitrators to make findings
of specific factual issues.
(d) In the event the Company terminates Kinnu's employment under
Section 9(c) of this Agreement and Kinnu challenges the
termination under this section, if the Arbitrator rules that
the Company did not have cause to terminate Kinnu's
employment, the maximum amount of damages that the Arbitrator
may award to Kinnu is the balance of his base salary under
this Agreement, a prorated bonus under Section 5(b) as of the
date of Kinnu's termination, based on the actual results plus
projected results for the Company's operating income for the
current fiscal year, the cash value of any earned but unused
vacation time, $25,000 for relocation expenses, and Kinnu's
legal fees and expenses in bringing the arbitration.
(e) The arbitrators shall complete their proceedings and render
their decision within forty days after submission of the
dispute to them, unless both parties agree to an extension.
Each party shall cooperate with the arbitrators to comply with
procedural time requirements, and the failure of either to do
so shall entitle the arbitrators to extend the arbitration
proceedings accordingly and to impose sanctions on the party
responsible for the delay, payable to the other party.
(f) The majority decision of the arbitrators shall contain
findings of facts on which the decision is based, including
any specific factual findings requested by either party, and
shall further contain the reasons for the decision with
reference to the legal principles on which the arbitrators
relied. Such decision of the arbitrators shall be final and
binding upon the parties, and accordingly the Company and
Kinnu shall promptly comply with the terms of such award, and
a judgment by a court of competent jurisdiction may be entered
in accordance therewith.
(g) The fees and expenses of the arbitrators in connection with
the resolution of disputes pursuant hereto shall be borne by
the party who does not prevail in the arbitration.
(h) The Company and Kinnu hereby consent to the jurisdiction of
the courts of the state of Texas for purposes of entering
judgment with respect to an arbitration award.
13. INDEMNIFICATION. Kinnu will be subject to and provided the
protection afforded in the indemnification provisions of the
current provisions of the Company's Certificate of Incorporation
and By-Laws and by the Indemnification Agreement attached to this
Agreement as Exhibit D.
14. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT. This Agreement replaces and supplants all
prior agreements,
9
oral or written, between the parties and constitutes the entire
understanding of the parties; and no change, alteration or
modification hereof may be made except by a writing signed by
the parties hereto.
(b) SUCCESSION. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and
assigns. The Company shall have the right to assign this
Agreement to a parent, affiliate or subsidiary corporation or
to any corporation with which it may merge or consolidate
subject to the provisions of Section 9(e) herein.
(c) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Texas.
(d) AMENDMENT. This Agreement may only be amended, or a new
agreement substituted, by a written instrument duly authorized
and executed by the Company and Kinnu.
(e) WAIVER. The waiver by either party of a breach or violation
of any provision of this Agreement shall not operate as or be
construed as a waiver of any subsequent breach hereof.
(f) SEVERABILITY. The Company and Kinnu agree that each of the
foregoing covenants shall be deemed a separate, severable an
independent covenant, and in the event any covenant shall be
declared invalid by any court of competent jurisdiction, such
invalidity shall not in any manner affect or impair the
validity or enforceability of any other unrelated part or
provision of such covenant or of any other covenant contained
herein.
(g) MULTIPLE ORIGINALS. This Agreement may be executed in
multiple originals, each of which shall be deemed an original
IN WITNESS WHEREOF, the parties have executed this Agreement
as of this 28th day of August, 1995.
COMPANY:
Vari-Lite Holdings, Inc.
By:/s/ X. X. Xxxxxxxx III
---------------------------------
President and Chief Executive Officer
/s/ Xxx Xxxxx
------------------------------------
Xxx Xxxxx
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EXHIBIT A-1
SHAREHOLDER BUY-SELL AGREEMENT
This Shareholder Buy-Sell Agreement (this "Agreement") is made and
entered into as of September __, 1995, by and between Vari-Lite Holdings,
Inc., a Texas corporation (the "Company"), and Xxx Xxxxx (the "Shareholder")
and the Shareholder's spouse.
W I T N E S S E T H :
WHEREAS, the Shareholder, contemporaneously herewith, is purchasing
10,000 shares of the Company's Class B Common Stock, $0.10 par value, from
the Company (the "Shares") for a Stock Purchase Promissory Note, of even date
herewith, in the aggregate principal amount of $132,900 payable to the
Company (the "Note"), and, in connection therewith, has agreed to the
imposition of the restrictions and obligations hereinafter set forth; and
WHEREAS, pursuant to that certain Stock Pledge Agreement, of even date
herewith, by and between the Company and the Shareholder and the
Shareholder's spouse (the "Pledge Agreement"), the Shares are pledged to the
Company to secure the repayment of the Note;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements and understandings of the parties hereto, the parties do hereby
agree as follows:
1. RESTRICTIONS UPON TRANSFER. Without first obtaining the written
consent of the Company, the Shareholder shall not give, sell, assign,
transfer, pledge or otherwise in any way encumber or dispose of any of the
Shares or any right or interest therein, or permit or suffer any of the
foregoing to occur, whether voluntarily or by operation of law or otherwise,
except as set forth in the Pledge Agreement or as specifically provided
herein. Any purported encumbrance or disposition of any of the Shares or any
right or interest therein in violation of any provision of this Agreement
shall be void and inoperative for all purposes.
2(a). SALE AND PURCHASE PRIOR TO THIRD ANNIVERSARY. At any time prior
to August 31, 1998 (the "Third Anniversary"), in the event the Shareholder
desires to sell any or all of his Shares, the Shareholder shall deliver to
the Company a written notice to such effect (the "Notice") and the Company
shall have the exclusive right and obligation to purchase from the
Shareholder, and the Shareholder shall have the obligation to sell to the
Company, all of the Shares owned by the Shareholder for a cash purchase price
determined in accordance with Paragraph 7 hereof. Within 30 days after
receipt of the Notice, the Company shall deliver to the Shareholder a written
notice (the "Purchase Notice") which shall specify the price and designate
the date upon which the consummation of such sale and purchase shall occur
(which date shall not be more than 30 days after the date of the Purchase
Notice) and the purchase shall be consummated on such designated date. The
purchase price payable pursuant to this Paragraph 2(a) shall be payable as
follows: (i) first, all accrued and unpaid interest under, and the principal
amount of, the Note shall be cancelled and applied to reduce the amount due
and owing and (ii) second, the balance of the purchase price shall be payable
on the date designated in the Purchase Notice.
2(b). COMPANY PURCHASE ON THIRD ANNIVERSARY. If and to the extent the
Shareholder owns any Shares on the Third Anniversary and the Company has not
yet consummated an initial public offering,
1
the Company shall have the exclusive right and obligation to purchase from
the Shareholder, and the Shareholder shall have the obligation to sell to the
Company, all of the Shares owned by the Shareholder for a cash purchase price
determined in accordance with Paragraph 7 hereof. Within 30 days after the
Third Anniversary, the Company shall deliver to the Shareholder the Purchase
Notice and the purchase shall be consummated on the date designated therein
(which date shall not be more than 30 days after the date of the Purchase
Notice). The purchase price payable pursuant to this Paragraph 2(b) shall be
payable as follows: (i) first, the principal amount of the Note shall be
cancelled and applied to reduce the amount due and owing and (ii) second, the
balance of the purchase price shall be payable on the date designated in the
Purchase Notice. Concurrently with the consummation of the purchase of the
Shares pursuant to this Paragraph 2(b), the Company shall forgive, and the
Shareholder shall not be obligated to pay, all accrued and unpaid interest
under the Note.
3. PURCHASE UPON DEATH. At any time prior to the Third Anniversary,
upon the death of the Shareholder, the heirs or legatees of the Shareholder
(collectively, the "Heirs") may retain any Shares received from the
Shareholder subject to this Agreement. No Shares so transferred to the Heirs
shall be transferred on the stock transfer records of the Company and no
certificates representing such Shares shall be issued to the Heirs unless and
until the Heirs shall execute and deliver to the Secretary of the Company a
counterpart of this Agreement amended only to reflect the Heirs as parties
thereto, thereby agreeing to be bound by the terms and conditions hereof.
All certificates representing Shares to be transferred to the Heirs shall
have endorsed thereon the legend set forth in Paragraph 10 hereof. If the
Heirs elect to sell the Shares upon the death of the Shareholder, the terms
and provisions of Paragraph 2 hereof shall apply and the Heirs shall be
treated as the Shareholder for purposes of this Agreement.
4. PURCHASE UPON DIVORCE. At any time prior to the Third Anniversary,
if the Shareholder shall become divorced and the former spouse of the
Shareholder shall be awarded any of the Shares in the divorce decree or in an
agreement entered into an anticipation of, or pursuant to, such divorce
decree, then, within 10 days thereafter, the Shareholder shall deliver to the
Company a written notice of the occurrence of such an event (the "Notice of
Divorce Decree/Agreement"), and the Company shall have the exclusive right
and obligation to purchase from such spouse, and such spouse shall have the
obligation to sell to the Company, all of the Shares awarded to such spouse
for a cash purchase price determined in accordance with Paragraph 7 hereof.
The consummation of such sale and purchase shall take place on the date
designated in a written notice delivered to such spouse by the Company, which
date shall not be more than 60 days after the Notice of Divorce
Decree/Agreement shall have been received by the Company.
5. PURCHASE UPON TERMINATION OF EMPLOYMENT. At any time prior to the
Third Anniversary, if the Shareholder shall no longer be an employee of the
Company, its subsidiaries or an affiliate of the Company or its subsidiaries
(for such reasons that include, but are not limited to, his permanent
disability and voluntary or involuntary termination of his employment,
whether with or without cause), then the Company shall have the exclusive
right and obligation to purchase from the Shareholder and the Shareholder
shall have the obligation to sell to the Company, all of the Shares owned by
the Shareholder for a cash purchase price determined in accordance with
Paragraph 7 hereof. The consummation of such sale and purchase shall take
place on the date designated in a written notice delivered to the Shareholder
by the Company (the "Termination Purchase Notice"), which date shall not be
more than 60 days after the Shareholder shall cease to be an employee.
"Affiliate," as used herein, means any corporation which directly or
indirectly controls, is controlled by or is under common control with, the
Company or its subsidiaries. For purposes of the preceding sentence,
"control" means possession, directly or indirectly,
2
of the power to direct or cause direction of management and policies through
ownership of voting securities, by contract, voting trust or otherwise.
6. OCCURRENCE OF CERTAIN EVENTS. At any time prior to the Third
Anniversary, if the Shareholder shall:
(a) breach any of his obligations hereunder,
(b) become insolvent or file a voluntary petition under the U.S.
Bankruptcy Code or any state insolvency act,
(c) be adjudicated a bankrupt under the U.S. Bankruptcy Code or any
state insolvency act,
(d) have a final judgment for damages entered against him which shall
not be discharged within 30 days after such judgment shall have become final,
(e) suffer an attachment, sequestration or garnishment to be levied
against any of the Shares and the same shall not be dissolved or such Shares
replevied within 10 days thereof, or
(f) makes a general assignment for the benefit of creditors,
then, within 10 days thereafter, the Shareholder shall deliver to the Company
a written notice of the occurrence of such an event (the "Notice of Event"),
and for a period of 90 days commencing upon the date on which the Company
shall have received the Notice of Event (hereinafter called the "Company
Purchase Period"), the Company shall have the exclusive right and obligation
to purchase, and the Shareholder shall have the obligation to sell to the
Company, all of the Shares owned by the Shareholder for a cash purchase price
determined in accordance with Paragraph 7 hereof. If the Shareholder shall
fail to deliver the Notice of Event to the Company and the Company shall
otherwise learn of the occurrence of an event specified hereinabove, then the
Company Purchase Period shall extend for a period of 60 days after the
Company shall deliver to the Shareholder a written notice of the occurrence
of such an event (the "Company Notice") or the Company shall receive the
Notice of Event from the Shareholder. The consummation of such sale and
purchase shall take place on the date designated in a written notice
delivered to the Shareholder by the Company, which date shall be prior to
expiration of the Company Purchase Period.
7. PRICE. The price of the Shares to be sold pursuant to Paragraphs 2,
3, 4, 5 or 6 hereof shall be an amount equal to the book value of the Shares
on the "Determination Day" (as defined below) minus the principal amount of,
and all accrued but unpaid interest (unless forgiven pursuant to Paragraph
2(b)) on, the Note as of the Determination Date. As used herein, the
"Determination Day" shall be the last day of the month immediately preceding
(a) the date the Shareholder shall deliver the Notice to the Company, (b) the
Third Anniversary, (c) the date the Shareholder shall deliver the Notice of
Divorce Decree/Agreement to the Company, (d) the date the Company shall
deliver the Termination Purchase Notice to the Shareholder or (e) the date
the Shareholder shall deliver the Notice of Event to the Company or the
Company shall deliver the Company Notice to the Shareholder, whichever shall
be applicable. For purposes of the Agreement, the "book value" of the Shares
shall be determined by dividing the consolidated shareholders' equity, as
reflected on an audited or unaudited consolidated balance sheet of
3
the Company and its consolidated subsidiaries as of the relevant
Determination Date, prepared in accordance with generally accepted accounting
principles applied on a consistent basis, by the aggregate number of the then
issued and outstanding shares of all classes of the common stock of the
Company.
8. DELIVERY OF STOCK CERTIFICATES. At the closing of any purchase of
any of the Shares hereunder, the Shareholder shall deliver to the Company a
certificate or certificates representing the aggregate number of the Shares
so purchased, together with such duly executed stock powers and other
instruments as may, in the opinion of counsel to the Company, be required to
transfer to the Company good title to such Shares, free and clear of all
restrictions, liens, security interests and other encumbrances.
9. STOCK SUBJECT TO AGREEMENT. This Agreement shall govern the Shares
now held by the Shareholder and any additional shares of capital stock of the
Company, its affiliates or its successor entity hereafter acquired by the
Shareholder, whether as a result of acquisition, stock dividend, stock split,
merger, consolidation or otherwise, and the term "Shares" as used herein
shall include such after-acquired shares. Any interest of the Shareholder's
spouse in the Shares shall for all purposes of this Agreement be included in,
deemed a part of and bound by the same terms as the interest of the
Shareholder in the Shares, and any action taken or option exercised hereunder
with reference to the Shares shall be applicable to any interest of such
spouse in the Shares.
10. ENDORSEMENT ON STOCK CERTIFICATES. All certificates representing
the Shares shall be endorsed as follows:
"The shares of stock represented by this certificate are subject to a
Shareholder Buy-Sell Agreement dated as of September __, 1995, a copy of
which is on file at the principal office of the Company, and said shares
may not be given, sold, transferred, assigned, pledged or otherwise in
any way encumbered or disposed of except in accordance with the terms of
such Agreement. A copy of such Agreement will be furnished without
charge to the holder of this certificate upon receipt by the Company at
its principal place of business or registered office of a written
request from the holder requesting such a copy."
11. SPECIFIC PERFORMANCE. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party
hereto or to the personal representative of a party hereto by reason of
a failure to perform any of the obligations under this Agreement.
Therefore, if any party hereto or the personal representative of any
party hereto shall institute any action or proceeding to enforce the
provisions hereof, any person against whom such action or proceeding is
brought hereby waives the claim or defense therein that such party or
such personal representative has an adequate remedy at law, and such
person shall not urge in any such action or proceeding the claim or
defense that such remedy at law exists.
12. NOTICES. Any notice, consent, demand, request, approval or
other communication to be given under this Agreement by either party to
the other shall be in writing and shall be either (a) delivered in
person, (b) mailed by registered or certified mail, return receipt
requested, postage prepaid, or (c) delivered by overnight express
delivery service or same-day local courier service to the address set
forth below, or to such other address as may be designated by the
parties from time to time in accordance with this Section.
If to the Company: Vari-Lite Holdings, Inc.
000 Xxxxx Xxx
0
Xxxxxx, XX 00000
Attn: Chief Financial Officer
If to the Shareholder: Xxxxx Xxxxx
0000 X. Xxxxxxxx Xx.
Xxxxxx, XX 00000
13. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provisions never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
14. MODIFICATIONS. No change or modification of this Agreement shall
be valid unless the same shall be in writing and signed by all parties hereto.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs, personal
representatives, successors and assigns.
16. TERMINATION. This Agreement shall terminate upon the occurrence of
any of the following events:
(a) the bankruptcy, insolvency, receivership or dissolution of the
Company;
(b) the written agreement of the Shareholder and the Company to
terminate this Agreement; and
(c) the becoming effective of a registration of the Company's
shares of common stock under the Securities Act of 1933, as amended.
17. GENDER AND NUMBER. Any word herein in the masculine shall be
deemed to include in all circumstances where appropriate the feminine or
neuter, and vice versa, and any word in the singular shall be deemed to
include in all circumstances where appropriate the plural, and vice versa.
18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes any and all other agreements, either oral or in writing. Each
party acknowledges that no representations, inducements, promises or
agreements not embodied herein, either oral or otherwise, have been made to
any party, or anyone acting on behalf of any party.
19. SPOUSE. By executing this Agreement, the spouse of the Shareholder
agrees to be bound in all respects by the terms of this Agreement to the same
extent as the Shareholder. The spouse of the Shareholder further agrees that
should she predecease the Shareholder or should she become divorced from the
Shareholder, any of the Shares which the spouse may own or in which she may
have any interest shall
5
remain subject to all of the restrictions and to all of the rights of the
Shareholders contained in this Agreement.
20. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
VARI-LITE HOLDINGS, INC.
By:/s/ X. X. Xxxxxxxx III
------------------------------------
X. X. Xxxxxxxx III, President
/s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx
I, the undersigned, being the spouse of the above-named Shareholder,
hereby acknowledge that I have read and understand the Shareholder Buy-Sell
Agreement, and I agree to be bound by the terms thereof, including, but not
limited to, Section 19 thereof.
Name Xxxxx Xxxxx
Signature /s/ Xxxxx Xxxxx
----------------------------
6
EXHIBIT A-2
STOCK PURCHASE
PROMISSORY NOTE
Dallas, Texas September 10, 1995
Xxxxx Xxxxx (the "Maker"), for value received, hereby promises to pay to
the order of Vari-Lite Holdings, Inc., a Texas corporation (together with any
successors or assigns, the "Payee"), at the time and in the manner
hereinafter provided, the principal sum of One Hundred Thirty-Two Thousand
Nine Hundred Dollars ($132,900.00), together with interest computed thereon
at the rate hereinafter provided. This Note shall be payable at the office
of the Payee at 000 Xxxxx Xxx, Xxxxxx, Xxxxx 00000, or at such other address
as the holder of this Note shall from time to time designate.
The outstanding principal amount of this Note shall bear interest from
the date hereof until the due date at a per annum interest rate equal to 8%,
calculated on the basis of actual days over a 365 day year; provided,
however, that in no event shall interest accrue at a rate higher than the
highest lawful rate.
The principal amount of this Note, plus all accrued but unpaid interest
hereon, shall be due and payable on August 31, 1998; provided, however, that
concurrently with the consummation of the purchase of the Maker's shares of
Class B Common Stock of the Payee pursuant to Paragraph 2(b) of that certain
Shareholder Buy-Sell Agreement, of even date herewith, between the Payee, the
Maker and the Maker's spouse, the Payee shall forgive, and the Maker shall
not be obligated to pay, all accrued and unpaid interest under this Note.
All sums of principal and interest past due under the terms of this Note
shall bear interest at a per annum interest rate equal to the lesser of
twelve percent (12%) per annum or the maximum rate allowed by law from the
due date thereof until paid.
In the event of a default hereunder and this Note is placed in the hands
of an attorney for collection (whether or not suit is filed), or if this Note
is collected by suit or legal proceedings or through bankruptcy proceedings,
the Maker agrees to pay in addition to all sums then due hereon, including
principal and interest, all expenses of collection, including, without
limitation, reasonable attorneys' fees.
This Note may be prepaid in whole or in part at any time or from time to
time at the option of the Maker without premium or penalty. Prepayment shall
be credited first to accrued but unpaid interest to the extent thereof, and
thereafter to unpaid principal in the inverse order that it becomes due.
The Payee shall be entitled to accelerate this Note and declare all sums
due hereunder immediately due and payable upon default by the Maker in any of
its obligations hereunder or under the Stock Pledge Agreement (the "Pledge
Agreement"), of even date herewith, by and between the Payee and the Maker.
The Maker and any and all sureties, guarantors and endorsers of this
Note and all other parties now or hereafter liable hereon, severally waive
grace, demand, presentment for payment, notice of dishonor, protest and
notice of protest, notice of intention to accelerate, notice of acceleration,
any other notice and diligence in collecting and bringing suit against any
party hereto and agree (i) to all extensions and partial payments, with or
without notice, before or after maturity, (ii) to any substitution, exchange
or release of any security now or hereafter given for this Note, (iii) to the
release of any party primarily or secondarily liable hereon, and (iv) that it
will not be necessary for the holder hereof, in order to enforce
payment of this Note, to first institute or exhaust such holder's remedies
against the Maker or any other party liable therefor or against any security
for this Note. No delay on the part of the Payee in exercising any power or
right under this Note shall operate as a waiver of such power or right, nor
shall any single or partial exercise of any power or right preclude further
exercise of that power or right.
A security interest has been granted by the Maker to the Payee to secure
the payment of this Note pursuant to the terms and conditions of the Pledge
Agreement, and to secure the payment of any costs and expenses incurred by
the Payee in the collection and enforcement hereof.
The Maker understands that this Note may be pledged to secure certain
obligations of the Payee and hereby consents to any such pledge.
All agreements between the Maker and the holder hereof, whether now
existing or hereafter arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of the maturity hereof, or otherwise, shall the amount
paid, or agreed to be paid, to the holder hereof for the use, forbearance or
detention of the funds advanced pursuant to this Note, or otherwise, or for
the payment or performance of any covenant or obligation contained herein or
in any other document or instrument evidencing, securing or pertaining to
this Note exceed the maximum amount permissible under applicable law. If
from any circumstances whatsoever fulfillment of any provision hereof or any
other document or instrument exceeds the maximum amount of interest
prescribed by law, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
holder hereof shall ever receive anything of value deemed interest by
applicable law, which would exceed interest at the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the unpaid principal balance of this Note or on account of any other
principal indebtedness of the Maker to the holder hereof, and not to the
payment of interest, or if such excessive interest exceeds the unpaid
principal balance of this Note and such other indebtedness, such excess shall
be refunded to the Maker. All sums paid, or agreed to be paid, by the Maker
for the use, forbearance or detention of the indebtedness of the Maker to the
holder of this Note shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest on
account of such indebtedness is uniform throughout the term hereof. The
terms and provisions of this paragraph shall control and supersede every
other provision of all agreements between the Maker and the holder hereof.
This Note shall be governed by and construed in accordance with the laws
of the State of Texas.
All references to the Maker herein shall, and shall be deemed to,
include its successors and assigns, and all covenants, stipulations, promises
and agreements contained herein by or on behalf of the Maker shall be binding
upon his heirs, successors and assigns, whether so expressed or not.
MAKER
/s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
2
EXHIBIT A-3
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement), dated as of September 10,
1995, is by and between Xxxxx Xxxxx, a resident of California (the
"Pledgor"), and Vari-Lite Holdings, Inc., a Texas corporation (the "Secured
Party").
WITNESSETH:
WHEREAS, the Pledgor is the owner of 10,000 shares of Class B Common
Stock, par value $0.10 per share, of the Secured Party (the "Pledged
Shares"); and
WHEREAS, the Pledgor has executed that certain Stock Purchase Promissory
Note of even date herewith payable to the Secured Party in the aggregate
original principal amount of $132,900 (as amended or modified from time to
time, the "Stock Purchase Promissory Note"); and
WHEREAS, the Pledgor and the Secured Party desire to have the Pledgor
grant to the Secured Party a security interest in the Pledged Collateral (as
hereinafter defined) to secure the payment of the Stock Purchase Promissory
Note;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor and the Secured Party hereby agree as follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
1. SECURITY INTEREST AND PLEDGE. The Pledgor hereby pledges to the Secured
Party, and grants to the Secured Party a security interest in, the Pledged
Shares and the certificates representing the Pledged Shares, and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the Pledged Shares (the "Pledged Collateral").
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all
obligations and liabilities of the Pledgor now or hereafter existing under
the Stock Purchase Promissory Note, whether for principal, interest, fees,
expenses (including, but not limited to, expenses incurred by the Secured
Party to preserve and maintain the Pledged Collateral, collect any of the
obligations herein described or enforce this Agreement) or otherwise, and all
obligations of the Pledgor now or hereafter existing under this Agreement
(all such obligations of the Pledgor being herein referred to as the
"Obligations").
ARTICLE II
AFFIRMATIVE AND NEGATIVE COVENANTS
The Pledgor covenants and agrees as follows:
3. PERFECTION OF LIENS. All certificates or instruments representing or
evidencing the Pledged Shares are hereby delivered to the Secured Party and
are either in suitable form for transfer by delivery, or are
accompanied by instruments of transfer or assignment duly executed in blank,
all in form and substance satisfactory to the Secured Party. The Pledgor
shall execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Secured Party may request, in order to
perfect and preserve the security interest granted or purported to be granted
hereby.
4. TRANSFERS AND OTHER LIENS. Without the prior written consent of the
Secured Party, the Pledgor shall not (a) sell or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, or (b)
create or permit to exist any lien, security interest or other charge or
encumbrance upon or with respect to any of the Pledged Collateral, except for
the security interest granted under this Agreement.
5. DISTRIBUTIONS. If the Pledgor shall become entitled to receive or shall
receive (a) any stock certificate or voting trust certificate or (b) any
certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or issued in
connection with any liquidation, reorganization, option or rights, whether as
an addition to, in substitution of or in exchange for any of the Pledged
Collateral, the Pledgor shall (i) accept the same as the Secured Party's
agent, (ii) hold the same in trust for the Secured Party, and (iii) deliver
the same immediately to the Secured Party in the exact form received, with an
appropriate endorsement of the Pledgor and/or appropriate undated stock
powers or assignments of stock certificate or voting trust certificate, duly
executed in blank, to be held by the Secured Party as Pledged Collateral,
subject to the terms hereof.
6. FURTHER ASSURANCES. The Pledgor agrees that, at any time and from time
to time after the date of this Agreement, at the expense of the Pledgor, the
Pledgor will promptly execute and deliver all further instruments and
documents, and take all further actions, that may be necessary or desirable,
or that the Secured Party may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to the Pledged Collateral or any portion thereof.
7. TAXES. The Pledgor agrees to pay or discharge prior to delinquency all
taxes, assessments, levies and other governmental charges imposed on him or
his property, except that the Pledgor shall not be required to pay or
discharge any tax, assessment, levy or other governmental charge if (a) the
amount or validity thereof is being contested by the Pledgor in good faith by
appropriate proceedings diligently pursued, (b) such proceedings do not
involve any danger of sale, forfeiture or loss of the Pledged Collateral or
any part thereof or interest therein, and (c) adequate reserves therefor have
been established in conformity with generally accepted accounting principles.
8. NOTIFICATION. The Pledgor shall promptly notify the Secured Party of
(a) any lien, security interest, encumbrance or claim made or threatened
against the Pledged Collateral and (b) the occurrence or existence of any
Event of Default (as hereinafter defined) or the occurrence or existence of
any condition or event that, with the giving of notice or lapse of time or
both, would be an Event of Default.
2
ARTICLE III
RIGHTS OF THE SECURED PARTY AND THE PLEDGOR
9. ATTORNEY-IN-FACT. The Pledgor hereby appoints the Secured Party as the
Pledgor's attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
discretion of the Secured Party, to take any action and to execute any
instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor
representing any dividend, interest payment or other distribution in respect
of the Pledged Collateral or any part thereof and to give full discharge for
the same.
10. VOTING RIGHTS AND DIVIDENDS. Except as otherwise provided in Section 15,
the Pledgor shall be entitled to:
(a) exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms of this Agreement or the Stock Purchase
Promissory Note; provided, however, that the Pledgor shall not exercise,
or shall refrain from exercising, any such right if, in the Secured
Party's judgment, such action would have a material adverse effect on
the value of the Pledged Collateral or any part thereof; and
(b) receive and retain all cash dividends paid on or in respect of
the Pledged Collateral.
11. THE SECURED PARTY MAY PERFORM. If the Pledgor fails to perform any
agreement contained herein, the Secured Party may perform, or cause
performance of, such agreement, and the expenses of the Secured Party
incurred in connection therewith shall be payable by the Pledgor under
Section 18.
12. THE SECURED PARTY'S DUTY OF CARE. Other than the exercise of
reasonable care in the physical custody of the Pledged Collateral while
held by the Secured Party hereunder, the Secured Party shall have no
responsibility for, or obligation or duty with respect to, all or any
part of the Pledged Collateral or any matter or proceeding arising out
of or relating thereto, including, without limitation, any obligation or
duty to collect any sums due with respect thereto or to protect or
preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that the Pledgor shall be
responsible for preservation of all rights in the Pledged Collateral.
Without limiting the generality of the foregoing, the Secured Party
shall be conclusively deemed to have exercised reasonable care in the
custody of the Pledged Collateral, if it takes such action, for purposes
of preserving rights in the Pledged Collateral, as the Pledgor may
reasonably request in writing; provided, however, that no refusal,
failure, omission or delay by the Secured Party in complying with any
such request shall be deemed to be a failure to exercise reasonable care.
13. THE PLEDGOR'S RIGHT TO SELL THE PLEDGED SHARES. At any time after
Vari-Lite Holdings, Inc. has sold shares of its common stock in an
initial public offering registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, the Pledgor may
sell all or any portion of the Pledged Shares, provided that (a) the
proceeds of such sale are used, first, to pay accrued but unpaid
interest on the Stock Purchase Promissory Note and, second, to pay the
outstanding principal amount of the Stock Purchase Promissory Note, and
only after payment in full of the Stock Purchase Agreement may the
Pledgor retain any additional proceeds of such sale, and (b) the Pledgor
enters into such agreements
3
and takes such actions as the Secured Party requests to provide adequate
assurance to the Secured Party that the Pledgor will comply with clause
(a) above.
ARTICLE IV
DEFAULT
14. EVENT OF DEFAULT. As used herein, the term "Event of Default"
shall mean the occurrence of any of the following events: (a) a default
under the Stock Purchase Promissory Note, (b) the Pledgor's
non-compliance with, or failure to perform, any agreement contained
herein, (c) a default under that certain Shareholder Buy-Sell Agreement,
of even date herewith, by and between the Pledgor and the Secured Party
and the Secured Party's spouse, or (d) the making of any representation,
statement or warranty of the Pledgor contained herein or given pursuant
hereto that is untrue as of the date made; provided, however, that an
Event of Default shall occur under (a), (b) or (c) only if the relevant
event remains uncured for ten days.
15. VOTING RIGHTS AND DIVIDENDS AFTER AN EVENT OF DEFAULT. Upon the
occurrence and during the continuance of an Event of Default, all rights
of the Pledgor to exercise the voting and other consensual rights and to
receive cash dividends in respect of the Pledged Collateral, which the
Pledgor would otherwise be entitled to exercise or receive pursuant to
Section 10, shall thereupon become vested in the Secured Party who shall
thereafter have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such
dividends.
16. REMEDIES UPON DEFAULT. If any Event of Default shall have occurred
and be continuing:
(a) The Secured Party may exercise in respect to the Pledged
Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Texas Business and Commerce Code, as
amended, in effect at that time, and the Secured Party may also, without
notice except as specified below, sell the Pledged Collateral or any
part thereof at public or private sale, at any exchange, broker's board
or at any other place chosen by the Secured Party, for cash, on credit
or for future delivery, and at such price or prices and upon such other
terms as the Secured Party may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Secured Party shall not
be obligated to make any sale of the Pledged Collateral regardless of
notice of sale having been given. The Secured Party may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
(b) Any cash held by the Secured Party as Pledged Collateral and
all cash proceeds received by the Secured Party in respect of any sale
of, collection from or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Secured Party, be held
by the Secured Party as collateral for, and/or then or at any time
thereafter be applied in whole or in part by the Secured Party against,
all or any part of the Obligations in such order as the Secured Party
shall elect. Any surplus of such cash or cash proceeds held by the
Secured Party and remaining after payment in full of all the Obligations
shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
4
(c) If the proceeds of the sale, collection or other realization
of or upon the Pledged Collateral are insufficient to cover the costs
and expenses of such sale, collection or realization and the payment in
full of the Obligations, the Pledgor shall remain liable for any
deficiency.
ARTICLE V
MISCELLANEOUS
17. RIGHT TO SELL. If the Secured Party shall determine to exercise
its right to sell (other than in a public offering) all or any of the
Pledged Collateral pursuant to Section 16, the Pledgor agrees that, upon
request of the Secured Party, the Pledgor will, at his own expense, do
or cause to be done all such other acts and things as may be necessary
to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law. The Pledgor
acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by the Secured Party by reason of the failure by
the Pledgor to perform the covenant contained in this Section and,
consequently, agrees that if the Pledgor shall fail to perform such
covenant, the Pledgor shall pay, as liquidated damages and not as a
penalty, an amount equal to the value of the Pledged Collateral on the
date the Secured Party shall demand compliance with this Section.
18. EXPENSES. The Pledgor will upon demand pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable
fees and expenses of counsel and of any experts and agents, which the
Secured Party may incur in connection with (a) the administration of
this Agreement, (b) the custody, preservation, sale or collection of, or
other realization upon, any of the Pledged Collateral, (c) the exercise
or enforcement of any of the rights of the Secured Party hereunder, or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
19. ABSOLUTE SECURITY INTEREST. All rights of the Secured Party and
the security interest hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any agreement or
instrument relating hereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the
Stock Purchase Promissory Note;
(c) any exchange, release or non-perfection of any other collateral, or
any release or amendment or waiver of or consent to departure from
any guaranty, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the
Stock Purchase Promissory Note or the Obligations.
20. CONTINUING SECURITY INTEREST; TRANSFER OF THE STOCK PURCHASE PROMISSORY
NOTE. This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (a) remain in full force and effect until
payment in full of the Obligations, (b) be binding upon the Pledgor, his
heirs, successors and assigns, and (c) inure to the benefit of the Secured
Party and its successors and assigns. Without limiting the generality of the
foregoing clause (c), the Secured Party may assign or otherwise transfer the
Stock Purchase Promissory Note to any other person or entity, and such other
person or entity shall thereupon
5
become vested with all the benefits in respect thereof granted to the Secured
Party herein or otherwise. Upon the payment in full of the Obligations, the
Pledgor shall be entitled to the return, upon his request and at his expense,
of such of the Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.
21. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Pledgor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Secured Party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
22. ADDRESSES FOR NOTICES. Any notice, consent, demand, request, approval
or other communication to be given under this Agreement by either party to
the other shall be in writing and shall be either (a) delivered in person,
(b) mailed by registered or certified mail, return receipt requested, postage
prepaid, or (c) delivered by overnight express delivery service or same-day
local courier service to the address set forth below, or to such other
address as may be designated by the parties from time to time in accordance
with this Section.
If to the Pledgor: Vari-Lite Holdings, Inc.
000 Xxxxx Xxx
Xxxxxx, XX 00000
Attn: Chief Financial Officer
If to the Secured Party: Xxxxx Xxxxx
0000 X. Xxxxxxxx Xx.
Xxxxxx, XX 00000
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. Any such
notice, consent or other communication shall be deemed given when delivered
in person or, if mailed, when duly deposited in the mails.
23. TERMINATION. When all Obligations shall have been paid in full, or at
such earlier time as the Secured Party may specify in writing, this Agreement
shall terminate, and the Secured Party shall forthwith cause to be assigned,
transferred and delivered, against receipt but without recourse, warranty or
representation whatsoever, any remaining Pledged Collateral to the Pledgor.
24. HEADINGS. The headings and captions used herein are for convenience
only and shall not affect the interpretation of this Agreement.
25. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery of this Agreement, and no
investigation by the Secured Party shall affect the representations and
warranties or the right of the Secured Party to rely upon them.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6
27. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement.
28. SUPREMACY. In the event of any conflict between the terms of this
Agreement and the terms or provisions of the Stock Purchase Promissory Note,
the terms or provisions of the Stock Purchase Promissory Note shall be
controlling.
29. NUMBER AND GENDER. Whenever the context requires, references in this
Agreement to the singular number shall include the plural, and the plural
number shall include the singular, and words denoting gender shall include
the masculine, feminine and neuter.
30. GOVERNING LAW AND VENUE. The parties acknowledge and agree that this
Agreement and the obligations and undertakings of the parties hereunder will
be performable in Dallas, Dallas County, Texas. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Texas. If any action is brought to enforce or interpret this Agreement,
venue for such action shall be in Dallas County, Texas.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first above written.
PLEDGOR
/s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx
SECURED PARTY
VARI-LITE HOLDINGS, INC.
By:/s/ X. X. Xxxxxxxx III
------------------------------------
X. X. Xxxxxxxx III, President
To the extent that the undersigned (the Pledgor's spouse) has or may in
the future have any interest in the Pledged Collateral, the undersigned
hereby agrees, as of the date first above written, to be bound by the terms
of this Agreement to the same extent as the Pledgor.
/s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx
7
RECEIPT
Vari-Lite Holdings, Inc. hereby acknowledges receipt from Xxxxx Xxxxx of
stock certificate number __________, evidencing 10,000 shares of Class B
Common Stock of Vari-Lite Holdings, Inc.
VARI-LITE HOLDINGS, INC.
By:/s/ X. X. Xxxxxxxx III
-------------------------------------
X. X. Xxxxxxxx III, President
8
EXHIBIT C
RELOCATION ASSISTANCE LOAN PROMISSORY NOTE
September 10, 1995 $200,000.00
Xxx Xxxxx (the "Maker"), for value received, hereby promises to pay to
Vari-Lite, Inc. (the "Holder"), the principal balance of $200,000.00,
together with interest as provided for herein, at the times specified herein.
The outstanding principal amount of this Note shall not bear interest from
the date hereof, except in the event of default as provided herein.
1. PAYMENT OF PRINCIPAL. The Maker shall receive a reduction against
the principal evidenced by this Note in an amount equal to $5555.56, for each
full calendar month that the Maker remains in the employ of the holder, with
the first reduction against principal on September 30, 1995 and continuing
monthly successively thereafter until August 31, 1998 when the entire
principal amount of this Note shall be paid in full.
2. WITHHOLDING. The Maker understands and agrees that the amounts of
the reductions against principal described in this Note and amounts equal to
interest on this Note are imputed and treated as compensation which will
result in taxable income to the Maker, as to which Holder may, during the
term of Maker's employment, withhold from Maker's base salary payments the
amount required by the Internal Revenue Code of 1986, as amended.
3. EVENTS OF DEFAULT. Should any of the following events occur (an
"Event of Default"), the Maker shall be in default hereunder:
(a) If the Maker resigns from his position of employment with
Vari-Lite Holdings, Inc. ("Holdings") prior to August 31, 1998; or
(b) If the Maker is terminated "For Cause" as defined in Section 9(c)
of that certain Employment Agreement by and between Holdings and Maker,
dated as of August 28, 1995 ("Employment Agreement").
4. ACCELERATION OF INDEBTEDNESS. Upon the occurrence of an Event of
Default, the entire unpaid principal amount shall be due and payable in full
at the option of the Holder. The unpaid principal shall bear an interest
rate of 10% per annum, to be charged over the period of time the remaining
principal is unpaid 30 days after the Event of Default.
5. CANCELLATION OF INDEBTEDNESS. If the Maker's employment with
Vari-Lite Holdings, Inc. terminates pursuant to Sections 9(a), (b), (d) or
(e) of the Employment Agreement between the parties hereto, then any
remaining balance of this Note shall be cancelled and forgiven.
6. WAIVER. Except as expressly provided herein, the Maker and any
other party ever liable for payment of any sums of money payable on this
Note, jointly and severally, expressly waive all notices, demands for
payment, presentations for payment, notices of intention to accelerate
maturity, notices of acceleration of maturity and any other notices as to
this Note and as to each, every and all installments or part payments hereof.
7. COLLECTION FEES. If an Event of Default occurs and this Note is
placed in the hands of an attorney for collection (whether or not suit is
filed), or if this Note is collected by suit or legal proceedings
or through bankruptcy proceedings, the Maker agrees to pay in addition to all
sums then due hereon, including principal and interest, all reasonable
expenses of collection including reasonable attorneys' fees.
8. AMENDMENTS. This Note may be amended by written agreement of the
Maker and the Holder. No waiver of the provisions hereof shall be effective
unless agreed to in writing by the party against whom such waiver is asserted.
9. NOTICE. All notices to the Maker required or permitted by this Note
shall be sufficient if given in writing and executed by the Holder of this
Note. All such notices of the Maker shall be delivered by registered or
certified mail, return receipt requested, or personally delivered, to the
Maker at its principal place of business on the date of the execution of this
Note as set forth under its signature hereto, or such other address as the
Maker may designate by written notice to the Holder of this Note.
10. GOVERNING LAW; VENUE. This Note shall be deemed to be a contract
made under the laws of the State of Texas, and for all purposes shall be
governed by and construed in accordance with the laws of the State of Texas,
exclusive of any such law under which the law of any other jurisdiction would
apply. The parties hereto agree that venue of any action pertaining to this
Note shall lie in Dallas County, Texas.
11. BINDING EFFECT. This Note and all the covenants, promises and
agreements contained herein shall be binding upon and inure to the benefit of
the respective legal and personal representatives, devisees, heirs,
successors and permitted assigns of the Maker and the Holder.
12. LIMITATION. This Note shall not be construed as limiting the
Holder's right to terminate Maker's employment at any time for any reason,
with or without cause, nor as limiting the right of Maker's employment at any
time for any reason.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES, THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as
of September 10, 1995.
MAKER
By: /s/Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
Address:
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
2
EXHIBIT D
INDEMNIFICATION AGREEMENT
This Agreement, dated as of August 28, 1995, is by and between Vari-Lite
Holdings, Inc., a Texas corporation (the "Company"), and Xxx Xxxxx
("Indemnitee").
WITNESSETH:
WHEREAS, the Company desires to have qualified persons serving as
officers of the Company 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 has appointed Indemnitee to serve as an
officer 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, 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 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 may be hereafter 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 an officer 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 continue to
serve as an officer of the Company, the parties hereto agree as follows:
1. Indemnity of Indemnitee. The Company shall indemnify Indemnitee in
his capacity as an officer 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 such a Proceeding or (c)
any inquiry or investigation
1
that could lead to such a 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 an
officer 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 a Proceeding and any inquiry or investigation that
could lead to a 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
such 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 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 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 (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 the 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 create a presumption
that Indemnitee did not meet the requirements for indemnification required by
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 such 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 parties to that particular Proceeding to
which Indemnitee is seeking indemnification or (ii) Independent Legal
Counsel selected by a majority of a quorum of directors who at the time
of selecting such Independent Legal Counsel are not parties to that
particular Proceeding to which Indemnitee is seeking indemnification, or
if such a quorum cannot be obtained, by a majority vote of a committee
of the Board of Directors of the Company designated to select such
Independent Legal Counsel 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, 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.
(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 such 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 an 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 the Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or
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
an officer, 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 such 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the date first above written.
VARI-LITE HOLDINGS, INC.
By: /s/ X. X. Xxxxxxxx III, President
----------------------------------------
X. X. Xxxxxxxx III, President
Address of Vari-Lite Holdings, Inc.
000 Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
5
/s/ Xxxxx Xxxxx
---------------------------------------------
Xxxxx Xxxxx
Address of Indemnitee:
0000 Xxxxxxxx Xx.
Xxxxxx, Xxxxxxxxxx 00000
6
