DEFERRED COMPENSATION AGREEMENT
BETWEEN
VARI-LITE HOLDINGS, INC.
AND
J. XXXXXXX XXXXX
This Deferred Compensation Agreement (the "Agreement"), dated as of July 1,
1995, is by and between Vari-Lite Holdings, Inc. (the "Company") and J. Xxxxxxx
Xxxxx (the "Director").
W I T N E S S E T H:
WHEREAS, the Director is a member of the Board of Directors of the Company
("Board"); and
WHEREAS, the Company recognizes the valuable services heretofore performed
for it by the Director and wishes to encourage his continued relationship with
the Company and valuable services; and
WHEREAS, the Director and the Company wish to provide the terms and
conditions upon which the Company will pay deferred compensation to the
Director (or his beneficiary after his death) on account of the valuable
services heretofore performed for the Company by the Director; and
WHEREAS, the parties hereto intend that this Agreement be considered an
unfunded arrangement, maintained primarily to provide deferred compensation
benefits for the Director, a member of a select group of management or highly
compensated employees of the Company, for purposes of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");
NOW, THEREFORE, in consideration of the covenants and agreements herein
set forth and of the mutual benefits accruing to the Company and to the
Director because of the key business relationship which has existed between
them, the Company and the Director agree as follows:
1. DEFERRED COMPENSATION AGREEMENT. The Company agrees to pay an annual
amount of $167,000, payable in equal monthly installments on the first
day of each month (the "Deferred Compensation Payments") to the Director
(or, if the Director dies, to his beneficiary as provided in Section 4(a)
of this Agreement) during the Term (as hereinafter defined).
2. TERM. The Director (or his beneficiary in the case of his death) will be
entitled to the Deferred Compensation Payments for the period commencing
on July 1, 1995, and ending June 30, 2001 (the "Term") , unless such
payments terminate as a result of one of the terminating events set forth
in Section 3 of this Agreement.
3. TERMINATION OF DEFERRED COMPENSATION PAYMENTS AND FORFEITURE OF RIGHTS.
The Deferred Compensation Payments will cease immediately upon the
occurrence of any of the events listed below in this Section 3 and all of
the Director's rights and entitlements under this Agreement will be
forfeited.
(a) VOLUNTARY TERMINATION. Except as provided in Section 4 of this
Agreement, the Deferred Compensation Payments shall terminate on the
date that is the later of the date of the Director's voluntarily
termination of his consulting relationship with the Company and the
date of his resignation as a director of the Company.
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(b) FOR CAUSE. The Company may terminate the Deferred Compensation
Payments at any time, without any additional notice, for Cause
(as hereinafter defined).
For purposes of this Agreement, "Cause" shall mean (i) the willful,
continued and material failure by the Director to follow the
reasonable and lawful directions of the Board in connection with the
Director's duties or to comply with any provision of this Agreement,
but only after (1) the Chairman of the Executive Committee of the
Board ("Executive Committee") (or, if the Director is the Chairman,
another member of the Executive Committee elected by the member or
members thereof other than the Director), pursuant to resolutions
adopted by a majority of the members of the Executive Committee
(excluding the Director if he is a member of the Executive Committee),
delivers a written demand to the Director for substantial performance
specifically setting forth the manner in which the Executive Committee
believes the Director has failed to follow such directions or to
comply with this Agreement and (2) the failure to follow such
directions or to comply with this Agreement continues for a period
of 30 days; (ii) the Director's gross negligence or intentional
misconduct in the performance of his duties; (iii) the Director's
conviction of a felony; or (iv) the commission by the Director of any
act involving embezzlement or fraud.
(c) CONFIDENTIAL INFORMATION; RECORDS. The Company may immediately
terminate the Deferred Compensation Payments upon a breach by the
Director of any covenant, agreement or other obligation with the
Company with respect to nondisclosure of confidential information or
records of the Company, whether or not such covenant or agreement is
in a consulting or other agreement with the Company, and including,
but not limited to, Section 7(c) of that certain Consulting Agreement
dated as of July 1, 1995, by and between the Company and the Director
(the "Consulting Agreement").
(d) NONCOMPETITION AGREEMENT. The Company may immediately terminate the
Deferred Compensation Payments upon a breach by the Director of any
noncompetition covenant or agreement with the Company, whether such
covenant or agreement is in a consulting or other agreement with the
Company, and including, but not limited to, Section 7(d) of the
Consulting Agreement.
4. CONTINUATION OF DEFERRED COMPENSATION PAYMENTS. The Deferred Compensation
Payments shall continue after the termination of the Director as a director
of, and consultant to, and the Company under the following circumstances:
(a) DEATH. If the Director dies, the Company shall pay the Deferred
Compensation Payments to the beneficiary designated by the Director.
The Director shall designate a beneficiary to receive the Deferred
Compensation Payments in the event of his death, which designation,
including any initial designation set forth in this Agreement, may
only be changed by written notice from the Director to the Company.
If the Director has not designated a beneficiary to receive the
Deferred Compensation Payments who is surviving on the date of his
death, the Deferred Compensation Payments shall be payable to the
surviving spouse, if any, of the Director and, if none, to the estate
of the Director or as otherwise directed by the duly appointed
personal representative of the estate of the Director. The Director
hereby designates ________________________________________________
as his beneficiary.
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(b) DISABILITY. If the Director suffers a Permanent Disability (as
hereinafter defined) and all of his services for the Company are
terminated by reason thereof, the Company shall continue to be
obligated to pay the Deferred Compensation Payments. For purposes of
this Agreement, "Permanent Disability" shall have the meaning given
to it in Section 6(b) of the Consulting Agreement or any successor
consulting agreement between the Company and the Director.
(c) TERMINATION WITHOUT CAUSE. If the Director's consulting relationship
with the Company is terminated by the Company without Cause, and even
if the Director thereafter does not serve or continue to serve as a
director of the Company, the Company shall continue to be obligated
to pay the Deferred Compensation Payments.
(d) CONSTRUCTIVE TERMINATION. If the Director's consulting relationship
with the Company is terminated by the Director because an event of
Constructive Termination (as hereinafter defined) occurs, and even
if the Director thereafter does not serve or continue to serve as a
director of the Company, the Company shall continue to be obligated
to pay the Deferred Compensation Payments. For purposes of this
Agreement, "Constructive Termination" shall have the meaning given
to it in Section 6(d) of the Consulting Agreement or any successor
consulting agreement between the Company and the Director.
(e) CHANGE OF CONTROL. If the Director's consulting relationship with
the Company is terminated, whether by the Company or the Director,
as a result of a Change of Control (as hereinafter defined), and
even if the Director thereafter does not serve or continue to serve
as a director of the Company, the Company shall continue to be
obligated to pay the Deferred Compensation Payments. For purposes
of this Agreement, "Change of Control" shall have the meaning given
to it in Section 6(e) of the Consulting Agreement or any successor
consulting agreement between the Company and the Director.
5. DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION. Subject
to the terms and provisions of this Agreement, the Executive Committee
(excluding the Director if he is a member of the Executive Committee)
shall have the discretion to make all benefit entitlement determinations
under this Agreement. All of the following references to the Director in
this Section 5 shall be deemed to include the Director or his duly
authorized representative.
(a) CLAIMS. Any claim for the benefits under this Agreement shall be
made in writing to the Company, Attention: Executive Committee. If
the Claim is accepted, the Executive Committee shall provide written
notice to the Director.
(b) NOTICE OF DENIAL OF CLAIM. When a claim for benefits under this
Agreement is denied, the Executive Committee shall provide notice
to the Director in writing of the denial within 90 days after the
submission of the claim. The notice shall be written in a manner
calculated to be understood by the Director and shall include:
(i) the specific reason or reasons for the denial;
(ii) specific references to the pertinent provisions of
this Agreement on which the denial is based;
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(iii) a description of any additional material or information
necessary for the Director to perfect the claim and an
explanation of why such material or information is necessary;
and
(iv) an explanation of the claim review procedures under this
Agreement as may be adopted by the Board or the Executive
Committee.
If special circumstances require an extension of time for processing
the initial claim, a written notice of the extension and the reason
therefor shall be furnished to the Director before the end of the
initial 90-day period, provided that in no event shall this extension
exceed 90 days.
(c) APPEAL OF DENIAL CLAIM. If a claim for benefits is denied or if the
Director has received no response to such claim within 90 days of its
submission (in which case the claim for benefits shall be deemed to
have been denied), the Director, at the Director's sole expense,
may appeal the denial to the Board within 60 days of the receipt of
written notice of the denial or the date such claim is deemed to be
denied. In pursuing such appeal the Director (i) may request in
writing that the Board review the denial, (ii) may review pertinent
documents and (iii) may submit issues and comments in writing.
The decision on review shall be made within 60 days of receipt of
the request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after
receipt of the request for review. If such an extension of time is
required, written notice of the extension shall be furnished to the
Director before the end of the original 60-day period. The decision
on review shall be made in writing, shall be written in a manner
calculated to be understood by the Director and shall include specific
references to the provisions of this Agreement on which the denial is
based. If the decision on review is not furnished within the time
specified above, the claim shall be deemed denied on review.
(d) ARBITRATION. If the Director still believes that his claim has been
wrongfully denied or if there is any other controversy or claim
arising out of or relating to this Agreement, it shall be settled by
binding arbitration. Any such arbitration proceedings shall be
conducted as follows:
(i) Arbitration shall be conducted by three arbitrators, one to be
selected by each of the parties and the third to be designated
by the two arbitrators so selected. If the two arbitrators
cannot agree on the third arbitrator, the American Arbitration
Association in Dallas, Texas where the arbitration shall take
place shall select the third arbitrator.
(ii) The arbitration shall follow the standard rules and procedures
of the American Arbitration Association, except as otherwise
provided herein. The arbitrators shall 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.
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(iii) The arbitrators shall complete their proceedings and render
their decision within 40 days after submission of the dispute to
them, unless both parties agree to an extension. Each party
will 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.
(iv) 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 the Director shall promptly
comply with the terms of such award, and a judgment by a court
of competent jurisdiction may be entered in accordance
therewith.
(v) 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.
(vi) The Company and the Director hereby consent to the jurisdiction
of the courts of the State of Texas for purposes of entering
judgment with respect to an arbitration award.
6. GENERAL PROVISIONS.
(a) STATUS OF AGREEMENT. For the purposes of ERISA, this Agreement is
an unfunded arrangement, sponsored by the Company and maintained
primarily to provide deferred compensation benefits for the Director,
a member of a select group of management or highly compensated
employees of the Company. Nothing in this Agreement should be
construed to mean that this Agreement is a funded deferred
compensation plan, fund, program or agreement. Furthermore, nothing
in this Agreement and no action taken by the Company according to
this Agreement should be construed to create a trust of any kind or a
fiduciary relationship between the Company and the Director, his
designated beneficiary or any other person.
(b) ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the entire
agreement between the Company and the Director concerning the
subject matter hereof and supersedes all prior agreements or
understandings, written or oral, with respect thereto. No attempted
modification or waiver of any of the provisions hereof shall be
binding on either party unless in writing and signed by both the
parties.
(c) COSTS. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, or any arbitration proceeding
is necessary pursuant to Section 5(d) of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief
to which he or it may be entitled.
(d) NOTICES. Any notices, consents, demands, requests, approvals and
other communications to be given under this Agreement by either
party to the other shall be in writing and shall be either (i)
delivered in person, (ii) mailed by registered or certified mail,
return receipt
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requested, postage prepaid, (iii) delivered by overnight express
delivery service or same-day local courier service or (iv) delivered
by facsimile transmission, to the addresses set forth below.
If to the Company: Vari-Lite Holdings, Inc.
000 Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to the Director: J. Xxxxxxx Xxxxx
Hit & Run Music, Ltd.
00 Xxxx Xxxxxx
Xxxxxx XX0 0XX Xxxxxxx
Facsimile: 011-44-171-5845774
Notices delivered personally, by overnight express delivery, local
courier or facsimile shall be deemed communicated as of actual
receipt; mailed notices shall be deemed communicated as of three days
after mailing. Any party may change its address for notice by written
notice in accordance with this Section given to the other parties.
(e) SUCCESSORS AND ASSIGNS.
(1) This Agreement shall be binding upon, inure to the benefit of
and be enforceable by the Director and the Director's legal
representatives. This Agreement is personal to the Director
and without the prior written consent of the Company shall not
be assignable by the Director otherwise than by will or the laws
of descent and distribution.
(2) This Agreement shall be binding upon, inure to the benefit of
and be enforceable by the Company and its successors and assigns.
The Company shall have the right to assign this Agreement to a
parent, affiliate or subsidiary corporation or to any corporation
succeeding to substantially all of the assets and business of the
Company whether by merger, consolidation, acquisition or
otherwise.
(3) The Company shall require any successor (whether direct or
indirect, by merger, consolidation, acquisition or otherwise) to
all or substantially all of the business and/or assets of the
Company expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this
Agreement by operation of law or otherwise.
(f) Partial Invalidity and Severability. If any one or more of the
provisions contained in this Agreement for any reason is held
to be illegal, invalid or unenforceable, the illegality,
invalidity or unenforceability will not affect, impair or
invalidate any other provision of this Agreement, which will be
construed as if the illegal, invalid or unenforceable provision
had not been contained in this Agreement and, in lieu of each
illegal, invalid or unenforceable provision, there will be
added
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automatically as a part of this Agreement a provision as similar
in terms to the illegal, invalid or unenforceable provision as
may be possible and be legal, valid and enforceable.
(g) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas to
the extent not preempted by ERISA. 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.
(h) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which
shall constitute one agreement.
[THE NEXT FOLLOWING PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DIRECTOR:
/s/ J. Xxxxxxx Xxxxx
---------------------------------------
J. Xxxxxxx Xxxxx
COMPANY:
Vari-Lite Holdings, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx
Vice President-Finance
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