INDEMNIFICATION AGREEMENT
This Agreement, dated as of _____________ _____, 1997, is by and between
Vari-Lite International, Inc., a Delaware corporation (the "Corporation"), and
______________ ("Indemnitee").
WITNESSETH:
WHEREAS, the Corporation desires to have qualified persons serving as
directors and officers of the Corporation and its subsidiaries who are willing
to make decisions that in their judgment are in the Corporation's best interest
without any undue threat of personal liability; and
WHEREAS, the Corporation is contemplating an initial public offering of its
common stock (the "Offering"); and
WHEREAS, in connection with the Offering, the Corporation will merge with
Vari-Lite International, Inc., a Texas corporation ("Vari-Lite Texas"), with the
Corporation being the surviving corporation (the "Reincorporation"), and, among
other things, all officers and directors of Vari-Lite Texas will become officers
and directors of the Corporation and each subsidiary of Vari-Lite Texas will
become a subsidiary of the Corporation; and
WHEREAS, upon consummation of the Reincorporation, Indemnitee will serve as
an officer and/or director of the Corporation and/or one or more of its
subsidiaries; and
WHEREAS, the Certificate of Incorporation of the Corporation requires the
Corporation (a) to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (a
"Proceeding") (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director, officer, employee, or agent of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (all of such persons being hereinafter
referred to as a "Corporate Functionary"), against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such Proceeding, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful, and (b)
to indemnify any person who was or is a party or is threatened to be made a
party to any Proceeding by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a Corporate
Functionary against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with the defense or settlement of such Proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, except that no indemnification shall be made in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable to the Corporation, unless and only to the extent that the Court of
Chancery shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such Losses which the Court of
Chancery shall deem proper; and
WHEREAS, the Corporation desires to grant to Indemnitee the maximum
indemnification permitted by law; and
WHEREAS, developments with respect to the terms and availability of
directors' and officers' liability insurance and with respect to the
application, amendment, and enforcement of statutory, charter, and bylaw
indemnification provisions generally have raised questions concerning the
adequacy and reliability of the protection afforded to persons intended to be
protected thereunder; and
WHEREAS, in order to resolve such questions and thereby induce Indemnitee
to serve and continue serving as a director and/or officer of the Corporation
and/or its subsidiaries, the Corporation has determined and agreed to enter into
this Agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve and
continue serving as a director and/or officer of the Corporation and/or its
subsidiaries, the parties hereto agree as follows:
1. EFFECTIVENESS OF AGREEMENT. This Agreement is expressly contingent on
the consummation of the Reincorporation and the Offering and shall have no legal
force or effect until such time as both events shall have taken place. In
addition, effective as of the consummation of the Reincorporation and the
Offering, any indemnification agreement by and between Indemnitee and Vari-Lite
Texas or any subsidiary of Vari-Lite Texas, will be terminated and superseded in
all respects by this Agreement and shall have no further force or effect.
2. INDEMNITY FOR PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify Indemnitee to the full extent of
all Losses (as hereinafter defined) in connection with any threatened, pending,
or completed Proceeding (other than an action by or in the right of the
Corporation and/or its subsidiaries) to which Indemnitee was or is a party or is
threatened to be made a party by reason of the fact that he is or was a
Corporate Functionary, if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
3. INDEMNITY FOR ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify Indemnitee to the extent of all Losses in connection
with the defense or settlement of any threatened, pending, or completed
Proceeding by or in the right of the Corporation and/or its subsidiaries to
procure a judgment in its favor to which Indemnitee was or is a party or is
threatened to be made a party by reason of the fact that Indemnitee is or was a
Corporate Functionary, if Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which Indemnitee shall have been adjudged to be
liable to the Corporation and/or any of its subsidiaries, unless and only to the
extent that the Court of Chancery or the court in which such Proceeding was
brought shall determine upon application that, despite the adjudication of
liability and in view of all the circumstances of the case, Indemnitee is fairly
and reasonably entitled to indemnity for such Losses which the Court of Chancery
or such other court shall deem proper.
4. EXPENSES RELATED TO A PROCEEDING. If Indemnitee is, by reason of the
fact that Indemnitee is a Corporate Functionary, a party to and is successful,
on the merits or otherwise, in defense of any Proceeding, or in defense of any
claim, issue, or matter therein, Indemnitee shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by him
(and not paid, reimbursed, or advanced by others) in connection therewith.
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5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Indemnitee is a
director or officer of the Corporation and/or any of its subsidiaries, and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim
or threatened, pending, or completed Proceeding or investigation that could lead
to such a Proceeding, by reason of the fact that Indemnitee was serving in any
capacity referred to herein.
6. 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 Corporation under this Agreement, notify the Corporation of the assertion of
any such claim or the commencement thereof; but the omission so to notify the
Corporation will not relieve it from any liability under this Agreement unless
such delay in notification actually prejudiced the Corporation (and then only to
the extent the Corporation was actually prejudiced thereby) and, in addition,
the Corporation 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 Corporation of the commencement
thereof:
(a) The Corporation will be entitled to participate therein at its
own expense.
(b) Except as otherwise provided below, to the extent that it may
wish, the Corporation, jointly with any other indemnifying party similarly
notified, will be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from the Corporation
to Indemnitee of its election so to assume the defense thereof, the
Corporation will not be liable to Indemnitee under this Agreement for any
legal or other fees or expenses subsequently actually and reasonably
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 Corporation 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 Corporation, (ii) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between
the Corporation and Indemnitee in the conduct of the defense of such
action, or (iii) the Corporation 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 Corporation. The
Corporation shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Corporation or as to which Indemnitee shall
have made the conclusion provided for in (ii) above.
(c) The Corporation shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without the Corporation's written consent. The Corporation 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 Corporation nor Indemnitee will unreasonably withhold consent to any
proposed settlement.
7. ADVANCES OF EXPENSES. Expenses (including attorneys' fees) actually
and reasonably 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 Corporation in advance of the final disposition of the
Proceeding within 10 days after the Corporation receives a written request by
Indemnitee accompanied by substantiating documentation of such expenses and a
written undertaking by or on behalf of Indemnitee to repay the amount paid or
reimbursed if it is ultimately determined that he is not entitled to be
indemnified by the Corporation hereunder or that such expenses do not constitute
Losses. The
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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.
8. 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 7 hereof), the
Corporation 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 upon 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 Corporation and Indemnitee as to what extent
Indemnitee will be permitted to be indemnified. The Corporation shall pay the
reasonable fees of Independent Legal Counsel and indemnify and hold harmless
Indemnitee against any and all reasonable 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.
9. DEFINITIONS. The following terms shall, for all purposes of this
Agreement, have the indicated meanings:
(a) "Reviewing Party" means (i) a majority of directors of the
Corporation who at the time of voting upon a determination of
indemnification are not parties to the Proceeding with respect to which
Indemnitee is seeking indemnification, even though less than a quorum, (ii)
Independent Legal Counsel selected by a majority of directors who at the
time of selecting such Independent Legal Counsel are not parties to the
Proceeding with respect to which Indemnitee is seeking indemnification, or
(iii) the stockholders of the Corporation.
(b) "Independent Legal Counsel" shall mean an attorney, selected in
accordance with the provisions of Section 9(a) hereof, who shall not have
otherwise performed services for Indemnitee, the Corporation, any person
that controls the Corporation, or any of the directors of the Corporation,
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 Corporation or Indemnitee in an action to
determine Indemnitee's rights under this Agreement, nor shall Independent
Legal Counsel be any person who has been sanctioned or censured for ethical
violations of applicable standards of professional conduct.
(c) "Losses" shall mean any and all expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by Indemnitee after realization of or giving effect to
all insurance, bonding, indemnification, and other payments or recoveries
actually received by or for the benefit of Indemnitee, directly or
indirectly, or to which Indemnitee may be entitled, directly or indirectly.
10. ENFORCEABILITY. The right to indemnification or payment,
reimbursement, or advancement of expenses 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 Corporation.
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Neither the failure of the Corporation (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 Corporation (including its Board of
Directors or Independent Legal Counsel) that Indemnitee has not met the
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.
11. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Corporation for a portion of Losses,
but not for the total amount thereof, the Corporation 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 all expenses (including
attorneys' fees) actually and reasonably incurred by him (and not paid,
reimbursed, or advance by others) in connection with such Proceeding, issue, or
matter, as the case may be.
12. REPAYMENT OF EXPENSES. Indemnitee shall reimburse the Corporation for
all reasonable expenses paid by the Corporation in defending any Proceeding
against Indemnitee if and only to the extent that it shall be ultimately
determined that Indemnitee is not entitled to be indemnified by the Corporation
for such expenses under the provisions of this Agreement or that such expenses
do not constitute Losses.
13. CONSIDERATION. The Corporation expressly confirms and agrees that it
has entered into this Agreement and assumed the obligations imposed on the
Corporation hereby in order to induce Indemnitee to serve and continue serving
as an officer and/or a director of the Corporation and/or any of its
subsidiaries, and acknowledges that Indemnitee is relying upon this Agreement in
serving in such capacities.
14. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification and
payment, reimbursement, 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 stockholders, as a matter of law, or
otherwise, but any indemnification of Indemnitee pursuant to the Certificate of
Incorporation or By-Laws of the Corporation is limited to Losses.
15. SUBROGATION. If a payment is made under this Agreement, the
Corporation 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.
16. 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.
17. NOTICE. Any notice, consent, or other communication to be given under
this Agreement by either party to the 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
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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).
18. 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 Delaware.
(b) This Agreement shall be binding upon and inure to the benefit of
Indemnitee and his heirs, executors, administrators, personal
representatives, and assigns, and upon the Corporation and its successors
and assigns.
(c) No amendment, modification, termination, or cancellation of this
Agreement shall be effective unless made in writing and 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 Corporation shall reimburse Indemnitee for all reasonable fees
(including attorneys' fees) and expenses actually and reasonably incurred
in bringing and pursuing such action.
(e) Words of any gender used in this Agreement shall be held and
construed to include any other gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the date first above written.
VARI-LITE INTERNATIONAL, INC.
By:
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X.X. Xxxxxxxx III, President
Address of Vari-Lite International, Inc.:
000 Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
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Address of Indemnitee:
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