EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of July 1, 1995, is by
and between Vari-Lite Holdings, Inc. (the "Company") and X. X. Xxxxxxxx III
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and its subsidiaries are engaged in the business of
manufacturing and leasing automated lighting and sound reinforcement
equipment; and
WHEREAS, the Executive is experienced and knowledgeable in the Company's
business and currently serves as the Company's President and Chief Executive
Officer; and
WHEREAS, the Company is interested in continuing to employ the Executive
and the Executive is interested in continuing to work for the Company; and
WHEREAS, the Executive and the Company desire to enter into a written
agreement governing the terms and conditions of the Executive's employment,
including, without limitation, the compensation paid to the Executive, the
duration of the Executive's employment and the protection of the Company's
confidential information, business, accounts, patronage and goodwill; and
WHEREAS, this Agreement will supersede and replace all prior employment
agreements between the Company and the Executive;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and conditions herein contained, the parties hereto agree as
follows:
1. EMPLOYMENT. The Company hereby employs the Executive on the
terms and conditions set forth below. The Executive hereby
accepts such employment and agrees that he will at all times
act and discharge his duties and utilize his skills in the
best interests of the Company.
2. POSITION AND DUTIES. The Executive shall serve as President
and Chief Executive Officer of the Company. The Executive
shall also serve as the Chairman of the Board of Directors of
the Company and shall serve on the Executive Committee and
other committees of the Board of Directors as shall be
determined by the Board of Directors. The Executive shall
discharge the duties of his office or offices as described in
the Company's Bylaws and as otherwise determined from time to
time by the Board of Directors; provided, however, that such
duties shall be reasonably commensurate with the duties of a
president or chief executive officer of a corporation. The
Executive shall devote his full working time, best efforts and
undivided attention to the Company's business and affairs.
The Executive may, however, devote reasonable periods of time
to engage in charitable and community activities and manage
his personal investments, to the extent that such activities
are not inconsistent with and do not detract from the
performance of his duties and responsibilities hereunder.
3. LOCATION OF EMPLOYMENT. The Executive's office and principal
place of business in carrying out his duties hereunder shall
be at the Company's corporate headquarters in Dallas, Texas
and the Executive's location of employment shall not be
changed without the Executive's written consent. The
Executive 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.
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4. TERM. The Executive's employment under this Agreement shall
be for a term of five years commencing as of the date first
above written (the "Commencement Date"), provided that such
term shall automatically be extended by one year for each
complete year served by the Executive. The term as originally
set forth or as automatically extended is referred to
hereinafter as the "Employment Term."
5. COMPENSATION. In consideration of the services to be
performed by the Executive hereunder, the Company shall pay
the Executive as follows:
(a) BASE SALARY. The Company shall pay the Executive an
annual salary of $433,000 (the "Base Salary"). The Base
Salary shall be payable bi-monthly on the 15th and the
last day of each month in equal installments. The
Compensation Committee of the Board of Directors shall
conduct an annual review of the Base Salary; the first
review shall be conducted not later than November 1,
1996, and the subsequent reviews shall be conducted not
later than November 1 of the following years during the
Employment Term. The Executive shall be entitled to such
increases in the Base Salary, if any, that may be
determined by the Board of Directors in its sole
discretion pursuant to such annual reviews. In no event
shall the Base Salary, as it may be increased from time
to time in accordance with this Section 5, be reduced.
(b) ANNUAL INCENTIVE COMPENSATION. The Executive shall be
eligible to receive annual incentive compensation (the
"Annual Incentive Compensation") in accordance with the
plans established or to be established for officers or
directors of the Company.
(c) LONG-TERM INCENTIVE COMPENSATION. The Executive shall be
eligible to receive long-term incentive compensation (the
"Long-Term Incentive Compensation") in accordance with
the plans established or to be established for officers
or directors of the Company.
(d) DEFERRED COMPENSATION. The Executive shall be entitled
to receive deferred compensation (the "Deferred
Compensation") in accordance with the plans established
or to be established for officers or directors of the
Company.
(e) ANNUAL BONUS FOR TERM LIFE INSURANCE. The Executive
shall be entitled to receive an annual bonus in an amount
equal to the sum of (i) the annual premiums payable under
Term Life Insurance Policy No. 4114972 from Transamerica
Occidental Life Insurance Company and owned by the X.X.
Xxxxxxxx III Insurance Trust, or any substitute life
insurance policy owned by the Executive or a designated
owner in replacement thereof and approved by the Company,
and (ii) an additional amount such that the net amount of
such bonus retained by the Executive or for his benefit,
after deduction of any federal, state or local income tax
payable by the Executive thereon, shall be equal the
amount in clause (i) above. Such bonus shall be paid to
the Executive as and when such premiums are due.
(f) LIFE INSURANCE. The Executive shall be entitled to
receive life insurance benefits (including the right to
designate one or more beneficiaries) under the Company's
Group Life Insurance Policy, Policy No. 000-0000-000,
from Phoenix Home Life or any additional or substitute
life insurance policy, plan or program hereafter obtained
or established for, or made available to, officers or
directors of the Company (collectively
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referred to in this Agreement, as they may be changed or
revised consistent with this Agreement, as the "Life Insurance
Plan").
(g) DISABILITY INSURANCE. The Executive shall be entitled to
receive disability insurance benefits under (i) the
Company's Group Disability Insurance Policy, Policy No.
000-0000-000, from Phoenix Home Life, (ii) Disability
Insurance Policy, Policy No. G556342, from Guardian Life
Insurance Company, (iii) Disability Income Policy, Policy
No. 9412790, from Massachusetts Mutual Life Insurance
Company, (iv) Income Replacement Policy, Policy No.
003002955, from United Life and Accident Insurance
Company and (v) any additional or substitute disability
insurance policy, plan or program hereafter obtained or
established for, or made available to, officers or
directors of the Company (collectively referred to in
this Agreement, as they may be changed or revised
consistent with this Agreement, as the "Disability
Insurance Plan"); provided, however, that at any time
during the Employment Term the terms of any such
disability insurance policies, plans or programs shall be
equivalent to or exceed the terms, taken as a whole, of
the policies described in clauses (i), (ii), (iii) and
(iv) above, as currently in effect or, if obtained after
the Commencement Date, in effect as of the date obtained,
and the aggregate benefits payable under any such
policies, plans or programs shall be in an amount equal
to or exceeding 59% of the Executive's Base Salary at the
rate then in effect.
(h) SPLIT-DOLLAR INSURANCE. The Executive shall be eligible,
directly or indirectly through a designated owner, to
receive benefits (including the right to designate one or
more beneficiaries) under (i) Life Insurance Policy No.
8592771 from Massachusetts Mutual Life Insurance Company
and any agreement or instrument between the Company and
the designated owner of such policy with respect to such
policy, (ii) Life Insurance Policy No. 67127331 from Xxxx
Xxxxxxx Mutual Life Insurance Company and any Split-Dollar Life
Insurance Agreement and Assignment of Life Insurance Policy as
Collateral between the Company and the designated owner of such
policy with respect to such policy and (iii) any additional or
substitute split-dollar insurance policy, plan or program
hereafter obtained or established for, or made available to,
officers or directors of the Company; provided, however,
that at any time during the Employment Term the terms of
any such split-dollar insurance policies, plans or
programs shall be equivalent to or exceed the terms,
taken as a whole, of the policies described in clauses
(i) and (ii) above, as currently in effect.
6. EMPLOYEE BENEFITS.
(a) BENEFIT PLANS OR OTHER ARRANGEMENTS. In addition to the
benefits required by Section 5 of this Agreement, subject
to meeting eligibility provisions, the Executive 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 generally, as
such benefits may exist from time to time, including, for
example and without limitation, group health, disability
and life insurance benefits and participation in the
Company's profit sharing, stock purchase and stock option
plans.
(b) VACATION AND SICK LEAVE. The Executive shall be entitled
to receive the number of days of vacation and sick leave
determined pursuant to vacation and sick leave plans
established from time to time by the Company.
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(c) FRINGE BENEFITS. The Company shall provide the Executive
with an automobile allowance of $1,000 per month and such
other fringe benefits as are or may be generally provided
to officers or directors of the Company and such other
benefits as the Board of Directors may, from time to
time, in its sole discretion, determine.
7. BUSINESS EXPENSES.
(a) OUT-OF-POCKET EXPENSES. The Company shall reimburse the
Executive for all reasonable out-of-pocket expenses
incurred by the Executive in the conduct of the Company's
business, provided that the Executive submits expense
accounts accompanied by receipts and vouchers within 12
months following the expenditures.
(b) FIRST CLASS AIR TRAVEL. The Company shall provide the
Executive with domestic first class air travel via
upgrade coupons and business class for overseas travel in
connection with the performance of his duties hereunder.
8. TAXES. All compensation to the Executive hereunder shall be
subject to applicable employment and withholding taxes. The
Executive shall be responsible for any taxes resulting from a
determination that any portion of any benefits supplied to the
Executive hereunder may be reimbursing personal as well as
business expenses.
9. TERMINATION. The Executive's employment may be terminated by
either party at any time in accordance with the following
provisions. In the event of such termination, the Executive's
rights and entitlements shall be determined in accordance with
the following provisions.
(a) DEATH. Notwithstanding any other provision to the
contrary, if the Executive dies, the Executive's
employment hereunder shall terminate as of the date of
death. Upon termination due to the Executive's death,
the Executive's estate shall receive the Base Salary at
the rate in effect at the time of the Executive's death
through the end of the month in which the death occurs.
The Executive's estate shall also be entitled to receive
a pro rata portion of the Annual Incentive Compensation,
if any, the Executive would have received for the fiscal
year in which he died. All other benefits, if any, due
the Executive following the Executive's termination of
employment on account of death shall be determined in
accordance with Sections 5, 6, and 7 and with the plans,
policies and practices of the Company, as such may be
amended or supplemented by the terms of this Agreement.
For purposes of determining a pro rata portion of the
Annual Incentive Compensation under this Section 9, the
amount shall be calculated in accordance with the
provisions of each applicable Annual Incentive
Compensation plan, but shall be based on the actual
results of the Company from the beginning of the fiscal
year through the date of death plus the projected results
of the Company for the remainder of the fiscal year as of
the date of death.
(b) DISABILITY. If the Executive suffers a Permanent
Disability (as defined below), the Company may terminate
his employment by written notice effective as of the Date
of Disability (as defined below). If the Executive's
employment is terminated by reason of a Permanent
Disability, from the Date of Disability until the end of
the Employment Term, the Company shall pay to the
Executive his Base Salary at the rate then in effect,
less any disability benefits which the Executive receives
pursuant to any disability insurance policy, plan or
program purchased or maintained by the Company.
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For the purpose of this Agreement, "Permanent Disability"
shall mean the inability to perform the services required
hereunder due to mental or physical disability which
prevents the Executive from substantially performing his
duties hereunder and continues for either (i) a total of
180 working days during any 12-month period or (ii) 150
consecutive working days. "Date of Disability" shall
mean the date following the last of such days to so
occur. If either party disputes, after notice from the
other, that the Executive is disabled, such dispute shall
be submitted to a physician mutually satisfactory to the
Executive and the Company. If the parties are unable to
agree on a mutually satisfactory physician, each shall
select a reputable physician, who shall select a third
physician whose determination of the Executive's ability
to perform shall be conclusive and binding on the
parties. Evidence of such disability, as so certified,
shall be conclusive notwithstanding that a disability
policy, or clause in an insurance policy, covering the
Executive shall contain a different definition of
"permanent disability." The Company shall pay the fees
and expenses of each physician so appointed.
If the Company's group health insurance plan is fully
insured as of the Date of Disability and thereafter, the
Company shall allow the Executive to continue
participation in the Company's group health insurance
plan at the Company's expense through the end of the
Employment Term. If the Company's group health insurance
plan is self-insured as of the Date of Disability, or
becomes self-insured after the Date of Disability, then
(x) until the expiration of continuation coverage under
the Consolidated Omnibus Budget Reconciliation Act of
1986 (the "COBRA Continuation Coverage") (currently 18
months or 29 months depending on the nature of the
Permanent Disability), the Company shall allow the
Executive to continue participation in the Company's
group health insurance plan at the Company's expense and
(y) after the expiration of COBRA Continuation Coverage
until the end of the Employment Term, the Company shall
(A) pay the cost of an individual health insurance policy
for the Executive with the same or better coverage as
provided under the Company's group health insurance plan
as of the date of termination, or (B) if an individual
policy cannot be obtained, provide comparable coverage in
another manner reasonably acceptable to the Executive.
(c) FOR CAUSE. The Company may terminate the Executive's
employment for Cause (as defined below) at any time,
without any additional notice. The Company shall inform
the Executive as to the grounds for such termination.
If the Executive's termination is for Cause, the
Executive shall not be entitled to damages for such
termination and shall have no claim for such damages, and
shall be entitled after such termination to receive the
Base Salary only for services rendered through the date
of termination. The Executive shall also be entitled to
(i) a pro rata portion of the Annual Incentive
Compensation, if any, he would have received for the year
in which he was terminated (computed as provided in
Subsection (b) above) and (ii) a payment for unused
vacation time in the year in which he was terminated as
determined pursuant to the Company's vacation and sick
leave plans in effect at the time of termination.
For purposes of this Agreement, "Cause" shall mean (i)
the willful, continued and material failure by the
Executive to follow the reasonable and lawful directions
of the Board of Directors in connection with the
Executive's duties hereunder or to comply with any
provision of this Agreement, but only after (1) the
Chairman of the Executive Committee of the Board of
Directors ("Executive Committee") (or, if the Executive
is the Chairman,
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another member of the Executive Committee elected by the
member or members thereof other than the Executive), pursuant
to resolutions adopted by a majority of the members of the
Executive Committee (excluding the Executive if he is a member
of the Executive Committee), delivers a written demand to the
Executive for substantial performance specifically
setting forth the manner in which the Executive Committee
believes the Executive 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
Executive's gross negligence or intentional misconduct in
the performance of his duties hereunder; (iii) the
Executive's conviction of a felony; (iv) the commission
by the Executive of any act involving embezzlement or
fraud; or (v) the Executive's habitual absenteeism not
related to disability or illness, but only after written
notice from the Executive Committee on two occasions, as
determined by the Executive Committee in good faith, of
such habitual absenteeism and the occurrence of such
habitual absenteeism for a third time during any
consecutive 12-month period.
(d) WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION. The Company
may terminate the Executive's employment for other than
death, disability, Cause or Change of Control (as defined
below) upon 30 days prior written notice.
If at any time during the Employment Term, an event of
Constructive Termination (as defined below) occurs, then
the Executive shall have the right, upon 30 days prior
written notice to the Company, to terminate his
employment hereunder. Such termination shall be deemed
a "Constructive Termination" of the Executive by the
Company.
In addition to any other rights of the Executive, if
termination is (i) by the Company for other than death,
disability, Cause or Change of Control, or (ii) on the
basis of a Constructive Termination, from the date of
termination until the end of the Employment Term, the
Company shall pay to the Executive his Base Salary at the
rate then in effect. In the event of such termination,
the Executive 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 the Executive from another
employer.
For purposes of this Agreement, "Constructive
Termination" means the following:
(i) the continued and material failure of the Company
to comply with its covenants and obligations under
this Agreement, but only after (A) the Executive
delivers written demand to the Company for
substantial performance specifically setting forth
the manner in which he believes the Company has so
failed to comply with its covenants and obligations
and (B) such material failure continues for a
period of ten days;
(ii) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's
position (including status, titles and reporting
requirements), duties or responsibilities as
contemplated in Section 2 of this Agreement, which
results in a diminution in such position,
authority, duties or responsibilities, excluding
for this purpose any isolated, insubstantial and
inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
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(iii) a change by the Company in the Executive's
location of employment as contemplated by
Section 3 of this Agreement without the
consent of the Executive;
(iv) any purported termination by the Company of the
Executive's employment other than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c)(iii) of this Agreement,
provided that the successor referred to therein has
received at least ten days prior written notice
from the Company or the Executive of the
requirements of Section 13(c)(iii).
(e) CHANGE OF CONTROL. Upon 30 days prior written notice to
the other party stating the grounds for such termination,
either the Company or the Executive may terminate the
Executive's employment as the result of a Change of
Control.
A "Change of Control" shall be deemed to have occurred if
(i) the Company is merged or consolidated with another
corporation and as a result of such merger or
consolidation less than 50% of the outstanding voting
securities of the surviving or resulting corporation are
owned in the aggregate by the former shareholders of the
Company; (ii) the Company sells all or substantially all
of its assets to another corporation, which is not a
wholly-owned subsidiary of the Company; (iii) any person
or group within the meaning of the Securities Exchange
Act of 1934, as amended, acquires (together with voting
securities of the Company held by such person or group)
30% or more of the outstanding voting securities of the
Company (whether directly, indirectly, beneficially or of
record) pursuant to any transaction or combination of
transactions; (iv) there is a change of control of the
Company of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of
1934, as amended, whether or not the Company is then
subject to such reporting requirements; or (v) the
individuals who, at the beginning of any period of twelve
consecutive months, constituted the Board of Directors
cease, for any reason, to constitute at least a majority
thereof, unless the nomination for election or election
by the Company's shareholders of each new director of the
Company was approved by a vote of at least two-thirds of
the directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously so
approved. 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 Company's capital stock or the issuance of capital
stock by the Company approved by a vote of at least two-thirds
of the directors then in office.
If the Executive's employment is terminated as a result
of a Change of Control or if the Executive elects to
terminate his employment as the result of a Change of
Control at any time within two years after the Change of
Control, the Executive shall be entitled to the
compensation and benefits provided below:
(i) From the date of termination until the end of the
Employment Term, the Company shall pay to the
Executive his Base Salary at the rate then in
effect.
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(ii) In lieu of shares of capital stock of the Company
issuable upon the exercise of exercisable or
unexercisable stock based incentives (which stock
based incentives shall be cancelled upon the making
of the payment referred to below), the Company
shall pay the Executive in cash, not later than the
tenth day following the date of termination, an
aggregate amount equal to the product of (A) the
difference (to the extent that such difference is a
positive number) obtained by subtracting the per
share exercise price of each stock based incentive
held by the Executive, whether or not then fully
exercisable, from the higher of (x) the market
price per share or (y) the highest price per share
actually paid in connection with any Change of
Control, and (B) the number of shares covered by
each such stock based incentive.
(iii) If the Company's group health insurance plan
is fully insured as of the date of termination
and thereafter, the Company shall allow the
Executive to continue participation in the
Company's group health insurance plan at the
Company's expense until he has obtained other
employment, but in any event not longer than
the end of the Employment Term. If the
Company's group health insurance plan is self-insured
as of the date of termination, or becomes self-insured
after the date of termination, (x) then until the first
to occur of the expiration of COBRA Continuation
Coverage (currently 18 months) or the
Executive obtaining other employment, the
Company shall allow the Executive to continue
participation in the Company's group health
insurance plan at the Company's expense and
(y) if the Executive has not obtained other
employment after the expiration of 18 months
from the date of termination, then until the
first to occur of the Executive obtaining
other employment or the end of the Employment
Term, the Company shall pay the cost of an
individual health insurance policy for the
Executive with the same or better coverage as
provided under the Company's group health
insurance plan as of the date of termination.
(iv) The Executive shall be entitled to continue to
participate under the Disability Insurance Plan and
the Life Insurance Plan until he has obtained other
employment, but in any event not longer than the
end of the Employment Term.
The amounts to be paid to the Executive pursuant to
clauses (i) and (ii) above shall be referred to herein as
the "Severance Payments."
(f) CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. If Severance
Payments pursuant to Section 9(e) of this Agreement
become subject to the excise tax (the "Excise Tax")
imposed under Section 4999 of the Internal Revenue Code
of 1986, as amended ("Code"), the Company shall pay to
the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the
Severance Payments (and any federal, state and local
income tax and Excise Tax upon the payment provided for
by this Section 9(f)), shall be equal to the Severance
Payments.
(i) For purposes of determining whether any of the
Severance Payments will be subject to the Excise
Tax and the amount of such Excise Tax, (A) any
other payment or benefit received or to be received
by the Executive in connection with a Change of
Control and the subsequent termination of the
Executive's employment (whether such termination is
pursuant to the terms of this Agreement
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or any other plan, arrangement or agreement with the
Company, with any other person whose actions
resulted in the Change of Control or with any
person affiliated with the Company or such other
person) shall be treated as a "parachute payment"
within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in
the opinion of tax counsel selected by the
Company's independent auditors and reasonably
acceptable to the Executive such other payments or
benefits (in whole or in part) do not constitute
parachute payments (including by reason of Section
280G(b)(4)(A) of the Code) or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered (within
the meaning of Section 280G(b)(4)(B) of the Code)
in excess of the "base amount" (as determined
according to Section 280G(b)(3) of the Code, any
final or temporary regulations promulgated under
Section 280G of the Code and any interpretations
thereof by the Internal Revenue Service) allocable
to such reasonable compensation, or are otherwise
not subject to the Excise Tax, (B) the amount of
the Severance Payments which shall be treated as
subject to the Excise Tax shall be equal to the
lesser of (1) the total amount of the Severance
Payments and (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1)
of the Code (after applying clause (A) above), and
(C) the value of any non-cash benefit, deferred
payment or other benefit shall be determined by the
Company's independent auditors in accordance with
the principles of Sections 280G(d)(3) and (4) of
the Code.
(ii) For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest
marginal rate of taxation in the state and locality
of the Executive's residence on the date of
termination, net of the maximum reduction in
federal income taxes which could be obtained from
deduction of such state and local taxes. If the
Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the
time of the Executive's termination of employment,
the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise
Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction
(plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state
and local income tax imposed on the Gross-Up
Payment being repaid by the Executive to the extent
that such repayment results in a reduction in
Excise Tax and/or a federal, state or local income
tax deduction) plus interest on the amount of such
repayment at the rate provided in Section
1274(b)(2)(B) of the Code. If the Excise Tax is
determined to exceed the amount taken into account
hereunder at the time of the termination of the
Executive's employment (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any
interest, penalties or additions payable by the
Executive with respect to such excess) at the time
that the amount of such excess is finally
determined. The Executive and the Company shall
each reasonably cooperate with the other in
connection with any administrative or judicial
proceedings concerning the
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existence or amount of liability for Excise Tax with respect
to the Severance Payments.
(g) TIME FOR PAYMENT. Except as otherwise provided in this
Section 9, the Company shall pay (a) any Base Salary due
to the Executive or his heirs or legal representatives
under this Section 9 on the Company's regularly scheduled
paydays and (b) any Annual Incentive Compensation
payments due to the Executive or his heirs or legal
representatives under this Section 9 within 30 days from
the date of termination.
10. ADDITIONAL OBLIGATIONS OF THE EXECUTIVE DURING AND AFTER
EMPLOYMENT.
(a) CONFIDENTIAL INFORMATION; RECORDS. The Executive
recognizes that the Executive's retention by the Company
is one of the highest trust and confidence by reason of
the Executive's access to and contact with certain trade
secrets, confidential business practices and proprietary
information of the Company (collectively, "Trade
Secrets"). The Executive shall use his best efforts and
exercise utmost diligence to protect and safeguard the
Trade Secrets. Except as may be required by the Company
in connection with this Agreement, or with the prior
written consent of the Company, the Executive shall not,
either during the term of his employment or thereafter,
directly or indirectly, use for the Executive's own
benefit or for the benefit of another, or disclose,
disseminate or distribute to another, any of the Trade
Secrets (whether or not acquired, learned, obtained or
developed by the Executive alone or in conjunction with
another) of the Company or of any other person with whom
the Company has a business relationship. All memoranda,
notes, records, drawings, documents or other writings
whatsoever made, compiled, acquired or received by the
Executive during the term of his employment arising out
of, in connection with or related to any activity or
business of the Company (other than records and personal
notes received or prepared by Executive in his capacity
as a director of the Company) are and shall continue to
be the sole and exclusive property of the Company, and
shall, together with all copies thereof, be delivered to
the Company by the Executive immediately when the
Executive ceases to be employed by the Company, or at any
other time upon the Company's demand.
(b) NONCOMPETITION AGREEMENT. The Executive acknowledges and
agrees that as a result of his employment with the
Company, including, without limitation, the experience he
has gained and will gain therefrom and the information he
has acquired and will acquire regarding the Trade
Secrets, he will be able to injure the Company if he
should engage in a business that is competitive with the
business conducted or to be conducted by the Company.
For these reasons, the Executive hereby agrees as
follows:
(i) Without the prior written consent of the Company,
the Executive shall not, during his period of
employment with the Company, directly or
indirectly, either as an individual, a partner or a
joint venturer, or in any other capacity,
(A) invest (other than investments in
publicly-owned companies which constitute not more
than 1% of the voting securities of any such
company) or engage in any business that is
competitive with that of the Company or its
affiliates, (B) accept employment with or render
services to a competitor of the Company or any of
its affiliates as a director, officer, agent,
employee or consultant, (C) contact, solicit, or
attempt to solicit or accept business from any
(1) customers of the Company or its affiliates or
(2) person or entity whose business the Company or
its affiliates is
10
soliciting, (D) contact, solicit or attempt to solicit
or accept or direct business that is competitive with
such business being conducted by the Company or any of
its affiliates during the Executive's employment under this
Agreement from any of the customers of the Company
or any of its affiliates or (E) take any action
inconsistent with the fiduciary relationship of an
employee to his employer. For purposes of this
Section 10, a "competitor" specifically includes
persons, firms, sole proprietorships, partnerships,
companies, corporations or other entities that
market products and/or perform services in direct
or indirect competition with the products marketed
and/or services performed by the Company or its
affiliates anywhere in the world. Without limiting
the generality of the foregoing, the Company's
products and services include, but are not limited
to, professional and architectural lighting, sound
reinforcement, stages and stage sets, design and
production management and other similar products
and services for concert touring, theatre,
television and film, corporate events and
conventions, commercial buildings and similar
markets. As used in this Section 10, "affiliates"
shall mean persons or entities that directly, or
indirectly through one or more intermediaries,
control or are controlled by, or are under common
control with, the Company.
(ii) Upon termination of the Executive's employment with
the Company for any reason, and for a period of two
years thereafter, the Executive shall not, directly
or indirectly, either as an individual, a partner
or a joint venturer, or in any other capacity, in
any geographic market in which the Company or any
of its affiliates is doing business on the date of
termination (A) invest (other than investments in
publicly-owned companies which constitute not more
than 1% of the voting securities of any such
company) or engage in any business that is
competitive with that of the Company or its
affiliates, (B) accept employment with or render
services to a competitor of the Company or its
affiliates as a director, officer, agent, employee
or consultant, (C) contact, solicit or attempt to
solicit or accept business from any party (1) who,
on the date of termination of the Executive's
employment or within one year prior thereto, was a
customer of the Company or its affiliates, or
(2) to whom the Company or any of its affiliates
has made, or from whom the Company or any of its
affiliates has received, a written sales proposal
within six months prior to such date of termination
or (D) hire or solicit or in any manner attempt to
influence or induce any employee of the Company or
its affiliates to leave the employment of the
Company or its affiliates, or use or disclose to
any person, partnership, association, corporation
or other entity any information obtained while an
employee of the Company concerning the names and
addresses of employees of the Company or its
affiliates. Notwithstanding the foregoing, if the
Executive's employment terminates for any reason
and the Company fails to perform timely its
obligations under Section 9 of this Agreement, the
Executive's obligations under this Section 10(b)
shall permanently terminate; provided, however,
that the Company shall not thereby be released of
its obligations under this Agreement, including,
without limitation, its payment obligations under
Section 9.
(c) ACKNOWLEDGEMENTS. The Executive acknowledges and
recognizes that the enforcement of any of the
nondisclosure and noncompetition provisions in Section 10
of this Agreement by the Company will not interfere with
the Executive's ability to pursue a proper livelihood.
The Executive further represents that he is capable of
pursuing a career
11
in other industries to earn a proper livelihood. The
Executive recognizes and agrees that the enforcement of
this Agreement is necessary to ensure the preservation
and continuity of the business and goodwill of the Company.
The Executive agrees that due to the nature of the Company's
business, the noncompetition restrictions set forth in this
Agreement are reasonable as to time and geographic area.
At any time during the Executive's employment with the Company
and for a period of two years thereafter, the Company may
request the Executive to supply such information as the Company
deems necessary to ascertain whether or not the Executive has
complied with, or has violated, the restrictive covenants
of Section 10 of this Agreement. The Executive shall
furnish the requested information to the Company within
ten days following the receipt of such request.
(d) REMEDIES. The Executive recognizes and acknowledges that
the ascertainment of damages in the event of his breach
of any provision of this Section 10 would be difficult,
and the Executive agrees that the Company, in addition to
all other remedies it may have, shall have the right to
specific performance or injunctive relief to enforce its
terms if there is such a breach, without any requirement
to post bond or other security.
(e) Notwithstanding anything to the contrary in this
Agreement, the provisions of this Section 10 shall
survive any termination of the Executive's employment
under this Agreement.
11. 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 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 Company: Vari-Lite Holdings, Inc.
000 Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to Executive: X. X. Xxxxxxxx III
5146 Kelsey
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
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.
12. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement (including, without limitation,
whether termination has been for "Cause" pursuant to Section
9(c)) shall be settled by binding arbitration. Any such
arbitration proceedings shall be conducted as follows:
(a) 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
12
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.
(b) The arbitration shall follow the Employment Arbitration
Rules 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.
(c) 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.
(d) 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 Executive shall
promptly comply with the terms of such award, and a
judgment by a court of competent jurisdiction may be
entered in accordance therewith.
(e) 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.
(f) The Company and the Executive 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. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT. This Agreement replaces and supersedes
any and all other agreements, either oral or written,
between the parties hereto with respect to the subject
matter hereof and constitutes the entire understanding of
the parties.
(b) COSTS. If any action at law or in equity is necessary to
enforce or interpret the terms 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.
(c) SUCCESSORS AND ASSIGNS.
(i) This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Executive and
the Executives legal representatives. This
Agreement is personal to the Executive and without
the prior written consent of the Company shall not
be assignable by the Executive otherwise than by
will or the laws of descent and distribution.
13
(ii) 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.
(iii) 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.
(d) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Texas. 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.
(e) AMENDMENT. This Agreement may be amended, or a new
agreement substituted, at any time and from time to time
only by a written instrument duly authorized and executed
by the Company and the Executive.
(f) 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.
(g) 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
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. In addition, however, the Executive agrees
that the provisions of Section 10 of this Agreement each
constitute separate agreements independently supported by
good and adequate consideration and shall be severable
from the other provisions of, and shall survive, this
Agreement. The existence of any claim or cause of action
of the Executive against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of the
covenants and agreements of the Executive contained in
Section 10.
(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]
14
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written.
COMPANY:
Vari-Lite Holdings, Inc.
By:/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
Vice President-Finance
EXECUTIVE:
/s/ X. X. Xxxxxxxx III
---------------------------------------
X. X. Xxxxxxxx III
15
