DEFERRED COMPENSATION AGREEMENT
BETWEEN
VARI-LITE HOLDINGS, INC.
AND
XXXX X. XXXXXX
This Deferred Compensation Agreement (the "Agreement"), dated as of July
1, 1995, is by and between Vari-Lite Holdings, Inc. (the "Company") and Xxxx
X. Xxxxxx (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 Xxxxx Xxxxxxx Xxxxxx 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: Xxxx X. Xxxxxx
Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
0000 Xxxxxxx Xxxx
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.
(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/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx
COMPANY:
Vari-Lite Holdings, Inc.
By:/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
Vice President-Finance
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