AMENDMENT NO. 2
TO
FINANCING AGREEMENT

                           This AMENDMENT NO. 2 TO FINANCING AGREEMENT (this
“Amendment”), made as of June 30, 2001, between FIRSTAR BANK, NATIONAL
ASSOCIATION, a national banking association (“Bank”) and VARI-LITE, INC., a
Delaware corporation (“Borrower”),

WITNESSETH:

                           WHEREAS, Borrower and Bank have entered into that
certain Financing Agreement, dated as of December 29, 2000, as amended by that
certain Amendment No. 1 to Financing Agreement, dated as of March 30, 2001 (as
so amended, the “Financing Agreement”), pursuant to which Bank has made certain
loans and financial accommodations available to Borrower; and

                           WHEREAS, Borrower and Bank desire to further amend
the Financing Agreement as hereinafter set forth;

                           NOW, THEREFORE, in consideration of the mutual
promises and agreements contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, Bank
and Borrower agree as follows:

1.  DEFINED TERMS.

                           Each defined term used herein and not otherwise
defined herein has the meaning ascribed to such term in the Financing Agreement.

2.  AMENDMENT TO FINANCING AGREEMENT.

                           The Financing Agreement is amended, effective as of
the date of this Agreement, as follows:

             Amendment to Exhibit J. Exhibit J to the Financing Agreement is
amended in its entirety to read as set forth on Exhibit J attached hereto and by
reference made a part hereof.

3.  REPRESENTATIONS AND WARRANTIES.

                           Borrower represents and warrants to Bank as follows:

             3.1        The Amendment.  This Amendment has been duly and validly
executed by an authorized executive officer of Borrower and constitutes the
legal, valid and binding obligation of Borrower enforceable against Borrower in
accordance with its terms.

             3.2        Financing Agreement.  The Financing Agreement as amended
by this Amendment remains in full force and effect and remains the valid and
binding obligation of Borrower enforceable against Borrower in accordance with
its terms.  Borrower hereby ratifies and confirms the Financing Agreement as
amended by this Amendment.

             3.3        Nonwaiver. Neither the execution, delivery, performance
or effectiveness of this Amendment shall operate nor be deemed to be nor
construed as a waiver (i) of any right, power or remedy of Bank under the
Financing Agreement, nor (ii) of any term, provision, representation, warranty
or covenant contained in the Financing Agreement or any other documentation
executed in connection therewith.  Further, none of the provisions of this
Amendment shall constitute, or be deemed to be or construed as, a waiver of any
Event of Default under the Financing Agreement as amended by this Amendment.

             3.4        Reference to and Effect on the Financing Agreement. 
Upon the effectiveness of this Amendment, each reference in the Financing
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like
import shall mean and be a reference to the Financing Agreement as amended
hereby, and each reference to the Financing Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the
Financing Agreement shall mean and be a reference to the Financing Agreement as
amended hereby.

             3.5        Claims and Defenses.  As of the date of this Amendment,
Borrower has no defenses, claims, counterclaims or setoffs with respect to the
Financing Agreement or its Obligations thereunder or with respect to any actions
of the Bank or any of its officers, directors, shareholders, employees, agents
or attorneys, and Borrower irrevocably and absolutely waives any such defenses,
claims, counterclaims and setoffs and releases the Bank and each of its
officers, directors, shareholders, employees, agents and attorneys from the
same.

4.  CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AMENDMENT NO. 2.

             In addition to all of the other conditions and agreements set forth
herein, the effectiveness of this Amendment is subject to the each of the
following conditions precedent:

             4.1        Amendment No. 2 to Financing Agreement.  Bank shall have
received an original counterpart of this Amendment No. 2 to Financing Agreement,
executed and delivered by a duly authorized officer of Borrower.

             4.2        Acknowledgment of Guarantor.  Bank shall have received
an original of the attached Acknowledgment of Vari-Lite International, Inc., a
Delaware corporation, executed and delivered by a duly authorized officer of
Vari-Lite International, Inc..

             4.3        No Material Adverse Change.  There shall have occurred
no material and adverse change in the Borrower’s assets, liabilities or
financial condition since the date of the last Financials delivered by Borrower
to Bank nor shall there have been any material damage to or loss of any of
Borrower’s assets or properties since such date.

             4.4        Amendment Fee.  Borrower shall have paid Bank an
amendment fee in an amount of Twenty Thousand Dollars ($20,000.00).

5.  SECTION   MISCELLANEOUS.

             5.1        Governing Law.  This Amendment has been delivered and
accepted at and shall be deemed to have been made at Cleveland, Ohio.  This
Amendment shall be interpreted and the rights and liabilities of the parties
hereto determined in accordance with the laws of the State of Ohio, without
regard to principles of conflict of law, and all other laws of mandatory
application.

             5.2        Severability.  Each provision of this Amendment shall be
interpreted in such manner as to be valid under applicable law, but if any
provision hereof shall be invalid under applicable law, such provision shall be
ineffective to the extent of such invalidity, without invalidating the remainder
of such provision or the remaining provisions hereof.

             5.3        Counterparts.  This Amendment may be executed in one or
more counterparts, each of which, when taken together, shall constitute but one
and the same agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

                           IN WITNESS WHEREOF, Borrower has caused this
Amendment No. 2 to Financing Agreement to be duly executed and delivered by its
duly authorized officer as of the date first above written.

Signed and acknowledged VARI-LITE, INC. in the presence of:      
_________________________ By:___________________________
Name:____________________     Its:__________________________
_________________________   Name:____________________      

 

STATE OF )   ) ss: COUNTY OF )

 

             The foregoing instrument was acknowledged before me this ___ day of
August, 2001, by _______________, the ___________________ of Vari-Lite, Inc., a
Delaware corporation, on behalf of the corporation.

 

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  Notary Public         Accepted at Cleveland, Ohio,   Effective as of June 30,
2001.       FIRSTAR BANK, NATIONAL ASSOCIATION       By:      

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  Its:      

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                                                                  ACKNOWLEDGMENT
OF GUARANTOR

                           The undersigned, Vari-Lite International, Inc., a
Delaware corporation, having guaranteed all of the obligations of Vari-Lite,
Inc. to Firstar Bank, National Association (“Bank”), hereby acknowledges and
agrees, effective as of June 30, 2001, to the terms of the foregoing Amendment
No. 2 to Financing Agreement.  The undersigned represents and warrants to Bank
that the Guaranty executed and delivered by the undersigned to Bank, dated as of
December 29, 2000, remains the valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms.

  VARI-LITE INTERNATIONAL, INC.   By:    

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Its:    

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  STATE OF        

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)               )ss:   COUNTY OF        

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)  

                           The foregoing instrument was acknowledged before me
this ___ day of August, 2001, by ___________________, the ________________ of
VARI-LITE INTERNATIONAL, INC., a Delaware corporation, on behalf of the company.

         

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    Notary Public

 

Exhibit J
Financial Covenants

Financial Covenants.  Borrower agrees that it shall:

(A) Net Capital Expenditures.  Not make nor permit International to make  Net
Capital Expenditures in an aggregate amount exceeding $9,000,000 for any fiscal
year.     (B) Earnings Before Interest, Taxes, Depreciation and Amortization. 
Not permit International’s Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") to be less than the following amounts for the following
periods:

 

EBIDTA   Period

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$ 2,931,000   10/01/00 - 12/31/00 $ 6,234,000   10/01/00 - 03/31/01 $ 7,460,000
  10/01/00 - 06/30/01 $ 9,491,000   10/01/00 - 09/30/01 $ 16,123,000   01/01/01
- 12/31/01 $ 16,272,000   04/01/01 - 03/31/02 $ 15,834,000   07/01/01 - 06/30/02
$ 15,447,000   10/01/01 - 09/30/02 $ 16,314,000   01/01/02 - 12/31/02 $
16,882,000   04/01/02 - 03/31/03 $ 17,385,000   07/01/02 - 06/30/03 $ 18,123,000
  10/01/02 - 09/30/03      

(C)        Net Worth.  Not permit International’s Net Worth to be less than the
following amounts as of the following dates:

Net Date   Period

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$ 45,000,000   12/31/00 $ 45,000,000   03/31/01 $ 45,000,000   06/30/01 $
44,600,000   09/30/01 $ 46,000,000   12/31/01 $ 46,000,000   03/31/02 $
46,000,000   06/30/02 $ 46,000,000   09/30/02 $ 47,750,000   12/31/02 $
47,750,000   03/31/03 $ 47,750,000   06/30/03 $ 47,750,000   09/30/03

(D)        Maximum Debt.  Not permit International’s Total Funded Indebtedness
to exceed the following amounts at any time during the following periods:

Total Funded Indebtedness   Period

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$ 29,000,000   01/01/01 - 06/30/01 $ 27,000,000   07/01/01 - 09/30/01 $
25,000,000   10/01/01 - 12/31/01 $ 25,000,000   01/01/02 - 03/31/02 $ 25,000,000
  04/01/02 - 06/30/02 $ 25,000,000   07/01/02 - 09/30/02 $ 25,000,000   10/01/02
- 12/31/02 $ 27,000,000   01/01/03 - 03/31/03 $ 27,000,000   04/01/03 - 06/30/03
$ 27,000,000   07/01/03 - 09/30/03 $ 27,000,000   at any time thereafter

 

(E)        Leverage Ratio.  Not permit International’s Leverage Ratio to exceed
the following ratios as of the following dates:

Leverage Ratio Date

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4.65 to 1 03/31/01 3.23 to 1 06/30/01 2.56 to 1 09/30/01 2.25 to 1 12/31/01 2.25
to 1 03/31/02 2.00 to 1 06/30/02 2.00 to 1 09/30/02 1.80 to 1 12/31/02 1.75 to 1
03/31/03 1.65 to 1 06/30/03 1.65 to 1 09/30/03    

(F)        Total Debt Service Ratio.  Not permit International’s Total Debt
Service Ratio to be less than the following ratios as of the following dates:

Total Debt Service Ratio   Date

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0.61 to 1   09/30/01 1.10 to 1   12/31/01 1.10 to 1   03/31/02 1.10 to 1  
06/30/02 1.10 to 1   09/30/02 1.20 to 1   12/31/02 1.20 to 1   03/31/03 1.20 to
1   06/30/03 1.20 to 1   09/30/03      

II.          Definitions

  (A) The term "Net Capital Expenditures" for purposes of this Exhibit J shall
mean the sum of  (a) International’s consolidated capital expenditures
(including, but not by way of limitation, expenditures for fixed assets or
leases capitalized or required to be capitalized on International’s consolidated
books by purchase, lease-purchase agreement, option or otherwise), minus 
(b) the net book value of capital assets previously sold and replaced by such
capital expenditures.         (B) The term "Earnings Before Interest, Taxes,
Depreciation, and Amortization" or "EBITDA"for purposes of this Exhibit J shall
mean International’s consolidated earnings from operations before income taxes
and interest income or expense plus depreciation, plus amortization of all
non-cash charges, all as determined in accordance with generally accepted
accounting principles, and shall not include any gains or losses from the sale
of assets outside the normal course of business or any other extraordinary
accounting adjustments or non-recurring items of income or loss.         (C) The
term "Net Worth" for purposes of this Exhibit J shall mean the total of
International’s consolidated shareholders equity, as determined in accordance
with generally accepted accounting principles, consistently applied.         (D)
The term "Total Funded Indebtedness" for purposes of this Exhibit J shall have
the meaning and be determined in accordance with generally accepted accounting
principles consistently applied by International on a consolidated basis in
accordance with past practices.

  (E) The term "Leverage Ratio" for purposes of this Exhibit J shall mean:      
    1.          As of 03/31/01,  the ratio of Total Funded Indebtedness as of
such date to EBITDA as measured from 10/01/00 to 03/31/01;           2.         
As of 06/30/01, the ratio of Total Funded Indebtedness as of such date to EBITDA
as measured from 10/01/00 to 06/30/01;           3.          As of 09/30/01, the
ratio of Total Funded Indebtedness as of such date to EBITDA as measured from
10/01/00 to 09/30/01; and           4.          As of 12/31/01 and as of the
last day of any fiscal quarter thereafter, the ratio of Total Funded
Indebtedness as of such date to EBITDA as measured on a four quarter trailing
basis.         (F) The term “Unfunded Capital Expenditure Payments” for purposes
of this Exhibit J shall mean the amount of consolidated capital expenditures of
International which are not financed under the CapEx Facility nor any other
financing arrangement with any other person.         (G) The term "Total Debt
Service Ratio" for purposes of this Exhibit J shall mean:           1.         
For the period commencing on the 07/01/01 and ending on 09/30/01, the ratio of
(a) EBITDA as measured from 01/01/01 to 09/30/01 to (b) the sum of  (i) the
total consolidated and regularly scheduled principal and interest payments of
Total Funded Indebtedness for the period 01/01/01 to 09/30/01,  plus  (ii)
Unfunded Capital Expenditure Payments for the period 01/01/01 to 09/30/01, minus
(iii) the US $1,000,000 Japanese principal payment paid by Vari-Lite Asia, Inc.
in March, 2001;           2.          For the period commencing on the 10/01/01
and ending on 12/31/01, the ratio of (a) EBITDA as measured on a four quarter
trailing basis to (b) the sum of  (i) the total consolidated and regularly
scheduled principal and interest payments of Total Funded Indebtedness for such
four quarter trailing period,  plus (ii) Unfunded Capital Expenditure Payments
for such four quarter trailing period,  minus  (iii) the US $1,000,000 Japanese
principal payment paid by Vari-Lite Asia, Inc. in March, 2001, plus (iv) the
amount of taxes paid by International on a consolidated basis during such four
quarter trailing period, minus (v) the amount of Japanese taxes paid by
Vari-Lite Asia, Inc. in February, 2001; and           3.          For all
periods after 12/31/01, the ratio of (a) EBITDA as measured on a four quarter
trailing basis to (b) the sum of  (i) the total consolidated and regularly
scheduled principal and interest payments of Total Funded Indebtedness for such
four quarter trailing period,  plus (ii) Unfunded Capital Expenditure Payments
for such four quarter trailing period, plus (iii) the amount of taxes paid by
International on a consolidated basis during such four quarter trailing period.