<PAGE>

                                                                 EXECUTION COPY


                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT (this "Agreement") between FIRSTAR BANK,
NATIONAL ASSOCIATION, a national banking association ("Bank"), and VARI-LITE,
INC., a Delaware corporation ("Borrower"), is as follows:

         1.   Definitions. Whenever the following terms are used herein, they
shall be defined as follows:

              (A)  Any capitalized term not defined herein shall have the
meaning ascribed thereto in the Financing Agreement of even date herewith
among Borrower and Bank, (as the same may hereafter be amended, supplemented,
amended and restated, renewed or otherwise modified from time to time the
"Financing Agreement"), unless the context requires otherwise.

              (B)  "Account", "Chattel Paper", "Deposit Account", "Document",
"General Intangible", "Goods", "Instrument", and "Proceeds", have the
meanings as set forth in Ohio Revised Code Sections 1309.01-1309.50
inclusive, including any amendments thereof and any substitutions therefor,
which definitions are hereby incorporated by reference as though fully
rewritten herein.

              (C)  "Account Debtor" means the Person who is obligated on a
Receivable.

              (D)  "Receivables" means:

                   (1)   any account receivable, Account, Chattel Paper,
                         Document, or Instrument owned, acquired, or received
                         by a Person,

                  (2)    any other indebtedness owed to or receivable owned,
                         acquired, or received by a Person of whatever kind
                         and however evidenced, and

                  (3)    any right, title, and interest in a Person's Goods
                         which were sold, leased, or furnished by that Person
                         and gave rise to either (a) or (b) above, or both of
                         them. This includes, without limitation,

                         (a)   any rights of stoppage in transit of a Person's
                               sold, leased, or furnished Goods,

                         (b)   any rights to reclaim a Person's sold, leased,
                               or furnished Goods, and

<PAGE>

                         (c)   any rights a Person has in such sold, leased,
                               or furnished Goods that have been returned to or
                               repossessed by that Person, and

              (4)  any and all Related Property.

              (E)  "Receivable Collection Account" means a commercial
Deposit Account which may be maintained by Borrower with Bank in the name of
the Bank, without liability by Bank to pay interest thereon, from which account
Bank shall have the exclusive right to withdraw funds until all Obligations
are paid, performed, and observed in full.

              (F)  "Cash Security" means all cash, Instruments, Deposit
Accounts, and other cash equivalents, whether matured or unmatured, whether
collected or in the process of collection, upon which Company presently has
or may hereafter have any claim, that are presently or may hereafter be existing
or maintained with, issued by, drawn upon, or in the possession of Bank.

              (G)  "Collateral" shall mean (i) all of Borrower's "Accounts",
"Chattel Paper", "Deposit Accounts", "Documents", "Equipment", "General
Intangibles", "Instruments", "Inventory", "Cash Security", "Investment
Property", "Receivables" and "Proceeds" (all as defined herein); (ii) all
proceeds including, without limitation, proceeds of any insurance policies,
and all products of all of Borrower's Equipment, Cash Security, Accounts,
Chattel Paper, Deposit Accounts, Documents, General Intangibles, Instruments,
Inventory, Investment Property and Receivables; (iii) all of Borrower's books
and records related to any of the foregoing; (iv) all of Borrower's rights,
title and interest in and to all cash, bank accounts, deposits and similar
sums, whether maintained with Bank, an Affiliate of Bank or any other entity;
and (v) all of the foregoing, whether now owned or existing or hereafter
acquired or arising, or in which Borrower now has or hereafter acquires any
rights; PROVIDED, HOWEVER, Collateral shall not include any assets of the
Borrower which are subject to purchase money liens permitted pursuant to
Section 10.11 and Section 10.12 of the Financing Agreement.

              (H)  "Equipment" shall mean all of Borrower's now owned and
hereafter acquired equipment and fixtures, including, without limitation,
tangible personal property not otherwise described herein, furniture, machinery,
vehicles (including, but not by way of limitation, the vehicles identified on
EXHIBIT A attached hereto), computers and associated hardware and equipment
and trade fixtures, together with any and all attachments, accessions, parts
and appurtenances thereto, substitutions therefor and replacements thereof.

              (I)  "Event of Default" shall mean any of the events listed in
PARAGRAPH 9 of this Agreement.

              (J)  "General Intangibles" shall mean all general intangibles as
set forth in Ohio Revised Code Sections 1309.01-1309.50, including, but not
limited to, all choses in action, causes of action and all other intangible
personal property of Borrower of every kind and nature (other than
Receivables), now owned and hereafter acquired, including, without
limitation, corporate or other business records, inventions, designs,
patents, patent applications, service marks, service mark applications,
service names, trademarks, trademark applications,

                                       2
<PAGE>


trade names, trade secrets, goodwill, registrations, copyrights, all
intellectual property used by Borrower in the operation of computers and
associated hardware and other equipment, licenses, franchises, customer
lists, tax refunds, tax refund claims, pension plan refunds and reversions,
rights and claims against carriers and shippers, rights to indemnification,
mineral rights, and possessory and revisionary interests in and rights to
Inventory, Goods and Equipment.

              (K)  "Inventory" shall mean and include all of Borrower's now
owned and hereafter acquired inventory, Rental Inventory, goods, merchandise
and other personal property furnished under any contract of service or
intended for sale, rental or lease, including, without limitation, all farm
products, all product and sales catalogs and literature, raw materials,
minerals, work-in-process, finished goods and materials and supplies of any
kind, nature or description which are used or consumed in Borrower's business
or are or might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or finishing of such Goods, merchandise and other
personal property and all documents of title or documents representing the same.

              (L)  "Investment Property" shall mean "investment property" as
defined in the Uniform Commercial Code as adopted in the State of Ohio.

              (M)  "Related Property" means with respect to any Receivable:
(a) all of the Borrower's right, title and interest in and to all Contracts,
purchase orders, agreements for lease or other agreements or documents that
evidence, secure or otherwise relate to such Receivable; (b) all of the
Borrower's interest in the merchandise (including returned merchandise), if
any, relating to the sale or lease which gave rise to such Receivable; (c)
all liens from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise, and
all property subject to such liens; (d) all UCC financing statements covering
any collateral securing payment of such Receivable (to the extent of the
interest of the purchaser or lessee in the related Receivable); (e) all
guarantees and other agreements or arrangements of whatever character from
time to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise; (f) all
books and records evidencing or otherwise relating to any Receivables or any
of the foregoing; (g) all collections with respect to, and other proceeds of,
such Receivables and any of the property described above and (h) all of
Borrower's rights, title and interest (but not obligations) arising under any
agreement for sale or lease.

              (N)  "Rental Inventory" shall mean all of Borrower's now owned or
hereafter acquired Inventory which is leased or available for lease by Borrower
to other Persons in the ordinary course of Borrower's business and is identified
as "fixed assets" under GAAP on the balance sheet of Borrower.

              (O)  Any accounting terms used in this Agreement which are not
specifically  defined shall have the meanings customarily given them in
accordance with generally accepted accounting principles. All other terms
contained in this Agreement shall, unless the context indicates otherwise, have
the meanings provided for by the applicable state's version of the Uniform
Commercial Code (the "Code") to the extent the same are defined therein.


                                       3
<PAGE>


         2.   GRANT OF SECURITY; SET-OFF AND RELATED MATTERS. As security for
the Obligations, Borrower hereby grants, pledges and assigns to Bank a
security interest in all of the Collateral. All moneys, securities and other
properties of Borrower and the proceeds thereof now or hereafter held or
received by Bank from or for the account of Borrower, including any and all
deposits (general or special), account balances and credits of Borrower with
Bank at any time existing, shall be deemed Collateral hereunder and held as
security for the Obligations and may be set-off and applied against any
Obligations, and Borrower further authorizes Bank's Affiliates to pay or
deliver to Bank any deposits or other sums credited by or due from Bank's
Affiliates to Borrower for application against any Obligation, at any time
upon the occurrence of any Event of Default and without further notice to
Borrower (such notice being expressly waived) and without any necessity on
Bank's part to resort to other security or sources of reimbursement for the
Obligations. The rights given to Bank hereunder are cumulative with Bank's
other rights and remedies, including other rights of set-off. Bank will
promptly notify Borrower of Bank's receipt of such funds for application
against the Obligations, but failure to do so will not affect the validity or
enforceability thereof. Bank may give notice of the above grant of security
interest and assignment of the aforesaid deposits and other sums, and
authorization to, and make any suitable arrangements with, any such Affiliate
of Bank for effectuation thereof, and Borrower hereby irrevocably appoints
Bank as its attorney to collect any and all such deposits or other sums to
the extent any such payment is not made to Bank by such Affiliate.

         3.   PERFECTION AND PROTECTION OF SECURITY INTEREST; DUTY OF CARE.

              (A)  Until all Obligations have been fully and irrevocably
satisfied and the Financing Agreement has been terminated, this Agreement and
Bank's security interest in the Collateral, and all proceeds and products
thereof, shall continue in full force and effect. Until the termination of
this Agreement, Borrower shall not permit any lien, claim or encumbrance
(other than Permitted Liens and those set forth on the date hereof in
SCHEDULE 3 to the Financing Agreement) to remain against any of the
Collateral and Borrower shall perform any and all steps requested by Bank to
create, perfect, maintain and protect Bank's security interest in the
Collateral, including, without limitation, executing and filing financing and
continuation statements in form and substance satisfactory to Bank,
maintaining a perpetual inventory and complete and accurate stock records,
delivering to Bank warehouse receipts covering that portion of the Collateral
located in warehouses and for which warehouse receipts are issued,
transferring Inventory to warehouses approved by Bank placing notations on
Borrower's books of account and on Chattel Paper held by Borrower to disclose
Bank's security interest therein, taking such other steps as deemed necessary
by Bank to protect Bank's interest in the Inventory and delivering to Bank
all letters of credit on which Borrower is named as a beneficiary. Bank may
file one or more financing statements disclosing Bank's security interest
under this Agreement without Borrower's signature appearing thereon and
Borrower shall pay the costs of, or incidental to, any recording or filing of
any financing statements concerning the Collateral.  Borrower agrees that
a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement. If any
Equipment or Inventory is in the possession or control of any warehouseman or
any of Borrower's agents or processors, Borrower shall notify such
warehousemen, agents or processors of Bank's security interest therein and
upon Bank's request, instruct them to hold all such Equipment and Inventory
for Bank's account and subject to Bank's instructions. Borrower shall pay or
cause to be paid all taxes, assessments and governmental charges levied or
assessed or imposed upon or with respect


                                       4
<PAGE>


to the Collateral or any part thereof; PROVIDED, HOWEVER, that no such taxes,
assessments or governmental charges need be paid during such period as they
are being contested in good faith by Borrower, in appropriate proceedings
promptly commenced and diligently prosecuted, if adequate reserves in
accordance with generally accepted accounting principles have been set aside
on Borrower's books, and the continuance of such contest shall neither result
in any part of the Collateral or any other property of Borrower being made
the subject of any proceeding in foreclosure, or of any levy or execution,
which shall not have been stayed or dismissed, or the subject of any seizure
or other loss nor prevent Bank from acquiring and/or maintaining a perfected
first priority security interest in the Collateral after the Closing Date or
with respect to future advances under the Financing Agreement; and PROVIDED,
FURTHER, that Borrower will promptly pay such tax, assessment or charge when
the dispute is finally settled. If Borrower fails to pay such taxes,
assessments and governmental charges, Bank may (but shall not be required to)
pay the same and charge the cost to Borrower's account as part of the
Obligations payable on demand and secured by the Collateral. In order to
protect or perfect the security interest which Bank is granted hereunder,
Bank may, in its sole discretion, discharge any lien or encumbrance or bond
on the Collateral, pay any insurance, maintain guards, pay any service bureau
and obtain any record and charge the same to Borrower's account as an advance
hereunder and part of the Obligations, payable on demand and secured by the
Collateral. Bank may notify Borrower's customers, lessees, or account debtors,
at any time and from time to time, that the Receivables have been assigned to
Bank and of Bank's security interest therein, and if Bank shall desire that
Borrower's customers or account debtors make payment directly to Bank, Bank,
as Borrower's irrevocable attorney-in-fact, shall be entitled to notify such
customers and account debtors to make payments directly to Bank in Bank's
name and to such address as Bank may designate.  Borrower understands and
agrees that Bank has no obligation whatsoever to, but at its sole discretion
may, take any steps to collect any of Borrower's Receivables, and that all
costs of collection and other expenses incurred in connection therewith shall
be charged to Borrower's account.

              (B)  Bank shall have no duty of care with respect to the
Collateral except that Bank shall exercise reasonable care with respect to
the Collateral in Bank's custody, but shall be deemed to have exercised
reasonable care if such property is accorded treatment substantially equal to
that which Bank accords its own property, or if Bank takes such action with
respect to the Collateral as Borrower shall request in writing, but no
failure to comply with any such request nor any omission to do any such act
requested by Borrower shall be deemed a failure to exercise reasonable care,
nor shall Bank's failure to take steps to preserve rights against any parties
or property be deemed to be failure to exercise reasonable care with respect
to the Collateral in Bank's custody.

         4.   BANK AS BORROWER'S ATTORNEY. Borrower hereby appoints Bank, or
any other Person whom Bank may designate, as Borrower's attorney, with power:
to send requests for verification of Receivables to customers, lessees or
account debtors; to sign and endorse Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security in
payment of Receivables or from the sale or lease of Inventory or Equipment or
that may otherwise come into Bank's possession; to sign Borrower's name on
any invoice, lease, Chattel Paper or bill of lading relating to any
Receivable, on drafts against customers, on schedules and assignments of
Receivables, on notices of assignment, financing statements and other public
records, on verifications of accounts and on notices to customers; to


                                       5
<PAGE>


collect, enforce, compromise, settle and adjust all Receivables and take
other actions with respect thereto as Bank determines in its sole discretion;
to give receipts in Borrower's name and to perform such other acts in
connection with the Receivables as Bank in its sole discretion may determine
to be appropriate; to notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Bank,
which may be a post office box opened by Bank for such purpose or any other
address, at Bank's sole discretion; to receive, open and dispose of all mail
addressed to Borrower; and to do all things necessary to perfect Bank's
security interest in the Collateral, to preserve and protect the Collateral
and to otherwise carry out this Agreement; all at the cost of Borrower, and
Borrower hereby ratifies and approves all acts of such attorney other than
any such acts which constitute gross negligence or willful misconduct.
Neither Bank nor the attorney will be liable for any acts or omissions nor
for any error of judgment or mistake of fact or law other than for such acts,
omissions, errors or mistakes that constitute gross negligence or willful
misconduct. This power, being coupled with an interest, is irrevocable until
the Obligations have been fully and irrevocably satisfied and this Agreement
terminated, whichever shall later occur. Borrower agrees to execute and
deliver promptly to Bank all instruments necessary or appropriate, as
determined in Bank's sole discretion, to further Bank's exercise of the
rights and powers granted it in this PARAGRAPH 4.

         5.   EXAMINATION OF COLLATERAL AND RECORDS. Bank shall at all times
thereafter have access to and the right to examine and inspect the Collateral
and all of Borrower's books and records relating thereto.

         6.   WARRANTIES AND REPRESENTATIONS. Borrower warrants and
represents that: (A) Borrower has full power and authority to enter into this
Agreement and to grant Bank the security interest in the Collateral in
accordance herewith, the grant of the security interest in the Collateral by
Borrower in the manner and for the purposes contemplated herein has been duly
authorized by all requisite corporate action, and this Agreement has been
duly executed and delivered; (B) The execution, delivery and/or performance
by Borrower of this Agreement will not (i) constitute a violation of any
applicable law or a breach of any provision contained in Borrower's
Certificate of Incorporation or By-laws or contained in any agreement,
indenture or undertaking or under any order of any court or other
governmental agency or in any agreement, instrument or document to which
Borrower is a party or by which Borrower or any of its assets or properties
is bound or (ii) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of Borrower's assets or
properties (other than in favor of Bank hereunder); (C)(i) The principal
place of business of Borrower and the office where its chief executive
offices and accounting offices are located on the date hereof, is set forth
on EXHIBIT B attached hereto, (ii) the office where Borrower keeps its
records concerning the Receivables and General Intangibles is at the location
set forth on EXHIBIT C attached hereto, (iii) Borrower's registered office in
the Borrower's state of incorporation is at the location set forth on EXHIBIT
D attached hereto, (iv) all of Borrower's Inventory (other than Rental
Inventory which is in the possession of Borrower's customers pursuant to
rental agreements entered into in the normal course of Borrower's business),
Equipment and other tangible Collateral are on the date hereof, at the
locations set forth on EXHIBIT E attached hereto, (v) all other locations of
Borrower's on the date hereof, other offices and places of business during
the five (5) years prior to the date hereof are set forth on EXHIBIT F
attached hereto and (vi) all trade names, assumed names, fictitious names and
other names used by Borrower during the five (5) years prior to the date
hereof are set forth on EXHIBIT G attached hereto; (D) Borrower has executed
UCC financing


                                       6
<PAGE>


statements, containing sufficient legal descriptions of the Collateral and
otherwise in form and substance sufficient for filing in every Filing
Jurisdiction necessary to perfect Bank's security interest in the Collateral,
and Borrower hereby irrevocably authorizes Bank to file the same; and (E)
Borrower has good, indefeasible and merchantable title to and ownership of
the Collateral, free and clear of all liens, claims, security interests and
encumbrances whatsoever, except for Permitted Liens and those set forth on
the date hereof in SCHEDULE 3 to the Financing Agreement.

         7.   COVENANTS. Until the Obligations are fully paid, performed and
satisfied and this Agreement is terminated, Borrower covenants that it shall:
(A) Defend in good faith the Collateral against the claims and demands of all
persons; (B) Advise Bank in writing, at least thirty (30) days prior thereto,
of any change in Borrower's principal place of business, registered office or
other places of business, or the opening of any new places of business, or
any change in Borrower's name or the adoption by Borrower of trade names,
assumed names or fictitious names, and, in such event, Borrower shall promptly
execute and deliver to Bank (and Borrower agrees that Bank may execute and
deliver the same as Borrower's irrevocable  attorney-in-fact) new UCC financing
statements describing the Collateral specified herein and otherwise in form
and substance sufficient for recordation wherever necessary or appropriate,
as determined in Bank's sole discretion, to perfect or continue perfected
Bank's security interest in the Collateral based upon such new places of
business or registered offices or changes in or adoption of names, and Borrower
shall pay all filing and recording fees and taxes in connection with the
filing or recordation of such financing statements and shall immediately
reimburse Bank therefor if Bank pays the same; (C) Notify Bank in writing
within fifteen (15) Business Days of the creation of any Receivables (to the
extent such Receivables constitute Eligible Receivables) with respect to
which the account debtor is the United States of America or any state, city,
county or other governmental authority or any department, agency or
instrumentality of any of them, or any foreign government or instrumentality
thereof or any business which is located in a foreign country; (D) Mark its
books and records of Receivables to indicate the security interest granted to
Bank hereunder; (E) Maintain the Equipment necessary for the operation of
Borrower's business in good operating condition and repair in all material
respects, make all necessary replacements thereof so that the value and
operating efficiency thereof shall at all times be maintained and preserved
in all material respects, and immediately upon demand therefor by Bank,
deliver to Bank any and all evidences of ownership of the Equipment
(including, without limitation, certificates of title and applications for
title); and if Borrower fails to keep and maintain the Equipment in good
operating condition and repair or to make necessary replacements thereof,
Bank may (but shall not be required to) so maintain, repair or replace all or
any part of the Equipment and charge the cost thereof to Borrower's account
as part of the Obligations payable on demand and secured by the Collateral;
(F) Insure the Collateral in Bank's name against loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as Bank
shall specify in amounts and under policies by insurers acceptable to Bank,
and the policies or a certificate thereof signed by the insurer evidencing
that such insurance coverage is in effect for periods of not less than one
(1) year shall be delivered to Bank within five (5) Business Days after the
issuance of the policies to Borrower and after each renewal thereof and all
premiums thereon shall be paid by Borrower monthly in advance; each such
policy shall name Bank (and no other party) as mortgagee under a New York
Standard Mortgage clause or other similar clause acceptable to Bank, shall
contain a lender's loss payable clause acceptable to Bank and shall provide
that such policy may not be amended or canceled without thirty (30) days
prior written notice to Bank; and if Borrower fails to do so, Bank may (but
shall not be required


                                       7
<PAGE>


to) procure such insurance and charge the cost to Borrower's account as part
of the Obligations payable on demand and secured by the Collateral, and other
security for the Obligations; (G) Not permit any part of the Collateral
(except for Inventory in the ordinary course of business) or any of the
records concerning the same to be removed from the locations referred to in
PARAGRAPH 6(C) above or any other location at which any of the same may
hereafter be located and shall not move or change its principal place of
business, registered office or other place of businesses, or open new places
of business, or change its name or adopt trade names, assumed names or
fictitious names, without notification to Bank as provided in PARAGRAPH 7(B)
above; (H) Not permit any of the Equipment to be sold, transferred or
otherwise disposed of or to become a fixture to real property not mortgaged
to Bank or an accession to other personal property not constituting part of
the Collateral except as otherwise permitted under SECTION 10.27 of the
Financing Agreement; and (I) Not, except for Permitted Liens and except as
otherwise provided herein, in the Financing Agreement or in the ordinary
course of Borrower's business, encumber, pledge, mortgage, grant a security
interest in, assign, sell, lease or otherwise dispose of or transfer, whether
by sale, merger, consolidation, liquidation, dissolution or otherwise, any of
the Collateral.

         8.   TERM. This Agreement shall terminate on the later to occur of
(i) the full and irrevocable performance, payment and satisfaction of the
Obligations and (ii) the termination of the Financing Agreement.

         9.   EVENTS OF DEFAULT. The occurrence of any Event of Default under
the Financing Agreement shall constitute an Event of Default hereunder,
PROVIDED, that Borrower's failure to comply with SECTION 7(C) and SECTION
7(F) above shall not constitute an Event of Default unless such failure
continues for twenty (20) consecutive days.

         10.  BANK'S RIGHTS AND REMEDIES.

              (A)  If any Event of Default shall occur, Bank shall have, in
addition to all other rights provided herein, in the Financing Agreement and
the other Loan Documents and available at law and in equity, the rights and
remedies of a secured party under the Code, and further, Bank may, without
notice, demand or legal process of any kind (except as may be required by
law), all of which Borrower waives, at any time or times, take physical
possession of the Collateral and maintain such possession on Borrower's
premises at no cost to Bank, convert raw materials Inventory to work-in-process
Inventory, convert work-in-process Inventory to finished goods Inventory, or
remove the Collateral, or any part thereof, to such other place(s) as Bank
may desire, or Borrower shall, upon Bank's demand, at Borrower's own cost and
expense, assemble the Collateral and make it available to Bank, at a place
convenient to Bank, and Bank may sell and deliver any or all Collateral held
by or for Bank at public or private sale(s), for cash, upon credit or
otherwise, at such prices and upon such terms as Bank deems advisable, at
Bank's sole discretion, and may postpone or adjourn any sale of the
Collateral from time to time by an announcement at the time and place of sale
or by announcement at the time and place of such postponed or adjourned sale,
without being required to give a new notice of sale. Borrower agrees that
Bank has no obligation to preserve rights to the Collateral against prior
parties. Borrower acknowledges that portions of the Collateral could be
difficult to preserve and dispose of and further subject to complex
maintenance and management. Accordingly, Bank shall have the widest possible
latitude to preserve and protect the Collateral and Bank's security interest


                                       8
<PAGE>


therein, and Bank, at its sole option, shall have the unqualified right to
appoint a receiver, without notice or hearing, for the preservation,
possession, protection and disposition of all or part of the Collateral and
the collection and protection for Bank of any proceeds of use or disposition
of the Collateral and to do any other thing and exercise any other right or
remedy which Bank may, with or without judicial process, do or exercise. Any
requirement of reasonable notice shall be met if such notice is mailed
postage prepaid to Borrower at its address as set forth herein at least five
(5) days before the time of sale or other disposition. The proceeds of sale
shall be applied first to all costs and expenses of sale, including
Attorneys' Fees (as defined in the Financing Agreement), and second to the
payment (in whatever order Bank elects) of all Obligations. Bank will return
any excess to Borrower and Borrower shall remain liable to Bank for any
deficiency. Bank's rights and remedies under this Agreement shall be
cumulative and not exclusive of any other right or remedy which Bank may have.

              (B)  Borrower shall pay to Bank, on demand and as part of the
Obligations, all costs and expenses, including court costs, Attorneys' Fees and
costs of sale, incurred by Bank in exercising any of its rights or remedies
hereunder.

         11.  WAIVER; AMENDMENTS; SUCCESSORS AND ASSIGNS.

              (A)  Any and all of Bank's rights with respect to the Collateral
and the security interest granted hereunder shall continue unimpaired,
notwithstanding the release or substitution of any Collateral at any time(s),
or of any rights or interests therein, or any delay, extension of time,
renewal, compromise or other indulgence granted by Bank in reference to any
Obligations, and Borrower hereby waives all notice of any such delay,
extension, release, substitution, renewal, compromise or other indulgence.

              (B)  Failure by Bank to exercise any right, remedy or option
under this Agreement or any present or future supplement hereto or in any
other agreement between Borrower and Bank or delay by Bank in exercising the
same will not operate as a waiver by Bank of its right to exercise any such
right, remedy or option. No waiver by Bank will be effective unless it is in
writing and then only to the extent specifically stated.

              (C)  This Agreement cannot be changed or terminated orally.

              (D)  Bank shall have the right to assign this Agreement.
Borrower may not assign, transfer or otherwise dispose of any of its rights
or obligations hereunder, by operation of law or otherwise, and any such
assignment, transfer or other disposition without Bank's prior written
consent shall be void. All of the rights, privileges, remedies and options
given to Bank hereunder shall inure to the benefit of Bank's successors and
assigns, and all the terms, conditions, covenants, provisions and warranties
of this Agreement shall inure to the benefit of and shall bind the
representatives, successors and assigns of Borrower and Bank, respectively.

         12.  MISCELLANEOUS.

              (A)  Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be


                                       9
<PAGE>


ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

              (B)  This Agreement has been delivered and accepted at and shall
be deemed to have been made at Cleveland, Ohio. This Agreement shall be
interpreted and the rights and liabilities of the parties hereto determined
in accordance with the internal laws of the State of Ohio and all other laws
of mandatory application.

              (C)  AS A SPECIFICALLY BARGAINED INDUCEMENT FOR BANK TO ENTER INTO
THIS AGREEMENT AND TO EXTEND CREDIT TO BORROWER AND ICG, BORROWER AGREES THAT
ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT,
ITS VALIDITY OR PERFORMANCE, AT THE OPTION OF BANK, ITS SUCCESSORS AND ASSIGNS,
AND WITHOUT LIMITATION ON THE ABILITY OF BANK, ITS SUCCESSORS AND ASSIGNS, TO
EXERCISE ALL RIGHTS AS TO THE COLLATERAL, THE PREMISES AND OTHER SECURITY FOR
THE OBLIGATIONS OR TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION
ACTIONS RELATED TO REPAYMENT OF THE OBLIGATIONS, SHALL BE INITIATED AND
PROSECUTED AS TO ALL PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT CLEVELAND,
OHIO. BANK AND BORROWER EACH CONSENTS TO AND SUBMITS TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY COURT SITUATED AT CLEVELAND, OHIO HAVING
JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED MAIL DIRECTED TO BORROWER AND BANK AT THEIR RESPECTIVE ADDRESSES AS
SET FORTH IN SUBPARAGRAPH (H) BELOW OR AS OTHERWISE PROVIDED UNDER THE LAWS OF
THE STATE OF OHIO. BORROWER WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS,
AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.

              (D)  AS A SPECIFICALLY BARGAINED INDUCEMENT FOR BANK TO ENTER
INTO THIS AGREEMENT AND TO EXTEND CREDIT TO BORROWER, BORROWER AND BANK EACH
WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING OUT OF THIS AGREEMENT AND/OR THE CONDUCT OF THE
RELATIONSHIP BETWEEN BANK AND BORROWER.

              (E)  Borrower covenants, warrants and represents to Bank that all
of Borrower's representations and warranties contained in this Agreement are
true at this time, shall survive the execution and delivery hereof and shall
remain true until the Obligations are fully performed, paid and satisfied,
subject to such changes as may not be prohibited hereby or do not constitute
Events of Default hereunder.

              (F)  All of the Obligations shall constitute one loan secured by
Bank's security interest in the Collateral and by all other security interests,
mortgages, liens, claims and encumbrances now and from time to time hereafter
granted by Borrower to Bank. Bank may, in


                                      10
<PAGE>


its sole discretion, (i) exchange, enforce, waive or release any such
security or portion thereof, (ii) apply such security and direct the order or
manner of sale thereof as Bank may, from time to time, determine, and (iii)
settle, compromise, collect or otherwise liquidate any such security in any
manner following the occurrence of any Event of Default without affecting or
impairing its right to take any other further action with respect to any
security or any part thereof.

              (G)  Borrower shall reimburse Bank for all reasonable Attorneys'
Fees and for all costs, fees, expenses and liabilities incurred by Bank or
for which Bank becomes obligated in connection with or arising out of (i) the
negotiation and preparation of this Agreement, any amendment hereof, and any
agreements, documents and instruments in any way relating hereto, (ii) the
enforcement by Bank of any of its rights hereunder, (iii) any transaction
contemplated by this Agreement, (iv) any inspection and/or audit and/or
verification (the "Audit Fees") of the Collateral and/or Borrower (Bank
currently charges Seven Hundred Fifty Dollars ($750) per diem based on an
eight (8) hour day (plus out-of-pocket expenses) per auditor or field
examiner for the services of its auditors or field examiners and a potentially
greater amount if the auditor is not a Bank employee), PROVIDED, HOWEVER,
that unless an Event of Default has occurred or is occurring or Bank in its
reasonable discretion believes or has cause to believe that Borrower has
committed or is committing fraud, the aggregate amount of Audit Fees payable
by Borrower to Bank in each fiscal quarter of Borrower shall not exceed Seven
Thousand Five Hundred Dollars ($7,500.00) and (v) meeting to discuss any
Event of Default and the course of action to be taken in connection therewith;
the foregoing to include, without limitation, all fees for the employment of
professionals, all lien search and title search fees, all filing and recording
fees and all travel expenses. All of the foregoing shall be part of the
Obligations, payable upon demand, and secured by the Collateral.

              (H)  Any notice or notification required, permitted or
contemplated hereunder shall be in writing, shall be addressed to the party
to be notified at the address set forth below or at such other address as
each party may designate for itself from time to time by notice hereunder,
and shall be deemed to have been validly served, given or delivered (i) three
(3) days following deposit in the United States mails, with proper postage
prepaid, or (ii) the next Business Day after such notice was delivered to a
regularly scheduled overnight delivery carrier with delivery fees either
prepaid or an arrangement, satisfactory with such carrier, made for the
payment of such fees, or (iii) upon receipt of notice given by telecopy,
mailgram, telegram, telex or personal delivery:

     To Bank:      Firstar Bank, National Association
                   425 Walnut Street
                   Cincinnati, Ohio 45202
                   Attention: Steven C. Kieffner
                   Telecopy No: (513) 632-2040

     To Borrower:  Vari-Lite, Inc.
                   201 Regal Row
                   Dallas, Texas 75247
                   Attention: Chief Financial Officer
                   Telecopy No: (214) 630-5867


                                      11
<PAGE>


              (I)  Borrower recognizes that, in the event Borrower fails to
perform, observe or discharge any of its obligations or liabilities under
this Agreement, any remedy of law may prove to be inadequate relief to Bank;
therefore, Borrower agrees that Bank, if Bank so requests, shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.




                                      12

<PAGE>




                  IN WITNESS WHEREOF, this Agreement has been duly executed by
Borrower as of the 29th day of December, 2000.



Signed and acknowledged                     VARI-LITE, INC.
in the presence of:


-------------------------           ---------------------------
Name:                               By:  Jerome L. Trojan III
     --------------------           Its:  Vice President-Finance and CFO

-------------------------
Name:
     --------------------








                                       13
<PAGE>



STATE OF OHIO                       )
                                    )  ss:
COUNTY OF CUYAHOGA                  )


                  The foregoing instrument was acknowledged before me this 29th
day of December, 2000, by Jerome L. Trojan III, Vice President-Finance and CFO
of Vari-Lite, Inc., a ________________ corporation, on behalf of the
corporation.



                                                 ------------------------------
                                                 Notary Public


Accepted at Cleveland, Ohio
as of December 29, 2000.

FIRSTAR BANK, NATIONAL ASSOCIATION


By:
   ---------------------------------
   ---------------, ----------------







                                          14

<PAGE>



                                    EXHIBIT A

                                 TITLED VEHICLES










<PAGE>



                                    EXHIBIT B

                             CHIEF EXECUTIVE OFFICE



Chief Executive Office:




Principal Place of Business:















<PAGE>



                                    EXHIBIT C

                               LOCATION OF RECORDS


Location of Records:













<PAGE>



                                    EXHIBIT D

                                REGISTERED OFFICE


Registered Office:











<PAGE>



                                    EXHIBIT E

                        LOCATIONS OF TANGIBLE COLLATERAL


INVENTORY LOCATION                         ADDRESS












<PAGE>



                                    EXHIBIT F

                                FORMER LOCATIONS



















<PAGE>



                                    EXHIBIT G

                            FORMER NAMES; TRADE NAMES

I.       Former Names


II.      Trade Names