AMENDMENT NO. 1TOFINANCING AGREEMENT

                           This AMENDMENTNO. 1 TO FINANCING AGREEMENT (this “Amendment”), made as of March 30,2001, between FIRSTAR BANK, NATIONAL ASSOCIATION, a national bankingassociation (“Bank”) and VARI-LITE, INC., a Delaware corporation (“Borrower”),

WITNESSETH:

                           WHEREAS, Borrower andBank have entered into that certain Financing Agreement, dated as of December29, 2000 (the “Financing Agreement”), pursuant to which Bank has made certainloans and financial accommodations available to Borrower; and

                           WHEREAS, Borrower andBank desire to amend the Financing Agreement as hereinafter set forth;

                           NOW, THEREFORE, inconsideration of the mutual promises and agreements contained herein and othergood and valuable consideration, the receipt and adequacy of which are herebyacknowledged, Bank and Borrower agree as follows:

1.  DEFINED TERMS.

                           Each defined termused herein and not otherwise defined herein has the meaning ascribed to suchterm in the Financing Agreement.

2.  AMENDMENT TO FINANCING AGREEMENT.

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

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

                           2.2        Amendment to Section 8.7 of theFinancing Agreement—Certified Quarterly FinancialStatements. Section 8.7of the Financing Agreement is amended in its entirety to read as follows:

                                        Section8.7 — Certified Quarterly Financial Statements.

                                        Promptlywhen available and in any event not later than forty-five (45) days after theend of each quarter, Borrower shall furnish to Bank quarterly financialstatements, on a consolidated basis, showing International’s financial conditionand results of International's operations for the periods of time covered bysuch statements in such detail as Bank may from time to time require, preparedin accordance with generally accepted accounting principles consistentlyapplied and containing all disclosures required to fully and accurately presentthe financial position and results of International and to make such statementsnot misleading under the circumstances, and in each instance certified by thechief financial officer or other responsible officer of International as beingfiled with the Securities and Exchange Commission.  Said statements shall include: (i) a comparisonprepared by International of its projected financial position and results ofoperations of International provided for in Section 8.6 hereof withthe actual financial position and results of operations of International and anexplanation of any variations between them; and (ii) a comparison betweenactual calculated results and the covenanted results for each of the FinancialCovenants contained in Exhibit  J attached hereto and incorporatedherein by reference.

3.  REPRESENTATIONS AND WARRANTIES.

                           Borrowerrepresents and warrants to Bank as follows:

                           3.1        The Amendment.  This Amendment has been duly and validly executedby an authorized executive officer of Borrower and constitutes the legal, validand binding obligation of Borrower enforceable against Borrower in accordancewith its terms.

                           3.2        Financing Agreement.  The Financing Agreement as amended by thisAmendment remains in full force and effect and remains the valid and bindingobligation of Borrower enforceable against Borrower in accordance with itsterms.  Borrower hereby ratifies andconfirms the Financing Agreement as amended by this Amendment.

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

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

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

4.  CONDITIONS PRECEDENT TO EFFECTIVENESS OFTHIS AMENDMENT NO. 1.

                           Inaddition to all of the other conditions and agreements set forth herein, theeffectiveness of this Amendment is subject to the each of the followingconditions precedent:

                           4.1        Amendment No. 1 to FinancingAgreement.  Bank shall have receivedan original counterpart of this Amendment No. 1 to Financing Agreement, executedand delivered by a duly authorized officer of Borrower.

                           4.2        Acknowledgment of Guarantor.  Bank shall have received an original of theattached Acknowledgment of Vari-Lite International, Inc., a Delawarecorporation, executed and delivered by a duly authorized officer of Vari-LiteInternational, Inc..

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

5.  SECTION  MISCELLANEOUS.

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

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

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

                           INWITNESS WHEREOF, Borrower has caused this Amendment No. 1 to FinancingAgreement to be duly executed and delivered by its duly authorized officer asof the date first above written.

| Signed and acknowledged in the presence of: |   | VARI-LITE, INC. |
|---------------------------------------------|--------|-----------------|
|                                        |   |
|                                             |   |            |   |
|                                             |   | By:             |  |
|                                        |   |            |   |
| Name:                                       |        |            |   |   |
|                                        |   |            |   |   |
|                                        |   | Its:            |  |
|                                             |   |            |   |
|                                        |   |            |   |
| Name:                                       |        |            |   |   |

 

| STATE OF  |        |   )    |
|-----------|--------|-------------|
|      |   |   )ss: |
| COUNTY OF |        |   )    |

                           The foregoinginstrument was acknowledged before me this ___ day of May, 2001, by_______________, the ___________________ of Vari-Lite, Inc., a Delawarecorporation, on behalf of the corporation.

|   |                                                                                                                                                                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Notary Public                                                |

 

 

 

| Accepted at Cleveland,  Ohio,  Effective as of  March 30, 2001.FIRSTAR BANK, NATIONAL  ASSOCIATION |   |
|--------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                              |   |
| By:                                                                                                          |        |   |
|                                                                                                         |   |
| Its:                                                                                                         |        |   |

ACKNOWLEDGMENT OFGUARANTOR

                           The undersigned,Vari-Lite International, Inc., a Delaware corporation, having guaranteed all ofthe obligations of Vari-Lite, Inc. to Firstar Bank, National Association(“Bank”), hereby acknowledges and agrees, effective as of March 30, 2001, tothe terms of the foregoing Amendment No. 1 to Financing Agreement.  The undersigned represents and warrants toBank that the Guaranty executed and delivered by the undersigned to Bank, datedas of December 29, 2000, remains the valid and binding obligation of theundersigned, enforceable against it in accordance with its terms.

|      |   |        | VARI-LITE INTERNATIONAL, INC. |
|-----------|--------|-------------|-------------------------------|
|           |   |        |                          |
|      |   |        | By:                           |  |
|      |   |        |                          |   |
|      |   |        | Its:                          |  |
|           |   |        |                          |   |
| STATE OF  |        |   )    |                          |   |
|      |   |   )ss: |                          |   |
| COUNTY OF |        |   )    |                          |   |

                           The foregoinginstrument was acknowledged before me this ___ day of May, 2001, by___________________, the ________________ of VARI-LITE INTERNATIONAL, INC., aDelaware corporation, on behalf of the company.

 

|   |                                                                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Notary Public                                              |

 

**Exhibit JFinancial 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               |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|
|                                                                                                                                                                                                                       |                      |
| $ 2,931,000                                                                                                                                                                                                      | 10/01/00  - 12/31/00 |
| $ 6,234,000                                                                                                                                                                                                      | 10/01/00  - 03/31/01 |
| $ 9,875,000                                                                                                                                                                                                      | 10/01/00  - 06/30/01 |
| $14,532,000                                                                                                                                                                                                           | 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   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                                                            |          |
| $45,000,000                                                                                                                                                                                                | 12/31/00 |
| $45,000,000                                                                                                                                                                                                | 03/31/01 |
| $45,000,000                                                                                                                                                                                                | 06/30/01 |
| $45,000,000                                                                                                                                                                                                | 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                           |
|----------------------------|----------------------------------|
|                            |                                  |
| $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     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                                          |          |
| 4.65  to 1                                                                                                                                                                               | 03/31/01 |
| 2.73  to 1                                                                                                                                                                               | 06/30/01 |
| 2.25  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     |
|---------------------------|----------|
|                           |          |
| 1.05 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.                                                                                                                                                                                                                                                    |
|        |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |