**EXECUTIVEEMPLOYMENT AGREEMENT**

             This Agreement, dated as of July11, 2001, is by and between Vari-Lite, Inc., a Delaware corporation (the“Company”), and Bob Schacherl (“Executive”).

**W I T N E S S E T H:**

             WHEREAS, Executive possessessignificant knowledge and information in matters relating to the Business (asdefined below), which knowledge and information will be increased, developedand enhanced through his continued employment by the Company; and

             WHEREAS, the parties hereto desireto enter into an agreement for the Company’s continued employment of Executiveon the terms and conditions contained herein;

             NOW, THEREFORE, in consideration ofthe premises and the mutual covenants and agreements contained herein, andcertain other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the parties hereto agree as follows:

**             1.          Employmentand Duties. **The Companyhereby employs Executive, and Executive hereby accepts employment with theCompany, to serve as Vice President of Sales for the Company.  In such capacity, Executive shall report tothe President of the Company and shall devote his full working time, attentionand energies to the diligent performance of such services and duties as fromtime to time may be designated by the President of the Company.  Executive shall not, without the priorwritten consent of the Company, directly or indirectly, at any time whileemployed by the Company, engage in any venture or activity that the Company, inits sole discretion, determines interferes with Executive’s performance of hisduties and responsibilities as an employee of the Company.

**             2.          Term. **The term of thisAgreement and Executive’s employment hereunder (the “Term”) shall commence asof the date hereof and, unless sooner terminated in accordance with thetermination provisions hereof, shall continue for one year (the “InitialTerm”), and thereafter shall renew for successive one-year periods unlesseither party hereto delivers to the other party at least 30 days prior to theexpiration of the Initial Term, or the expiration date of any subsequentone-year renewal period, written notice of the election not to renew the Term.

**             3.          Compensation. **The Company shallcompensate Executive as follows:

                           (a)         **BaseSalary.**  During the Term,the Company shall pay to Executive an annual salary of $175,000 (the “BaseSalary”), payable in arrears and in accordance with the Company’s normalpayroll practices as in effect from time to time.  The Base Salary may be increased, but not decreased,  from time to time as the CompensationCommittee of the Company’s Board of Directors determines, in its solediscretion.

                           (b)        **Benefitsand Perquisites.** Executive shall be entitled to vacation and employee benefits (includingbonus plans offered to management employees generally) in accordance with thepolicies of the Company in effect from time to time.  The Company may change or amend any of the benefits it providesat any time.

                           (c)         **ExpenseReimbursement.**  TheCompany shall reimburse Executive for all reasonable expenses properly incurredby Executive in the performance of Executive’s duties hereunder, in accordancewith policies established from time to time by the Company.

 

**             4.          Terminationby the Company Without Cause. **The Company mayterminate Executive’s employment with the Company at any time and for anyreason other than for Cause (as defined below), including Employer electing notto renew the Initial Term or any Renewal Term, as the case may be, pursuant toSection 2.  In the event of any suchtermination, the Company shall pay Executive the Base Salary through the end ofthe Term (as determined without regard to the termination), payable inaccordance with the Company’s normal payroll practices.  In addition, the Company will (a) continueto pay Executive the Base Salary for a six month period after the end of theTerm (as determined without regard to the termination), payable in accordance with the Company’s normal payrollpractices.

**             5.          Terminationby the Company for Cause. **The Company mayterminate Executive’s employment with the Company at any time for Cause bydelivering to Executive written notice of termination supported by a reasonablydetailed statement of the relevant facts and reason for termination.  In the event of any such termination, theCompany shall pay Executive the Base Salary accrued and unpaid through the dateof termination, payable in accordance with the Company’s normal payrollpractices.  As used herein, “Cause”means (a) Executive has breached Section 10 or 11 hereof, (b) Executive hasused alcohol or drugs on the job or in a manner affecting his job performance,(c) Executive has been grossly negligent in the performance or hasintentionally not performed Executive’s material duties and responsibilitieshereunder, continuing for 10 days after receipt of written notice of suchperformance or lack of performance, (d) Executive has committed acts of willfuldishonesty, fraud or material misconduct with respect to the business oraffairs of the Company, or (e) Executive has been found guilty of or has plednolo contendere to the commission of a felony offense.

**             6.          VoluntaryTermination by Executive. **Executive mayterminate his employment with the Company at any time for any reason other thanfor Good Reason (as defined below) upon delivering 30 days’ prior writtennotice to the Company.  In the event ofany such termination, the Company shall pay Executive the Base Salary accruedand unpaid through the date of termination, payable in accordance with theCompany’s normal payroll practices.

**             7.          Terminationby Death or Disability.**

                           (a)         **Death.**  If Executive dies during the Term, theCompany shall pay Executive’s estate the Base Salary through the end of theTerm (as determined without regard to the termination), payable in accordancewith the Company’s normal payroll practices.

                           (b)        **Disability.**  If, as a result of Executive’s incapacitydue to physical or mental illness or injury, Executive shall have been absentfrom the full-time performance of his duties with the Company (i) for a periodof three consecutive months or (ii) for shorter periods aggregating 180 or morebusiness days in any 12-month period and, within 30 days after written noticeof termination is thereafter given by the Company, Executive shall not havereturned to the full-time performance of his duties, the Company may terminateExecutive’s employment with the Company. In the event of any such termination, the Company shall pay Executivethe Base Salary through the end of the Term (as determined without regard tothe termination), payable in accordance with the Company’s normal payrollpractices.

**             8.          Terminationby Executive for Good Reason.**  Executive may terminate his employment withthe Company for Good Reason at any time by delivering 30 days’ prior writtennotice to the Company.  In the event ofany such termination, the Company shall pay Executive the Base Salary throughthe end of the Term (as determined without regard to the termination), payablein accordance with the Company’s normal payroll practices.  In addition, the Company will (a) continueto pay Executive the Base Salary for a six month period after the end of theTerm (as determined without regard to the termination), payable in accordance with the Company’s normal payrollpractices.  As used herein,“Good Reason” means (a) Executive has been assigned any duties inconsistent inany material manner with, or suffered any adverse material change in,Executive’s position, duties, responsibilities or status with the Company, (b)the Company has reduced the Base Salary, or (c) the Company has failed to paythe Base Salary, and in any case the Company fails to remedy such matter within10 days of receiving written notice from Executive of his intention toterminate his employment based thereon.

**             9.          CovenantAgainst Competition and Employment.**  Executive shall not, directly or indirectly,individually or on behalf of any Person (as defined below) other than theCompany, (i) for as long as Executive continues to receive the Base Salaryhereunder, and (ii) in the case of a termination of Executive’s employment withthe Company pursuant to Section 5 or 6 for an additional period of two yearsafter such termination:

                           (a)         engage in, have an equity or profitinterest in, or render services of any kind or nature to any Person engaged inthe Business within the Territory (as defined below);

                           (b)        solicit, call upon or attempt to obtainbusiness from any Customer (as defined below) for the purpose of providing thatCustomer with any product or service provided by the Company or any competitiveproduct; or

                           (c)         employ or offer to employ any employeeof the Company.  For these purposes, anemployee of the Company shall be deemed to be an employee of the Company whileemployed by the Company and for a period of 60 days thereafter.

             Nothing contained in this Section 9shall be construed to prohibit Executive from owning either of record orbeneficially not more than 1% of the shares or other equity interest of anypublicly traded Person or continuing to own, as a passive investor, hisexisting shares in High End Systems, Inc. Executive agrees that the foregoing covenants in this Section 9 impose areasonable restraint on Executive in light of the activities and business ofCompany as of the date hereof and that the enforcement of the non-competitionprovisions in this Section 9 by the Company will not interfere with Executive’sability to pursue a proper livelihood. Executive acknowledges and agrees that the enforcement of this Agreementis necessary to ensure the preservation and continuity of the goodwill of theCompany.

             As used herein, the following termsshall have the meanings indicated:

             “Business” means the design,manufacture and/or distribution of automated or conventional lighting equipmentand/or related services.

             “Customer” means all Persons (a)who purchased products from, or utilized the services of, the Company whileExecutive was employed by the Company, (b) who Executive solicited on behalf ofthe Company, (c) whose dealings with the Company were coordinated orsupervised, in whole or in part, by Executive, or (d) about whom Executiveobtained Confidential Information (as defined below).

             “Person” means any individual,corporation, limited liability company, partnership, joint venture,association, trust, unincorporated organization or other entity.

             “Territory” means anywhere in theworld.

**             10.        ConfidentialInformation. **Executive shallnot, except with the prior written approval of the Company, discloseConfidential Information to any Person, or use Confidential Information forpersonal financial gain or other reason not in the Company’s best interest atany time either during or after the Term for whatever reason, except that theserestrictions shall not apply to (a) information that shall become publiclyknown through no fault of Executive, (b) information that is disclosed toExecutive by a third party that has legitimate and unrestricted possessionthereof and the unrestricted right to make such disclosure, (c) informationthat Executive can demonstrate was within his legitimate and unrestrictedpossession prior to the time of his employment with the Company, or (d) otherinformation not rising to the level of a trade secret at any time after twoyears from and after the end of the Term. “Confidential Information” means all business records, trade secrets,know-how concerning marketing, customer lists or compilations, sources ofsupply, manufacturing techniques, pricing information, financial information,personnel data, information contained in any documents prepared by or for theCompany and its employees at the Company’s expense or on the Company’s time orotherwise in furtherance of the Company’s business, and made available only tothe Company and such of its authorized agents as may be necessary to furtherthe Company’s business, and other confidential information used and/or obtainedby Executive in the course of his employment by the Company.  Executive shall return to the Company allConfidential Information and any and all copies of the same in his control upontermination of employment with the Company for any reason whatsoever.

**             11.        Assignment.**  This Agreement may not be assigned ortransferred by Executive, in whole or in part, without the prior writtenconsent of the Company, and any assignment in violation of this Section shallbe void.  The Company shall have theright to assign this Agreement and any of its rights hereunder to an affiliateof the Company, or as a part of a sale or transfer of the stock, assets orbusiness of the Company or any substantial portion thereof.  This Agreement shall be binding upon andshall inure to the benefit of the parties hereto, and their respective heirs,successors and permitted assigns.

**             12.        Relief.**  A breach or threatened breach of any of theterms of this Agreement by Executive would result in material and irreparabledamage and injury to the Company, and it would be difficult or impossible toestablish the full monetary value of such damage.  Therefore, the Company shall be entitled to injunctive relief bya court of appropriate jurisdiction in the event of Executive’s breach orthreatened breach of any of the terms hereunder, without the necessity ofhaving to post bond or other collateral in connection therewith.  The Company’s right to an injunction willnot prohibit the Company from pursuing other remedies, including the recoveryof damages.

**             13.        Notice.**  All notices and communications required orpermitted hereunder shall be in writing and may be given by (a) depositing thesame in the United States mail, addressed to the party to be notified, postageprepaid and registered or certified with return receipt requested, (b)telecopy, (c) overnight delivery service, or (d) hand delivery.  Such notice shall be deemed received (i) onthe first business day after it was actually received if sent by overnightdelivery service, (ii) on the day it was delivered if  hand delivered, (iii) on the day the telecopy is transmitted tothe proper telecopy number if sent by telecopy or (iv) on the third businessday following the date on which it is so mailed.  For purposes of notice, the address of the parties shall be:

Ifto the Company:

Vari-Lite, Inc.201 Regal RowDallas, Texas 75247Telecopy:Attn:    President

witha copy (which shall not constitute notice) to:

Gardere Wynne Sewell LLP1601 Elm Street3000 Thanksgiving TowerDallas, Texas 75201Telecopy:  214-999-3683Attn: Alan J. Perkins

Ifto Executive:

Bob Schacherl5903 Hayden’s CoveAustin, TX 78730

or such otheraddress as either party hereto shall specify pursuant to this Section 13 fromtime to time.

**             14.        Non-Waiver.**  No failure on the part of either partyhereto to exercise, and no delay by either party hereto in exercising anyright, power, or remedy under this Agreement shall operate as a waiver thereof,nor shall any single or partial exercise of any right, power or remedy byeither party hereto preclude any other or further exercise thereof or theexercise by such party of any other right, power or remedy.  No express waiver or assent by either partyhereto of any breach of or default in any term or condition of this Agreementby the other party shall constitute a waiver of or an assent to any succeedingbreach of or default in the same or any other term or condition hereof.

**             15.        Amendmentsand Modifications.**  ThisAgreement may be amended or modified only by a writing signed by both partieshereto.

**             16.        GoverningLaw.**  ThisAgreement shall be construed in accordance with the laws of the State of Texas,without regard to the choice of law provisions, statutes, regulations orprinciples of this or any other jurisdiction.

**             17.        Reformationand Severability.**  If anyprovision of this Agreement is held to be illegal, invalid or unenforceableunder present or future laws effective during the term hereof, such provisionshall be fully severable and this Agreement shall be construed and enforced asif such illegal, invalid or unenforceable provision never comprised a parthereof, and the remaining provisions hereof shall remain in full force andeffect and shall not be affected by the illegal, invalid or unenforceableprovision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceableprovision, there shall be added automatically as part of this Agreement, aprovision as similar in its terms to such illegal, invalid or unenforceableprovision as may be possible and be legal, valid and enforceable.

**             18.        Counterparts.**  This Agreement may be executedsimultaneously in two or more counterparts, each of which shall be deemed anoriginal and all of which together shall constitute but one and the sameinstrument. Facsimile transmission of any signed original document orretransmission of any signed facsimile transmission shall be deemed the same asdelivery of an original.  At the requestof either party hereto, the parties hereto will confirm facsimile transmissionby signing a duplicate original document.

             IN WITNESS WHEREOF, the parties heretohave executed this Agreement, as of the date first written above.

|   | Vari-Lite International, Inc. |
|--------|-------------------------------|
|        |                          |
|   | By:                           |  |
|   |                          | T. Clay Powers, President |
|        |                          |   |
|   | Bob Schacherl                 |
|   |