Document:

<PAGE>

                              PATENT, TRADEMARK AND
                           LICENSE SECURITY AGREEMENT

                  THIS PATENT, TRADEMARK AND LICENSE SECURITY AGREEMENT
("Agreement") is made by VARI-LITE, INC., a Delaware corporation having its
principal office and place of business at 201 Regal Row, Dallas, Texas 75247
("Grantor"), in favor of FIRSTAR BANK, NATIONAL ASSOCIATION, a national
banking association whose address is 425 Walnut Street, Cincinnati, Ohio 45202
("Grantee"):

                              W I T N E S S E T H:

                  WHEREAS, Grantor and Grantee are parties to a certain
Financing Agreement of even date herewith (as the same may hereafter be
amended, supplemented, amended and restated, renewed or otherwise modified
from time to time, the "Financing Agreement"), which Financing Agreement
provides (i) for the Grantee to, from time to time, extend credit to or for
the account of Grantor and (ii) for the grant by Grantor to Grantee of a
security interest in certain of Grantor's assets, including, without
limitation, its patents, patent applications, service marks, service mark
applications, service names, trademarks, trademark applications, service
names, trademarks, trademark applications, trade names, goodwill and licenses;

                  NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor agrees as follows:

                  1.    INCORPORATION OF FINANCING AGREEMENT. The Financing
Agreement and the terms and provisions thereof are hereby incorporated herein
in their entirety by this reference thereto.

                  2.    SECURITY INTEREST IN PATENTS. To secure the complete
and timely satisfaction of all of the "Obligations" (as defined in the
Financing Agreement), Grantor hereby grants and conveys to Grantee a lien and
security interest in all of the Grantor's right, title and interest in and to
all of its now owned or existing and filed and hereafter acquired or arising
and filed:

         (A)      patents and patent applications, including, without
limitation, the inventions and improvements described and claimed therein, and
those patents listed on SCHEDULE A, attached hereto and made a part hereof,
and (a) the reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (b) all income, royalties, damages and payments
now and hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (c) the right to sue for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the

<PAGE>

world (all of the foregoing patents and applications, together with the items
described in clauses (a)-(d), are sometimes hereinafter individually and/or
collectively referred to as the "Patents"); and

         (B)      license agreements with any other party, whether Grantor is
a licensor or licensee under any such license agreement, including, without
limitation, the licenses listed on SCHEDULE C attached hereto and made a part
hereof, and the right to prepare for sale, sell and advertise for sale, all
"Inventory" (as defined in the Financing Agreement) now or hereafter owned by
Grantor and now or hereafter covered by such licenses (all of the foregoing is
hereinafter referred to collectively as the "Licenses").

                  3.    SECURITY INTEREST IN TRADEMARK AND GOODWILL. To secure
the complete and timely satisfaction of all of the "Obligations" (as defined
in the Financing Agreement), Grantor hereby grants and conveys to Grantee a
lien and security interest in all of the Grantor's right, title and interest
in and to all of its now owned or existing and filed and hereafter acquired or
arising and filed:

                  (A)   trademarks, trademark registrations, trade names and
trademark applications, service marks, service mark registrations, service
names and service mark applications, including, without limitation, the
trademarks, trademark registrations, trade names and trademark applications,
service marks, service mark registrations, service names and service mark
applications listed on SCHEDULE B, attached hereto and made a part thereof,
and (a) renewals thereof, (b) all income, royalties, damages and payments now
and hereafter due and/or payable with respect thereto, including, without
limitation, damages and payment for past or future infringements thereof, (c)
the right to sue for past, present and future infringements thereof, and (d)
all rights corresponding thereto throughout the world (all of the foregoing
trademarks, service marks, trademark and service mark registrations, trade
names, service names and applications, together with the items described in
clauses (a)-(d), are sometimes hereinafter individually and/or collectively
referred to as the "Trademarks"); and

                  (B)   the goodwill of Grantor's business, including, but not
by way of limitation, such goodwill connected with and symbolized by the
Trademarks.

                  4.    RESTRICTIONS ON FUTURE ASSIGNMENTS. Grantor agrees
that until the Obligations shall have been satisfied in full and the Financing
Agreement shall have been terminated, Grantor will not, without Grantee's
prior written consent, enter into any agreement relating to the Patents,
Trademarks or Licenses (for example, a license agreement) and Grantor further
agrees that it will not take any action, or permit any action to be taken by
others subject to its control, including licensees, or fail to take any action
which would affect the validity or enforcement of the rights transferred to
Grantee under this Agreement.

                  5.    NEW PATENTS, TRADEMARKS, AND LICENSES. Grantor
represents and warrants that the Patents, Trademarks and Licenses listed on
SCHEDULES A, B AND C, respectively, constitute all of the patents, service
marks, trademarks, applications and licenses now owned by Grantor. If, before
the Obligations shall have been satisfied in full, Grantor shall (i) obtain
rights to any new patentable inventions, trademarks, trademark registrations,
trade names, service marks, service mark registrations, service names, or
licenses, or (ii) become entitled to the

<PAGE>

benefit of any patent, service mark or trademark application, service mark,
service mark registration, trademark, trademark registration, or license
renewal, or patent for any reissue, division, continuation, renewal,
extension, or continuation-in-part of any Patent or any improvement on any
Patent, the provisions of this Agreement shall automatically apply thereto and
Grantor shall give to Grantee prompt written notice thereof. Grantor hereby
authorizes Grantee as attorney in fact to modify this Agreement by amending
SCHEDULES A, B AND/OR C, as applicable, to include any future patents, patent
applications, service marks, service mark registrations, service mark
applications, service names, trademarks, trademark registrations, trademark
applications, trade names and licenses which are Patents, Trademarks or
Licenses, as applicable, under PARAGRAPHS 2 AND 3 above or under this
PARAGRAPH 5, and to file or refile this Agreement with the United States
Patent and Trademark Office.

                  6.    REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants to and agrees with Grantee that:

         (i)      The Patents and Trademarks are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part;

         (ii)     Each of the Patents and Trademarks is valid and enforceable;

         (iii)    Grantor is the owner of the Patents and Trademarks and has
the power and authority to make, and will continue to have authority to
perform, this Agreement according to its terms;

         (iv)     This Agreement does not violate and is not in contravention
of any other agreement to which Grantor is a party or any judgment or decree
by which Grantor is bound and does not require any consent under any other
agreement to which Grantor is a party or by which Grantor is bound. Upon the
occurrence of and during the continuance of an Event of Default, Grantor
hereby authorizes the Commissioner of Patents and Trademarks to issue any and
all Patents on said inventions and any and all certificates of registration on
all Trademarks to Grantee as assignee of Grantor's entire interest;

         (v)      There has been no prior sale, pledge, encumbrance,
assignment or other transfer or disposition of any of the Patents, Trademarks
or Licenses or any part thereof and the same are free from all liens, charges
and encumbrances of any kind, including but not limited to licenses, shop
rights and covenants not to sue third persons, other than Permitted Liens (as
defined in the Financing Agreement); and

         (vi)     The Licenses are valid and binding agreements enforceable
according to their terms. Each of the Licenses is in full force and effect and
has not been amended or abrogated and there is no default under any of the
Licenses.

                  7.    TERMS. The term of the security interests granted
herein shall extend until the earlier of (i) the  expiration of each of the
respective Patents, Trademarks and Licenses assigned hereunder, or (ii) the
Obligations have been paid in full and the Financing Agreement has been
terminated.

<PAGE>

                  8.    CONTINGENT ASSIGNMENT. The Grantor has executed in
blank and delivered to the Grantee an assignment of federally registered
trademarks in substantially the form of EXHIBIT 1 hereto (the "Assignment of
Trademarks") and an assignment of federally registered patents in
substantially the form of Exhibit 2 hereto (the "Assignment of Patents"). The
Grantor hereby authorizes the Grantee to complete as assignee and record with
the United States Patent and Trademark Office the Assignment of Trademarks and
the Assignment of Patents upon the occurrence and during the continuance of an
Event of Default and the proper exercise of the Grantee's remedies under this
Agreement.

                  9.    DUTIES OF GRANTOR. Grantor shall have the duty to (i)
prosecute diligently any patent application of the Patents made by it and any
trademark or service mark application of the Trademarks made by it pending as
of the date hereof or thereafter until the Obligations shall have been paid in
full, (ii) make application on unpatented but patentable inventions and on
trademarks and service marks, as appropriate to the extent the making of such
application is consistent with past practices of Grantor and unless the
officers of Grantor reasonably determine in their best business judgment that
the application is not in the best interests of the Grantor, and (iii)
preserve and maintain all of its rights in patent applications and patents of
the Patents and in trademark applications, trademarks, trademark
registrations, service mark applications, service marks, and service mark
registrations of the Trademarks. Any expenses incurred in connection with such
applications shall be borne by Grantor. Grantor shall not abandon any right to
file a Patent application or Trademark application, or any pending Patent
application, Trademark application, Patent, or Trademark without the consent
of Grantee.

                  10.   FINANCING STATEMENTS; DOCUMENTS. At the request of
Grantee, Grantor will join with Grantee in executing one or more financing
statements pursuant to the Ohio version of the Uniform Commercial Code in form
satisfactory to Grantee and will pay the costs of filing and/or recording this
Agreement and all financing, continuation and termination statements in all
public offices where filing or recording is deemed necessary or desirable by
Grantee. Grantor will execute and deliver to Grantee from time to time such
supplemental assignments or other instruments, including, but not by way of
limitation, additional assignments to be filed with the United States Patent
and Trademark Office, as Grantee may require for the purpose of confirming
Grantee's interest in the Patents, Trademarks and Licenses.

                  11.   GRANTEE'S RIGHT TO SUE. Upon the occurrence of an
Event of Default (as defined in the Financing Agreement), Grantee shall have
the same rights, if any, as Grantor has, but shall in no way be obligated, to
bring suit in its own name to enforce the Licenses and the Patents and
Trademarks, and any licenses thereunder, and, if Grantee shall commence any
such suit, Grantor shall, at the request of Grantee, do any and all lawful
acts and execute any and all proper documents required by Grantee in aid of
such enforcement and Grantor shall promptly, upon demand and as a part of the
Obligations, reimburse and indemnify Grantee for all costs and expenses
incurred by Grantee in the exercise of its rights under this PARAGRAPH 11.

                  12.   WAIVERS. No course of dealing between Grantor and
Grantee nor any failure to exercise nor any delay in exercising, on the part
of Grantee, any right, power or privilege hereunder or under the Financing
Agreement shall operate as a waiver thereof; nor shall

<PAGE>

any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.

                  13.   SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.

                  14.   MODIFICATION. This Agreement cannot be altered,
amended or modified in any way, except as specifically provided in PARAGRAPH 5
hereof or by a writing signed by the parties hereto.

                  15.   CUMULATIVE REMEDIES; EFFECT ON FINANCING AGREEMENT.
All of Grantee's rights and remedies with respect to the Patents, Trademarks
and Licenses, whether established hereby or by the Financing Agreement or any
other Loan Document, or by any other agreements or by law shall be cumulative
and may be exercised singularly or concurrently. Grantor acknowledges and
agrees that this Agreement is not intended to limit or restrict in any way the
rights and remedies of Grantee under Financing Agreement but rather is
intended to facilitate the exercise of such rights and remedies.

                  16.   BINDING EFFECT; BENEFITS. This Agreement shall be
binding upon the Grantor and its respective successors and assigns, and shall
inure to the benefit of Grantee, its successors and assigns.

                  17.   GOVERNING LAW. This Agreement has been delivered and
accepted in Cleveland, Ohio, and shall be governed by and construed in
accordance with the local laws of the State of Ohio.

                [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

<PAGE>

         IN WITNESS WHEREOF, VARI-LITE, INC., by its duly authorized officer,
has executed this Agreement as of the 29th day of December, 2000.

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

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

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

<PAGE>

STATE OF OHIO                       )
                                    ) ss:
COUNTY OF CUYAHOGA                  )

                  The foregoing Patent, Trademark and License Security
Agreement was executed and acknowledged before me this 29th day of December,
2000, by Jerome L. Trojan III, the Vice President-Finance and CFO of
VARI-LITE, INC., a Delaware corporation, on behalf of the corporation.

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

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

FIRSTAR BANK, NATIONAL ASSOCIATION

By:
   -------------------------------
   Paul W. Patrick, Vice President

<PAGE>

                                    SCHEDULE A
                                     (Patents)

<PAGE>

                                   SCHEDULE B
                                  (Trademarks)

<PAGE>

                                   SCHEDULE C
                              (License Agreements)

<PAGE>

                                    EXHIBIT 1

                ASSIGNMENT OF TRADEMARKS AND SERVICE MARKS (U.S.)

                  WHEREAS, Vari-Lite, Inc., a corporation organized and existing
under the laws of the State of Delaware, having a place of business at 201 Regal
Row, Dallas, Texas 75247 (the "Assignor"), has adopted and used and is using the
trademarks (the "Trademarks") identified on the ANNEX hereto, and is the owner
of the registrations of and pending registration applications for such
Trademarks in the United States Patent and Trademark Office identified on such
ANNEX; and

                  WHEREAS, _________________________, a ___________ organized
and existing under the laws of the State of ___________, having a place of
business at _________________________________ (the "Assignee"), is desirous of
acquiring the Trademarks and the registrations thereof and registration
applications therefor;

                  NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, the Assignor does hereby assign, sell and
transfer unto the Assignee all right, title and interest in and to the
Trademarks, together with (a) the registrations of and registration applications
for the Trademarks, (b) the goodwill of the business symbolized by and
associated with the Trademarks and the registrations thereof, and (c) the right
to sue and recover for, and the right to profits or damages due or accrued
arising out of or in connection with, any and all past, present or future
infringements or dilution of or damage or injury to the Trademarks or the
registrations thereof or such associated goodwill.

                  This Assignment of Trademarks and Service Marks (U.S.) is
intended to and shall take effect as a sealed instrument at such time as the
Assignee shall complete this instrument by inserting its name in the second
paragraph above and signing its acceptance of this Assignment of Trademarks and
Service Marks (U.S.) below.

                  IN WITNESS WHEREOF, the Assignor, by its duly authorized
officer, has executed this assignment, as an instrument under seal, on this 29th
day of December, 2000.

                                   VARI-LITE, INC.

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

<PAGE>

                  The foregoing assignment of the Trademarks and the
registration thereof and registration applications therefor by the Assignor to
the Assignee is hereby accepted as of the _____ day of __________,_____.

                                      [Assignee]
                                      ----------------------------------------

                                      By:
                                         -------------------------------------

                                      Title:
                                            ----------------------------------

<PAGE>

STATE OF OHIO                       )
                                    ) ss:
COUNTY OF CUYAHOGA                  )

                  On this the 29th day of December, 2000, before me appeared
Jerome L. trojan III, the person who signed this instrument, who acknowledged
that he is the Vice President-Finance and CFO of Vari-Lite, Inc. and that being
duly authorized (s)he signed such instrument as a free act on behalf of
Vari-Lite, Inc.

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

         [Seal]
                                       My commission expires:
                                                             ------------------

<PAGE>

                                      ANNEX

Trademark                                 Registrations--
   or                      United States Patent and Trademark Office
Service Mark               Registration No.          Registration Date
------------               ----------------          -----------------

               [List chronologically in ascending numerical order]

Trademark                                 Registrations--
   or                      United States Patent and Trademark Office
Service Mark               Serial No.                Filing Date
------------               ----------                -----------

               [List chronologically in ascending numerical order]

<PAGE>

                                    EXHIBIT 2

                          ASSIGNMENT OF PATENTS (U.S.)

                  WHEREAS, VARI-LITE, INC., a corporation organized and existing
under the laws of the State of Delaware, having a place of business at 201 Regal
Row, Dallas, Texas 75247 (the "Assignor"), has adopted and used and is using the
patents (the "Patents") identified on the ANNEX hereto, and is the owner of the
registrations of and pending registration applications for such Patents in the
United States Patent and Trademark Office identified on such ANNEX; and

                  WHEREAS, _________________________, a ___________ organized
and existing under the laws of the State of ___________, having a place of
business at _________________________________ (the "Assignee"), is desirous of
acquiring the Patents and the registrations thereof and registration
applications therefor;

                  NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, the Assignor does hereby assign, sell and
transfer unto the Assignee all right, title and interest in and to the Patents,
together with (a) the registrations of and registration applications for the
Patents, (b) the goodwill of the business symbolized by and associated with the
Patents and the registrations thereof, and (c) the right to sue and recover for,
and the right to profits or damages due or accrued arising out of or in
connection with, any and all past, present or future infringements or dilution
of or damage or injury to the Patents or the registrations thereof or such
associated goodwill.

                  This Assignment of Patents (U.S.) is intended to and shall
take effect as a sealed instrument at such time as the Assignee shall complete
this instrument by inserting its name in the second paragraph above and signing
its acceptance of this Assignment of Patents (U.S.) below.

                  IN WITNESS WHEREOF, the Assignor, by its duly authorized
officer, has executed this assignment, as an instrument under seal, on this 29th
day of December, 2000.

                                   VARI-LITE, INC.

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

<PAGE>

                  The foregoing assignment of the Patents and the registration
thereof and registration applications therefor by the Assignor to the Assignee
is hereby accepted as of the _____ day of __________, 200__.

                                                [Assignee]
                                                ------------------------------

                                                By:
                                                   ---------------------------

                                                Title:
                                                      ------------------------

<PAGE>

STATE OF OHIO                       )
                                    ) ss:
COUNTY OF CUYAHOGA                  )

                  On this the 29th day of December, 2000, before me appeared
Jerome L. Trojan III the person who signed this instrument, who acknowledged
that he is the Vice President-Finance and CFO of Vari-Lite, Inc. and that being
duly authorized he signed such instrument as a free act on behalf of Vari-Lite,
Inc.

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

         [Seal]
                                   My commission expires:
                                                         ---------------------

<PAGE>

                                      ANNEX

                                            Registrations--
                           United States Patent and Trademark Office
Patents                    Registration No.          Registration Date
-------                    ----------------          -----------------

               [List chronologically in ascending numerical order]

                                            Registrations--
                           United States Patent and Trademark Office
Patents                    Serial No.                Filing Date
-------                    ----------                -----------

               [List chronologically in ascending numerical order]<PAGE>

Vari-Lite Production Services Limited
20-22 Fairway Drive
Greenford
Middlesex
UB6 8PW

09 November 2000

RE: CHATTEL MORTGAGE  FACILITY OFFER

1).      Assets will be as detailed in the original Henry Butcher valuation. All
         additions and deletions have been covered to our satisfaction in the
         final asset register appended to the master documentation.

         The Chattel Mortgage loan to Estimated Restricted Resale Value ratio is
         to be a maximum of 75% and the maximum loan value at inception (pound)
         4,000,000. The asset schedule provided satisfies this condition at
         inception point.

2).      Loan to Value Maintenance Clause @ 75%.

3).      Maximum funding term of 48 months.

4).      Pricing - Barclays Mercantile require a return of 2.50% over
         appropriate fixed or linked funds. Fixed treasury rate for 48 months is
         6.55% for drawdown 31/10/00. Hence gross yield will be 9.05%.

5).      Fees - An arrangement fee of 0.75% of the facility will be deducted
         from funds released on completion.

<PAGE>

         The Henry Butcher Valuation fee of (pound) 13,125 plus Vat will be
         charged separately. Barclays Mercantile have settled this bill in the
         interim on behalf of Vari-Lite.

         This will represent the maximum level of fees required to complete the
         asset purchase and all accompanying paperwork.

6).      Full payment Guarantee of Vari-Lite International Inc. in favour of
         Vari-Lite Production services Ltd.

         This document will be prepared by Barclays Mercantile internal
         Solicitors and will require sign off by either Vari-Lite's internal
         Solicitor or an external Solicitor within the state of Dallas, Texas.

7).      Inter company Loan of(pound)2.125m provided by Vari-Lite Inc. to
         Vari-Lite Production Services Ltd to be postponed via standard BMBF
         documentation.

8).      UK legal representatives for Vari-Lite will hold to the order of
         Barclays Mercantile the following documents :

         Bill of Sale for the schedule of assets Vari-Lite Inc. to Vari Lite
         Production Services Ltd.

         Appropriate wording from U.S. Attorney that the title chain is free of
         any charges or encumbrances.

         Appropriate wording from U.S. Attorney or U.S. Auditors to confirm that
         the new (pound) 4,000,000 Barclays Mercantile chattel mortgage will
         formally replace the current inter company lease charge and does not
         breach any US Banking covenants.

9).      Barclays Mercantile will register a charge over the assets with
         Companies House via Chattel Mortgage documentation.

10).     Barclays Mercantile will register an Assignment and Charge over sub-let
         income.
         This security will only be invoked on the occurrence of a default event
         which is continuing or unwaived.

<PAGE>

11).     Barclays Mercantile will lodge a Debenture charge over all additional
         fixed assets. This is intended to capture the stock of spare parts
         which is continually being exhausted and replenished.

12).     Barclays Mercantile will require an audit of the sub-hire agreements to
         be carried out four monthly from inception.

13).     Barclays Bank to be the sole UK clearing Bank.

14).     Cross Default Clause between Barclays Bank and Barclays Mercantile.

15).     Negative Pledge from Vari-Lite Production Services Limited.

16).     New Capital Expenditure to be capped at (pound)350k for the year to
         29/09/00 and at (pound)650k for the year to 29/09/01. Capital
         expenditure for subsequent years to be agreed in line with business
         performance, full financial review process and covenant compliance.

17).     Ratcheted Net Tangible Asset covenant of(pound)500k per annum for
         financial year ends 29/09/01, 29/09/02 and 29/09/03.

18).     Minimum Debt Service Ratio of 160% in Audited Accounts.

19).     Confirmation from Jerry Trojan that ongoing technical support from VL
         Inc and access to any software will be uninhibited by the sale of
         assets to VLPS (UK) Ltd.

20).     The process of Bar Coding the assets subject to the Barclays Mercantile
         chattel mortgage needs to be completed post deal inception and within a
         reasonable period of time. A sufficient level of completeness has been
         achieved in order to complete drawdown.

21).     The premises at 20-22 Fairway Drive, Greenford are subject to a lease
         arrangement. Your Landlord has refused to provide a standard waiver in
         respect to the assets which are the subject of the securities and
         charges detailed within this Offer Letter. Any instance of non-payment
         of monies due in respect to the lease of these premises which is
         unremedied, shall be deemed a default event to the primary mortgage
         facility.

22).     In respect of `21' above, an amount equivalent to one quarterly lease
         payment will be held to the order of Barclays Mercantile in a Barclays
         Bank `Re' account. This payment will be made to the landlord under our
         instruction to ensure the landlord has no right of distraint over the
         assets subject to this offer letter.

<PAGE>

         Any interest which accrues on the balance held, will be credited to
         Vari-Lite Production Services Limited.
         The monies held will be released to Vari-Lite Production Services upon
         receipt of a satisfactorily completed waiver from the Landlord to the
         premises.

<PAGE>

                           OFFER LETTER DATED 09/11/00
                              TERMS AND CONDITIONS

1). LOAN TO VALUE MAINTENANCE CLAUSE

The aggregate value of assets (as determined from time to time by Barclays
Mercantile or, at the expense of the Borrower, by professional valuers
acceptable to BM on such bases and assumptions as BM may in its discretion
require) charged to BM under the chattel mortgage.

Remedies to bring the loan value to 75% can be the introduction of additional
unencumbered assets deemed suitable for purpose by BM, or a partial payment
made to the chattel mortgage to reduce the balance outstanding.

ERRP MEANS ESTIMATED RESTRICTED RESALE PRICE AS CONFIRMED WITHIN THE HENRY
BUTCHER ASSET VALUATION DATED 13/04/00.

2). NEGATIVE PLEDGE

The Borrower shall not create or agree to create or permit to subsist (other
than in favour of Barclays Mercantile) any Encumbrance.

3). CAPITAL EXPENDITURE RESTRICTION

No acquisition of capital assets in excess of the stated limits without the
express consent of Barclays Mercantile.

4). RATCHETED NTA

The adjusted net worth at any time during each period set out below shall not
fall below the amount set out as follows:

Completion   to 29/09/01  (pound)2,125,000
30/09/01     to 29/09/02  (pound)2,625,000
39/09/02     to 29/09/03  (pound)3,125,000

<PAGE>

Should profits be retained in the year to 29/09/00, then the above figures
will be adjusted upwards. Base figure is any retained profits plus postponed
loan of (pound)2,125,000 plus (pound)500,000 for each of the three subsequent
years.

ADJUSTED NET WORTH MEANS:

A). THE TOTAL AMOUNT OF THE POSTPONED INTER-COMPANY LOANS
B). EXCLUDE ANY NOTIONAL PROFIT OR GAIN DERIVED FROM ONE GROUP COMPANY TO
ANOTHER
C). DEDUCT ANY DIVIDEND OR DISTRIBUTION PAID OR PROPOSED TO BE PAID BY THE
BORROWER SINCE COMPLETION DATE.
D). ADD OR SUBTRACT ACCUMULATED PROFIT OR LOSS AFTER INTEREST AND PROVISION
FOR TAX.
E). TAKE ACCOUNT OF ANY SUBSCRIPTIONS IN CASH FOR SHARE CAPITAL OR REDEMPTIONS
OF SHARE CAPITAL SINCE THE COMPLETION DATE.

The base point for the Net Worth calculation is to be the amount of Paid Up or
Issued Share Capital, plus the aggregate amount of reserves (including postponed
loans) within the balance sheet of Vari-Lite Production Services Limited.

5). DEBT SERVICE RATIO

The ratio of Cash Flow to Debt Service for each accounting period shown in
the latest audited financial statements shall not fall below 160% calculated
in accordance with generally accepted UK accounting principles consistently
applied:

CASH FLOW MEANS:

THE CONSOLIDATED NET INCOME FIGURE AFTER:

a). DEDUCTING AMOUNTS PAID IN RESPECT OF CORPORATION TAX (INCLUDING ADVANCE
CORPORATION TAX)
b). ADDING AMOUNTS CHARGED IN RESPECT OF DEPRECIATION
c). ADDING AMOUNTS CHARGED IN RESPECT OF AMORTISATION OF KNOW-HOW AND OTHER
INTANGIBLES
d). DEDUCTING ANY INCREASE (OR ADDING ANY DECREASE) IN WORKING CAPITAL NOT
INCLUDING CASH
e). DEDUCTING AMOUNTS PAID IN RESPECT OF CAPITAL EXPENDITURE
f). DEDUCTING AMOUNTS OF ALL DIVIDENDS OR DISTRIBUTION OF ANY KIND IN CASH PAID
IN RESPECT OF THE SHARE CAPITAL.

DEBT SERVICE MEANS:

a). THE AGGREGATE AMOUNT OF INTEREST PAID OR CAPITALISED UNDER ALL BORROWINGS
PLUS
b). THE PRINCIPAL AMOUNT OF ALL BORROWINGS REPAID WITHIN THE RELEVANT
TESTING PERIOD.

WORKING CAPITAL MEANS:

<PAGE>

a). THE AGGREGATE OF ALL CURRENT ASSETS LESS THE AGGREGATE OF ALL CURRENT
LIABILITIES (AFTER DEDUCTING THE AMOUNT OF ALL SHORT TERM BORROWINGS,
OVERDRAFT AND THE CURRENT PORTION OF LONG TERM DEBT.

                           OFFER LETTER DATED 09/11/00
                              TERMS AND CONDITIONS

       6). TESTING OF FINANCIAL COVENANTS

       The Financial Covenants shall be tested by reference to the most recent
       audited accounts of Vari-Lite Production Services (UK) Limited.

       The first formal test will be undertaken on the Audited Accounts to
       year end 30/09/01.

       Notwithstanding the foregoing The Financial Covenants are to be satisfied
       at all times and the Borrower shall if so required by Barclays Mercantile
       from time to time provide evidence of such satisfaction acceptable to
       Barclays Mercantile.

       7). AUDITED ACCOUNTS

       Copies of audited accounts, including a balance sheet and profit and
       loss, as soon as they are available and not later than 180 days from the
       end of its financial year end.

       8). MANAGEMENT ACCOUNTS

       Unaudited quarterly management accounts, including a balance sheet and
       profit and loss, are required as soon as they are available and not more
       than 30 days after the relevant accounting period.

       9). CHANGE OF BUSINESS

       No Relevant party will make any material change in the scope or nature
       of its activity.

<PAGE>

       Our willingness to provide these facilities is upon the condition that,
       in our opinion, there is no adverse change in your financial
       circumstances before we purchase the equipment.

       As we play no part in selecting equipment for use in your business or
       appropriate suppliers, we recommend that you review the equipment you
       have selected to assess whether it needs to be and is Year 2000
       compliant. If it is not, or if you are unsure, you should contact the
       supplier or manufacturer for any specific advice, warranties or
       maintenance and support you may consider appropriate.

       This offer is valid for a period of fourteen days from today;
       nevertheless we reserve the right to revise our terms should monetary,
       economic or taxation conditions change before we purchase the equipment.

       We welcome the opportunity to be of service to you. Please signify your
       acceptance of the above terms by signing and returning the enclosed
       additional copy of this letter.

       Yours sincerely

       David Roberts
       Branch Manager

       For and on behalf of Vari-Lite Production Services Limited

       -----------------------------
       Authorised to sign

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