Exhibit 10.3

 

SEVERANCE AGREEMENT

 

THIS SEVERANCE AGREEMENT is entered into by and among David N. Ruckert (the
“Employee”) and  FIBERSTARS, INC. (the “Company”).

 

Instructions To Employee.

 

This Severance Agreement is an important document which you should examine
carefully before signing.  You are encouraged to seek the advice of anyone you
need to in order to make an informed decision, including an attorney.

 

1.             TERMINATION OF EMPLOYMENT.

 

I resigned as Chief Executive Officer of the Company effective July 1, 2005, and
understand that my employment with the Company will terminate effective
September 30, 2005 (“Termination Date”).

 

2.             Amount of Severance Pay.

 

I understand that I am entitled to severance pay in the amount of $332,075.88,
subject to my execution and non-revocation of an Agreement and Release in the
form attached as Exhibit A.  This amount is equal to eighteen months’ base
salary.    I understand that taxes and other legally required deductions will be
withheld from the severance amount and that no amounts will be withheld for
contribution to the Company’s 401(k) plan.  The severance will be paid in equal
insallments over 36 months, beginning October 1, 2005.  If the Company closes a
financing of $5 million or higher at any time prior to the 36 month period, the
balance of the severance amount will be paid in a lump sum as soon as
practicable following the close of the Financing, but not later than 2 months
after the financing closes.

 

3.             CONFIDENTIALITY.

 

On 10/16/87 I signed the agreement attached as Exhibit B regarding confidential
information and intellectual property in which I agreed to protect Company
confidential information both during and after my employment (“Confidentiality
Agreement”).  In the course of my employment I had access to confidential
Company information which I am required to keep confidential both during and
after my employment.  As a condition of accepting the severance payment set
forth in Section 2 above, I reaffirm my obligation to keep secret all
confidential information that belongs to the Company and to comply with the
terms of the enclosed Confidentiality Agreement.

 

4.             PROPERTY OF THE COMPANY.

 

I agree to return all property that belongs to the Company.

 

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5.             Section 409A.

 

This Agreement is intended to comply with the requirements of Section 409A of
the Internal Revenue Code (to the extent applicable).  Should the Company in
good faith determine that any benefits to be provided to me pursuant to this
Agreement are subject to Section 409A, the Company may delay the payment of such
benefits for at least six (6) months (or such other period as may be applicable)
following my separation from service with the Company, after first notifying me
of its intention to do so.

 

6.             Entire Agreement.

 

The provisions of this Agreement, the Agreement and Release attached as
Exhibit A, and the Confidentiality Agreement attached as Exhibit B set forth the
entire agreement between the Company and me concerning termination of my
employment.  Any other promises, written or oral, are replaced by the provisions
of this document, and are no longer effective unless they are contained in this
document.

 

7.             ENFORCEABILITY.

 

The fact that any provision of this Agreement is found invalid or unenforceable
shall not affect the validity or enforceability of the remainder of this
Agreement.

 

8.             APPLICABLE LAW.

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of California, notwithstanding any California choice of laws rule to
the contrary.

 

9.             EXECUTION IN COUNTERPART.

 

This Agreement may be executed in counterparts and will be valid even though the
signatures of all parties do not appear on the same page.

 

 

By:

/s/ David N. Ruckert

 

Sept. 15, 2005

 

Employee Signature

 

Date

 

 

 

 

By:

/s/ Robert A. Connors

 

Sept. 16, 2005

 

CFO

 

Date

 

for Fiberstars, Inc.

 

 

 

Attachments:

Exhibit A: Agreement and Release

Exhibit B: Confidentiality Agreement

 

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EXHIBIT A
AGREEMENT AND RELEASE

 

This Agreement and Release (“Agreement”), effective the 30th day of September,
2005, is entered into between David N. Ruckert  (“Employee”) and
Fiberstars, Inc. (“Company”), with regard to the following:

 

Resignation.  Employee resigned from his position as Chief Executive Officer
effective July 1, 2005, and resigns as an employee effective September 30, 2005
(the “Termination Date”).

 

Severance Payments.  In consideration of the covenants and promises contained in
this Agreement and the Severance Agreement between the Company and Employee
dated               (“Severance Agreement”), the Company will pay Employee
severance in accordance with the terms of the Severance Agreement.

 

Release.  In consideration of the above described payments, Employee does hereby
unconditionally, irrevocably and absolutely release and discharge the Company,
and all related holding, parent or subsidiary entities and Company employee
benefit plans, and their affiliates, directors, officers, employees, agents,
attorneys, stockholders, insurers, successors and/or assigns (“Released
Parties”), from any and all liability, claims, demands, causes of action, or
suits of any type, whether in law and/or in equity, known or unknown, related
directly or indirectly or in any way connected with any transaction, affairs or
occurrences between them to date, including, but not limited to, Employee’s
employment with the Company, Employee’s resignation from his position as Chief
Executive Officer and his agreement to terminate his employment as set forth in
the Severance Agreement. This release shall include but not be limited to a
release of claims arising under any state or federal statute or common law
regulating or affecting employment, including Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act of 1974, the California Labor Code, the
California Fair Employment and Housing Act, and any other statutory or common
law provision relating to or affecting Employee’s employment by the Company,
including any federal or state statutory provision covering any age
discrimination in any form by the Company against Employee, except any claim for
worker’s compensation.

 

Claims.  In further consideration of the above described payments and benefits,
Employee irrevocably and absolutely agrees that he will not prosecute nor allow
to be prosecuted on his behalf in any administrative agency, whether federal or
state, or in any court, whether federal or state, any claim or demand of any
type related to the matter release above.  It is the intention of the parties
that, with the execution of this Agreement, the Released Parties will be
absolutely, unconditionally and forever discharged of and from all obligations
to or on behalf of Employee related in any way to the matter discharged herein. 
Employee represents that he has not filed any complaint, charges or lawsuits
against the Released Parties with any governmental agency or any court.

 

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Unknown Claims.  Employee understands and agrees that this release extends to
all claims of every nature, known or unknown, suspected or unsuspected, past or
present, and that any and all rights granted to Employee under Section 1542 of
the California Civil Code or any analogous federal law or regulation are hereby
expressly waived.  Said Section 1542 of the California Civil Code reads as
follows:

 

“A general release does not extend to claims which the creditor does not know of
or suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

 

Notwithstanding any provisions of this Agreement to the contrary, Employee does
not waive any right or release any claim against the Company which claim or
right arises from the Company failing to perform its undertakings as set forth
in the Severance Agreement and/or may arise after the date of this Agreement.

 

Effect on Previous or Existing Agreements.  This Agreement is intended to
resolve any and all issues between Employee and the Company, including, without
limitation, any and all claims for wages, severance pay, compensation, benefits,
or other aspects of the employment relationship between Employee and the Company
through the date hereof.  This Agreement shall supersede and extinguish all
prior employment agreements, express or implied, verbal or written, between
Employee and the Company except the Severance Agreement, which is incorporated
by reference herein.  In addition, this Agreement shall have no effect on the
Confidentiality and Assignment of Inventions Agreement, previously signed by
Employee.  This Agreement shall also not in any way supersede or affect any
obligation of Employee, contractual or otherwise, with respect to the
disclosure, use of protection of any proprietary or confidential information of
the Company, including any trade secrets, or with respect to the disclosure and
assignment of inventions made or conceived by Employee during his employment. 
All previous written agreements and obligations imposed by any contract relating
to the intellectual property of the Company or its subsidiary or affiliated
entities shall remain in full force and effect and survive the execution of this
Agreement.

 

Binding Effect.  Employee further declares and represents that no promise,
inducement or agreement not expressed herein has been made to him and that this
Agreement contains the entire agreement between the parties relating to the
subject matter hereof.

 

Successors.  The Company and Employee understand and expressly agree that this
Agreement shall bind and benefit the heirs, partners, successors, employees,
directors, stockholders, officers, attorneys, affiliates, predecessors,
representatives and assigns of the Company and Employee.

 

Publicity.  The parties hereto agree not to divulge or publicize the existence
of this Agreement or the terms hereof except as may be necessary to enforce this
Agreement or as may be required by law.

 

Interpretation.  The validity, interpretation, and performance of this Agreement
shall be construed and interpreted according to the laws of the State of
California.  This Agreement shall

 

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not be interpreted for or against either party hereto on the ground that such
party drafted or caused this Agreement to be drafted.  If any provision of this
Agreement, or part thereof, is held invalid, void or voidable as against the
public policy or otherwise, the invalidity shall not affect other provisions, or
parts thereof, which may be given effect without the invalid provision or part. 
To this extent, the provisions, and parts thereof, of this Agreement are
declared to be severable.

 

Arbitration of Disputes.  Any controversy involving the construction or
application of any terms, covenants or conditions of this Agreement, or any
claims arising out of any alleged breach of this Agreement, will be governed by
the rules of the American Arbitration Association and submitted to and settled
by final and binding arbitration in Santa Clara County, California.

 

No Admissions.  It is agreed that this Agreement is not an admission of any
liability or fault whatsoever by either the Company or Employee.

 

Execution and Revocation Periods.  Employee’s employment may be considered
terminated as part of a group layoff.   Attached is additional information about
the job titles and ages of all individuals currently selected for termination
and the ages of all individuals in the same job classification not currently
selected for termination.  Employee has forty-five (45) days after actual
receipt of this Agreement in which to consider and execute this Agreement. 
Employee has a period of seven (7) days following the execution of this
Agreement in which to revoke this Agreement.  This Agreement will not become
effective or enforceable, and no benefits will be paid under the Severance
Agreement, until the revocation period has expired.

 

Counsel.  Employee acknowledges that he fully understands his right to discuss
this Agreement with independent counsel of his choice, that he is encouraged to
do so, that he has carefully read and fully understands this entire Agreement
and that he is voluntarily entering into this Agreement.

 

The undersigned have executed this Agreement on this 15 day of September, 2005
at Coronado, California.

 

 

EMPLOYEE:

EMPLOYER:

/s/ David N. Ruckert

 

By:

/s/ Robert A. Connors

 

 

Name:

Robert A. Connors

 

 

Title:

CFO

 

 

 

Fiberstars, Inc.

 

 

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