Exhibit 10.1


 


FIRST AMENDMENT TO PRODUCTION SHARE AGREEMENT


 


THIS FIRST AMENDMENT TO
PRODUCTION SHARE AGREEMENT is effective as of August 17, 2005 (the “Effective
Date”), by and between North American Production Sharing, Inc., a
California corporation (hereinafter “North American”), Industrias Unidas de
B.C., S.A. de C.V. (“North American Mexican Affiliate”) and Fiberstars, Inc.,
a California corporation (“Client”).


 


WHEREAS, North American,
North American Mexican Affiliate and Client entered into that certain
Production Share Agreement effective October 9, 2003 (hereinafter the “Production
Share Agreement”);


 


WHEREAS, North American
and North American Mexican Affiliate have advised Client that it has reached
agreement with the landlord for early termination of the lease for the plant
facility located at Calle Antigua a Tecate # 16760 Nave 25, Parque Industrial
Los Pinos, Colonia Niños Heroes Este, Tijuana. B.C. in the Republic of Mexico
(the “Facility”) which North American Mexican Affiliate subleases to Client
under the Production Share Agreement should Client early terminate the
Production Share Agreement effective as of November 17, 2006 as provided
herein below;


 


WHEREAS, North American
and Client desire to amend the Production Share Agreement in the manner
hereinafter set forth below:


 


NOW, THEREFORE, in
consideration of the mutual covenants contained herein and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:


 


1.             The Production Share Agreement.  Except as specifically set forth herein in
this First Amendment to Production Share Agreement (hereinafter “First
Amendment”), the parties hereby ratify and confirm each and every term,
representation, warranty, covenant and condition of said Production Share
Agreement which shall remain in full force and effect; provided, however, that
in the event of any conflict between the Production Share Agreement and this
First Amendment, this First Amendment shall govern and control.  Unless otherwise specifically provided for in
this First Amendment, all capitalized terms used throughout this First
Amendment shall have the same meaning as such terms are defined in the
Production Share Agreement.


 


2.             Termination Without Cause.  The following section is hereby added to
the Production Share Agreement:


 


“9.3         Termination Without Cause.


 


Client shall have the right to terminate this
Agreement early and without cause (“Early Termination”) effective during the
period commencing on November 17, 2006 and ending on November 17,
2007 (when the renewal term otherwise expires), subject to the additional terms
and conditions specified herein.  Client
shall provide North American with a minimum of ninety (90) days prior written
notice of Client’s intention to terminate this Agreement pursuant to this
section.  Early Termination of this
Agreement pursuant to this section shall be deemed effective ninety (90)
days after the date of such notice of intention to terminate, unless (i) the
notice of termination specifies an effective termination date that


 


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is more than ninety (90) days after the date of such notice (in which
case such later date shall be the effective termination date), or (ii) the
parties agree in writing otherwise (“Early Termination Date”). Early
Termination of this Agreement pursuant to this Section 9.2 shall be
subject to the following:


 


(a)  regardless of the Early Termination Date, after Early
Termination Client shall retain its existing responsibility for payment
obligations as provided by the Production Share Agreement for (i) Severance
Pay obligations, and (ii) its Facility lease related payment obligations
for the remainder of the renewal term of this Agreement as the same otherwise
become due and payable in the regular course from Client to North American
under the Production Share Agreement in the absence of Early Termination; provided, however, that no charges for Facility rent,
Facility utilities, Facility janitorial service, Facility insurance and other
Facility lease related payment obligations shall become due and payable by
Client after the Early Termination Date should Client timely deliver notice of
an Early Termination with an Early Termination Date of November 17, 2006; provided further, however, that an effective Early
Termination as of November 17, 2006 or otherwise is not intended to
release Client from those provisions of the Production Share Agreement which
relate to the condition in which Client is to return the Facility as of lease
termination as the same are set forth at the last sentence of Section 2.2
of the Production Share Agreement. 
Further, if the Early Termination Date is any date after November 17,
2006, Client shall retain all existing payment obligations as provided by the
Production Share Agreement in connection with the Lease for the Facility.  If this occurs, North American shall use its
best efforts to minimize the costs for which Client is responsible in
connection with the Lease and/or the Facility which accrue after November 17,
2006.


 


(b)  on or before the Early Termination Date, if any, Client shall
pay North American a fee equal to the sum of 20 Personnel at 48 hours per week
at the rate of $3.00 per hour times the number of weeks remaining in the
renewal term, the total of which shall be divided by two. For example, if the
termination date is November 17, 2006, the termination fee shall be
calculated as follows:  20 Personnel x 48
hours x $3.00 per hour x 52 weeks divided by 2 equals $74,880.00.  The parties acknowledge and agree that in the
event of Early Termination of this Agreement in accordance with this section it
would be impracticable and/or extremely difficult to determine the losses
suffered by North American and that the amount set forth herein represents the
parties’ best and most reasonable estimate of the losses which North American
would incur in the case of Early Termination of this Agreement.  The parties further acknowledge that the
amount set forth in this subparagraph shall not be deemed to constitute a
forfeiture or penalty.


 


Nothing contained herein shall relieve Client of any payment
obligations or other liabilities which were incurred on its behalf prior to the
Termination Date or any other representations, warranties and any other obligations
which are deemed to survive the termination of this Agreement.  North American shall use its best efforts to
minimize the costs for which Client is responsible in connection with this Section 9.3,
including Severance Pay obligations.”


 


3.             Further Assurances. The parties shall execute,
acknowledge and deliver such other instruments and take any and all action as
may be necessary or appropriate to carry out the full intent and purpose of the
Production Share Agreement, as amended by the First Amendment.


 


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4.             Entire Agreement. 
This First Amendment constitutes and contains the entire agreement of
the parties with respect to the subject matter hereof, and supersedes any and
all other prior negotiations, correspondence, understandings and agreements
respecting the subject matter hereof and thereof.


 


5.             Severability. 
If any provision of this First Amendment shall be invalid or
unenforceable for any reason and to any extent, the remainder of the First
Amendment shall not be affected thereby, but rather shall be enforced to the
fullest extent permitted by law.


 


6.             Counterpart Originals.  This First Amendment may be executed in one
or more counterparts.  All such
counterparts, when taken together, shall comprise the fully executed First
Amendment.  This First Amendment may also
be executed by delivery by facsimile of an executed counterpart original of
this First Amendment.  The parties shall
thereafter exchange the original documents bearing original signatures, but the
failure to do so shall not affect the enforceability of this First Amendment.


 


7.             Parties of Interest.  Each party represents that this First
Amendment is executed by its duly authorized representative.  The terms of this First Amendment shall be
binding upon, and inure to the benefit of, the parties to this First Amendment
and their successors and assigns.


 


8.             Time of the Essence.  Time is of the essence with respect to all
provisions of this First Amendment that specify a time for performance of any
obligations of the parties hereunder.


 


IN WITNESS WHEREOF, the
parties have executed this First Amendment to Production Share Agreement
effective as of the date set forth above.


 


 


	
  “NORTH
  AMERICAN”

  	
   

  	
   

  	
  “INDUSTRIAS
  UNIDAS DE B.C., S.A.

  DE C.V.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North
  American Production Sharing, Inc.

  a California corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ William E. Lew

  	
   

  	
  By:

  	
  /s/ Richard F. Jaime

  	
   

  
	
   

  	
  William
  E. Lew

  	
   

  	
  Printed
  Name:

  	
  Richard
  F. Jaime

  	
   

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
    Sole Administrator

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “CLIENT”

  	
   

  	
   

  	
   

  
	
  Fiberstars, Inc.

  	
   

  	
   

  	
   

  
	
  a
  California Corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert A. Connors

  	
   

  	
   

  	
   

  
	
  Printed
  Name: 

  	
  Robert
  A. Connors

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice
  President, Finance and

  	
   

  	
   

  	
   

  
	
  Chief
  Financial Officer

  	
   

  	
   

  	
   

  	
   

  
											



 


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