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.


 





















 


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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