Exhibit 10.2


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT entered
into and effective as of July 1, 2005, among, FIBERSTARS, Inc.., a California corporation (“Fiberstars”),
and John Davenport (“Employee”);


 


WITNESSETH: 


 


WHEREAS, FIBERSTARS and Employee desire to terminate any and all prior
agreements, whether oral or written, between the parties and between Employee
and FIBERSTARS relating to Employee’s employment; and


 


WHEREAS, FIBERSTARS and Employee desire to
enter into an Employment
Agreement as set forth herein
below to Fiberstars of the
services of Employee as FiberstarsPresident and Chief Executive Officer
and to set forth the rights and duties of the parties hereto,


 


NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:


 


1. Termination of Prior Agreements. 


 


FIBERSTARS and Employee hereby terminate any
and all prior agreements, whether oral or written, between the parties relating
to Employee’s employment, except with regard to the disposition of Fiberstars
warrants and options, provided, however that any existing agreement between
Employee and FIBERSTARS non-competition, non-solicitation or confidentiality or
ownership of intellectual property rights shall continue in full force and
effect as supplemented by this Employment Agreement.


 


2. Employment. 


 


a. FIBERSTARS hereby employs Employee, and
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.


 


b. During the term of this Employment
Agreement, (for purposes hereof, all references to the term of this Employment
Agreement shall be deemed to include all renewals or extensions hereof, if
any), Employee shall devote his full business time to his employment and shall
perform diligently such duties as are, or may be, required by the Board of
Directors of FIBERSTARS or their designee, which duties shall be within the
bounds of reasonableness and acceptable business standards and ethics.


 





















 


c. During the term of this Employment
Agreement, Employee shall not, without the prior written consent of FIBERSTARS,
which shall not be unreasonably withheld, directly or indirectly, render
services of a business, professional or commercial nature to any other person
or firm, whether for compensation or otherwise, other than in the performance
of duties naturally inherent in the businesses of FIBERSTARS or any subsidiary
or affiliate of FIBERSTARS; provided, however, Employee may continue to render
services to and participate in philanthropic and charitable causes. During the
term of this Employment Agreement, Employee shall comply with all policies and
procedures of FIBERSTARS, including but not limited to, all terms and
conditions set forth in any employee handbook and any other memoranda
pertaining to FIBERSTARS policies, procedures, rules and regulations.
Failure to comply with all such policies and procedures shall be grounds for
disciplinary action, including termination for “cause” pursuant to Section 6(a) of
this Employment Agreement.


 


3. Term and Position. 


 


a. Subject to the termination provisions
contained herein, the terms of this Employment Agreement shall commence as of July 1,
2005  and shall continue for a term of
three (3) years from such date, subject, however, to the provisions of Section 6.


 


b. Employee shall serve as President and
Chief Executive Officer of FIBERSTARS, and in such offices or positions with
FIBERSTARS as shall be agreed upon by Employee and the Board of Directors of Fiberstars,
as the case may be, without, however, any change in Employee’s compensation (but
such offices or positions shall be consistent with the office and position
stated herein).


 


c. The principal business office of Employee
shall be in Solon, Ohio


 


4. Compensation. 


 


a. Subject to the provisions of this
Employment Agreement, for all services which Employee may render to FIBERSTARS
during the term of this Employment Agreement, Employee shall receive a salary
at the rate of Two Hundred Fifty Thousand
Dollars ($250,000) per annum for the first year of this Employment
Agreement, which shall be payable in equal, consecutive biweekly installments.


 


b.
Employee will receive an option to purchase shares of the common stock of
Fiberstars, vesting over four years, with the price established as the closing
price of Fiberstars’ stock in the number as described in Exhibit A.  The options shall have a term of ten (10) years.


 


c. Provided that Employee satisfactorily
performs his services under this Employment Agreement, Employee shall be
eligible for salary increases from time to time as determined by the
Compensation Committee of FIBERSTARS.


 


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e. Provided that Employee has satisfactorily
performed his services under this Employment Agreement, Employee shall be
eligible for bonuses from time to time as described on Exhibit A.


 


5. Other Benefits.



 


During the term of this Employment Agreement,
Employee shall be entitled to such vacation privileges, life insurance, medical
and hospitalization benefits, and such other benefits as are typically provided
to other executive officers of FIBERSTARS and its subsidiaries in comparable
positions; provided, however, that such benefits shall he comparable to those
benefits provided by FIBERSTARS in FIBERSTARS fiscal year ended December 31,
2004.


 


6. Termination and Further Compensation.



 


a. The employment of Employee under this
Employment Agreement, for the term thereof, may be terminated by the Board of
Directors of FIBERSTARS for cause at any time. For purposes hereof, the term “cause”
shall mean:


1. Employee’s committing an act constituting
a misdemeanor involving fraud, dishonesty, or theft or a felony;


2. Employee’s engaging in habitual or
repeated alcohol or drug abuse’;


3. Employee’s disregarding the instructions
of the Board of Directors.


4. Employee’s neglecting duties (other than
by reason of disability or death), with five (5) business days notice to
cure;


5. Employee’s willful misconduct or gross
negligence; or


6. Employee’s material breach of this
Employment Agreement, in whole or in part, with five (5) days notice to
cure.


 


Any termination by reason of the foregoing
shall not be in limitation of any other right or remedy Fiberstars may have
under this Employment Agreement or otherwise.


 


b. In the event of (i) termination of
the Employment Agreement for any of the reasons set forth in Subparagraph (a) of
this Section 6, or (ii) if Employee shall voluntarily terminate his
employment hereunder prior to the end of the term of this Employment Agreement,
then in either event Employee shall be entitled to no further salary, bonus or
other benefits under this Employment Agreement, except as to that portion of
any unpaid salary and other benefits accrued and earned by him hereunder up to
and including the effective date of such termination. In the event the Employee
voluntarily terminates this Employment Agreement, Employee shall provide 30
days’ prior written notice to FIBERSTARS of such voluntary termination.


 


c. In the event that FIBERSTARS terminates
Employee’s employment without “cause” (as defined herein above) or Employee
terminates employment with


 


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“good reason” ( as defined below) prior to
the end of the term of this Employment Agreement, then, in addition to any
salary and bonus amounts and medical benefits due to Employee for the remainder
of the term or renewal term of this Employment Agreement, as the case may be,
Employee shall be entitled to an immediate payment equal to three (3) months
salary upon the terms and as set forth herein; provided however, notwithstanding
continuation salary following such termination, bonus amounts shall be paid or
payable with respect only to fiscal years of Fiberstars commencing prior to
such termination. Such salary, bonus and benefits shall be paid in accordance
with FIBERSTARS normal payment practices. At the conclusion of the term of this
Employment Agreement, all salary, medical and other benefits as set forth
herein shall cease. Employee shall have no other rights and remedies except as
set forth in this Section 6. For purposes hereof, the tern “good reason”
shall mean (i) without the express written consent of Employee, a material
reduction of Employee’s duties, authority, compensation, benefits or
responsibilities or (ii) a material breach of this Employment Agreement by
FIBERSTARS.


 


d, In the event of Employee’s death or
permanent disability (as defined herein below) occurring during the term of
this Employment Agreement, this Employment Agreement shall be deemed terminated
for cause and Employee or his estate, as the case may be, shall be entitled to
no further salary or other compensation provided for herein except as, to that
portion of any unpaid salary accrued or earned by Employee hereunder up to and
including the date of death or permanent disability, and any benefits under any
insurance policies or other plans.


 


e. “Permanent disability” means the inability
of Employee to perform satisfactorily his usual or customary occupation for a
period of 120 days in the aggregate out of 150 consecutive days as a result of
a physical or mental illness or other disability which in the written opinion
of a physician of recognized ability and reputation, is likely to continue for
a significant period of time.


 


f. In the event this Employment Agreement is
terminated with cause, before the end of the term, FIBERSTARS may, in its sole
discretion, notify Employee that FIBERSTARS intends to continue to pay all
compensation, benefits and monies due under the terms of the Employment
Agreement for the remainder of the term. In such event, and provided FIBERSTARS
continues to make such payments, Employee shall continue to be bound by the
terms of the non-competition provisions in Section 7 hereof, during the
remainder of the term and for a period of one ( 1) year immediately following
the stated term of the Agreement.


 


g. Rights upon a change in control:  If the Fiberstars consummates a merger or consolidation
in which the Fiberstars’ shareholders do not retain at least 50% of the
surviving corporation’s stock (a “Change of Control”), this contract will
continue in full effect.  If such a
change in control occurs up to 6 months before the termination of Executive’s
employment hereunder, then this Agreement shall be extended (the “Extended
Employment Agreement”) in the same form and


 


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substance as in effect immediately prior to
the Change in Control, except that the termination date of this Agreement shall
be that date which would permit the Extended Employment Agreement to continue
in effect for an additional period of time equal to six (6) months after
the notice of termination of employment. 
Also, if such change in control occurs all Employee options granted
under this agreement will become fully vested.


 


7. Covenants Regarding Non-competition and
Confidential Infomlation. 


 


a.               Non-Competition


 


i. Recognizing that Employee will have been
involved as an executive officer of FIBERSTARS and that FIBERSTARS and its
affiliates, are engaged in the supply of products and/or services in every
state of the United States and internationally, therefore, upon termination of
this employment by FIBERSTARS or its subsidiaries, whether such termination is
initiated by FIBERSTARS or Employee and whether at the expiration of the term
of this Employment Agreement or otherwise, for any reason, he agrees that he
will not, for a period of one (I) year immediately following such termination,
engage, in the United States or in any country where Fiberstars or any of its
subsidiaries or affiliates conduct business, either directly or indirectly on
behalf of himself or on behalf of an another, as an employee, consultant,
director, partner or shareholder ( other than with respect to holding up to one
percent (1%) of a publicly traded corporation) of any corporation, limited
liability company, partnership or other business entity, in any business of the
type and character or in competition with the business carried on by FIBERSTARS
or any of its subsidiaries or affiliates ( as conducted on the date Employee
ceases to be employed by FIBERSTARS in any capacity).


 


ii. Employee will not, for a period of one (1) year
immediately following the termination of his employment by FIBERSTARS or its
subsidiaries, whether such termination is initiated by Fiberstars or Employee
and whether at the expiration of the term of this Employment Agreement or
otherwise, either directly or indirectly or on behalf of another, as an
employee, consultant, director, partner or shareholder (other than with respect
to holding up to one percent (1%) of a publicly traded corporation) of any
corporation, limited liability company, partnership or other business entity,
recruit, hire or otherwise entice any employee(s) of FIBERSTARS or its
subsidiaries or affiliates, to terminate his or her employment with FIBERSTARS
or to accept employment with anyone or any entity other than FIBERSTARS.


 


iii. Employee
will not, for a period of one (1) year immediately following the termination of
his employment by FIBERSTARS or its subsidiaries, whether such termination is
initiated by FIBERSTARS or Employee and whether at the expiration of the term
of this Employment Agreement or otherwise, either directly or indirectly or on
behalf of another, as an employee,
consultant, director, partner or shareholder ( other than with respect to holding up to one percent (1%) of a


 


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publicly
traded corporation) of any corporation, limited liability company, partnership
or other business entity, solicit, do business with or employ any current or former
employee of FIBERSTARS , or any of its subsidiaries or affiliates, or any
customer or client of FIBERSTARS in connection with any business of the type
and character or in competition with the business carried on by FIBERSTARS or
any of its subsidiaries or affiliates ( as conducted on the date Employee
ceases to be employed by FIBERSTARS in any capacity).


 


iv. Employee will not, directly or
indirectly, disclose, divulge, discuss or copy to or for any person or entity,
or otherwise use or suffer to be used in any manner or for any purpose, except
for the benefit of FIBERSTARS or any of its subsidiaries or affiliates, any
ideas, methods, customer lists or other customer information, business plans,
product research or engineering data or other trade secrets, intellectual
property, or any other confidential or proprietary information of FIBERSTARS or
any of its subsidiaries or affiliates, it being acknowledged by Employee that
all such information regarding the business of FIBERSTARS or its subsidiaries
or affiliates conceived, suggested, developed, compiled or obtained by or
furnished to Employee while Employee shall have been employed by or associated
with Fiberstars or its subsidiaries or affiliates is confidential information
and FIBERSTARS’s or its subsidiaries’ or affiliates’ exclusive property
..Employee’s obligations under this Section 7(a)(iv) will not apply to
any information which (A) is known to the public other than as a result of
Employee’s acts or omissions, (B) is approved for release, in writing, by
Fiberstars, (C) is disclosed to Employee by a third party without
restriction, or (D) Employee is legally required to disclose.


 


8. Renewal. 


 


This Employment Agreement shall be
automatically renewed for successive one (1) year periods, notwithstanding
whether the initial terms of this Agreement was for a term other than one (1) year,
unless and until FIBERSTARS or Employee delivers written notice to the other
party of its intent to terminate this Employment Agreement upon completion of
the current term. In the event Employee or FIBERSTARS desires to terminate this
Employment Agreement upon completion of the current term, such terminating
party must deliver written notice to the other party not later than three (3) months
prior to the end of the term (or any successive term) of this Employment
Agreement.


 


9. Severable Provisions. 


 


The provisions of this Employment Agreement
are severable and if anyone or more provisions may be determined to be illegal
or otherwise unenforceable, in whole or in part, the remaining provisions and
any partially unenforceable provision to the extent enforceable in any
jurisdiction shall, nevertheless, be binding and enforceable.


 


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10. Arbitration. 


 


Any controversy or claim arising out of or
relating to this Employment Agreement, or the breach thereof, shall be settled
by arbitration by a single arbitrator in the City of Solon, State of Ohio, in
accordance with the Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator may be entered in any court
having jurisdiction thereof. The Arbitrator shall be deemed to possess the
powers to issue mandatory orders and restraining orders in connection with such
arbitration.


 


11. Notices. 


 


a. Each notice, request, demand or other
communication (“Notice”) by either party to the other party pursuant to this
Employment Agreement shall be in writing and shall be personally delivered or
sent by U.S. certified mail, return receipt requested, postage prepaid, or by
nationally recognized overnight commercial courier, charges prepaid, or by
facsimile transmission (but each such Notice sent by facsimile transmission
shall be confirmed by sending a copy thereof to the other party by U .S. mail
or commercial courier as provided herein no later than the following business
day), addressed to the address of the receiving party or to such other address
as such party shall have communicated to the other party in accordance with
this Section. Any Notice hereunder shall be deemed to have been given and
received on the date when personally delivered, on the date of sending when
sent by facsimile, on the third business day following the date of sending when
sent by mail or on the first business day following the date of sending when
sent by commercial courier.


 


b. If a Notice is to FIBERSTARS, then such
Notice shall be addressed to Fiberstars, Inc. 44259 Noble Drive Fremont CA
94538, attention of the Board of Directors.


 


c. If a Notice is to Employee, then such Notice
shall be addressed to Employee at his home address last known on the payroll
records of FIBERSTARS.


 


12. Waiver. 


 


The failure of either party to enforce any
provision or provisions of this Employment Agreement shall not in any way be
construed as a waiver of any such provision or provisions as to any future
violations thereof, nor prevent that party thereafter from enforcing each and
every other provision of this Employment Agreement. The rights granted the
parties herein are cumulative and the waiver of any single remedy shall not
constitute a waiver of such party’s right to assert all other legal remedies
available to it under the circumstances.


 


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13 .Miscellaneous. 


 


This Employment Agreement supersedes all
prior agreements and understandings between the parties and may not be modified
or terminated orally. No modification, termination or attempted waiver shall be
valid unless in writing and signed by the party against whom the same it is
sought to be enforced.


 


14. Governing Law. 


 


This Employment Agreement shall be governed
by and construed according to the laws of the State of Ohio.


 


IN WITNESS WHEREOF, the
parties have executed this Employment Agreement on the day and year first set forth above.


 


 


	
  WITNESS:

  	
  FIBERSTARS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Donna Prunetti

  	
  By:

  	
  /s/ Robert A. Connors

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   Donna Prunetti

  	
  Name:

  	
  Robert A. Connors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  C.F.O.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John M. Davenport

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John M. Davenport

  



 


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EXHIBIT A (BONUS AND OPTIONS)


 


EXHIBIT A
(COMPENSATION)


 


1.               Annual salary of
$250,000 effective 7/1/2005.


 


2.               Bonus of 25% if
Fiberstars achieves the Operating Income goal established for each year. For
2006, this is based on the operating income in the base (EFO revenue doubles
the 2005 level) plan.  A bonus of 50% is
earned in 2006 if the high plan (EFO revenue triples vs. 2005) operating income
goal is achieved or exceeded.


 


3.               For subsequent
years, the operating income levels for a base (25% bonus) and high  (50% bonus) plan will be mutually negotiated
between John and the board of directors.


 


4.               200,000 options to
purchase Fiberstars stock on the standard four year vesting schedule with
a strike price as of July 1, 2005.


 


5.               50,000 options
awarded on December 31, 2006 if  EFO
revenue at least doubles vs. 2005.  Bonus
of 100,000 options on December 31, 2006 if EFO revenue at least triples
vs. 2005.


 


6.               Bonus of 50,000
options awarded as of December 31, 2007 if the base level of EFO revenue
is achieved for that year. Bonus of 100,000 options on December 31, 2007
if the high level of EFO sales is achieved for that year.


 


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