FIBERSTARS INC /CA/
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>5
<FILENAME>v02198_ex10-43.txt
<TEXT>
                                  EXHIBIT 10.42

                            INDEMNIFICATION AGREEMENT


      THIS AGREEMENT (the "Agreement") is made and entered into this ____ day of
January, 2003 between Fiberstars, Inc., a California corporation (the
"Corporation"), and ________________________ ("Officer").

      WHEREAS, Officer, an officer of the Corporation, performs a valuable
service in such capacity for the Corporation;

      WHEREAS, the Articles of Incorporation and Bylaws of the Corporation
authorize and permit contracts between the Corporation and an officer with
respect to indemnification of such officers;

      WHEREAS, in accordance with the authorization as provided by the
California Corporations Code, as amended (the "Code"), the Corporation may
purchase and maintain a policy or policies of Directors and Officers Liability
Insurance ("D & O Insurance"), covering certain liabilities which may be
incurred by Officer in his or her performance as an officer of the Corporation;
and

      WHEREAS, as a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded members of the Board of Directors by such D & O
Insurance and by statutory and bylaw indemnification provisions.

      NOW, THEREFORE, in consideration of Officer's service as an officer, the
parties hereto agree as follows:

      1. Indemnity of Officer. The Corporation hereby agrees to hold harmless
and indemnify officer to the fullest extent authorized by the provisions of the
Code, as it may be amended from time to time.

      2. Additional Indemnity. Subject only to the limitations set forth in
Section 3 hereof, the Corporation hereby further agrees to hold harmless and
indemnify Officer:

      (a) against any and all expenses (including attorneys' fees), witness
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by Officer in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Corporation) to
which Officer is, was, or at any time becomes a party, or is threatened to be
made a party, by reason of the fact that Officer is, was, or at any time becomes
an officer, director, employee or agent of the Corporation, or is or was serving
or at any time serves at the request of the Corporation as an officer, director,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise; and

      (b) otherwise to the fullest extent as may be provided to Officer by the
Corporation under the Articles of Incorporation of the Corporation and the Code.



                                      -1-
<PAGE>

      3. Limitations on Additional Indemnity.

      (a) No indemnity pursuant to Section 2 hereof shall be paid by the
Corporation for any of the following:

            (i) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of such losses for which the Officer is indemnified
pursuant to Section 1 hereof or pursuant to any D & O Insurance purchased and
maintained by the Corporation;

            (ii) in respect to remuneration paid to Officer if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;

            (iii) on account of Officer's acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law;

            (iv) on account of any action, claim or proceeding (other than a
proceeding referred to in Section 8(b) hereof) initiated by Officer unless such
action, claim or proceeding was authorized in the specific case by action of the
Board of Directors;

            (v) on account of Officer's conduct which is the subject of an
action, suit or proceeding described in Section 7(c)(ii) hereof; or

            (vi) if a final decision by a Court having jurisdiction in the
matter shall determine that such indemnification is not lawful (and, in this
respect, both the Corporation and officer have been advised that the Securities
and Exchange Commission believes that indemnification for liabilities arising
under the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication).

      (b) In addition to those limitations set forth above in paragraph (a) of
this Section 3, no indemnity pursuant to Section 2 hereof in an action by or in
the right of the Corporation shall be paid by the Corporation for any of the
following:

            (i) on account of acts or omissions that Officer believes to be
contrary to the best interests of the Corporation or its shareholders or that
involve the absence of good faith on the part of Officer;

            (ii) with respect to any transaction from which Officer derived an
improper personal benefit;

            (iii) on account of acts or omissions that show a reckless disregard
for Officer's duty to the Corporation or its shareholders in circumstances in
which Officer was aware, or should have been aware, in the ordinary course of
performing an officer's duties, of a risk of serious injury to the Corporation
or its shareholders;

            (iv) on account of acts or omissions that constitute an unexcused
pattern of inattention that amounts to an abdication of Officer's duty to the
corporation or its shareholders;



                                      -2-
<PAGE>

            (v) in respect of any claim, issue or matter as to which Officer
shall have been adjudged to be liable to the Corporation in the performance of
Officer's duty to the Corporation and its shareholders, unless and only to the
extent that the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, officer is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that the court shall determine;

            (vi) of amounts paid in settling or otherwise disposing of a pending
action without court approval; or

            (vii) of expenses incurred in defending a pending action which is
settled or otherwise disposed of without court approval.

      4. Contribution. If the indemnification provided in Sections 1 and 2
hereof is unavailable by reason of a Court decision described in subsection
3(a)(vi) hereof based on grounds other than any of those set forth in
subsections 3(a)(ii) through (v) hereof or in subsections 3(b)(i) through (iv)
hereof, then in respect of any threatened, pending or completed action, suit or
proceeding in which the Corporation is jointly liable with Officer (or would be
if joined in such action, suit or proceeding), the Corporation shall contribute
to the amount of expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred and paid or payable
by Officer in such proportion as is appropriate to reflect (i) the relative
benefits received by the Corporation on the one hand and Officer on the other
hand from the transaction from which such action, suit or proceeding arose, and
(ii) the relative fault of the Corporation on the one hand and of Officer on the
other in connection with the events which resulted in such expenses, judgments,
fines or settlement amounts, as well as any other relevant equitable
considerations. The relative fault of the Corporation on the one hand and of
Officer on the other shall be determined by reference to, among other things,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent the circumstances resulting in such expenses, judgments,
fines or settlement amounts. The Corporation agrees that it would not be just
and equitable if contribution pursuant to this Section 4 were determined by pro
rata allocation or any other method of allocation which does not take account of
the foregoing equitable considerations.

      5. Continuation of Obligations. All agreements and obligations of the
Corporation contained herein shall continue during the period Officer is an
officer, director, employee or agent of the Corporation (or is or was serving at
the request of the Corporation as an officer, director, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise) and shall continue thereafter so long as Officer shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by reason of the fact
that Officer was an officer of the Corporation or serving in any other capacity
referred to herein.

      6. Notification and Defense of Claim. Not later than thirty (30) days
after receipt by Officer of notice of the commencement of any action, suit or
proceeding, officer will, if a claim in respect thereof is to be made against
the Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to officer otherwise than under this Agreement.




                                      -3-
<PAGE>

With respect to any such action, suit or proceeding as to which Officer notifies
the Corporation of the commencement thereof:

      (a) the Corporation will be entitled to participate therein at its own
expense;

      (b) except as otherwise provided below, to the extent that it may wish,
the Corporation jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Officer. After notice from the Corporation to. Officer of its
election so as to assume the defense thereof, the Corporation will not be liable
to Officer under this Agreement for any legal or other expenses subsequently
incurred by officer in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Officer shall have the
right to employ its counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Officer unless (i)
the employment of counsel by officer has been authorized by the Corporation,
(ii) Officer shall have reasonably concluded that there may be a conflict of
interest between the Corporation and officer in the conduct of the defense of
such action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of Officer's separate counsel shall be at the expense of the Corporation. The
Corporation shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Corporation or as to which officer
shall have made the conclusion provided for in (ii) above; and

      (c) the Corporation shall not be liable to indemnify Officer under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. The Corporation shall be permitted to settle any
action except that it shall not settle any action or claim in any manner which
would impose any penalty or limitation on Officer without Officer's written
consent. Neither the Corporation nor Officer will unreasonably withhold its
consent to any proposed settlement.

      7. Advancement and Repayment of Expenses.

      (a) In the event that Officer employs his own counsel pursuant to Section
6(b)(i) through (iii) above, the Corporation shall advance to Officer, prior to
any final disposition of any threatened or pending action, suit or proceeding,
whether civil, criminal, administrative or investigative, any and all reasonable
expenses (including legal fees and expenses) incurred in investigating or
defending any such action, suit or proceeding within ten (10) days after
receiving copies of invoices presented to Officer for such expenses; and

      (b) Officer agrees that Officer will reimburse the Corporation for all
reasonable expenses paid by the Corporation in defending any civil or criminal
action, suit or proceeding against Officer in the event and only to the extent
it shall be ultimately determined by a final judicial decision (from which there
is no right of appeal) that officer is not entitled, under applicable law, the
Bylaws, this Agreement or otherwise, to be indemnified by the Corporation for
such expenses.



                                      -4-
<PAGE>

      (c) Notwithstanding the foregoing, the Corporation shall not be required
to advance such expenses to Officer if Officer (i) commences any action, suit or
proceeding as a plaintiff unless such advance is specifically approved by a
majority of the Board of Directors or (ii) is a party to an action, suit or
proceeding brought by the Corporation and approved by a majority of the Board
which alleges willful misappropriation of corporate assets by Officer,
disclosure of confidential information in violation of Officer's fiduciary or
contractual obligations to the Corporation, or any other willful and deliberate
breach in bad faith of Officer's duty to the Corporation or its shareholders.

      8. Enforcement. In the event Officer is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, the Corporation shall reimburse Officer for all of officer's
reasonable fees and expenses in bringing and pursuing such action.

      9. Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Officer, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.

      10. Non Exclusivity of Rights. The rights conferred on officer by this
Agreement shall not be exclusive of any other right which Officer may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or Officers, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.

      11. Survival of Rights. The rights conferred on Officer by this Agreement
shall continue after Officer has ceased to be an officer, director, employee or
other agent of the Corporation and shall inure to the benefit of officer's
heirs, executors and administrators. 12. Severability. Each of the provisions of
this Agreement is a separate and distinct agreement and independent of the
others, so that if any provision hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of the other provisions hereof.

      13. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California.

      14. Binding Effect. This Agreement shall be binding upon officer and upon
the Corporation, its successors and assigns, and shall inure to the benefit of
officer, his heirs, personal representatives and assigns and to the benefit of
the Corporation, its successors and assigns.

      15. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.



                                      -5-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.

                                FIBERSTARS, INC.



                                By
                                   --------------------------------------------
                                                    David Ruckert
                                        President and Chief Executive Officer


                                OFFICER



                                   --------------------------------------------


                                   --------------------------------------------
                                               (Print Name and Title)




                                      -6-

</TEXT>
</DOCUMENT>
