Prepared by MERRILL CORPORATION




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Exhibit 4.1  






FIBERSTARS, INC.
  a California corporation 


and 


MELLON INVESTOR SERVICES LLC
  a New Jersey limited liability company 


Rights
Agent 




Rights
Agreement 


Dated
as of September 20, 2001 









 
 
 

TABLE OF CONTENTS    
  



	 
	 	 
	 	Page

	1.	 	Certain Definitions	 	1
	2.	 	Appointment of Rights Agent	 	4
	3.	 	Issue of Rights Certificates	 	4
	4.	 	Form of Rights Certificates	 	5
	5.	 	Countersignature and Registration	 	6
	6.	 	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates	 	7
	7.	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	7
	8.	 	Cancellation and Destruction of Rights Certificates	 	9
	9.	 	Reservation and Availability of Preferred Stock	 	9
	10.	 	Preferred Stock Record Date	 	10
	11.	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	11
	12.	 	Certificate of Adjusted Purchase Price or Number of Shares	 	17
	13.	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	 	17
	14.	 	Additional Covenants	 	19
	15.	 	Fractional Rights and Fractional Shares	 	19
	16.	 	Rights of Action	 	20
	17.	 	Agreement of Rights Holders	 	21
	18.	 	Rights Certificate Holder Not Deemed a Shareholder	 	21
	19.	 	Concerning the Rights Agent	 	21
	20.	 	Merger or Consolidation or Change of Name of Rights Agent	 	22
	21.	 	Rights and Duties of Rights Agent	 	22
	22.	 	Change of Rights Agent	 	24
	23.	 	Issuance of New Rights Certificates	 	25
	24.	 	Redemption, Termination and Exchange	 	25
	25.	 	Notice of Certain Events	 	28
	26.	 	Notices	 	28
	27.	 	Supplements and Amendments	 	29
	28.	 	Determination and Actions by the Board	 	29
	29.	 	Successors	 	30
	30.	 	Benefits of This Agreement	 	30
	31.	 	Severability	 	30
	32.	 	Governing Law	 	30
	33.	 	Counterparts	 	30
	34.	 	Descriptive Headings	 	30





	Exhibit A—Certificate of Determination of Series A Participating Preferred Stock	 	A-1
	Exhibit B—Form of Rights Certificate	 	B-1
	Exhibit C—Form of Summary of Rights	 	C-1




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RIGHTS AGREEMENT    
  


    THIS RIGHTS AGREEMENT (this "Agreement") is dated as of September 20, 2001, between
FIBERSTARS, INC., a California corporation (the "Company"), and MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company (the
"Rights Agent"). 


W
I T N E S S E T H: 


    WHEREAS,
on September 12, 2001, the Board of Directors of the Company (the "Board") authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of Common Stock, of the Company (the "Common Stock") outstanding as of the Close of
Business on September 26, 2001 (the "Record Date"), and contemplates the issuance of one Right (subject to adjustment as provided herein) for
each share of Common Stock issued between the Record Date and the earlier of the Distribution Date and the Expiration Date, as such terms are hereinafter defined (with Rights also to be issued in
connection with certain issuances of Common Stock after the Distribution Date, as provided more fully herein), each Right representing the right to purchase one one-thousandth of a share
of Series A Participating Preferred Stock of the Company (the "Preferred Stock") having the rights, powers and preferences set forth in the form
of Certificate of Determination attached hereto as Exhibit A (the "Certificate of
Determination"), upon the terms and subject to the conditions hereinafter set forth (the "Rights"). 



    NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto hereby agree as follows: 


    1.  Certain Definitions.  For purposes of this Agreement, the following terms have the meanings
indicated: 



    (a) "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of fifteen
percent (15%) or more of the shares of Common Stock then outstanding or who was such a Beneficial Owner at any time on or after the date hereof, whether or not such Person continues to be
the Beneficial Owner of fifteen percent (15%) or more of the outstanding shares of Common Stock. Notwithstanding the foregoing: 



    (i)  in
no event shall a Person who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner of less than fifteen percent (15%) of
the outstanding shares of Common Stock become an Acquiring Person solely as a result of a reduction of the number of shares of outstanding Common Stock, including repurchases of outstanding shares of
Common Stock by the Company, which reduction increases the percentage of outstanding shares of Common Stock Beneficially Owned (as such term is hereinafter defined) by such Person;  provided, however,
that any subsequent increase in the amount of Common Stock Beneficially Owned by such Person, together with all Affiliates and
Associates of such Person, without the prior written approval of the Board shall cause such Person to be an Acquiring Person (unless, measured at such time, such Person would not be an Acquiring
Person); 


    (ii) the
term Acquiring Person shall not mean: (A) the Company; (B) any Subsidiary (as such term is hereinafter defined) of the Company; (C) any
employee benefit plan of the Company or any of its Subsidiaries; (D) any entity holding securities of the Company organized, appointed or established by the Company or any of its Subsidiaries
for or pursuant to the terms of any such plan; (E) any underwriter acting in good faith in a firm commitment underwriting of an offering of the Company's securities pursuant to arrangements
with the Company that have been approved by the Board (however, the exception provided by this clause (E)  shall no longer be available in the event
that any such underwriter is otherwise an Acquiring Person on or after the date which is forty (40) days after the date of
initial 




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acquisition of the Company's securities by such underwriter in connection with such offering); or (F) Advanced Lighting Technologies, Inc. (referred to collectively with its Affiliates
and Associates as "ADLT"), so long as ADLT is not the Beneficial Owner of a percentage of the outstanding shares of Common Stock that is greater (by more than one percent (1%) of the outstanding
shares of Common Stock) than (1) the percentage of the outstanding shares of Common Stock as to which ADLT has Beneficial Ownership on the date hereof or (2) such lesser percentage as to
which ADLT has Beneficial Ownership following any transfer or exercise of securities Beneficially Owned by ADLT, or the expiration or cancellation of any securities Beneficially Owned by ADLT, after
the date hereof (except that this clause (F) shall pertain only until such time as ADLT has Beneficial Ownership of less than fifteen percent
(15%) of the outstanding shares of Common Stock); and 


    (iii) no
Person shall be deemed to be an Acquiring Person if: (A)(1) any Schedule 13D under the Exchange Act (as hereinafter defined), or any comparable or
successor report, filed (or required to be filed) by such Person does not (or would not) state any intention to or reserve the right to control or influence the management or policies of the Company
or engage in any of the actions specified in Item 4 (or any comparable or successor Item) of such Schedule 13D (other than the disposition of Common Stock), (2) either (x) within
two (2) Business Days of being requested by the Company to advise the Company regarding the same, such Person certifies in writing to the Company that such Person acquired Beneficial Ownership
of fifteen percent (15%) or more of the outstanding shares of Common
Stock inadvertently or without knowledge of the terms of the Rights, or (y) the Board determines in good faith that such Person has become an Acquiring Person inadvertently, (3) such
Person divests as promptly as practicable (as determined in good faith by the Board) a sufficient number of securities so that such Person would not be deemed to be an Acquiring Person pursuant to the
first sentence of this Section 1(a), (or such other provisions of this Section 1(a) as may be applicable) and (4) promptly
following such Person's divestiture of such securities, such Person certifies to the Board that such Person would no longer be deemed an Acquiring Person as defined pursuant to the first sentence of
this Section 1(a) (or such other provisions of this Section 1(a) as may be applicable); or (B) by reason of such Person's
Beneficial Ownership of fifteen percent (15%) or more of the outstanding shares of Common Stock on the date hereof if prior to the Record Date such Person notifies the Board that such Person is no
longer the Beneficial Owner of fifteen percent (15%) or more of the then outstanding shares of Common Stock. 




    (b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement. 


    (c) A
Person shall be deemed the "Beneficial Owner," and shall be deemed to "Beneficially
Own" or have "Beneficial Ownership," of any securities: 



    (i)  which
such Person or any of such Person's Affiliates or Associates is deemed to beneficially own (within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date hereof); 


    (ii) which
such Person or any of such Person's Affiliates or Associates has (A) the right or obligation to acquire (whether such right or obligation is
exercisable or effective immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed (under this  clause (A)
) the "Beneficial Owner," and shall not be deemed (under this
clause (A)) to "Beneficially Own" or have "Beneficial
Ownership," of 




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securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment
or exchange; or (B) the right to vote or dispose of pursuant to any agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner," and shall not be deemed to
"Beneficially Own" or have "Beneficial Ownership," of any security under this  clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy given in response
to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or successor report); and provided, further, that ADLT shall be deemed at any time, for
purposes of this
Agreement, to have Beneficial Ownership of all shares of Common Stock which may be issued upon exercise of the "Warrants" to purchase Common Stock (the "ADLT
Warrants") issued to ADLT by the Company and outstanding at such time (regardless of whether the ADLT Warrants are exercisable at such time), as such term is defined under and
pursuant to that certain Asset Purchase Agreement, dated January 14, 2000, by and among the Company and Unison Fiber Optic Lighting Systems, Inc., so long as ADLT continues to own the
ADLT Warrants; or 


    (iii) which
are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) (other than customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or with which such Person or any of such Person's Affiliates or Associates have otherwise formed a group, for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in clause (B) of subparagraph (ii) of
this paragraph (c)) or disposing of any securities of the Company. 




    (d) "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State
of California or the State of New Jersey are authorized or obligated by law or executive order to close. 


    (e) "Close of Business" on any given date shall mean 5:00 p.m., San Francisco time, on such date;  provided, however, that if such date is not a Business Day it shall
mean 5:00 p.m., San Francisco time, on the next succeeding Business Day. 


    (f)  "Common Stock" shall mean the Common Stock of the Company or any other shares of capital stock of the Company into
which such Common Stock may be reclassified or exchanged, except that "Common Stock" when used with reference to stock issued by any Person other than
the Company shall mean the capital stock with the greatest Voting Power, or the equity securities or other equity interest having power to control or direct the management, of such Person or, if such
Person is a Subsidiary of another Person, of the Person which ultimately controls such first-mentioned Person and which has issued and outstanding such capital stock, equity securities or equity
interests. 


    (g) "Distribution Date" shall have the meaning set forth in Section 3(a)  hereof. 



    (h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 


    (i)  "Permitted Offer" shall mean a tender or exchange offer for all outstanding shares of Common Stock at a price and
on terms determined, prior to the date of the first acceptance of payment for any of such shares, to be fair to and in the best interests of the Company and its shareholders (other than the offeror or
any Affiliate or Associate thereof) by at least a majority of 



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the members of the Board who are not (i) officers of the Company, (ii) the offeror, (iii) Acquiring Persons or (iv) Affiliates or Associates of the offeror or any Acquiring
Person. 


    (j)  "Person" shall mean any individual, firm, corporation, partnership, limited liability company, joint venture,
association, trust or other entity, and shall include any successor (by merger or otherwise) of such entity. 


    (k) "Preferred Stock" shall mean the Series A Participating Preferred Stock of the Company. 


    (l)  "Stock Acquisition Date" shall mean the first date of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such. 


    (m) A
"Subsidiary" of any Person shall mean any corporation or other entity of which a majority of the voting power of
the voting equity securities or voting interests is owned, directly or indirectly, by such Person, or which is otherwise controlled by such Person. 



    (n) "Triggering Event" shall mean a Section 11 Event (as defined in Section 11(a) hereof) or a
Section 13 Event (as defined in Section 13(a) hereof). 


    (o) "Voting Power" shall mean the voting power of all securities of the Company then outstanding and generally entitled
to vote for the election of directors of the Company. 




    2.  Appointment of Rights Agent.  The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may
deem necessary or desirable upon written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such
co-Rights Agent. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agents and any co-Rights Agents shall be as the
Company shall determine. 


    3.  Issue of Rights Certificates.  



    (a) Until
the earlier of (i) the Stock Acquisition Date or (ii) the Close of Business on the tenth (10th) Business Day (or such later date
as may be determined by action of the Board) after the date of the commencement (determined in accordance with Rule 14d-2 of the General Rules and Regulations under the Exchange Act
as in effect as the date hereof or, if no longer applicable, the intent of such Rule 14d-2 as in effect on the date hereof as determined in good faith by the Board) by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any of its Subsidiaries, or any entity organized, appointed or established by the Company or any of
its Subsidiaries for or pursuant to the terms of any such plan) of a tender or exchange offer (other than a Permitted Offer) the consummation of which would result in such Person becoming an Acquiring
Person (including any such date which is on or after the date of this Agreement and prior to the issuance of the Rights) (the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights shall be evidenced by the certificates for Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates and (y) the Rights (and the right to receive certificates
therefor) shall be transferable only in connection with the transfer of the underlying shares of Common Stock. As soon as practicable after the Distribution Date, the Company shall provide the Rights
Agent with a list of holders of Common Stock and the Rights Agent shall send, by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the Company, a certificate for Rights, in substantially the form of Exhibit B  hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held (subject to adjustment as
provided 



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herein). As of and after the Distribution Date, the Rights shall be evidenced solely by such Rights Certificates. 


    The
Company shall promptly notify the Rights Agent in writing upon the occurrence of the Distribution Date and, if such notification is given orally, the Company shall confirm same in
writing on or prior to the Business Day next following. Until such notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not
occurred. 


    Promptly
following the Record Date, the Company shall send a copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C  (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records of the Company. With respect to certificates for the Common Stock outstanding as of the Record Date, until the
Distribution Date (or earlier redemption, expiration or termination of the Rights), the Rights shall be evidenced by such certificates for the Common Stock and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the surrender for transfer of any of
the certificates for the Common Stock outstanding on the Record Date shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. 


    (b) Certificates
issued for Common Stock (including, without limitation, certificates issued upon transfer or exchange of Common Stock) after the Record Date, but prior
to the earlier of the Distribution Date or the Expiration Date (as such term is hereinafter defined), shall be deemed also to be certificates for Rights, and shall have impressed, printed, stamped,
written or otherwise affixed onto them the following legend: 




This
certificate also evidences and entitles the holder hereof to certain "Rights" as set forth in a Rights Agreement between Fiberstars, Inc. (the "Company") and Mellon Investor Services LLC
(the "Rights Agent") dated as of September 20, 2001 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may expire or may be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain
circumstances, Rights "Beneficially Owned" by "Acquiring Persons" (as such terms are defined in the Rights Agreement) or certain related parties, as well as subsequent holders of such Rights, may
become null and void. 





    With
respect to such certificates containing the foregoing legend, until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the Rights associated
with the Common Stock represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. 




    4.  Form of Rights Certificates.  



    (a) The
Rights Certificates (and the forms of election to purchase shares and of assignment and certificates to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, and do not affect the rights, duties or responsibilities of the
Rights Agent or as may be required to comply with any applicable law or 



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with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or interdealer quotation system on which the Rights may from time to time be listed or traded, or
to conform to usage. Subject to the provisions of Section 11 and Section 23 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date, and on their face shall entitle the holders thereof to purchase such number of one one-thousandths of a
share of Preferred Stock as shall be set forth therein at the price per one one-thousandth of a share set forth therein (the "Purchase
Price"), such Purchase Price to be initially equal to the amount set forth in Section 7(b) below but the number
of one one-thousandths of a share and the Purchase Price shall be subject to adjustment as provided herein. 


    (b) Any
Rights Certificate issued pursuant to Section 3(a) hereof that represents Rights Beneficially Owned by an
Acquiring Person or any Associate or Affiliate thereof, any Rights Certificate issued at any time upon the transfer of any Rights to such an Acquiring Person or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate, and any Rights Certificate issued pursuant to Section 6, Section 11 or  Section 23 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain
the following legend: 




The
Rights represented by this Rights Certificate were issued to a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). This Rights Certificate and the Rights represented hereby may become null and void under the circumstances specified in Section 7(e) of the Rights Agreement. 





The
provisions of Section 7(e) hereof shall be operative whether or not the foregoing legend is contained on any such Rights Certificate. 




    5.  Countersignature and Registration.  



    (a) The
Rights Certificates shall be executed on behalf of the Company by its Chief Executive Officer, its President, its Chief Financial Officer or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though
the Person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any Person who, at the actual
date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Agreement any such Person was
not such an officer. 


    (b) Following
the Distribution Date and receipt by the Rights Agent of notice to that effect and any necessary information, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates. 



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    6.  Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.  



    (a) Subject
to the provisions of Sections 7(e), 7(f) and 15 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to purchase a like number of one one-thousandths of a share of Preferred Stock (or, after the occurrence of a Triggering
Event, shares of Common Stock or other securities and property, as the case may be) as the Rights Certificate or Rights Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose. Subject to receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them (as the Company may reasonably request) of the identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
Certificate or the Affiliates or Associates thereof, the Rights Agent shall (subject to Section 7(e) hereof) thereupon countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or charge that may be
imposed in connection with any transfer, split up, combination or exchange of Rights Certificates. The Rights Agent shall have no duty or obligation under this Section 6 unless and until it is
satisfied that all applicable taxes and charges have been paid in full. 


    (b) Subject
to the provisions of Sections 7(e), 7(f) and 15 hereof, upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate and such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request, and, in case of loss, theft or destruction, of indemnity or security satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company shall execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate
so lost, stolen, destroyed or mutilated. 




    7.  Exercise of Rights; Purchase Price; Expiration Date of Rights.  



    (a) Subject
to the provisions of Sections 7(e) and 7(f) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon presentation of the Rights Certificate, with the appropriate form of election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent set forth in Section 26 hereof, together with payment of the Purchase Price for each one
one-thousandth of a share of Preferred Stock (or such other securities or property as the case may be) as to which the Rights are exercised, at or prior to the earliest of (i) the
Close of Business on September 20, 2011 (the "Final Expiration Date"), (ii) the time at which the Rights are redeemed as provided in  Section 24 hereof, (iii) the consummation of a transaction contemplated by Section 13(d)  hereof or (iv) the time at which the Rights are exchanged as provided in Section 24(c) hereof (such earliest time
being herein referred to as the "Expiration Date"). Notwithstanding any other provision of this Agreement, any Person who prior to the Distribution Date
becomes a record holder of shares of Common Stock may exercise all of the rights of a registered holder of a Rights Certificate with respect to the Rights associated with such shares of Common Stock
in accordance with and subject to the provisions of this Agreement, including the provisions of Section 7(e) hereof, as of the date such Person
becomes a record holder of shares of Common Stock. 



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    (b) The
Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be  Thirty Dollars ($30.00),
shall be subject to adjustment from time to time as provided in  Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with  paragraph (c) of this Section 7 below. 



    (c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the appropriate form of election to purchase duly executed, accompanied by payment of the
Purchase Price for the fractional interests in shares of Preferred Stock (or other securities or property) to be purchased and an amount equal to any applicable tax or charge in cash, or by certified
check or bank draft payable to the order of the Company, the Rights Agent shall, subject to Section 21(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent) certificates for the number of one one-thousandths of a
share of Preferred Stock to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company, in its sole discretion, shall
have elected to deposit the fractional interests in shares of Preferred Stock issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths of a share of Preferred Stock as are to be purchased (in which case certificates for the one one-thousandths of a share
of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company shall direct the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of cash, if any, to be paid in lieu of issuance of fractional shares in accordance with  Section 15, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order
of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder and, (iv) when appropriate, after receipt promptly deliver such cash to
or upon the order of the registered holder of such Rights Certificate. In the event that the Company is obligated to issue other securities of the Company, and/or distribute other property pursuant to  Section 11(a)
, the Company shall make all arrangements necessary so that such other securities and/or property are available for distribution by
the Rights Agent, if and when appropriate. In addition, in the case of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the
Rights Agent shall return such Rights Certificate to the registered holder thereof after imprinting, stamping or otherwise indicating thereon that the rights represented by such Rights Certificate no
longer include the rights provided by Section 11(a)(ii) hereof; provided, however, that if less
than all the Rights represented by such Rights Certificate were so exercised, the Rights Agent shall indicate on the Rights Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii). 


    (d) In
case the registered holder of any Rights Certificate shall exercise (except pursuant to Section 11(a)(ii))
less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to such registered holder's duly authorized assigns, subject to the provisions of Section 6 and  Section 15
hereof. 


    (e) Notwithstanding
anything in this Agreement to the contrary, if there occurs any Triggering Event, then any Rights that are or were on or after the Distribution Date
Beneficially Owned by an Acquiring Person or any Associate or Affiliate of an Acquiring Person shall become null and void, without any further action, and any holder of such Rights shall thereafter
have no rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. Without limiting the foregoing sentence, Rights held by the following Persons shall
be null and void without any further action: (i) any direct or indirect transferee of any Rights that are or were on or after the Distribution Date Beneficially Owned by an Acquiring Person or
any Associate or Affiliate of an Acquiring Person; (ii) any direct or indirect transferee of any Rights 



8





 


that were on or before the Distribution Date Beneficially Owned by an Acquiring Person or any Associate or Affiliate of an Acquiring Person if the transferee received such Rights, directly or
indirectly, (A) from an Acquiring Person or any Associate or Affiliate of an Acquiring Person (x) as a result of a distribution by such Acquiring Person or any Associate or Affiliate of
an Acquiring Person to holders of its equity securities or similar interests (including, without limitation, partnership interests) or (y) pursuant to any continuing agreement, arrangement or
understanding with respect to the Rights or (B) in a transfer (or series of transfers) which the Board determines is part of a plan, agreement, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e); and (iii) subsequent transferees of Persons referred to in the
foregoing clauses (i) and (ii) as well as this clause (iii). The Company shall notify the Rights Agent when this Section 7(e)  applies and shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) are complied with, but
neither the Company nor the Rights Agent shall have any liability to any holder of Rights or any Rights Certificate or to any other Person as a result of the Company's failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. 


    (f)  Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless the Certificate contained in the
appropriate form of Election to Purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise shall have been properly completed and duly executed by the registered
holder thereof and the Company shall have been provided with such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company or the Rights Agent shall reasonably request. 




    8.  Cancellation and Destruction of Rights Certificates.  All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or,
if surrendered to the Rights Agent, shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. 


    9.  Reservation and Availability of Preferred Stock.  



    (a)
The Company covenants and agrees that it shall cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock, or any authorized and issued
shares of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and other securities) held in its treasury, the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and other securities) that will be sufficient (in accordance with the provisions of this Agreement, including  Section 11(a)(iii) hereof) to permit the exercise in full of all outstanding Rights. 


    (b)
So long as the shares of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and other securities) issuable upon the exercise of the
Rights may be listed on any national securities exchange or quoted on any national quotation system, the Company shall use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares (or other securities) reserved for such issuance to be listed on such exchange or quoted on such system upon official notice of issuance upon such exercise. 



9





 


    (c) If then required by applicable law, the Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the occurrence of a
Triggering Event as to which the consideration to be delivered by the Company upon exercise of the Rights has been determined pursuant to this Agreement, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the Securities Act of 1933, as amended (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Expiration Date or (C) the date the Company receives an opinion of counsel to the effect that the maintenance of such registration statement in
effect is no longer necessary. If then required by applicable law, the Company will also take such action as may be appropriate under the securities or "blue sky" laws of the various states. The
Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of this  Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement or to comply with such blue sky laws.
Upon any such suspension, the Company shall promptly notify the Rights Agent thereof and issue a public announcement stating that the exercisability of the Rights has been temporarily suspended.
Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been
obtained. 


    (d) The
Company covenants and agrees that it shall take all such action as may be necessary to ensure that all one one-thousandths of a share of Preferred
Stock and/or other securities delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares or other securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable shares or securities. 


    (e) The
Company further covenants and agrees that it shall pay when due and payable any and all taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for one one-thousandths of a share of Preferred Stock and/or other securities upon the exercise of Rights. The Company shall not,
however, be required to (i) pay any tax or charge which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or in respect of the issuance or
delivery of the shares of Preferred Stock and/or other securities in a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or
(ii) issue or deliver any certificates for shares of Preferred Stock and/or other securities in a name other than that of the registered holder upon the exercise of any Rights until such tax or
charge shall have been paid (any such tax or charge being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's or Rights Agent's
satisfaction that no such tax or charge is due. 




    10.  Preferred Stock Record Date.  Each Person in whose name any certificate for one
one-thousandths of a share of Preferred Stock (or other securities) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the
fractional shares of Preferred Stock (or other securities) represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly
presented and payment of the Purchase Price (and any applicable taxes or charges) was made; provided, however, that if the date of such presentation and
payment is a date upon which the Preferred Stock (or other securities) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or other securities) transfer books of the Company are open. Prior to the exercise of 


10





 


the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall not be entitled to any rights of a shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein. 


    11.  Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.  The Purchase Price,
the number of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this  Section 11. 




(a)
(i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this  Section 11(a)
 and in Section 7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock and other securities which, if
such Right had been exercised immediately prior to such date and at a time when the Preferred Stock transfer books of the Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this  Section 11(a)(i) and Section 11(a)(ii) hereof the adjustment provided for in this  Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required
pursuant to  Section 11(a)(ii) hereof. 


    (ii) Subject
to Section 24(c) hereof, in the event any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person other than pursuant to a Permitted Offer (such an event being a "Section 11 Event"), then, promptly
following the first occurrence of such a Section 11 Event, proper provision shall be made so that each holder of a Right, except as provided in  Section 7(e) hereof, shall, for a period of
sixty (60) days after the later of the occurrence of any such Section 11 Event and the
effective date of an appropriate registration statement pursuant to Section 9 hereof, have a right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in lieu of fractional interests in shares of Preferred Stock, such number of shares of Common Stock of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the Section 11 Event at issue and (y) dividing that product by fifty percent (50%) of the current market price per one share of Common Stock (determined pursuant to  Section 11(d)
 hereof) on the date of the occurrence of the Section 11 Event at issue (such number of shares being referred to as the
"number of Adjustment Shares"); provided, however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of Section 13 hereof, then only the provisions of  Section 13 hereof shall
apply and no adjustment shall be made pursuant to this  Section 11(a)(ii); and provided, further, that such sixty (60) day period shall not be
deemed to run during any period in which the exercise of the Rights or the fulfillment by the Company or the Rights Agent of its or their obligations under this Agreement shall be enjoined or
otherwise prohibited in full or in part by any court or other governmental agency or body. 




11





 



    (iii) In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof, the Company may, if
a majority of the Board then in office determines that such action is necessary or appropriate and not contrary to the interests of holders of Rights, elect to (and, in the event that the Board has
not exercised the exchange right contained in Section 24(c) hereof and there are not sufficient treasury shares and authorized but unissued
shares of Common Stock to permit the exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, the Company shall) take all such
action as may be
necessary to authorize, issue or pay, upon the exercise of the Rights, cash (including by way of a reduction of the Purchase Price), property, shares of Common Stock, other securities (whether equity
or debt securities of the Company, any Subsidiary of the Company, or otherwise) or any combination thereof having an aggregate value equal to the value of the shares of Common Stock which otherwise
would have been issuable pursuant to Section 11(a)(ii) hereof, which aggregate value shall be determined by a nationally recognized investment
banking firm selected by a majority of the Board. For purposes of the preceding sentence, the value of the Common Stock shall be determined pursuant to  Section 11(d) hereof and the value of any
fractional interests in preferred stock or preference stock which a majority of the Board determines to
be a "common stock equivalent" shall be deemed to have the same value as the Common Stock. Any such election by the Board must be made and publicly
announced within sixty (60) days following the date on which the Section 11 Event at issue shall have occurred with prompt notice thereof to the Rights Agent. Following the occurrence of
such Section 11 Event, a majority of the Board then in office may suspend the exercisability of the Rights for a period of up to sixty (60) days following the date on which such
Section 11 Event shall have occurred to the extent that such Directors have not determined whether to exercise their rights of election under this  Section 11(a)(iii). If the Board shall
determine in good faith that it is likely that sufficient additional shares of Common Stock or common
stock equivalents could be authorized for issuance upon exercise in full of the Rights, the sixty (60) day period set forth above may be extended to the extent necessary, but not more than
ninety (90) days following the occurrence of the Section 11 Event at issue, in order that the Company may seek shareholder approval for the authorization of such additional shares. In
the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended with prompt notice thereof to the Rights
Agent. 




    (b) If
the Company shall fix a record date for the issuance of rights, options or warrants to all holders of any interests in Preferred Stock entitling them (for a
period expiring within forty-five (45) calendar days after such record date) to subscribe for or purchase any interests in Preferred Stock (or securities having the same or more
favorable rights, privileges and preferences as the Preferred Stock ("equivalent preferred stock")) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as defined in Section 11(d)) per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred stock to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of shares of Preferred Stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or equivalent preferred
stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration
part or all 



12





 


of which shall be in a form other than cash, the value of such consideration shall be as determined reasonably and with good faith to the holders of Rights by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. 


    (c) If
the Company shall fix a record date for the making of a distribution to all holders of interests in Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in Preferred Stock, but including any dividend payable in stock other than Preferred Stock) or subscription rights, options or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then current market price (as defined in  Section 11(d) hereof) per
share of Preferred Stock on such record date, less the fair market value (as determined reasonably and with good faith
to the holders of Rights by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes) of
the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights, options or warrants distributable in respect of one share of Preferred Stock and the
denominator of which shall be the then current market price (as defined in Section 11(d) hereof) per share of the Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would be in effect if such record date had not been fixed. 



(d)
(i) For the purpose of any computation hereunder, other than as provided in Section 11(a)(iii), the "current market
price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that in the event that the current per share
market price of the Common Stock is determined in whole or in part during a period following the announcement by the issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock or (B) any subdivision, combination or reclassification of such Common Stock, and prior
to the expiration of thirty (30) Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification,
then, and in each such case, the "current market price" shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange but are
listed or quoted on The Nasdaq Stock Market, the last reported sale price, or, in case no such sale takes place on such day, the average of the closing 




13





 



bid and asked prices as reported by Nasdaq, or, if the shares of Common Stock are not listed or quoted on The Nasdaq Stock Market, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the OTC Bulletin Board or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board. If
on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as determined reasonably and with good faith by the Board shall be used and shall be
binding on the Rights Agent and conclusive for all purposes. The term "Trading Day" shall mean a day on which the principal national securities exchange
or The Nasdaq Stock Market, as the case may be, on which the shares of Common Stock are principally listed or admitted to trading or quoted is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading or quoted on any national securities exchange or The Nasdaq Stock Market, a Business Day. If the Common Stock is not publicly held or not so listed
or traded, "current market price" per share shall mean the fair value per share determined reasonably and with good faith to the holders of Rights by
the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and conclusive for all purposes. 


    (ii) For
the purpose of any computation hereunder, the "current market price" per share (or one
one-thousandth of a share) of Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in  Section 11(d)(i) (other than the last sentence thereof). If the
current market price per share (or one one-thousandth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in  Section 11(d)(i), the "current market price" per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalization with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current market price per share of the Common Stock and the "current market price" per one
one-thousandth of a share of Preferred Stock shall be equal to the current market price per share of the Common Stock (as appropriately adjusted). If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "current market price" per share shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. 




    (e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this  Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Expiration Date. 


    (f)  If
as a result of any provision of this Section 11, the holder of any Right shall become entitled to receive
any shares of capital stock of the Company other than Preferred Stock, thereafter the number
of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares (and the related Purchase Price) contained 



14





 


in this Section 11, and the provisions of Sections 7, 9, 10, 13 and  15 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares. 


    (g) All
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a share of Preferred Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein. 


    (h) Unless
the Company shall have exercised its election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and (c)
hereof, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. 



    (i)  The
Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number
of one one-thousandths of a share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one millionth) obtained by dividing the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement and promptly notify the Rights Agent of its
election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to  Section 15 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement. 


    (j)  Irrespective
of any adjustment or change in the Purchase Price or the number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-thousandths of a share and the number of one
one-thousandths of a share which were expressed in the initial Rights Certificates issued hereunder. 


    (k) Before
taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of the number of one
one-thousandths of a share of Preferred 



15





 


Stock or shares of Common Stock or other securities issuable upon exercise of the Rights (aggregating, for this purpose, an appropriate amount of the Purchase Price for fractional shares to compare
such aggregated amount to the par value for a whole share), the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable one one-thousandths of a share of Preferred Stock or shares of Common Stock or other securities at such adjusted Purchase Price. If upon any
exercise of the Rights, a holder is to receive a combination of Common Stock and common stock equivalents, or Preferred Stock and preferred stock equivalents, a portion of the consideration paid upon
such exercise, equal to at least the then par value, if any, of a share of Common Stock or Preferred Stock of the Company, as the case may be, shall be allocated as the payment for each share of
Common Stock or Preferred Stock of the Company, as the case may be, so received. 


    (l)  In
any case in which this Section 11 shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company may elect to defer (and shall promptly notify the Rights Agent of any such election) until the occurrence of such event the issuing to
the holder of any Right exercised after such record date the shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the
shares of Preferred Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;  provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring such adjustment. 


    (m) Anything
to the contrary in this Section 11 notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its
sole discretion shall determine to be advisable in order that any consolidation or subdivision of the Preferred Stock, issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, issuance wholly for cash of shares of Preferred Stock or securities which by their terms are convertible into or exchangeable for shares of
Preferred Stock, stock dividends or issuance of rights, options or warrants referred to hereinabove in this Section 11, hereafter made by the
Company to holders of Preferred Stock shall not be taxable to such shareholders. 


    (n) Anything
in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the date of this Agreement and prior to the
Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine
the outstanding Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock outstanding immediately following the occurrence of such event. 


    (o) The
exercise of Rights under Section 11(a)(ii) hereof shall only result in the loss of rights under  Section 11(a)(ii) hereof to the extent so
exercised and shall not otherwise affect the rights represented by the Rights under this Agreement,
including the rights represented by Section 13 hereof. 



16





 

    12.  Certificate of Adjusted Purchase Price or Number of Shares.  Whenever an adjustment or any event
affecting the Rights or their exercisability (including without limitation an event which causes Rights to become null and void) occurs as provided in Sections
11 or 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment or describing such
event and a brief, reasonably detailed statement of the facts, computations and methodology accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock and the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Rights Certificate in accordance with  Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall
have no duty with respect to and shall not be deemed to have knowledge of any adjustment or event unless and until it shall have received such certificate. Notwithstanding the foregoing provisions of
this Section 12, the failure of the Company to make such certification or give such notice shall not affect the validity, or the force or effect,
of the requirement for such adjustment or event. 


    13.  Consolidation, Merger or Sale or Transfer of Assets or Earning Power.  



    (a) In
the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other
Person, (y) any Person shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger (other than, in the
case of any transaction described in (x) or (y), a merger or consolidation which would result in all of the Voting Power represented by the securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into securities of the surviving entity) all of the Voting Power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation and the holders of such securities not having changed as a result of such merger or consolidation), or
(z) the Company shall sell, mortgage or otherwise transfer (or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one or more transactions, assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person (any of the events described in the foregoing
clauses (x), (y) or (z) being herein referred to as a "Section 13 Event"), then, and in each such case, proper provision shall be
made so that (i) each holder of a Right (other than as provided in Section 7(e) hereof) shall have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of shares of freely tradable Common Stock of the Principal Party (as hereinafter defined), free
and clear of liens, rights of call or first refusal, encumbrances or other adverse claims, as shall be equal to the result obtained by (x) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right is then exercisable (without taking into account any adjustment previously made pursuant to  Section 11(a)(ii) hereof)
and (y) dividing that product by fifty percent (50%) of the current market price per share of the Common Stock
of such Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to ensure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights. 



17





 


    (b) "Principal Party" shall mean: 



    (i)  in
the case of any transaction described in clauses (x) or (y) of the first sentence of this  Section 13, the Person that is the issuer of any securities into which shares of Common Stock of
the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other party to the merger or consolidation (including, if applicable, the Company, if it is the surviving corporation); and 


    (ii) in
the case of any transaction described in clause (z) of the first sentence in this Section 13, the
Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; 



provided, however, that in any such case, (A) if the Common Stock of such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary or Affiliate of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other Person; (B) in case such Person is a Subsidiary, directly or
indirectly, or Affiliate of more than one Person, the Common Stock of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value; and (C) in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in clauses (A) and (B) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such joint venture were a Subsidiary of each such joint venturer and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests. 




    (c) The
Company shall not consummate any Section 13 Event unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and each Principal Party and each other Person who may become a Principal Party as a result of such Section 13 Event shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this  Section 13 and further providing that, as soon as
practicable after the date of such Section 13 Event, the Principal Party at its own
expense shall: 



    (i)  prepare
and file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, will use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; 


    (ii) use
its best efforts to (x) qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate and (y) cause the Rights and the securities purchasable upon exercise of the Rights to be listed on any national securities exchange or national
quotation system upon which its Common Stock is listed, traded or quoted; and 


    (iii) deliver
to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates that comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act. 




18











  



The
provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. The rights under
this Section 13 shall be in addition to the rights to exercise Rights and adjustments under  Section 11(a)(ii) hereof and shall survive any
exercise thereunder. 



    (d) Notwithstanding
anything in this Agreement to the contrary, this Section 13 shall not be applicable to a
transaction described in clauses (x) or (y) of Section 13(a) hereof if (i) such transaction is (x) consummated with a Person
or Persons who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of any such Person or Persons) and (y) related to such Permitted Offer,
(ii) the price per share of Common Stock offered in such transaction is not less than the price per share of Common Stock paid to all holders of Common Stock whose shares were purchased
pursuant to such Permitted Offer and (iii) the form of consideration being offered to the remaining holders of Common Stock pursuant to such transaction is the same as the form of consideration
paid pursuant to such Permitted Offer. Upon consummation of any such transaction contemplated by this subsection (d), all Rights hereunder shall expire. 




    14.  Additional Covenants.  



    (a) The
Company covenants and agrees that after the Stock Acquisition Date it shall not (i) consolidate with, (ii) merge with or into or (iii) sell
or transfer to any other Person, in one or more transactions, assets or earning power aggregating more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries taken
as a whole, if at the time of or after such consolidation, merger or sale there are any charter or by-law provisions or any rights, warrants or other instruments outstanding or any other
action taken which would diminish or otherwise eliminate the benefits intended to be afforded by the Rights. The Company shall not consummate any such consolidation, merger or sale unless prior
thereto the Company and such other Person shall have executed and delivered to the Rights Agent a supplemental agreement evidencing compliance with this subsection. 


    (b) The
Company covenants and agrees that, after the Stock Acquisition Date, it will not, except as permitted by Section 24  hereof, take any action the purpose or effect of which is to diminish or
otherwise eliminate the benefits intended to be afforded by the Rights. 




    15.  Fractional Rights and Fractional Shares.  



    (a) The
Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(n)  hereof, or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 15(a), the current market value
of a whole Right shall be (except as otherwise provided in the last sentence of this Section 15(a)) the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any day shall be the last sale price, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by The Nasdaq Stock Market or such other system then in
use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined reasonably and with good faith to the
holders of Rights by the Board shall be used and shall be binding on the Rights Agent and conclusive for all purposes. 



19





 


    (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the fractional interests
in shares of Preferred Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-thousandth of a share of
Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one one-thousandth of a share of Preferred Stock. For purposes of this Section 15(b), the current market
value of one one-thousandth of a share of Preferred Stock shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise. 


    (c) Following
the occurrence of a Triggering Event, the Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock, the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share of Common Stock. For purposes of this  Section 15(c), the current
market value shall be determined in the manner set forth in Section 11(d)  hereof for the Trading Day immediately prior to the date of such exercise. 


    (d) Except
as otherwise expressly provided herein, the holder of a Right by the acceptance of the Right expressly waives such holder's right to receive any fractional
Rights or any fractional shares (other than,
in the case of Preferred Stock, fractions which are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise of a Right. The Rights Agent shall have no duty or
obligation with respect to this Section 15 and Section 24 below unless and until it has
received specific instructions (and sufficient cash, if required) from the Company with respect to its duties or obligations under such Sections. 




    16.  Rights of Action.  All rights of action in respect of this Agreement, except those rights of action
expressly vested in the Rights Agent under this Agreement, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in such holder's own behalf and for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect of, such holder's right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach by the Company of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened
violations by the Company of the obligations hereunder of any Person subject to this Agreement. Holders of Rights shall be entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this Agreement. 


20





 


    17.  Agreement of Rights Holders.  Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that: 



    (a) prior
to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Stock; 


    (b) after
the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent and only if surrendered at the office of the
Rights Agent set forth in Section 26 hereof, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and
certificates attached; 


    (c) the
Company and the Rights Agent shall deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and 



    (d) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other
Person as a result of the inability of the Company or the Rights Agent to perform any of its or their obligations under this Agreement by reason of any preliminary or permanent injunction or other
order, decree, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company must use its best efforts to have any such order, decree, judgment or ruling lifted or otherwise overturned as soon as possible. 




    18.  Rights Certificate Holder Not Deemed a Shareholder.  No holder, as such, of any Rights Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock, Common Stock or any other securities of the Company which may at any time be
issuable upon exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such,
any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 25 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions thereof. 


    19.  Concerning the Rights Agent.  



    (a) The
Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the preparation, delivery, administration, amendment and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost, or expense (including, without limitation, the reasonable fees and expenses of legal counsel), incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction), for 



21





 


any action taken, suffered or omitted by the Rights Agent in connection with the acceptance, administration, exercise and performance of this Agreement, including the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the Company. The provisions of this Section 19 and  Section 21 below shall
survive the termination of this Agreement, the exercise or expiration of the Rights and the resignation or removal of the
Rights Agent. 


    (b) The
Rights Agent shall be authorized to rely on, shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement or the exercise or performance of its duties hereunder in reliance upon any Rights Certificate or certificate for Common Stock or
for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged by the proper Person or Persons, or otherwise upon the advice of counsel as set forth in  Section 21
hereof. 




    20.  Merger or Consolidation or Change of Name of Rights Agent.  



    (a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person
would be eligible for appointment as a successor Rights Agent under the provisions of Section 22 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement. 


    (b) In
case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement. 




    21.  Rights and Duties of Rights Agent.  The Rights Agent undertakes the duties and obligations expressly
imposed by this Agreement (and not implied duties or obligations) upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound: 



    (a) The
Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the advice or opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it in good faith and in
accordance with such advice or opinion. 



22





 


    (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of current market price) be proved or established by the Company prior to taking, suffering or omitting any action hereunder,
such fact or matter (unless other evidence in respect thereof shall be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chief
Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted in good
faith by it under the provisions of this Agreement in reliance upon such certificate. 


    (c) The
Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful
misconduct must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). Anything in this Agreement to the contrary
notwithstanding, in no case will the Rights Agent be liable for special, indirect, punitive, incidental or consequential loss or damages of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the possibility of such damages. Notwithstanding anything to the contrary herein, the liability of the Rights Agent hereunder will be limited to
the amount of fees paid by the Company to the Rights Agent hereunder. 


    (d) The
Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates (except
as to the fact that it has countersigned the Rights Certificates) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. 


    (e) The
Rights Agent shall not have any liability for or be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible or liable
for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible or liable for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible or liable for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after
receipt of a certificate pursuant to Section 12 describing
any such adjustment); nor shall it be responsible or liable for any determination by the Board of the current market value of the Rights or Preferred Stock or Common Stock pursuant to the provisions
of Section 15 hereof; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation
of any shares of Preferred Stock or other securities to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Preferred Stock or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable. 


    (f)  The
Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performance by the Rights Agent of the provisions of this Agreement. 



    (g) The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder and certificates delivered
pursuant to any provision hereof from the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, 



23





 


and is authorized to apply to such officers for advice or instructions in connection with its duties, and such advice or instructions shall be full authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it in good faith in accordance with the advice or written instructions of any such
officer. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or omitted
by the Rights Agent with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken, suffered or omitted and the Rights Agent shall not be
liable for any action taken, suffered or omitted in accordance with a proposal included in any such application on or after the date specified therein (which date shall not be less than three
(3) Business Days after the date any such officer actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking,
suffering or omitting any such action, the Rights Agent has received written instructions in response to such application specifying the action to be taken, suffered or omitted. 


    (h) The
Rights Agent and any Affiliate, shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent or any such Affiliate, shareholder, director, officer or employee from acting in any other capacity for
the Company or for any other Person. 


    (i)  The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to
the Company or to the holders of the Rights or any other Person resulting from any such act, omission, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction). 


    (j)  No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of its rights if the Rights Agent believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it. 


    (k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been properly completed or indicates an affirmative response to clause l and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first consulting with the Company. 




    22.  Change of Rights Agent.  The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company and to each transfer agent of the Common Stock and Preferred Stock by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and Preferred Stock by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the 


24





 


Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit such holder's Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a Person organized and doing business under the laws of the United States or of the State of New York or the State of California (or of any other state of the
United States so long as such Person is authorized to do business in the State of New York or the State of California), in good standing, which is authorized under such laws to exercise shareholder
services powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000.00 or (b) an Affiliate of a Person described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall mail notice thereof in writing to the predecessor
Rights Agent and each transfer agent of the Common Stock and Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 22, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be. 


    23.  Issuance of New Rights Certificates.  Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall,
with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or otherwise under any employee plan or arrangement, which plan or arrangement is existing as of the
Distribution Date, or upon the exercise, conversion or exchange of any other securities issued by the Company on or prior to the Distribution Date, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificates shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificates would be issued, and (ii) no such Rights Certificates shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. 


    24.  Redemption, Termination and Exchange.  




(a)
(i) The Board may, at its option, at any time prior to the earlier of (x) the Stock Acquisition Date or (y) the Close of Business on the Final Expiration Date, redeem all but
not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the "Redemption Price"). The Company may, at its option, pay the Redemption Price in
any form of consideration deemed appropriate by the Board. 


    (ii) In
addition, and notwithstanding the provisions of Section 24(a)(i) hereof, the Board may redeem all but not
less than all of the then outstanding Rights at the Redemption Price 




25





 



on or after the Stock Acquisition Date but prior to any Section 13 Event either (x) in connection with any Section 13 Event in which all holders of Common Stock are treated alike
and not involving (other
than as a holder of Common Stock being treated like all other such holders) an Acquiring Person or an Affiliate or Associate thereof or any other Person in which such Acquiring Person or Affiliate or
Associate thereof has any interest, or any other Person acting directly or indirectly on behalf of or in association with any such Acquiring Person or Affiliate or Associate thereof, or
(y) following the occurrence of a Section 11 Event, and the expiration of any period during which the holder of Rights may exercise the rights under  Section 11(a)(ii) hereof as a result
thereof, if and for as long as any Acquiring Person having triggered the Section 11 Event at issue is
not thereafter the Beneficial Owner of fifteen percent (15%) or more of the outstanding shares of Common Stock, and at the time of redemption there are no other Persons who are Acquiring Persons. 


(b)
(i) In the case of a redemption permitted under Section 24(a)(i) hereof, immediately upon the action of the Board ordering the redemption of
the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price. In the case of a redemption permitted only under Section 24(a)(ii)  hereof, evidence of which shall have been filed with
the Rights Agent, the right to exercise the Rights will terminate and represent only the right to receive the Redemption
Price only after ten (10) Business Days following the giving of notice of such redemption to the holders of such Rights if no Section 11 Event shall have occurred, and, if a
Section 11 Event shall have occurred, upon the later of ten (10) Business Days following the giving of such notice or the expiration of any period during which the rights under  Section 11(a)(ii) hereof may be exercised as a result thereof. Within ten (10) days after the action of the Board ordering any such
redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock. Any
notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of
the Redemption Price will be made. 


    (ii) In
the case of a redemption permitted under Section 24(a)(i) or  (ii), the Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the
manner of redemption of the Rights and (ii) mailing payment of the Redemption Price to the registered holders of the Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent of the Common Stock, and upon such action, all outstanding Rights Certificates shall be null and void
without any further action by the Company. 


(c)
(i) Subject to the limitations of applicable laws, the Board may, at its option and at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 7(e) hereof) for
(A) shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (the "Exchange Shares"), or (B) Substitute Consideration (as that term is defined below). The Board may determine, in its sole
discretion, whether to deliver Exchange Shares or Substitute Consideration. Notwithstanding the foregoing, the Board shall not be empowered to effect 




26





 



such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Stock
for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty percent (50%) or more of the Common Stock then
outstanding. 


    (ii) In
the event the Board shall determine to deliver Substitute Consideration in exchange for Rights, the Company shall (1) determine the value of the Exchange
Shares (the "Exchange Value"), and (2) with respect to each Right to be exchanged, make adequate provision to substitute for Exchange Shares the
following (the "Substitute Consideration"): (v) cash, (w) Common Stock or common stock equivalents (as that term is defined in  Section 11(a)(iii) hereof) or Preferred Stock or equivalent preferred stock (as that term is defined in  Section 11(b) hereof), (x) debt securities of the Company, (y) other assets, or (z) any
combination of the foregoing, having
an aggregate value equal to the Exchange Value, where such aggregate value has been determined by the Board based upon the advice of a nationally recognized investment banking firm selected by the
Board. For purposes of this Section 24(c), the value of a share of Common Stock shall be the current market price (as determined pursuant to  Section 11(d)
hereof) per share of Common Stock on the day that is the later of (x) the first occurrence of a Section 11 Event or
(y) the date on which the Company's right of redemption pursuant to Section 24(a)(i) hereof expires; and the value of any common stock
equivalent shall be deemed to have the same value as the Common Stock on such date. 


    (iii) Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to this  Section 24(c), and without any further action and without any notice, the right to exercise such Rights shall
terminate and the only right
thereafter of a holder of such Rights shall be to receive Exchange Shares or Substitute Consideration for each Right exchanged by such holder. The Company shall promptly give public notice and notice
to the Rights Agent of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent.
Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange
of Common Stock (or Substitute Consideration) for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights. 


    (iv) In
the event that there shall not be sufficient shares of Common Stock or Preferred Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24(c), the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or Preferred Stock for issuance upon exchange of the Rights. 


    (v) The
Company shall not be required to issue fractions of shares of Common Stock or to distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay to the registered holders of the Rights Certificates with regard to which such fractional shares of Common Stock would otherwise
be issuable an amount in cash equal to the same fraction of the current market value of a whole share of Common Stock. For the purposes of this  Section 24(c)(v), the current market value of a whole
share of Common Stock shall be determined in the manner 




27





 



set forth in Section 11(d) hereof for the Trading Day immediately prior to the date of exchange pursuant to this  Section 24(c). 





    25.  Notice of Certain Events.  



    (a) In
case the Company shall propose (i) to pay any dividend payable in stock of any class to the holders of Preferred Stock or to make any other distribution
to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company), (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any
reclassification of Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than fifty percent (50%) of the
assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Rights Certificate, in accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by
the holders of the shares of Preferred Stock, whichever shall be the earlier. 


    (b) In
case any Triggering Event shall occur, then, in any such case, the Company or the Principal Party, as the case may be, shall as soon as practicable thereafter
give to each holder of a Rights Certificate and the Rights Agent, in accordance with Section 26 hereof, a notice of the occurrence of such
Triggering Event, which shall specify the event and the consequences of the Triggering Event to holders of Rights under Section 11(a)(ii) or 13(a) hereof, as the case may be. 


    (c) The
failure to give notice required by this Section 25 or any defect therein shall not affect the legality or
validity of the action taken by the Company or the vote upon any such action. 




    26.  Notices.  Notices or demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, or sent by nationwide overnight delivery, addressed
(until another address is filed in writing with the Rights Agent) as follows: 




Fiberstars, Inc.

44259 Nobel Drive

Fremont, CA 94538

Attention: Corporate Secretary 




28





 





Subject
to the provisions of Section 22, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of
any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, or sent by nationwide overnight delivery, addressed (until another
address is filed in writing with the Company) as follows: 




Mellon
Investor Services LLC

400 South Hope Street, 4th Floor

Los Angeles, CA 90071

Attention: William Dougherty 


With
a copy to: 


Mellon
Investor Services LLC

85 Challenger Road

Ridgefield Park, NJ 07660-2108

Attention: General Counsel 





Notices
or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by
first-class
mail, postage prepaid, or sent by nationwide overnight delivery, addressed to such holder at the address of such holder as shown on the registry books of the Company. 


    27.  Supplements and Amendments.  The Company and the Rights Agent may from time to time supplement or
amend this Agreement without approval of any holders of Rights or Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii) prior to the Distribution Date, to change or supplement any provision hereunder in any manner which the Company
may deem necessary or desirable or (iv) on or following the Distribution Date, to change or supplement any provision hereunder in any manner which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the holders of Rights Certificates. Upon the delivery of a certificate from an appropriate officer of the Company, and if requested by the Rights
Agent an opinion of counsel, which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment unless the Rights Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this
Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock. 


    28.  Determination and Actions by the Board.  For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock or any other securities
of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement; provided, however, that ADLT shall be deemed, for purposes of any such calculation at any time, to have
Beneficial Ownership of all shares of Common Stock which may be issued upon exercise of any then outstanding ADLT Warrants (regardless of whether the ADLT Warrants are exercisable at such time), so
long as ADLT continues to own the ADLT Warrants. Except as otherwise provided herein, the Board shall have the exclusive power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend this Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith, shall 


29





 


(x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights Certificates and all other parties and (y) not subject the Board to any liability to the
holders of the Rights Certificates. The Rights Agent may hereby assume without any need to investigate that the Board has acted in good faith and shall be fully protected and incur no liability in
reliance thereon. 


    29.  Successors.  All the covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 


    30.  Benefits of This Agreement.  Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Stock). 


    31.  Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. 


    32.  Governing Law.  This Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of the Company's jurisdiction of incorporation and for all purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts to be made and to be performed entirely within such state; provided, however, that all provisions regarding the rights,
duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such
State. 


    33.  Counterparts.  This Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 


    34.  Descriptive Headings.  Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 


30





 


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



	 	 	FIBERSTARS, INC.
	

 	
 	

By:	
 	

/s/ DAVID N. RUCKERT   

	 	 	Title:	 	Chief Executive Officer

	

 	
 	

MELLON INVESTOR SERVICES LLC, as Rights Agent
	

 	
 	

By:	
 	

/s/ WILLIAM A. DOUGHERTY   

	 	 	Title:	 	Assistant Vice President





31






  



 
 

EXHIBIT A
  
    CERTIFICATE OF DETERMINATION
  
    OF SERIES A PARTICIPATING PREFERRED STOCK
  
    OF
  
    FIBERSTARS, INC.    
  



    We, David N. Ruckert, the Chief Executive Officer, and Robert A. Connors, the Secretary of Fiberstars, Inc., a corporation organized and existing under
the General Corporation Law of the State of California (the "Corporation"), DO HEREBY CERTIFY: 


    That
we are the duly elected and acting Chief Executive Officer and Secretary, respectively, of the Corporation; and 


    That
pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation of the Corporation, the Board of Directors on September 12, 2001, adopted
the following resolution creating a series of One Hundred Thousand (100,000) shares of Preferred Stock designated as Series A Participating Preferred Stock: 



    RESOLVED,
that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Articles of Incorporation, a series of Preferred
Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the powers, preferences and relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations or restrictions thereof are as follows: 


    1.  Designation and Amount.  The shares of such series shall be designated as
"Series A Participating Preferred Stock," and the number of shares constituting such series shall be One Hundred Thousand (100,000). Such number
of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of
Series A Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or
upon conversion of outstanding securities issued by the Corporation. 


    2.  Dividends and Distributions.  


    (A)
Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating
Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock in preference to the holders of shares of Common Stock (the
"Common Stock"), of the Corporation and any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Participating Preferred Stock in an amount per share (rounded to the nearest cent) equal to the greater of (a) $25.00 or, (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of
Series A Participating Preferred Stock. In the event the Corporation shall at any time after the close of business on September 20, 2001 (the "Rights Declaration
Date") (i) declare any dividend on Common 


A–1





 


Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the amount to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 


    (B)
The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $25.00 per share on the Series A Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. 


    (C)
Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares of Series A Participating Preferred Stock unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of
holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof. 


    3.  Voting Rights.  The holders of shares of Series A Participating Preferred Stock shall have the
following voting rights: 


    (A)
Subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock into a greater number of shares or (iii) combine the outstanding Common Stock into a smaller number of
shares, by reclassification or otherwise, then in each such case the number of votes per share to which holders of shares of Series A Participating Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding immediately prior to such event. 


    (B)
Except as otherwise provided herein, in the Articles of Incorporation or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. 


A–2





 

(C)
(i) If at any time dividends on any Series A Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the holders of the Series A
Participating Preferred Stock, voting as a separate series from all other series of Preferred Stock and classes of capital stock, shall be entitled to elect two members of the Board of Directors in
addition to any Directors elected by any other series, class or classes of securities and the authorized number of Directors will automatically be increased by two. Promptly thereafter, the Board of
Directors of this Corporation shall, as soon as may be practicable, call a special meeting of holders of Series A Participating Preferred Stock for the purpose of electing such members of the
Board of Directors. Said special meeting shall in any event be held within 45 days of the occurrence of such arrearage. 


    (ii) During
any period when the holders of Series A Participating Preferred Stock, voting as a separate series, shall be entitled and shall have exercised their
right to elect two Directors, then and during such time as such right continues (a) the then authorized number of Directors shall remain increased by two, and the holders of Series A
Participating Preferred Stock, voting as a separate series, shall remain entitled to elect the additional Directors so provided for, and (b) each such additional Director shall not be a member
of any existing class of the Board of Directors, but shall serve until the next annual meeting of shareholders for the election of Directors, or until his or her successor shall be elected and shall
qualify, or until his or her right to hold such office terminates pursuant to the provisions of this Section 3(C). 


    (iii) A
Director elected pursuant to the terms hereof may be removed with or without cause by the holders of Series A Participating Preferred Stock entitled to
vote in an election of such Director. 


    (iv) If,
during any interval between annual meetings of shareholders for the election of Directors and while the holders of Series A Participating Preferred
Stock shall be entitled to elect two Directors, there are fewer than two such Directors in office by reason of resignation, death or removal, then, promptly thereafter, the Board of Directors shall
call a special meeting of the holders of Series A Participating Preferred Stock for the purpose of filling such vacancy(ies) and such vacancy(ies) shall be filled at such special meeting. Such
special meeting shall in any event be held within 45 days of the occurrence of any such vacancy(ies). 


    (v) At
such time as the arrearage is fully cured, and all dividends accumulated and unpaid on any shares of Series A Participating Preferred Stock outstanding
are paid, and, in addition thereto, at least one regular dividend has been paid subsequent to curing such arrearage, the term of office of any Director elected pursuant to this  Section 3(C), or his
or her successor, shall automatically terminate, and the authorized number of Directors shall automatically decrease by two,
and the rights of the holders of the shares of the Series A Participating Preferred Stock to vote as provided in this Section 3(C) shall
cease, subject to renewal from time to time upon the same terms and conditions. 




    (D)
Except as set forth herein or as otherwise provided by law, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders of Common Stock and any other capital stock of the Corporation having general voting rights as set forth herein) for taking
any corporate action. 


    4.  Certain Restrictions.  


    (A)
Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in  Section 2 are in arrears, thereafter and until all accrued



A–3





 


and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: 



    (i)  declare
or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; 



    (ii) declare
or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Participating Preferred Stock except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; 


    (iii) redeem
or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Participating Preferred Stock provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; or 


    (iv) purchase
or otherwise acquire for consideration any shares of Series A Participating Preferred Stock or any shares of stock ranking on a parity with the
Series A Participating Preferred Stock except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the respective series or classes. 




    (B)
The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. 


    5.  Reacquired Shares.  Any shares of Series A Participating Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. 


    6.  Liquidation, Dissolution or Winding Up.  


    (A)
Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Participating
Preferred Stock shall have received per share, the greater of $1,000.00 or 1,000 times the payment made per share of Common Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the
full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing
(i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock
dividends and recapitalization with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the 


A–4





 


payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Participating Preferred Stock and Common
Stock, respectively, holders of Series A Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. 


    (B)
In the event there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series
of Preferred Stock, if any, which rank on a parity with the Series A Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares
in proportion to their respective liquidation preferences. In the event, following payment in full of all liquidation preferences of all shares senior to Common Stock (including the Series A
Participating Preferred Stock), there are not sufficient assets available to permit payment in full of the Common Adjustment, then the remaining assets shall be distributed ratably to the holders of
Common Stock. 


    (C)
In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, by reclassification or otherwise, then in each such case the
Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 


    7.  Consolidation, Merger, etc.  In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to
1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. 



    8.  Redemption.  The shares of Series A Participating Preferred Stock shall not be redeemable. 


    9.  Ranking.  The Series A Participating Preferred Stock shall rank junior to all other series of
the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. 


    10.  Amendment.  The Articles of Incorporation and the By-Laws of the Corporation shall not
be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least 662/3% of the outstanding shares of Series A Participating Preferred Stock voting separately as a class. 


A–5





 


    11.  Fractional Shares.  Series A Participating Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Participating Preferred Stock. 


    IN
WITNESS WHEREOF, the undersigned have executed this Certificate on the    day of September, 2001. 



	

 	

 David N. Ruckert

Chief Executive Officer
	

 	

 Robert A. Connors

Secretary





    The undersigned declare under penalty of perjury that the matters set forth in the foregoing Certificate are true and correct of their own knowledge. 


    Executed
on the    day of September, 2001. 



	

 	

 David N. Ruckert
	

 	

 Robert A. Connors






A–6






  



 
 

EXHIBIT B
  
    [Form of Rights Certificate]    
  


Certificate
No. R-____________      ____________ Rights 



NOT
EXERCISABLE AFTER SEPTEMBER 20, 2011, OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AN
AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]* 





	*
	The
portion of the legend in brackets shall be inserted only if applicable. 


 
 

Rights Certificate
  
    FIBERSTARS, INC.    
  



    This certifies that            , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the Rights Agreement dated as of September 20, 2001 (the "Rights Agreement")
between Fiberstars, Inc., a California corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey limited liability company (the
"Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m. (San
Francisco time) on September 20, 2011, unless earlier redeemed or exchanged by the Company as set forth in the Rights Agreement, at the office of the Rights Agent designated for such purpose,
one one-thousandth of a fully paid, nonassessable share of Series A Participating Preferred Stock (the "Preferred Stock"), of the
Company, at a purchase price of Thirty Dollars ($30.00) per one one-thousandth of a share
(the "Purchase Price"), upon presentation and surrender of this Rights Certificate with the appropriate Form of Election to Purchase and Certificate
duly executed. 


    The
number of Rights evidenced by this Rights Certificate (and the number of one one-thousandths of a share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of the close of business on the record date relating to the initial distribution of the Rights, based on the Preferred
Stock as constituted at such date. 


    Upon
the occurrence of a Triggering Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are Beneficially Owned (as such term is
defined in the Rights Agreement) by (i) an Acquiring Person (as such term is defined in the Rights Agreement) or an Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement) or, (iii) under certain circumstances specified in the Rights Agreement, a transferee of an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall
become null and void and no holder hereof shall have any rights with respect to such Rights from and after the occurrence of any such Triggering Event. 


    As
provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths of a share of Preferred Stock or other securities which may be purchased upon
the exercise of the 


B–1





 


Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events. 


    This
Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of the Rights Agreement are on file at the principal office of the Company and are also available upon written request to
the Company. 


    This
Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-thousandths of a share of Preferred Stock as
the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised (other than pursuant to  Section 11(a)(ii)
 of the Rights Agreement) in part,
the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised. If this Rights Certificate shall be
exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this Rights
Certificate duly marked to indicate that such exercise has occurred as set forth in the Rights Agreement. 


    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may, in certain instances, be (i) redeemed by the Company at its option at a
redemption price of $0.001 per Right or (ii) exchanged in whole or in part for shares of the Company's Common Stock or substitute consideration. Subject to the provisions of the Rights
Agreement, the Company, at its option, may elect to mail payment of the redemption price to the registered holder of the Rights at the time of redemption, in which event this Certificate may become
void without any further action by the Company. 


    The
Company may elect not to issue fractional shares of Preferred Stock upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), in which event a cash payment will be made, in lieu
thereof, as provided in the Rights Agreement. 


    No
holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of one one-thousandths of a share of
Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement. 


    This
Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. 


B–2





 


    WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. 


    Dated:
________________________, 20____. 



	Attest:	 	FIBERSTARS, INC.
	

	
 	

By:	


	

Title:	

	
 	

Title:	


	Countersigned:	 	 	 	 
	

MELLON INVESTOR SERVICES LLC,

as Rights Agent	
 	

 	

 
	By:	
	 	 	 




B–3





 

[Form of Reverse Side of Rights Certificate] 


 
 

FORM OF ASSIGNMENT    
  


(To
be executed by the registered holder if such

holder desires to transfer the Rights Certificate.) 


    FOR
VALUE RECEIVED,            hereby sells, assigns and transfers
unto                                



	

 (please print name, address and social security or other identifying number of transferee)
	

 this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and
appoint            Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.





    Dated:
________________________, 20____. 


    ________________________

    Signature 


Signature
Guaranteed: 


    Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. 


B–4





 
 
 

CERTIFICATE    
  


    The undersigned hereby certifies by checking the appropriate boxes that: 


    (1)
the Rights evidenced by this Rights Certificate [  ] are [  ] are not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and 



    (2)
after due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did [  ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. 


    Dated:
________________________, 20____. 


    ________________________

    Signature 


 
 

NOTICE    
  


    The signature to the foregoing Assignment must correspond to the name as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever. 


    In
the event the Certificate set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement) and will affix a legend to that effect on any Rights Certificate issued in exchange for this Rights Certificate. 


B–5






  



 
 

FORM OF ELECTION TO PURCHASE    
  


(To
be executed if holder desires to

exercise the Rights Certificate pursuant to
 Section 11(a)(ii) of the Rights Agreement.) 


To:
FIBERSTARS, INC. 


    The
undersigned hereby irrevocably elects to exercise            Rights represented by this Rights Certificate to purchase the shares of Common Stock (or such other securities
of the Company) issuable upon the exercise of the Rights and requests that certificates for such shares be issued in the name of: 


___________________________________________________________________________________________

(Please insert social security or other identifying number) 


___________________________________________________________________________________________

(Please print name and address) 


___________________________________________________________________________________________



    The
Rights Certificate indicating the balance, if any, of such Rights which may still be exercised pursuant to Section 11(a)(ii)  of the Rights Agreement shall be returned to the undersigned unless the
undersigned requests that the Rights Certificate be registered in the name of and delivered to:
 


___________________________________________________________________________________________

Please insert social security or other identifying number (complete only if Rights Certificate is to be registered in a name other than the undersigned) 


___________________________________________________________________________________________

(Please print name and address) 


    Dated:
________________________, 20____. 


    ________________________

    Signature 


Signature
Guaranteed: 


    Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. 


B–6





 
 
 

CERTIFICATE    
  


    The undersigned hereby certifies by checking the appropriate boxes that: 


    (1) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); 


    (2) this
Rights Certificate [  ] is [  ] is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement); and 



    (3) after
due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did
[  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. 


    Dated:
________________________, 20____. 


    ________________________

    Signature 


 
 

NOTICE    
  


    The signature to the foregoing Election to Purchase must correspond to the name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever. 


    In
the event the Certificate set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement). 


B–7





 
 
 

FORM OF ELECTION TO PURCHASE    
  


(To
be executed if holder desires to exercise

the Rights Certificate other than pursuant to
 Section 11(a)(ii) of the Rights Agreement.) 



To:
FIBERSTARS, INC. 


    The
undersigned hereby irrevocably elects to exercise            Rights represented by this Rights Certificate to purchase the one one-thousandths of a share of
Preferred Stock (or such other securities of the Company or any other Person) issuable upon the exercise of the Rights and requests that certificates for such shares be issued in the name of: 


___________________________________________________________________________________________

(Please insert social security or other identifying number) 


___________________________________________________________________________________________

(Please print name and address) 


___________________________________________________________________________________________ 


    If
applicable, the Rights Certificate indicating the balance, if any, of such Rights which may still be exercised pursuant to Section 11(a)(ii)  of the Rights Agreement shall be returned to the
undersigned unless such Person requests that the Rights Certificate be registered in the name of and delivered to: 



___________________________________________________________________________________________

Please insert social security or other identifying number (complete only if Rights Certificate is to be registered in a name other than the undersigned) 


___________________________________________________________________________________________

(Please print name and address) 


___________________________________________________________________________________________



    Dated:
________________________, 20____. 


    ________________________

    Signature 


Signature
Guaranteed: 


    Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. 


B–8





 
 
 

CERTIFICATE    
  


    The undersigned hereby certifies by checking the appropriate boxes that: 


    (1) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); 


    (2) the
Rights evidenced by this Rights Certificate [  ] are [  ] are not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement);
and 


    (3) after
due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did
[  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person. 


    Dated:
________________________, 20____. 


    ________________________

    Signature 


 
 

NOTICE    
  


    The signature to the foregoing Election to Purchase must correspond to the name as written upon the fact of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever. 


    In
the event the Certificate set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement). 


B–9






  



 
 

EXHIBIT C    
  


 
 

SUMMARY OF RIGHTS    
  


    On September 12, 2001, the Board of Directors of Fiberstars, Inc. (the "Company") declared a
dividend distribution of one "Right" for each outstanding share of common stock (the "Common Stock") of
the Company to shareholders of record at the close of business on September 26, 2001 (the "Record Date"). Except as set forth below, each Right,
when exercisable, entitles the registered holder to purchase from the Company one one-thousandth of a share of a new series of preferred stock, designated as Series A Participating
Preferred Stock (the "Preferred Stock"), at a price of Thirty Dollars  ($30.00) per one one-thousandth of a
share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement") between the Company and
Mellon Investor Services LLC, as "Rights Agent." 


    Initially,
the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate Rights certificates will be distributed. The Rights will
separate from the Common Stock and a "Distribution Date" will occur upon the earliest of the following: (i) a public announcement that a person,
entity or group of affiliated or associated persons and/or entities (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of fifteen percent (15%) or more of the outstanding shares of Common Stock (other than (A) as a result of repurchases of stock by the Company or certain inadvertent actions by
institutional or certain other shareholders, (B) the Company, any subsidiary of the Company or any employee benefit plan of the Company or any subsidiary, (C) Advanced Lighting
Technologies, Inc. (which currently owns in excess of fifteen percent (15%) of the outstanding shares of Common Stock), so long as such entity, together with its affiliated or associated
persons and/or entities ("ADLT"), does not increase its beneficial ownership by more than one percent (1%) of the outstanding shares of Common Stock
above (x) the percentage held on September 20, 2001 (including by reason of its beneficial ownership of warrants to purchase common stock) or (y) such lesser percentage as may
result following any transfer or exercise of securities after such date by ADLT or the expiration or cancellation of the same (although this exception will terminate at such time as ADLT beneficially
owns less than fifteen percent (15%) of the outstanding shares of Common Stock) and (D) certain other instances set forth in the Rights Agreement); or (ii) ten (10) business days
(unless such date is extended by the Board of Directors) following the commencement of a tender offer or exchange offer which would result in any person, entity or group of affiliated or associated
persons and/or entities becoming an Acquiring Person (unless such tender offer or exchange offer is a Permitted Offer (defined below)). 


    Until
the Distribution Date (or earlier redemption or expiration of the Rights, if applicable), (i) the Rights will be evidenced by certificates for Common Stock and will be
transferred only with such Common Stock certificates, (ii) new Common Stock certificates issued after the Record Date upon transfers or new issuances of the Common Stock will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for outstanding Common Stock will also constitute the transfer of the Rights associated
with such Common Stock. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and the separate Rights Certificates alone will evidence the Rights. 


    The
Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest of (i) September 20, 2011, (ii) consummation of a merger
transaction with a person, entity or group who (x) acquired Common Stock pursuant to a Permitted Offer (as defined below) and (y) is offering in the merger the same price per share and
form of consideration paid in the Permitted Offer or (iii) redemption or exchange of the Rights by the Company as described below. 


C–1





 


    The number of Rights associated with each share of Common Stock shall be proportionately adjusted to prevent dilution in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Stock. The Purchase Price payable, and the number of one one-thousandths of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification
of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights, options or warrants to subscribe for Preferred Stock, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences as the Preferred Stock at less than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends out of earnings or retained earnings) or of subscription rights,
options or warrants (other than those referred to above). With certain exceptions, no adjustments in the Purchase Price will be required until cumulative adjustments require an adjustment of at least
one percent (1%) in such Purchase Price. 


    In
the event that, after the first date of public announcement by the Company or an Acquiring Person that an Acquiring Person has become such, the Company is involved in a merger or
other business combination transaction (whether or not the Company is the surviving corporation) or fifty percent (50%) or more of the Company's assets or earning power are sold (in one transaction or
a series of transactions), proper provision shall be made so that each holder of a Right (other than an Acquiring Person) shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price, that number of shares of common stock of either the Company, in the event that it is the surviving corporation of a merger or consolidation, or the acquiring company (or,
in the event there is more than one acquiring company, the acquiring company receiving the greatest portion of the assets or earning power transferred) which at the time of such transaction would have
a market value of two (2) times the Purchase Price (such right being called the "Merger Right"). In the event that a person,
entity or group becomes an Acquiring Person (unless pursuant to a tender offer or exchange offer for all outstanding shares of Common Stock at a price and on terms determined prior to the date of the
first acceptance of payment for any of such shares by at least a majority of the members of the Board of Directors who are not officers of the Company and are not Acquiring Persons (or affiliated or
associated persons and/or entities thereof) to be fair to and in the best interests of the Company and its shareholders (a "Permitted Offer")), then
proper provision shall be made so that each holder of a Right will, for a sixty (60) day period (subject to extension under certain circumstances) thereafter, have the right to receive upon
exercise that number of shares of Common Stock (or, at the election of the Company, which election may be obligatory if sufficient authorized shares of Common Stock are not available, a combination of
Common Stock, property, other securities (e.g., Preferred Stock) and/or cash (including by way of a reduction in the Purchase Price)) having a market
value of two (2) times the Purchase Price (such right being called the "Subscription Right"). The holder of a Right will continue to have the
Merger Right whether or not such holder exercises the Subscription Right. Notwithstanding the foregoing, upon the occurrence of any of the events giving rise to the exercisability of the Merger Right
or the Subscription Right, any Rights that are or were at any time after the Distribution Date owned by an Acquiring Person (or affiliated or associated persons and/or entities thereof) shall
immediately become null and void. 


    At
any time prior to the earlier to occur of (i) a person, entity or group becoming an Acquiring Person or (ii) the expiration of the Rights, the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (the "Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Company may, following a person, entity or group becoming an Acquiring Person, redeem the then outstanding Rights in whole, but not in part, at the Redemption
Price (i) if such redemption is incidental to a merger or other business combination transaction or series of transactions involving the Company but not involving an Acquiring Person (or
certain related persons and/or entities) or (ii) following an event giving rise to, and the expiration of 


C–2





 


the exercise period for, the Subscription Right if and for as long as the Acquiring Person triggering the Subscription Right beneficially owns securities representing less than fifteen percent (15%)
of the outstanding shares of Common Stock and at the time of redemption there are no other Acquiring Persons. The redemption of Rights described in the preceding sentence shall be effective only as of
such time when the Subscription Right is not exercisable. Upon the effective date of the redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price. 


    Subject
to applicable law, the Board of Directors, at its option, may at any time after a person, group or entity becomes an Acquiring Person (but not after the acquisition by such
Acquiring Person of fifty percent (50%) or more of the outstanding shares of Common Stock), exchange all or part of the then outstanding and exercisable Rights (except for Rights which have become
void) for shares of Common Stock at a rate of one share of Common Stock per Right (subject to adjustment) or, alternatively, for substitute consideration consisting of cash, securities of the Company
or other assets (or any combination thereof). 


    The
Preferred Stock purchasable upon exercise of the Rights will be nonredeemable and junior to any other series of preferred stock the Company may issue (unless otherwise provided in
the terms of such stock). Each share of Preferred Stock will have a preferential quarterly dividend in an amount equal to 1,000 times the dividend declared on each share of Common Stock, but in no
event less than $25.00. In the event of liquidation, the holders of shares of Preferred Stock will receive a preferred liquidation payment equal, per share, to the greater of $1,000.00 or 1,000 times
the payment made per share of Common Stock. Each share of Preferred Stock will have 1,000 votes, voting together with the shares of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share of Preferred Stock will be entitled to receive 1,000 times the amount and type of consideration received per share of Common
Stock. The rights of the Preferred Stock as to dividends, liquidation and voting, and in the event of mergers and consolidations, are protected by customary antidilution provisions. Fractional shares
of Preferred Stock will be issuable; however, the Company may elect to (i) distribute depositary receipts in lieu of such fractional shares and
(ii) make an adjustment in cash, in lieu of fractional shares other than fractions that are multiples of one one-thousandth of a share, based on the market price of the Preferred
Stock prior to the date of exercise. 


    Until
a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including, without limitation, the right to vote or to receive dividends.
While the distribution of the Rights should not be taxable to shareholders or to the Company, holders of Rights may, depending upon the circumstances, recognize taxable income in the event
(i) that the Rights become exercisable for (x) Common Stock or Preferred Stock (or other consideration) or (y) common stock of an acquiring company in the instance of the Merger
Right as set forth above or (ii) of any redemption or exchange of the Rights as set forth above. 



    The
Company and the Rights Agent retain broad authority to amend the Rights Agreement; however, following any Distribution Date any
amendment may not adversely affect the interests of holders of Rights. 


    A
copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the Company. THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS
AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE. 


C–3









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TABLE OF CONTENTS


RIGHTS AGREEMENT


EXHIBIT A CERTIFICATE OF DETERMINATION OF SERIES A PARTICIPATING PREFERRED STOCK OF FIBERSTARS, INC.


EXHIBIT B [Form of Rights Certificate]

Rights Certificate FIBERSTARS, INC.

FORM OF ASSIGNMENT

CERTIFICATE

NOTICE



FORM OF ELECTION TO PURCHASE

CERTIFICATE

NOTICE

FORM OF ELECTION TO PURCHASE

CERTIFICATE

NOTICE


EXHIBIT C

SUMMARY OF RIGHTS