Exhibit 4.1




 




AMENDMENT NO. 2




 




TO




 




RIGHTS AGREEMENT




 




This Amendment

No. 2 to Rights Agreement (this “Amendment”) is dated as of June 17, 2003 by

and between FIBERSTARS, INC., a California corporation (the “Company”), and

MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company, as Rights

Agent (the “Rights Agent”), with reference to the following:




 




A.                                   The

Company and the Rights Agent entered into that certain Rights Agreement dated

as of September 20,2001 (as amended from time to time, the “Agreement”) in

order to implement a shareholder rights plan as more fully described

therein.  The Company and the Rights

Agent entered into that certain Amendment No. 1 to the Agreement dated as of

March 26, 2002 (the “First Amendment”) in order to clarify the shareholder

rights as more fully described in the Agreement.




 




B.                                     The

Company desires to amend the Agreement in certain respects in order to permit

Trigran Investments LP (or any of its affiliates) and Advanced Lighting

Technologies, Inc. (or any of its affiliates) to purchase additional shares of

Common Stock of the Company without triggering the occurrence of the

Distribution Date (as defined in the Agreement).




 




C.                                     Under

the Agreement, the Company and the Rights Agent may amend the Agreement, at any

time prior to a Distribution Date, which has yet to occur.




 




NOW,

THEREFORE, pursuant to Section 27 of the Agreement, the Company and the Rights

Agent hereby amend, effective upon the date hereof, the following:




 




The definition of the term

“Acquiring Person” set forth in Section 1(a) of the Agreement such that Section

1(a)(ii) of the Agreement shall read in its entirety as follows:




 




“(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 acquisition

of the Company’s securities by such underwriter in connection with such offering);




 




(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 represented by the sum of

(x) the shares as to which ADLT has Beneficial Ownership immediately prior to

the “Second Closing” (as that term is defined in that certain Securities

Purchase Agreement, dated June     , 2003, entered into by

the Company and each of the “Investors” named therein, a copy of which is

attached hereto as Exhibit A, the “Purchase Agreement”), plus (y)

the shares as to which ADLT obtains Beneficial Ownership, pursuant to the

transactions described in the Purchase Agreement, or (2) such lesser percentage

as to which ADLT has Beneficial Ownership following any disposal of Common

Stock by ADLT after such Second Closing (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); or




 




(G)                                Trigran

Investments LP, an Illinois limited partnership (referred to collectively with

their Affiliates and Associates as “Trigran”), so long as Trigran 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

represented by the sum of (x) the shares as to which Trigran has Beneficial

Ownership immediately prior to the “Second Closing”, plus (y) the shares

as to which Trigran obtains Beneficial Ownership, pursuant to the transactions

described in the Purchase Agreement, or (2) such lesser percentage as to which

Trigran has Beneficial Ownership following any disposal of Common Stock by

Trigran after such Second Closing (except that this clause (G) shall

pertain only until such time as Trigran has Beneficial Ownership of less than

fifteen percent (15%) of the outstanding shares of Common Stock); and”;




 




The definition of the term

“Beneficial Owner” set forth in Section 1(a) of the Agreement such that Section

1(c)(ii) of the Agreement shall read in its entirety as follows:




 




“(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




 




2





























 




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 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 issued to ADLT by the Company and outstanding at such

time (the “ADLT Warrants,” regardless of whether the ADLT Warrants are

exercisable at such time), so long as ADLT continues to own the ADLT Warrants;

and provided, further, that Trigran 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 issued to Trigran by the Company and outstanding at such time (the

“Trigran Warrants”) (regardless of whether the Trigran Warrants are

exercisable at such time), so long as Trigran continues to own the Trigran

Warrants; or”




 




Section 28 of the Agreement

such that it shall read in its entirety as follows:




 




“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;

and, provided, further, that Trigran shall be deemed, for

purposes of any such calculation at any time, to have Beneficial Ownership of

all shares of




 




3





























 




Common Stock

which may be issued upon exercise of any then outstanding Trigran Warrants

(regardless of whether the Trigran Warrants are exercisable at such time), so

long as Trigran continues to own the Trigran 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 (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.”




 




This Amendment

may be executed by facsimile signature and in any number of counterparts, each

which shall be deemed an original, and all of this together shall constitute

one instrument.  This Amendment shall be

deemed to be a contract made under the laws of this 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

under the Agreement, as amended by this Amendment, shall continue to 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.  Except as specifically amended

by this Amendment, all other terms and conditions of the Agreement shall remain

in full force and effect and are hereby ratified and confirmed.




 




[signature page to follow]




 




4





























 




IN WITNESS

WHEREOF, this Amendment No. 2 to the Rights Agreement is executed as of the

date first written above.




 




	

   


  	

  FIBERSTARS,

  INC.


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  By:


  	

  /s/ Robert

  A. Connors


  	

   


  
	

   


  	

  Name:


  	

  Robert A.

  Connors


  	

   


  
	

   


  	

  Title:


  	

  CFO


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  MELLON

  INVESTOR SERVICES LLC


  
	

   


  	

   


  
	

   


  	

  By:


  	

  /s/ Joseph

  W. Thatcher, Jr.


  	

   


  
	

   


  	

  Name:


  	

  Joseph W.

  Thatcher, Jr.


  	

   


  
	

   


  	

  Title:


  	

  Vice

  President


  	

   


  





 




5