Exhibit 4.2


 


AMENDMENT NO. 3


 


TO


 


RIGHTS AGREEMENT


 


This Amendment No.
3 to Rights Agreement (this “Amendment”) is dated as of December 8, 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 and the Rights Agent entered into that certain Amendment No. 2 to the
Agreement as of June 17, 2003 (the “Second Amendment”) to amend the
Agreement in certain respects in order to permit Trigran Investments LP and
Advanced Lighting Technologies, Inc. the opportunity to purchase certain
additional shares of Common Stock of the Company without triggering the
occurrence of a Distribution Date (as defined in the Agreement).


 


C.                                     Shareholder
Advanced Lighting Technologies, Inc. (“ADLT”) is a debtor-in-possession
under chapter 11 of the Bankruptcy Code in the matter fashioned In re
VENTURE LIGHTING INTERNATIONAL, et. al., Debtors, Case No. 03-0525,
pending in the United States Bankruptcy Court, Northern District of Illinois,
Eastern Division (the “Bankruptcy Proceeding”).  ADLT, together with others, is scheduled to
appear in the Bankruptcy Proceeding on or about December 8, 2003 and move the
court for judicial confirmation of a proposed Chapter 11 Plan of Reorganization
(as amended through its Fourth Amendment, the “Plan”).  In substance the Plan provides in relevant
part that, if it is approved by, among others, the requisite number of ADLT
common stock holders as of the bankruptcy petition date (the “Class 7
Interests”), Beneficial Ownership (as defined by the Agreement) of the
Fiberstars Common Stock held by ADLT would transfer as of, and subject to, the
Plan’s Effective Date (as defined by the Plan) to a trust (the “Trust”)
for the benefit of the Class 7 Interests.


 


D.                                    The
Company hereby desires to amend the Agreement to allow such a transfer of
Beneficial Ownership by ADLT to the Trust, and/or its trustee, as applicable,
without triggering the occurrence of a Distribution Date (as defined by the
Agreement).


 


E.                                      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 be, and hereby is, restated to 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 hereinafter with its (i) Affiliates, (ii) Associates and (iii) any
trust (including any trustee of such trust) established to hold shares of
Common Stock pursuant to a confirmed and effective plan of reorganization of
ADLT under chapter 11 of the Bankruptcy Code in the matter fashioned In re
VENTURE LIGHTING INTERNATIONAL, et. al., Debtors, Case No. 03-0525,
United States Bankruptcy Court, Northern District of Illinois, Eastern
Division, 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 the
percentage of the outstanding shares of Common Stock as to which ADLT has
Beneficial Ownership immediately prior to December 4, 2003 (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 the percentage of the
outstanding shares of Common as to which Trigran has Beneficial Ownership
immediately prior to December 4, 2003 (except that this clause (G) shall
pertain only until


 


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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 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


 


3

















 


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 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 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
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.


 


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IN WITNESS
WHEREOF, this Amendment No. 3 to the Rights Agreement is executed as of the
date first written above.


 


	
   

  	
  FIBERSTARS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT CONNERS

  	
   

  
	
   

  	
  Name:

  	
  Robert Connors

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MELLON
  INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LISA BRENTON

  	
   

  
	
   

  	
  Name:

  	
  Lisa Brenton

  	
   

  
	
   

  	
  Title:

  	
  Client Service Manager

  	
   

  
					



 


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