Document:

Unassociated Document

    [FACE
      OF
      CERTIFICATE]

    

    COMMON
      STOCK

    

    SF

    

    [LOGO]

    

    COMMON
      STOCK

    

    THIS
      CERTIFICATE IS TRANSFERABLE IN

    JERSEY
      CITY, NJ AND NEW YORK, NY

    

    INCORPORATED
      UNDER THE LAWS OF THE STATE OF DELAWARE

    

    SEE
      REVERSE FOR CERTAIN DEFINITIONS

    AND
      A
      STATEMENT AS TO THE RIGHTS,

    PREFERENCES,
      PRIVILEGES AND RESTRICTIONS
      

    ON
      SHARES

    

    CUSIP
      315662 10 6

    

    THIS
      CERTIFIES THAT

    

    IS
      THE
      OWNER OF

    

    FULLY
      PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.0001 PAR VALUE PER SHARE,
      OF

    

    FIBERSTARS,
      INC.

    

    transferable
      on the books of the Corporation by the holder hereof in person or by duly
      authorized attorney upon surrender of this Certificate properly endorsed. This
      Certificate is not valid until countersigned and registered by the Transfer
      Agent and Registrar.

    

    WITNESS
      the facsimile seal of the Corporation and the facsimile signatures of its duly
      authorized officers.

    

    Dated:

    

    [SIGNATURE]

    CHIEF
      FINANCIAL OFFICER

    

    [SEAL]

    

    [SIGNATURE]

    PRESIDENT
      AND CHIEF EXECUTIVE OFFICER

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    COUNTERSIGNED
      AND REGISTERED:

    MELLON
      INVESTOR SERVICES LLC

    TRANSFER
      AGENT

    AND
      REGISTRAR

    BY

    AUTHORIZED
      OFFICER

     

    

    [REVERSE
      OF CERTIFICATE]

    

    The
      statement of the powers, designations, preferences and relative, participating,
      optional, or other special rights of each class of stock or series thereof
      and
      the qualifications, limitations or restrictions of such preferences and/or
      rights as established from time to time, by the Certificate of Incorporation
      of
      the Corporation and by any certificate of determination, the number of shares
      constituting each class and series, and the designations thereof, may be
      obtained by the holder hereof upon request and without charge at the principal
      office of the Corporation.

    

    The
      following abbreviations, when used in the inscription on the face of this
      certificate, shall be construed as though they were written out in full
      according to applicable laws or regulations:

    

    TEN
      COM —
as tenants in common

    TEN
      ENT —
as tenants by the entireties

    JT
      TEN
 —
as
      joint tenants with right of

    survivorship
      and not as tenants

    in
      common

    

    UNIF
      GIFT
      MIN ACT — ......................... Custodian
      .........................

                                                       
      (Cust)  
(Minor)

    under
      Uniform Gifts to Minors

    Act
      ..............................................................

                                
      (State)

    UNIF
      TRF
      MIN ACT — ................. Custodian (until age ................)

    (Cust)

    ............................
      under Uniform Transfers

    (Minor)

    to
      Minors
      Act ..............................................

                                           
      (State)

    

    Additional
      abbreviations may also be used though not in the above list.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    FOR
      VALUE
      RECEIVED, _________________________________________hereby sell, assign and
      transfer unto

    

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER

    IDENTIFYING
      NUMBER OF ASSIGNEE

    _______________________________________

    

    ____________________________________________________________________________

    (PLEASE
      PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
      ASSIGNEE)

    

    Shares
      of
      the common stock represented by the within Certificate, and do hereby
      irrevocably constitute and appoint

    

    Attorney
      to transfer the said stock on the books of the within named Corporation with
      full power of substitution in the premises.

    

    Dated
      ______________________

    

    X___________________

    X___________________

    NOTICE:
      THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
      UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
      ENLARGEMENT OR ANY

    CHANGE
      WHATEVER.

    

    Signature(s)
      Guaranteed

    By

    THE
      SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
      STOCKBROKERS, SAVINGS AND LOAN SSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
      IN
      AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
      17Ad-15.

    

    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 October 25, 2006
      (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.

     

    
      
         

      

      
        3Unassociated Document

     

    FIBERSTARS, INC.

    a
      Delaware corporation

     

    and

     

    MELLON
      INVESTOR SERVICES LLC

    a
      New
      Jersey limited liability company

     

    Rights
      Agent

     

      
        

      

       

    

    Rights
      Agreement

     

    Dated
      as
      of October 25, 2006

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      	
               

            	
               

            	
               

            	
               

            	
              Page
                

            
	
              1.

            	
               

            	
              Certain
                Definitions

            	
               

            	
              1

            
	
              2.

            	
               

            	
              Appointment
                of Rights Agent

            	
               

            	
              5

            
	
              3.

            	
               

            	
              Issue
                of Rights Certificates

            	
               

            	
              5

            
	
              4.

            	
               

            	
              Form
                of Rights Certificates

            	
               

            	
              7

            
	
              5.

            	
               

            	
              Countersignature
                and Registration

            	
               

            	
              7

            
	
              6.

            	
               

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

            	
               

            	
              8

            
	
              7.

            	
               

            	
              Exercise
                of Rights; Purchase Price; Expiration Date of Rights

            	
               

            	
              9

            
	
              8.

            	
               

            	
              Cancellation
                and Destruction of Rights Certificates

            	
               

            	
              11

            
	
              9.

            	
               

            	
              Reservation
                and Availability of Preferred Stock

            	
               

            	
              11

            
	
              10.

            	
               

            	
              Preferred
                Stock Record Date

            	
               

            	
              13

            
	
              11.

            	
               

            	
              Adjustment
                of Purchase Price, Number and Kind of Shares or Number of
                Rights

            	
               

            	
              13

            
	
              12.

            	
               

            	
              Certificate
                of Adjusted Purchase Price or Number of Shares

            	
               

            	
              21

            
	
              13.

            	
               

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

            	
               

            	
              21

            
	
              14.

            	
               

            	
              Additional
                Covenants

            	
               

            	
              23

            
	
              15.

            	
               

            	
              Fractional
                Rights and Fractional Shares

            	
               

            	
              24

            
	
              16.

            	
               

            	
              Rights
                of Action

            	
               

            	
              25

            
	
              17.

            	
               

            	
              Agreement
                of Rights Holders

            	
               

            	
              26

            
	
              18.

            	
               

            	
              Rights
                Certificate Holder Not Deemed a Shareholder

            	
               

            	
              26

            
	
              19.

            	
               

            	
              Concerning
                the Rights Agent

            	
               

            	
              26

            
	
              20.

            	
               

            	
              Merger
                or Consolidation or Change of Name of Rights Agent

            	
               

            	
              27

            
	
              21.

            	
               

            	
              Rights
                and Duties of Rights Agent

            	
               

            	
              28

            
	
              22.

            	
               

            	
              Change
                of Rights Agent

            	
               

            	
              30

            
	
              23.

            	
               

            	
              Issuance
                of New Rights Certificates

            	
               

            	
              31

            
	
              24.

            	
               

            	
              Redemption,
                Termination and Exchange

            	
               

            	
              32

            
	
              25.

            	
               

            	
              Notice
                of Certain Events

            	
               

            	
              34

            
	
              26.

            	
               

            	
              Notices

            	
               

            	
              35

            
	
              27.

            	
               

            	
              Supplements
                and Amendments

            	
               

            	
              36

            
	
              28.

            	
               

            	
              Determination
                and Actions by the Board

            	
               

            	
              36

            
	
              29.

            	
               

            	
              Successors

            	
               

            	
              37

            
	
              30.

            	
               

            	
              Benefits
                of This Agreement

            	
               

            	
              37

            
	
              31.

            	
               

            	
              Severability

            	
               

            	
              37

            
	
              32.

            	
               

            	
              Governing
                Law

            	
               

            	
              37

            
	
              33.

            	
               

            	
              Counterparts

            	
               

            	
              37

            
	
              34.

            	
               

            	
              Descriptive
                Headings

            	
               

            	
              37

            
	
              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

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    RIGHTS
      AGREEMENT

     

    THIS
      RIGHTS AGREEMENT (this "Agreement")
      is
      dated as of October 25, 2006, between FIBERSTARS, INC., a Delaware
      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 Fiberstars, Inc., a
      California corporation (“Fiberstars
      California”)
      authorized and declared a dividend distribution of one California Right (as
      hereinafter defined) for each share of Common Stock outstanding as of the Close
      of Business on September 26, 2001 (the "Record
      Date"),
      and
      provided for the issuance of one California Right for each share of common
      stock
      of Fiberstars-California issued between the Record Date and the earlier of
      the
      Distribution Date and the Expiration Date, as such terms are hereinafter defined
      (with California Rights also to be issued in connection with certain issuances
      of such common stock after the Distribution Date, each California Right
      representing the right to purchase one one-thousandth of a share of
      Series A Participating Preferred Stock of Fiberstars California having the
      rights, powers and preferences set forth in the form of Certificate of
      Determination attached as Exhibit A to the Rights Agreement between
      Fiberstars California and the Rights Agent dated as of September 21, 2001,
      upon
      the terms and subject to the conditions hereinafter set forth (the "California
      Rights"). 

     

    WHEREAS,
      upon the merger of Fiberstars California into the Company, the California Rights
      will be automatically converted into Rights to purchase one-thousandths of
      a
      share of Series A Participating Preferred Stock of the Company (“Preferred
      Stock”)
      having
      the rights, powers and preferences set forth in the form of Certificate of
      Designation attached hereto as Exhibit A (the “Certificate
      of Designation”)
      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; or (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); 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. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

        (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
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); 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. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

        (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 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. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

        (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 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.
      

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    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 October 25,
      2006 (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.
      

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    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 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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

        (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. 

     

    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. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

     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.
      

     

        (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).
      

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

        (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
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. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

        (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. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

        (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.
      

     

        (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. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    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 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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

        (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. 

     

        (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.
      

     

    
      
        
        

      

      
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        (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 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. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

        (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
      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. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

        (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. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

        (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 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. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

        (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 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. 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

        (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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    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. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

        (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:

     

    
      
        
        

      

      
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        (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.

     

    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. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

        (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. 

     

        (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.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

        (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. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    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 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. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

        (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. 

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

        (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, in
      the
      absence of bad faith, the Rights Agent shall incur no liability for or in
      respect of any action taken, suffered or omitted by it in accordance with such
      advice or opinion. 

     

        (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, in the absence of bad
      faith, the Rights Agent shall incur no liability for or in respect of any action
      taken, suffered or omitted 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. 

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

        (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,
      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, in the absence of bad faith, the Rights
      Agent shall incur no liability for or in respect of any action taken, suffered
      or omitted to be taken by it 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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

        (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 the Rights Agent 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 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. 

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    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.
      

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

       

    

    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 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. 

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

        (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 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. 

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

        (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 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. 

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

        (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.

    32000
      Aurora Road

    Solon,
      OH
      44139

    Attention:
      Corporate Secretary 

     

    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: 

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    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

    480
      Washington Blvd

    Jersey
      City, NJ 07310

    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 the absence of bad 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. 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 and calculations 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.
      

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    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. 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    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/ John M. Davenport 
                

              

            
	
               

            	
               

            	
              Title:

            	
               

            	
              Chief
                Executive Officer 
                

              

            
	
               

               

            	
               

               

            	
               

              MELLON
                INVESTOR SERVICES LLC, as Rights Agent

            
	
               

               

            	
               

               

            	
               

              By:

            	
               

               

            	
               

                 
                /s/ Asa Drew 
                

              

            
	
               

            	
               

            	
              Title:

            	
               

            	
              Assistant
                Vice President 
                

              

            

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    CERTIFICATE
      OF DESIGNATION

    

    OF
      SERIES A PARTICIPATING PREFERRED STOCK

     

    OF

     

    FIBERSTARS,
      INC.

     

    Fiberstars,
      Inc., a corporation organized and existing under the Delaware General
      Corporation Law (the “Corporation”),
      DOES
      HEREBY CERTIFY:

     

    That
      pursuant to the authority conferred upon the Board of Directors by the
      Certificate of Incorporation of the Corporation, and pursuant to Section 151
      of
      the Delaware Corporation Law, the Board of Directors on _______________, 2006,
      by unanimous consent in lieu of a meeting, duly determined that the Corporation
      shall designate One Hundred Thousand (100,000) shares of Preferred Stock as
      Series A Participating Preferred Stock and to that end, the Board of
      Directors adopted the following resolution providing for the terms,
      designations, powers, preferences and relative participating, optional and
      other
      special rights, and the qualifications, limitations, and restrictions, of the
      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 Certificate of
      Incorporation, and pursuant to Section 151 of the Delaware Corporation Law,
      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 the
      Effective Date, as defined in the Merger Agreement between Fiberstars California
      and the Corporation (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 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.

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    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 Certificate 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.

     

    (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).

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    (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 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;

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    (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 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.

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

    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 Certificate 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 66-2/3% of the outstanding shares of Series A Participating Preferred
      Stock voting separately as a class.

     

    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,
      in
      accordance with Subsections (a)(1)(b) and (b)(2) of Section 103 and Section
      151(g) of the Delaware General Corporation Law, the undersigned Chief Executive
      Officer of Fiberstars, Inc. has hereunto set his hand on this _____ day of
      October, 2006, and affirms under penalties of perjury that this instrument
      is
      his act and deed and the act and deed of the Corporation and that the facts
      stated herein are true.

     

    
      	 	 	 
	 	FIBERSTARS,
              INC.
	 	 
	
               

            	By:  	 
	 	Name:	
              
 John
              M. Davenport
	 	Title:	 Chief Executive
              Officer

    

     

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

     

    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 October 25, 2006(the "Rights
      Agreement")
      between Fiberstars, Inc., a Delaware 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. 

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

        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 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. 

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

        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. 

     

     

        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
      

     

    Signature
      Guaranteed: 

     

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

     

     

    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. a
      California corporation, declared a dividend distribution of one "Right" for
      each
      outstanding share of common stock of such company to shareholders of record
      at
      the close of business on September 26, 2001). Upon the merger of such
      corporation into Fiberstars, Inc., a Delaware corporation (“Fiberstars
      Delaware”)
      each
      outstanding right was automatically converted into a Right of like Tenor of
      Fiberstars Delaware. Except as set forth below, each Right, when exercisable,
      entitles the registered holder to purchase from Fiberstars Delaware 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 Fiberstars Delaware 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 Fiberstars Delaware or certain
      inadvertent actions by institutional or certain other shareholders,
      (B) Fiberstars Delaware, any subsidiary of Fiberstars Delaware or any
      employee benefit plan of Fiberstars Delaware or any subsidiary, and
      (C) 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. 

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

     

        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 Fiberstars
      Delaware as described below. 

     

        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 Fiberstars
      Delaware or an Acquiring Person that an Acquiring Person has become such,
      Fiberstars Delaware is involved in a merger or other business combination
      transaction (whether or not Fiberstars Delaware is the surviving corporation)
      or
      fifty percent (50%) or more of Fiberstars Delaware'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
      Fiberstars Delaware, 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 Fiberstars Delaware
      and are not Acquiring Persons (or affiliated or associated persons and/or
      entities thereof) to be fair to and in the best interests of Fiberstars Delaware
      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 Fiberstars Delaware, 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.

     

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

     

        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,
      Fiberstars Delaware 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, Fiberstars Delaware 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 Fiberstars Delaware 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 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 Fiberstars Delaware 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 Fiberstars Delaware 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,
      Fiberstars Delaware 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. 

     

    
      
        
        

      

      
        C-3

        
          

        

      

      
        
        

      

    

     

        Until
      a Right is exercised, the holder thereof, as such, will have no rights as a
      shareholder of Fiberstars Delaware, including, without limitation, the right
      to
      vote or to receive Fiberstars Delaware dividends. 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.

     

        Fiberstars
      Delaware 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 and the Certificate of Designation of the Series
      A
      Particiating Preferred Stock of Fiberstars Delaware are attached as appendices
      D
      and E to the Proxy Statement regarding the Merger. THIS SUMMARY DESCRIPTION
      OF
      THE RIGHTS AND SERIES A PARTICIPATING PREFERRED STOCK DOES NOT PURPORT TO BE
      COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT
      CERTIFICATE OF DESIGNATION, WHICH IS INCORPORATED HEREIN BY REFERENCE.

     

    
      
        
        

      

      
        C-4

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