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Sunrise Telecom Adopts Stockholder Rights Plan to Protect Net Operating Loss Carryforward Assets and Declares a Return of Capital Distribution

Sunrise Telecom Incorporated (Pink Sheets: SRTI) (“the Company”) announced today that its Board of Directors has adopted a Section 382 Rights Agreement (the “Rights Plan”) designed to preserve its tax assets associated with net operating loss carryforwards (“NOLs”) under Section 382 of the Internal Revenue Code.

Pursuant to U.S. federal income tax rules, the Company’s use of certain tax assets could be substantially limited if the Company experiences an “ownership change” (as defined in Section 382 of the Internal Revenue Code). In general, an ownership change occurs if there is a cumulative change in the Company’s ownership by “5 percent shareholders” that increases by more than 50 percent over the lowest percentage owned by such shareholders at any time during the prior three years on a rolling basis. The Company noted that the Rights Plan is designed to serve the interests of all shareholders by helping to protect the Company’s ability to use its NOLs to offset future tax liabilities and is similar to plans adopted by many other public companies with significant tax attributes.

In connection with the adoption of the Rights Plan, the Board of Directors has declared a dividend of one-one thousandth of a share of preferred share purchase right (a “Right”) for each outstanding share of common stock to the Company’s shareholders of record as of the close of business on June 13, 2013. After the Rights Plan takes effect, any person or group that acquires beneficial ownership of 4.95% or more of the Company’s common stock without Board approval would be subject to significant dilution in the ownership interest of that person or group. Shareholders who currently own 4.95% or more of the outstanding shares of the Company’s common stock will not trigger the preferred share purchase rights unless they acquire additional shares.

The Rights will expire on the earliest of (i) the close of business on May 28, 2017 (unless that date is advanced or extended by the Board), (ii) the time at which the Rights are redeemed or exchanged under the Rights Plan, (iii) the repeal of Section 382 or any successor statute, and (iv) the Board’s determination that the Rights Plan is no longer necessary for the preservation of the Company’s NOLs.

The issuance of the Rights will not affect the Company’s reported earnings per share, nor is it taxable to the Company or its shareholders.

In Addition to adopting the Rights Plan, Sunrise Telecom Incorporated today announced a return of capital distribution of $0.055 per common share. The distribution will be paid on June 20, 2014, to holders of record on June 13, 2014. This distribution will be treated as a return of capital for tax purposes. The Ex-date will be determined by the NASDAQ and National Association of Security Dealers.

About Sunrise Telecom

For investor information about Sunrise Telecom, please visit www.sunrisetelecom.com.

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