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[Letterhead of Corsair Communications, Inc.]
December __, 1998
To Our Stockholders:
On November 17, 1998, your Board of Directors declared a
dividend distribution of Preferred Stock Purchase Rights (the "Rights"). The
Rights were issued on December 4, 1998 to stockholders of record on that date
and will expire in ten years. This letter and its attachment summarize certain
key features of the Stockholder Rights Plan and the Board of Directors' reasons
for adopting it. These documents should be kept with your Common Stock
Certificates.
The Rights contain provisions that should, along with certain
charter and by-law provisions and certain provisions of the Delaware General
Corporation Law, help protect the stockholders of Corsair Communications, Inc.
(the "Company") in the event of an unsolicited attempt to acquire the Company,
including a gradual accumulation of shares in the open market, a partial or
two-tier tender offer that does not treat all stockholders equally, a
squeeze-out merger and other coercive or unfair takeover tactics. These tactics
can unfairly pressure stockholders, squeeze them out of their investment without
giving them any real choice and deprive them of the full value of their shares,
and the Board of Directors does not believe they are in the best interests of
the Company's stockholders.
Over 1,700 companies, including approximately half the Fortune
500 companies and two-thirds of the Fortune 200 companies, have issued similar
rights to protect their stockholders against these tactics. We consider the
Rights to be very valuable in protecting both your right to retain your equity
investment in the Company and the full value of that investment, while not
foreclosing a fair acquisition bid for the Company.
Your Board of Directors was aware when it acted that some
people have advanced arguments that securities of the sort we are issuing deter
legitimate acquisition proposals. We carefully considered these views and
concluded that the arguments are speculative and do not justify leaving
stockholders without any protection during the next year. Your Board of
Directors believes that these Rights represent a sound and reasonable means of
addressing the complex issues of corporate policy.
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To Our Stockholders Page 2
December ____, 1998
The Rights are not intended to prevent an acquisition of the
Company and will not do so. However, they should deter any attempt to acquire
the Company in a manner or on terms not approved by the Board of Directors. The
Rights may be redeemed by the Board of Directors at a price of $.001 per Right
prior to the first public announcement of the accumulation, through open-market
purchases, a tender offer or otherwise, of 15% or more of the combined number of
the Company's shares of Common Stock by a single acquiror or group, and
thereafter in certain circumstances. Thus, the Rights should not interfere with
any merger or business combination approved by the Board of Directors prior to
that time.
Issuance of the Rights does not in any way weaken the
financial strength of the Company or interfere with its business plans. The
issuance of the Rights has no dilutive effect, will not affect reported earnings
per share and will not change the way in which you can presently trade the
Company's shares.
The Rights will expire November 17, 2008, which should give
the Company adequate time to determine whether any further protection is
required.
The Board of Directors has been advised by legal counsel for
the Company that the distribution of the Rights will not be taxable to you or to
the Company. However, stockholders may recognize taxable income upon the
occurrence of certain subsequent taxable events.
In declaring the Rights dividend, we have expressed our
confidence in the future of the Company and our determination that you, our
stockholders, be given every opportunity to participate in that future.
On behalf of the
Board of Directors
Mary Ann Byrnes
President and Chief Executive Officer