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EXHIBIT 99.1
November _______, 2000
To Our Shareholders:
We are pleased to inform you that T/R Systems, Inc. has adopted a share
purchase rights plan.
This action was taken after long and careful study and was not taken in
response to any pending takeover or proposed change in control of the Company.
The plan is intended to protect the Company and its shareholders from
potentially coercive takeover practices or takeover bids which are inconsistent
with the interests of the Company and its shareholders. The plan is not intended
to deter unsolicited offers that would provide superior long-term value to all
of the Company's shareholders. The adoption of a share purchase rights plan has
become common practice in major American companies and a well accepted approach
to ensuring that all shareholders receive a fair price and are treated equally
in the event of a takeover.
To effect the plan, the Board of Directors declared a dividend of one
share purchase right for each outstanding share of the Company's common stock.
The distribution is being made to shareholders of record as of the close of
business on November 27, 2000.
Under the plan, the rights will initially trade together with the
Company's common stock and will not be exercisable. In the absence of further
Board action, the rights issued under the plan generally will become exercisable
and allow the holder to acquire shares of the Company's common stock at a
discounted price if a person or group acquires 15 percent or more of the
Company's common stock. Rights held by persons who exceed the applicable
threshold will be void. Under certain circumstances, the rights will entitle the
holder to buy shares in an acquiring entity at a discounted price.
The plan also includes an exchange option. In general, after the rights
become exercisable, the Directors may, at their option, effect an exchange of
part or all of the rights (other than rights that have become void) for shares
of the Company's common stock. Under this option, the Company would issue one
share of common stock for each right, subject to adjustment in certain
circumstances.
The Company's Board of Directors may, at its option, redeem all rights
for $.01 per right, generally at any time prior to the rights becoming
exercisable. The rights will expire November 27, 2010, unless earlier redeemed,
exchanged or amended by the Board of Directors.
The issuance of the rights is not a taxable event, will not affect the
Company's reported financial condition or results of operations (including
earnings per share), should not interfere with
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the Company's operating, financing or investing activities and will not change
the way in which the Company's common stock is currently traded.
A summary of the share purchase rights plan (which explains the terms
and nature of the rights) is enclosed. Shareholders are urged to review the
summary carefully and retain it with their permanent records.
In adopting the share purchase rights plan, the Board has expressed its
confidence in the Company's future and its determination that you, our
shareholders, be given every opportunity to participate fully in that future.
On Behalf of the Directors,
Michael E. Kohlsdorf
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SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
The Directors of T/R Systems, Inc. (the "Company") have declared a
dividend distribution of one right (a "Right") for each outstanding share of
Common Stock, par value $0.01 per share (the "Common Shares"), of the Company.
The distribution is payable on November 27, 2000 (the "Record Date") to the
stockholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $0.01 per share (the "Preferred Shares"), of the Company at a price (the
"Purchase Price") of $45.00 per one one-hundredth of a Preferred Share, subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of November 9, 2000 (the "Rights Agreement"), between the
Company and EquiServe Trust Company, N.A., as Rights Agent (the "Rights Agent").
Under the Rights Agreement, the Rights will be evidenced by the
certificates evidencing Common Shares until the earlier (the "Distribution
Date") of: (i) the close of business on the tenth calendar day following the
first date (the "Share Acquisition Date") of public announcement that a person
or entity (other than the Company, a subsidiary or employee benefit or stock
ownership plan of the Company or any of its affiliates or associates), together
with its affiliates and associates, has acquired beneficial ownership of 15% or
more of the outstanding Common Shares (any such person or entity being
hereinafter called an "Acquiring Person") or (ii) the close of business on the
tenth business day (or such later date as may be specified by the Directors)
following the commencement of a tender offer or exchange offer by a person or
entity (other than the Company, a subsidiary or employee benefit or stock
ownership plan of the Company or any of its affiliates or associates), the
consummation of which would result in beneficial ownership by such person of 15%
or more of the outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date, the
Rights may be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
any certificate evidencing Common Shares of the Company issued upon transfer or
new issuance of the Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights), the surrender for transfer of
any certificates evidencing Common Shares will also constitute the transfer of
the Rights associated with such certificates. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of Common Shares as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights. No Right is exercisable at any time prior to the
Distribution Date. The Rights will expire on the tenth anniversary of the Record
Date (the "Final Expiration Date") unless earlier redeemed, exchanged or amended
by the Company as described below. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company, including
the right to vote or to receive dividends.
The Purchase Price payable, and the number of the Preferred Shares or
other securities issuable, upon exercise of the Rights will be 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,
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the Preferred Shares, (ii) upon the grant to holders of Preferred Shares of
certain rights or warrants to subscribe for or purchase the Preferred Shares at
a price, or securities convertible into the Preferred Shares with a conversion
price, less than the then-current market price of the Preferred Shares, or (iii)
upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash (excluding regular periodic cash dividends), assets, stock
(excluding dividends payable in the Preferred Shares) or subscription rights or
warrants (other than those referred to above). The number of outstanding Rights
and the number of one one-hundredths of the Preferred Shares issuable upon
exercise of each Right will be subject to adjustment in the event of a stock
dividend on the Common Shares payable in Common Shares or a subdivision,
combination or reclassification of Common Shares occurring, in any such case,
prior to the Distribution Date.
The Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled, in connection with the
declaration of a dividend on the Common Shares, to a preferential dividend
payment equal to the greater of (i) $1.00 per share and (ii) an amount equal to
100 times the related dividend declared per Common Share. Subject to customary
anti-dilution provisions, in the event of liquidation, the holders of Preferred
Shares will be entitled to a preferential liquidation payment equal to the
greater of (a) $100 per share and (b) an amount equal to 100 times the
liquidation payment made per Common Share. Because of the nature of the
Preferred Shares' dividend, voting and liquidation rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon exercise of a Right
should approximate the value of one Common Share.
Rights will be exercisable to purchase Preferred Shares only after the
Distribution Date occurs and prior to the occurrence of a Flip-in Event as
described below. A Distribution Date resulting from the commencement of a tender
offer or exchange offer described in clause (ii) of the second paragraph of this
summary could precede the occurrence of a Flip-in Event and thus result in the
Rights being exercisable to purchase Preferred Shares. A Distribution Date
resulting from any occurrence described in clause (i) of the second paragraph of
this summary would necessarily follow the occurrence of a Flip-in Event and thus
result in the Rights being exercisable to purchase Common Shares or other
securities as described below.
Under the Rights Agreement, in the event (a "Flip-in Event") that (i)
any person or entity, together with its affiliates and associates, becomes an
Acquiring Person (ii) any Acquiring Person or any affiliate or associate thereof
merges into or combines with the Company and the Company is the surviving
corporation, (iii) any Acquiring Person or any affiliate or associate thereof
effects certain other transactions with the Company, or (iv) during such time as
there is an Acquiring Person the Company effects certain transactions, in each
case as described in the Rights Agreement, then, in each such case, proper
provision will be made so that from and after the latest of the Share
Acquisition Date, the Distribution Date and the date of the occurrence of such
Flip-in Event each holder of a Right, other than Rights that are or were owned
beneficially by an Acquiring Person (which, from and after the date of a Flip-in
Event, will be void), will have the right to receive, upon exercise thereof at
the then-current exercise price of the Right, that number of Common Shares (or,
under certain circumstances, an economically equivalent security or securities
of the Company) that at the time of such Flip-in Event have a market value of
two times the exercise price of the Right.
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In the event (a "Flip-over Event") that, at any time after a person has
become an Acquiring Person, (i) the Company merges with or into any person and
the Company is not the surviving corporation, (ii) any person merges with or
into the Company and the Company is the surviving corporation, but all or part
of the Common Shares are changed or exchanged for stock or other securities of
any other person or cash or any other property, or (iii) 50% or more of the
Company's assets or earning power, including securities creating obligations of
the Company, are sold, in each case as described in the Rights Agreement, then,
and in each such case, proper provision will be made so that from and after the
latest of the Share Acquisition Date, the Distribution Date and the date of the
occurrence of such Flip-over Event, each holder of a Right, other than Rights
which have become void, will thereafter have the right to receive, upon the
exercise thereof at the then-current exercise price of the Right, that number of
shares of common stock (or, under certain circumstances, an economically
equivalent security or securities) of such other person that at the time of such
Flip-over Event have a market value of two times the exercise price of the
Right.
From and after the later of the Share Acquisition Date and the
Distribution Date, Rights (other than any Rights that have become void) will be
exercisable as described above, upon payment of the aggregate exercise price in
cash. In addition, at any time after the later of the Share Acquisition Date and
the Distribution Date and prior to the acquisition by any person or group of
affiliated or associated persons of 50% or more of the outstanding Common
Shares, the Company may exchange the Rights (other than any rights that have
become void), in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company will not be required to issue fractional
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share, which may, at the option of the Company, be
evidenced by depositary receipts) or fractional Common Shares or other
securities issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
The Company may, at its option, redeem the Rights in whole, but not in
part, at a price of $0.01 per Right, subject to adjustment (the "Redemption
Price"), at any time prior to the close of business on the later of the
Distribution Date and the Share Acquisition Date. Immediately upon any
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.
Notwithstanding the foregoing, a majority of the continuing directors (defined
to include incumbent Directors of the Company and their successors that are
nominated for election by a majority of the incumbent Directors, but
specifically excluding representatives of Acquiring Persons) must concur with
the redemption of any of the Rights on or for a period of one calendar year
following the date (i) a person becomes an Acquiring Person or (ii) a majority
of the Directors are replaced due to the actions of any person or persons who
may become an Acquiring Person or who may cause a Flip-in Event or Flip-over
Event.
The Rights Agreement may be amended by the Company without the approval
of any holders of Rights Certificates, including amendments that increase or
decrease the Purchase Price, that add other events requiring adjustment to the
Purchase Price payable and the number of the Preferred Shares or other
securities issuable upon the exercise of the Rights or that modify procedures
relating
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to the redemption of the Rights, except that no amendment may be made that
decreases the stated Redemption Price to an amount less than $0.01 per Right.
Notwithstanding the foregoing, a majority of the continuing directors must
concur with any amendment of the Rights Agreement on or for a period of one
calendar year following the date (i) a person becomes an Acquiring Person or
(ii) a majority of the Directors are replaced due to the actions of any person
or persons who may become an Acquiring Person or who may cause a Flip-in Event
or a Flip-over Event.
The Directors will have the exclusive power and authority to administer
the Rights Agreement and to exercise all rights and powers specifically granted
to the Directors or to the Company therein, or as may be necessary or advisable
in the administration of the Rights Agreement, including without limitation the
right and power to interpret the provisions of the Rights Agreement and to make
all determinations deemed necessary or advisable for the administration of the
Rights Agreement (including any determination to redeem or not redeem the Rights
or to amend or not amend the Rights Agreement). All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the Directors in good faith will be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and will not subject the Directors to any
liability to any person, including without limitation the Rights Agent and the
holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights is as of the Record Date, does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by this reference.
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