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February 12, 2001


Michael Liess
520 Hidden Ridge Court
Encinitas, CA  92024

Dear Michael,

On behalf of T/R Systems, Inc., I want to formally offer you the position of
Executive Vice President and Chief Operating Officer reporting to me. The
starting base salary for this position is $200,000 per year. You will be
eligible for a bonus package of up to fifty percent of your annual base salary,
one half of which will be guaranteed during your first year of employment, upon
achievement of T/R Systems' financial performance objectives. You and I will
jointly develop the performance criteria for this bonus. Additionally, we agree
to grant you options to purchase 180,000 shares of T/R Systems, Inc. common
stock.

In addition to the above, T/R Systems will assist you in your relocation to the
Atlanta area. We will be responsible for the physical move of your household
goods and automobiles to Atlanta. We will also reimburse you, on an after tax
basis, for real estate commissions on the sale of your home in California. Other
incidental out of pocket costs related to you relocation will also be reimbursed
as appropriate. You should coordinate your relocation with Lyle Newkirk.

In the event of either a change of control involving at least 50% of T/R
Systems' common stock or a material change in executive reporting structure, and
in the event that either change results in a termination of your employment at
T/R Systems, whether voluntarily or involuntarily, 120,000 of your options will
vest immediately and you will receive eight months of salary following the later
of the date of such change in control or the date that an involuntary
termination is communicated to you.

You have the option to treat up to two months of your initial tenure at T/R
Systems as a consultancy engagement. Under this option, we would pay a monthly
rate of $16,667 to your consulting entity for services rendered.

On March 1, 2002, we will advance $50,000 to you, or if you so elect, to your
consulting entity. This will be considered as satisfaction of our guarantee of
payment of one half of your first year bonus. Should you elect to leave T/R
Systems before October 1, 2002, you agree to pay a $50,000 early termination
penalty to T/R Systems within sixty days of your last day of employment. This
termination penalty is in partial satisfaction of the expenses, related to your
employment, incurred by T/R Systems.

The terms and conditions of your employment are outlined in the T/R Systems'
employee manual.

The entire executive staff is very excited about having you join the T/R
Systems' team. We are in a very exciting period and we are certain you will make
a significant contribution to our success.

This offer must be accepted by February 15, 2002 or it will be considered
invalid.

If this offer letter is satisfactory, please sign and fax a copy back to
770-448-7662.

Sincerely,

/s/ Mike Kohlsdorf


Mike Kohlsdorf
President and Chief Executive Officer


Accepted By:

/s/ Michael T. Liess                                  2-18-02
---------------------------------           ---------------------------------
Michael T. Liess                                     Date




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                                    ADDENDUM

         This Addendum supplements that certain letter dated February 15, 2002
("Letter") between T/R Systems, inc. ("T/R Systems") and MICHAEL T. LIESS
("Executive"). T/R Systems and the Executive further agree as follows:

         1.       DUTIES. During his employment, Executive shall have the
authority and power to perform such duties consistent with those of the position
set out in the Letter and shall not be required without Executive's consent to
undertake responsibilities not commensurate with such position.

         2.       BONUS AND RELOCATION PERQUISITES. The performance criteria for
the bonus referred to in the Letter shall be developed jointly by Mike Kohlsdorf
and Executive reasonably and in good faith. T/R Systems agrees that its
responsibilities for moving Executive's household referred to in the Letter
include its payment and reimbursement of the expenses set forth on attached
EXHIBIT A.

         3.       STOCK OPTIONS. T/R Systems grants Executive the options to
purchase 180,000 shares of T/R Systems common stock referred to in the Letter
("Stock Options"). The Stock Options shall vest over three years as follows:

<TABLE>
<CAPTION>
                             VESTING UPON                     SHARES
                             ------------                     ------
                  <S>                                        <C>
                   9 months after date of grant               45,000
                  18 months after date of grant               90,000
                  27 months after date of grant              135,000
                  36 months after date of grant              180,000
</TABLE>

The exercise price for the Stock Options is the current fair market value.

         4.       TERMINATION. Executive may resign or T/R Systems may discharge
Executive at any time for any reason or for no reason after giving written
notice.

         5.       COMPENSATION AND BENEFITS UPON TERMINATION. (a) If T/R Systems
discharges Executive without Cause (defined below) or Executive resigns for any
Good Reason (defined below), T/R Systems will pay Executive:

                  (i)      Eight months of salary.

                  (ii)     Any accrued bonus and consultancy payments.

                  (iii)    120,000 of Executive's stock options will vest
                           immediately.

         (b)      "Cause" means any of:

                  (i)      Any willful failure by Executive to substantially
         perform Executive's employment duties which remains uncured after T/R
         Systems gives Executive written notice specifying such failure and a 30
         day opportunity to cure.

                  (ii)     Executive engaging in serious misconduct which is
         materially injurious to T/R Systems.

                  (iii)    Executive being convicted of, indicted for, or
         pleading nolo contendere to, any felony, any crime for which
         imprisonment is a possible punishment, or any crime of moral turpitude.

                  (iv)     Executive abusing illegal drugs or other controlled
         substances or Executive's habitual intoxication.

                  (v)      Executive misappropriating or attempting to
         misappropriate T/R Systems funds or property.

         (c)      "Good Reason" means any of:

                  (i)      The assignment to Executive of any duties
         inconsistent, in a material respect, with the scope of authority,
         duties and responsibilities of Executive's position (including status,
         offices, titles, and Executive reporting to any person other than Mike
         Kohlsdorf).


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                  (ii)     The occurrence of a Change in Control.(1)

                  (iii)    A material reduction in the compensation and benefits
         to which Executive is entitled.

                  (iv)     Any material breach by T/R Systems of the terms of
         the Letter or this Addendum which remains uncured after Executive gives
         T/R Systems written notice specifying such breach and a 30 day
         opportunity to cure.

                  (v)      Any relocation of Executive outside the greater
         metropolitan area of Atlanta, Georgia.

         6.       ATTORNEY'S FEES. The non-prevailing party in any litigation
concerning the Letter or this Addendum shall pay the prevailing party's
reasonable attorney's fees and costs.

         7.       ADDENDUM TO CONTROL. In the event of a conflict between any
term or condition of the Letter and this Addendum, the terms and conditions of
this Addendum shall control.


T/R SYSTEMS, INC.


By:  /s/ Mike Kohlsdorf                                      2-19-02
     ---------------------------------------               ---------------------
     Mike Kohlsdorf                                        Date
     President and Chief Executive Officer


CONSENTED AND AGREED TO THIS ___ DAY OF FEBRUARY, 2002.


/s/ Michael T. Lies
-------------------------------------------
Michael T. Liess


-----------------------------
         (1) "Change in Control" means the purchase of at least 50% of T/R
Systems' common stock referred to in the Letter. A Change in Control shall also
be deemed to occur if:

                  (i)      The members of the Board of Directors of T/R Systems
         ("Board") at the beginning of any consecutive twenty-four calendar
         month period ("Incumbent Directors") cease for any reason other than
         due to death to constitute at least a majority of the members of the
         Board; provided, however, that any director whose election, or
         nomination for election by T/R Systems' stockholders, was approved by a
         vote of at least a majority of the members of the Board then still in
         office who were members of the Board at the beginning of such
         twenty-four calendar month period, shall be deemed an Incumbent
         Director.

                  (ii)     Any "person", including a "group" (as such terms are
         used in Sections 13(d) and 14(d) of the Securities Exchange Act of
         1934, as amended ("Act"), but excluding T/R Systems, any of its
         affiliates, or any employee benefit plan of T/R Systems or any of its
         affiliates) is or becomes the "beneficial owner" (as defined in Rule
         13(d)(3) under the Act), directly or indirectly, of securities of T/R
         Systems representing the greater of 50% or more of the combined voting
         power of then outstanding securities.

                  (iii)    The stockholders of T/R Systems approve a definitive
         agreement (1) for the merger or other business combination of T/R
         Systems with or into another corporation if (A) a majority of the
         directors of the surviving corporation were not directors of T/R
         Systems immediately prior to the effective date of such merger or (B)
         the stockholders of T/R Systems immediately prior to the effective date
         of such merger own less than 50% of the combined voting power in the
         then outstanding securities in such surviving corporation or (2) for
         the sale or other disposition of all or substantially all of the assets
         of T/R Systems.


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                                    EXHIBIT A
                                   TO ADDENDUM


RELOCATION ALLOWANCE                Full reimbursement of all expenses
                                    associated with relocation, including the
                                    succeeding items.

HOUSE HUNTING TRIP REIMBURSEMENT    Executive and one other person. One trip 7
                                    days max. Reasonable lodging, car rental,
                                    meals $30/person/day with receipts.
                                    Airfare-coach if mileage over 250; or
                                    mileage at T/R Systems' rate. Childcare
                                    $35/day. Pet boarding up to $200.

TEMPORARY HOUSING                   Maximum 90 days. Most cost efficient means.
                                    1 trip home to visit per month. 1 trip final
                                    move. Laundry and telephone $50/month. Car
                                    rental for 7 days while autos being shipped.

SHIPMENT OF HHG                     Packing, shipping, loading and insurance for
                                    shipment of personal goods. Direct billing
                                    to T/R Systems. Storage maximum 90 days. One
                                    pick up at origin and delivery to one point
                                    at destination. 3 autos authorized.

TRAVEL NEW LOCATION                 If move is less than 250 miles, mileage
                                    reimbursement at T/R Systems' rate.
                                    Reasonable meals and lodging while in
                                    transit. Excess of 250 miles, coach airfare
                                    for Executive and family members.

RESIDENCE SALE                      Must be primary residence. Home sale must
                                    occur within one year of transfer.
                                    Reimbursement not to exceed homesale
                                    allowance. Mandatory marketing assistance.
                                    Broker fees max 6%, statutory fees, state
                                    and local doc fees, title transfer, termite
                                    inspection.

RESIDENCE PURCHASES                 Must be purchased within one year of
                                    transfer. Typical closing costs; 1% loan
                                    origination fee, escrow fees, attorney fees,
                                    credit report, appraisal fees. Executive may
                                    in his sole discretion apply such
                                    reimbursements to two residences (primary
                                    and vacation).

GROSS-UP ASSISTANCE                 All relocation reimbursements are subject to
                                    Federal, State and other applicable tax
                                    regulations. T/R Systems will gross-up all
                                    reimbursed amounts for tax purposes.


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