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TELTONE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 29, 1996
TO THE SHAREHOLDERS:
THE ANNUAL MEETING OF THE SHAREHOLDERS OF TELTONE CORPORATION WILL BE HELD AT
THE CORPORATE HEADQUARTERS, 22121 - 20TH AVENUE SE, BOTHELL, WASHINGTON, ON
OCTOBER 29, 1996, AT 3:00 P.M. FOR THE FOLLOWING PURPOSES:
1. To elect directors;
2. To approve the 1996 Nonemployee Directors Stock Option Plan;
3. To ratify the selection of Price Waterhouse LLP as auditors for the
current fiscal year; and
4. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on September 2, 1996, are
entitled to notice of and to vote at this meeting.
BY THE ORDER OF THE BOARD OF DIRECTORS
Peter C. Spratt, Secretary
EACH SHAREHOLDER IS URGED TO SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Bothell, Washington
September 30, 1996
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TELTONE CORPORATION
CORPORATE HEADQUARTERS
22121 - 20TH AVE. S.E.
BOTHELL, WASHINGTON 98021
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 1996
This proxy statement, which was first mailed to shareholders with the enclosed
form of proxy on September 30, 1996, is furnished in connection with the
solicitation of proxies by the Board of Directors of Teltone Corporation (the
"Company") to be voted at the Annual Meeting of Shareholders of the Company. The
meeting will be held at the Corporate Headquarters, 22121 20th Avenue SE,
Bothell, Washington, on October 29, 1996 at 3:00 p.m., for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders.
Shareholders who execute proxies retain the right to revoke them at any time
before they are voted by delivering a signed written statement to the Secretary
of the Company at or prior to the Annual Meeting of Shareholders or by executing
another proxy dated as of a later date. The cost of solicitation of proxies is
to be borne by the Company.
Shareholders of record at the close of business on September 2, 1996, will be
entitled to vote at the meeting. On September 2, 1996, there were 5,576,796
shares of common stock and 1,075,641 shares of preferred stock outstanding, each
of which is entitled to one vote.
1. ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting of Shareholders, to hold
office until the next Annual Meeting of Shareholders and until their successors
are elected and qualified. It is intended that the accompanying proxy will be
voted in favor of the following persons to serve as directors unless the
shareholder indicates to the contrary on the proxy. Management expects that
each of the nominees will be available for election, but if any of them is not a
candidate at the time of the election, it is intended that proxies will be voted
for the election of another nominee to be designated by the Board of Directors
of the Company to fill any vacancy.
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The following table lists the nominees for election as directors of the Company,
information regarding their ownership of the Company's common stock, and
information regarding the ownership of the Company's common stock by the
officers and directors as a group.
NOMINEES' BENEFICIAL OWNERSHIP
OF TELTONE STOCK
------------------------------
Voting
Common Stock Preferred Stock (1)
------------ ---------------
Amount and Nature Amount and Nature
of Beneficial of Beneficial
Ownership Percent Ownership Percent
as of of as of of
Nominees 09/02/96(2) Class 09/02/96(2) Class
- --------------------------------------------------------------------------------
Charles L. Anderson 911,732 (3)(4) 16.3% 125,704 (3)(4) 11.6%
Robert Bailey 0 0% 0 0%
Tracy Storer 0 0% 0 0%
Richard W. Soshea 694,844 (5) 12.5% 7,303 .6%
Charles P. Waite 56,355 (6) 1.0% 292,309 (6) 27.1%
Don Wilson 26,173 .4% 0 0%
Paul M. Wythes 350,443 (7)(8) 6.3% 209,860 (9)(10) 19.5%
All Officers and
Directors as
a group (10 persons) 2,136,703 (11) 38.3% 635,176 59%
- --------------------------------------------------------------------------------
(1) Each share of the Company's no par value voting preferred stock is
entitled to one vote on each matter submitted to shareholders.
(2) Except to the extent that each director's shares are subject to community
property laws or as otherwise indicated, beneficial ownership represents
sole voting and investment power with respect to the Company's no par
value common stock or no par value voting preferred stock.
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(3) Includes 47,037 shares of common stock and 9,770 shares of preferred
stock owned by the Teltone Corporation Profit Sharing Trust, over which
Mr. Anderson shares voting and investment power.
(4) Includes 66,400 shares of common stock and 50,000 shares of preferred
stock owned by the Anderson Family Foundation, a charitable foundation,
controlled by Mr. Anderson and members of his family.
(5) Includes stock options of which 400,000 shares are exercisable within
sixty days of the record date.
(6) Includes 35,002 shares of common stock and 292,309 shares of preferred
stock owned of record by Greylock Ventures Partnership, of which Mr.
Waite is a partner and over which Mr. Waite shares voting and investment
power.
(7) 255,305 of these shares are owned of record by Sutter Hill Ventures, of
which Mr. Wythes is a general partner. As such, Mr. Wythes shares voting
and investment power over these shares.
(8) 75,983 of these shares are owned of record by TOW Partners, of which Mr.
Wythes is the sole general partner. As such, Mr. Wythes has sole voting
power over these shares.
(9) 152,893 of these shares are owned of record by Sutter Hill Ventures, of
which Mr. Wythes is a general partner. As such, Mr. Wythes shares voting
and investment power over these shares.
(10) 45,495 of these shares are owned of record by TOW Partners, of which Mr.
Wythes is sole general partner. As such, Mr. Wythes has sole voting
power over these shares.
(11) Includes stock options of which 527,500 shares are exercisable within
sixty days of the record date.
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OTHER INFORMATION CONCERNING DIRECTORS
Mr. Anderson, 66, has been a Director of the Company since 1968 and Chairman
since 1981. He was Chief Executive Officer of the Company from June 1984
through December 1987 and from 1968 through 1981. He also was President of
Teltone from 1970 through 1981, and Acting President from June 1984 to April
1985.
Dr. Soshea, 64, assumed the position of Director, President & Chief Executive
Officer for the Company in August 1991. Prior to joining Teltone, Dr. Soshea
was Vice President of the Semiconductor Group at M/A-COM, Inc., Lowell,
Massachusetts since 1988. His background also includes general management
positions with Hewlett Packard and with Harris Corp., where he founded Harris
Microwave Semiconductor, Inc.
Mr. Waite, 66, has served on the Board of Directors of the Company since 1976.
He has been a General Partner of Greylock Partnerships since 1966. He is also a
director of Celeritek, Inc. of Santa Clara, California, which underwent an
initial public offering this year.
Mr. Wilson, 69, joined the Teltone Board of Directors in April 1990. Mr. Wilson
worked for US West Communications for more than 35 years, the last 14 years of
which he was Vice President, prior to his retirement in 1990. He is a past
Chairman of the Board of Trustees for Goodwill Industries, serves on the
National Advisory Board for the Salvation Army and is a Director of US Bank of
Washington.
Mr. Wythes, 63, has been a Director since 1976. In 1964 he was a Founding
Partner of Sutter Hill Ventures, a venture capital limited partnership,
headquartered in Palo Alto, California, where he continues to serve as a General
Partner. He also serves as a Director of Interventional Technologies, Inc., San
Diego, California, Sutter Hill Investments Mauritius Inc. and on 20 equity
mutual funds, managed by T. Rowe Price Associates, of Baltimore, Maryland.
Mr. Bailey, 39, became a director of the Teltone Board of Directors in February
1996. He is President & CEO of PMC-Sierra of Vancouver, B.C., a supplier of
advanced integrated circuits to the telecommunications markets, which he joined
in 1993. He was previously a Vice President at AT&T Microelectronics and has
also been with Texas Instruments' Semiconductor Group.
Mr. Storer, 62, became a director of the Company in February 1996. He is
President of The Stanbridge Group, a corporation he founded in 1989 to focus on
strategic business development and consulting for clients in the
telecommunications industry.
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COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has standing Audit and Compensation Committees.
There is no standing nominating committee. The members of each Committee and the
functions performed thereby are outlined below:
Audit Committee - Messrs. Anderson, Wythes, and Wilson. This
Committee reviews the planned scope of independent auditor's services,
reviews financial statements and the auditor's opinion letter,
recommends the independent auditor for the following fiscal year,
reviews the auditor's recommendations relating to accounting, internal
control, and other matters, and reviews internal accounting procedures
with corporate financial staff.
Compensation Committee - Messrs. Storer, Bailey, and Waite. This
Committee reviews current remuneration of the directors and officers
of the Company and makes recommendations to the Board of Directors
regarding appropriate periodic adjustments of those amounts. The
Committee also makes recommendations to the Board regarding the
granting of stock options to officers and employees.
Both the Compensation Committee and the Audit Committee met once. The entire
Board of Directors met six times during the last fiscal year. All Directors
attended more than 75% of the aggregate number of Board meetings and meetings of
Committees on which they served.
COMPENSATION OF BOARD MEMBERS
Members of the Company's Board of Directors, other than employee-directors, are
entitled to receive $1,200 per quarter, plus $500 for each Board meeting
attended, and $250 for each committee meeting held on a day when a Board of
Directors meeting was not also held. Mr. Anderson received $11,700 in
compensation during the fiscal year ending June 30, 1996, for consulting
services as needed. If approved by the shareholders, the 1996 Nonemployee
Directors Stock Option Plan will provide additional compensation for Board
Members. See Section 4 Proposal For Adoption Of The 1996 Nonemployee Directors
Stock Option Plan below.
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PRINCIPAL SHAREHOLDERS
The following table sets forth information as of September 2, 1996, with respect
to all shareholders who are known to the Company to be beneficial owners of more
than 5% of either outstanding voting preferred or common stock.
Voting
Common Stock Preferred Stock (1)
------------ ---------------
Amount and Nature Amount and Nature
of Beneficial of Beneficial
Ownership Percent Ownership Percent
as of of as of of
Shareholder 09/02/96(2) Class 09/02/96(2) Class
- --------------------------------------------------------------------------------
Charles L. Anderson 934,211 (3)(4) 16.8% 125,705 (3)(4) 11.6%
660 N. Smith Road
Stanwood, WA 98292
Steve Sarich Jr. 571,673 10.3% 98,407 9.1%
505 Madison Street
Suite 230
Seattle, WA 98104
Richard W. Soshea 694,844 (5) 12.4% 7,303 .6%
15130 - 141st Avenue SE
Snohomish, WA 98290
Greylock Ventures Limited 35,002 .6% 292,309 27.1%
One Federal Street
26th Floor
Boston, MA 02110
Sutter Hill Ventures 255,305 4.5% 152,893 14.2%
755 Page Mill Rd.
Suite A-200
Palo Alto, CA 94304
- --------------------------------------------------------------------------------
(1) Each share of the Company's no par value voting preferred stock is
entitled to one vote on each matter submitted to shareholders.
(2) Except to the extent the shares owned by an individual listed above are
subject to community property laws or as otherwise indicated, beneficial
ownership represents sole voting and investment power with respect to the
Company's no par value common stock or no par value voting preferred
stock, as the case may be.
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(3) Includes 69,517 shares of common stock and 9,770 shares of preferred
stock owned by the Teltone Corporation Profit Sharing Trust, over which
Mr. Anderson shares voting and investment power.
(4) Includes 66,400 shares of common stock and 50,000 shares of preferred
stock owned by the Anderson Family Foundation, a charitable foundation,
which is controlled by Mr. Anderson and members of his family.
(5) Includes stock options of which 400,000 shares are exercisable within
sixty days of the record date.
EXECUTIVE OFFICER COMPENSATION
CASH COMPENSATION
-----------------
Cash compensation paid by the Company to its executive officers who earn in
excess of $100,000:
CASH COMPENSATION TABLE
- --------------------------------------------------------------------------------
ANNUAL COMPENSATION
-------------------------------------------
Name and Principal Other
Position Year Salary Bonus Compensation
- --------------------------------------------------------------------------------
Richard W. Soshea
President & CEO 1996 $155,768 $11,269
Richard W. Soshea
President & CEO 1995 $149,135
Richard W. Soshea
President & CEO 1994 $131,826
Kermit L. Ross
VP Sales & Marketing* 1996 $102,044 $6,967
Kermit L. Ross
VP Sales & Marketing 1995 $114,465
Kermit L. Ross
VP Sales & Marketing 1994 $113,849
----------------------------------------------------------------------
* Mr. Ross left Teltone Corporation in the fourth quarter of fiscal 1996.
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COMPENSATION PURSUANT TO PLANS
Described below are the compensation plans that have been established by the
Company that provide for the payment of cash or noncash compensation to the
individuals and group covered by the Cash Compensation table. The amounts paid
to the listed individuals and group are also disclosed.
A. SALARY DEFERRAL
All employees are eligible to participate on the first day of the month
after their date of hire. An employee is able to defer up to 15% of his or
her pre-tax annual salary up to a maximum of $9,500 under the salary
deferral provisions of the Plan. At the discretion of the Board of
Directors, the first $300 of the employee's deferral shall be matched by
the Company dollar for dollar. The Company shall match $.50 for each $1.00
an employee defers between $300 and 6% of the employee's compensation. Any
deferral in excess of 6% of the employee's compensation shall not be
matched. The employee's deferrals and the Company's contributions are
invested, at the employee's direction, in one or more investment funds.
Employees are 100% vested in their salary deferrals, the Company's
contributions, and all earnings thereon. At any time after an employee has
reached age 59 1/2, an employee may withdraw all or a portion of the funds.
In addition, the employee may borrow from the Plan and may receive a
distribution of benefits in the event of financial hardship. Upon
termination of employment, death or disability, the employee or beneficiary
will receive a lump sum payment of benefits. Executive officer
compensation, as related in the Cash Compensation table includes any salary
deferral under the Plan.
During the period ending June 30, 1996, the Company's contributions to the
executive officers named in the Cash Compensation table and all employees
as a group were:
Richard W. Soshea $4,770
Kermit L. Ross $3,922
All Employees as a Group
Excluding Executive Officers $49,496
(58)
B. STOCK OPTION PLANS
Currently, there is one option plan: the 1992 Stock Option Plan (the "1992
Option Plan"), which expires February 18, 2002. The 1992 Option Plan
authorizes the Board to grant either incentive stock options, as that term
is defined in the Internal Revenue Code of 1986, as amended, or non-
qualified options.
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Under the terms of the 1992 Option Plan, all present and future key
employees who, at the time the options are granted, are regular full-time
employees of the Company, are eligible to participate. The number of
shares that may be granted under the 1992 Option Plan is 800,000, of which
225,250 shares remain available for grant as of September 2, 1996. The
option price and award are determined by the Compensation Committee of the
Board of Directors. Subject to the provisions of the 1992 Option Plan, the
Board of Directors determines the terms and provisions of the option
agreements and the number of shares of common stock subject to each option.
During fiscal year 1996 the following options to purchase common stock were
granted at fair market value to all employees as a group:
Name of Individual or
Number of Persons in Average Per Share
a Group Number of Shares Exercise Price
--------------------- ---------------- --------------
All Employees as a Group
Excluding Executive Officers 45,000 $.50
(58)
88,700 options were exercised during the period beginning July 1, 1995 and
ending June 30, 1996.
C. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the directors and executive
officers of the Company and persons who own more than ten percent (10%) of
the Company's common stock are required to report their initial ownership
of the Company's common stock and any subsequent changes in that ownership
to the Securities and Exchange Commission (the "SEC"). Specific due dates
for these reports have been established and the Company is required to
disclose in this proxy statement any late filings during fiscal years 1994
and 1993. To the Company's knowledge, based solely on its review of the
copies of such reports required to be furnished to the Company and on
written representations that no other reports were required, all of the
reports were timely filed.
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2. PROPOSAL FOR ADOPTION OF 1996 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
At the meeting, the shareholders will be requested to approve the adoption by
the Board of the 1996 Nonemployee Directors Stock Option Plan (the "Option
Plan"). The Board believes stock options are essential to attracting, retaining
and encouraging Directors to devote their full efforts toward the success of the
Company. The Board adopted the Option Plan, subject to shareholder approval,
during the course of a series of Board Meetings beginning April 15, 1996 and
recommends adoption of the Option Plan.
DESCRIPTION OF THE OPTION PLAN
The following description is qualified in its entirety by reference to the
Option Plan itself, which can be obtained from the Company. Capitalized terms
used herein and not defined are defined in the Option Plan.
The Option Plan will reserve 320,000 shares of the Company's common stock for
issuance pursuant to stock options to be granted thereunder. Non-qualified
stock options only may be granted to eligible directors of the Company during
the ten-year term of the Option Plan.
Options may be granted only to Directors who are not, and have not been within
the immediately prior twelve (12) months, employed by the Company or any
subsidiary of the Company, on a full-time basis. Upon initial election by the
shareholders or upon appointment to fill a vacancy on the Board, a Director
shall be granted an Option to purchase 40,000 shares of Common Stock, provided
that subject to shareholder approval of the Plan, eligible Directors who were
members of the Board on April 15, 1996, shall be granted an Option to purchase
40,000 shares of Common Stock, and April 15, 1996 shall be the Grant Date for
such options.
Each Option shall vest over a four (4) year period, with 1/48th of the Optioned
Stock vesting on the first day of each month beginning the first day of the
first month following the Grant Date and continuing each month thereafter that
the Optionee is eligible, under the Plan and the Option Agreement, until fully
vested.
The per share exercise price under each Option shall be the average of the bid
and ask quotes of the Company's stock as reported in the exchange on which the
stock is listed on the Grant Date, or if not listed, the fair market value of
the stock as determined by a committee of disinterested members of the Board.
If there are not two (2) disinterested directors to serve on such committee, the
fair market value of the stock shall be determined by independent means as
directed by the Board.
The terms of each Option shall be no more than six years from the date of grant.
Generally, Options expire ninety days following termination of the Optionee's
status as a director, whether by retirement, election (other than for cause), or
death or permanent disability, but in no event later than the date
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of expiration of the term of the option as set forth in the Option Agreement,
except in the case of removal from the Board for cause as determined by the
shareholders. If the Optionee is removed from office by the shareholders for
cause, all unexercised Options expire on the date of such removal.
The purchase price of Option shares may be paid in cash. Option holders may
also exercise their Options by surrendering shares of the Company's common stock
owned by the Optionee. Shares used to pay the exercise price shall be valued at
their fair market value on the exercise date. The Option holder must also pay
the Company, at the time of purchase, the amount of federal, state, and local
withholding taxes required to be withheld by the Company. Option holders may
pay these federal, state, and local withholding taxes by turning in shares of
the Company's common stock, valued at fair market value.
In the event of a proposed sale of all or substantially all of the assets of the
Company, or a merger of the Company with or into another corporation,
outstanding Options shall be assumed or equivalent Options shall be substituted
by such successor corporation. If the successor corporation refuses to assume
Options or substitute equivalent Options, all Option holders shall have the
right to immediately exercise all of their vested Options.
In the event of a proposed dissolution or liquidation of the Company,
outstanding Options will terminate immediately prior to the consummation of such
proposed action. In such a situation, the Option holders shall have the right
to immediately exercise all of their vested Options.
The Option Plan may be modified, amended, or terminated by the Board of
Directors except with respect to Options granted prior to such action.
Notwithstanding the foregoing, shareholder approval is required for any
amendment which increases the number of shares subject to the Option Plan (other
than in connection with automatic adjustments due to changes in capitalization
or the assumption of Options in connection with mergers or acquisitions) or
which otherwise requires shareholder approval pursuant to Rule 16b-3 of the
Securities and Exchange Commission.
The issuance of stock upon exercise of Options already granted is subject to
securing shareholder approval of the Option Plan and the registration with the
Securities and Exchange Commission of the shares reserved thereunder.
The Options are nonassignable except by will or by the laws of descent and
distribution.
NEW PLAN BENEFITS
Position Dollar Value ($) Number of Units
- -------- ---------------- ---------------
Nonemployee Director (1) 40,000
- --------------------------------------------------------------------------------
(1) Value determined by appreciation, if any, of price of the Company's common
stock over the period from the Grant Date to the vesting of the Option.
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FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE OPTION PLAN
The federal income tax consequences of a director's participation in the Option
Plan are complex and subject to change. The following discussion is only a
summary of the general rules applicable to an option. A taxpayer's particular
situation may be such that some variation of the general rules is applicable.
Stock options granted under the Option Plan will be "non-qualified options"
which do not qualify for any special tax benefits to the optionee. An optionee
will not recognize any taxable income at the time he or she is granted a non-
qualified option. However, upon its exercise, the optionee will recognize
ordinary income for federal tax purposes measured by the excess of the then fair
market value of the shares over the option price. The income realized by the
optionee will be subject to income tax withholding by the Company.
Upon a disposition of any shares acquired pursuant to the exercise of non-
qualified stock option, the difference between the sales price and the
optionee's basis in the shares will be treated as a capital gain or loss and
will be characterized a long-term capital gain or loss, if the shares have been
held for more than one year at the date of their disposition. The optionee's
basis for determination of gain or loss upon and subsequent disposition of
shares acquired upon the exercise of a non-qualified stock option will be the
amount paid for such shares plus any ordinary income recognized as a result of
the exercise of such option.
In general, there will be no federal tax consequences to the Company upon the
grant or termination on non-qualified stock option or a sale or disposition of
the shares acquired upon the exercise of a non-qualified stock option. However,
upon the exercise of a non-qualified stock option, the Company will be entitled
to a deduction for federal income tax purposes equal to the amount of ordinary
income that an optionee is required to recognize as a result of the exercise.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of common stock
represented at the meeting is required to adopt the Option Plan. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE OPTION PLAN.
3. RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors will request that the shareholders ratify its selection
of Price Waterhouse LLP, Certified Public Accountants, as independent public
auditors for the Company for the current fiscal year. If the shareholders do
not ratify the selection of Price Waterhouse LP, another firm of certified
public accountants will be selected by the Board of Directors.
Representatives of Price Waterhouse LP will be present at the Annual Meeting of
Shareholders, will have an opportunity to make a statement and will be available
to respond to appropriate questions.
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4. OTHER MATTERS
The Board of Directors does not intend to bring any other business before the
meeting, and so far as is known to the Board, no matters are to be brought
before the meeting except as specified in the notice of the meeting. However,
the Board of Directors intends that proxies, in the form enclosed, will be voted
in respect of any other business that may properly come before the meeting in
accordance with the judgment of the persons voting such proxies.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of the Company. Proxies may be solicited by officers, directors and
regular supervisory and executive employees of the Company, none of whom will
receive any additional compensation for their services. All of the costs of
solicitation of proxies will be paid by the Company.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Annual Meeting of
Shareholders, October 30, 1997 must be received by the Company no later than May
15, 1997 to be included in the Company's proxy statement and form of proxy
relating to that meeting.
Dated: Bothell, Washington
September 30, 1996
A COPY OF THE COMPANY'S FORM 10-KSB REPORT FOR FISCAL YEAR 1996, CONTAINING
INFORMATION ON OPERATIONS, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS
AVAILABLE WITHOUT CHARGE UPON REQUEST. PLEASE WRITE TO:
JEFFREY B. DECILLIA
TELTONE CORPORATION
22121 - 20TH AVENUE SE
BOTHELL, WASHINGTON 98021-4408
<PAGE>
PROXY
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS OF
TELTONE CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles L. Anderson and Richard W. Soshea,
and each of them, with full power of substitution, as Proxies to vote the shares
which the undersigned is entitled to vote at the Annual Meeting of the
Corporation to be held at Teltone Headquarters, 22121 - 20th Ave SE, Bothell, WA
98021 on October 29, 1996 at 3:00 p.m. and at adjournments thereof.
THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 & 3 IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be signed on the other side).
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
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Please mark your choices like this /X/
Proposal 1: To elect directors:
C.L. Anderson, R.W. Soshea, C.P. Waite, D.C. Wilson, P.M. Wythes, R.L. Bailey,
T.S. Storer
FOR all nominees listed (except as marked to the contrary).
/ /
WITHHOLD AUTHORITY to vote for all nominees listed
/ /
To withhold authority to vote for any nominee(s), write name(s) below:
- --------------------------------------------------------------------------------
Proposal 2: To approve the 1996 Nonemployee Directors Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
Proposal 3: TO RATIFY THE APPOINTMENT OF Price Waterhouse LLP as auditors for
the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
Important - Please sign and return promptly. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian should give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
SIGNATURE(S)
--------------------------------------------------------------------
DATE
------------------------
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
