<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TELTONE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
TELTONE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 29, 1998
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, 1998, AT 2:00 P.M. LOCAL TIME FOR THE FOLLOWING PURPOSES:
1. To elect directors;
2. To approve an amendment to the Corporation's 1992 Stock Option Plan
increasing the number of shares reserved for issuance from 800,000 shares
to 1,050,000 shares of common stock upon the exercise of stock options
granted thereunder;
3. To ratify the selection of PricewaterhouseCoopers 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, 1998, 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 28, 1998
<PAGE>
TELTONE CORPORATION
Corporate Headquarters
22121 - 20th Ave. S.E.
Bothell, Washington 98021
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
To Be Held October 29, 1998
This proxy statement, which was first mailed to shareholders with the
enclosed form of proxy on September 28, 1998, 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 Company's Corporate Headquarters, 22121
20th Avenue SE, Bothell, Washington, on October 29, 1998, at 2:00 p.m. local
time, 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, 1998, will
be entitled to vote at the meeting. On September 2, 1998, there were 6,006,796
shares of common stock and 1,075,641 shares of preferred stock outstanding, each
of which is entitled to one vote. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders.
A shareholder who abstains from voting on any or all proposals will be
included in the number of shareholders present at the meeting for the purpose of
determining the presence of a quorum. Abstentions will not be counted either in
favor of or against the election of the nominees or other proposals. Under the
rules of the National Association of Securities Dealers, brokers holding stock
for the accounts of their clients who have not been given specific voting
instructions as to a matter by their clients may vote their clients' proxies in
their own discretion.
Proxies and ballots will be received and tabulated by ChaseMellon
Shareholder Services, an independent business entity not affiliated with the
Company.
1. ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
The Company's Board of Directors currently consists of six members. Each
of the current directors is up for re-election at the Annual Meeting of
Shareholders, to hold office until the next Annual Meeting of Shareholders or
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.
1
<PAGE>
VOTE REQUIRED
Candidates receiving a majority of the votes present, either in person or
by proxy, will be elected as Directors. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE IN FAVOR OF EACH OF THE NOMINEES.
NOMINEES
CHARLES L. ANDERSON, 68, 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.
RICHARD W. SOSHEA, 66, 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.
CHARLES P. WAITE, 68, 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.
DON WILSON, 71, 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.
PAUL M. WYTHES, 65, 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 Managing
Director. He also serves as a Director of Interventional Technologies, Inc.,
San Diego, California, Sutter Hill Investments Mauritius Inc. and T. Rowe Price
Mutual Funds, of Baltimore, Maryland.
TRACY STORER, 64, 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.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. 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 serve on this
committee. 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 and Waite serve on this committee.
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.
During the last fiscal year, the Compensation Committee met three times and
the Audit Committee met once. The entire Board of Directors met six times
during the last fiscal year.
2
<PAGE>
All Directors attended more than 75% of the aggregate number of Board meetings
and meetings of Committees on which they served.
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of September 2, 1998, certain
information regarding beneficial ownership of the Company's voting stock (a) by
each person known to the Company to be the beneficial owner of more than five
percent of the outstanding voting stock, (b) by each director and nominee for
director, (c) by the Chief Executive Officer and the other executive officers of
the Company whose total annual salary and bonus, for the fiscal year ended June
30, 1998, exceeded $100,000, and (d) by all of the Company's executive officers
and directors as a group. Unless otherwise noted, the named beneficial owner
has sole voting and investment power.
<TABLE>
<CAPTION>
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 09/02/98(2) Class 09/02/98(2) Class
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles L. Anderson 931,581 (3)(4) 17% 115,934 (3) 11%
Tracy Storer 25,833 (4) *
Richard W. Soshea 782,177 (5) 14% 27,272 3%
Charles P. Waite 48,911 (4) * 14,401 1%
Don Wilson 52,006 (4) *
Steve Sarich Jr. 571,673 10% 98,407 9%
Paul M. Wythes 376,276 (4)(6)(7) 7% 209,860 (8)(9) 20%
Mark Blazek 57,693 (10) *
All Officers and Directors
as a group (11 persons) 2,465,937 (11) 44% 367,467 34%
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(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.
3
<PAGE>
(3) 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.
(4) Includes stock options of which 25,833 shares are exercisable within sixty
days of the record date.
(5) Includes stock options of which 30,000 shares are exercisable within sixty
days of the record date.
(6) 255,305 of these shares are owned of record by Sutter Hill Ventures, of
which Mr. Wythes is Managing Director. As such, Mr. Wythes shares voting
and investment power over these shares.
(7) 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.
(8) 152,893 of these shares are owned of record by Sutter Hill Ventures, of
which Mr. Wythes is Managing Director. As such, Mr. Wythes shares voting
and investment power over these shares.
(9) 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.
(10) Includes stock options of which 39,000 shares are exercisable within sixty
days of the record date.
(11) Includes stock options of which 343,165 shares are exercisable within sixty
days of the record date.
INFORMATION REGARDING DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
DIRECTOR COMPENSATION
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. The Chairman receives an additional $1,750
per quarter. Employee-directors receive no additional compensation for serving
on the Board.
4
<PAGE>
EXECUTIVE OFFICER COMPENSATION -- CASH COMPENSATION
The table below sets forth the cash compensation paid by the Company to its
the Chief Executive Officer and the other executive officers of the company
whose total annual salary and bonus, for the fiscal year ended June 30, 1998,
exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION AWARDS
Name and Principal Securities Underlying
Position Year Salary Bonus Options Granted
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard W. Soshea
President & CEO 1998 $160,000 40,000
1997 $167,306 40,000
1996 $155,768 $11,269
Jeffrey deCillia(1)
Vice President Finance 1998 $109,615 20,000
1997 $82,211 50,000
Mark Blazek
VP Sales & Marketing 1998 $103,688 50,000
1997 $87,600 $14,987 8,000
</TABLE>
(1) On July 10, 1998, Mr. DeCillia resigned from the Company and was
replaced by Debra Griffith. From 1983 to 1996, Ms. Griffith served the
Company in various capacities, most recently as Vice President Finance and
Chief Financial Officer.
EXECUTIVE OFFICER COMPENSATION -- 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
certain directors and executive officers of the Company. The amounts paid to
the listed individuals and group are also disclosed.
MANAGEMENT INCENTIVE PLAN
Executive officers and key management are eligible to participate in an
incentive plan which provides for the payment of bonuses after the end of each
fiscal year based on net profit achieved prior to the cost of the Management
Incentive Plan (MIP). No bonus is paid if net profit is less than 75% of
planned profit for the year. Actual bonuses vary linearly with profit and are
paid as a percent of base salary. Should planned profits be achieved, bonuses
paid would range from 40% of base salary for the Chief Executive Officer to 30%
for Vice Presidents and 12% for other key management. There were no bonuses
paid for fiscal 1998. This incentive plan is proposed annually by the
Compensation Committee and approved by the Board of Directors and is subject to
revision.
5
<PAGE>
SALARY DEFERRAL PLAN
All employees are eligible to participate in this plan 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 591/2, 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, 1998, the Company's contributions to the
executive officers named in the Cash Compensation table and all employees as a
group were:
<TABLE>
<S> <C>
Richard W. Soshea $ 4,900.00
Jeffrey deCillia $ 2,579.24
Mark Blazek $ 3,600.00
All Employees as a Group
Excluding Executive Officers $45,202.86
(52)
</TABLE>
STOCK OPTION PLANS
The Company has two active stock option plans: the Nonemployee Directors'
Stock Option Plan and the 1992 Stock Option Plan for key employees. The
Nonemployee Directors' Stock Option Plan provides for the grant of options to
purchase up to 320,000 common shares to outside directors of the Company.
Options are granted at the fair market value of the stock on the date of grant
and vest over a four year period. The maximum term of an option may not exceed
six years.
Under the terms of the 1992 Stock 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 110,750
shares remain available for grant as of September 2, 1998. 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.
6
<PAGE>
During fiscal year 1998 the following options to purchase common stock were
granted at fair market value to named executive officers:
<TABLE>
<CAPTION>
% of Total
Number of Options Granted
Securities Underlying To Employees in Exercise Price Expiration
Name of Individual Options Granted Fiscal Year Per Share Date
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard W. Soshea 40,000 14% $.50 10/30/2003
Mark Blazek 50,000 18% $.50 10/30/2003
</TABLE>
During the period beginning July 1, 1997, and ending June 30, 1998, there
were no options exercised. There were no options exercised by named executive
officers during this period. In August 1998, 400,000 options were exercised by
Richard W. Soshea at $.51 per share.
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 1998 and 1997. 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.
2. PROPOSAL FOR APPROVAL OF AMENDMENT TO
1992 STOCK OPTION PLAN
At the meeting the shareholders will be requested to approve an amendment
to the 1992 Stock Option Plan ( the "1992 Option Plan"). The amendment is to
increase the Company's common stock subject to the 1992 Stock Option Plan from
800,000 shares to 1,050,000 shares. The Board believes stock options are
essential to attracting and retaining key employees and encouraging them to
devote their full efforts toward the success of the Company. The Board adopted
the 1992 Option Plan at its meeting held on February 18, 1992, and recommends
approval of this amendment.
DESCRIPTION OF THE OPTION PLAN
The following description is qualified in its entirety by reference to the
1992 Option Plan itself, which can be obtained from the Company.
7
<PAGE>
The 1992 Option Plan, if the amendment is approved by the shareholders,
will reserve 1,050,000 shares of the company's common stock for issuance
pursuant to stock options to be granted thereunder. Incentive stock options
and/or non-qualified stock options may be granted to eligible employees of the
Company during the ten-year term of the 1992 Option Plan.
Option grants to non-officer employees may be made by the entire Board or
by a committee of two or more Board members. Option grants to officers shall be
made by the entire Board if all Board members are "disinterested persons" as
that term is defined in Rule 16-b-3 of the SEC, or by a committee of two or more
directors, all of whom must be "disinterested persons." The Board has delegated
to the Compensation Committee the function of granting options to officers,
including the determination of which officers will receive options and the size
of such options.
The Committee will establish the time or times at which options may be
exercised and whether all of the options may be exercisable at one time or in
increments over time. The option price shall be set by the Committee at the
time of granting of an option. For incentive stock options, the option price
may not be less than the fair market value of the Company's stock on the date of
grant. For non-qualified stock options, the option price may be less than,
equal to, or greater than the fair market value of the Company's stock on the
date of grant. The Company can reset the price of any stock option after the
original grant and before exercise. In the event of stock dividends, splits,
and similar capital changes, the 1992 Option Plan provides for appropriate
adjustments in the number of shares available for options and the number and
option prices of shares subject to outstanding options.
The terms of each option shall be no more than six years from the date of
grant. Generally, options expire thirty days following termination of
employment (but in no event later than the date of expiration of the term of the
option as set forth in the option agreement), except in the case of permanent
disability or death and except for discharge for misconduct, willfully or
wantonly harmful to the Company. In the case of termination due to death or
permanent disability, the option terminates ninety days (or such shorter period
as is specified in the option agreement) from the date the employee ceases work
as a result of death or disability (but in no event later than the date of
expiration of the term of such option as set forth in the option agreement).
The Board has the authority to extend the foregoing expiration dates of any
outstanding option in circumstances it deems appropriate, provided that no such
extension can go beyond the original term of such option (e.g., six years from
grant date). Each option vests over a four year period, with 25% vesting on
each of the first four anniversaries of the Grant Date.
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. For non-qualified
options, 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.
8
<PAGE>
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 refused to assume
options or substitute equivalent options, the Board shall provide all option
holders with the right to immediately exercise all of their options, whether
vested or unvested.
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, unless otherwise provided by the Board. In such a situation,
the Board is authorized to give option holders the right to immediately exercise
all of their options, whether vested or unvested.
The Board has the right to substitute or assume options in connection with
mergers, reorganizations, separations, or other transactions to which Section
424(a) of the Internal Revenue Code of 1986, as amended, (the "Code") applies,
provided such substitutions and assumptions are permitted by Section 424 of the
Code and the regulations promulgated thereunder. The number of shares reserved
for the 1992 Option Plan may be increased by the corresponding number of options
assumed and, in the case of a substitution, by the net increase in the number of
shares subject to options before and after the substitution.
The 1992 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 with increases the number of shares subject to the 1992 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 SEC.
The issuance of stock upon exercise of options already granted is subject
to securing shareholder approval of 1992 Option Plan and the registration with
the SEC of the shares reserved thereunder.
The options are nonassignable except by will or by the laws of descent and
distribution.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of common stock
represented at the meeting, either in person or by proxy, is required to amend
the Option Plan. THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
PROPOSED AMENDMENT TO THE OPTION PLAN.
3. RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors will request that the shareholders ratify its
selection of PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP, another
firm of certified public accountants will be selected by the Board of Directors.
9
<PAGE>
Representatives of PricewaterhouseCoopers LLP 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.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of common stock
represented at the meeting, either in person or by proxy, is required to ratify
the Company's selection of auditors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF THE RATIFICATION OF THE AUDITORS.
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 28, 1999, must be received by the Company no later than
May 31, 1999, to be included in the Company's proxy statement and form of proxy
relating to that meeting.
Dated: Bothell, Washington
September 28, 1998
A COPY OF THE COMPANY'S FORM 10-KSB REPORT FOR FISCAL YEAR 1998, CONTAINING
INFORMATION ON OPERATIONS, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS
AVAILABLE WITHOUT CHARGE UPON REQUEST. PLEASE WRITE TO:
DEBRA L. GRIFFITH
TELTONE CORPORATION
22121 - 20TH AVENUE SE
BOTHELL, WASHINGTON 98021-4408
10
<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, 1998 at 2:00 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).
_______________________________________________________________________________
-TRIANGLE- FOLD AND DETACH HERE -TRIANGLE-
<PAGE>
_______________________________________________________________________________
Please mark / X /
your votes as
indicated in
this example
Proposal 1: To elect directors:
C.L. Anderson, R.W. Soshea, C.P. Waite, D.C. Wilson, P.M. Wythes,
T.S. Storer
FOR all nominees listed WITHHOLD AUTHORITY To withhold authority
(except as marked to to vote for all nominees to vote for any nominee(s),
the contrary). listed write name(s) below:
/ / / /
___________________________
Proposal 2: To approve an amendment to the Corporation's 1992 Stock Option
Plan increasing the number of shares reserved for issuance from 800,000
shares to 1,050,000 shares of common stock upon the exercise of stock options
granted thereunder.
FOR AGAINST ABSTAIN
/ / / / / /
Proposal 3: TO RATIFY THE APPOINTMENT OF
PricewaterhouseCoopers 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___________________
_______________________________________________________________________________
-TRIANGLE- FOLD AND DETACH HERE -TRIANGLE-
