<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
- --------------------------------------------------------------------------------
(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):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
TELTONE CORPORATION
CORPORATE HEADQUARTERS
22121 - 20TH AVE. S.E.
BOTHELL, WASHINGTON 98021
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 4, 1999
This proxy statement, which was first mailed to shareholders with the
enclosed form of proxy on September 27, 1999, 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 November 4, 1999, 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 7, 1999,
will be entitled to vote at the meeting. On September 7, 1999, there were
6,009,796 shares of common stock and 1,072,641 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, 69, 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, 67, 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, 69, 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, 72, 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, 66, 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, 65, 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 once and
the Audit Committee met once. The entire Board of Directors met six times during
the last fiscal year.
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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 7, 1999, 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, 1999, 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 09/07/99(2) Class 09/07/99(2) Class
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles L. Anderson 939,915 (3)(4) 16% 115,934 (3) 11%
Tracy Storer 34,167 (4) *
Richard W. Soshea 775,526 (5) 13% 27,272 3%
Charles P. Waite 57,245 (4) 1% 14,401 1%
Don Wilson 60,340 (4) 1%
Steve Sarich Jr. 571,673 10% 98,407 9%
Paul M. Wythes 384,610 (4)(6)(7) 6% 209,860 (8)(9) 20%
Mark Blazek 79,693 (10) 1%
Debra Griffith 15,000 (11) *
Richard Johnson 61,086 (12) 1%
Ray Ma 115,221 (13) 2%
All Officers and Directors
as a group (11 persons) 2,555,303 (14) 43% 367,467 34%
</TABLE>
* Less than 1%
3
<PAGE>
(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) 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 34,167 shares are exercisable within
sixty days of the record date.
(5) Includes stock options of which 57,500 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 61,000 shares are exercisable within
sixty days of the record date.
(11) Includes stock options of which 15,000 shares are exercisable within
sixty days of the record date.
(12) Includes stock options of which 32,500 shares are exercisable within
sixty days of the record date.
(13) Includes stock options of which 67,500 shares are exercisable within
sixty days of the record date.
(14) 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,
1999, exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
Name and Principal Securities Underlying
Position Year Salary Bonus Options Granted
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard W. Soshea
President & CEO 1999 $166,154 $66,362 30,000
1998 $160,000 40,000
1997 $167,306 40,000
Debra L. Griffith
VP Finance & CFO 1999 $113,077 $37,327 60,000
Mark Blazek
VP Sales & Marketing 1999 $118,847 $35,770 20,000
1998 $103,688 50,000
1997 $87,600 $14,987 8,000
Richard Johnson
VP Operations 1999 $100,727 $30,171 20,000
1998 $96,881 10,000
1997 $97,082 10,000
Ray Ma
VP Engineering 1999 $96,577 $28,929 20,000
1998 $92,885 20,000
1997 $92,640 10,000
</TABLE>
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.
5
<PAGE>
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. This incentive plan is proposed
annually by the Compensation Committee and approved by the Board of Directors
and is subject to revision.
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 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, 1999, 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 $4,650
Debra L. Griffith $1,742
Mark Blazek $2,837
Richard G. Johnson $3,059
Ray Ma $2,940
All Employees as a Group
Excluding Executive Officers $48,060
(47)
</TABLE>
6
<PAGE>
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 1,050,000, of which 3,750 shares
remain available for grant as of September 7, 1999. 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 1999 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 30,000 9% $.60 10/29/2004
Mark Blazek 20,000 6% $.60 10/29/2004
Debra L. Griffith 50,000 16% $.53 08/11/2004
10,000 3% $.60 10/29/2004
Richard G. Johnson 20,000 6% $.60 10/29/2004
Ray Ma 20,000 6% $.60 10/29/2004
</TABLE>
During the period beginning July 1, 1998, and ending June 30, 1999,
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 1999 and
1998.
7
<PAGE>
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 Option Plan from
1,050,000 shares to 1,400,000 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.
The 1992 Option Plan, if the amendment is approved by the shareholders,
will reserve 1,400,000 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
8
<PAGE>
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.
In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Board shall provide for the Optionee to have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable. The Board shall notify the
Optionee that the Option shall be fully exercisable for a period of thirty (30)
days from the date of such notice, and the Option will terminate upon the
expiration of such period.
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.
9
<PAGE>
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 1992 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.
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.
10
<PAGE>
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Annual
Meeting of Shareholders, November 2, 2000, must be received by the Company no
later than June 2, 2000, to be included in the Company's proxy statement and
form of proxy relating to that meeting.
Dated: Bothell, Washington
September 27, 1999
SHAREHOLDERS CAN VIEW A COPY OF THE ANNUAL REPORT ON FORM 10-KSB, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, BY VISITING TELTONE'S WEBSITE
(WWW.TELTONE.COM) OR CONTACTING DEBRA L. GRIFFITH, VICE PRESIDENT FINANCE AND
CHIEF FINANCIAL OFFICER. COPIES ARE AVAILABLE WITHOUT CHARGE. PLEASE WRITE TO:
DEBRA L. GRIFFITH
TELTONE CORPORATION
22121 - 20TH AVENUE SE
BOTHELL, WASHINGTON 98021-4408
11
<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 November 4, 1999 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).
FOLD AND DETACH HERE
<PAGE>
<TABLE>
Please mark
your votes as / X /
indicated in
this example
<S><C>
Proposal 1: To elect directors:
C.L. Anderson, R.W. Soshea, C.P. Waite,
D.C. Wilson, P.M. Wythes, T.S. Storer
Proposal 3: TO RATIFY THE APPOINTMENT OF
FOR all nominees WITHHOLD AUTHORITY To withhold authority to vote for any PricewaterhouseCoopers LLP as auditors
listed (except to vote for all nominee(s), write name(s) below: for the current fiscal year.
as marked to nominees listed ________________________________________
the contrary). FOR AGAINST ABSTAIN
/ / / / / / / / / /
Proposal 2: To approve an amendment to the Corporation's 1992 Stock Option Plan
increasing the number of shares reserved for issuance from 1,050,000 shares to
1,400,000 shares of common stock upon the exercise of stock options granted thereunder.
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
</TABLE>
