<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
</TABLE>
TELTRONICS, INC
------------------------------------------------------
(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>
TELTRONICS, INC.
(Company Logo)
2150 Whitfield Industrial Way
Sarasota, Florida 34243
Dear Stockholders:
It is my pleasure to invite you to attend the 1997 Annual
Meeting of Stockholders to be held at the principal executive
offices of the Company, 2150 Whitfield Industrial Way, Sarasota,
Florida 34243 at 10:00 a.m. on June 26, 1997. The doors will
open at 9:30 a.m.
Your vote is important. To be sure your shares are voted at
the Annual Meeting, even if you are unable to attend in person,
please sign and return the enclosed proxy card(s) as promptly as
possible. This will not prevent you from voting your shares in
person if you do attend.
The Annual Meeting of Stockholders will be held to consider
and take action with regard to the election of four directors,
the ratification of the selection of the Company's auditors, the
ratification of an Amendment to the Company's 1995 Incentive
Stock Option Plan and any other business that may properly come
before the Annual Meeting.
Complete details are included in the accompanying proxy
statement.
Ewen R. Cameron
President and Chief Executive Officer
Sarasota, Florida
May 12, 1997
<PAGE>
TELTRONICS, INC.
(Company Logo)
2150 Whitfield Industrial Way
Sarasota, Florida 34243
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF TELTRONICS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Teltronics, Inc. will be held at the principal
offices of the Company, 2150 Whitfield Industrial Way, Sarasota,
Florida 34243 on June 26, 1997 at 10:00 a.m., to consider and
take action with regard to the following:
1. The election of four (4) directors of the Company to
serve until the next Annual Meeting of the Stockholders and the
election or appointment and qualification of their successors.
2. The ratification of the selection of Millward and
Company, independent certified public accountants, as auditors of
the Company for the current fiscal year.
3. The ratification of an Amendment to the Company's
1995 Incentive Stock Option Plan.
4. The transaction of such other business as may
properly come before the Annual Meeting or any adjournments
thereof.
FURTHER NOTICE IS HEREBY GIVEN that the stock transfer
books of the Company will not be closed, but only stockholders of
record at the close of business on May 9, 1997 will be entitled
to notice of and to vote at the Annual Meeting.
STOCKHOLDERS WHO WILL BE UNABLE TO ATTEND THE ANNUAL
MEETING IN PERSON MAY ATTEND THE MEETING BY PROXY. SUCH
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE RETURN ENVELOPE ENCLOSED.
By Order of the Board of Directors
Mark E. Scott
Vice President-Finance and Secretary
May 12, 1997
<PAGE>
TELTRONICS, INC.
2150 Whitfield Industrial Way
Sarasota, Florida 34243
MAY 12, 1997
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
1997
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Teltronics, Inc.
("Company") of proxies for use at the Annual Meeting of
Stockholders to be held at the principal executive offices of the
Company at 2150 Whitfield Industrial Way, Sarasota, Florida 34243
on June 26, 1997 at 10:00 a.m., and at any adjournment thereof,
for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. In addition to solicitation by mail,
solicitations may be made by personal interview, telephone,
telegram or other electronic means by Directors, officers and
other regular employees of the Company. The cost of this proxy
solicitation will be borne by the Company. The Company will also
reimburse persons holding stock for others in their names or
those of their nominees for their reasonable expenses in sending
proxy material to their principals and obtaining their proxies.
The Company will use the services of American Securities Transfer
& Trust, Inc., 938 Quail Street, Suite 101, Lakewood, Colorado
80215 to aid in solicitation of proxies at an anticipated fee of
$800 plus reasonable expenses. It is contemplated that this
Proxy Statement will be first sent to Stockholders on or about
May 12, 1997.
If the enclosed proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the
instructions contained therein. Any proxy given pursuant to this
solicitation may be revoked by the stockholder at any time prior
to its use, by the stockholder voting in person at the meeting,
by submitting a proxy bearing a date subsequent to the date on
the proxy to be revoked or by written notice to the Secretary of
the Company.
The Board of Directors has fixed the close of business on
May 9, 1997 as the record date for determining the holders of
Common Stock entitled to notice of and to vote at the Annual
Meeting. On May 2, 1997, the Company had outstanding and
entitled to vote at the Annual Meeting a total of 3,366,013
shares of Common Stock. Each outstanding share of Common Stock
is entitled to one vote on all matters to be brought before the
Annual Meeting.
On May 2, 1997, the closing bid for the Company's $.001 par
value common stock as reported on NASDAQ was $2.38.
ELECTION OF DIRECTORS
The Board of Directors is proposing the election of four
Directors to hold office until the election and qualification of
their successors at the next Annual Meeting of Stockholders.
Unless the proxy directs otherwise, the persons named in the
enclosed form of proxy will vote for the election of the four
nominees named below. If any of the nominees should be unable to
serve as a Director, or for good reason will not serve, the proxy
will be voted in accordance with the best judgment of the person
or persons acting under it. It is not anticipated that any of
the nominees will be unable to serve. In the case of a vacancy,
the Board of Directors may elect another Director as a
replacement or may leave the vacancy unfilled. Decisions
regarding the election of new Directors during the year normally
are based upon considerations such as the size of the Board and
the need to obtain fresh perspectives or to replace particular
skills or experience of former Directors. The nominees for
Directors, their ages, their principal occupations during at
least the past five years, their positions and offices with the
Company and, as applicable, the date each was first elected a
Director of the Company or its predecessors are as follows:
<TABLE>
<CAPTION>
FIRST ELECTED
DIRECTOR
POSITION WITH OF THE COMPANY
NAME AGE THE COMPANY OR PREDECESSOR
---- --- ------------- --------------
<S> <C> <C> <C>
Ewen R. Cameron 44 President, Chief 1994
Executive Officer,
Assistant Secretary,
and Director
Norman R. Dobiesz 49 Vice President 1991
Mergers and
Acquisitions and
Director
Carl S. Levine 50 Director 1988
Craig Macnab 41 Director 1997
</TABLE>
EWEN R. CAMERON has served as President and Chief Executive
Officer since July, 1993 and a Director since June, 1994. Prior
to that, Mr. Cameron served as Managing Director of SRH plc, a
European telecommunications and computer maintenance company from
1989 to 1992. From January 1978 to December 1989 Mr. Cameron
served as Managing Director of Systems Reliability Europe SA/NV,
a wholly owned subsidiary of SRH plc based in Brussels, Belgium.
Mr. Cameron has spent the last 23 years in the computer and
telecommunications industry.
CARL S. LEVINE has served as a Director of the Company
since July 27, 1988. Mr. Levine is an attorney who has been
engaged in private practice in New York, New York from 1977 to
1981, and in Garden City, New York from 1981 to June 1985. Mr.
Levine is presently the senior partner in the law firm of Carl S.
Levine & Associates, Roslyn, New York. He specializes primarily
in the practice of energy, environmental and tax law. Prior to
entering private practice, Mr. Levine was employed as counsel for
the New York Regional Office of the United States Department of
Energy.
NORMAN R. DOBIESZ has served as a Director of the Company
since October 25, 1991. On November 28, 1994, Mr. Dobiesz was
appointed Vice President Mergers and Acquisitions. Effective
January 1, 1995 Mr. Dobiesz entered into a five (5) year
employment agreement with the Company. Mr. Dobiesz has developed
substantial financial and general management experience as a
principal stockholder and executive of a group of privately held
companies controlled by Mr. Dobiesz. Mr. Dobiesz owns and
operates Florida Software Systems, Inc., a software development
and medical billing company. Mr. Dobiesz is a principal
stockholder of the Company.
CRAIG MACNAB has served as a Director of the Company since
February 13, 1997. Mr. Macnab was appointed Director as nominee
of Sirrom Capital Corporation ("Sirrom") in connection with the
issuance of an aggregate $4,250,000 of 11% Subordinated
Convertible Debentures Due February 13, 2002 to Sirrom pursuant
to a Debenture Purchase Agreement. The Debenture Purchase
Agreement requires that the Company's Board of Directors be
expanded to five members, including a nominee to be selected by
Sirrom. Since January 1997, Mr. Macnab has been the President of
Tandem Capital, Inc. which invests in micro-cap public
companies. From 1993 to 1996, Mr. Macnab served as the general
partner of MacNiel Advisors, Inc., the general partner of three
private funds that invested in the publicly traded securities of
small public companies. From 1987 to 1993, Mr. Macnab was a
partner of J.C. Bradford & Co., a regional brokerage firm,
jointly responsible for the merger and acquisition department and
a private mezzanine capital fund. Mr. Macnab is also a director
of JDN Realty.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to
the beneficial ownership of all of the Company's outstanding
Common Stock by each person owning five percent (5%) or more of
such shares, by each director, by each executive officer of the
Company listed in the Summary Compensation Table below, and by
all directors and officers as a group as of May 2, 1997. Unless
otherwise indicated, it is assumed that all shares are directly
owned and that the holders thereof have sole voting and
investment power with respect thereto.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL AMOUNT AND NATURE OF PERCENTAGE
OWNER AND ADDRESS (1) BENEFICIAL OWNERSHIP (2) OF CLASS (2)
- - --------------------- ------------------------ ------------
<S> <C> <C>
Norman R. Dobiesz (3)(4)(5) 1,432,097 42.6%
2150 Whitfield Industrial Way
Sarasota, Florida 34243
Carl S. Levine (3) 2,240 (6)(7)
1800 Northern Blvd.
Roslyn, New York 11576
Ewen Cameron (3)(5) 3,360 (6)(8)
2150 Whitfield Industrial Way
Sarasota, Florida 34243
Craig Macnab (3) 0 0
500 Church Street, Suite 200
Nashville, Tennessee 37219
Shared Resource Exchange (9) 650,000 19.3%
3480 Lotus Drive
Plano, Texas 75075
All Directors and Officers 1,438,117 42.7%
as a Group (9 persons)
</TABLE>
______________________________
(1) Gregory L. Deringer, an executive officer named in the
Summary Compensation Table served as Senior Vice President Sales
and Marketing until January 6, 1997 but was not an officer of the
Company as of the date of this Proxy Statement.
(2) Does not include (i) an aggregate of 766,000 shares of
Common Stock which may be issued upon exercise of incentive stock
options granted under the Company's 1995 Incentive Stock Option
Plan and 4,000 shares of Common Stock which may be issued upon
exercise of stock options granted to the Company's former
President; (ii) possible issuance of up to 1,000,000 shares of
Common Stock in connection with the transfer to Interactive
Solutions, Inc., a majority owned subsidiary of the Company of
certain technology relative to the Mentis (Trademark) product, a
wearable, Pentium (Registered) processor powered, multi-media
computer; or (iii) possible issuance of up to 1,062,500 shares of
Common Stock subject to adjustment, which may be issued upon
conversion of the 11% Subordinated Convertible Debentures Due
February 13, 2002.
(3) Director of the Company.
(4) Includes 56,000 shares owned by virtue of 100% ownership of
H & N Management Co., Inc. ("H&N"), 1,295,000 shares owned by
virtue of 100% ownership of W&D Consultants, Inc., and 4,455
shares owned by virtue of 67% ownership of Whitfield Capital of
Sarasota, Inc. Excludes: (i) 100,000 shares of Series A
Preferred Stock owned by Mr. Dobiesz, and (ii) 30,000 shares
which may be issued upon exercise of incentive stock options by
Mr. Dobiesz.
(5) Executive Officer of the Company named in the Summary Compensation
Table below.
(6) Beneficially owns less than 1% of the Company's outstanding
Common Stock.
(7) Does not include up to 50,000 shares which may be issued
upon exercise of incentive stock options by Mr. Levine.
(8) Does not include up to 530,000 shares which may be issued
upon exercise of incentive stock options by Mr. Cameron.
(9) 120,000 of the 650,000 shares are held in escrow to cover certain
reimbursement and/or indemnity claims owed to the Company.
BOARD OF DIRECTORS MEETINGS
The Board of Directors has no standing committees. The
Board of Directors exercises supervision over nominating,
auditing and compensation matters directly. In this respect, the
Board of Directors reviews the annual financial statements and
the scope of the annual audit with the Company's independent
accountants, is available to discuss with the auditors any other
audit-related matters arising during the year and reviews the
Company's internal audit function.
From January 1 to December 31, 1996, the Board of Directors
held three (3) formal meetings; and the Board of Directors took
action by unanimous written consent seven (7) times during that
period.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain
information relating to the compensation received and to be
received by certain persons who are presently, or were executive
officers of the Company during the fiscal year ended December 31,
1996. As indicated below, no executive officers of the Company
other than Ewen R. Cameron, Gregory L. Deringer, and Norman R.
Dobiesz, received total salary and bonus in excess of $100,000
during the fiscal year ended December 31, 1996.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- --------------------------------
Awards Payouts
---------------------- -------
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonus sation Awards SARs(#) Payouts sation
- - ------------------ ---- ------ ----- ------ ------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ewen R. Cameron 1996 $248,272 $ --- --- --- 500,000 --- ---
President & CEO 1995 226,551 --- --- --- 30,000 --- ---
1994 178,340 37,530 (1) --- --- --- ---
Gregory L. Deringer 1996 $162,585 $ --- --- --- --- --- ---
Senior Vice President 1995 161,271 --- --- --- 20,000 --- ---
Sales & Marketing 1994 143,000 --- (1) --- --- --- ---
Norman R. Dobiesz 1996 $248,434 $ --- --- --- --- --- ---
Vice President 1995 232,674 --- --- --- 30,000 --- ---
Mergers & Acquisitions 1994 160,299 --- (1) --- --- --- ---
</TABLE>
_____________________________
(1) Certain personal benefits that aggregate less than the lesser of $50,000
or ten percent (10%) of the total cash compensation of any of the executive
officers or which cannot be readily ascertained are not included.
EMPLOYMENT AGREEMENTS
The Company entered into five (5) year employment agreements
with Ewen Cameron, President, Chief Executive Officer and
Assistant Secretary, and Norman R. Dobiesz, Vice President
Mergers and Acquisitions commencing January 1, 1995. Mr.
Cameron's agreement was an amendment and restatement of a prior
agreement which he entered into with the Company in July 1993.
Each employment agreement provides for a base annual salary of
$225,000 subject to annual increases of $25,000 per year. Either
of the Company or the employee may terminate the employment
agreements upon the occurrence of certain events. Mr. Cameron's
employment agreement contains a covenant restricting him from
competing for a period of two years after termination. If the
Company terminates the employment of Mr. Cameron or Mr. Dobiesz,
the terminated employee will be entitled to severance equal to
one year's base salary.
On October 14, 1996, the Company entered into a three (3)
year employment agreement with William L. Hutchison, the
Company's Executive Vice President and Chief Operating Officer.
The employment agreement provides for an annual salary of
$180,000 and is terminable prior to expiration of its stated term
upon the occurrence of certain events. If Mr. Hutchison's
employment agreement is terminated prior to its scheduled
expiration without cause or for failure to adequately perform, in
the Company's judgment, the services, duties and responsibilities
assigned by the Company, whether or not such failure is
intentional, Mr. Hutchison will be entitled to severance equal to
six (6) month's salary.
1995 INCENTIVE STOCK OPTION PLAN
For a description of the Company's 1995 Incentive Stock
Option Plan, as amended, see Ratification of Amendment to 1995
Incentive Stock Option Plan below.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Number of % of Total
securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted (#)(1) in Fiscal Year (1) Price ($/Sh) Date
- - ---- -------------- ------------------ ------------ ----------
<S> <C> <C> <C> <C>
Ewen R. Cameron 500,000 77.64% $5.50 July 30, 2001
</TABLE>
(1) Represents options only. No SARs have been granted.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-Ended(#) at FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized ($) Unexercisable Unexercisable
- - ---- -------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Ewen R. Cameron 0 0 5,000/25,000 $9,375/$46,875
0/500,000 $0/$0(1)
Gregory L. Deringer (2) 4,000 $16,000 0/16,000 $0/$30,000
Norman R. Dobiesz 0 0 5,000/25,000 $8,575/$42,875
</TABLE>
(1) None of the options granted to Mr. Cameron in 1996 to
purchase 500,000 shares were in-the-money at December 31, 1996
because they are exercisable at $5.50 per share.
(2) Mr. Deringer served as Senior Vice President Sales and
Marketing until January 6, 1997 on which date the Company
canceled Mr. Deringer's remaining options to purchase 16,000
shares.
DIRECTOR COMPENSATION
On August 12, 1996 the Company adopted a policy to
compensate members of its Board of Directors in the amount of
$2,500 for each meeting and reimburse expenses for attending
meetings of the Board or committees of the Board of Directors.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1993, Ewen Cameron, the Company's President and
CEO, loaned the Company an aggregate of $113,228 pursuant to two
promissory notes. Each note is payable upon demand with interest
accruing at 8% per annum. The remaining principal and accrued
interest due on the notes at December 31, 1996 was $37,302.
On May 11, 1995, W&D Consultants, Inc. ("W&D"), a financial
consulting company owned and controlled by Norman R. Dobiesz, a
director and principal stockholder of the Company, acquired
1,400,000 restricted shares of Common Stock from the Company upon
exercise by W&D of a conditional right to convert a $140,000
advance made by W&D in order for the Company to close its
$3,500,000 line of credit with CIT in October, 1994. The shares
were issued to W&D after performance by W&D of certain conditions
including: (a) cancellation of the $140,000 advance; (b) payment
of $14,000 to the Company; (c) delivery of a termination by H&N
of management consulting and acquisition consulting agreements
between the Company and H&N; (d) delivery by W&D of a guarantee
of H&N's obligations under the H&N termination; and (e) other
conditions necessary for conversion.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
No disagreements with accountants in any accounting and
financial disclosures occurred during the fiscal years ended
December 31, 1995 and December 31, 1996. While there was no
change in accountants during the fiscal year ended December 31,
1996, there were changes in accountants for the Company during
the 1995 fiscal year as previously disclosed and more fully
described in the Form 8-K reports respectively filed with the
Securities and Exchange Commission on January 4, 1995 and March
2, 1995.
SELECTION OF MILLWARD & COMPANY
The Board of Directors has selected Millward and Company to
act as auditors of the Company for the current fiscal year. The
Board of Directors believes that it is desirable to engage their
services for the current fiscal year because Millward and Company
competently acted as the Company's auditors for the last fiscal
year. Representatives of Millward and Company are expected to
attend the Annual Meeting and will have the opportunity to make a
statement if they desire and will be available to respond to
appropriate questions.
In the event the stockholders fail to ratify the selection
of Millward and Company, the Board of Directors will consider it
a direction to select other auditors for the subsequent year.
Even if the selection is ratified, the Board of Directors, in its
discretion, may direct the appointment of a new independent
accounting firm at any time during the year, if the Board feels
that such a change would be in the best interests of the Company
and its stockholders.
Ratification of the selection of Millward and Company as the
Company's auditors for the coming fiscal year requires the
affirmative vote of a majority of the total votes cast by the
holders of record of the shares present and entitled to vote at
the Annual Meeting, a quorum being present.
<PAGE>
RATIFICATION OF AMENDMENT TO THE 1995 INCENTIVE STOCK OPTION PLAN
There will be presented to the meeting a proposal to ratify
an amendment ("Amendment") to the 1995 Incentive Stock Option
Plan (the "Plan") to increase the number of shares authorized
under the Plan from 250,000 to 1,250,000. The Board of Directors
believes that the additional stock options available under the
Plan will enhance the Company's ability to retain the services of
outstanding personnel and encourage such employees to have a
greater financial investment in the Company.
The Amendment is set forth in Exhibit A. The Plan, as
amended, is set forth in Exhibit B. Primary aspects of the Plan
including the proposed Amendment are summarized below provided
however that such summary is qualified in its entirely by
reference to the detailed terms and conditions of the Plan and
the Amendment.
The Plan authorizes the Board of Directors to grant
incentive stock options under the Internal Revenue Code of 1986,
as amended, to key employees of the Company or its subsidiaries.
At the date of this Proxy Statement there are approximately
eighteen (18) employees eligible to participate in the Plan.
The Plan is administered by the Board of Directors which has
full power and authority to designate Participants, to determine
the terms and provisions of respective option agreements (which
need not be identical) and to interpret the provisions of the
Plan. Any decision reduced to writing and signed by a majority
of the Board members shall be fully effective as if it had been
made by a majority at a meeting duly held. No member of the
Board shall be liable for any action or determination made in
good faith in connection with administration of the Plan.
The aggregate number of shares of the Company's Common Stock
that maybe issued or transferred to grantees under the Plan, as
amended, shall not exceed 1,250,000 shares. If there is a stock
split, stock dividend or other relevant change affecting the
Company's shares, appropriate adjustments will be made in the
number of shares that may be issued or transferred in the future
and in the number of shares and price in all outstanding grants
made before such event. If shares under a grant are not issued
or transferred, those shares would again be available for
inclusion in future grants. On May 2, 1997 the closing bid price
of the Company's Common Stock on the National Association of
Securities Dealers, Inc. Automated Quotation System was $2.38.
The stock options the Plan, as amended, authorizes the Board
to grant are intended to qualify as incentive stock options under
the Internal Revenue Code of 1986, as amended. The term of an
option shall be fixed by the Board. The option price shall not
be less than the fair market value of the Company's Common Stock
on the date of grant, unless the grantee is the holder of more
than 10% of the voting power of all classes of stock of the
Company, in which case the option price shall not be less than
110% of the fair market value of the stock on the date of grant
and the option shall state it is not exercisable after the
expiration of five years from the date the option is granted.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an incentive stock option would not result in
income for the grantee or in a deduction for the Company.
The exercise of an incentive stock option would not result
in income for the grantee so long as the grantee does not dispose
of the shares within two years after the date of grant or one
year after the transfer of shares upon exercise, provided that:
(i) if the grantee's employment is terminated for any reason
other than death, disability or normal retirement, the option
granted to him shall lapse to the extent unexercised on the
earlier of the expiration date of the option or the date of
termination; (ii) if the grantee dies during the term of his
employment, the option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date or the date one
year following the date of the grantee's death; (iii) if the
grantee is permanently and totally disabled within the meaning of
Section 22(c)(3) of the Internal Revenue Code of 1986, as
amended, the option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date of the option
or one year following the date of such disability; and (iv) if
the grantee retires from employment in the normal course, the
option granted to him shall lapse to the extent unexercised on
the earlier of the expiration date of the option or three months
following the date of retirement. If these requirements are met,
the basis of the shares upon later disposition would be the
option price. Any gain upon disposition qualifying with these
requirements will be taxed to the employee as long-term capital
gain and the Company would not be entitled to a deduction. The
excess of the market value on the exercise date over the option
price is an item of tax preference to the employee, potentially
subject to the alternative minimum tax.
If the grantee makes a disposition of the shares which does
not qualify with either of these holding requirements, the
grantee would recognize ordinary income and the Company would be
entitled to a deduction equal to the lesser of the fair market
value of the shares on the exercise date minus the option price
or the amount realized on disposition minus the option price.
Any gain in excess of the ordinary income portion would be
taxable as long-term or short-term capital gain.
OTHER INFORMATION
Upon its original ratification on August 8, 1995 by the
Company's stockholders, the Plan became effective as of May 16,
1995, and is scheduled to terminate ten (10) years after the date
of ratification by the stockholders, unless terminated earlier by
the Board of Directors or extended by the Board with approval of
the stockholders. The Board may amend the Plan as it deems
advisable but, if the Securities Exchange Act of 1934 or the
Internal Revenue Code of 1986, as amended, requires the Company
to obtain stockholder approval, then such approval will be
sought. Employees who will participate in the Plan in the future
and the amounts of their allotments are to be determined by the
Board of Directors subject to any restrictions outlined above.
The names and positions with the Company of certain executive
officers of the Company named in the Summary Compensation Table
above and the respective number of option shares allotted to such
executive officers and to all other individuals participating
under the Plan (classified as executive officers, non-executive
officer directors, and non-executive officer employees) at
December 31, 1996 are set forth in the New Plan Benefits Table
below:
<PAGE>
NEW PLAN BENEFITS TABLE
1995 INCENTIVE STOCK OPTION PLAN
--------------------------------------------------------------
<TABLE>
<CAPTION>
NAME AND POSITION (1) DOLLAR VALUE ($) NUMBER OF UNITS
- - --------------------- ---------------- ---------------
<S> <C> <C>
Ewen R. Cameron (2) 30,000
President, Chief Executive Officer, 500,000
Assistant Secretary and Director
Norman R. Dobiesz (2) 30,000
Vice President Mergers and
Acquisitions and Director
Executive Officer Group (5 persons) (2) 100,000
(other than Messrs. Cameron
and Dobiesz)
Non-Executive Officer (2) 50,000
Director Group (1 person)
Non-Executive Officer (2) 56,000
Employee Group (12 persons)
</TABLE>
________________________________
(1) Gregory L. Deringer, an executive officer named in the
Summary Compensation Table above, served as Senior Vice President
Sales and Marketing until January 6, 1997 but was not an officer
of the Company as of the date of this Proxy Statement.
(2) The value of the options granted to Plan Participants is
dependent upon the difference, if any, from time to time, between
the market price of the Company's $.001 par value Common Stock
and the exercise price of the participant's options. See
Executive Compensation for additional information regarding
options granted under the Plan.
The Board of Directors recommends a vote "FOR" this proposal.
PROPOSALS OF STOCKHOLDERS FOR 1998 ANNUAL MEETING
If any stockholder wishes to propose an item of business for
consideration at next year's Annual Meeting of Stockholders, the
proposal must be in writing and received by the Secretary of the
Company no later than January 13, 1998.
OTHER BUSINESS
The Board of Directors knows of no other matters to be voted
upon at the Annual Meeting. If any other matters properly come
before the Annual Meeting or any adjournment thereof, it is the
intention of the persons named in the enclosed proxy to vote on
such matters in accordance with their own judgment.
<PAGE>
ADDITIONAL INFORMATION
Copies of the 1996 Annual Report of the Company have been
mailed to stockholders. Additional copies of the Annual Report,
as well as this Proxy Statement, Proxy Card(s), and Notice of
Annual Meeting of Stockholders, may be obtained upon written
request from Mark E. Scott, Vice President Finance, Secretary and
Treasurer, Teltronics, Inc., 2150 Whitfield Industrial Way,
Sarasota, Florida 34243.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-KSB, EXCLUSIVE OF EXHIBITS, WILL
BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS, BENEFICIALLY OR OF
RECORD ON MAY 9, 1997, UPON WRITTEN REQUEST TO THE SECRETARY AT
THE ADDRESS NOTED ABOVE.
BY ORDER OF THE BOARD OF DIRECTORS,
Mark E. Scott
Vice President-Finance and Secretary
<PAGE>
EXHIBIT A
AMENDMENT NO. 1
TO
TELTRONICS, INC. 1995 INCENTIVE STOCK OPTION PLAN
TELTRONICS, INC.
2150 Whitfield Industrial Way
Sarasota, Florida 34243
ALL PLAN PARTICIPANTS:
Teltronics, Inc. is now providing you with the following
information regarding Amendment No. 1 to the Teltronics, Inc.
1995 Incentive Stock Option Plan adopted by the Company on May
16, 1995 ("Plan").
Effective immediately, in accordance with the authority
described in Article II of the Plan, the paragraph entitled III.
STOCK TO BE OPTIONED. of the Plan be, and it hereby is, amended
so that the securities authorized for option or sale pursuant to
the Plan shall consist of 1,250,000 shares of the Company's
Common Stock.
Except as expressly amended by the preceding paragraphs, the
Plan shall remain in full force and effect.
Copies of the Plan and the documentation incorporated by
reference in the Plan and made a part thereof may be obtained,
without charge, by writing the Company at 2150 Whitfield
Industrial Way, Sarasota, Florida 34243, attention: President,
or by calling (941) 753-5000.
Sincerely,
Teltronics, Inc.
Dated: July 30, 1996
By: Ewen R. Cameron,
President and Chief Executive Officer
<PAGE>
EXHIBIT B
TELTRONICS, INC.
1995 INCENTIVE STOCK OPTION PLAN
I. PURPOSE
The purposes of this Plan are to encourage stock
ownership by key employees and directors of Teltronics, Inc. (the
"Company") and its Subsidiaries, to provide an incentive for such
employees and directors to expand and improve the profits and
prosperity of the Company and its Subsidiaries, and to assist the
Company and its Subsidiaries in attracting and retaining key
personnel through the grant of Options to purchase shares of the
Company's common stock.
The Company intends that stock options granted under
this Plan (the "Options") will qualify as Incentive Stock Options
under Section 422A of the Internal Revenue Code of 1954, as
amended (the "Code").
II. DEFINITIONS
Unless otherwise required by the context:
A. "Board" shall mean the Board of Directors of the Company.
B. "Company" shall mean Teltronics, Inc., a Delaware corporation.
C. "Code" shall mean the Internal Revenue Code of 1954, as amended.
D. "Option" shall mean a right to purchase Stock, granted pursuant
to the Plan.
E. "Option Price" shall mean the purchase price for Stock under an
Option, as determined in Section VI below.
F. "Participant" shall mean an employee or director if an
employee of the Company, or of any Subsidiary of the Company, to
whom an Option is granted under the Plan.
G. "Plan" shall mean this Teltronics, Inc. 1995 Incentive
Stock Option Plan.
H. "Stock" shall mean the common stock of the Company.
I. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing fifty (50) percent or more of the total combined
voting power of all classes of Stock in one of the other
corporations in such chain.
III. STOCK TO BE OPTIONED
Subject to the provisions of Section X of the
Plan, the maximum number of shares of Stock that may be optioned
or sold under the Plan is 1,250,000 shares. These shares may
consist either in whole or in part of shares of the Company ' s
authorized but unissued common shares or shares of the Company's
authorized and issued common shares reacquired by the Company and
held by its treasury, and such amount of shares shall be and is
hereby reserved for sale for such purpose. If an Option granted
under the Plan for any reason ceases to be exercisable in whole
or in part, the shares which were subject to any such Option but
as to which the Option ceases to be exercisable shall be
available for further Options to be granted under the Plan.
Should any Option granted under the Plan expire or be terminated
or relinquished unexercised for any reason, the shares which were
subject to such Option shall again be available for issuance
under the Plan.
<PAGE>
The Company, during the term of this Plan, will at all
times reserve and keep available, and will seek or obtain from
any regulatory body having jurisdiction any requisite authority
necessary to issue and to sell, the number of shares of Stock
that shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority deemed necessary by
counsel for the Company for the lawful issuance and sale of its
Stock hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell Stock as to which the
requisite authority has not been obtained.
IV. ADMINISTRATION
The Plan shall be administered by the Board of
Directors of the Company. The Board shall have full power and
authority to designate Participants, to determine the terms and
provisions of respective option agreements (which need not be
identical) and to interpret the provisions and supervise the
administration of the Plan. All decisions and selections made by
the Board pursuant to the provisions of the Plan shall be made by
a majority of its members. Any decision reduced to writing and
signed by a majority of the members shall be fully effective as
if it had been made by a majority at a meeting duly held. The
Board shall have the authority to grant in its discretion to the
holder of an outstanding Option in exchange for the surrender and
cancellation of such Option, a new Option having a purchase price
lower than provided in the Option so surrendered and canceled and
containing such other terms and conditions as the Board may
prescribe in accordance with the provisions of the Plan.
The interpretation and construction of any provision of
the Plan and the establishment and amendment of rules and
regulations for its administration by the Board shall be final.
No member of the Board shall be liable for any action or
determination made by him in good faith and the Company shall
indemnify such member who was or is a party or is threatened to
be made a party to any threatened, pending or completed action,
suit or proceeding, by reason of the fact that he is or was a
member of such Board, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such member in connection with such
action, suit or proceeding, if he acted in good faith.
V. ELIGIBILITY
The persons eligible for participation in the Plan as
recipients of Options shall include only key employees and
directors who are employees of the Company or of any Subsidiary
of the Company. A person who has been granted an Option
hereunder may be granted an additional Option or Options, if the
Board shall so determine.
Options may be awarded at any time and from time to new
Participants, or to then Participants, or to a greater or lesser
number of Participants, and may include or exclude previous
Participants, as the Board shall determine.
VI. OPTION PRICE
The purchase price for Stock under each Option shall be
determined as described in Section IV of the Plan, by the Board,
but in no event less than the 100 percent of the fair market
value of the Stock, if any, on the date the Option is granted
except that in the case of an option granted to an employee or
director owning more than 10% of the total combined voting power
of all classes of stock of the Company or of any parent or
subsidiary of the Company (a "10% Stockholder"), the purchase
price shall not be less than 110% of the fair market value of the
Stock, if any, on the date the Option is granted.
<PAGE>
The purchase price of the shares as to which an Option
is exercised shall be paid in the manner determined by the Board.
The holders of Options shall not be or have any of the rights or
privileges of a shareholder of the Company in respect of any
shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares shall have
been issued by the Company to such holders.
The Board, in its discretion, may determine that
payment upon the exercise of an Option may be made with shares of
the Company owned by the Optionee having a fair market value on
the exercise date equivalent to the amount which would otherwise
be payable, or any combination of cash, notes and/or and such
shares equivalent to such amount.
VII. OPTION PERIOD
Each Option shall expire at such time as the Board may
determine when such Option is granted, and no Option shall have a
term which shall extend more than ten years from the date such
Option is granted. Each Option shall be subject to earlier
termination as provided elsewhere in this Plan. The Options
granted under this Plan shall terminate and be of no force and
effect with respect to any shares not previously taken up by
Participant upon the expiration of ten (10) years from the date
of granting of each Option. In the case of an Option granted to
a 10% Stockholder, such Option, by its terms, shall be
exercisable only within five (5) years from the date of grant.
If the Company is reorganized, or merged or
consolidated with another corporation while unexercised Options
remain outstanding under the Plan, there shall be substituted for
the shares subject to the unexercised portions of such
outstanding Options a proportionately adjusted number of shares
of each class of stock or other securities of the reorganized or
merged or consolidated corporation which were distributed to the
shareholders of the Company in respect of such shares on the same
proportionate basis as such distribution and subject to a
proportionate adjustment of the Option Price; provided, however,
that all such Options may be canceled by the Company as of the
effective date of any such reorganization, merger, or
consolidation or of any dissolution or liquidation of the Company
by giving notice to each holder thereof or his personal
representative of its intention to do so and by permitting the
purchase during the thirty (30) day period next preceding such
effective date of all of the shares subject to such outstanding
Options.
VIII. EXERCISE OF OPTIONS
The Board, in granting Options hereunder, shall have
discretion to determine the terms upon which such Options shall
be exercisable, subject to the applicable provisions of the Plan.
No Option shall become exercisable except following expiration
of a minimum of twelve (12) months of continued employment with
the Company or any Subsidiary or service on the Board immediately
following the date upon which the Option is granted.
Options may be exercised solely by the Participant or
his or her legal representative during his or her employment with
the Company or any Subsidiary or after his or her death by the
person or persons entitled thereto under his or her will or the
laws of descent and distribution.
In the event of termination of employment for any
reason other than death, permanent disability as determined by
the Board, or retirement with the consent of the Company, Options
may not be exercised by the Participant or his or her legal
representative and shall lapse effective upon the earlier to
occur of (i) notice of employment termination or (ii) last day of
employment with the Company or any Subsidiary.
<PAGE>
In the event of termination of employment with the
Company or any Subsidiary due to death or permanent disability as
determined by the Board, Options may be exercised by the
Participant to the extent exercisable on the date when the
Participant's employment terminated, at any time prior to the
expiration date of the Option or within twelve (12) months of the
date of termination of employment, whichever is earlier.
In the event of termination of employment with the
Company or any Subsidiary due to retirement with the consent of
the Company, Options may be exercised by the Participant to the
extent exercisable on the date when the Participant's employment
terminated, at any time prior to the expiration date of the
Option or within three (3) months of the date of termination of
employment, whichever is earlier.
Unless the Options and shares covered by the Plan have
been registered under the Securities Act of 1933, as amended, or
the Company has determined that such registration is unnecessary,
each Participant exercising an Option under the Plan will be
required by the Company to give a representation in writing that
he or she is acquiring such shares for his or her own account for
investment and not with a view to, or for sale in connection
with, the distribution of any part thereof and that the shares
can only be transferred in accordance with Rule 144 under the
Securities Act of 1933.
The Option may contain such other terms, provisions and
conditions not inconsistent with the Plan as shall be determined
by the Board.
IX. NONASSIGNABILITY
Options shall not be transferable other than by will or
by the laws of descent and distribution, and during a
Participant's lifetime shall be exercisable only by such
Participant or his or her legal representative.
X. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN
If the outstanding shares of Stock shall at any time be
changed or exchanged by declaration of a stock dividend, split-
up, combination of shares, or recapitalization, the number and
kind of shares subject to this Plan or subject to any Options
theretofore granted, and the Option Prices, shall be
appropriately and equitably adjusted so as to maintain the
proportionate number of shares subject to this Plan or any
Options theretofore granted and the Option Prices in relation to
the change in stock; provided, however, that no adjustment shall
be made by reason of the distribution of subscription rights on
outstanding stock.
XI. AMENDMENTS OR TERMINATION
The Board may amend, alter, or discontinue the Plan,
except that no amendment or alteration shall be made which would
impair the rights of any Participant under any Option theretofore
granted, without his or her consent; and, except further, that
each Option granted under this Plan shall be subject to the
requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration, or qualification
of the Stock issuable or transferable upon exercise thereof upon
any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
the granting of such Option or the issue, transfer, or purchase
of shares thereunder, such Option may not be exercised in whole
or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Board; and except further
that no amendment or alteration shall be made which, without the
approval of the shareholders, would:
<PAGE>
(a) Increase the total number of shares reserved for
the purposes of the Plan, except as is provided in Section X, or
decrease the Option Price provided for in Section VI, or change
the class of persons eligible to participate in the Plan as
provided in Section V;
(b) Extend the Option period provided for in Section
VII; or
(c) Materially increase the benefits under the Plan.
XII. EFFECTIVE DATE OF PLAN
The Plan shall be effective May 16, 1995 provided the
Plan is ratified by the shareholders of the Company prior to May
15, 1996. Unless the Plan is discontinued earlier pursuant to
Sections VII or XI, the Plan shall expire at the close of
business ten (10) years from the date of the aforesaid approval
of the Plan. No grants shall be made under this Plan after it
expires. However, Options granted under the Plan at any time on
or prior to its expiration shall remain in effect until they have
been fully exercised, are surrendered, or by their terms expire.
Teltronics, Inc.
By: Ewen R. Cameron
President
<PAGE>
PROXY CARD
TELTRONICS, INC.
2150 Whitfield Industrial Way
Sarasota, Florida 34243
Proxy Solicited by the BOARD OF DIRECTORS for the Annual Meeting of
Stockholders June 26, 1997
Ewen R. Cameron, Norman R. Dobiesz and Mark E. Scott, or any of them
individually and each of them with power of substitution, are hereby
appointed Proxies of the undersigned to vote all common stock of
Teltronics, Inc. owned on the record date by the undersigned at the
Annual Meeting of Stockholders to be held in the principal executive
offices of the Company at 2150 Whitfield Industrial Way, Sarasota,
Florida 34243, at 10 a.m. on Thursday, June 26, 1997, or any adjournment
thereof, upon such business as may properly come before the meeting,
including the items below as set forth in the Notice of Annual Meeting
and the Proxy Statement dated May 12, 1997.
Election of Directors, Nominees: E. R. Cameron, N. R. Dobiesz, C. S.
Levine and C. Macnab.
(Shares cannot be voted unless this Proxy Card is signed and returned,
or other specific arrangements are made to have the shares represented
at the Annual Meeting.)
Teltronics' Directors recommend a vote FOR proposals 1 through 3.
SHARES WILL BE SO VOTED UNLESS OTHERWISE INDICATED.
Teltronics' Directors recommend a vote FOR proposals 1 through 3.
1. Election of directors (see above)
2. Ratification of appointment of auditors (page 7)
3. Ratification of Amendment to the 1995 Incentive Stock Option Plan (page 8)
PLEASE COMPLETE REVERSE SIDE
Teltronics, Inc.
Meeting Date: June 26, 1997
1. For All (except as noted below) [ ]
Withhold All [ ]
Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name below.
____________________________________________________
Instructions: Please indicate your voting directions in the ballot
area to the right.
<TABLE>
<S> <C> <C> <C>
2. [ ] For [ ] Against [ ] Abstain
3. [ ] For [ ] Against [ ] Abstain
</TABLE>
[SPACE RESERVED --------------------------------
FOR LABEL] Signature/Date
--------------------------------
Signature/Date
Please sign exactly as name appears hereto. When shares are held as
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full titles as such.
If a corporation or partnership, please sign in full corporate or
partnership name by an authorized officer or person.
