Tollgrade Sends Letter to Its Shareholders

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Thu Jul 30, 2009 6:58pm EDT

URGES SHAREHOLDERS NOT TO LET AUDIT COMMITTEE CHAIRMAN BRIAN MULLINS BE
REPLACED WITH RAMIUS GROUP NOMINEE SCOTT CHANDLER AND REMINDS SHAREHOLDERS
THAT ALL THREE OF THE NATION'S LEADING PROXY ADVISORY FIRMS RECOMMEND THAT
SHAREHOLDERS NOT VOTE FOR THE ELECTION OF SCOTT CHANDLER



PITTSBURGH, July 30 /PRNewswire-FirstCall/ -- Tollgrade Communications, Inc.
(Nasdaq: TLGD) today announced that it has sent the following letter to its
shareholders:
Dear Fellow Tollgrade Shareholder
                       RE-ELECT TOLLGRADE'S HIGHLY QUALIFIED
                           AND VERY EXPERIENCED DIRECTORS

                           VOTE THE WHITE PROXY CARD TODAY


As you decide how to vote at the upcoming 2009 Annual Meeting of the
Shareholders of Tollgrade Communications, Inc. to be held on August 5, 2009,
ask yourself the following question:
                      IS IT IN THE BEST INTEREST OF TOLLGRADE
              FOR THE RAMIUS GROUP TO CAUSE THE ENTIRE MEMBERSHIP OF
             YOUR BOARD'S AUDIT COMMITTEE TO BE REPLACED AT ONE TIME?



As you are now aware, the Ramius Group is seeking your support to elect its
hand-picked slate of three proposed nominees, Scott C. Chandler, Edward B.
Meyercord, III and Jeffrey M. Solomon, to your Board. Among the incumbent
directors who the Ramius Group has targeted with its proxy contest are all
members of the Tollgrade Board's Audit Committee who are standing for
re-election. The only member of the Audit Committee not standing for
re-election is Daniel P. Barry, our former Chairman of the Board, who is
retiring from the Board. The election of Ramius' nominees to your Board would
result in the replacement at one time of all members of your Board's Audit
Committee. Tollgrade believes that shareholders should carefully consider the
possible effects of such an outcome on the effective functioning of your
Board's Audit Committee and on Tollgrade's overall corporate governance. The
Tollgrade Board does not believe that it is in the best interest of the
Company and is counter to best practices in corporate governance for the
entire membership of your Board's Audit Committee to be completely replaced at
one time and believes that shareholders should be troubled by such a prospect.

While the Ramius Group has provided you with numerous "talking points" and
rhetoric from its tired and worn activist shareholder playbook about why it
believes that "change" is needed on the Tollgrade Board, even after your Board
added to its membership two distinguished telecom industry veterans, Charles
E. Hoffman and Edward H. Kennedy, and restructured the Board's leadership, you
have not heard from the Ramius Group, at any time during this proxy contest,
any complaints or concerns articulated questioning the extremely effective
functioning of your Board's Audit Committee or the strong and extremely
competent leadership that has been provided to the Audit Committee by its
Chairman, Brian C. Mullins. 

For reasons that are unclear to us, notwithstanding the extremely effective
functioning of your Board's Audit Committee and the strong and extremely
competent leadership of the Audit Committee that has been provided by Mr.
Mullins, the Ramius Group is seeking to cause Mr. Mullins and the other
members of your Board's Audit Committee to be replaced with entirely new
members who lack in-depth historical knowledge of, or intimate familiarity
with, Tollgrade's accounting systems and processes for ensuring compliance
with the Sarbanes-Oxley Act of 2002, including the Section 404 requirements
relating to the assessment of internal controls.  

Given that the only nominee proposed by the Ramius Group with a public
accounting background, though relatively limited, is Scott C. Chandler, we
believe that the Ramius Group may seek for Mr. Chandler, if elected to the
Tollgrade Board, to take Mr. Mullins' place on your Board's Audit Committee
and as the Audit Committee's financial expert. For reasons that Tollgrade has
already noted at length in previous communications, we do not believe that Mr.
Chandler should be elected to the Tollgrade Board.  We remind shareholders
that all three of the nation's leading proxy advisory firms, RiskMetrics
Group, Inc., Glass Lewis & Co., and PROXY Governance, Inc., have all
recommended that Tollgrade shareholders NOT vote for the election of Mr.
Chandler.

We believe that if shareholders compared the experience and record of Mr.
Mullins to that of Mr. Chandler, focusing on their accounting, auditing and
finance backgrounds and their tenures serving in accounting, auditing and
finance leadership positions, it would be abundantly clear that Mr. Mullins
has substantially more experience in the areas of accounting, auditing and
finance than Mr. Chandler. 

Mr. Mullins, who is currently retired, has served in accounting and auditing
positions for most of his career. He formerly served as the Senior Vice
President, Chief Financial Officer and Treasurer at SCA Packaging North
America which was the successor to Tuscarora Incorporated, a publicly-held,
NASDAQ-listed manufacturer of protective packaging and material-handling
products. Mr. Mullins served as Treasurer of Tuscarora and as both its
principal accounting officer and principal financial officer for more than 20
years.  Prior to that, Mr. Mullins worked for 10 years as a Certified Public
Accountant and as Senior Manager with a predecessor of the leading public
accounting firm of Ernst & Young LLP.  

In contrast to the extensive accounting, auditing and finance experience of
Mr. Mullins, and Mr. Mullins' lengthy tenure as a Chief Financial Officer of a
publicly-traded, NASDAQ-listed company, Mr. Chandler joined the now-defunct
Rhythms NetConnections, Inc. on April 29, 1998 as Chief Financial Officer and,
less than two years after being named Chief Financial Officer, on April 7,
2000, Rhythms announced that Mr. Chandler was being replaced as Chief
Financial Officer. On March 29, 2000, while still Chief Financial Officer, Mr.
Chandler signed the Annual Report on Form 10-K of Rhythms for the year ended
December 31, 1999. The Form 10-K contained the following statement with regard
to the cash reserves of Rhythms: "We believe that our current capital
resources will be sufficient to fund our aggregate capital expenditures and
working capital requirements, including operating losses, through
approximately December 2001." As it would turn out, Rhythms did not survive
past August 2001 when it would file for bankruptcy and would eventually
liquidate. Following the collapse of Rhythms, shareholders received NOTHING
for their shares and the former management of Rhythms would have to defend
themselves against a securities class action suit that was not settled until
April 2009 when the U.S. District Court for the District of Colorado approved
a $17.5 million settlement in favor of the plaintiffs.

In addition to Mr. Mullins' extensive accounting, auditing and finance
background and his lengthy tenure as a Chief Financial Officer of a
publicly-traded, NASDAQ-listed company, Mr. Mullins has been a member of the
Tollgrade Board almost since the time that Tollgrade was first required to
comply with the Sarbanes-Oxley Act of 2002 and, as the director designated as
Tollgrade's financial expert pursuant to the Sarbanes-Oxley Act, he has been
critical to the development and implementation of the detailed processes and
procedures necessary for Tollgrade to ensure compliance with the
Sarbanes-Oxley Act, including the requirements set forth in Section 404
thereof relating to the assessment of internal controls. Given Mr. Mullins'
in-depth historical knowledge of, and intimate familiarity with, Tollgrade's
accounting systems and its processes and procedures for complying with
Sarbanes-Oxley and Section 404 thereof, Tollgrade believes that Mr. Mullins'
continued service on the Tollgrade Board is critical to maintaining continuity
on, and the effective functioning of, the Audit Committee.

In light of the above, Tollgrade believes that shareholders should carefully
consider the consequences for the effective functioning of your Board's Audit
Committee and Tollgrade's overall corporate governance if the entire
membership of your Board's Audit Committee was abruptly reconstituted with
completely new members who lack in-depth historical knowledge of, or intimate
familiarity with, Tollgrade's accounting systems and processes or Tollgrade's
internal control framework.

Please help us preserve continuity on, and ensure the effective functioning
of, your Board's Audit Committee by voting today to elect your company's
highly qualified and very experienced nominees on the WHITE proxy card TODAY.

                              YOUR VOTE IS IMPORTANT!
                            RE-ELECT YOUR DIRECTORS BY
                         VOTING THE WHITE PROXY CARD TODAY



Your vote is important, no matter how many or how few shares you own. To vote
your shares, please vote TODAY by telephone, Internet or by signing, dating
and returning the enclosed WHITE proxy card in the enclosed postage-paid
envelope provided. You may also vote by phone or Internet by following the
instructions on the enclosed proxy card.  If you have any questions or need
assistance in voting your WHITE proxy card, we encourage you to call our proxy
solicitor, The Altman Group, Inc., Toll-Free at (866) 340-6685 or (201)
806-7300.

Thank you for your continued support of Tollgrade. 

                           Sincerely,


                       Joseph A. Ferrara
         Chairman of the Board of Directors, President and
                    Chief Executive Officer



     If you have questions about how to vote your shares, or need additional
       assistance, please contact the firm assisting us in the solicitation
                                   of proxies:


                                The Altman Group
                              1200 Wall Street West
                               Lyndhurst, NJ  0707
                    Shareholders Call Toll-Free: (866) 340-6685
               Banks and Brokerage Firms Call Collect: (201) 806-730


Important Information
In connection with the solicitation of proxies, Tollgrade Communications, Inc.
has filed with the SEC and mailed to shareholders on or about June 22, 2009 a
definitive proxy statement in connection with its 2009 Annual Meeting of
Shareholders. A supplement to this proxy statement was filed with the SEC and
mailed to shareholders on or about July 7, 2009 and it amends, supplements
and, to the extent inconsistent, supersedes the corresponding information
previously sent to the shareholders of Tollgrade. Tollgrade, its directors,
nominees for director and certain officers, employees and other persons are
deemed to be participants in the solicitation of proxies from shareholders in
connection with the 2009 Annual Meeting of Shareholders. Information regarding
the interests of such participants is included in the definitive proxy
statement, the supplement thereto and other relevant documents filed and to be
filed by Tollgrade with the SEC in connection with the proxy solicitation. WE
URGE INVESTORS TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT TOLLGRADE WILL FILE
WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Shareholders will be able to obtain, free of charge, copies of
the definitive proxy statement, the supplement thereto and any other documents
filed by Tollgrade with the SEC in connection with the proxy solicitation at
the SEC's website at http://www.sec.gov and Tollgrade's website at
http://www.tollgrade.com.

About Tollgrade
Tollgrade Communications, Inc. is a leading provider of network service
assurance products and services for centralized test systems around the world.
 Tollgrade designs, engineers, markets and supports centralized test systems,
test access and next generation network assurance technologies. Tollgrade's
customers range from the top telecom providers, to numerous independent
telecom and broadband providers around the world. Tollgrade's network testing,
measurement and monitoring solutions support the infrastructure of telecom
companies, as well as for power distribution companies. For more information,
visit Tollgrade's web site at www.tollgrade.com.

Forward-Looking Statements
The foregoing release contains "forward-looking statements" regarding future
events or results within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The Company cautions readers that such "forward-looking statements"
are, in fact, predictions that are subject to risks and uncertainties and that
actual events or results may differ materially from those anticipated events
or results expressed or implied by such forward-looking statements. The
Company disclaims any current intention to update its "forward-looking
statements," and the estimates and assumptions within them, at any time or for
any reason. Any number of factors that could cause actual events or results to
differ materially from those contained in the "forward-looking statements" is
included in the Company's filings with the U.S. Securities and Exchange
Commission (the "SEC") including, but not limited to, the Company's Form 10-K
for the year ended December 31, 2008 and any subsequently filed reports. All
documents are also available through the SEC's Electronic Data Gathering
Analysis and Retrieval system at www.sec.gov or from the Company's website at
www.tollgrade.com.


SOURCE  Tollgrade Communications, Inc.

Bob Butter, Communications, +1-412-820-1347, bbutter@tollgrade.com, of
Tollgrade Communications, Inc.
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