SA TELECOMMUNICATIONS INC /DE/, DEF 14A, 1996-04-24

SA TELECOMMUNICATIONS INC /DE/
DEF 14A, 1996-04-24
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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<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

SA TELECOMMUNICATIONS, 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):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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:
------------------------------------------------------------------------
/X/ 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>
SA TELECOMMUNICATIONS, INC.
1600 PROMENADE CENTER, 15TH FLOOR
RICHARDSON, TEXAS 75080

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 1996

TO: THE STOCKHOLDERS OF SA TELECOMMUNICATIONS, INC.

NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders (the
"Annual Meeting") of SA Telecommunications, Inc., a Delaware corporation (the
"Company"), will be held on Friday, May 31, 1996, at 9:00 a.m. local time in the
Company's executive offices at 1600 Promenade Center, 15th Floor, Richardson,
Texas 75080 for the purpose of considering and voting upon the following:

(1) A proposal to elect five (5) directors to serve for a three year-term or
until their respective successors are elected and qualified.

(2) A proposal to approve and adopt an amendment to the Company's
Certificate of Incorporation to effect a reverse stock split.

(3) A proposal to approve and adopt an amendment to the Company's
Certificate of Incorporation to increase the authorized Common Stock and
Preferred Stock.

(4) A proposal to approve and adopt amendments to the Company's 1994
Employee Stock Option Plan.

(5) A proposal to ratify the Board of Directors' appointment of Price
Waterhouse LLP as independent public accountants for the Company for the
fiscal year ending December 31, 1996.

(6) Such other business as may properly come before the Annual Meeting or
any adjournment(s) thereof. The Board of Directors is presently unaware
of any other business to be presented to a vote of the stockholders at
the Annual Meeting.

The items of business are more fully described in the Proxy Statement
accompanying this notice.

The Board of Directors has fixed April 15, 1996 as the record date (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournment(s) thereof. Only stockholders
of record at the close of business on the Record Date are entitled to notice of
and to vote at the Annual Meeting. The stock transfer books of the Company will
not be closed. A list of stockholders entitled to vote at the Annual Meeting
will be available for examination at the offices of the Company for ten (10)
days prior to the Annual Meeting.

By Order of the Board of Directors

/s/ JACK W. MATZ, JR.

Jack W. Matz, Jr.
Chairman and Chief Executive Officer

Richardson, Texas
April 26, 1996

IMPORTANT

YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER, WHETHER OR NOT
YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO PROMPTLY
MARK, SIGN, DATE AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED,
SELF-ADDRESSED, STAMPED ENVELOPE SO THAT YOUR SHARES OF STOCK MAY BE REPRESENTED
AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. YOUR PROXY WILL BE RETURNED TO YOU
IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND SHOULD REQUEST SUCH RETURN OR
IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER PROVIDED FOR REVOCATION OF
PROXIES ON THE INITIAL PAGES OF THE ENCLOSED PROXY STATEMENT. PROMPT RESPONSE BY
OUR STOCKHOLDERS WILL REDUCE THE TIME AND EXPENSE OF SOLICITATION.
<PAGE>

SA TELECOMMUNICATIONS, INC.
1600 PROMENADE CENTER, 15TH FLOOR
RICHARDSON, TEXAS 75080

------------------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 1996

------------------------

SOLICITATION AND REVOCABILITY OF PROXIES

This Proxy Statement and the accompanying proxy are furnished in connection
with the solicitation by the Board of Directors of SA Telecommunications, Inc.
(the "Company") of proxies for the Annual Meeting of Stockholders of the Company
(the "Annual Meeting"), to be held on Friday, May 31, 1996, at the time and
place and for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders and any adjournment(s) thereof. This Proxy Statement,
the accompanying proxy and the Company's Annual Report to Stockholders for the
year ended December 31, 1995 are being first mailed to the Company's
stockholders on or about April 26, 1996.

The accompanying proxy is designed to permit each holder of the Company's
common stock, par value $.0001 per share (the "Common Stock"), to vote for or
withhold voting for any or all of the nominees for election as directors of the
Company listed under Proposal 1, to vote for or against or to abstain from
voting on Proposals 2, 3, 4 and 5 and to authorize the proxies to vote in their
discretion with respect to any other proposal brought before the Annual Meeting.
When a stockholder's executed proxy card specifies a choice with respect to a
voting matter, the shares will be voted accordingly. IF NO SUCH SPECIFICATIONS
ARE MADE, THE PROXIES FOR THE COMMON STOCK WILL BE VOTED BY THOSE PERSONS NAMED
IN THE PROXIES AT THE ANNUAL MEETING: FOR THE ELECTION OF THE NOMINEES UNDER THE
CAPTION "ELECTION OF DIRECTORS;" FOR THE AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT; FOR THE AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF COMMON STOCK AND PREFERRED STOCK, PAR VALUE $.00001 PER SHARE (THE
"PREFERRED STOCK") OF THE COMPANY; FOR THE AMENDMENTS TO THE COMPANY'S 1994
EMPLOYEE STOCK OPTION PLAN (THE "EMPLOYEE PLAN"); AND FOR RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
COMPANY FOR THE CURRENT FISCAL YEAR. If any other matters properly come before
the Annual Meeting, the proxies will vote such matters according to their
judgment.

The Company encourages the personal attendance of its stockholders at the
Annual Meeting. Execution of the accompanying proxy will not affect a
stockholder's right to attend the Annual Meeting and to vote his or her shares
in person. Any stockholder giving a proxy has the right to revoke it by either
(i) giving written notice of revocation to the Corporate Secretary, SA
Telecommunications, Inc., at the Company's principal executive offices, 1600
Promenade Center, 15th Floor, Richardson, Texas 75080, at any time before the
proxy is voted, (ii) executing and delivering a later-dated proxy, or (iii)
attending the Annual Meeting and voting his or her shares in person. No such
notice of revocation or later-dated proxy, however, will be effective until
received by the Company at or prior to the Annual Meeting. Such revocation will
not affect a vote on any matters taken prior to the receipt of such revocation.
Mere attendance at the Annual Meeting will not in and of itself revoke the
proxy.

All expenses of the Company in connection with this solicitation will be
borne by the Company. In addition to the solicitation of proxies by use of the
mail, officers, directors and regular employees of the Company may solicit the
return of proxies by personal interview, mail, telephone or facsimile. Such
persons will not be additionally compensated, but will be reimbursed for
out-of-pocket expenses. The

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Company will also request brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation material to the beneficial owners of shares
held of record by such persons and will reimburse such persons and the Company's
transfer agent for their reasonable out-of-pocket expenses incurred in
forwarding such material.

The Annual Report to Stockholders covering the Company's fiscal year ended
December 31, 1995 (the "Annual Report"), including audited financial statements,
is enclosed herewith. The Annual Report does not form any part of the material
for the solicitation of proxies.

ACTION TO BE TAKEN AT THE MEETING

At the Annual Meeting, the stockholders of the Company will consider and
vote upon the following matters:

(1) A proposal to elect five (5) directors to serve as Class I Directors for a
three-year term or until their respective successors are elected and
qualified.

(2) A proposal to approve and adopt an amendment to the Company's Certificate of
Incorporation to effect a reverse stock split.

(3) A proposal to approve and adopt an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of Common Stock
and Preferred Stock.

(4) A proposal to approve and adopt certain amendments to the Employee Plan.

(5) A proposal to ratify the Board of Directors' appointment of Price Waterhouse
LLP as independent public accountants for the Company for the fiscal year
ending December 31, 1996.

(6) Such other business as may properly come before the Annual Meeting or any
adjournment(s) thereof.

VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS

GENERAL

The Board of Directors has fixed April 15, 1996 as the record date (the
"Record Date") for the Annual Meeting. Only holders of record of the outstanding
shares of Common Stock at the close of business on the Record Date are entitled
to notice of and to vote at the Annual Meeting and any adjournment(s) thereof.
At the close of business on the Record Date, 14,321,488 shares of the Common
Stock were outstanding and entitled to be voted at the Annual Meeting. The
Common Stock is the only class of stock entitled to vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote on each matter presented to
the stockholders. 166,667 shares of the Company's Series A Cumulative
Convertible Preferred Stock, par value $.00001 per share (the "Series A Stock")
and 125,000 shares of the Company's Series B Cumulative Convertible Preferred
Stock, par value $.00001 per share (the "Series B Stock") were also outstanding
as of the Record Date, none of which are entitled to be voted at the Annual
Meeting. The holders of the Series B Stock have contractually waived all rights
to convert such shares into Common Stock.

QUORUM AND VOTE REQUIRED; EFFECT OF ABSTENTIONS AND BROKER NON-VOTES

The presence, in person or by proxy, of a majority of the outstanding shares
of Common Stock is necessary to constitute a quorum at the Annual Meeting.
Assuming the presence of a quorum, the affirmative vote of the holders on the
Record Date of a plurality of the shares of Common Stock outstanding,
represented in person or by proxy at the Annual Meeting, is required for the
election of directors. Assuming the presence of a quorum at the Annual Meeting,
the affirmative vote of the holders on the Record Date of a majority of the
shares of Common Stock outstanding is necessary for the approval of the
amendments to the Company's Certificate of Incorporation, including (i) an
amendment to effect a reverse stock split and (ii) an amendment to increase the
authorized number of shares of Common Stock and Preferred Stock of the Company.
The affirmative vote of the holders on

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<PAGE>
the Record Date of a majority of the shares of Common Stock outstanding,
represented in person or by proxy at the Annual Meeting, is required for the
approval of the amendments to the Employee Plan and for the ratification of the
appointment by the Board of Directors of Price Waterhouse LLP as independent
public accountants to the Company for the current year.

Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. However,
abstentions and broker non-votes do not have any effect on the election of
directors. Nevertheless, in all other cases, abstentions are counted essentially
as votes "against" the remaining proposals presented to stockholders because
such proposals require the affirmative vote of a majority of the shares entitled
to vote thereon at the meeting. With respect to Proposals 1, 4 and 5, broker
non-votes are not counted for purposes of determining whether a proposal has
been approved and for Proposals 2 and 3, broker non-votes are effectively
counted as votes "against" for purposes of determining whether a proposal has
been approved.

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table and notes thereto set forth certain information with
respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) each director and executive officer of the Company included in this
Proxy Statement under "Executive Compensation" and (iii) all officers and
directors of the Company as a group, as of April 15, 1996.

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------
NUMBER OF SHARES
BENEFICIALLY PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) BENEFICIALLY OWNED(2)
- - --------------------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
Jack W. Matz, Jr. ................................................... 4,337,662(3)(4) 23.6%
1600 Promenade Center, Suite 1510
Richardson, Texas 75080
Paul R. Miller ...................................................... 331,272(5) 2.3%
1600 Promenade Center, Suite 1510
Richardson, Texas 75080
J. David Darnell .................................................... 251,250(6) 1.7%
1600 Promenade Center, Suite 1510
Richardson, Texas 75080
Terry R. Houston .................................................... 1,164,750(7) 8.0%
1600 Promenade Center, Suite 1510
Richardson, Texas 75080
John Q. Ebert ....................................................... 125,000(8) *
3612 Garden Brook Dr. #134
Farmers Branch, Texas 75234
Igor I. Mamantov .................................................... 318,300(9) 2.2%
1600 Promenade Center, Suite 1510
Richardson, Texas 75080
Howard F. Curd ...................................................... 1,898,336(10)(11) 11.7%
650 Fifth Avenue
New York, New York 10019
Dean A. Thomas ...................................................... 335,905(12) 2.3%
1907 Ridge Creek Dr.
Richardson, Texas 75082
Barry J. Williams, M.D. ............................................. 327,816(13) 2.2%
4100 W 15th St., #103
Plano, Texas 75075
</TABLE>

3
<PAGE>

- - ------------------------
* Represents less than one percent (1%).

(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Unless otherwise indicated each of the persons
or entities named has sole voting and investment power with respect to the
shares reported.

(2) The percentages indicated are based on exercisable outstanding options and
conversion privileges for each individual or entity listed and 14,321,488
shares of Common Stock issued and outstanding on April 15, 1996.

(3) Includes 1,125,720 shares that Mr. Matz has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(4) Includes shares that Mr. Matz has the right to vote (or direct the vote)
under voting agreements or voting trusts but over which he does not have
dispositive power. Mr. Matz, as trustee under nine separate voting trust
agreements, has the right to vote 1,703,781 shares of the Company's Common
Stock on any matters presented to the stockholders for a vote. Each of these
voting trust agreements has a duration of five years and will terminate at
various times through April 1999. In addition, under additional voting
agreements with 11 purchasers of the Company's Common Stock in connection
with a September 20, 1995 private placement, Mr. Matz has the right to vote
1,095,000 shares of the Company's Common Stock held by (and included
herein), and 1,100,000 shares of Common Stock issuable upon exercise of
certain Common Stock Purchase Warrants ("Private Placement Warrants") issued
to (but excluded herefrom), such purchasers. Each of these voting agreements
terminates on August 31, 2005. The Private Placement Warrants are not
exercisable until either (i) the market price of the Common Stock is greater
than $4.00 per share for ten consecutive days or (ii) the Company provides
written notice to the holder of Private Placement Warrants that such
warrants will expire on the 46th day following such written notice. Also
includes 142,354 shares of Common Stock which Mr. Matz has the right to vote
under a voting agreement until the earlier of Mr. Houston's transfer of such
shares or April 11, 2001.

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<PAGE>
(5) Includes 160,000 shares that Mr. Miller has the right to acquire upon the
exercise of options and other rights exercisable in 60 days. Pursuant to
that certain Voting Trust Agreement, dated April 12, 1994, Mr. Miller has
transferred the right to vote 169,272 shares of Common Stock to Jack W.
Matz, Jr. as Trustee on all matters presented to the stockholders for a
vote. Mr. Miller retains sole dispositive power over all shares beneficially
owned by him.

(6) Includes 236,250 shares that Mr. Darnell has the right to acquire upon the
exercise of stock options, exercisable within 60 days.

(7) Includes 150,000 shares that Mr. Houston has the right to acquire upon the
exercise of options and other rights exercisable within 60 days. Pursuant to
that certain Voting Trust Agreement, dated April 12, 1994, Mr. Houston has
transferred the right to vote 872,396 shares of Common Stock to Jack W.
Matz, Jr. as Trustee on all matters presented to the stockholders for a
vote. Mr. Matz also has the right to vote an additional 142,354 shares of
Common Stock owned by Mr. Houston under a separate voting agreement. Mr.
Houston retains sole dispositive power over all shares beneficially owned by
him.

(8) Includes 125,000 shares that Mr. Ebert has the right to acquire upon the
exercise of stock options, exercisable within 60 days.

(9) Includes 318,300 shares that Mr. Mamantov has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(10) Includes 500,000 shares of the Company's Common Stock that Jesup & Lamont
Capital Markets, Inc. ("JLCM") has the right to acquire upon the exercise of
Common Stock Purchase Warrants exercisable within 60 days and 1,333,336
shares issuable upon conversion of shares of Series A Stock of the Company.
Messrs. Curd and Richards are Managing Director and Senior Managing
Director, respectively, of such entity.

(11) Includes 15,000 shares that Mr. Curd has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(12) Includes 151,666 shares that Mr. Thomas has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(13) Includes 261,666 shares that Dr. Williams has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(14) Includes 104,166 shares that Mr. Smith has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(15) Includes 20,000 shares that Mr. Cunningham has the right to acquire upon
the exercise of stock options and other rights exercisable within 60 days.

(16) Includes 20,000 shares that Mr. Nugent has the right to acquire upon the
exercise of stock options and other rights exercisable within 60 days.

(17) Includes 4,521,104 shares that 14 directors and executive officers have the
right to acquire upon the exercise of stock options and other rights
exercisable within 60 days.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The Laura Huberfeld/Naomi Bodner Partnership (the "LH/NB Partnership"), 152
West 57th Street, New York, New York 10019 owns 600,000 shares of Common Stock
and has the right to acquire 600,000 shares of the Company's Common Stock upon
exercise of a Private Placement Warrant. Each of the Private Placement Warrants,
including the warrant held by the LH/NB Partnership, may not be exercised until
either (i) the market price of the Common Stock is greater than $4.00 per share
for ten consecutive days or (ii) the Company provides written notice to the
holders of the Private Placement

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Warrants that such warrants will expire on the 46th day following such written
notice. The Company's Chairman and Chief Executive Officer, Jack W. Matz, Jr.,
has the power to vote all shares which may be issued upon exercise of any
Private Placement Warrant pursuant to a voting agreement that terminates on
August 31, 2005.

Except (i) as set forth in the chart above or (ii) the LH/NB Partnership
upon exercise of its Private Placement Warrant, the Company knows of no person
or entity that on the Record Date had or could be deemed to have beneficial
ownership of 5% or more of the Common Stock. The employee directors of the
Company have informed the Company that they intend to vote all shares of Common
Stock over which they have voting power in favor of Proposals No. 1 through No.
6.

PROPOSAL NO. 1
ITEM 1 ON PROXY
ELECTION OF DIRECTORS

NOMINEES

The Bylaws of the Company provide that the Board of Directors shall consist
of not fewer than 5 nor more than 20 members and that the number of directors,
within such limits, shall be determined by resolution of the Board of Directors
at any meeting or by the stockholders at the Annual Meeting. The Board of
Directors of the Company has currently set the number of directors comprising
the Board of Directors at 13. As a consequence of the 1995 annual meeting, the
Company's Certificate of Incorporation was amended to provide for classification
of the Board of Directors into three classes, with the term of Class I Directors
so elected ending at this year's Annual Meeting, the term of Class II Directors
so elected ending at the Annual Meeting of Stockholders in 1997, and the term of
the Class III Directors so elected ending at the Annual Meeting of Stockholders
in 1998.

The Board of Directors has nominated for director the 5 individuals named
below to be elected at the Annual Meeting to hold office until their respective
successors have been duly elected and qualified except as noted below. The Class
I Directors will serve for a three-year term expiring in 1999. Thereafter, each
replacement class will serve for a like three-year term.

<TABLE>
<S> <C> <C> <C>
CLASS I NOMINEES (TERM EXPIRING IN 1999)
Igor I. Mamantov Howard F. Curd*
Thomas L. Cunningham Reuben F. Richards*
John H. Nugent
</TABLE>

* Each of such nominees has agreed to resign from the Board of Directors in the
event the contractual basis for their nomination is no longer in effect.

The table below sets forth the name and age for each nominee for director
and the year he first became a director of the Company. All nominees are
presently serving as directors of the Company. Biographical information on each
of these persons, including business experience during the past five years, is
set forth below under "Management -- Executive Officers and Directors."

<TABLE>
<CAPTION>
YEAR FIRST BECAME A
NAME AND AGE DIRECTOR OF THE COMPANY
- - ------------------------------------------------------------ -------------------------
<S> <C>
Igor I. Mamantov (54) 1993

Thomas L. Cunningham (52) 1995

John H. Nugent (51) 1995

Howard F. Curd (31) 1995

Reuben F. Richards (39) 1996
</TABLE>

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<PAGE>
Although the Company does not anticipate that any of the above-named
nominees will refuse or be unable to accept or serve as a director of the
Company for the term specified, the persons named in the enclosed form of proxy
intend, if any such nominee is unable or unwilling to serve as a director, to
vote the shares represented by the proxy for the election of such other person
or persons as may be nominated or designated by management unless they are
directed by the proxy to do otherwise.

Assuming the presence of a quorum, the affirmative vote of the holders of a
plurality of the shares of Common Stock, represented in person or by proxy at
the Annual Meeting, is required for the election of directors. Assuming the
receipt by each such person of the affirmative vote of at least a plurality of
the shares of Common Stock represented at the Annual Meeting, the 5 persons
receiving the greatest number of votes will be elected as directors. Proxies
will be voted for the nominees in accordance with specifications marked thereon
and, if no specification is made, will be voted FOR the above nominees.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF EACH OF THE INDIVIDUALS NOMINATED
FOR ELECTION AS A DIRECTOR.

PROPOSAL NO. 2
ITEM 2 ON PROXY

AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT

GENERAL

On April 8, 1996, the Board of Directors of the Company adopted, subject to
stockholder approval, a resolution proposing that the Company amend its
Certificate of Incorporation to reduce the outstanding number of shares of
Common Stock and effect a reverse stock split (the "Reverse Stock Split") of not
less than one share of the Company's Common Stock ("New Common Stock") for every
two shares of the Company's then issued Common Stock ("Old Common Stock") nor
more than one share of New Common Stock for every three shares of Old Common
Stock, with the specific exchange ratio to be determined by the Board (the
"Split Number").

The Certificate of Incorporation presently authorizes 50,000,000 shares of
Common Stock, of which 14,321,488 shares were issued and outstanding on the
Record Date. In addition, as of the Record Date, 9,641,714 shares of Common
Stock were subject to issuance upon exercise of outstanding warrants,
convertible debentures and options (including shares issuable upon the exercise
of options granted under the Employee Plan and shares issuable upon the exercise
of options granted under the Company's 1994 Stock Option Plan for Non-Employee
Directors (the "Outside Director Plan")). In addition, 1,333,336 shares of
Common Stock are reserved for issuance upon conversion of the 166,667 shares of
Series A Stock outstanding as of the Record Date.

PURPOSES OF THE REVERSE STOCK SPLIT

The Board of Directors believes that if the market price of the Common Stock
increases after the Reverse Stock Split, the Common Stock may be eligible for
listing on the Nasdaq Stock Market's National Market ("Nasdaq-NMS"). The Company
believes that having its securities listed on Nasdaq-NMS will provide greater
access to, and visibility in, a nationally recognized capital market. In order
to be eligible for listing on the Nasdaq-NMS, the following minimum conditions
are required to be satisfied. First, all securities must maintain a minimum bid
price of $3.00. Second, the Company must maintain minimum net tangible assets
(total assets (excluding goodwill) minus total liabilities) of $12,000,000.
Third, a public float (shares not held directly or indirectly by an officer,
director or by any person who is beneficial owner of more than 10% of the total
shares outstanding) of at least 1,000,000 shares must exist in the Company's
securities and the total float of the Company's listed securities must have a
market value of at least $15,000,000. Last, the Common stock must be held by at
least 400 beneficial owners. There can be no assurances that even if the Reverse
Stock Split is effected, the Common Stock will be accepted for listing on the
Nasdaq-NMS.

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<PAGE>
The Board of Directors also believes that the current low per share price of
the Common Stock has had a negative effect on the marketability of existing
shares, the amount and percentage (relative to share price) of transaction costs
paid by individual stockholders and the potential ability of the Company to
raise capital by issuing additional shares. Reasons for these effects include
internal policies of certain institutional investors which prevent the purchase
of low-priced stocks, the fact that many brokerage houses do not permit
low-priced stocks to be used as collateral for margin accounts or to be
purchased on margin and a variety of brokerage house policies and practices
which tend to discourage individual brokers within those firms from dealing in
low-priced stocks.

In addition, since broker's commissions on low-priced stocks generally
represent a higher percentage of the stock price than commissions on higher
priced stocks, the current share price of the Common Stock can result in
individual stockholders paying transaction costs which are a higher percentage
of the share price than would be the case if the Company's share price were
substantially higher. The Board of Directors also believes that this factor
limits the willingness of certain institutional investors to purchase the
Company's stock. The Board of Directors also believes that the proposed Reverse
Stock Split will enhance the Company' flexibility in the future for financing
and capitalization needs.

The Board of Directors believes that the decrease in the number of shares of
Common Stock outstanding as a consequence of the proposed Reverse Stock Split
and the resulting anticipated increased share price will encourage interest in
the Common Stock and possibly promote greater liquidity for the Company's
stockholders, although such liquidity could be adversely affected by the reduced
number of shares outstanding after the Reverse Stock Split. Although any
increase in the market price of the Common Stock resulting from the Reverse
Stock Split may be proportionately less than the decrease in the number of
shares outstanding, the proposed Reverse Stock Split could result in a market
price for the shares that will be high enough to overcome the reluctance,
policies and practices of brokers and institutional investors referred to above
and to diminish the adverse impact of trading commissions on the market for
those shares. There can, however, be no assurance that the foregoing effects
will occur.

THERE CAN BE NO ASSURANCE THAT THE MARKET PRICE OF THE COMMON STOCK AFTER
THE PROPOSED REVERSE STOCK SPLIT WILL BE EQUAL TO THE MARKET PRICE BEFORE THE
PROPOSED REVERSE STOCK SPLIT MULTIPLIED BY THE SPLIT NUMBER, OR THAT THE MARKET
PRICE FOLLOWING THE REVERSE STOCK SPLIT WILL EITHER EXCEED OR REMAIN IN EXCESS
OF THE CURRENT MARKET PRICE.

EFFECTIVENESS OF THE REVERSE STOCK SPLIT

If Proposal No. 3 is approved by the stockholders, the Reverse Stock Split
would become effective after the Board determines the Split Number and files the
Certificate of Amendment with the Secretary of State of Delaware ("Effective
Date"). Upon the filing of the Certificate of Amendment, all of the Old Common
Stock will be converted into New Common Stock appropriate to reflect the Split
Number as set forth in the Certificate of Amendment. The number of shares of New
Common Stock calculated pursuant to the Split Number will be rounded up to the
nearest whole share as fractional shares will not be issued. From and after the
Effective Date, certificates representing shares of Old Common Stock shall be
deemed to represent only the right to receive shares of New Common Stock to
which an individual stockholder would otherwise be entitled.

CERTIFICATES AND FRACTIONAL SHARES

As soon as practicable after the Effective Date, the Company will request
all stockholders to return their stock certificates representing issued shares
of Old Common Stock outstanding on the Effective Date ("Old Certificates") in
exchange for certificates representing the number of whole shares of New Common
Stock into which the shares of Common Stock have been converted ("New
Certificates") as a result of the Reverse Stock Split. Each stockholder will
receive a letter of transmittal from the Company's transfer agent, Securities
Transfer Corp., Dallas, Texas (the "Transfer Agent"), containing instructions on
how to exchange certificates. STOCKHOLDERS SHOULD NOT SUBMIT THEIR OLD
CERTIFICATES TO THE TRANSFER AGENT UNTIL THEY RECEIVE THESE INSTRUCTIONS. In
order to receive New

8
<PAGE>
Certificates, stockholders must surrender their Old Certificates pursuant to the
Transfer Agent's instructions, together with the properly executed and completed
letter of transmittal and such evidence of ownership of such shares as the
Company may require.

Beginning with the Effective Date, each Old Certificate will, until
surrendered and exchanged as described above, be deemed for all corporate
purposes to evidence ownership of the whole number of shares of the Company's
Common Stock into which the shares evidenced by such Old Certificate have been
converted.

No fractional shares of New Common Stock will be issued as a result of the
Reverse Stock Split. In lieu of receiving fractional shares, stockholders who
hold a number of shares not evenly divisible by the Split Number immediately
prior to the Reverse Stock Split will be entitled to receive a whole share of
New Common Stock for any fractional share at no additional cost. The number of
shares of New Common Stock to be issued in connection with rounding up such
fractional interests is not expected by management of the Company to be
material.

CERTAIN EFFECTS OF THE REVERSE STOCK SPLIT

The principal effect of the Reverse Stock Split will be to decrease the
number of shares of Common Stock outstanding as follows:

<TABLE>
<CAPTION>
SHARES OUTSTANDING APPROXIMATE NUMBER OF
AS OF APRIL 15, SHARES OUTSTANDING
EXCHANGE RATIO 1996 AFTER REVERSE STOCK SPLIT
- - ---------------------------------------------------- ------------------ -----------------------------
<S> <C> <C>
1:2................................................. 14,321,488 7,160,744
1:3................................................. 14,321,488 4,773,830
</TABLE>

The shares of Common Stock to be issued pursuant to the Reverse Stock Split
will be fully paid and nonassessable. The relative voting and other rights of
holders of the Common Stock will not be altered by the Reverse Stock Split. The
Company does not anticipate that the Reverse Stock Split will result in any
material reduction in the number of holders of Common Stock.

The Company notes that certain stockholders' post-Reverse Stock Split
holdings may include an "odd lot" number of shares. In general, it is somewhat
more difficult to purchase or sell an odd-lot number of shares, and transactions
in odd lots are subject to higher commissions and other transaction costs
applicable to so-called even lots.

Although the outstanding shares will be reduced if the Reverse Stock Split
is approved, if the related amendment to the Certificate of Incorporation of the
Company to increase the authorized number of shares of Common Stock and
Preferred Stock (see Proposal No. 3) is also approved by the stockholders, the
total number of shares authorized for issuance will not be affected.
Accordingly, if the amendments are approved by the stockholders, the Company
will have the ability to issue significantly more shares of Common Stock than is
presently the case (up to the full amount of authorized shares), as the Board of
Directors deems to be in the Company's best interests, without additional
stockholder approval, except as may be required by applicable law, regulation,
rules of any stock exchange or automated quotation system on which the Common
Stock may then be listed. The issuance of such shares may, among other things,
have a dilutive effect on earnings per share and on the equity and voting power
of existing holders of Common Stock.

The number of shares subject to outstanding warrants and options and
conversion privileges, as well as the exercise price and conversion ratio
therefor, will be proportionately adjusted to reflect the Reverse Stock Split.

The Preferred Stock of the Company will be unaffected by the Reverse Stock
Split except that the conversion ratios will be proportionately adjusted.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following description of certain federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended (the "Code"), the
applicable Treasury Regulations promulgated

9
<PAGE>
thereunder, judicial authority and current administrative rulings and practices
as in effect on the date of this Proxy Statement. This discussion is for general
information only and does not discuss consequences which may apply to special
classes of taxpayers (e.g., non-resident aliens, broker-dealers, or insurance
companies). Stockholders are urged to consult their own tax advisors to
determine the particular tax consequences to them.

The Company has not sought and will not seek a ruling from the Internal
Revenue Service or an opinion of counsel regarding the federal income tax
consequences of the Reverse Stock Split. However, the Company believes that
because the Reverse Stock Split is not part of a plan to periodically increase a
stockholder's proportionate interest in the assets or earnings and profits of
the Company, the Reverse Stock Split will have the following effects:

The exchange of shares of Old Common Stock for shares of New Common Stock
should not result in recognition of gain or loss (except in the case of the
portion of the whole shares of New Common Stock received as a result of the
rounding up to the nearest whole number of shares of New Common Stock in lieu of
fractional shares as described above). The holding period for the shares and
portions of shares of New Common Stock received in exchange for shares of Old
Common Stock will include the stockholder's holding period for the shares of Old
Common Stock exchanged therefor, provided that the shares of Old Common Stock
were held as a capital asset. The portion of the shares of New Common Stock
received as a result of rounding up for fractional shares will have a holding
period commencing on the date of distribution. The adjusted basis of the shares
of New Common Stock will be the same as the adjusted basis of the shares of
Common Stock exchanged therefor, increased by the income or gain recognized upon
receipt of the portion of shares of New Common Stock attributable to the
rounding up to a whole number of shares as described herein. The stockholder who
receives an increased number of shares of New Common Stock as a result of the
rounding up to the nearest whole number of such shares will be treated as if the
Company has issued fractional shares to him in a disproportionate dividend
distribution. Such stockholder should generally recognize ordinary income to the
extent of earnings and profits of the Company allocated to the portion of each
share of New Common Stock attributable to the rounding up process, and the
remainder of the gain, if any, shall be treated as received from the exchange of
property.

MISCELLANEOUS

The Board of Directors may abandon the proposed Reverse Stock Split at any
time before or after the Annual Meeting and prior to the filing of the
Certificate of Amendment related thereto if for any reason the Board of
Directors deems it advisable to do so. In addition, the Board of Directors may
make any and all changes to the applicable Certificate of Amendment that it
deems necessary to file the Certificate of Amendment with the Delaware Secretary
of State and give effect to the Reverse Stock Split.

No further action or authorization by stockholders would be necessary prior
to the issuance of the additional shares of Common Stock authorized pursuant to
the amendment unless applicable laws or regulations would require approval in a
given instance.

RECOMMENDATION AND VOTE

Assuming the presence of a quorum, the proposal to amend the Company's
Certificate of Incorporation to effect the Reverse Stock Split requires the
approval by the holders of a majority of the outstanding shares of Common Stock.
Proxies will be voted for or against such approval in accordance with
specifications marked thereon and, if no specification is made, will be voted
FOR such approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO EFFECT
A REVERSE STOCK SPLIT.

10
<PAGE>
PROPOSAL NO. 3
ITEM 3 ON PROXY
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK AND PREFERRED STOCK

GENERAL

On March 5, 1996, the Board of Directors of the Company adopted, subject to
stockholder approval, a resolution proposing that, if the Reverse Stock Split is
approved by the stockholders, the Company should further amend its Certificate
of Incorporation to ensure that after giving effect to the Reverse Stock Split,
the authorized number of shares of Common Stock of the Company shall remain
50,000,000. Also on March 5, 1996, the Board adopted a resolution, subject to
stockholder approval, proposing an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of Preferred Stock of
the Company from 12,500,000 to 15,000,000. If Proposal No. 2 regarding an
amendment to the Company's Certificate of Incorporation is not approved by the
stockholders, Proposal No. 3 will still be presented to the stockholders but
with the effect that only the authorized number of shares of Preferred Stock
will be increased. The proposal resolution also provides that the par value of
the Company's Common Stock and Preferred Stock will remain $.0001 and $.00001
per share, respectively, following such amendments.

The Certificate of Incorporation of the Company, as amended, currently
authorizes 50,000,000 shares of Common Stock, 250,000 shares of Series A Stock,
250,000 shares of Series B Stock and 12,000,000 yet undesignated shares of
Preferred Stock, of which 14,321,488 shares of the Common Stock, 166,667 shares
of the Series A Stock and 125,000 shares of the Series B Stock were issued and
outstanding on the Record Date. In addition, as of the Record Date 9,641,714
shares of Common Stock were subject to issuance upon exercise of outstanding
warrants, convertible debentures and options previously issued by the Company
and 1,333,336 shares of Common Stock were reserved for issuance upon conversion
of the 166,667 shares of Series A Stock outstanding. If the Reverse Stock Split
is effected and the Certificate of Incorporation is not otherwise amended as
provided in this Proposal 3, the authorized number of shares of Common Stock
would be reduced to between 16,666,666 and 25,000,000 and the number of shares
of Common Stock reserved for issuance would be proportionately reduced.
Consequently, assuming the Reverse Stock Split is approved, approval of this
proposal would result in a significant increase in the number of shares of
Common Stock available for issuance by the Board of Directors of the Company in
their discretion without stockholder approval.

PURPOSES OF THE INCREASE IN AUTHORIZED COMMON STOCK AND PREFERRED STOCK

If approved, the increased number of authorized shares of Common Stock and
Preferred Stock will be available for issue from time to time for such purposes
and consideration as the Board of Directors may approve and no further vote of
stockholders of the Company will be required, except as provided under Delaware
law or the rules applicable to issuers listed on Nasdaq-NMS or any other
national securities exchange or automated quotation system on which shares of
Common Stock of the Company are at the time listed. The availability of
additional shares for issuance (both Common and Preferred), without the delay
and expense of obtaining the approval of stockholders, will afford the Company
greater flexibility in acting upon future transactions.

The additional authorized shares of Common Stock will result in more
flexibility with respect to future issuances of Common Stock than existed prior
to the Reverse Stock Split (if effected) since the number of authorized and
reserved shares of Common Stock will be reduced as a result of the Reverse Stock
Split but the number of shares of Common Stock will not be similarly reduced (if
this Proposal No. 3 is approved). Furthermore, the issuance by the Company of
several series of Preferred Stock over the past year has reduced the level of
flexibility to issue additional series of Preferred Stock below that which
existed prior to August 1995, when the Company first authorized the issuance of
Preferred Stock. On March 8, 1996, the Company and the holders of the Series B
Stock entered into a Purchase Agreement whereby the Company contracted to buy,
among other things, all of the issued and

11
<PAGE>
outstanding Series B Stock from the holders thereof. It is anticipated that
closing of the Purchase Agreement, if consummated, will occur during the second
quarter of 1996. Closing is subject to a number of closing conditions including
adequate financing to fund the transaction.

The additional shares of Common Stock for which authorization is sought
would be identical to the shares of Common Stock of the Company now authorized.
Holders of Common Stock do not have preemptive rights to subscribe to additional
securities which may be issued by the Company. The additional shares of
Preferred Stock for which authorization is sought would be of the same class of
Preferred Stock of the Company currently authorized, and would be undesignated
as to series. Under the Certificate of Incorporation of the Company, the Board
of Directors is authorized to designate the terms of any new series of Preferred
Stock, including dividend rates, voting rights, redemption prices and conversion
or other special rights, if any, without further action by stockholders of the
Company, except that the Company may not designate a series of Preferred Stock
senior to (as to dividends, or upon liquidation) the Series A Stock of the
Company or the Series B Stock of the Company without the consent of at least 51%
of such holders, voting separately as a class.

The additional shares of Common Stock and Preferred Stock proposed to be
authorized would be available for issuance by the Board of Directors to oppose
an attempt by another corporation or individual to acquire or to take control of
the Company which management deemed not to be in the best interests of the
Company. For example, the Company might seek to frustrate a takeover attempt by
making a private sale of a large block of shares to a third party who was
opposed to such an attempt or by issuing shares of Preferred Stock or stock
rights to stockholders, which shares or rights would possess certain
characteristics (such as conversion or redemption rights) upon an unfriendly
attempted takeover. In addition, the Board of Directors has the ability to fix
the relative rights and preferences of shares of the authorized Preferred Stock.
These include, among other things, each share having more than one vote, voting
as a separate class on certain matters, special conversion rights or redemption
features, which features could be a significant factor in opposing any takeover
attempt. In considering the desirability of having additional shares of Common
Stock and Preferred Stock available which might be used to defeat attempts to
acquire control of the Company, if the Board of Directors believed such attempts
not to be in the best interest of the Company, stockholders should also consider
that such availability might also lead to the frustration of takeover attempts
which might be beneficial and such anti-takeover measures, if successful, could
result in the continuation in office of the Company's incumbent management.
There are no other "anti-takeover" measures that are currently part of the
Company's charter documents, By-laws or other governing instruments other than
as set forth in the Company's option plans or in employment agreements and
severance agreements with certain senior officers. As discussed in Proposal 4
below, the Board of Directors has proposed that the Employee Plan be amended to
provide for certain effects upon a change of control of the Company.

The Company has considered from time to time the adoption of a "poison pill"
or other plan which might involve the issuance of additional shares of Preferred
Stock or Common Stock. However, to date, the Company has not made any
determination to implement such a plan.

Existing stockholders do not have preemptive rights with respect to future
issuances of Common Stock or Preferred Stock by the Company and their respective
interests in the Company could be diluted by such issuance with respect to any
of the following: earnings per share, voting, liquidation rights and book and
market value per share. As a consequence, the Board of Directors will, in the
exercise of their fiduciary duties to the stockholders, weigh all the factors
carefully, together with the needs and prospects of the Company, before
committing to the issuance of further shares not requiring stockholder approval.

EFFECTIVENESS; RECOMMENDATION AND VOTE

If the above described proposal is approved by the stockholders, the Company
will file an amendment to the Certificate of Incorporation with the Secretary of
State of the State of Delaware promptly after such approval. The proposed
amendment will become effective on the date of filing. Assuming

12
<PAGE>
the presence of a quorum, the proposal to amend the Company's Certificate of
Incorporation to increase the authorized number of shares of Common Stock and
Preferred Stock requires the approval by the holders of a majority of the
outstanding shares of Common Stock. Proxies will be voted for or against such
approval in accordance with specifications marked thereon and, if no
specification is made, will be voted FOR such approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER
OF SHARES OF COMMON STOCK AND PREFERRED STOCK.

PROPOSAL NO. 4
ITEM 4 ON PROXY

CERTAIN AMENDMENTS TO THE
EMPLOYEE PLAN

On March 5, 1996, the Board of Directors adopted, subject to stockholder
approval, amendments to the Employee Plan to provide that (i) the name of the
Employee Plan will be changed to the "SA TELECOMMUNICATIONS, INC. 1994 EMPLOYEE
STOCK OPTION PLAN" to reflect the current name of the Company, and (ii) all
options granted under the Employee Plan will automatically vest upon a change of
control of the Company and that in the event of a termination of employment
following a change of control all options would be exercisable for a minimum of
ninety (90) days. In connection with such amendments, the Company would also
make certain conforming changes to the Employee Plan.

A general description of the principal terms of the Employee Plan, the
amendments approved by the Board of Directors, and the purposes of such
amendments are set forth below. Although the Company believes that the following
description provides a fair summary of the material terms of the Employee Plan,
the description is qualified in its entirety by the text of the Employee Plan,
including the amendments to be approved by the stockholders (which are provided
in italics) which is attached to this Proxy Statement as EXHIBIT A.

GENERAL DESCRIPTION OF EMPLOYEE PLAN

On July 11, 1994, the stockholders of the Company approved the Employee
Plan. The purpose of the Employee Plan is to further the success of the Company
and its affiliates by making available Common Stock for purchase by officers and
employees of the Company and its affiliates, and thus to provide an additional
incentive to such individuals to continue in the service of the Company and its
affiliates and to give them a greater interest as stockholders in the success of
the Company. The Employee Plan provides for the granting of non-qualified stock
options ("NQSOs") as well as incentive stock options ("ISOs") (NQSOs and ISOs
collectively, the "Employee Options") qualifying under Section 422 of the Code.
Under the Employee Plan, 2,000,000 shares of Common Stock are reserved for
granting as Employee Options. As of April 15, 1996, the Company had granted
Employee Options to purchase an aggregate of 1,723,750 shares of Company Common
Stock under the Employee Plan.

TERMS AND CONDITIONS

The Employee Plan is administered by a committee comprised of two or more
disinterested directors appointed by the Board of Directors of the Company (the
"Stock Option Committee"). The Stock Option Committee has full and final
authority to determine, subject to the provisions of the Employee Plan, the
employees to whom, and the times at which Employee Options are granted under the
Employee Plan and the number of shares and purchase price of Common Stock
covered by each Employee Option. Furthermore, the Stock Option Committee has the
authority to determine the terms and provisions of the respective option
agreement (which need not be identical or consistent

13
<PAGE>
with respect to each optionee) including terms covering the payment of the
option price, vesting schedules and forfeiture provisions with respect to the
shares of Common Stock acquired upon exercise of an Employee Option.

The option exercise price for ISOs may not be less than one hundred percent
(100%) of the fair market value of the Common Stock on the date of grant or one
hundred ten percent (110%) of fair market value with respect to any ISO granted
to a holder of ten percent (10%) or more of the Company's Common Stock. There is
no minimum option exercise price requirement for NQSOs other than that the
option exercise price must exceed the par value of such shares. The Employee
Plan further directs the Stock Option Committee to set forth provisions in
option agreements regarding the exercise and expiration of Employee Options
according to stated criteria.

The Employee Options have certain anti-dilution provisions and are not
assignable or transferable, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order. During the
lifetime of an optionee, the options granted under the Employee Plan are
exercisable only by the optionee or his or her guardian or legal representative.
The Employee Options granted under the Employee Plan cannot be exercised more
than ten years after the date of grant (five years with respect to a holder of
ten percent (10%) or more of the Company's shares in the case of an ISO).

No participant in the Employee Plan shall receive any grant of an Employee
Option, whether ISOs or NQSOs, exercisable for more than 250,000 shares of
Common Stock during any one fiscal year of the Company. An ISO may be granted to
a participant only if such participant, at the time the ISO is granted, does not
own, after application of the attribution rules of Section 424 of the Code,
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of Common Stock of the Company.

The preceding restrictions do not apply if at the time the ISO is granted
the exercise price is at least one hundred ten percent (110%) of the fair market
value of the Common Stock subject to the ISO and the ISO by its terms is not
exercisable after the expiration of five (5) years from the date of grant.

Pursuant to option agreements under the Employee Plan, if an optionee ceases
to be an employee of the Company for any reason whatsoever subsequent to
vesting, during the subsequent period (varying from 18 months after vesting to
30 months after vesting), the Company has the right, but not the obligation (the
"Company Repurchase Option"), to require the optionee to sell to the Company the
shares of Common Stock acquired by the optionee under such agreement.
Furthermore, under terms of the Employee Options as currently in effect,
optionees are also subject to certain restrictions on sale of the shares of
Common Stock acquired upon exercise of Employee Options for varying terms of 18
months to 30 months after vesting.

The Employee Plan terminates on January 1, 2004. The Board may at any time
suspend or terminate the Employee Plan prior to such time or may amend it from
time to time in such respects as the Board may deem advisable. No amendment,
suspension or termination, however, shall, without an optionee's consent, impair
or negate any of the rights or obligations under any Employee Option previously
granted to such optionee under the Employee Plan.

DESCRIPTION OF THE PROPOSED AMENDMENTS

The Board of Directors of the Company proposes that the name of the Employee
Plan be amended to reflect the current name of the Company effected by the
amendment to the Certificate of Incorporation approved by the stockholders of
the Company at the 1995 annual meeting. Accordingly, it is proposed that the
name of the Employee Plan be changed to the "SA Telecommunications, Inc. 1994
Employee Stock Option Plan."

The Board of Directors has adopted certain additional amendments to the
Employee Plan addressing situations following a change of control of the
Company. The proposed amendments will add a defined term to the Employee Plan
for a change of control of the Company. Change of control is

14
<PAGE>
generally defined to mean (i) the consummation of any consolidation or merger of
the Company in which the Company is not the surviving corporation or in which
shares of the Company's Common Stock are converted into cash, securities or
other property, (ii) a sale or other transfer of all or substantially all of the
assets of the Company, (iii) stockholder approval of a proposal to liquidate or
dissolve the Company, (iv) a person shall become the beneficial owner of 30% or
more of the Company's outstanding Common Stock (except for those who had such
beneficial ownership prior to May 31, 1996) or (v) during the period of any two
consecutive years, individuals at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a majority
thereof. In each instance, such events are subject to certain exclusions. In
addition, upon a change in control, provisions of the Employee Plan requiring
termination of Employee Options upon termination of the employment of the holder
will not apply except for a termination due to conviction for a felony or a
crime involving moral turpitude. The definition of "change of control" is set
forth in Section 2(b) included as EXHIBIT A hereto.

The Employee Plan would be amended to provide that following a change of
control, all options granted thereunder would be deemed to vest immediately and
that the Company Repurchase Option and Salability Restrictions provided in the
Employee Plan or any option agreement under the Plan would be considered void
and of no further force and effect. This amendment would be accomplished by
adding a new Section 18 to the Employee Plan. The full text of such amendment is
included in EXHIBIT A hereto.

The Board of Directors believes that the adoption of such amendments to the
Employee Plan is important to minimize the uncertainty created by a change in
control of the Company which might result in the loss or distraction of key
employees to the detriment of the Company and its stockholders. The Board of
Directors considers the avoidance of such loss and distraction to be essential
in protecting and enhancing the best interests of the Company and its
stockholders. The Board also believes that when a change in control is perceived
as imminent, or is occurring, the Board should be able to receive and rely on
disinterested service from executives and key employees regarding the best
interests of the Company and its stockholders, without concern that such person
might be distracted or concerned by the personal uncertainties and risks created
by the perception of an imminent or occurring change of control.

The Board of Directors believes that the change of control amendments would,
if adopted, be a negative factor considered by any potential purchaser of the
Company desiring to effect a change of control. Accordingly, stockholders should
carefully read the discussion above which describes those change of control
amendments and their purposes and effects.

NEW PLAN BENEFITS

Because the amendments proposed to be made to the Employee Plan do not
substantively affect the number or dollar value of the benefits to be received
by participants thereunder unless and until there has been a change of control
of the Company, it is not possible to determine the dollar value or the number
of shares that will be received under the Employee Plan as so amended. However,
please refer to "Executive Compensation" for information regarding the total
number of stock options granted to the executive officers during fiscal 1995 and
the value of all options held by such persons at December 31, 1995.
Non-executive officers, as a group, received options exercisable for an
aggregate of 305,000 shares of Common Stock during fiscal 1995 under the
Employee Plan. Each of these grants, including those to executive officers, have
exercise prices of $1.75 or $1.93 per share. The number of Employee Options
granted under the Employee Plan in 1995 is not necessarily indicative of the
number of shares subject to Employee Options to be granted in the future.

As of April 15, 1996, there were outstanding options exercisable for an
aggregate of 2,171,470 shares of Common Stock by employees (and employee
directors) of the Company including both grants under and exclusive of any plan.

15
<PAGE>
RECOMMENDATION AND VOTE

Approval of the proposed amendments to the Employee Plan is one of the
conditions of Rule 16b-3, a rule promulgated by the Securities and Exchange
Commission that provides an exemption from the operation of the "short-swing
profit" recovery provisions of Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with respect to the acquisition of Common
Stock underlying Employee Options.

Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock represented at the Annual
Meeting, in person or by proxy, is necessary for the adoption of the proposed
amendment. Proxies will be voted for or against such approval in accordance with
specifications marked thereon and, if no specification is made, will be voted
FOR such approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE PROPOSAL TO AMEND
THE EMPLOYEE PLAN.

PROPOSAL NO. 5
ITEM 5 ON PROXY

RATIFICATION AND APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors of the Company has appointed the firm of Price
Waterhouse LLP to serve as independent public accountants of the Company for the
fiscal year ending December 31, 1996. Although stockholder ratification is not
required, the Board of Directors has directed that such appointment be submitted
to the stockholders of the Company for ratification at the Annual Meeting. Price
Waterhouse LLP has served as independent public accountants of the Company with
respect to the Company's financial statements for fiscal 1994 through 1995 and
is considered by management of the Company to be well qualified. If the
stockholders do not ratify the appointment of Price Waterhouse LLP, the Board of
Directors may reconsider the appointment.

Representatives of Price Waterhouse LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from stockholders.

On November 3, 1994, upon the recommendation of the Audit Committee of the
Board of Directors, the Board unanimously selected Price Waterhouse LLP to serve
as independent auditors for the Company and its subsidiaries for the fiscal year
ended December 31, 1994. In so doing, the Board dismissed King, Burns & Company
and engaged Price Waterhouse LLP effective as of such date.

The audit reports of King, Burns & Company on the Company's financial
statements for the years ended December 31, 1993 and 1992 contained no adverse
opinions or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.

In connection with the audits of the fiscal years ended December 31, 1993
and 1992 and the subsequent interim period through November 3, 1994, there were
no disagreements ("Disagreements") as defined in item 304(a)(1)(iv) and the
Instructions to Item 304 of Regulation S-K promulgated pursuant to the Exchange
Act ("Regulation S-K"), between the Company and King, Burns & Company on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which Disagreements if not resolved to their
satisfaction would have caused King, Burns & Company to make reference in
connection with their opinions to the subject matter of the Disagreement.

16
<PAGE>
In connection with the audits of the fiscal years ended December 31, 1993
and 1992 and the subsequent interim period through November 3, 1994, there were
no reportable events ("Reportable Events") as defined in item 304(a)(1)(v) of
Regulation S-K and the Instructions to Item 304 of Regulation S-K.

The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission on November 3, 1994 (the "November Form 8-K") reporting this
change in its independent auditors. King, Burns & Company previously furnished
the Company with a letter addressed to the Securities and Exchange Commission
stating that it agrees with the Company's statements included in the November
Form 8-K, except that King, Burns & Company was not in a position to agree or
disagree with the statement that the change was recommended by the Audit
Committee of the Board. A copy of the King, Burns & Company letter is attached
as an exhibit to the November Form 8-K.

Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock present at the meeting in
person or by proxy, is necessary for the adoption of the proposal. Proxies will
be voted for or against such adoption in accordance with specifications marked
thereon and, if no specification is made, will be voted FOR such approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL
TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1996.

PROPOSAL NO. 6
ITEM 6 ON PROXY

OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING

The Board of Directors of the Company knows of no matters, other than those
referred to in the accompanying Notice of Annual Meeting of Stockholders, which
properly may come before the Annual Meeting. However, if any other matter should
be properly presented for consideration and voting at the Annual Meeting or any
adjournment(s) thereof, it is the intention of the persons named as proxies on
the enclosed form of proxy card to vote the shares of Common Stock represented
by such proxy in accordance with their judgment.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

At March 31, 1996, the executive officers and directors of the Company were
as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- - --------------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
Jack W. Matz, Jr............................. 47 Director (since 1989), Chairman and Chief Executive
Officer (1)(6)
Paul R. Miller............................... 53 Director (since 1995), President and Chief Operating
Officer (1)(6)
J. David Darnell............................. 50 Director (since 1993), Vice President-Finance and Chief
Financial Officer (1)(6)
Terry R. Houston............................. 55 Director (since 1994) (5)
Lynn H. Johnson.............................. 47 Vice President, General Counsel and Secretary
Igor I. Mamantov............................. 54 Director (since 1993) and Vice President (4)
John Q. Ebert................................ 55 Director (since 1990) (5)
Howard F. Curd............................... 31 Director (since September 1995) (4)
Dean A. Thomas............................... 77 Director (since 1992) (1)(2)(5)
</TABLE>

17
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION
- - --------------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
Barry J. Williams, M.D....................... 51 Director (since 1992) (5)
Pete W. Smith................................ 41 Director (since 1993) (1)(3)(6)
Thomas L. Cunningham......................... 52 Director (since 1995) (2)(3)(4)
John H. Nugent............................... 51 Director (since 1995) (2)(3)(4)
Rueben F. Richards........................... 39 Director (since March 1996) (4)
</TABLE>

- - ------------------------
(1) Member of the Executive Committee

(2) Member of the Audit Committee

(3) Member of the Compensation Committee

(4) Class I Director (term expiring 1999, if elected)

(5) Class II Director (term expiring 1997)

(6) Class III Director (term expiring 1998)

The following is a description of the business experience of and other
matters concerning the Company's executive officers and directors.

JACK W. MATZ, JR. serves as Chairman of the Board and Chief Executive
Officer of the Company. For more than eight years, Mr. Matz served as President
and a director of the Company and its predecessor, Strategic Abstract & Title
Corporation. Mr. Matz has also served as director and/or executive officer of
the following privately held corporations: Strategic Industries, Inc., an
investment company (1982-1989); El Dorado Systems (Canada), Inc., a computer
systems firm (1983-1986); HCS Drilling and Operating Corporation, an oil and gas
firm (1981-1984) and Koewell Oil and Gas Corporation (1980-1981). Prior to these
relationships, Mr. Matz held numerous positions with Chrysler Corporation,
ending with zone sales manager for the Rocky Mountain States in 1981. Strategic
Industries, Inc. filed a petition under Chapter 11 of the Federal Bankruptcy
Code in 1990. Mr. Matz was not an employee, executive officer or director of
such entity at the time of the filing. In June 1991, Mr. Matz filed a petition
under Chapter Seven of the Federal Bankruptcy Code. The personal bankruptcy,
discharged the actual and contingent liabilities that Mr. Matz guaranteed or
incurred on behalf of Strategic Industries, Inc.

PAUL R. MILLER was elected President, Chief Operating Officer and a director
of the Company in February 1995. He previously served as Executive Vice
President of Long Distance Network, Inc. ("LDN") since 1991. LDN was acquired by
the Company in March 1994 and is currently a wholly owned subsidiary of the
Company. Mr. Miller's career in telecommunications began in 1981 with U.S.
Telephone, Inc. as a member of the management team. His last position with that
company was Vice President of Sales, Southwest. He left U.S. Telephone, Inc. in
1984 and for the next three years was involved in other start-up companies
concentrating in the field of telecommunications. In 1987, Mr. Miller was
appointed Vice President of Sales, North Region for ClayDesta Communications and
directed that company's sales effort. He left ClayDesta in 1988 to join
Telesphere International, Inc. as Vice President of Sales where he directed a
nationwide sales force until joining LDN. For disclosure of certain allegations
against Mr. Miller in connection with the Company's dispute with a former
consultant see "Guatemala Litigation" below.

J. DAVID DARNELL was appointed Vice President-Finance and Chief Financial
Officer of the Company in October 1993 and became a director of the Company in
December 1993. From December 1989 through September 1993, Mr. Darnell was Chief
Financial Officer and a minority owner of Message Phone, Inc., a privately held
intellectual property company which develop patents and licenses technology for
the telecommunications industry. From 1986 through November 1989, Mr. Darnell
held several key financial management positions with TIC United Corporation, a
privately held conglomerate and a group of privately owned insurance companies,
the largest of which was American Equitable Life Insurance Company. Mr. Darnell
is a certified public accountant.

18
<PAGE>
TERRY R. HOUSTON served as Vice President-Telecom Acquisitions until April
11, 1996 and has served as a director of the Company since July 1994. Prior to
that time he served as President and Chief Executive Officer of LDN since 1989.
Mr. Houston spent ten years with Southwestern Bell Corporation from 1971 to
1981, before leaving to join U.S. Telephone, Inc. where he held various
positions, the last being Regional Manager of Major Accounts. From 1984 to 1987,
Mr. Houston was Vice President of Metromedia Long Distance. In January 1987, Mr.
Houston joined ClayDesta Communications where he spent approximately fourteen
months.

LYNN H. JOHNSON has served as the Company's General Counsel and Secretary
since September 1995, and was elected a Vice President in January 1996. Ms.
Johnson served as Counsel-Corporate Acquisitions and Finance at Electronic Data
Systems Corporation from August 1990 to June 1995. From 1979 to July, 1990, Ms.
Johnson was a partner and an associate in the corporate section of the law firm
of Hughes & Luce in Dallas, Texas.

IGOR I. MAMANTOV was appointed Vice President of the Company in October
1992, became President of Baltic States/CIS Ventures, Inc., a wholly owned
subsidiary of the Company, in November 1992 and was appointed to the Board of
Directors of the Company in July 1993. For the past five years, Mr. Mamantov has
been consulting others in product development and distribution in the Eastern
European markets through his company, Dallas International Marketing, Inc. Prior
to organizing this company, Mr. Mamantov was associated with Ideal Industries,
Inc., Parker Pen Company, and Ridge Tool Company, managing and developing their
foreign marketing and distribution divisions.

JOHN Q. EBERT has served as a director since April 1990 and served as
Secretary of the Company from April 1990 to August 1995. He joined the Company
as Vice President in December of 1993. Mr. Ebert was formerly the Chairman of
the Board and Chief Executive Officer of Redlake Corporation of Carmel, Indiana.
Prior to Mr. Ebert's association with Redlake, he was President and Chief
Executive Officer of ATEK Information Services, an information services company.
ATEK was acquired in January 1992 by Redlake Corporation. Before the ATEK
relationship, Mr. Ebert was President of The Ebert Corporation, a Michigan
corporation engaged in the development and administration of computerized
appraisal systems and property databases for property tax administration.

HOWARD F. CURD was elected as a director of the Company in September 1995.
Mr. Curd is President, CEO, Director and shareholder of Jesup & Lamont Group
Holdings, Inc., a diversified financial holding company. Jesup & Lamont Group
Holdings, Inc. operates primarily through its two operating subsidiaries, Jesup
& Lamont Securities Corporation, a fully registered NASD broker/ dealer, and
JLCM, a full service investment bank and financial advisory company. Mr. Curd is
Chairman, President and CEO of Jesup & Lamont Securities Corporation and a
Managing Director of JLCM. He has held such positions for more than five years.

DEAN A. THOMAS was elected as a director of the Company in March 1992. Mr.
Thomas is a retired insurance executive and actuary and was associated with
Lincoln National Life Insurance Company in various management capacities. He
retired in 1983 as a Vice President of Lincoln National Life after 40 years of
service. Since 1983, Mr. Thomas has been active as a business consultant to
insurance companies and others.

BARRY J. WILLIAMS, M.D. has served as a member of the Board of Directors of
the Company since March 1992. Dr. Williams is a family practitioner in Plano,
Texas and has served as Vice Presient of Medshare, Inc., an international
medical software development and sales company since January 1993 and Senior
Medical Director for Allied Physicians of DFW, Inc., a physicians management
services group since April 1996. In addition to being the former Chief of Staff
of HCA Medical Center of Plano and Vice Chairman of the Board of Trustees, Dr.
Williams has served on the Board of Directors of Koewell Oil & Gas Corp.,
Strategic Industries, Inc., United City Corporation and West Plano Medical
Center, Inc.

19
<PAGE>
PETE W. SMITH was elected to the Board of Directors of the Company in July
1993. Since 1971, Mr. Smith has been the President of Spectrum International
Corp., a distributor of tools, test equipment and maintenance related products
in the electronics and telecommunications industries. Mr. Smith has also been
President of PulseTech Products Corp., a distributor of battery enhancement
devices, since August 1994.

THOMAS L. CUNNINGHAM, was elected to the Board of Directors of the Company
in July 1995. Mr. Cunningham has been employed since May 1995 at Rauscher Pierce
Refsnes, Inc., a subsidiary of Inter-Regional Financial Group, Inc., as a vice
president and senior investment research analyst. From January 1993 to March
1995, Mr. Cunningham was employed as a securities analyst at William K. Woodruff
& Company Incorporated. From August 1992 to January 1993, he served as Chief
Operating Officer of Healthcare Billing Management, Inc., Medical Infusion
Technologies, Inc. and fifteen additional privately-owned related entities
engaged in providing outpatient infusion services to oncology patients. From
June 1963 (partner since 1979) to September 1991, he was associated with Ernst &
Young and predecessor "Ernst" firms. From September 1991 to August 1992 and
during April 1995, he was a self-employed business consultant operating as
Cunningham Enterprises. Mr. Cunningham has been a director of Bluebonnet Savings
Bank FSB, Dallas, Texas, a federally chartered savings bank that is privately
owned, since December 1991. He is a member of the National Association of
Corporate Directors and American Institute of Certified Public Accountants. Mr.
Cunningham is licensed as a Certified Public Accountant and under NASD Series 24
and Series 7.

JOHN H. NUGENT was elected to the Board of Directors of the Company in July
1995. Mr. Nugent has been engaged in a consulting practice since January 1995.
He was also employed by CDx, Inc., a physiological laboratory involved in
monitoring cardiac patients over the public switched telephone network, as Vice
President and Director from January 1995 to November 1995 and as a consultant
from January 1995 until March 1, 1996. Mr. Nugent has served as an Adjunct
Professor of advanced accounting and corporate finance courses at the University
of Dallas (Graduate School of Management) since 1982. From September 1985 to
1992, Mr. Nugent was President and a member of the Board of Directors of
AT&T/DATOTEK, INC., a wholly owned subsidiary of American Telephone and
Telegraph Company ("AT&T"). From January 1993 through August 1993, Mr. Nugent
served as President and a member of the Board of Directors of Aviation
Technologies and Systems, Ltd., a joint venture owned principally by AT&T. Mr.
Nugent is a certified public accountant.

REUBEN F. RICHARDS, was elected as a director of the Company in March 1996.
Mr. Richards has been Senior Managing Director of JLCM since June 1994. From
January 1990 through June 1994, Mr. Richards was a principal of Hauser Richards
& Co., Inc., an investment firm. Mr. Richards was also President and Chief
Operating Officer of Emcore Technology Corporation, a privately held compound
semiconductor equipment manufacturer, since October 1995.

GUATEMALA LITIGATION

The Company is currently in litigation with Silvio Avyam, who was formerly a
consultant for a Company subsidiary in Guatemala. Mr. Avyam has commenced an
action against the Company in connection with a termination of his consulting
agreement with such subsidiary. In this action, which is pending in Dallas
County, Texas, Mr. Avyam is seeking, among other things, in excess of $1,500,000
for alleged breach of contract, breach of fiduciary duty and fraud. In
connection with the termination of the agreement with Mr. Avyam, the Company
relocated its offices to another location in Guatemala. Mr. Avyam has filed an
additional criminal complaint in Guatemala City, Guatemala against Paul Miller
and others claiming that the personal property which was relocated belonged to
Mr. Avyam personally and not the Company. The Company and its subsidiary are
vigorously defending all of such actions and pursuing counterclaims against Mr.
Avyam for breach of his consulting agreement and other related claims. Mr. Avyam
has filed a general denial to such counterclaims.

BOARD OF DIRECTORS; ELECTION OF OFFICERS

The Company has a classified Board of Directors currently comprised of three
separate classes, each of which serves for three (3) years, with one class being
elected each year. All directors hold office for their elected term or until
their respective successors are duly elected and qualified, except that

20
<PAGE>
Messrs. Curd and Richards have agreed to resign from the Board at the time the
contractual obligations giving rise to their nominations are no longer in
effect. If a director should be disqualified or unable to serve as a director,
the vacancy so arising may be filled by the Board for the unexpired portion of
the term period. All officers serve at the discretion of the Board. There are no
family relationships between members of the Board of Directors or any executive
officers of the Company.

COMMITTEES, MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and through its numerous committees. In accordance with the Bylaws of the
Company, the Board of Directors has established, among other committees, an
Executive Committee, an Audit Committee and a Compensation Committee.

EXECUTIVE COMMITTEE. The Executive Committee exercises broad authority
including the powers of the Board between meetings of the entire Board other
than such power and authority as Delaware Corporation Law specifically prohibits
a committee of the Board from performing. This committee is currently comprised
of Messrs. Matz, Miller, Darnell, Thomas and Smith.

AUDIT COMMITTEE. The Audit Committee acts on behalf of the Board of
Directors with respect to the Company's financial statements, record-keeping,
auditing practices and matters relating to the Company's independent public
accountants. Such functions include recommending to the Board of Directors the
firm to be engaged as independent public accountants for the next fiscal year;
reviewing with the Company's independent public accountants the scope and
results of the audit; consulting with the independent public accountants and
management with regard to the Company's accounting methods and the adequacy of
its internal accounting controls; and approving professional services by the
independent public accountants. The Audit Committee is limited to directors who
are not officers or employees of the Company or any of its subsidiaries and
currently is comprised of Messrs. Cunningham, Nugent and Thomas.

COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations to the Board of Directors concerning major compensation policies
and compensation of executive employees. This committee is comprised of Messrs.
Nugent, Cunningham and Smith.

COMMITTEE MEETINGS. During the fiscal year ended December 31, 1995, the
Board of Directors met 13 times. During the year, the Compensation Committee met
once, and the Audit Committee met once. There were no meetings of the Executive
Committee during the year. During fiscal 1995, each director attended at least
75% of the total of all meetings of the Board of Directors and any committee on
which he served.

COMPENSATION OF DIRECTORS. The Company has historically granted stock
options (at market price or above) in lieu of directors fees to its various
directors. Since the adoption of the Director Option Plan, options have
generally been granted to directors under that plan. No other compensation was
paid to the members of the Board of Directors of the Company (in such capacity)
during fiscal 1995.

OUTSIDE DIRECTOR STOCK GRANTS DURING 1995

<TABLE>
<CAPTION>
1994 NON-EMPLOYEE DIRECTOR PLAN
---------------------------------------------------
NUMBER OF SECURITIES EXERCISE PRICE PER
DIRECTOR UNDERLYING OPTIONS GRANTED SHARE (1)
- - -------------------------------------------------------------- -------------------------- -----------------------
<S> <C> <C>
Barry J. Williams............................................. 12,500 $ 1.875
Pete W. Smith................................................. 17,500 1.875
Thomas L. Cunningham.......................................... 20,000 1.875
John H. Nugent................................................ 20,000 1.875
Howard F. Curd................................................ 15,000 2.125
Dean A. Thomas................................................ 17,500 1.875
--------

TOTAL OPTIONS GRANTED......................................... 102,500
</TABLE>

- - ------------------------
(1) The exercise price of the options, in each case, was based upon the market
value of the Common Stock of the Company on the date of each respective
option grant.

21
<PAGE>
EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following information is furnished for the years ended December 31,
1995, 1994 and 1993 with respect to the Company's Chief Executive Officer and
each of the other most highly compensated executive officers of the Company
whose total salary during 1995 exceeded $100,000. No other executive officer of
the Company received total salary compensation for services rendered to the
Company during fiscal 1995 in excess of $100,000.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY $ (1) OPTIONS (#)
- - ------------------------------------------------------------- ------------- -------------- -------------
<S> <C> <C> <C>
Jack W. Matz, Jr. ........................................... 1995 $ 203,750(2) 170,000
Chairman of the Board and 1994 150,000 80,000
Chief Executive Officer 1993 172,000(3) 280,000

Paul R. Miller .............................................. 1995 160,000 135,000
President and Chief Operating Officer 1994 126,323(4) 25,000

J. David Darnell ............................................ 1995 114,000 118,750
Vice President-Finance and 1994 68,000 52,500
Chief Financial Officer 1993 15,000(5) 65,000

Terry R. Houston ............................................ 1995 185,000 110,000
Vice President, Telecom Acquisitions 1994 163,636(4) 40,000
</TABLE>

- - ------------------------
(1) None of the executive officers listed received any annual compensation not
properly categorized as salary, except for certain perquisites and other
personal benefits which are not shown because the aggregate amount of such
compensation, if any, to such individuals during the applicable fiscal year
did not exceed the lesser of $50,000 or 10% of total reported salary and
bonus.

(2) Includes $40,000 paid in 1995 which represented accrued compensation for
1994.

(3) Includes $70,000 paid in 1993 which represented accrued compensation for
1992.

(4) Amount shown reflects salary paid to Mr. Miller and Mr. Houston from March
1, 1994, the beginning date of their employment with the Company, through
December 31, 1994.

(5) Amount shown reflects salary paid to Mr. Darnell from October 1, 1993, the
beginning date of his employment with the Company, through December 31,
1993.

For information regarding the contractual compensation to be paid to the
above named executive officers, see "-- Employment Agreements and
Change-In-Control Arrangements."

22
<PAGE>
STOCK OPTION GRANTS IN FISCAL 1995

The following table provides information related to the stock options
granted to the named executive officers during fiscal 1995.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS GRANTED EMPLOYEES IN PRICE
NAME (#)(1) PERIOD (2) (PER SHARE) EXPIRATION DATE
- - --------------------------------------------- ------------------- ------------------- ------------- ---------------
<S> <C> <C> <C> <C>
Jack W. Matz, Jr............................. 170,000 19% $ 1.93 1-17-2000
to 5-12-2000
Paul R. Miller............................... 135,000 15% 1.75 1-17-2000
to 5-12-2000
J. David Darnell............................. 115,750 13% 1.75 1-17-2000
to 5-12-2000
Terry R. Houston............................. 110,000 12% 1.75 1-17-2000
to 5-12-2000
</TABLE>

- - ------------------------
(1) On January 17 and May 12, 1995, the Board of Directors granted the options
listed in the chart above under the Employee Plan. The options are
non-transferable and forfeitable if the executive leaves the Company for any
reason. After a six-month waiting period from the date of grant, the shares
acquired upon exercise may only be sold over periods varying from eighteen
months to twenty-four months and are subject to repurchase by the Company
under certain circumstances. See "Proposal No. 4 -- Amendments to the
Employee Plan."

AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL YEAR-END OPTION VALUES

The following table sets forth certain information concerning the exercise
of options by each of the named executive officers during fiscal 1995, including
the aggregate amount of gains on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 1995. Also reported are values of
"in-the-money" options that represent the possible spread between the respective
exercise prices of outstanding stock options and $2.50 per share, which was the
market value of the Company's Common Stock as of December 31, 1995.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE (2) OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
YEAR-END (#) AT YEAR-END ($)
SHARES VALUE -------------------- ----------------------------
ACQUIRED ON REALIZED EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE (#) ($)(1) CISABLE CISABLE CISABLE (3) CISABLE
- - --------------------------------- ------------ ----------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jack W. Matz, Jr. (4)............ 256,280 $ 271,888 965,720 800,000 $ 1,300,660 $ 1,000,000
Paul R. Miller................... -0- -0- 160,000 -0- 101,250 -0-
J. David Darnell................. -0- -0- 226,250 -0- 199,582 -0-
Terry R. Houston................. -0- -0- 150,000 -0- 82,500 -0-
</TABLE>

- - ------------------------
(1) Market value of the underlying securities at exercise date minus the
exercise price.

(2) Market value of the underlying securities at December 31, 1995 minus the
exercise price.

(3) With respect to Employee Plan stock options, the shares acquired upon
exercise are subject to varying resale restrictions over a period of 18 or
24 months after vesting of the option (vesting generally occurs six months
after the date of grant) and repurchase rights by the Company.

(4) Mr. Matz had 200,000 shares exercisable and 800,000 shares unexercisable as
of December 31, 1995 under his Employment Agreement described below.

23
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS

Effective March 24, 1995, the Company entered into an Employment Agreement
with Jack W. Matz, Jr. which was amended effective January 1, 1996 on March 13,
1996.

The current Employment Agreement with Mr. Matz will expire on March 24,
2000, unless terminated earlier as provided therein, including termination by
the Company with or without cause. In the event Mr. Matz is terminated for cause
(defined in the Employment Agreement to include such reasons as an act of
dishonesty on the part of Mr. Matz constituting a felony or intended to result
in substantial gain or personal enrichment at the expense of the Company, his
willful failure to perform his duties and a determination by 75% of the members
of the Board of Directors to terminate the Employment Agreement), Mr. Matz shall
be entitled to receive only the base salary being paid to him at such time,
through the date of termination. The Employment Agreement may also be terminated
by the Company at any time without cause upon 30 days written notice to Mr.
Matz. In the event of this termination without cause, Mr. Matz shall be entitled
to continue to receive the base salary effective at the time of termination, and
to continue to participate in all regular employee benefit plans, for a period
of two and one-half (2 1/2) years or until March 23, 2000, whichever occurs
earlier. Mr. Matz may voluntarily terminate the Employment Agreement at any time
upon 30 days written notice to the Company, in which event he shall be entitled
to receive only his base pay in effect at that time through the date of
termination.

The Employment Agreement provides that Mr. Matz shall be paid an annual base
salary of $150,000, subject to increase, at Mr. Matz's option, to a level equal
to the highest salary level being paid to any other employee of the Company from
time to time during Mr. Matz's employment period. As a result of this feature of
Mr. Matz's Employment Agreement, Mr. Matz currently receives an annual base
salary equivalent to Mr. Terry Houston, the Company's former Vice
President-Telecom Acquisitions, of $175,000. Additionally, Mr. Matz is entitled
to receive annual cash bonuses based upon the attainment by the Company of
certain annual consolidated net income levels, as follows:

<TABLE>
<CAPTION>
ANNUAL NET PERCENTAGE TO BE PAID
INCOME LEVEL AS BONUS COMPENSATION
- - --------------------------- ------------------------------------------------------------------------
<S> <C>
$0 -- 200,000 1% of net income up to and including $200,000
$200,001 -- 1,200,000 4% of net income from $200,001 up to and including $1,200,000
$1,200,001 and above 8% of net income above $1,200,000
</TABLE>

For purposes of this bonus, net income is the net income of the Company and
its consolidated subsidiaries determined in accordance with generally accepted
accounting principles as reflected in the Company's audited financial
statements, excluding the effect of income taxes and including cash bonuses paid
to any employee or consultant other than Mr. Matz and 50% of goodwill
amortization expense for such year.

Mr. Matz may also be awarded additional bonuses, at the discretion of the
Board of Directors.

The Employment Agreement also provides that Mr. Matz will be entitled to
receive stock options entitling Mr. Matz to purchase up to an aggregate of
60,000 shares of Common Stock of the Company, in three 20,000 share allotments,
to be granted at such time that the annual earnings per share of the Company and
its subsidiaries (on a consolidated basis) exceed, for the first time, $.01,
$.15 and $.25 earnings per share, respectively. Any option granted under this
provision of Mr Matz's Employment Agreement shall be exercisable for a period of
five (5) years from the date of grant and shall have an exercise price equal to
the fair market value of the Common Stock on the date of grant.

Effective March 24, 1995, in connection with Mr. Matz's agreement to release
any and all claims against the Company under any prior agreements relating to
his employment with the Company, Mr. Matz was granted an option to acquire up to
1,000,000 shares of Common Stock at an exercise price of $1.25 per share, the
fair market value on the settlement date. This stock option, which is
exercisable for up to five years after full vesting, vested as to 200,000 shares
of Common Stock on the

24
<PAGE>
date of grant, March 24, 1995, 160,000 shares of Common Stock on March 24, 1996
and vests as to an additional 160,000 shares of Common Stock on each of the four
anniversaries thereafter. However, if Mr. Matz is terminated by the Company
without cause, such stock option will become immediately exercisable, and will
remain exercisable for two (2) years thereafter, with respect to a number of
shares of Common Stock equal to 500,000 plus all vested but unexercised options
then outstanding, but in no event in excess of 1,000,000 shares. The price to be
paid for the shares of Common Stock to be issued pursuant to the exercise of
this option may be paid at the option of Mr. Matz (i) in cash, (ii) through a
combination of cash and a promissory note, or (iii) by the delivery to the
Company of an equivalent number of shares of Common Stock.

In the event Mr. Matz is no longer employed by the Company prior to March
24, 2000, the Company may repurchase any or all of the shares of Common Stock,
in excess of 500,000 shares of Common Stock, acquired by Mr. Matz pursuant to
the exercise of the options issued in connection with the Employment Agreement.
The price payable by the Company in connection with any such repurchase shall be
equal generally to the fair market value of such shares at the date of the
repurchase and shall be payable, at the option of the Company, in cash or by the
delivery of a promissory note of the Company.

Mr. Matz also has the right to require the Company to register for sale, on
three separate occasions between April 1, 1996 and March 23, 2000, any or all of
the shares of Common Stock acquired as a result of the exercise of the options
issued in connection with the Employment Agreement.

On March 13, 1996, the Company entered into an Employment Agreement with
Paul R. Miller effective as of January 1, 1996. The Employment Agreement will
expire on December 31, 1998, but is automatically extended for additional
successive one-year terms thereafter unless the agreement is terminated by the
Company or Mr. Miller upon at least 60 days prior written notice as provided
therein. Similar to Mr. Matz's employment agreement, if the Employment Agreement
with Mr. Miller is terminated with cause, he is entitled to the base salary
earned by him to the date of termination. Pursuant to the terms of Mr. Miller's
Employment Agreement, he is entitled to an annual base salary of $160,000.

Additionally, Mr. Miller is entitled to receive annual cash bonuses based
upon the attainment by the Company of certain annual consolidated net income
levels (calculated in generally the same method as set forth in Mr. Matz's
Employment Agreement), as follows:

<TABLE>
<CAPTION>
ANNUAL NET PERCENTAGE TO BE PAID
INCOME LEVEL AS BONUS COMPENSATION
- - --------------------------- ------------------------------------------------------------------------
<S> <C>
$0 -- $250,000 None
$250,001 to $500,000 1% of net income up to and including $500,000
$500,001 -- $1,200,000 2% of net income from $500,001 up to and including $1,200,000
$1,200,001 and above 5% of net income above $1,200,000
</TABLE>

Mr. Miller may also be awarded additional bonuses, at the discretion of the
Board of Directors.

The Employment Agreement with Mr. Miller also provides that he will be
entitled to receive stock options entitling Mr. Miller to purchase up to an
aggregate of 60,000 shares of Common Stock of the Company, in three 20,000 share
allotments, to be granted at such time that the annual earnings per share of the
Company and its subsidiaries (on a consolidated basis) exceed, for the first
time, $.01, $.15 and $.25 earnings per share, respectively. Any option granted
under this provision of Mr. Miller's Employment Agreement shall be exercisable
for a period of five (5) years from the date of grant and shall have an exercise
price equal to the fair market value of the Common Stock on the date of grant.
Mr. Miller has the right to require the Company to register for resale, on two
separate occasions after

25
<PAGE>
January 1, 1997 and until the later of December 31, 1998 or the final
termination date of any automatic extension of his Employment Agreement, any and
all of the shares of Common Stock acquired as a result of the exercise of these
options.

In the event Mr. Miller is no longer employed by the Company on the later to
occur of December 31, 1998 or, if his Employment Agreement is automatically
extended, the date of termination as so extended, the Company may repurchase any
or all of the shares of the Common Stock acquired by Mr. Miller pursuant to the
exercise of the options issued in connection with the Employment Agreement. The
price payable by the Company in connection with any such repurchase shall be
equal generally to the fair market value of such shares at the date of the
repurchase and shall be payable, at the option of the Company, in cash or by the
delivery of a promissory note of the Company.

Effective April 11, 1996, Mr. Houston and the Company entered into a
settlement agreement (the "Settlement Agreement") pursuant to which Mr.
Houston's Employment Agreement with LDN was terminated, the Company issued to
Mr. Houston 142,354 shares of restricted Common Stock and Mr. Houston was
released from his obligations under a certain promissory note of Mr. Houston to
LDN in the principal sum of $195,903.75. In reaching this agreement, the Company
calculated the present value of all sums remaining to be paid under his
employment agreement and offset the outstanding balance under the promissory
note against such sum. In connection with the Settlement Agreement, Mr. Houston
agreed to remain available to advise and consult with the Company (for no
additional consideration other than reasonable out of pocket expenses) through
March 31, 1999, and agreed not to compete with the Company for three years after
the date of the Settlement Agreement. In addition, Mr. Houston executed a Voting
Agreement in connection with such transaction granting Mr. Matz the right to
designate the manner in which these shares of Common Stock owned by Mr. Houston
are voted.

The Company entered into a Severance Agreement with Mr. Darnell in lieu of
any rights Mr. Darnell previously had under an employment agreement with the
Company dated August 8, 1993, except for his right to receive formula bonuses
based on the annual profitability of the Company determined by measuring gross
income less all operating expenses on a consolidated basis. Generally, should
the Company have profits of between $500,001 and $1,500,000 or profits in excess
of $1,500,000, Mr. Darnell is eligible to receive a bonus of 1.5%, respectively,
of such profits. Under the Severance Agreement, Mr. Darnell will be entitled to
receive as severance 150% of his annual salary in effect on the date of a change
of control of the Company if he is terminated for any reason (other than death,
voluntarily or due to a conviction of a felony involving a crime of moral
turpitude) within one year after such change of control. Change of control under
the Severance Agreement is defined in generally the same manner as in the
proposed amendment to the Employee Plan discussed under Proposal No. 4 above.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal 1993, Jack W. Matz, Jr. and Igor I. Mamantov, directors of the
Company, made loans to the Company in the original principal amounts of $72,000
and $60,000, respectively. Each of these loans were repaid during the year ended
December 31, 1993, including accrued interest at 12% per annum. In connection
with these loans, each such director was granted an option to purchase (i) one
share of Common Stock and (ii) one Common Stock purchase warrant for each $.75
of principal amount loaned to the Company at an exercise price of $.75 per share
for the option and $.94 for the warrant. The Company granted options and
warrants to purchase an aggregate of 352,000 shares of Common Stock to Messrs.
Matz and Mamantov in this regard. The options expire on May 1, 1998 and the
warrants expire on May 1, 2003. Neither Messrs. Matz nor Mamantov exercised any
such options or warrants during the year ended December 31, 1995.

On February 17, 1995, Messrs. Matz, Thomas, Houston, Williams and Smith each
made a loan in the principal amount of $25,000 and Mr. Miller made a loan in the
principal amount of $20,000 to the Company with an interest rate of 12% per
annum. The loans were originally due on May 17, 1995 and

26
<PAGE>
were extended for varying periods through October 1995 for a 1% extension fee.
Mr. Thomas agreed to receive 27,239 shares of Common Stock from the Company in
exchange for the cancellation of such loan and an additional payment by Mr.
Thomas of $3,404.88 to the Company. All other such loans were repaid in cash or
offset in connection with the exercise of options by the Company during 1995. In
addition, in connection with such loans, Messrs. Matz, Houston and Smith
accepted options to purchase 14,286 shares of Common Stock and Mr. Miller
accepted options to purchase 11,429 shares of Common Stock, all exercisable
between June 17, 1995 and December 17, 1995 at $1.75 per share. All of such
options expired unexercised.

In addition to the loans described above, Mr. Matz made loans to the Company
with an interest rate of 12% per annum in the following principal amounts on the
following dates: $48,610.36 on July 1, 1994, $75,000 on May 15, 1995 and $25,000
on June 1, 1995. The Company made aggregate repayments on such loans of $13,000
in 1994 and $135,000 in 1995. At December 31, 1995, the outstanding principal
balance on such loans was $25,610.36.

In connection with the financing of the Company's acquisition of U.S.
Communications, Inc. ("USC"), JLCM purchased 166,667 shares of Series A Stock
and was issued a warrant to purchase 500,000 shares of Common Stock (with an
exercise price of $1.125 per share) for an aggregate of $1.5 million. In
addition, the Company paid fees and expenses of $49,240.66 to JLCM in 1995. Bill
Johnson, a director and officer of the Company from September 1995 through
January 1996 and a former shareholder of USC was issued (i) promissory notes in
the aggregate principal amount of $1,700,000, (ii) 50,000 shares of Series B
Stock; and (iii) a warrant exercisable for 420,000 shares of Common Stock in
connection with the purchase of his shares of USC Common Stock. During 1995, the
Company made aggregate payments of principal and interest of $468,396.60 to Mr.
Johnson under such notes (and other immaterial notes which were outstanding to
USC before consummation of the acquisition) and additional payments of $75,000
under an employment agreement with Mr. Johnson. Mr. Johnson also received a
payment of $1,000,000 in cash for his USC Stock and the sum of $799,920 as a
nonsolicitation fee in connection with such transaction.

In connection with the Company's credit facility with Norwest Bank
Minnesota, N.A., the Company agreed to pay Mr. Matz an annual guarantee fee of
5% of $500,000, the maximum amount of Mr. Matz' guarantee. Because the Company
borrowed in excess of Mr. Matz' guarantee under this facility, the Company
incurred an expense of $25,000 during 1995 as a result of this obligation. No
payments were paid or accrued in 1995 in connection with this guarantee fee.

Pursuant to the Share Purchase Agreement dated as of July 31, 1995 (the
"Share Purchase Agreement") under which JLCM purchased 166,667 shares of the
Company's Series A Stock, the Company is obligated to use its best efforts to
cause up to two persons nominated by JLCM to be elected to the Board. The
Company's obligation ceases when there are less than 100,000 shares of Series A
Stock outstanding or JLCM and its affiliates (together with the directors,
officers and employees of JLCM and its affiliates) beneficially own collectively
less than five percent (5%) of the combined voting power of all shares of
capital stock then outstanding, assuming all converison rights are exercised.
Messrs. Curd and Richards were JLCM designees to the Company's Board of
Directors under the provisions of the Share Purchase Agreement and were
appointed to the Board of Directors in September 1995 and March 1996,
respectively, in accordance therewith.

In addition to the right noted immediately above, if at any time while there
are at least 100,000 shares of Series A Stock outstanding, the Company fails to
(a) redeem shares of Series A Stock in accordance with the terms thereof or (b)
declare and legally pay the equivalent of one year's dividend payments on the
outstanding shares of Series A Stock, then, in such event, the holders of such
Series A Stock shall be entitled to elect, voting as a class, a certain
additional number of individuals to the Board of Directors of the Company and
the Company is obligated to increase the number of directorships by that number.
The exact number of directors to be elected by the holders of Series A Stock is
based upon a fraction of the number of directors then in office where the
numerator of such fraction is equal to the maximum number of shares of Common
Stock issuable upon conversion of the Series A

27
<PAGE>
Stock and the denominator of such fraction is equal to the total number of
shares of Common Stock then outstanding on a fully diluted basis. Directors
elected by the holders of the Series A Stock may not be removed at any time
without the written consent of at least 51% of the shares of Series A Stock.

On March 25, 1996, JLCM and the Company entered into an agreement resolving
prior disputes regarding (i) registration and conversion rights attributable to
the Series A Stock and Common Stock acquired upon the conversion of Series A
Stock or upon the exercise of warrants held by JLCM; (ii) any obligation of the
Company to enter into a new agreement with respect to JLCM's services; and (iii)
certain fees and expenses. The parties also amended certain related provisions
in existing agreements between the Company and JLCM. In connection with the
resolution of these disputes, the Company has agreed to pay $63,000 of fees and
expenses and to issue to JLCM an additional 50,000 shares of Common Stock of the
Company. Mr. Reuben Richards and Mr. Howard Curd, both directors of the Company,
serve as Senior Managing Director and Managing Director, respectively, of JLCM.

SECTION 16(A) REPORTING

Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of the Company's Common Stock, to
file with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, certain reports required by Section 16(a) to
have been filed during the fiscal year ended December 31, 1995 were filed late,
not filed or, copies of such reports were not furnished to the Company as
required as follows: Jack Matz has made late filings with respect to (i) the
grant of options granted under his Employment Agreement in March 1995, and (ii)
gifts of an aggregate amount of 38,500 shares to charitable organizations in
December 1995. Mr. Houston made a late filing with respect to the purchase of
shares in June 1994 and Mr. Mamantov made late filings with respect to sales of
Common Stock during 1995. Messrs. Matz, Houston and Mamantov made late filings
with respect to grants of options under the Employee Plan on Form 5 because of
these intervening reportable transactions earlier during 1995.

Also, Mr. Thomas made late filings with respect to the purchase of shares of
Common Stock in October 1995 and a gift of Common Stock in December 1995; Mr.
Cunningham filed his initial Form 3 and Form 5 annual statements of ownership
late in February 1996; Mr. Nugent has filed his annual Form 5 statement late in
February 1996 and Dr. Williams made late filings with respect to sales of Common
Stock in December 1995.

Mr. Reimer, a former director of the Company, made late filings with respect
to Common Stock purchased in April and October 1995. In addition, Bill Johnson
and Harold Wilson (deceased) (both former directors of the Company), did not, to
the knowledge of the Company, make requisite filings on Forms 3, 4 or 5 during
1995.

Additionally, Messrs. Matz, Miller, Houston, Ebert and Mr. Smith have each
made, or are in the process of making, a late filing with respect to grant and
expiration of options to acquire shares of Common Stock in connection with the
loan transactions described in "Certain Relationships and Related Transactions."

Mr. Ebert has not furnished the Company with a copy of any Form 5 and Mr.
Curd has not furnished the Company with any Form 3 or Form 5 which they may have
filed.

Some, but not all, of the late filings occurred under a combination of
factors resulting from the Company's late reporting of the grant of options to
individuals, and the mistaken belief by such individuals that all transactions
could be reported on Form 5 for the year. The Company has instituted a system to
timely report the grant of options to officers and directors, and has
distributed written information to such individuals concerning their obligations
under Section 16.

28
<PAGE>
STOCKHOLDERS' PROPOSALS FOR 1997 ANNUAL MEETING

Pursuant to Rule 14a-8 of the Exchange Act, stockholders may present proper
proposals for inclusion in the Company's proxy statement for consideration at
its 1997 Annual Meeting of Stockholders by submitting proposals to the Company
in a timely manner. In order to be so included for the 1997 Annual Meeting of
Stockholders, stockholder proposals must be received by the Company by January
17, 1997, and must otherwise comply with the requirements of Rule 14a-8.

By Order of the Board of Directors
By: /s/ JACK W. MATZ, JR.

-----------------------------------
Jack W. Matz, Jr.
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER

Richardson, Texas
April 26, 1996

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED TO DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

29
<PAGE>
EXHIBIT A

SA TELECOMMUNICATIONS, INC.

PROXY STATEMENT FOR 1996 ANNUAL MEETING OF STOCKHOLDERS

AMENDMENTS TO 1994 EMPLOYEE STOCK OPTION PLAN
<PAGE>
SA TELECOMMUNICATIONS, INC.

1994 EMPLOYEE STOCK OPTION PLAN

1. PURPOSE. The purpose of this 1994 Stock Option Plan (hereinafter called
the "Plan") is to further the success of SA Telecommunications, Inc., a Delaware
corporation (hereinafter called the "Company"), and certain of its affiliates by
making available Common Stock of the Company for purchase by certain officers
and employees of the Company and its affiliates and certain bona fide
consultants, and thus to provide an additional incentive to such individuals to
continue in the service of the Company or its affiliates and to give them a
greater interest as shareholders in the success of the Company. Subject to
compliance with the provisions of the Plan and the Internal Revenue Code of
1986, as amended, Incentive Stock Options are authorized by Section 422 of the
Code and stock options which do not qualify under Section 422 of the Code are
authorized and may be granted under the Plan.

2. DEFINITIONS. As used in this Plan the following terms shall have the
meanings indicated as follows:

(a) "Board" means the Board of Directors of the Company.

(B) "CHANGE OF CONTROL OF THE COMPANY" SHALL MEAN IF (I) THERE SHALL BE
CONSUMMATED (X) ANY CONSOLIDATION OR MERGER OF THE COMPANY IN WHICH THE
COMPANY IS NOT THE CONTINUING OR SURVIVING CORPORATION OR PURSUANT TO WHICH
SHARES OF THE COMMON STOCK WOULD BE CONVERTED INTO CASH, SECURITIES OR OTHER
PROPERTY, OTHER THAN A MERGER OF THE COMPANY IN WHICH THE HOLDERS OF THE
COMMON STOCK IMMEDIATELY PRIOR TO THE MERGER HAVE THE SAME PROPORTIONATE
OWNERSHIP OF COMMON STOCK OF THE SURVIVING CORPORATION IMMEDIATELY AFTER THE
MERGER, OR (Y) ANY SALE, LEASE, EXCHANGE OR OTHER TRANSFER (IN ONE
TRANSACTION OR A SERIES OF RELATED TRANSACTIONS) OF ALL, OR SUBSTANTIALLY
ALL, OF THE ASSETS OF THE COMPANY; OR (II) THE STOCKHOLDERS OF THE COMPANY
APPROVE ANY PLAN OR PROPOSAL FOR THE LIQUIDATION OR DISSOLUTION OF THE
COMPANY; OR (III) ANY PERSON (AS SUCH TERM IS USED IN SECTIONS 13(D) AND
14(D)(2) OF THE EXCHANGE ACT, SHALL BECOME THE BENEFICIAL OWNER (WITHIN THE
MEANING OF RULE 13D-3 UNDER THE EXCHANGE ACT) OF THIRTY PERCENT (30%) OR
MORE OF THE COMPANY'S OUTSTANDING COMMON STOCK, EXCEPT FOR ANY PERSON WHO
HAD SUCH BENEFICIAL OWNERSHIP PRIOR TO MAY 31, 1996; OR (IV) DURING ANY
PERIOD OF TWO (2) CONSECUTIVE YEARS, INDIVIDUALS WHO AT THE BEGINNING OF
SUCH PERIOD CONSTITUTE THE ENTIRE BOARD OF DIRECTORS SHALL CEASE FOR ANY
REASON TO CONSTITUTE A MAJORITY THEREOF; provided, however, THAT AN EVENT OR
SERIES OF EVENTS DESCRIBED IN (I), (II), (III) OR (IV) ABOVE SHALL NOT
CONSTITUTE A CHANGE IN CONTROL IF A MAJORITY OF THE DIRECTORS IN OFFICE WHO
WERE ALSO DIRECTORS ON THE DATE WHICH IS THREE (3) YEARS PRIOR TO THE
OCCURRENCE OF SUCH AN EVENT SHALL SO DETERMINE.

(d) "Committee" means the Committee administering the Plan described in
Paragraph 3 hereof.

(e) "Common Stock" means the Company's Common Stock, par value $0.0001
per share.

(f) "Date of Grant" means the date on which an option is granted under a
written option agreement executed by the Company and a Participant pursuant
to the Plan.

(g) "Disinterested Person" means a "disinterested person" as defined
under Rule 16b-3 promulgated under the Exchange Act or any successor
provision.

(h) "Effective Date" means the effective date of this Plan specified in
Paragraph 13 hereof.

(i) "Exchange Act" means the Securities Exchange Act of 1934, as it may
be amended from time to time.

(j) "Incentive Stock Option" means an option qualifying under Section
422 of the Code.

1994 EMPLOYEE STOCK OPTION PLAN - PAGE 2
<PAGE>
(k) "Parent" means a parent corporation of the Company as defined in
Section 424(e) of the Code.

(l) "Participants" means the employees and officers of the Company, its
Subsidiaries and its Parents and those directors of the Company who are also
employees of the Company or its subsidiaries. Bona fide consultants to the
Company may also be "Participants" hereunder, provided that such persons
shall only be entitled to receive nonqualified stock options (as defined
below).

(m) "Subsidiary" means a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.

3. ADMINISTRATION OF THE PLAN. The Board of Directors of the Company shall
appoint a committee (the "Committee") comprised of two (2) or more directors to
administer the Plan. Only directors who are Disinterested Persons shall be
eligible to serve as members of the Committee. The Committee shall report all
action taken by it to the Board, which shall review and ratify or approve those
actions that are by law required to be so reviewed and ratified or approved by
the Board. The Committee shall have full and final authority in its discretion,
subject to the provisions of the Plan, to determine the Participants to whom,
and the time or times at which, options shall be granted and the number of
shares and purchase price of Common Stock covered by each option; to construe
and interpret the Plan and any agreements made pursuant to the Plan; to
determine the terms and provisions (which need not be identical or consistent
with respect to each Participant) of the respective option agreements and any
agreement ancillary thereto including, but without limitation, terms covering
the payment of the option price vesting schedules and any forfeiture provisions
with respect to stock acquired upon the exercise of any option; and to make all
other determinations and to take all other actions deemed necessary or advisable
for the proper administration of the Plan. All such actions and determinations
shall be conclusively binding for all purposes and upon all persons.

4. OPTIONS AUTHORIZED. The options granted under this Plan may be
Incentive Stock Options or stock options that do not qualify as Incentive Stock
Options (sometimes referred to herein as "nonqualified options" or "nonqualified
stock options"). The Committee shall have the full power and authority to
determine which options shall be nonqualified stock options and which shall be
Incentive Stock Options; to grant only Incentive Stock Options or,
alternatively, only nonqualified stock options; and to, in its sole discretion,
grant 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
that provided in the option so surrendered and cancelled and containing such
other terms and conditions as the Committee may prescribe in accordance with the
provisions of the Plan. Under no circumstances may nonqualified stock options be
granted where the exercise of such nonqualified stock options may affect the
exercise of Incentive Stock Options granted pursuant to the Plan. No options may
be granted under the Plan prior to the Effective Date. In addition to any other
limitations set forth herein, (1) no Participant shall receive any grant of
options, whether Incentive Stock Options or nonqualified stock options,
exercisable for more than two hundred fifty thousand (250,000*) shares of Common
Stock during any one fiscal year of the Company and (2) the aggregate fair
market value (determined in accordance with Paragraph 7(a) of the Plan as of the
time the option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by a Participant in any calendar year
(under all plans of the Company and of any Parent or Subsidiary) shall not
exceed $100,000 (except as provided in Paragraph 18).

5. COMMON STOCK SUBJECT TO OPTIONS. The aggregate number of shares of the
Company's Common Stock which may be issued upon the exercise of options shall
not exceed two million (2,000,000*), subject to adjustment under the provisions
of Paragraph 8. The shares of Common Stock to be issued upon the exercise of
options may be authorized but unissued shares, or shares issued and reacquired
by the Company. In the event any option shall, for any reason, terminate or
expire or be

1994 EMPLOYEE STOCK OPTION PLAN - PAGE 3
<PAGE>
surrendered without having been exercised in full, the shares subject to such
option shall again be available for options to be granted under the Plan, except
that shares for which relinquished options (or portions thereof) are exercisable
shall not again be available for options under the Plan.

6. PARTICIPANTS. Except as hereinafter provided, options may be granted
under the Plan to any Participant. In determining the Participants to whom
options shall be granted and the number of shares to be covered by such option,
the Committee may take into account the nature of the services rendered by the
respective Participants, their present and potential contributions to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant. A participant who has been granted an option under the Plan
may be granted an additional option or options under the Plan, in the
Committee's discretion.

7. TERMS AND CONDITIONS OF OPTIONS. The grant of an option under the Plan
shall be evidenced by a written agreement executed by the Company and the
applicable Participant and shall contain such terms and be in such form as the
Committee may from time to time approve, subject to the following limitations
and conditions:

(a) OPTION PRICE. The option price per share with respect to each
option shall be determined by the Committee, but shall in no instance be
less than the par value of the shares subject to the option. In addition,
the option price per share with respect to Incentive Stock Options granted
hereunder shall in no instance be less than the fair market value of the
shares subject to the option as determined by the Committee. For the
purposes of this Paragraph 7(a), fair market value shall be, where
applicable, the Closing Price of the Common Stock on the Date of Grant. For
this purpose, the Closing Price of the Common Stock on the Date of Grant
shall be (i) if the Common Stock is listed or admitted for trading on any
United States national securities exchange, the last reported sales price of
Common Stock on such exchange, as reported in any newspaper of general
circulation, (ii) if actual transactions in the Common Stock are included in
the National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ-NMS") or are reported on a consolidated transaction
reporting system, the last sales price of the Common Stock on such system,
(iii) if Common Stock is otherwise quoted on the National Association of
Securities Dealer Automated Quotation System ("NASDAQ"), or any similar
system of automated dissemination of quotations of securities prices in
common use, the mean between the closing high bid and low asked quotations
for such day of Common Stock on such system, (iv) if none of clause (i),
(ii) or (iii) is applicable, the mean between the high bid and low asked
quotations for Common Stock as reported by the National Daily Quotation
Service if at least two securities dealers have inserted both bid and asked
quotations for Common Stock on at least five (5) of the ten (10) preceding
days. Notwithstanding the foregoing, however, fair market value shall be
determined consistent with Code Section 422(b)(4) or any successor
provisions. The Committee may permit the option purchase price to be payable
by transfer to the Company of Common Stock owned by the option holder with a
fair market value at the time of the exercise equal to the option purchase
price.

(b) PERIOD OF OPTION. The expiration date of each option shall be
fixed by the Committee but, notwithstanding any provision of the Plan to the
contrary, such expiration date shall not be more than ten (10) years from
the Date of Grant.

(c) VESTING OF SHAREHOLDER RIGHTS. Neither the optionee nor his
successor in interest shall have any of the rights of a shareholder of the
Company until the shares relating to the option hereunder are issued by the
Company and are properly delivered to such optionee, or successor.

(d) EXERCISE OF OPTION. Each option shall be exercisable from time to
time (but not less than six (6) months after the Date of Grant except as
provided in Paragraph 18) over such period and upon such terms and
conditions as the Committee shall determine, but not at any time as to

- - ------------------------
*Prior to effect of proposed reverse stock split.

1994 EMPLOYEE STOCK OPTION PLAN - PAGE 4
<PAGE>
less than one hundred (100) shares unless the remaining shares which have
become so purchasable are less than one hundred (100) shares. After the
death of the optionee, an option may be exercised as provided in Paragraph
15 hereof.

(e) NONTRANSFERABILITY OF OPTION. No option shall be transferable or
assignable by an optionee, other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order and each
option shall be exercisable, during the optionee's lifetime, only by him or
her or, during periods of legal disability, by his or her legal
representative. No option shall be subject to execution, attachment, or
similar process.

(f) DISQUALIFYING DISPOSITION. The option agreement evidencing any
Incentive Stock Options granted under this Plan shall provide that if the
optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of
Common Stock issued to him or her pursuant to exercise of the option within
the two-year period commencing on the day after the Date of Grant of such
option or within the one-year period commencing on the day after the date of
issuance of the share or shares to him or her pursuant to the exercise of
such option, he or she shall, within ten (10) days of such disposition date,
notify the Company of the sales price or other value ascribed to or used to
measure the disposition of the share or shares thereof and immediately
deliver to the Company any amount of federal income tax withholding required
by law.

(g) LIMITATION ON GRANTS TO CERTAIN SHAREHOLDERS. An Incentive Stock
Option may be granted to a Participant only if such Participant, at the time
the option is granted, does not own, after application of the attribution
rules of Code Section 424, stock possessing more than 10% of the total
combined voting power of all classes of Common Stock of the Company or of
its Parent or Subsidiary. The preceding restrictions shall not apply if at
the time the option is granted the option price is at least 110% of the fair
market value (as defined in Paragraph 7(a) above) of the Common Stock
subject to the option and such option by its terms is not exercisable after
the expiration of five (5) years from the Date of Grant.

(h) CONSISTENCY WITH CODE. Notwithstanding any other provision in this
Plan to the contrary, the provisions of all agreements granting incentive
stock options pursuant to the Plan shall not violate the requirements of the
Code applicable to the Incentive Stock Options authorized hereunder.

8. ADJUSTMENTS. The Committee, in its discretion, may make such
adjustments in the option price and the number of shares covered by outstanding
options that are required to prevent any dilution or enlargement of the rights
of the holders of such options that would otherwise result from any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, issuance of rights or any other change in the
capital structure of the Company. The Committee, in its discretion, may also
make such adjustments in the aggregate number of shares that may be the subject
of options which are appropriate to reflect any transaction or event described
in the preceding sentence.

9. RESTRICTION OF ISSUING SHARES. The exercise of each option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares pursuant thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.

10. USE OF PROCEEDS. The proceeds received by the Company from the sale of
Common Stock pursuant to the exercise of options granted under the Plan shall be
added to the Company's general funds and used for general corporate purposes.

1994 EMPLOYEE STOCK OPTION PLAN - PAGE 5
<PAGE>
11. AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN. The Board may at any
time suspend or terminate the Plan or may amend it from time to time in such
respects as the Board may deem advisable in order that the options granted
thereunder may conform to any changes in the law or in any other respect that
the Board may deem to be in the best interests of the Company; provided,
however, that without approval by the shareholders of the Company voting the
proper percentage of its voting power, no such amendment shall make any change
in the Plan for which shareholder approval is required of the Company in order
to comply with (i) Rule 16b-3, as amended, promulgated under the Exchange Act,
(ii) the Code or regulatory provisions dealing with Incentive Stock Options,
(iii) any rules for listed companies promulgated by any national stock exchange
on which the Company's stock is traded or (iv) any other applicable rule or law.
Unless sooner terminated hereunder, the Plan shall terminate ten (10) years
after the Effective Date. No option may be granted during any suspension or
after the termination of the Plan. Except as provided in Paragraph 12, no
amendment, suspension, or termination of the Plan shall, without an optionee's
consent, impair or negate any of the rights or obligations under any option
theretofore granted to such optionee under the Plan.

12. TAX WITHHOLDING. The Committee may, in its sole discretion, (a)
require an optionee to remit to the Company a cash amount sufficient to satisfy,
in whole or in part, any federal, state or local withholding tax requirements
prior to the delivery of any certificate for shares pursuant to the exercise of
an option hereunder; or (b) satisfy such withholding requirements through
another lawful method.

13. EFFECTIVE DATE AND TERMINATION DATE. This Plan shall become effective
on the date (the "Effective Date") of the last to occur of (i) the adoption of
the Plan by the Board and (ii) the approval, within twelve (12) months of such
adoption, by a majority (or such other proportion as may be required by state
law) of the outstanding voting shares of the Company, voted either in person or
by proxy, at a duly held stockholders meeting. This Plan shall terminate on
January 1, 2004, and any option outstanding on such date will remain outstanding
until it has either expired or has been exercised.

14. TERMINATION OF EMPLOYMENT WITHOUT A CHANGE OF CONTROL. In the event of
the retirement (with the written consent of the Company) or other termination of
the employment of an employee to whom an option has been granted under the Plan,
other than (a) a termination that is either (i) for cause or (ii) voluntary on
the part of the employee and without the written consent of the Company, or (b)
a termination by reason of death, the employee may (unless otherwise provided in
his option agreement) exercise his option at any time within three (3) months
after such retirement or other termination of employment (or within one (1) year
after termination of employment due to disability within the meaning of Code
Section 422(c)(7)), or within such other time as the Committee shall authorize,
but in no event after ten (10) years from the date of granting thereof (or such
lesser period as may be specified in the stock option agreement), but only to
the extent of the number of shares for which his options were exercisable by him
at the date of the termination of his employment. In the event of the
termination of the employment of an employee to whom an option has been granted
under the Plan that is either (i) for cause or (ii) voluntary on the part of the
employee and without the written consent of the Company, any option held by him
under the Plan, to the extent not previously exercised, shall forthwith
terminate on the date of such termination of employment. Options granted under
the Plan shall not be affected by any change of employment so long as the holder
continues to be an employee of the Company, a Subsidiary or a Parent. The option
agreement may contain such provisions as the Committee shall approve with
respect to the effect of approved leaves of absence. Nothing in the Plan or in
any option granted pursuant to the Plan shall confer on any individual any right
to continue in the employ of the Company or any of its Subsidiaries or Parents
or interfere in any way with the right of the Company or any of its Subsidiaries
or Parents to terminate his employment at any time.

14A. TERMINATION OF EMPLOYMENT AFTER A CHANGE IN CONTROL. THE PROVISIONS
OF THIS PARAGRAPH 14A SHALL SUPERSEDE THE PROVISIONS OF PARAGRAPH 14 IF, AND
SHALL ONLY BE APPLICABLE UPON, A CHANGE OF CONTROL OF THE COMPANY. IN THE EVENT
OF THE RETIREMENT (WITH OR WITHOUT THE WRITTEN CONSENT OF THE COMPANY) OR OTHER
TERMINATION OF THE EMPLOYMENT OF AN EMPLOYEE TO WHOM AN OPTION HAS BEEN GRANTED

1994 EMPLOYEE STOCK OPTION PLAN - PAGE 6
<PAGE>
UNDER THE PLAN, OTHER THAN (A) A TERMINATION DUE TO CONVICTION OF A FELONY
INVOLVING A CRIME OF MORAL TURPITUDE, OR (B) A TERMINATION BY REASON OF DEATH,
THE EMPLOYEE MAY (UNLESS OTHERWISE PROVIDED IN HIS OPTION AGREEMENT) EXERCISE
HIS OPTION AT ANY TIME WITHIN THREE (3) MONTHS AFTER SUCH RETIREMENT OR OTHER
TERMINATION OF EMPLOYMENT (OR WITHIN ONE (1) YEAR AFTER TERMINATION OF
EMPLOYMENT DUE TO DISABILITY WITHIN THE MEANING OF CODE SECTION 422(C)(7)), OR
WITHIN SUCH OTHER LONGER TIME AS THE COMMITTEE SHALL AUTHORIZE, BUT IN NO EVENT
AFTER TEN (10) YEARS FROM THE DATE OF GRANTING THEREOF (OR SUCH LESSER PERIOD AS
MAY BE SPECIFIED IN THE STOCK OPTION AGREEMENT), BUT ONLY TO THE EXTENT OF THE
NUMBER OF SHARES FOR WHICH HIS OPTIONS WERE EXERCISABLE BY HIM AT THE DATE OF
THE TERMINATION OF HIS EMPLOYMENT. IN THE EVENT OF THE TERMINATION OF THE
EMPLOYMENT OF AN EMPLOYEE TO WHOM AN OPTION HAS BEEN GRANTED UNDER THE PLAN THAT
IS TERMINATED DUE TO A CONVICTION OF A FELONY INVOLVING A CRIME OF MORAL
TURPITUDE, ANY OPTION HELD BY HIM, TO THE EXTENT NOT PREVIOUSLY EXERCISED, SHALL
TERMINATE ON THE DATE OF TERMINATION OF EMPLOYMENT. OPTIONS GRANTED UNDER THE
PLAN SHALL NOT BE AFFECTED BY ANY CHANGE OF EMPLOYMENT EXCEPT AS SET FORTH
HEREIN. THE OPTION AGREEMENT MAY CONTAIN SUCH PROVISIONS AS THE COMMITTEE SHALL
APPROVE WITH RESPECT TO THE EFFECT OF APPROVED LEAVES OF ABSENCE. NOTHING IN THE
PLAN OR IN ANY OPTION GRANTED PURSUANT TO THE PLAN SHALL CONFER ON ANY
INDIVIDUAL ANY RIGHT TO CONTINUE IN THE EMPLOY OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR PARENTS OR INTERFERE IN ANY WAY WITH THE RIGHT OF THE COMPANY OR
ANY OF ITS SUBSIDIARIES OR PARENTS TO TERMINATE HIS EMPLOYMENT AT ANY TIME.

15. DEATH OF HOLDER OF OPTION. In the event an employee to whom an option
has been granted under the Plan dies during, or within three (3) months after
the termination of, his employment by the Company or a Subsidiary or Parent,
such option (unless it shall have been previously terminated pursuant to the
provisions of the Plan or unless otherwise provided in his option agreement) may
be exercised (to the extent of the entire number of shares covered by the option
whether or not purchasable by the employee at the date of his death) by the
executor or administrator of the optionee's estate or by the person or persons
to whom the optionee shall have transferred such option by will or by the laws
of descent and distribution, at any time within a period of one (1) year after
his death, but not after the exercise termination date set forth in the relevant
stock option agreement.

16. LOANS TO ASSIST IN EXERCISE OF OPTIONS. If approved by the Board, the
Company or any Parent or Subsidiary may lend money or guarantee loans by third
parties to an individual to finance the exercise of any option granted under the
Plan. No such loans to finance the exercise of an Incentive Stock Option shall
have an interest rate or other terms that would cause any part of the principal
amount to be characterized as interest for purposes of the Code.

17. RULE 16B-3 PLAN. This Plan is intended and has been drafted to comply
in all respects with Rule 16b-3, as amended, under the Exchange Act. If any
provision of this Plan does not comply with Rule 16b-3, as amended, this Plan
shall be automatically amended to comply with Rule 16b-3, as amended.

18. EFFECT OF CHANGE OF CONTROL OF THE COMPANY. WITHOUT LIMITING ANY OF
THE OTHER PROVISIONS HEREOF AND NOTWITHSTANDING ANYTHING TO THE CONTRARY IN ANY
STOCK OPTION AGREEMENT OR OTHER AGREEMENT, UPON A CHANGE OF CONTROL OF THE
COMPANY (I) ALL OPTIONS GRANTED UNDER THE PLAN SHALL IMMEDIATELY VEST AND BE
FULLY EXERCISABLE, (II) ANY RESTRICTIONS ON THE RIGHT OF THE PARTICIPANT TO
EXERCISE ANY OPTIONS GRANTED HEREUNDER OR SELL ANY SHARES OF COMMON STOCK
ACQUIRED UPON EXERCISE THEREOF SHALL AUTOMATICALLY TERMINATE AND BE OF NO FORCE
AND EFFECT, AND (III) ANY RIGHT OF THE COMPANY TO REPURCHASE ANY SHARES OF
COMMON STOCK ACQUIRED UPON EXERCISE OF AN OPTION SHALL AUTOMATICALLY TERMINATE
AND BE OF NO FURTHER FORCE AND EFFECT.

1994 EMPLOYEE STOCK OPTION PLAN - PAGE 7
<PAGE>
SA TELECOMMUNICATIONS, INC.
1600 PROMENADE CENTER, 15TH FLOOR
RICHARDSON, TEXAS 75080

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints JACK W. MATZ, JR. and LYNN H. JOHNSON, and
both or either of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and vote, as
designated below, all of the shares of the Common Stock, par value $.0001 per
share, of SA Telecommunications, Inc. (the "Company") held of record by the
undersigned on April 15, 1996, at the Annual Meeting of Stockholders to be held
on May 31, 1996, or any adjournment(s) thereof.

1. PROPOSAL TO ELECT AS CLASS I DIRECTORS OF THE COMPANY, THE
FOLLOWING PERSONS, TO HOLD OFFICE UNTIL THE 1999 ANNUAL
MEETING OF STOCKHOLDERS OR UNTIL THEIR RESPECTIVE SUCCESSORS
HAVE BEEN DULY ELECTED AND QUALIFIED.
FOR all the nominees listed WITHHOLD AUTHORITY
below TO VOTE FOR ALL NOMINEES
(EXCEPT AS MARKED TO THE LISTED BELOW / /
CONTRARY BELOW) / /

Class I Nominees (Term Expiring 1999): Igor I. Mamantov, Thomas
L. Cunningham, John H. Nugent, Howard F. Curd and Reuben F.
Richards.

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)

- - --------------------------------------------------------------------------------

2. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT
A REVERSE STOCK SPLIT.
/ / FOR / / AGAINST / / ABSTAIN

3. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED
STOCK.
/ / FOR / / AGAINST / / ABSTAIN

(CONTINUED ON REVERSE SIDE)
<PAGE>

4. PROPOSAL TO APPROVE AND ADOPT CERTAIN AMENDMENTS TO THE
COMPANY'S 1994 EMPLOYEE STOCK OPTION PLAN.
/ / FOR ]/ / AGAINST / / ABSTAIN
5. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
/ / FOR / / AGAINST / / ABSTAIN

This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF EACH OF THE NOMINEES UNDER PROPOSAL 1, "FOR"
THE PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK
SPLIT UNDER PROPOSAL 2, "FOR" THE PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK AND
PREFERRED STOCK OF THE COMPANY UNDER PROPOSAL 3, "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S 1994 EMPLOYEE STOCK OPTION PLAN UNDER PROPOSAL 4, "FOR' THE PROPOSAL
TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR UNDER PROPOSAL 5 and in the
discretion of the proxies with respect to any other matter that is properly
presented at the meeting.

Please execute this proxy as your name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
DATED: _______________________ , 1996
_____________________________________
Signature
_____________________________________
Signature If Held Jointly