<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
TELETOUCH COMMUNICATIONS, INC.
(Name of Registrant As Specified in its Charter)
TELETOUCH COMMUNICATIONS, INC.
(Name of Person(s) Filing the Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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:
N/A
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
N/A
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:/1/
--------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
N/A
--------------------------------------------------------------------------
/1/Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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 date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[TELETOUCH LETTERHEAD APPEARS HERE]
October 8, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Teletouch Communications, Inc. on November 12, 1996. The Annual Meeting will
begin at 9:00 a.m. local time at the Four Seasons Hotel, 1300 Lamar Street,
Houston, Texas.
Information regarding each of the matters to be voted upon at the Annual Meeting
is contained in the attached Proxy Statement. We urge you to read the Proxy
Statement carefully. The Proxy Statement is being mailed to all Stockholders on
or about October 8, 1996.
Because it is important that your shares be voted at the Annual Meeting, whether
or not you plan to attend in person, we urge you to complete, date, and sign the
enclosed proxy card and return it as promptly as possible in the accompanying
envelope. If you are a Stockholder of record and do attend the meeting and wish
to vote your shares in person, even after returning your proxy, you still may do
so.
We look forward to seeing you in Houston on November 12, 1996.
Very truly yours,
/s/ ROBERT M. MCMURREY
- - - --------------------------------------
Robert M. McMurrey
Chairman of the Board
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
110 N. College, Suite 200
Tyler, Texas 75702
________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 12, 1996
________________________________________
TO THE STOCKHOLDERS OF TELETOUCH COMMUNICATIONS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Teletouch
Communications, Inc., a Delaware corporation (the "Company"), will be held on
November 12, 1996, at the Four Seasons Hotel, 1300 Lamar Street, Houston, Tyler,
Texas, at 9:00 a.m. local time, and thereafter as it may from time to time be
adjourned, for the purposes stated below:
1. To elect two Class II directors to serve for three years and until their
successors have been duly elected and shall qualify.
2. To ratify the selection of Ernst & Young LLP as the Company's independent
accountants.
3. To transact such other business as may properly come before the meeting.
All Stockholders are cordially invited to attend the Annual Meeting. Only
those Stockholders of record at the close of business on September 17, 1996, are
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. The stock transfer books will not be closed.
Stockholders should note that the Company's By-Laws provide that no
proposals or nominations of Directors by Stockholders shall be presented for
vote at an Annual Meeting of Stockholders unless notice complying with the
requirements in the By-Laws is provided to the Board of Directors or the
Company's Secretary no later than the close of business on the fifth day
following the day on which notice of the meeting is first given to Stockholders.
A copy of the Company's Annual Report to Stockholders for the year ended
May 31, 1996, which contains consolidated financial statements and other
information of interest to stockholders, accompanies this Notice of Meeting and
the enclosed Proxy Statement.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, 2 BROADWAY, NEW YORK, NEW YORK
10004.
TELETOUCH COMMUNICATIONS, INC.
/s/ SUSIE F. SMITH
October 8, 1996 --------------------------------------------------
Susie F. Smith, Secretary
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
PROXY STATEMENT
Dated October 8, 1996
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Teletouch Communications, Inc., a Delaware
corporation (the "Company"), for use at the annual meeting of the Company's
Stockholders to be held at the Four Seasons Hotel, 1300 Lamar Street, Houston,
Texas, on November 12, 1996 at 9:00 a.m., and at any adjournments thereof (the
"Annual Meeting"). The principal executive offices of the Company are located
at 110 N. College, Suite 200, Tyler, Texas 75702 and its telephone number is
(903) 595-8800.
The Annual Meeting has been called to consider and take action on the
following proposals: (i) to elect two Class II Directors to serve for three
years and until their successors have been duly elected and shall qualify; (ii)
to ratify the selection of Ernst & Young LLP as the Company's independent
accountants; and (iii) to transact such other business as may properly come
before the Annual Meeting.
The Company's Board of Directors has taken unanimous affirmative action
with respect to each of the foregoing proposals and recommends that the
Stockholders vote in favor of each of the proposals. All of the holders of
record of common stock, $.001 par value (the "Common Stock"), of the Company at
the close of business on September 17, 1995 (the "Record Date") will be entitled
to vote at the Annual Meeting. The stock transfer books will not be closed.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY AND THE
COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED MAY 31, 1996 ARE
BEING MAILED TO STOCKHOLDERS ON OR ABOUT OCTOBER 8, 1996. THE COMPANY WILL, UPON
WRITTEN REQUEST OF ANY STOCKHOLDER, FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED MAY 31, 1996, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS. PLEASE ADDRESS ALL SUCH
REQUESTS TO THE COMPANY, 1000 LOUISIANA, SUITE 600, HOUSTON, TEXAS 77002,
ATTENTION: CORPORATE SECRETARY. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST
AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
<PAGE>
VOTING REQUIREMENTS
As of the Record Date, there were outstanding 6,347,416 shares of the
Common Stock. Only holders of shares of Common Stock of record as of the close
of business on the Record Date will be entitled to vote at the Annual Meeting,
such holders being entitled to one vote on all matters presented at the Annual
Meeting for each share held of record. The presence in person or by proxy of
holders of record of at least one-third of the shares of Common Stock
outstanding as of the Record Date is required for a quorum to transact business
at the Annual Meeting. If a quorum should not be present, the Annual Meeting may
be adjourned until a quorum is obtained. The nominees to be selected as Class II
Directors named in Proposal 1 must receive a plurality of the eligible votes
cast at the Annual Meeting with respect to Proposal 1. The approval of all other
matters to be considered at the Annual Meeting requires the affirmative vote of
a majority of the eligible votes cast at the Annual Meeting on such matter.
Abstentions and broker non-votes will be counted only for the purpose of
determining the existence of a quorum. Holders of the 15,000 shares of Series A
14% Cumulative Preferred Stock and the 130,930 shares of Series B Preferred
Stock which are issued and outstanding are entitled to notice of all meetings of
shareholders at the same time and in the same manner as notice is given to all
stockholders entitled to vote at any such meeting; however, such shares shall
not be counted for purposes of calculating the quorum nor are such shares of
Preferred Stock entitled to vote on any matter proposed herein .
As of the Record Date, all of the present Directors, as a group of six
persons, and all of the present Directors and executive officers of the Company,
as a group of nine persons, owned beneficially 71.4% of the total voting
securities of the Company. To the knowledge of management, as of the Record
Date, the only executive officers, directors or nominees for director who owned
beneficially five percent or more of the Company's outstanding shares are
Messrs. McMurrey, Higginbotham, Wedner and Perry. See "Voting Securities,
Principal Holders Thereof and Management."
Proxies given by Stockholders of record for use at the Annual Meeting
may be revoked at any time prior to the exercise of the powers conferred. In
addition to revocation in any other manner permitted by law, Stockholders of
record giving a proxy may revoke the proxy by an instrument in writing, executed
by the Stockholder or his attorney authorized in writing or, if the Stockholder
is a corporation, under its corporate seal, by an officer or attorney thereof
duly authorized, and deposited either at the corporate headquarters of the
Company at any time up to and including the last business day preceding the day
of the Annual Meeting, or any adjournment thereof, at which the proxy is to be
used, or with the chairman of such Annual Meeting on the day of the Annual
Meeting or adjournment thereof, and upon either of such deposits the proxy is
revoked.
ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO
CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
COME BEFORE THE ANNUAL MEETING.
2
<PAGE>
The cost of soliciting proxies in the accompanying form will be borne by
the Company. The Company may reimburse brokerage firms and others for their
expenses in forwarding proxy materials to the beneficial owners and soliciting
them to execute the proxies.
The Company's Annual Report for the fiscal year ended May 31, 1996,
including audited financial statements, will accompany the mailing to
Stockholders of this Proxy Statement.
DISSENTERS' RIGHTS OF APPRAISAL
The Board of Directors does not propose any action for which the laws of
the state of Delaware, the Certificate of Incorporation or the By-Laws of the
Company provide a right of a Stockholder to dissent and obtain payment appraisal
of or payment for such Shareholder's shares.
INTEREST OF OFFICERS AND DIRECTORS
IN MATTERS TO BE ACTED UPON
Officers or Directors of the Company have a substantial interest in one of
the matters to be acted upon at the Annual Meeting of Stockholders: The Class II
directors have been nominated for re-election to the office of director for a
term of three years.
VOTING SECURITIES, PRINCIPAL HOLDERS
THEREOF, AND MANAGEMENT
Only holders of record of the outstanding 6,347,416 shares of Common Stock
as of the close of business on the Record Date will be entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote. The
following table sets forth certain information as of the Record Date with
respect to: (1) each executive officer, Director and the Director nominees; (2)
all executive officers and Directors of the Company as a group; and (3) all
persons known by the Company to be the beneficial owners of five percent or more
of the Company's Common Stock.
<TABLE>
<CAPTION>
Number of Shares Percentage of Outstanding
Name and Address of Beneficially Shares of Common Stock
Beneficial Owner (1) Owned Beneficially Owned
- - - -------------------- ---------------- -------------------------
<S> <C> <C>
Robert M. McMurrey (2)(3)(4) 1,871,666 29.2%
110 N. College, Suite 200
Tyler, TX 75702
David Higginbotham (2)(3)(5) 488,334 7.7%
110 N. College, Suite 200
Tyler, TX 75702
Clifford E. McFarland (3)(6) 19,000 *
McFarland, Grossman & Company
9821 Katy Freeway, Suite 500
Houston, TX 77024
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Charles C. Green III (3)(7) 10,000 *
Torch Energy Advisors, Inc.
1221 Lamar, Suite 1600
Houston, TX 77010
Continental Illinois 5,065,951 49.0%
Venture Corporation (8)
231 South La Salle Street
Chicago, IL 60697
Marcus D. Wedner (3)(9) 5,075,951 49.0%
Continental Illinois
Venture Corporation
231 South La Salle Street
Chicago, IL 60697
Christopher J. Perry (3)(9) 5,075,951 49.0%
Continental Illinois
Venture Corporation
231 South La Salle Street
Chicago, IL 60697
CIVC Partners I (10) 443,473 7.0%
c/o Continental Illinois
Venture Corporation
231 South La Salle Street
Chicago, IL 60697
GM Holdings, L.L.C. (11) 607,914 9.6%
201 Fourth Avenue North,
11th Floor
Nashville, TN 37219
Benchmark Equity Group, Inc. (12) 430,000 6.4%
16815 Royal Crest Drive,
Suite 160
Houston, TX 77024
All Executive Officers & 7,501,182 71.4%
Directors as a Group
(Nine Persons) (13)
- - - ---------------------
</TABLE>
* Denotes less than one percent.
(1) Unless otherwise noted, the Company believes that all of such shares are
owned of record by each individual named as beneficial owner and that such
individual has sole voting and dispositive power with respect to the shares
of Common Stock owned by each of them. Such person's percentage ownership
is determined by assuming that the options or convertible securities that
are held by such person, and which are exercisable within 60 days from the
date hereof, have been exercised or converted, as the case may be.
(2) Executive Officer.
(3) Director.
(4) Mr. McMurrey is the sole owner of the outstanding stock of Rainbow
Resources, which is the direct owner of 1,800,000 of such shares. Includes
71,666 shares underlying the currently exercisable portion of options
issued to Mr. McMurrey. By virtue of Mr. McMurrey's ownership of Rainbow
Resources, he may be deemed to be a "parent" of the Company.
(5) Includes 38,334 shares underlying the currently exercisable portion of
options issued to Mr. Higginbotham.
(6) Includes 10,000 shares underlying a stock option granted to Mr. McFarland.
(7) Represents shares underlying a stock option granted to Mr. Green.
4
<PAGE>
(8) Includes 3,991,260 shares of Common Stock underlying a currently
exercisable warrant issued to Continental Illinois Venture Corporation
("CIVC"). Also includes 1,074,691 outstanding shares of Common Stock
issued to parties related to and not related to CIVC for which CIVC holds
or will hold the voting rights. CIVC may be deemed to be the beneficial
owner of such additional shares pursuant to the rules of attribution of
beneficial ownership set forth in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act"). CIVC disclaims beneficial ownership of
such 1,074,691 shares of Common Stock. Does not include the following
other securities of the Company issued to CIVC: (a) liquidation value of
$11,818,000 (or 11,818 shares) of non-voting Series A Preferred Stock (each
share of Series A Preferred Stock is convertible into Common Stock after
August 3, 2003), (b) immediately exercisable warrants to purchase 486,259
shares of non-voting Series B Preferred Stock, (each share of Series B
Preferred Stock is convertible into six shares of Common Stock after August
3, 1997, or earlier upon the occurrence of an event of default as specified
in the Purchase Agreement) and (c) a 14% Junior Subordinated Promissory
Note in the principal amount of $7,878,600. CIVC may be deemed to be a
"parent" of the Company pursuant to the Exchange Act. See "Certain
Transactions."
(9) Includes 10,000 shares of Common Stock underlying stock options which each
of Messrs. Wedner and Perry are entitled to receive. The remaining
holdings represent shares of Common Stock issued or underlying currently
exercisable warrants issued to CIVC, of which each of Messrs. Wedner and
Perry is a Managing Director, and to certain related parties of CIVC
(including CIVC Partners I, of which Messrs. Wedner and Perry are general
partners) and others. Because they hold voting control over (i) the
Company's securities owned by CIVC and (ii) the Company's securities
covered by proxies granted by others to CIVC, each of Messrs. Wedner and
Perry may be deemed to be the beneficial owner of such shares pursuant to
the rules of attribution of beneficial ownership set forth in Rule 13d-3
under the Exchange Act. See "Certain Transactions."
(10) Such shares are also included in the figure reported for CIVC in this
table, because CIVC holds the voting power, but not the dispositive power,
for such shares. CIVC may be deemed to be the beneficial owner of such
shares pursuant to the rules of attribution of beneficial ownership set
forth in Rule 13d-3 under the Exchange Act. Does not include the following
other securities of the Company issued to CIVC Partners I: (a) liquidation
value of $1,313,000 (or 1,313 shares) of Series A Preferred Stock; (b)
$875,400 in principal amount of the Subordinated Notes; and (c) 54,029
shares of Teletouch non-voting Series B Preferred Stock. Each of Messrs.
Wedner and Perry is a general partner of CIVC Partners I and each has
voting control over the securities of the Company held by CIVC Partners I.
(11) Represents shares of Common Stock underlying a currently exercisable
warrant issued to GM Holdings, L.L.C. Such shares are also included in the
figure reported for CIVC in this table, because CIVC holds the voting
power, but not the dispositive power, for such shares. CIVC may be deemed
to be the beneficial owner of such shares pursuant to the rules of
attribution of beneficial ownership set forth in Rule 13d-3 under the
Exchange Act. Does not include the following other securities of the
Company issued to GM Holdings, L.L.C.: (a) liquidation value of $1,800,000
(or 1,800 shares) of Series A Preferred Stock; (b) $1,200,000 in principal
amount of the Subordinated Notes; and (c) 74,063 shares of Teletouch non-
voting Series B Preferred Stock.
(12) Includes 400,000 shares of Common Stock underlying a warrant issued to
Benchmark. Benchmark is wholly-owned by Frank M. DeLape, its President and
sole shareholder and director, who may be deemed to be the beneficial owner
of the securities of the Company held by Benchmark. See "Certain
Transactions."
(13) Includes 2,874,691 shares of Common Stock issued and outstanding, and
4,152,991 shares of Common Stock underlying exercisable warrants and
options.
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The names of all directors and executive officers of the Company as of the
date hereof are as follows :
Years with the
Company or a
Name Predecessor Position with the Company
- - - --------------------------------------------------------------------------------
Robert M. McMurrey 11 Chairman of the Board of Directors
and Chief Executive Officer
G. David Higginbotham 19 President, Chief Operating Officer
and Director
Clifford E. McFarland 1 Director
Charles C. Green III 1 Director
Marcus D. Wedner 1 Director
Christopher J. Perry 1 Director
Michael Rosen * Executive Vice President, Chief
Financial Officer and Assistant
Secretary
- - - ---------------------
* Denotes less than one year.
Biographical information with respect to the present executive
officers and Directors of the Company, including the nominees for Director, is
set forth below.
Robert M. McMurrey has been Chief Executive Officer and a director of
the Company since 1984. He is also the President and Chief Executive Officer
and Director of Rainbow Resources, of which he is the sole stockholder. Through
Rainbow Resources, Mr. McMurrey acquired a controlling interest in the Company
in 1984. Also in 1984, Mr. McMurrey formed a corporation known as Jecca Towers
to own and operate telecommunications towers and SMR operations. At the time
Mr. McMurrey sold the assets of Jecca Towers to Motorola in 1989. Mr. McMurrey
was active in the oil and gas industry for over 30 years. Mr. McMurrey received
a B.S. Degree in Petroleum Engineering from the University of Texas in 1971.
Mr. McMurrey is 50 years old and has been designated as a Class I director.
G. David Higginbotham has been President, Chief Operating Officer and
a director of the Company since August 1993. He joined the Company in 1976 as a
technician, became general manager several years later, and Vice President -
Operations in 1984. Mr. Higginbotham established and operated his own radio
equipment service business in Jacksonville, Texas from 1969 to 1976. Mr.
Higginbotham is 48 years old and has been nominated for reelection as a Class II
director at the Annual Meeting of Stockholders.
6
<PAGE>
Clifford E. McFarland has been a director of the Company since May
1995 and is the President and a Managing Director of McFarland, Grossman &
Company ("MGCO"), an investment bank in Houston, Texas. Prior to co-founding
MGCO in 1991, Mr. McFarland was co-founder and Managing Director from 1986 to
1991 of The Watkins Group, a Little Rock, Arkansas merchant banking firm. MGCO
has from time to time rendered investment banking services to the Company. See
"Certain Transactions." From 1988 to 1994 Mr. McFarland was Secretary and a
Director of Amerinet Corporation ("Amerinet"), a non-reporting, public company
marketing affinity credit cards. Amerinet ceased operations on March 15, 1990
and was inactive thereafter. Amerinet made filings in bankruptcy court in early
1995 in order to reorganize for merger with a private company. Mr. McFarland is
40 years old and has been designated as a Class I director.
Charles C. Green III has been a director of the Company since May
1995. He became Vice Chairman and Chief Investment Officer in 1995 of Torch
Energy Advisors Incorporated ("Torch"), a Houston based manager of oil and gas
investments for domestic and foreign institutional investors. He was President
of Torch from 1994 to 1995 and Executive Vice President from 1992 to 1994. From
1982 through 1992 Mr. Green was President of Treptow Development Company, a real
estate developer. Prior to that he was with J.P. Morgan Investment Management
for 13 years in New York and London. Mr. Green is a director of Torch Royalty
Company, an oil and gas company, and Vice President of Bellwether Exploration
Company, an oil and gas exploration company affiliated with Torch. Mr. Green is
50 years old and has been designated as a Class III director.
Marcus D. Wedner has been a director of the Company since August 1995
and has been a Managing Director of Continental Illinois Venture Corporation
("CIVC"), a venture capital investor, since 1992, prior to which he was a Vice
President of CIVC from 1990. Mr. Wedner is 33 years old and has been nominated
for reelection as a Class II director at the Annual Meeting of Stockholders.
Christopher J. Perry has been a director of the Company since August
1995 and has been President and a Managing Director of CIVC since December 1994.
From 1990 to 1994 Mr. Perry was a Managing Director and head of the Mezzanine
Investment Group, a division of Continental Bank. Mr. Perry is 41 years old and
has been designated as a Class III director.
Michael Rosen joined the Company in February 1996 and has been
appointed Executive Vice President, Chief Financial Officer and Assistant
Secretary. From February 1995 through December 1995 Mr. Rosen was Vice
President and Chief Financial Officer of Electrosource, Inc., Austin, TX. From
April 1993 through February 1995 he was Vice President and Chief Financial
Officer of BDM Technologies, Inc., McLean, VA and from August 1988 through April
1993 he held various senior financial positions with ICF International, Inc.,
Fairfax, VA. Mr. Rosen is a certified public accountant and is 35 years old.
All officers of the Company are elected to serve in such capacities
until the next annual meeting of the Board of Directors of the Company and until
their successors are duly elected and qualified.
7
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership of equity securities of the Company with the Securities and Exchange
Commission (the "Commission") and the NASDAQ Stock Market. Officers, directors
and greater-than-ten-percent shareholders are required by Commission regulation
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely upon a review of Forms 3, Forms 4 and Forms 5 furnished
to the Company pursuant to the Exchange Act during its most recent fiscal year,
the Company believes that all such forms required to be filed pursuant to
Section 16(a) of the Exchange Act were timely filed, as necessary, by the
officers, directors and securityholders required to file the same during the
fiscal year ended May 31, 1996, except Form 4's were not timely filed by Mr.
McMurrey and Mr. Higginbotham. These forms have subsequently been filed.
THE BOARD OF DIRECTORS
The Company's Certificate of Incorporation provides that the number of
Directors of the Company shall be set forth in the Bylaws, which number may be
increased or decreased pursuant to the By-Laws. In accordance with the Bylaws
the number of Directors may not be fewer than three and no more than twelve.
Pursuant to the Company's By-Laws, the Board of Directors has established that
the Board of Directors shall consist of six members.
The current directors are designated in each class as follows: Class
I - Robert M. McMurrey and Clifford E. McFarland; Class II - G. David
Higginbotham and Marcus D. Wedner; and Class III - Charles C. Green III and
Christopher J. Perry. Class I directors are expected to stand for re-election
at the annual meeting of shareholders two years subsequent to the Annual
Meeting; Class II directors are standing for re-election at the upcoming Annual
Meeting of Shareholders; and Class III directors are expected to stand for re-
election at the annual meeting of shareholders one year subsequent to the Annual
Meeting. Each member of the Board of Directors then elected will serve for a
term of three years or until a successor has been elected and qualified. The
Class II Directors, G. David Higginbotham and Marcus D. Wedner, will stand for
re-election at the Annual Meeting to serve for three years and until their
successors are duly elected and qualified.
The underwriters of the Company's Initial Public Offering ("IPO") have
the right for a period of three years after the effective date of the IPO to
designate one person to be nominated as a member of the Board of Directors. No
person has been so designated as of the date hereof. Messrs. Wedner and Perry
serve on the Board of Directors as the designees of CIVC.
The Board of Directors met eleven times during the fiscal year ended
May 31, 1996. No incumbent Director attended fewer than 75% of the total number
of meetings held by the Board of Directors.
8
<PAGE>
There are no material proceedings to which any Director, officer or
affiliate of the Company, any owner of record or beneficially of more than five
percent of any class of voting securities of the Company, or security holder is
a party adverse to the Company or any of its subsidiaries or has a material
interest adverse to the Company or any of its subsidiaries.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors established three standing committees in
September 1995, namely, an Audit Committee, a Compensation Committee and an
Executive Committee and a Special Committee in April 1996. The Board of
Directors does not have a standing nominating committee or any committee serving
a similar function.
Audit Committee
- - - ---------------
Members: Christopher Perry and Clifford E. McFarland
Duties and Responsibilities: To recommend the selection of the
independent public accountants for the Company to the Board of Directors, to
review the scope and cost of the audit, to review the performance and procedures
of the auditors, to review the final report of the independent auditors, to be
available for consultation to the independent auditors, to review with the
Company's Chief Financial Officer and independent auditors corporate accounting
practices and policies and financial controls, and to perform all other such
duties as the Board of Directors may from time to time designate.
Compensation Committee
- - - ----------------------
Members: Charles C. Green III and Marcus D. Wedner.
Duties and Responsibilities: To review periodically the compensation
of executive officers and other key employees, to make recommendations as to
bonuses and salaries, and to perform all other such duties as the Board of
Directors may from time to time designate.
Executive Committee
- - - -------------------
Members: Robert M. McMurrey, G. David Higginbotham and Marcus D. Wedner.
Duties and Responsibilities: To exercise the powers and authority of
the Board of Directors in the management of the business and affairs of the
Company, to the extent not assigned to other committees of the Board of
Directors and to the extent permitted by Delaware law and the By-Laws of the
Company.
Special Committee
- - - -----------------
Members: Charles C. Green III and Clifford E. McFarland
Duties and Responsibilities: To investigate the alternatives reasonably
available to the Company for the further development of its business and
considering the merits of any
9
<PAGE>
proposed transaction, making a recommendation to the full Board on whether to
approve such transaction, and reviewing the process that the Company and the
Executive Committee of the Board followed in executing the Board's objective to
move forward with discussions with various companies and to explore the
strategic possibilities of any interest in the Company by other companies.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the aggregate cash compensation paid to
the Company's Chief Executive Officer and President for services rendered to the
Company during the fiscal years ended May 31, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------------------- ---------------------------
Securities
Other Restricted Underlying
Name and Fiscal Annual Stock Options/
Principal Position Year Salary ($) Bonus ($)(1) Compensation ($) Awards ($)(2) SARs (#)
- - - ------------------ ------ ---------- ------------ ---------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert M. McMurrey, 1996 $157,346 $35,000 --- --- 25,000
Chairman and CEO 1995 86,307 --- --- --- 100,000
1994 66,000 --- --- --- ---
G. David Higginbotham, 1996 $147,346 $33,000 --- --- 25,000
President and COO 1995 77,752 --- --- --- 50,000
1994 61,431 --- --- --- ---
</TABLE>
_____________________
(1) Bonus was for services provided during fiscal year 1996 but was paid in
fiscal year 1997.
(2) The number and value of the aggregate restricted stock holdings for Mr.
McMurrey at the end of the last fiscal year, based on the closing bid price
of the Common Stock on NASDAQ on May 31, 1996, were 1,800,000 shares, held
in the name of Rainbow Resources, Inc., of which Mr. McMurrey is the sole
stockholder, with a value of $9,450,000 (without giving effect to the
consideration paid). The number and value of the aggregate restricted stock
holdings for Mr. Higginbotham at the end of the last fiscal year, based on
the closing bid price of the Common Stock on NASDAQ on May 31, 1996, were
450,000 shares, with a value of $2,362,500 (without giving effect to the
consideration paid).
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to options
granted during the fiscal year ended May 31, 1996 to Robert M. McMurrey the
Chairman and Chief Executive Officer of the Company, and G. David Higginbotham,
the President and Chief Operation Officer of the Company, as set forth above in
the Summary Compensation Table.
<TABLE>
<CAPTION>
Number of Securities Percent of Total
Underlying Options/SARs Granted to Exercise or Base Price Expiration
Name Options/SARs Granted (#) Employees in Fiscal Year ($/Sh) Date
- - - ----------------------- ----------------------------- -------------------------- ----------------------- ---------
<S> <C> <C> <C> <C>
Robert M. McMurrey 25,000 17.9% $4.00 08/06
G. David Higginbotham 25,000 17.9% $4.00 08/06
</TABLE>
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth certain information with respect to: (i)
options exercised during the fiscal year ended May 31, 1995 by Robert M.
McMurrey, the Chief Executive Officer of the Company, and G. David Higginbotham,
the President and Chief Operation Officer of the Company, as set forth above in
the Summary Compensation Table, and (ii) unexercised options held by Mr.
McMurrey and Mr. Higginbotham at the end of the fiscal year ended May 31, 1996.
<TABLE>
<CAPTION>
Shares Number of Securities Underlying Value of Unexercised in the Money
Acquired On Value Unexercised Options/SARs Options/SARs at the Fiscal Year
Name Exercise (#) Realized ($) at Fiscal Year End (#) Ended May 31, 1996 ($)
---- ----------- ------------ ------------------------------- --------------------------------
Exercisable Unexercisable Exerciseable Unexercisable
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. McMurrey 0 0 33,333 91,667 n/a $0
G. David Higginbotham 0 0 16,667 58,333 n/a $0
</TABLE>
EMPLOYMENT AGREEMENTS
In August 1995 the Company entered into employment agreements with Mr.
McMurrey, the Chairman of the Board and Mr. Higginbotham, the President and
Chief Operating Officer. Pursuant to the agreements, Mr. McMurrey and Mr.
Higginbotham are employed at a base salary of $175,000 and $165,0000,
respectively, per annum for the first three years ending August 1998, and are
entitled to bonuses based on a performance formula.
The employment agreements permit the Company to terminate the employment of
the employee for "cause" or for any other reason, provided that in the latter
case the Company is obligated to continue the employee's base salary (at twice
the then current rate) for 12 months. The agreements require that Messrs.
McMurrey and Higginbotham devote substantially all of their business time to the
Company. Pursuant to the agreements, in August 1995, the Company issued to each
of Messrs. McMurrey and Higginbotham options to purchase 25,000 shares of Common
Stock, which are exercisable at a price of $4.00 per share and vest ratably over
five years (provided that the vesting of such options shall accelerate upon any
sale of the Company). The agreements also contain confidentiality and non-
competition provisions. In addition, the agreements provide for death benefits
and disability benefits and provide for the payment by the Company of any
expenses of the employee incurred in any successful proceeding to enforce
provisions of his employment agreement.
CONSULTING AND OTHER ARRANGEMENTS
On August 5, 1994 the Company entered into a Financial Advisory Agreement
(the "MGCO Agreement") with McFarland, Grossman & Company ("MGCO"). Clifford E.
McFarland is President and a Managing Director of MGCO, and became a director of
the Company in May 1995. Pursuant to the terms of the MGCO Agreement, MGCO
acted as a financial advisor to assist the Company with certain acquisitions and
assisted in arranging a secured credit facility. For such services through
February 1995 MGCO was issued 20,000
11
<PAGE>
shares of Common Stock and was paid an aggregate of $720,000 ($500,000 in cash
and $220,000 in a promissory note bearing interest at 8% per annum, due in May
1996). MGCO received additional indirect compensation from the Company through
MGCO's arrangement with Newman and Associates, Inc. ("Newman"), the private
placement agent in the August 1995 private placement to the CIVC Investors. MGCO
provided full and part time senior level investment banking professionals to
Newman during the period from February 1995 through August 3, 1995. MGCO's gross
fees received from Newman for such services were $500,000.
REMUNERATION OF DIRECTORS
All non-employee directors are entitled to receive a one-time grant of
options to purchase 10,000 shares of Common Stock upon election as a director.
All directors are entitled to reimbursement of reasonable travel and lodging
expenses related to attending meetings of the directors.
There are no standard arrangements or agreements to provide compensation to
directors for attending meetings of the Board of Directors. However, in April
1996, the Board of Directors authorized the payment of $25,000 each to Charles
C. Green and Clifford E. McFarland for their services in connection with the
Special Committee of the Board of Directors.
CERTAIN TRANSACTIONS
On August 3, 1995 the Company completed a private placement of debt and
equity securities with Continental Illinois Venture Corporation ("CIVC") an
affiliate of Bank of America, under which CIVC, certain related parties and
other parties (the "CIVC Investors") provided the Company with $25 million in
financing in connection with the Dial Acquisition. In connection with the Dial
Acquisition, the Company designated 15,000 shares of its authorized preferred
stock as "Series A 14% Cumulative Preferred Stock" and 617,189 shares as "Series
B Preferred Stock." The CIVC Investors purchased $15 million in initial
liquidation value (or 15,000 shares) of Series A Preferred Stock and $10 million
of 14% Junior Subordinated Notes due in 2003 (the "Subordinated Notes").
Dividends on the Series A Preferred Stock and interest on the Subordinated Notes
accrue at the rate of 14% per annum. The following table sets forth the
respective portions of the total $25,000,000 investment made by the CIVC
Investors, and the securities issued to each:
<TABLE>
<CAPTION>
Investor Total Liquidation Value of Principal Amount of Warrants to Warrants to
Investment Series A Preferred Subordinated Purchase Common Purchase Series B
Stock Promissory Note Stock Preferred Stock
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CIVC $19,696,600 $11,818,000 $ 7,878,600 3,991,260 486,259
CIVC Partners I 2,188,400 1,313,000 875,400 443,473 54,029
GM Holdings LLC 3,000,000 1,800,000 1,200,000 607,914 74,063
Other Investors 115,000 69,000 46,000 23,304 2,838
---------------------------------------------------------------------------------------------------------
Total $25,000,000 $15,000,000 $10,000,000 5,065,951 617,189
</TABLE>
12
<PAGE>
Each share of Series A Preferred Stock has a liquidation value of $1,000.
Each share of Series B Preferred Stock will become convertible into six shares
of Common Stock after August 3, 1997, or earlier upon the occurrence of an event
of default as specified in the Purchase Agreement. Each of the CIVC Investors
besides CIVC has granted to CIVC an irrevocable proxy to vote such shares of
Common Stock underlying the Common Stock warrants as each CIVC Investor
acquired. Pursuant to such arrangement, CIVC may be deemed to be the beneficial
owner of all the shares of Common Stock underlying the 5,065,951 warrants issued
in the CIVC transaction. The CIVC Investors will have the right, after August
3, 1997, to require that its securities be registered for public sale. CIVC has
the right to designate up to three of seven members of the Company's Board of
Directors (four of seven after August 3, 1997, or sooner in the event of a
default under certain operating covenants). In respect of this right, on August
3, 1995 the Board was enlarged to six, and Marcus D. Wedner and Christopher J.
Perry, Managing Directors of CIVC, were designated by CIVC to fill two of the
three newly created Board seats. They were elected to the Board immediately
after the completion of the transactions. The Company had no relationship with
CIVC prior to entering into such transactions and entered into such transactions
following arms-length negotiations.
In connection with the August 1995 Dial Acquisition, the Company paid a
finder's fee to Benchmark in the amount of $551,060 and Benchmark paid a $51,600
note payable to the Company in respect of a stock subscription payable to the
Company.
CIVC may be deemed to be a "parent" of the Company under the Exchange Act
by virtue of the exercisable and convertible securities of the Company either
registered in CIVC's name or for which CIVC holds irrevocable proxies. Further,
Robert M. McMurrey, the Company's Chairman and CEO, is the sole owner of Rainbow
Resources, which is the registered owner of approximately 28% of the Company's
outstanding Common Stock. Mr. McMurrey may also be deemed to be a "parent" of
the Corporation. For additional information relating to the percentage of
voting control and other basis of control by CIVC and Mr. McMurrey/Rainbow
Resources, see "Voting Securities, Principal Holders Thereof, and Management,"
the table therein and footnotes 4, 8, 9 and 10 thereto.
Effective as of January 1994 the Company entered into a consulting
agreement with Benchmark Equity Group, Inc. ("Benchmark") whereby Benchmark
provided the Company with strategic advice related to the Company's overall
business strategy, possible acquisitions and sources of acquisition financing.
Benchmark also agreed to provide general business consulting services to the
Company. In consideration for these services, in January 1994 the Company
agreed to issue to Benchmark 430,000 shares of Common Stock at $0.12 per share
(a price based on the Company's then current book value) and the Benchmark
Warrant to purchase 400,000 shares at an exercise price of $.50 per share, which
is currently exercisable, and expires in January 2004. In connection with the
issuance of these securities, the Company granted Benchmark the right to require
the Company, on one occasion subsequent to 13 months after the consummation of
the IPO, to register such securities under the Securities Act, and also granted
certain "piggy-back" registration rights to Benchmark. The Company had no
relationship with Benchmark prior to entering into such agreement and entered
into such agreement following arms-length negotiations. In August 1994, at the
Company's request, Benchmark, which was then the beneficial owner of 16% of the
Common Stock, loaned the Company $200,000 to provide funds to pay various
offering and acquisition-
13
<PAGE>
related expenses. In consideration for such loan, Benchmark was issued a
$150,000 8% Promissory Note and a $50,000 4% Convertible Note, which was
convertible into 225,225 shares of Common Stock. The agreement to obtain such
loan from Benchmark was obtained following arms-length negotiations and the
terms of such loan are believed by the Company to be as favorable as could
reasonably have been obtained by the Company in an arms-length negotiation with
an unaffiliated party.
For a discussion of employment agreements with certain of the Company's
executive officers and directors, see "Compensation of Directors and Executive
Officers--Employment Agreements" and "Compensation of Directors and Executive
Officers--Consulting and Other Arrangements."
14
<PAGE>
PROPOSAL 1
TO ELECT TWO CLASS II DIRECTORS TO SERVE FOR THREE YEARS AND UNTIL THEIR
SUCCESSORS HAVE BEEN DULY ELECTED AND SHALL QUALIFY.
The Board of Directors has concluded that the re-election of the Class II
Directors is in the best interests of the Company and recommends Stockholder
approval of the re-election of G. David Higginbotham and Marcus D. Wedner for
three year terms and until their successors have been duly elected and shall
qualify. The remaining four Directors will continue to serve in their positions
for the remainder of their terms. Biographical information concerning Messrs.
Higginbotham and Wedner and the Company's other Directors can be found under
"Directors and Executive Officers."
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of Messrs. Higginbotham and
Wedner, the nominees listed herein. Although the Board of Directors of the
Company does not contemplate that such nominees will be unable to serve, if such
a situation arises prior to the Annual Meeting, the persons named in the
enclosed proxy will vote for the election of such other persons as may be
nominated by the Board of Directors.
The Board of Directors unanimously recommends a vote FOR the election of
Messrs. Higginbotham and Wedner, the nominees listed above.
PROPOSAL 2
TO RATIFY THE SELECTION OF THE FIRM OF ERNST & YOUNG LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE COMPANY.
The Board of Directors, upon recommendation of the Audit Committee,
concluded that the continued engagement of Ernst & Young LLP as the Company's
independent public accountants for the 1997 fiscal year was in the best
interests of the Company. The Board of Directors recommends that the
Shareholders ratify its choice of Ernst & Young LLP. Representatives of Ernst &
Young LLP will be present at the Annual Meeting of Shareholders and will have
the opportunity to make a statement if they desire to do so. Such
representatives are expected to be available to respond to appropriate
questions.
The Board of Directors unanimously recommends a vote FOR the ratification
of the selection of Ernst & Young LLP as independent public accountants for the
Company.
15
<PAGE>
OTHER PROPOSED ACTION
The Board of Directors does not intend to bring any other matters before
the Annual Meeting, nor does the Board of Directors know of any matters which
other persons intend to bring before the Annual Meeting. If, however, other
matters not mentioned in this Proxy Statement properly come before the Annual
Meeting, the persons named in the accompanying form of Proxy will vote thereon
in accordance with the recommendation of the Board of Directors.
Stockholders should note that the Company's By-Laws provide that no
proposals or nominations of Directors by Stockholders shall be presented for
vote at an Annual Meeting of Stockholders unless notice complying with the
requirements in the By-Laws is provided to the Board of Directors or the
Company's Secretary no later than the close of business on the fifth day
following the day on which notice of the Annual Meeting is first given to
Stockholders.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any Stockholder wishes to present a proposal for inclusion in the proxy
materials to be solicited by the Company's Board of Directors with respect to
the next Annual Meeting of Stockholders, that proposal must be presented to the
Company's management prior to September 1, 1997.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN
AND RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT. IF YOU ARE A
STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON,
YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
TELETOUCH COMMUNICATIONS, INC.
/s/ SUSIE F. SMITH
-----------------------------
Susie F. Smith, Secretary
16
<PAGE>
PROXY TELETOUCH COMMUNICATIONS, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS OF TELETOUCH COMMUNICATIONS, INC.
ON NOVEMBER 12, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert M. McMurrey, G. David Higgenbotham,
Marcus D. Wedner and Clifford E. McFarland and each or any of them proxies, with
power of substitution, to vote all shares of the undersigned at the Annual
Meeting of Stockholders to be held on November 12, 1996 at 10:00 a.m. at the
Four Seasons Hotel, 1300 Lamar St., Houston, Texas or at any adjournment
thereof, upon the matters set forth in the Proxy Statement for such meeting, and
in their discretion, or such other business as may properly come before the
meeting.
1. TO ELECT TWO CLASS II DIRECTORS TO SERVE FOR THREE YEARS AND UNTIL THEIR
SUCCESSORS HAVE BEEN DULY ELECTED AND SHALL QUALIFY.
/ /FOR THE NOMINEES LISTED BELOW / /WITHHOLD AUTHORITY
to vote for the nominees listed below
(INSTRUCTION: To withhold authority to vote for the nominee strike a line
through the nominee's name below:)
G. David Higginbotham and Marcus D. Wedner
2. TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS:
/ / FOR / / AGAINST / / ABSTAIN
NOTE: When shares are held by joint tenants, both should sign. Persons
signing as Executor, Administrator, Trustee, etc. should so indicate. Please
sign exactly as the name appears on the proxy.
IF NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS
1 AND 2.
Dated: , 1996
--------------------------------
Signature
Signature if held jointly
PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
