Teletouch Subsidiary Progressive Concepts, Inc. (dba Hawk Electronics) Announces Official End of Litigation with AT&T

Teletouch Communications, Inc. (OTCBB: TLLE), a leading U.S. wireless services, cellular, consumer electronics and public safety equipment provider, today announced that the Company and AT&T (NYSE: T) recently entered into, and the Hon. Judge Willcutts acting as the arbitrator in this case, signed off on the mutually Agreed Order of Dismissal, dismissing with prejudice the ongoing litigation, pursuant to the parties having recently reached a comprehensive, multi-part settlement between its wholly owned subsidiary, Progressive Concepts, Inc. dba Hawk Electronics (“PCI”), and AT&T, previously announced on November 23, 2011.

Material terms of the multi-part settlement include:

  • Amended and renewed 3-Yr Distribution Agreement for all of PCI’s current and prior market areas, including the DFW, San Antonio, Houston/South Texas, Austin/Central Texas, Tyler/East Texas and Arkansas service areas;
  • A new 6-Yr Exclusive Dealer Agreement, the first half of which runs coterminously with the amended and renewed Distribution Agreement, then continuing for 3-years thereafter;
  • PCI’s contracted right and authorization to sell, activate and provide service to Apple (NASDAQ: AAPL) iPhone and iPad models as a Distributor and to sell and activate such models as a Dealer, subject and pursuant to the terms set forth in supplements to each Agreement respectively, and from the locations described therein;
  • Cash and other consideration in excess of $18.5 million as mutually agreed to by the parties, including: $5 million in cash, a $5 million credit against PCI’s accrued accounts payable to AT&T at closing, and an agreement for the transfer of all remaining subscribers to AT&T at the end of the 3-year Distribution Agreement term for a maximum amount of $8.5 million, subject to certain terms and conditions, at which point, such Distribution Agreement ends, and PCI then acts solely as a Dealer for the remaining three-year term of the Dealer Agreement;
  • Mutual releases by the parties from and against any and all claims, demands, obligations, liabilities, and causes of action, of any nature whatsoever, as of the Effective Date.

“Having now received all document signatures and initial payments due from AT&T, and mutually entering into this Agreed Order of Dismissal, the parties have successfully ended the two-year litigation, and have fully settled all claims and matters of controversy in this cause of action. We continue to be very pleased that the parties were able to achieve a mutually satisfactory resolution, eliminating further uncertainty and establishing a renewed, positive distribution and sales relationship with AT&T,” stated T. A. "Kip" Hyde, Jr., President, Chief Operating Officer and a Director of Teletouch. “Our comprehensive settlement with new distribution and dealer agreements can now allow PCI to once again be a strong regional distribution channel for AT&T.”

Hyde concluded, “Given our estimated total consolidated settlement value of approximately $40-$50 million, including especially our renewed and extended distribution agreements - which are expected to provide an incremental contribution margin of $25-30 million to the Company over the term based on historical results - resolving the litigation in this manner provides a high degree of certainty and shareholder value, and effectively allows the Company to move forward.”

As initially reported on September 30, 2009, Teletouch’s subsidiary, PCI dba Hawk Electronics, the largest regional distributor for AT&T cellular products and services in the U.S., initiated legal action against AT&T. For a more detailed description of the Company’s legal action Notice and detailed Initial Statement of Claim, please refer to the related Form 8-K, filed October 1, 2009 (also available at the Company’s website: www.teletouch.com and on EDGAR at www.sec.gov), as well as updates provided through press releases and the Company’s public filings since that date.

About Teletouch Communications

For over 47 years, Teletouch has offered a comprehensive suite of wireless telecommunications solutions, including cellular, two-way radio, GPS-telemetry and wireless messaging. Teletouch is a leading Authorized Services Provider and billing agent of AT&T (NYSE: T) products and services to consumers, businesses and government agencies, as well as an operator of its own two-way radio network and LTR systems in Texas. Teletouch operates a chain of 20 retail and authorized agent stores under the “Teletouch” and “Hawk Electronics” brands, in conjunction with its direct sales force, call center operations and various retail eCommerce websites including: www.hawkelectronics.com, www.hawkwireless.com and www.hawkexpress.com. Through its wholly owned subsidiary, Progressive Concepts, Inc., Teletouch operates a national distribution business, PCI Wholesale, primarily serving large cellular carrier agents and rural carriers, as well as auto dealers and smaller consumer electronics retailers, with product sales and support available through www.pciwholesale.com and www.pcidropship.com, among other B2B oriented websites.

Teletouch's common stock is traded Over-The-Counter under stock symbol: TLLE. Additional information about the Teletouch family of companies can be found at www.teletouch.com.

The registered trademarks of AT&T, Apple, Inc. and each, any and all product or service names discussed in relation to Teletouch Communications, Inc. and its affiliates are the property of their respective owners.

All statements from Teletouch Communications, Inc. in this news release that are not based on historical fact are "forward-looking statements" within the meaning of the PSLRA of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While the Company's management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the caption "Risk Factors" in the Company’s most recent Form 10-K and 10-Q filings, and amendments thereto, as well as other public filings with the SEC since such date. The Company operates in a rapidly changing and competitive environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intention to, and undertakes no obligation to, update or revise any forward-looking statement.

Contacts:

Media Contacts:
Edelman Public Relations
Denisha Stevens, 214-520-3555
Denisha.Stevens@Edelman.com
or
Investors & Analysts Contact:
Teletouch Communications, Inc.
Amy Gossett, 800-232-3888
Investor Relations
investors@teletouch.com

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