Summary of TELETOUCH COMMUNICATIONS INC

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On May 23, 2008, Teletouch Communications, Inc., a Delaware corporation ("Teletouch" or "Company") completed negotiations and entered into binding agreements with the owners of six million (6,000,000) outstanding redeemable common stock warrants, which became redeemable by their terms and at the election of the holders for an aggregate amount of $3.0 million in December 2007 (the "GM Warrants"); those agreements provide in part for the payment by the Company of $1.5 million of the redemption amount currently, with monthly payment terms and a deferral of the payment of the balance (balloon payment) at eighteen months. In December of 2007, the holders of the GM Warrants indicated a desire to redeem the GM Warrants. Since that time the Company has been engaged in active negotiations with the warrant holders to conclude payment terms favorable to the Company, while separately attempting to secure a source of additional working capital to support operations and to fund the current portion of the GM Warrant redemptions, which it succeeded in doing on May 16, 2008 when it entered into a new asset based revolving credit facility providing for up to $5.0 million of total borrowing availability based on then available assets (the "Revolving Credit Facility") with Thermo Credit, LLC, a Colorado limited liability company (the "Lender"). As of the date of this Current Report, approximately $4.5 million has been advanced to the Company under that facility. On February 26, 2008, Teletouch completed an amendment with the Lender to its existing accounts receivable factoring facility dated August 11, 2006 which, among other things, increased the accounts receivable purchase limits from $10.0 million to $15.0 million (the "Factoring Facility"). The Factoring Facility and the Revolving Credit Facility are collectively referred to as the "Thermo Agreements".

In August 2006, in conjunction with the contribution of all of the equity securities of Progressive Concepts, Inc., a Texas corporation ("PCI") to the Company, and the assumption by Teletouch's parent company, TLL Partners, LLC, a Delaware limited liability company ("TLLP"), of all of the remaining senior debt of PCI, Teletouch entered into a Transaction Party Agreement ("TPA") with PCI's senior lender, Fortress Credit Corp. ("Fortress"), in return for Fortress' agreement to release all liens against the assets of PCI. Under the TPA, Teletouch and PCI were prohibited from taking certain actions or effecting certain transactions absent the prior consent of Fortress. In order to complete the Thermo Agreements and to eliminate the need to seek further consents from Fortress, Teletouch entered into a Termination Agreement with Fortress on May 16, 2008 which among other things terminated the TPA in return for the payment of a one time fee to Fortress.

The series of transactions completed and the material terms and provisions of the operative agreements are discussed in further detail below.

Thermo Revolving Credit Facility

Teletouch, Teletouch Licenses, Inc., a Delaware corporation and wholly owned subsidiary of Teletouch ("TLI"), PCI (collectively Teletouch, TLI and PCI, the "Debtors"), on the one hand, and the Lender, on the other hand, executed a Loan and Security Agreement dated as of April 30, 2008 (the "Thermo Loan Agreement"), to secure the Revolving Credit Facility providing for initial availability of up to $5.0 million allowing the Debtors, on a consolidated basis, to obtain revolving credit loans from the Lender from time to time. Beginning November 30, 2008, the availability under the Thermo Loan Agreement is reduced monthly by an amount equal to the average principal balance outstanding for that month divided by sixty (60) (the "Monthly Step Down"). The purpose of the Revolving Credit Facility is to finance working capital, organizational and other similar needs of Teletouch, including, without limitation, the redemption of the GM Warrants, as discussed below.

In order to secure their repayment obligations under the Thermo Loan Agreement, the Debtors granted to the Lender a lien and a security interest in substantially all of the Debtors' assets, properties, accounts, inventory, goods and the like. The Debtors also executed a promissory note dated as of the same date payable to the Lender in the original principal amount of $5.0 million (the "Thermo Note"). The Thermo Note provides for the monthly payment of interest only through October 31, 2008 and thereafter monthly payments equal to the sum of the Monthly Step Down amount plus any accrued interest are payable through April 30, 2010 at which date the remaining principal plus any accrued interest are due in full. At the $5.0 million maximum amount of borrowings under the Thermo Loan Agreement, the Monthly Step Down (principal payment) would be approximately $83,000 beginning in November 2008. The annual interest rate on the Thermo Note is the lesser of: (a) the maximum non-usurious rate of interest per annum permitted by applicable Louisiana law, or (b) the prime rate plus 8%.

In addition, the parties to the Thermo Loan Agreement executed an Escrow Agreement, also dated as of April 30, 2008 (the "Escrow Agreement"), under the terms of which the Thermo Loan Agreements were to be released and be effective upon satisfaction of several closing conditions, including, without limitation, the satisfaction of the conditions precedent under the Thermo Loan Agreement, the execution of the Loan Amendment (as defined below) and the Termination Agreement (as defined below) (the "Thermo Closing Conditions").

The Thermo Loan Agreement, the Thermo Note and the Escrow Agreement are collectively referred to as the "Thermo Loan Documents". The Thermo Loan Documents contain other terms and provisions customary for transaction documents of this nature. The foregoing is a summary of the terms and provisions of the Thermo Loan Documents and is qualified in its entirety by reference to such documents which are attached as exhibits to this filing.

Thermo Factoring and Security Agreement

As discussed in Teletouch's Current Report on Form 8-K filed on August 17, 2006 (the "2006 8-K"), PCI entered into the Factoring Facility as secured by the Factoring and Security Agreement dated August 11, 2006 under which Thermo agreed to purchase accounts receivable of PCI up to an overall limit of $10.0 million in outstanding purchased accounts, providing for up to a total of approximately $8.4 million in total advances (the "Factoring and Security Agreement"). On May 31, 2007 the Factoring Facility was amended to provide for, among other items, (i) an increase to the gross amount of sold and uncollected accounts receivable to $13.0 million, thereby limiting outstanding cash advances to (i.e., not to exceed) $10.0 million; (ii) a fixed initial advance of 85% against purchased receivables (with the remainder held in reserve by Thermo until the receivable is collected) (iii) a one time 1.45% discount fee on the gross amount of purchased receivables; (iv) certain advances against in-process billings to customers under long term contracts at an initial advance rate of 80% of the value of such estimated future billings decreasing periodically to a 60% advance rate by June 2008 with a discount fee of 1.0% per month computed on the outstanding gross value of future billings purchased and; (v) the extension of the termination date to August 11, 2009 (the "First Amended Factoring Agreement").

On February 26, 2008, Teletouch entered into a second amendment to the Factoring Facility to provide for, among other items, (i) an increase to the gross amount of sold and uncollected accounts receivable to $15.0 million with a continuance of the cash advance rate of 85%; (ii) a one time 1.05% discount fee on the gross amount of purchased receivables; (iii) a 0.95% monthly discount fee on the outstanding gross value of in-process billings that have been advanced against and; (iv) the extension of the termination date to February 26, 2010 (the "Second Amended Factoring Agreement").

Teletouch anticipated closing the Revolving Credit Facility immediately following the completion of the Second Amended Factoring Agreement, but encountered delays in negotiating certain ancillary agreements necessary complete the transaction, as further discussed below. However, the full benefit of the Second Amended Factoring Agreement will not be realized by the Company until such time as it increases it business and is able to generate a sufficient level of receivables in order to maximize the cash advances under the available credit line of $15.0 million. As of the date of this Current Report and at the current advance rate levels and net of certain other reserves retained by Thermo, Teletouch has maximum cash availability under the Factoring Facility of approximately $12.0 million if sufficient receivables are available to be sold . . .