Document:

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                                                                   Exhibit 10.11

                          PLEDGE and SECURITY AGREEMENT
                          -----------------------------

     THIS PLEDGE and SECURITY AGREEMENT (hereinafter referred to as "Pledge
Agreement"), is made and entered into this 17th day of May, 2002, by and
between TELETOUCH COMMUNICATIONS, INC., a Delaware corporation ("Pledgor");
TELETOUCH LICENSES, INC., a Delaware corporation ("Subsidiary"); and ING PRIME
RATE TRUST, a Massachusetts business trust formerly known as Pilgrim America
Prime Rate Trust ("Pledgee").

R E C I T A L S:
---------------

     A.   Pledgor is indebted to the Pledgee in the amount of Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000.00), which indebtedness is evidenced
by that certain Amended and Restated Promissory Note dated of even date herewith
(the "Note");

     B.   Subsidiary is indebted to the Pledgee in the amount of Two Million
Seven Hundred Fifty Thousand Dollars ($2,750,000.00), pursuant to its guarantee
of Pledgor's obligations to Pledgee under the Credit Agreement (defined in
section 2 below) (the "Guarantee");

     C.   Pledgor owns 100% of the shares of stock in Subsidiary;

     D.   Pledgor has agreed to pledge and grant a security interest in all of
the stock in Subsidiary to Pledgee as security for repayment of the Note and
Pledgor's obligations to Pledgee under the Credit Agreement;

     E.   Pledgor and Subsidiary have entered into that certain Amended and
Restated Operating Agreement, dated of even date herewith (the "License
Agreement"); and

     F.   Pledgor and Subsidiary have agreed to pledge and grant a security
interest in all of their respective rights, titles and interests in, to and
under the License Agreement to Pledgee as security for repayment of the Note and
Pledgor's obligations to Pledgee under the Credit Agreement.

A G R E E M E N T S:
-------------------

     NOW, THEREFORE, for valuable consideration and in consideration of the
foregoing recitals and the covenants, agreements, warranties and
representations, hereinafter set forth, the parties hereto agree as follows:

     1.   Pledge.
          ------

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     (a)  Pledgor hereby pledges, transfers and assigns to Pledgee as secured
party, and grants to Pledgee a security interest in all of Pledgor's right,
title and interest in and to all of the shares of stock in Subsidiary and all
instruments and certificates evidencing the shares, all increases, splits,
dividends and profits received therefrom, all substitutions therefor, all
warrants, subscriptions, rights and options to purchase any of the foregoing and
all proceeds thereof in any form (collectively, the "Stock"), and Pledgor agrees
to deliver all certificates evidencing or constituting the Stock directly to
Pledgee. Pledgor agrees to execute a stock power in the name of Pledgee and
deliver the same to Pledgee. Pledgee shall hold the pledged shares as security
for the repayment of the Note.

     (b)  Pledgor and Subsidiary hereby pledge, transfer and assign to Pledgee
as secured party, and grant to Pledgee a security interest in, all of their
respective rights, titles and interests in, to and under the License Agreement,
all substitutions therefor and replacements thereof and all proceeds thereof in
any form.

     All of the property described above shall be collectively referred to
herein as the "Collateral," and the pledge and other rights transferred therein
shall be collectively referred to as the "Security Interest."

     2.   Restrictions. During the term of this pledge, Subsidiary shall not,
          ------------
and Pledgor shall not permit Subsidiary to, whether directly or indirectly,
declare, issue or make any dividend payments, distributions, returns of capital,
or stock splits, or issue any new shares of stock, warrants, options, or
subscriptions in Subsidiary. Pledgor and Subsidiary shall comply with and be
bound by all provisions, conditions, restrictions and limitations set forth in
the Second Amended and Restated Credit Agreement dated of even date herewith
(the "Credit Agreement") terms thereof.

     3.   Obligations Secured. The Security Interest in the Collateral secures
          -------------------
the obligations of the Pledgor and Subsidiary hereunder and all payment and
performance obligations under the Note, the Credit Agreement, the Guarantee and
all other related loan documents (collectively the "Obligations").

     4.   Representations and Warranties of Pledgor. The Pledgor represents and
          -----------------------------------------
warrants to Pledgee as follows:

     (a) The Pledgor (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and (ii) has all
requisite power and authority to execute, deliver and perform this Pledge
Agreement.

     (b) The execution, delivery and performance by the Pledgor of this Pledge
Agreement (i) have been duly authorized by all necessary corporate action, (ii)
do not and will not contravene its charter or by-laws, law or any contractual
restriction binding on or affecting the Pledgor or any of its properties, and
(iii) except as herein specifically provided, do not and will not result in or
require the creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties.

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     (c) This Agreement is a legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms.

     (d) On the date of delivery of any of the Stock to Pledgee, no person
(other than the Pledgor and the Pledgee) will have any right, title or interest
in and to any of the Stock.

     (e) The Pledgor owns the Collateral free and clear of any lien, security
interest or other charge or encumbrance except for the security interest in
favor of Pledgee created by this Pledge Agreement.

     (f) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other regulatory body is required for
(i) the due execution, delivery and performance by the Pledgor of this
Agreement, (ii) the Pledge by the Pledgor of all its right, title and interest
in and to the Collateral, or (iii) the grant by the Pledgor, or the perfection
of the Security Interest created hereby in the Collateral.

     (g) This Agreement creates in favor of Pledgee a valid pledge, collateral
assignment of, and Security Interest in, the Collateral, as security for the
Obligations. Such Security Interest is a perfected first priority Security
Interest. All actions necessary or desirable to perfect, establish the first
priority of, or otherwise protect, such Security Interest in favor of Pledgee in
the Collateral have been duly completed. It is understood and agreed that the
Pledgee does not assume and shall not be subject to any obligation or liability
of Pledgor under any Collateral in which the Pledgee is granted a Security
Interest hereunder.

     (h) The Stock constitutes 100% of the issued and outstanding shares of
stock in the Subsidiary.

     5.   Representations and Warranties of Subsidiary. The Subsidiary
          --------------------------------------------
represents and warrants to Pledgee as follows:

     (a) The Subsidiary (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware; and (ii) has all
requisite power and authority to execute, deliver and perform this Pledge
Agreement.

     (b) The execution, delivery and performance by the Subsidiary of this
Pledge Agreement (i) have been duly authorized by all necessary corporate
action, (ii) do not and will not contravene its charter or by-laws, law or any
contractual restriction binding on or affecting the Subsidiary or any of its
properties, and (iii) except as herein specifically provided, do not and will
not result in or require the creation of any lien, security interest or other
charge or encumbrance upon or with respect to any of its properties.

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     (c) This Pledge Agreement is a legal, valid and binding obligation of the
Subsidiary, enforceable against the Subsidiary in accordance with its terms.

     (d) The Subsidiary owns its right, title and interest in the License
Agreement free and clear of any lien, security interest or other charge or
encumbrance except for the security interest in favor of Pledgee created by this
Pledge Agreement.

     (e) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other regulatory body is required for
(i) the due execution, delivery and performance by the Subsidiary of this
Agreement, (ii) the Pledge by the Subsidiary of all its right, title and
interest in and to the Collateral, or (iii) the grant by the Subsidiary, or the
perfection of the Security Interest created hereby in the Collateral.

     (f) This Agreement creates in favor of Pledge a valid pledge, collateral
assignment of, and Security Interest in, the Collateral, as security for the
Obligations. Such Security Interest is a perfected first priority Security
Interest. All actions necessary or desirable to perfect, establish the first
priority of, or otherwise protect, such Security Interest in favor of Pledge in
the Collateral have been duly completed. It is understood and agreed that the
Pledgee does not assume and shall not be subject to any obligation or liability
of Subsidiary under any Collateral in which the Pledgee is granted a Security
Interest hereunder.

     (g) As of the date hereof, the Stock constitutes 100% of the issued and
outstanding shares of stock in the Subsidiary.

     6.   Covenants as to the Collateral. So long as any of the Obligations
          ------------------------------
shall remain outstanding, unless the Pledgee otherwise consents in writing:

     (a) Pledgor and Subsidiary will, at its expense at any time and from time
to time, promptly execute and deliver all further instruments and documents and
take all further action that may be necessary or desirable or that the Pledgee
may request in order (i) to perfect and protect the Security Interest created or
purported to be created hereby, (ii) to enable the Pledgee to exercise and
enforce their rights and remedies hereunder in respect of the Collateral, or
(iii) to otherwise effect the purposes of this Agreement.

     (b) Pledgor and Subsidiary will furnish to the Pledgee from time to time
such information and reports regarding the Collateral as the Pledgee may
reasonably request.

     (c) Pledgor and Subsidiary will not take or fail to take any action which
would in any manner impair the value or enforceability of the Pledgee's Security
Interest in any of the Collateral.

                                       4

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     (d) Pledgor and Subsidiary will pay when due all taxes, licenses, charges
and other impositions on or for the Collateral.

     (e) Pledgor and Subsidiary will promptly deliver to Pledgee, to be subject
to this Pledge Agreement, all proceeds, securities, insurance proceeds, rights,
goods and other property of all kinds to which debtor is or hereinafter becomes
entitled to receive for or on account of the Collateral. If any of the
Collateral or proceeds or payments are received by Pledgor or Subsidiary, it
receives the same as trustee for the Pledgee and shall immediately properly
deliver the same in kind to Pledgee, with such endorsements as are necessary,
and without cashing or commingling the same.

     (f) Pledgor and Subsidiary hereby authorizes all persons and organizations
having records or files pertaining to the Collateral to furnish information to
the Pledgee with regard thereto and to allow them to inspect and copy all such
records.

     7.    Additional Provisions Concerning the Collateral.
           -----------------------------------------------

     (a) The Pledgor and Subsidiary authorize the Pledgee to file, without the
signature of the Pledgor and Subsidiary, one or more financing statements,
continuation statements, and amendments thereto, relating to the Collateral.

     (b) If the Pledgor or Subsidiary fails to perform any agreement contained
herein, the Pledgee may but shall not be obligated to perform, or cause
performance of, such agreement or obligation.

     (c) The powers conferred on the Pledgee hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers, it being understood that the Pledgee shall not have any
responsibility for taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.

     8.    Events of Default. Any one of the following shall constitute an event
           -----------------
of default:

     (a) Failure of Pledgor to pay when due any indebtedness secured hereby
including, without limitation, failure to make any required payment on the Note;

     (b) Failure of Subsidiary to pay when due any indebtedness secured hereby
including, without limitation, failure to make any required payment on the Note
or pursuant to the Guarantee; or

     (c) The occurrence of any Event of Default under the Credit Agreement.

     9.    Rights and Remedies of the Pledgee.
           ----------------------------------

                                       5

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     (a) Rights and Remedies Irrespective of Default:

           (i)  Pledgee may delay exercising or omit to exercise any right or
           remedy under this Pledge Agreement without waiving that, or any other
           past, present or future right or remedy.

           (ii) Pledgee may, at its option, substitute or release such portions
           of the Collateral held hereunder as the Pledgee in its sole
           discretion shall deem proper. In that event, all of the rights and
           privileges of the Pledgee and all Obligations of Pledgor and
           Subsidiary shall be forthwith applicable to said substituted or
           exchanged items of Collateral, the same in all respects as to the
           items of Collateral originally pledged or held as Collateral
           hereunder.

     (b) Rights and Remedies Upon Default: Upon the happening of any of the
foregoing events of default and at any time thereafter, Pledgee shall have the
rights and remedies set forth in the Credit Agreement and, without limitation
thereto, the Pledgee shall have the following additional specific cumulative
rights:

           (i)  To sell, assign and deliver all of said Collateral, or any part
           thereof, or any substitutes therefor, or any additions thereto, at
           public or private sale, by one or more contracts, in one or more
           lots, at the same or different times, for cash and/or credits, at the
           Pledgee's option (or that of anyone acting in the Pledgee's behalf)
           and the Pledgee, and assigns may bid and become purchasers at any
           such sale, whether private or public, as authorized by the Uniform
           Commercial Code as adopted in Arizona. Unless the Collateral held
           under this Pledge Agreement declines speedily in value or are sold on
           a recognized market, Pledgee shall give the Pledgor reasonable notice
           of the time and place of any public sale, or of the time after which
           any private sale is to be made. Any requirement for reasonable notice
           shall be met by the sending of ten (10) days' notice by regular mail,
           postage prepaid to Pledgor's and Subsidiary's last known address. If
           any of the Collateral held under this Pledge Agreement is sold by the
           Pledgee upon credit or for future delivery, Pledgee shall not be
           liable for the failure of the purchaser to pay for the same, and in
           such event Pledgee may re-sell such Collateral. The Pledgee may buy
           any part or all of the Collateral at any public sale, and if the
           Collateral is sold in a recognized market, the Pledgee may buy at
           private sale and make payment for the same by any means including,
           without limitation, application of all or any part of the
           Obligations. The Pledgee shall apply all cash proceeds actually
           received from any sale in the order and subject to the conditions
           provided, if any, in the Arizona Uniform Commercial Code. After
           deducting all legal and other expenses and costs of collections of
           any of said Obligations and all legal or other expenses and costs of
           collection, storage, custody, sale and delivery of

                                       6

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           Collateral held hereunder, the residue of any proceeds of collection
           or sale shall be applied to the payment of principal or interest on
           one or more of said Obligations of Pledgor due or to become due, in
           such order of preference as Pledgee may determine. Pledgor and
           Subsidiary acknowledge and agree that, upon a default under this
           Pledge Agreement, any sale of the Collateral by the Pledgee will be a
           sale in good faith for a bona fide debt and such sale will be exempt
           from Arizona and federal securities laws (the "Securities Act").
           Pledgor and Subsidiary recognize that Pledgee may deem it impractical
           to effect a public sale of all or any part of the Collateral and that
           the Pledgee may, therefore, determine to make one or more private
           sales of any such Collateral to a restricted group of purchasers who
           will be obligated to agree among other things, to acquire such
           Collateral for their own account, for investment and not with a view
           to the distribution or resale thereof. Pledgor and Subsidiary
           acknowledge that any such private sale may be at prices and on terms
           less favorable to the seller than the prices and other terms which
           might have been obtained at a public sale and, notwithstanding the
           foregoing, agrees that such private sales shall be deemed to have
           been made in a commercially reasonable manner and that Pledgee shall
           have no obligation to delay sale of any such Collateral for the
           period of time necessary to permit the issuer of such securities to
           register such securities for public sale under the Securities Act.
           Pledgor further acknowledges and agrees that for any offer to sell
           the Stock portion of the Collateral which has been (i) publicly
           advertised on a bona fide basis in a newspaper or other publication
           of general circulation in the financial community of Phoenix, Arizona
           (to the extent that such an offer may be so advertised without prior
           registration under the Securities Act) or (ii) made privately in the
           manner described above to not less than ten (10) bona fide offerees
                                                            ---------
           shall be deemed to involve a "public sale," notwithstanding that such
           sale may not constitute a "public offering" under the Securities Act,
           and that the Pledgee may, in such event, bid for the purchase of such
           securities.

           (ii)   At any sale or disposition of the Collateral, the Pledgee may
           accept a trade of property for all or a portion of the sale price.

           (iii)  To require Pledgor and Subsidiary to assemble all records,
           instruments, documents or writings pertaining to the Collateral and
           make such available to the Pledgee at a place, to then be designated
           by the Pledgee, which is reasonably convenient to both parties.

           (iv)   To apply the proceeds realized from disposition of the
           Collateral according to law and to payment of reasonable attorneys'
           fees and legal expenses incurred by Pledgee whether or not suit be
           filed.

                                       7

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           (v)    If the proceeds realized from disposition of the Collateral
           shall fail to satisfy all of the Obligations of Pledgor to Pledgee,
           Pledgor and Subsidiary shall continue to be jointly and severally
           liable and obligated to pay the remaining Obligations and any other
           debts and liabilities which may be owed to Pledgee.

           (vi)   Pledgee may exercise in respect of the Collateral, in addition
           to other rights and remedies provided for herein or otherwise
           available to it, all the rights and remedies of a secured party upon
           default under the Uniform Commercial Code currently in effect in the
           State of Arizona (whether or not the Code applies to the affected
           Collateral).

           (vii)  Any cash held by or on behalf of Pledgee as Collateral and all
           cash proceeds received by or on behalf of Pledgee in respect of any
           sale of, collection from, or other realization upon, all or any part
           of the Collateral may, in the discretion of the Pledgee, be held by
           or on behalf of the Pledgee as collateral for, and/or then or at any
           time thereafter applied in whole or in part by the Pledgee against,
           all or any part of the Obligations in such order as the Pledgee shall
           select. Any surplus of such cash or cash proceeds held by the Pledgee
           and remaining after payment in full of all of the Obligations shall
           be paid over to the person lawfully entitled to receive such surplus.

           (viii) To take immediate possession of all records, instruments,
           documents and writings pertaining to the Collateral without notice or
           resort to legal process, and for such purpose to enter upon any
           premises on which such records, instruments, documents, writings or
           any part thereof my be situated and remove the same therefrom.

           (ix)   During any period of default, Pledgor irrevocably appoints
           Pledgee as proxy, with full power of substitution and revocation, to
           exercise Pledgor's rights to attend meetings, vote, consent to and/or
           take any action respecting the Collateral or an issuer thereof as
           fully as Pledgor might do. This proxy remains effective during the
           continuation of any event of default and so long as any sum remains
           unpaid under the Note.

     10.   Uniform Commercial Code. In addition to the provisions of this Pledge
           -----------------------
Agreement, Pledgor shall have all rights and remedies before and after default
as are provided in the Uniform Commercial Code as adopted in the State of
Arizona.

     11.   Security Interest Absolute and Continuing. All rights of the Pledgee,
           -----------------------------------------
all Security Interests and all Obligations of the Pledgor and Subsidiary
hereunder shall be absolute and unconditional irrespective of: (i) any change in
the time, manner or place or payment of, or in any other term in respect of, all
or any of the Obligations, or any other amendment or waiver of or consent to any
departure from any other agreement or instrument relating thereto; (ii) any
increase in, addition to, exchange or release of, or 8 non-perfection of any
lien on or security interest in, any other collateral, or any release or
amendment

                                       8

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or waiver of or consent to departure from any guaranty, for all or any of the
Obligations; (iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any other person in respect of the
Obligations in respect of this Pledge Agreement; or (v) the absence of any
action on the part of the Pledgee to obtain payment or performance of the
Obligations from the Pledgor, Subsidiary or any other person. This Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the payment in full and release of the
Obligations, and performance of all agreements of Pledgor and Subsidiary to the
Pledgee, (ii) be binding on the Pledgor and Subsidiary and each of their
respective successors and assigns and shall inure, together with all rights and
remedies of the Pledgee hereunder, to the benefit of the Pledgee and its
successors, transferees and assigns. Without limiting the generality of the
foregoing, the Pledgee may assign or otherwise transfer its rights under this
Pledge Agreement and the instrument secured hereby and such other person shall
thereupon become vested with all of the benefits in respect thereof granted to
the Pledgee. None of the rights or obligations of the Pledgor or Subsidiary
hereunder may be assigned or otherwise transferred without the prior written
consent of the Pledgee.

     12.   Headings. The headings used herein are for convenience and reference
           --------
only and are not intended to define, limit or describe the scope or intent of
any provision of this Pledge Agreement.

     13.   Entire Agreement. This Pledge Agreement, together with the Credit
           ----------------
Agreement and those other and further documents executed and delivered in
connection with the Credit Agreement, constitutes and embodies the full and
complete understanding and agreement of the parties hereto.

     14.   Notices. Any notice or communication given pursuant to this Pledge
           -------
Agreement ("Notice") shall be in writing and delivered in person or deposited
Certified United States mail, postage prepaid, return receipt requested,
addressed as follows:

     To Pledgor:       Teletouch Communications, Inc.
                       110 College Street, Suite 200
                       Tyler, Texas 75702

     To Subsidiary:    Teletouch Licenses, Inc.
                       110 College Street, Suite 200
                       Tyler, Texas 75702

     To Pledgee:       ING Prime Rate Trust
                       7337 E. Doubletree Ranch
                       Scottsdale, Arizona 85258
                       Attention: Robert L. Wilson, Vice President

or at such other address any party may from time to time designate by notice
hereunder. Notices shall be effective upon delivery in person or, if mailed,
four (4) business days after the date of mailing.

                                       9

<PAGE>

     15.   Modification and Amendments. This Pledge Agreement shall not be
           ---------------------------
altered or amended, except by a writing signed by the party sought to be charged
with such alteration or amendment or by that party's authorized agent.

     16.   Attorney Fees. In any action at law or equity to enforce any of the
           -------------
provisions or rights under this Pledge Agreement, the unsuccessful party to such
litigation, as determined by the court in a final judgment or decree, shall pay
the successful party or parties all costs, expenses and reasonable attorney fees
incurred therein by such party or parties (including without limitation such
costs, expenses and fees on any appeals) and, if the successful party recovers
judgment in any such action or proceedings, such costs, expenses and attorney
fees shall be included in and as a part of such judgment.

     17.   Counterparts. This Agreement may be executed in several counterparts,
           ------------
each of which shall be deemed an original and all of which together shall
constitute one single instrument.

     18.   Governing Law. This Pledge Agreement shall be construed and
           -------------
interpreted in accordance with the laws of the State of Arizona and the parties
expressly agree that, in the event litigation is commenced, jurisdiction and
venue will be in Maricopa County, Arizona.

     19.   Successors and Assigns. This Pledge Agreement shall be binding upon
           ----------------------
and inure to the benefit of the parties hereto and their heirs, successors and
assigns.

     20.   Time. Time is of the essence of this Pledge Agreement and each and
           ----
every provision hereof. Any extension of time granted for the performance of any
duty under this Pledge Agreement shall not be considered an extension of time
for the performance of any other duty under this Pledge Agreement.

     21.   Waiver. No waiver of any of the terms or conditions of this Pledge
           ------
Agreement and no waiver of default or failure of compliance shall be effective
unless in writing, and no waiver furnished in writing shall be deemed a waiver
of any other term or provision or any future condition. Failure of any party to
exercise any right or option arising out of a breach of this Pledge Agreement
shall not be deemed a waiver of any right or option with respect to the
continuance of any such breach or any subsequent or different breach.

     22.   Interpretations. To the extent permitted by the context in which
           ---------------
used, (i) words in the singular number shall include the plural, words in the
masculine gender shall include the feminine and neuter, and vice versa, and (ii)
references to "persons" or "parties" in this Pledge Agreement shall be deemed to
refer to natural persons, corporations, general partnerships, limited
partnerships, trusts and all other entities. This instrument is to be
interpreted in the manner which will most fairly and closely

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achieve the apparent intention of the parties as expressed herein, irrespective
of which party drafted the same and without regard to any construction with
regard thereto.

     23.   Exhibits. Any exhibit attached hereto shall be deemed to have been
           --------
incorporated herein by this reference, with the same force and effect as if
fully set forth in the body hereof.

     24.   Representations and Warranties. Any representations or warranties
           ------------------------------
made herein shall be continuing in nature and shall survive completion of the
transactions contemplated hereby.

     25.   Recitals. The Recitals set forth at the beginning of this instrument
           --------
are adopted, approved and incorporated herein as agreements of the parties.

     26.   Severability. If any provision of this Pledge Agreement is declared
           ------------
void or unenforceable, such provision shall be deemed severed from this Pledge
Agreement, which shall otherwise remain in full force and effect and be
construed as a whole in the manner which will most fairly and closely achieve
the apparent intention of the parties.

     27.   Conflicts. In the event of a conflict between the terms of this
           ---------
Pledge Agreement and the terms of the Credit Agreement, the terms of the Credit
Agreement shall govern and control.

     IN WITNESS WHEREOF, the parties have caused its duly authorized officers to
execute this Pledge Agreement on the date first above written.

PLEDGOR:                                        SUBSIDIARY:

TELETOUCH COMMUNICATIONS, INC.,         TELETOUCH LICENSES, INC.,
a Delaware corporation                  a Delaware corporation

By: ______________________________      By: ___________________________________
     J. Kernan Crotty, President              Robert M. McMurrey, President
     hereunto duly authorized                 hereunto duly authorized

PLEDGEE:

ING PRIME RATE TRUST, a Massachusetts

                                       11

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business trust formerly known as Pilgrim
America Prime Rate Trust

By: ING Investments, LLC,
a Delaware limited liability company,
its investment manager

    By: _____________________________________
          Robert L. Wilson, Vice President
          hereunto duly authorized

STATE OF ______________________)
                                 )ss.
County of _____________________)

     On this ________ day of May, 2002, before me, the undersigned notary
public, personally appeared J. Kernan Crotty who, after satisfactorily
identifying himself to me, executed the foregoing instrument in my presence as
the President and Chief Financial Officer of TELETOUCH COMMUNICAITONS, INC., a
Delaware corporation, and acknowledged that he was the President and Chief
Financial Officer of said corporation, that he was signing the foregoing
instrument in such capacity on behalf of such corporation for the purposes
therein contained, that he had been duly authorized by the corporation to do so,
and that the same constituted the free act and deed of such corporation.

     IN WITNESS WHEREOF, I hereunder set my hand and official seal.

                         ________________________________
                                   Notary Public

My Commission Expires:

_____________________

                                       12

<PAGE>

STATE OF ____________________)
                               )ss.
County of ___________________)

     On this _______ day of May, 2002, before me, the undersigned notary public,
personally appeared Robert M. McMurrey, who, after satisfactorily identifying
himself/herself to me, executed the foregoing instrument in my presence as the
President of TELETOUCH LICENSES, INC., a Delaware corporation, and acknowledged
that he/she was the President of said corporation, that he/she was signing the
foregoing instrument in such capacity on behalf of such corporation for the
purposes therein contained, that he/she had been duly authorized by the
corporation to do so, and that the same constituted the free act and deed of
such corporation.

         IN WITNESS WHEREOF, I hereunder set my hand and official seal.

                        __________________________________
                                   Notary Public

My Commission Expires:

______________________

STATE OF ____________________)
                               )ss.
County of ___________________)

     On this _______ day of May, 2002, before me, the undersigned notary public,
personally appeared Robert L. Wilson, who, after satisfactorily identifying
himself/herself to me, executed the foregoing instrument in my presence as the
Vice President of ING Investments, LLC, a Delaware limited liability company and
the investment manager for ING PRIME RATE TRUST, a Massachusetts business trust
formerly known as Pilgrim America Prime Rate Trust, and acknowledged that he/she
was the Vice President of said limited liability company, that such limited
liability company was the investment

                                       13

<PAGE>

manager for such business trust, that he/she was signing the foregoing
instrument in such capacity on behalf of such limited liability company, as the
investment manager for such business trust, for the purposes therein contained,
that he/she had been duly authorized by the limited liability company and the
business trust to do so, and that the same constituted the free act and deed of
such limited liability company and business trust.

     IN WITNESS WHEREOF, I hereunder set my hand and official seal.

                         __________________________________
                                    Notary Public

My Commission Expires:

______________________

                                       14<PAGE>

                                                                   Exhibit 10.12

                                CO-SALE AGREEMENT

     This Co-Sale Agreement (the "Agreement") is entered into as of May 17,
2002, by and between TLL Partners, L.L.C., a Delaware limited liability company
("TLL Partners"), and GM Holdings, LLC, a Tennessee limited liability company
("Holdings"). Holdings and, except as otherwise expressly provided herein, its
successors and assigns, are sometimes referred to herein individually as an
"Investor" and collectively as the "Investors".

                                    RECITALS

     WHEREAS, TLL Partners, Holdings and Teletouch Communications, Inc. (the
"Company") propose to enter into a Restructuring Agreement dated as of the date
hereof (the "Restructuring Agreement"); and

     WHEREAS, prior to the execution and delivery of this Agreement by any party
hereto, TLL Partners has purchased: (a) from CIVC Partners I, a Delaware
partnership, 295,649 shares of Common Stock and (b) from Continental Illinois
Venture Corporation, a Delaware corporation, warrants to purchase 2,660,840
shares of Common Stock ; and

     WHEREAS, as of the date hereof, each party "beneficially owns" (as such
term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended) and each Stockholder is entitled to dispose of (or to direct
the disposition of) and to vote (or to direct the voting of) (a) the number of
shares of common stock, par value $0.001 per share of the Company (the "Common
Stock") and (b) the number of shares of Common Stock that may be issued upon
exercise of any options, warrants and other rights of any kind that are then
exercisable, and all shares of Common Stock that may be issued upon conversion
or exchange of any convertible securities which are by their terms then
convertible into or exchangeable for Common Stock, including without limitation,
warrants to purchase common stock and preferred stock, in each case set forth
opposite the party's name on Annex A hereto, as such shares may be adjusted by
stock dividend, stock split, recapitalization, combination, merger,
consolidation, reorganization or other change in the capital structure of the
Company affecting the Common Stock (such shares of Common Stock, together with
any other shares of Common Stock the voting power over which is acquired by TLL
Partners or the Investors during the period from and including the date hereof
through and including the date on which this Agreement is terminated in
accordance with its terms, together with the underlying securities which are
convertible into such shares of Common Stock, are collectively referred to
herein as the "Subject Shares"); and
               --------------

     WHEREAS, as a condition to the willingness of Holdings to enter into the
Restructuring Agreement, and as an inducement and in consideration therefor,
Holdings has required that TLL Partners agree, and TLL Partners has agreed, to
enter into this Agreement.

<PAGE>

     NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:

1.   Rights of Co-Sale.
     -----------------

1.1 Investors' Rights. Each time TLL Partners (the "Transferring Investor")
    -----------------
    proposes to sell, transfer or otherwise dispose of Subject Shares other than
    to any wholly owned subsidiary or parent of, or to any corporation that is,
    within the meaning of the Securities Act of 1933, as amended (the "Act"),
    controlling, controlled by or under common control with, such Transferring
    Investor, in the case of a limited liability company, to its members, or
    gift transfers to its family members or one or more trusts (each, a
    "Permitted Transferee") for the benefit of the foregoing (in each case a
    "Transfer"), each Investor (referred to herein individually as an "Other
    Investor" and collectively as the "Other Investors") shall have a right of
    co-sale with respect to the sale of Subject Shares owned by such Other
    Investor in accordance with the provisions of this Section 1.
    Notwithstanding anything contained herein to the contrary, the parties
    hereto expressly agree that provisions of this Agreement shall continue and
    be binding against TLL Partners and any Permitted Transferee holding Subject
    Shares.

1.2 Notice of Proposed Transfer. Before the Transferring Investor may Transfer
    ---------------------------
    its Subject Shares, the Transferring Investor shall provide notice (a
    "Transferring Investor Notice") to the Other Investor stating: (a) its bona
    fide intention to Transfer such Subject Shares: (b) the number of Subject
    Shares proposed to be transferred (the "Offered Stock"); (c) the name of
    each proposed transferee; and (d) the cash price or other consideration
    (including the cash equivalent value of any non-cash consideration) per
    share for which the Transferring Investor proposes to transfer the Offered
    Stock (the "Offered Price").

1.3 Right of Co-Sale.
    ----------------

(a) Exercise of Right of Co-Sale. The Other Investors shall have the right to
    ----------------------------
    participate in the Transferring Investor's transfer of the Offered Stock to
    the proposed transferee pursuant to the specified terms and conditions of
    the Transfer as set forth in the Transferring Investor Notice and in
    accordance with the terms and conditions of the Transfer as set forth in
    this Section 1.3 (the "Right of Co-Sale"). For purposes of the preceding
    sentence, the participation of the Other Investor shall be on the same terms
    as the Transferring Investor. To the extent an Other Investor exercises his,
    her or its Right of Co-Sale, the number of shares of Offered Stock that the
    Transferring Investor may transfer pursuant to the Transferring Investor
    Notice shall be correspondingly reduced. Each Other Investor shall be
    responsible for its pro rata share of the reasonable fees and expenses of
    the Transferring Investor relating to the negotiation of the transaction.
    The Right of Co-Sale of the Other Investors shall be subject to the
    following terms and conditions:

(i) Each Other Investor may transfer all or any part of such Other Investor's
    Subject Shares that is not in excess of the number obtained by multiplying
    the aggregate number of shares of Subject Shares constituting the Offered
    Stock by a fraction (A) the numerator of which is the

                                        2

<PAGE>

     number of shares of such Other Investor's Subject Shares, and (B) the
     denominator of which is the total number of Subject Shares then owned by
     the Transferring Investor, the Other Investors and investors, if any, who
     are parties to any other similar co-sale agreement with the Transferring
     Investor which is in existence at the time of the Transfer.

(ii) By written notice received by TLL Partners within fifteen (15) calendar
     days of the mailing of the Transferring Investor Notice by the Transferring
     Investor to the Other Investors, each Other Investor may effect its
     election to participate in the transfer subject to this Section 1.3. Such
     written notice shall contain the Other Investor's election to participate
     in the Transfer of the Offered Stock setting forth the number and type of
     shares that the Other Investor elects to include in the Transfer,
     accompanied by one or more certificates or other documentation, properly
     endorsed for transfer, representing those shares (if the Other Investor so
     elects, then such Other Investor shall be referred to in this Agreement as
     a "Participant").

(b)  Delivery of Stock Certificates and Proceeds. Upon the closing of the
     -------------------------------------------
     Transfer subject to this Section 1.3, the stock certificate(s) or other
     documentation representing the Subject Shares to be transferred shall be
     transferred and delivered to the investor or transferee pursuant to the
     terms and conditions specified in the Transferring Investor Notice, and
     there shall be promptly thereafter remitted to the Participant that portion
     of the proceeds from the Transfer to which it is entitled by reason of
     participating in the Transfer.

1.4  Offering Investor's Right to Transfer. The Transferring Investor may
     -------------------------------------
     transfer that portion of the Offered Stock permitted to be transferred by
     the Transferring Investor, after application of the Right of Co-Sale
     contained in Section 1.3 hereof, to any person named as an investor or
     other transferee in the Transferring Investor Notice, at the Offered Price,
     provided that the transfer: (a) is consummated within ninety (90) days
     after the date of the Transferring Investor Notice; and (b) is in
     accordance with all the terms of this Agreement. If the Offered Stock is
     transferred in accordance with the terms and conditions of this Agreement,
     then the transferee(s) of the Offered Stock shall thereafter hold the
     Offered Stock free of this Agreement and the Right of Co-Sale set forth
     herein. If the Offered Stock is not so transferred during such ninety (90)
     day period, then the Transferring Investor shall not transfer any of the
     Offered Stock without complying again in full with the provisions of this
     Agreement.

1.5  Effect of Prohibited Transfer. In the event TLL Partners should sell any
     -----------------------------
     Subject Shares in contravention of the co-sale rights of the Investors
     under this Agreement (TLL Partners in such capacity a "Violating Investor";
     such a transaction a "Prohibited Transfer"), the Investors, in addition to
     all other remedies available at law, in equity or hereunder, shall have the
     put option provided below, and the Violating Investor shall be bound by the
     applicable provisions of that option. Any attempt by a Violating Investor
     to transfer Subject Shares in violation of Section 1 hereof shall be void.

1.6  Put Option. Notwithstanding Section 1.5 hereof, in the event of a
     ----------
     Prohibited Transfer, the other Investor shall have the right to sell to the
     Violating Investor the type and number of shares of Subject Shares equal to
     the number of shares such Investor would have been entitled to sell to the
     Violating Investor or transferee under Section 1.3 hereof had the

<PAGE>

    Prohibited Transfer been effected pursuant to and in compliance with the
    terms hereof. This sale shall be made on the following terms and
    conditions:

(a) The price per share at which the Subject Shares are to be sold to the
    Violating Investor shall be equal to the price per share (on an as-converted
    basis) paid by the transferee to the Violating Investor in the Prohibited
    Transfer. The Violating Investor shall also reimburse the Investors for any
    and all fees and expenses, including legal fees and expenses, incurred
    pursuant to the exercise or the attempted exercise of the Investors' rights
    under Section 1.

(b) Within ninety (90) days after the later of the dates on which the Investors:
    (i) receive notice of the Prohibited Transfer; or (ii) otherwise become
    aware of the Prohibited Transfer, the Investors, if exercising the option
    created hereby, shall deliver to the Violating Investor the certificate or
    certificates representing shares to be sold, each certificate to be properly
    endorsed for transfer.

(c) The Violating Investor shall, upon receipt of the certificate or
    certificates for the shares to be sold by the Investors pursuant to this
    Section 1.6, pay the aggregate purchase price therefor and the amount of
    reimbursable fees and expenses, as specified in Section 1.6(a), in cash or
    by other means acceptable to the other Investor.

2.     Exceptions, Termination.
       -----------------------

2.1 Exceptions. Notwithstanding anything in this Agreement to the contrary, the
    ----------
    Right of Co-Sale set forth in this Agreement shall not apply to any Transfer
    or series of Transfers of Subject Shares by TLL Partners: (a) pursuant to a
    reorganization or merger of the Company with or into any other corporation
    or entity, or a sale of all or substantially all of the assets of the
    Company, in which the Investors and TLL Partners in the aggregate own
    immediately after such transaction less than 5% of the voting equity
    securities of the surviving entity; or (b) pursuant to the winding up and
    dissolution of the Company.

2.2 Termination of Rights. The Right of Co-Sale set forth herein shall terminate
    ---------------------
    the date on which this Agreement is terminated by a written agreement to
    such effect executed by TLL Partners and the Investors.

3.     Restrictive Legend and Stop-Transfer Orders.
       -------------------------------------------

3.1 Legend. TLL Partners shall cause the legend set forth below, or a legend
    ------
    substantially equivalent thereto, to be placed upon any certificate(s)
    evidencing ownership of its Subject Shares:

          THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
          CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN A AGREEMENT
          ENTERED INTO BY THE ORIGINAL HOLDER OF THESE SHARES, AND
          OTHER PERSONS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
          OFFICE OF THE COMPANY. SUCH

                                  4

<PAGE>

          RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES
          UNDER SOME CIRCUMSTANCES.

3.2 Stop Transfer Instructions. TLL Partners agrees, to ensure compliance with
    --------------------------
    the restrictions referred to herein, that the Company may issue appropriate
    "stop transfer" certificates or instructions with respect to the Subject
    Shares and that, the Company may make appropriate notations to the same
    effect in its records.

4.     Miscellaneous Provisions.
       ------------------------

4.1 Notices. All notices, requests, demands and other communications which are
    -------
    required to be or may be given under this Agreement to any party by any of
    the other parties shall be in writing and shall be deemed to have been duly
    given when: (a) delivered in person; (b) the day following dispatch by a
    nationally recognized overnight courier service (such as Federal Express or
    UPS, etc.) for next day delivery; (c) five (5) days after dispatch by
    certified or registered first class mail, postage prepaid, return receipt
    requested, to the party to whom the same is so given or made; or (d) in the
    case of notice sent by telecopy, on the date of dispatch, provided that the
    report generated by the sender's telecopy machine shows that all pages of
    such notice or other communication were properly transmitted to each
    recipient's telecopy number. Any notice or other communication given
    hereunder shall be addressed to TLL Partners, at its principal offices as
    set forth below or to the Investors at their addresses indicated on the
    signature page hereto; or to such other address as the parties hereto may
    designate by delivering notice thereof to such the other parties in
    accordance herewith.

4.2 Severability. If one or more of the provisions of this Agreement should, for
    ------------
    any reason, be held to be invalid, illegal or unenforceable in any respect,
    such invalidity, illegality or unenforceability shall not affect any other
    provisions of this Agreement, and such invalid, illegal or unenforceable
    provision shall be enforced to the extent permissible.

4.3 Amendment. Any amendment, modification or waiver of this Agreement shall be
    ---------
    effective only with the written consent of TLL Partners and Investors
    holding more than seventy five percent (75%) of the then outstanding Subject
    Shares of all Investors (calculated on a fully diluted basis as if such
    Subject Shares had been converted into Common Stock); provided, however,
    that any person may waive, reduce or release (in whole or in part) any of
    its rights hereunder without the consent of any other parties hereto. Any
    waiver by a party of its rights hereunder shall be effective only if
    evidenced by a written instrument executed by a duly authorized
    representative of such party.

4.4 Governing Law. This Agreement shall be governed by and construed in
    -------------
    accordance with the internal laws (and not the laws pertaining to choice of
    conflict of laws) of the State of Delaware.

4.5 Expenses. If any action at law or in equity is necessary to enforce or
    --------
    interpret the terms of this Agreement, the prevailing party shall be
    entitled to reasonable attorneys' fees, costs and necessary disbursements in
    addition to any other relief to which such party may be entitled.

                                       5

<PAGE>

4.6 Counterparts. This Agreement may be executed in any number of counterparts,
    ------------
    each of which shall be deemed an original and all of which together shall
    constitute one and the same instrument.

4.7 Facsimile Signatures. Any signature page delivered by a fax machine or
    --------------------
    telecopy machine shall be binding to the same extent as an original
    signature page, with regard to any agreement subject to the terms hereof or
    any amendment thereto. Any party who delivers such a signature page agrees
    to later deliver an original counterpart to any party which requests it.

4.8 Binding Effect; Assignment. This Agreement shall be binding upon the parties
    --------------------------
    hereto and their respective successors and assigns. Except as expressly
    provided in this Agreement, this Agreement shall not be construed so as to
    confer any right or benefit upon any person other than the parties to this
    Agreement, and their respective successors and assigns. The parties hereto
    recognize that Holdings intends to transfer to its members its Subject
    Shares or the right to receive such Subject Shares and it is expressly
    acknowledged that, from and after such transfer, such members shall be
    "Investors" under this Agreement. Upon any assignment as contemplated in
    this paragraph, the assignor shall provide written notice of such assignment
    to TLL Partners.

                            [Signature pages follow.]

                                       6

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                                           TLL PARTNERS, L.L.C.

                                           By:  /s/ Robert M. McMurrey
                                              --------------------------------
                                              Name:  Robert M. McMurrey
                                              Title: President

                                           GM HOLDINGS, LLC

                                           By:  /s/ John C. Maggart
                                              --------------------------------
                                              Name:  John C. Maggart
                                              Title: Manager

                                       S-1

<PAGE>

                                     ANNEX A
                       LIST OF STOCKHOLDERS AND OWNERSHIP

                                OF SUBJECT SHARES

                              (as of May 17, 2002)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Stockholders         Address                   Common       Series A    Series B    Series B
                                                Stock       Preferred   Preferred   Warrants
----------------------------------------------------------------------------------------------
<S>             <C>                           <C>           <C>         <C>         <C>
TLL             TLL Partners, L.L.C.          2,956,509(1)    13,200      36,019     324,173
Partners,       110 North College
L.L.C.          Suite 200
                Tyler, Texas 75702
                Attn: Robert M. McMurrey
----------------------------------------------------------------------------------------------
GM              GM Holdings, LLC                405,276        1,800      49,375       -0-
Holdings,       c/o John C. Maggart
LLC             Aintree Capital
                201 Fourth Avenue North
                Nashville, Tennessee 37219
                Telecopier: 615-782-4111
----------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes warrants to purchase 2,660,860 shares of Common Stock.

                                      S-2

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