PRONET INC /DE/, 10-Q, 1995-11-13

PRONET INC /DE/
10-Q, 1995-11-13
RADIOTELEPHONE COMMUNICATIONS

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<PAGE>

==============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

_______________

(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from .................. to ....................

Commission File Number 0-16029

PRONET INC.
(Exact name of registrant as specified in its charter)

DELAWARE 75-1832168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

6340 LBJ Freeway 75240
Dallas, Texas (Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (214-687-2000)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
--- ---

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of September 30, 1995; 6,412,157.

==============================================================================

<PAGE>

PRONET INC.

INDEX

PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at September 30, 1995
and December 31, 1994 ............................... 1

Consolidated Statements of Operations for the Three
and Nine Months Ended September 30, 1995 and 1994 ... 2

Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and 1994 ............ 3

Notes to Consolidated Financial Statements ........... 4

Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations .... 8

PART II. OTHER INFORMATION

Item 1. Legal Proceedings .................................... 16

Item 6. Exhibits and Reports on Form 8-K ..................... 16

SIGNATURES .................................................... 18

</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PRONET INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ............................................. $ 37,708 $ 666
Trade accounts receivable, net of allowance for doubtful accounts ..... 6,271 5,055
Recoverable FIT - Note E .............................................. 1,095 --
Inventories - Note A .................................................. 4,273 4,614
Other current assets - Note A ......................................... 2,659 2,528
-------- --------
52,006 12,863
EQUIPMENT
Pagers ................................................................ 27,922 23,669
Communications equipment .............................................. 20,887 14,561
Security systems equipment ............................................ 11,525 10,517
Office and other equipment ............................................ 5,845 3,210
-------- --------
66,179 51,957
Less allowance for depreciation ....................................... (31,089) (25,441)
-------- --------
35,090 26,516
GOODWILL AND OTHER ASSETS, net of amortization - Note A ................. 96,218 33,894
-------- --------
$183,314 $ 73,273
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Trade payables ........................................................ $ 1,671 $ 4,759
Other accrued expenses and liabilities - Note A ....................... 12,556 7,829
-------- --------
14,227 12,588
LONG-TERM DEBT, less current maturities - Note B ........................ 99,301 9,500
DEFERRED CREDITS - Note C ............................................... 19,498 950
STOCKHOLDERS' EQUITY - Note A
Common stock .......................................................... 68 65
Additional capital .................................................... 51,988 49,574
Retained earnings (deficit) ........................................... (338) 2,026
Less treasury stock at cost ........................................... (1,430) (1,430)
-------- --------
50,288 50,235
-------- --------
$183,314 $ 73,273
======== ========
</TABLE>

See notes to consolidated financial statements.

<PAGE>

PRONET INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES - Note A
Service revenues..................... $15,297 $ 9,373 $39,189 $22,834
Product sales........................ 2,462 1,985 7,131 3,916
------- ------- ------- -------
Total revenues....................... 17,759 11,358 46,320 26,750
Cost of products sold................ (2,615) (1,806) (7,210) (3,661)
------- ------- ------- -------
15,144 9,552 39,110 23,089
COST OF SERVICES
Pager lease and access services...... 3,784 2,485 9,139 5,445
Security systems equipment services.. 360 297 900 914
------- ------- ------- -------
4,144 2,782 10,039 6,359
------- ------- ------- -------
GROSS MARGIN.......................... 11,000 6,770 29,071 16,730

EXPENSES
Sales and marketing.................. 1,865 1,964 5,277 4,765
General and administrative........... 4,083 1,526 10,882 3,821
Depreciation and amortization........ 4,479 2,445 10,941 5,884
------- ------- ------- -------
10,427 5,935 27,100 14,470
------- ------- ------- -------
OPERATING INCOME..................... 573 835 1,971 2,260
OTHER INCOME (EXPENSE)
Interest and other income............ 853 45 976 69
Interest expense..................... (3,340) (602) (5,233) (1,119)
------- ------- ------- -------
(2,487) (557) (4,257) (1,050)
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES.... (1,914) 278 (2,286) 1,210
Income tax expense - Note E........... 116 207 78 684
------- ------- ------- -------
NET INCOME (LOSS).................... $(2,030) $ 71 $(2,364) $ 526
======= ======= ======= =======
NET INCOME (LOSS) PER SHARE........... $ (.32) $ 0.02 $ (.38) $ 0.13
======= ======= ======= =======
WEIGHTED AVERAGE SHARES............... 6,323 4,216 6,199 4,176
======= ======= ======= =======
</TABLE>

See notes to consolidated financial statements.

<PAGE>
PRONET INC. AND SUBSIDIARIES
CONSOLIDATED STATEMNTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................... $ (2,364) $ 526
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 10,941 5,884
Amortization of discount............................... 18 --
Deferred tax provision................................. -- 217
Provision for losses on accounts receivable............ 770 377
Changes in operating assets and liabilities:
Increase in trade accounts receivable................ (800) (80)
(Increase) decrease in inventories................... 1,528 (700)
(Increase) decrease in other current assets.......... (77) 99
Increase (decrease) in trade payables and
other accrued expenses and liabilities............. (252) 2,529
-------- --------
Net cash provided by operating activities.............. 9,764 8,852
INVESTING ACTIVITIES:
Purchase of equipment.................................. (7,735) (4,359)
Acquisitions, net of cash acquired..................... (50,288) (35,949)
Reduction in equipment................................. 721 313
Computer system software, product enhancements
and other intangible assets.......................... (1,143) (427)
Other.................................................. (35) (9)
-------- --------
Net cash used in investing activities.................. (58,480) (40,431)
FINANCING ACTIVITIES:
Exercise of incentive stock options for common stock... 1,357 191
Debt financing costs................................... (5,324) (1,287)
Proceeds from bank debt................................ 39,900 35,100
Proceeds from senior subordinated debt offering........ 99,283 --
Decrease in other long-term obligations................ (58) (194)
Payment on bank debt................................... (49,400) --
-------- --------
Net cash provided by financing activities.............. 85,758 33,810
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................. 37,042 2,231
CASH AND CASH EQUIVALENTS:
Beginning of period.................................... 666 530
-------- --------
End of period.......................................... $ 37,708 $ 2,761
======== ========
</TABLE>

See notes to consolidated financial statements.

<PAGE>

PRONET INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1995

NOTE A - ACCOUNTING POLICIES

BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Form 10-K for
ProNet Inc. (the "Company") filed with the Securities and Exchange Commission
(the "SEC") on March 13, 1995.

INVENTORIES: The Company values inventory at the lower of first-in,
first-out (FIFO) cost or market. Inventories consist of the following (in
thousands):

SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
Raw materials................................. $ 167 $ 263
Work in process............................... 153 89
Finished goods................................ 3,953 4,262
------ ------
$4,273 $4,614
====== ======
</TABLE>

OTHER CURRENT ASSETS: Other current assets consist of the following
(in thousands):
<TABLE>
<CAPTION>

SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
Security transmitter TracPacs................. $1,266 $1,428
Other current assets.......................... 1,393 1,100
------ ------
$2,659 $2,528
====== ======
</TABLE>

GOODWILL AND OTHER ASSETS: Goodwill and other assets consist of the
following (in thousands):
<TABLE>
<CAPTION>

SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
Goodwill...................................... $ 88,577 $27,946
Noncompetition agreements..................... 3,250 3,050
Debt financing costs.......................... 6,769 1,445
Other......................................... 4,673 5,281
-------- -------
103,269 37,722
Less accumulated amortization................. 7,051 3,828
-------- -------
$ 96,218 $33,894
======== =======
</TABLE>

OTHER ACCRUED EXPENSES AND LIABILITIES: Other accrued expenses and
liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>

SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
Accrued revenue................................ $ 4,751 $3,530
Customer deposits.............................. 2,108 2,247
Accrued interest on senior subordinated debt... 3,464 --
Other accrued liabilities...................... 2,233 2,052
------- ------
$12,556 $7,829
======== ========
</TABLE>

<PAGE>

Goodwill is amortized on the straight-line method over a fifteen year
term. Noncompetition agreements are amortized on the straight-line method
over a five year term. Senior subordinated debt offering costs are amortized
on the straight-line method over a ten year term.

NET INCOME PER SHARE: Net income per share is based on the weighted
average number of common and common equivalent shares outstanding during each
period. Stock options are considered common stock equivalents for purposes of
computing weighted average shares outstanding in periods with net income.

RECLASSIFICATION OF FINANCIAL STATEMENTS: The 1994 financial statements
have been reclassified to conform to the 1995 financial statement
presentation.

NOTE B - LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------- -----------------
<S> <C> <C>
Senior subordinated notes..................... $99,301 $ --
Revolving line of credit...................... -- 9,500
------- ------
99,301 9,500
Less current maturities....................... -- --
------- ------
$99,301 $9,500
======= ======
</TABLE>

During the nine months ended September 30, 1995, the Company paid
$1,496,033 in interest compared to $677,800 for the comparable period in 1994.

CREDIT FACILITIES

In June 1994, the Company (the "Borrower") entered into an agreement
with The First National Bank of Chicago, as Agent (the "Lender"), making
available a $52 million revolving line of credit (the "Former Credit
Facility") for working capital purposes and for acquisitions approved by the
Lender. The Former Credit Facility was amended and restated in February 1995
and June 1995 (the "New Credit Facility") increasing the amount of available
credit from $52 million under the Former Credit Facility to $125 million
under the New Credit Facility and permitting the issuance of senior
subordinated notes. In February 1997, the revolving line of credit under the
New Credit Facility will convert to a five and one-half year term loan
maturing in July 2002. The term loan may be repaid at any time and will be
payable in quarterly installments, based on the principal amount outstanding
on the conversion date, in amounts ranging from 3.25% initially to 5.75%. The
borrowings bear interest, at the Company's designation, at either (i) the
greater of the Lender's corporate base rate or the Federal Funds Rate, plus a
margin of up to 1.25%, or (ii) LIBOR, plus a margin of up to 2.50%. In
addition, an arrangement fee of 1.125% of the aggregate commitment was paid
in February 1995 and a commitment fee is required on the revolving line of
credit at .5% per annum computed on the daily unused portion of the available
loan commitment. Borrowings are secured by all assets of the Company and its
subsidiaries. The New Credit Facility requires maintenance of certain
specified financial and operating covenants and prohibits the payment of
dividends or other distributions on the Company's common stock (the "Common
Stock"). The New Credit Facility also states that in the event of an issuance
of subordinated indebtedness of the Borrower or an equity issuance (other
than the common stock offering which occurred in December 1994), the Lender
can request that some portion of the proceeds be used to pay down outstanding
borrowings under the New Credit Facility.

Effective June 12, 1995, the Lender requires that the interest expense
on 50% of the aggregate principal amount of all outstanding indebtedness be
fixed at a prevailing market rate through either or both of (a) loans or
other financial accommodations bearing interest at a fixed rate or (b) an
interest rate exchange or insurance agreement or agreements with one or more
financial institutions. At September 30, 1995, none of the outstanding
long-term debt was subject to hedging agreements.

<PAGE>

SENIOR SUBORDINATED NOTES

In June 1995, the Company completed a Rule 144A Offering of $100 million
principal amount of its 11 7/8% Senior Subordinated Notes due 2005 (the
"Notes"). Proceeds to the Company from the sale of the Notes, after deducting
discounts, commissions and offering expenses, were approximately $95.6
million. The Company used approximately $49.4 million of the net proceeds to
repay all indebtedness outstanding under the New Credit Facility. The Company
expects to use the remaining proceeds to pursue the Company's acquisition
strategy, to purchase frequency rights, to make capital expenditures for
buildout of the Company's regional paging systems and for enhanced services,
and for working capital and general corporate purposes.

The Notes are general unsecured obligations of the Company and are
subordinated to all existing and future senior debt of the Company. The
indenture provides that the Company may not incur any debt that is
subordinate in right of payment to the senior debt and senior in right of
payment to the Notes. The indenture also contains certain covenants that,
among other things, limit the ability of the Company and its subsidiaries to
incur indebtedness, pay dividends, engage in transactions with affiliates,
sell assets and engage in certain other transactions. Interest on the Notes
will be payable in cash semi-annually, on each June 15 and December 15,
commencing December 15, 1995. The Notes will not be redeemable at the
Company's option prior to June 15, 2000.

The Company filed a Form S-4 Registration Statement (the "1995 Form
S-4") on July 7, 1995, to register the Notes with the SEC under the
Securities Act of 1993, as amended (the "Securities Act").

NOTE C - DEFERRED CREDITS

Deferred credits consist of the following (in thousands):
<TABLE>
<CAPTION>

SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------- -----------------
<S> <C> <C>
Deferred payments............................. $ 18,600 $ 950
Deferred tax liability........................ 898 --
-------- -------
$ 19,498 $ 950
======== =======
</TABLE>

The Company has deferred payments outstanding related to the High Tech
Communications Corp. ("High Tech"), Signet Paging of Charlotte, Inc.
("Signet"), Carrier Paging Systems, Inc. ("Carrier"), All City Communication
Company, Inc. ("All City"), Americom Paging Corporation ("Americom") and
Lewis Paging, Inc. ("Lewis") acquisitions of $200,000, $4.2 million, $3.0
million, $350,000, $8.7 million and $2.1 million, respectively, which are due
and payable one year from the closing of the respective transactions. These
balances are payable, at the Company's discretion, either in cash or shares
of the Company's Common Stock based on market value at the date of payment.
In August 1995, the Company issued 44,166 shares of Common Stock to the RCC
division of Chicago Communication Service, Inc. ("ChiComm") for full payment
of the $950,000 deferred portion of the ChiComm purchase price. The purchase
prices for the Contact Communications, Inc. ("Contact"), Radio Call Company,
Inc. ("Radio Call"), Metropolitan Houston Paging Services, Inc.
("Metropolitan") and Gold Coast Paging, Inc. ("Gold Coast") acquisitions were
paid in full at closing.

On July 25, 1995, the Company filed a Form S-3 Registration Statement
(the "1995 S-3") to register 2,000,000 shares of the Common Stock to fund the
deferred payments related to the purchase prices for the Company's
acquisitions.

NOTE D - ACQUISITIONS

<PAGE>

Lewis for $5.6 million and Gold Coast for $2.3 million and all the
outstanding capital stock of Metropolitan for $21.0 million. The eleven
completed acquisitions were accounted for as purchases and funded either by
borrowings under the New Credit Facility or proceeds from the sale of the
Notes. Also in 1995, the Company signed letters of intent or definitive
agreements to purchase the paging assets of SigNet Paging of Raleigh, Inc.
("SigNet Raleigh"), Sun Paging Communications ("Sun"), Paging and Cellular of
Texas (a sole proprietorship) ("P&C"), Cobbwells, Inc. dba Page One/Airtel
("Page One"), RCS Paging, a Division of Reisenweaver Communications, Inc.
("RCS") and Nationwide Paging, Inc. ("Nationwide") and all of the outstanding
stock of Apple Communications, Inc. ("Apple"), Williams Metro Communications
Corp. and affiliates ("Williams"), Total Communications,Inc. ("Total") and
A.G.R. Electronics, Inc. and affiliates ("AGR"). The nine pending acquisitions
are expected to close in late 1995 or early 1996 and will be funded by proceeds
from the sale of the Notes, borrowings under the New Credit Facility and
issuances of shares of common stock of the Company. The nine pending
acquisitions are subject to various conditions, including FCC, regulatory and
other third-party approvals and the execution of definitive agreements.

The pro forma unaudited results of operations for the nine months ended
September 30, 1995 and 1994, (which include acquisitions closed as of
September 30, 1995), assuming consummation of the purchases at the beginning
of the periods indicated, are as follows (in thousands, except per share
data):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1995 1994
-------- --------
<S> <C> <C>
Total revenues...................... $ 55,323 $ 53,849
Net income (loss)................... (3,369) (4,063)
Net income (loss) per common share.. (.54) (.97)
</TABLE>

These pro forma results have been prepared for comparative purposes only
and do not purport to be indicative of the results of operations which
actually would have resulted had the acquisitions been made as of those dates
or of results which may occur in the future.

NOTE E - INCOME TAXES

For the three and nine months ended September 30, 1995, the primary
differences between the U.S. Federal statutory tax rate and the effective tax
rate are state income taxes, the amortization of goodwill related to stock
acquisitions, which is not deductible for tax purposes, additional
compensation expense (for tax purposes) for certain sales of the Company's
Common Stock acquired through incentive stock options and an allowance
provided against the current year operating loss which may not be realizable
within the statutory time frame.

During the three and nine months ended September 30, 1995, the Company
paid approximately $6,600 and $289,000 respectively, for Federal and state
income taxes combined, compared to $143,700 and $678,400 for the comparable
periods ended September 30, 1994.

NOTE F - SUBSEQUENT EVENTS

Effective October 2, 1995, the Company completed the acquisition of
substantially all of the paging assets of P&C for approximately $9.5 million
in cash. This acquisition was accounted for as a purchase and was funded
primarily by a portion of the proceeds from the sale of the Notes.

On October 6, 1995, the SEC declared the 1995 S-3 and 1995 S-4 effective.

<PAGE>

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company provides wireless messaging services through its paging and
security systems operations. Until 1994, paging services were provided solely
to members of the healthcare industry. Beginning in 1994, the Company
broadened its paging focus through the acquisition of paging businesses
serving the general commercial marketplace. As a result of completed and
anticipated acquisitions, the Company's results of operations for prior
periods may not be indicative of future performance.

The Company focuses its activities in five geographic regions or
communication "SuperCenters" centered around major metropolitan markets and
population corridors, which generally have the demographics, market size,
travel patterns and types of businesses that indicate significant potential
demand for the Company's products and services. The Company is a leading
provider of paging services in 13 major metropolitan markets in the United
States, including New York, Chicago, Dallas/Fort Worth, Houston, Charlotte
and Los Angeles.

In both its paging and security systems operations, the Company builds
and operates communications systems and generates revenues from the sale and
lease of pagers, Intelligent Processing Terminal ("IPT") systems and security
devices and related access fees. The Company's revenues are derived primarily
from fixed monthly, quarterly, annual and bi-annual fees charged to customers
for paging and security tracking services. While a subscriber remains in
service, operating results benefit from this recurring monthly revenue stream
with minimal requirements for additional selling expenses or other fixed
costs. However, certain variable costs such as telephone and equipment
charges are directly related to the number of pagers in service.

Each month a percentage of the customer base disconnects service for a
variety of reasons. ProNet does, however, place substantial emphasis on
customer care and quality of service and as a result currently has one of the
lowest average monthly disconnect ("churn") rates in the paging industry -
approximately 2%, compared to an industry average of approximately 2.9%
(source: June 1994 EMCI, Inc. industry survey for the years 1990 to 1993).
Churn is the number of customers discontinuing service each month as a
percentage of the total subscriber base. In the future, the Company expects
that it will experience a higher churn rate among small businesses,
individual consumers and other subscribers than it has experienced
historically with its healthcare subscribers. The Company's monthly churn
rate in the security tracking business is lower than in its paging business -
currently approximately .6%.

Currently, service revenues consist of two components - service fees and
unit leasing fees. As the Company pursues its strategy of expanding into new
markets, increasing its coverage within its existing service areas and
broadening its customer base and distribution channels, the percentage of
customers who own and maintain ("COAM") their paging equipment rather than
leasing it from the Company is likely to increase. This, together with
competitive factors, may result in declining service revenues per subscriber
since these customers will not pay a leasing fee as part of their monthly
charge. However, the Company will not incur the capital costs related to
these COAM pagers. Additionally, average revenue per unit ("ARPU") for pagers
served through resellers is lower than for direct sales due to the wholesale
rates charged to this distribution channel. Such resellers do, however,
assume all selling, marketing, subscriber management and related costs that
would otherwise be incurred by the Company.

Product sales and costs are also likely to increase as the business mix
shifts in favor of COAM units. The Company's objective is to break even on
product sales, but it may selectively offer discounts due to promotional
offers or competitive pressures.

The Company currently enjoys low operating costs per unit due to the
efficiency of its operations. It expects that the development of its business
around its SuperCenters will result in substantial economies of scale and
consolidation of operating and selling expenses that will help it retain this
competitive advantage.

<PAGE>

Earnings before other income (expense), income taxes, depreciation and
amortization ("EBITDA") is a standard measure of operating performance in the
paging industry. The Company's EBITDA has grown at a compound annual rate of
over 30% over the past four years. EBITDA growth is expected to continue
although near term margins may be slightly impacted by start-up costs
associated with certain SuperCenters and the buildout of existing and
acquired frequencies in its marketplaces. The Company, unlike a number of its
competitors, has generated net income in recent years. It should be noted,
however, that non-cash and financing-related charges for the Company's
acquisition program have the potential to negatively impact earnings in the
future.

The following discussion and analysis of financial condition and results
of operations includes the historical results of operations of the Company
and the results of operations of Contact, Radio Call, ChiComm, High Tech,
Signet, Carrier, Metropolitan, All City, Americom, Lewis and Gold Coast. The
results of operations of P&C and pending acquisitions are not reflected in
this discussion.

PAGING SYSTEMS' RESULTS OF OPERATIONS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

Net revenues and gross margin for paging systems consisted of the
following:

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------------
1995 1994 1995 1994
------- ------ ------- -------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues
Service revenues..................... $13,929 $ 8,111 $35,207 $19,096
Product sales........................ 2,462 1,968 6,994 3,818
------- ------- ------- -------
Total revenues......................... 16,391 10,079 42,201 22,914
Cost of products sold.................. (2,613) (1,802) (7,145) (3,627)
------- ------- ------- -------
Net revenues (1)....................... 13,778 8,277 35,056 19,287
Cost of service revenues............... (3,784) (2,485) (9,139) (5,445)
------- ------- ------- -------
Gross margin........................... 9,994 5,792 25,917 13,842
Sales and marketing expenses........... 1,793 1,907 5,065 4,582
General and administrative expenses.... 3,960 1,362 10,393 3,275
Depreciation and amortization expense.. 4,124 2,052 9,756 4,733
------- ------- ------- -------
Operating income....................... $ 117 $ 471 $ 703 $ 1,252
======= ======= ======= =======
EBITDA................................. $ 4,241 $ 2,523 $10,459 $ 5,985
======= ======= ======= =======
</TABLE>

(1) Net revenues represent revenues from services, rent and maintenance plus
product sales less cost of products sold.

PAGING SYSTEMS' NET REVENUES for the three and nine months ended
September 30, 1995 increased to $13.8 million and $35.1 million,
respectively, compared to $8.3 million and $19.3 million for the comparable
periods in 1994. Service revenues increased approximately 72% and 84%,
respectively, to $13.9 million and $35.2 million for the three and nine
months ended September 30, 1995, compared to $8.1 million and $19.1 million
for the comparable periods in 1994. This increase was primarily the result of
a 125% increase in pagers in service to 768,660 at September 30, 1995 from
341,300 at September 30, 1994. The increase in pagers in service was
primarily the result of the acquisitions of Radio Call, ChiComm, and High
Tech in 1994 and the acquisitions of Signet, Carrier, All City, Metropolitan,
Americom, Lewis and Gold Coast during the first three quarters of 1995. In
1994 and 1995, most of the Company's growth in pagers in service has been
from acquisitions. In addition, internal growth accounted for approximately
30,479 pagers in service during the quarter ended September 30, 1995,
representing an annual growth rate of approximately 27%. The Company believes
that this internal growth rate will increase due to continued commercial
paging activity.

<PAGE>

ARPU was $6.22 for the month of September 1995 compared to $8.63 for the
month of September 1994. This decrease was due to the Company's continued
acquisition of commercial paging businesses, which traditionally have lower
ARPU than healthcare operations since most commercial pagers are COAM and do
not generate leasing fees. The Company believes that ARPU will continue to
decrease, completion of the pending acquisitions, as the Company continues to
become more involved in the commercial paging business and expands its
reseller operations, which tend to generate lower revenues per subscriber.

PRODUCT SALES LESS COST OF PRODUCTS SOLD were ($151,000) for both the
three and nine months ended September 30, 1995, compared to $166,000 and
$191,000 for the comparable periods ended September 30, 1994. In certain of
the Company's markets, pagers are sold at a slight loss in order to gain
market share. As the Company's commercial operations continue to grow,
management anticipates that product sales will increase but that margins on
these sales will continue to be lower than were achieved prior to 1994 in the
healthcare industry. Management also anticipates that the Company's margins
may vary from market to market due to competition and other factors.

RECLASSIFICATION OF COSTS. During 1994, the Company restructured its
technical, sales and operational functions into its decentralized SuperCenter
strategy. To reflect this restructuring financially, certain costs that were
previously classified as cost of service revenues and sales and marketing
expenses in 1994 were reclassified to general and administrative expenses in
1995. In the aggregate, costs of service revenues, sales and marketing
expenses and general and administrative expenses increased by 66% and 85% for
the three and nine months ended September 30, 1995, compared to the same
periods last year as a result of the Company's internal growth and
acquisitions. In total, these costs were $9.5 million (69% of paging systems'
net revenues) and $24.6 million (70% of paging systems' net revenues) for the
three and nine months ended September 30, 1995, compared to $5.8 million (70%
of paging systems' net revenues) and $13.3 million (69% of paging systems'
net revenues) for the comparable periods ended September 30, 1994. The
increase in these costs as a percentage of net revenues for the nine months
ended September 30, 1995 from the comparable period in 1994 was the result of
increased expenses related to the buildout of the Company's regional
SuperCenters. These expenses as a percentage of net revenues should decline
in the future as new acquisition companies are integrated into the existing
SuperCenters.

PAGING SYSTEMS' GROSS MARGIN (net revenues less cost of service
revenues) was $10.0 million (73% of paging systems' net revenues) and $25.9
million (74% of paging systems' net revenues) for the three and nine months
ended September 30, 1995, compared to $5.8 million (70% of paging systems'
net revenues) and $13.8 million (72% of paging systems' net revenues) for the
comparable periods ended September 30, 1994. The increase in gross margin was
due to the reclassification of certain operating expenses described above.
The Company believes that the margin on net revenues will decrease in the
near future as an increasing number of the Company's customers elect to
purchase their paging equipment resulting in a corresponding decrease in ARPU
as discussed above. The Company also believes that the margin on net revenues
will decrease in the near future as the Company upgrades its existing systems
in certain markets and expands to new markets in 1996. In addition, cost of
service revenues increased to $3.8 million and $9.1 million for the three and
nine months ended September 30, 1995, compared to $2.5 million and $5.4
million for the comparable periods ended September 30, 1994, as a result of
the increased costs of servicing new customers added through both internal
growth and acquisitions.

PAGING SYSTEMS' SALES AND MARKETING EXPENSES were $1.8 million (13% of
paging systems' net revenues) and $5.1 million (14% of paging systems' net
revenues) for the three and nine months ended September 30, 1995, compared to
$1.9 million (23% of paging systems' net revenues) and $4.6 million (24% of
paging systems' net revenues) for the comparable periods of the prior year.
The decrease as a percentage of paging systems' net revenues was due to the
reclassification of certain operating expenses described above. These
expenses are not expected to change significantly in the future as a
percentage of paging systems' net revenues.

PAGING SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $4.0 million
(29% of paging systems' net revenues) and $10.4 million (30% of paging
systems' net revenues) for the three and nine months ended September 30,
1995, compared to $1.4 million (16% of paging systems' net revenues) and $3.3
million (17% of paging systems' net revenues) for the comparable periods
ended September 30, 1994. The increase as a percentage of paging systems' net
revenues was due to the reclassification of certain operating expenses
described above, plus the cost of additional management hired in the fourth
quarter of 1994 and the first quarter of 1995, offset by savings resulting
from

<PAGE>

consolidating the paging operations into the Company's SuperCenters. The
Company anticipates that paging systems' general and administrative expenses
will continue to grow but at a lesser rate than increases in paging systems'
net revenues, as a result of general and administrative expenses being
amortized across a larger subscriber base as well as savings resulting from
the consolidation of acquisitions.

PAGING SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES are better
expressed as a percentage of service revenues since product sales do not
require any capital investment. Paging systems' depreciation and amortization
expenses as a percentage of service revenues for the three and nine months
ended September 30, 1995, were 30% and 28%, respectively, compared to 25% for
both of the comparable periods in 1994. The increase was due to the
amortization of intangibles arising from acquisitions. The Company believes
that this trend in depreciation and amortization expenses as a percentage of
service revenues will continue in the short term as a result of acquisitions
and continued capital investment in paging equipment to support the Company's
growth.

EBITDA for the paging systems' operations was $4.2 million (31% of
paging systems' net revenues) and $10.5 million (30% of paging systems' net
revenues) for the three and nine months ended September 30, 1995, compared to
$2.5 million (30% of paging systems' net revenues) and $6.0 million (31% of
paging system's net revenues) for the comparable periods in 1994.
Consolidation savings in general and administrative expenses were offset by
lower margins on product sales. The Company believes EBITDA may decrease in
the short term due to system upgrades, market expansion and increased
commercial paging activity as a result of internal growth and future
acquisitions of commercial paging operations, but will increase over time as
the Company integrates the acquired operations and achieves resulting
economies of scale and operating efficiencies.

SECURITY SYSTEMS' RESULTS OF OPERATIONS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994

Security systems' net revenues and gross margin consisted of the
following:

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------------
1995 1994 1995 1994
------- ------ ------- -------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues
Service revenues..................... $1,368 $1,262 $3,982 $3,738
Product Sales........................ -- 17 137 98
------ ------ ------ ------
Total revenues......................... 1,368 1,279 4,119 3,836
Cost of products sold.................. (2) (4) (65) (34)
------ ------ ------ ------
Net revenues (1)....................... 1,366 1,275 4,054 3,802
Cost of service revenues............... (360) (297) (900) (914)
------ ------ ------ ------
Gross margin........................... 1,006 978 3,154 2,888
Sales and marketing expenses........... 72 57 212 183
General and administrative expenses.... 123 164 489 546
Depreciation and amortization expense.. 355 393 1,185 1,151
------ ------ ------ ------
Operating income....................... $ 456 $ 364 $1,268 $1,008
====== ====== ====== ======
EBITDA................................. $ 811 $ 757 $2,453 $2,159
====== ====== ====== ======
</TABLE>

(1) Net revenues represent revenues from services, rent and maintenance plus
product sales less cost of products sold.

SECURITY SYSTEMS' SERVICE REVENUES increased to $1.4 million and $4.0
million for the three and nine months ended September 30, 1995, from $1.3
million and $3.7 million for the comparable periods in 1994. The increase was
due to the installation of four new systems since September 30, 1994, as well
as expansion and additional penetration in existing markets. The number of
TracPacs in service increased from 26,970 at September 30, 1994 to 27,897 at
September 30, 1995.

<PAGE>

PRODUCT SALES LESS COST OF PRODUCTS SOLD was ($2,000) and $72,000 for
the three and nine months ended September 30, 1995 compared to $13,000 and
$64,000 for the comparable periods in 1994. Net revenues fluctuate depending
on the type and volume of equipment sold. The Company does not anticipate
significantly increasing this area of security systems operations.

SECURITY SYSTEMS' GROSS MARGIN was $1.0 million (74% of security
systems' net revenues) and $3.2 million (78% of security systems' net
revenues) for the three and nine months ended September 30, 1995, compared to
$978,000 (77% of security systems' net revenues) and $2.9 million (76% of
security systems' net revenues) for the comparable periods ended September
30, 1994. The increase as a percentage of net revenues for the nine months
ended September 30, 1995 from the comparable period in 1994 was due to
additional product sales in the first quarter of 1995. The Company
anticipates that these margins will decrease slightly in the near future as
more systems are installed in new or existing markets, but will increase over
time as more subscribers are added to new or existing systems.

SECURITY SYSTEMS' SALES AND MARKETING EXPENSES were $72,000 and $212,000
for the three and nine months ended September 30, 1995 (5% of security
systems' net revenues for each period), compared to $57,000 and $183,000 for
the comparable periods in 1994 (4% and 5% of security systems' net revenues).
The Company currently anticipates hiring additional management in the near
future to accelerate the growth of security systems' net revenues. Therefore,
these expenses should grow at or slightly above the rate of growth in the
related security systems' net revenues and therefore should increase slightly
as a percentage of these revenues.

SECURITY SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $123,000 (9%
of security systems' net revenues) and $489,000 (12% of security systems' net
revenues) for the three and nine months ended September 30, 1995, compared to
$164,000 (13% of security systems' net revenues) and $546,000 (14% of
security systems' net revenues) for the comparable periods ended September
30, 1994. This decrease in general and administrative expenses was the result
of the decreased burden of corporate overhead as a result of the Company's
expanded paging operations. The Company currently believes that general and
administrative expenses will grow at a slower rate than security systems' net
revenues and therefore should represent a decreasing percent of such revenues.

SECURITY SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES are better
expressed as a percentage of service revenues since product sales do not
require any capital investment. Security systems' depreciation and
amortization expenses as a percentage of service revenues for the three and
nine months ended September 30, 1995, were 26% and 30%, respectively,
compared to 31% for both of the comparable periods in 1994. The decrease was
a result of certain intangibles becoming fully amortized in 1995. The Company
believes that the depreciation and amortization will increase in the future
due to the capital investment necessary to support the expansion into new
markets as well as growth within existing markets.

EBITDA for the security systems' operations was $811,000 (59% of
security systems' net revenues) and $2.5 million (61% of security systems'
net revenues) for the three and nine months ended September 30, 1995,
compared to $757,000 (59% of security systems' net revenues) and $2.2 million
(57% of security systems' net revenues) for the same periods in 1994. This
increase was primarily due to decreases in general and administrative
expenses as described above.

OTHER INCOME (EXPENSE)

Other income (expense) includes interest income generated from
short-term investments and interest expense incurred. The period-to-period
fluctuation in interest expense has resulted primarily from changes in the
outstanding amounts under the Company's revolving loan agreement and the
Notes. Interest expense increased in 1995 as a result of interest due on the
Notes which were issued in June 1995. Interest expense is expected to
continue to increase in the future as a result of interest due on the Notes
and borrowings under the New Credit Facility to fund further acquisitions.
Proceeds from the sale of the Notes caused interest income to increase in
1995. The Company anticipates this income will decline in future periods as
the proceeds are used to fund future acquisitions.

<PAGE>

FEDERAL INCOME TAXES

At December 31, 1994 the Company had net operating loss carryforwards of
$3.9 million for income tax purposes that expire in years 2004 through 2008.
For the nine months ended September 30, 1995, the differences between the
U.S. Federal statutory tax rate and the effective rate in the Company's
historical financial statements are state income taxes, the amortization of
goodwill related to stock acquisitions, which is not deductible for tax
purposes, additional compensation expense (for tax purposes) for certain
sales of the Company's stock acquired through incentive stock options and an
allowance provided against the current year operating loss which may not be
realizable within the statutory time frame. The Company anticipates that in
the future the primary differences will continue to be state income taxes and
the amortization of goodwill related to stock acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

During 1994 and 1995, the Company financed the majority of its growth,
other than acquisitions, through internally generated funds. Net cash
provided by operating activities was $9.8 million for the nine months ended
September 30, 1995 compared to $8.9 million for the comparable period in
1994. The net increase in cash provided by operating activities was due to
increases in depreciation and amortization and decreases in inventories,
offset by decreases in net income and trade payables and increases in trade
accounts receivable. The acquisitions of Contact, Radio Call, ChiComm and
High Tech in 1994 and Signet, Carrier, Metropolitan and All City in the first
and second quarters of 1995 were financed under the New Credit Facility.
Proceeds from the sale of the Notes funded the acquisitions of Americom,
Lewis and Gold Coast in the third quarter of 1995. The Company anticipates
that its ongoing capital needs, including the pending acquisitions, will be
funded with the borrowings under the New Credit Facility, proceeds from the
sale of the Notes and net cash generated by operations.

CAPITAL EXPENDITURES

As of September 30, 1995, the Company had invested $48.8 million in
system equipment and pagers for its 13 major metropolitan markets and $11.5
million in system equipment and TracPacs for its twenty-eight security
systems.

Capital expenditures for paging systems' equipment and pagers (excluding
assets acquired pursuant to the completed acquisitions) were $6.7 million for
the nine months ended September 30, 1995 compared to $3.8 million for the
comparable period in 1994. Capital expenditures for security systems'
equipment and TracPacs were $1.0 million for the nine months ended September
30, 1995 compared to $527,000 for the comparable period in 1994.

At September 30, 1995, the Company had invested $4.3 million in
inventories, the majority of which were pagers, compared to $4.6 million at
December 31, 1994. The decrease was due to better inventory management as the
SuperCenters generated operating efficiencies. Inventory balances are
expected to increase over prior years as a result of acquisitions and
increased subscriber growth.

Except for those assets acquired through acquisitions, the Company
expects to meet its capital requirements in 1995 with cash generated from
operations. Although the Company had no material binding commitments to
acquire capital equipment at September 30, 1995, the Company anticipates
capital expenditures for the remainder of 1995 to be approximately $6.6
million for the purchase of pagers and system equipment for its current
paging systems' operations and $1.2 million for the manufacture of TracPacs
and the purchase of system equipment for its security systems' operations.

SENIOR SUBORDINATED NOTES

In June 1995, the Company completed a Rule 144A Offering of $100 million
principal amount of its 11 7/8% Senior Subordinated Notes due 2005. Proceeds
to the Company from the sale of the Notes, after deducting discounts,
commissions and offering expenses, were approximately $95.6 million. The
Company used approximately $49.4 million of the net proceeds to repay all
indebtedness outstanding under the New Credit Facility. The Company expects
to use the remaining proceeds to pursue the Company's acquisition strategy,
to purchase frequency rights, to

<PAGE>

make capital expenditures for buildout of the Company's regional paging
systems and for enhanced services, and for working capital and general
corporate purposes.

The Notes are general unsecured obligations of the Company and are
subordinated to all existing and future senior debt of the Company. The
indenture provides that the Company may not incur any debt that is
subordinate in right of payment to the senior debt and senior in right of
payment to the Notes. The indenture also contains certain covenants that,
among other things, limit the ability of the Company and its subsidiaries to
incur indebtedness, pay dividends, engage in transactions with affiliates,
sell assets and engage in certain other transactions. Interest on the Notes
will be payable in cash semi-annually on each June 15 and December 15,
commencing December 15, 1995. The Notes will not be redeemable at the
Company's option prior to June 15, 2000.

The Company filed the 1995 S-4 on July 7, 1995 to register the Notes
with the SEC under the Securities Act. On October 6, 1995, the SEC declared
the 1995 S-4 effective.

CREDIT FACILITIES

The Former Credit Facility was amended and restated in February 1995 to
increase the amount of available credit from $52 million to $125 million. The
New Credit Facility was subsequently amended in June 1995. The New Credit
Facility is a revolving line of credit which, in February 1997, will convert
to a five and one-half year term loan maturing in July 2002. The term loan
may be repaid at any time and will be payable in quarterly installments,
based on the principal amount outstanding on the conversion date, in amounts
ranging from 3.25% initially to 5.75% over five and one-half years.

Concurrent with the Company's Rule 144A Offering, the New Credit
Facility was amended by and among the Company and its Lenders to permit
issuance of the Notes. The approximate $49.4 million outstanding under the
New Credit Facility was repaid with the proceeds of the Rule 144A offering.

ACQUISITIONS

In early 1993, the Company announced its plans to commence a program of
acquiring businesses that serve the commercial paging market and offer
operational synergies when integrated within the Company's SuperCenters.
During 1994, the Company acquired all of the outstanding capital stock of
Contact, substantially all of the paging assets of Radio Call and High Tech
and substantially all of the Chicago-area paging assets of ChiComm for $19.0
million, $7.8 million, $900,000 and $9.8 million, respectively. In the first
nine months of 1995, the Company acquired the paging assets of All City for
$6.4 million, Signet for $9.0 million, Carrier for $6.5 million, Americom for
$17.5 million, Lewis for $5.6 million and Gold Coast for $2.3 million and all
the outstanding capital stock of Metropolitan for $21.0 million. In October
1995, the Company purchased substantially all of the paging assets of P&C for
$9.5 million in cash. The twelve completed acquisitions were all accounted
for as purchases and were funded either by borrowings under the New Credit
Facility or proceeds from the sale of the Notes. Also in 1995, the Company
signed letters of intent or definitive agreements to purchase the paging
assets of SigNet Raleigh, Sun, Page One, RCS and Nationwide and all of the
outstanding capital stock of Apple, Williams, Total and AGR. The nine pending
acquisitions are expected to close in late 1995 or early 1996 and will be
funded by proceeds from the sale of the Notes, borrowings under the New
Credit Facility and issuances of shares of common stock of the Company. The
pending acquisitions are subject to various conditions, including FCC,
regulatory and other third-party approvals and the execution of definitive
agreements.

The Company has deferred payments outstanding related to the High Tech,
Signet, Carrier, All City, Americom and Lewis acquisitions of $200,000, $4.2
million, $3.0 million, $350,000, $8.7 million and $2.1 million, respectively,
which are due and payable one year from the closing of the respective
transactions. These balances are payable, at the Company's discretion, either
in cash or shares of the Company's Common Stock based on current market value
at the date of payment. In August 1995, the Company issued 44,166 shares of
its common stock to ChiComm for full payment of the $950,000 deferred portion
of the purchase price of ChiComm. The purchase prices for Contact, Radio
Call, Metropolitan, Gold Coast and P&C were paid in full at closing.

<PAGE>

On July 25, 1995, the Company filed the 1995 S-3 to register 2,000,000
shares of the Common Stock to fund the deferred payments related to the
purchase prices for the Company's acquisitions. The SEC declared the 1995 S-3
effective on October 6, 1995.

REGISTRATION STATEMENTS

The Company filed an amendment to its Form S-4 Registration Statement on
October 5, 1995, to register the Notes with the Securities and Exchange
Commission under the Securities Act of 1993, as amended.

On October 5, 1995, the Company filed an amendment to its Form S-3
Registration Statement to register 2,000,000 shares of the Common Stock to
fund the deferred payments related to the purchase prices for the Company's
acquisitions.

The SEC declared the 1995 S-3 and the 1995 S-4 effective on October 6,
1995.

<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On August 2, 1995, the Company and its wholly-owned subsidiary, Contact
Communications Inc. ("CCI") filed a lawsuit against Page East, Inc. ("Page
East"), C.T. Spruill ("Spruill"), Network USA Paging Corp. ("Network USA"),
and A+ Communications, Inc. ("A+") in the 296th Judicial District Court,
Collin County, Texas, Cause No. 296-850-95. The lawsuit alleges that Network
USA and A+, with full knowledge of the terms and conditions of the letter of
intent between ProNet and CCI, as buyers, and Page East and Spruill, as
sellers, maliciously interfered with existing contracts and with prospective
business relationships with Page East, Spruill, and the customers of Page
East. The lawsuit also alleges that Page East and Spruill breached their
contractual obligations and made actionable misrepresentations and material
omissions to ProNet and CCI, which constituted fraud. The lawsuit seeks
damages in an unspecified amount, exemplary damages, and attorney's fees.
The Company cannot predict the outcome of the litigation. However, based
upon the information available to the Company at this time, the Company
believes that this matter should not have a material adverse effect on the
Company.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS.

4.1 - Indenture, dated as of June 15, 1995, between the
Registrant and First Interstate Bank of Texas, N.A., as
Trustee (filed as an Exhibit to the Registrant's
Current Report on Form 8-K, dated July 5, 1995, and
incorporated herein by reference).

4.2 - Registration Rights Agreement, dated as of June 15,
1995, between the Registrant, Lehman Brothers, Inc.,
Alex. Brown & Sons Incorporated and PaineWebber
Incorporated (filed as an Exhibit to the Registrant's
Registration Statement on Form S-4 (file no. 33-60925)
filed with the Commission July 7, 1995, and
incorporated herein by reference).

4.3 - Rights Agreement, dated as of April 5, 1995, between
the Registrant and Chemical Shareholder Services Group,
Inc., as Rights Agent, specifying the terms of the
rights to purchase the Registrant's Series A Junior
Participating Preferred Stock, and the exhibits thereto
(filed as an Exhibit to the Registrant's Registration
Statement on Form 8-A dated April 7, 1995, and
incorporated herein by reference).

10.1 - Asset Purchase Agreement dated May 24, 1995, regarding
the acquisition of substantially all of the paging
assets of Americom Paging Corporation, by and among
CCI, Gregory W. Hadley, Mo Shebaclo and American 900
Paging, Inc. dba Americom Paging Corporation (filed as
an Exhibit to the Registrant's Current Report on Form 8-K,
dated July 7, 1995, and incorporated herein by reference).

10.2 - Waiver, Consent and Amendment No. 1 dated as of June
12, 1995 by and among the Registrant, The First
National Bank of Chicago, as Agent, and the Lenders
party thereto (filed as an Exhibit to the Registrant's
Registration Statement on Form S-4 (file no. 33-60925)
filed with the Commission July 7, 1995, and
incorporated herein by reference).

10.3 - Office Lease Agreement by and between the Registrant
and Carter-Crowley Properties, Inc., as Landlord (filed
as an Exhibit to the Registrant's Current Report on
Form 8-K, dated July 5, 1995, and incorporated herein
by reference).

10.4 - Letter of Agreement dated July 10, 1995, regarding the
acquisition of substantially all of the paging assets
of SigNet Paging of Raleigh, Inc., by and among CCI,
SigNet Paging of Raleigh, Inc., and W. David Sweatt
(filed as an Exhibit to the Registrant's Registration
Statement on Form S-3 (file no. 33-61279) filed with
the Commission July 25, 1995, and incorporated herein
by reference).

10.5 - Letter of Agreement dated July 10, 1995, regarding the
acquisition of the common stock of Apple
Communications, Inc. and certain assets of Best Page,
Inc., by and among Apple Communications, Inc., Best
Page, Inc., CCI, Sam Zarcone and Jill DiFoggio (filed
as an Exhibit to the Registrant's

<PAGE>

Registration Statement on Form S-3 (file no. 33-61279) filed
with the Commission July 25, 1995, and incorporated herein
by reference).

10.6 - Asset Purchase Agreement dated September 30, 1995,
regarding the acquisition of substantially all of the
paging assets of Paging and Cellular of Texas, by and
among CCI, Paging and Cellular of Texas and Daniel L.
Sheppard.

10.7 - Letter of Agreement dated October 10, 1995, regarding
the acquisition of the outstanding capital stock of
Cobbwells, Inc. dba Page One/Airtel, by and among CCI,
Cobbwells, Inc. dba Page One/Airtel, James H. Cobb, III
and Warren K. Wells.

27 - Financial Data Schedule.

(b) REPORTS ON FORM 8-K. On July 5, 1995, the Company
filed a Current Report on Form 8-K relating to the
Indenture of the Rule 144A Offering, the Certificate of
Amendment to Restated Certificate of Incorporation of the
Company and the new office lease agreement. On July 7,
1995, the Company filed a Current Report on Form 8-K
relating to the acquisition of Americom. On September
15, 1995, the Company filed a Current Report on Form 8-K
relating to the acquisitions of Lewis and Gold Coast. On
October 3, 1995, the Company filed a Current Report on
Form 8-K/A relating to the acquisitions of Lewis and Gold
Coast. On October 5, 1995, the Company filed a Current
Report on Form 8-K/A-2 relating to the acquisitions of
Lewis and Gold Coast.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

ProNet Inc.
(Registrant)

DATE: November 13, 1995 By: /s/ Jan E. Gaulding
------------------------------
Jan E. Gaulding
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

<PAGE>

INDEX TO EXHIBITS

Exhibit
-------

10.4 - Letter of Agreement dated July 10, 1995, regarding the
acquisition of substantially all of the paging assets
of Signet Paging of Raleigh, Inc., by and among CCI,
Signet Paging of Raleigh, Inc., and W. David Sweatt
(filed as an Exhibit to the Registrant's Registration
Statement on Form S-3 (file no. 33-61279) filed with
the Commission July 25, 1995, and incorporated herein
by reference).

Registration Statement on Form S-3 (file no. 33-61279) filed
with the Commission July 25, 1995, and incorporated herein
by reference).

27 - Financial Data Schedule.

<PAGE>

EXHIBIT 10.6

ASSET PURCHASE AGREEMENT
AMONG
DANIEL L. SHEPPARD DBA PAGING AND CELLULAR OF TEXAS

AND

CONTACT COMMUNICATIONS INC.
AND PRONET INC.

September 30, 1995

<PAGE>

TABLE OF CONTENTS

Page
----

ARTICLE 1
PURCHASE AND SALE OF ASSETS

1.1 ASSETS TO BE ACQUIRED . . . . . . . . . . . . . . . . . . . . 1
1.2 EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 ASSUMPTION OF CERTAIN LIABILITIES . . . . . . . . . . . . . . 1
1.4 PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 INDEMNIFICATION ESCROW AGREEMENT. . . . . . . . . . . . . . . 4

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PRONET

2.1 PURCHASER DUE ORGANIZATION. . . . . . . . . . . . . . . . . . 4
2.2 PRONET DUE ORGANIZATION . . . . . . . . . . . . . . . . . . . 4
2.3 DUE AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . 4
2.4 CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6. PENDING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 LICENSES AND PERMITS. . . . . . . . . . . . . . . . . . . . . 5
2.8 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . 5
2.9 CLAIMS AND PROCEEDINGS. . . . . . . . . . . . . . . . . . . . 5
2.10 PERSONNEL . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND SHEPPARD

3.1 ORGANIZATION; OWNERSHIP . . . . . . . . . . . . . . . . . . . 6
3.2 DUE AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . 6
3.3 CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 7
3.6 CONDUCT OF BUSINESS; CERTAIN ACTIONS. . . . . . . . . . . . . 7
3.7 TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 PAGERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 LICENSES AND PERMITS. . . . . . . . . . . . . . . . . . . . . 8
3.10 INTELLECTUAL RIGHTS . . . . . . . . . . . . . . . . . . . . . 9
3.11 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . 9
3.12 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 ERISA PLANS . . . . . . . . . . . . . . . . . . . . . . . . . 10

(i)

<PAGE>

3.14 CONTRACTS AND AGREEMENTS. . . . . . . . . . . . . . . . . . . 10
3.15 CLAIMS AND PROCEEDINGS. . . . . . . . . . . . . . . . . . . . 10
3.16 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.17 PERSONNEL . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.18 BUSINESS RELATIONS. . . . . . . . . . . . . . . . . . . . . . 12
3.19 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.21 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . . 12
3.22 CUSTOMERS AND SUPPLIERS . . . . . . . . . . . . . . . . . . . 13
3.23 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS . . . . . . 13
3.24 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.25 COMMISSION SALES CONTRACTS. . . . . . . . . . . . . . . . . . 13
3.26 REGULATORY CERTIFICATES . . . . . . . . . . . . . . . . . . . 13
3.27 INFORMATION FURNISHED . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 4
COVENANTS OF THE SELLER

4.1 INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. . . . . . . . . . . 14
4.4 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 NOTICE OF DEVELOPMENTS. . . . . . . . . . . . . . . . . . . . 14
4.6 NOTICE OF BREACH. . . . . . . . . . . . . . . . . . . . . . . 14
4.7 NOTICE OF LITIGATION. . . . . . . . . . . . . . . . . . . . . 15
4.8 CONTINUATION OF INSURANCE COVERAGE. . . . . . . . . . . . . . 15
4.9 MAINTENANCE OF CREDIT TERMS . . . . . . . . . . . . . . . . . 15
4.10 UPDATING INFORMATION. . . . . . . . . . . . . . . . . . . . . 15
4.11 INTERIM OPERATIONS OF THE SELLER. . . . . . . . . . . . . . . 15
4.12 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 16
4.13 ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 5
COVENANTS OF THE PURCHASER AND PRONET

5.1 COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 SATISFACTION OF ALL CONDITIONS PRECEDENT. . . . . . . . . . . 16
5.3 NOTICE OF DEVELOPMENTS. . . . . . . . . . . . . . . . . . . . 16
5.4 NOTICE OF BREACH. . . . . . . . . . . . . . . . . . . . . . . 17
5.5 NOTICE OF LITIGATION. . . . . . . . . . . . . . . . . . . . . 17
5.6 ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7 UPDATING INFORMATION. . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 6
CONDITIONS TO CLOSING

6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. . . . . . . . . . 17
6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER . . . . . . . . . . . 19

(ii)

<PAGE>

ARTICLE 7
TERMINATION

7.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 8
INDEMNIFICATION

8.1 INDEMNIFICATION OF THE PURCHASER. . . . . . . . . . . . . . . 21
8.2 INDEMNIFICATION OF THE SELLER . . . . . . . . . . . . . . . . 21
8.3 DEFENSE OF THIRD-PARTY CLAIMS . . . . . . . . . . . . . . . . 21
8.4 DIRECT CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . 22
8.5 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.6 SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 9
DISPUTE RESOLUTION

9.1 AGREEMENT TO USE PROCEDURE. . . . . . . . . . . . . . . . . . 23
9.2 INITIATION OF MEDIATION . . . . . . . . . . . . . . . . . . . 23
9.3 CONDUCT OF MEDIATION. . . . . . . . . . . . . . . . . . . . . 24
9.4 TERMINATION OF PROCEDURE. . . . . . . . . . . . . . . . . . . 24
9.5 FEES OF MEDIATION; DISQUALIFICATION . . . . . . . . . . . . . 24
9.6 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE 11
MISCELLANEOUS

10.1 COLLATERAL AGREEMENTS, AMENDMENTS, AND WAIVERS. . . . . . . . 24
10.2 BULK SALES COMPLIANCE . . . . . . . . . . . . . . . . . . . . 25
10.3 RISK OF LOSS - DAMAGE TO TRANSFERRED ASSETS . . . . . . . . . 25
10.4 PRORATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.5 ALLOCATION OF PURCHASE PRICE. . . . . . . . . . . . . . . . . 25
10.6 RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.7 SELLER'S LIABILITIES. . . . . . . . . . . . . . . . . . . . . 26
10.8 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . 26
10.9 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.10 SALES TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.11 INVALID PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 26
10.12 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.13 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.14 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. . . . 27
10.15 PUBLIC ANNOUNCEMENT . . . . . . . . . . . . . . . . . . . . . 27
10.16 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . 27
10.17 NO THIRD-PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . 28
10.18 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 28
10.19 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.20 SECTIONS; EXHIBITS. . . . . . . . . . . . . . . . . . . . . . 28

(iii)

<PAGE>

10.21 NUMBER AND GENDER OF WORDS. . . . . . . . . . . . . . . . . . 28
10.22 SPECIFIC PERFORMANCE. . . . . . . . . . . . . . . . . . . . . 28
10.23 PRONET GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . 28
10.24 BUSINESS DAYS . . . . . . . . . . . . . . . . . . . . . . . . 28
10.25 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . 28
10.26 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . 29

(iv)

<PAGE>

SCHEDULES

1.1 Transferred Assets
Annex 1 Tangible Assets
Annex 2 Personal Property Leases
Annex 3 Miscellaneous Contracts
Annex 4 Accounts Receivable
Annex 5 Business Records
Annex 6 Trade Secrets and Other Intangibles
Annex 7 Licenses and Permits
Annex 8 Customer Rental Deposits Obligation
1.2 Excluded Assets
1.4 Accounts Receivable Deemed Current
2.5 Purchaser Consents
2.10 Employment Offer
3.3 Conflicts
3.4 Consents
3.5 Accounting Disclosures
3.6 Conduct of Business
3.7 Title and Encumbrances
3.9 Licenses and Permits Disclosure
3.10 Intellectual Rights
3.11 Compliance with Law
3.12 Insurance
3.14 Material Contracts and Agreements
3.15 Claims and Proceedings
3.16 Taxes
3.17 Personnel and Compensation
3.20 Warranties
3.21 Accounts Receivable Disclosure
3.22 Customers and Suppliers
3.23 Interest in Competitors, Suppliers and Customers
3.24 Inventory Disclosure
3.25 Commission Sales Contracts Disclosure
4.11 Purchaser's Interim Operations Consent
6.1 Seller's Closing Certificate
6.2 Purchaser's and ProNet's Closing Certificates

EXHIBITS

A - Indemnification Escrow Agreement
B - Bill of Sale and Assignment
C - Assumption Agreement
D - Form of Opinion of Counsel to the Seller
E - Noncompetition Agreement - Seller
F - Sublease
G - Agreement for Paging, Broadcast and Voicemail
H - Form of Opinion of Consent of the Purchaser

(v)

<PAGE>

I - Allocation of Purchase Price

(vi)

<PAGE>

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this "Agreement") is made and entered
effective into as of September 30, 1995, by and among Daniel L. Sheppard dba
Paging and Cellular of Texas, a sole proprietorship, (the "Seller"), Contact
Communications Inc., a Delaware corporation (the "Purchaser"), and ProNet
Inc., a Delaware corporation ("ProNet").

R E C I T A L S

A. Seller is the sole owner of Paging and Cellular of Texas, a
Texas sole proprietorship.

B. The Purchaser desires to purchase from the Seller, and the
Seller desires to sell to the Purchaser, upon the terms and subject to the
conditions set forth herein, substantially all of the property and assets of
the Seller that are used in Seller's radio paging system business conducted
in the name of Paging and Cellular of Texas (such property, assets, and
business being hereinafter collectively called the "Business").

A G R E E M E N T S

NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:

ARTICLE 1

PURCHASE AND SALE OF ASSETS

1.1 ASSETS TO BE ACQUIRED. On the Closing Date (as hereinafter
defined), the Seller shall sell to the Purchaser, and the Purchaser shall
purchase from the Seller, on the terms and conditions set forth in this
Agreement, the property and assets of the Seller that are used in the conduct
of the Business as more fully described in SCHEDULE 1.1 attached hereto
(collectively, the "Transferred Assets"), free and clear of all liens,
security interests, claims, rights of another, and encumbrances of any kind
or character except as disclosed in SCHEDULE 3.7 attached hereto.

1.2 EXCLUDED ASSETS. The Seller shall not sell, assign,
transfer, or convey to the Purchaser hereunder any of the assets or property
of any nature of the Seller other than the Transferred Assets described in
SCHEDULE 1.1 (the "Excluded Assets"). The Excluded Assets include, without
limitation, the assets listed on SCHEDULE 1.2 attached hereto.

1.3 ASSUMPTION OF CERTAIN LIABILITIES. On the Closing Date, the
Purchaser shall assume and agree to perform and discharge the liabilities and
obligations of the Seller under:

(a) All personal property leases listed on ANNEX 2 to
SCHEDULE 1.1 (the "Personal Property Leases");

(b) All contracts, agreements, arrangements, policies,
and instruments that are listed on ANNEX 3 to SCHEDULE 1.1 (the
"Miscellaneous Contacts" and, collectively with

<PAGE>

the Personal Property Leases, the "Assumed Contracts"), but
only to the extent such liabilities and obligations relate to
goods delivered to, services performed for, or benefits received
by the Purchaser on or after the Closing.

In addition to the above described obligations under the Assumed
Contracts, the Purchaser shall assume and agrees to discharge the obligations
of the Seller with respect to the customer pager rental deposits in the
amounts set forth on ANNEX 8 to SCHEDULE 1.1 hereto (such deposits and the
Assumed Contracts collectively referred to herein as the "Assumed
Liabilities"); provided that the amount of such deposits shall be deducted
from the Purchase Price (as hereinafter defined).

Notwithstanding the foregoing, it is expressly understood that the
Purchaser shall not assume any of the Seller's obligations or liabilities
(whether known or unknown, matured or unmatured, or fixed or contingent)
other than obligations and liabilities expressly assumed in this Section 1.3
or otherwise prorated, allocated or provided for in this Agreement. Without
limiting the generality of the foregoing, the Purchaser shall not assume any
of the Seller's obligations or liabilities with respect to (a) any claims for
workers compensation, (b) any foreign, Federal, state, county, or local taxes
("Taxes") on income of the Seller whether arising before or after the Closing
Date, or any Taxes, fees, and assessments of any kind of the Seller or for
which the Seller has the obligation to collect from any other party,
including, without limitation, value-added, withholding, and any other taxes,
whether arising before or after the Closing Date, (c) any liability for any
violation by the Seller of any statutes, laws, regulations, or ordinances of
any federal, state, or local government, including, without limitation, the
failure to file or the improper filing of any and all tax returns and other
reports or the failure to timely pay any and all Taxes, fees, and assessments
to any governmental unit, authority, or instrumentality by the Seller, (d)
any liability for any breach of contract, negligence, or misconduct by the
Seller or any of its agents, servants, or employees, (e) any liability of the
Seller arising out of or pursuant to this Agreement (including, without
limitation, any liability arising out of the Seller's employee severance
policy, if any), (f) any liability of the Seller relating to any litigation
arising from any event, action, or omission, (g) any liability of the Seller
relating to employee benefit plans, if any, maintained by the Seller, and
(h) any liability arising out of or incurred in respect of any transaction of
the Seller occurring after the Closing Date; provided, the above provisions
are not intended to release Purchaser (or ProNet) from its obligations
provided for in this Agreement or otherwise including, without limitation,
sales and use taxes relating to the purchase and sale of the Transferred
Assets or receipts for paging services on or after the Closing Date. Any
liabilities or obligations of Seller not expressly assumed by the Purchaser
pursuant to this Section 1.3 or otherwise prorated, allocated or provided
shall be Indemnified Costs (as hereinafter defined) and, as such, shall be
subject to offset by the Purchaser pursuant to Section 9.4 hereof.

1.4 PURCHASE PRICE. The aggregate purchase price payable by the
Purchaser in consideration for the sale of the Transferred Assets shall be an
amount equal to the remainder of (i) the sum of (A) $200,000 ("Escrowed
Funds"), which amount shall be deposited with the Escrow Agent (hereinafter
defined) as a deposit in accordance with Section 1.6 hereof and the terms of
the Indemnification Escrow Agreement (herein so called), a copy of which is
attached hereto as EXHIBIT A, (B) $9,800,000 payable in cash on the Closing
Date via wire transfer to Seller's account and Seller's secured creditor
accounts as instructed by Seller, and (C) an amount payable in cash on the
Closing Date equal to the value of Seller's accounts receivable in respect of
services or merchandise provided in the Business prior to the Closing Date as
of 11:59 p.m.,

<PAGE>

on the day immediately preceding the Closing Date, minus (ii) the amount of
any revenues collected by Seller prior to the Closing Date in respect of
services or merchandise to be provided to customers of the Business after the
Closing Date. For purposes of calculating the Purchase Price, the Seller's
accounts receivable shall be valued as follows:

The following formula will be used to determine the payoff on each
customer account on the Seller's accounts receivable aging at
Closing. Seller will give Purchaser a list of every account written
off between July 1, 1995 and Closing.

1. Purchaser will pay to Seller 10% of the total customer
account balance outstanding at the Closing which is more
than 90 days past due.

2. Purchaser will pay to Seller 50% of the total customer
account balance outstanding at the Closing which is more
than 60 days past due but no more than 90 days past due.

3. Purchaser will pay Seller 80% of the total customer account
balance outstanding at Closing which is more than 30 days
past due but no more than 60 days past due.

4. Purchaser will pay Seller 100% of the total customer account
balance outstanding at the Closing which is not more than 30
days past due.

5. The accounts described in SCHEDULE 1.4 will be treated as
though they are not more than 30 days past due for purposes
of the above classification and for purposes of payment.

Notwithstanding the foregoing, to the extent that any such accounts
receivable are in dispute with the obligor or are known by the Seller to be
non-collectible at the time of Closing, no value shall be assigned to any
such disputed or non-collectable accounts receivable. In addition, the
parties hereto acknowledge and agree that no amount shall be paid by the
Purchaser for accounts receivable relating to services to be performed, or
goods sold by the Purchaser after the Closing Date. The Purchase Price shall
be paid at the Closing by certified bank check or wire transfer of
immediately available funds as determined by Seller.

1.5 CLOSING.

(a) CLOSING DATE. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of the
Purchaser located at 600 Data Drive, Suite 100, Plano, Texas 75075 at 9:00
a.m., local time, on Monday, October 2, 1995 effective September 30, 1995.
The date on which the Closing actually occurs is referred to herein as the
"Closing Date".

(b) DELIVERY AND PAYMENT. At the Closing, (i) the
Seller shall execute and deliver to the Purchaser a bill of sale and
assignment with respect to the Transferred Assets substantially in the form
attached hereto as EXHIBIT B (the "Bill of Sale"), and such other bills of
sale, assignments, certificates of title, endorsements, and other instruments
of conveyance as may be reasonably necessary to transfer the Transferred
Assets to the Purchaser, and (ii) the Purchaser shall (A) execute and deliver
to the Seller an assumption agreement with respect to the

<PAGE>

Assumed Liabilities substantially in the form attached hereto as EXHIBIT C
(the "Assumption Agreement"), (B) deliver to the Seller a certified bank
check or wire transfer for the amount of the cash portion of the Purchase
Price to be paid on the Closing Date as provided in Section 1.4 hereof, and
(C) deliver to the Escrow Agent a certified bank check or wire transfer in
the amount of $200,000 in accordance with the terms of the Indemnification
Escrow Agreement, a copy of which is attached hereto as EXHIBIT A.

1.6 INDEMNIFICATION ESCROW AGREEMENT. Prior to or at Closing,
Purchaser, Seller and the Escrow Agent shall enter into an Indemnification
Escrow Agreement (herein so called) substantially in the form of EXHIBIT A,
attached hereto, whereby the parties shall agree that the Escrowed Funds
shall be deposited into and held in escrow under and pursuant to the
Indemnification Escrow Agreement.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PRONET

The Purchaser and ProNet, jointly and severally, hereby represent
and warrant to the Sellers as follows (with the understanding that the Seller
is relying materially on such representations and warranties in entering into
and performing this Agreement):

2.1 PURCHASER DUE ORGANIZATION. The Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has full corporate power and corporate authority to own
or lease the Transferred Assets and to carry on the Business as, and in the
places where, Transferred Assets are owned or leased and the Business is
conducted. Further, Purchaser is or by the Closing will be qualified to do
business as a foreign corporation in the State of Texas.

2.2 PRONET DUE ORGANIZATION. ProNet is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has full corporate power and corporate authority to own or
lease the Transferred Assets and to carry on the Business as, and in the
places where, the Transferred Assets are owned or leased and such Business is
conducted. ProNet is the legal and beneficial owner of all of the
outstanding stock of Purchaser and his authority to vote all of the
outstanding stock of the Purchaser.

2.3 DUE AUTHORIZATION. The Purchaser and ProNet have full
corporate power and corporate authority to enter into and perform its
obligations under this Agreement and each agreement, document, and instrument
required to be executed by the Purchaser or ProNet in accordance herewith.
This Agreement and the other agreements, documents, and instruments required
to be executed and delivered by the Purchaser or ProNet, as applicable, in
accordance herewith have been, or by the Closing shall have been, duly and
validly executed and delivered by the Purchaser or ProNet, as applicable, and
shall constitute, valid and binding obligations of the Purchaser or ProNet,
as applicable, after execution and deliver enforceable in accordance with
their respective terms, except that (a) such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent transfer, or other laws, now or
hereafter in effect, affecting creditors' rights generally, and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses (including commercial
reasonableness, good faith, and

<PAGE>

fair dealing) and to the discretion of the court before which any proceeding
therefor may be brought.

2.4 CONFLICTS. Neither the execution, delivery nor performance
of this Agreement or any other agreement, document, or instrument to be
executed, by the Purchaser or ProNet in connection herewith shall, (a) to the
best of its knowledge, violate any Federal, state, county, or local law,
rule, or regulation applicable to Purchaser or ProNet or (b) violate or
conflict with any material agreement involving Purchaser or ProNet.

2.5 CONSENTS. Set forth on SCHEDULE 2.5 attached hereto is a
complete list of all actions, consents, or approvals of, or filings with, any
governmental authorities or third parties required by Purchaser or ProNet or
on behalf of either, in connection with the execution, delivery, or
performance of this Agreement or any agreement, document, or other instrument
to be executed in connection herewith by Purchase or ProNet.

2.6. PENDING LAW. To the best knowledge of Purchaser or ProNet,
there are no pending or proposed statutes, rules, or regulation, nor any
current or pending developments or circumstances, which would have a material
adverse effect on the business, properties, assets or prospects of the
Business.

2.7 LICENSES AND PERMITS. Purchaser by the Closing will have
all Federal, state, county, and local governmental licenses, authorization,
certificates, permits, and orders necessary to own and operate the
Transferred Assets and the Business.

2.8 COMPLIANCE WITH LAWS. Purchaser and ProNet have complied in
all material respects, and are in compliance in all material respects, with
all Federal, state, county and local laws, regulations, and orders that are
applicable to Purchaser's and ProNet's obligations pursuant to this
Agreement, and no claim has been made by any governmental authority (and, to
the best knowledge of Purchaser or ProNet, no such claim is anticipated).

2.9 CLAIMS AND PROCEEDINGS. No inquiry, action, or proceeding
has been asserted, institutional, or, to the best knowledge of Purchaser or
ProNet, threatened to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement or to challenge the validity of
such transactions or any part thereof.

2.10 PERSONNEL. Purchaser shall provide Seller at least three
(3) days prior to Closing a SCHEDULE 2.10 listing the Seller employees it
contemplates hiring. On the Closing Date, Purchaser shall offer employment
at will to those employees of Seller who are identified on SCHEDULE 2.10.
Purchaser shall offer health insurance coverage to all employees accepting
the Purchaser's offer of employment in accordance with ProNet's standard
practice.

2.11 BROKERS. Neither Purchaser nor ProNet has caused any
liability to be incurred to any finder, broker, or sales agent in connection
with the execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.

<PAGE>

ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND SHEPPARD

The Seller hereby represents and warrants to the Purchaser as
follows (with the understanding that the Purchaser is relying materially on
such representations and warranties in entering into and performing this
Agreement):

3.1 ORGANIZATION; OWNERSHIP. Paging and Cellular of Texas is a
sole proprietorship owned by Seller and Seller has full power and authority
to own or lease the properties and to carry on the Businesses as, and in the
places where, such properties are owned or leased and the Business is
conducted. The Seller is qualified to do business and is in good standing in
the State of Texas which state represents the sole jurisdiction where Seller
conducts business involving the Transferred Assets. No other jurisdiction
has asserted a claim that the Seller is required to qualify to do business as
a sole proprietorship in such jurisdiction. There are no authorized or
outstanding options or rights of any kind to acquire from the Seller any
interest in the Transferred Assets.

3.2 DUE AUTHORIZATION. Seller has full power and authority to
enter into and perform obligations under this Agreement and each agreement,
document, and instrument required to be executed by the Seller in accordance
herewith. The execution, delivery, and performance of this Agreement and any
agreements, documents, and instruments required to be executed by the Seller
have been duly authorized by Seller. This Agreement and the agreements,
documents, and instruments required to be executed and delivered by the
Seller in accordance herewith have been duly and validly executed and
delivered by the Seller and constitute valid and binding obligations of the
Seller after execution and delivery enforceable in accordance with their
respective terms, except that (a) such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent transfer, or other laws, now or
hereafter in effect, affecting creditors' rights generally, and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses (including commercial
reasonableness, good faith, and fair dealing) and to the discretion of the
court before which any proceeding therefor may be brought.

3.3 CONFLICTS. Except as set forth on SCHEDULE 3.3, neither the
execution, delivery, nor performance of this Agreement or any other
agreement, document, or instrument to be executed by the Seller in connection
herewith shall (a) to the best of his knowledge, violate any Federal, state,
county, or local law, rule, or regulation applicable to the Transferred
Assets, (b) violate or conflict with, or permit the cancellation of, any
material agreement to which the Seller is a party and involving the
Transferred Assets, or by which Transferred Assets are bound, or result in
the creation of any lien, security interest, charge, or encumbrance upon any
of the Transferred Assets.

3.4 CONSENTS. Set forth on SCHEDULE 3.4 attached hereto is a
complete list of all actions, consents, or approvals of, or filings with, any
governmental authorities or third parties required by Seller or on behalf of
Seller in connection with the execution, delivery, or performance of this
Agreement or any agreement, document, or other instrument to be executed in
connection herewith by the Seller.

<PAGE>

3.5 FINANCIAL STATEMENTS. The Seller has delivered to the
Purchaser (a) a complete and correct copy of the audited statement of
financial condition of the Seller as of December 31, 1994, (the "1994
Financial Statements"), (b) a complete and correct copy of the unaudited
statement of financial condition of the Seller as of June 30, 1995 and August
31, 1995, and the related statements of operations and retained earnings for
the period then ended (the "Interim Financial Statements" and together with
the 1994 Financial Statements, the "Financial Statements"), and (c) a
complete and correct tangible asset group list of the Transferred Assets
together with a reasonable estimate of the adjusted book value of such
tangible asset groups as of August 31, 1995, which list is attached to
SCHEDULE 3.5 ("August Asset List"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as indicated
on SCHEDULE 3.5 and with respect to the Interim Financial Statements, for the
absence of footnotes, and subject to normal year-end adjustments and accruals
required to be made in the ordinary course of business consistent with past
practices) and fairly present the financial position, results of operations,
and changes in financial position of the Seller as of the indicated dates and
for the indicated periods subject to any disclosures on SCHEDULE 3.5. The
August Asset List has been prepared in accordance with the books and records
of the Seller except as indicated in the notes and calculations on such list
and present fairly and accurately an estimate of the adjusted book value of
the tangible asset groups subject to the notes and calculations indicated on
such list or in SCHEDULE 3.5. Since December 31, 1994, there has been no
material adverse change in the financial position, assets, results of
operations, business, or prospects of the Business subject to any disclosures
on SCHEDULE 3.5 or in the Interim Financial Statements. To the best
knowledge of the Seller, there are no pending or proposed statutes, rules, or
regulations, nor any current or pending developments or circumstances, which
would have a material adverse effect on the business, properties, assets, or
prospects of the Business.

3.6 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except as set forth
on SCHEDULE 3.6 attached hereto, since December 31, 1994, the Seller has
conducted the business and operations involving the Transferred Assets in the
ordinary course and consistent with its past practices and has not (a) except
for wage and salary increases made in the ordinary course of business and
consistent with the past practices of the Seller, increased the compensation
of any employees of the Business, (b) made any capital expenditures (other
than for pagers) exceeding $5,000 individually or $15,000 in the aggregate
involving the Transferred Assets, (c) sold any asset (or any group of related
assets) (other than for pagers) used in the operation of the Business in any
transaction (or series of related transactions) in which the purchase price
for such asset (or group of related assets) exceeded $3,000, (d) discharged
or satisfied any material lien or encumbrance or paid any material obligation
or liability, absolute or contingent, other than current liabilities incurred
and paid in the ordinary course of business, (e) made or guaranteed any loans
or advances to any party whatsoever other than to affiliates and related
persons, (f) suffered or permitted any lien, security interest, claim,
charge, or other encumbrance to arise or be granted or created against or
upon any of the Transferred Assets other than tax and similar statutory liens
on obligations not due, (g) cancelled, waived, or released any debts, rights,
or claims of Seller relating to the Business against third parties, (h) made
any change in the method of accounting as to the Transferred Assets and
Business (i) made, entered into, amended, or terminated any written
employment contract or created, made, amended, or terminated any bonus, stock
option, pension, retirement, profit sharing, or other employee benefit plan
or arrangement, or withdrawn from any "multi-employer plan" (as defined in
Section 414(f) of the Internal Revenue Code of 1986, as amended (the "Code"))
relating to the Business and Transferred Assets so as to create

<PAGE>

any liability under Article IV of ERISA (as hereinafter defined) to any
entity, (j) amended, renewed, or experienced a termination of any material
contract, agreement, lease, franchise, or license related to the conduct of
the Business to which the Seller is a party, except in the ordinary course of
business, (k) entered into any other material transactions relating to the
Business except in the ordinary course of business, (l) entered into any
material contract, commitment, agreement, or understanding to do any acts
described in the foregoing clauses (a)-(k) of this Section 3.6, (m) suffered
any material damage, destruction, or loss (whether or not covered by
insurance) to any of the Transferred Assets, (n) experienced any strike,
slowdown, or demand for recognition by a labor organization by or with
respect to any of the employees of the Business, or (o) experienced or
effected any shutdown, slow-down, or cessation of any operations conducted
by, or constituting a material part of, the Business.

3.7 TITLE. Except as set forth in SCHEDULE 3.7 attached hereto,
the Seller has good and indefeasible title to all of the Transferred Assets.
Except as set forth on SCHEDULE 3.7 attached hereto, the Transferred Assets
are free and clear of all liens (including any liens for currently due Taxes
(as defined in Section 3.16 hereof), security interests, claims, rights of
another, and encumbrances. Upon consummation of the transactions
contemplated hereby, the Purchaser shall acquire good and indefeasible title
to the Transferred Assets, free and clear of all liens, security interests,
claims, rights of another, and encumbrances. Except as indicated on
SCHEDULES 1.1 OR 3.7, the tangible Transferred Assets listed on ANNEX 1 to
SCHEDULE 1.1 are in good operating condition and repair, normal wear and tear
excepted, and are free from material defects. To the best of Seller's
knowledge, operation of the Business in the manner in which it is now and has
been operated does not violate any zoning ordinances, municipal regulations,
or other rules, regulations, or laws. No covenants, easements,
rights-of-way, or regulations of record impair the uses of the Transferred
Assets for the purposes for which they are now operated other than
regulations and restrictions promulgated by the FCC and similar
governmental/quasi-governmental organizations regulating the Business. There
are no other parties in possession of any portion of the Transferred Assets
except for pagers and as indicated on SCHEDULES 3.7. To the best of
Seller's knowledge, there are no pending or threatened condemnation or
similar proceedings or assessments affecting the Transferred Assets.

3.8 PAGERS. ANNEX 1 to SCHEDULE 1.1 includes a true and
complete list of the number and type of pagers in the Transferred Assets. To
the best of Seller's knowledge, all of such pagers in service are operating
pursuant to valid and binding rental and/or service agreements with the
Seller or agents or resellers, no single subscriber or related group of
subscribers accounts for more than five percent of the paging revenues
attributable to the Business, and the Seller does not know of any current
subscribers who intend to discontinue the use of such service for any reason
including, but not limited to, the consummation of the transactions
contemplated herein other than the regular turnover of customers at the rate
of approximately 2% per month. As used herein, "rental" means, with respect
to any pager, provision of communications common carriage and/or the rental
or lease of subscriber equipment to the customer by the Seller or its agents
or resellers to permit the customer to utilize such service.

3.9 LICENSES AND PERMITS. Set forth on ANNEX 7 to SCHEDULE 1.1
attached hereto is a list of all Federal, state, county, and local
governmental licenses, authorizations, certificates, permits, and orders held
or applied for by the Seller in connection with or related to the operation
of the Business (collectively, the "Licenses"). Except as set forth on
SCHEDULE 3.9, to the best of Seller's knowledge, the Seller has complied and
is in compliance with the terms and conditions

<PAGE>

of all Licenses, and no violation of any such Licenses or the laws or rules
governing the issuance or continued validity thereof, has occurred. Other
than the Licenses, the Purchaser is required to obtain and the consents
required to be obtained in connection with this Agreement (which consents are
set forth on SCHEDULE 3.4 hereto), to the best of Seller's knowledge, no
additional license, authorization, certificate, permit, or order is required
from any Federal, state, county, or local governmental agency or body thereof
in connection with the operation of the Business by the Seller or the
Purchaser or the transfer of the Transferred Assets by the Seller to the
Purchaser. To the best of the Seller's knowledge, no claim has been made by
any governmental authority to the effect that any license, authorization,
certificate, permit, or order in addition to those listed on ANNEX 7 to
SCHEDULE 1.1 is necessary in respect of the operation of the Business.

3.10 INTELLECTUAL RIGHTS. Attached hereto as SCHEDULE 3.10 is a
list and description of all patents, trademarks, servicemarks, tradenames,
and copyrights (including applications for patents, trademarks, servicemarks,
tradenames, and copyrights) related to the Business and owned by or
registered in the name of the Seller or in which the Seller has any right,
license, or interest. The Seller is not a party to any license agreements
whether written or oral, either as licensor or licensee, with respect to any
patents, trademarks, servicemarks, tradenames, or copyrights (including
applicable applications). The Seller has good and indefeasible title to or
the right to use such patents, trademarks, service marks, tradenames, and
copyrights and all material inventions, processes, designs, formulae, trade
secrets, and know-how necessary for the conduct of the Business, without the
payment of any royalty or similar payment except as indicated on SCHEDULE
3.10. The Seller is not infringing any patent, trademark, servicemark,
tradename, or copyright of others, and Seller is not aware of any
infringement by others of any such rights owned by the Seller.

3.11 COMPLIANCE WITH LAWS. To the best of Seller's knowledge
except as indicated in SCHEDULE 3.11, the Seller has complied in all material
respects, and is in compliance in all material respects, with all Federal,
state, county, and local laws, regulations, and orders that are applicable to
the Business including, but not limited to, the rules and regulations of the
Federal Communications Commission (the "FCC") and the Federal Aviation
Administration (the "FAA") and the states and municipalities in which the
Business is located, and has filed with the proper authorities all material
statements and reports relating to the Business required by the laws,
regulations, and orders to which the Seller or Transferred Assets are
subject. The Seller represents and warrants that he, to the best of his
knowledge, has complied in all material respects and, prior to the Closing,
will comply in all material respects with, all rules, regulations, policies,
precedents, and orders of the FCC. No claim has been made by any
governmental authority (and, to the best knowledge of the Seller, no such
claim is anticipated) to the effect that the Business fails to comply, in any
material respect, with any law, rule, regulation, or ordinance. Without
limiting the foregoing, the Seller, to the best of his knowledge, has
complied with all judicial and governmental requirements involving the
Business relating to pollution and environmental control and regulation and
employee health and safety including, but not limited to, laws, rules,
regulations, ordinances, and orders related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, handling,
presence, emission, discharge, release, or threatened release into or on the
air, land, surface, water, groundwater, personal property, or structures,
wherever located, of any contaminants, hazardous materials, hazardous or
toxic substances, or wastes as defined under any federal, state, or local
laws, regulations, or ordinances.

<PAGE>

3.12 INSURANCE. Attached hereto as SCHEDULE 3.12 is a list of
all policies of fire, liability, business interruption, and other forms of
insurance and all fidelity bonds held by or applicable to the Seller relating
to the Business at any time within the past three years, which schedule sets
forth in respect of each such policy the policy name, policy number, carrier,
term, type of coverage, deductible amount or self-insured retention amount,
limits of coverage, and annual premium. To the best of Seller's knowledge,
no event relating to the Seller has occurred which is likely to result in any
prospective material upward adjustment in such premiums. To the best of
Seller's knowledge, the insurance currently held by the Seller is in such
amounts and is of such types and scope as is customary in the Business except
Seller does not maintain workers compensation insurance. Excluding insurance
policies which have expired and been replaced, no insurance policy of the
Seller relating to the Business has been cancelled within the last three
years, and no threat has been made to cancel any insurance policy of the
Seller within such period.

3.13 ERISA PLANS. The Seller does not have employee benefit
plans subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").

3.14 CONTRACTS AND AGREEMENTS. The contracts and agreements
listed and described in SCHEDULES 1.1 AND 1.2 attached hereto constitute all
of the written or oral contracts, commitments, leases, and other agreements
(including, without limitation, promissory notes, loan agreements, and other
evidences of indebtedness but excluding rental agreements and agreements with
resellers) involving the Transferred Assets to which the Seller is a party or
by which the Transferred Assets are bound with respect to which the
obligations of or the benefits to be received by the Seller could reasonably
be expected to have a value in excess of $5,000 in any consecutive 12 month
period (each a "Material Agreement"). The Seller has also furnished to the
Purchaser the Seller's standard form rental agreement and agreement with
resellers used in the ordinary course of the Business. The Seller is not a
lessor under any rental agreement or reseller agreement that varies from such
standard form agreement in any material respect except as described in
SCHEDULE 3.14. The Seller has afforded to the Purchaser and the Purchaser's
officers, attorneys, and other representatives the opportunity to review
complete and correct copies of all of the Material Agreements. The Seller is
not and, to the best knowledge of the Seller, no other party thereto is in
default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default) under any Material
Agreements, and the Seller has not waived any material right under any
Material Agreements. Seller has not received any notice of default or
termination under any Material Agreements and, except for the assignment of
the Assumed Contracts to the Purchaser pursuant to this Agreement, the Seller
has not assigned or otherwise transferred any rights under any Material
Agreements. None of the Material Agreements are leases in connection with
which an election was made under Section 168(f)(8) of the Code.

3.15 CLAIMS AND PROCEEDINGS. Attached hereto as SCHEDULE 3.15 is
a list and description of all claims, actions, suits, proceedings, and
investigations pending or, to the best knowledge of the Seller, threatened
against or affecting the Seller relating to the Business and the Transferred
Assets, at law or in equity, or before or by any court, municipal or other
governmental department, commission, board, agency, or instrumentality.
Except as set forth on SCHEDULE 3.15 attached hereto, none of such pending
claims, actions, suits, proceedings, or investigations will result in any
liability or loss to the Seller which (individually or in the aggregate) is
material to the Seller, and the Seller has not been, and the Seller is not
now, subject to any order, judgment,

<PAGE>

decree, stipulation, or consent of any court, governmental body, or agency
relating to the Business and the Transferred Assets. No inquiry, action, or
proceeding has been asserted, instituted, or, to the best knowledge of the
Seller, threatened to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement or to challenge the validity of
such transactions or any part thereof or seeking damages on account thereof.
To the best knowledge of the Seller, there is no basis for any such claim or
action or any other claims or actions relating to the Business which would,
or could reasonably be expected to (individually or in the aggregate), have a
material adverse effect on the Business or Transferred Assets or result in a
material liability of the Seller.

3.16 TAXES. To the best of Seller's knowledge, all material
returns, reports, statements, invoices, and declarations of estimated tax
(collectively, "Returns") relating to Federal, foreign, state, county, and
local income, gross receipts, excise, property, ad valorem, transfer,
franchise, capital stock business and occupation, license, sales, use,
value-added, transfer, profits, gains, mortgage recording, disability,
employment, payroll, withholding, custom, estimated, and other taxes, fees
and assessments imposed by any governmental entity, agency, or
instrumentality relating to the Business (individually, a "Tax" and
collectively, "Taxes") which were required to be filed by the Seller on or
before the date hereof have been filed within the time and in the manner
provided by law, and all such Returns are true, correct, and complete and
accurately reflect the liabilities for Tax of the Seller. To the best of
Seller's knowledge, all Taxes, penalties, interest, and other additions to
Taxes which have become due pursuant to such Returns have been adequately
accrued in the Financial Statements of the Seller or are described on
SCHEDULE 3.16 and, to the extent the due date for payment (including
extensions) of such Taxes has occurred prior to the Closing date hereof, have
been timely paid by the Seller unless the Taxes are subject to a bona fide
dispute in which case they are listed on SCHEDULE 3.16. Except as disclosed
on SCHEDULE 3.16, the Seller has not executed any presently effective waiver
or extension of any statute of limitations against assessments and
collections of Taxes, interest, penalties, or additions to Taxes or any
extension of time to file any Return. There are no pending, or to the best
of Seller's knowledge, no threatened claims, assessments, notices, proposals
to assess, deficiencies, or audits (collectively, "Seller Tax Actions") with
respect to any Taxes, penalties, interest, or additions to Taxes owed or
allegedly owed by the Seller. To the best knowledge of the Seller, there is
no basis for any Seller Tax Actions. There are no liens for Taxes,
penalties, interest, or additions to Taxes on any of the Transferred Assets.
Proper and accurate amounts of any and all payroll and employment Taxes that
are required to be withheld have been withheld and remitted by the Seller
from and in respect of Seller's employees involved in the Business for all
periods in material compliance with the tax withholding provisions of all
applicable laws and regulations.

3.17 PERSONNEL. Attached hereto as SCHEDULE 3.17 is a list of
the names and annual rates of compensation of the employees of the Seller
involved in the Business whose annual rates of compensation during the fiscal
year ending December 31, 1994 (including base salary, bonuses, commissions,
and incentive pay), exceeded or are expected to exceed $20,000. SCHEDULE
3.17 attached hereto also summarizes the bonus, profit sharing, percentage
compensation, company automobile, club membership, and other like benefits,
if any, paid or payable to such employees during such fiscal year and to the
date hereof. SCHEDULE 3.17 attached hereto also contains a brief description
of all material terms of all employment agreements and confidentiality
agreements involved in the Business to which the Seller is a party and all
severance benefits which any employee of the Seller is or may be entitled to
receive. The Seller

<PAGE>

has delivered to the Purchaser accurate and complete copies of all such
employment agreements, confidentiality agreements, and all other agreements,
plans, and other instruments relating to the Business to which the Seller is
a party and under which any of its employees are entitled to receive benefits
of any nature. The employee relations of the Seller relating to the Business
are good and there is no pending or, to the best knowledge of the Seller,
threatened labor dispute or union organization campaign involving the Seller
relating to the Business. None of the employees of the Seller involved in
the Business is represented by any labor union or organization. To the best
of Seller's knowledge, the Seller as to the Business is in compliance with
all Federal and state laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours and is not engaged in
any unfair labor practices. There is no unfair labor practice claim against
the Seller relating to the Business before the National Labor Relations Board
or any strike, labor dispute, work slowdown, or work stoppage pending or, to
the best knowledge of the Seller, threatened against or involving the Seller
as to the Business.

3.18 BUSINESS RELATIONS. Seller does not know or does not
believe that any customer or supplier of the Business will cease or otherwise
refuse to do business with the Purchaser after the Closing in the same manner
as such business was previously conducted with the Seller. The Seller has
not received any notice of any material disruption (including delayed
deliveries or allocations by suppliers) in the availability of the materials
or products used by the Seller in the operation of the Business nor is the
Seller aware of any facts which lead him to believe that the operation of the
Business will be subject to any such material disruption.

3.19 BROKERS. Seller has not caused any liability to be incurred
to any finder, broker, or sales agent in connection with the execution,
delivery, or performance of this Agreement or the transactions contemplated
hereby.

3.20 WARRANTIES. Attached hereto as SCHEDULE 3.20 is a list and
brief description of all warranties and guarantees made by the Seller to
third parties with respect to any products sold or leased or services
rendered by the Seller in connection with the operation of the Business.
Except as set forth on SCHEDULE 3.20 attached hereto, no claims for breach of
product or service warranties to customers have been made against the Seller
since January 1, 1995. To the best knowledge of the Seller, no state of
facts exists, or event has occurred, which may form the basis of any material
claim against the Seller for liability on account of any express or implied
warranty to any third party related to the operation of the Business.

3.21 ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 3.21
attached hereto, all of the accounts, notes, and loans receivable that have
been recorded on the books of the Seller relating to the Business are bona
fide and represent amounts validly due and all such accounts receivable (net
of reserves set forth on the Seller's balance sheet as of June 30, 1995)
should be collected in full within 60 days after the Closing Date. Except as
indicated on Schedule 3.21 and to the best of Seller's knowledge, all of such
accounts, notes, and loans receivable are free and clear of any security
interests, liens, encumbrances, or other charges; none of such accounts,
notes, or loans receivable are subject to any offsets or claims of offset;
and none of the obligors of such accounts, notes, or loans receivable have
given notice that they will or may refuse to pay monthly the full amount
thereof or any portion thereof. The Seller hereby guarantees collection of
90% by the Purchaser of any Seller's accounts receivable of any customers
that open new accounts with the Seller within the 30 days prior to Closing;
provided, Purchaser diligently

<PAGE>

attempts to collect such accounts receivable. Purchaser shall provide Seller
monthly notice of the diligent accounts receivables and amounts past due.

3.22 CUSTOMERS AND SUPPLIERS. SCHEDULE 3.22 attached hereto
contains a true, correct, and complete list of (a) the ten largest customers
(measured in dollar volume of revenue) of the Business during the period from
January 1, 1995 to June 30, 1995, (b) the ten largest suppliers (measured in
dollar volume of purchases) of the Business during the years January 1, 1995
to June 30, 1995, and (c) with respect to each such customer and supplier,
the name and address thereof, approximate dollar volume involved for such
period, and nature of the relationship (including the principal categories of
products bought, sold, and leased).

3.23 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. Except
as set forth in SCHEDULE 3.23, the Seller, and, to the best of Seller's
knowledge, no employee of the Seller, or affiliate of any of the foregoing,
has any ownership interest greater than 2% in any competitor, supplier, or
customer of the Business or Transferred Assets.

3.24 INVENTORY. Except as set forth on SCHEDULE 3.24 attached
hereto, the inventories involved in the Business shown on the Financial
Statements consist of (and the inventories of the Seller at the Closing will
consist of) items of a quality and quantity usable and readily saleable or
rentable in the ordinary course of business by the Seller in the Business,
subject to normal wear and tear and maintenance.

3.25 COMMISSION SALES CONTRACTS. Except as disclosed in SCHEDULE
3.25 attached hereto, the Seller does not employ or have any relationship
with any individual, corporation, partnership, or other entity whose
compensation from the Seller arising from the operation of the Business is in
whole or in part determined on a commission basis.

3.26 REGULATORY CERTIFICATES. Seller is not aware of any
information concerning the Seller or involving the Business that should cause
or any regulatory authority not to issue to the Purchaser all regulatory
certificates and approvals necessary for the consummation of the transactions
contemplated hereunder and for the Purchaser's operation of the Business and
ownership of the Transferred Assets.

3.27 INFORMATION FURNISHED. The Seller has made available to the
Purchaser and its officers, attorneys, accountants, lenders, and
representatives true and correct copies of all agreements, documents, and
other items listed on the schedules to this Agreement and all books and
records of the Seller, and neither this Agreement, the schedules hereto, nor
any information, agreements, or documents delivered to or made available to
the Purchaser or its officers, attorneys, accountants, lenders, and
representatives pursuant to this Agreement or otherwise contain any untrue
statement of a material fact or omit any material fact necessary to make the
statements herein or therein, as the case may be, not misleading.

ARTICLE 4

COVENANTS OF THE SELLER

4.1 INSPECTION. From the date hereof to the Closing, the Seller
shall provide the Purchaser and the Purchaser's officers, attorneys,
accountants, representatives, and lenders

<PAGE>

("Purchaser's Agents") free, full, and complete reasonable access during
business hours to all books, records, tax returns, files, correspondence,
personnel, facilities, and properties of the Seller relating to the Business;
provide the Purchaser and Purchaser's Agents all requested material
information pertaining to the business and affairs of the Seller relating to
the Business; and use his best reasonable efforts to afford the Purchaser and
its officers, attorneys, accountants, and representatives the opportunity to
meet with the customers and suppliers of the Seller relating to the Business
to discuss the business, condition (financial or otherwise), operations, and
prospects of the Seller relating to the Business. Any investigation by the
Purchaser or Purchaser's Agents shall not in any manner affect the
representations and warranties of the Seller contained herein; provided,
Purchaser shall promptly notify the Seller in writing of any actual or
apparent misrepresentation known to Purchaser. Notwithstanding the about,
any inspection or communications by Purchaser or Purchaser's Agents shall not
unreasonably interfere with the Business including Seller's customers or
suppliers and all confidential information obtained shall remain confidential.

4.2 COMPLIANCE. From the date hereof to the Closing, Seller
shall use best efforts to not take or fail to take any reasonable action
which action or failure to take such action would cause the representations
and warranties made by the Seller herein to be materially untrue or incorrect
as of the Closing.

4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date
hereof to the Closing, the Seller shall use his best reasonable efforts to
cause all conditions precedent to the obligations of the Purchaser hereunder
to be satisfied by the Closing.

4.4 NO SOLICITATION. From the date hereof until 11:59 p.m., on
November 1, 1995, the Seller shall not, and shall use their best reasonable
efforts to cause the officers, directors, employees, and agents of the Seller
not to, (a) solicit, initiate or encourage the submission of proposals or
offers from any person or entity for, or enter into any agreement or
arrangement not in the ordinary course of business relating to, any
acquisition or purchase of any or all of the Transferred Assets or (b)
participate in any negotiations regarding, or, except as required by legal
process, furnish to any other person or entity any information with respect
to, or otherwise cooperate in any way with, or assist or participate in,
facilitate, or encourage, any effort or attempt by any other person or entity
to do or seek any of the foregoing. In addition, until 11:59 p.m. on
November 1, 1995, the Seller agrees that Seller will not enter into any
agreement or consummate any transaction that would interfere with the
consummation of the transactions contemplated by this Agreement other than
transactions in the ordinary course of business. The Seller shall promptly
notify the Purchaser if any such proposal or offer described in this Section
4.4, or any inquiry or contact with any person or entity with respect
thereto, is made. The notification under this Section 4.4 shall include the
identity of the person or entity making such acquisition, offer or other
proposal, the terms thereof, and any other information with respect thereto
as the Purchaser may reasonably request.

4.5 NOTICE OF DEVELOPMENTS. From the date hereof to the
Closing, the Seller shall, immediately upon the Seller becoming aware
thereof, notify the Purchaser of any material problems or developments with
respect to the Business or the Transferred Assets.

4.6 NOTICE OF BREACH. From the date hereof to the Closing, the
Seller shall, immediately upon the Seller becoming aware thereof, give
detailed written notice to the Purchaser

<PAGE>

of the occurrence of, or the impending or threatened occurrence of, any event
that would cause or constitute a breach, or would have caused or constituted
a breach had such event occurred or been known to the Seller prior to the
date of this Agreement, of any of his covenants, agreements, representations,
or warranties contained or referred to herein or in any document delivered in
accordance with the terms hereof.

4.7 NOTICE OF LITIGATION. From the date hereof to the Closing,
the Seller shall, immediately upon the Seller becoming aware thereof, notify
the Purchaser of (a) any suit, action, or proceeding (including, without
limitation, any Seller Tax Action or proceeding involving a labor dispute or
grievance or union recognition) to which the Seller becomes a party or which
is threatened against the Seller relating to the Business or involving the
Transferred Assets, (b) any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereby, or (c) any notice from any tribunal
of its intention to institute an investigation into, or to institute a suit
or proceeding to restrain or enjoin the consummation of, this Agreement or
the transactions contemplated hereby or to nullify or render ineffective this
Agreement or such transactions if consummated.

4.8 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to
the Closing, the Seller shall keep in full force and effect insurance
coverage for the Seller relating to the Business and Transferred Assets
comparable in amount and scope to the coverage now maintained covering the
Seller relating to the Business and Transferred Assets.

4.9 MAINTENANCE OF CREDIT TERMS. From the date hereof to the
Closing, the Seller shall continue to effect sales and leases of its products
used in the Business only on similar terms to the terms that have
historically been offered or agreed to by the Seller or on such other terms
which are no less favorable to the Seller.

4.10 UPDATING INFORMATION. As of the Closing, the Seller shall
update all information provided by Seller set forth in the schedules to this
Agreement.

4.11 INTERIM OPERATIONS OF THE SELLER.

(a) From the date hereof to the Closing, the Seller
shall conduct the Business only in the ordinary course consistent
with past practice, and the Seller shall not, unless the Purchaser
gives its prior written approval or in the ordinary course of
business, (i) sell, pledge, dispose of, or encumber, or agree to
sell, pledge, dispose of, or encumber, any of the Transferred Assets,
(ii) incur any indebtedness for borrowed money or enter into or
modify any contract, agreement, commitment, or arrangement with
respect to the Transferred Assets, or authorize any capital
expenditure in excess of $5,000 relating to the Business (iii) enter
into, amend, or terminate any employment or consulting agreement
with any other person that relates to the operation of the Business,
take any action intended to materially increase or decrease the
number of persons employed in the Business, or take any action with
respect to the grant or payment of any severance or termination pay
other than pursuant to policies or agreements of the Seller in effect
on the date hereof, (iv) enter into, extend, or renew any lease for
office space used in connection with the operation of the Business,
or (v) except as required by law, adopt, amend, or terminate any
bonus, profit sharing, compensation, pension, retirement, deferred
compensation, employment, or other employee benefit plan, agreement,
trust, fund, or

15
<PAGE>

arrangement, if any, for the benefit or welfare of any employee, or
sales representative of the Seller involved in the Business, so as to
create any liability under Article IV of ERISA to any person, (vi)
grant any increase in compensation to any employee or consultant to
the Business except in the ordinary course of business consistent with
past practice. Purchaser consents to the matters described in
SCHEDULE 4.11.

(b) From the date hereof to the Closing, Seller shall
use its best reasonable efforts to preserve intact the business
organization of the Business, to keep available in all material
respects the services of its present employees, to preserve the
goodwill of those having business relationships with the Business,
and to comply with all applicable laws.

4.12 FINANCIAL STATEMENTS. From the date hereof until the
Closing, as soon as available, and in any event within 30 days after the end
of each calendar month beginning with September 1995, the Seller shall
furnish to the Purchaser a balance sheet, statement of income and retained
earnings, and statement of changes in financial position of the Business for
such month prepared by the Seller as an internal management control in
accordance with the accounting principles applied in the preparation of the
Financial Statements including the disclosures in SCHEDULE 3.5 (except for
the absence of notes to such monthly financial statements and subject to
normal year-end adjustments and accruals required to be made in the ordinary
course of business that are not materially adverse and are consistent with
past practices). Such monthly financial statements shall fairly present the
financial position, results of operations, and changes in financial position
as of the indicated dates and for the indicated periods. All costs and
expenses relating to an audit of Purchaser requested by Purchaser or ProNet
shall be the responsibility of Purchaser and ProNet.

4.13 ASSIGNMENTS. From the date hereof until the Closing, the
Seller shall use his best reasonable efforts to obtain all necessary consents
to the assignment by the Seller to the Purchaser of the Assumed Contracts,
all of which consents are described on SCHEDULE 3.4 hereto; provided, Seller
shall not be required to obtain consents to paging contracts unless
specifically indicated on SCHEDULE 3.4 and Seller shall not be required to
pay the consenting person any compensation for the consent.

ARTICLE 6

COVENANTS OF THE PURCHASER AND PRONET

5.1 COMPLIANCE. From the date hereof to the Closing, neither
Purchaser nor ProNet shall take or fail to take any reasonable action which
action or failure to take such action would cause the representations and
warranties made by the Purchaser or ProNet herein to be materially untrue or
incorrect at the Closing.

5.2 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date
hereof to the Closing, the Purchaser and ProNet shall use their best
reasonable efforts to cause all conditions precedent to the obligations of
the Seller to be satisfied by the Closing.

5.3 NOTICE OF DEVELOPMENTS. From the date hereof to the
Closing, the Purchaser and ProNet shall immediately upon the Purchaser or
ProNet becoming aware thereof, notify the Seller

16
<PAGE>

of any material problem or development with respect to consummating the
transactions contemplated by this Agreement or any warranties or
representations in this Agreement.

5.4 NOTICE OF BREACH. From the date hereof to the Closing, the
Purchaser and ProNet shall, immediately upon the Purchaser or ProNet becoming
aware thereof, give detailed written notice to the Purchaser or ProNet of the
occurrence of, or the impending or threatened occurrence of, any event that
would cause or constitute a breach, or would have caused or constituted a
breach had such event occurred or been known to the Purchaser or ProNet prior
to the date of this Agreement, of any of it or their covenants, agreements,
representations, or warranties contained or referred to herein or in any
document delivered in accordance with the terms hereof.

5.5 NOTICE OF LITIGATION. From the date hereof to the Closing,
the Purchaser and ProNet shall, immediately upon the Purchaser or ProNet
becoming aware thereof, notify the Seller of (a) any suit, action, or
proceeding to which the Purchaser or ProNet becomes a party or which is
threatened against the Purchaser or ProNet which might materially effect or
interfere with this Agreement or the transactions contemplated by this
Agreement, (b) any order or decree or any complaint praying for an order or
decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereby, or (c) any notice from any tribunal of its
intention to institute an investigation into, or to institute a suit or
proceeding to restrain or enjoin the consummation of, this Agreement or the
transactions contemplated hereby or to nullify or render ineffective this
Agreement or such transactions if consummated.

5.6 ASSIGNMENTS. From the date hereof until the Closing,
Purchaser and ProNet shall fully cooperate with Seller and use best
reasonable efforts to obtain all necessary consents to the assignments by the
Seller of the Assumed Contracts; provided, Purchaser and ProNet shall not be
required to pay the consenting person any compensation for the consent.

5.7 UPDATING INFORMATION. As of the Closing, Purchaser and
ProNet shall update all information provided by Purchaser or ProNet set forth
in the schedules to this Agreement.

ARTICLE 7

CONDITIONS TO CLOSING

6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations
of the Purchaser to consummate the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions:

(a) The representations and warranties of the Seller
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing with the same effect as
though such representations and warranties had been made on and as
of the Closing; the Seller shall have performed and complied in all
material respects with all agreements required by this Agreement to be
performed or complied with by the Seller at or prior to the Closing;
and the Purchaser shall have received a certificate (SCHEDULE 6.1),
dated as of the Closing Date, signed by Seller to the foregoing
effects.

<PAGE>

(b) No action or proceeding shall have been instituted
or threatened for the purpose or with the possible effect of
enjoining or preventing the consummation of this Agreement or seeking
damages on account thereof.

(c) The Purchaser shall have received an opinion of
Brown, Parker & Leahy, L.L.P., counsel for the Seller, dated as of
the Closing Date, in the form attached hereto as EXHIBIT C.

(d) Prior to the Closing, there shall not have occurred
any material casualty or damage (whether or not insured) to any of
the Transferred Assets; there shall have been no material adverse
change in the financial condition, business, properties, operations,
or prospects of or involved with the Business since June 30, 1995;
and the operation of the Business shall have been conducted in the
ordinary course consistent with past practices.

(e) As of the Closing Date, the Seller shall have at
least 40,000 pagers in service (I.E., pager subscribers) in the
Business and the Purchaser shall have received a certificate, dated
as of the Closing Date, signed by Sheppard setting forth the number
and type of pagers in service in the Business.

(f) As of the Closing Date, the Seller's average
revenue per unit shall not be less than $9.00 and the Purchaser
shall have received a certificate, dated as of the Closing Date,
signed by Sheppard to the foregoing effects.

(g) As of the Closing Date, the Seller's pager
inventory (I.E., agent inventory, wait to return, working supply,
loaners and demo/spare units) shall include at least 3,000 useable,
current- model pagers as set forth in SCHEDULE 1.1, and the Purchaser
shall have received a certificate, dated as of the Closing Date,
signed by Sheppard to the foregoing effect.

(h) All consents and approvals (i) listed on SCHEDULE
3.4 hereto and (ii) otherwise required in connection with the
execution, delivery, and performance of this Agreement shall have
been obtained or waived and all such consents and approvals shall
be in form and content reasonably satisfactory to the Purchaser.

(i) All necessary action shall have been taken by the
Seller to authorize, approve, and adopt this Agreement and the
consummation and performance of the transactions contemplated hereby,
and the Purchaser shall have received a certificate, dated as of the
Closing Date, signed by Seller to the foregoing effect.

(j) The Purchaser shall have received from the Seller a
duly executed Bill of Sale and all such other instruments as shall
be necessary or desirable in the reasonable opinion of the Purchaser's
counsel to vest in or confirm in the Purchaser good and indefeasible
title to the Transferred Assets in accordance herewith.

(k) Seller shall have entered into a Noncompetition
Agreement (a "Noncompetition Agreement") with the Purchaser
substantially in the forms attached hereto as EXHIBIT E.

<PAGE>

(l) Seller has delivered such good standing certificates,
and similar documents and certificates, if any, as counsel for the
Purchaser shall have reasonably requested prior to the Closing Date.

The decision of the Purchaser to consummate the transactions contemplated
hereby without the satisfaction of any of the preceding conditions shall not
constitute a waiver of any of the Seller's respective representations,
warranties, covenants, or indemnities herein unless Purchaser waives such
items in a written instrument signed by Purchaser.

6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of
the Seller to consummate the transactions contemplated hereby are subject to
the fulfillment of the following conditions:

(a) The representations and warranties of the Purchaser
and ProNet contained in this Agreement shall be true and correct in
all material respects at and as of the Closing with the same effect
as though such representations and warranties had been made as of the
Closing; Purchaser and ProNet shall have performed and complied in
all material respects with all agreements required by this Agreement
to be performed or complied with by the Purchaser or ProNet at or
prior to the Closing; and Seller shall have received a certificate
(SCHEDULE 6.2), dated as of the Closing Date, signed by an officer of
the Purchaser and ProNet to the foregoing effects.

(b) The Purchaser shall have delivered to the Seller a
certified bank check or wire transfer, as determined by Seller, in
the amount of the cash portion of the Purchase Price to be paid on
the Closing Date in accordance with and as specified in Section 1.4
hereof.

(c) The Purchaser shall have delivered to the Seller an
Assumption Agreement substantially in the form attached hereto as
EXHIBIT C with respect to the Assumed Liabilities.

(d) The Purchaser shall have entered into the
Noncompetition Agreements with the Seller.

(e) The Purchaser shall have entered into the Sublease,
substantially in the form attached hereto as EXHIBIT F, and paid the
rent for the Sublease through December 31, 1995 plus remitted to
Seller $25,000.00 for reconfiguration of the office.

(f) The Purchaser shall have entered into the Reseller
Agreement with a most favored nations type provision for pricing and
in substantially the form attached hereto as EXHIBIT G.

(g) No action or proceeding shall have been instituted
or threatened for the purpose or with the possible effect of
enjoining or preventing the consummation of this Agreement or seeking
damages on account thereof.

<PAGE>

(h) The Seller shall have received an opinion of Mark
A. Solls, counsel for the Purchaser and ProNet, dated as of the
Closing Date, in the form attached hereto as EXHIBIT H.

(i) All consents and approvals (i) listed on SCHEDULE
3.4 hereto and (ii) otherwise required in connection with the
execution, delivery, and performance of this Agreement shall have
been obtained or waived to the reasonable satisfaction of Seller.

(j) All necessary action shall have been taken by
Purchaser and ProNet to authorize, approve, and adopt this Agreement
and the consummation and performance of the transactions contemplated
hereby, and the Seller shall have received a certificate dated as of
the Closing Date, signed by Purchaser and ProNet.

(k) Purchaser and ProNet shall have delivered such good
standing certificate, and similar documents and certificates as
counsel for the Seller shall have reasonably requested prior to the
Closing Date.

(l) Execution and delivery of the Indemnification
Escrow Agreement plus deposit of the Estoppel Funds with the Escrow
Agent.

(m) The sales tax certificates described in Section
10.10 have been completed and delivered to Seller.

The decision of the Seller to consummate the transactions
contemplated hereby without the satisfaction of any of the preceding
conditions shall not constitute a waiver of any of Purchaser's or ProNet's
respective agreements, representations, warranties, covenants or indemnities
herein unless Seller waives such items in a written instrument signed by
Seller.

ARTICLE 7

TERMINATION

7.1 TERMINATION. This Agreement may be terminated prior to the
Closing by (a) the mutual consent of the Purchaser and the Seller, (b) the
Seller upon the failure of the Purchaser or ProNet to perform or comply in
all material respects with each of its covenants or agreements contained
herein prior to the Closing or if each representation or warranty of the
Purchaser or ProNet hereunder shall not have been true and correct in all
material respects as of the time at which such representation or warranty was
made, (c) the Purchaser upon the failure of the Seller to perform or comply
in all material respects with each of his covenants or agreements contained
herein prior to the Closing or if each representation or warranty of the
Seller hereunder shall not have been true and correct in all material
respects as of the time at which such representation or warranty was made,
(d) the Seller or the Purchaser if the Closing does not occur by November 1,
1995; provided, that no party may terminate this Agreement pursuant to (b) or
(c) above if such party is, at the time of any such attempted termination, in
breach of any material term hereof.

<PAGE>

ARTICLE 8

INDEMNIFICATION

8.1 INDEMNIFICATION OF THE PURCHASER. The Seller agrees to
indemnify and hold harmless the Purchaser and each officer, director,
employee, consultant, stockholder, and affiliate of the Purchaser
(collectively, the "Purchaser Indemnified Parties") from and against any and
all damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding)
(collectively, "Purchaser Indemnified Costs") which any of the Purchaser
Indemnified Parties may sustain, or to which any of the Purchaser Indemnified
Parties may be subjected, arising out of any breach or default by the Seller
of or under any of the representations, warranties, covenants, agreements, or
other provisions of this Agreement or any agreement or document executed in
connection herewith.

8.2 INDEMNIFICATION OF THE SELLER. The Purchaser and ProNet
agree to indemnify and hold harmless the Seller and each employee, consultant
and agent (collectively, the "Seller Indemnified Parties" and collectively
with the Purchaser Indemnified Parties, the "Indemnified Parties") from and
against any and all damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorney's fees incurred in the investigating and preparing for any
litigation or proceeding) (collectively, the "Seller Indemnified Costs" and,
collectively with the Purchaser Indemnified Costs, the "Indemnified Costs")
which any of the Seller Indemnified Parties may sustain, or to which any of
the Seller Indemnified Parties may be subjected, arising out of any breach or
default by the Purchaser or ProNet under any of the representations,
warranties, covenants, agreements, or other provisions of this Agreement or
any agreement or document executed in connection herewith.

8.3 DEFENSE OF THIRD-PARTY CLAIMS. Indemnified Parties shall
give prompt written notice to any entity or person who is obligated to
provide indemnification hereunder (an "Indemnifying Party") of the
commencement or assertion of any action, proceeding, demand, or claim by a
third party (collectively, a "third-party action") in respect of which such
Indemnified Parties shall seek indemnification hereunder. Any failure so to
notify an Indemnifying Party shall not relieve such Indemnifying Party from
any liability that it or he may have to such Indemnified Parties under this
Article 8 unless the failure to give such notice materially and adversely
prejudices such Indemnifying Party. An Indemnifying Party shall have the
right to assume control of the defense of, settle, or otherwise dispose of
such third-party action on such terms as they or he deem appropriate;
provided that:

(a) The Indemnified Parties shall be entitled, at their
own expense, to participate in the defense of such third-party
action (provided that the Indemnifying Party shall pay the reasonable
attorneys' fees of the Indemnified Parties if (i) the employment
of separate counsel shall have been authorized in writing by any such
Indemnifying Party in connection with the defense of such third-
party action, (ii) the Indemnified Parties shall have reasonably
concluded that there is a meritorious defense available to such
Indemnified Parties that are material different from or additional
to those available to the Indemnifying Party and likely to cause a
materially different result and benefit, or (iii) the Indemnifying
Party's counsel shall have advised the Indemnified Party in writing,
with a copy to the Indemnified Party, that there is a conflict of
interest that probably makes it

<PAGE>

inappropriate under applicable standards of professional
conduct to have common counsel and such conflict is not waived;

(b) The Indemnifying Party shall obtain the prior
written approval of the Indemnified Parties before entering into or
making any settlement, compromise, admission, or acknowledgment of
the validity of such third-party action or any liability in respect
thereof if, pursuant to or as a result of such settlement, compromise,
admission, or acknowledgment, injunctive or other equitable relief
would be imposed against the Indemnified Parties or if, in the
reasonable opinion of the Indemnified Parties, such settlement,
compromise, admission, or acknowledgment could have a material adverse
effect on their business or, in the case of Indemnified Parties
who are natural person, on their assets or interests;

(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by each claimant or
plaintiff to each of the Indemnified Parties of a release from all
liability in respect of such third-party action or the settled
matters; provided, the consents or approvals of the Indemnified
Parties mandated by Sections 7.3(b) and (c) hereof shall not be
unreasonably withheld; and

(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its or his own
expense in the defense of), and the Indemnified Parties shall be
entitled to have sole control over, the defense or settlement,
compromise, admission, or acknowledgment of any third-party action
as to which the Indemnifying Party fails to assume the defense within
a reasonable length of time; PROVIDED, HOWEVER, that the Indemnified
Parties shall make no settlement, compromise, admission, or
acknowledgment that would give rise to liability on the part of any
Indemnifying Party without the prior written consent of such
Indemnifying Party which shall not be unreasonably withheld.

The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 8 and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.

8.4 DIRECT CLAIMS. In any case in which an Indemnified Parties
seeks indemnification hereunder which is not subject to Sections 8.1 or 8.2
hereof because no third-party action is involved, the Indemnified Parties
shall notify the Indemnifying Party in writing of any Indemnified Costs which
such Indemnified Parties claims are subject to indemnification under the
terms hereof. The failure of the Indemnified Parties to exercise promptness
in such notification shall not amount to a waiver of such claim unless the
resulting delay materially prejudices the position of the Indemnifying Party
with respect to such claim.

8.5 Limitations

(a) An Indemnifying Party shall have no liability
relating to this Agreement unless such notice of claim or potential
claim shall have been given within eighteen (18)

<PAGE>

months after Closing; provided, the limitation period
applicable to Taxes shall terminate with the assessment limitation
period applicable to such Taxes.

(b) The aggregate liability of Seller for all events or
occurrences giving rise to Seller being required to indemnify
Purchaser or Purchaser Indemnified Parties for claims and losses
relating to this Agreement is limited to $7,500,000.00. The aggregate
liability of Purchaser for all events or occurrences giving rise to
Purchaser being required to indemnify Seller or Seller Indemnified
Parties for claims and losses relating to this Agreement is limited to
$7,500,000.00.

(c) Seller shall have no obligation to indemnify
Purchaser and Purchaser Indemnified Parties and such persons shall
not be entitled to assert a claim against Seller or the Escrowed Funds
until the aggregate claims and losses to Purchaser and Purchaser
Indemnified Parties exceeds the sum of $25,000.00.

(d) The liability of Seller to Purchaser and Purchaser
Indemnified Parties for claims and losses relating to this Agreement
shall not include punitive or exemplary damages except as to claims
involving fraud. Seller's liability for punitive or exemplary
damages awarded to third parties shall not be limited.

(e) Any indemnity claims or losses shall be determined
after taking into account any tax benefits relating to the claim or
loss.

8.6 SUBROGATION. To the extent that an Indemnifying Party is or
becomes liable for a claim under this Agreement, the Indemnifying Party shall
be subrogated to all of the rights of the Indemnified Parties and shall have
the right of full substitution in the place of the Indemnified Parties with
respect to possible claims against third parties.

ARTICLE 9

DISPUTE RESOLUTION

9.1 AGREEMENT TO USE PROCEDURE. The parties hereto agree that if
any dispute arises between them relating to this Agreement ("Dispute"), they
will first utilize the mediation procedure specified in this Article 9
("Procedure") prior to any arbitration proceedings pursuant to Section 9.7
("Arbitration Proceedings").

9.2 INITIATION OF MEDIATION. The party seeking to initiate the
Procedure ("Initiating Party") shall give notice to the other party or
parties, describing in general terms the nature of the Dispute, the
Initiating Party's claim for relief and identifying one or more individuals
with authority to settle the Dispute on the Initiating Party's behalf. The
party or parties receiving such notice ("Responding Party," whether one or
more) shall have 5 business days within which to designate by notice to the
Initiating Partner, one or more individuals with authority to settle the
Dispute on the Responding Party's behalf. The individuals so designated
shall be known as the "Authorized Individuals". The Initiating Party and the
Responding Party shall collectively be referred to as the "Disputing Party"
or, individually, as the "Disputing Parties". The Authorized Individuals
shall have 30 business days from the date of the Responding Party's notice to
the

<PAGE>

Initiating Party to select a mutually agreeable mediator. In
consultation with the mediator selected, the Authorized Individuals shall
promptly designate a mutually convenient time and place for the mediation,
and unless circumstances require otherwise, such time to be not later than 45
days after selection of the mediator.

9.3 CONDUCT OF MEDIATION. In the mediation, each Disputing Party
shall be represented by an Authorized Individual and may be represented by
counsel. In addition, each Disputing Party may, with permission of the
mediator, bring such additional persons as needed to respond to questions,
contribute information, and participate in the negotiations. The Disputing
Parties agree to sign a document that provides that the mediator shall be
governed by the provisions of Chapter 154 of the Texas Civil Practice and
Remedies Code and such other rules as the mediator shall prescribe. The
Disputing Parties commit to participate in the proceedings in good faith to
its conclusion and with the intention of resolving the Dispute if at all
possible.

9.4 TERMINATION OF PROCEDURE. The mediation shall be terminated
(i) by the execution of a settlement agreement by the Disputing Parties, (ii)
by a declaration of the mediator that the mediation is terminated, or (iii)
by a written declaration of a Disputing Parties to the effect that the
mediation process is terminated at the conclusion of one full day's mediation
session. Even if the mediation is terminated without a resolution of the
Dispute, the Disputing Parties agree not to commence any Arbitration
Proceedings prior to the expiration of 5 days following the mediation.

9.5 FEES OF MEDIATION; DISQUALIFICATION. The fees and expenses
of the mediator shall be shared equally by the Disputing Parties. The
mediator shall be disqualified as a witness, consultant, expert or counsel
for any Disputing Party with respect to the Dispute and any related matters.

9.6 CONFIDENTIALITY. The entire mediation process is
confidential, and no stenographic, visual or audio record shall be made. All
conduct, statements, promises, offers, views and opinions, whether oral or
written, made in the course of the mediation by any Disputing Party, their
agents, employees, representatives or other invitees and by the mediator are
confidential and shall be deemed privileged where appropriate. Such conduct,
statements, promises, offers, views and opinions shall not be disclosed to
anyone not an agent, employee, expert, witness, or representative of any of
the party.

ARTICLE 10

MISCELLANEOUS

10.1 COLLATERAL AGREEMENTS, AMENDMENTS, AND WAIVERS. This
Agreement (together with the documents delivered in connection herewith)
supersedes all prior documents, understandings, and agreements, oral or
written, relating to this transaction, among the parties hereto and
constitutes the entire understanding among the parties hereto with respect to
the subject matter hereof. Any modification or amendment to, or waiver of,
any provision of this Agreement (or any document delivered in connection
herewith unless otherwise expressly provided therein) may be made only by an
instrument in writing executed by the party against whom enforcement thereof
is sought.

<PAGE>

10.2 BULK SALES COMPLIANCE. The Purchaser hereby waives
compliance by the Seller with any laws governing bulk sales (to the extent
such laws are applicable to the transactions contemplated by this Agreement).
The Seller hereby agrees to indemnify the Purchaser for any liabilities, if
any, incurred by the Purchaser as a result of such noncompliance. Any such
liabilities shall be Indemnified Costs.

10.3 RISK OF LOSS - DAMAGE TO TRANSFERRED ASSETS. The parties
hereto hereby agree that the risk of loss or damage to any of the Transferred
Assets shall be upon the Seller prior to the Closing and upon the Purchaser
thereafter.

10.4 PRORATIONS. All annual or periodic ad valorem fees, taxes,
and assessments and similar charges imposed by taxing authorities on the
Transferred Assets (collectively, "Property Taxes") shall be borne and paid
(a) by the Seller for all full tax years or periods ending before the Closing
Date and for that portion of any tax year or period ending on or after the
Closing Date from the date of commencement of such year or period to the date
immediately preceding the Closing Date and (b) by the Purchaser for all full
tax years or periods beginning on or after the Closing Date and for that
portion of any tax year or period ending on or after the Closing Date from
and including the Closing Date to the final date of such year or period,
regardless of when or by which party such Property Taxes are actually paid to
the applicable taxing authority. In addition, all rents and other lease
charges, power and utility charges, license or other fees, wages, salaries,
and commissions, all Assumed Contracts, prepaid items and expenses, and
similar items to be allocated between the Purchaser and the Seller shall be
allocated between the Purchaser and the Seller effective as of 12:01 a.m. on
the Closing Date. Such allocations shall be determined and payment
accordingly made from one party to the other, as the case may be, on the
Closing Date to the extent they are known and agreed to by the Purchaser and
the Seller; otherwise such allocations shall be determined and payment made
(effective as of 12:01 a.m. on the Closing Date) on the date 30 days
thereafter. If there shall be any dispute in regard to the amounts due under
this Section 10.4, the same shall be determined by a nationally recognized
accounting firm selected by the Purchaser and approved by Seller, which
consent shall not be unreasonably withheld, and any such determination shall
be binding and conclusive on the parties hereto. The charges of such firm
shall be shared equally by the Purchaser and the Seller.

10.5 ALLOCATION OF PURCHASE PRICE. The parties hereto
acknowledge that the transactions contemplated hereby must be reported in
accordance with Section 1060 of the Code. Accordingly, the parties shall
report such transactions for all purposes in accordance with the Purchase
Price allocation set forth on EXHIBIT I hereto.

10.6 RECORDS. At the Closing, the Seller will turn over and
deliver to the Purchaser all files of the Seller relating to the Transferred
Assets and/or the Business, including, without limitation, all copies and
originals of all Assumed Contracts, any and all operating manuals, third
party warranties, and like materials and data in the Seller's possession
relating to the design, construction, maintenance, and operation of
facilities, improvements, and equipment included in the Transferred Assets
and/or the Business, and all appropriate books and records, accounting
information, and operating information and data, current and historical,
reasonably related to the Transferred Assets and/or the Business. Upon the
reasonable request of Seller, after reasonable notice Purchaser and ProNet
shall make such files and records available to Seller and his representatives
for review and/or copying, at Seller's expense, for legal and business
purposes including the preparation of tax returns and responding to audits.

<PAGE>

10.7 SELLER'S LIABILITIES. The Seller agrees to satisfy, pay and
extinguish all of the known and uncontested liabilities of the Seller
relating to the Business outstanding as of the Closing Date within 90 days
following the Closing Date.

10.8 SUCCESSORS AND ASSIGNS. No rights or obligations of any
party hereto under this Agreement may be assigned (except that the Purchaser
may assign its rights and obligations to any affiliate (as that term is
defined in Rule 144 under the Securities Act) of the Purchaser or to any
successor entity to the Purchaser whether pursuant to a sale of all or
substantially all of the Purchaser's assets, the merger, consolidation,
liquidation, or dissolution of the Purchaser, or otherwise; provided,
Purchaser and ProNet shall remain fully liable for their respective
obligations pursuant to this Agreement and related documents. Any assignment,
dissolution, or liquidation in violation of the foregoing shall be null and
void. Subject to the preceding sentences of this Section 10.8, the
provisions of this Agreement (and, unless otherwise expressly provided
therein, of any document delivered pursuant to this Agreement) shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and permitted assigns.

10.9 EXPENSES. Each of the parties hereto shall pay its or his
own respective costs and expenses incurred in connection with this Agreement.

10.10 SALES TAXES. Purchaser shall deliver to Seller at the
Closing a Texas Sales Tax Exemption Certificate relating to acquisition of
the Transferred Assets in an occasional sale pursuant to Section 151.304 of
the Texas Tax Code, as amended ("Texas Code"), and a Texas Sale Tax Resale
Certificate relating to acquisition of the pagers for resale pursuant to
Section 151.302 of the Texas Code.

10.11 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws,
such provision shall be fully severable from this Agreement, this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid,
and enforceable.

10.12 WAIVER. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall operate as a
waiver of such right, power, or privilege; nor shall any single or partial
exercise of any such right, power, or privilege preclude any other or future
exercise thereof or the exercise of any other right, power, or privilege.

10.13 NOTICES. Any notices required or permitted to be given
under this Agreement (and, unless otherwise expressly provided therein, under
any document delivered in connection with this Agreement) shall be given in
writing and shall be deemed received (a) when personally delivered to the
relevant party at such party's address as set forth below, (b) when confirmed
if delivered by telefacsimile or similar device, or (c) if sent by mail, on
the third day following the

<PAGE>

date when deposited in the United States mail, certified or registered mail,
postage prepaid, to the relevant party at its or his address indicated below:

If to the Purchaser: Contact Communications Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Fax No: (214) 774-0640

With a copy to: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Mark A. Solls
Fax No: (214) 774-0640

If to the Seller: Daniel L. Sheppard
701 North Post Oak Road
Suite 100
Houston, Texas 77024
Fax # (713) 613-7029

With a copy to: E. Blake Hawk
Brown, Parker & Leahy, L. L. P.
Citicorp Center
1200 Smith, Suite #3600
Houston, Texas 77002-4594
Fax # (713) 654-1871

Each party may change its or his address for purposes of this Section 10.13
by proper notice to the other parties.

10.14 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, all
covenants, agreements, representations, and warranties made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby
shall survive the Closing.

10.15 PUBLIC ANNOUNCEMENT. No public announcement shall be made
by any party with respect to the transactions contemplated hereby without
the approval of the Purchaser and Seller, which shall NOT be unreasonably
withheld, unless otherwise required by applicable law including the
Securities Act of 1933, as amended ("Securities Act") and the Securities
Exchange Act of 1934, as amended ("Exchange Act") and other security laws.
Seller acknowledges that the completion of the transaction (including the
purchase price and number of pagers in service) will be announced subsequent
to the Closing.

10.16 FURTHER ASSURANCES. From time to time hereafter, (a) at the
request of the Purchaser, but without further consideration, the Seller shall
execute and deliver such other instruments of conveyance, assignment,
transfer, and delivery and take such other action as the

<PAGE>

Purchaser may reasonably request in order more effectively to consummate the
transactions contemplated hereby, and (b) at the request of the Seller, but
without further consideration, the Purchaser shall execute and deliver such
other certificates, statements, and documents, and take such other action as
the Seller may reasonably request in order to more effectively consummate the
transactions contemplated hereby.

10.17 NO THIRD-PARTY BENEFICIARIES. Except for the Indemnified
Parties not a party to this Agreement, no person or entity not a party to
this Agreement shall be deemed to be a third-party beneficiary hereunder or
entitled to any rights hereunder.

10.18 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.

10.19 HEADINGS. The headings, captions, and arrangements used in
this Agreement are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of this Agreement
or affect the meaning hereof.

10.20 SECTIONS; EXHIBITS. All references to "Sections",
"Subsections", "Schedules", "Annexes", and "Exhibits" herein are, unless
specifically indicated otherwise, references to sections, subsections,
schedules, annexes, and exhibits of and to this Agreement. All schedules and
exhibits attached hereto are made a part hereof for all purposes, the same as
set forth herein verbatim, it being understood that if any exhibit attached
hereto which is to be executed and delivered contains blanks, the same shall
be completed correctly and in accordance with the terms and provisions
contained and as contemplated herein prior to or at the time of the execution
and delivery thereof.

10.21 NUMBER AND GENDER OF WORDS. Whenever herein the singular
number is used, the same shall include the plural where appropriate, and
words of any gender shall include each other gender where appropriate.

10.22 SPECIFIC PERFORMANCE. The parties hereto acknowledge and
agree that, without limiting any other remedy available to the Purchaser at
law or in equity, the Purchaser shall be able to specifically enforce the
terms of this Agreement.

10.23 PRONET GUARANTEE. ProNet hereby agrees to unconditionally
guarantee any and all obligations of Purchaser of any nature relating to in
this Agreement including, without limitation, the Sublease, Reseller
Agreement, any other agreement or document executed in connection herewith
and including any amendments, additions, extensions or collection costs of,
to or involving such obligations or agreements.

10.24 BUSINESS DAYS. In the event that any date or any period
provided for in this Agreement shall end on a Saturday, Sunday or legal
holiday, the applicable period shall be extended to the first business day
following such Saturday, Sunday or legal holiday.

10.25 CONFIDENTIALITY. Purchase, ProNet and Seller shall keep
confidential all information obtained by it or him with respect to the other
party in connection with this Agreement unless required by applicable law
including the Securities Act and the Exchange Act and other security laws or
mandates. If the transactions contemplated hereby are not consummated for
any reason,

<PAGE>

each shall return to the other party without retaining any copy thereof any
material obtained from the other party.

10.26 FORCE MAJEURE. Neither party herein shall be liable for
delays or defaults in its performance of any agreement or covenants hereunder
due to force majeure. Term "force majeure" as employed herein shall mean:
any act of God including but not limited to storms, floods, washouts,
landslides, and lighting; acts of the public enemy, wars, blockades,
insurrections or riots; strikes or lockouts, epidemics or quarantine
regulations; laws, act, orders or request of federal, state, municipal or
other governments, exhaustion or unavailability or delays in delivery of any
product, labor, service, or material outside a party's reasonable control.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement in one or more counterparts (all of which shall constitute one and
the same agreement) as of the day and year first above written.

CONTACT COMMUNICATIONS INC.

By: /s/ Mark A. Solls
--------------------------------------
Mark A. Solls, Vice President

PRONET INC.

By: /s/ Mark A. Solls
--------------------------------------
Mark A. Solls, Vice President

/s/ Daniel L. Sheppard
---------------------------------------
Daniel L. Sheppard (individually and
dba Paging and Cellular of Texas)

<PAGE>

EXHIBIT 10.7

CONTACT COMMUNICATIONS, INC.
6340 LBJ FREEWAY
DALLAS, TEXAS 75240

October 10, 1995

SENT VIA FACSIMILE
C/O JAKE COGBURN, ESQUIRE
(404) 228-5018
--------------

Mr. James H. Cobb, III
President
Cobbwells, Inc.
245 Meriwether Street
Griffin, GA 30223-3010

Dear Mr. Cobb:

This letter will confirm the understanding that James H. Cobb, III and
Warren K. Wells (the "Shareholders") have reached with Contact Communications
Inc., a Delaware corporation ("Buyer"), and wholly owned subsidiary of ProNet
Inc. ("ProNet"), with respect to the acquisition ("Acquisition") by Buyer of all
issued and outstanding shares of common stock (the "Shares") of Cobbwells, Inc.
d/b/a Page One/Airtel, a Georgia corporation (the "Company") from the
Shareholders.

1. The parties hereto shall immediately proceed with the further
negotiation, preparation and execution of a Definitive Agreement (herein so
called) containing, among other things, the terms and conditions set forth in
EXHIBIT A attached hereto. The parties intend that the Definitive Agreement be
executed no later than 5:00 p.m., Dallas time, November 17, 1995, unless they
shall otherwise agree in writing.

2. Following the date of execution hereof, the Shareholders and the
Company shall afford to Buyer through its officers, attorneys, accountants,
lenders and authorized representatives and affiliates free and full access to
the properties, books and records of the Company on reasonable notice during
normal business hours in order to permit Buyer to make such investigation of
the business, properties and operations of the Company as Buyer may deem
necessary. In the event Buyer determines not to proceed with the Acquisition,
any information furnished to, or obtained by, any party hereto, its officers,
attorneys, accountants, lenders or authorized representatives, as a result of
its investigations or otherwise in connection with the Acquisition, shall be
treated as confidential information except (a) to the extent such

<PAGE>

Mr. James H. Cobb, III
October 10, 1995
Page -2-

information is otherwise public or generally available to the public or (b) as
required by law. In the event the Acquisition does not occur, each party shall
return to the other parties all written confidential information furnished by
the other parties to it or him and will not thereafter use, for any purposes
whatsoever, such confidential information, or permit any such confidential
information to be made publicly available.

3. The Shareholders and the Company represent and warrant to Buyer that
neither the Shareholders nor the Company has entered into any agreement
pursuant to which any person or entity has obtained the right to acquire any
portion of the securities or assets of the Company (whether by purchase of
assets or stock, by merger, or otherwise) and (b) the execution, delivery and
performance of this letter of intent by the Shareholders and the Company do not
and will not breach, violate or conflict with, or permit the cancellation of,
any agreement to which the Company is a party or by which it or its properties
is bound. In order to induce Buyer to undertake the considerable effort and to
incur the major expenses associated with the Acquisition, the Shareholders and
the Company shall not, and shall use their best efforts to cause the officers,
directors, employees, and agents of the Company not to, (a) solicit, initiate
or encourage the submission of proposals or offers from any person or entity
for, or enter into any agreement or arrangement relating to, any acquisition or
purchase of any or all of the assets of, or securities of, or any merger,
consolidation, or business combination with, the Company or any subsidiary
thereof or (b) participate in any negotiations regarding, or, except as
required by legal process, furnish to any other person or entity any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate, or encourage, any effort or attempt by any other
person or entity to do or seek any of the foregoing until 5:00 p.m., Dallas,
Texas time, on November 17, 1995. In addition, until 5:00 p.m., Dallas, Texas
time, on November 17, 1995, the Shareholders and the Company agree that neither
the Shareholders nor the Company will enter into any agreement or consummate
any transaction that would interfere with the consummation of the Acquisition.
The Shareholders and the Company shall promptly notify Buyer if any such
proposal or offer described in this paragraph, or any inquiry or contact with
any person or entity with respect thereto, is made. The notification under this
paragraph shall include the identity of the person or entity making such
acquisition, offer or other proposal, the terms thereof, and any other
information with respect thereto as Buyer may reasonably request and which may
be legally provided to Buyer by the Company and the Shareholders.

4. No public announcement shall be made by Buyer, ProNet, the Company or
either Shareholder with respect to the transactions contemplated hereby without
the approval of the respective parties, unless otherwise required by law;
provided, however, it is specifically understood that ProNet may issue press
releases regarding the execution of this letter of intent, the execution of the
Definitive Agreement and/or the Closing of the Acquisition.

<PAGE>

Mr. James H. Cobb III
October 10, 1995
Page -3-

5. This letter is intended merely to be a guide in the preparation of a
Definitive Agreement satisfactory to the parties hereto and nothing contained
herein shall be construed to preclude other provisions that are inconsistent
with the terms of the Acquisition outlined herein from being included in the
Definitive Agreement, provided such other provisions are satisfactory to all
parties to the Definitive Agreement. While the parties presently intend to
proceed promptly to complete the Definitive Agreement, it is expressly
understood that this is a letter of intent and that no liability or obligation
of any nature whatsoever is intended to be created between or among any of the
parties hereto except as set forth in paragraphs 2, 3 and 4 hereof.

6. Upon the execution of this letter by all parties, the Letter of Intent
by and among the same parties dated August 7, 1995 shall terminate.

If the foregoing sets forth your understanding with respect to this matter,
please execute the enclosed copies of this letter in the space provided below
for your signatures and return one fully executed copy to the undersigned,
whereupon this letter shall become a binding agreement among the parties hereto
and our respective heirs, successors and assigns as of the date hereof.

CONTACT COMMUNICATIONS INC.

By:___________________________________

Title: _________________________________

Accepted and agreed to in all respects
as of ______ day of __________, 1995

COBBWELLS, INC.

By:_________________________________

Title:________________________________

____________________________________
James H. Cobb, III

____________________________________
Warren K. Wells

<PAGE>

EXHIBIT A

COBBWELLS, INC.
TERM SHEET

Nature of Transaction Sale Of Stock of Cobbwells, Inc.

Purchase Price The Purchase Price shall be $16,200,000.

The Purchase Price shall be paid as
follows:(a) 70% in cash at closing, and
(b) 30% payable in shares of common
stock ("Common Stock") of ProNet Inc.
(valued at the then current trading
price) or cash (the "Deferred Amount"),
in Buyer's sole discretion, within 12
months after the closing of the
Acquisition. The Purchase Price shall be
allocated between the Shares and the
Shareholders' Noncompetition Agreements
(in an amount to be agreed to by the
parties hereto). On the date of
execution of the definitive agreement,
Buyer shall deposit with an escrow
agent, a $500,000 earnest money deposit
("Earnest Money"). Such Earnest Money
would be credited toward the Purchase
Price at Closing. In the event the
transaction does not close due solely to
Buyer's breach of its obligations under
the definitive agreement, then the
Earnest Money shall be payable to
Shareholders; otherwise, the Earnest
Money shall be payable to Buyer. Buyer
shall pay the Shareholders interest at
the rate of 6 1/2% per annum on any
portion of the Deferred Amount
outstanding (calculated from the date of
Closing until paid).

The shares of common stock to be
delivered in payment of the Deferred
Amount, if any, shall be the subject of
a Registration Rights Agreement between
the Shareholders and ProNet pursuant to
which ProNet shall agree that such
shares shall be registered with the
Securities and Exchange Commission (the
"SEC") within 14 days after the delivery
of such shares to the Shareholders.

Cobbwells, Inc.
Terms -2-

<PAGE>

Accounts Receivable The Purchase Price shall be increased by the
Company's accounts receivable pursuant
to a formula reflecting the Company's
aging to be mutually agreed by the
parties.

Recurring Revenue The Company shall have at least $328,000 in
recurring monthly revenue (as defined
from the summary billing by price code
generated by the Company in its ordinary
course) for the last complete month
prior to the date of Closing ("Recurring
Monthly Revenue"). In the event
Recurring Monthly Revenue is less than
$328,000, the Buyer shall have the
option to terminate the transaction with
the Earnest Money payable to the Buyer.
In the event Recurring Monthly Revenue
exceeds $328,000, the purchase price
shall be increased by $25,000 for each
$1,000 over $328,000.

Other Conditions to Closing (a) All third party consents, approvals and
waivers required to be obtained by the
Company or the Buyer to consummate the
transaction shall have been obtained or
waived.

(b) Between September 30, 1995 and Closing,
there shall have been no material
adverse change in the financial
condition, assets or business of the
Company and between September 30, 1995
and Closing, the business of the Company
shall have been conducted in the
ordinary course consistent with past
practice.

(c) Any required government filings shall
have been made and applicable waiting
periods shall have expired or been
terminated or waived by Buyer.

(d) No declared but unpaid dividends shall
be in effect on the date of the Closing.

Cobbwells, Inc.
Terms -3-

<PAGE>

(e) No loans to officers or employees shall
be outstanding on the date of the
Closing.

(f) Since September 30, 1995, there shall
have been no dividends or distributions
(other than in the normal course
consistent with past practice), no
material increase in the compensation to
officers or other key employees of the
Company (other than in the normal course
consistent with past practice) and no
material commitments shall be made
without the consent of the Buyer, except
such distributions or compensation as is
mutually agreed to between the parties.

(g) The cash and cash equivalents (including
accounts receivable) of the Company
shall meet or exceed the amount of
Accounts Payable existing on the date of
the Closing.

(h) The Company's pagers in service shall
not be less than 27,328 at the date of
the Closing.

(i) The Acquisition shall include all of the
Company's radio paging systems,
including all affiliated networks for
continuity of such system (collectively
the "System"),and any frequencies
licensed for radio paging in such
metropolitan areas held by the Company
but not currently used in the operation
of the System and all tangible assets of
the System including receivers,
transmitters, base station equipment,
accounts receivable, inventory (of an
appropriate working level to supply the
System; provided however, that the value
of the inventory shall not be less than
$200,000), furniture, fixtures and
computer equipment.

Cobbwells, Inc.
Terms -4-

Excluded Assets (a) The Company's cash: the cash and cash

<PAGE>

equivalents (excluding accounts
receivable) to the extent such cash and
cash equivalents exceed Accounts Payable
existing on the date of the Closing. .
(b) Two (2) leased automobiles.
(c) Spectrum Mail Machine.
(d) Postage Machine.
(e) The Company's telephone answering
service equipment.

Noncompetition Agreement The Shareholders will agree not to compete
with Buyer in the area in which the
Company serves its customers (Georgia
and South Carolina) for a period of
five years from the closing of the
Acquisition; provided however, the
Shareholders may operate as Resellers
on Buyer's system under terms to be
mutually agreed upon by the parties.

Representation and Warranties The Shareholders shall represent and warrant
that (a) neither they nor the Company
has entered into any agreement pursuant
to which any person or entity has
obtained the right to acquire any
portion of the securities or all or
substantially all of the assets of the
Company (whether by purchase of assets
or stock, by merger or otherwise), and
(b) except as otherwise disclosed on the
appropriate disclosure schedule, the
execution, delivery and performance of
the Definitive Agreement by such
Shareholders and the Company do not and
will not breach, violate or conflict
with, or permit the cancellation of, any
agreement to which the Shareholders or
the Company is a party or by which any
of them or their properties is bound.

Cobbwells, Inc.
Terms -5-

License Transfers Within ten (10) days after the parties
have signed this letter of intent, Buyer
(with the

<PAGE>

Company's/Shareholders' assistance)
shall apply with the Federal
Communications Commission for the
transfer of all licenses currently
issued to the Company (including any
pending applications with respect to the
Company). The parties will each pay
one-half of the cost of such
applications.

Deferred Revenue/Deposits The Purchase Price shall be reduced by (a)
the amount of any revenues collected by
the Company prior to the Closing in
respect of services or merchandise to be
provided after the Closing and (b) the
amount of customer pager rental deposits
collected by the Company prior to the
Closing.

Liabilities The Company will pay or provide for payment
at Closing for all of its liabilities so
that the Company's assets are free and
clear of all liabilities, liens and
encumbrances as of the date of Closing.

Indemnification/Offset Buyer shall have a right to offset and
indemnification for any damages
resulting from breaches of the
Definitive Agreement by the Company or
the Shareholders.

ProNet Guarantee ProNet shall guarantee the obligations of
Buyer contained in the Definitive
Agreement.

Closing The Closing shall take place on or after
January 1, 1996.

<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements for ProNet Inc. for the nine months ended
September 30, 1995 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 37,708
<SECURITIES> 0
<RECEIVABLES> 7,072
<ALLOWANCES> 801
<INVENTORY> 4,273
<CURRENT-ASSETS> 52,006
<PP&E> 66,179
<DEPRECIATION> 31,090
<TOTAL-ASSETS> 183,314
<CURRENT-LIABILITIES> 14,227
<BONDS> 99,301
<COMMON> 68
0
0
<OTHER-SE> 50,219
<TOTAL-LIABILITY-AND-EQUITY> 183,314
<SALES> 46,320
<TOTAL-REVENUES> 46,320
<CGS> 7,210
<TOTAL-COSTS> 17,248
<OTHER-EXPENSES> 27,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,233
<INCOME-PRETAX> (2,286)
<INCOME-TAX> (78)
<INCOME-CONTINUING> (2,364)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,364)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> (.38)

</TABLE>