PRONET INC /DE/, 10-Q, 1996-05-06

PRONET INC /DE/
10-Q, 1996-05-06
RADIOTELEPHONE COMMUNICATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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<TABLE>
<S> <C>
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996

/ / 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
</TABLE>

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

<TABLE>
<S> <C>
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)
</TABLE>

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 March 31, 1996: 7,069,328.

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PRONET INC.

INDEX

PART I. FINANCIAL INFORMATION

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

Consolidated Balance Sheets at March 31, 1996 and December 31, 1995........................ 1

Consolidated Statements of Operations for the Three Months Ended March 31, 1996 and 1995... 2

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995... 3

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 7

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.......................................................................... 14

Item 6. Exhibits and Reports on Form 8-K........................................................... 14

SIGNATURES............................................................................................. 18
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PRONET INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents......................................................................... $ 2,089 $ 10,154
Trade accounts receivable, net of allowance for doubtful accounts................................. 10,635 7,498
Federal income tax receivable -- Note E........................................................... 753 990
Inventories....................................................................................... 2,156 1,574
Other current assets.............................................................................. 2,040 1,937
----------- ------------
17,673 22,153
EQUIPMENT
Pagers............................................................................................ 47,485 36,789
Communications equipment.......................................................................... 31,689 26,051
Security systems' equipment....................................................................... 12,304 11,866
Office and other equipment........................................................................ 9,024 7,179
----------- ------------
100,502 81,885
Less allowance for depreciation................................................................... (38,614) (34,203)
----------- ------------
61,888 47,682
GOODWILL AND OTHER ASSETS, net of amortization -- Note A............................................ 151,269 117,134
----------- ------------
$230,830 $186,969
----------- ------------
----------- ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Trade payables.................................................................................... $ 12,033 $ 8,387
Other accrued expenses and liabilities............................................................ 14,384 10,524
Current maturities of long-term debt -- Note B.................................................... 1,040 --
----------- ------------
27,457 18,911
LONG-TERM DEBT, less current maturities -- Note B................................................... 130,297 99,319
DEFERRED CREDITS -- Note C.......................................................................... 17,382 19,183
STOCKHOLDERS' EQUITY -- Note A
Common stock...................................................................................... 75 70
Additional capital................................................................................ 68,874 56,617
Retained deficit.................................................................................. (11,795) (5,671)
Less treasury stock at cost....................................................................... (1,460) (1,460)
----------- ------------
55,694 49,556
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$230,830 $186,969
----------- ------------
----------- ------------
</TABLE>

See notes to consolidated financial statements.

1
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PRONET INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
--------- ---------
(UNAUDITED)
<S> <C> <C>
REVENUES
Service revenues......................................................................... $ 21,016 $ 10,488
Product sales............................................................................ 3,146 2,196
--------- ---------
Total revenues........................................................................... 24,162 12,684
Cost of products sold.................................................................... (2,781) (2,066)
--------- ---------
21,381 10,618
COST OF SERVICES
Pager lease and access services.......................................................... 5,512 2,220
Security systems' equipment services..................................................... 275 246
--------- ---------
5,787 2,466
--------- ---------
GROSS MARGIN............................................................................. 15,594 8,152

EXPENSES
Sales and marketing...................................................................... 4,039 1,642
General and administrative............................................................... 5,340 2,996
Depreciation and amortization............................................................ 8,707 2,745
--------- ---------
18,086 7,383
--------- ---------
OPERATING INCOME (LOSS).................................................................. (2,492) 769

OTHER INCOME (EXPENSE)
Interest and other income................................................................ 27 41
Interest expense......................................................................... (3,659) (386)
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(3,632) (345)
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INCOME (LOSS) BEFORE INCOME TAXES........................................................ (6,124) 424
Income tax expense -- Note E............................................................... -- 358
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NET INCOME (LOSS)........................................................................ $ (6,124) $ 66
--------- ---------
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NET INCOME (LOSS) PER SHARE................................................................ $ (0.89) $ 0.01
--------- ---------
--------- ---------
WEIGHTED AVERAGE SHARES.................................................................... 6,909 6,627
--------- ---------
--------- ---------
</TABLE>

See notes to consolidated financial statements.

2
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PRONET INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1996 1995
---------- ---------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................................................... $ (6,124) $ 66
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization........................................................... 8,707 2,745
Amortization of discount................................................................ 18 --
Deferred tax provision.................................................................. -- 106
Provision for losses on accounts receivable............................................. 348 208
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable...................................... (2,143) 781
Decrease in inventories............................................................... 625 146
Increase in other current assets...................................................... (104) (220)
Increase (decrease) in trade payables and other accrued expenses and liabilities...... 6,324 (4,176)
---------- ---------
Net cash provided by (used in) operating activities..................................... 7,651 (344)
INVESTING ACTIVITIES:
Purchase of equipment, net.............................................................. (5,811) (926)
Purchase of pagers, net of disposals.................................................... (9,899) 635
Acquisitions, net of cash acquired...................................................... (31,647) (5,434)
Computer system software, product enhancements and other intangible assets.............. (372) (332)
Other................................................................................... (12) 53
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Net cash used in investing activities................................................... (47,741) (6,004)
FINANCING ACTIVITIES:
Proceeds from bank debt................................................................. 32,000 12,400
Exercise of incentive stock options for common stock.................................... 30 111
Debt financing costs.................................................................... (9) (1,391)
Other................................................................................... 4 (69)
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Net cash provided by financing activities............................................... 32,025 11,051
---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................................... (8,065) 4,703
CASH AND CASH EQUIVALENTS:
Beginning of period..................................................................... 10,154 666
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End of period........................................................................... $ 2,089 $ 5,369
---------- ---------
---------- ---------
</TABLE>

See notes to consolidated financial statements.

3
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PRONET INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 1996

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 three month
period ended March 31, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. 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 1, 1996.

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

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Goodwill.................................................................... $ 143,286 $ 108,153
Noncompetition agreements................................................... 7,354 4,750
Debt financing costs........................................................ 6,988 6,980
Other....................................................................... 5,967 6,517
----------- ------------
163,595 126,400
Less accumulated amortization............................................... 12,326 9,266
----------- ------------
$ 151,269 $ 117,134
----------- ------------
----------- ------------
</TABLE>

Goodwill is amortized using the straight-line method over a fifteen year
term. Noncompetition agreements are amortized using the straight-line method
over the terms of the agreements, generally five years. Debt financing costs
consist of costs incurred in connection with the Company's senior subordinated
notes and revolving line of credit and are amortized over periods not to exceed
the terms of the related agreements.

EQUIPMENT: Beginning in October 1995, the Company began recording and
depreciating all pagers as part of pager equipment.

NET INCOME (LOSS) PER SHARE: Net income (loss) 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.

RECLASSIFICATION OF FINANCIAL STATEMENTS: The 1995 financial statements
have been reclassified to conform to the 1996 financial statement presentation.

4
<PAGE>
PRONET INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B -- LONG-TERM DEBT
Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Senior subordinated notes................................................... $ 99,337 $ 99,319
Revolving line of credit.................................................... 32,000 --
----------- ------------
131,337 99,319
Less current maturities..................................................... (1,040) --
----------- ------------
$ 130,297 $ 99,319
----------- ------------
----------- ------------
</TABLE>

NOTE C -- DEFERRED CREDITS
Deferred credits consist of the following (in thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
Deferred payments............................................................. $ 16,694 $ 18,495
Deferred tax liability........................................................ 688 688
----------- ------------
$ 17,382 $ 19,183
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----------- ------------
</TABLE>

The Company has deferred payments outstanding related to various completed
acquisitions which are due and payable one year from the closing of the
respective transactions. The balances are payable, at the Company's discretion,
either in cash or shares of the Company's common stock, $.01 par value (the
"Common Stock") based on current market value at the date of payment. In January
1996, the Company paid in cash the $200,000 deferred portion of the purchase
price of High Tech Communications Corp. ("High Tech"). In February 1996, the
Company issued 172,535 shares of its Common Stock and paid in cash $13,000 to
Signet Paging of Charlotte, Inc. ("Signet Charlotte") for payment of the $4.2
million deferred portion of the purchase price of Signet Charlotte. In March
1996, the Company issued 114,994 shares of its Common Stock to Carrier Paging
Systems, Inc. ("Carrier") in payment of the $3.0 million deferred portion of the
purchase price of Carrier.

NOTE D -- 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
Communications, Inc. ("Contact"), substantially all of the of the paging assets
of Radio Call Company, Inc. ("Radio Call") and High Tech and substantially all
of the Chicago-area paging assets of the RCC division of Chicago Communication
Service, Inc., ("ChiComm") for $19.0 million, $7.8 million, $900,000 and $9.8
million, respectively. In 1995, the Company acquired the paging assets of Signet
Charlotte for $9.0 million, Carrier for $6.5 million, All City Communication
Company, Inc. ("All City") for $6.4 million, Americom Paging Corporation
("Americom") for $17.5 million, Lewis Paging, Inc. ("Lewis") for $5.6 million,
Gold Coast Paging, Inc. ("Gold Coast") for $2.3 million and Paging & Cellular of
Texas, a Sole Proprietorship ("Paging & Cellular") for $9.5 million and all the
outstanding capital stock of Metropolitan Houston Paging Services, Inc.
("Metropolitan") for $21.0 million and Apple Communication, Inc. ("Apple") for
$13.0 million. Effective January 1, 1996, the Company acquired substantially all
of the paging assets of Sun Paging Communications ("Sun") and SigNet Paging of
Raleigh, Inc. ("SigNet Raleigh") and all of the outstanding capital stock of
Cobbwells, Inc. dba Page One ("Page One") for $2.3 million, $8.7 million and
$19.7 million, respectively. Effective February 1, 1996, the Company completed
the acquisition of all of the outstanding capital stock of A.G.R. Electronics,
Inc. and affiliates ("AGR"), Total Communication Services, Inc.

5
<PAGE>
PRONET INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D -- ACQUISITIONS (CONTINUED)
("Total") and Williams Metro Communications Corp. and affiliates ("Williams")
for $6.5 million, $2.2 million and $2.7 million, respectively. The nineteen
completed acquisitions were accounted for as purchases and funded by borrowings
under the Company's revolving line of credit (the "Credit Facility"), proceeds
from the sale of the Company's senior subordinated notes (the "Notes") and
issuances of shares of the Company's Common Stock.

The pro forma unaudited results of operations for the three months ended
March 31, 1996 and 1995, (which include acquisitions closed as of March 31,
1996), assuming consummation of the purchases at the beginning of the periods
indicated, are as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1996 1995
----------- ------------
<S> <C> <C>
Total revenues................................................................ $ 24,572 $ 25,086
Net loss...................................................................... (6,304) (1,671)
Net loss per common share..................................................... (0.91) (0.24)
</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 months ended March 31, 1996, the primary difference between
the U.S. Federal statutory tax rate and the effective tax rate is the
amortization of goodwill related to stock acquisitions, which is not deductible
for tax purposes. Additionally, no recognition has been given to the potential
future tax benefits from net operating losses incurred in the first quarter of
1996, as such tax benefits are not assured beyond a reasonable doubt.

NOTE F -- SUBSEQUENT EVENTS
In April 1996, the Company signed a letter of intent to purchase all of the
outstanding capital stock of Georgialina Communication Company and affiliates
("Georgialina"). Also in April 1996, the Company signed two definitive
agreements. The first definitive agreement involved the merger of the Company
and Teletouch Communications, Inc. ("Teletouch"). The second definitive
agreement involved a merger with Pac-West Telecomm, Inc. and affiliates
("PacWest"). In May 1996, the Company entered into an agreement to purchase
substantially all of the assets of Ventures in Paging, L.C. ("VIP"). These
transactions will be accounted for as purchases for an approximate aggregate
purchase price of $218.5 million.

Also in April 1996, the Company entered into an agreement to purchase a
nationwide license (931.9125 MHz Radio Common Carrier frequency) and for the
purchase of associated system equipment (the "Nationwide License") from
Motorola, Inc. ("Motorola") for approximately $43 million.

These transactions are expected to close in 1996 and are subject to various
conditions and approvals. The Company anticipates amending the Credit Facility
to increase the amount of available credit in order to fund these transactions.

6
<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
subscribers in the healthcare industry. Beginning in 1994, the Company broadened
its operating focus through the acquisition of paging businesses serving the
general commercial marketplace. As a result of the completed acquisitions and
anticipated acquisitions, the Company's results of operations for prior periods
may not be indicative of future performance.

The Company is a leading provider of paging services in major metropolitan
markets in the United States and 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 Supercenters are
located in New York, Chicago, Houston, Charlotte and Los Angeles, and, pro forma
for the Pending Acquisitions, the Company will be the fifth largest publicly
traded paging company in the United States, with approximately 1.4 million
subscribers at March 31, 1996.

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 its paging business currently has
one of the lowest monthly disconnect ("churn") rates in the paging industry --
approximately 2.1%, compared to an industry average of approximately 2.8%
(source: June 1995 EMCI, Inc. industry survey for the years 1990 to 1994). Churn
is the number of customers disconnecting service each month as a percentage of
the total subscriber base. Although the Company's current disconnect rate is
below the industry average, there can be no assurance that the Company will not
experience an increase in its churn rate, which may adversely affect the
Company's results of operations. The Company's monthly churn rate in the
security tracking business is lower than in its paging business -- currently
approximately 1.0%.

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.

7
<PAGE>
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 continued development of its
business within and 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.

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 and cash flows from operating activities
have each grown at a compound annual rate of over 36% the past four years.
EBITDA and cash flows from operating activities growth is expected to continue
although near term EBITDA margins may be slightly impacted by start-up costs
associated with certain SuperCenters and the buildout of existing and acquired
frequencies in its marketplaces. Non-cash and financing-related charges for the
Company's acquisition program negatively impacted earnings in 1995 and have the
potential to continue the trend in the future.

The following discussion and analysis of financial condition and results of
operations include the historical results of operations of the Company and the
results of operations from the respective acquisition dates of all acquisitions
completed by the Company during 1994 and 1995. The results of operations of
Georgialina, PacWest, Teletouch and VIP (collectively, the "Pending
Acquisitions") and the acquisition of the Nationwide License are not reflected
in this discussion.

PAGING SYSTEMS' RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revenues
Service revenues............................................................ $ 19,558 $ 9,187
Product sales............................................................... 3,124 2,085
--------- ---------
Total revenues................................................................ 22,682 11,272
Cost of products sold......................................................... (2,781) (2,007)
--------- ---------
Net revenues (1).............................................................. 19,901 9,265
Cost of services.............................................................. (5,512) (2,220)
--------- ---------
Gross margin.................................................................. 14,389 7,045
Sales and marketing expenses.................................................. 3,956 1,571
General and administrative expenses........................................... 5,161 2,807
Depreciation and amortization expenses........................................ 8,311 2,329
--------- ---------
Operating income.............................................................. $ (3,039) $ 338
--------- ---------
--------- ---------
EBITDA........................................................................ $ 5,272 $ 2,667
--------- ---------
--------- ---------
</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 quarter ended March 31, 1996 increased
to $19.9 million, a 115% increase from $9.3 million for the quarter ended March
31, 1995. For the quarter ended March 31, 1996, service revenues increased to
$19.6 million, a 113% increase from $9.2 million for the comparable period in
1995. These increases are primarily attributable to a growing subscriber base
achieved through greater market penetration in existing markets and the
additions of Carrier, Metropolitan, All City, Americom, Lewis, Gold Coast,
Paging & Cellular, Apple, Signet Raleigh, Sun, Page

8
<PAGE>
One, AGR, Total and Williams (collectively, the "Acquisitions Completed since
March 1995"). Pagers in service increased 157% to 1,039,222 at March 31, 1996
from 404,713 at March 31, 1995. The increase in pagers in service was primarily
the result of the Acquisitions Completed since March 1995. In 1994 and 1995,
most of the Company's growth in pagers in service was from acquisitions. In
addition, internal growth accounted for approximately 58,420 units during the
quarter ended March 31, 1996, which represents year over year, internal growth
rate of approximately 41%. The Company believes that this internal growth rate
will continue due to ongoing commercial paging activity.

ARPU was $6.69 for the quarter ended March 31, 1996 compared to $8.26 for
the quarter ended March 31, 1995. This decrease was due to a further shift in
the Company's subscriber base from leased to COAM pagers which do not generate
leasing fees. The Company's subscriber base was 72% COAM at March 31, 1996
compared to 53% at March 31, 1995. The Company believes that ARPU will continue
to decrease, although at a slower rate as the Company expands its reseller
operations, which tend to generate lower revenues per subscriber.

PRODUCT SALES LESS COST OF PRODUCTS SOLD was $343,000 for the quarter ended
March 31, 1996, compared to $78,000 for the comparable period in 1995. The
margin increased in 1996 primarily due to increases in product sales, partially
offset by depreciation on pagers. Beginning in October 1995, the Company began
recording all purchases of pagers as part of pager equipment and depreciating
these pagers accordingly. Due to this change, management anticipates that the
margin on pager sales will increase in the short-term. Management also
anticipates that the Company's margins may vary from market to market due to
competition and other factors.

PAGING SYSTEMS' GROSS MARGIN (net revenues less cost of services) was $14.4
million (72% of paging systems' net revenues) for the three months ended March
31, 1996, compared to $7.0 million (76% of paging systems' net revenues) for the
comparable period in 1995. The decrease in gross margin as a percentage of
paging systems' net revenues was due to the increased expenses related to
increased acquisition activity and the buildout of the Company's regional
SuperCenters. The Company currently anticipates that these margins will decrease
in the short term, but will increase in the future as cost efficiencies and
integration savings are achieved. The cost of services increased to $5.5 million
for the three months ended March 31, 1996, compared to $2.2 million for the
comparable period of the prior year, as a result of the increased costs of
servicing a substantially larger subscriber base resulting from both internal
growth and acquisitions.

PAGING SYSTEMS' SALES AND MARKETING EXPENSES were $4.0 million (20% of
paging systems' net revenues) for the three months ended March 31, 1996,
compared to $1.6 million (17% of paging systems' net revenues) for the
comparable period of the prior year. The increase as a percentage of paging
systems' net revenues was due to the increase in the number of retail counter
locations (from four at March 31, 1995, to 37 at March 31, 1996), the majority
of such expenses are sales and marketing, and increased advertising expenses.
These expenses as a percentage of paging systems' net revenues are not expected
to change significantly in the future due to the Company's focus on expanding
its retail distribution channel.

PAGING SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $5.2 million (26%
of paging systems' net revenues) for the quarter ended March 31, 1996, compared
to $2.8 million (30% of paging systems' net revenues) for the comparable period
in 1995. The decrease as a percentage of paging systems' net revenues was due to
savings resulting from the consolidation of certain of the Acquisitions
Completed since March 1995 into the SuperCenter structure, as well as the
increase in the number of retail counter locations referred to above. While
retail counter locations are operated with higher sales and marketing expenses
than other methods of distribution, these expenses are at least partially offset
with lower general and administrative expenses. These expenses as a percentage
of net revenues are expected to decrease slightly over time 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 and the
Company's focus on expanding its retail distribution channel.

9
<PAGE>
PAGING SYSTEMS' DEPRECIATION AND AMORTIZATION EXPENSES for the three months
ended March 31, 1996 were $8.3 million, a 257% increase from $2.3 million for
the comparable period in 1995. The increase was primarily due to the
amortization of intangibles arising from the Acquisitions Completed since March
1995. The increase in 1996 was also due to a change in the method of recording
pager purchases in 1995. Beginning in October 1995, the Company began recording
all purchases of pagers as part of paging equipment and depreciating those
pagers accordingly. The Company expects this trend in depreciation and
amortization expenses will continue in the near term as a result of acquisitions
and continued capital investment in paging equipment to support the Company's
growth.

EBITDA for paging systems' operations was $5.3 million (26% of paging
systems' net revenues) for the three months ended March 31, 1996, compared to
$2.7 million (29% of paging systems' net revenues) for the three months ended
March 31, 1995. The decrease in EBITDA as a percentage of net revenues was
primarily the result of increased expenses related to the increased level of
acquisition activity for the three months ending March 31, 1996 compared to the
three months ending March 31, 1995 as well as the buildout of the Company's
SuperCenters. The Company believes EBITDA margins may decrease in the short term
as a result of future acquisitions of commercial paging operations, but will
thereafter increase over time as the Company integrates the acquired operations,
spreads its costs over a larger subscriber base and achieves resulting economies
of scale and operating efficiencies.

SECURITY SYSTEMS' RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revenues
Service revenues.............................................................. $ 1,458 $ 1,301
Product sales................................................................. 22 111
--------- ---------
Total revenues.................................................................. 1,480 1,412
Cost of products sold........................................................... -- (59)
--------- ---------
Net revenues (1)................................................................ 1,480 1,353
Cost of services................................................................ (275) (246)
--------- ---------
Gross margin.................................................................... 1,205 1,107
Sales and marketing expenses.................................................... 83 71
General and administrative expenses............................................. 179 189
Depreciation and amortization expenses.......................................... 396 416
--------- ---------
Operating income................................................................ $ 547 $ 431
--------- ---------
--------- ---------
EBITDA.......................................................................... $ 943 $ 847
--------- ---------
--------- ---------
</TABLE>

- ------------------------

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

SECURITY SYSTEMS' NET REVENUES increased 9% to $1.5 million for the three
months ended March 31, 1996, from $1.4 million for the comparable period in
1995. The increase was due to the installation of six new systems since March
31, 1995, as well as expansion of and additional penetration in existing
markets. The number of miniature radio transmitters, or "TracPacs" in service
increased 5% to 28,409 at March 31, 1996, from 27,106 at March 31, 1995.

PRODUCT SALES LESS COST OF PRODUCTS SOLD was $22,000 for the three months
ended March 31, 1996, compared to $52,000 for the comparable period in 1995. Net
product sales fluctuate depending on the type and volume of equipment sold. The
Company does not anticipate significantly increasing this area of security
systems' operations.

10
<PAGE>
SECURITY SYSTEMS' GROSS MARGIN was $1.2 million (81% of security systems'
net revenues) for the three months ended March 31, 1996, compared to $1.1
million (82% of security systems' net revenues) for the comparable period in
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 $83,000 (6% of security
systems' net revenues) for the three months ended March 31, 1996, compared to
$71,000 (5% of security systems' net revenues) for the comparable period in
1995. The Company currently anticipates hiring additional management in the near
future which should increase sales and marketing expenses at or slightly above
the rate of growth in security systems' net revenues, therefore increasing
slightly as a percentage of these revenues.

SECURITY SYSTEMS' GENERAL AND ADMINISTRATIVE EXPENSES were $179,000 (12% of
security systems' net revenues) for the three months ended March 31, 1996,
compared to $189,000 (14% of security systems' net revenues) for the comparable
period in 1995. This decrease in general and administrative expenses was the
result of the decreased 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 percentage 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. Depreciation and amortization expenses for security
systems' operations were $396,000 for the quarter ended March 31, 1996 (27% of
security systems' service revenues), compared to $416,000 (32% of security
systems' service revenues) for the comparable period in 1995. These decreases
were a result of certain fixed assets that were fully depreciated in 1995. The
Company believes that depreciation and amortization expenses will increase in
the near future due to planned increases in capital expenditures, primarily the
installation of several new systems.

EBITDA for the security systems' operations was $943,000 (64% of security
systems' net revenues) for the three months ended March 31, 1996, compared to
$847,000 (63% of security systems' net revenues) for the same period in 1995.
This increase was primarily due to increases in net revenues and 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 fluctuations in
interest expense have resulted primarily from the issuance of the Notes and
changes in the outstanding amounts under the Credit Facility. Interest expense
increased in the first quarter of 1996 primarily as a result of interest due on
the Notes and increased borrowings under the Credit Facility. Interest expense
is expected to increase in the future as a result of interest due on additional
borrowings under the Credit Facility and the issuance of the Notes.

FEDERAL INCOME TAXES

At December 31, 1995 the Company had net operating loss carryforwards of
$11.0 million for income tax purposes that expire in years 2005 through 2011.
For the three months ended March 31, 1996, the differences between the U.S.
Federal statutory tax rate and the effective rate in the Company's historical
financial statements reflect 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 Common Stock acquired through
incentive stock options and an allowance provided against the current year and
for the three months ended March 31, 1996 operating loss which may not be
realizable within the statutory time frame. The Company anticipates that in the
future the primary difference between the statutory and effective rates will
continue to be the amortization of goodwill

11
<PAGE>
related to stock acquisitions. Further, the Company does not anticipate
recording any tax benefit in the near future from the net operating losses
because the realization of such tax benefits are not assured beyond a reasonable
doubt.

LIQUIDITY AND CAPITAL RESOURCES

During 1995 and 1996, the Company financed the majority of its growth, other
than acquisitions, through internally generated funds. Net cash provided by
operating activities was $7.7 million for the three months ended March 31, 1996,
compared to $344,000 for the comparable period in 1995. The increase in net cash
provided by operating activities was primarily due to increases in depreciation
and amortization, the provision for losses on accounts receivable, and trade
payables and other accrued expenses and liabilities and a decrease in
inventories, offset by an increase in accounts receivable and a decrease in net
income. The acquisitions of Signet Charlotte, Carrier, Metropolitan and All City
in 1995 were financed with borrowings under the Credit Facility. Proceeds from
the sale of the Notes were used to repay all indebtedness outstanding under the
Credit Facility and to fund the acquisitions of Americom, Lewis, Gold Coast,
Paging & Cellular and Apple in 1995. The Company funded $7.3 million of the cash
for the acquisitions of Sun, SigNet Raleigh, Page One, AGR, Total and Williams
in 1996 with proceeds from the sale of the Notes, with the remaining amounts
financed with borrowings under the Credit Facility. The Company anticipates that
its ongoing capital needs, including the Pending Acquisitions and the purchase
of the Nationwide License, will be funded with borrowings under its Credit
Facility and net cash generated by operations. The Company anticipates amending
the Credit Facility to extend the maturity and to increase the amount of
available credit thereunder.

CAPITAL EXPENDITURES

As of March 31, 1996, the Company had invested $79.2 million in system
equipment and pagers for its major metropolitan markets and $12.3 million in
system equipment and TracPacs for its 32 security systems.

Capital expenditures for paging systems' equipment were $5.3 million for the
three months ended March 31, 1996 compared to $599,000 for the comparable period
in 1995 (excluding assets acquired pursuant to the Acquisitions Completed since
March 1995), primarily due to expansion of the Company's commercial paging
operations in Philadelphia. Capital expenditures for security systems' equipment
and TracPacs for the three months ended March 31, 1996 were $496,000 compared to
$328,000 for the comparable period in 1995.

At March 31, 1996, the Company had invested $2.2 million in inventories,
compared to $1.6 million at December 31, 1995. The increase was a result of
higher security systems inventory in 1996 for planned installations of new
security systems in the second quarter of 1996. Inventory balances are expected
to decline slightly as the new systems are installed.

Except for those assets acquired through acquisitions, the Company expects
to meet its capital requirements in 1996 with cash generated from operations.
Although the Company had no material binding commitments to acquire capital
equipment at March 31, 1996, the Company anticipates capital expenditures for
the remainder of 1996 to be $19.0 million (of which $6.0 million is attributable
to system equipment associated with the Nationwide License) for the purchase of
system equipment for its current paging systems operations and $1.6 million for
the manufacture of TracPacs and the purchase of system equipment for its
security systems' operations.

CREDIT FACILITY

The Credit Facility is a $125 million 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. The Company anticipates amending the Credit Facility to extend
the maturity and to increase the amount of available credit to $300 million.

12
<PAGE>
SENIOR SUBORDINATED NOTES

In June 1995 the Company completed an offering pursuant to Rule 144A of the
Securities Act 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 Credit Facility. The Company has
used 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 Notes
provide 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
Notes also contain 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 is 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 S-4") on July
7, 1995 to register the Notes with the SEC under the Securities Act of 1933, as
amended (the "Securities Act"). On October 6, 1995, the SEC declared the 1995
S-4 effective.

ACQUISITIONS

In 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 1995, the Company acquired the
paging assets of Signet Charlotte, Carrier, All City, Americom, Lewis, Gold
Coast and Paging & Cellular and all the outstanding capital stock of
Metropolitan and Apple for $9.0 million, $6.5 million, $6.4 million, $17.5
million, $5.6 million, $2.3 million, $9.5 million, $21.0 million and $13.0
million, respectively. In the first quarter of 1996, the Company acquired
substantially all of the paging assets of Sun for $2.3 million and SigNet
Raleigh for $8.7 million and all of the outstanding capital stock of Page One
for $19.7 million, AGR for $6.5 million, Total for $2.2 million and Williams for
$2.7 million. The 19 completed acquisitions were accounted for as purchases and
funded by borrowings under the Credit Facility, proceeds from the sale of the
Notes and issuances of shares of Common Stock. In 1996, the Company signed
letters of intent or definitive agreements with Georgialina, PacWest, Teletouch
and VIP and agreed to acquire the Nationwide License. The Pending Acquisitions
and the acquisition of the Nationwide License are expected to close in 1996 for
an approximate aggregate cost of $227.5 million. A portion of the Pending
Acquisitions will be funded with issuance of shares of Common Stock. The Pending
Acquisitions and the acquisition of the Nationwide License are subject to
various conditions and approvals.

At March 31, 1996, the Company had deferred payments outstanding related to
the All City (which was paid off effective May 1, 1996), Americom, Lewis, SigNet
Raleigh and Page One acquisitions which are due and payable one year from the
closing of the respective transactions. The 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 January 1996, the Company paid in cash the $200,000 deferred portion of
the purchase price of High Tech. In February 1996, the Company issued 172,535
shares of its Common Stock and paid in cash $13,000 to Signet Charlotte for the
$4.2 million deferred portion of the purchase price of Signet Charlotte. In
March 1996, the Company issued 114,994 shares of Common Stock to Carrier in
payment of the $3.0 million deferred portion of the purchase price of Carrier.

13
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS

In the first quarter of 1996, the Company adopted the Financial Accounting
Standards Board ("FASB") Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." Adoption of this
statement did not have a material effect on the Company's financial statements.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein are not based on historical facts, but
are forward-looking statements that are based upon numerous assumptions about
future conditions that could prove not to be accurate. Actual events,
transactions and results may materially differ from the anticipated events,
transactions or results described in such statements. The Company's ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the existence of demand for and acceptance of the Company's
products and services, the availability of appropriate candidates for
acquisition by the Company, regulatory approvals, economic conditions, the
impact of competition and pricing, results of financing efforts and other
factors affecting the Company's business that are beyond the Company's control,
including but not limited to the matters described in "Risks Associated with
Business Activities" included in the Form 10-K for the Company filed with the
SEC on March 1, 1996.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS.

<TABLE>
<C> <C> <S>
3.1 -- Restated Certificate of Incorporation dated July 31, 1987 (filed as an exhibit
to the Company's Registration Statement on Form S-4 (File No. 33-60925) filed
July 7, 1995, and incorporated herein by reference).
3.2 -- Certificate of Designation of Series A Junior Participating Preferred Stock
dated April 11, 1995 (filed as part of the Company's Registration Statement on
Form 8-A dated April 7, 1995, and incorporated herein by reference).
3.3 -- Certificate of Amendment to Restated Certificate of Incorporation dated June 12,
1995 (filed as an exhibit to the Company's Current Report on Form 8-K, dated
July 5, 1995, and incorporated herein by reference).
3.4 -- Restated Bylaws of the Company, as amended (filed as an exhibit to the Company's
Current Report on Form 8-K filed April 19, 1995, and incorporated herein by
reference).
4.1 -- Indenture, dated as of June 15, 1995, between the Company and First Interstate
Bank of Texas, N.A., as Trustee (filed as an exhibit to the Company'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 Company,
Lehman Brothers, Inc., Alex. Brown & Sons Incorporated and Paine Webber
Incorporated (filed as an exhibit to the Company's Registration Statement on
Form S-4 (File No. 33-60925) filed July 7, 1995, and incorporated herein by
reference).
4.3 -- Rights Agreement, dated as of April 5, 1995, between the Company and Chemical
Shareholder Services Group, Inc., as Rights Agent, specifying the terms of the
rights to purchase the Company's Series A Junior Participating Preferred Stock,
and the exhibits thereto (filed as an exhibit to the Company's Registration
Statement on Form 8-A dated April 7, 1995, and incorporated herein by
reference).
</TABLE>

14
<PAGE>
<TABLE>
<C> <C> <S>
10.1 -- Form of Indemnification Agreement between the Company and certain of the
Company's Directors (filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (File No. 33-14956) filed July 10, 1987, and
incorporated herein by reference).
10.2 -- Deferred Compensation Plan of the Company (filed as an exhibit to Amendment No.
2 to the Company's Registration Statement on Form S-1 (File No. 33-14956) filed
July 15, 1987, and incorporated herein by reference).
10.3 -- 1987 Stock Option Plan of the Company (filed as an exhibit to Amendment No. 4 to
the Company's Registration Statement on Form S-1 (File No. 33-14956) filed July
29, 1987, and incorporated herein by reference).
10.4 -- Agreement dated June 15, 1988, between the Company and Texas Instruments
Incorporated for the acquisition of assets including the use of patents,
technology and software related to ProNet Tracking Systems (filed as an exhibit
to the Company's Current Report on Form 8-K, dated July 21, 1988, and
incorporated herein by reference).
10.5 -- Nonqualified Stock Option Agreement of the Company dated May 22, 1991 (filed as
an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference).
10.6 -- Non-Employee Director Stock Option Plan of the Company (filed as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31, 1991,
and incorporated herein by reference).
10.7 -- Stock Purchase Agreement dated September 24, 1993, by and between the Company
and Contact Communications, Inc. (filed as an exhibit to the Company's Current
Report on Form 8-K, dated March 1, 1994, and incorporated herein by reference).
10.8 -- Amendment Letter No. One to Stock Purchase Agreement dated October 20, 1993, by
and between the Company and Contact Communications, Inc. (filed as an exhibit to
the Company's Current Report on Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.9 -- Amendment Letter No. Two to Stock Purchase Agreement dated January 4, 1994, by
and between the Company and Contact Communications, Inc. (filed as an exhibit to
the Company's Current Report on Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.10 -- Amendment Letter No. Three to Stock Purchase Agreement dated March 1, 1994, by
and between the Company and Contact Communications, Inc. (filed as an exhibit to
the Company's Current Report on Form 8-K, dated March 1, 1994, and incorporated
herein by reference).
10.11 -- 1994 Employee Stock Purchase Plan of the Company (filed as an exhibit to the
Company's Proxy Statement filed April 26, 1994, and incorporated herein by
reference).
10.12 -- Stock Purchase Agreement dated April 20, 1995, regarding the acquisition of the
outstanding capital stock of Metropolitan Houston Paging Services, Inc.,
("Metropolitan") by and among Contact Communications Inc., Metropolitan and the
shareholders of Metropolitan (filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1995, and
incorporated herein by reference).
10.13 -- Form PS-58 Split Dollar Agreement between the Company and each of its executive
officers (filed as an exhibit to the Company's Registration Statement on Form
S-2 (File No. 33-85696) filed October 28, 1994, and incorporated herein by
reference).
10.14 -- Employment Agreement dated May 18, 1994, by and between the Company and Jackie
R. Kimzey (filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1994, and incorporated herein by
reference).
</TABLE>

15
<PAGE>
<TABLE>
<C> <C> <S>
10.15 -- Employment Agreement dated May 18, 1994, by and between the Company and David J.
Vucina (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1994, and incorporated herein by reference).
10.16 -- Change in Control Agreement dated May 18, 1994, by and between the Company and
Bo Bernard (filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1994, and incorporated herein by
reference).
10.17 -- Change in Control Agreement dated May 18, 1994, by and between the Company and
Jan E. Gaulding (filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1994, and incorporated herein by
reference).
10.18 -- Change in Control Agreement dated May 18, 1994, by and between the Company and
Jeffery Owens (filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1994, and incorporated herein by
reference).
10.19 -- Change in Control Agreement dated January 17, 1995, by and between the Company
and Mark A. Solls (filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1994, and incorporated herein by
reference).
10.20 -- Asset Purchase Agreement dated May 24, 1995, regarding the acquisition of
substantially all of the paging assets of Americom Paging Corporation, by and
among the Company, Gregory W. Hadley, Mo Shebaclo and American 900 Paging, Inc.
dba Americom Paging Corporation (filed as an exhibit to the Company's Current
Report on Form 8-K, dated July 7, 1995, and incorporated herein by reference).
10.21 -- Amended and Restated Credit Agreement dated February 9, 1995, by and among the
Company, The First National Bank of Chicago, as Agent, and the Lenders party
thereto (filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated herein by reference).
10.22 -- Waiver, Consent and Amendment No. 1 dated as of June 12, 1995 by and among the
Company, The First National Bank of Chicago, as Agent, and the Lenders party
thereto (filed as an exhibit to the Company's Registration Statement on Form S-4
(File No. 33-60925) filed July 7, 1995, and incorporated herein by reference).
10.23 -- Office Lease Agreement by and between the Company and Carter-Crowley Properties,
Inc., as Landlord (filed as an exhibit to the Company's Current Report on Form
8-K, dated July 5, 1995, and incorporated herein by reference).
10.24 -- Stock Purchase Agreement dated October 6, 1995, regarding the acquisition of all
of the outstanding capital stock of Apple Communication, Inc., by and among CCI,
Apple Communication, Inc., and Salvatore Zarcone and Jill DiFoggio (filed as an
exhibit to the Company's Current Report on 8-K, dated January 16, 1996, and
incorporated herein by reference).
10.25 -- Stock Purchase Agreement dated November 22, 1995, regarding the acquisition of
all of the outstanding capital stock of Cobbwells, Inc. d/b/a Page One, by and
among the Company, CCI, Cobbwells, Inc. d/b/a Page One, James H. Cobb, III and
Warren K. Wells (filed as an exhibit to the Company's Current Report on 8-K,
dated January 16, 1996, and incorporated herein by reference).
10.26 -- 1995 Long-Term Incentive Plan of the Company (filed as an exhibit to the
Company's Proxy Statement filed April 24, 1995, and incorporated herein by
reference).
10.27 -- Voting Agreement by and among the Company and Continental Illinois Venture
Corporation, CIVC Partners I, GM Holdings, LLC, Rainbow Resources, Inc., Robert
McMurrey and G. David Higginbotham, dated as of April 15, 1996 (filed as an
exhibit to the Company's Schedule 13D filed April 26, 1996, and incorporated by
reference).
</TABLE>

16
<PAGE>
<TABLE>
<C> <C> <S>
10.28 -- Agreement and Plan of Merger by and among the Company, ProNet Subsidiary, Inc.
and Teletouch Communications, Inc., dated as of April 15, 1996 (filed as an
exhibit to the Company's Schedule 13D filed April 26, 1996, and incorporated by
reference).
*10.29 -- Asset Purchase Agreement dated April 19, 1996, regarding the purchase of a
nationwide data transmission license and associated system equipment from EMBARC
Communication Services, Inc., by and among Contact Communications Inc., the
Company, EMBARC Communication Services, Inc. and Motorola Inc.
*10.30 -- Stock Purchase Agreement dated April 24, 1996, regarding the acquisition of all
of the outstanding capital stock of Strategic Products Corporation, by and among
the Company, Strategic Products Corporation, John K. LaRue and Keith Bussman.
*10.31 -- Merger Agreement dated April 24, 1996, by and among the Company, Pac-West
Telecomm, Inc., John K. LaRue, William E. Koch and Bay Alarm Company.
(b) -- Reports on Form 8-K: On January 16, 1996, the Company filed a Current Report on
Form 8-K relating to the acquisitions of SigNet Raleigh, Page One and Sun.
</TABLE>

- ------------------------
* Filed herewith.

17
<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)

By: /s/ JAN E. GAULDING

-----------------------------------
Jan E. Gaulding
SENIOR VICE PRESIDENT, TREASURER
AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)

DATE: May 6, 1996

18
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION NUMBER
- --------- ------------------------------------------------------------------------------------------ -----------
<C> <C> <S> <C>
3.1 -- Restated Certificate of Incorporation dated July 31, 1987 (filed as an exhibit to the
Company's Registration Statement on Form S-4 (File No. 33-60925) filed July 7, 1995, and
incorporated herein by reference).
3.2 -- Certificate of Designation of Series A Junior Participating Preferred Stock dated April
11, 1995 (filed as part of the Company's Registration Statement on Form 8-A dated April 7,
1995, and incorporated herein by reference).
3.3 -- Certificate of Amendment to Restated Certificate of Incorporation dated June 12, 1995
(filed as an exhibit to the Company's Current Report on Form 8-K, dated July 5, 1995, and
incorporated herein by reference).
3.4 -- Restated Bylaws of the Company, as amended (filed as an exhibit to the Company's Current
Report on Form 8-K filed April 19, 1995, and incorporated herein by reference).
4.1 -- Indenture, dated as of June 15, 1995, between the Company and First Interstate Bank of
Texas, N.A., as Trustee (filed as an exhibit to the Company'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 Company, Lehman
Brothers, Inc., Alex. Brown & Sons Incorporated and Paine Webber Incorporated (filed as an
exhibit to the Company's Registration Statement on Form S-4 (File No. 33-60925) filed July
7, 1995, and incorporated herein by reference).
4.3 -- Rights Agreement, dated as of April 5, 1995, between the Company and Chemical Shareholder
Services Group, Inc., as Rights Agent, specifying the terms of the rights to purchase the
Company's Series A Junior Participating Preferred Stock, and the exhibits thereto (filed
as an exhibit to the Company's Registration Statement on Form 8-A dated April 7, 1995, and
incorporated herein by reference).
10.1 -- Form of Indemnification Agreement between the Company and certain of the Company's
Directors (filed as an exhibit to Amendment No. 1 to the Company's Registration Statement
on Form S-1 (File No. 33-14956) filed July 10, 1987, and incorporated herein by
reference).
10.2 -- Deferred Compensation Plan of the Company (filed as an exhibit to Amendment No. 2 to the
Company's Registration Statement on Form S-1 (File No. 33-14956) filed July 15, 1987, and
incorporated herein by reference).
10.3 -- 1987 Stock Option Plan of the Company (filed as an exhibit to Amendment No. 4 to the
Company's Registration Statement on Form S-1 (File No. 33-14956) filed July 29, 1987, and
incorporated herein by reference).
10.4 -- Agreement dated June 15, 1988, between the Company and Texas Instruments Incorporated for
the acquisition of assets including the use of patents, technology and software related to
ProNet Tracking Systems (filed as an exhibit to the Company's Current Report on Form 8-K,
dated July 21, 1988, and incorporated herein by reference).
10.5 -- Nonqualified Stock Option Agreement of the Company dated May 22, 1991 (filed as an exhibit
to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, and
incorporated herein by reference).
10.6 -- Non-Employee Director Stock Option Plan of the Company (filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991, and
incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S> <C>
10.7 -- Stock Purchase Agreement dated September 24, 1993, by and between the Company and Contact
Communications, Inc. (filed as an exhibit to the Company's Current Report on Form 8-K,
dated March 1, 1994, and incorporated herein by reference).
10.8 -- Amendment Letter No. One to Stock Purchase Agreement dated October 20, 1993, by and
between the Company and Contact Communications, Inc. (filed as an exhibit to the Company's
Current Report on Form 8-K, dated March 1, 1994, and incorporated herein by reference).
10.9 -- Amendment Letter No. Two to Stock Purchase Agreement dated January 4, 1994, by and between
the Company and Contact Communications, Inc. (filed as an exhibit to the Company's Current
Report on Form 8-K, dated March 1, 1994, and incorporated herein by reference).
10.10 -- Amendment Letter No. Three to Stock Purchase Agreement dated March 1, 1994, by and between
the Company and Contact Communications, Inc. (filed as an exhibit to the Company's Current
Report on Form 8-K, dated March 1, 1994, and incorporated herein by reference).
10.11 -- 1994 Employee Stock Purchase Plan of the Company (filed as an exhibit to the Company's
Proxy Statement filed April 26, 1994, and incorporated herein by reference).
10.12 -- Stock Purchase Agreement dated April 20, 1995, regarding the acquisition of the
outstanding capital stock of Metropolitan Houston Paging Services, Inc., ("Metropolitan")
by and among Contact Communications Inc., Metropolitan and the shareholders of
Metropolitan (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995, and incorporated herein by reference).
10.13 -- Form PS-58 Split Dollar Agreement between the Company and each of its executive officers
(filed as an exhibit to the Company's Registration Statement on Form S-2 (File No.
33-85696) filed October 28, 1994, and incorporated herein by reference).
10.14 -- Employment Agreement dated May 18, 1994, by and between the Company and Jackie R. Kimzey
(filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1994, and incorporated herein by reference).
10.15 -- Employment Agreement dated May 18, 1994, by and between the Company and David J. Vucina
(filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1994, and incorporated herein by reference).
10.16 -- Change in Control Agreement dated May 18, 1994, by and between the Company and Bo Bernard
(filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1994, and incorporated herein by reference).
10.17 -- Change in Control Agreement dated May 18, 1994, by and between the Company and Jan E.
Gaulding (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1994, and incorporated herein by reference).
10.18 -- Change in Control Agreement dated May 18, 1994, by and between the Company and Jeffery
Owens (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1994, and incorporated herein by reference).
10.19 -- Change in Control Agreement dated January 17, 1995, by and between the Company and Mark A.
Solls (filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S> <C>
10.20 -- Asset Purchase Agreement dated May 24, 1995, regarding the acquisition of substantially
all of the paging assets of Americom Paging Corporation, by and among the Company, Gregory
W. Hadley, Mo Shebaclo and American 900 Paging, Inc. dba Americom Paging Corporation
(filed as an exhibit to the Company's Current Report on Form 8-K, dated July 7, 1995, and
incorporated herein by reference).
10.21 -- Amended and Restated Credit Agreement dated February 9, 1995, by and among the Company,
The First National Bank of Chicago, as Agent, and the Lenders party thereto (filed as an
exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
and incorporated herein by reference).
10.22 -- Waiver, Consent and Amendment No. 1 dated as of June 12, 1995 by and among the Company,
The First National Bank of Chicago, as Agent, and the Lenders party thereto (filed as an
exhibit to the Company's Registration Statement on Form S-4 (File No. 33-60925) filed July
7, 1995, and incorporated herein by reference).
10.23 -- Office Lease Agreement by and between the Company and Carter-Crowley Properties, Inc., as
Landlord (filed as an exhibit to the Company's Current Report on Form 8-K, dated July 5,
1995, and incorporated herein by reference).
10.24 -- Stock Purchase Agreement dated October 6, 1995, regarding the acquisition of all of the
outstanding capital stock of Apple Communication, Inc., by and among CCI, Apple
Communication, Inc., and Salvatore Zarcone and Jill DiFoggio (filed as an exhibit to the
Company's Current Report on 8-K, dated January 16, 1996, and incorporated herein by
reference).
10.25 -- Stock Purchase Agreement dated November 22, 1995, regarding the acquisition of all of the
outstanding capital stock of Cobbwells, Inc. d/b/a Page One, by and among the Company,
CCI, Cobbwells, Inc. d/b/a Page One, James H. Cobb, III and Warren K. Wells (filed as an
exhibit to the Company's Current Report on 8-K, dated January 16, 1996, and incorporated
herein by reference).
10.26 -- 1995 Long-Term Incentive Plan of the Company (filed as an exhibit to the Company's Proxy
Statement filed April 24, 1995, and incorporated herein by reference).
10.27 -- Voting Agreement by and among the Company and Continental Illinois Venture Corporation,
CIVC Partners I, GM Holdings, LLC, Rainbow Resources, Inc., Robert McMurrey and G. David
Higginbotham, dated as of April 15, 1996 (filed as an exhibit to the Company's Schedule
13D filed April 26, 1996, and incorporated by reference).
10.28 -- Agreement and Plan of Merger by and among the Company, ProNet Subsidiary, Inc. and
Teletouch Communications, Inc., dated as of April 15, 1996 (filed as an exhibit to the
Company's Schedule 13D filed April 26, 1996, and incorporated by reference).
*10.29 -- Asset Purchase Agreement dated April 19, 1996, regarding the purchase of a nationwide data
transmission license and associated system equipment from EMBARC Communication Services,
Inc., by and among Contact Communications Inc., the Company, EMBARC Communication
Services, Inc. and Motorola Inc.
*10.30 -- Stock Purchase Agreement dated April 24, 1996, regarding the acquisition of all of the
outstanding capital stock of Strategic Products Corporation, by and among the Company,
Strategic Products Corporation, John K. LaRue and Keith Bussman.
*10.31 -- Merger Agreement dated April 24, 1996, by and among the Company, Pac-West Telecomm, Inc.,
John K. LaRue, William E. Koch and Bay Alarm Company.
<FN>
- ------------------------
* Filed herewith.
</TABLE>

<PAGE>

ASSET PURCHASE AGREEMENT

BETWEEN

CONTACT COMMUNICATIONS INC.,

PRONET INC.

AND

EMBARC COMMUNICATION SERVICES, INC.

MOTOROLA INC.

APRIL 19, 1996

<PAGE>

TABLE OF CONTENTS

PAGE

SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .5

SECTION 2. BASIC TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . .8
2.1 Purchase and Sale of Assets. . . . . . . . . . . . . . . . . . . .8
2.2 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . .8
2.3 Earnest Money Deposit. . . . . . . . . . . . . . . . . . . . . . .8
2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.5 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.6 Deliveries at the Closing. . . . . . . . . . . . . . . . . . . . .9
2.7 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.8 Closing Before Final FCC Grant . . . . . . . . . . . . . . . . . .10
2.9 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . .10

SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . .10
3.1 Due Organization; Ownership. . . . . . . . . . . . . . . . . . . .10
3.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . .11
3.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .11
3.4 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.5 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.6 Network Sites. . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.7 Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . .12
3.8 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.10 Information Furnished. . . . . . . . . . . . . . . . . . . . . . .13

SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . .13
4.1 Organization of Buyer. . . . . . . . . . . . . . . . . . . . . . .13
4.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . .14
4.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . .14
4.4 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.5 Unconditional Financing Commitment . . . . . . . . . . . . . . . .14
4.6 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . .14

SECTION 5. PRE-CLOSING COVENANTS. . . . . . . . . . . . . . . . . . . . . . .15
5.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.2 Notices and Consents . . . . . . . . . . . . . . . . . . . . . . .15
5.3 FCC Application. . . . . . . . . . . . . . . . . . . . . . . . . .15
5.4 Operation of Business. . . . . . . . . . . . . . . . . . . . . . .16
5.5 Full Access. . . . . . . . . . . . . . . . . . . . . . . . . . . .16

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5.6 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.7 Notice Of Development. . . . . . . . . . . . . . . . . . . . . . .16
5.8 Updating Information . . . . . . . . . . . . . . . . . . . . . . .16

SECTION 6. CONDITIONS TO OBLIGATION TO CLOSE. . . . . . . . . . . . . . . . .17
6.1 Conditions to Obligation of Buyer. . . . . . . . . . . . . . . . .17
6.2 Conditions to Obligation of Seller . . . . . . . . . . . . . . . .18

SECTION 7. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
7.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . .20
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . .21

SECTION 8. SURVIVAL; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . .21
8.1 Survival of Representations and Warranties . . . . . . . . . . . .21
8.2 Indemnification Provisions for Benefit of Buyer. . . . . . . . . .21
8.3 Indemnification Provisions for Benefit of Seller . . . . . . . . .21
8.4 Matters Involving Third Parties. . . . . . . . . . . . . . . . . .22
8.5 Determination of Adverse Consequences. . . . . . . . . . . . . . .22

SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .23
9.1 Canadian Nationwide Paging License . . . . . . . . . . . . . . . .23
9.2 Press Releases and Public Announcements. . . . . . . . . . . . . .23
9.3 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . .23
9.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .23
9.5 Succession and Assignment. . . . . . . . . . . . . . . . . . . . .23
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .23
9.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
9.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
9.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .25
9.10 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . .25
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .25
9.12 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
9.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . .26
9.14 Incorporation of Exhibits and Schedules. . . . . . . . . . . . . .26
9.15 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
9.16 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
9.17 Seller's Liabilities . . . . . . . . . . . . . . . . . . . . . . .27
9.18 Sales Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
9.19 Specific Performance . . . . . . . . . . . . . . . . . . . . . . .27
9.20 Additional Documents.. . . . . . . . . . . . . . . . . . . . . . .27
9.21 Coordination Agreement . . . . . . . . . . . . . . . . . . . . . .27

SECTION 10. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
10.1 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

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<PAGE>

SECTION 11. ALTERNATE DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . .28
11.1 Alternate Dispute Resolution. . . . . . . . . . . . . . . . . . .28

Exhibit A--Acquired Assets
Exhibit B--Assumed Liabilities
Exhibit C--(i) Form of Bill of Sale
(ii) Assignment and Assumption Agreement
Exhibit D--Allocation Schedule
Exhibit E--Form of Transition Agreement
Exhibit F--Opinion of Counsel for Seller
Exhibit G--Opinion of Counsel for Buyer
Exhibit H--Sublicense Agreement
Exhibit I--Depository Agreement - Escrow
Disclosure Schedule
Schedule 4.1--Ownership of Buyer

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<PAGE>

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of April 19, 1996, by and between Contact Communications Inc., a Delaware
corporation (the "Buyer") which is a wholly-owned subsidiary of Pronet Inc., a
Delaware corporation ("Guarantor") and EMBARC Communication Services, Inc., a
Nevada corporation (the "Seller") which is ultimately wholly owned by Motorola
Inc., a Delaware corporation ("Parent"). Buyer and Seller are referred to
collectively herein as the "Parties."

RECITALS

WHEREAS, Seller is the holder of a nationwide data transmission
license issued by the FCC for operation on the 931.9125 MHz frequency and
various other licenses, authorizations and approvals used exclusively in
connection therewith (the "Nationwide Paging License"), pursuant to which Seller
operates approximately 400 individual transmission facilities (collectively, the
"Network Facilities" and each such facility a "Network Site").

WHEREAS, the Parties desire that Seller should assign to Buyer, and
Buyer should accept such assignment and assume from Seller, the Nationwide
Paging License on the terms and conditions set forth herein;

WHEREAS, the Parties desire that Buyer should purchase from Seller,
and Seller should sell to Buyer, the Network Facilities on the terms and
conditions set forth herein; and

WHEREAS, the Parties further desire that they should enter into the
other covenants and agreements contemplated herein, including the Transition
Agreement contemplated hereby;

NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and the representations, warranties, and covenants
contained herein, the Parties agree as follows.

SECTION 1. DEFINITIONS

"Acquired Assets" means those assets and acquired contracts set forth on
Exhibit A hereto and used exclusively for the Nationwide Paging License and
Network Facilities.

"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,

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<PAGE>

orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.

"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

"Ancillary Agreements" means the Transition Agreement and the Sublicense
Agreement related to the Network Facilities.

"Assumed Liabilities" means those liabilities set forth on Exhibit B
hereto.

"Buyer" has the meaning set forth in the preface above.

"Canadian Nationwide Paging License" means the license issued by the
Canadian Radio-Television Commission ("IC") for 931.9125 MHz frequency to
Motorola Canada Limited.

"Closing" has the meaning set forth in Section 2.5 below.

"Closing Date" has the meaning set forth in Section 2.5 below.

"Communications Act" means the Communications Act of 1934, as amended.

"Confidential Information" means any information concerning the businesses
and affairs of Seller that is not already generally available to the public.

"Depository Agreement - Escrow" means an agreement between Buyer, Seller
and Escrow Agent concerning the Earnest Money Deposit in substantially the form
attached hereto as Exhibit I.

"Disclosure Schedule" has the meaning set forth in Section 3 below.

"Escrow Agent" means Norwest Bank Texas, N.A.

"Excluded Assets" means the excluded assets as described in Section 2.9.

"FCC" means the Federal Communications Commission.

"Final FCC Grant" means action by the FCC (i) with respect to such no
action, request for stay, petition for rehearing or reconsideration, or appeal
is pending, and as to which the time for filing any such action, request,
petition or appeal has expired and with respect to which the time for agency
action taken on its own motion has expired; or (ii) in the event of the filing
of such action, request, petition or appeal, such action shall have been
reaffirmed or upheld and with respect to

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<PAGE>

which the time for seeking further administrative or judicial review shall have
expired without the filing of any such action for further review.

"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended ("HSR").

"Indemnified Party" has the meaning set forth in Section 8.4 below.

"Indemnifying Party" has the meaning set forth in Section 8.4 below.

"Knowledge" means actual knowledge of officers and senior employees without
their independent investigation and search.

"Nationwide Paging License" has the meaning set forth in the recitals.

"Network Facilities" has the meaning set forth in the recitals.

"Network Site" has the meaning set forth in the recitals.

"Ordinary Course of Business" means the ordinary course of operation of the
Network Facilities (including with respect to the 931.9125 MHz frequency)
consistent with past custom and practice.

"Parent" has the meaning set forth in the preface above.

"Party" has the meaning set forth in the preface above.

"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).

"Purchase Price" has the meaning set forth in Section 2.4 below.

"Transition Agreement" means the Agreement in substantially the form
attached hereto as Exhibit E.

"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.

"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than liens for taxes not yet due and payable
or for taxes that the taxpayer is contesting in good faith through appropriate
proceedings.

"Seller" has the meaning set forth in the preface above.

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April 19, 1996
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<PAGE>

"Sublicense Agreement" means the agreement providing for Seller to transmit
EMBARC information programs via the National Paging License in substantially the
form attached hereto as Exhibit H.

"Third Party Claim" has the meaning set forth in Section 8.4 below.

"Transactions" means the transfer of the Acquired Assets to Buyer and the
execution of the Ancillary Agreements.

SECTION 2. BASIC TRANSACTION

2.1 PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, (i) Seller agrees to assign, transfer, convey and
deliver to Buyer, and Buyer agrees to accept such assignment from Seller, the
Nationwide Paging License and (ii) Buyer agrees to purchase from Seller, and
Seller agrees to sell, transfer, convey, and deliver to Buyer, all of the
Acquired Assets at the Closing for the consideration specified below in this
Section 2.

2.2 ASSUMPTION OF LIABILITIES. On and subject to the terms and conditions
of this Agreement, Buyer agrees (i) to assume and become responsible for all
liabilities arising after the Closing Date in connection with the Nationwide
Paging License and the Network Facilities and (ii) to assume and become
responsible for all of the Assumed Liabilities at the Closing. Buyer will not
assume or have any responsibility, however, with respect to any other obligation
or liability of Seller (other than those liabilities arising after the Closing
Date in connection with the Nationwide Paging License and Network Facilities)
which is not an Assumed Liability.

2.3 EARNEST MONEY DEPOSIT. Pursuant to the Depository Agreement - Escrow
and concurrently with the execution hereof, Buyer has delivered to the Escrow
Agent $1,000,000 in cash (the "Earnest Money Deposit"). If Closing is held as
provided herein, at the Closing, the Escrow Agent shall deliver the Earnest
Money Deposit to Seller and the interest accrued thereon to Buyer. Subject to
the terms and conditions of the Depository Agreement, (a) if this Agreement is
terminated as provided in Section 7.1(c)(A) herein, upon such termination, the
Earnest Money Deposit and all interest accrued thereon shall be paid to Seller
as liquidated damages and in complete satisfaction of and as a full remedy for
any claims of Seller against Buyer, and Buyer and Seller shall so instruct the
Escrow Agent, or (b) if the Agreement is terminated for any reason other than as
set forth in Section 7.1(c)(A) herein (unless Buyer has breached any material
representation, warranty or covenant contained in this Agreement), upon such
termination, the Earnest Money Deposit and all interest accrued thereon shall be
paid to Buyer, and Buyer and Seller shall instruct the Escrow Agent to
distribute the Earnest Money Deposit and all interest accrued thereon.

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<PAGE>

2.4 PURCHASE PRICE. The aggregate purchase price payable by Buyer to
Seller in consideration of the Acquired Assets shall be an amount equal to the
sum of (a) the Earnest Money Deposit, payable to Seller at Closing, which amount
has been deposited by Buyer with the Escrow Agent in accordance with the terms
of the Depository Agreement - Escrow of even date herewith and (b) $42,000,000
payable in cash to Seller at the Closing. This amount will be paid at Closing
by certified cheque or electronic funds transfer as directed by Seller.

2.5 THE CLOSING. Subejct to Section 2.8, the Closing of the
Transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of Buyer at 6340 LBJ Freeway, Dallas, Texas, 75240 commencing
at 9:00 a.m. local time on June 28, 1996 provided that all conditions to the
obligations of the Parties to consummate the Transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will
take at the Closing itself) have been satisfied or waived, or such other
location and date as the Parties may mutually determine (the "Closing Date").
Subject to Section 7.1, if all conditions to the obligations of the Parties
to consummate the Transactions contemplated hereby have not been satisfied or
waived by June 28, 1996, the Closing Date shall take place on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the Transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will
take at the Closing itself). Time is of the essence.

2.6 DELIVERIES AT THE CLOSING. At the Closing, (i) Seller shall deliver
to Buyer the various certificates, instruments, and documents referred to in
Section 6.1 below; (ii) Buyer shall deliver to Seller the various certificates,
instruments, and documents referred to in Section 6.2 below; (iii) Seller shall
execute, acknowledge (if appropriate), and deliver to Buyer (A) a bill of sale
and assignment with respect to the Acquired Assets substantially in the form
attached hereto as Exhibit C(i) (the "Bill of Sale") and (B) such other
instruments of sale, transfer, conveyance, and assignment as Buyer and its
counsel reasonably may request; (iv) Buyer shall execute, acknowledge (if
appropriate), and deliver to Seller (A) an Assignment and Assumption Agreement
with respect to the Assumed Liabilities substantially in the form attached
hereto as Exhibit C(ii) (the "Assumption Agreement") and (B) such other
instruments of assumption as Seller and its counsel reasonably may request; (v)
Buyer shall deliver to Seller the consideration specified in Section 2.4 above;
and (vi) the Escrow Agent shall deliver (A) to Seller the Earnest Money Deposit
and (B) to Buyer all interest accrued thereon.

2.7 ALLOCATION. The Parties agree to allocate the Purchase Price (and all
other capitalizable costs) among the Acquired Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation
schedule attached hereto as Exhibit D.

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<PAGE>

2.8 CLOSING BEFORE FINAL FCC GRANT. Subject to Section 7, the Closing
shall be no later than thirty-three (33) days after the date of grant by FCC
of consent to the assignment of the Nationwide Paging License held by Seller
or such earlier date as the parties may agree (but not earlier than June 28,
1996) or, if the Final FCC Grant has not been obtained, as a later date at
Seller's option. Assuming Buyer and Seller have proceeded with the Closing
prior to Final FCC Grant of consent to the assignment of the Nationwide
Paging License to Buyer by the FCC, and Final FCC Grant of the consent to the
assignment has not been obtained within sixty (60) days of the date of
Closing, Buyer shall sell and Seller shall purchase the Acquired Assets and
Assumed Liabilities, upon either Seller's or Buyer's request, for the
consideration specified in Section 2.4, less any liabilities relating to the
business incurred outside the Ordinary Course of Business by Buyer during the
time period in which Buyer had possession of the Acquired Assets.

2.9 EXCLUDED ASSETS. For greater certainty, Acquired Assets do not
include any other assets owned or used or held for use by Seller other than
those listed in Exhibit A, and there shall be specifically excluded from the
Acquired Assets the following property and assets ("Excluded Assets") all of
which remain the property of Seller: customer contracts, all rights of Seller
under this Agreement or any other agreement between Buyer and Seller or their
respective Affiliates entered into in connection with this Agreement; any
copyrights, patents, trade-marks, trade names and other rights to "EMBARC", or
any other trade-marks, trade names, logos or service marks of Seller or its
Affiliates; and all proprietary information and intellectual property and
software of Seller or its Affiliates including any proprietary information of
whatever nature including but not limited to patents, technology, trade secrets,
and notwithstanding that any such information is included in the documentation
or Network Facilities delivered pursuant to this Agreement or any Ancillary
Agreement, any interest in any assets, properties or rights, real or personal,
which are not used exclusively and directly in the Ordinary Course of Business,
including without limitation any assets, properties or rights relating to
Seller's other businesses.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer that the statements contained in
this Section 3 are correct and complete as of the date of this Agreement, except
as set forth in the disclosure schedule accompanying this Agreement (the
"Disclosure Schedule").

3.1 DUE ORGANIZATION; OWNERSHIP. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to own or lease its
properties and to carry on the Ordinary Course of Business as, and in the places

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where, such properties are owned and leased and such business is conducted. All
of the equity securities of Seller are owned of record and beneficially by
Parent.

3.2 AUTHORIZATION OF TRANSACTION. Seller has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, Parent and the board of directors of Seller have
duly authorized the execution, delivery, and performance of this Agreement by
Seller. This Agreement constitutes the valid and legally binding obligation of
Seller, enforceable in accordance with its terms and conditions.

3.3 NONCONTRAVENTION. Except as set forth in the Disclosure Schedule,
neither the execution and the delivery of this Agreement, nor the consummation
of the Transactions contemplated hereby (including the assignments and
assumptions referred to in Section 2 above), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Seller is subject or any provision of the charter or bylaws of any of Seller or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Seller is a party or by which
it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets), except where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
material adverse effect on the ability of the Parties to consummate the
Transactions contemplated by this Agreement. Except for (i) the applicable
requirements of the HSR Act and (ii) approval of the FCC pursuant to the
Communications Act, Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the Transactions contemplated by
this Agreement (including the assignments and assumptions referred to in Section
2 above), except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the ability of the Parties to consummate the Transactions contemplated by this
Agreement.

3.4 BROKERS' FEES. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the Transactions
contemplated by this Agreement for which Buyer could become liable or obligated.

3.5 TITLE TO THE ACQUIRED ASSETS. Seller has good title to, or a valid
leasehold interest in, the Acquired Assets. Except as set forth in the
Disclosure Schedule, the Acquired Assets are free and clear of all Security
Interests which would have a material adverse effect on the operation of the
Network Facilities and the Nationwide Paging License. Upon consummation of the
Transactions

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contemplated hereby, Seller shall provide good and indefeasible title to the
Acquired Assets, free and clear of all Security Interests. The Acquired
Assets taken as a whole are in good operating condition and repair, normal
wear and tear excepted, and are free from material defects.

3.6 NETWORK SITES. Except as disclosed in writing to Buyer prior to
the execution of this Agreement, Seller has to its Knowledge, all of the
licenses, permits, approvals and authorizations necessary to operate each of
the Network Sites in the manner currently operated. Other than (i) the
applicable requirements of the HSR Act and (ii) approval of the FCC pursuant
to the Communications Act required to be obtained in connection with this
Agreement, there is to Seller's Knowledge no additional consent, license,
authorization, certificate, permit or order required from any Federal, state,
county, or local governmental agency or body thereof in connection with the
operation of the Nationwide Paging License as currently operated in the
Ordinary Course of Business by Seller or the ownership by Seller or the
transfer of the Acquired Assets by Seller to Buyer, the lack of which would
materially adversely affect the ability of the Parties to consummate the
Transactions respecting the Nationwide Paging License and Network Facilities
and to operate the Nationwide Paging License as currently operated at
Closing. To the Knowledge of Seller, no claim has been made by any
governmental authority to the effect that any license, authorization,
certificate, permit, or order in addition to those required by the FCC is
necessary in respect of the operation of the Nationwide Paging License.

3.7 LEGAL COMPLIANCE. Except as disclosed in writing to Buyer prior to
the execution of this Agreement, Seller has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state and local
governments (and all agencies thereof), except where the failure to comply
would not have a material adverse effect on the ability of the Parties to
consummate the Transactions contemplated by this Agreement and to operate the
Nationwide Paging License as currently operated at Closing. No claim has
been made by any governmental authority (and to the Knowledge of Seller, no
such claim is anticipated) to the effect that the Ordinary Course of Business
conducted by Seller fails to comply, in any material respect, with any law
rule, regulation or ordinance.

3.8 CONTRACTS. The Disclosure Schedule lists all written contracts and
other written agreements ("acquired contracts") used exclusively in the
operation of the Nationwide Paging License. Seller has delivered to Buyer or
its representatives a correct and complete copy of each acquired contract (as
amended to date). The Seller to its Knowledge is not in default (and to its
Knowledge no event has occurred which, with the passage of time or the giving of
notice, or both, would constitute a material default) under any acquired
contract. Neither Seller nor Parent has received any notice of default or
termination under any acquired contract and, except for assignment of the
acquired contracts to Buyer pursuant to this Agreement,

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Seller has not assigned or otherwise transferred any rights under any acquired
contract.

3.9 LITIGATION. Except as disclosed in writing to Buyer prior to the
execution of this Agreement, Seller is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge nor is it a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state or
local jurisdiction where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation would have a material
adverse effect on the ability of the Parties to consummate the Transactions
contemplated by this Agreement. Except as disclosed in writing to Buyer, to
the Knowledge of Seller and Parent, there is no basis for any claim or action
which would, or could reasonably be expected to (individually or in the
aggregate), have a material adverse effect on the Ordinary Course of
Business, operations, or condition of the Nationwide Paging License or result
in a material liability to the Nationwide Paging License and Network
Facilities.

3.10 INFORMATION FURNISHED. The Seller, to its Knowledge and Parent, to
its Knowledge have made available to Buyer and its officers, directors,
employees, attorneys, accountants, and financial advisors (i) true and correct
copies of all agreements, documents, and other items listed on the schedules to
this Agreement and (ii) all reasonably related material information in books and
records of Seller used in the Ordinary Course of Business, and this Agreement,
the schedules hereto and any information, agreements, or documents delivered to
or made available to Buyer or its officers, directors, employees, attorneys,
accountants, or financial advisors pursuant to this Agreement or otherwise, when
taken together, to the Knowledge of Seller and Parent, do not contain any
untrue statement of a material fact or do not omit any material fact necessary
to make the statements herein or therein, as the case may be, not misleading,
which would have a material adverse effect on the use of the Nationwide Paging
License and the Network Facilities.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that the statements contained in
this Section 4 are correct and complete as of the date of this Agreement.

4.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation, and has full corporate power and authority to own or lease its
properties and to carry on its businesses as, and in the places where, such
properties are owned and leased and such businesses are conducted. All of the
equity securities of Buyer are owned of record and beneficially as set forth on
Schedule 4.1 attached hereto.

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4.2 AUTHORIZATION OF TRANSACTION. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions.

4.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the Transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Buyer is a party or by which it is bound or to which any of its assets is
subject. Except for (i) the applicable requirements of the HSR Act and (ii)
approval of the FCC pursuant to the Communications Act, Buyer does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the Transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above).

4.4 BROKERS' FEES. Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the Transactions
contemplated by this Agreement for which Seller could become liable or
obligated.

4.5 LENDER'S CONSENT TO ACQUISITION. Buyer hereby warrants that it
has executed an agreement with The First National Bank of Chicago and certain
other lenders, in which agreement such lenders consent to the acquisition
contemplated herein, subject to certain terms and conditions, which terms and
conditions Buyer, to its Knowledge, believes will be obtained or satisfied so
that the Closing will not be delayed beyond June 28, 1996 and the payment to
Seller of the amount of $43,000,000 will be not be delayed beyond July 1,
1996.

4.6 DUE DILIGENCE. Buyer has conducted an independent investigation and
verification of the Acquired Assets, the Assumed Liabilities and the Nationwide
Paging License and, to Buyer's Knowledge, has not identified any matters which
would have a material adverse effect on the Ordinary Course of Business and the
financial condition of the Network Facilities or result in a material liability
to the Nationwide Paging License. In making its determination to proceed with
the transactions contemplated by this Agreement, Buyer has relied on the results
of its own independent investigation and verification, documentation supplied by
Seller to Buyer and the representations and warranties and covenants as
specifically set

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forth in this Agreement AND BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT,
EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND COVENANTS EXPRESSLY AND
SPECIFICALLY SET FORTH IN THIS AGREEMENT BY SELLER, THE PURCHASED ASSETS AND
ASSUMED LIABILITIES ARE BEING CONVEYED BY SELLER TO BUYER "AS IS, WHERE IS".

SECTION 5. PRE-CLOSING COVENANTS

The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.

5.1 GENERAL. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary in order to consummate and make
effective the Transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).

5.2 NOTICES AND CONSENTS. Seller will give any notices to third parties,
and Seller will use its reasonable best efforts to obtain any third party
consents, that Buyer reasonably may request in connection with the matters
referred to in Section 3.3 above. Each of the Parties will give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3.3 and Section 4.3 above.
Without limiting the generality of the foregoing, each of the Parties has filed
the Notification and Report Forms and related material that it is required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Act, will use its
reasonable best efforts to obtain a waiver from the applicable waiting period,
and will make any further filings pursuant thereto that may be necessary in
connection therewith.

5.3 FCC APPLICATION. Prior to the date hereof, the Parties have
completed and delivered to the FCC an executed copy of a complete application
requesting the FCC's written consent to the assignment of (i) the Nationwide
Paging License and (ii) all licenses, approvals and authorizations relating
to the Network Facilities to Buyer and to the consummation of the
Transactions contemplated by this Agreement. Each of the Parties will take,
or cooperate in the taking of, all steps that are reasonably necessary,
proper or desirable to expedite prosecution of such application to a
favorable conclusion. Each Party shall promptly provide to each other Party
a copy of any pleading, order or other document served on such Party relating
to such application.

5.4 OPERATION OF BUSINESS. Seller will not engage in any practice, take
any action, or enter into any transaction that is outside the Ordinary Course of
Business

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or which would reasonably be expected to have a material adverse effect on the
value of the Network Paging License or the Network Facilities.

5.5 FULL ACCESS. Seller will permit representatives of Buyer to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of Seller, to all premises, properties, personnel,
books, records, contracts, and documents of or pertaining to the Acquired Assets
or the Assumed Liabilities. Buyer will treat and hold as such any Confidential
Information it receives from Seller in the course of the reviews contemplated by
this Section 5, will not use any of the Confidential Information except in
connection with this Agreement, and, if this Agreement is terminated for any
reason whatsoever, will return to Seller all tangible embodiments (and all
copies) of the Confidential Information which are in its possession.

5.6 EXCLUSIVITY. Seller and Parent will not solicit, initiate, or
encourage the submission of any proposal or offer from any Person or participate
in any negotiation relating to (i) the acquisition of any asset contained among
the Acquired Assets or (ii) the acquisition, prior to the Closing, of all or
substantially all of the capital stock of Seller (including any acquisition
structured as a merger, consolidation, or share exchange). In addition, Seller
and Parent agree that neither Seller nor Parent will enter into any agreement or
consummate any transaction that would interfere with the consummation of the
Transactions contemplated by this Agreement.

5.7 NOTICE OF DEVELOPMENTS. From the date hereof to the Closing, Seller
and Parent shall, immediately upon Seller and Parent becoming aware thereof,
notify Buyer of any material problems or developments (including but not limited
to breaches of representations, warranties, covenants or agreements contained
herein) with respect to the Acquired Assets.

5.8 UPDATING INFORMATION. As of the Closing, Seller and Parent shall
update all information set forth in the schedules to this Agreement.

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SECTION 6. CONDITIONS TO OBLIGATION TO CLOSE

6.1 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date and Seller shall have delivered to Buyer a certificate to such effect;

(b) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;

(c) there shall not be to the Knowledge of Seller any injunction,
judgment, order, decree, ruling, or charge in effect preventing
consummation of any of the Transactions contemplated by this Agreement;

(d) all applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Act shall have expired or otherwise been terminated;

(e) the FCC shall have granted its consent to the assignment of the
Nationwide Paging License to Buyer and it shall have issued public notice
indicating that it has granted such consent provided that no protest has
been filed;

(f) Buyer shall have received an opinion of Counsel for Seller and
Parent, dated as of the Closing, substantially in the form attached hereto
as Exhibit F;

(g) Buyer shall have received an opinion of Wiley, Rein & Fielding,
FCC counsel for Seller and Parent, dated as of the Closing addressing
the matters raised in the form attached hereto as Exhibit G;

(h) prior to the Closing, there shall not have occurred any material
casualty or damage to any facility, property, asset or equipment used in
connection with the operation of the Nationwide Paging License; there shall
have been no material adverse change in the condition, Ordinary Course of
Business, the Network Facilities or operations of the Nationwide Paging
License and the Network Facilities since the date of this Agreement; and
the operation of the Acquired Assets shall have been conducted only in the
ordinary course consistent with past practices;

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(i) all consents and approvals 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 Buyer;

(j) all necessary action (corporate or otherwise) shall have been
taken by Seller and Parent to authorize, approve, adopt and execute this
Agreement and the consummation and performance of the Transactions
contemplated hereby, and Seller shall have received a certificate to such
effect;

(k) Buyer shall have received from Seller a duly executed Bill of
Sale and Assignment and Assumption Agreement and such other instruments as
shall be necessary or desirable in the reasonable opinion of Buyer's
counsel to vest in or confirm in Buyer good and indefeasible title to the
Acquired Assets in accordance herewith; and

(l) Seller and Parent shall have delivered such good standing
certificates, officer's certificates, and similar documents and
certificates as counsel for Buyer shall have reasonably requested prior to
the Closing.

Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing.

6.2 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

(a) the representations and warranties set forth in Section 4 above
shall be true and correct in all material respects at and as of the Closing
Date and Buyer shall have delivered to Seller a certificate to such effect;

(b) Buyer shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;

(c) there shall not be to the Knowledge of Buyer any injunction,
judgment, order, decree, ruling, or charge in effect preventing
consummation of any of the Transactions contemplated by this Agreement;

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(d) all applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Act shall have expired or otherwise been terminated;

(f) Buyer shall have executed and entered into with Seller the
Transition Agreement in form and substance as set forth in Exhibit E and
the same shall be in full force and effect;

(g) Buyer shall have executed and entered into with Seller the
Sublicense Agreement for ESPN and the Sublicense Agreement for CNBC in form
and substance as set forth in Exhibit H and the same shall be in full force
and effect;

(h) Seller shall have received by wire transfer (or in such other
form as is satisfactory to the Seller) immediately available funds for the
consideration in Section 2.4;

(i) Seller shall have received from Seller a duly executed Assignment
and Assumption Agreement substantially in the form attached hereto as
Exhibit C with respect to the Assumed Liabilities.

(j) Seller shall have received an opinion of Mark Solls, Esq., for
Buyer and Guarantor, dated as of the Closing, substantially in the form
attached hereto as Exhibit F;

(k) all consents and approvals 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 Seller;

(l) all necessary action (corporate or otherwise) shall have been
taken by Buyer and Guarantor to authorize, approve, adopt and execute this
Agreement and the consummation and performance of the Transactions
contemplated hereby, and Seller shall have received a certificate to such
effect;

(m) Buyer and Guarantor shall have delivered such good standing
certificates, officer's certificates, and similar documents and
certificates as counsel for Seller shall have reasonably requested prior to
the Closing; and

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(n) Buyer shall provide evidence satisfactory to Seller of attornment
to the legal jurisdiction and the courts of the State of Illinois.

Seller may waive any condition specified in this Section 6.2 if it executes a
writing so stating at or prior to the Closing.

SECTION 7. TERMINATION

7.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement as
provided below:

(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;

(b) Buyer may terminate this Agreement by giving written notice to
Seller of its intention to terminate at any time prior to the Closing (A)
in the event Seller has breached any material representation, warranty, or
covenant contained in this Agreement (not including the right of Buyer to
use the Canadian National Paging Frequency due to IC withholding its
approval) in any material respect, Buyer has notified Seller of the breach,
and the breach has continued without cure for a period of 10 days after the
notice of breach and after allowing Seller a period of two business days to
contest such termination by Seller giving written notice to Buyer requiring
the dispute to be resolved pursuant to Section 11. No notice of such
termination, if contested, shall be effective until the dispute or
controversy respecting such termination is resolved in Buyer's favor; or
(B) if the Closing shall not have occurred on or before September 30, 1996;
and

(c) Seller may terminate this Agreement by giving written notice to
Buyer of its intention to terminate at any time prior to the Closing (A) in
the event Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, Seller has
notified Buyer of the breach, and the breach has continued without cure for
a period of 10 days after the notice of breach and after allowing Buyer a
period of two business days to contest such termination by Buyer giving
written notice to Seller requiring the dispute to be resolved pursuant to
Section 11. No notice of such termination, if contested, shall be effective
until the dispute or controversy respecting such termination is resolved in
Seller's favor or (B) if the Closing shall not have occurred on or before
September 30, 1996.

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7.2 EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant
to Section 7.1 above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in Section 5.5 above shall survive
termination.

SECTION 8. SURVIVAL; INDEMNIFICATION

8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer and Seller contained in this Agreement shall survive the
Closing (unless the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period of eighteen (18) months thereafter; provided
however, that such limitation shall not apply to 3.1, 3.2, all but the last
sentence of 3.5 and any taxes relating to Seller, the National Paging License or
the Network Facilities accruing during the period to Closing.

8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the event Seller
breaches any of its representations and warranties contained in this Agreement,
provided that Buyer makes a written claim for indemnification against Seller
within the survival period set forth in Section 8.1 above, then Seller agrees to
indemnify Buyer from and against any Adverse Consequences Buyer shall suffer
through and after the date of the claim for indemnification (but excluding any
Adverse Consequences Buyer shall suffer after the end of the applicable survival
period) caused proximately by the breach; provided, however, that Seller shall
not have any obligation to indemnify Buyer from and against any Adverse
Consequences caused by the breach of any representation or warranty of Seller
(A) unless an Adverse Consequence is equal to at least $5,000 (B) until Buyer
has suffered Adverse Consequences by reason of all such breaches in excess of a
$50,000 aggregate deductible (after which point Seller will be obligated only to
indemnify Buyer from and against such further Adverse Consequences), or
thereafter (C) to the extent the Adverse Consequences Buyer has suffered by
reason of all such breaches exceeds a $10,000,000 aggregate ceiling (after which
point Seller will have no obligation to indemnify Buyer from and against further
such Adverse Consequences).

8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. In the event Buyer
breaches any of its representations and warranties contained in this Agreement,
provided that Seller makes a written claim for indemnification against Buyer
within the survival period set forth in Section 8.1 above, then Buyer agrees to
indemnify Seller from and against any Adverse Consequences Seller shall suffer
through and after the date of the claim for indemnification (but excluding any
Adverse Consequences Seller shall suffer after the end of any applicable
survival

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period) caused proximately by the breach; provided, however, that Buyer shall
not have any obligation to indemnify Seller from and against any Adverse
Consequences caused by the breach of any representation or warranty of Buyer (A)
unless an Adverse Consequence is equal to at least $5,000 (B) until Seller has
suffered Adverse Consequences by reason of all such breaches in excess of a
$50,000 aggregate deductible (after which point Buyer will be obligated only to
indemnify Seller from and against further such Adverse Consequences), or
thereafter (C) to the extent the Adverse Consequences Seller has suffered by
reason of all such breaches exceeds a $10,000,000 aggregate ceiling (after which
point Buyer will have no obligation to indemnify Seller from and against further
such Adverse Consequences).

8.4 MATTERS INVOLVING THIRD PARTIES.

(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly (and in any event within five business days after receiving
notice of the Third Party Claim) notify the Indemnifying Party thereof in
writing.

(b) The Indemnifying Party will have the right at any time to assume
and thereafter conduct and control the defense of the Third Party Claim
with counsel of its choice.

(c) Unless and until the Indemnifying Party assumes the defense of
the Third Party Claim as provided above, however, the Indemnified Party may
defend against the Third Party Claim in any manner it reasonably may deem
appropriate.

(d) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party.

8.5 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage and take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section 8. All
indemnification payments under this Section 8 shall be deemed adjustments to the
Purchase Price.

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SECTION 9. MISCELLANEOUS

9.1 CANADIAN NATIONWIDE PAGING LICENSE. The Parties will cooperate and
use their best reasonable efforts to obtain the approval of IC if required, for
Buyer to have the right to use the Canadian Nationwide Paging License which use
shall be subject to the terms and conditions of the Canadian Nationwide Paging
Licensing Agreements.

9.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure which is required by
applicable law or any listing or trading agreement concerning its publicly-
traded securities (in which case the disclosing Party will use its best efforts
to advise the other Party prior to making the disclosure); provided further,
that neither Party shall make public the text of the Agreement or the Ancillary
Agreements themselves without the prior written approval of the other Party,
except as required by law in the written opinion of counsel, a copy of which
will be provided to the other Party. Notwithstanding anything to the
contrary, Buyer may, if required, provide a copy of this Asset Purchase
Agreement to the SEC and the NASD provided that Seller is advised with
reasonable advance notice and there will be prior agreement on a joint press
release.

9.3 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.

9.4 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) and the Mutual Non-Disclosure Agreement dated February 22, 1996 entered
into by the Affiliates of the Parties (which the Parties acknowledge shall
remain in full force and effect according to its terms) constitute the entire
agreement between the Parties and supersede any prior understandings,
agreements, or representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.

9.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party hereto, which approval shall not be unreasonably withheld or
delayed.

9.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

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Page 23

<PAGE>

9.7 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

9.8 NOTICES. Any demand, notice or other communication to be given in
connection with this Agreement shall be given in writing and shall be given by
personal delivery, by registered mail, by overnight delivery or by electronic
means of communication addressed to the recipients as follows:

To: EMBARC Communication Services, Inc.
1301 North Congress Avenue, Suite 410
Boynton Beach, FL 33426
Attention: Nehemia "Hemi" Zucker
Facsimile Number: (407) 739 3683

To: Contact Communications Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attention: Jackie R. Kimzey
Facsimile Number: (214) 774 0646

Copy To: Motorola Inc.
1301 East Algonquin Road
Schaumburg, IL 60196
Attention: Joseph P. Mulvey
Facsimile Number: (847) 538 3471

Copy To: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attention: Mark A. Solls
Facsimile Number: (214) 774 0646

Copy To: Wiley, Rein & Fielding
1776 K Street N.W.
Washington, D.C. 20006
Attention: Robert Pettit
Facsimile Number: (202) 429-7207

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Page 24

<PAGE>

or to such other address, individual or electronic communication number as may
be designated by notice given by one party to the other. Any demand, notice or
other communication given by personal delivery shall be conclusively deemed to
have been given on the day of actual delivery thereof if given by registered
mail on the second business day following the deposit thereof in the mail, if by
overnight delivery on the next business day before the close of business at the
recipient's location and, if given by electronic communication, on the day of
transmittal thereof if given during the normal business hours of the recipient
and on the business day during which such normal business hours next occur if
not given during such hours on any business day subject to confirmation of
receipt. If the party giving any demand, notice or other communication knows or
ought reasonably to know of any difficulties with the postal system which might
affect the delivery of mail, any such demand, notice or other communication
shall not be mailed but shall be given by personal delivery or by electronic
communication.

9.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Illinois.

9.10 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

9.11 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

9.12 EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the Transactions contemplated hereby.

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Page 25

<PAGE>

9.13 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.

9.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

9.15 PRORATIONS. All annual or period ad valorem fees, taxes, and
assessments and similar charges imposed by taxing authorities on the Acquired
Assets (collectively, "Property Taxes") shall be borne and paid (a) by Seller
for all full tax years or periods ending before the Closing and (b) by Buyer for
all full tax years or periods beginning on or after the Closing and for that
portion of any tax year or period ending on or after the Closing from and
including the Closing 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 rent and other lease charges, power and
utility charges, telephone line charges, license or other fees, wages, salaries,
and commissions, all amounts related to acquired contracts, prepaid items and
expenses, and similar items to be allocated between Buyer and Seller shall be
allocated between Buyer and Seller effective as of 12:01 a.m. on the day of the
Closing. Such allocations shall be determined and payment accordingly made from
one party to the other, as the case may be, at the Closing to the extent they
are known and agreed to by Buyer and Seller; otherwise such allocations shall be
determined and payment made (effective as of 12:01 a.m. on the day of Closing)
on the date 60 days thereafter. If there shall be any dispute in regard to the
amounts due under this Section 9.15, the same shall be determined by a
nationally recognized accounting firm selected by Buyer in its sole and absolute
discretion and any such determination shall be binding and conclusive upon the
Parties. The charges of such firm shall be shared equally by Buyer and Seller.
Prorations under this Section 9.15 shall be paid in accordance with this Section
9.15 and shall not constitute Adverse Consequences, notwithstanding any
limitations set forth in Section 8 herein.

9.16 RECORDS. At the Closing, Seller to its Knowledge and Parent to its
Knowledge will turn over and deliver to Buyer all material and non-confidential
files of Seller and Parent relating to the Acquired Assets of the Nationwide
Paging License, including, without limitation, all copies and originals of all
acquired contracts, any and all operating manuals for the Network Facilities,
third party warranties, and like materials and data in Seller's and Parent's
possession relating to the design, construction, maintenance, and operation of
facilities, improvements,

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Page 26

<PAGE>

and equipment included in the Acquired Assets and/or the Nationwide Paging
License, and all appropriate books and records, accounting information, and
operating information and data, current and historical, reasonably related to
the Acquired Assets and/or Nationwide Paging License. Seller shall have the
right to retain a copy of all documentation.

9.17 SELLER'S LIABILITIES. Seller agrees to use its best efforts to
satisfy, pay and extinguish all of the liabilities of Seller outstanding as of
the Closing which will materially adversely affect the Nationwide Paging License
or the Network Facilities within 60 days following the Closing.

9.18 SALES TAXES. The Parties expressly agree that Seller shall be
responsible for and pay all federal, state, county, or local taxes of Seller
arising prior to Closing with respect to the Ordinary Course of Business and
Buyer shall pay all federal, state and county taxes arising by reason of, or
resulting form, the sale of the Acquired Assets and the assumption of
liabilities contemplated hereby.

9.19 SPECIFIC PERFORMANCE. The Parties acknowledge and agree that:(i)
without limiting any other remedy available to Seller at law or in equity,
Seller shall be able to specifically enforce the terms of this Agreement; and
(ii) without limiting any other remedy available to Buyer at law or in equity,
Buyer shall be able to specifically enforce the terms of this Agreement.

9.20 ADDITIONAL DOCUMENTS. Each Party agrees that, without further
consideration, whenever and as often as required to do so, to execute and
deliver to the other Party, such instruments of conveyance, transfer and
assignment as the other Party may require, acting reasonably, to complete the
Transactions contemplated herein.

9.21 COORDINATION AGREEMENT. EMBARC further agrees that, subsequent to the
Closing provided for herein, it will ensure that its Affiliate, Motorola Canada
Limited ("MCL"), promptly considers and consents in writing to any request for
coordination presented by Buyer (or Buyer's Affiliates) with respect to Buyer's
construction and operation of 931.9125 MHz facilities in the continental United
States North of Line A, as required by and in accordance with the U.S. Canada
Interim Coordination Considerations for 929-932 MHz, as amended, and as set
forth in FCC Rule 22.531(e)(4), 47 C.F.R. S22.531(e)(4). EMBARC will inform
Motorola's International Networks Division ("IND"), which is responsible for
931.9125 MHz operations in Canada, of EMBARC's obligations under this Section
and will ensure that IND takes all steps necessary to fulfill those obligations.
EMBARC's obligations pursuant to this subparagraph shall survive the Closing.

SECTION 10. GUARANTEE

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April 19, 1996
Page 27

<PAGE>

10.1 GUARANTEE. The Guarantor hereby guarantees the performance by Buyer
of all its covenants, representations and warranties hereunder and as set out in
the Ancillary Agreements. The Parent hereby guarantees the covenants,
representations and warranties of Seller hereunder.

SECTION 11. ALTERNATE DISPUTE RESOLUTION

11.1 ALTERNATE DISPUTE RESOLUTION. For all disputes arising under this
Agreement, unless otherwise specifically provided for under this Agreement, the
Parties will attempt to settle any claim or controversy arising hereunder
through consultation and negotiation in good faith and a spirit of mutual
cooperation. If those attempts fail, then the dispute will be mediated by a
mutually acceptable mediator to be chosen by The Parties, within forty-five (45)
days after written notice by either Party demanding mediation. Neither Party
may unreasonably withhold consent to the selection of a mediator. Any hearings
or other similar meetings or conferences with the advisor shall take place in
Chicago, Illinois. By mutual agreement, however, the Parties may postpone
mediation until each has completed some specified but limited discovery
regarding the dispute. The Parties may also agree to replace mediation with
some other form of alternate dispute resolution ("ADR") such as neutral fact-
finding or a mini-trial.

Any dispute which cannot be resolved between the Parties through negotiation,
mediation or other form of ADR within sixty (60) days of the date of the initial
demand for ADR by one of the Parties, except a dispute involving either Party's
intellectual property, may then be submitted to the courts within ten (10) days
for resolution. The use of any ADR procedures will not be construed under the
doctrines of laches, waiver or estoppel to affect adversely the rights of either
Party. Disputes involving either Party's intellectual property rights shall be
resolved by a court of competent jurisdiction. Nothing in this Section will
prevent either Party from resorting to judicial proceedings, if: (a) good faith
efforts to resolve the dispute under these procedures have been unsuccessful, or
(b) interim relief from a court is necessary to prevent serious and irreparable
injury to that party or to others. Pending decisions of any dispute hereunder,
the parties shall diligently proceed with performance of this Agreement.

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April 19,1996
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<PAGE>

Each party shall bear its own costs of mediation, ADR and/or litigation, but the
parties agree to share the costs of the mediator or other arbiter equally.

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

CONTACT COMMUNICATIONS INC.

By: /s/ Mark Solls
----------------------------
Mark Solls
Vice-President

PRONET INC.

By: /s/ Mark Solls
----------------------------
Its: Vice President
----------------------------

EMBARC COMMUNICATION SERVICES, INC.

By: /s/ Joseph P. Mulvey
----------------------------
Joseph P. Mulvey
Vice-President and Director
Business Development

MOTOROLA INC.

By: /s/ Joseph P. Mulvey
----------------------------

Its: Vice President and Director
Business Development
----------------------------

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April 19, 1996
Page 29

<PAGE>

STOCK PURCHASE AGREEMENT
AMONG STRATEGIC PRODUCTS CORPORATION
JOHN K. LA RUE, KEITH BUSSMAN

AND

PRONET INC.

April 25, 1996

<PAGE>

TABLE OF CONTENTS

Page
----

RECITALS 1

ARTICLE 1 - PURCHASE AND SALE OF SHARES 1

1.1 Purchase and Sale 1
1.2 Purchase Price 1
1.3 Closing 2

ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF PRONET 2

2.1 Due Organization 2
2.2 Due Authorization 2
2.3 Conflicts 3
2.4 Consents 3
2.5 Claims and Proceedings 3
2.6 Brokers 3
2.7 Regulatory Certificates 3
2.8 California Corporation Code Section 25102 Representation 4

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF
SPC AND THE SELLERS 4

3.1 Due Organization; Ownership; Subsidiaries 4
3.2 Capital Stock 4
3.3 Title to Shares 4
3.4 Due Authorization 5
3.5 Conflicts 5
3.6 Consents 6
3.7 Financial Statements 6
3.8 Conduct of Business; Certain Actions 6
3.9 Properties 7
3.10 Licenses and Permits 8
3.11 Intellectual Rights 8
3.12 Compliance with Laws 9
3.13 Insurance 10
3.14 ERISA Plans 10
3.15 Contracts and Agreements 10
3.16 Claims and Proceedings 10
3.17 Taxes 11
3.18 Personnel 12
3.19 Business Relations 12
3.20 Brokers 12
3.21 Warranties 12
3.22 Accounts Receivable 12
3.23 Customers and Suppliers 13
3.24 Interest in Competitors, Suppliers, and Customers 13

<PAGE>

3.25 Inventory 13
3.26 Commission Sales Contracts 13
3.27 Regulatory Certificates 13
3.28 Information Furnished 13

ARTICLE 4 - COVENANTS 14

4.1 Inspection 14
4.2 Compliance 14
4.3 Satisfaction of All Conditions Precedent 14
4.4 No Solicitation 14
4.5 Notice of Developments 15
4.6 Notice of Breach 15
4.7 Notice of Litigation 15
4.8 Continuation of Insurance Coverage 16
4.9 Maintenance of Credit Terms 16
4.10 Updating Information 16
4.11 Interim Operations of SPC 16
4.12 Financial Statements 17
4.13 Licenses 17
4.14 Resignations of Directors and Officers 17
4.15 Compliance 18
4.16 Satisfaction of All Conditions Precedent 18
4.17 Continuation of Insurance Coverage 18
4.18 Licenses 18
4.19 Notice of Breach 18
4.20 Updating Information 18
4.21 Final Tax Returns 18

ARTICLE 5 - REGULATORY APPROVALS 19

ARTICLE 6 - CONDITIONS TO CLOSING 20

6.1 Conditions to Obligations of ProNet 20
6.2 Conditions to Obligations of the Sellers 22

ARTICLE 7 - TERMINATION 23

ARTICLE 8 - INDEMNIFICATION 23

8.1 Indemnification of ProNet 23
8.2 Indemnification of the Sellers 24
8.3 Defense of Third-Party Claims 24
8.4 Direct Claims 26
8.5 No Contribution 26
8.6 Limitations on Liability 26
8.7 Sole Remedy 26
8.8 Arbitration 27

ARTICLE 9 - MISCELLANEOUS 28

9.1 Collateral Agreements, Amendments, and Waivers 28

<PAGE>

9.2 Successors and Assigns 28
9.3 Expenses 28
9.4 Invalid Provisions 28
9.5 Waiver 29
9.6 Notices 29
9.7 Survival of Representations, Warranties, and Covenants 30
9.8 Public Announcement 30
9.9 Further Assurances 30
9.10 No Third-Party Beneficiaries 30
9.11 Governing Law 30
9.12 Headings 30
9.13 Sections; Exhibits 31
9.14 Number and Gender of Words 31
9.15 Specific Performance 31
9.16 Definition of Knowledge 31
9.17 Records 31
9.18 Counterparts 32

ARTICLE 10 - CONFIDENTIALITY 32

iii

<PAGE>

SCHEDULES

1.2 Purchase Price
2.3 Conflicts
2.4 Consents
2.5 Claims and Proceedings
3.1 Foreign Qualification
3.2 Capital Stock
3.3 Title to Shares
3.5 Conflicts
3.6 Consents
3.7 Asset List
3.8 Conduct of Business; Certain Actions
3.9 Properties
3.10 Licenses and Permits
3.11 Intellectual Rights
3.13 Insurance
3.15 Contracts and Agreements
3.16 Claims and Proceedings
3.17 Taxes
3.19 Business Relations
3.21 Warranties
3.23 Suppliers
3.24 Interest in Competitors, Supplier and Customers
3.26 Commission Sales Contracts
10(a) SPC Confidential Information
10(b) ProNet Confidential Information

EXHIBITS
- --------

A - Form of Opinion of Counsel to SPC and the Sellers
B - Form of Opinion of FCC Counsel to SPC
C - Assets to be Acquired
D-1 - Noncompetition Agreement - John K. La Rue
D-2 - Noncompetition Agreement - Keith Bussman

<PAGE>

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made and entered
into as of April 25, 1996, by and among Strategic Products Corporation, a
California corporation ("SPC"), John K. La Rue ("La Rue"), and Keith Bussman
("Bussman") together with La Rue (the "Sellers"), and ProNet Inc., a Delaware
corporation ("ProNet").

R E C I T A L S

A. La Rue and Bussman collectively own 1000 shares (the "Shares") of the
no par common stock ("SPC Common Stock"), of SPC, which Shares constitute all of
the authorized, issued and outstanding capital stock of SPC.

C. In order to acquire substantially all of the property assets and
businesses of SPC paging system (such property, assets, and businesses,
including all rights to affiliated networks, being hereinafter collectively
called the "System"), ProNet desires to purchase from the Sellers, and the
Sellers desire to sell to ProNet the Shares in consideration of the Purchase
Price (hereinafter defined), upon the terms and subject to the conditions set
forth herein.

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 SHARES

1.1 PURCHASE AND SALE. On the Closing Date (as hereinafter defined), the
Sellers shall sell to ProNet, and ProNet shall purchase from the Sellers, on the
terms and conditions set forth in this Agreement, the Shares, free and clear of
all liens, security interests, claims, rights of another, and encumbrances of
any kind or character.

1.2 PURCHASE PRICE. The aggregate purchase price payable by ProNet to the
Sellers in consideration for the sale of the Shares shall be One Million Nine
Hundred Twelve Thousand Dollars ($1,912,000). The purchase price shall be
allocated among the Sellers as set forth on SCHEDULE 1.2 attached hereto and
incorporated herein by this reference. The purchase price shall be payable in
full in cash at the Closing.

<PAGE>

1.3 CLOSING.

(a) CLOSING DATE. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Neumiller & Beardslee, a
professional corporation, 509 West Weber Avenue, Stockton, California at 9:00
a.m., local time, on the last day of the month in which all Federal, state, and
local regulatory approvals for the transactions contemplated hereby are received
by Final Order (as hereinafter defined) or such other time as agreed upon by the
parties ("the Closing Date").

(b) DELIVERY AND PAYMENT. At the Closing, (i) each Seller shall deliver
to ProNet stock certificates evidencing all of the Shares owned by such Seller
duly endorsed or accompanied by a duly executed stock power assigning such
Shares to ProNet and otherwise in good form for transfer and (ii) ProNet shall
deliver to each Seller by wire transfer, the amount of the cash constituting the
Purchase Price to be paid to such Seller on the Closing Date as provided in
SCHEDULE 1.2.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PRONET

ProNet hereby represents and warrants to the Sellers as follows (with the
understanding that the Sellers and SPC are relying materially on each such
representation and warranty in entering into and performing this Agreement):

2.1 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 its properties and
to carry on its business as, and in the places where, such properties are owned
or leased and such business is conducted.

2.2 DUE AUTHORIZATION. ProNet has 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 it in
accordance herewith. This Agreement has been and any other agreements,
documents, and instruments required to be executed and delivered by ProNet in
accordance herewith as of the Closing shall have been, duly and validly executed
and delivered by ProNet and shall, upon their execution, constitute valid and
binding obligations of ProNet 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

<PAGE>

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

2.3 CONFLICTS. Except as set forth on SCHEDULE 2.3, to the knowledge of
ProNet neither the execution, delivery, nor performance of this Agreement or any
other agreement, document, or instrument to be executed by the ProNet in
connection herewith shall (a) violate in any material respect any Federal,
state, county, or local law, rule, or regulation applicable to ProNet, or its or
properties, (b) violate or conflict with, or permit the cancellation of, any
agreement to which ProNet is a party, or by which it, or any of its properties
is bound, or result in the creation of any lien, security interest, charge, or
encumbrance upon any of such properties, (c) result in the acceleration of the
maturity of any indebtedness of, or indebtedness secured by any property or
other assets of ProNet, or (d) violate or conflict with any provision of the
articles of incorporation or by-laws ProNet.

2.4 CONSENTS. To the knowledge of ProNet, set forth on SCHEDULE 2.4
attached hereto is a complete list of all actions, consents, or approvals of, or
filings with, any governmental authorities or third parties required 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 ProNet.

2.5 CLAIMS AND PROCEEDINGS. Except as set forth in SCHEDULE 2.5 attached
hereto, to the actual knowledge of ProNet, no claims, actions, suits,
proceedings or investigations are pending or have been threatened or filed since
the date of ProNet's latest Quarterly Report on Form 10Q which would have a
material adverse effect on the business operations or financial condition of
ProNet, and all such matters existing as of the date of such 10Q were disclosed
therein.

2.6 BROKERS. ProNet 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 with the
exception of Daniels and Associates.

2.7 REGULATORY CERTIFICATES. ProNet does not have actual knowledge of any
information concerning ProNet or its operations that could cause the FCC or any
other regulatory authority having jurisdiction over SPC, not to issue to ProNet
all regulatory certificates and approvals necessary for the consummation of the
transactions contemplated hereunder and for the operation of the System
subsequent thereto.

<PAGE>

2.8 CALIFORNIA CORPORATION CODE SECTION 25102 REPRESENTATION. As of the
date hereof ProNet is and as of the Closing Date ProNet shall be a corporation
with outstanding securities registered under section 12 of the Securities
Exchange Act of 1934. ProNet is purchasing the Shares of SPC for its own
account and not with a view to or for sale in connection with any distribution
of such shares.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SPC AND THE SELLERS

SPC and each of the Sellers hereby jointly and severally represent and
warrant to ProNet as follows (with the understanding that ProNet is relying
materially on each such representation and warranty in entering into and
performing this Agreement:

3.1 DUE ORGANIZATION; OWNERSHIP; SUBSIDIARIES. SPC is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California and has full corporate power and corporate authority to own or lease
its properties and to carry on its businesses as, and in the places where, such
properties are owned or leased and such businesses are conducted. SPC is
qualified to do business and is in good standing in the states set forth on
SCHEDULE 3.1 attached hereto, which states represent every jurisdiction where
such qualification is required. No other jurisdiction has asserted a claim that
SPC is required to qualify to do business as a foreign corporation in such
jurisdiction. Except as set forth in SCHEDULE 3.1 attached hereto, SPC does not
have any subsidiaries, or any equity investment in any other corporation,
partnership, joint venture, or other business enterprise.

3.2 CAPITAL STOCK. The authorized capital stock of SPC consists of 1,000
shares of SPC Common Stock, 1,000 of which shares are issued and outstanding.
Except as set forth in SCHEDULE 3.2 attached hereto, all of the Shares are duly
authorized and validly issued, fully paid, and nonassessable; none of the Shares
was issued in violation of any preemptive or preferential right; there are no
other equity securities of SPC outstanding; and there are no outstanding
securities or indebtedness convertible into, exchangeable for, or carrying the
right to acquire, SPC Common Stock or other equity securities SPC, or
subscriptions, warrants, options, rights, or other arrangements or commitments
obligating SPC to issue or dispose of any SPC Common Stock or other SPC equity
securities or any ownership therein.

3.3 TITLE TO SHARES. Except as set forth in SCHEDULE 3.3 attached hereto,
La Rue is the true and lawful owner of record

<PAGE>

and beneficially, of 510 of the Shares; and Bussman is the true and lawful
owner, of record and beneficially, of 490 of the Shares. Except as set forth in
SCHEDULE 3.3 attached hereto, the Shares are, and on the Closing Date will be,
owned by the Sellers free and clear of all liens, security interests, pledges,
assessments, charges, adverse claims, leases, licenses, restrictions, or other
encumbrances (collectively, "Liens"). Other than the rights and obligations
arising under this Agreement, none of the Shares is subject to any rights of any
other person to acquire the same. None of the Shares is subject to any Liens or
restrictions on transfer thereof, except for restrictions imposed by applicable
federal and state securities laws.

3.4 DUE AUTHORIZATION. SPC has full corporate power and authority to
enter into and perform its obligations under this Agreement and each agreement,
document, and instrument required to be executed by it in accordance herewith.
The execution, delivery, and performance of this Agreement and any agreements,
documents, and instruments required to be executed by SPC in accordance herewith
have been duly authorized by the Board of Directors of SPC. This Agreement and
the agreements, documents, and instruments required to be executed and delivered
by SPC or the Sellers in accordance herewith have been duly and validly executed
and delivered by SPC or the Sellers and constitute valid and binding obligations
of SPC or the Sellers 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.

3.5 CONFLICTS. Except as set forth on SCHEDULE 3.5, to the knowledge of
SPC or the Sellers, neither the execution, delivery, nor performance of this
Agreement or any other agreement, document, or instrument to be executed by SPC
and/or any of the Sellers in connection herewith shall (a) violate any Federal,
state, county, or local law, rule, or regulation applicable to SPC or any of the
Sellers, or its or his properties, (b) violate or conflict with, or permit the
cancellation of, any agreement to which SPC or any Seller is a party, or by
which it, he, or she or any of its, his, or her properties are bound, or result
in the creation of any lien, security interest, charge, or encumbrance upon any
of such properties, (c) result in the acceleration of the maturity of any
indebtedness of, or indebtedness secured by any property or other assets of SPC,
or (d) violate or conflict with any provision of the certificate of
incorporation or by-laws of SPC.

<PAGE>

3.6 CONSENTS. To the knowledge of SPC or the Sellers, set forth on
SCHEDULE 3.6 attached hereto is a complete list of all actions, consents, or
approvals of, or filings with, any governmental authorities or third parties
required 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 any of the Sellers, or SPC.

3.7 FINANCIAL STATEMENTS. SPC has delivered to ProNet (a) a complete and
correct copy of the unaudited statement of financial condition of SPC as of and
for the year ended December 31, 1995 and for the period ended February 29, 1996
(the "Financial Statements"), and (b) a complete and correct list of the assets
or asset classes of SPC together with the book value of each such asset or asset
class as of December 31, 1995, which list is set forth on SCHEDULE 3.7 attached
hereto (the "Asset List"). Except as expressly noted thereon, the Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and in accordance with past accounting
practices of SPC throughout the periods indicated and fairly present the
financial position, results of operations, and changes in financial position of
SPC as of the indicated dates and for the indicated periods. The Asset List has
been prepared in accordance with and is otherwise consistent with the books and
records of SPC, presents fairly and accurately the book value of each of the
assets and assets classes, and has been prepared in accordance with generally
accepted accounting principles as used in the preparation of Financial
Statements. Since December 31, 1995, there has been no material adverse change
in the financial position, assets, results of operations, businesses, or
prospects of the System. To the actual knowledge of SPC and the Sellers without
inquiry, 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
System.

3.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except as set forth on SCHEDULE
3.8 attached hereto, since December 31, 1995 SPC has conducted its business and
operations in the ordinary course and consistent with its past practices and has
not (a) increased the compensation of any of its directors, or officers,
(b) made any capital expenditures exceeding $10,000 individually or $15,000 in
the aggregate, (c) except for inventory sold and used or consumed in the
ordinary course of business, sold any asset (or any group of related assets) 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 lien or encumbrance or paid any 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

<PAGE>

or advances to any party whatsoever, (f) suffered or permitted any lien,
security interest (except purchase money security interests), claim, charge, or
other encumbrance to arise or be granted or created against or upon any of its
assets other than purchase money liens incurred in the ordinary course of
business, (g) canceled, waived, or released any debts, rights, or claims against
third parties, (h) made any change in the method of accounting of SPC, (i) made
any investment or commitment therefor in any person, business, corporation,
limited liability company, association, partnership, joint venture, trust, or
other entity, (j) 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")) so as to
create any liability under Article IV of ERISA (as hereinafter defined) to any
entity, (k) amended, renewed, or experienced a termination of any contract,
agreement, lease, franchise, or license to which SPC is a party, except in the
ordinary course of business, (l) entered into any other material transactions
except in the ordinary course of business, (m) entered into any contract,
commitment, agreement, or understanding to do any acts described in the
foregoing clauses (a)-(l) of this Section 3.8, (n) suffered any material damage,
destruction, or loss (whether or not covered by insurance) to any of the its
assets, (o) experienced any strike, slowdown, or demand for recognition by a
labor organization by or with respect to any of its employees, or
(p) experienced or effected any shutdown, slow-down, or cessation of its
operations.

3.9 PROPERTIES.

(a) REAL PROPERTY. SPC does not own any real property.

(b) PERSONAL PROPERTY. Except for (i) supplies disposed of or consumed in
the ordinary course of business, consistent with past practice and (ii) personal
property listed in SCHEDULE 3.9, SPC owns all of its equipment, and other
personal property (both tangible and intangible) reflected on the latest balance
sheet included in the Financial Statements, and any notes and schedules thereto,
free and clear of any Liens, except for statutory liens for current Taxes not
yet due and payable and except for purchase money security interests and other
liens set forth on SCHEDULE 3.8 attached hereto.

(c) LEASEHOLDS. SCHEDULE 3.9 hereto lists all leases of real property,
all leases of vehicles and rolling stock and all other leases of personal
property with annual lease payments over $5,000, to which SPC is a party or to
which any of the assets of SPC is subject. SPC owns the leasehold estates
created by such leases free and clear of any Liens, except for (i) statutory

<PAGE>

liens for current taxes not yet due and payable, (ii) in the case of leases of
real property, agreements with, or conditions imposed on the issuance of land
use permits, zoning, business licenses, use permits or other entitlements of
various types issued by city, county, state, and federal governmental bodies or
agencies, necessary or beneficial to the continued use and occupancy of SPC's
assets or the continuation of SPC's operations, liens created by landlords or
their predecessors in title, and rights of landlords on lease terminations,
(iii) mechanics', carriers', workers', repairers', and other similar liens
imposed by law arising or incurred in the ordinary course of business for
obligations not yet due, and (iv) in the case of leases of vehicles, rolling
stock, and other personal property, encumbrances, which do not, individually or
in the aggregate, materially impair the operation of the business at the
facility at which such leased equipment or other personal property is located
and (v) liens of lenders to Lessors of real or personal property of the
companies, the exact number, nature and extent of which, if any, are unknown to
Sellers and the Companies.

3.10 LICENSES AND PERMITS. Set forth on SCHEDULE 3.10 is a list of all
federal, state, county, and local governmental licenses, authorizations,
certificates, permits, and orders (collectively the "Licenses") held or applied
for by SPC. SPC has complied and, to the knowledge of SPC and Sellers, are in
compliance with the terms and conditions of all Licenses, and to the best
knowledge of SPC and the Sellers, no violation of any such Licenses or the laws
or rules governing the issuance or continued validity thereof, has occurred.
Other than the consents required to be obtained in connection with this
Agreement (which consents are set forth on SCHEDULE 3.6 hereto), no notice has
been received by SPC stating that an 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 System SPC or the ownership by SPC or the transfer of the Shares by the
Sellers to ProNet. 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 SCHEDULE 3.10 is necessary for the conduct of SPC's
business.

3.11 INTELLECTUAL RIGHTS. Attached hereto as SCHEDULE 3.11 is a list and
description of all patents, trademarks, servicemarks, tradenames, and copyrights
and applications therefor owned by or registered in the name of SPC or in which
SPC has any right, license, or interest. To the knowledge of SPC and the
Sellers, without inquiry, SPC has good and marketable title to or the right to
use such patents, trademarks, service marks, tradenames, and copyrights and all
inventions, processes, designs, formulae, trade secrets, and know-how necessary
for the

<PAGE>

conduct of its business, without the payment of any royalty or similar payment.
SPC 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 or applications therefor. Except as set forth on
SCHEDULE 3.11 to the best knowledge without inquiry of SPC and the Sellers, SPC
is not infringing any patent, trademark, servicemark, tradename, or copyright of
others, and neither SPC nor the Sellers are aware of any infringement by others
of any such rights owned by SPC.

3.12 COMPLIANCE WITH LAWS. To the best knowledge of SPC and the Sellers,
SPC has 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 SPC's 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 System is located, and has filed with the proper
authorities all statements and reports required by the laws, regulations, and
orders to which SPC or its properties or operations are subject. SPC and Sellers
represent and warrant that, to their knowledge, they have 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 and the FAA with respect to marking, lighting, notification, and approval of
each and every tower used in SPC's business. To the knowledge of SPC and the
Sellers, none of the owners of any of the towers on which SPC leases tower space
has failed to comply in any material respect with any of the aforesaid rules,
regulations, policies, precedents, and orders of the FCC or the FAA applicable
to such owner in its capacity as a tower owner. To the best knowledge of SPC
and the Sellers, without inquiry, no claim has been made by any governmental
authority (and, to the best knowledge of SPC and the Sellers, without inquiry,
no such claim is anticipated) to the effect that the business conducted by SPC
fails to comply, in any material respect, with any law, rule, regulation, or
ordinance. Without limiting the foregoing, to the knowledge of SPC and the
Sellers, SPC has complied in all material respects with all judicial and
governmental requirements 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>

3.13 INSURANCE. Attached hereto as SCHEDULE 3.13 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 SPC 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 knowledge of SPC and the Sellers, without inquiry, no event relating to SPC
has occurred which is likely to result in any prospective upward adjustment in
such premiums. The insurance currently held by SPC is in such amounts and is of
such types and scope as SPC management believes in good faith to be reasonably
adequate for protection of their respective interests and properties. Excluding
insurance policies which have expired and been replaced, no insurance policy of
SPC has been canceled within the last three years, and no threat has been made
to cancel any insurance policy of SPC within such period.

3.14 ERISA PLANS. SPC has no employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").

3.15 CONTRACTS AND AGREEMENTS. The contracts and agreements listed and
described in SCHEDULE 3.15 constitute all of the written (and to the best
knowledge of SPC and the Sellers, oral) contracts, commitments, leases, and
other agreements (including, without limitation, promissory notes, loan
agreements, and other evidences of indebtedness) to which SPC is a party or by
which SPC or its properties are bound with respect to which the obligations of
or the benefits to be received by SPC could reasonably be expected to have a
value in excess of $10,000 in any consecutive 12 month period (each a "Material
Agreement"). SPC and the Sellers have afforded to ProNet and ProNet's officers,
attorneys, and other representatives the opportunity to review complete and
correct copies of all of the Material Agreements in effect as of the date
hereof. SPC is not and, to the best knowledge of SPC and the Sellers, without
inquiry, 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 (excluding trade accounts receivable),
and since December 31, 1995, and SPC has not waived any right under any Material
Agreements. Since December 31, 1995, neither SPC nor any Seller has received
any notice of default or termination under any Material Agreements and SPC has
not assigned or otherwise transferred any rights under any Material Agreements.

3.16 CLAIMS AND PROCEEDINGS. Attached hereto as SCHEDULE 3.16 is a list
and description of all claims, actions, suits, and proceedings (and to the
actual knowledge of SPC and the Sellers, investigations) pending or, threatened
against or affecting SPC

<PAGE>

or any of its properties or 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 claims, actions, suits, proceedings, or investigations will result in any
liability or loss to SPC which (individually or in the aggregate) is material to
SPC, and SPC has not been, and is not now, subject to any order, judgment,
decree, stipulation, or consent of any court, governmental body, or agency
rendered in such proceeding except licenses, construction permits or permits
granted in the ordinary course of business. Except for any analysis by the
Federal Trade Commission and the Department of Justice pursuant to Hart-Scott
filings, no inquiry, action, or proceeding has been asserted, instituted, or, to
the best knowledge of SPC and the Sellers, without inquiry, 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 SPC and the
Sellers, there is no basis for any such claim or action or any other claims or
actions which would, or could reasonably be expected to (individually or in the
aggregate), have a material adverse effect on the business, operations, or
financial condition or prospects of SPC or the System or result in a material
liability of SPC.

3.17 TAXES. All 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 (individually, a "Tax" and collectively,
"Taxes") returns, reports, statements, invoices, and declarations of estimated
tax (collectively, "Returns") which were required to be filed by SPC on or
before the date hereof have been filed within the time and in the manner
provided by law, and, to the knowledge of SPC and the Sellers, all such Returns
are true, correct, and complete and accurately reflect the liabilities for Tax
of SPC. All Taxes, penalties, interest, and other additions to Taxes which have
become due pursuant to such Returns have been either paid or adequately accrued
in the Financial Statements of SPC. All annual or other FCC regulatory fees
arising from the operations of SPC have been paid. SPC 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. Except as set forth on SCHEDULE
3.17 there are no pending (or, to the knowledge of SPC or Sellers, threatened)
claims, assessments, notices, proposals to assess, deficiencies, or audits
(collectively, "SPC Tax Actions") with respect to any

<PAGE>

Taxes, penalties, interest, or additions to Taxes owed or allegedly owed by SPC.
To the best knowledge of SPC and the Sellers, there is no basis for any SPC Tax
Actions. There are no liens for delinquent Taxes, penalties, interest, or
additions to Taxes on any of the assets of SPC. Proper and accurate amounts of
any and all payroll and employment Taxes that are required to be withheld have
been withheld and remitted by SPC from and in respect of its directors,
officers, shareholders, and employees for all periods in full and complete
compliance with the tax withholding provisions of all applicable laws and
regulations.

3.18 PERSONNEL. SPC has no employees or payroll.

3.19 BUSINESS RELATIONS. Except as set forth in SCHEDULE 3.19, neither SPC
nor any Seller has actual knowledge that any Materially Significant Customer or
Supplier (as defined herein) of the SPC will cease or otherwise refuse to do
business after the Closing in the same manner as such business was previously
conducted with SPC. For purposes of this Section 3.19, "Materially Significant
Customer" shall mean a customer which has at least $2,000 per month in billings
with SPC. SPC has not received notice of any disruption (including delayed
deliveries or allocations by suppliers) in the availability of the materials or
products used by SPC nor do SPC or the Sellers have actual knowledge of any
facts which could lead any of them to believe that the operations of SPC will be
subject to any such material disruption.

3.20 BROKERS. Except for Daniels and Associates, the payment of commission
to which is the responsibility of ProNet, neither SPC nor any Seller has
knowledge of any liability to any finder, broker, or sales agent in connection
with the execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.

3.21 WARRANTIES. Attached hereto as SCHEDULE 3.21 is a list and brief
description of all express written (and to the best knowledge of SPC and
Sellers, oral) warranties and guarantees made by SPC to third parties with
respect to any products sold or leased or services rendered by SPC. Except as
set forth on SCHEDULE 3.21, to the knowledge of SPC and Sellers, no claims for
breach of product or service warranties to customers have been made against SPC
since November 30, 1995. To the best knowledge of SPC and the Sellers, without
inquiry, no state of facts exists, or event has occurred, which may form the
basis of any claim against SPC for liability on account of any express or
implied warranty to any third party.

3.22 ACCOUNTS RECEIVABLE. SPC has no accounts receivable, notes receivable
or loans receivable.

<PAGE>

3.23 CUSTOMERS AND SUPPLIERS. SPC has no customers other than Pac-West
Telecomm, Inc. SCHEDULE 3.23 contains a true, correct and complete list of
SPC's ten largest suppliers (measured in dollar volume of purchases) during the
month ended December 31, 1995, and the name and address thereof, dollar volume
involved, and nature of the relationship (including the principal categories of
products bought, sold, and leased).

3.24 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. Except as set
forth in SCHEDULE 3.24 and except for interests constituting five percent or
less of a publicly traded company, neither SPC, the Sellers, nor any officer or
director of SPC or affiliate of any of the foregoing, has any ownership interest
in any competitor, supplier, or customer of the SPC or any property used in the
operation of the System.

3.25 INVENTORY. SPC has no inventory.

3.26 COMMISSION SALES CONTRACTS. Except as disclosed in SCHEDULE 3.26, SPC
neither employs nor has any relationship with any individual, corporation,
partnership, or other entity whose compensation from SPC arising from the
operation of the System is in whole or in part determined on a commission basis.

3.27 REGULATORY CERTIFICATES. Neither SPC nor any Seller is aware of any
information concerning SPC or its operations that could cause the FCC or any
other regulatory authority not to issue to ProNet all regulatory certificates
and approvals necessary for the consummation of the transactions contemplated
hereunder and for the operation of the System subsequent thereto.

3.28 INFORMATION FURNISHED. On request SPC and the Sellers have made
available to ProNet and its officers, attorneys, accountants, lenders, and
representatives true and correct copies of all written agreements, documents,
and other items listed on the schedules to this Agreement and all books and
records of SPC, and, to the knowledge of the Sellers and SPC neither this
Agreement, the schedules hereto, nor any information, agreements, or documents
delivered to or made available to ProNet 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.

Notwithstanding anything to the contrary contained elsewhere in this Agreement,
the failure of a Condition Precedent to either party's obligations which failure
is due to the action or inaction of a third party or the failure to list any
matter or item on any Schedule or in any certificate attached hereto or
delivered herewith, shall not give rise to a claim of breach by, be the basis
for excusing the performance of, or give rise to the

<PAGE>

right to recover Indemnified Costs by, the other party if such matter or item is
disclosed on another Schedule hereto or on a Schedule attached to the Merger
Agreement of even date herewith between ProNet and Pac-West Telecomm, Inc. or
certificate furnished by such party to the other party.

ARTICLE 4
COVENANTS

4.1 INSPECTION. From the date hereof to the Closing, and subject to all
specific limitations contained elsewhere in this Agreement SPC and the Sellers
shall provide ProNet and its officers, attorneys, accountants, representatives,
and lenders free, full, and complete access during business hours to all books,
records, tax returns, files, correspondence, personnel, facilities, and
properties of SPC; provide ProNet and its officers, attorneys, accountants,
representatives, and lenders all information and material pertaining to the
System as ProNet may deem necessary or appropriate; and use their best efforts
to afford ProNet and its officers, attorneys, accountants, and representatives
the opportunity to meet with the customers and suppliers of SPC to discuss the
business, condition (financial or otherwise), operations, and prospects of SPC,
provided however, that such access shall only be with the prior approval of SPC
and in the presence of one or more of the Sellers. Any investigation by ProNet
or its officers, attorneys, accountants, representatives, or lenders shall not
in any manner affect the representations and warranties of SPC and the Sellers
contained herein.

4.2 COMPLIANCE. From the date hereof to the Closing, neither SPC nor the
Sellers shall take or fail to take any action with the intent to cause the
representations and warranties made by SPC or the Sellers herein to be untrue or
incorrect as of the Closing.

4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing SPC and the Sellers shall use their best efforts to cause all conditions
precedent to the obligations of ProNet hereunder to be satisfied by the Closing.

4.4 NO SOLICITATION. From the date hereof until 5:00 p.m., Stockton time,
on September 30, 1996 SPC and the Sellers shall not, and shall use their best
efforts to cause the officers, directors, employees, and agents of SPC 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 or securities of
SPC, or any merger, consolidation, or business combination with SPC or (b)
participate in any negotiations regarding, or, except as required

<PAGE>

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 5:00 p.m., Stockton time,
on September 30, 1996, SPC and the Sellers agree that neither SPC nor any Seller
will enter into any agreement or consummate any transaction that would interfere
with the consummation of the transactions contemplated by this Agreement. SPC
and the Sellers shall promptly notify ProNet 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 ProNet may reasonably request.

4.5 NOTICE OF DEVELOPMENTS. From the date hereof to the Closing, SPC and
the Sellers shall, immediately upon SPC or any Seller becoming aware thereof,
notify ProNet of any material problems or developments with respect to the
business, operations, assets, or prospects of SPC.

4.6 NOTICE OF BREACH. From the date hereof to the Closing, SPC and each
Seller shall, immediately upon SPC or any Seller becoming aware thereof, give
detailed written notice to ProNet of the occurrence of, or the impending or
threatened occurrence of, any event that would cause or constitute a breach,
which breach or impending breach would constitute or give rise to a material
adverse change in the business or prospects of SPC, or would have caused or
constituted a breach had such event occurred or been known to SPC or the Sellers
prior to the date of this Agreement, of any of their respective 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, SPC and
the Sellers shall, immediately upon SPC or any Seller becoming aware thereof,
notify ProNet of (a) any suit, action, or proceeding (including, without
limitation, any Tax Action or any proceeding involving a labor dispute or
grievance or union recognition) to which SPC becomes a party or which is
threatened against SPC, (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.

<PAGE>

4.8 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to the
Closing, SPC shall keep (and the Sellers shall cause SPC to keep) in full force
and effect insurance coverage for SPC and its assets and operations comparable
in amount and scope to the coverage now maintained covering SPC and its assets
and operations.

4.9 MAINTENANCE OF CREDIT TERMS. From the date hereof to the Closing, SPC
shall use commercially reasonable efforts to continue (and the Sellers shall
cause SPC to continue) to effect sales and leases of its products only on the
terms that have historically been offered by SPC or on such other terms which
are no less favorable to SPC.

4.10 UPDATING INFORMATION. As of the Closing, SPC and the Sellers shall
update all information set forth in the schedules to this Agreement.

4.11 INTERIM OPERATIONS OF SPC.

(a) From the date hereof to the Closing, SPC shall conduct (and the
Sellers shall cause SPC to conduct) its business only in the ordinary course
consistent with past practice, and SPC shall not, unless ProNet gives its prior
written approval, (i) issue or sell, or authorize for issuance or sale,
additional shares of any class of capital stock, or issue, grant, or enter into
any subscription, option, warrant, right, convertible security, or other
agreement or commitment of any character obligating SPC to issue securities,
(ii) declare, set aside, make, or pay any dividend or other distribution with
respect to its capital stock, (iii) redeem, purchase, or otherwise acquire,
directly or indirectly, any of its capital stock, (iv) except in the ordinary
course of business, sell, pledge, dispose of, or encumber, or agree to sell,
pledge, dispose of, or encumber, any of its assets, or authorize any capital
expenditure in excess of $10,000, (v) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership, or other business
organization or division thereof, or enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing, (vi) incur any
indebtedness for borrowed money, issue any debt securities, or enter into or
modify any contract, agreement, commitment, or arrangement with respect thereto,
(vii) enter into, amend, or terminate any employment or consulting agreement
with any director, officer, consultant, or key employee, enter into, amend, or
terminate any employment or consulting agreement with any other person otherwise
than in the ordinary course of business, take any action intended to increase or
decrease the number of persons employed by SPC, 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 SPC in effect on the date hereof, (viii) enter
into, extend, or renew any lease for office space, or (ix) except as required by

<PAGE>

law, adopt, amend, or terminate any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment, or other
employee benefit plan, agreement, trust, fund, or arrangement for the benefit or
welfare of any officer, employee, or sales representative of SPC, so as to
create any liability under Article IV of ERISA to any entity, (x) grant any
increase in compensation to any director, officer, consultant, or key employee,
or (xi) grant any increase in compensation to any other employee or consultant
except in the ordinary course of business consistent with past practice, or
(xii) cancel, waive or release any debts, rights or claims against third
parties.

(b) From the date hereof to the Closing, SPC shall use (and the Sellers
shall cause SPC to use) commercially reasonable efforts to preserve intact the
business organization of SPC to keep available in all material respects the
services of its present officers, to preserve the goodwill of those having
business relationships with SPC, 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 March 1996, SPC shall furnish to ProNet a balance sheet,
statement of income and retained earnings of SPC for such month prepared by SPC
as an internal management control in accordance with the generally accepted
accounting principles applied in the preparation of the Financial Statements
except as noted to the contrary thereon (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.

4.13 LICENSES. From the date hereof until the Closing, SPC and the Sellers
shall cooperate and assist fully in connection with ProNet's efforts to obtain,
prior to the Closing Date, all consents and authorizations that may be required
in connection with the transfer of each of the Licenses listed on SCHEDULE 3.10.

4.14 RESIGNATIONS OF DIRECTORS AND OFFICERS. SPC and the Sellers shall
cause all directors and officers of SPC to deliver their written resignations to
ProNet which resignations shall be effective as of the Closing and shall be in
form and substance satisfactory to ProNet. Each such resignation shall state
that ProNet is not in any way indebted or obligated to the resigning party for
termination pay, loans (except to the extent included in long term debt on the
Financial Statements), or advances. At the Closing, the Sellers shall cause
nominees of ProNet to be

<PAGE>

elected as the directors of SPC.

4.15 COMPLIANCE. From the date hereof to the Closing, ProNet shall not
take or fail to take any action with the intent to cause the representations and
warranties made by ProNet herein to be untrue or incorrect as of the Closing.

4.16 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof until
the Closing, ProNet shall use its best efforts to cause all conditions precedent
to the obligations of the Sellers hereunder to be satisfied by the Closing.

4.17 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to the
Closing, ProNet shall keep in full force and effect insurance coverage for
ProNet and its assets and operations.

4.18 LICENSES. From the date hereof until the Closing, ProNet shall
cooperate and assist fully in connection with the Sellers' efforts to obtain,
prior to the Closing Date, all consents and authorizations that may be required
in connection with the transfer of each of the Licenses listed on SCHEDULE 3.10.

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

4.20 UPDATING INFORMATION. As of the Closing, ProNet shall update all
information set forth in the Schedules to this Agreement; provided however, that
ProNet shall not be required to disclose information which has not been
disclosed to the public at large. Such nondisclosure will not represent a
breach of a representation, warranty or covenant by ProNet.

4.21 FINAL TAX RETURNS. ProNet shall cause the preparation of final tax
returns for SPC operations through December 31, 1996, or such earlier date as
ProNet terminates the existence of SPC. ProNet shall pay all taxes due as
reported on such returns and shall not be entitled to reimbursement thereof
except to the extent that accruals for taxes through the Closing Date were
inadequate to cover taxes on operations through the Closing Date. To the extent
any such tax on operations through the Closing Date exceeds amounts so accrued,
the Sellers shall

<PAGE>

cause ProNet to be reimbursed therefore on demand. Failure to reimburse
following a valid demand shall give rise to an Indemnified Cost under Article 9
and shall not be subject to the limitations set forth in Section 9.7(a). The
tax returns shall be prepared by ProNet without cost to the Sellers. ProNet
shall direct the handling of any audits or proceedings to determine liability
thereunder and shall have the authority to agree to a compromise or final
resolution thereof. Sellers shall be consulted and have reasonable right of
review of such returns and proceedings but subject to the final authority of
ProNet as noted above.

ARTICLE 5
REGULATORY APPROVALS

With the full cooperation and assistance of SPC and the Sellers as
contemplated in Section 4.13 hereof, ProNet shall file with the FCC, the FAA,
and with all state regulatory agencies, commissions, or other entities having
jurisdiction over the System, applications for consent to transfer to ProNet of
the Shares or the licenses and any other state or federal authorizations,
currently held by and required in connection with the System. SPC and Sellers
and ProNet shall each prepare and file with the Federal Trade Commission ("FTC")
and the Department of Justice ("DOJ") pursuant to the Hart-Scott-Rodino Anti-
Trust Improvements Act ("Hart-Scott") the Notification and Report Form for
Certain Mergers and Acquisitions, in such manner as is required by Hart-Scott,
seeking determination that neither such agency will take action to prevent
consummation of the transactions contemplated by this Agreement. ProNet shall
use all commercially reasonable efforts to prosecute such applications and
filings so as to permit the Closing to occur. Approval of the aforementioned
applications to the FCC, FAA, FTC and the DOJ and by any applicable state
agencies, commissions, or other entities shall be by Final Order (and such
approvals shall hereinafter collectively be referred to as the "Final Order").
As used in this Agreement, any such approval shall be a Final Order if (a) the
action of the subject governmental agency approving the application has not been
reversed, stayed, enjoined, set aside, annulled, or suspended, (b) with respect
to such approval, no timely request for stay, motion, or petition for
reconsideration or rehearing, application, or request for review, or notice of
appeal or other judicial petition for review is pending, and (c) the time for
filing any such request, motion, petition, application, appeal, or notice, and
for the entry of orders staying, reconsidering, or reviewing the subject
governmental agency's own motion, shall have expired. Any action by a
governmental authority approving an application subject to materially adverse
conditions (other than conditions concerning notification of the consummation of
this Agreement and other conditions that the FCC routinely attaches to grants of
this

<PAGE>

type) shall not be deemed a Final Order until such time as ProNet notifies SPC
in writing of its willingness to accept such materially adverse conditions. In
addition, if prior to the date on which any such action would become a Final
Order, either party does not elect to accept any such materially adverse
conditions, that party shall have the right to terminate this Agreement upon
written notice and shall be relieved of all obligations hereunder as provided in
Article 7 hereof. ProNet shall pay all fees and costs of the filings referenced
herein except the Hart-Scott filing fees which shall be shared one half by
ProNet and one half by SPC and the Sellers.

ARTICLE 6
CONDITIONS TO CLOSING

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

(a) The representations and warranties of SPC and the Sellers 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; SPC and the Sellers shall have performed
and complied in all material respects with all agreements required by this
Agreement to be performed or complied with by SPC and the Sellers at or prior to
the Closing; and ProNet shall have received a certificate, dated as of the
Closing Date, signed by the President of SPC and by each Seller to the foregoing
effects.

(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) Each of the Sellers shall have delivered to ProNet stock certificates
evidencing the Shares owned by such Seller duly endorsed or accompanied by duly
executed stock powers assigning such Shares to ProNet and otherwise in good form
for transfer.

(d) ProNet shall have received an opinion of Neumiller & Beardslee, a
professional corporation, counsel for SPC and the Sellers, dated as of the
Closing Date, in the form attached hereto as EXHIBIT A.

(e) ProNet shall have received an opinion of Pepper and Corazzini LLP, FCC
counsel for SPC, dated as of the Closing Date, in the form attached hereto as
EXHIBIT B.

(f) Prior to the Closing, there shall not have occurred any

<PAGE>

material casualty or damage (whether or not insured) to any facility, property,
asset, or equipment used in connection with the operation of SPC's business;
there shall have been no material adverse change in the financial condition,
business, properties, operations, or prospects of SPC since December 31, 1995;
and SPC shall have conducted its operations only in the ordinary course
consistent with past practices.

(g) The FCC and all applicable federal and state regulatory agencies,
commissions, or other entities by Final Order, shall have granted any required
consent to the sale, transfer, and assignment of the Shares or control of the
licenses to ProNet and to ProNet's ownership of the Shares and operation of the
System.

(h) All consents and approvals (i) listed on SCHEDULE 3.6 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
ProNet; provided however, that any failure to obtain such consents shall not
constitute a breach of this Agreement provided SPC and the Sellers have used
their commercially reasonable efforts to obtain such consents.

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

(j) SPC and the Sellers shall have delivered such good standing
certificates, officer's certificates, and similar documents and certificates as
counsel for ProNet shall have reasonably requested in writing at least ten (10)
business days prior to the Closing Date.

(k) ProNet shall have received the resignations contemplated by Section
4.14 hereof.

(l) The Federal applicable waiting periods provided for under Hart-Scott
have elapsed without notification from FTC or DOJ that either agency would take
action to enjoin consummation of the transactions contemplated by this
Agreement.

(m) The concurrent closing of the transactions and the merger contemplated
in that certain Merger Agreement of even date herewith among Pac-West Telecomm,
Inc, and its Shareholders on the one hand and ProNet on the other hand.

(n) Each of the Sellers shall have entered into a Noncompetition Agreement
(a "Noncompetition Agreement") with

<PAGE>

ProNet substantially in the form of EXHIBITS D-1 and D-2.

Except as provided in the last sentence of Article 3 hereof, the decision
of ProNet to consummate the transactions contemplated hereby, knowing that one
or more of the preceding conditions have not been satisfied, shall not
constitute a waiver of any of SPC's or any of Seller's respective
representations, warranties, covenants or indemnities herein.

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

(a) The representations and warranties of 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; all agreements to be performed hereunder by ProNet
at or prior to the Closing shall have been performed in all material respects;
and the Sellers shall have received a certificate, dated as of the Closing Date,
signed by the CEO of ProNet to the foregoing effects.

(b) ProNet shall have delivered to each Seller a wire transfer in the
amount of his portion of the Purchase Price to be paid to such Seller on the
Closing Date.

(c) All guaranties by the Sellers of SPC related debt shall be released
and all such debt shall be paid by ProNet in addition to the purchase price
simultaneously with the Closing.

(d) All conditions precedent in favor of ProNet as set forth in 6.1 (b),
(g), (h), (l), (m) and (n) shall have been satisfied or otherwise resolved to
the satisfaction of SPC, and the Sellers, such conditions precedent being hereby
deemed mutual conditions precedent.

(e) All necessary action (corporate or otherwise) shall have been taken by
ProNet to authorize, approve, and adopt this Agreement and the consummation and
performance of the transactions contemplated hereby, and SPC and the Sellers
shall have received a certificate dated as of the Closing Date, signed by the
CEO of ProNet to the forgoing effect.

(f) At or before the Closing, the Sellers shall have acquired the
respective assets identified on EXHIBIT C attached hereto and incorporated
herein by this reference from SPC for cash payments equal to the purchase price
of such assets also as set forth on EXHIBIT C.

(g) All payments owing to Sellers under the Noncompetition

<PAGE>

Agreements referred to in 6.1(n) shall have been made simultaneously with the
Closing.

(h) All satellite uplink transfer licenses held by SPC shall have been
transferred, with the approval of regulatory authorities and without charge, by
SPC to the corporation referred to as "Telco" in that certain Merger Agreement
of even date herewith between ProNet and Pac-West Telecomm, Inc.

Except as provided in the last sentence of Article 3 hereof, the decision
of SPC or the Sellers to consummate the transactions contemplated hereby without
the satisfaction of any of the preceding conditions shall not constitute a
waiver of any of ProNet's representations, warranties, covenants or indemnities
herein.

ARTICLE 7
TERMINATION

This Agreement may be terminated prior to the Closing by (a) the mutual
consent of ProNet and the Sellers, (b) the Sellers upon the failure of Pro Net
to perform or comply in all material respects with each of its covenants and
agreements contained herein prior to the Closing or if each representation or
warranty of ProNet hereunder shall not have been materially true and correct as
of the time at which such representation or warranty was made, the effect of
which would have a material adverse effect on the business of ProNet, (c) ProNet
upon the failure of SPC or any Seller to perform or comply in all material
respects with each of its, or his covenants and agreements contained herein
prior to the Closing or if each representation or warranty of SPC or the Sellers
hereunder shall not have been materially true and correct as of the time at
which such representation or warranty was made, the effect of which would have a
material adverse effect on the business of SPC, (d) either party in accordance
with the provisions of Article 6 hereof, and (e) the Sellers or ProNet if the
Closing does not occur by December 31, 1996; provided, that no party may
terminate this Agreement pursuant to (b), (c), or (e) above if such party is, at
the time of any such attempted termination, in material breach hereof.

ARTICLE 8
INDEMNIFICATION

8.1 INDEMNIFICATION OF PRONET. SPC and the Sellers, each jointly and
severally agree to indemnify and hold harmless ProNet and each officer,
director, employee, consultant, stockholder, and affiliate of ProNet
(collectively, the "Purchaser Indemnified Parties") from and against any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties, costs,
and

<PAGE>

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 SPC or either 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 SELLERS. ProNet agrees to indemnify and hold
harmless each of the Sellers (collectively, the "Seller Indemnified Parties" and
together 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
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) (collectively, the "Seller Indemnified Costs") and
together 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 or relating to (a) any
debts, claims, obligations or liabilities incurred after the Closing ("Post-
Closing Liabilities"), other than any Post-Closing Liabilities arising out of or
relating to any breach or default by SPC or any Seller of any of the
representations, warranties, covenants, agreements or other provisions of this
Agreement or any agreement or document executed in connection herewith and (b)
any breach or default by ProNet 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.

8.3 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party 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
Party 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 Party under this Article 8 unless the
failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Parties 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 deem appropriate; provided, however, that:

(a) The Indemnified Party shall be entitled, at his or its own expense, to
participate in the defense of such third-party

<PAGE>

action (provided, however, that the Indemnifying Parties shall pay the
attorneys' fees of the Indemnified Party 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 Indemnifying
Parties shall not have employed counsel reasonably satisfactory to the
Indemnified Party to have charge of such third-party action, (iii) the
Indemnified Party shall have reasonably concluded that there may be defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Parties, or (iv) the Indemnified Party's
counsel shall have advised the Indemnified Party in writing, with a copy to the
Indemnifying Parties, that there is a conflict of interest that could make it
inappropriate under applicable standards of professional conduct to have common
counsel);

(b) The Indemnifying Parties shall obtain the prior written approval of
the Indemnified Party 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 Party or if, in the opinion of the
Indemnified Party, such settlement, compromise, admission, or acknowledgment
could have a material adverse effect on its business or, in the case of an
Indemnified Party who is a natural person, on his or her 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 Indemnified Party of a release
from all liability in respect of such third-party action and, if a settlement is
reached, a recitation that the settlement is without admission of liability; and

(d) The Indemnifying Parties shall not be entitled to control (but shall
be entitled to participate at their own expense in the defense of), and the
Indemnified Party shall be entitled to have sole control over, the defense or
settlement, compromise, admission, or acknowledgment of any third-party action
(i) as to which the Indemnifying Parties fail to assume the defense within a
reasonable length of time or (ii) to the extent the third-party action seeks an
order, injunction, or other equitable relief against the Indemnified Party
which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; PROVIDED,
HOWEVER, that the Indemnified Party 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.

<PAGE>

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 Party seeks
indemnification hereunder which is not subject to Section 8.3 hereof because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Parties in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The failure
of the Indemnified Party 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 Parties with respect to such claim.

8.5 NO CONTRIBUTION. In the event the Closing occurs, the Sellers, and
not SPC, shall be fully liable for Indemnified Costs sustained by the Purchaser
Indemnified Parties; accordingly, the Sellers shall not be entitled to
contribution or any other payments from SPC for any Indemnified Costs that the
Sellers are obligated to pay pursuant to this Agreement or under applicable law.

8.6 LIMITATIONS ON LIABILITY. Notwithstanding any other provision of this
Agreement, (i) ProNet (including, after Closing SPC) shall not be entitled to
indemnification hereunder unless and until their Indemnified Costs exceed
$150,000 (in which case they shall be entitled to indemnification for all of
their Indemnified Costs except for the first ($100,000.00 thereof).

Notwithstanding any other provision of this Agreement, (i) the
indemnification obligations of Sellers under Section 8.1 hereof are several and
shall not individually exceed $975,120 for La Rue, and $936,880 for Bussman, or
collectively exceed $1,912,000, and (ii) the indemnification obligations of
ProNet under Section 8.2 will not collectively exceed $1,912,000.00.

Except for failure of ProNet to pay any portion of the Purchase Price or
any other monetary obligation due under the terms of the Stock Purchase
Agreement, the Noncompetition Agreements or otherwise, the Sellers shall not be
entitled to indemnification hereunder unless and until total Seller Indemnified
Costs exceed $75,000 (in which case they shall be entitled to all of their
Indemnified Costs except for the first $50,000 thereof).

8.7 SOLE REMEDY. Except for claims of actual fraud as defined in
California Civil Code Section 1572, or for claims under federal or state
securities law or for injunctive relief,

<PAGE>

specific performance or damages under any Noncompetition Agreement entered into
and executed in connection herewith, this Article 8 shall be the sole remedy of
the parties for breaches of this Agreement.

8.8 ARBITRATION.

(a) ARBITRATION. The parties acknowledge that this Agreement evidences a
transaction involving interstate commerce. Except as otherwise provided in this
Article 8 and in Article 10, any controversy, dispute or claim of any nature
having an asserted value of $100,000 or less and arising out of, in connection
with or in relation to the interpretation, performance or breach of this
Agreement, including any claim based on contract, tort or statute, shall be
resolved at the request of any party to this Agreement initially by nonbinding
mediation and then, if still unresolved, by final and binding arbitration
conducted (i) by a member of the Judicial Arbitration & Mediation Services, Inc.
San Francisco Panel (ii) at a location in San Francisco, California selected by
the arbitrator, and (iii) administered in accordance with the Federal
Arbitration Act (9 USC Section Section 1 ET. SEQ.) and the then existing Rules
of Practice and Procedure of Judicial Arbitration & Mediation Services, Inc.
Judgment upon any award rendered by the arbitrator may be entered by the
Superior Court of San Joaquin County, California on the application of any party
hereto. The arbitrator shall not be empowered to award any provisional remedies
or punitive damages, or any compensatory or general damages in excess of
$100,000 with the exception of awards made pursuant to Article 10.

(b) INTERIM RELIEF. Any party may seek from a court any interim or
provisional relief that may be necessary to protect or preserve its/his rights
under this Agreement pending the establishment of an arbitration proceeding
under this Article 8 and the arbitrator's determination of the merits of the
controversy; provided, however, that the arbitrator shall be empowered to
dissolve, discharge or otherwise release such interim or provisional relief at
any time before conclusion of proceedings upon a proper showing. The arbitrator
shall be empowered to award monetary damages up to $100,000 to any party for
loss occasioned by such interim or provisional relief upon an ultimate showing
of lack of merit.

<PAGE>

discovery disputes shall be resolved by the arbitrator. The United States
Arbitration Act and the then existing Rules of Practice and Procedure of
Judicial Arbitration & Mediation Services, Inc. to the contrary
notwithstanding, this Section 8.9(c) sets forth the exclusive rights of the
parties to discovery in any arbitration under this Article 8.

(d) TIME PERIOD. The arbitrator shall render a final award within ninety
(90) days after the date of his or her appointment, plus such additional time,
if any, as the arbitrator permits for discovery pursuant to Section 8.9(c).

ARTICLE 9
MISCELLANEOUS

9.1 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 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.

9.2 SUCCESSORS AND ASSIGNS. No rights or obligations of any party hereto
under this Agreement may be assigned. Subject to the preceding sentence, 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.

9.3 EXPENSES. Each of the parties hereto shall pay its or his own
respective costs and expenses incurred in connection with this Agreement;
provided however, that the Sellers may pay their expenses through SPC through
the Closing Date. SPC and ProNet shall each pay one-half of any Hart-Scott
filing fees (exclusive of legal fees for preparation of the filing). All other
administrative, application, and filing costs incurred in connection with
regulatory approvals described in Article 5 hereof, shall be paid exclusively by
ProNet including the cost of audits performed with respect to SPC.

9.4 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

<PAGE>

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.

9.5 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.

9.6 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, overnight delivery service or similar device, or (c) if sent by
mail, on the third day following the 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: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn:Jackie R. Kimzey
Mark A. Solls, Esq.
Fax No: (214) 774-0646

If to La Rue: John K. La Rue
1548 El Camino Avenue
Stockton, CA 95209

If to Bussman: Keith Bussman
P.O. Box 77766
Stockton, CA 95267-1066

With a copy to: Robert C. Morrison, Esq.
Neumiller & Beardslee
P.O. Box 20
Stockton, California 95201
Fax No: (209) 948-4910

<PAGE>

Each party may change its or his address for purposes of this Section 9.6 by
proper notice to the other parties.

9.7 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 which do not expressly
provide for a longer duration shall survive the Closing, for a period of one
eighteen (18) months after the Closing Date, except that the representations and
warranties contained in (a) Sections 2.1, 2.2, 3.1, 3.2, 3.3, and 3.4 shall
continue in full force and effect indefinitely and (b) Section 3.16 shall
continue in full force and effect through the applicable statute of limitations
with respect to the subject matter of each representation and warranty.

9.8 PUBLIC ANNOUNCEMENT. No public announcement shall be made by any
party with respect to the transactions contemplated hereby without the approval
of ProNet unless otherwise required by law.

9.9 FURTHER ASSURANCES. From time to time hereafter, (a) at the request
of ProNet, but without further consideration, SPC and the Sellers shall execute
and deliver such other instruments of conveyance, assignment, transfer, and
delivery and take such other action as ProNet may reasonably request in order
more effectively to consummate the transactions contemplated hereby, and (b) at
the request of SPC or the Sellers, but without further consideration, ProNet
shall execute and deliver such other certificates, statements, and documents,
and take such other action as SPC or the Sellers may reasonably request in order
to more effectively consummate the transactions contemplated hereby.

9.10 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.

9.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to any
conflict of laws doctrine. Jurisdiction and venue of any judicial proceeding
shall be in either the Superior Court of the State of California in and for the
county of San Joaquin or the United States District Court for the Eastern
District of California.

9.12 HEADINGS. The headings, captions, and arrangements used in this
Agreement are, unless specified otherwise, for

<PAGE>

convenience only and shall not be deemed to limit, amplify, or modify the terms
of this Agreement or affect the meaning hereof.

9.13 SECTIONS; EXHIBITS. All references to "Sections", "Subsections",
"Schedules", "Exhibits" herein are, unless specifically indicated otherwise,
references to sections, subsections, schedules, 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.

9.14 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.

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

9.16 DEFINITION OF KNOWLEDGE. Wherever any term contained herein involves
or is limited to the knowledge or best knowledge of SPC or the Sellers, the term
"knowledge" shall in all instances mean the knowledge of John K. La Rue, Keith
Bussman, Dennis Meyer and Jeffrey Webster. Further "knowledge", except where
expressly limited to actual knowledge or knowledge without inquiry, shall be
deemed to mean such knowledge as such individuals could reasonably be expected
to possess in the prudent performance of the duties of their respective offices.

9.17 RECORDS. At the Closing, SPC and the Sellers will turn over and
deliver to ProNet all files of SPC and each of the Sellers relating to the
assets and liabilities of SPC 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 SPC or the Sellers' possession
relating to the design, construction, maintenance, and operation of facilities,
improvements, and equipment included in the assets and/or the System and all
appropriate books records, accounting information, and operating information and
data, current and historical, reasonably related to such assets and/or the
System and liabilities. ProNet shall make all such transferred books and
records available for inspection and copying by Sellers for the purposes of
preparing Sellers' tax returns, any tax audits of Sellers, and other purposes
not inconsistent with this Agreement. Further, ProNet agrees to maintain normal
records with regard to the transferred assets and to make such records available
to

<PAGE>

Sellers for the foregoing purposes. ProNet's obligation to make records
available to Sellers pursuant to this Section 9.17 shall be limited to regular
business hours, after reasonable prior notice, for a period of seven (7) years
after Closing. The Sellers shall pay for any and all reasonable costs
associated with ProNet's obligations under this Section 9.17.

9.18 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and such counterparts
shall constitute and be one and the same instrument.

ARTICLE 10
CONFIDENTIALITY

(a) ProNet has requested the opportunity to review, and has reviewed or
will review a variety of documents, records and other information which SPC
views as confidential and which is generally described on SCHEDULE 10(a) ("SPC
Confidential Information").

The SPC Confidential Information has been and is being provided to ProNet
to enable ProNet to consider the desirability, feasibility and timing of, and in
order to induce the execution of this Agreement in respect of, the transactions
contemplated in this Agreement. Such SPC Confidential Information would not be
provided if ProNet did not agree to the provisions of this Article and it is
being provided in reliance upon execution of this Agreement including the
provisions of this Article.

ProNet agrees that SPC Confidential Information will be disclosed only to
such of ProNet's personnel, and to such of ProNet's outside experts and
advisors, as (i) reasonably need to know such information to advise ProNet in
connection with the transactions with SPC, or to make decisions (or to
participate in the making of such decisions) affecting ProNet in relation SPC,
and (ii) agree, in a manner reasonably satisfactory to ProNet under the
circumstances to be bound by the provisions and restrictions regarding SPC
Confidential Information contained herein. ProNet, will be and remain fully
responsible to SPC for any use of SPC Confidential Information by any person who
receives it on ProNet's behalf, or to whom ProNet or any such person discloses
it, for any reason, in all respects as though ProNet had made such use of such
information.

Furthermore, ProNet agrees that all SPC Confidential Information will be
kept and maintained confidential by ProNet; will not be disclosed to any third
person (except as described in the preceding paragraph); will under no
circumstances (and without in any manner limiting the preceding clause) be
disclosed to, or utilized in connection with, any supplier, customer or

<PAGE>

competitor (present or potential) of SPC's (including any such person now or
hereafter controlled by or affiliated with ProNet); and will not in any way be
used, or be permitted to be used, in a manner detrimental to the business or
prospects of SPC. If and when the proposed business transactions between ProNet
and SPC as provided for in this Agreement should be terminated, the foregoing
restrictions shall nonetheless continue and remain in effect, and ProNet shall
return to SPC, all copies of SPC Confidential Information then held by ProNet,
ProNet's agents and ProNet's advisors, or shall certify to SPC's satisfaction
that all such copies have been destroyed, and neither ProNet nor any of ProNet's
agents or advisors will retain any of the SPC Confidential Information in
ProNet's or their possession or control.

Notwithstanding the foregoing "SPC Confidential Information" shall not
include any information which ProNet can show (a) is now or later becomes
available in the public domain without breach of this Agreement by ProNet;
provided all government filings containing any such SPC Confidential Information
shall designate such information as confidential, be sealed or otherwise
designated by the agency as not available for public viewing in accordance with
applicable guidelines of such government agency, (b) was in the possession of
ProNet prior to disclosure to ProNet by SPC and the Sellers, (c) was received
from a third party without breach of any nondisclosure obligations to SPC and
the Sellers or otherwise in violation of or the Sellers rights or (d) was
developed by ProNet independently of any SPC Confidential Information received
from SPC and the Sellers.

In the event of any breach or threatened breach of the provisions of this
Article, SPC and/or the Sellers shall be entitled to bring a binding arbitration
proceeding for the recovery of damages and or injunctive relief. In addition to
any other proffered evidence, the Arbitrator shall receive and consider all
evidence proffered by SPC or Sellers concerning loss of business profits to SPC
and shall not be precluded from awarding compensatory damages based on such
evidence. Judgment on the award shall be entered by the Superior Court of San
Joaquin County, California, on the application of SPC and or the Sellers and
ProNet waives any right to challenge the sufficiency of the evidence considered
by the Arbitrator or the reasonableness of the award in view of such evidence.

(b) SPC has requested the opportunity to review, and has reviewed or will
review a variety of documents, records and other information which ProNet views
as confidential and which is generally described on SCHEDULE 10(b) ("ProNet
Confidential Information").

<PAGE>

The ProNet Confidential Information has been and is being provided to SPC
to enable SPC to consider the desirability, feasibility and timing of, and in
order to induce the execution of this Agreement in respect of, the transactions
contemplated in this Agreement. Such ProNet Confidential Information would not
be provided if SPC did not agree to the provisions of this Article and it is
being provided in reliance upon execution of this Agreement including the
provisions of this Article.

SPC agrees that ProNet Confidential Information will be disclosed only to
such of SPC's personnel, and to such of SPC's outside experts and advisors, as
(i) reasonably need to know such information to advise SPC in connection with
the transactions with ProNet, or to make decisions (or to participate in the
making of such decisions) affecting SPC in relation ProNet, and (ii) agree, in a
manner reasonably satisfactory to SPC under the circumstances to be bound by the
provisions and restrictions regarding ProNet Confidential Information contained
herein. SPC, will be and remain fully responsible to ProNet for any use of
ProNet Confidential Information by any person who receives it on SPC's behalf,
or to whom SPC or any such person discloses it, for any reason, in all respects
as though SPC had made such use of such information.

34
<PAGE>

Furthermore, SPC agrees that all ProNet Confidential Information will be
kept and maintained confidential by SPC; will not be disclosed to any third
person (except as described in the preceding paragraph); will under no
circumstances (and without in any manner limiting the preceding clause) be
disclosed to, or utilized in connection with, any supplier, customer or
competitor (present or potential) of ProNet's (including any such person now
or hereafter controlled by or affiliated with SPC); and will not in any way
be used, or be permitted to be used, in a manner detrimental to the business
or prospects of ProNet. If and when the proposed business transactions
between ProNet and SPC as provided for in this Agreement should be
terminated, the foregoing restrictions shall nonetheless continue and remain
in effect, and SPC shall return to ProNet, all copies of ProNet Confidential
Information then held by SPC, SPC's agents and SPC's advisors, or shall
certify to ProNet's satisfaction that all such copies have been destroyed,
and neither SPC nor any of SPC's agents or advisors will retain any of the
ProNet Confidential Information in SPC's or their possession or control.

Notwithstanding the foregoing "ProNet Confidential Information" shall not
include any information which SPC can show (a) is now or later becomes available
in the public domain without breach of this Agreement by SPC; provided all
government filings containing any such ProNet Confidential Information shall
designate such information as confidential, be sealed or otherwise designated by
the agency as not available for public viewing in accordance with applicable
guidelines of such government agency, (b) was in the possession of SPC prior to
disclosure to SPC by ProNet and the Sellers, (c) was received from a third party
without breach of any nondisclosure obligations to ProNet and the Sellers or
otherwise in violation of or the Sellers rights or (d) was developed by SPC
independently of any ProNet Confidential Information received from ProNet and
the Sellers.

In the event of any breach or threatened breach of the provisions of this
Article, ProNet and/or the Sellers shall be entitled to bring a binding
arbitration proceeding for the recovery of damages and or injunctive relief. In
addition to any other proffered evidence, the Arbitrator shall receive and
consider all evidence proffered by ProNet or Sellers concerning loss of business
profits to ProNet and shall not be precluded from awarding compensatory damages
based on such evidence. Judgment on the award shall be entered by the Superior
Court of San Joaquin County, California, on the application of ProNet and or the
Sellers and SPC waives any right to challenge the sufficiency of the evidence
considered by the Arbitrator or the reasonableness of the award in view of such
evidence.

<PAGE>

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.

PRONET INC.

By: /s/ Mark A. Solls
----------------------------------------
Title: VICE PRESIDENT
-------------------------------------

/s/ John K. La Rue
- -------------------------------------------
John K. La Rue

/s/ Keith Bussman
- -------------------------------------------
Keith Bussman

STRATEGIC PRODUCTS CORPORATION

By: /s/ Keith Bussman
----------------------------------------
Title: PRESIDENT
-------------------------------------

<PAGE>

MERGER AGREEMENT
AMONG PAC-WEST TELECOMM, INC.,
JOHN K. LA RUE, WILLIAM E. KOCH,
BAY ALARM COMPANY

AND

PRONET INC.

April 25, 1996

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE 1 - SEPARATION OF TELEPHONE BUSINESS . . . . . . . . . . . . . . . . 1

1.1 Organization of Subsidiary. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Transfer of Assets to New Corporation . . . . . . . . . . . . . . . . . 1
1.3 Transfer of Shares of Telco . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 2 - MERGER OF PAC-WEST & PRONET. . . . . . . . . . . . . . . . . . . 2

2.1 Tax Free Reorganization . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Certificate of Incorporation. . . . . . . . . . . . . . . . . . . . . . 3
2.6 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Conversion of Pac-West Common Stock . . . . . . . . . . . . . . . . . . 4
2.10 Exchange of Pac-West Common Stock . . . . . . . . . . . . . . . . . . . 4
2.11 Issuance of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.13 Name Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Adjustments to Merger Consideration . . . . . . . . . . . . . . . . . . 5

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF PRONET . . . . . . . . . . . . 8

3.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 ProNet Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Regulatory Certificates . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Consent To Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF
PAC-WEST AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 10

4.1 Due Organization; Ownership; Subsidiaries . . . . . . . . . . . . . . . 10
4.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Title to Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Conduct of Business; Certain Actions. . . . . . . . . . . . . . . . . . 13
4.9 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10 Pagers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.11 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . . . . . 15

<PAGE>

4.12 Intellectual Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.15 ERISA Plans and Compliance. . . . . . . . . . . . . . . . . . . . . . . 17
4.16 Contracts and Agreements. . . . . . . . . . . . . . . . . . . . . . . . 19
4.17 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 20
4.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.19 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.20 Business Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.22 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.23 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.24 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . 23
4.25 Interest in Competitors, Suppliers, and Customers . . . . . . . . . . . 23
4.26 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.27 Commission Sales Contracts. . . . . . . . . . . . . . . . . . . . . . . 23
4.28 Regulatory Certificates . . . . . . . . . . . . . . . . . . . . . . . . 23
4.29 Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.30 Accredited Investor Status. . . . . . . . . . . . . . . . . . . . . . . 24
4.31 Investment Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.32 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.33 ProNet Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.34 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.35 Assumption of Telephone Related Liabilities . . . . . . . . . . . . . . 24

ARTICLE 5 - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

5.1 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Satisfaction of All Conditions Precedent. . . . . . . . . . . . . . . . 25
5.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6 Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Notice of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.8 Continuation of Insurance Coverage. . . . . . . . . . . . . . . . . . . 27
5.9 Maintenance of Credit Terms . . . . . . . . . . . . . . . . . . . . . . 27
5.10 Updating Information. . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Interim Operations of Pac-West. . . . . . . . . . . . . . . . . . . . . 27
5.12 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.13 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.15 Satisfaction of All Conditions Precedent. . . . . . . . . . . . . . . . 29
5.16 Continuation of Insurance Coverage. . . . . . . . . . . . . . . . . . . 29
5.17 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.18 Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.19 Updating Information. . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.20 Interim Operations of ProNet. . . . . . . . . . . . . . . . . . . . . . 29
5.21 Cooperation Regarding Pledged Stock . . . . . . . . . . . . . . . . . . 29
5.22 WARN ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.23 Final Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 6 - REGULATORY APPROVALS . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 7 - CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . 31

<PAGE>

7.1 Conditions to Obligations of ProNet . . . . . . . . . . . . . . . . . . 31
7.2 Conditions to Obligations of the Shareholders . . . . . . . . . . . . . 34

ARTICLE 8 - TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 9 - INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 36

9.1 Indemnification of ProNet . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Indemnification of the Shareholders . . . . . . . . . . . . . . . . . . 36
9.3 Defense of Third-Party Claims . . . . . . . . . . . . . . . . . . . . . 37
9.4 Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.5 No Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.6 Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.7 Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . 39
9.8 Sole Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.9 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 10 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 40

10.1 Collateral Agreements, Amendments, and Waivers . . . . . . . . . . . . 40
10.2 Restriction on Transfer of Common Stock. . . . . . . . . . . . . . . . 41
10.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 41
10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.5 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.8 Survival of Representations, Warranties, and Covenants . . . . . . . . 43
10.9 Public Announcement. . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.11 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . 44
10.12 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.14 Sections; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.15 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . 44
10.16 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.17 Definition of Knowledge. . . . . . . . . . . . . . . . . . . . . . . . 44
10.18 Waiver of Shareholder Agreement. . . . . . . . . . . . . . . . . . . . 45
10.19 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.20 Rental Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.21 Telco\ProNet Contracts . . . . . . . . . . . . . . . . . . . . . . . . 45
10.22 Pager System Charges . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.23 Telco as Reseller. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.24 Waiver of Dissenters Rights. . . . . . . . . . . . . . . . . . . . . . 46
10.25 Answering Service Combined Billing . . . . . . . . . . . . . . . . . . 46
10.26 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

ARTICLE 11 - CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . 46

iii

<PAGE>

SCHEDULES

1.2 Retained Assets and Retained Liabilities
3.5 Conflicts
3.6 Consents
3.7 Claims and Proceedings
4.1 Due Organization; Ownership; Subsidiaries
4.2 Capital Stock
4.3 Title to Shares
4.5 Conflicts
4.6 Consents
4.7 Asset List
4.8 Conduct of Business; Certain Actions
4.9 Properties
4.10 Pagers
4.11 Licenses and Permits
4.12 Intellectual Rights
4.14 Insurance
4.15(a) Welfare Benefit Plans
4.15(b) Retirement Benefit Plans
4.15(g) Determination Letters, Reports and Other Documents
4.16 Contracts and Agreements
4.17 Claims and Proceedings
4.18 Taxes
4.20 Business Relations
4.22 Warranties
4.23 Accounts Receivable
4.25 Interest in Competitors, Suppliers, and Customers
4.26 Inventory
4.27 Commission Sales Contracts
9.7 Limitation on Liabilities
11(a) Pac-West Confidential Information
11(b) ProNet Confidential Information

CERTIFICATES

4.19 Personnel
4.24 Customers and Suppliers

EXHIBITS

A -- Depository Escrow Agreement
B -- Form of Opinion of Counsel to Pac-West and the Shareholders
C -- Form of Opinion of FCC Counsel to Pac-West
C-1 -- Form Of Opinion of Regulatory Counsel In California and Nevada to Pac-
West
D-1 -- Noncompetition Agreement - John K. La Rue
D-2 -- Noncompetition Agreement - William E. Koch
D-3 -- Noncompetition Agreement - Bay Alarm Companies
E -- Registration Rights Agreement
F -- Assets to be Acquired

<PAGE>

MERGER AGREEMENT

This Merger Agreement (this "Agreement") is made and entered into as of
April 25, 1996, by and among Pac-West Telecomm, Inc., a California
corporation ("Pac-West"), John K. La Rue ("La Rue"), William E. Koch
("Koch"), and Bay Alarm Company, a California corporation ("Bay Alarm", and
together with La Rue and Koch, the "Shareholders"), and ProNet Inc., a
Delaware corporation ("ProNet").

R E C I T A L S

A. La Rue, Koch and Bay Alarm collectively own 1,400 shares (the "Pac-
West Shares") of the no par common stock of Pac-West ("Pac-West Common Stock"),
which Pac-West Shares constitute all of the authorized, issued, and outstanding
capital stock of Pac-West.

B. Pac-West presently conducts radio paging and long distance and local
telephone businesses.

C. ProNet does not presently desire to be in the telephone business
conducted by Pac-West. ProNet desires to expand its radio paging system
business.

D. In order to acquire all of the property and assets of Pac-West that
are used in the conduct of Pac-West's radio paging system (such property,
assets, and businesses, including all rights to affiliated paging networks,
being hereinafter collectively called the "System"), ProNet desires to merge
with Pac-West, upon the terms and subject to the conditions set forth herein.

A G R E E M E N T S

ARTICLE 1
SEPARATION OF TELEPHONE BUSINESS

1.1 ORGANIZATION OF SUBSIDIARY. At or prior to the Closing, Pac-West
shall cause to be organized, under the laws of the State of California, a new
corporation to be known as "JKL Bay Inc." and hereafter referred to as "Telco",
pursuant to the terms and conditions of this Agreement. At or prior to the
Closing, all of the authorized shares of Telco shall be issued and delivered to
Pac-West in fully paid, nonassessable certificates.

1.2 TRANSFER OF ASSETS TO NEW CORPORATION. In exchange for the shares of
Telco, Pac-West shall assign, transfer, convey, and deliver to Telco all of Pac-
West's assets except the paging related

<PAGE>

assets described in SCHEDULE 1.2. The Schedule 1.2 Assets shall be referred to
as the "Retained Assets." Telco shall assume all booked liabilities of Pac-West
except the booked liabilities described in SCHEDULE 1.2 which are to remain with
Pac-West. The Schedule 1.2 Liabilities shall be referred to as the "Retained
Liabilities." The assets to be transferred to Telco shall be referred to herein
as the "Transferred Assets" and the liabilities transferred to and assumed by
Telco shall be referred to as the "Transferred Liabilities."

1.3 TRANSFER OF SHARES OF TELCO. At or prior to the Closing, but after
the transfer by Pac-West of the Transferred Assets to and assumption of the
Transferred Liabilities by Telco, and after the issuance of the Telco shares to
Pac-West, Pac-West shall assign and transfer all of the outstanding shares of
common stock of Telco to Bay Alarm and La Rue in exchange for Pac-West shares
with a value of $5,060,000 as determined by the Valuation Services Group of
Arthur Andersen. It is intended that the transactions contemplated by this
Article 1 shall constitute a corporate division of the telephone business of
Pac-West in compliance with Internal Revenue Code Sections 355 and 368(a)(1)(D),
and the transaction so contemplated is referred to herein as the "Corporate
Division".

ARTICLE 2
MERGER OF PAC-WEST & PRONET

2.1 TAX FREE REORGANIZATION. At the Closing, but after the Corporate
Division, and subject to the representations, warranties, and other terms and
conditions of this Agreement, the parties to this Agreement shall execute such
documents, certificates, and resolutions as necessary to effect a statutory
merger of Pac-West into ProNet in a tax free reorganization in conformity with
Section 368(a)(1)(A) of the Internal Revenue Code (the "Merger").

2.2 THE MERGER. Upon the terms and subject to the conditions hereof, the
Merger shall be consummated at the Effective Time (as defined in Section 2.3) in
accordance with the provisions of the Delaware General Corporation Law (the
"DGCL") and the California Corporations Code (the "CCC"). At the Effective Time
and subject to and upon the terms and conditions of this Agreement and the DGCL
and the CCC, Pac-West shall be merged with and into ProNet, the separate
corporate existence of Pac-West shall cease, and ProNet shall continue as the
surviving corporation. ProNet, as the surviving corporation after the Merger,
is hereinafter sometimes referred to as the "Surviving Corporation."

2.3 EFFECTIVE TIME. If all the conditions to the Merger set forth in
Article 7 hereof shall have been fulfilled or waived and this Agreement shall
not have been terminated in accordance with Article 8 hereof, as promptly
thereafter as practicable, the parties hereto shall cause the Merger to be
consummated by filing (a) a properly executed Certificate of Merger with the
Secretary of State of the State of Delaware and (b) a properly executed
Certificate of Merger and Tax Clearance Certificate with the

<PAGE>

Secretary of State of the State of California, in such form as required by,
and executed in accordance with, the relevant provisions of the DGCL and CCC.
The Merger shall become effective in accordance with law upon (i) the filing
of such Certificate of Merger with the Secretary of State of the State of
Delaware and (ii) the filing of the Certificate of Merger and Tax Clearance
Certificate with the Secretary of State of the State of California
("Effective Time").

2.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in Section 259 of the DGCL and Section 1107 of the CCC.

2.5 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
ProNet shall from and after the Effective Time be the Certificate of
Incorporation of the Surviving Corporation and shall be and remain the
Certificate of Incorporation of the Surviving Corporation until altered, amended
or repealed in accordance with law, such Certificate of Incorporation of the
Surviving Corporation and its Bylaws.

2.6 BYLAWS. The Bylaws of ProNet as in effect at the Effective Time shall
from and after the Effective Time be the Bylaws of the Surviving Corporation and
shall be and remain the Bylaws of the Surviving Corporation until altered,
amended or repealed in accordance with law, the Certificate of Incorporation of
the Surviving Corporation and such Bylaws.

2.7 DIRECTORS AND OFFICERS. The directors of ProNet immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, to serve
in each case until their respective successors shall have been duly elected and
shall qualify. The respective officers of ProNet immediately prior to the
Effective Time shall occupy corresponding positions as the officers of the
Surviving Corporation, in each case to serve until their respective successors
shall have been duly elected and shall qualify.

2.8 FURTHER ASSURANCES. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances or any other things are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in or to the Surviving Corporation the title to
any property or right of Pac-West acquired or to be acquired by reason of or as
a result of the Merger, the last acting officers of Pac-West (in the name of
Pac-West and to the extent of their authority), or the corresponding officers of
the Surviving Corporation shall (without personal liability or expense relating
thereto) execute and deliver all such deeds, assignments and assurances, and do
all such other things, as may be requested by the Surviving Corporation and as
may be necessary and proper to vest, perfect or confirm title to such property
or rights in or to the Surviving Corporation and otherwise to carry out the
purpose of this Agreement, and the proper officers of the Surviving Corporation
are fully authorized in the name of Pac-West or

<PAGE>

otherwise to take any and all such action.

2.9 CONVERSION OF PAC-WEST COMMON STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of Pac-West, ProNet or any
holder of the following securities:

(a) Each share of Pac-West Common Stock issued and outstanding
immediately prior to the Effective Time shall be cancelled and extinguished and
be converted into and become a right to receive in exchange shares of common
stock, par value of $.01 per share, of ProNet ("ProNet Stock") in an amount
calculated in accordance with Sections 2.11 and 2.12 and 2.15 of this Article 2.

(b) Each share of Pac-West Common Stock issued and outstanding
immediately prior to the Effective Time and held in the treasury of Pac-West
shall be cancelled and retired and no exchange or payment shall be made with
respect thereto.

(c) Any outstanding options, warrants or rights to acquire securities
of Pac-West shall be cancelled and extinguished and no shares of stock shall be
issued or other consideration paid with respect thereto.

(d) Any outstanding options, warrants or rights to acquire securities
of ProNet as of the Effective Time shall continue unchanged.

(e) Each share of ProNet Stock issued and outstanding immediately
prior to the Effective Time shall continue unchanged as a share of common stock
of the Surviving Corporation.

(f) From and after the Effective Time, holders of certificates
formerly evidencing Pac-West Common Stock shall cease to have any rights as
shareholders of Pac-West, except as provided herein or by law.

2.10 EXCHANGE OF PAC-WEST COMMON STOCK. Each Shareholder who holds a
certificate or certificates representing Pac-West Common Stock shall, at the
Closing, deliver or cause to be delivered to ProNet, the stock certificate or
certificates evidencing such Pac-West Common Stock for cancellation and ProNet
shall, at the Closing, cause to be delivered to each Shareholder a stock
certificate or certificates representing the number of shares of ProNet Stock
that such Shareholder is entitled to receive pursuant to the provisions of this
Article 2. No fraction of a share of ProNet Stock shall be issuable upon
conversion of the Pac-West Common Stock in the Merger. Any fractional share of
ProNet Stock which would otherwise be issuable in the Merger shall be rounded up
to one whole share of ProNet Stock. From and after the Effective Time, the
Shareholders shall cease to have any rights with respect to the Pac-West Common
Stock they hold except as otherwise provided herein or by law.

2.11 ISSUANCE OF SHARES. The aggregate number of shares of ProNet Common
Stock to be issued to the Shareholders shall equal

<PAGE>

the Merger Consideration divided by the Average Closing Price. The ProNet
Common Stock so issued at the Closing shall be registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
quoted on the National Association of Securities Dealers Automated Quotation
System (or other quotation system or securities exchange). ProNet Common Stock
having a value of $1,000,000 determined on the basis of the Average Closing
Price shall be deposited with the Escrow Agent (hereinafter defined) by ProNet
in accordance with the terms of a Depository Escrow Agreement (herein so called)
by and among the Shareholders, ProNet and the Escrow Agent substantially in the
form of EXHIBIT A. Additionally, ProNet common stock having a value of
$2,000,000, determined on the basis of the Average Closing Price, shall be
deposited with the Escrow Agent in accordance with the Depository Escrow
Agreement (herein so called) by and among the Shareholders, ProNet and the
Escrow Agent substantially in the form of EXHIBIT A. The timing of any
Dispositions (hereinafter defined) of such shares of ProNet Common Stock by the
Shareholders will be subject to certain restrictions as provided in
Section 10.2. As used herein, "Average Closing Price" means the lower of $24.50
per share or the average closing price of the ProNet Common Stock on the
National Market System of the National Association of Securities Dealers
Automated Quotation System (or such other quotation system or securities
exchange on which the Common Stock is then quoted or listed) as reported by the
Wall Street Journal for the 20 consecutive trading days beginning 25 trading
days prior to the Closing Date.

2.12 MERGER CONSIDERATION. The Merger Consideration shall be Thirteen
Million Four Hundred Thirty Eight Thousand Dollars ($13,438,000), subject to
adjustment pursuant to Section 2.15.

2.13 NAME CHANGE. As of the Effective Date, Telco shall file a Certificate
of Amendment to its Articles of Incorporation in the State of California
changing its name to "Pac-West Telecomm, Inc."

2.14 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Neumiller & Beardslee, a
professional corporation, 509 West Weber Avenue, Stockton, California at 9:00
a.m., local time, on the last day of the month in which all Federal, state, and
local regulatory approvals for the transactions contemplated hereby are received
by Final Order (as hereinafter defined) or such other date as the parties shall
agree, (the "Closing Date").

2.15 ADJUSTMENTS TO MERGER CONSIDERATION. The Merger Consideration shall
be subject to adjustment in accordance with the following provisions:

(a) No later than seventy-five (75) days after the Closing Date (i)
the Merger Consideration shall be increased by the amount, if any, by which the
Adjustment Computation (as defined below) is positive; or (ii) the Merger
Consideration shall be reduced by the amount, if any, by which the Adjustment
Computation is negative.

<PAGE>

(b) Adjustment Computation shall be determined in accordance with
generally accepted accounting principles consistently applied from prior
periods, subject to any modifications expressly referred to in this Section
2.15. The Adjustment Computation shall mean a detailed computation, signed and
delivered by Shareholders in a preliminary form no less than ten (10) days prior
to the Closing Date and in final form as approved by ProNet no less than one (1)
business day prior to the Closing Date, setting forth the Shareholders' good
faith estimate as of the Closing Date of the various financial items included in
said computation.

(c) Between the date hereof and the Closing Date, the Shareholders
shall cause the Company to conduct its operations and to follow accounting
principles consistent with prior practices so that items included in the
Adjustment Computation would be treated in the same fashion for the closing
adjustment calculations under this Section 2.15.

(d) The Adjustment Computation shall include the following and only
the following items:

The Merger Consideration shall be increased by the following:

- All accounts receivable in the CalPage billing system ("Accounts
Receivable") excluding the receivables related to answering service revenue
valued in accordance with the formula discussed in (e) below.

- All specially identified prepaid paging expenses and other
specifically identified paging current assets.

- All Paging Revenue for reseller customers, which as of the
Closing Date, has been earned by Pac-West but has not yet been billed, due to
the timing of their normal billing cycle.

- $1,475,000 for 59 transmitter units of which 32 have been
installed in southern California, 6 in Las Vegas, and 21 of which as the date of
this Agreement are in inventory, and may be installed as agreed to by the Buyer
prior to the closing of the merger.

- Cost of any capital expenditures which have not specially been
referred to elsewhere herein, and have been approved in writing by ProNet.

- $60.00 multiplied by the change in the number of leased pagers in
service in SCHEDULE 4.10 and the number of leased pagers in service at Closing.

- Pager inventory in excess of $550,000 of net book value as
consistently computed under Pac-West's pager fixed asset accounting procedures;
provided $200,000 of such inventory shall be new, unused models.

<PAGE>

The Merger Consideration shall be reduced by the following:

- All accounts payable related to paging vendors that will be
assumed and paid by ProNet.

- All accrued liabilities, not included in accounts payable above,
related to paging operations through the Closing Date other than taxes.

- The full amount of all corporate taxes in excess of accruals as
provided in Section 5.23, including the full amount of any Section 311 corporate
income taxes resulting from the application of Section 355 (d) of the Internal
Revenue Code or any similar state income tax provisions.

- Compensation and all related payroll tax liabilities (including
vacation earned, but not yet taken) for all paging employees. Compensation
shall include, but not be limited to all regular earnings, commissions, bonuses,
401(k) matching contribution, auto/travel allowance, and expense reimbursement
owed to employees as of the Closing Date, but not yet paid.

- Deposits related to paging customers at Closing.

- Deferred revenues relating to paging accounts at Closing.

- All debt collateralized by paging assets and paging receivables,
equal to the payoff letter received directly from the debt holders except any
additional interest or fees payable due to early payoff of such debt will be
made by ProNet without reduction of the Merger Consideration.

- If Pager Inventory is less than $500,000 at net book value as
consistently computed under Pac-West's pager fixed asset accounting procedures,
the shortfall below $500,000 shall reduce the Merger Consideration.

(e) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of this Section 2.15, the Accounts Receivable shall be
valued as follows:

(i) 98% of face amount for Accounts Receivable which are less
than 31 days past due from the date of billing;

(ii) 85% of face amount for Accounts Receivable which are 31 days
or more and less than 61 days past due from the date of billing;

(iii) 60% of face amount for Accounts Receivable which are 61
days or more and less than 91 days past due from the date of billing.

(iv) 5% of face amount for Accounts Receivable which

<PAGE>

are 91 days or more past due from the date of billing.

(f) Notwithstanding the foregoing, Shareholders can elect to exclude
10 paging customers which customarily pay in over 30 days (but have historically
paid in full) from the 31-60 and 61-90 day categories, and instead include them
in the 0-30 day aging category. Shareholders shall be entitled only to exclude
10 total paging customers hereunder and not 10 from each identified category.

(g) The Adjustment Computation shall be agreed to by the parties no
later than 75 days after the Closing (a) if the Adjustment Computation is a net
increase, the parties shall jointly instruct the Escrow Agent under the
Depository Trust Agreement to release the $2,000,000 block of ProNet shares to
the Shareholders and ProNet shall immediately issue and deliver to the
Shareholders an additional number of ProNet shares which, when multiplied by the
Average Closing Price, equal the Adjustment Computation, and (b) if the
Adjustment Computation is a net decrease, the parties shall jointly instruct the
Escrow Agent to return the $2,000,000 block of ProNet shares held by it to
ProNet for cancellation. If the net decrease is less than $2,000,000, ProNet
shall immediately issue and deliver to the Shareholders, the reduced number of
shares which, when multiplied by the Average Closing Price equals the difference
between $2,000,000 and the Adjustment calculation. If the net decrease is
greater than $2,000,000, the Shareholders shall ratably surrender to ProNet,
shares valued at the Average Closing Price equal to the amount by which the net
decrease exceeds $2,000,000.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PRONET

ProNet hereby represents and warrants to Pac-West and to the Shareholders
as follows (with the understanding that the Shareholders and Pac-West are
relying materially on each such representation and warranty in entering into and
performing this Agreement):

3.1 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 authority to own or lease its properties and to carry
on its business as, and in the places where, such properties are owned or leased
and such business is conducted.

3.2 DUE AUTHORIZATION. ProNet has full corporate power and authority to
enter into and perform its obligations under this Agreement, and each agreement,
document, and instrument required to be executed by it in accordance herewith.
This Agreement has been and any other agreements, documents, and instruments
required to be executed and delivered by ProNet in accordance herewith as of the
Closing shall have been, duly and validly executed and delivered by ProNet, as
applicable, and shall, upon execution, constitute valid

<PAGE>

and binding obligations of ProNet, 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 COMMON STOCK. The ProNet Common Stock to be issued by ProNet to the
Shareholders as the Merger Consideration, when issued and delivered in
accordance with the terms of this Agreement, shall be duly authorized, validly
issued, fully paid, and non-assessable, shall be saleable to the public on the
Closing Date subject to the terms of the Registration Rights Agreement (as
defined herein) and for a period of two (2) consecutive years thereafter
pursuant to the terms of a shelf registration, and in compliance with all
federal and state securities laws.

3.4 PRONET INFORMATION. ProNet has delivered to the Shareholders (and
will continue to deliver to the Shareholders from execution hereof until
termination of the Registration Rights Agreement or of this Agreement) true and
correct copies of ProNet's most recent Proxy Statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q and the Form S-3 Registration Statement (the
"ProNet Filings").

3.5 CONFLICTS. Except as set forth on SCHEDULE 3.5, to the knowledge of
ProNet, neither the execution, delivery, nor performance of this Agreement or
any other agreement, document, or instrument to be executed by ProNet in
connection herewith shall (a) violate in any material respect any Federal,
state, county, or local law, rule, or regulation applicable to ProNet, or its
properties, (b) violate or conflict with, or permit the cancellation of, any
agreement to which ProNet is a party, or by which it, or any of its properties
is bound, or result in the creation of any lien, security interest, charge, or
encumbrance upon any of such properties, (c) result in the acceleration of the
maturity of any indebtedness of, or indebtedness secured by any property or
other assets of, ProNet, or (d) violate or conflict with any provision of the
articles of incorporation or by-laws of ProNet.

3.6 CONSENTS. To the knowledge of ProNet, set forth on SCHEDULE 3.6
attached hereto is a complete list of all actions, consents, or approvals of, or
filings with, any governmental authorities or third parties required 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 ProNet.

3.7 CLAIMS AND PROCEEDINGS. Except as set forth in SCHEDULE 3.7 attached
hereto, to the actual knowledge of ProNet, no claims, actions, suits,
proceedings or investigations are pending or have

<PAGE>

been threatened or filed since the date of ProNet's latest Quarterly Report on
Form 10Q which would have a material adverse effect on the business operations
or financial condition of ProNet, and all such matters existing as of the date
of such 10Q were disclosed therein.

3.8 BROKERS. ProNet 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 with the
exception of Daniels and Associates.

3.9 REGULATORY CERTIFICATES. ProNet is not aware of any information
concerning its operations that could cause the FCC or any other regulatory
authority, including without limitation the California Public Utilities
Commission ("CPUC") and the Public Service Commission of Nevada ("Nevada PSC"),
not to issue to ProNet all regulatory certificates and approvals necessary for
the consummation of the transactions contemplated hereunder and for the
operation of the System subsequent thereto.

3.10 CONSENT TO BUDGET. ProNet has received a copy of, reviewed, and
approved the Pac-West Capital and Operating budgets ("Budget")for 1995-1996.
Simultaneously with execution hereof, ProNet has delivered a signed copy of such
Budget to Pac-West, and Shareholders to evidence such consent. Any
expenditures, contracts, financing or other actions provided for in such Budget
are consented to by ProNet notwithstanding that they may take place after
execution hereof or may be inconsistent with any other term hereof. No such
expenditures, contracts, financing or other actions shall constitute a breach of
any representation, warranty or covenant hereof or the failure of any condition
precedent.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PAC-WEST AND THE SHAREHOLDERS

Pac-West and each of the Shareholders hereby jointly and severally
represent and warrant to ProNet as follows (with the understanding that ProNet
is relying materially on each such representation and warranty in entering into
and performing this Agreement):

4.1 DUE ORGANIZATION; OWNERSHIP; SUBSIDIARIES. Pac-West is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of California and has full corporate power and corporate authority to own
or lease its paging related properties and to carry on its paging businesses as,
and in the places where, such properties are owned or leased and such businesses
are conducted. Pac-West is qualified to do paging business and is in good
standing in the states set forth on SCHEDULE 4.1 attached hereto, which states
represent every jurisdiction where such qualification is required for conduct of
its paging related business. No other jurisdiction has asserted a

<PAGE>

claim that Pac-West is required to qualify to do paging business as a foreign
corporation in such jurisdiction. Except as set forth in SCHEDULE 4.1 attached
hereto, and except as contemplated in this Merger Agreement, Pac-West does not
have any subsidiaries, or any equity investment in any other corporation,
partnership, joint venture, or other business enterprise.

4.2 CAPITAL STOCK. The authorized capital stock of Pac-West consists
solely of 1,000,000 shares of Pac-West Common Stock, 1,400 of which shares are
issued and outstanding. Except as set forth in SCHEDULE 4.2 attached hereto,
all of the Shares are duly authorized and validly issued, fully paid, and
nonassessable; none of the Shares was issued in violation of any preemptive or
preferential right; there are no other equity securities of Pac-West
outstanding; and there are no outstanding securities or indebtedness convertible
into, exchangeable for, or carrying the right to acquire, Pac-West Common Stock
or other equity securities of Pac-West, or subscriptions, warrants, options,
rights, or other arrangements or commitments obligating Pac-West to issue or
dispose of any Pac-West Common Stock or other Pac-West equity securities or any
ownership therein.

4.3 TITLE TO SHARES. Except as set forth in SCHEDULE 4.3, La Rue is the
true and lawful owner, of record and beneficially, of 505 of the Pac-West
Shares; Koch is the true and lawful owner, of record and beneficially, of 210 of
the Shares; and Bay Alarm is the true and lawful owner, of record and
beneficially, of 685 of the Pac-West Shares. Except as provided elsewhere in
this Agreement and except as set forth in SCHEDULE 4.3 attached hereto, the
Shares are, and on the Closing Date will be, owned by the Shareholders free and
clear of all liens, security interests, pledges, assessments, charges, adverse
claims, leases, licenses, restrictions, or other encumbrances (collectively,
"Liens"). Other than the rights and obligations arising under this Agreement
and as set forth in SCHEDULE 4.3, none of the Shares is subject to any rights of
any other person to acquire the same, and none of the Shares is subject to any
Liens or restrictions on transfer thereof, except for restrictions imposed by
applicable federal and state securities laws. Notwithstanding anything to the
contrary contained in this Agreement, the Shareholders shall be free to transfer
Pac-West Shares between themselves until the Closing.

4.4 DUE AUTHORIZATION. Pac-West has full corporate power and authority to
enter into and perform its respective obligations under this Agreement and each
agreement, document, and instrument required to be executed by Pac-West in
accordance herewith. The execution, delivery, and performance of this Agreement
and any agreements, documents, and instruments required to be executed by Pac-
West has been duly authorized by the Board of Directors of Pac-West. This
Agreement and the agreements, documents, and instruments required to be executed
and delivered by Pac-West, or the Shareholders in accordance herewith have been
duly and validly executed and delivered by Pac-West, or the Shareholders and
constitute valid and binding obligations of Pac-West, or the Shareholders
enforceable in accordance with their respective terms,

<PAGE>

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.

4.5 CONFLICTS. Except as set forth on SCHEDULE 4.5, to the knowledge of
Pac-West, or the Shareholders, neither the execution, delivery, nor performance
of this Agreement or any other agreement, document, or instrument to be executed
by Pac-West, and/or any of the Shareholders in connection herewith shall
(a) violate any Federal, state, county, or local law, rule, or regulation
applicable to Pac-West, or any of the Shareholders, or its or his properties,
(b) violate or conflict with, or permit the cancellation of, any agreement to
which Pac-West, or any Shareholder is a party, or by which it, he, or any of
its, or his, properties are bound, or result in the creation of any lien,
security interest, charge, or encumbrance upon any of such properties,
(c) result in the acceleration of the maturity of any indebtedness of, or
indebtedness secured by any property or other assets of, Pac-West or (d) violate
or conflict with any provision of the certificate of incorporation or by-laws of
Pac-West.

4.6 CONSENTS. To the knowledge of Pac-West, or the Sellers, set forth on
SCHEDULE 4.6 attached hereto is a complete list of all actions, consents, or
approvals of, or filings with, any governmental authorities or third parties
required 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 any of the Shareholders, or Pac-West with regard to any
of the transactions described herein.

4.7 FINANCIAL STATEMENTS. Pac-West has delivered (a) a complete and
correct copy of the unaudited statement of financial condition of the System as
of and for the year ended November 30, 1995, and for the fiscal quarter ended
February 29, 1996 (the "Financial Statements"), and (b) a complete and correct
list of the Retained Assets or classes of Retained Assets of Pac-West together
with the book value of each such Retained Asset or class of Retained Assets as
of February 29, 1996, which list is set forth on SCHEDULE 4.7 attached hereto
(the "Asset List") and (c) a complete and correct copy of the Budget. Except as
expressly noted thereon, the Financial Statements have been prepared in
accordance with

<PAGE>

generally accepted accounting principles applied on a consistent basis and in
accordance with past accounting practices of Pac-West throughout the periods
indicated and fairly present the financial position, results of operations, and
changes in financial position of the System as of the indicated dates and for
the indicated periods. The Asset List has been prepared in accordance with and
is otherwise consistent with the books and records of Pac-West, presents fairly
and accurately the book value of each of the assets and assets classes, and has
been prepared in accordance with generally accepted accounting principles as
used in the preparation of financial statements. Since November 30, 1995, there
has been no material adverse change in the financial position, assets, results
of operations, business, or prospects of the System. To the actual knowledge of
Pac-West and the Shareholders without inquiry, 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 System.

4.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except (a) as set forth on
SCHEDULE 4.8 attached hereto, (b) the Corporate Division, and (c) matters
provided for in the Budget, since November 30, 1995, Pac-West has conducted its
paging related business and operations in the ordinary course and consistent
with its past practices and has not (i) increased the compensation of any of its
directors, officers, or key employees or, except for wage and salary increases
made in the ordinary course of business and consistent with past practices,
increased the compensation of any employees of the System, (ii) made any paging
related capital expenditures exceeding $10,000 individually or $15,000 in the
aggregate above amounts provided for in the Budget, (iii) except for pagers and
other inventory sold and used or consumed in the ordinary course of business,
sold any asset (or any group of related assets) in any transaction (or series of
related transactions) in which the purchase price for such asset (or group of
related assets) exceeded $3,000, (iv) discharged or satisfied any lien or
encumbrance or paid any obligation or liability, absolute or contingent, other
than current liabilities incurred and paid in the ordinary course of business,
(v) made or guaranteed any loans or advances to any party whatsoever,
(vi) suffered or permitted any lien, security interest (except purchase money
security interests), claim, charge, or other encumbrance to arise or be granted
or created against or upon any of its assets other than purchase money liens
incurred in the ordinary course of business, (vii) canceled, waived, or released
any debts, rights, or claims against third parties, (viii) made any change in
the method of accounting of Pac-West, (ix) made any investment or commitment
therefor in any person, business, corporation, limited liability company,
association, partnership, joint venture, trust, or other entity, (x) 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")) so as to create any liability under
Article IV of ERISA (as hereinafter defined) to any entity, (xi) amended,
renewed, or experienced a termination of any contract, agreement, lease,
franchise, or license to which Pac-West is a party, except in the ordinary
course of business, (xii) entered into any other paging related material
transactions except in the ordinary course of business, (xiii) entered into any
contract, commitment, agreement, or understanding to do any acts described in
the foregoing clauses (i)-(xii) of this Section 4.8, (xiv) suffered any material
damage, destruction, or loss (whether

<PAGE>

or not covered by insurance) to any of the its assets, (xv) experienced any
strike, slowdown, or demand for recognition by a labor organization by or with
respect to any of its employees, or (xvi) experienced or effected any shutdown,
slow-down, or cessation of its operations. Notwithstanding anything to the
contrary contained elsewhere in this Merger Agreement, Pac-West may pay, prior
to Closing, up to $520,000.00 in deferred compensation owing to three officers
of Pac-West.

4.9 PROPERTIES.

(a) REAL PROPERTY. Pac-West does not own any real property.

(b) PERSONAL PROPERTY. Except for (i) inventory and supplies
disposed of or consumed in the ordinary course of business, consistent with past
practice and (ii) personal property listed in SCHEDULE 4.9, Pac-West owns all of
its inventory, equipment (including towers), and other personal property (both
tangible and intangible) reflected on the latest balance sheet included in the
Financial Statements, and any notes and schedules thereto, free and clear of any
Liens, except for statutory liens for current Taxes not yet due and payable and
except for purchase money security interests and other liens set forth on
SCHEDULE 4.9 attached hereto.

(c) LEASEHOLDS. SCHEDULE 4.9 hereto lists all leases of real
property, all leases of vehicles and rolling stock and all other leases of
personal property with annual lease payments over $5,000, to which Pac-West is a
party or to which any of the assets of Pac-West is subject. Pac-West owns the
leasehold estates created by such leases free and clear of any Liens, except for
(i) statutory liens for current taxes not yet due and payable, (ii) in the case
of leases of real property, agreements with, or conditions imposed on the
issuance of land use permits, zoning, business licenses, use permits or other
entitlements of various types issued by city, county, state, and federal
governmental bodies or agencies, necessary or beneficial to the continued use
and occupancy of Pac-West's assets or the continuation of Pac-West's operations,
liens created by landlords or their predecessors in title, and rights of
landlords on lease terminations, (iii) purchase money, mechanics', carriers',
workers', repairers', and other similar liens imposed by law arising or incurred
in the ordinary course of business for obligations not yet due, and (iv) in the
case of leases of vehicles, rolling stock, and other personal property,
encumbrances, which do not, individually or in the aggregate, materially impair
the operation of the business at the facility at which such leased equipment or
other personal property is located and (v) liens of lenders to Lessors of real
or personal property of the companies, the exact number, nature and extent of
which, if any, are unknown to Sellers and the Companies.

4.10 PAGERS. SCHEDULE 4.10 includes a true and complete list of the number
and type of pagers in service (including perquisite pagers) in Pac-West's System
as of November 30, 1995. All of such

<PAGE>

pagers in service are operating pursuant to valid and binding rental and/or
service agreements (excluding the perquisite pagers and other matters listed in
SCHEDULE 4.10) with Pac-West, 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 System, and Pac-West, and the Shareholders do not
know the specific identity of any current subscribers who account for more than
500 pagers in service on the System and who intend to discontinue the use of
such service for any reason including, but not limited to, the consummation of
the transactions contemplated herein. As used herein, "rental" means, with
respect to any pager, provision of communications private carriage pursuant to
Part 22 or Part 90 of the Communications Act of 1934, as amended, and the rental
or lease of subscriber equipment to the customer by Pac-West or its agents or
resellers to permit the customer to utilize such service. The rates customarily
charged to subscribers for each class of service and copies of all applicable
tariffs filed with governmental agencies regulating the rates to be charged to
subscribers of the System are all contained in SCHEDULE 4.10. ProNet
acknowledges that customary and published rates are not charged in many
instances.

4.11 LICENSES AND PERMITS. Set forth on SCHEDULE 4.11 is a list of all
federal, state, county, and local governmental licenses, authorizations,
certificates, permits, and orders (collectively the "Licenses") held, used or
applied for by Pac-West including licenses held or applied for by any third
parties which are used by Pac-West in the operation of the System. Pac-West and
or the third party holders of such licenses have complied and, to the knowledge
of Pac-West and Shareholders, are in compliance with the terms and conditions of
all Licenses, and to the best knowledge of Pac-West and the Shareholders, no
violation of any such Licenses or the laws or rules governing the issuance or
continued validity thereof, has occurred. Other than the consents required to
be obtained in connection with this Agreement or any other agreement referred to
herein (which consents are set forth on SCHEDULE 4.6 hereto), no notice has been
received by Pac-West stating that an 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 System by Pac-West or the ownership by Pac-West or the transfer of the
Shares by the Shareholders to ProNet in connection with the transactions
contemplated in this Merger Agreement. 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 SCHEDULE 4.11 is
necessary for the conduct of Pac-West's business.

4.12 INTELLECTUAL RIGHTS. Attached hereto as SCHEDULE 4.12 is a list and
description of all paging related patents, trademarks, servicemarks, tradenames,
and copyrights and applications therefor owned by or registered in the name of
Pac-West or in which Pac-West has any right, license, or interest. To the
knowledge of Pac-West and the Shareholders, without inquiry, Pac-West has good
and

<PAGE>

marketable title to or the right to use such patents, trademarks, service marks,
tradenames, and copyrights and all inventions, processes, designs, formulae,
trade secrets, and know-how necessary for the conduct of its paging business,
without the payment of any royalty or similar payment. Pac-West is not a party
to any license agreements whether written or oral, either as licensor or
licensee, with respect to any paging related patents, trademarks, servicemarks,
tradenames, or copyrights or applications therefor. Except as set forth on
SCHEDULE 4.12 to the best knowledge without inquiry of Pac-West and the
Shareholders, Pac-West is not infringing any paging related patent, trademark,
servicemark, tradename, or copyright of others, and neither Pac-West nor the
Shareholders are aware of any infringement by others of any such rights owned by
Pac-West.

4.13 COMPLIANCE WITH LAWS. To the best knowledge of Pac-West and the
Shareholders, Pac-West 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 Pac-West's business
including, but not limited to, the rules and regulations of the Federal
Communications Commission (the "FCC") and the Federal Aviation Administration
(the "FAA"), the CPUC, the Nevada PSC and the states and municipalities in which
the System is located, and has filed with the proper authorities all statements
and reports required by the laws, regulations, and orders to which Pac-West or
its properties or operations are subject. Pac-West represents and warrants
that, to its knowledge, it 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 and the FAA with respect to marking,
lighting, notification, and approval of each and every tower used in Pac-West's
business. To the knowledge of Pac-West and the Shareholders, none of the owners
of any of the towers on which Pac-West leases tower space has failed to comply
in any material respect with any of the aforesaid rules, regulations, policies,
precedents, and orders of the FCC or the FAA applicable to such owner in its
capacity as a tower owner. To the best knowledge of Pac-West and the
Shareholders, without inquiry, no claim has been made by any governmental
authority (and, to the best knowledge of Pac-West and the Shareholders, without
inquiry, no such claim is anticipated) to the effect that the business conducted
by Pac-West fails to comply, in any material respect, with any law, rule,
regulation, or ordinance. Without limiting the foregoing, to the knowledge of
Pac-West and the Sellers, Pac-West has complied in all material respects with
all judicial and governmental requirements 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,

<PAGE>

regulations, or ordinances.

4.14 INSURANCE. Attached hereto as SCHEDULE 4.14 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 Pac-West 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 knowledge of Pac-West and the Shareholders, without inquiry, no event
relating to Pac-West has occurred which is likely to result in any prospective
upward adjustment in such premiums. The insurance currently held by Pac-West is
in such amounts and is of such types and scope as Pac-West management believes
in good faith to be reasonably adequate for protection of its respective
interests and properties. Excluding insurance policies which have expired and
been replaced, no insurance policy of Pac-West has been canceled within the last
three years, and no threat has been made to cancel any insurance policy of Pac-
West within such period.

4.15 ERISA PLANS AND COMPLIANCE.

(a) WELFARE BENEFIT PLANS. SCHEDULE 4.15(A) sets forth a list of
each "employee welfare benefit plan" (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), maintained by
Pac-West or to which Pac-West contributes or is required to contribute with
respect to its employees, including any multi-employer welfare plan within the
meaning of Section 3(40) of ERISA (such employee welfare benefit plans being
hereinafter collectively referred to as the "Welfare Benefit Plans"). True,
correct, and complete copies of each of the Welfare Benefit Plans have been
delivered to ProNet. For purposes of the immediately preceding sentence, plan
documents are to include applicable excerpts from any employee handbooks and
similar documents. SCHEDULE 4.15(A) also sets forth (i) the amount of any
liability of Pac-West for amounts determined to be payable that are more than 60
days past due with respect to each Welfare Benefit Plan as of November 30, 1995,
and as of the end of each subsequent month ending prior to the date hereof and
(ii) a description of any liability of Pac-West for benefits under any Welfare
Benefit Plan to retired employees of Pac-West and any former subsidiaries
thereof, excluding benefits provided pursuant to Part 6 of Title I of ERISA
(relating to COBRA coverage). For purposes of this Section 4.15, the term
"Welfare Benefit Plans" shall include any plan described in Sections 120, 125,
127 and 129 of the Code.

(b) RETIREMENT BENEFIT PLANS. SCHEDULE 4.15(B) sets forth a list of
each "employee pension benefit plan" (as defined in Section 3(2) of ERISA)
maintained by Pac-West or to which Pac-West contributes or is required to
contribute with respect to its employees, including any multi-employer pension
plan within the meaning of Section 3(37) of ERISA (such employee pension benefit
plans being hereinafter collectively referred to as the "Pension Benefit
Plans"). True, correct, and complete copies of each of the

<PAGE>

Pension Benefit Plans have been delivered to the Purchaser. Pac-West does not
maintain, sponsor, or participate in any plan that is subject to Title I,
Subtitle B, Part 3 of ERISA (concerning "Funding"). During the last six years,
neither Pac-West nor any former subsidiary thereof has maintained or
participated in, or had any obligation of any nature to contribute to, a plan
described in the immediately preceding sentence. With respect to each Pension
Benefit Plan, including an "individual account plan" (as defined in Section
3(34) of ERISA), SCHEDULE 4.15(B) completely and accurately sets forth the
amount of any liability of Pac-West for contributions due with respect to such
Pension Benefit Plan as of November 30, 1995. SCHEDULE 4.15(B) also sets forth
any plan, fund, program or arrangement not described above in this Section
4.15(b) pursuant to which payments are earned or measured over a period in
excess of a single year or are deferred for more than two and one-half months
after the year in which earned or which may be described in Section 3(2) of the
ERISA.

(c) BENEFIT PLAN COMPLIANCE. All of the Pension Benefit Plans and
Welfare Benefit Plans and any related trust agreements or annuity contracts (or
any other funding instruments) are in material compliance, both as to form and
operation, with the provisions of ERISA and the Code (including Section 410(b)
of the Code relating to minimum coverage), where required in order to be tax-
qualified under Section 401(a) or 403(a) of the Code, and all other applicable
laws, rules, and regulations so that any such noncompliance does not give rise
to any material liability of Pac-West or any current or former subsidiary
thereof. All necessary Internal Revenue Service ("IRS") approvals for the
Pension Benefit Plans and each amendment thereto have been obtained or the
period during which such approvals may be timely requested has not expired and
will not expire prior to the Closing Date.

(d) BENEFIT PLAN REPORTS. Each Welfare Benefit Plan and Pension
Benefit Plan has been administered to date in material compliance with the
requirements of the Code and ERISA with respect to reporting and disclosure, so
that any such noncompliance does not give rise to any liability of any of the
Sellers or any of their current or former subsidiaries. Future compliance with
the requirements of ERISA and the Code as in effect on the date hereof or any
collective bargaining agreements to which either of the Sellers is a party will
not result in any increase in the rate of benefit accrual or required
contributions under any Pension Benefit Plan.

(e) NO PROHIBITED TRANSACTIONS. Neither of the Sellers or any of
their subsidiaries nor any other "disqualified person" (within the meaning of
Section 4975 of the Code) or "party in interest" (within the meaning of Section
3(14) of ERISA) has engaged in any transaction involving any Welfare Benefit
Plan or Pension Benefit Plan or the assets thereof in violation of Section
406(a) or (b) of ERISA (for which no exemption exists under Section 408 of
ERISA) or any "prohibited transaction" (as defined in Section 4975(c)(1) of the
Code) for which no exemption exists under Section 4975(c)(2) or (d) of the Code.

<PAGE>

(f) NO PBGC LIABILITY. Neither Pac-West nor any of its present or
former subsidiaries presently are, and in the past have not been, liable for any
premiums (or interest charges or penalties for late payments) payable to the
Pension Benefit Guaranty Corporation (the "PBGC") established pursuant to ERISA
with respect to each Pension Benefit Plan and each plan year thereof. There has
been no "reportable event" (as defined in Section 4043(b) of ERISA) with respect
to any Pension Benefit Plan. No liability to the PBGC has been incurred by Pac-
West or any corporation or other trade or business which is now or was in the
past under common control with Pac-West (as determined under Sections 414(b),
414(c), and 414(m) of the Code)("Common Control Entity") on account of any
termination of an employee pension benefit plan subject to Title IV of ERISA.
No filing has been made by Pac-West or any Common Control Entity with the PBGC
(and no proceeding has been commenced by the PBGC) to terminate any Pension
Benefit Plan maintained, or wholly or partially funded, by Pac-West or any
Common Control Entity. Neither Pac-West nor any Common Control Entity has (i)
ceased operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA, (ii) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA, (iii) ceased making
contributions to any Pension Benefit Plan subject to Section 4064(a) of ERISA to
which Pac-West or any Common Control Entity made contributions during the five
years prior to the Closing Date, or (iv) made a complete or partial withdrawal
from a multi-employer plan (as defined in Section 3(37) of ERISA so as to incur
withdrawal liability as defined in Section 4201 of ERISA (without regard to
subsequent reduction or waiver of such liability under Section 4207 or 4208 of
ERISA).

(g) DETERMINATION LETTERS, REPORTS AND OTHER DOCUMENTS. SCHEDULE
4.15(G) sets forth a list of (i) the most recent determination letter issued by
the IRS which respect to each Pension Benefit Plan, (ii) all Annual Reports on
Form 5500 series required to be filed with any governmental agency for each
Welfare Benefit Plan and each Pension Benefit Plan for the six most recent plan
years, and (iii) if any of the Welfare Benefit Plans or Pension Benefit Plans
have been the subject of an IRS or Department of Labor ("DOL") audit, an IRS
closing agreement, or an IRS Voluntary Compliance Resolution Program submission,
the reports and documents that were submitted to or issued from the IRS and/or
DOL. True, correct, and complete copies of such letters and reports have been
delivered to ProNet. True, correct, and complete copies of any documents or
worksheets used to demonstrate compliance by any of the Pension Benefit Plans or
Welfare Benefit Plans with any nondiscrimination requirements under the Code
have been delivered to ProNet.

4.16 CONTRACTS AND AGREEMENTS. The contracts and agreements listed and
described in SCHEDULE 4.16 constitute all of the paging related written (and to
the best knowledge of Pac-West and the Shareholders, 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) to which Pac-West

<PAGE>

is a party or by which Pac-West or its properties are bound with respect to
which the obligations of or the benefits to be received by Pac-West could
reasonably be expected to have a value in excess of $15,000 in any consecutive
12 month period (each a "Material Agreement"). Pac-West and the Shareholders
have afforded to ProNet and its officers, attorneys, and other representatives
the opportunity to review complete and correct copies of all of the Material
Agreements in effect as of the date hereof. Pac-West is not and, to the best
knowledge of Pac-West and the Sellers, without inquiry, 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 (excluding trade accounts receivable), and since November 30, 1995,
Pac-West has not waived any right under any Material Agreements. Since November
30, 1995, neither Pac-West nor any Shareholder has received any notice of
default or termination under any Material Agreements and Pac-West has not
assigned or otherwise transferred any rights under any Material Agreements.

4.17 CLAIMS AND PROCEEDINGS. Attached hereto as SCHEDULE 4.17 is a list
and description of all claims, actions, suits, and proceedings (and to the
actual knowledge of Pac-West and the Shareholders, investigations) pending or,
threatened against or affecting Pac-West or any of its properties or 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 4.17 attached hereto, none of such claims, actions, suits,
proceedings, or investigations will result in any liability or loss to Pac-West
which (individually or in the aggregate) is material to Pac-West and Pac-West
has not been, and is not now, subject to any order, judgment, decree,
stipulation, or consent of any court, governmental body, or agency rendered in
such proceeding except licenses, construction permits or permits granted in the
ordinary course of business. Except for any analysis by the Federal Trade
Commission and the Department of Justice pursuant to Hart-Scott filings, no
inquiry, action, or proceeding has been asserted, instituted, or, to the best
knowledge of Pac-West and the Shareholders, without inquiry, 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 Pac-West and
the Shareholders, there is no basis for any such claim or action or any other
claims or actions which would, or could reasonably be expected to (individually
or in the aggregate), have a material adverse effect on the business,
operations, or financial condition or prospects of Pac-West or the System or
result in a material liability of Pac-West.

4.18 TAXES. All 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 (individually, a "Tax" and

<PAGE>

collectively, "Taxes") returns, reports, statements, invoices, and declarations
of estimated tax (collectively, "Returns") which were required to be filed by
Pac-West on or before the date hereof have been filed within the time and in the
manner provided by law, and, to the knowledge of Pac-West and the Shareholders,
all such Returns are true, correct, and complete and accurately reflect the
liabilities for Tax of Pac-West. All Taxes, penalties, interest, and other
additions to Taxes which have become due pursuant to such Returns have been
either paid or adequately accrued in the Financial Statements of Pac-West. All
annual or other FCC regulatory fees arising from the operations of Pac-West have
been paid. Pac-West 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. Except as set forth in SCHEDULE 4.18 there are no pending (or,
to the knowledge of Pac-West, or Shareholders, threatened) claims, assessments,
notices, proposals to assess, deficiencies, or audits (collectively, "Pac-West
Tax Actions") with respect to any Taxes, penalties, interest, or additions to
Taxes owed or allegedly owed by Pac-West. To the best knowledge of Pac-West and
the Shareholders, there is no basis for any Pac-West Tax Actions. There are no
liens for delinquent Taxes, penalties, interest, or additions to Taxes on any of
the assets of Pac-West. Proper and accurate amounts of any and all payroll and
employment Taxes that are required to be withheld have been withheld and
remitted by Pac-West from and in respect of its directors, officers,
shareholders, and employees for all periods in full and complete compliance with
the tax withholding provisions of all applicable laws and regulations.

4.19 PERSONNEL. Pac-West and Shareholders have delivered to ProNet a
certificate of even date herewith containing a list of the names and annual
rates of compensation of the employees of the System whose annual rates of
compensation during the calendar year ending December 31, 1995 (including base
salary, bonuses, commissions, and incentive pay), exceeded or are expected to
exceed $25,000. Such certificate 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. Such certificate also contains a brief description of all
material terms of all written employment agreements and confidentiality
agreements to which Pac-West is a party and all severance benefits which any
director, officer, or employee of Pac-West is or may be entitled to receive.
Pac-West has delivered to ProNet accurate and complete copies of all such
employment agreements, confidentiality agreements, and all other agreements,
plans, and other instruments to which Pac-West is a party and under which any of
its employees is entitled to receive benefits of any nature. There is no pending
or, to the best knowledge of Pac-West, and the Shareholders without inquiry,
threatened labor dispute or union organization campaign involving Pac-West.
None of the employees of Pac-West is represented by any labor union or labor
organization. To the knowledge of Pac-West and Shareholders, Pac-West is in
compliance with all federal and state laws respecting employment and

<PAGE>

employment practices, terms and conditions of employment, and wages and hours,
and Pac-West is not engaged in any unfair labor practices. There is no unfair
labor practice claim against Pac-West before the National Labor Relations Board
or any strike, labor dispute, work slowdown, or work stoppage pending or, to the
best knowledge, without inquiry, of Pac-West and the Shareholders, threatened
against or involving Pac-West.

4.20 BUSINESS RELATIONS. Except as set forth in SCHEDULE 4.20, neither Pac-
West nor any Shareholder has actual knowledge that any Materially Significant
Customer or Supplier (as defined herein) of the System will cease or otherwise
refuse to do business after the Closing in the same manner as such business was
previously conducted with Pac-West. For purposes of this Section 4.20,
"Materially Significant Customer" shall mean a customer which has at least
$2,000 per month in paging related billings with Pac-West. Pac-West has not
received notice of any disruption (including delayed deliveries or allocations
by suppliers) in the availability of the materials or products used by Pac-West
nor does Pac-West or the Shareholders have actual knowledge of any facts which
could lead any of them to believe that the operations of Pac-West will be
subject to any such material disruption.

4.21 BROKERS. Except for Daniels and Associates, the payment of commission
to which is the responsibility of ProNet, Pac-West and Shareholders have no
knowledge of any liability incurred to any finder, broker, or sales agent in
connection with the execution, delivery, or performance of this Agreement or the
transactions contemplated hereby.

4.22 WARRANTIES. Attached hereto as SCHEDULE 4.22 is a list and brief
description of all express written (and to the best knowledge of Pac-West and
Shareholders, oral) warranties and guarantees made by Pac-West to third parties
with respect to any paging related products sold or leased or services rendered
by Pac-West. Except as set forth on SCHEDULE 4.22, to the knowledge of Pac-West
and Shareholders, no claims for breach of such product or service warranties to
customers have been made against Pac-West since November 30, 1995. To the best
knowledge of Pac-West, and the Shareholders, without inquiry, no state of facts
exists, or event has occurred, which may form the basis of any claim against
Pac-West for liability on account of any express or implied warranty to any
third party for paging related matters.

4.23 ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 4.23, all of the
paging related accounts, notes, and loans receivable that have been recorded on
the books of Pac-West are bona fide and represent amounts validly due and Pac-
West and the Shareholders have no reason to believe that all such accounts
receivable (net of reserves set forth on Pac-West's balance sheet) will not be
collected in full. All of such accounts, notes, and loans receivable are free
and clear of any security interests, liens (except as set forth in SCHEDULE
4.23), 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

<PAGE>

obligors of such accounts, notes, or loans receivable have given notice that
they will or may refuse to pay the full amount thereof or any portion thereof.

4.24 CUSTOMERS AND SUPPLIERS. Pac-West and Shareholders have delivered to
ProNet a certificate of even date herewith which contains a true, correct, and
complete list of (a) Pac-West's ten (10) largest paging customers in service in
the System (measured in dollar volume of revenue) during the month ended October
31, 1995, (b) Pac-West's five (5) largest paging related suppliers (measured in
dollar volume of purchases) for the year ended November 30, 1995, and (c) with
respect to each such customer and supplier, the name and address thereof, dollar
volume involved, and nature of the relationship (including the principal
categories of products bought, sold, and leased).

4.25 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. Except as set
forth in SCHEDULE 4.25 and except for interests constituting five percent or
less of a publicly traded company, neither Pac-West, the Shareholders, nor any
officer or director of Pac-West or affiliate of any of the foregoing, has any
ownership interest in any competitor, supplier, or customer of the System or any
property used in the operation of the System.

4.26 INVENTORY. Except as set forth on SCHEDULE 4.26, the inventories
shown on the Financial Statements and the Asset List consist of items of a
quality and quantity usable and readily saleable in the ordinary course of
business by Pac-West.

4.27 COMMISSION SALES CONTRACTS. Except as disclosed in SCHEDULE 4.27,
Pac-West neither employs nor has any relationship with any individual,
corporation, partnership, or other entity whose compensation from Pac-West
arising from the operation of the System is in whole or in part determined on a
commission basis.

4.28 REGULATORY CERTIFICATES. Neither Pac-West nor any Shareholder is
aware of any information concerning Pac-West or its paging related operations
that could cause the FCC or any other regulatory authority, including without
limitation the CPUC and Nevada PSC, not to issue to the Purchaser and Telco all
regulatory certificates and approvals necessary for the consummation of the
transactions contemplated hereunder and for the operation of the System by
Purchaser and the Telco business by Telco subsequent thereto.

4.29 INVESTMENT. Each Shareholder is acquiring the ProNet Common Stock
pursuant hereto for its own account for investment and not with a view to, or
for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the same; and, other than pursuant to the
provisions of the Registration Rights Agreement attached as EXHIBIT E hereto,
each Shareholder has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness, or commitment regarding ownership or sale
of the ProNet Common Stock.

<PAGE>

4.30 ACCREDITED INVESTOR STATUS. The Shareholders are each Accredited
Investors, as such term is defined in Rule 501 promulgated under the Securities
Act of 1933, as amended (the "Securities Act").

4.31 INVESTMENT RISK. Each Shareholder acknowledges and agrees that the
acquisition by such Shareholder of ProNet Common Stock pursuant to this
Agreement carries a certain degree of risk and it has taken full cognizance of
and understands all of the risks related to the acquisition of ProNet Common
Stock.

4.32 LEGENDS. Each Shareholder understands, acknowledges, and agrees that
a legend will be placed on all certificates evidencing the ProNet Common Stock
in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE STATE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION,
SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
AT ANY TIME WHATSOEVER, EXCEPT UPON DELIVERY TO PRONET INC., A DELAWARE
CORPORATION (THE "COMPANY"), OF AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER AND/OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE
COMPANY THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
1933, AS AMENDED, AND/OR APPLICABLE STATE SECURITIES LAWS, AND/OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.

4.33 PRONET INFORMATION. Each Shareholder has received copies of the
ProNet Filings. Each Shareholder has carefully read or reviewed and is familiar
with the ProNet Filings. Each Shareholder and such Shareholder's
representatives all have had an opportunity to ask questions of persons acting
on behalf of ProNet regarding ProNet and the ProNet Common Stock, and answers
have been provided to all such questions to such Shareholder's satisfaction.

4.34 INFORMATION FURNISHED. On request, Pac-West and the Shareholders have
made available to ProNet and its officers, attorneys, accountants, lenders, and
representatives true and correct copies of all written agreements, documents,
and other items listed on the schedules to this Agreement and all books and
records of Pac-West, and, to the knowledge of the Shareholders and Pac-West,
neither this Agreement, the schedules hereto, nor any information, agreements,
or documents delivered to or made available to ProNet 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.

4.35 ASSUMPTION OF TELEPHONE RELATED LIABILITIES. All liabilities of Pac-
West relating to the telephone business are or will be included within the
Transferred Liabilities at the time of the Corporate Division, have been or will
be assumed by Telco as of

<PAGE>

the time of the Corporate Division, and will be discharged or otherwise provided
for by Telco from and after the Closing without cost or expense of any kind to
ProNet.

Notwithstanding anything to the contrary contained elsewhere in this
Agreement, the failure of a Condition precedent to either party's obligations
which failure is due to the action or inaction of a third party or the failure
to list any matter or item on any Schedule or in any certificate attached hereto
or delivered herewith, or in any Schedule attached to the Stock Purchase
Agreement referred to in Section 7.1(p) hereof, shall not give rise to a claim
of breach by, be the basis for excusing the performance of, or give rise to the
right to recover Indemnified Costs by, the other party if such matter or item is
disclosed on another Schedule hereto or certificate furnished by such party to
the other party.

ARTICLE 5
COVENANTS

5.1 INSPECTION. From the date hereof to the Closing, and subject to all
specific limitations contained elsewhere in this Agreement, Pac-West and the
Shareholders shall provide ProNet and its officers, attorneys, accountants,
representatives, and lenders free, full, and complete access during business
hours to all books, records, tax returns, files, correspondence, personnel,
facilities, and properties of Pac-West pertaining to the System; provide ProNet
and its officers, attorneys, accountants, representatives, and lenders all
information and material pertaining to the System and paging related affairs of
Pac-West as ProNet may deem necessary or appropriate; and use their best efforts
to afford ProNet and its officers, attorneys, accountants, and representatives
the opportunity to meet with the paging related customers and suppliers of Pac-
West to discuss the paging related business, condition (financial or otherwise),
operations, and prospects of Pac-West, provided however, that such access shall
only be with the prior approval of Pac-West and in the presence of one or more
of the Shareholders. Any investigation by ProNet or its officers, attorneys,
accountants, representatives, or lenders shall not in any manner affect the
representations and warranties of Pac-West and the Shareholders contained
herein.

5.2 COMPLIANCE. Except for actions expressly contemplated herein, from
the date hereof to the Closing, neither Pac-West nor the Shareholders shall take
or fail to take any action with the intent to cause the representations and
warranties made by Pac-West or the Shareholders herein to be untrue or incorrect
as of the Closing.

5.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing, Pac-West and the Shareholders shall use their best efforts to cause all
conditions precedent to the obligations of ProNet hereunder to be satisfied by
the Closing.

5.4 NO SOLICITATION. From the date hereof until 5:00 p.m.,

<PAGE>

Stockton time, on September 30, 1996, Pac-West and the Shareholders shall not,
and shall use their best efforts to cause the officers, directors, employees,
and agents of Pac-West 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 paging related assets or securities of Pac-West or any merger,
consolidation, or business combination with Pac-West other than the Corporate
Division and (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 5:00
p.m., Stockton time, on September 30, 1996, Pac-West and the Shareholders agree
that neither Pac-West nor any Shareholder will enter into any agreement or
consummate any transaction that would interfere with the consummation of the
transactions contemplated by this Agreement. Pac-West and the Shareholders
shall promptly notify ProNet if any such proposal or offer described in Section
5.4, or any inquiry or contact with any person or entity with respect thereto,
is made. The notification under this Section 5.4 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 ProNet may reasonably
request.

5.5 NOTICE OF DEVELOPMENTS. From the date hereof to the Closing, Pac-West
and the Shareholders shall, immediately upon Pac-West or any Shareholder
becoming aware thereof, notify ProNet of any material problems or developments
with respect to the paging related business, operations, assets, or prospects of
Pac-West.

5.6 NOTICE OF BREACH. From the date hereof to the Closing, Pac-West and
each Shareholder shall, immediately upon Pac-West or any Shareholder becoming
aware thereof, give detailed written notice to ProNet of the occurrence of, or
the impending or threatened occurrence of, any event that would cause or
constitute a breach, which breach or impending breach would constitute or give
rise to a material adverse change in the paging related business or prospects of
Pac-West or would have caused or constituted a breach had such event occurred or
been known to Pac-West or the Shareholders prior to the date of this Agreement,
of any of their respective covenants, agreements, representations, or warranties
contained or referred to herein or in any document delivered in accordance with
the terms hereof.

5.7 NOTICE OF LITIGATION. From the date hereof to the Closing, Pac-West
and the Shareholders shall, immediately upon Pac-West or any Shareholder
becoming aware thereof, notify ProNet of (a) any suit, action, or proceeding
(including, without limitation, any Tax Action or any proceeding involving a
labor dispute or grievance or union recognition) to which Pac-West becomes a
party or which is threatened against Pac-West or, (b) any order or decree or any
complaint praying for an order or decree restraining or

<PAGE>

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.

5.8 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to the
Closing, Pac-West shall keep (and the Shareholders shall cause Pac-West to keep)
in full force and effect insurance coverage for Pac-West and its paging related
assets and operations comparable in amount and scope to the coverage now
maintained covering Pac-West and its paging related assets and operations.

5.9 MAINTENANCE OF CREDIT TERMS. From the date hereof to the Closing,
Pac-West shall use commercially reasonable efforts to continue (and the
Shareholders shall cause Pac-West to continue) to effect sales and leases of its
paging related products only on the terms that have historically been offered by
Pac-West or on such other terms which are no less favorable to Pac-West.

5.10 UPDATING INFORMATION. As of the Closing, Pac-West and the
Shareholders shall update all information set forth in the schedules to this
Agreement.

5.11 INTERIM OPERATIONS OF PAC-WEST.

(a) From the date hereof to the Closing, Pac-West shall conduct (and
the Shareholders shall cause Pac-West to conduct) its paging related business
only in the ordinary course consistent with past practice, and, except as to the
Corporate Division and other matters expressly contemplated elsewhere herein,
Pac-West shall not, unless ProNet gives its prior written approval, (i) issue or
sell, or authorize for issuance or sale, additional shares of any class of
capital stock, or issue, grant, or enter into any subscription, option, warrant,
right, convertible security, or other agreement or commitment of any character
obligating Pac-West to issue securities, (ii) declare, set aside, make, or pay
any dividend or other distribution with respect to its capital stock,
(iii) redeem, purchase, or otherwise acquire, directly or indirectly, any of its
capital stock, (iv) except in the ordinary course of business, sell, pledge,
dispose of, or encumber, or agree to sell, pledge, dispose of, or encumber, any
of its paging related assets, or authorize any paging related capital
expenditure in excess of $10,000, (v) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership, or other business
organization or division thereof, or enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing, (vi) issue any
debt securities, or enter into or modify any contract, agreement, commitment, or
arrangement with respect thereto, (vii) enter into, amend, or terminate any
employment or consulting agreement with any director, officer, consultant, or
key employee, enter into, amend, or terminate any employment or consulting
agreement with any other person otherwise

<PAGE>

than in the ordinary course of business, take any action intended to increase or
decrease the number of persons employed by Pac-West 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 Pac-West in effect on the date hereof,
(viii) enter into, extend, or renew any lease for paging related office space,
or (ix) except as required by law, adopt, amend, or terminate any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
employment, or other employee benefit plan, agreement, trust, fund, or
arrangement for the benefit or welfare of any officer, employee, or sales
representative of Pac-West, so as to create any liability under Article IV of
ERISA to any entity, (x) grant any increase in compensation to any director,
officer, consultant, or key employee, (xi) grant any increase in compensation to
any other employee or consultant except in the ordinary course of business
consistent with past practice and provided it may adjust compensation of any
employee or class of employees in accordance with the Budget or (xii) cancel,
waive, or release any debts, rights, or claims against third parties;

(b) From the date hereof to the Closing, Pac-West shall use (and the
Shareholders shall cause Pac-West to use) commercially reasonable efforts to
preserve intact the paging related business organization of Pac-West, to keep
available in all material respects the services of its present officers and key
employees, to preserve intact Pac-West's banking relationships and credit
facilities, to preserve the goodwill of those having business relationships with
Pac-West, and to comply with all applicable laws.

5.12 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 quarter
beginning with the quarter ending May 31, 1996, Pac-West shall furnish to
ProNet, a Statement of Net Assets, and statement of cash flow with respect to
the System for such quarter. Commencing April 30, 1996, Pac-West shall furnish
to ProNet monthly a Statement of Income for the preceding month (the first such
statement to be for March, 1996) together with monthly summary of paging related
accounts receivable aged by billing cycle; a summary of new, used, rented and
owned pagers; a summary of earned but unbilled revenue and of deferred revenue
related to paging accounts, and a schedule of paging related capital
expenditures for the month. Such statements shall be prepared by Pac-West as an
internal management control in accordance with generally accepted accounting
principles applied in the preparation of the Financial Statements except as
noted to the contrary thereon (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 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.

5.13 LICENSES. From the date hereof until the Closing, Pac-

<PAGE>

West and the Shareholders shall cooperate and assist fully in connection with
ProNet's efforts to obtain, prior to the Closing Date, all consents and
authorizations that may be required in connection with the transfer of each of
the Licenses listed on SCHEDULE 4.11.

5.14 COMPLIANCE. From the date hereof to the Closing, ProNet shall not
take or fail to take any action with the intent to cause the representations and
warranties made by it herein to be untrue or incorrect as of the Closing.

5.15 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing, ProNet shall use its best efforts to cause all conditions precedent to
the obligations of the Shareholders and Pac-West hereunder to be satisfied by
the Closing.

5.16 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to the
Closing, ProNet shall keep in full force and effect insurance coverage for its
assets and operations.

5.17 LICENSES. From the date hereof until the Closing, ProNet shall
cooperate and assist fully in connection with the Shareholders' efforts to
obtain, prior to the Closing Date, all consents and authorizations that may be
required in connection with the transfer of each of the Licenses listed on
SCHEDULE 4.11.

5.18 NOTICE OF BREACH. From the date hereof to the Closing, ProNet shall
immediately upon becoming aware thereof, give detailed written notice to Pac-
West and the Shareholders of the occurrence of, or the impending or threatened
occurrence of, any event that would cause or constitute a breach, which breach
or impending breach would constitute or give rise to material adverse change in
the business or prospects of ProNet or would have caused or constituted a breach
had such event occurred or been known to ProNet prior to the date of this
Agreement, of any of its covenants, agreements, representations, or warranties
contained or referred to herein or in any document delivered in accordance with
the terms hereof.

5.19 UPDATING INFORMATION. As of the Closing, ProNet shall update all
information set forth in the Schedules to this Agreement; provided however, that
ProNet shall not be required to disclose information which has not been
disclosed to the public at large and in such event, nondisclosure will not
represent a breach of a representation, warranty or covenant by ProNet.

5.20 INTERIM OPERATIONS OF PRONET. From the date hereof to the Closing,
ProNet shall use commercially reasonable efforts to preserve in tact its
business and organization and to preserve the good will of those having business
relationships with it, and to comply with all applicable laws.

5.21 COOPERATION REGARDING PLEDGED STOCK. Bay Alarm shall use its best
commercial efforts to obtain release by Dahl Dorman of all Pac-West Shares
pledged by Bay Alarm to Dahl Dorman (the "Dorman

<PAGE>

Shares"). ProNet shall cooperate with Bay Alarm in facilitating the release by
Dahl Dorman of the Dorman Shares including but not limited to agreeing to
specially escrow Shares to be delivered to Bay Alarm at Closing in accordance
with the request of Bay Alarm in order to accomplish the release. Bay Alarm
shall bear all costs of obtaining such release.

5.22 WARN ACT. Neither Pac-West, Shareholders nor ProNet shall take any
action in violation of the Worker Adjustment and Retraining Notification Act (29
USC, Sections 2101 et seq., hereinafter referred to as "WARN ACT"). Any
decisions regarding reduction of Pac-West work force shall only be made and
implemented by ProNet post closing and shall be in full compliance with the WARN
ACT. Any WARN ACT liability caused by personnel decisions implemented by ProNet
after the closing shall be a Shareholder Indemnified Cost and ProNet shall
indemnify, hold harmless and defend Shareholders and Pac-West therefrom.

5.23 FINAL TAX RETURNS. The Shareholders shall cause the preparation of
final tax returns for Pac-West operations through the Closing. ProNet shall pay
all taxes due as reported on such returns. To the extent such taxes have been
provided for by either (a) accruals on the Financial Statements or (b) included
in the Adjustment Computation pursuant to Section 2.15, ProNet shall not be
entitled to reimbursement thereof. To the extent any such tax exceeds amounts
so accrued and/or included in the Adjustment Computation, the Shareholders shall
cause ProNet to be reimbursed therefore on demand. Failure to reimburse
following a valid demand shall give rise to an Indemnified Cost under Article 9
and shall not be subject to the limitations set forth in Section 9.7(a). The
tax returns shall be prepared by the Shareholders without cost to ProNet. The
Shareholders shall direct the handling of any audits or the proceedings to
determine liability thereunder and shall have the authority to agree to a
compromise or final resolution thereof. ProNet shall be consulted and have
reasonable right of review of such returns and proceedings but subject to the
final authority of the Shareholders as noted above.

ARTICLE 6
REGULATORY APPROVALS

With the full cooperation and assistance of Pac-West, and the Shareholders
as contemplated in Section 5.13 hereof, ProNet shall file with the FCC, the FAA,
and with all state regulatory agencies, commissions, or other entities,
including without limitation the CPUC, having jurisdiction over the System,
applications for consent to transfer to ProNet of the licenses and any other
state or federal authorizations, currently held by Pac-West and required in
connection with the System, including without limitation the CPUC and Nevada
PSC. Pac-West shall make all filings required to effectuate the transfer of
telephone related licenses to Telco. Pac-West and Shareholders and ProNet shall
each prepare and file with the Federal Trade Commission ("FTC") and the
Department of Justice ("DOJ") pursuant to the Hart-Scott-Rodino Anti-Trust

<PAGE>

Improvements Act ("Hart-Scott") the Notification and Report Form for Certain
Mergers and Acquisitions, in such manner as is required by Hart-Scott, seeking
determination that neither such agency will take action to prevent consummation
of the transactions contemplated by this Agreement. The Parties shall use all
commercially reasonable efforts to prosecute such applications and filings so as
to permit the Closing to occur. Approval of the aforementioned applications to
the FCC, CPUC, and/or Nevada PSC, FAA, FTC and the DOJ and by any applicable
state agencies, commissions, or other entities shall be by Final Order (and such
approvals shall hereinafter collectively be referred to as the "Final Order").
As used in this Agreement, any such approval shall be a Final Order if (a) the
action of the subject governmental agency approving the application has not been
reversed, stayed, enjoined, set aside, annulled, or suspended, (b) with respect
to such approval, no timely request for stay, motion, or petition for
reconsideration or rehearing, application, or request for review, or notice of
appeal or other judicial petition for review is pending, and (c) the time for
filing any such request, motion, petition, application, appeal, or notice, and
for the entry of orders staying, reconsidering, or reviewing the subject
governmental agency's own motion, shall have expired. Any action by a
governmental authority approving an application subject to materially adverse
conditions (other than conditions concerning notification of the consummation of
this Agreement and other conditions that the FCC routinely attaches to grants of
this type) shall not be deemed a Final Order until such time as ProNet notifies
Pac-West in writing of its willingness to accept such materially adverse
conditions. In addition, if prior to the date on which any such action would
become a Final Order, either party does not elect to accept any such materially
adverse conditions, that party shall have the right to terminate this Agreement
upon written notice and shall be relieved of all obligations hereunder as
provided in Article 8 hereof. ProNet shall pay all fees and costs of the
filings referenced herein except filing fees related to the transfer of licenses
of Telco which shall be paid in full by Pac-West or the Shareholders prior to
the Closing and except the Hart-Scott filing fees which shall be shared one half
by ProNet and one half by Pac-West and the Shareholders.

ARTICLE 7
CONDITIONS TO CLOSING

7.1 CONDITIONS TO OBLIGATIONS OF PRONET. The obligations of ProNet to
consummate the transactions contemplated hereby are subject to the fulfillment
of each of the following conditions:

(a) The representations and warranties of Pac-West, and the
Shareholders 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; Pac-West,
and the Shareholders shall have performed and complied in all material respects
with all agreements required by this Agreement to be performed or complied

<PAGE>

with by Pac-West, and the Shareholders at or prior to the Closing; and ProNet
shall have received a certificate, dated as of the Closing Date, signed by the
President of Pac-West and by each Shareholder to the foregoing effects.

(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) ProNet shall have received an opinion of Neumiller & Beardslee, a
professional corporation, counsel for Pac-West, La Rue and Koch, dated as of the
Closing Date, in the form attached hereto as EXHIBIT B, and an opinion of Knox
Ricksen, counsel for Bay Alarm, in form and content reasonably satisfactory to
ProNet and similar to the portions of the Neumiller & Beardslee opinion dealing
with Shareholder matters pertaining to Bay Alarm.

(d) ProNet shall have received an opinion of Pepper and Corazzini,
LLP, FCC counsel for Pac-West dated as of the Closing Date, in the form attached
hereto as EXHIBIT C. In addition, ProNet shall have received opinions from
Goodin, MacBride, Squeri, Schlotz & Richie, LLP, California and Nevada
regulatory counsel for Pac-West, dated as of the Closing Date, in the form
attached hereto as EXHIBIT C-1.

(e) Prior to the Closing, there shall not have occurred any material
casualty or damage (whether or not insured) to any facility, property, asset, or
equipment used in connection with the operation of the System; there shall have
been no material adverse change in the paging related financial condition,
business, properties, operations, or prospects of Pac-West since November 30,
1995; and, except for matters expressly contemplated herein, Pac-West shall have
conducted its operations only in the ordinary course consistent with past
practices.

(f) The FCC and all applicable federal and state regulatory agencies,
commissions, or other entities, including without limitation the CPUC and Nevada
PSC, by Final Order, shall have granted any required consent to the merger, and
transfer, of the respective licenses to Telco and ProNet and to operation of the
System by ProNet and to operation of the telephone business by Telco.

(g) As of the Closing Date, Pac-West shall have at least 45,000
pagers in service in the System (including nation wide pagers for which airtime
is being purchased from various nation wide paging companies) and ProNet shall
have received a certificate, dated as of the Closing Date, signed by the
President of Pac-West setting forth the number and type of pagers in service in
the System.

(h) As of the Closing Date, Pac-West's inventory shall include at
least 2500 readily saleable or rentable new and used pagers and ProNet shall
have received a certificate, dated as of

<PAGE>

the Closing Date, signed by the President of Pac-West to the foregoing effect.

(i) All consents and approvals (i) listed on SCHEDULE 4.6 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
ProNet; provided however, that any failure to obtain such consents shall not
constitute a breach of this Agreement provided Pac-West and the Shareholders
shall have used commercially reasonable efforts to obtain such consents.

(j) All necessary action (corporate or otherwise) shall have been
taken by Pac-West to authorize, approve, and adopt this Agreement and the
consummation and performance of the transactions contemplated hereby, and ProNet
shall have received a certificate, dated as of the Closing Date, signed by the
President of Pac-West and the Shareholders to the foregoing effect.

(k) Each of the Shareholders shall have entered into a Noncompetition
Agreement (a "Noncompetition Agreement") with the Purchaser substantially in the
forms attached hereto as EXHIBITS D-1, D-2, AND D-3.

(l) Each of the Shareholders and ProNet shall have entered into a
Registration Rights Agreement substantially in the form of EXHIBIT E.

(m) The Shareholders, ProNet and the Escrow Agent shall have entered
into the Depository Escrow Agreement and the Adjustment Escrow Agreement.

(n) Pac-West and the Shareholders shall have delivered such good
standing certificates, tax clearance certificates and officer's certificates,
and similar documents and certificates as counsel for ProNet shall have
reasonably requested in writing at least ten (10) business days prior to the
Closing Date.

(o) The Federal applicable waiting periods, if any, provided for
under Hart-Scott have elapsed without notification from FTC or DOJ that either
agency would take action to enjoin consummation of the transactions contemplated
by this Agreement.

(p) The concurrent closing of the transactions contemplated in that
Certain Stock Purchase Agreement among Strategic Products Corporation, and its
shareholders on the one hand and ProNet on the other hand.

(q) Dahl Dorman has consented to accept either full prepayment of Bay
Alarm's note obligation to him or to the substitution of alternate collateral as
security for such obligation.

Except as provided in the last sentence of Article 4 hereof,

<PAGE>

the decision of ProNet to consummate the transactions contemplated hereby,
knowing that one or more of the preceding conditions have not been satisfied,
shall not constitute a waiver of any of Pac-West's or any Shareholder's
respective representations, warranties, covenants or indemnities herein.

7.2 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS. The obligations of the
Shareholders to consummate the transactions contemplated hereby are subject to
the fulfillment of the following conditions:

(a) The representations and warranties of 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; all agreements to be performed hereunder by ProNet
at or prior to the Closing shall have been performed in all material respects;
and the Shareholders shall have received a certificate, dated as of the Closing
Date, signed by the President of ProNet to the foregoing effects.

(b) ProNet shall have delivered to each Shareholder (and to the
escrow agent pursuant to the Depository Escrow Agreement) a certificate or
certificates representing the shares of ProNet Common Stock to be delivered to
such Seller as his or its share of the Merger Consideration as provided in
Section 2.11 hereof.

(c) ProNet shall have entered into the Noncompetition Agreements with
each of the Shareholders and performed all matured obligations thereunder,
including payment of any compensation thereunder.

(d) The Shareholders, ProNet and the Escrow Agent shall have entered
into the Depository Escrow Agreement.

(e) All guaranties by the Shareholders of Pac-West pager related debt
shall be released and all such debt shall be paid by ProNet in addition to the
Merger Consideration simultaneously with the Closing.

(f) All conditions precedent in favor of ProNet as set forth in 7.1
(b), (f), (i), (l), (o) and (p) shall have been satisfied or otherwise resolved
to the satisfaction of Pac-West and the Shareholders, such conditions precedent
being hereby deemed mutual conditions precedent.

(g) There shall have been no material adverse change in the financial
condition, business, properties, operations or prospects of ProNet.

(h) All necessary action (corporate or otherwise) shall have been
taken by ProNet to authorize, approve, and adopt this Agreement and the
consummation and performance of the transactions contemplated hereby, and Pac-
West and the Shareholders shall have received a certificate dated as of the
Closing Date, signed by the

<PAGE>

President of Pro-Net to the forgoing effect.

(i) Dahl Dorman has consented to accept either full prepayment of Bay
Alarm's note obligation to him or to the substitution of alternate collateral as
security for such obligation.

(j) The Shareholders and Pac-West shall have received a
satisfactorily unqualified opinion from Arthur Andersen opining as to the
corporate and individual income tax consequences of the Corporate Division and
the qualification of the contemplated merger as a tax free reorganization.

(k) The Corporate Division shall have become effective with all
documents filed with the California Secretary of State.

(l) A Tax Clearance Certificate with respect to Pac-West shall have
been obtained from the California Franchise Tax Board based upon a Corporate
Assumption of Tax Liability by ProNet.

(m) At or before the Closing, the individual Shareholders shall have
acquired the respective assets identified on EXHIBIT F attached hereto and
incorporated herein by this reference from Pac-West for cash payments equal to
the purchase price of such assets also as set forth on such Exhibit.

(n) ProNet shall have filed and caused to become effective a
registration statement pursuant to the terms of the Registration Rights
Agreement attached hereto as EXHIBIT E; provided, however, that in the event all
other conditions to Closing have been previously satisfied but such registration
statement has not been declared effective by the Securities and Exchange
Commission by October 31, 1996, ProNet shall be entitled, at its sole
discretion, to a one-time postponement of the Closing until November 30, 1996 to
allow the registration statement to be declared effective; provided, however,
that any failure to obtain such declaration of effectiveness shall not
constitute a breach of this Agreement provided ProNet shall have used
commercially reasonable efforts to obtain such declaration.

Except as provided in the last sentence of Article 4 hereof, the decision
of Pac-West or the Shareholders to consummate the transactions contemplated
hereby without the satisfaction of any of the preceding conditions shall not
constitute a waiver of any of ProNet's respective representations, warranties,
covenants or indemnities herein.

ARTICLE 8
TERMINATION

This Agreement may be terminated prior to the Closing by (a) the mutual
consent of ProNet and the Shareholders, (b) the Shareholders upon the failure of
ProNet to perform or comply in all material respects with each of its covenants
and agreements

<PAGE>

contained herein prior to the Closing or if each representation or warranty of
ProNet hereunder shall not have been materially true and correct as of the time
at which such representation or warranty was made, the effect of which would
have a material adverse effect on the business of ProNet, (c) ProNet upon the
failure of Pac-West or any Shareholder to perform or comply in all material
respects with each of its, or his covenants and agreements contained herein
prior to the Closing or if each representation or warranty of Pac-West, or the
Shareholders hereunder shall not have been materially true and correct as of the
time at which such representation or warranty was made, the effect of which
would have a material adverse effect on the business of Pac-West, (d) either
party in accordance with the provisions of Article 6 hereof, and (e) the
Shareholders or ProNet if the Closing does not occur by December 31, 1996;
provided, however, that ProNet may extend the Closing in accordance with Section
7.2(n); provided, that no party may terminate this Agreement pursuant to (b),
(c), or (e) above if such party is, at the time of any such attempted
termination, in material breach hereof.

ARTICLE 9
INDEMNIFICATION

9.1 INDEMNIFICATION OF PRONET. Pac-West and the Shareholders, each
jointly and severally agree to indemnify and hold harmless ProNet and each
officer, director, employee, consultant, stockholder, and affiliate of ProNet
(collectively, the "ProNet 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,
"ProNet Indemnified Costs") which any of the ProNet Indemnified Parties may
sustain, or to which any of the ProNet Indemnified Parties may be subjected,
arising out of any breach or default by Pac-West or any Shareholder 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.

9.2 INDEMNIFICATION OF THE SHAREHOLDERS. ProNet agrees to indemnify and
hold harmless each of the Shareholders and their respective officers, directors,
employees, consultants, and affiliates (collectively, the "Shareholder
Indemnified Parties" and together with the ProNet 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 attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively, the
"Shareholder Indemnified Costs") and together with the ProNet Indemnified Costs,
the "Indemnified Costs") which any of the Shareholder Indemnified Parties may
sustain, or to which any of the Shareholder Indemnified Parties may be
subjected, arising out of or relating to (a) any debts, claims, obligations or
liabilities incurred after the Closing ("Post-

<PAGE>

Closing Liabilities"), other than any Post-Closing Liabilities arising out of or
relating to any breach or default by Pac-West or any Shareholder of any of the
representations, warranties, covenants, agreements or other provisions of this
Agreement or any agreement or document executed in connection herewith and (b)
any breach or default by ProNet 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.

9.3 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party 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
Party 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 Party under this Article 9 unless the
failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Parties 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 deem appropriate; provided, however, that:

(a) The Indemnified Party shall be entitled, at his or its own
expense, to participate in the defense of such third-party action (provided,
however, that the Indemnifying Parties shall pay the attorneys' fees of the
Indemnified Party 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 Indemnifying Parties shall not have
employed counsel reasonably satisfactory to the Indemnified Party to have charge
of such third-party action, (iii) the Indemnified Party shall have reasonably
concluded that there may be defenses available to such Indemnified Party that
are different from or additional to those available to the Indemnifying Parties,
or (iv) the Indemnified Party's counsel shall have advised the Indemnified Party
in writing, with a copy to the Indemnifying Parties, that there is a conflict of
interest that could make it inappropriate under applicable standards of
professional conduct to have common counsel);

(b) The Indemnifying Parties shall obtain the prior written approval
of the Indemnified Party 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 Party or if, in the
opinion of the Indemnified Party, such settlement, compromise, admission, or
acknowledgment could have a material adverse effect on its business or, in the
case of an Indemnified Party who is a natural person, on his or her assets or
interests;

<PAGE>

(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 Indemnified Party of a
release from all liability in respect of such third-party action and, if a
settlement is reached, a recitation that the settlement is without admission of
liability; and

(d) The Indemnifying Parties shall not be entitled to control (but
shall be entitled to participate at their own expense in the defense of), and
the Indemnified Party shall be entitled to have sole control over, the defense
or settlement, compromise, admission, or acknowledgment of any third-party
action (i) as to which the Indemnifying Parties fail to assume the defense
within a reasonable length of time or (ii) to the extent the third-party action
seeks an order, injunction, or other equitable relief against the Indemnified
Party which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party 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.

The parties hereto shall extend reasonable cooperation in connection with
the defense of any third-party action pursuant to this Article 9 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.

9.4 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 9.3 hereof because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Parties in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The failure
of the Indemnified Party 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 Parties with respect to such claim.

9.5 NO CONTRIBUTION. In the event the Closing occurs, the Shareholders,
and not Pac-West shall be fully liable for Indemnified Costs sustained by the
ProNet Indemnified Parties; accordingly, the Shareholders shall not be entitled
to contribution or any other payments from Pac-West or ProNet for any
Indemnified Costs that the Shareholders are obligated to pay pursuant to this
Agreement or under applicable law.

9.6 ESCROW. On the Closing Date, ProNet, the Shareholders and the Escrow
Agent will enter into the Depository Escrow Agreement in accordance with which
ProNet shall, at Closing, deposit ProNet Common Stock having a value of
$1,000,000 (as determined under Section 2.11 herein) with the Escrow Agent to

<PAGE>

remain with the Escrow Agent for a period of one (1) year following the Closing.
If any claim for indemnification is made by a ProNet Indemnified Party pursuant
to this Article 9 prior to the Release Date (as defined in the Depository Escrow
Agreement), such ProNet Indemnified Party may apply for payment of any such
Indemnified Costs in accordance with the provisions of the Depository Escrow
Agreement and this Agreement.

9.7 LIMITATIONS ON LIABILITY.

(a) Notwithstanding any other provision of this Agreement, ProNet
shall not be entitled to indemnification hereunder unless and until their
Indemnified Costs exceed $150,000 (in which case they shall be entitled to
indemnification for all of their Indemnified Costs except for the first
$100,000.00 thereof).

(b) Notwithstanding any other provision of this Agreement, (i) the
indemnification obligations of Shareholders under Section 9.1 hereof are several
and shall not individually exceed their respective portions of the Merger
Consideration as set forth in SCHEDULE 9.7 or collectively exceed the Merger
Consideration, and (ii) the indemnification obligations of ProNet under Section
9.2 will not collectively exceed the Merger Consideration.

(c) Except for failure of ProNet to pay any portion of the Merger
Consideration or any other monetary obligation due under the terms of the Merger
Agreement, the Noncompetition Agreements or otherwise, the Shareholders shall
not be entitled to indemnification hereunder unless and until total Shareholder
Indemnified Costs exceed $75,000 (in which case they shall be entitled to all of
their Indemnified Costs except for the first $50,000 thereof).

9.8 SOLE REMEDY. Except for claims of actual fraud as defined in
California Civil Code Section 1572, or for claims under federal or state
securities law or for injunctive relief, specific performance or damages under
any Noncompetition Agreement or under the Registration Rights Agreement entered
into and executed in connection herewith, this Article 9 shall be the sole
remedy of the parties for breaches of this Agreement.

9.9 ARBITRATION.

(a) ARBITRATION. The parties acknowledge that this Agreement
evidences a transaction involving interstate commerce. Except as otherwise
provided in this Article 9 and in Article 11 any controversy, dispute or claim
of any nature having an asserted value of $100,000 or less and arising out of,
in connection with or in relation to the interpretation, performance or breach
of this Agreement, including any claim based on contract, tort or statute, shall
be resolved at the request of any party to this Agreement initially by
nonbinding mediation and then, if still unresolved, by final and binding
arbitration conducted (i) by a member of the Judicial Arbitration & Mediation
Services, Inc. San Francisco Panel

<PAGE>

(ii) at a location in San Francisco, California selected by the arbitrator, and
(iii) administered in accordance with the Federal Arbitration Act (9 USC Section
Section 1 ET. SEQ.) and the then existing Rules of Practice and Procedure of
Judicial Arbitration & Mediation Services, Inc. Judgment upon any award
rendered by the arbitrator may be entered by the Superior Court of San Joaquin
County, California on the application of any party hereto. The arbitrator shall
not be empowered to award any provisional remedies or punitive damages, or any
compensatory or general damages in excess of $100,000 with the exception of
awards made pursuant to Article 11.

(b) INTERIM RELIEF. Any party may seek from a court any interim or
provisional relief that may be necessary to protect or preserve its/his rights
under this Agreement pending the establishment of an arbitration proceeding
under this Article 9 and the arbitrator's determination of the merits of the
controversy; provided, however, that the arbitrator shall be empowered to
dissolve, discharge or otherwise release such interim or provisional relief at
any time before conclusion of proceedings upon a proper showing. The arbitrator
shall be empowered to award monetary damages up to $100,000 to any party for
loss occasioned by such interim or provisional relief upon an ultimate showing
of lack of merit.

(c) DISCOVERY. The parties shall allow and participate in discovery
in accordance with the Federal Rules of Civil Procedure, except (i) depositions
may be taken at any time after the appointment of the arbitrator and (ii) the
response to a written discovery request shall be served within fourteen (14)
days after the appointment of the arbitrator, plus such additional time as the
arbitrator determines to be appropriate to protect an inquiring party from
responding party's delay in responding to one or more discovery requests.
Unresolved discovery disputes shall be resolved by the arbitrator. The United
States Arbitration Act and the then existing Rules of Practice and Procedure of
Judicial Arbitration & Mediation Services, Inc. to the contrary notwithstanding,
this Section 9.9(c) sets forth the exclusive rights of the parties to discovery
in any arbitration under this Article 9.

(d) TIME PERIOD. The arbitrator shall render a final award within
ninety (90) days after the date of his or her appointment, plus such additional
time, if any, as the arbitrator permits for discovery pursuant to Section
9.9(c).

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 and constitutes the entire understanding among the parties
hereto with

<PAGE>

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.

10.2 RESTRICTION ON TRANSFER OF COMMON STOCK. In consideration of the
benefits to be received by the Shareholders hereunder, each Shareholder hereby
agrees and acknowledges that the ProNet Common Stock to be delivered to each
Shareholder pursuant to this Merger Agreement shall be subject to the following
restrictions on transfer: (a) absolutely no sale of such ProNet Common Stock
may be made during the first ninety (90) days after the Closing and (b)
thereafter, Shareholders shall only be permitted to publicly offer for sale
("Disposition Rights") (but may assign, transfer, grant options for the purchase
of, contract to sell, or otherwise dispose of such ProNet Common Stock subject
to the provisions of this section) of that number of shares of Common Stock
equal to eleven percent (11%) of the total number of shares of Common Stock to
be delivered to the Shareholders at Closing in each calendar month following
expiration of the 90 day period referred to in (a) above, for a period of nine
(9) calendar months thereafter, provided that Dispositions of any shares of
ProNet Common Stock released from the restriction contained in this subsection
(b) may be made at any time and from time to time after such release,
notwithstanding the fact that total shares of ProNet Common Stock disposed of by
Sellers in a given month would exceed 11% of total shares of ProNet Common Stock
received by the Shareholders. Shareholders may allocate Disposition Rights
between themselves as they shall agree but such rights shall be ratable to
shares received from ProNet unless they agree to the contrary. The Shareholders
shall not be obligated to transfer any of the ProNet Common Stock received
hereunder and, upon the expiration of nine (9) months following the period
referred to in (a), such Common Stock shall be released from the foregoing
restriction. Bay Alarm shall be permitted to transfer sufficient Shares to the
collateral agent for Dahl Dorman to provide replacement security for the Pac-
West Shares pledged by Bay Alarm to Dorman in November, 1993, and said transfer
shall not be included when calculating the number of shares of ProNet Common
Stock subject to monthly Dispositions by Bay Alarm.

10.3 SUCCESSORS AND ASSIGNS. No rights or obligations of any party hereto
under this Agreement may be assigned without the written consent of the other
parties. Subject to the preceding sentence, 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.

10.4 EXPENSES. Each of the parties hereto shall pay its or his own
respective costs and expenses incurred in connection with this Agreement;
provided however, that the Shareholders may pay

<PAGE>

their expenses through Pac-West through the Closing Date. Pac-West and ProNet
shall each pay one-half of any Hart-Scott filing fees (exclusive of legal fees
for preparation of the filing). All other administrative, application, and
filing costs incurred in connection with regulatory approvals in connection with
the transactions contemplated by this Merger Agreement, shall be paid
exclusively by ProNet (including the cost of audits performed with respect to
Pac-West) except the cost of filings for transfer of licenses to Telco which
shall be the responsibility of Pac-West and the Shareholders to be paid prior to
the Closing.

10.5 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.

10.6 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.

10.7 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, overnight delivery service or similar device, or (c) if sent by
mail, on the third day following the 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:

<PAGE>

If to ProNet: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls, Esq.
Fax No: (214) 774-0640

If to La Rue: John K. La Rue
1548 El Camino Avenue
Stockton, California 95209

If to Koch: William E. Koch
3635 Moultrie
Stockton, California 95219

With a copy to: Robert C. Morrison, Esq.
Neumiller & Beardslee
P.O. Box 20
Stockton, California 95201
Fax No: (209) 948-4910

If to Bay Alarm: Bay Alarm Company
P.O. Box 8140
Walnut Creek, California 94596-8140
Attn: Bruce A. Westphal

With a copy to: Thomas A. Palmer, Esquire
Knox Ricksen
Lake Merritt Plaza
1999 Harrison Street, Suite #1700
Oakland, California 94612-3500
Fax No: (510) 446-1946

Each party may change its or his address for purposes of this Section 10.7 by
proper notice to the other parties.

10.8 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 which do not expressly
provide for a longer duration shall survive the Closing, for a period of
eighteen (18) months after the Closing Date, except that the representations and
warranties contained in (a) Sections 3.1, 3.2, 3.3, 4.1, 4.2, 4.3, and 4.4 shall
continue in full force and effect indefinitely and (b) Section 4.18 shall
continue in full force and effect through the applicable statute of limitations
with respect to the subject matter of each representation and warranty.

10.9 PUBLIC ANNOUNCEMENT. No public announcement shall be made by any
party with respect to the transactions contemplated hereby without the approval
of ProNet unless otherwise required by law.

<PAGE>

10.10 FURTHER ASSURANCES. From time to time hereafter, (a) at the
request of any party, but without further consideration, the other parties shall
execute and deliver such other instruments of conveyance, assignment, transfer,
and delivery and take such other action as may reasonably be required in order
more effectively to consummate the transactions contemplated hereby.

10.11 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.

10.12 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to any
conflict of laws doctrine. Jurisdiction and venue of any judicial proceeding
shall be in either the Superior Court of the State of California in and for the
county of San Joaquin or the United States District Court for the Eastern
District of California.

10.13 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.

10.14 SECTIONS; EXHIBITS. All references to "Sections", "Subsections",
"Schedules", "Exhibits" herein are, unless specifically indicated otherwise,
references to sections, subsections, schedules, 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.

10.15 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.

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

10.17 DEFINITION OF KNOWLEDGE. Wherever any term contained herein
involves or is limited to the knowledge or best knowledge of Pac-West or the
Shareholders, the term "knowledge" shall in all instances mean the knowledge of
John K. La Rue, William E. Koch, Bruce A. Westphal, Glen S. Purdie, Dennis Meyer
and Jeffrey Webster. Further "knowledge", except where expressly limited to
actual knowledge or knowledge without inquiry, shall be deemed to mean such
knowledge as such individuals could reasonably

<PAGE>

be expected to possess in the prudent performance of the duties of their
respective offices.

10.18 WAIVER OF SHAREHOLDER AGREEMENT. Effective as of the Closing
Date, the Shareholders who are parties to that certain Stock Purchase Agreement
and Shareholder Agreement dated November 30, 1994 with respect to the Pac-West
Common Stock and other matters, hereby terminate and waive all provisions of
such Agreements.

10.19 RECORDS. At the Closing, Pac-West and the Shareholders will turn
over and deliver to ProNet all files of Pac-West relating to the paging related
assets and liabilities of Pac-West 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 Pac-West or the Shareholders'
possession relating to the design, construction, maintenance, and operation of
facilities, improvements, and equipment included in the assets and/or the System
and liabilities of Pac-West, and all appropriate books records, accounting
information, and operating information and data, current and historical,
reasonably related to such assets and/or the System and liabilities. ProNet
shall make all such transferred books and records available for inspection and
copying by Shareholders for the purposes of preparing Shareholders' or Telco's
tax returns, any tax audits of Shareholders or Telco, and other purposes not
inconsistent with this Agreement. Further, ProNet agrees to maintain normal
records with regard to the paging related assets and liabilities and to make
such records available to Shareholders for the foregoing purposes. ProNet's
obligation to make records available to Shareholders pursuant to this Section
10.19 shall be limited to regular business hours, after reasonable prior notice,
for a period of seven (7) years after Closing. The Shareholders shall pay for
any and all reasonable costs associated with ProNet's obligations under this
Section 10.19.

10.20 RENTAL AGREEMENTS. Upon closing, and so long thereafter as Pac-
West continues to lease such space from the Owner, ProNet shall be entitled to
sublet space at the Coronado Street offices of Pac-West in Suites 4202 and 4210C
together with adequate space in the 4210 A switch room for paging terminal and
related paging control equipment, at a square footage rate equal to the rates
charged by Pac-West to other paging carriers. Such subletting shall be on a
month to month basis. ProNet shall also lease transmitter tower space at the
Coronado tower, Bear Mountain, Fresno, Merced, Mettler Lodi, Mt. Oso, South Lake
Tahoe, Mt. Bullion and Mt. Hough sites from Pac-West's designee. Telco will be
allowed to continue to have its Long Distance Telephone POP at the Las Vegas
office premises after the Closing at rental not to exceed $100.00 per month for
rack space subject to termination at the option of ProNet after three months
advance written notice.

10.21 TELCO\PRONET CONTRACTS. ProNet will pay Telco's regular market
rates to Telco for usage of the satellite uplink system at the Coronado facility
and will pay Telco at rates similar

<PAGE>

to those charged to Pac-West's largest paging telephone customers for paging
telephone services.

10.22 PAGER SYSTEM CHARGES. Pending the Closing, ProNet will have the
right to put numeric units on Pac-West's Southern California System at an
effective rate of $1.00 per pager per month and alpha-numeric units at an
effective rate of $2.00 per unit per month. Messages will be sent on CAP-TNPP
basis. ProNet will pay all data circuit costs required to accomplish the
foregoing. If the transactions contemplated in this Merger Agreement are not
consummated by September 30, 1996, ProNet will pay the market rate of $2.25 per
unit without refund thereafter.

10.23 TELCO AS RESELLER. From and after the Closing, Telco will be a
paging reseller for ProNet at rates similar to those charged to ProNet's
customers with comparable volume. Paging accounts currently billed under the
"StarLine" billing system will be retained by Telco as a paging reseller.

10.24 WAIVER OF DISSENTERS RIGHTS. By execution hereof each
Shareholder expressly waives all rights to receive cash for his or its interest
in Pac-West as provided for in Chapter 13 of the California Corporations Code
which provisions have been explained to the undersigned by counsel.

10.25 ANSWERING SERVICE COMBINED BILLING. Paging accounts currently
billed together with answering service charges shall continue to be so billed,
but by Telco, after the Closing. Telco shall remit 95% of the paging revenues
received by it under these joint billings to ProNet on a monthly basis.

10.26 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and such counterparts
shall constitute and be one and the same instrument.

ARTICLE 11
CONFIDENTIALITY

(a) ProNet has requested the opportunity to review, and has reviewed or
will review a variety of documents, records and other information which Pac-West
views as confidential and which is generally described on SCHEDULE 11(A) ("Pac-
West Confidential Information").

The Pac-West Confidential Information has been and is being provided to
ProNet to enable ProNet to consider the desirability, feasibility and timing of,
and in order to induce the execution of this Agreement in respect of, the
transactions contemplated in this Agreement. Such Pac-West Confidential
Information would not be provided if ProNet did not agree to the provisions of
this Article and it is being provided in reliance upon execution of this
Agreement including the provisions of this Article.

<PAGE>

ProNet agrees that Pac-West Confidential Information will be disclosed only
to such of its personnel, and to such of its outside experts and advisors, as
(i) reasonably need to know such information to advise ProNet in connection with
the transactions with Pac-West or to make decisions (or to participate in the
making of such decisions) affecting ProNet in relation to Pac-West, and
(ii) agree, in a manner reasonably satisfactory to Pac-West under the
circumstances to be bound by the provisions and restrictions regarding Pac-West
Confidential Information contained herein. ProNet will be and remain fully
responsible to Pac-West for any use of Pac-West Confidential Information by any
person who receives it on ProNet's behalf, or to whom ProNet or any such person
discloses it, for any reason, in all respects as though ProNet had made such use
of such information.

Furthermore, ProNet agrees that all Pac-West Confidential Information will
be kept and maintained confidential by it; will not be disclosed to any third
person (except as described in the preceding paragraph); will under no
circumstances (and without in any manner limiting the preceding clause) be
disclosed to, or utilized in connection with, any supplier, customer or
competitor (present or potential) of Pac-West's (including any such person now
or hereafter controlled by or affiliated with ProNet); and will not in any way
be used, or be permitted to be used, in a manner detrimental to the business or
prospects of Pac-West. If and when the proposed business transactions between
ProNet and Pac-West as provided for in this Agreement should be terminated, the
foregoing restrictions shall nonetheless continue and remain in effect, and
ProNet shall return to Pac-West, all copies of Pac-West Confidential Information
then held by ProNet, its agents and advisors, or shall certify to Pac-West's
satisfaction that all such copies have been destroyed, and neither ProNet nor
any of its agents or advisors will retain any of the Pac-West Confidential
Information in ProNet's or their possession or control.

Notwithstanding the foregoing "Pac-West Confidential Information" shall not
include any information which ProNet can show (a) is now or later becomes
available in the public domain without breach of this Agreement by ProNet;
provided all government filings containing any such Pac-West Confidential
Information shall designate such information as confidential, be sealed or
otherwise designated by the agency as not available for public viewing in
accordance with applicable guidelines of such government agency, (b) was in the
possession of ProNet prior to disclosure to ProNet by Pac-West and the
Shareholders, (c) was received from a third party without breach of any
nondisclosure obligations to Pac-West and the Shareholders or otherwise in
violation of Pac-West or the Shareholders rights or (d) was developed by ProNet
independently of any Pac-West Confidential Information received from Pac-West
and the Shareholders.

In the event of any breach or threatened breach of the provisions of this
Article, Pac-West and/or the Shareholders shall be entitled to bring a binding
arbitration proceeding for the recovery of damages and or injunctive relief. In
addition to any

<PAGE>

other proffered evidence, the Arbitrator shall receive and consider all evidence
proffered by Pac-West or Shareholders concerning loss of business profits to
Pac-West and shall not be precluded from awarding compensatory damages based of
such evidence. Judgment on the award shall be entered by the Superior Court of
San Joaquin County, California, on the application of Pac-West and or the
Shareholders and ProNet waives any right to challenge the sufficiency of the
evidence considered by the Arbitrator or the reasonableness of the award in view
of such evidence.

(b) Pac-West has requested the opportunity to review, and has reviewed or
will review a variety of documents, records and other information which ProNet
views as confidential and which is generally described on SCHEDULE 11(B)
("ProNet Confidential Information").

The ProNet Confidential Information has been and is being provided to Pac-
West to enable Pac-West to consider the desirability, feasibility and timing of,
and in order to induce the execution of this Agreement in respect of, the
transactions contemplated in this Agreement. Such ProNet Confidential
Information would not be provided if Pac-West did not agree to the provisions of
this Article and it is being provided in reliance upon execution of this
Agreement including the provisions of this Article.

Pac-West agrees that ProNet Confidential Information will be disclosed only
to such of its personnel, and to such of its outside experts and advisors, as
(i) reasonably need to know such information to advise Pac-West in connection
with the transactions with ProNet or to make decisions (or to participate in the
making of such decisions) affecting Pac-West in relation to ProNet, and
(ii) agree, in a manner reasonably satisfactory to Pac-West under the
circumstances to be bound by the provisions and restrictions regarding ProNet
Confidential Information contained herein. Pac West will be and remain fully
responsible to ProNet for any use of ProNet Confidential Information by any
person who receives it on Pac-West's behalf, or to whom Pac-West or any such
person discloses it, for any reason, in all respects as though Pac-West had made
such use of such information.

Furthermore, Pac-West agrees that all ProNet Confidential Information will
be kept and maintained confidential by it; will not be disclosed to any third
person (except as described in the preceding paragraph); will under no
circumstances (and without in any manner limiting the preceding clause) be
disclosed to, or utilized in connection with, any supplier, customer or
competitor (present or potential) of ProNet's (including any such person now or
hereafter controlled by or affiliated with Pac-West); and will not in any way be
used, or be permitted to be used, in a manner detrimental to the business or
prospects of ProNet. If and when the proposed business transactions between
ProNet and Pac-West as provided for in this Agreement should be terminated, the
foregoing restrictions shall nonetheless continue and remain in effect, and Pac-
West shall return to ProNet, all copies of ProNet Confidential

<PAGE>

Information then held by Pac-West, its agents and advisors, or shall certify to
ProNet's satisfaction that all such copies have been destroyed, and neither
Pac-West nor any of its agents or advisors will retain any of the ProNet
Confidential Information in Pac-West's or their possession or control.

<PAGE>

Notwithstanding the foregoing "ProNet Confidential Information" shall not
include any information which Pac-West can show (a) is now or later becomes
available in the public domain without breach of this Agreement by Pac-West;
provided all government filings containing any such Pac-West Confidential
Information shall designate such information as confidential, be sealed or
otherwise designated by the agency as not available for public viewing in
accordance with applicable guidelines of such government agency, (b) was in the
possession of Pac-West prior to disclosure to Pac-West by ProNet, (c) was
received from a third party without breach of any nondisclosure obligations to
ProNet or otherwise in violation of ProNet's rights or (d) was developed by
Pac-West independently of any ProNet Confidential Information received from
ProNet.

In the event of any breach or threatened breach of the provisions of this
Article, ProNet shall be entitled to bring a binding arbitration proceeding for
the recovery of damages and or injunctive relief. In addition to any other
proffered evidence, the Arbitrator shall receive and consider all evidence
proffered by ProNet concerning loss of business profits to ProNet and shall not
be precluded from awarding compensatory damages based of such evidence.
Judgment on the award shall be entered by the Superior Court of San Joaquin
County, California, on the application of ProNet and Pac-West waives any right
to challenge the sufficiency of the evidence considered by the Arbitrator or the
reasonableness of the award in view of such evidence.

PRONET INC.

By: /s/ Mark A. Solls
-------------------------------

Title: Vice President
----------------------------

PAC-WEST TELECOMM, INC.

By:
-------------------------------
John K. La Rue, President

-------------------------------
John K. La Rue

<PAGE>

- --------------------------------------------------------------------------------

-------------------------------
William E. Koch

BAY ALARM COMPANY

By: /s/ illegible
-------------------------------

Title: CEO, Chairman
----------------------------

<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements for ProNet Inc. for the quarter ended Marck 31,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,089
<SECURITIES> 0
<RECEIVABLES> 11,764
<ALLOWANCES> 1,129
<INVENTORY> 2,156
<CURRENT-ASSETS> 17,673
<PP&E> 100,502
<DEPRECIATION> 38,614
<TOTAL-ASSETS> 230,830
<CURRENT-LIABILITIES> 27,457
<BONDS> 99,337
0
0
<COMMON> 75
<OTHER-SE> 55,619
<TOTAL-LIABILITY-AND-EQUITY> 230,830
<SALES> 21,016
<TOTAL-REVENUES> 24,162
<CGS> 2,781
<TOTAL-COSTS> 8,568
<OTHER-EXPENSES> 18,086
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,659
<INCOME-PRETAX> (6,124)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,124)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,124)
<EPS-PRIMARY> (.89)
<EPS-DILUTED> (.89)

</TABLE>