AMERICAN PAGING INC, DEF 14A, 1997-04-07

AMERICAN PAGING INC
DEF 14A, 1997-04-07
RADIOTELEPHONE COMMUNICATIONS

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

AMERICAN PAGING, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No Fee Required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE>
AMERICAN PAGING, INC.

1300 GODWARD STREET NORTHEAST
SUITE 3100
MINNEAPOLIS, MINNESOTA 55413-1767
PHONE:(612) 623-3100
FAX: (612) 623-4413

[LOGO]

April 7, 1997

Dear Shareholders:

You are cordially invited to attend the Company's 1997 Annual Meeting of
Shareholders on Monday, May 5, 1997, at 11:00 a.m., local time, at the Sheraton
Minneapolis Metrodome, 1330 Industrial Boulevard, Minneapolis, Minnesota. At the
Annual Meeting, the Board of Directors and members of our management will report
on the Company's recent performance and plans for the Company.

The formal notice of the Annual Meeting, Proxy Statement and the 1996 Annual
Report are enclosed. The Proxy Statement contains information about the nominees
for the Board of Directors. In addition, shareholders are being asked to approve
the 1997 Employee Stock Purchase Plan of the Company and to ratify the selection
of independent public accountants for the current fiscal year.

We would like to have as many shareholders as possible represented at the
Annual Meeting. Accordingly, please sign, date and return the enclosed proxy in
the enclosed envelope, whether or not you plan to attend the Annual Meeting.

If you have any questions prior to the Annual Meeting, please call Investor
Relations at (612) 623-3100.

We look forward with pleasure to visiting with you at the Annual Meeting.

Very truly yours,

<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]

LeRoy T. Carlson, Jr. Terrence T. Sullivan
Chairman President and Chief Executive Officer
</TABLE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT

To the Shareholders of

AMERICAN PAGING, INC.

The 1997 Annual Meeting of Shareholders of American Paging, Inc., a Delaware
corporation (the "Company" or "APP"), will be held at the Sheraton Minneapolis
Metrodome, 1330 Industrial Boulevard, Minneapolis, Minnesota, on Monday, May 5,
1997, at 11:00 a.m., local time, for the following purposes:

1. to elect two Class I directors and one Class III director;

2. to approve the Company's 1997 Employee Stock Purchase Plan;

3. to ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for the current fiscal year; and

4. to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.

This Notice of Annual Meeting of Shareholders and Proxy Statement is first
being sent to shareholders on or about April 7, 1997.

The Board of Directors has fixed the close of business on March 27, 1997 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting.

The Board of Directors would like to have all shareholders represented at
the Annual Meeting. Even if you plan to attend the Annual Meeting, please sign,
date and mail your proxy in the enclosed postage prepaid envelope to Harris
Trust and Savings Bank, 311 West Monroe Street, Chicago, Illinois 60606. You
have the power to revoke your proxy by giving written notice of revocation to
the Secretary of the Company at any time before it is voted, by executing a
proxy bearing a later date or by attending the Annual Meeting and voting your
shares in person. Once voted, however, proxies may not be retroactively revoked.

On February 28, 1997, the Company had outstanding 7,588,551 Common Shares,
par value $1.00 per share, and 12,500,000 Series A Common Shares, par value
$1.00 per share. Telephone and Data Systems, Inc., an Iowa corporation [AMEX:
"TDS"], is the sole holder of Series A Common Shares. Each holder of outstanding
Common Shares is entitled to one vote for each Common Share held in such
holder's name with respect to all matters on which holders of Common Shares are
entitled to vote at the Annual Meeting. The holder of outstanding Series A
Common Shares is entitled to 15 votes for each Series A Common Share with
respect to all matters on which the holder of Series A Common Shares is entitled
to vote at the Annual Meeting. Accordingly, the voting power of the Series A
Common Shares was 187,500,000 and the total voting power of all outstanding
shares of capital stock was 195,088,551 at February 28, 1997.

VOTING INFORMATION

A holder of Common Shares may, with respect to the election of the Class I
director to be elected by the Common Shares, vote FOR the election of such
director nominee or WITHHOLD authority to vote for such director nominee. The
holder of Series A Common Shares may, with respect to the election of the Class
I director and the Class III director to be elected by the Series A Common
Shares, vote FOR the election of such director nominees or WITHHOLD authority to
vote for such director nominees. A shareholder may, with respect to the proposal
to approve the Company's 1997 Employee Stock Purchase Plan, (i) vote FOR
approval, (ii) vote AGAINST approval or (iii) ABSTAIN from voting on the

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<PAGE>
proposal. A shareholder may, with respect to the proposal to ratify the
selection of Arthur Andersen LLP as the Company's independent public accountants
for 1997, (i) vote FOR ratification, (ii) vote AGAINST ratification or (iii)
ABSTAIN from voting on the proposal. All properly executed and unrevoked proxies
received in the accompanying form in time for the 1997 Annual Meeting will be
voted in the manner directed therein. If no direction is made, a proxy by a
holder of Common Shares will be voted FOR the election of the named director
nominee to serve as a Class I director, a proxy by the holder of Series A Common
Shares will be voted FOR the election of the named director nominees to serve as
Class I and Class III directors and all proxies will be voted FOR the proposal
to approve the Company's 1997 Employee Stock Purchase Plan and FOR the proposal
to ratify the selection of Arthur Andersen LLP as the Company's independent
public accountants for 1997. If a proxy indicates that all or a portion of the
votes represented by such proxy are not being voted with respect to a particular
matter, such non-votes will not be considered present and entitled to vote on
such matter, although such votes may be considered present and entitled to vote
on other matters and will count for purposes of determining the presence of a
quorum. The holders of a majority of the votes of the stock issued and
outstanding and entitled to vote, present in person or represented by proxy,
will constitute a quorum at the Annual Meeting, except that, in the case of
matters such as the election of directors, where a separate vote by a class or
classes is required, the holders of a majority of the votes of the stock of such
class or classes, present in person or represented by a proxy, will constitute a
quorum entitled to take action with respect to that vote on that matter.

The election of the Class I director to be elected by the holders of Common
Shares requires the affirmative vote of a plurality of the voting power of the
Common Shares present in person or represented by proxy and entitled to vote on
such matter at the Annual Meeting. Accordingly, if a quorum is present at the
Annual Meeting, the person receiving the greatest number of votes by the holders
of Common Shares with respect to the election of such Class I director will be
elected to serve as a Class I director. The election of the Class I director and
the Class III director to be elected by the holder of Series A Common Shares
requires the affirmative vote of a plurality of the voting power of the Series A
Common Shares present in person or represented by proxy and entitled to vote on
such matter at the Annual Meeting. Accordingly, if a quorum is present at the
Annual Meeting, the two persons receiving the greatest number of votes by the
holder of Series A Common Shares with respect to the election of such directors
will be elected to serve as directors of such classes. Since the election of
directors requires only the affirmative vote of a plurality of the voting power
of the Common Shares or a plurality of the voting power of the Series A Common
Shares, respectively, present in person or represented by proxy and entitled to
vote with respect to such matter, withholding authority to vote for a nominee
and non-votes with respect to the election of directors will not affect the
outcome of the election of directors.

Assuming a quorum is present at the Annual Meeting, the approval of the
Company's 1997 Employee Stock Purchase Plan requires the affirmative vote of a
majority of the voting power of the Common Shares and Series A Common Shares
voting together and present in person or represented by proxy and entitled to
vote on such matter at the Annual Meeting. A vote to abstain from voting on such
proposal will be treated as a vote against such proposal. Non-votes with respect
to such proposal will not affect the determination of whether such proposal is
approved.

Assuming a quorum is present at the Annual Meeting, the ratification of the
selection of Arthur Andersen LLP as the Company's independent public accountants
for 1997 requires the affirmative vote of a majority of the voting power of the
Common Shares and Series A Common Shares voting together and present in person
or represented by proxy and entitled to vote on such matter at the Annual
Meeting. A vote to abstain from voting on such proposal will be treated as a
vote against such proposal. Non-votes with respect to such proposal will not
affect the determination of whether such proposal is approved.

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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS

The Company's Board of Directors is divided into three classes. At the 1997
Annual Meeting, two Class I directors will be elected to serve until the Annual
Meeting to be held in 2000, or until their successors are elected and qualified.
In addition, one Class III director will be elected to serve until the Annual
Meeting to be held in 1999. The nominees for election as directors are
identified in the tables below. In the event a nominee, each of whom has
expressed an intention to serve if elected, fails to stand for election, the
persons named in the proxy presently intend to vote for a substitute nominee
designated by the Board of Directors.

NOMINEES

The following persons, if elected at the 1997 Annual Meeting, will serve as
Class I directors until the 2000 Annual Meeting of Shareholders, or until their
successors are elected and qualified.

CLASS I DIRECTORS -- TERM SCHEDULED TO EXPIRE IN 2000
NOMINEE FOR ELECTION BY HOLDERS OF COMMON SHARES

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY SERVED AS
NAME AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------- --- ---------------------------------------- ---------------
<S> <C> <C> <C>
Edwin L. Russell....................... 52 Director of the Company, and Chairman, 1994
President and Chief Executive Officer
of Minnesota Power
</TABLE>

Mr. Russell was appointed President of Minnesota Power, a public,
diversified utility company, in 1995 and was appointed its Chairman and Chief
Executive Officer in 1996. Prior to that, Mr. Russell was employed by J.M. Huber
Corporation between 1989 and 1994 in various capacities, including Vice
President of Corporate Development and Group Vice President. J.M. Huber
Corporation is a privately held, broadly diversified manufacturing and natural
resources company.

NOMINEE FOR ELECTION BY HOLDER OF SERIES A COMMON SHARES

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY SERVED AS
NAME AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------- --- ---------------------------------------- ---------------
<S> <C> <C> <C>
LeRoy T. Carlson, Jr................... 50 Chairman and Director of the Company and 1980
President and Chief Executive Officer
of TDS
</TABLE>

LeRoy T. Carlson, Jr. was appointed Chairman of the Company in 1994. He has
been President and Chief Executive Officer of TDS for more than five years. Mr.
Carlson also serves on the Board of Directors of TDS, United States Cellular
Corporation [AMEX: "USM"], a subsidiary of TDS which provides cellular telephone
services, Aerial Communications, Inc. [NASDAQ: "AERL"], a subsidiary of TDS
which is developing broadband personal communications services, and TDS
Telecommunications Corporation ("TDS Telecom"), a subsidiary of TDS which
operates local telephone companies. He is also the Chairman of USM, AERL and TDS
Telecom. He is the brother-in-law of Debora M. de Hoyos.

4
<PAGE>
CLASS III DIRECTOR -- TERM SCHEDULED TO EXPIRE IN 1999

The following person, if elected at the 1997 Annual Meeting, will serve as a
Class III director until the 1999 Annual Meeting of Shareholders, or until his
successor is elected and qualified.

NOMINEE FOR ELECTION BY HOLDER OF SERIES A COMMON SHARES

The Board of Directors appointed Mr. Terrence T. Sullivan to fill the
vacancy on the Board of Directors resulting from the resignation of John R.
Schaaf in September 1996. Terrence T. Sullivan was also appointed the President
and Chief Executive Officer of the Company in September 1996. Terrence T.
Sullivan had been Vice President-Finance (Chief Financial Officer) and Treasurer
of the Company since January 1996. Prior to that time he was Vice President of
Finance & Administration, CFO and Treasurer for Microelectronics and Computer
Technology Corporation, a consortium which conducts research and development,
from February 1995 to January 1996. Before that time, he was Vice President of
Finance, Administration and Contract Programs for Minnesota Supercomputer
Center, Inc., which provides remote supercomputing services and software, for
more than five years.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE NOMINEES
FOR DIRECTOR.

OTHER DIRECTORS

The following persons are currently directors of the Company whose terms
will continue after the 1997 Annual Meeting.

CLASS II DIRECTORS -- TERMS SCHEDULED TO EXPIRE IN 1998

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY SERVED AS
NAME AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------- --- ---------------------------------------- ---------------
<S> <C> <C> <C>
Debora M. de Hoyos..................... 43 Director of the Company and Partner, 1993
Mayer, Brown & Platt, Chicago, Illinois
Murray L. Swanson...................... 55 Director of the Company and Executive 1991
Vice President-Finance of TDS
</TABLE>

Debora M. de Hoyos has been a partner at the law firm of Mayer, Brown &
Platt since 1985. She has served as managing partner since October 1991. The law
firm of Mayer, Brown & Platt provides legal services to TDS. Ms. de Hoyos is the
sister-in-law of LeRoy T. Carlson, Jr.

Murray L. Swanson has been Executive Vice President-Finance and Chief
Financial Officer of TDS for more than five years. Mr. Swanson also serves on
the Board of Directors of TDS, USM, AERL and TDS Telecom.

Both Ms. de Hoyos and Mr. Swanson were elected by the holder of Series A
Common Shares.

5
<PAGE>
CLASS III DIRECTORS -- TERMS SCHEDULED TO EXPIRE IN 1999

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY SERVED AS
NAME AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------- --- ---------------------------------------- ---------------
<S> <C> <C> <C>
James Barr III......................... 57 Director of the Company and President 1994
and Chief Executive Officer of TDS
Telecommunications Corporation
Jean Burhardt Keffeler................. 51 Business and Management Consultant and 1995
President, The Keffeler Company
</TABLE>

James Barr III has been the President and Chief Executive Officer of TDS
Telecom for more than five years. Mr. Barr also serves on the Board of Directors
of TDS, TDS Telecom and AERL.

Ms. Keffeler has been an independent business and management consultant and
the President of The Keffeler Company, which provides management advisory
services to corporations and governments, since 1991. Immediately prior to that
time, she was Senior Vice President, West Region, of HealthOne Corporation,
which provides health care systems for medical centers and related facilities
and programs, between 1989 and 1991. Ms. Keffeler is a director of National
Computer Systems, Inc., a public company which provides integrated information
management products and services.

Mr. Barr was elected by the holder of Series A Common Shares. Ms. Keffeler
was elected by the holders of Common Shares.

COMMITTEES AND MEETINGS

The Board of Directors of the Company held four meetings during 1996. Each
person who was a director during all of 1996 attended at least 75% of the
meetings in 1996.

The Board of Directors does not presently have a formal nominating
committee.

The Audit Committee of the Board of Directors is composed of Edwin L.
Russell (Chairperson), Debora M. de Hoyos and Jean Burhardt Keffeler. The Audit
Committee, among other things, determines audit policies, reviews external and
internal audit reports and reviews recommendations made by TDS's internal
auditing staff and independent public accountants. The Audit Committee held two
meetings in 1996. Each committee member attended both meetings in 1996.

In 1996, the Board of Directors established a Stock Option Compensation
Committee composed of Edwin L. Russell (Chairperson) and Jean Burhardt Keffeler.
The principal functions of the Stock Option Compensation Committee are to
consider and approve the long-term compensation, in the form of stock options,
under the Company's 1994 Long-Term Incentive Plan. All actions of the Stock
Option Compensation Committee in 1996 were taken by unanimous written consent.

6
<PAGE>
EXECUTIVE OFFICERS

Set forth below is a table identifying the executive officers of the Company
who are not identified above under "Election of Directors."

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
Dennis M. Beste........................ 48 Vice President-Finance, Chief Financial Officer and
Treasurer
Malcolm T. Humphrey.................... 51 Vice President-Information Technology and Chief
Information Officer
James F. Kelly......................... 47 Vice President-Sales, Marketing and Field Operations
George H. Orr.......................... 51 Vice President-Human Resources
Larry A. Piumbroeck.................... 44 Vice President-Development and Engineering
Michelle M. Haupt...................... 38 Controller
Michael G. Hron........................ 52 Secretary
</TABLE>

Dennis M. Beste was appointed Vice President-Finance, Chief Financial
Officer and Treasurer of the Company in January 1997. Prior to that, Mr. Beste
was Chief Operating Officer of Jacobs Trading Company, a wholesaler and retailer
of excess and returned merchandise, from 1993 to 1996. From 1992 to 1993, Mr.
Beste was a financial and general management consultant to small businesses and
served as the Principal and General Manager of Beste's, Inc., a start-up
manufacturer of sporting goods equipment. Prior to that, he was the Corporate
Vice President and Controller of Tonka Corporation, a worldwide manufacturer and
marketer of toys and games, from 1990 to 1991.

Malcolm T. Humphrey was appointed Vice President-Information Technology and
Chief Information Officer of the Company in 1995. Prior to that time, he was
Senior Vice President, Information Services Department, of GMAC Mortgage Corp.,
a corporation which provides mortgage loans, from 1991 to 1995. Before that
time, he was employed by the Federal Reserve Bank of Philadelphia for more than
five years, most recently as Senior Vice President, Computer Services
Department.

James F. Kelly was appointed Vice President-Sales, Marketing and Field
Operations of the Company in November 1996. Prior to that, he was Vice
President, Sales & Marketing for Jostens, Inc., a company which provides printed
material, merchandise and services to business, schools and sport markets,
between 1994 and 1996. Between 1992 and 1994, Mr. Kelly was Area Vice President
for Carlson Marketing Group, which is a marketing services, consulting and
execution agency. Prior to that, he was Director of Marketing for an American
Express subsidiary between 1987 and 1992.

George H. Orr has been Vice President-Human Resources of the Company since
1991. From 1989 through 1990, he was Director of Management Development and
General Manager of the Company's Oklahoma City operation.

Larry A. Piumbroeck was appointed Vice President-Development and Engineering
in September 1996. Prior to that, he was Vice President-Business Development
since April 1996. Between 1994 and April 1996, he was Director of PCS
Development and General Manager of the Company's Minnesota operations. Before
that, he was Vice President-Regional General Manager for USM, TDS's subsidiary
which provides cellular service, between 1987 and 1994.

Michelle M. Haupt was appointed Controller of the Company in September 1996.
Between 1994 and September 1996, she was Financial Reporting Manager of the
Company. Before that time, she was employed by Echo Bay Mines Ltd., a
publicly-held gold mining company between 1988 and 1993. During her employment
at such company, Ms. Haupt held the positions of Senior Internal Auditor between
1988 and 1989, and Manager, Financial Accounting and Reporting, between 1989 and
1993.

7
<PAGE>
Michael G. Hron, Secretary of the Company, has been a partner in the law
firm of Sidley & Austin for more than five years. Mr. Hron is also the Secretary
of TDS. The law firm of Sidley & Austin provided legal services to TDS and to
the Company in 1996.

PROPOSAL 2
1997 EMPLOYEE STOCK PURCHASE PLAN

The Board of Directors has determined that it is in the best interests of
the Company and its shareholders to approve the 1997 Employee Stock Purchase
Plan of the Company (the "Plan").

The purpose of the Plan is to encourage and facilitate the purchase of
Common Shares by eligible employees of the Company and its subsidiaries and to
provide an additional incentive to promote the best interests of the Company and
its subsidiaries and an additional opportunity to participate in their economic
progress. The Plan was adopted by the Board of Directors of the Company (the
"Board") and became effective January 1, 1997. The Plan is subject to the
approval of the shareholders of the Company within twelve months before or after
its adoption by the Board. The Plan will be administered by a two-person
committee (the "Committee") composed of persons who are ineligible to
participate in the Plan. Subject to the express provisions of the Plan, the
Committee will have complete authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it and to make all other
determinations necessary or advisable for the administration of the Plan. The
Board may at any time, and from time to time, amend the Plan in any respect,
except that, without shareholder approval, no amendment may be made changing the
number of shares to be reserved under the Plan (unless certain changes occur in
the Company's capital structure as described in the Plan), or that would
otherwise require shareholder approval under applicable law.

The Plan will terminate on December 31, 1998 (the "Termination Date"), or,
if earlier, upon the purchase by participants of all shares that may be issued
under the Plan or any earlier time in the discretion of the Board. The date on
which the Plan terminates will be treated as a "Purchase Date" under the Plan,
as described below.

In general, any employee of the Company or any of its subsidiaries that has
adopted the Plan with the prior approval of the Company (a "participating
subsidiary") is eligible to participate in the Plan as of the effective date of
the Plan, provided that such employee has at least three months of continuous
service with the Company or a participating subsidiary immediately prior to such
effective date (a "Participant"). Under the Plan, an entry date occurs on
January 1, 1997 and the first day of each subsequent calendar quarter.
Approximately 825 employees were eligible to participate in the Plan as of
January 1, 1997.

The maximum number of shares available for purchase under the Plan will be
100,000 Common Shares, subject to adjustment in the event of certain changes to
the Company's capital structure, as described in the Plan. Notwithstanding
anything to the contrary in the Plan, no employee may be granted an option under
the Plan to purchase Common Shares if such employee, immediately after the grant
of the option, would own stock (including shares subject to the option)
possessing five percent or more of the total combined voting power or value of
all classes of issued and outstanding stock of the Company, TDS or any of their
subsidiaries. In addition, no Participant may be granted an option to purchase
Common Shares that permits the Participant to purchase shares in any calendar
year under the Plan and all other employee stock purchase plans (within the
meaning of section 423 of the Internal Revenue Code of 1986, as amended (the
"Code")) of the Company, TDS and their subsidiaries with an aggregate fair
market value (determined at the time such option is granted) in excess of
$25,000.

At least 15 days (or such other period as may be prescribed by the
Committee) prior to the first entry date as of which an employee is eligible to
participate in the Plan, an employee may file an election specifying his chosen
rate of payroll deduction contributions. Under the Plan, an employee may elect
to make payroll deduction contributions in an amount equal to a whole percentage
not less than one and

8
<PAGE>
not more than 15 percent of the employee's compensation (as defined in the Plan)
for each payroll period, beginning with the first pay date which occurs on or
after the entry date as of which such employee commences participation in the
Plan. At least 15 days (or such other period as may be prescribed by the
Committee) prior to any entry date, a Participant will have the right to elect
to decrease (but not to increase) his or her designated rate of payroll
deductions under the Plan. An election by a Participant to decrease his
designated rate of payroll deductions to zero percent of his compensation will
be deemed an election to abandon his right to purchase Common Shares under the
Plan, as described below.

The Committee will cause to be established a separate "Employee Stock
Purchase Account" on behalf of each Participant to hold payroll deduction
contributions made under the Plan. Subject to a Participant's right of
abandonment described below, the balance of each Participant's Employee Stock
Purchase Account will be applied on each Purchase Date to purchase the number of
whole Common Shares determined by dividing the balance of such Participant's
Employee Stock Purchase Account as of such date by the Purchase Price. Under the
Plan, a "Purchase Date" occurs on June 30, 1997, December 31, 1997, June 30,
1998 and December 31, 1998. The "Purchase Price" under the Plan is, with respect
to a Purchase Date, 85 percent of the closing price of a Common Share on the
American Stock Exchange on such date, or if such date is not a trading day, 85
percent of the closing price of a Common Share on the American Stock Exchange on
the next preceding trading day, rounded up to the nearest whole cent. If the
number of shares to be purchased by a Participant on any Purchase Date is less
than ten, the Participant will not be permitted to purchase any Common Shares as
of such Purchase Date. In addition, a Participant will not be permitted to
purchase more than 5,333 Common Shares during any calendar year. Such maximum
number of shares is equal to $25,000 divided by $4.6875, the closing price of a
Common Share on the American Stock Exchange on December 31, 1996.

Following each Purchase Date, the Company will purchase or issue Common
Shares, in its sole discretion, and each Participant will be issued a
certificate representing the Common Shares purchased by the Participant under
the Plan on such date. In the event the amount of shares to be purchased on
behalf of all Participants collectively exceeds the shares available for
purchase under the Plan, the number of Common Shares to be purchased by each
Participant will be reduced in a manner described in the Plan, or such other
method which the Committee determines to be equitable, in its sole discretion.

The Company believes that the Plan qualifies under section 423 of the Code
as an employee stock purchase plan. Under section 423 of the Code the
Participant does not recognize any taxable income at the time Common Shares are
purchased under the Plan. The following is a brief summary of the federal income
tax consequences under the Plan.

If a Participant disposes of Common Shares purchased under the Plan within
two years after January 1, 1997 (referred to herein as the "grant date") or
within one year after an applicable Purchase Date, whichever is later (a
"disqualifying disposition"), the Participant will recognize ordinary
compensation income in the amount of the excess of the fair market value of the
Common Shares on such Purchase Date over the Purchase Price of the Common
Shares. The Participant's cost basis in the Common Shares will be increased by
the amount of such ordinary compensation income. If the amount realized upon
such disposition exceeds the Participant's cost basis in the Common Shares (as
so increased), the Participant will recognize capital gain in the amount of the
difference between the amount realized and such adjusted cost basis. Under
current tax law, gain on capital assets held for less than one year is treated
as "short-term" capital gain which is not eligible for certain preferential tax
treatment afforded "long-term" capital gain. In the event the amount realized is
less than the cost basis in the Common Shares (as so increased), the Participant
will recognize capital loss in the amount of the difference between the adjusted
cost basis and the amount realized.

If a Participant disposes of Common Shares purchased under the Plan two
years or more after the grant date or one year or more after the applicable
Purchase Date, whichever is later (a "qualifying disposition"), the tax
treatment will be different. The Participant will recognize ordinary
compensation

9
<PAGE>
income in the amount of the lesser of (i) the excess of the fair market value of
the Common Shares on the grant date over the option price of the Common Shares
(in this case, 85 percent of the closing price for such Common Shares on the
American Stock Exchange) on the grant date, and (ii) the excess of the amount
realized over the Purchase Price of the Common Shares. The Participant's cost
basis in the Common Shares will be increased by the amount of such ordinary
compensation income. In addition, the Participant will recognize capital gain
equal to the difference (if any) between the amount realized upon such
disposition and the cost basis in the Common Shares (as so increased). In the
event the amount realized is less than the Purchase Price, the Participant will
recognize capital loss in the amount of the difference between the Purchase
Price and the amount realized.

The Company will not be entitled to a deduction for any excess of the fair
market value of the Common Shares over the Purchase Price, except to the extent
the Participant recognizes ordinary compensation income upon a disqualifying
disposition.

The following table specifies the number of Common Shares and the value of
the discount purchase price assuming all Common Shares subscribed for by the
named group are purchased:

NEW PLAN BENEFITS
1997 EMPLOYEE STOCK PURCHASE PLAN

<TABLE>
<CAPTION>
DOLLAR NUMBER OF COMMON
NAME VALUE(1) SHARES(2)
- -------------------------------------------------------------------- -------------- ------------------
<S> <C> <C>
Executive Group..................................................... $ -- --
Non-Executive Director Group........................................ -- --
Non-Executive Employee Group........................................ 70,314 100,000
-------------- --------
TOTAL (3)..................................................... $ 70,314 100,000
-------------- --------
-------------- --------
</TABLE>

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

(1) Represents the product of (i) the number of Common Shares subscribed for and
(ii) the difference between $4.6875, the closing price of the Common Shares
on December 31, 1996, and 85% of such closing price.

(2) Represents the number of Common Shares subscribed for by the named executive
officer or groups (calculated as the amount of annual compensation elected
to be deducted by the named person or group divided by $3.984375, which
represents 85% of the closing price of the Common Shares on December 31,
1996).

(3) This assumes that the maximum number of shares available will be purchased
under the Plan.

This description of the 1997 Employee Stock Purchase Plan is a summary only
and is qualified by the terms of the 1997 Employee Stock Purchase Plan itself, a
copy of which is attached to this Proxy Statement as Annex A.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1997 EMPLOYEE
STOCK PURCHASE PLAN.

PROPOSAL 3
INDEPENDENT PUBLIC ACCOUNTANTS

The directors anticipate continuing the services of Arthur Andersen LLP as
independent public accountants for the current fiscal year. Representatives of
Arthur Andersen LLP, who served as independent public accountants for the last
fiscal year, are expected to be present at the Annual Meeting of Shareholders
and will have the opportunity to make a statement and respond to appropriate
questions raised by shareholders at the Annual Meeting or submitted in writing
prior thereto. Shareholder ratification of the selection of Arthur Andersen LLP
as the Company's independent public accountants is not required by the Bylaws or
otherwise. However, as a matter of good corporate practice, the Board of
Directors has elected to seek such ratification by the affirmative vote of the
holders of a majority of the voting power of all classes of capital stock
present in person or represented by proxy and entitled to vote with respect to
such matter at the Annual Meeting. Should the shareholders fail to ratify the
selection of Arthur Andersen LLP as independent public accountants, the Board of
Directors will consider whether to retain such firm for the year ending December
31, 1997, subject to the obligations of the Company under the Intercompany
Agreement to engage the firm of independent public accountants either selected
by TDS or selected by the Audit Committee of the Company and acceptable to TDS.
See "Executive Compensation and Other Information -- Compensation Committee
Interlocks and Insider Participation -- Intercompany Agreement -- Accountants
and Legal Counsel."

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL
YEAR.

10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION

SUMMARY COMPENSATION TABLE

The following table sets forth compensation information for the President
and Chief Executive Officer of the Company and the other named executive
officers for services rendered during the years ended December 31, 1996, 1995
and 1994.

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
AWARDS
--------------- PAYOUTS
ANNUAL COMPENSATION(2) SECURITIES -----------
---------------------------------- UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY(3) BONUS(4) OPTIONS/SARS(5) PAYOUTS(6) COMPENSATION(7)
- ------------------------------ --------- ---------- ----------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Terrence T. Sullivan (8) 1996 $ 140,243 $ 46,800 12,000 $ -- $ 1,270
President and Chief 1995 -- -- -- -- --
Executive Officer 1994 -- -- -- -- --

John R. Schaaf (9) 1996 $ 266,838 $ 8,175 -- $ -- $ 494
Former President and 1995 218,000 26,596 -- 700,436 8,501
Chief Executive Officer 1994 185,000 32,749 50,000 -- 6,918

Robert A. McClure (10) 1996 $ 131,229 $ -- -- $ -- $ 8,654
Vice President-Operations 1995 125,000 16,250 -- 79,341 8,639
1994 115,000 14,532 20,000 -- 8,581

Malcolm T. Humphrey (11) 1996 $ 119,792 $ 28,800 -- $ -- $ 11,159
Vice President-Information 1995 57,500 15,573 12,000 -- 84
Technology and Chief 1994 -- -- -- -- --
Information Officer

George H. Orr 1996 $ 104,792 $ 6,300 -- $ -- $ 9,612
Vice President-Human 1995 100,000 14,000 -- 113,014 9,024
Resources 1994 90,000 11,529 20,000 -- 8,434

Larry A. Piumbroeck 1996 $ 94,059 $ 22,620 7,500 $ -- $ 7,757
Vice President- 1995 89,675 8,968 -- -- 1,303
Development 1994 65,914 9,375 7,500 -- 1,059
and Engineering
</TABLE>

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

(1) Mr. LeRoy T. Carlson, Jr., Chairman of the Company, receives no
compensation directly from the Company. Mr. Carlson is compensated by TDS in
connection with his services for TDS and all TDS subsidiaries. Although TDS
allocates part of Mr. Carlson's salary and bonus to the Company pursuant to
the Intercompany Agreement described below, such allocation in the aggregate
was less than $100,000 for 1996, 1995 and 1994.

(2) Does not include the discount amount of any employee stock purchase plan
since such plans are generally available to all eligible salaried employees.
Does not include the value of any perquisites and other personal benefits,
securities or property, since the aggregate amount of such compensation is
less than the lesser of either $50,000 or 10% of the total of annual salary
and bonus reported for the named executive officers above.

(3) Represents the dollar value of base salary (cash and non-cash) earned by
the named executive officer during the fiscal year identified.

(4) Represents the dollar value of bonus (cash and non-cash) earned by the
named executive officer during the fiscal year identified. See "Executive
Officer Compensation Report."

(5) Represents the number of Common Shares subject to stock options awarded
during the fiscal year identified. No stock appreciation rights ("SARs")
were awarded, either on a stand-alone basis or in tandem with options,
during any of the identified fiscal years.

(6) Represents payouts under the Company's Long-Term Incentive Plan. Pursuant
to such plan, senior managers of the Company, including certain executive
officers named in the Summary Compensation Table, received appreciation
rights ("ARs") as of January 1, 1988 (or subsequently if the date of hire
was after January 1, 1988). The ARs allowed grantees to receive an

11
<PAGE>
amount, in TDS Common Shares or cash, equivalent to the difference between
the estimated market value of the ARs on the grant date and the exercise
date. The estimated value of the ARs at the grant date and exercise date was
based on a weighted formula of revenue, operating cash flow and the number
of pagers in service. The ARs became fully vested on December 31, 1994, and
all ARs were exercised in 1995. All ARs under the plan were settled in cash
and the plan expired as of December 31, 1994.

(7) Includes contributions for the benefit of the named executive officer under
the TDS Tax-Deferred Savings Plan ("TDSP") and the Company's Secure and
Future Earnings Plan ("SAFE"), and the cost of insurance premiums paid
during the covered fiscal year with respect to term life insurance for the
benefit of the named executive ("Life Insurance"), as indicated below for
1996:

<TABLE>
<CAPTION>
TERRENCE T. JOHN R. ROBERT A. MALCOLM T. GEORGE H. LARRY A.
SULLIVAN SCHAAF MCCLURE HUMPHREY ORR PIUMBROECK
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
TDSP................................ $ 975 $ -- $ -- $ 1,200 $ 2,376 $ 1,953
SAFE................................ -- -- 8,355 9,687 6,998 5,589
Life Insurance...................... 295 494 299 272 238 215
----------- ----- ----------- ----------- ----------- -----------
$ 1,270 $ 494 $ 8,654 $ 11,159 $ 9,612 $ 7,757
----------- ----- ----------- ----------- ----------- -----------
----------- ----- ----------- ----------- ----------- -----------
</TABLE>

(8) Mr. Sullivan was appointed Vice President-Finance, Chief Financial Officer
and Treasurer of the Company in January 1996, and was appointed President
and Chief Executive Officer of the Company upon the resignation of Mr. John
R. Schaaf in September 1996. See "Compensation and Severance Arrangement
with Terrence T. Sullivan" below.

(9) Mr. Schaaf resigned as President of the Company in September 1996. See
"Severance Arrangement with John R. Schaaf" below.

(10) Mr. McClure resigned as Vice President-Operations of the Company in January
1997.

(11) Mr. Humphrey joined the Company in June 1995.

GENERAL INFORMATION REGARDING OPTIONS AND SARS

The following tables show, as to the executive officers who are named in the
Summary Compensation Table, information regarding options and/or SARs.

INDIVIDUAL OPTION/SAR GRANTS IN 1996

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION
UNDERLYING OPTIONS/SARS FOR OPTION TERMS(5)
OPTIONS/SARS GRANTED TO EXERCISE MARKET EXPIRATION --------------------
NAME(1) GRANTED(2) EMPLOYEES(3) PRICE PRICE(4) DATE 5% 10%
- ---------------------------------------- ------------- ------------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Terrence T. Sullivan (6)................ 12,000 36.4% $ 6.62 $ 6.62 2/16/02 $ 27,319 $ 62,073
Larry A. Piumbroeck (7)................. 7,500 22.7% $ 6.74 $ 6.74 2/16/02 $ 16,862 $ 38,153
</TABLE>

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

(1) Mr. LeRoy T. Carlson, Jr., does not receive options or SARs from APP. Mr.
Carlson receives long-term compensation from TDS, but this is not charged to
APP by TDS.

(2) Represents the number of APP Common Shares underlying options/SARs which
were awarded for the named executive during the fiscal year.

(3) Represents the percent of total APP Common Shares underlying options/SARs
awarded to employees during the fiscal year.

(4) Represents the fair market value of the Common Shares as of the award date.

(5) Represents the potential realizable value of each grant of options,
assuming that the market price of Common Shares appreciates in value from
the award date to the end of the option term at the indicated annualized
rates.

(6) On January 26, 1996, Mr. Sullivan was granted an option to purchase 12,000
Common Shares pursuant to the APP 1994 Long-Term Incentive Plan. The
exercise price was equal to the fair market value of the Common Shares on
the date of grant. The

12
<PAGE>
option becomes exercisable with respect to 4,000 Common Shares on February
16, 1997, February 16, 1998 and February 16, 1999. See also "Compensation
and Severance Arrangement with Terrence T. Sullivan" below.

(7) On April 1, 1996, Mr. Piumbroeck was granted options to purchase 7,500
Common Shares pursuant to the APP 1994 Long-Term Incentive Plan. The
exercise price was equal to the fair market value of the Common Shares on
the date of grant. The option becomes exercisable with respect to 2,500
Common Shares on February 16, 1997, February 16, 1998 and February 16, 1999.

AGGREGATED DECEMBER 31, 1996 OPTION/SAR VALUE(1)

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-
UNEXERCISED OPTIONS/SARS MONEY OPTIONS/SARS AT
AT DECEMBER 31, 1996(2) DECEMBER 31, 1996(3)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Terrence T. Sullivan (4)................................. -- 12,000 -- --
John R. Schaaf (5)....................................... 20,000 -- -- --
Robert A. McClure (6).................................... 8,000 12,000 -- --
Malcolm T. Humphrey (7).................................. 3,000 9,000 -- --
George H. Orr (8)........................................ 8,000 12,000 -- --
Larry A. Piumbroeck (9).................................. 3,000 4,500 -- --
(10)................................... -- 7,500 -- --
</TABLE>

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

(1) No options were exercised in 1996.

(2) Represents number of shares subject to free-standing options as indicated,
as of December 31, 1996.

(3) The closing price of the Common Shares on December 31, 1996 was $4.6875.
Since the exercise price for all specified options is in excess of $4.6875,
no options were in-the-money at December 31, 1996.

(4) Such options were granted as of January 26, 1996 at an exercise price of
$6.62 per share. The option becomes exercisable with respect to 4,000 Common
Shares on February 16, 1997, February 16, 1998 and February 16, 1999, and
expires on February 16, 2002. See also "Compensation and Severance
Arrangement with Terrence T. Sullivan" below.

(5) Mr. Schaaf resigned as President of the Company in September 1996.

(6) Mr. McClure resigned as Vice President-Operations of the Company in January
1997.

(7) Such options were granted as of June 19, 1995 at an exercise price of $6.75
per share. The option becomes exercisable with respect to 3,000 shares on
each of February 16, 1996, February 16, 1997, February 16, 1998 and February
16, 1999, and expires on February 16, 2002.

(8) Such options were granted in connection with the Company's initial public
offering ("IPO") on February 16, 1994 at the IPO price of $14.00 per share.
The option becomes exercisable with respect to 4,000 shares on February 16,
1995 and on each anniversary thereof through February 16, 1999, and expires
on February 16, 2002.

(9) Such options were granted in connection with the Company's IPO on February
16, 1994 at the IPO price of $14.00 per share. The option becomes
exercisable with respect to 1,500 shares on February 16, 1995 and on each
anniversary thereof through February 16, 1999, and expires on February 16,
2002.

(10) Such options were granted as of April 1, 1996 at an exercise price of $6.74
per share. The option becomes exercisable with respect to 2,500 shares on
February 16, 1997, February 16, 1998 and February 16, 1999 and expires on
February 16, 2002.

COMPENSATION AND SEVERANCE ARRANGEMENT WITH TERRENCE T. SULLIVAN

Pursuant to a compensation and severance arrangement approved by the
Chairman of the Company, Mr. Terrence T. Sullivan is entitled to, among other
things, (i) a salary of $195,000 effective September 1, 1996, (ii) a target
bonus opportunity of 15% of such base salary in 1996, (iii) a target bonus
percentage of 40% for 1997 and (iv) a severance allowance of up to one year and
six months of his base salary in the event that a change-in-control of the
Company results in the constructive termination of Mr. Sullivan. In addition,
Mr. Sullivan will be awarded an additional 16,000 automatic stock options for
the

13
<PAGE>
remaining years of the current APP Stock Option Program starting in 1997 (for a
total of 20,000 stock option shares per year), and an additional
performance-based stock option award of 16,000 stock option shares at target
performance for the remaining years of the current Stock Option Program starting
in 1997 (for a total of 20,000 stock option shares per year at target
performance). Mr. Sullivan will also receive an additional 6,000 automatic stock
options for functioning as APP's CEO for the last four months of 1996, and an
additional performance-based stock option award for 1996, which at target
performance would generate 6,000 stock option shares. Mr. Sullivan will also
have a 670 target stock option opportunity for company performance over the
final four months of 1996. How many stock option shares are earned under this
stock option opportunity will depend on how well APP performs in meeting the
target/performance measures to be approved by the Chairman. This new Stock
Option Program is subject to approval by APP's two outside directors who are
members of APP's Stock Option Committee.

SEVERANCE ARRANGEMENT WITH JOHN R. SCHAAF

Pursuant to a severance arrangement approved by the Chairman of the Company,
Mr. Schaaf received a severance package which includes among other things, (i)
the equivalent of 15 months of full pay ($18,167 per month), (ii) up to an
additional three months of full pay ($18,167 per month) if Mr. Schaaf has not
accepted a full-time position after such 15-month period, (iii) an additional
bonus of $10,900 for 1995; (iv) a bonus of $8,175 for 1996; and (v) the payment
by the Company of up to $54,500 of outplacement assistance. In consideration
therefor, Mr. Schaaf agreed, among other things, to provide consulting services
to the Company for up to four full days per month through March 15, 1998 or
until he secures another full-time position, whichever comes first, and to not
compete with the Company for the two-year period ending September 15, 1998.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company, TDS or their subsidiaries or
affiliates receive an annual payment of $12,000 plus $1,000 for attendance at
each regularly scheduled or special meeting of the Board of Directors and $500
for attendance at each Audit Committee meeting. All directors are reimbursed for
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors and meetings of committees thereof.

EXECUTIVE OFFICER COMPENSATION REPORT

This report is submitted by LeRoy T. Carlson, Jr., Chairman of the Company,
who in effect functions as the compensation committee of the Board of Directors,
except with respect to long-term compensation, and the Stock Option Compensation
Committee, which approves long-term compensation under the Company's 1994
Long-Term Incentive Plan.

The Chairman, who is also the President of TDS, is paid by TDS and receives
no compensation directly from the Company. (See Footnote (1) to the Summary
Compensation Table.) As the President of TDS, the Chairman of the Company
represents the controlling shareholder of the Company.

The Stock Option Compensation Committee of the Company consists of Edwin L.
Russell and Jean Burhardt Keffeler. The principal functions of the Stock Option
Compensation Committee are to consider and approve long-term compensation under
the Company's 1994 Long-Term Incentive Plan. The Company's Stock Option
Compensation Committee is composed of members of the Board of Directors who are
not officers or employees of TDS or the Company or their subsidiaries, and who
are not eligible to receive options under the Company's 1994 Long-Term Incentive
Plan.

The Company's compensation policy for executive officers is intended to
provide incentives for the achievement of corporate and individual performance
goals and to provide compensation consistent with the financial performance of
the Company. The Company's policy is based on the belief that the incentive
compensation performance goals for executive officers should be based on factors
over which

14
<PAGE>
such officers have significant control and which are important to the Company's
long-term success. It is also believed that compensation paid should be
appropriate in relation to the financial performance of the Company and should
be sufficient to enable the Company to attract and retain individuals possessing
the talents required for the Company's long-term successful performance.

Executive compensation consists of both annual and long-term compensation.
Annual compensation consists of a base salary and bonus. The Company evaluates
the base salary and bonus of each executive officer on an annual basis. Annual
compensation decisions are based partly on annual performance measures, as
described below. Long-term compensation is intended to compensate executives
primarily for their contributions to long-term increases in shareholder value.
Long-term compensation is currently provided through the Company's 1994
Long-Term Incentive Plan.

The process of determining base salary begins with establishing an
appropriate salary range for each executive officer. Each officer's range is
based upon the particular duties and responsibilities of the officer, as well as
salaries for comparable positions with other companies in the wireless messaging
industry. These other companies may include the companies included in the peer
group index described below under "Performance Graph," as well as other
companies to the extent considered appropriate in the judgment of the Chairman.
No written or formal list of specific companies is prepared. Instead, the Vice
President-Human Resources of TDS and the President of the Company provide the
Chairman with various sources of information about executive compensation at
other companies, such as compensation reported in proxy statements of comparable
companies and salary surveys published by various organizations. The Chairman
uses these sources and makes a personal determination of appropriate sources,
companies and ranges for each executive officer, based on the recommendations of
the Vice President-Human Resources of TDS and the President of the Company with
respect to all officers other than the President. The base salary of each
officer is set within a range considered to be appropriate in the judgment of
the Chairman based on an assessment of the particular responsibilities and
performance of such officer taking into account the performance of the Company
(as discussed below), other comparable companies, the wireless messaging
industry, and the economy in general during the immediately preceding year. No
written or formal salary survey is prepared nor is there formal documentation of
the ranges considered appropriate in the judgment of the Chairman. Instead, the
Chairman makes the determination of the appropriate ranges based on the total
mix of information available to him. The salaries of the President and the other
executive officers are believed to be at or slightly higher than the median of
the ranges considered to be relevant in the judgment of the Chairman. The ranges
considered to be relevant by the Chairman are based on his informed judgment,
using the information provided to him by the Vice President-Human Resources of
TDS and the President of the Company, as discussed above. The ranges are not
based on any formal analysis nor is there any documentation of the ranges which
the Chairman considers relevant in making his compensation decisions.

Annually, the nature and extent of each executive officer's personal
accomplishments and contributions for the year are evaluated by the President.
With regard to all executive officers who are employees other than the
President, the President evaluates the information in terms of the personal
objectives given by the President or other direct supervisor to such executive
officer for the performance appraisal period. The President also makes an
assessment of how well the Company did as a whole during the year and the extent
to which the executive officer contributed to the results. Except as discussed
below for the bonus program, no specific measures of performance are considered
determinative in the base salary compensation decisions of executive officers.
Instead, all of the facts and circumstances are taken into consideration by the
President and the Chairman in their executive compensation decisions.
Ultimately, it is the judgment of the Chairman based on the recommendation of
the Vice President-Human Resources of TDS and the President of the Company that
determines an executive's base salary based on the total mix of information
rather than on relationships to any specific measures of performance.

15
<PAGE>
With respect to each executive officer other than the President, the Vice
President-Human Resources of TDS and the President of the Company make
recommendations regarding the base salary to the Chairman, who represents the
controlling shareholder and who exercises final approval.

In addition, the executive officers participate in a bonus program. The
objectives of the 1996 Bonus Program for the Senior Management Staff of American
Paging (the "1996 Bonus Plan") were: (i) to provide suitable incentives for the
senior corporate staff of the Company to extend their best efforts to achieve
superior results in relation to key performance targets, (ii) to suitably reward
the Company's senior corporate staff in relation to their success in meeting and
exceeding these performance targets and (iii) to help the Company attract and
retain talented management personnel in positions of critical importance to the
success of the Company.

For target performance, the 1996 Bonus Plan was designed to generate a 1996
bonus equal to 25% of the executive's base salary (30% for the President). Under
the 1996 Bonus Plan, the size of the actual bonus is increased or decreased
depending on the Company's 1996 achievements with respect to the performance
categories. No bonus is paid under such plan if the minimum performance level is
not achieved in at least one of these categories. The maximum bonus that could
be generated, which would require exceptional performance in all areas, would
equal 50% of the executive's base salary. The performance categories for the
bonus and the weight assigned to each category were: operating cash flow
(EBITDA) (45%), service revenue (40%), and individual objectives (15%). The
minimum performance levels for operating cash flow (EBITDA) and service revenue
were not met in 1996.

In the fourth quarter of 1996, the Chairman approved a 1996 Special Bonus
Opportunity Program which provided an opportunity for the President and the
executive team to earn a special bonus depending upon the achievement of
specific individual projects. Based on the achievement of such projects, the
Chairman approved bonuses as indicated above in the Summary Compensation Table
for certain executive officers for 1996.

Financial personnel prepare calculations for the President and Chairman
which define whether the performance categories discussed above have been met,
exceeded or not met in any fiscal year. The Chairman also has presented to him,
and has access to, numerous performance measures and financial statistics
prepared by Company financial personnel. This financial information includes the
audited financial statements of the Company, as well as internal financial
statements such as budgets and their results, operating statistics and various
analyses. The Chairman will not be limited in his analysis to such information,
and may consider other factual or subjective factors as he deems appropriate in
his compensation decisions.

The base salary and bonus ranges and actual compensation of the President
(principal executive officer) of the Company are determined in a manner similar
to the foregoing, but with some differences. In addition to the factors
described above for all executive officers in general, the Chairman considers
compensation paid to chief executive officers of other comparable companies,
including those which are divisions or subsidiaries of parent companies. No
written or formal list of specific companies is prepared. Instead, the Chairman
is provided with various sources of information about executive compensation at
other companies by the Vice President-Human Resources of TDS. These sources
include compensation reported in proxy statements of comparable companies and
salary surveys published by various organizations. The Chairman uses these
sources and makes a personal determination of appropriate sources, companies and
ranges for the President. The base salary of the President is set within a range
considered to be appropriate in the judgment of the Chairman based on an
assessment of the particular responsibilities and performance of such officer
taking into account the performance of the Company (as discussed above), other
comparable companies, the wireless messaging industry, and the economy in
general during the period. No written or formal salary survey is prepared nor is
the range considered appropriate in the judgment of the Chairman formally
documented. As discussed above, the Chairman approved a base salary of $195,000
for the President effective September 1, 1996. The salary

16
<PAGE>
of the President is believed to be at or slightly higher than the median of the
range considered to be relevant in the judgment of the Chairman. The range
considered to be relevant by the Chairman is based on his informed judgment,
using the information provided to him by the Vice President-Human Resources of
TDS, as discussed above. The range is not based on any formal analysis nor is
there any documentation of the range which the Chairman considers relevant in
making his compensation decisions for the President. As with the other executive
officers, the base salary and compensation decisions for the President are based
on all facts and circumstances rather than related to any specific measures of
performance. No specific measures of performance are considered determinative in
the compensation of the President. Instead, all of the facts and circumstances
are taken into consideration by the Chairman in his decisions with respect to
executive compensation for the President. Ultimately, it is the informed
judgment of the Chairman that determines the salary and bonus for the President,
this being based on the total mix of information rather than on any specific
measures of performance.

The President and each of the other executive officers named in the Summary
Compensation Table are also eligible to participate in the Company's 1994
Long-Term Incentive Plan. The options granted in 1996 to the President and the
other named executive officers are shown in the above tables.

SECTION 162(m) OF THE CODE. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), generally limits to $1 million the amount that a
publicly held corporation is allowed to deduct each year for the compensation
paid to each of the corporation's chief executive officer and the corporation's
four most highly compensated officers other than the chief executive officer,
subject to certain exceptions. The Company does not believe that the $1 million
deduction limitation should have a material effect on the Company in the near
future. If the $1 million deduction limitation is expected to have a material
effect on the Company in the future, the Company will consider ways to maximize
the deductibility of executive compensation, while retaining the discretion the
Company deems necessary to compensate executive officers in a manner
commensurate with performance and the competitive environment for executive
talent.

This Executive Officer Compensation Report is submitted by the Chairman of
the Board of Directors, LeRoy T. Carlson, Jr. and by the Stock Option
Compensation Committee, Edwin L. Russell (Chairperson) and Jean Burhardt
Keffeler.

PERFORMANCE GRAPH

The rules of the Securities and Exchange Commission ("SEC") require each
public company to include a performance graph comparing the cumulative total
shareholder return on such company's common stock for the five preceding fiscal
years, or such shorter period as the registrant's class of securities has been
registered with the SEC, with the cumulative total returns of a broad equity
market index (such as Standard & Poor's 500 Stock Index) and a peer group or
similar index. The Common Shares began trading on the American Stock Exchange
under the symbol "APP" on February 10, 1994. Accordingly, the performance graph
included in this Proxy Statement shows the period from February 10, 1994 through
December 31, 1996.

The following chart graphs the performance of the cumulative total return to
shareholders (stock price appreciation plus dividends) between February 10, 1994
and December 31, 1996 in comparison to returns of the Standard & Poor's 500
Composite Stock Price Index and a peer group index. The peer group index was
constructed specifically for the Company and includes the following wireless
messaging companies: A Plus Network, Inc., American Paging, Inc., Arch
Communications Group, Inc., Metrocall, Inc., Mobile Telecommunications
Technologies Corp., Pagemart Wireless, Inc. (Class A), Paging Network, Inc. and
ProNet, Inc. In calculating the peer group index, the returns of each company in
the group have been weighted according to such company's market capitalization
at the beginning of the period.

17
<PAGE>
COMPARATIVE TOTAL RETURNS*
AMERICAN PAGING, INC., S&P 500, PEER GROUP
(PERFORMANCE RESULTS BETWEEN 2/10/94 AND 12/31/96)

[Graph]

<TABLE>
<CAPTION>
FEBRUARY 10, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
American Paging, Inc......... $ 100.00 $ 53.64 $ 46.36 $ 34.09
S&P 500...................... $ 100.00 $ 100.34 $ 138.05 $ 169.74
Peer Group................... $ 100.00 $ 116.20 $ 150.96 $ 76.71
</TABLE>

Assumes $100 invested on February 10, 1994 in American Paging, Inc. Common
Shares, S&P 500, and Peer Group.

*Cumulative total return assumes reinvestment of dividends.

The peer group index was revised from the prior year to delete Page America
Group, Inc., due to the fact that most of its assets and customers have been
sold and such company no longer represents a comparable firm, and to add
Pagemart Wireless, Inc. in lieu thereof. For comparison to the above-reported
peer group results, if the Company had not changed the peer group index from the
peer group reported in its 1996 Notice of Annual Meeting and Proxy Statement,
the peer group results would have been as follows:

<TABLE>
<CAPTION>
FEBRUARY 10, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Peer Group............. $ 100.00 $ 109.33 $ 141.01 $ 71.64
</TABLE>

18
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

LeRoy T. Carlson, Jr., President (Chief Executive Officer) of TDS, makes
annual executive compensation decisions for TDS other than for himself. The
Stock Option Compensation Committee of the Board of Directors of TDS makes
annual executive compensation decisions for the President of TDS and approves
long-term compensation awards for the executive officers of TDS. The Stock
Option Compensation Committee of TDS is composed of members of the TDS Board of
Directors who are not officers or employees of TDS or any of its subsidiaries,
and who are not directors of any TDS subsidiaries. LeRoy T. Carlson, Jr., is a
member of the Board of Directors of TDS and the Company. LeRoy T. Carlson, Jr.
is also the Chairman of the Company and, as such, approves annual compensation
for the executive officers of the Company. LeRoy T. Carlson, Jr. is compensated
by TDS for his services to TDS and all of its subsidiaries. However, TDS is
reimbursed by the Company for a portion of Mr. Carlson's salary and bonus paid
by TDS pursuant to the Intercompany Agreement described below. See Footnote (1)
to the Summary Compensation Table above. The President of the Company, who is
also a director of the Company, participates in executive compensation decisions
for executive officers of the Company, other than with respect to himself.

LeRoy T. Carlson, Jr., is a trustee and beneficiary of the voting trust
which controls TDS, which controls the Company. See "Security Ownership of
Certain Beneficial Owners and Management." LeRoy T. Carlson, Jr., Murray L.
Swanson and James Barr III are directors of TDS and Debora M. de Hoyos is the
wife of Walter C.D. Carlson, a director of TDS. The Company has entered into
certain agreements with TDS to provide for certain transactions and
relationships. These agreements were executed while the Company was a wholly
owned subsidiary of TDS and are not the result of arm's length negotiations.
There can be no assurance that such arrangements will continue or that the terms
of such arrangements will not be modified in the future. If additional
transactions occur in the future, there can be no assurance that the terms of
such future transactions will be favorable to the Company or will continue to
provide the Company with the same level of support for the Company's financing
and other needs as TDS has provided in the past. The principal arrangements that
exist between the Company and TDS are summarized below.

EXCHANGE AGREEMENT. The Company and TDS are parties to an Exchange
Agreement (the "Exchange Agreement").

COMMON SHARE PURCHASE RIGHTS; POTENTIAL DILUTION. The Exchange Agreement
grants TDS the right to purchase additional Common Shares sold by the Company to
the extent necessary for TDS to maintain its proportionate interest in Common
Shares. For purposes of calculating TDS's proportionate interest in Common
Shares, the Series A Common Shares are treated as if converted into Common
Shares. Upon notice to the Company, TDS is entitled to subscribe to each
issuance in full or in part at its discretion. If TDS decides to waive, in whole
or in part, one or more of its purchase opportunities, the number of Common
Shares subject to purchase as a result of subsequent issuances will be reduced.

If TDS elects to exercise its purchase rights, it is required to pay for all
Common Shares issued to it by the Company with cash, cancellation of
indebtedness owed by the Company to TDS or such other consideration as is
reasonably acceptable to the Company. Depending on the price per Common Share
paid by TDS upon exercise of these rights, the issuance of Common Shares by the
Company pursuant thereto could have a dilutive effect on other shareholders of
the Company.

19
<PAGE>
The Exchange Agreement also contains provisions which contemplate that the
Company may issue to TDS from time to time additional Series A Common Shares.
Any such issuance could have the effect of maintaining or increasing TDS's
relative ownership of capital stock and voting power in the Company.

CORPORATE OPPORTUNITY ARRANGEMENTS. The Company's Restated Certificate of
Incorporation provides that the Company may not, directly or indirectly, without
the written consent of TDS, own, invest or otherwise have an interest in, lease,
operate or manage any business other than a business engaged solely in the
construction, ownership or management of radio paging systems. However, there
can be no assurance that TDS will give such consent with respect to any business
opportunities. In addition, TDS could impose conditions on any such consent.

The Restated Certificate of Incorporation also restricts the circumstances
under which the Company is entitled to claim that an opportunity, transaction,
agreement or other arrangement to which TDS, or any person in which TDS has or
acquires a financial interest, is or should be the property of the Company or
its subsidiaries. In general, so long as at least 500,000 Series A Common Shares
are outstanding, the Company will not be entitled to any such "corporate
opportunity" unless it relates solely to the construction of, the ownership of
interests in or the management of radio paging systems other than a system that
is ancillary to and integrated with another communications system.

The Exchange Agreement provides that TDS and its subsidiaries and affiliates
(other than the Company and its subsidiaries) will retain all their existing
radio paging operations that have previously been offered for sale to the
Company and that the Company has decided not to acquire. The Exchange Agreement
also provides that TDS will give the Company the opportunity to negotiate the
purchase of any radio paging operations acquired by TDS or its other
subsidiaries in the future, except for such operations that are ancillary to and
integrated with other communications systems, where there are restrictions on a
sale of such operations or where, in the reasonable judgment of TDS, there are
material adverse consequences to TDS that may result therefrom.

REVOLVING CREDIT AGREEMENT. Pursuant to a Revolving Credit Agreement, as
amended on March 5, 1997 effective January 1, 1997 (the "Revolving Credit
Agreement") between the Company and TDS, the Company may borrow up to an
aggregate of $180 million from TDS, at an interest rate equal to 1 1/2% above
the prime rate announced from time to time by the LaSalle National Bank of
Chicago on the unpaid principal amount, with interest payable on demand at a
rate equal to 3 1/2% above such prime rate on any overdue principal or overdue
installment of interest. The advances made by TDS under the Revolving Credit
Agreement are unsecured. Interest on the balance due under the Revolving Credit
Agreement is payable quarterly and no principal is payable until the earlier of
January 1, 1999, or six months after such time that TDS's ownership of the
Company falls below 70%, subject to acceleration under certain circumstances, at
which time the entire principal balance due under the Revolving Credit Agreement
then outstanding is scheduled to become due and payable. The Company has
determined that it was in violation of a covenant under the Revolving Credit
Agreement with TDS relating to maintaining a certain ratio of equity to
liabilities. The Company has obtained a waiver of the covenant from TDS through
January 1, 1999. In absence of such waiver, the entire amount outstanding under
the Revolving Credit Agreement would have become immediately due and payable at
the discretion of TDS. The Company may prepay the balance due under the
Revolving Credit Agreement at any time, in whole or in part, without premium.
Any principal so repaid is available for the Company to borrow during the
remaining term of the Revolving Credit Agreement, subject to the satisfaction of
certain conditions. Interest expense incurred by the Company to TDS totaled
$11.8 million for the year ended December 31, 1996. Borrowings in an aggregate
amount of $140.1 million were outstanding as of December 31, 1996. The greatest
amount outstanding in 1996 was $140.1 million.

The Revolving Credit Agreement provides that the Company will not, without
the prior written consent of TDS: (i) purchase or redeem any shares of its stock
or declare or pay any dividends thereon, except to the extent of one-half of the
cumulative consolidated net income, if any, of the Company for the

20
<PAGE>
period from and after January 1, 1994, or make any other distribution to its
shareholders other than normal dividends payable with respect to Preferred Stock
which may be issued; (ii) permit its consolidated equity to be less than 30% of
consolidated liabilities (including certain adjustments); (iii) incur or
guarantee any indebtedness that is senior to the Revolving Credit Agreement;
(iv) with certain exceptions, create any lien on any of the Company's assets; or
(v) enter into certain contracts for the purchase of materials, supplies or
other property or services.

The Revolving Credit Agreement provides that if certain "events of default"
occur, TDS may immediately declare the amount under the Revolving Credit
Agreement due and payable and terminate the Revolving Credit Agreement. Events
of default under the Revolving Credit Agreement include the failure to pay
interest or principal, the breach of specified covenants (including the
covenants specified in the immediately preceding paragraph and covenants to
furnish to TDS specified financial information, permit TDS to visit and inspect
the Company's properties, maintain customary levels of insurance, and pay all
taxes and other liabilities of the Company), any default under certain other
indebtedness, and certain judgments, defaults and events of bankruptcy or
insolvency.

TAX ALLOCATION AGREEMENT. The Company has entered into a Tax Allocation
Agreement with TDS (the "Tax Allocation Agreement") under which the Company and
its subsidiaries will continue to join in filing consolidated federal income tax
returns with the TDS affiliated group unless TDS requests otherwise. For tax
years ended prior to January 1, 1994, TDS has reimbursed or will reimburse the
Company for the reduction in the provision for federal income taxes reflected in
TDS's consolidated statements of income resulting from the inclusion of the
Company and its subsidiaries in the TDS affiliated group. For tax years
beginning after December 31, 1993, TDS no longer reimburses the Company on a
current basis for losses or credits used by the TDS affiliated group. Instead,
the Company will be compensated (by an offset to amounts the Company would
otherwise be required to pay to TDS for federal income taxes) for TDS's use of
tax benefits at such time as the Company could utilize such benefits on a
separate return basis. The Company will be required to pay to TDS an amount
equal to the greater of the federal income tax liability of the Company,
calculated as if it were a separate affiliated group (including any minimum tax
liability, notwithstanding the absence of consolidated group liability for
minimum tax) or the tax calculated using the average tax rate (before taking
into account tax credits) of the TDS affiliated group. Any deficiency in tax
thereafter proposed by the Internal Revenue Service for any consolidated return
year that involves income, deductions or credits of the Company or its
subsidiaries, and any claim for refund of tax for any consolidated return year
that involves such items, will be contested or prosecuted at the sole discretion
of TDS and at the expense of the Company. To the extent that any deficiency in
tax or refund of tax is finally determined to be attributable to the income,
deductions or credits of the Company, such deficiency or refund will be payable
by or to the Company.

If the Company ceases to be a member of the TDS affiliated group, and for a
subsequent year the Company or its subsidiaries are required to pay a greater
amount of federal income tax than they would have paid if they had not been
members of the TDS group after December 31, 1993, TDS will reimburse the Company
for the excess amount of tax, without interest. In determining the amount of
reimbursement, any profits or losses from new business activities acquired by
the Company or its subsidiaries after the Company leaves the TDS group will be
disregarded. No reimbursement will be required if at any time in the future
fewer than 500,000 Series A Common Shares are outstanding. Nor will
reimbursement be required on account of the income of any subsidiary of the
Company if more than 50% of the voting power of such subsidiary is held by a
person or group other than a person or group owning more than 50% of the voting
power of TDS.

Rules similar to those described above will be applied to any state or local
franchise or income tax liabilities to which TDS and the Company and its
subsidiaries are subject and which are required to be determined on a unitary,
combined or consolidated basis. Payments under the Tax Allocation Agreement by
one party to the other are required to be increased by an amount sufficient so
that after deduction of

21
<PAGE>
any federal, state or local taxes payable in respect of the receipt of such
payments, the net amount received will equal the amount that would have been
payable had no deduction been made.

CASH MANAGEMENT AGREEMENT. The Company has from time to time deposited its
excess cash with TDS for investment under TDS's cash management programs
pursuant to the terms of a Cash Management Agreement (the "Cash Management
Agreement"). To the extent of the Company's normal working capital requirements,
such cash is deposited into an account (which may include cash from other
participants in TDS's cash management programs) and then invested in the name of
a nominee for each participant in such account. The Company is credited with,
and may withdraw on demand, its pro rata share of investment income from such
account minus its pro rata share of costs attributable to such investment
income. Funds in excess of the Company's normal working capital requirements
that are deposited under the Cash Management Agreement are available to the
Company on demand and bear interest each month at the 30-day Commercial Paper
Rate reported in THE WALL STREET JOURNAL on the last business day of the
preceding month, plus 1/4%, or such higher rate as TDS may in its discretion
offer on such demand deposits. The Company may elect to place funds for a longer
period than on demand in which event, if such funds are placed with TDS, they
will bear interest at the Commercial Paper Rate for investments of similar
maturity plus 1/4%, or at such higher rate as TDS may in its discretion offer on
such investments.

INTERCOMPANY AGREEMENT. In order to provide for certain transactions and
relationships between the parties, the Company and TDS have agreed under an
Intercompany Agreement (the "Intercompany Agreement"), among other things, as
follows:

SERVICES. The Company and TDS make available to each other from time to
time services relating to operations, marketing, human resources, accounting,
customer services, customer billing, finance, and general administration, among
others. Unless otherwise provided by written agreement, services provided by TDS
or any of its subsidiaries are charged and paid for in conformity with the
customary practices of TDS for charging TDS's non-telephone company
subsidiaries. Payments by the Company to TDS for such services totaled $5.9
million in 1996. For services provided to TDS, the Company receives payment for
the salaries of its employees and agents assigned to render such services (plus
40% of the cost of such salaries in respect of overhead) for the time spent
rendering such services, plus out-of-pocket expenses. Payments by TDS to the
Company for such services were nominal in 1996.

EQUIPMENT AND MATERIALS. The Company and its subsidiaries purchase
materials and equipment from TDS and its subsidiaries on the same basis as
materials and equipment are purchased by any TDS affiliate from another TDS
affiliate. Purchases by the Company and its subsidiaries from TDS affiliates
totaled $244,000 in 1996.

ACCOUNTANTS AND LEGAL COUNSEL. The Company has agreed to engage the firm of
independent public accountants either selected by TDS or selected by the Audit
Committee of the Company and acceptable to TDS for purposes of auditing the
financial statements of the Company, including the financial statements of its
direct and indirect subsidiaries, and for purposes of providing tax, data
processing and all other accounting services and advice. The Company also has
agreed that, in any case where legal counsel is to be engaged to represent the
parties for any purpose, TDS has the right to select the counsel to be engaged,
which may be the same counsel selected to represent TDS unless such counsel
deems there to be a conflict. If TDS and the Company use the same counsel, each
is responsible for the portion of the fees and expenses of such counsel
determined by such counsel to be allocable to each.

INDEMNIFICATION. The Company will indemnify TDS and its subsidiaries
against certain losses, claims, damages or liabilities including those arising
out of: (i) the conduct by the Company and its subsidiaries of their respective
businesses (except where the loss, claim, damage or liability arises from TDS's
gross negligence or willful misconduct); and (ii) any inaccurate representation
or breach of

22
<PAGE>
warranty under the Intercompany Agreement. TDS will similarly indemnify the
Company and its subsidiaries with respect to losses, claims, damages or
liabilities arising out of (i) the conduct by TDS of its non-paging businesses
before January 1, 1994 (except where the loss, claim, damage or liability arises
from the Company's gross negligence or willful misconduct); and (ii) any
inaccurate representation or breach of warranty under the Intercompany
Agreement.

DISPOSAL OF COMPANY SECURITIES. TDS will not dispose of any securities of
the Company held by it if such disposition would result in the loss of any
license or other authorization held by the Company and such loss would have a
material adverse effect on the Company and its subsidiaries, taken as a whole.

TRANSFER OF ASSETS. Without the prior written consent of TDS, neither the
Company nor any of its subsidiaries may transfer (by sale, merger or otherwise)
more than 15% of its consolidated assets unless the transferee agrees to become
subject to the Intercompany Agreement.

REGISTRATION RIGHTS AGREEMENT. Under a Registration Rights Agreement (the
"Registration Rights Agreement"), the Company has agreed, upon the request of
TDS, to file one or more registration statements under the Securities Act of
1933, as amended, or take other appropriate action under the laws of foreign
jurisdictions in order to permit TDS to offer and sell, domestically or abroad,
any debt or equity securities of the Company that TDS may hold at any time. TDS
will pay all costs relating thereto and any underwriting discounts and
commissions relating to any such offering, except that the Company will pay the
fees and expenses of its counsel and accountants, and any trustees, transfer
agents or other agents appointed in connection therewith. TDS has the right to
select the counsel the Company retains to assist it in fulfilling any of its
obligations under the Registration Rights Agreement.

There is no limitation on the number or frequency of the occasions on which
TDS may exercise its registration rights, except that the Company will not be
required to comply with any registration request unless, in the case of a class
of equity securities, the request involves at least the lesser of one million
shares or 1% of the total number of shares of such class then outstanding, or,
in the case of a class of debt securities, the principal amount of debt
securities covered by the request is at least $5 million. The Company has also
granted TDS the right to include securities of the Company owned by TDS in
certain registration statements covering offerings by the Company and will pay
all costs of such offerings other than incremental costs attributable to the
inclusion of securities of the Company owned by TDS in such registration
statements and TDS will pay the fees and expenses of its counsel and all
underwriting discounts and commissions.

The Company will indemnify TDS, its officers and directors and each
underwriter, if any, and controlling persons of TDS or any such underwriter
against certain liabilities arising under the laws of any country in respect of
any registration or other offering covered by the Registration Rights Agreement.
The Company has the right to require TDS to delay any exercise by TDS of its
rights to require registration and other actions for a period of up to 90 days
if, in the judgment of the Company, any underwritten offering by the Company for
its account then being conducted or about to be conducted would be materially
adversely affected. TDS has further agreed that it will not include any
securities of the Company owned by TDS in any registration statement of the
Company which, in the judgment of the managing underwriters, would materially
adversely affect any offering by the Company. The rights of TDS under the
Registration Rights Agreement are transferable to non-affiliates of TDS.

INSURANCE COST SHARING AGREEMENT. Pursuant to an Insurance Cost Sharing
Agreement (the "Insurance Cost Sharing Agreement"), the Company and its
subsidiaries, and their officers, directors and employees are afforded coverage
under certain insurance policies purchased by TDS. A portion of the premiums
payable under each such policy is allocated by TDS to the Company on the same
basis as premiums were allocated before the Insurance Cost Sharing Agreement was
entered into, or on such other reasonable basis as TDS may select from time to
time. If TDS decides to change the allocation of premiums at any time, TDS will
consult with the Company before the change is made, but the decision

23
<PAGE>
as to whether to make the change will be in the reasonable discretion of TDS.
Management of the Company believes that the amounts payable by the Company under
the Insurance Cost Sharing Agreement are generally more favorable than the
premiums the Company would pay if it were to obtain coverage under separate
policies.

EMPLOYEE BENEFIT PLANS AGREEMENT. Under an Employee Benefit Plans
Agreement, in connection with the purchase by employees of the Company of TDS
Common Shares, $1.00 par value, under the TDS Employee Stock Purchase Plan, the
Company has agreed to reimburse TDS in an amount equal to the excess of the fair
market value of such TDS Common Shares on the date of purchase over the amount
paid for such shares plus amounts paid or to be paid by TDS for taxes, less any
amounts paid by the Company's employees for withholding taxes.

OTHER ARRANGEMENTS. Walter C.D. Carlson, a director of TDS, Michael G.
Hron, Secretary of TDS, the Company and certain other subsidiaries of TDS,
William S. DeCarlo, the Assistant Secretary of TDS and certain subsidiaries of
TDS, Stephen P. Fitzell, the Secretary of certain subsidiaries of TDS, and
Sherry S. Treston, the Assistant Secretary of certain subsidiaries of TDS, are
partners of Sidley & Austin, the principal law firm of TDS and its subsidiaries.
Walter C.D. Carlson is also a trustee and beneficiary of the voting trust which
controls the Company and TDS. He is the husband of Debora M. de Hoyos, a
director of the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF THE COMPANY BY CERTAIN BENEFICIAL OWNERS

The following table sets forth, at February 28, 1997, information regarding
each person who beneficially owns more than 5% of any class of the Company's
voting securities.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL PERCENT OF VOTING
NAME AND ADDRESS TITLE OF CLASS(1) OWNERSHIP(2) CLASS POWER
- ------------------------------------------ ------------------------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Telephone and Data Systems, Inc. 30 North Common Shares 4,000,000 52.7% 2.1%
LaSalle Street Series A Common Shares 12,500,000 100.0% 96.1%
Chicago, Illinois 60602
</TABLE>

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

(1) The Series A Common Shares are convertible on a share-for-share basis at any
time into Common Shares.

(2) The nature of beneficial ownership is sole voting and investment power
unless otherwise stated in these footnotes.

SECURITY OWNERSHIP OF THE COMPANY BY MANAGEMENT

The following table sets forth, at February 28, 1997, information with
respect to the beneficial ownership of Common Shares by each director of the
Company, each executive officer of the Company

24
<PAGE>
named in the Summary Compensation Table and all directors and executive officers
of the Company as a group.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF PERCENT OF VOTING
NAME TITLE OF CLASS OWNERSHIP(1) CLASS POWER
- -------------------------------------------------- -------------------- ------------- ----------- -----------------
<S> <C> <C> <C> <C>
LeRoy T. Carlson, Jr.,
C. Theodore Herbert,
Ronald D. Webster and
Michael G. Hron (2).............................. Common Shares 31,283 * *
LeRoy T. Carlson, Jr. (3)......................... Common Shares 1,000 * *
Terrence T. Sullivan (4).......................... Common Shares 10,000
James Barr III.................................... -- -- -- --
Debora M. de Hoyos................................ -- -- -- --
Jean Burhardt Keffeler............................ Common Shares 1,000 * *
Edwin L. Russell.................................. Common Shares 500 * *
Murray L. Swanson................................. -- -- -- --
John R. Schaaf (5)................................ Common Shares 23,843 * *
Robert A. McClure (6)............................. Common Shares 16,600 * *
Malcolm T. Humphrey (7)........................... Common Shares 10,000 * *
George H. Orr (8)................................. Common Shares 17,000 * *
Larry A. Piumbroeck (9)........................... Common Shares 8,035 * *
All directors and executive officers as a group
(16 persons)(10)(11)............................. Common Shares 122,209 1.7% *
</TABLE>

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

*Less than 1%

(1) The nature of beneficial ownership is sole voting and investment power
unless otherwise specified.

(2) Voting and investment control is shared by the persons named as trustees of
the Telephone and Data Systems, Inc. Tax-Deferred Savings Trust. Does not
include 35,579 shares as to which voting power is passed through to plan
participants.

(3) Such shares are held by Mr. Carlson's wife.

(4) Includes 10,000 Common Shares subject to a stock option exercisable on
February 28, 1997 or within 60 days thereof.

(5) Includes 20,000 Common Shares subject to a stock option exercisable on
February 28, 1997 or within 60 days thereof. Mr. Schaaf resigned as
President of the Company in September 1996.

(6) Includes 16,000 Common Shares subject to a stock option exercisable on
February 28, 1997 or within 60 days thereof. Mr. McClure resigned as Vice
President-Operations of the Company in January 1997.

(7) Includes 10,000 Common Shares subject to a stock option exercisable on
February 28, 1997 or within 60 days thereof.

(8) Includes 16,000 Common Shares subject to a stock option exercisable on
February 28, 1997 or within 60 days thereof.

(9) Includes 7,750 Common Shares subject to a stock option exercisable on
February 28, 1997 or within 60 days thereof.

(10) Includes shares as to which voting and/or investment power is shared.

(11) Includes 80,750 Common Shares subject to stock options exercisable on
February 28, 1997 or within 60 days thereof.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder require the Company's directors and officers and
persons who are deemed to own more than ten percent of the Common Shares
(collectively, the "Reporting Persons"), to file certain reports ("Section 16
Reports") with the SEC with respect to their beneficial ownership of Common
Shares. The Reporting Persons are also required to furnish the Company with
copies of all Section 16 Reports they file.

25
<PAGE>
Based on a review of copies of Section 16 Reports furnished to the Company
by the Reporting Persons and written representations by directors and officers
of the Company, the Company believes that all Section 16 filing requirements
applicable to the Reporting Persons during and with respect to 1996 were
complied with on a timely basis, except as follows:

Malcolm T. Humphrey was required to have filed a Form 5 on or prior to
February 14, 1997, which was filed on March 27, 1997 due to an administrative
error.

DESCRIPTION OF TDS SECURITIES

Several directors and executive officers of the Company hold ownership
interests indirectly in the Company by virtue of their ownership of the capital
stock of TDS. See "Beneficial Ownership of TDS by Directors and Executive
Officers of the Company" below.

The authorized capital stock of TDS consists of 100,000,000 Common Shares,
$1.00 par value (the "TDS Common Shares"), 25,000,000 Series A Common Shares,
$1.00 par value (the "TDS Series A Common Shares"), and 5,000,000 Preferred
Shares, without par value (the "TDS Preferred Shares"). As of February 28, 1997,
54,145,158 TDS Common Shares (excluding Common Shares held by TDS and a
subsidiary of TDS), 6,916,546 TDS Series A Common Shares and 308,019 TDS
Preferred Shares were outstanding.

The TDS Series A Common Shares have ten votes per share, and TDS Common
Shares and outstanding TDS Preferred Shares have one vote per share. The holders
of TDS Series A Common Shares, TDS Common Shares and TDS Preferred Shares vote
as a single group, except with respect to matters as to which the Iowa Business
Corporation Act grants class voting rights and with respect to the election of
directors. With respect to the election of directors, the holders of TDS Common
Shares and TDS Preferred Shares issued before October 31, 1981, voting as a
group, are entitled to elect 25% of the board of directors of TDS, rounded up to
the nearest whole number, and the holders of TDS Series A Common Shares and TDS
Preferred Shares issued after October 31, 1981, voting as a group, are entitled
to elect the remaining members of the board of directors of TDS.

PRINCIPAL SHAREHOLDERS OF TDS

In addition to the persons listed under "Beneficial Ownership of TDS by
Directors and Executive Officers of the Company," below, the following table
sets forth, as of February 28, 1997, information regarding the persons who
beneficially own more than 5% of any class of the voting securities of TDS. The
nature of beneficial ownership in this table is sole voting and investment
power, except as otherwise set forth in the footnotes.

<TABLE>
<CAPTION>
SHARES OF PERCENT OF PERCENT OF
TDS CLASS TDS TDS VOTING
SHAREHOLDER'S NAME AND ADDRESS TITLE OF CLASS OWNED CLASS POWER
- ------------------------------------------------------ ----------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
The Equitable Companies Inc.(1) TDS Common Shares 11,977,785 22.1% 9.7%
787 Seventh Avenue
New York, New York 10019

Franklin Mutual Advisers, Inc.(2) TDS Common Shares 5,308,600 9.8% 4.3%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078

The Capital Group Companies, Inc.(3) TDS Common Shares 3,589,750 6.6% 2.9%
333 South Hope Street
Los Angeles, California 90071

Massachusetts Financial Services Company(4) TDS Common Shares 2,731,030 5.0% 2.2%
500 Boylston Street
Boston, Massachusetts 02116
</TABLE>

26
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENT OF PERCENT OF
TDS CLASS TDS TDS VOTING
SHAREHOLDER'S NAME AND ADDRESS TITLE OF CLASS OWNED CLASS POWER
- ------------------------------------------------------ ----------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Merrill, Lynch, Pierce, Fenner & Smith, Inc. TDS Preferred 63,532 20.6% *
P.O. Box 2658 Shares
Jersey City, New Jersey 07303

William and Betty McDaniel TDS Preferred 46,666 15.2% *
160 Stowell Road Shares
Salkum, Washington 98582

Roland G. and Bette B. Nehring TDS Preferred 23,030 7.5% *
5253 North Dromedary Road Shares
Phoenix, Arizona 85018

The Peterson Revocable Living Trust TDS Preferred 20,637 6.7% *
Kenneth M. & Audrey M. Peterson, Trustees Shares
108 Avocado Lane
Weslaco, Texas 78596

Regional Operations Group, Inc. TDS Preferred 15,807 5.1% *
312 South 3rd Street Shares
Minneapolis, Minnesota 55440
</TABLE>

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

*Less than 1%

(1) Based on the most recent Schedule 13G (Amendment No. 10) filed with the SEC.
Includes shares held by the following affiliates: The Equitable Life
Assurance Society of the United States -- 4,976,200 shares; Alliance Capital
Management, L.P. -- 6,974,884 shares; Wood, Struthers & Winthrop Management
Corp. -- 26,200 shares; and Donaldson Lufkin & Jenrette Securities
Corporation -- 501 shares. In such Schedule 13G, Equitable reported sole
voting power with respect to 11,757,743 shares, shared voting power with
respect to 84,600 shares, sole dispositive power with respect to 11,977,284
shares and shared dispositive power with respect to 501 shares. Alpha
Assurance I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Uni Europe Assurance
Mutuelle and AXA, corporations organized under the laws of France, are
affiliates of The Equitable Companies, Inc.

(2) Based on a Schedule 13D filed with the SEC. Such Schedule 13D reports that
Franklin Mutual Advisers, Inc. exercised sole voting and investment power
with respect to all such shares. Such Schedule 13D is also filed on behalf
of Franklin Resources, Inc., the parent holding company of Franklin Mutual
Advisers, Inc., and by Charles B. Johnson and Rupert H. Johnson, Jr.,
principal shareholders of such parent holding company.

(3) Based on a Schedule 13G filed with the SEC. Such Schedule 13G reported that
Capital Guardian Trust Company, Capital Research and Management Company and
Capital International S.A., subsidiaries of The Capital Group, Inc.,
exercised sole voting and investment discretion with respect to 1,794,150
and 3,589,750 shares, respectively. Beneficial ownership was disclaimed with
respect to all such shares.

(4) Based on a Schedule 13G filed with the SEC. Such Schedule 13G reported that
Massachusetts Financial Services Company exercised sole voting and
investment power with respect to all such shares.

27
<PAGE>
BENEFICIAL OWNERSHIP OF TDS BY DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth the number of TDS Common Shares and TDS
Series A Common Shares beneficially owned by each director of the Company, by
each executive officer named in the Summary Compensation Table and by all
directors and executive officers of the Company as a group as of February 28,
1997.

<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF PERCENT OF
NAME OF INDIVIDUAL OR NUMBER OF OF BENEFICIAL TDS TDS VOTING
PERSONS IN GROUP TITLE OF TDS CLASS OWNERSHIP(1) CLASS POWER
- ------------------------------- ------------------------------------ ------------------ ------------- -------------
<S> <C> <C> <C> <C>
LeRoy T. Carlson, Jr.,
Walter C.D. Carlson,
Letitia G. C. Carlson,
Donald C. Nebergall and
Melanie J. Heald(2)........... TDS Series A Common Shares 6,318,335 91.4% 51.1%

LeRoy T. Carlson, Jr.,
C. Theodore Herbert,
Ronald D. Webster and
Michael G. Hron(3)............ TDS Common Shares 1,008 * *
TDS Series A Common Shares 146,576 2.1% 1.2%

LeRoy T. Carlson, Jr.,
C. Theodore Herbert,
Ronald D. Webster and
Michael G. Hron(4)............ TDS Common Shares 59,957 * *

LeRoy T. Carlson, Jr.(5)....... TDS Common Shares 135,976 * *

Terrence T. Sullivan........... -- -- -- --

James Barr III(7).............. TDS Common Shares 17,213 * *

Debora M. de Hoyos(8).......... -- -- -- --

Jean Burhardt Keffeler......... -- -- -- --

Edwin L. Russell(6)............ TDS Common Shares 5,653 * *
TDS Series A Common Shares 6,302 * *

Murray L. Swanson(6)(9)........ TDS Common Shares 42,846 * *
TDS Series A Common Shares 2,485 * *

John R. Schaaf(6).............. TDS Common Shares 902 * *

Robert A. McClure.............. -- -- -- --

Malcolm T. Humphrey............ -- -- -- --

George H. Orr.................. -- -- -- --

Larry A. Piumbroeck............ -- -- -- --

All directors and executive
officers as a group
(16 persons)(6)(10).......... TDS Common Shares 264,670 * *
TDS Series A Common Shares 6,473,798 93.6% 52.4%
</TABLE>

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

*Less than 1%

(1) The nature of beneficial ownership for shares in this column is sole voting
and investment power, except as otherwise set forth in these footnotes.

28
<PAGE>
(2) The shares of TDS listed are held by the persons named as trustees under a
voting trust which expires June 30, 2009, created to facilitate
long-standing relationships among the trust certificate holders. Under the
terms of the voting trust, the trustees hold and vote the TDS Series A
Common Shares held in the trust. If the voting trust were terminated, the
following persons would each be deemed to own beneficially over 5% of the
outstanding TDS Series A Common Shares: Margaret D. Carlson (wife of LeRoy
T. Carlson), LeRoy T. Carlson, Jr., Walter C.D. Carlson, Prudence E.
Carlson, Letitia G. C. Carlson (children of LeRoy T. Carlson and Margaret D.
Carlson), and Donald C. Nebergall, as trustee under certain trusts for the
benefit of the heirs of LeRoy T. and Margaret D. Carlson and an educational
institution.

(3) Voting and investment control is shared by the persons named as trustees of
the Telephone and Data Systems, Inc. Employees' Pension Trust I. Such
trustees disclaim beneficial ownership of such shares.

(4) Represents shares voted by the persons named as trustees of the Telephone
and Data Systems, Inc. Tax-Deferred Savings Trust. Does not include 169,628
TDS Common Shares purchased with employee contributions which are voted by
plan participants. The trustees vote shares which are purchased with
Company-matching contributions. The trustees disclaim beneficial ownership
of all such shares except for shares held for their individual benefit in
such plan.

(5) Includes 131,107 TDS Common Shares that Mr. LeRoy T. Carlson, Jr. may
purchase pursuant to stock options which are currently exercisable or
exercisable within 60 days. Does not include 1,074,959 TDS Series A Common
Shares (15.5% of class) held in the voting trust referred to in footnote (2)
above, of which 1,037,019 shares are held for the benefit of Mr. LeRoy T.
Carlson, Jr. Beneficial ownership is disclaimed as to 37,940 TDS Series A
Common Shares held for the benefit of his wife, his children and others in
such voting trust.

(6) Includes shares as to which voting and/or investment power is shared.

(7) Includes 14,000 TDS Common Shares that Mr. Barr may purchase pursuant to
stock options which are currently exercisable or exercisable within 60 days.

(8) Does not include 6,401 TDS Series A Common Shares held for the benefit of
Ms. de Hoyos in the voting trust referred to in footnote (2) above. Ms. de
Hoyos disclaims beneficial ownership of all other TDS Series A Common Shares
held in such voting trust with respect to which Walter C.D. Carlson, Ms. de
Hoyos' spouse, acts as trustee, and of 68 TDS Common Shares owned directly
by Walter C.D. Carlson.

(9) Includes 23,937 TDS Common Shares that Mr. Swanson may purchase pursuant to
stock options which are currently exercisable or exercisable within 60 days.

(10) Includes 169,044 shares subject to stock options which are currently
exercisable or exercisable within 60 days.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Executive Compensation -- Compensation Committee Interlocks and Insider
Participation."

SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING

In order to be considered for inclusion in the Company's proxy materials for
the 1997 Annual Meeting of Shareholders, any shareholder proposal must be
addressed to American Paging, Inc., 1300 Godward Street Northeast, Suite 3100,
Minneapolis, Minnesota 55413-1767, Attention: Controller, and must be received
no later than December 8, 1997.

GENERAL

Your proxy is solicited by the Board of Directors and its agents and the
cost of solicitation will be paid by the Company. Officers, directors and
regular employees of the Company, acting on its behalf, may also solicit proxies
by telephone, facsimile transmission or personal interview. The Company will, at
its expense, request brokers and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of shares held of
record by such persons. The Company has retained Kissel-Blake Inc. to aid in
solicitation of proxies for a fee of $1,500 plus out-of-pocket expenses.

THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, INCLUDING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THERETO, UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER AS OF THE
RECORD DATE, AND WILL PROVIDE COPIES OF THE EXHIBITS TO THE REPORT UPON PAYMENT
OF A REASONABLE FEE THAT WILL NOT EXCEED THE COMPANY'S REASONABLE

29
<PAGE>
EXPENSES INCURRED IN CONNECTION THEREWITH. REQUESTS FOR SUCH MATERIALS SHOULD BE
DIRECTED TO AMERICAN PAGING, INC., 1300 GODWARD STREET, N.E., SUITE 3100,
MINNEAPOLIS, MINNESOTA 55413, ATTENTION: INVESTOR RELATIONS, TELEPHONE: (612)
623-3100.

OTHER BUSINESS

It is not anticipated that any matter will be considered by the shareholders
other than those set forth above, but if other matters are properly brought
before the Annual Meeting, the persons named in the proxy will vote in
accordance with their best judgment.

By order of the Board of Directors

[SIGNATURE]

Michael G. Hron
SECRETARY

ALL SHAREHOLDERS ARE URGED TO SIGN, DATE
AND MAIL THEIR PROXIES PROMPTLY.

30
<PAGE>
ANNEX A

AMERICAN PAGING, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1. ESTABLISHMENT; PURPOSE; SCOPE.

American Paging, Inc. hereby establishes the American Paging, Inc. 1997
Employee Stock Purchase Plan to encourage and facilitate the purchase of Common
Shares of the Company by eligible employees. The Plan is intended to provide a
further incentive for eligible employees to promote the best interests of the
Controlled Group and an additional opportunity to participate in its economic
progress. It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" within the meaning of section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), and provisions of the Plan shall
be construed in a manner consistent with the Code.

SECTION 2. DEFINITIONS; CONSTRUCTION.

As used in this Plan, as of any time of reference, and unless the context
otherwise requires:

(a) "AFFILIATE" means any trade or business entity which is a member of
the same controlled group (as described in section 414(b) and (c) of the
Code) with Telephone and Data Systems, Inc. ("TDS"), any organization that
is a member of an affiliated service group (as described in section 414(m)
of the Code) with TDS or such a trade or business, or any other entity
required to be aggregated with TDS pursuant to final regulations under
section 414(o) of the Code.

(b) "BENEFITS REPRESENTATIVE" means the Benefits Department of TDS
located in Middleton, Wisconsin, or such other person or persons designated
by the Committee to assist the Committee with the administration of the
Plan.

(d) "COMMON SHARES" means the common shares of the Company, par value
$1.00 per share.

(e) "COMPANY" means American Paging, Inc., a Delaware corporation, and
any successor thereto.

(f) "COMPENSATION" means an employee's "Compensation" as defined in
Section 4.2(a) of the Telephone and Data Systems, Inc. Tax-Deferred Savings
Plan, as amended from time to time, determined without regard to the
limitation on compensation which is taken into account under such plan
pursuant to section 401(a)(17) of the Code.

(g) "CONTROLLED GROUP" means the Company and its Subsidiaries.

(h) "EFFECTIVE DATE" means January 1, 1997.

(i) "EMPLOYEE STOCK PURCHASE ACCOUNT" means the account established
pursuant to Section 5(c) of the Plan to hold a Participant's payroll
deduction contributions.

(j) "EMPLOYER" means the Company and any corporation that is a member
of the Controlled Group that adopts the Plan as of the effective date, with
the prior approval of the Company, and each corporation which subsequently
becomes a member of the Controlled Group and adopts the Plan, with the prior
approval of the Committee.

(k) "ENTRY DATE" means January 1, 1997, and each subsequent April 1,
July 1, October 1 and January 1.

A-1
<PAGE>
(l) "PARTICIPANT" means any employee of an Employer who meets the
eligibility requirements of Section 4, and has elected to participate in the
Plan as described in such Section. An individual shall cease to be a
Participant as of the date he terminates employment with all Employers and
Affiliates, for whatever reason.

(m) "PLAN" means the American Paging, Inc. 1997 Employee Stock Purchase
Plan herein set forth, and any amendment or supplement thereto.

(n) "PURCHASE DATE" means June 30, 1997, December 31, 1997, June 30,
1998 or December 31, 1998, as the case may be.

(o) "PURCHASE PERIOD" means a semi-annual period ending on a Purchase
Date.

(p) "PURCHASE PRICE" means, with respect to a Purchase Date, 85 percent
of the closing price of a Common Share on the American Stock Exchange on
such date, or if such date is not a trading day, 85 percent of the closing
price of a Common Share on the American Stock Exchange on the next preceding
trading day; provided that if such price includes a fraction of a cent, the
Purchase Price shall be rounded up to the next whole cent.

(q) "SUBSIDIARY" means, with respect to an entity, a corporation (other
than the entity) in an unbroken chain of corporations beginning with the
entity if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.

(r) "TERMINATION DATE" means the earliest of (i) December 31, 1998,
(ii) such earlier date on which the Board terminates the Plan and (iii) the
Purchase Date on which all shares available for issuance under the Plan
shall have been purchased by Participants under the Plan.

The masculine gender, when appearing in this Plan, shall be deemed to
include the feminine gender unless the context clearly indicates to the
contrary. The words "hereof," "herein," and "hereunder," and other similar
compounds of the word "here," shall mean and refer to the entire Plan and not to
any particular provision or section of this document.

SECTION 3. ADMINISTRATION.

This Plan shall be administered by the 1997 Employee Stock Purchase Plan
Committee (hereinafter referred to as the "Committee"), the members of which
shall be individuals selected by the Board who do not satisfy the eligibility
requirements of Section 4 hereunder. The Committee shall be comprised of LeRoy
T. Carlson, Jr. and Murray L. Swanson. Subject to the express provisions hereof,
the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it and to make
all other determinations necessary or advisable for the administration of this
Plan. The Committee's determinations on the matters referred to in this
paragraph shall be conclusive. No member of the Committee shall be personally
liable for any decision or determination made in good faith under the Plan.

SECTION 4. ELIGIBILITY AND PARTICIPATION.

(a) Any employee of an Employer shall be eligible to participate in the
Plan as of the first Entry Date following such employee's satisfaction of the
eligibility service requirement, or, if later, the first Entry Date following
the date on which the employee's Employer adopted the Plan. For purposes of this
subsection, an Employee shall have satisfied the eligibility service requirement
if he has completed at least three months of continuous service with an
Employer. For the sole purpose of calculating length of service under the Plan,
employees shall be credited with service for an Employer, an Affiliate and any
other member of the Controlled Group (even though such service may have been
performed prior to the Company's acquisition of such member or prior to the time
such Affiliate became an Affiliate). No

A-2
<PAGE>
eligibility provision hereof shall permit or deny participation in the Plan in a
manner contrary to the applicable requirements of the Code and the regulations
promulgated thereunder.

(b) At least 15 days (or such other period as may be prescribed by the
Committee) prior to the first Entry Date as of which an employee is eligible to
participate in the Plan as described in subsection (a) of this Section, the
employee shall execute and deliver to the Benefits Representative an application
on the prescribed form specifying his chosen rate of payroll deduction
contributions described in Section 5. Such application shall authorize his
Employer to reduce the employee's Compensation by the amount of any such payroll
deduction contributions. The application shall also evidence the employee's
acceptance of and agreement to all provisions of this Plan. An employee who
fails timely to file an application described in this subsection shall not be
eligible to commence participation in the Plan as of any subsequent Entry Date.

(c) If a Participant is transferred from one Employer to another Employer,
such transfer shall not terminate the Participant's participation in the Plan.
Such transferred employee may continue to make payroll deduction contributions
under the Plan provided such Participant completes such forms as the Committee
may require, if any, in the time and manner prescribed by the Committee.

(d) If an individual terminates employment with all Employers and
Affiliates so as to discontinue participation in the Plan, and such individual
is subsequently reemployed by an Employer, such individual shall be required to
satisfy the eligibility service requirement described in subsection (a) of this
Section as if he were a new employee.

(e) Notwithstanding anything herein to the contrary, no employee shall be
entitled to participate in the Plan if such employee, immediately after the
grant of an option would own shares (including shares which may be purchased
under the Plan) possessing five percent or more of the total combined voting
power or value of all classes of stock of the Company, any of its Subsidiaries,
TDS or any of TDS' Subsidiaries actually issued and outstanding immediately
after such grant. For purposes of the foregoing sentence, the rules of stock
attribution set forth in section 424(d) of the Code shall apply in determining
share ownership. In addition, no member of the Committee shall be eligible to
participate in the Plan.

SECTION 5. PARTICIPANT CONTRIBUTIONS.

(a) Each Participant may elect, in the manner described in Section 4, to
make payroll deduction contributions under the Plan in an amount equal to a
whole percentage not less than 1 and not more than 15 percent of such
Participant's Compensation for each payroll period, beginning with the first pay
date which occurs on or after the Entry Date as of which such Participant
commences participation in the Plan.

(b) At least 15 days (or such other period as may be prescribed by the
Committee) prior to any Entry Date, a Participant shall have the right to elect
to decrease his designated rate of payroll deductions under the Plan by
executing and delivering to the Benefits Representative an application on the
prescribed form specifying his chosen rate of payroll deduction contributions.
An election by a Participant to decrease his designated rate of payroll
deductions to 0% of his Compensation shall be deemed an election to abandon his
right to purchase Common Shares under the Plan, as described in Section 8. A
Participant shall not have the right to elect to increase his designated rate of
payroll deductions under the Plan.

(c) All payroll deductions in the possession of the Company shall be
segregated from the general funds of the Company. The Committee shall cause to
be established a separate Employee Stock Purchase Account on behalf of each
Participant to hold his payroll deduction contributions made under the Plan.
Such accounts shall be solely for accounting purposes, and there shall be no
segregation of assets among the separate accounts. Such accounts shall not be
credited with interest or other

A-3
<PAGE>
investment earnings. Each Employee Stock Purchase Account shall be restricted to
the uses provided herein until such time as the Company issues certificates to
Participants purchasing Common Shares under the Plan.

SECTION 6. PURCHASE OF COMMON SHARES.

(a) Subject to a Participant's right of abandonment described in Section 8
of the Plan, the balance of each Participant's Employee Stock Purchase Account
shall be applied on each Purchase Date to purchase the number of whole Common
Shares determined by dividing the balance of such Participant's Employee Stock
Purchase Account as of such date by the Purchase Price. The Participant's
Employee Stock Purchase Account shall be debited accordingly. No fractional
shares shall be issued under the Plan. Any balances remaining in Participants'
accounts attributable to fractional shares shall remain credited to such
accounts so that such remaining balances shall be available to purchase shares
on the next Purchase Date; provided that such amounts shall be refunded to
Participants upon termination of the Plan.

(b) If the employment of an individual who is a Participant in the Plan is
transferred to an Affiliate that is not an Employer, then the Participant's
payroll deductions shall be suspended and the balance of the Participant's
Employee Stock Purchase Account shall be applied to purchase Common Shares on
the Purchase Date next occurring after the effective date of such transfer,
except to the extent the individual abandons his election to purchase Common
Shares as described in Section 8. Upon the Participant's transfer from such
Affiliate back to an Employer, the Participant's payroll deduction contributions
shall resume in accordance with the most recent election made by the Participant
pursuant to Section 5, provided such Participant completes such forms as the
Committee may require, if any, in the time and manner prescribed by the
Committee.

(c) Upon termination of employment because of the Participant's retirement,
the balance of the Participant's Employee Stock Purchase Account shall be
refunded to the Participant as soon as administratively practicable following
such termination of employment; provided, however, that if the date of such
termination of employment occurs during the three-month period ending on the
next Purchase Date, the balance of the Participant's Employee Stock Purchase
Account shall be applied to purchase Common Shares for the Participant as of the
Purchase Date next occurring after the Participant's retirement, unless the
Participant elects, in the manner prescribed by the Committee, to abandon all or
a portion of such purchase of Common Shares on or before the earlier of the 15th
day (or such shorter period prescribed by the Committee) prior to the Purchase
Date next occurring after the Participant's retirement.

(d) Upon termination of employment because of the Participant's death, the
balance of the Participant's Employee Stock Purchase Account, after crediting
such account with payroll deductions for any Compensation due and owing, shall
be applied to purchase Common Shares for the beneficiary designated by the
Participant in accordance with procedures prescribed by the Committee, or if no
such beneficiary designation is in effect with respect to such Participant, the
Participant's estate, as of the Purchase Date next occurring after the
Participant's death, unless the Participant's designated beneficiary or estate,
as the case may be, elects, in the manner prescribed by the Committee, to
abandon all or a portion of such purchase of Common Shares on or before the
earlier of (i) the 15th day (or such shorter period prescribed by the Committee)
prior to the Purchase Date next occurring after the Participant's death and (ii)
the 90th day after the Participant's death, or such other period as established
by the Committee.

(e) Upon termination of employment with all Employers for any reason other
than as a result of a transfer of employment to an Affiliate as described in
subsection (b) of this Section, retirement as described in subsection (c) of
this Section, or death as described in subsection (d) of this Section, the

A-4
<PAGE>
Participant's participation in the Plan shall cease and the entire balance of
the Participant's Employee Stock Purchase Account shall be refunded to him as
soon as administratively practicable.

(f) Notwithstanding any provision of this Plan to the contrary, if the
number of shares to be purchased by a Participant on any Purchase Date is less
than ten, the Participant shall not be permitted to purchase any Common Shares
as of such Purchase Date. The balance remaining in such Participant's Employee
Stock Purchase Account shall be treated in the same manner as account balances
attributable to fractional shares, as described in subsection (a) of this
Section.

(g) Notwithstanding any provision of this Plan to the contrary, a
Participant shall in no event be permitted to purchase in any calendar year more
than the number of shares determined by dividing $25,000 by the closing price of
a Common Share on the American Stock Exchange on the Effective Date (or if such
date is not a business day, the first day preceding such date that is a business
day). Any portion of the balance of a Participant's Employee Stock Purchase
Account in excess of the amount necessary to purchase shares on a Purchase Date
in excess of the foregoing limitation shall be treated in the same manner as
account balances attributable to fractional shares, as described in subsection
(a) of this Section. The maximum share limitation prescribed by this Section
shall be subject to adjustment as described in Section 11.

(h) Notwithstanding any provision of the Plan to the contrary, the maximum
number of shares which shall be available for purchase under the Plan shall be
100,000 Common Shares, subject to adjustment as provided in Section 11. The
Common Shares to be sold under this Plan may, at the election of the Company, be
treasury shares, shares originally issued for such purpose or shares purchased
by the Company. In the event the amount of shares to be purchased on behalf of
all Participants collectively exceeds the shares available for purchase under
the Plan, the number of Common Shares to be purchased by each Participant under
this Section shall be reduced in the manner prescribed by this subsection, or
such other method which the Committee determines to be equitable, in its sole
discretion. The Committee shall determine the deferral percentage (referred to
herein as the "maximum deferral percentage") permissible for Participants under
which the amount of shares to be purchased on behalf of all Participants
collectively equals the shares available for purchase under the Plan. Such
maximum deferral percentage need not be expressed as a whole percentage. The
payroll deduction contributions made by each Participant whose elected deferral
percentage described in Section 5(a) is higher than such maximum deferral
percentage shall be reduced so that each such Participant's deferral percentage
equals such maximum deferral percentage, and each such Participant's excess
payroll deduction contributions shall be refunded to such Participant as soon as
administratively practicable.

(i) Notwithstanding any provision contained herein to the contrary, no
Participant shall be granted an option to purchase shares under the Plan that
permits the Participant to purchase shares in any calendar year under the Plan
and other employee stock purchase plans (within the meaning of section 423 of
the Code) of the Company, its Subsidiaries, TDS and TDS' Subsidiaries with an
aggregate fair market value (determined at the time such option is granted) in
excess of $25,000, all determined in the manner provided by section 423(b)(8) of
the Code. Any portion of the balance of a Participant's Employee Stock Purchase
Account that is not applied to purchase Common Shares due to the application of
this subsection shall be treated in the same manner as amounts attributable to
fractional shares, as described in subsection (a) of this Section.

SECTION 7. ISSUANCE OF CERTIFICATES.

As soon as administratively practicable after each Purchase Date, the
Company shall purchase or issue Common Shares, in its sole discretion, and each
Participant shall be issued a certificate representing the Common Shares
purchased by him under the Plan on such date. Shares to be delivered to a
Participant under the Plan shall be registered in the name of the Participant
or, if the Participant so directs

A-5
<PAGE>
by written notice to the Benefits Representative prior to the issuance thereof,
in the names of the Participant and one other person as the Participant may
designate, as joint tenants with right of survivorship. Such a joint tenancy
designation shall not apply to shares purchased after a Participant's death by
the Participant's beneficiary or estate, as the case may be.

SECTION 8. PARTICIPANT'S RIGHT TO ABANDON PURCHASE OF SHARES.

At any time during a Purchase Period, but in no event later than 15 days (or
such shorter period prescribed by the Committee) prior to a Purchase Date, a
Participant may elect to abandon his election to purchase Common Shares under
the Plan. Such abandonment election shall be made on forms prescribed by the
Committee and delivered to the Benefits Representative. Upon a Participant's
election to abandon pursuant to this Section, the amount credited to the
Participant's Employee Stock Purchase Plan Account shall be refunded to the
Participant as soon as is administratively practicable, and such Participant's
participation in the Plan shall be terminated.

SECTION 9. SUSPENSION ON ACCOUNT OF EMPLOYEE'S HARDSHIP WITHDRAWAL.

If a Participant makes a hardship withdrawal from the Telephone and Data
Systems, Inc. Tax-Deferred Savings Plan or any other plan with a cash or
deferred arrangement qualified under section 401(k) of the Code which plan is
sponsored, or participated in, by any Employer, such Participant shall be
suspended from making payroll deductions under this Plan for a period of twelve
months from the date of such withdrawal. The balance of such Participant's
Employee Stock Purchase Account shall be applied to purchase Common Shares on
the Purchase Date next occurring after the effective date of such withdrawal,
except to the extent the Participant abandons his election to purchase Common
Shares as described in Section 8, or discontinues participation in this Plan on
account of the Participant's termination of employment. After the expiration of
such twelve-month period, the Participant's payroll deduction contributions
shall automatically resume in accordance with the most recent election made by
the Participant pursuant to Section 5, unless he has abandoned his election to
purchase Common Shares as described in Section 8.

SECTION 10. RIGHTS NOT TRANSFERABLE.

The right to purchase Common Shares under this Plan shall not be
transferable by any Participant other than by will or the laws of descent and
distribution, and must be exercisable, during his lifetime, only by the
Participant.

SECTION 11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.

(a) The existence of the Plan shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock that affects the
Common Shares or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

(b) If, during the term of the Plan, the Company shall effect (i) a
distribution or payment of a dividend on its Common Shares in shares of the
Company, (ii) a subdivision of its outstanding Common Shares by a stock split or
otherwise, (iii) a combination of the outstanding Common Shares into a smaller
number of shares by a reverse stock split or otherwise, or (iv) an issuance by
reclassification or other reorganization of its Common Shares (other than by
merger or consolidation) of any shares of the Company, then each Participant
shall be entitled to receive upon the purchase of shares pursuant to this Plan
such shares of the Company which the Participant would have owned or would have
been entitled

A-6
<PAGE>
to receive after the happening of such event had the Participant purchased
Common Shares pursuant to the Plan immediately prior to the happening of such
event. If any other event shall occur that, in the judgment of the Board,
necessitates adjusting the Offering Price, the number of Common Shares offered
or other terms of the Plan, the Board shall take any action that in its judgment
shall be necessary to preserve each Participant's rights substantially
proportionate to the rights existing prior to such event. To the extent that any
event or action pursuant to this paragraph shall entitle Participants to
purchase additional Common Shares or other shares of the Company, the shares
available under this Plan shall be deemed to include such additional Common
Shares or such other shares of the Company.

(c) In the event of a merger of one or more corporations into the Company,
or a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Participant in the Plan shall,
at no additional cost, be entitled, upon his payment for all or part of the
Common Shares purchasable by him under the Plan, to receive (subject to any
required action by shareholders) in lieu of the number of Common Shares which he
was entitled to purchase, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to the terms
of the agreement of merger or consolidation if, immediately prior to such merger
or consolidation, such holder had been the holder of record of the number of
Common Shares equal to the number of shares paid for by the Participant.

(d) If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company sells or otherwise disposes of substantially all its assets to
another corporation during the term of the Plan: (i) subject to the provisions
of clause (ii) below, after the effective date of such merger, consolidation or
sale, as the case may be, each holder of a right to purchase shall be entitled
to receive, upon his payment for all or part of the Common Shares purchasable by
him under the Plan and receive in lieu of Common Shares, shares of such stock or
other securities as the holders of Common Shares received pursuant to the terms
of the merger, consolidation or sale; and (ii) all outstanding rights to
purchase may be canceled by the Board as of the effective date of any such
merger, consolidation or sale, provided that (i) notice of such cancellation
shall be given to each Participant and (ii) each such Participant shall have the
right to purchase, during a 30-day period preceding the effective date of such
merger, consolidation or sale, all or any part of the shares allocated to him
under the terms of the Plan.

(e) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Common Shares then available for
purchase under the Plan.

SECTION 12. SHAREHOLDER APPROVAL.

The Plan is subject to the approval of a majority of the votes cast on the
matter by the shareholders of the Company within twelve months before or after
its adoption by the Board.

SECTION 13. RIGHTS OF A SHAREHOLDER.

No Participant shall have rights or privileges of a shareholder of the
Company with respect to shares purchasable under this Plan unless and until the
Participant shall become the holder of record of one or more Common Shares.

SECTION 14. NO REPURCHASE OF COMMON SHARES BY COMPANY.

The Company is not obligated to repurchase any Common Shares acquired under
the Plan.

A-7
<PAGE>
SECTION 15. AMENDMENT OF THE PLAN.

The Board may at any time, and from time to time, amend the Plan in any
respect, except that, without the approval of the shareholders of the Company,
no amendment may be made that changes the number of shares to be reserved under
the Plan (other than as provided in Section 11), or that would otherwise require
shareholder approval.

SECTION 16. TERMINATION OF THE PLAN.

While it is intended that the Plan remain in effect for the term of the
Plan, the Board may terminate the Plan at any time in its discretion. Upon
termination of the Plan, the Committee shall terminate payroll deductions and
shall apply the balance of each Participant's Employee Stock Purchase Account to
purchase Common Shares as described in Section 6 as if such termination date
were a Purchase Date under the Plan. Notwithstanding the foregoing, upon
termination of the Plan, a Participant may elect, in the time and manner
prescribed by the Committee, to abandon his right to purchase all or a portion
of the Common Shares purchasable by him. As soon as administratively practicable
after the termination of the Plan, the Committee shall refund to the Participant
any amount in his Employee Stock Purchase Plan Account which has not been
applied to purchase Common Shares, or, in the case of a Participant who elects
to abandon his right to purchase Common Shares, the entire balance of such
account or the applicable portion thereof.

Notwithstanding any provision in the Plan to the contrary, the Plan shall
automatically terminate as of the Purchase Date on which all shares available
for issuance under the Plan shall have been purchased by Participants under the
Plan.

SECTION 17. COMPLIANCE WITH STATUTES AND REGULATIONS.

The sale and delivery of Common Shares under the Plan shall be in compliance
with relevant statutes and regulations of governmental authorities, including
state securities laws and regulations, and with the regulations of applicable
stock exchanges.

SECTION 18. GOVERNING LAW.

This Plan and all determinations made hereunder and action taken pursuant
hereto shall be governed by the laws of the State of Delaware and construed in
accordance therewith.

SECTION 19. COMPANY AS AGENT FOR THE EMPLOYERS.

Each Employer, by adopting the Plan, appoints the Company and the Board as
its agents to exercise on its behalf all of the powers and authorities hereby
conferred upon the Company and the Board by the terms of the Plan, including,
but not by way of limitation, the power to amend and terminate the Plan. The
authority of the Company and the Board to act as such agents shall continue for
as long as necessary to carry out the purposes of the Plan.

A-8
<PAGE>
PROXY PROXY

PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
AMERICAN PAGING, INC.
TO BE HELD ON MAY 5, 1997

The undersigned hereby appoints LeRoy T. Carlson, Jr., and Terrence T.
Sullivan, or either of them acting in the absence of the other, with power of
substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of Common Shares that the undersigned would be
entitled to vote if then personally present at the 1997 Annual Meeting of the
Shareholders of American Paging, Inc., or at any adjournment thereof, upon the
matters as set forth in the Notice of Annual Meeting and Proxy Statement, as
designated on the reverse side hereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1 AND
"FOR" PROPOSALS 2 AND 3.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE

(CONTINUED ON REVERSE SIDE)

PROXY PROXY

PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
AMERICAN PAGING, INC.
TO BE HELD ON MAY 5, 1997

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1 AND
"FOR" PROPOSALS 2 AND 3.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE

(CONTINUED ON REVERSE SIDE)

PROXY PROXY

PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
AMERICAN PAGING, INC.
TO BE HELD ON MAY 5, 1997

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IN PROPOSAL 1 AND
"FOR" PROPOSALS 2 AND 3.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE

(CONTINUED ON REVERSE SIDE)

<PAGE>

AMERICAN PAGING, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/

WITHHOLD
FOR the AUTHORITY to vote
nominee for the nominee

1. ELECTION OF DIRECTORS
EDWIN L. RUSSELL / / / /

For Against Abstain
2. APPROVAL OF THE 1997 EMPLOYEE
STOCK PURCHASE PLAN / / / / / /

For Against Abstain
3. RATIFY ACCOUNTANTS FOR 1997 / / / / / /

4. In accordance with their discretion, upon all other matters that may
properly come before said Annual Meeting and any adjournment thereof

Dated ________________________, 1997
Please Sign Here ___________________
____________________________________

(Note: Please date this proxy and sign it exactly as your name or names appear
hereon. All joint owners of shares should sign. State full title when signing as
executor, administrator, trustee, guardian, etc. Please return signed proxy in
the enclosed envelope.)

AMERICAN PAGING, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/

WITHHOLD
FOR the AUTHORITY to vote
nominee for the nominee

1. ELECTION OF DIRECTORS
EDWIN L. RUSSELL / / / /

For Against Abstain
2. APPROVAL OF THE 1997 EMPLOYEE
STOCK PURCHASE PLAN / / / / / /

For Against Abstain
3. RATIFY ACCOUNTANTS FOR 1997 / / / / / /

4. In accordance with their discretion, upon all other matters that may
properly come before said Annual Meeting and any adjournment thereof

Dated ________________________, 1997
Please Sign Here ___________________
____________________________________

AMERICAN PAGING, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/

WITHHOLD
FOR the AUTHORITY to vote
nominee for the nominee

1. ELECTION OF DIRECTORS
EDWIN L. RUSSELL / / / /

For Against Abstain
2. APPROVAL OF THE 1997 EMPLOYEE
STOCK PURCHASE PLAN / / / / / /

For Against Abstain
3. RATIFY ACCOUNTANTS FOR 1997 / / / / / /

4. In accordance with their discretion, upon all other matters that may
properly come before said Annual Meeting and any adjournment thereof

Dated ________________________, 1997
Please Sign Here ___________________
____________________________________