TELEPHONE & DATA SYSTEMS INC, SC 14D1, 1998-02-18

TELEPHONE & DATA SYSTEMS INC
SC 14D1, 1998-02-18
RADIOTELEPHONE COMMUNICATIONS

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
___________________
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)

AMERICAN PAGING, INC.
(Name of Subject Company [Issuer])

API MERGER CORP.
AND
TELEPHONE AND DATA SYSTEMS, INC.
(BIDDER)

COMMON SHARES ($1.00 PAR VALUE)
(Title of Class of Securities)

02882K10
(CUSIP NUMBER OF CLASS OF SECURITIES)

LEROY T. CARLSON, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TELEPHONE AND DATA SYSTEMS, INC.
30 N. LASALLE STREET, SUITE 4000, CHICAGO, ILLINOIS 60602
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)

COPY TO:
JAMES G. ARCHER, ESQ.
SIDLEY & AUSTIN
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 906-2000

CALCULATION OF FILING FEE
TRANSACTION AMOUNT OF
VALUATION* FILING FEE
$9,122,120* $1,824

* Note: The Transaction Valuation is calculated by multiplying (i) $2.50,
the per share tender offer price, by (ii) 3,658,946 (the total of 7,645,446
(the number of Common Shares outstanding) minus 4,000,000 (the number of
Common Shares owned by API Merger Corp.) plus 13,500 (the number of Common
Shares subject to options with an exercise price less than $2.50)) and
subtracting from such product the aggregate exercise price of the options.

/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: ___________
Form or Registration No.: _________
Filing Party: ___________
Date Filed: ___________

Note: The remainder of this cover page is only to be completed if this
Schedule 14D-1 (or amendment thereto) is being filed, inter alia, to satisfy the
reporting requirements of Section 13(d) of the Securities Exchange Act of 1934.
See General Instructions D, E and F to Schedule 14D-1.

* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosure provided in a prior cover page.

The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).

<PAGE>

CUSIP No. 02882K10
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS

API Merger Corp.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) / /
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY

- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)

AF
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 16,500,000
shares - Includes 12,500,000 Series A Common Shares, par value $1.00 per
share (the "Series A Common Shares"), which have fifteen votes per share
on all matters and are convertible on a share-for-share basis into Common
Shares, and 4,000,000 Common Shares, par value $1.00 per share (the
"Common Shares"). See Item 6 for further explanation.
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS)

/ /
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) - Reporting person
beneficially owns 100% of the outstanding Series A Common Shares of the
Issuer and approximately 52.3% of the outstanding Common Shares of the
Issuer for a combined total of approximately 81.9% of the Issuer's
outstanding classes of capital stock and approximately 98.1% of their
combined voting power.*
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (See Instructions)

CO
- -------------------------------------------------------------------------------
* Based on 7,645,446 Common Shares and 12,500,000 Series A Common Shares
outstanding on February 10, 1998.

<PAGE>

CUSIP No. 02882K10
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS

Telephone and Data Systems, Inc.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) / /
(b)/ /
- -------------------------------------------------------------------------------
3 SEC USE ONLY

- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)

WC, BK
- -------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION

Iowa
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 16,500,000
shares - Includes 12,500,000 Series A Common Shares, par value $1.00 per
share (the "Series A Common Shares"), which have fifteen votes per share
on all matters and are convertible on a share-for-share basis into Common
Shares, and 4,000,000 Common Shares, par value $1.00 per share (the
"Common Shares"). See Item 6 for further explanation.
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS)

HC, CO
- -------------------------------------------------------------------------------
* Based on 7,645,446 Common Shares and 12,500,000 Series A Common Shares
outstanding on February 10, 1998.

<PAGE>

CUSIP No. 02882K10
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS

The Trustees of The Voting Trust under Agreement dated June 30, 1989,
as amended
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) /X/
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)

AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION

United States
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 16,500,000
shares - Includes 12,500,000 Series A Common Shares, par value $1.00 per
share (the "Series A Common Shares"), which have fifteen votes per share
on all matters and are convertible on a share-for-share basis into
Common Shares, and 4,000,000 Common Shares, par value $1.00 per share
(the "Common Shares"). See Item 6 for further explanation.
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS)
/ /
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) - Reporting person
beneficially owns 100% of the outstanding Series A Common Shares of the
Issuer and approximately 52.3% of the outstanding Common Shares of the
Issuer for a combined total of approximately 81.9% of the Issuer's
outstanding classes of capital stock and approximately 98.1% of their
combined voting power.*
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

00
- -------------------------------------------------------------------------------
* Based on 7,645,446 Common Shares and 12,500,000 Series A Common Shares
outstanding on February 10, 1998.

4
<PAGE>

This Tender Offer Statement on Schedule 14D-1 and Amendment No. 2
to Schedule 13D (this "Statement") relates to the offer by API Merger Corp.,
a Delaware corporation ("Purchaser"), and a direct wholly owned subsidiary of
Telephone and Data Systems, Inc., a company organized under the laws of Iowa
("TDS"), to purchase all outstanding Common Shares, par value $1.00 per share
(the "Common Shares"), of American Paging Inc., a Delaware corporation (the
"Company"), at a price of $2.50 per Common Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in Purchaser's Offer to Purchase dated February 18, 1998 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together with the
Offer to Purchase constitute the "Offer"), copies of which are attached
hereto as Exhibits (a) (1) and (a) (2), respectively.

ITEM 1. SECURITY AND SUBJECT COMPANY.

(a) The name of the subject company is American Paging, Inc., a Delaware
corporation (the "Company"), which has its principal executive offices at 1300
Godward Street NE, Suite 3100, Minneapolis, Minnesota 55413-1767.

(b) The class of equity securities being sought is all the outstanding
Common Shares, par value $1.00 per share, of the Company. The information set
forth under "INTRODUCTION" and "THE TENDER OFFER -- 1. Terms of the Offer;
Expiration Date" of the Offer to Purchase is incorporated herein by reference.

(c) The information concerning the principal market in which the Common
Shares are traded and certain high and low sales prices for the Common Shares in
such principal market set forth in "THE TENDER OFFER -- 6. Price Range of
Common Shares; Dividends" of the Offer to Purchase is incorporated herein by
reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d) and (g) This Statement is filed by Purchaser, TDS and the Trustees
of The Voting Trust. The information concerning the name, state or other place
of organization, principal business and address of the principal office of each
of Purchaser, TDS and the Trustees of the Voting Trust under Agreement dated
June 30, 1989, as amended (the "Voting Trust"), and the information concerning
the name, residence or business address, present principal occupation or
employment and the name, principal business and address of any corporation or
other organization in which such employment or occupation is conducted, material
occupations, positions, offices or employments during the last five years and
the name, principal business and address of any business, corporation or other
organization in which such occupation, position, office or employment was
carried on and citizenship of each of the executive officers and directors of
Purchaser and TDS and the Trustees of the Voting Trust are set forth under
"INTRODUCTION", "THE TENDER OFFER -- 8. Certain Information Concerning
Purchaser, TDS and the Trustees

5
<PAGE>

of The Voting Trust" and Schedules I and II of the Offer to Purchase and are
incorporated herein by reference.

(e) and (f) During the last five years, none of Purchaser, TDS nor The
Voting Trust, and, to the best knowledge of Purchaser and TDS, none of the
persons listed in Schedules I and II of the Offer to Purchase has been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.

(a) The information set forth under "SPECIAL FACTORS -- Background of the
Offer and the Merger", "SPECIAL FACTORS -- The Merger Agreement", "SPECIAL
FACTORS -- Interests of Certain Persons in the Offer and the Merger", "SPECIAL
FACTORS -- Beneficial Ownership of Securities of the Company", "SPECIAL FACTORS
- -- Related Party Transactions" and "THE TENDER OFFER -- 8. Certain Information
Concerning Purchaser, TDS and The Voting Trust" in the Offer to Purchase is
incorporated herein by reference.

(b) The information set forth under "INTRODUCTION", "SPECIAL FACTORS --
Background of the Offer and the Merger" "SPECIAL FACTORS -- Purpose and
Structure of the Offer and the Merger; Reasons of TDS and Purchaser for the
Offer and the Merger", "SPECIAL FACTORS -- Plans for the Company after the Offer
and the Merger; Certain Effects of the Offer", "SPECIAL FACTORS -- The Merger
Agreement", "THE TENDER OFFER -- 7. Certain Information Concerning the Company"
and "THE TENDER OFFER -- 8. Certain Information Concerning Purchaser, TDS and
The Voting Trust" of the Offer to Purchase is incorporated herein by reference.

ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(c) The information set forth under "THE TENDER OFFER -- 9. Financing
of the Offer and the Merger" of the Offer to Purchase is incorporated herein by
reference.

ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.

(a)-(e) The information set forth under "INTRODUCTION", "SPECIAL
FACTORS -- Background of the Offer and the Merger", "SPECIAL FACTORS --
Purpose and Structure of the Offer and the Merger; Reasons of TDS and
Purchaser for the Offer and the Merger", "SPECIAL FACTORS -- Plans for the
Company after the Offer and the Merger; Certain Effects of the Offer" and
"SPECIAL FACTORS -- The Merger Agreement" of the Offer to Purchase is
incorporated herein by reference.

6
<PAGE>

(f) and (g) The information set forth under "SPECIAL FACTORS -- Plans for
the Company after the Offer and the Merger; Certain Effects of the Offer" and
"THE TENDER OFFER -- 11. Effect of the Offer on the Market for the Common
Shares; American Stock Exchange, Inc. and Exchange Act Registration" of the
Offer to Purchase is incorporated herein by reference.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a) and (b) The information set forth under "SPECIAL FACTORS -- Background
of the Offer and the Merger", "SPECIAL FACTORS -- Interests of Certain Persons
in the Offer and the Merger", "SPECIAL FACTORS -- Beneficial Ownership of
Securities of the Company", "THE TENDER OFFER -- 8. Certain Information
Concerning Purchaser, TDS and The Voting Trust" and Schedule I of the Offer to
Purchase is incorporated herein by reference.

ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.

The information set forth under "INTRODUCTION", "SPECIAL FACTORS --
Background of the Offer and the Merger", "SPECIAL FACTORS -- Purpose and
Structure of the Offer and the Merger; Reasons of TDS and Purchaser for the
Offer and the Merger", "SPECIAL FACTORS -- Plans for the Company after the Offer
and the Merger; Certain Effects of the Offer", "SPECIAL FACTORS -- The Merger
Agreement" and "THE TENDER OFFER -- 8. Certain Information Concerning
Purchaser, TDS and The Voting Trust" of the Offer to Purchase is incorporated
herein by reference.

ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth under "INTRODUCTION", "SPECIAL FACTORS -- Opinion
of Financial Advisor to the Special Committee", "SPECIAL FACTORS -- Analysis of
Financial Advisor to TDS" and "THE TENDER OFFER -- 14. Fees and Expenses" of
the Offer to Purchase is incorporated herein by reference.

ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.

Not applicable.

ITEM 10. ADDITIONAL INFORMATION.

(a) Not applicable.

(b)-(c) and (e) The information set forth under "THE TENDER OFFER -- 13.
Certain Legal Matters and Regulatory Approvals" of the Offer to Purchase is
incorporated herein by reference.

7
<PAGE>

(d) The information set forth under "THE TENDER OFFER -- 11. Effect of
the Offer on the Market for the Shares, American Stock Exchange, Inc. and
Exchange Act Registration" of the Offer to Purchase is incorporated herein by
reference.

(f) The information set forth in the Offer to Purchase, Letter of
Transmittal and the Agreement and Plan of Merger, dated as of February 11, 1998,
among TDS, Purchaser and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), is incorporated herein by reference and the
information set forth in the Asset Contribution Agreement, dated as of December
22, 1997, among TDS, TSR Paging, Inc., a Delaware corporation ("TSR Paging"),
and TSR Wireless, a Delaware LLC ("TSR Wireless"), and the Option Agreement,
dated as of December 22, 1997, between TDS and TSR Wireless, which are listed as
Exhibits (c)(2) and (c)(3), is incorporated herein by reference.

ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.

(a)(1) Form of Offer to Purchase dated February 18, 1998.

(a)(2) Form of Letter of Transmittal.

(a)(3) Form of Notice of Guaranteed Delivery.

(a)(4) Form of Letter from Credit Suisse First Boston Corporation to
Brokers, Dealers, Commercial Banks Trust Companies and Nominees.

(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.

(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.

(a)(7) Summary Advertisement as published in The Wall Street Journal on
February 18, 1998.

(a)(8) Joint Press Release issued by the Company and TDS on February 11,
1998.

(a)(9) Press Release issued by TDS on February 18, 1998.

(a)(10) Letter to Company Stockholders dated February 18, 1998.

(b) None.

(c)(1) Agreement and Plan of Merger, dated as of February 11, 1998, among
TDS, Purchaser and the Company.

(c) (2) Asset Contribution Agreement, dated as of December 22, 1997, among
TDS, TSR Paging and TSR Wireless, is hereby incorporated herein by reference to
Exhibit 2.1 of the Schedule 13-D relating to the Company filed by TDS on
December 23, 1998.

<PAGE>

(c)(3) Option Agreement, dated as of December 22, 1997, between TDS and
TSR Paging, is hereby incorporated herein by reference to Exhibit 2.2 of the
Schedule 13-D relating to the Company filed by TDS on December 23, 1998.

(c)(4) Restated Certificate of Incorporation, as amended, is hereby
incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.

(c)(5) The Voting Trust Agreement, dated June 30, 1989, as amended, is
hereby incorporated herein by reference to Exhibit 9.1(a), Exhibit 9.1(b) and
Exhibit 9.1(c) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.

(c)(6) Exchange Agreement, between the Company and TDS, is hereby
incorporated by reference to Exhibit 10.1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-72707).

(c)(7) Revolving Credit Agreement, between the Company and TDS, is hereby
incorporated by reference to Exhibit 10.2 to the Company's Registration
Statement on Form S-1 (Registration No. 33-72707).

(c)(8) Amendment to Revolving Credit Agreement, between the Company and
TDS, dated March 5, 1997 and effective January 1, 1997, is hereby incorporated
by reference to Exhibit 10.2(b) of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.

(c)(9) Amendment to Revolving Credit Agreement, between the Company and
TDS, dated January 13, 1998.

(c)(10) Intercompany Agreement, between the Company and TDS, is hereby
incorporated by reference to Exhibit 10.5 to the Company's Registration
Statement on Form S-1 (Registration No. 33-72707).

(c)(11) Registration Rights Agreement, between the Company and TDS, as
amended, is hereby incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-1 (Registration No. 33-72707).

(c)(12) Employee Benefit Plans Agreement, between the Company and TDS, is
hereby incorporated by reference to Exhibit 10.8 to the Company's Registration
Statement on Form S-1 (Registration No. 33-72707).

(d) None.

(e) Not Applicable.

<PAGE>

(f) None.

<PAGE>

JOINT FILING AGREEMENT

The undersigned hereby agree and consent, pursuant to Rule 13d-(f)(1),
to the joint filing of all Schedules 13D and/or Schedules 13G (including any
amendments thereto) on behalf of such parties.

SIGNATURES

Dated: February 18, 1998

After due inquiry and to the best of our knowledge and belief, we certify
that the information set forth in this statement is true, complete and correct.

API MERGER CORP. THE VOTING TRUST*

By: /s/ LEROY T. CARLSON, JR. /s/ LEROY T. CARLSON, JR.

Name: LeRoy T. Carlson, Jr. LeRoy T. Carlson, Jr.
Title: President Title: As Trustee and Attorney-in-Fact
for other Trustees**

* Signature only for Amendment No. 2 to
the Schedule 13D relating to the direct
TELEPHONE AND DATA SYSTEMS, INC. and indirect beneficial ownership of the
Common Shares of American Paging, Inc.
by API Merger Corp., Telephone and Data
By: /s/ LEROY T. CARLSON, JR. Systems, Inc. and The Voting Trust,
Name: LeRoy T. Carlson, Jr. respectively.

**Pursuant to Joint Filing Agreement and
Power of Attorney previously filed with
the Securities and Exchange Commission
and incorporated by reference herein.

Signature Page to Schedule 14D-1 relating to the Offer by API
Merger Corp. to purchase all outstanding Common Shares of
American Paging, Inc. and Amendment No. 2 to Schedule 13D
relating to the direct and indirect beneficial ownership of the Common
Shares of American Paging, Inc. by API Merger Corp., Telephone and
Data Systems, Inc., and The Voting Trust, respectively.

<PAGE>

EXHIBIT INDEX

EXHIBIT NO. EXHIBIT DESCRIPTION

(a)(1) Form of Offer to Purchase dated February 18, 1998.

(a)(2) Form of Letter of Transmittal.

(a)(3) Form of Notice of Guaranteed Delivery.

(a)(4) Form of Letter from Credit Suisse First Boston
Corporation to Brokers, Dealers, Commercial Banks Trust
Companies and Nominees.

(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.

(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.

(a)(7) Summary Advertisement as published in The Wall Street
Journal on February 18, 1998.

(a)(8) Joint Press Release issued by the Company and TDS on
February 11, 1998.

(a)(9) Press Release issued by TDS on February 18, 1998.

(a)(10) Letter to Company Stockholders dated February 18, 1998.

(c)(1) Agreement and Plan of Merger, dated as of February 11,
1998, among TDS, Purchaser and the Company.

(c)(9) Amendment to Revolving Credit Agreement, between
the Company and TDS, dated January 13, 1998.

<PAGE>
Offer to Purchase for Cash

All Outstanding Common Shares

American Paging, Inc.

$2.50 Net Per Common Share

API Merger Corp.

a direct wholly owned subsidiary of

Telephone and Data Systems, Inc.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY
TIME, ON TUESDAY, MARCH 17, 1998, UNLESS THE OFFER IS EXTENDED.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) AT
LEAST THE NUMBER OF COMMON SHARES THAT WHEN ADDED TO THE COMMON SHARES OWNED
BY TELEPHONE AND DATA SYSTEMS, INC. ("TDS") AND API MERGER CORP.
("PURCHASER") SHALL CONSTITUTE 90% OF THE COMMON SHARES THEN OUTSTANDING
(THE "MINIMUM CONDITION") AND (II) THAT THE ASSET CONTRIBUTION
AGREEMENT, DATED AS OF DECEMBER 22, 1997, AMONG TDS, TSR PAGING,
INC. AND TSR WIRELESS LLC BE IN FULL FORCE AND EFFECT AND NOT
TERMINATED IN ACCORDANCE WITH THE TERMS THEREOF AND ALL OF THE
CONDITIONS SET FORTH IN ARTICLES XI AND XII THEREOF SHALL HAVE
BEEN SATISFIED OR WAIVED (THE "ASSET CONTRIBUTION AGREEMENT
CONDITION"). PURCHASER HAS AGREED TO WAIVE THE
MINIMUM CONDITION UNDER CERTAIN CIRCUMSTANCES
DESCRIBED HEREIN.

THE BOARD OF DIRECTORS OF AMERICAN PAGING, INC. (THE "COMPANY"), BY UNANIMOUS
VOTE OF ALL DIRECTORS, BASED UPON, AMONG OTHER THINGS, THE UNANIMOUS
RECOMMENDATION AND APPROVAL OF THE SPECIAL COMMITTEE OF THE BOARD OF
DIRECTORS CONSISTING OF THE INDEPENDENT DIRECTORS OF THE COMPANY WHO
ARE NOT DIRECTORS, OFFICERS OR EMPLOYEES OF TDS OR PURCHASER OR
OTHERWISE AFFILIATED WITH TDS OR PURCHASER NOR OFFICERS OR
EMPLOYEES OF THE COMPANY (THE "SPECIAL COMMITTEE"), HAS
DETERMINED THAT EACH OF THE OFFER AND THE MERGER (AS DEFINED
BELOW) IS FAIR TO THE SHAREHOLDERS OF THE COMPANY (OTHER THAN
TDS AND PURCHASER), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR COMMON SHARES PURSUANT
TO THE OFFER.

IMPORTANT

Any shareholder desiring to tender all or any portion of such shareholder's
Common Shares, par value $1.00 per share (the "Common Shares"), of American
Paging, Inc. should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) evidencing
tendered Common Shares, and any other required documents, to the depositary or
tender such Common Shares pursuant to the procedure for book-entry transfer set
forth in "The Tender Offer-- 3. Procedures for Accepting the Offer and Tendering
Common Shares" or (2) request such shareholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
shareholder. Any shareholder whose Common Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
shareholder desires to tender such Common Shares.

Any shareholder who desires to tender Common Shares and whose certificates
evidencing such Common Shares are not immediately available, or who cannot
comply with the procedure for book-entry transfer on a timely basis, may tender
such Common Shares by following the procedure for guaranteed delivery set forth
in "THE TENDER OFFER-- 3. Procedures for Accepting the Offer and Tendering
Common Shares".

Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or the Dealer Manager.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.

The Dealer Manager for the Offer is:

[LOGO]
February 18, 1998
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
INTRODUCTION.......................................................................... 1

SPECIAL FACTORS....................................................................... 4
Background of the Offer and the Merger.............................................. 4
Recommendation of the Special Committee and the Company's Board; Fairness of the
Offer and the Merger.............................................................. 7
Fairness of the Offer and the Merger................................................ 7
Opinion of Financial Advisor to the Special Committee............................... 9
Position of TDS and Purchaser Regarding Fairness of the Offer and the Merger........ 12
Presentation of Financial Advisor to TDS............................................ 13
Financial Projections............................................................... 15
Purpose and Structure of the Offer and the Merger; Reasons of TDS and Purchaser for
the Offer and the Merger.......................................................... 16
Plans for the Company after the Offer and the Merger; Certain Effects of the
Offer............................................................................. 17
Rights of Shareholders in the Merger................................................ 18
The Merger Agreement................................................................ 18
Interests of Certain Persons in the Offer and the Merger............................ 23
Beneficial Ownership of Securities of the Company................................... 26
Related Party Transactions.......................................................... 34
Fees and Expenses................................................................... 39

THE TENDER OFFER...................................................................... 41
1. Terms of the Offer; Expiration Date............................................. 41
2. Acceptance for Payment and Payment for Common Shares............................ 42
3. Procedures for Accepting the Offer and Tendering Common Shares.................. 43
4. Withdrawal Rights............................................................... 45
5. Certain Federal Income Tax Consequences......................................... 46
6. Price Range of Common Shares; Dividends......................................... 47
7. Certain Information Concerning the Company...................................... 48
8. Certain Information Concerning Purchaser, TDS and The Voting Trust.............. 51
9. Financing of the Offer and the Merger........................................... 52
10. Dividends and Distributions..................................................... 52
11. Effect of the Offer on the Market for the Common Shares; American Stock
Exchange, Inc. and Exchange Act Registration.................................... 53
12. Certain Conditions of the Offer................................................. 53
13. Certain Legal Matters and Regulatory Approvals.................................. 55
14. Fees and Expenses............................................................... 57
15. Miscellaneous................................................................... 58
</TABLE>

<TABLE>
<S> <C> <C>
SCHEDULE I. Directors and Executive Officers of TDS and Purchaser and the
Trustees of The Voting Trust....................................... I-1

SCHEDULE II. Directors and Executive Officers of the Company.................... II-1

SCHEDULE III. Opinion of PaineWebber Incorporated................................ III-1

SCHEDULE IV. Summary of Stockholder Appraisal Rights and Text of Section 262 of
the General Corporation Law of the State of Delaware............... IV-1

SCHEDULE V. Audited Financial Statements (and Related Notes) for the Company
for the Years Ended December 31, 1997 and December 31, 1996........ V-1
</TABLE>

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<PAGE>
To the Holders of Common Shares of
American Paging, Inc.:

INTRODUCTION

API Merger Corp., a Delaware corporation ("Purchaser") and a direct wholly
owned subsidiary of Telephone and Data Systems, Inc., a corporation organized
under the laws of Iowa ("TDS"), hereby offers to purchase all outstanding Common
Shares, par value $1.00 per share (the "Common Shares"), of American Paging,
Inc., a Delaware corporation (the "Company"), at a price of $2.50 per Common
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer").

Tendering shareholders who have Common Shares registered in their name and
who tender directly will not be obligated to pay brokerage fees or commissions
or, except as otherwise provided in Instruction 6 of the Letter of Transmittal,
stock transfer taxes with respect to the purchase of Common Shares by Purchaser
pursuant to the Offer. Shareholders who hold their Common Shares through their
bank or broker should consult with them as to whether they charge any service
fees. Purchaser will pay all charges and expenses of Credit Suisse First Boston
Corporation, which is acting as Dealer Manager for the Offer (in such capacity,
the "Dealer Manager"), Harris Trust and Savings Bank (the "Depositary") and
MacKenzie Partners, Inc. (the "Information Agent") incurred in connection with
the Offer. See "SPECIAL FACTORS--Fees and Expenses" and "THE TENDER OFFER--14.
Fees and Expenses".

THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD"), BY UNANIMOUS VOTE OF
ALL DIRECTORS, BASED UPON, AMONG OTHER THINGS, THE UNANIMOUS RECOMMENDATION AND
APPROVAL OF THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS CONSISTING OF THE
INDEPENDENT DIRECTORS WHO ARE NOT DIRECTORS, OFFICERS OR EMPLOYEES OF TDS OR
PURCHASER OR OTHERWISE AFFILIATED WITH TDS OR PURCHASER NOR OFFICERS OR
EMPLOYEES OF THE COMPANY (THE "SPECIAL COMMITTEE"), HAS DETERMINED THAT EACH OF
THE OFFER AND THE MERGER IS FAIR TO THE SHAREHOLDERS OF THE COMPANY (OTHER THAN
PURCHASER AND TDS), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR COMMON SHARES PURSUANT TO THE OFFER.

The Company has advised TDS that PaineWebber Incorporated ("PaineWebber")
has delivered to the Special Committee its written opinion that the $2.50 per
Common Share cash consideration to be offered to the shareholders of the Company
in each of the Offer and the Merger (as defined below) is fair to such
shareholders (other than the Purchaser and TDS) from a financial point of view.
See "SPECIAL FACTORS--Opinion of Financial Advisor to the Special Committee" for
further information concerning the opinion of PaineWebber.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to shareholders herewith.

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<PAGE>
ARTICLES XI AND XII THEREOF SHALL HAVE BEEN SATISFIED OR WAIVED (THE "ASSET
CONTRIBUTION AGREEMENT CONDITION"). PURCHASER HAS AGREED TO WAIVE THE MINIMUM
CONDITION UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN. PURCHASER CURRENTLY OWNS
12,500,000 SERIES A COMMON SHARES, PAR VALUE $1.00 PER SHARE (THE "SERIES A
COMMON SHARES"), WHICH HAVE FIFTEEN VOTES PER SHARE ON ALL MATTERS AND ARE
CONVERTIBLE ON A SHARE-FOR-SHARE BASIS INTO COMMON SHARES, AND 4,000,000 COMMON
SHARES, CONSTITUTING 100% OF THE CURRENTLY OUTSTANDING SERIES A COMMON SHARES
AND APPROXIMATELY 52.3% OF THE OUTSTANDING COMMON SHARES FOR A COMBINED TOTAL OF
APPROXIMATELY 81.9% OF THE COMPANY'S OUTSTANDING CLASSES OF CAPITAL STOCK AND
APPROXIMATELY 98.1% OF THEIR COMBINED VOTING POWER. AFTER CONSUMMATION OF THE
OFFER, IF REQUIRED TO ACHIEVE OWNERSHIP OF 90% OF THE COMMON SHARES THEN
OUTSTANDING, PURCHASER CURRENTLY INTENDS TO CONVERT ITS EXISTING 12,500,000
SERIES A COMMON SHARES INTO AN EQUIVALENT NUMBER OF COMMON SHARES IN ACCORDANCE
WITH THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION. SEE "THE TENDER
OFFER--12. CERTAIN CONDITIONS OF THE OFFER", WHICH SETS FORTH IN FULL THE
CONDITIONS TO THE OFFER.

The Company has advised Purchaser that as of February 10, 1998, (i)
12,500,000 Series A Common Shares were issued and outstanding, (ii) no Series B
Common Shares, par value $1.00 per share, were issued and outstanding, (iii) no
shares of Preferred Stock, par value $1.00 per share (the "Preferred Stock")
were issued and outstanding, (iv) 7,645,446 Common Shares were issued and
outstanding, (v) no Common Shares were held in the treasury of the Company, (vi)
150,000 Common Shares were reserved for future issuance pursuant to the TDS
Tax-Deferred Savings Plan, (vii) 100,000 Common Shares were reserved for future
issuance for sale to employees of the Company and its subsidiaries under the
1997 Employee Stock Purchase Plan, (viii) 700,000 shares were reserved for
future issuance under the 1994 Long Term Incentive Plan (with respect to which
options to acquire 287,072 Common Shares were issued and outstanding) and (ix)
12,500,000 Common Shares were reserved for issuance upon conversion of the
Series A Common Shares. The Company has further advised Purchaser that prior to
the announcement of the Offer, there were approximately 111 holders of record of
the issued and outstanding Common Shares. Purchaser owns 4,000,000 Common Shares
and 12,500,000 Series A Common Shares (see "SPECIAL FACTORS--Background of the
Offer and the Merger"), which it acquired in consideration for the issuance by
it of 100 shares of common stock, par value $1.00 per share, to TDS. Purchaser
does not currently intend to convert any of the Series A Common Shares while the
Offer is open. As a result, assuming Purchaser does not convert any of the
Series A Common Shares during the Offer, but all exercisable options with an
exercise price less than $2.50 are exercised, the Minimum Condition would be
satisfied if 2,893,052 Common Shares were validly tendered in the Offer and not
withdrawn. If after the consummation of the Offer Purchaser is not the owner of
at least 90% of the outstanding Common Shares and can become the owner of at
least 90% of the outstanding Common Shares by converting its Series A Common
Shares into Common Shares, Purchaser currently intends to then convert its
Series A Common Shares into Common Shares to become the owner of at least 90% of
the outstanding Common Shares.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 11, 1998 (the "Merger Agreement"), among TDS, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Common Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
become a direct wholly owned subsidiary of TDS. At the effective time of the
merger (the "Effective Time"), each Common Share issued and outstanding
immediately prior to the Effective Time (other than Common Shares held in the
treasury of the Company or owned by Purchaser, TDS or any direct or indirect
wholly owned subsidiary of TDS or the Company, and other than Common Shares held
by shareholders

2
<PAGE>
who shall have properly demanded and perfected appraisal rights under Section
262 of Delaware Law) will be canceled and converted automatically into the right
to receive $2.50 in cash, or any higher or lower price that may be paid per
Common Share pursuant to the Offer, without interest (the "Merger
Consideration"). The Merger Agreement is more fully described in "SPECIAL
FACTORS--The Merger Agreement". Upon consummation of such merger, TDS and TSR
Paging, in accordance with the terms and conditions of the Asset Contribution
Agreement, would combine their respective paging businesses, and TDS would cause
the Company to contribute substantially all of the assets and certain, limited,
liabilities of the Company, and TSR Paging would contribute all of its assets
and liabilities into TSR Wireless. TSR Wireless would not assume debt owed by
the Company to TDS pursuant to the Revolving Credit Agreement (approximately
$185 million at January 31, 1998). The Company, which would then be a wholly
owned subsidiary of TDS, would have a 30% interest and TSR Paging would have a
70% interest in TSR Wireless, subject to adjustment pursuant to the terms of the
Asset Contribution Agreement.

The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the shareholders of the Company. See "SPECIAL
FACTORS--The Merger Agreement". Under the Company's Restated Certificate of
Incorporation and Delaware Law, the approval of the Board and the affirmative
vote of the holders of Common Shares and Series A Common Shares entitled to cast
at least a majority of the total number of votes entitled to be cast by the
holders of Common Shares and Series A Common Shares is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. Consequently, Purchaser currently has sufficient voting power to
approve and adopt the Merger Agreement and the Merger without the vote of any
other shareholder. Pursuant to the Asset Contribution Agreement, TDS is
obligated to use its best efforts to cause Purchaser to complete the Merger,
subject to the approval of the Merger by the Special Committee and TDS is not
required to complete a Merger which does not have the recommendation of the
Special Committee.

Under Delaware Law, if Purchaser owns, following consummation of the Offer,
conversion of its Series A Common Shares or otherwise, at least 90% of the then
outstanding Common Shares and Series A Common Shares, Purchaser will be able to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without a vote of the Company's shareholders. In
such event, TDS, Purchaser and the Company have agreed to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
shareholders. If, after the consummation of the Offer, Purchaser is not the
owner of at least 90% of the outstanding Common Shares and can become the owner
of at least 90% of the outstanding Common Shares by converting its Series A
Common Shares into Common Shares, Purchaser currently intends to convert its
Series A Common Shares into Common Shares to become the owner of at least 90% of
the outstanding Common Shares. Purchaser's obligation to consummate the Offer is
conditioned on there being validly tendered and not withdrawn at least the
number of Common Shares that, when added to the 4,000,000 Common Shares owned by
Purchaser, shall constitute 90% of the Common Shares then outstanding, so as to
enable Purchaser to consummate the Merger without a vote of the Company's
shareholders. If, however, fewer than such number of Common Shares are validly
tendered and not withdrawn, and all other conditions set forth in Annex II of
the Merger Agreement are satisfied, Purchaser may extend the Offer for a period
or periods not to exceed 20 business days after the later of (i) the initial
Expiration Date and (ii) the date on which all other conditions set forth in the
Merger Agreement shall have been satisfied, after which time (or earlier if TDS
did not extend the Offer) Purchaser shall waive the Minimum Condition. In such
case, if the conversion of all of Purchaser's Series A Common Shares would not
result in Purchaser owning at least 90% of the Common Shares outstanding, a vote
of the Company's shareholders will be required under Delaware Law, and a
significantly longer period of time will be required to effect the Merger. See
"SPECIAL FACTORS--Purpose and Structure of the Offer and the Merger; Reasons of
TDS and Purchaser for the Offer and the Merger".

The term "Expiration Date" means 12:00 Midnight, New York City time, on
March 17, 1998, unless and until Purchaser shall have extended the period of
time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire.

THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.

3
<PAGE>
SPECIAL FACTORS

BACKGROUND OF THE OFFER AND THE MERGER

TDS INVESTMENT IN THE COMPANY. The Company was formed in 1980 under
Delaware Law as a wholly owned subsidiary of TDS. In 1994, the Company sold 3.5
million Common Shares in an underwritten public offering at an initial public
offering price of $14.00 per share. The Company realized $45.6 million in
connection with the sale, after the payment of the underwriters' discount. The
proceeds of the sale were used to repay indebtedness to TDS. Prior to the public
offering, TDS exchanged all of the outstanding common stock of the Company for
1.5 million Common Shares and 15.0 million Series A Common Shares. During 1994,
TDS converted 2.5 million Series A Common Shares into Common Shares.

The holders of Common Shares are entitled to one vote per share. The holders
of Series A Common Shares are entitled to fifteen votes per share. Series A
Common Shares are convertible on a share-for-share basis into Common Shares. On
February 9, 1998, TDS contributed all of the Series A Common Shares and Common
Shares held by it in consideration for 100 shares of common stock, par value
$1.00 per share, of Purchaser.

The Company has experienced cumulative net losses since 1993 of
$117,441,000, including net losses in 1996 of $45,527,000 and in 1997 of
$51,636,000. Cash flows from Operating Activities were ($10,774,000) in 1996 and
($18,752,000) in 1997, with additional negative cash flows from investing
activities of ($38,535,000) in 1996 and ($19,050,000) in 1997, which were
financed with loans from TDS of $45,437,000 in 1996 and $40,030,000 in 1997.
Pursuant to a Revolving Credit Agreement dated as of January 1, 1994 between TDS
and the Company, as amended and supplemented to date (the "Revolving Credit
Agreement"), TDS has made advances to the Company totaling $28,113,000 as of
December 31, 1994, $94,523,000 as of December 31, 1995, $139,960,000 as of
December 31, 1996, and $179,990,000 as of December 31, 1997. Pursuant to a
waiver granted March 5, 1997, TDS agreed to waive all defaults by the Company
under the Revolving Credit Agreement resulting from violation of a covenant
requiring the Company to maintain a certain ratio of equity to liabilities or
the insolvency of the Company until January 1, 1999. In January 1998, TDS agreed
to extend the line of credit to $185 million, of which $185 million has been
advanced through January 31, 1998. TDS has undertaken in its agreement with TSR
Paging described below to advance sufficient funds to the Company through the
closing of the transaction with TSR Paging described below, but has not
determined whether or under what conditions it will continue to advance funds
should the TSR closing not occur. See "SPECIAL FACTORS--Background of the Offer
and the Merger--TSR Negotiations". TDS's investment has been partially offset by
$37.1 million of federal tax benefits and $3.9 million of state tax benefits
used in TDS's consolidated federal and state income tax returns in accordance
with the provisions of the Tax Allocation Agreement between TDS and the Company.
See "RELATED PARTY TRANSACTIONS--Tax Allocation Agreement."

BACKGROUND OF SEARCH FOR A STRATEGIC PARTNER. In September 1996, TDS
retained Credit Suisse First Boston Corporation ("Credit Suisse First Boston" or
"CSFB") to assist TDS in evaluating alternatives for maximizing TDS's investment
in the Company, including seeking third party indications of interest in a
possible strategic transaction involving the Company. After an extensive search
conducted on behalf of TDS during early 1997, only two written indications of
interest, including a proposal from TSR Paging, were received which were not
withdrawn. A third written indication of interest was received in late 1997. In
the judgment of TDS, the most favorable indication of interest received came
from TSR Paging. None of the indications involved consideration to TDS which, as
evaluated by TDS and CSFB, exceeded the amount of the Company's outstanding debt
to TDS. See "SPECIAL FACTORS--Background of the Offer and the Merger--TSR
Negotiations", "--Presentation of Financial Advisor to TDS" and "SPECIAL
FACTORS--Fairness of the Offer and the Merger--Other Proposals." From time to
time representatives of TDS briefed the Board of Directors of the Company on the
progress of these efforts.

4
<PAGE>
During late 1996 and 1997, the Company attempted to improve its operations
and develop an alternative strategy. Discussions with a potential purchaser of
certain license assets as a means to redeploy capital in early 1997 were
unsuccessful. Management of the Company prepared and revised a tentative plan
for independent operation which recognized that significant operating losses
would continue to be incurred in 1998, funded in part by significant asset sales
and supported by conversion of the Company's indebtedness to TDS into equity.
Absent such recapitalization and asset sales, the last version of this plan
called for $45 million of additional investment by TDS in 1997 and 1998 beyond
its commitment under the Revolving Credit Agreement. Management later withdrew
this plan as not capable of achievement.

TSR NEGOTIATIONS. In the fall of 1997, TSR Paging presented a revised
indication of interest. After negotiations between TDS and TSR Paging, on
December 22, 1997, TDS, TSR Paging and TSR Wireless entered into the Asset
Contribution Agreement. In accordance with the terms and conditions of the Asset
Contribution Agreement, TDS agreed to propose to negotiate and enter into a
merger agreement with the Company pursuant to which a wholly owned subsidiary of
TDS would acquire all of the issued and outstanding stock of the Company not
owned by TDS and its affiliates. TDS is not, however, required to complete a
merger which does not have the recommendation of a special committee of the
independent directors of the Company. Upon consummation of such merger, TDS and
TSR Wireless, in accordance with the terms and conditions of the Asset
Contribution Agreement, would combine their respective paging businesses, and
TDS would cause the Company to contribute substantially all of the assets and
certain, limited, liabilities of the Company, and TSR Paging would contribute
all of its assets and liabilities into TSR Wireless (the "TSR Transaction"). TSR
Wireless would not assume debt owed by the Company to TDS pursuant to the
Revolving Credit Agreement (approximately $185 million at January 31, 1998). The
Company, which would then be a wholly owned subsidiary of TDS, would have a 30%
interest and TSR Paging would have a 70% interest in TSR Wireless, subject to
adjustment pursuant to the terms of the Asset Contribution Agreement. A copy of
the Asset Contribution Agreement is filed as an Exhibit to the Schedule 14D-1
filed by TDS and Purchaser with the Commission in connection with the Offer.
Upon closing of the TSR Transaction, the Company will be entitled to elect two
of the nine member Management Committee of TSR Wireless. In addition, although
the Company's membership interest in TSR Wireless will not be transferable
without consent of TSR Paging, the Company will be granted registration rights
in the event either TSR Wireless or TSR Paging, both of which currently are
privately held, conducts an initial or subsequent public offering of its
securities. After such an initial public offering and in any event by December
31, 2002, the Company will have certain rights to demand registration of its
interests. The Company will also be entitled to require, and is subject to TSR
Paging's (and the controlling Shareholders of TSR Paging) right to require, that
its interests be sold on the same terms as certain dispositions of the interests
of TSR Paging in TSR Wireless and certain dispositions by the controlling
shareholders of their interests in TSR Paging, subject to various exceptions.

Concurrently with the execution and delivery of the Asset Contribution
Agreement, TDS and TSR Wireless executed and delivered an option agreement (the
"Option Agreement"), pursuant to which TDS granted TSR Wireless an option to
acquire the Company's debt to TDS pursuant to the Revolving Credit Agreement
(the "Option"). Such Option would become exercisable upon certain conditions,
including failure of the special committee of independent directors of the
Company to approve the acquisition of the Common Shares of the Company not owned
by TDS and its affiliates pursuant to the Merger described herein or the
withdrawal by such special committee of its approval of such acquisition.
Although the Option is not currently exercisable, if the special committee were
to withdraw its recommendation of the Merger, or the Purchaser agreed to sell
its capital stock in the Company, or the Board of the Company resolved to
liquidate the Company or the Company entered into an agreement for the merger,
consolidation, other combination or sale of substantially all its assets, then,
TSR Wireless would be in a position to acquire TDS's interest in the Company's
indebtedness to TDS and, after January 1, 1999, to take whatever action the
holder of that debt is entitled to take with regard to any defaults then
existing under such indebtedness. A copy of the Option is filed as an Exhibit to
the Schedule 14D-1 filed by TDS and Purchaser.

5
<PAGE>
On December 23, 1997, TDS delivered to the Board of Directors of the Company
(the "Board") a letter dated December 23, 1997 (the "TDS Proposal Letter"), in
which TDS offered to enter into a merger agreement with the Company pursuant to
which all of the issued and outstanding Common Shares not owned by TDS would be
acquired for cash in an amount equal to $2.25 per share.

On December 26, 1997, the Board met and appointed Jean Burhardt Keffeler and
Edwin L. Russell as the members of a special committee (the "Special Committee")
to, among other things, consider how the Company should respond to the TDS
Proposal Letter. In January 1998, the Special Committee retained PaineWebber as
financial advisor to the Special Committee and Vedder, Price, Kaufman & Kammholz
("Vedder, Price") as legal advisor to the Special Committee. The Special
Committee held meetings by conference telephone with its financial and legal
advisors present to consider and conduct due diligence with respect to the TDS
Proposal Letter on January 9, 15 and 23 and February 6, 1998, and met in person
with its financial and legal advisors present on February 2 and 10, 1998. In
January and February 1998 PaineWebber and Vedder Price conducted due diligence
with respect to the TDS Proposal Letter, including a review of the Asset
Contribution Agreement and ancillary agreements including the Option Agreement
as well as information about the Company and the efforts of TDS to find a
suitable strategic partner. Counsel for TDS also prepared on behalf of TDS and
discussed with Vedder, Price a draft Merger Agreement which provided for an
offer to purchase for cash the Common Shares not owned by TDS and its
affiliates.

On February 6, 1998, the Special Committee discussed with Mr. LeRoy T.
Carlson, Jr., President of TDS, the TDS Proposal Letter and stated that it was
not able to recommend that the Common Shares not held by TDS and its affiliates
be acquired at a price of $2.25. The Special Committee proposed that the price
should be increased from $2.25 to $2.55, or a premium of 20 percent above
$2.125, the closing price on the date prior to announcement of the TDS Proposal
Letter. The Special Committee also requested that TDS seek further confirmation
from TSR Paging that it was unwilling to modify the terms of the Asset
Contribution Agreement in order to allow the shareholders of the Company other
than TDS and Purchaser (the "Public Shareholders") to remain as shareholders of
the Company and thereby indirectly participate in TSR Wireless. On February 10,
1998, counsel to TSR Paging confirmed by letter to TDS's legal advisors that
since the beginning of the discussions with respect to the transaction
contemplated by the Asset Contribution Agreement, TSR had been unwilling to
proceed with such transaction if there continued to be any public minority
shareholders. Such letter also stated that "TSR Paging is not interested in
having a continuing reporting obligation nor having public stockholders" and
that "TSR Paging's negotiations . . . were based on this premise."

On February 7, 1998, the Company's and TDS's financial advisors further
discussed the appropriate premium, if any, for TDS's acquisition of such Common
Shares and the extent to which other recent minority acquisition transactions
provided a relevant basis for comparison.

On February 9, 1998, Mr. Leroy T. Carlson, Jr. and Mr. Scott H. Williamson,
Vice President-- Acquisitions of TDS, held further discussions with the Special
Committee. Mr. Carlson, while indicating that he believed the TDS Proposal
Letter was fair, offered to increase the price per share to $2.32. The Special
Committee stated that it was not prepared to reconsider its original
recommendation.

On February 10, 1998, the Special Committee and its financial and legal
advisors met in person with Mr. Carlson and Mr. Williamson and TDS's legal
advisors. Both sides made presentations with respect to their positions. The
Special Committee, based in part upon additional information provided by its
financial advisors about other minority purchase transactions which it
considered to be relevant, indicated that it could recommend as fair a
consideration of $2.50 per share. After an adjournment, the TDS representatives
agreed to increase the consideration offered to that amount.

Subsequently on February 10, 1998, the Special Committee unanimously
determined to recommend the proposed transaction to the Board of Directors of
the Company after PaineWebber expressed the opinion (subsequently confirmed in
its written opinion) that, on the basis of, and subject to the matters

6
<PAGE>
stated in its opinion, the consideration to be received by the Public
Shareholders pursuant to the Offer and the Merger is fair to the Public
Shareholders from a financial point of view. Later that day, the Board, with all
directors personally in attendance, met to consider the Offer and the Merger.
The Special Committee, with representatives of PaineWebber and Vedder, Price in
attendance, reported to the Board on its review of the TDS Proposal Letter, the
TSR Transaction and its recommendation of the proposed transaction as fair to
the Public Shareholders. After receiving the recommendation of the Special
Committee, asking questions of the Special Committee as well as its financial
and legal advisors and receiving a further explanation of the TSR Transaction
and the provisions of the Offer and Merger Agreement from representatives of TDS
and its legal advisors, the Board unanimously approved the Merger Agreement and
Offer.

Subsequently that evening, the Board of Directors of TDS, at a special
meeting held to consider the matter, unanimously approved the Offer and the
Merger Agreement. Representatives of TDS and the Company completed execution of
the Merger Agreement, and the proposed Offer and the Merger were announced, the
next day.

RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE COMPANY'S BOARD; FAIRNESS OF THE
OFFER AND THE MERGER

On February 10, 1998, the Special Committee unanimously approved and
recommended to the Company's Board as fair to the Public Shareholders of the
Company, and the Board, by a unanimous vote of all directors, based in part on
the recommendation and approval of the Special Committee, approved the Merger
Agreement and the transactions contemplated thereby and determined that each of
the Offer and the Merger is fair to the Public Shareholders. The Board, by a
unanimous vote of all directors, has recommended that all holders of Common
Shares accept the Offer and tender their Common Shares pursuant to the Offer.

FAIRNESS OF THE OFFER AND THE MERGER

In reaching its determinations referred to immediately above, the Special
Committee considered the following factors, each of which, in the view of the
Special Committee, supported such determinations:

(i) the poor historical performance of the Company, its current high
turnover rate of employees and changes in management, its inability to
restructure its operations in a manner which significantly improved its
financial prospects, and its inability to develop a viable plan for independent
operations indicate that the Company is unlikely to achieve success on a stand
alone basis;

(ii) the current financial condition of the Company, its need for
significant continuing investment to fund operating and capital requirements,
and questions about its ability to obtain such financing from TDS or third
parties indicate that its prospects are in jeopardy;

(iii) a review of possible transactions considered by the Company or TDS in
1996 and 1997 as previously reported to the Board of Directors and the diligent
search for strategic partners conducted on behalf of TDS, confirmed by a review
of such activities by the Special Committee's own financial advisor, indicate
that a thorough effort had been made by TDS to find the most favorable
transaction for API;

(iv) representatives of TDS have advised that the TSR Proposal provided
higher value than the only other proposals received;

(v) the refusal of TSR to consider a transaction which would allow the
Public Shareholders to continue to participate in the paging business by
retaining an interest in the new venture, which refusal was confirmed in writing
by its counsel, indicate that there is limited practical opportunity for the
Public Shareholders to continue their investment;

(vi) the Special Committee received an opinion dated February 10, 1998, of
its financial advisor, PaineWebber, which concluded, based upon its review and
assumptions and subject to the limitations

7
<PAGE>
stated therein, that the consideration to be received by the shareholders of the
Company pursuant to the Offer and the Merger (the "Offer Price") is fair, from a
financial point of view, to the Public Shareholders.

(vii) the Offer Price was the product of arms length negotiations between the
Special Committee and representatives of TDS which resulted in an increase in
the Offer Price; and

(viii) the likelihood that the Offer and Merger will be consummated based in
part on the financial condition of TDS and the advice of its representatives
with respect to the likelihood that the other conditions contained in the Asset
Contribution Agreement will be met, based upon information currently available
to such representatives.

In light of the nature of the recent trading value of the Common Shares, the
Special Committee did not consider net book values or liquidation value to be
relevant indicators of the value of the consideration to be received by the
Public Shareholders.

In reaching its determinations referred to above, the Board considered the
recommendation of the Special Committee and the factors set forth immediately
above, each of which, in view of the Board, supported such determinations.

The members of the Board, including the Special Committee, evaluated the
various factors listed above in light of their knowledge of the business,
financial condition and prospects of the Company, and based upon the advice of
financial and legal advisors. In light of the number and variety of factors that
the Board and the Special Committee considered in connection with their
evaluation of the Offer and the Merger, neither the Board nor the Special
Committee found it practicable to assign relative weights to the foregoing
factors, and, accordingly, neither the Board nor the Special Committee did so.
In addition to the factors listed above, the Board and the Special Committee had
each considered the fact that consummation of the Offer and the Merger would
eliminate the opportunity of the Public Shareholders to participate in any
potential future growth in the value of the Company, but determined that (i)
this loss of opportunity was reflected in part by the price of $2.50 per Common
Share to be paid in the Offer and the Merger, and (ii) as noted above, there was
significant uncertainty as to the Company's long-term economic viability.

The Board, including the Special Committee, believes that the Offer and the
Merger are procedurally fair because, among other things:

(i) the Special Committee consisted of independent directors appointed
to represent the interests of the Public Shareholders;

(ii) the Special Committee retained and was advised by independent legal
counsel;

(iii) the Special Committee retained PaineWebber as its independent
financial advisor to assist them in evaluating the Offer and the Merger;

(iv) the deliberations pursuant to which the Special Committee evaluated
the Offer and the Merger and alternatives thereto; and

(v) the fact that the $2.50 per Common Share price and the other terms
and conditions of the Merger Agreement resulted from active arm's length
bargaining between the Special Committee, on the one hand, and TDS, on the
other.

The Board and the Special Committee recognized that the Merger is not
structured to require the approval of a majority of the shareholders of the
Company other than Purchaser, and that Purchaser has sufficient voting power to
approve the Merger without the affirmative vote of any other shareholder of the
Company. The Board and the Special Committee recognized that TDS is required
pursuant to the Asset Contribution Agreement to vote its shares in favor of the
Merger so long as the Special Committee recommends and approves the Merger.

8
<PAGE>
OTHER PROPOSALS. Although TDS advised the Special Committee and the Board
that no other firm offers had been received by TDS with respect to its
investment in the Company, the Board and Special Committee did consider two
other indications of interest which representatives of TDS advised had been
received and not withdrawn. As so described, one non-binding indication of
interest was originally submitted in January 1997 by another paging company and
subsequently revised. As last revised, that proposal contemplated an offer for
the assets and business of the Company (without assumption of the Company's
indebtedness under the Revolving Credit Agreement) for a consideration
consisting of preferred stock and convertible preferred stock, estimated to have
a present value by TDS's financial advisor of approximately $105 million to $110
million. The potential buyer in that transaction did not conduct on site due
diligence with the Company or review its performance and plans with management.
In addition, the proposal contemplated that closing of the transaction would be
delayed for as much as one year.

In early December 1997, another proposal was received from a financial
buyer, subject to due diligence and financing, of $95 million in cash and a
contingent note of $25 million. In view of the low value of the offer relative
to TDS's assessment of the value of the TSR Transaction, the lateness of the
offer, the advanced state of the negotiations with TSR Paging and documentation
of the TSR Transaction, and the uncertain status of the financial buyer and its
financing, TDS declined to proceed with the proposal.

OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE

The Special Committee retained PaineWebber as its financial advisor in
connection with the Offer and Merger as described under "SPECIAL
FACTORS--Background of the Offer and the Merger." In connection with such
engagement, the Special Committee requested PaineWebber to render an opinion as
to whether or not the price of $2.50 per share to be paid to the Public
Shareholders (the "Consideration") is fair, from a financial point of view, to
the holders of Common Shares (other than TDS and its affiliates).

The full text of the opinion of PaineWebber, dated February 10, 1998, which
sets forth the assumptions made, procedures followed, matters considered and
limitations on the review undertaken, is attached as Schedule III to this Offer
to Purchase. The holders of the Common Shares are urged to read such opinion
carefully and in its entirety. The summary of the PaineWebber opinion set forth
in this Offer to Purchase is qualified in its entirety by reference to the full
text of such opinion.

PaineWebber delivered its opinion on February 10, 1998 (the "PaineWebber
Opinion"), to the effect that, as of the date of the PaineWebber Opinion, and
based on its review and assumptions and subject to the limitations summarized
below, the Consideration is fair, from a financial point of view, to the holders
of Common Shares (other than TDS and its affiliates). The PaineWebber Opinion
was prepared at the request and for the information of the Special Committee and
does not constitute a recommendation as to whether or not any Public Shareholder
should tender its Common Shares in the Offer. The PaineWebber Opinion does not
address the relative merits of the Offer and the Merger and other transactions
or business strategies discussed by the Special Committee as alternatives to the
Offer and the Merger or the decision of the Special Committee to proceed with
the Offer and the Merger. The Consideration was determined by the Special
Committee and TDS after arm's length negotiations. PaineWebber was not requested
to, and did not, solicit third party indications of interest with respect to a
business combination with the Company. The Special Committee did not place any
limitations upon PaineWebber with respect to the procedures followed or factors
considered in rendering the PaineWebber Opinion. It should be understood that,
although subsequent developments may affect the conclusions reached in the
PaineWebber Opinion, PaineWebber does not have any obligation to update, revise
or reaffirm its opinion.

In arriving at its opinion, PaineWebber, among other things: (i) reviewed,
among other public information, the Company's Annual Reports, Forms 10-K and
related financial information for the three fiscal years ended December 31, 1996
and the Company's Form 10-Q and the related unaudited financial

9
<PAGE>
information for the nine months ended September 30, 1997; (ii) reviewed the
Company's unaudited financial information for the fiscal year ended December 31,
1997; (iii) reviewed certain information including a preliminary 1998 financial
budget, relating to the business, earnings, cash flow, assets and prospects of
the Company, prepared on the basis that the TSR Transaction would be completed
in April 1998, furnished to PaineWebber by the Company; (iv) conducted
discussions with members of senior management of the Company concerning its
businesses and prospects; (v) reviewed the historical market prices and trading
activity for the Common Shares and compared them with that of certain publicly
traded companies which it deemed to be relevant; (vi) compared the results of
operations of the Company with that of certain companies which it deemed to be
relevant; (vii) compared the proposed financial terms of the transactions
contemplated by the Merger Agreement with the financial terms of certain other
mergers and acquisitions which it deemed to be relevant; (viii) reviewed the
draft of the Merger Agreement dated February 10, 1998; and (ix) reviewed such
other financial studies and analyses and performed such other investigations and
took into account such other matters as it deemed necessary including its
assessment of regulatory, economic, market and monetary conditions.

In preparing the PaineWebber Opinion, PaineWebber relied on the accuracy and
completeness of all information that was publicly available, supplied or
otherwise communicated to PaineWebber by or on behalf of the Company and
PaineWebber has not assumed any responsibility to independently verify such
information. PaineWebber assumed, with the consent of the Special Committee,
that the preliminary 1998 financial budget examined by PaineWebber was
reasonably prepared on bases reflecting the best currently available estimates
and good faith judgments of the management of the Company as to the future
performance of the Company. PaineWebber also relied upon assurances of the
management of the Company that they are unaware of any facts that would make the
information, or the preliminary 1998 financial budget provided to PaineWebber
prepared on the basis that the TSR Transaction would be completed in April 1998,
suspended, incomplete or misleading. PaineWebber also assumed, with the consent
of the Special Committee, that any material liabilities (contingent or
otherwise, known or unknown) are as set forth in the financial statements of the
Company. PaineWebber was not engaged to make and did not make an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company nor was PaineWebber furnished with any such evaluations or
appraisals. The PaineWebber Opinion was based upon regulatory, economic,
monetary, and market conditions existing on the date thereof.

The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant quantitative methods of financial analyses and
the application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description. Accordingly, PaineWebber believes that its analysis must be
considered as a whole and that considering any portion of such analysis and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the PaineWebber
Opinion. In its analyses, PaineWebber made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of the Company. Any estimates
contained in these analyses are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than as set forth therein. In addition, analyses relating to the value
of the business do not purport to be appraisals or to reflect the prices at
which the business may actually be sold. Accordingly, such analyses and
estimates are inherently subject to substantial uncertainty and neither the
Company nor PaineWebber assumes responsibility for the accuracy of such analyses
and estimates.

The following paragraphs summarize the significant analyses performed by
PaineWebber in arriving at the PaineWebber Opinion.

SELECTED COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available
information, PaineWebber compared selected historical and projected financial,
operating and stock market performance data of the Company to the corresponding
data of the following companies: Arch Communications Group, Inc.;

10
<PAGE>
Metrocall Inc.; Mobile Telecommunications Technologies Corp.; PageMart Wireless,
Inc.; and Paging Network, Inc.; comprising the Paging Company Index
(collectively, the "Paging Comparable Companies").

With respect to the Company and the Paging Comparable Companies, PaineWebber
compared multiples of total enterprise value ("TEV")(market value of equity,
based on stock market prices as of February 6, 1998, plus total debt less cash
and cash equivalents as set forth in their most recent Form 10-Q) to latest
twelve months ("LTM") net revenue. LTM earnings before interest, taxes,
depreciation and amortization ("EBITDA"), 1998 estimated EBITDA and units in
service ("UIS"). The relevant Paging Comparable Companies' TEV multiples of LTM
net revenue, LTM EBITDA, 1998 EBITDA and UIS were 2.25x to 3.36x, 8.4x to 11.2x,
7.0x to 9.6x, and $229 to $281, respectively. PaineWebber applied the relevant
Paging Comparable Companies' multiples to the Company's LTM net revenue. LTM
EBITDA, 1998 EBITDA and UIS and derived an implied range of fully diluted equity
values for the Company of $0.00 to $2.50 per Common Share.

SELECTED COMPARABLE TRANSACTION ANALYSIS. PaineWebber reviewed publicly
available financial information for selected transactions involving acquisitions
of paging companies. The selected transactions PaineWebber analyzed included
(acquiror/target): Metrocall/ProNet; Metrocall/Page America Group; Metrocall/A+
Network; and Arch Communications Group/USA Mobile Communications (collectively,
the "Comparable Transactions"). PaineWebber noted that there are no directly
comparable transactions to the Offer and the Merger.

PaineWebber reviewed the consideration paid in the Comparable Transactions
and compared multiples of TEV to the target's net revenue and EBITDA, each for
the LTM prior to the announcement of the transaction, and to the UIS, as set
forth in the latest publicly reported financial statements prior to the
announcement of the transaction. With respect to stock-for-stock transactions,
stock prices for acquirors on the day prior to the announcement of the
transaction were used to calculate consideration paid. PaineWebber calculated
the relevant Comparable Transactions' multiples of net revenue, EBITDA and UIS
to be 2.08x, 8.4x and $167, respectively. PaineWebber applied the relevant
Comparable Transactions multiples to the Company's LTM net revenue, LTM EBITDA,
and latest quarter UIS and derived an implied range of fully diluted equity
values for the Company of $0.00 to $0.10 per Common Share.

NONCONTROL POSITION BUYOUT ANALYSIS. PaineWebber analyzed premiums paid to
noncontrol shareholders in publicly-disclosed business combinations in all
industries announced and completed from January 1, 1994 through February 6,
1998. This analysis indicated mean premiums to the target's closing stock price
one day, one week and four weeks prior to the announcement of the transaction of
20.3%, 25.6% and 29.1%, respectively. This analysis also indicated median
premiums to the target's closing stock price one day, one week and four weeks
prior to the announcement of the transaction of 18.4%, 19.4% and 24.5%,
respectively. Based on the closing stock prices of the Common Shares one day,
one week and four weeks prior to the December 23, 1997 announcement by TDS to
acquire the Common Shares for $2.25 per share, applying the relevant premiums to
the applicable closing stock prices yielded fully diluted equity values of $2.24
to $2.56 per Common Share.

The Special Committee selected PaineWebber to be its financial advisor in
connection with the Offer and the Merger because PaineWebber is a prominent
investment banking and financial advisory firm with experience in the valuation
of businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of securities, private
placements and valuations for corporate purposes.

Pursuant to an engagement letter between the Company and PaineWebber dated
January 8, 1998, PaineWebber has earned a fee of $450,000 for the rendering of
the PaineWebber Opinion. In addition, PaineWebber will be reimbursed for certain
of its related expenses. The Special Committee also agreed, under separate
agreement, to indemnify PaineWebber, its affiliates and each of its directors,
officers, agents and employees and each person, if any, controlling PaineWebber
or any of its affiliates against certain liabilities, including liabilities
under federal securities laws.

11
<PAGE>
In the past, PaineWebber and its affiliates have provided investment banking
services to TDS unrelated to the TSR Transaction or the Offer and the Merger and
have received fees for the rendering of these services. During 1997 and in 1998,
PaineWebber acted as a co-manager of Trust Originated Preferred Securities
offerings by TDS for which it received customary underwriter's compensation.
PaineWebber has not provided investment banking services to the Company at any
time in the past. PaineWebber may provide financial advisory services to, and
may act as underwriter or placement agent for, TDS or the Company in the future.

In the ordinary course of business, PaineWebber and its affiliates may trade
the securities or TDS or the Company for its own account and for the accounts of
its customers and, accordingly, may at any time hold long or short positions in
such securities.

POSITION OF TDS AND PURCHASER REGARDING FAIRNESS OF THE OFFER AND THE MERGER

TDS and Purchaser believe that the consideration to be received by the
Company's Public Shareholders pursuant to the Offer and the Merger is fair to
the Company's Public Shareholders. TDS and Purchaser base their belief on the
following facts and conclusions:

(i) the Company's Board and the Special Committee concluded that the
Offer and the Merger are fair to and in the best interests of the Company's
Public Shareholders;

(ii) notwithstanding the fact that PaineWebber's opinion was addressed
to the Special Committee, and that neither TDS or Purchaser is entitled to
rely on such opinion, the Special Committee received an opinion from
PaineWebber that, as of the date of such opinion and based on and subject to
certain matters stated in such opinion, the consideration to be received in
the Offer and the Merger is fair to the Company's Public Shareholders from a
financial point of view;

(iii) the poor historical performance of the Company, its current high
turnover rate of employees and changes in management, its inability to
restructure its operations in a manner which significantly improved its
financial prospects, and its inability to develop a viable plan for
independent operations indicate that the Company is unlikely to achieve
success on a stand alone basis;

(iv) the Company's inability to continue as an independent entity is
further indicated by (a) the current rate at which the Company is utilizing
funds, (b) the uncertainty regarding whether TDS will provide advances
beyond its current commitment under the Revolving Credit Agreement and its
obligations under the Asset Contribution Agreement, and (c) the uncertainty
that the Company could successfully raise additional sources of capital to
repay existing indebtedness or provide necessary additional capital without
TDS guarantees of future borrowings and the lack of an achievable strategic
plan;

(v) the sale of assets by the Company on a piece-meal or liquidation
basis would not, in the judgment of the Board of Directors of TDS (the "TDS
Board"), upon advice of its management and its financial advisor, recover
values as great as that available from combination with a strategic partner;

(vi) after diligent efforts of TDS with the assistance of TDS's
financial advisor to solicit indications of interest in a strategic
transaction involving the Company, the TSR Paging proposal was in the
judgment of TDS management, after consultation with TDS's financial and
legal advisors, superior to the only two other indications of interest
received and not withdrawn;

(vii) upon the basis of the foregoing, the TDS Board believes that the
value of the Company does not exceed its outstanding debt to TDS under the
Revolving Credit Agreement and the value to be obtained by TDS from its
continuing participation in the paging industry through the 30% interest in
TSR Wireless does not exceed the outstanding debt to TDS under the Revolving
Credit Agreement;

12
<PAGE>
(viii) the consideration stated in the Offer and Merger for purchase of
the Common Shares not already owned by TDS and its affiliates represents a
premium of 17.6% over the closing price of the Common Shares on December 22,
1997, the day prior to announcement of the TDS Proposal, and a premium of
approximately 29% over the closing price four weeks prior to the
announcement of the TDS Proposal;

(ix) although the current prices for the Common Shares reflect a decline
in value of the Company over historical market prices during 1995 and 1996,
such decline is attributable to the continuing deterioration in the
Company's financial results and business prospects as well as concerns about
the long term future of the paging industry in general; and

(x) the other factors enumerated by the Special Committee as supporting
their recommendation of the Offer and the Merger.

Neither TDS nor Purchaser found it practicable to assign, nor did either of
them assign, relative weights to the individual factors considered in reaching
its conclusion as to fairness. In light of the nature of the Company's business
and the TSR Transaction TDS and Purchaser did not consider net book value or
liquidation value to be relevant indicators of the value of the consideration to
be received by the Public Shareholders.

PRESENTATION OF FINANCIAL ADVISOR TO TDS

Credit Suisse First Boston is acting as Dealer Manager in connection with
the Offer and as financial advisor to TDS in connection with the Merger and the
TSR Transaction. CSFB was selected by TDS based on CSFB's experience, expertise
and familiarity with TDS and its business. CSFB is an internationally recognized
investment banking firm and is regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes.

In connection with CSFB's engagement, TDS requested that CSFB assist TDS in
evaluating alternatives in maximizing TDS's investment in the Company, including
soliciting third party indications of interest in a possible strategic
transaction involving the Company and evaluating the financial terms of any
proposals received by TDS in connection with any such transaction. On February
10, 1998, CSFB reviewed with the Board of Directors of TDS the solicitation
process undertaken on behalf of TDS in respect of the Company and the proposals
received by TDS, including the TSR Transaction. CSFB was not requested to, and
did not, render an opinion regarding the fairness of the consideration to be
paid by TDS in the Offer and the Merger or to be received by TDS in the TSR
Transaction.

In preparing its presentation, CSFB reviewed certain publicly available
business and financial information relating to the Company and certain available
business and financial information relating to TSR Wireless. CSFB also reviewed
certain other information provided by TDS, the Company and TSR Paging, including
financial forecasts relating to TSR Wireless provided by TSR Paging, and met
with the managements of TDS, the Company and TSR Paging to discuss the
operations and prospects of the Company and TSR Wireless. CSFB also considered
certain financial and stock market data and such other information, financial
studies, analyses and investigations and financial, economic and market criteria
which CSFB deemed relevant.

In connection with its review, CSFB did not assume any responsibility for
independent verification of any of the information provided to or otherwise
reviewed by CSFB and relied on such information being complete and accurate in
all material respects. With respect to its review of the TSR Transaction, CSFB
assumed that the financial forecasts relating to TSR Wireless provided by TSR
Paging were reasonably prepared on bases reflecting the best available estimates
and judgments of the management of TSR Paging as to the future financial
performance of TSR Wireless. CSFB was not requested to make, and did not

13
<PAGE>
make, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company or TSR Wireless, nor was CSFB furnished
with any such evaluations or appraisals. CSFB's presentation was necessarily
based upon information available to CSFB, and financial, economic, market and
other conditions as they existed and could be evaluated, on the date of its
presentation. No other limitations were imposed by TDS on CSFB with respect to
the investigations made or procedures followed by CSFB in connection with its
presentation.

In preparing its presentation to the Board of Directors of TDS, CSFB
provided the TDS Board of Directors with a written presentation, a copy of which
has been filed as an exhibit to the Schedule 13E-3 and may be inspected, copied
and obtained in the manner specified in "THE TENDER OFFER-- Section 7--Certain
Information Concerning the Company". The summary of CSFB's presentation set
forth below does not purport to be a complete description of CSFB's
presentation. In preparing its presentation, CSFB made qualitative judgments as
to the significance and relevance of the various factors considered by it and
made numerous assumptions with respect to TDS, the Company, TSR Wireless,
industry performance, regulatory, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
TDS, the Company and TSR Paging. The estimates contained or utilized in the
presentation set forth below are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than those suggested by such presentation. In addition, analyses
relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may be sold. Accordingly, such analyses and estimates are inherently subject to
substantial uncertainty. CSFB's presentation is only one of many factors
considered by the TDS Board of Directors with respect to TDS's investment in the
Company and should not be viewed as determinative of the views of the TDS Board
of Directors or management of TDS with respect to the TSR Transaction, the Offer
or the Merger or the consideration payable in such transactions.

The following is a summary of the material aspects of CSFB's presentation to
the TDS Board of Directors dated February 10, 1998:

COMPANY STAND-ALONE VALUE. CSFB discussed with the TDS Board of Directors
the potential stand-alone value of the Company. Based upon, among other things,
difficult conditions in the paging industry generally and the Company's weak
financial performance, failed restructuring efforts, decline in the growth of
its subscribers, cash flow requirements and lack of a business plan, CSFB
believed that the Company's stand-alone value would likely be defined by the
value of its assets on a liquidation basis. CSFB further believed that such
value would likely be below the value that a potential acquiror, which would be
acquiring the Company not only for its assets but also for its future potential
under such acquiror's management team, philosophy and business capabilities,
would place on the Company.

SOLICITATION PROCESS. CSFB reviewed with the TDS Board of Directors the
efforts undertaken on behalf of TDS to solicit indications of interest in a
possible strategic transaction involving the Company. Initially, 50 parties were
contacted regarding a possible transaction. Ten potential parties subsequently
requested and were furnished with a confidential memorandum regarding the
Company. In the spring of 1997, two bidders, TSR Paging and one other strategic
bidder, submitted written indications of interest. Based on a discounted cash
flow analysis of TSR Wireless performed by CSFB utilizing financial forecasts
provided by TSR Paging, discount rates of 14% to 15% and terminal value EBITDA
multiples of 5.0x to 6.0x, TSR's final proposal was estimated to yield, on a
present value basis, approximately $143 million to $180 million for TDS's 30%
equity interest in TSR Wireless. The second bidder's final proposal had an
estimated present value of approximately $105 million to $110 million. In early
December 1997, a financial buyer also submitted a proposal, subject to due
diligence and financing, which consisted of $95 million in cash and a contingent
note of $25 million. None of the proposals described above, including the TSR
Transaction, contemplated assumption of the indebtedness of the Company to TDS
and its affiliates of approximately $185 million at January 31, 1998.

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<PAGE>
MISCELLANEOUS. In the ordinary course of business, CSFB and its affiliates
may actively trade the debt and equity securities of TDS, its affiliates and the
Company for their own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
See "THE TENDER OFFER--Fees and Expenses" for a description of TDS's fee
arrangements with CSFB in connection with the Offer, the Merger and the TSR
Transaction.

FINANCIAL PROJECTIONS

Management of the Company prepared but withdrew as unachievable certain
projections for independent operation for years beginning in 1997. Accordingly,
such projections were not considered by the Board of Directors of the Company or
of TDS or by the Special Committee in reaching their views about the fairness of
the Offer and Merger to the Public Shareholders. In addition, the financial
advisor to the Special Committee, PaineWebber, requested and received a
preliminary version of a 1998 budget for the Company prepared in late January
1998 at the request of TDS in connection with the Company's request to TDS to
increase the Revolving Credit Agreement limit to $185 million. This budget,
prepared on the assumption that the TSR Transaction would be completed in April
1998, assumed revenues from services of $80.2 million and from equipment sales
of $13.4 million. However, the Board of Directors of TDS was advised of and
examined certain projections prepared by TSR Paging management for TSR Wireless
after completion of the combination of paging businesses contemplated by the
Asset Contribution Agreement, based upon individual projections for the Company
and TSR Wireless also prepared by TSR Paging management, which were reviewed by
CSFB in evaluating the TDS Transaction. The Special Committee and its financial
advisor, PaineWebber, did not consider such projections as relevant to their
determination. Such projections included the following:

<TABLE>
<CAPTION>
1997 1998 1999 2000 2001
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
COMPANY:
Net Revenues................................................... $ 84.3 77.1 78.1 89.9 100.6
EBITDA(1)...................................................... (5.7) 0.7 25.3 29.7 35.2

TSR PAGING:
Net Revenues................................................... $ 65.1 90.5 123.1 163.6 210.4
EBITDA......................................................... 21.3 32.4 43.4 58.3 80.6

TSR WIRELESS:
Net Revenues................................................... $ 149.4 167.6 201.2 253.4 311.0
EBITDA......................................................... 15.6 33.1 68.7 88.0 115.9
</TABLE>

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

(1) EBITDA represents earnings before interest, taxes, depreciation and
amortization.

THE FOREGOING PROJECTIONS WERE PREPARED BY TSR PAGING AND BASED UPON ASSUMPTIONS
CONCERNING TSR WIRELESS REVENUES AND BUSINESS PROSPECTS, INCLUDING CERTAIN
ASSUMPTIONS WITH REGARD TO THE ABILITY OF TSR WIRELESS TO INTEGRATE SUCCESSFULLY
THE COMPANY'S OPERATIONS WITH THOSE OF TSR PAGING AND THE FUTURE SUCCESS OF THE
COMBINED BUSINESS. THE PROJECTIONS WERE ALSO BASED UPON OTHER REVENUE AND
OPERATING ASSUMPTIONS WHICH MAY DIFFER MATERIALLY FROM ACTUAL RESULTS. PROJECTED
INFORMATION OF THIS TYPE IS BASED UPON ASSUMPTIONS THAT ARE INHERENTLY SUBJECT
TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF
WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF TSR
WIRELESS. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE PROJECTED RESULTS
WOULD BE REALIZED OR THAT ACTUAL RESULTS WOULD NOT BE SIGNIFICANTLY HIGHER OR
LOWER THAN THOSE SET FORTH ABOVE. IN ADDITION, THESE PROJECTIONS WERE NOT
PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES

15
<PAGE>
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO TDS BY TSR PAGING AND CONSIDERED
IN CONNECTION WITH ITS EVALUATION OF THE TSR TRANSACTION. NONE OF TDS,
PURCHASER, THE COMPANY, TSR PAGING OR TSR WIRELESS OR ANY OTHER PARTY ASSUMES
ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS OR
ANY DUTY TO UPDATE SUCH PROJECTIONS IN THE FUTURE BASED UPON ACTUAL RESULTS OR
OTHER EVENTS.

PURPOSE AND STRUCTURE OF THE OFFER AND THE MERGER; REASONS OF TDS AND
PURCHASER FOR THE OFFER AND THE MERGER

The purpose of the Offer and the Merger is for TDS indirectly to acquire the
entire equity interest in, the Company in accordance with the obligations of TDS
under the Asset Contribution Agreement. See "SPECIAL FACTORS--BACKGROUND OF THE
OFFER AND THE MERGER--TSR Negotiations." The purpose of the Merger is for TDS
indirectly to acquire all Common Shares not purchased pursuant to the Offer.
Upon consummation of the Merger, the Company will become a direct wholly owned
subsidiary of TDS. The acquisition of the entire equity interest in the Company
has been structured as a cash tender offer followed by a cash merger in order to
provide a prompt and orderly transfer of ownership of the Company from the
Public Shareholders to TDS and to provide the Public Shareholders with cash for
all of their Common Shares.

Under the Company's Restated Certificate of Incorporation and Delaware Law,
the approval of the Board and the affirmative vote of the holders of Common
Shares and Series A Common Shares entitled to cast at least a majority of the
total votes to be cast by the holders of Common Shares and Series A Common
Shares are required to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger. The Board of Directors
of the Company has approved and adopted the Merger Agreement and the
transactions contemplated thereby, and, unless the Merger is consummated
pursuant to the short-form merger provisions under Delaware Law described below,
the only remaining required corporate action of the Company is the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of Common Shares and Series A Common Shares
entitled to cast at least a majority of the total votes to be cast by the
holders of Common Shares and Series A Common Shares. Purchaser already has
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative vote
of any other shareholder of the Company. Pursuant to the Asset Contribution
Agreement, TDS is obligated to use its best efforts to cause Purchaser to
complete the Merger, subject to the approval of the Merger by the Special
Committee, and TDS is not required to complete a Merger which does not have the
recommendation of the Special Committee.

In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its shareholders as soon as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required by Delaware Law. TDS and Purchaser have agreed that all Series A
Common Shares and Common Shares owned by them and their subsidiaries will be
voted in favor of the Merger Agreement and the transactions contemplated
thereby.

Under Delaware Law, since Purchaser already owns 100% of the Series A Common
Shares outstanding, if Purchaser acquires, pursuant to the Offer, conversion of
its Series A Common Shares or otherwise, the number of Common Shares that, when
added to the Common Shares owned by TDS, Purchaser or any of their affiliates,
equals at least 90% of the Common Shares then outstanding, Purchaser will be
able to approve the Merger without a vote of the Company's shareholders. In such
event, TDS, Purchaser and the Company have agreed in the Merger Agreement to
take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition, without a
meeting of

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the Company's shareholders. If after the consummation of the Offer Purchaser is
not the owner of at least 90% of the outstanding Common Shares and can become
the owner of at least 90% of the outstanding Common Shares by converting its
Series A Common Shares into Common Shares, Purchaser currently intends to
convert its Series A Common Shares into Common Shares to become the owner of at
least 90% of the outstanding Common Shares. Purchaser's obligation to consummate
the Offer is conditioned on there being validly tendered and not withdrawn at
least the number of Common Shares that, when added to the 4,000,000 Common
Shares owned by Purchaser, shall constitute 90% of the Common Shares then
outstanding, so as to enable Purchaser to consummate the Merger without a vote
of the Company's shareholders. If, however, fewer than such number of Common
Shares are validly tendered and not withdrawn, and all other conditions set
forth in Annex II of the Merger Agreement are satisfied, Purchaser may extend
the Offer for a period not to exceed 20 business days after the later of (i) the
initial expiration date of the Offer and (ii) the date on which all of the other
conditions set forth in Annex II shall be satisfied, after which time Purchaser
shall waive the Minimum Condition and acquire such fewer number of Common
Shares. In such case, if the conversion of all of Purchaser's Series A Common
Shares would not result in Purchaser owning at least 90% of the Common Shares
outstanding, a vote of the Company's shareholders will be required under
Delaware Law, and a significantly longer period of time will be required to
effect the Merger.

PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER; CERTAIN EFFECTS OF THE
OFFER

Pursuant to the Merger Agreement, upon completion of the Offer, TDS and
Purchaser intend to effect the Merger in accordance with the terms of the Merger
Agreement. See "SPECIAL FACTORS-- The Merger Agreement". Pursuant to the Asset
Contribution Agreement, TDS is obligated to use its best efforts to cause
Purchaser to complete the Merger, subject to the approval of the Merger by the
Special Committee and TDS is not required to complete a Merger which does not
have the recommendation of the Special Committee.

Upon consummation of the Merger, the Surviving Corporation will become a
privately held corporation and TDS and TSR Wireless, in accordance with the
terms and conditions of the Asset Contribution Agreement, will combine their
respective paging businesses. TDS will cause the Surviving Corporation to
contribute substantially all of the assets and certain, limited, liabilities of
the Company, and TSR Paging would contribute all of its assets and liabilities
into TSR Wireless. TSR Wireless would not assume approximately $185 million of
debt owed by the Company to TDS pursuant to the Revolving Credit Agreement. The
Surviving Corporation would have a 30% interest and TSR Paging would have a 70%
interest in TSR Wireless, in each case subject to adjustment pursuant to the
terms of the Asset Contribution Agreement. Accordingly, Public Shareholders will
not have the opportunity to participate in the earnings and growth of TSR
Wireless and will not have any right to vote on corporate matters. Similarly,
Public Shareholders will not face the risk of losses generated by TSR Wireless's
operations or decline in the value of TSR Wireless.

Following the consummation of the Merger, the Common Shares will no longer
be quoted on the American Stock Exchange (the "Amex") and the registration of
the Common Shares under the Securities Exchange Act of 1934 (the "Exchange Act")
will be terminated. Accordingly, following the Merger there will be no publicly
traded equity securities of the Company outstanding and the Company will no
longer be required to file periodic reports with the Commission. See "THE TENDER
OFFER--11. Effect of the Offer on the Market for Common Shares; American Stock
Exchange, Inc. and Exchange Act Registration".

For a discussion of certain federal income tax consequences of the Offer and
the Merger, see "THE TENDER OFFER--5. Certain Federal Income Tax Consequences."

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RIGHTS OF SHAREHOLDERS IN THE MERGER

No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, shareholders who have not tendered their Common
Shares will have certain rights under Delaware Law to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Common
Shares. Such rights to dissent, if the statutory procedures are complied with,
could lead to a judicial determination of the fair value of the Common Shares,
as of the day prior to the date on which the shareholders' vote was taken
approving the Merger or similar business combination (excluding any element of
value arising from the accomplishment or expectation of the Merger), required to
be paid in cash to such dissenting holders for their Common Shares. In addition,
such dissenting shareholders would be entitled to receive payment of a fair rate
of interest from the date of consummation of the Merger on the amount determined
to be the fair value of their Common Shares. In determining the fair value of
the Common Shares, the court is required to take into account all relevant
factors. Accordingly, such determination could be based upon considerations
other than, or in addition to, the market value of the Common Shares, including,
among other things, asset values and earning capacity. In WEINBERGER V. UOP,
INC., the Delaware Supreme Court stated, among other things, that "proof of
value by any techniques or methods which are generally considered acceptable in
the financial community and otherwise admissible in court" should be considered
in an appraisal proceeding. Therefore, the value so determined in any appraisal
proceeding could be the same as or more or less than the purchase price per
Common Share in the Offer or the Merger Consideration.

In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling shareholder of a company involved in a merger has a
fiduciary duty to other shareholders which requires that the merger be fair to
such other shareholders. In determining whether a merger is fair to minority
shareholders, Delaware courts have considered, among other things, the type and
amount of consideration to be received by the shareholders and whether there was
fair dealing among the parties. The Delaware Supreme Court stated in WEINBERGER
AND RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that the remedy ordinarily available
to minority shareholders in a cash-out merger is the right to appraisal
described above. However, a damages remedy or injunctive relief may be available
if a merger is found to be the product of procedural unfairness, including
fraud, misrepresentation or other misconduct.

See Schedule IV attached hereto for a description of appraisal rights under
Delaware Law, as well as a reproduction of the text of Section 262 of Delaware
Law.

THE MERGER AGREEMENT

The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Schedule 14D-1 filed by TDS and Purchaser with the
Commission in connection with the Offer. Such summary is qualified in its
entirety by reference to the Merger Agreement.

THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable after the date thereof, but in no event
later than five business days after the initial public announcement of
Purchaser's intention to commence the Offer. The obligation of Purchaser to
commence the Offer and accept for payment, and pay for any Common Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition, the Asset Contribution Agreement Condition and certain other
conditions that are described in "THE TENDER OFFER--12. Certain Conditions of
the Offer" hereof. Purchaser and TDS have agreed that without the consent of the
Company no change in the Offer may be made which decreases the price per Common
Share or changes the form of consideration payable in the Offer or which reduces
the maximum number of Common Shares to be purchased in the Offer or which
modifies or adds to the conditions to the Offer in addition to those set forth
in "THE TENDER OFFER--12. Certain Conditions of the Offer" or which extends the
Offer except as expressly permitted by the Merger Agreement. Pursuant to the
Merger Agreement, in the event all conditions set forth in the Merger Agreement
shall have been satisfied other than the Minimum Condition, Purchaser may extend
the Offer for a period or periods aggregating not more than 20 business days
after the later of (i) the initial Expiration Date and (ii) the date on which
all other conditions set forth

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<PAGE>
in the Merger Agreement shall have been satisfied, after which time (or earlier
if TDS does not extend the Offer) Purchaser shall waive the Minimum Condition
and consummate the Offer.

THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, at the Effective
Time, Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Purchaser will cease and the Company
will continue as the Surviving Corporation of the Merger and will become a
direct wholly owned subsidiary of TDS. Upon consummation of the Merger, each
issued and then outstanding Common Share (other than any Common Shares held in
the treasury of the Company or owned by Purchaser, TDS or any direct or indirect
wholly owned subsidiary of TDS or the Company, and other than Common Shares held
by shareholders who shall not have voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such Common Shares in accordance with Section 262 of Delaware Law) shall be
canceled and shall be converted automatically into the right to receive the
Merger Consideration.

Pursuant to the Merger Agreement, each share of common stock, par value
$1.00 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $1.00 per share,
of the Surviving Corporation.

The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, at the Effective Time, the Certificate of
Incorporation of Purchaser will be the Certificate of Incorporation of the
Surviving Corporation. The Merger Agreement also provides that the By-laws of
Purchaser will be the By-laws of the Surviving Corporation.

The Surviving Corporation or the designated paying agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to the
Merger Agreement to any holder of Common Shares such amounts that the Surviving
Corporation or the paying agent is required to deduct and withhold with respect
to the making of such payment under the United States Internal Revenue Code of
1986, as amended, the rules and regulations promulgated thereunder or any
provision of state, local or foreign tax law.

AGREEMENTS OF TDS, PURCHASER AND THE COMPANY. Pursuant to the Merger
Agreement, the Company shall, if required by applicable law in order to
consummate the Merger, at TDS's request, duly call, give notice of, convene and
hold a special meeting of its shareholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby (the
"Shareholders' Meeting"). At the Shareholders' Meeting, TDS and Purchaser shall
cause all Series A Common Shares and Common Shares then owned by them to be
voted in favor of the approval and adoption of the Merger Agreement and the
Merger. Purchaser currently has sufficient voting power to approve the Merger,
even if no other shareholder votes in favor of the Merger. In the event that
Purchaser acquires such number of Common Shares that, when taken together with
the Common Shares previously owned by Purchaser, constitute at least 90% of the
then outstanding Common Shares, the parties have agreed to take all necessary
and appropriate action to cause the Merger to become effective, in accordance
with Section 253 of Delaware Law, as soon as practicable after the consummation
of the Offer, without a meeting of the shareholders of the Company.

The Merger Agreement provides that the Company shall, if required by
applicable law, as soon as practicable following consummation of the Offer, file
a preliminary proxy statement with the Commission under the Exchange Act (the
"Proxy Statement"), and will use its reasonable best efforts to respond to any
comments of the Commission or its staff and to cause the Proxy Statement to be
mailed to the Company's shareholders. The Company shall notify TDS promptly of
the receipt of any comments of the Commission or its staff and of any request by
the Commission or its staff for amendments or supplements to the Proxy Statement
or for additional information and will supply TDS with copies of all
correspondence between

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<PAGE>
the Company or any of its representatives, on the one hand, and the Commission
and its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the approval of this Agreement by the Company's
shareholders there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will promptly notify
TDS thereof and prepare and mail to its shareholders such an amendment or
supplement. The Company will not mail any Proxy Statement or any amendment or
supplement thereto, to which TDS reasonably objects.

Pursuant to the Merger Agreement, the Company has covenanted and agreed
that, between the date of the Merger Agreement and the Effective Time, unless
TDS shall otherwise agree in writing, the businesses of the Company and its
subsidiaries shall be conducted only in, and the Company and its subsidiaries
shall not take any action except in, the ordinary course and substantially in
accordance with past practice, except with respect to certain licenses issued by
the Federal Communications Commission ("FCC") and applications for licenses
issued by the FCC and certain reductions in planned license build-outs.

The Company and TDS are each obligated under the Merger Agreement to give
each other prompt notice of (i) the occurrence, or non-occurrence, of any event
the occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate; (ii) any failure of the Company, TDS or Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it thereunder and (iii) any change or event which
has or is reasonably likely to have a material adverse effect on the Company or
TDS and its subsidiaries, as the case may be.

The Merger Agreement provides that for six years from and after the
Effective Time, TDS agrees, to the extent permitted by law, to cause the
Surviving Corporation to indemnify and hold harmless all current officers and
directors of the Company and of its subsidiaries to the same extent such persons
are currently indemnified by the Company pursuant to the Company's Restated
Certificate of Incorporation and By-Laws for acts or omissions occurring at or
prior to the Effective Time. TDS will cause to be maintained for a period of not
less than six years from the Effective Time the current directors' and officers'
insurance and indemnification policy of TDS to the extent that it provides
coverage for events occurring prior to the Effective Time for all directors and
officers of the Company as of the date of the Merger Agreement.

Pursuant to the terms of the Merger Agreement and subject to the conditions
thereof, each of the parties thereto shall use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable,
transactions contemplated by the Merger Agreement, including (i) the obtaining
of all necessary actions or non-actions, waivers, consents and approvals from
governmental authorities and the making of all necessary registrations and
filings (including filings with governmental authorities) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by any governmental authority, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any claims, investigations, actions, lawsuits or other legal
proceedings, whether judicial or administrative, challenging the Merger
Agreement or the consummation of the transactions contemplated thereby,
including seeking to have any stay or temporary restraining order entered by any
court or other governmental authority vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
transactions contemplated by the Merger Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of the Merger Agreement, the proper officers and directors of each
party to the Merger Agreement and the Surviving Corporation shall use their
reasonable best efforts to take all such action.

STOCK OPTIONS. Subject to any restrictions under Section 16(b) of the
Exchange Act, the Company has agreed to use its reasonable best efforts to cause
each holder of an outstanding option with an exercise price less than the Merger
Consideration to purchase Common Shares granted under the 1994 Long Term
Incentive Plan to agree in writing prior to the Effective Time that (i) such
holder shall be entitled to receive from the Company on the Closing Date, in
lieu of such option, an amount in cash in respect of

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<PAGE>
each Common Share subject to such option equal to the excess, if any, of the
Merger Consideration over the per share exercise price of such option (it being
understood that if there is no such excess with respect to any such option, such
holder will not be entitled to receive any cash, securities or other
consideration with respect thereto) and (ii) such option shall be canceled
immediately prior to the Effective Time. The Company has terminated the 1994
Long Term Incentive Plan effective as of February 10, 1998 and no new options
will be granted after such date.

NO SOLICITATION. From the date of the Merger Agreement through the
Effective Time or the earlier termination of the Merger Agreement, the Company
has agreed not to, and shall use its best efforts to cause its representatives
not to, directly or indirectly, enter into, solicit, initiate or continue any
discussions or negotiations with, or encourage or respond to any inquires or
proposals by, or participate in any negotiations with, or provide any
information to, or otherwise cooperate in any other way with, any person, other
than TDS or TSR Paging and their respective representatives, concerning any sale
of all or any substantial portion of the assets or business of the Company, or
of any shares of capital stock of the Company or its subsidiaries, or any
merger, consolidation, liquidation, dissolution or exclusive licensing
arrangement or similar transaction involving the Company or its subsidiaries
(each such transaction being referred to herein as a "Proposed API Acquisition
Transaction"); provided, however, that prior to the acceptance for payment of
Common Shares pursuant to the Offer, to the extent required by the fiduciary
obligations of the Board of Directors of the Company, as determined in good
faith by the Board based on the written advice of outside counsel (a copy of
which written advice shall be promptly furnished to TDS), the Company may, in
response to unsolicited requests therefor, participate in discussions or
negotiations with, or furnish information pursuant to an appropriate
confidentiality agreement approved by the Board to, any person. TDS agreed to a
similar non-solicitation covenant in the Asset Contribution Agreement and also
agreed with in the Asset Contribution Agreement to impose a similar covenant on
the Company in the Merger Agreement, except that the agreement does not contain
the proviso stated above permitting TDS to respond to or participate in
discussions or negotiations with, or furnish information to, any other person
based upon the advice of outside counsel that the fiduciary obligations of the
TDS board of directors require that it do so.

The Company has agreed that neither the Board of Directors of the Company
nor any committee thereof (including the Special Committee) shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to TDS or
Purchaser, the approval or recommendation by the Board or any such committee of
the Offer, this Agreement or the Merger or (ii) approve or recommend, or propose
to approve or recommend, any Proposed API Acquisition Transaction.
Notwithstanding the foregoing, the Board of Directors of the Company or any
committee thereof, to the extent required by the fiduciary obligations thereof,
as determined in good faith by the Board or such committee, as the case may be,
based on the written advice of outside counsel (a copy of which written advice
shall be promptly furnished to TDS), may approve or recommend (and, in
connection therewith, withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger) a superior proposal and the Company may
take such actions as are contemplated by Rule 14e-2(a) and Rule 14d-9
promulgated under the Exchange Act. For purposes of this Agreement, "superior
proposal" means a bona fide written proposal made by a third party to acquire
the Company pursuant to a tender or exchange offer, a merger, a statutory share
exchange, a sale of all or substantially all its assets or otherwise on terms
which the Special Committee determines in its good faith reasonable judgment
(based on the advice of independent financial advisors) to be more favorable to
the Company and its shareholders than the Offer and the Merger and for which
financing, to the extent required, is then fully committed or which, in the
reasonable good faith judgment of the Special Committee (based on the advice of
independent financial advisors), is reasonably capable of being financed by such
third party.

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REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company, TDS and Purchaser as to the enforceability of
the Merger Agreement and by the Company as to the absence of certain changes or
events concerning the Company's business, compliance with law, corporate status
and capitalization and the accuracy of financial statements and filings with the
Commission. The representations and warranties given by the Company to TDS in
the Merger Agreement are substantially the same as those given by TDS to TSR
Paging and TSR Wireless in the Asset Contribution Agreement.

CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (i) to the extent
required by Delaware Law and the Company's Restated Certificate of
Incorporation, the Merger Agreement and the transactions contemplated thereby
shall have been approved and adopted by the affirmative vote or consent of the
holders of the Common Shares; (ii) no statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any court or other tribunal or governmental body or
authority which prohibits the consummation of the transactions contemplated by
the Merger Agreement on the terms thereof; and (iii) Purchaser shall have
purchased all Common Shares validly tendered and not withdrawn pursuant to the
Offer; PROVIDED, HOWEVER, that this condition shall not be applicable to the
obligations of TDS or Purchaser if, in breach of the Merger Agreement or the
terms of the Offer, Purchaser fails to accept for payment the Common Shares
tendered pursuant to the Offer.

In addition, TDS's obligation to effect the Merger is subject to the Asset
Contribution Agreement being in full force and effect and not terminated in
accordance with the terms thereof and all of the conditions to closing set forth
therein shall have been satisfied or waived.

TERMINATION; FEES AND EXPENSES. The Merger Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of any
matters presented in connection with the Merger by the shareholders of the
Company: (i) by mutual written consent duly authorized by the Boards of
Directors of TDS and the Company, if such termination is also approved by the
Special Committee; or (ii) by either TDS or the Company if (A) the Effective
Time shall not have occurred on or before September 30, 1998; PROVIDED, HOWEVER,
that such right to terminate shall not be available to any party whose failure
to fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date
or (B) there shall be any law or regulation that makes consummation of the
Merger illegal or otherwise prohibited or any court of competent jurisdiction or
other governmental authority shall have issued an order, decree, ruling or taken
any other action restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become final and
nonappealable; or (iii) by TDS if due to an occurrence or circumstance that
would result in a failure to satisfy any condition to the Offer, Purchaser shall
have (A) failed to commence the Offer within 60 days following the date of the
Merger Agreement, (B) terminated the Offer without having accepted any Common
Shares for payment thereunder or (C) failed to pay for Common Shares pursuant to
the Offer within 90 days following the commencement of the Offer, unless such
failure to pay for Common Shares shall have been caused by or resulted from the
failure of TDS or Purchaser to perform in any material respect any material
covenant or agreement of either of them contained in the Merger Agreement or the
material breach by TDS or Purchaser of any material representation or warranty
of either of them contained in the Merger Agreement; or (iv) by the Company,
upon approval of the Board and the Special Committee, if due to an occurrence or
circumstance that would result in a failure to satisfy any of the conditions to
the Offer, Purchaser shall have (A) failed to commence the Offer within 60 days
following the date of the Merger Agreement, (B) terminated the Offer without
having accepted any Common Shares for payment thereunder or (C) failed to pay
for Common Shares pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Common Shares shall
have been caused by or resulted from the failure of the Company to perform in
any material respect any material covenant or agreement of it contained in the
Merger Agreement or the material breach by the

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Company of any material representation or warranty of it contained in the Merger
Agreement; or (v) by the Company, upon approval of the Board and the Special
Committee, (A) if any representation or warranty of TDS and Purchaser in the
Merger Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified shall
not be true and correct in any material respect, in each case as if such
representation or warranty was made as of such time on or after the date of the
Merger Agreement, or (B) TDS or Purchaser shall have failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of TDS or Purchaser to be performed or complied with by it
under the Merger Agreement; or (vi) by TDS, upon approval of the Board of
Directors of TDS, if any representation or warranty of the Company in the Merger
Agreement which is qualified as to materiality shall not be true and correct or
any such representation or warranty that is not so qualified shall not be true
and correct in any material respect, in each case as if such representation or
warranty was made as of such time on or after the date of the Merger Agreement;
or the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under the Merger
Agreement; or (vii) by TDS if the Board of Directors of the Company or any
committee thereof (including the Special Committee) (A) shall withdraw, modify
or change in any adverse manner to TDS or Purchaser its approval of the Merger
Agreement, the Offer or the Merger, (B) shall approve or recommend any Proposed
API Acquisition Transaction in each case, other than by TDS or an affiliate of
TDS, or (C) shall resolve to take any of the actions specified in clauses (A) or
(B) above.

In the event of the termination of the Merger Agreement, the Merger
Agreement shall forthwith become void.

All fees and expenses incurred in connection with the Offer, the Merger, the
Merger Agreement and the transactions contemplated thereby shall be paid by the
party incurring such fees and expenses, whether or not the Offer or Merger is
consummated.

INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER

In considering the recommendation of the Board and the Special Committee
with respect to the Offer and the Merger and the fairness of the consideration
to be received in the Offer and the Merger, shareholders should be aware that
certain officers and directors of the Company have interests in the Offer and
the Merger which are described below and which may present them with certain
potential conflicts of interest. Shareholders also should be aware that TDS and
Purchaser have certain interests that present actual or potential conflicts of
interest in connection with the Offer and the Merger. As a result of Purchaser's
current ownership of 12,500,000 Series A Common Shares and 4,000,000 Common
Shares, constituting 100% of the currently outstanding Series A Common Shares
and approximately 52.3% of the outstanding Common Shares for a combined total of
approximately 81.9% of the Company's outstanding classes of capital stock and
approximately 98.1% of their combined voting power and its nominees constituting
a majority of the Company's directors, Purchaser may be deemed to control the
Company. The Board was aware of these actual and potential conflicts of interest
and considered them along with the other matters described under "SPECIAL
FACTORS-- Recommendation of the Special Committee and the Company's Board;
Fairness of the Offer and the Merger".

TDS and Purchaser have been advised by the executive officers, directors and
affiliates of the Company that such persons intend to tender Common Shares owned
by them pursuant to the Offer.

EXECUTIVE OFFICER COMPENSATION AND SEVERANCE ARRANGEMENTS. The Company has
entered into the executive officer compensation and severance arrangements set
forth below:

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 in September 1996,
(ii) a target bonus opportunity of 15% of such base salary in 1996 (which was

23
<PAGE>
subsequently adjusted to 24%), (iii) a target bonus percentage of 50% for 1997
(which was subsequently adjusted to 75%) 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 has been awarded additional automatic stock options with
respect to 6,000 Common shares (in which he is currently vested) for functioning
as the Company's CEO for the last four months of 1996 and 32,000 Common Shares
(16,000 of which he is currently vested) for the remaining years of the Company
Stock Option Program. Such awards, together with Mr. Sullivan's previous awards,
total 50,000 stock options. Mr. Sullivan has also been awarded an additional
performance-based stock option with respect to 13,872 shares for the 1996
performance period. He is also eligible to receive a performance-based stock
option award for the remaining years of the Company Stock Option Program for a
total of up to 20,000 stock option shares per year at target performance. The
exact number of performance-based stock option awards is dependent upon Company
performance in each of the remaining performance periods. The performance of the
Company at a level greater than, or less than, the target level of performance
will result in an award of as many as 40,000 shares or as few as zero shares,
respectively, for each of the performance periods. The number of shares awarded
under this stock option opportunity will be approved by the Chairman of the
Company.

DENNIS M. BESTE. Pursuant to a compensation and severance agreement
approved by the Chairman of the Company, Mr. Dennis M. Beste is entitled to,
among other things, (i) a salary of $130,000 per year effective in January 1996,
(ii) a target bonus opportunity of 35% of salary in 1997, and (iii) a severance
allowance of up to one year of his base salary in the event that a
change-in-control of the Company results in the constructive termination of Mr.
Beste. In addition, Mr. Beste has been awarded automatic stock options with
respect to 24,000 Common Shares (12,000 of which he is currently vested) for the
remaining years of the Company Stock Option Program. Mr. Beste is also eligible
to receive a performance-based stock option award for each of the remaining
years of the Company Stock Option Program, beginning January 1, 1997, for a
total of up to 12,000 Common Shares per year at target performance. The exact
number of performance-based stock option awards is dependent on Company
performance in each of the three remaining performance periods. The performance
of the Company at a level greater than, or less than, the target level of
performance will result in an award of as many as 24,000 shares or as few as
zero shares, respectively, for each of the performance periods. The number of
shares awarded under this stock option opportunity will be approved by the
Chairman.

MICHELLE M. HAUPT. In March 1997 Ms. Michelle M. Haupt entered into an
Agreement Regarding Severance with the Company whereby the Company approved a
severance allowance of up to one year of her base salary in the event that a
change-in-control of the Company results in her constructive termination. Ms.
Haupt is also entitled to a target bonus opportunity of 35% of salary in 1997.
In addition, Ms. Haupt was previously awarded an automatic stock option with
respect to 3,000 Common Shares (2,000 of which she is currently vested).

LAWRENCE J. LARSEN. Pursuant to a compensation and severance arrangement
approved by the Chairman of the Company, Mr. Lawrence J. Larsen is entitled to,
among other things, (i) a salary of $130,000, effective in October, 1997, (ii) a
target bonus opportunity of 35% of salary in 1997, and (iii) a severance
allowance of up to one year of his base salary in the event that a
change-in-control of the Company results in the constructive termination of Mr.
Larsen. In addition, Mr. Larsen is eligible to receive an automatic stock option
award with respect to 24,000 Common Shares (12,000 of which he would be
currently vested) for the remaining years of the Company Stock Option Program.
Mr. Larsen is also eligible to receive a performance-based stock option award
for each of the remaining years of the Company Stock Option Program, beginning
January 1, 1998, for a total of up to 12,000 Common Shares per year at target
performance. The exact number of performance-based stock option awards is
dependent on Company performance in each of the two remaining performance
periods. The performance of the Company at a level greater than, or less than,
the target level of performance would result in an award of as many as

24
<PAGE>
24,000 shares or as few as zero shares respectively, for each of the performance
periods. The number of shares awarded under this stock option opportunity will
be approved by the Chairman.

LAWRENCE A. PIUMBROECK. In March 1997 Mr. Piumbroeck entered into an
Agreement Regarding Severance with the Company whereby the Company approved a
severance allowance of up to one year of his base salary in the event that a
change-in-control of the Company results in his constructive termination. In
addition, Mr. Piumbroeck has been awarded automatic stock options with respect
to 16,000 Common Shares (8,000 of which he is currently vested) for the
remaining years of the Company Stock Option Program. Such awards, together with
Mr. Piumbroeck's previous awards, total 31,000 stock options. Mr. Piumbroeck has
also been awarded additional performance-based stock options with respect to 750
shares and 3,200 shares for the 1995 and 1996 performance periods, respectively.
Mr. Piumbroeck is also eligible to receive a performance-based stock option
award for each of the remaining years of the Company Stock Option Program,
beginning January 1, 1997, for a total of up to 12,000 Common Shares per year at
target performance. The exact number of performance-based stock option awards is
dependent on Company performance in each of the three remaining performance
periods. The performance of the Company at a level greater than, or less than,
the target level of performance will result in an award of as many as 24,000
shares or as few as zero shares respectively. The number of shares awarded under
this stock option opportunity will be approved by the Chairman.

MERGER INCENTIVE PROGRAM. On April 1, 1997, the Company adopted the Merger
Incentive Program (the "Merger Program"). The purpose of the Merger Program is
to provide incentives to participants of the Merger Program to exercise maximum
effort to raise the value of the Company's equity during the term of the Merger
Program. To be eligible to participate in the Merger Program, an employee must
be employed by the Company on the closing date of any transaction between TDS
and any individual, entity or group or between the Company and any individual,
entity or group that reduces TDS's voting control of the Common Shares below 50%
through a merger; or other transaction that results in a sale or disposition of
all or substantially all of the assets of the Company (a "Transaction"). Each of
the executive officers named below is eligible to participate in the Merger
Program. The Merger Program commenced on April 1, 1997 and terminates on June
30, 1998 or on the closing date of a Transaction, whichever is earlier, unless
extended by the Board of Directors of the Company.

The maximum incentive awards for participants will be equal to the greater
of Column A or Column B (the "Maximum Award"). The Maximum Award for Terrence T.
Sullivan will be equal to the greater of $195,000 or 100% of his Base Salary
(the"CEO Award").

<TABLE>
<CAPTION>
COLUMN A COLUMN B
----------- -----------------------
<S> <C> <C>
Dennis M. Beste............................. $ 78,000 40% of CEO Award
Lawrence A. Piumbroeck...................... $ 78,000 40% of CEO Award
Lawrence J. Larsen.......................... $ 78,000 40% of CEO Award
Michelle M. Haupt........................... $ 78,000 40% of CEO Award
</TABLE>

25
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES OF THE COMPANY

SECURITY OWNERSHIP OF THE COMPANY BY TDS, PURCHASER AND CERTAIN BENEFICIAL
OWNERS. The following table sets forth, at December 31, 1997, information
regarding TDS, Purchaser and each person who beneficially owns more than 5% of
any class of the Company's securities.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF PERCENT OF
NAME AND ADDRESS TITLE OF CLASS(1) OWNERSHIP(2) CLASS VOTING POWER
- ------------------------------------ ----------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>

Telephone and Data Systems, Inc.
30 North LaSalle Street
Chicago, Illinois 60602(3)......... Common Shares 4,000,000 52.3% 2.0%
Series A Common Shares 12,500,000 100.0% 98.1%

Dimensional Funds Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, California
90401(4)........................... Common Shares 523,600 6.8% *
</TABLE>

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

* Less than 1%

(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.

(3) Such Common Shares and Series A Common Shares were transferred by TDS to
Purchaser on February 9, 1998.

(4) Based on a Schedule 13G filed with the Commission. Such Schedule 13G
reported that Dimensional Funds Advisors, Inc. had sole voting power with
respect to 399,400 Common Shares and that persons who are officers at
Dimensional Funds Advisors, Inc. also serve as officers of DFA Investment
Dimensions Group Inc. (the "Fund") and the DFA Investment Trust Company (the
"Trust"), each an open-end management investment company registered under
the Investment Company Act of 1940. In their capacities as officers of the
Fund and the Trust, these persons vote 112,200 additional Common Shares
which are owned by the Fund and 12,000 Common Shares which are owned by the
Trust. Such Schedule 13G states that all such Common Shares are owned by
advisory clients of Dimensional Funds Advisors Inc. which disclaims
beneficial ownership of all such Common Shares.

26
<PAGE>
SECURITY OWNERSHIP OF THE COMPANY BY DIRECTORS AND EXECUTIVE OFFICERS OF TDS
AND THE TRUSTEES OF THE VOTING TRUST. The following table sets forth, at
December 31, 1997, information with respect to the beneficial ownership of the
Common Shares of the Company by each director and executive officer of TDS and
each Trustee of The Voting Trust.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF PERCENT OF
NAME TITLE OF CLASS OWNERSHIP(1) CLASS VOTING POWER
- -------------------------------------------- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>

LeRoy T. Carlson, Jr.,
C. Theodore Herbert and
Michael G. Hron(2)......................... Common Shares 19,741 * *
James Barr III.............................. -- -- -- --
Donald R. Brown............................. -- -- -- --
LeRoy T. Carlson............................ Common Shares 1,000 * *
LeRoy T. Carlson, Jr.(3).................... Common Shares 1,000 * *
Letitia G.C. Carlson........................ -- -- -- --
Walter C.D. Carlson......................... -- -- -- --
Michael K. Chesney.......................... -- -- -- --
George L. Dienes............................ -- -- -- --
Melanie J. Heald............................ -- -- -- --
C. Theodore Herbert......................... Common Shares 1,000 * *
Rudolph E. Hornacek......................... -- -- -- --
Michael G. Hron............................. Common Shares 400 * *
Ross J. McVey(4)............................ Common Shares 400 * *
Donald C. Nebergall......................... -- -- -- --
H. Donald Nelson............................ -- -- -- --
George W. Off............................... -- -- -- --
Martin L. Solomon........................... -- -- -- --
Karen M. Stewart............................ -- -- -- --
Terrence T. Sullivan(5)..................... Common Shares 44,006 * *
Murray L. Swanson........................... -- -- -- --
Edward W. Towers............................ -- -- -- --
Herbert S. Wander........................... -- -- -- --
Donald W. Warkentin......................... -- -- -- --
Byron A. Wertz.............................. -- -- -- --
Scott H. Williamson......................... -- -- -- --
Gregory J. Wilkinson(6)..................... -- 500 * *
</TABLE>

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

* Less than 1%

(1) Each person has the sole power to vote or direct the vote and the sole power
to dispose or direct the disposition of the indicated number of Common
Shares, unless otherwise indicated.

(2) Voting and investment control is shared by the persons named as members of
the investment management committee of the Telephone and Data Systems, Inc.
Tax-Deferred Savings Plan (the "Plan"). Does not include 57,782 Common
Shares purchased by employee salary deferrals as to which voting power is
passed through to Plan participants. If any Plan participant does not
exercise such participant's passed-through voting power in a timely manner,
the Trustee for the Plan shall exercise such voting power as directed by the
investment management committee, which shall act in the best interest of
such Plan participant.

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

(4) Includes 200 Common Shares held by Mr. McVey's wife.

(5) Includes 43,872 Common Shares that Mr. Terrence T. Sullivan may purchase
pursuant to stock options that were exercisable as of December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(6) Held in the name of the person's spouse.

27
<PAGE>
SECURITY OWNERSHIP OF THE COMPANY BY MANAGEMENT. The following table sets
forth, at December 31, 1997, information with respect to the beneficial
ownership of Common Shares by each director of the Company and each executive
officer of the Company.

LeRoy T. Carlson, Jr.,
C. Theodore Herbert
and Michael G. Hron(2)..................... Common Shares 19,741 * *
LeRoy T. Carlson, Jr.(3).................... Common Shares 1,000 * *
James Barr III.............................. -- -- -- --
Debora M. de Hoyos.......................... -- -- -- --
Jean Burhardt Keffeler...................... Common Shares 4,520 * *
Edwin L. Russell............................ Common Shares 4,020 * *
Murray L. Swanson........................... -- -- -- --
Terrence T. Sullivan(4)..................... Common Shares 44,006 * *
Dennis M. Beste(5).......................... Common Shares 12,000 * *
Michelle M. Haupt(6)........................ Common Shares 3,915 * *
James F. Kelly(7)........................... Common Shares 12,000 * *
Larry A. Piumbroeck(8)...................... Common Shares 23,751 * *
Lawrence Larsen............................. -- -- * *
Michael Hron................................ Common Shares 400 * *
</TABLE>

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

* Less than 1%

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

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

(4) Includes 43,872 Common Shares that Mr. Terrence T. Sullivan may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(5) Includes 12,000 Common Shares that Mr. Dennis M. Beste may purchase pursuant
to stock options which were exercisable on December 31, 1997 or exercisable
within 60 days of December 31, 1997.

(6) Includes 2,000 Common Shares that Ms. Michelle M. Haupt may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(7) Includes 12,000 Common Shares that Mr. James F. Kelly may purchase pursuant
to stock options which were exercisable on December 31, 1997 or exercisable
within 60 days of December 31, 1997. Mr. Kelly resigned from the Company on
January 30, 1998.

(8) Includes 22,950 Common Shares that Mr. Larry A. Piumbroeck may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

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 December 31, 1997,
53,648,683 TDS Common Shares (excluding Common Shares held by TDS and a

28
<PAGE>
subsidiary of TDS), 6,936,277 TDS Series A Common Shares and 324,667 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 the 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," the following table sets forth information regarding the persons who
beneficially own more than 5% of any class of the voting securities of TDS. Such
information is as of December 31, 1997, except as otherwise indicated. The
nature of beneficial ownership in this table is sole voting and investment
power, except as otherwise set forth in the footnotes.

<TABLE>
<CAPTION>
PERCENT OF
SHARES OF TDS PERCENT OF TDS
SHAREHOLDER'S NAME AND ADDRESS TITLE OF CLASS CLASS OWNED TDS CLASS VOTING POWER
- --------------------------------------- -------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
The Equitable Companies Inc.(1)
787 Seventh Avenue
New York, New York 10019.............. TDS Common Shares 10,988,100 20.4% 8.9%
Franklin Mutual Advisers, Inc. (2)
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078......... TDS Common Shares 5,279,200 9.8% 4.3%
Massachusetts Financial Services
Company (3)
500 Boylston Street
Boston, Massachusetts 02116........... TDS Common Shares 1,907,100 3.6% 1.6%
William and Betty McDaniel
160 Stowell Road
Salkum, Washington 98582.............. TDS Preferred Shares 46,666 14.4% *
Bennet R. Miller
1212 Wea Avenue
Lafayette, Indiana 47905.............. TDS Preferred Shares 30,000 9.2% *

Roland G. and Bette B. Nehring
5253 North Dromedary Road
Phoenix, Arizona 85018................ TDS Preferred Shares 20,012 6.2% *

The Peterson Revocable Living Trust
Kenneth M. & Audrey M. Peterson,
Trustees
108 Avocado Lane
Weslaco, Texas 78596.................. TDS Preferred Shares 20,637 6.4% *
</TABLE>

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

* Less than 1%

(1) Based on the most recent Schedule 13G (Amendment No. 11) filed with the
Commission on February 17, 1998. Includes shares held by the following
affiliates: The Equitable Life Assurance Society of the United States--
4,176,200 shares; Alliance Capital Management, L.P.-- 6,782,543 shares;
Wood, Struthers & Winthrop Management Corp.-- 28,976 shares; and Donaldson
Lufkin & Jenrette Securities Corporation-- 381 shares. In such Schedule 13G,
Equitable reported sole voting power with respect to 11,428,250 shares,
shared voting power with respect to 84,600 shares, sole dispositive power
with respect to 11,790,690 shares and shared dispositive power

29
<PAGE>
with respect to 915 shares. Alpha Assurance I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle, AXA Assurances Vie Mutuelle, AXA Courtage Assurance
Mutuelle and AXA-UAP, corporations organized under the laws of France, are
affiliates of The Equitable Companies, Inc.

(2) Based on the most recent Schedule 13D (Amendment No. 4) filed with the
Commission on April 9, 1997. 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 filled on behalf of Franklin
Resources, Inc., the TDS holding company of Franklin Mutual Advisers, Inc.,
and by Charles B. Johnson and Rupert H. Johnson, Jr., principal shareholders
of such TDS holding company.

(3) Based on the most recent Schedule 13G (Amendment No. 1) filed with the
Commission. Such Schedule 13G reported that Massachusetts Financial Services
Company exercised sole voting and investment power with respect to all such
shares.

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 and by
each executive officer as of December 31, 1997.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR BENEFICIAL PERCENT OF PERCENT OF
NUMBER OF PERSONS IN GROUP TITLE OF TDS CLASS OWNERSHIP (1) TDS CLASS VOTING 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 6,337,187 91.4% 51.5%
LeRoy T. Carlson, Jr.,
C. Theodore Herbert 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 and
Michael G. Hron(4)............ TDS Common Shares 2,300 * *
LeRoy T. Carlson, Jr.,
C. Theodore Herbert and
Michael G. Hron(5)............ TDS Common Shares 59,957 * *
LeRoy T. Carlson, Jr.(6)....... TDS Common Shares 157,760 * *
James Barr III(8).............. TDS Common Shares 19,958 * *
Debora M. de Hoyos(9).......... -- -- -- --
Jean Burhardt Keffeler......... -- -- -- --
Edwin L. Russell(7)............ TDS Common Shares 5,713 * *
TDS Series A Common Shares 6,368 * *
Murray L. Swanson(7)(10)....... TDS Common Shares 47,324 * *
TDS Series A Common Shares 2,506 * *
Terrence T. Sullivan........... -- -- -- --
Dennis M. Beste................ -- -- * *
Michelle M. Haupt.............. -- -- -- --
James F. Kelly(11)............. -- -- * *
Larry A. Piumbroeck............ TDS Common Shares 357 * *
Lawrence J. Larsen............. -- -- -- --
Michael Hron................... TDS Common Shares 1,000 * *
</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.

(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

30
<PAGE>
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 members of
the investment management committee of the Telephone and Data Systems, Inc.
Employees' Pension Trust I. Such members disclaim beneficial ownership of
such shares.

(4) Voting and investment control is shared by the persons named as members of
the investment management committee of the Telephone and Data Systems, Inc.
Wireless Companies' Pension Plan. Such members disclaim beneficial ownership
of such shares.

(5) Voting and investment control is shared by the persons named as members of
the investment management committee of the Telephone and Data Systems, Inc.
Tax-Deferred Savings Trust. Does not include 142,575 TDS Common Shares
purchased with employee salary deferrals as to which voting and investment
control is passed-through to Plan participants. If any Plan participant does
not exercise his passed-through voting power in a timely manner, the Trustee
for the Plan shall exercise such voting power as directed by the investment
management committee, which shall act in the best interest of such Plan
participant.

(6) Includes 152,297 TDS Common Shares that Mr. LeRoy T. Carlson, Jr. may
purchase pursuant to stock options which were exercisable on December 31,
1997 or exercisable within 60 days of December 31, 1997. Does not include
1,068,186 TDS Series A Common Shares (15.4% of class) held in the voting
trust referred to in footnote (2) above, of which 1,037,084 shares are held
for the benefit of Mr. LeRoy T. Carlson, Jr. Beneficial ownership is
disclaimed as to 31,102 TDS Series A Common Shares held for the benefit of
his wife, his children and others in such voting trust.

(7) Includes shares as to which voting and/or investment power is shared with
his wife.

(8) Includes 16,000 TDS Common Shares that Mr. Barr may purchase pursuant to
stock options and/or stock appreciation rights which were exercisable on
December 31, 1997 or exercisable within 60 days of December 31, 1997.

(9) 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 405 TDS Common Shares owned directly
by Walter C.D. Carlson.

(10) Includes 28,541 TDS Common Shares that Mr. Swanson may purchase pursuant to
stock options and/or stock appreciation rights which were exercisable on
December 31, 1997 or exercisable within 60 days of December 31, 1997.

(11) Mr. Kelly resigned from the Company on January 30, 1998.

SECURITY OWNERSHIP OF TDS BY DIRECTORS AND EXECUTIVE OFFICERS OF TDS

The following table sets forth at December 31, 1997, the number of Common
Shares and Series A Common Shares beneficially owned, and the percentage of the
outstanding shares of each such class so owned by each director and executive
officer of TDS.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR BENEFICIAL PERCENT OF PERCENT OF
NUMBER OF PERSONS IN GROUP TITLE OF CLASS OWNERSHIP (1) CLASS VOTING 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)........... Series A Common Shares 6,337,187 91.4% 51.4%
LeRoy T. Carlson, Jr.,
C. Theodore Herbert
and Michael G. Hron(3)........ Common Shares 1,008 * *
Series A Common Shares 146,576 2.1% 1.2%
</TABLE>

31
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR BENEFICIAL PERCENT OF PERCENT OF
NUMBER OF PERSONS IN GROUP TITLE OF CLASS OWNERSHIP (1) CLASS VOTING POWER
- ------------------------------- ---------------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
LeRoy T. Carlson, Jr.,
C. Theodore Herbert
and Michael G. Hron(4)........ Common Shares 2,300 * *
LeRoy T. Carlson, Jr.,
C. Theodore Herbert
and Michael G. Hron(5)........ Common Shares 59,957 * *
LeRoy T. Carlson(6)............ Common Shares 62,407 * *
Series A Common Shares 51,975 * *
LeRoy T. Carlson, Jr.(7)(12)... Common Shares 157,760 * *
Walter C.D. Carlson(8)......... Common Shares 405 * *
Letitia G.C. Carlson(9)........ Common Shares 470 * *
Murray L. Swanson(10)(13)...... Common Shares 47,324 * *
Series A Common Shares 2,506 * *
Rudolph E. Hornacek(11)........ Common Shares 20,233 * *
Series A Common Shares 1,669 * *
James Barr III(14)............. Common Shares 19,958 * *
Donald C. Nebergall(12)........ Common Shares 1,463 * *
Donald R. Brown(10)............ Common Shares 4,001 * *
Series A Common Shares 4,735 * *
Herbert S. Wander.............. Common Shares 334 * *
George W. Off.................. Common Shares 1,127 * *
Series A Common Shares 1,127 * *
Martin L. Solomon.............. Common Shares 15,000 * *
Kevin A. Mundt................. -- -- -- --
H. Donald Nelson............... Common Shares 4,098 * *
Series A Common Shares 5,308 * *
Donald W. Warkentin(15)........ Common Shares 29,566 * *
Terrence T. Sullivan........... -- -- -- --
Michael K. Chesney(16)......... Common Shares 15,229 * *
George L. Dienes(17)........... Common Shares 68,100.25 * *
C. Theodore Herbert(18)........ Common Shares 39,996 * *
Karen M. Stewart(19)........... Common Shares 10,761 * *
Edward W. Towers(20)........... Common Shares 21,663 * *
Herbert S. Wander.............. Common Shares 334 * *
Byron A. Wertz(21)............. Common Shares 17,512 * *
Series A Common Shares 19,461 * *
Gregory J. Wilkinson(22)....... Common Shares 18,063 * *
Series A Common Shares 731 * *
Scott H. Williamson(23)........ Common Shares 11,782 * *
</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.

(2) The shares listed are held by the persons named as trustees under a voting
trust which expires June 30, 2009, created to facilitate longstanding
relationships among the trust certificate holders. Under the terms of the
voting trust, the trustees hold and vote the Series A Common Shares held in
the trust. If the voting trust were terminated, the following persons would
each be deemed to own beneficially more than 5% of the outstanding 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.

32
<PAGE>
(4) Voting and investment control is shared by the persons named as members of
the investment management committee of the Telephone and Data Systems, Inc.
Wireless Companies' Pension Plan. Such members disclaim beneficial ownership
of such shares.

(5) Voting and investment control with respect to Company-match shares is shared
by the persons named as members of the investment management committee of
the Telephone and Data Systems, Inc. Tax-Deferred Savings Trust. Does not
include 142,575 Common Shares acquired by employee salary deferrals as to
which voting and investment control is passed-through to Plan participants.
If any Plan participant does not exercise his passed-through voting power in
a timely manner, the Trustee for the Plan shall exercise such voting power
as directed by the investment management committee, which shall act in the
best interest of such Plan participant.

(6) Includes 55,978 Common Shares that Mr. LeRoy T. Carlson may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997. Includes 51,975 Series A
Common Shares held by Mr. Carlson's wife. Mr. Carlson disclaims beneficial
ownership of such shares. Does not include 252,668 Series A Common Shares
held for the benefit of LeRoy T. Carlson, 630,525 Series A Common Shares
held for the benefit of Mr. Carlson's wife or 50,526 Series A Common Shares
held for the benefit of certain grandchildren of Mr. Carlson (an aggregate
of 933,719 shares, or 13.5% of class) in the voting trust described in
footnote (2). Beneficial ownership is disclaimed as to Series A Common
Shares held for the benefit of his wife and grandchildren in such voting
trust.

(7) Includes 152,297 Common Shares that Mr. LeRoy T. Carlson, Jr. may purchase
pursuant to stock options that were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997. Does not include 1,068,186
Series A Common Shares (15.4% of class) held in the voting trust described
in footnote (2), of which 1,037,084 shares are held for the benefit of Mr.
LeRoy T. Carlson, Jr. Beneficial ownership is disclaimed with respect to an
aggregate of 31,102 Series A Common Shares held for the benefit of his wife,
his children and others in such voting trust.

(8) Does not include 1,087,366 Series A Common Shares (15.7% of class) held in
the voting trust described in footnote (2), of which 1,058,143 shares are
held for the benefit of Mr. Walter C.D. Carlson. Beneficial ownership is
disclaimed with respect to an aggregate of 29,223 Series A Common Shares
held for the benefit of his wife and children in such voting trust.

(9) Does not include 1,070,127 Series A Common Shares (15.4% of class) held in
the voting trust described in footnote (2), of which 1,061,477 shares are
held for the benefit of Dr. Letitia G.C. Carlson. Beneficial ownership is
disclaimed with respect to an aggregate of 8,650 Series A Common Shares held
for the benefit of her husband and child in such voting trust.

(10) Beneficial ownership is disclaimed by Mr. Donald R. Brown with respect to
1,862 Common Shares held by his wife.

(11) Includes 12,374 Common Shares that Mr. Rudolph E. Hornacek may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997. Does not include 1,669
Series A Common Shares held as custodian for his children, for which
beneficial ownership is disclaimed.

(12) Does not include 641,540 Series A Common Shares (9.2% of class) held as
trustee under trusts for the benefit of the heirs of LeRoy T. and Margaret
D. Carlson and an educational institution, or 31 Series A Common Shares held
for the benefit of Mr. Donald C. Nebergall, which are held in the voting
trust described in footnote (2).

(13) Includes 28,541 Common Shares that Mr. Murray L. Swanson may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(14) Includes 16,000 Common Shares that Mr. James Barr III may purchase pursuant
to stock options which were exercisable on December 31, 1997 or exercisable
within 60 days of December 31, 1997.

(15) Includes 29,026 Common Shares that Mr. Donald W. Warkentin may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(16) Includes 15,014 Common Shares that Mr. Michael K. Chesney may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(17) Includes 58,639.25 Common Shares that Mr. George L. Dienes may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(18) Includes 15,787 Common Shares that Mr. C. Theodore Herbert may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

(19) Includes 8,447 Common Shares that Ms. Karen M. Stewart may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

33
<PAGE>
(20) Includes 15,245 Common Shares that Mr. Edward W. Towers may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997. Beneficial ownership is
disclaimed with respect to an aggregate of 1,007 Common Shares held for the
benefit of his wife and son.

(21) Includes 17,512 Common Shares that Mr. Byron A. Wertz may purchase pursuant
to stock options which were exercisable on December 31, 1997 or exercisable
within 60 days of December 31, 1997. Does not include 44,008 Series A Common
Shares held for the benefit of people not in Mr. Wertz's immediate family in
voting trust with Mr. Wertz acting as trustee.

(22) Includes 11,593 Common Shares that Mr. Gregory J. Wilkinson may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997. Beneficial ownership is
disclaimed with respect to 17 Series A Common Shares held by his wife.

(23) Includes 10,923 Common Shares that Mr. Scott H. Williamson may purchase
pursuant to stock options which were exercisable on December 31, 1997 or
exercisable within 60 days of December 31, 1997.

RELATED PARTY TRANSACTIONS

COMPENSATION COMMITTEE INTERLOCKS; BOARD OF DIRECTORS 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.
Such reimbursement in the aggregate was less than $100,000 for 1997, 1996 and
1995. 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.

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.

LeRoy T. Carlson, Jr. is a trustee and beneficiary of The Voting Trust which
controls TDS, which controls the Company. See "BENEFICIAL OWNERSHIP OF
SECURITIES OF THE COMPANY-- Beneficial Ownership of TDS by Directors and
Executive Officers of the Company." LeRoy T Carlson, Jr., Murray L. Swanson and
James Barr III are directors of both TDS and the Company and Debora M. de Hoyos,
a director of the Company, is the wife of Walter C.D. Carlson, a director of TDS
and brother of LeRoy T. Carlson, Jr.

AGREEMENTS BETWEEN THE COMPANY AND 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.

34
<PAGE>
EXCHANGE AGREEMENT. The Company and TDS are parties to an Exchange
Agreement (the "Exchange Agreement"). 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.

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 the Revolving Credit Agreement
between the Company and TDS, the Company may borrow up to an aggregate of $185
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

35
<PAGE>
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 $7.0 million, $11.8 million and $16.1 million for the years ended
December 31, 1995, 1996 and 1997, respectively. Borrowings in an aggregate
amount of $94.5 million, $140.0 million and $180.0 million were outstanding as
of December 31, 1995, 1996 and 1997, respectively. The greatest amount
outstanding in 1995 was $94.5 million, in 1996 was $140.0 million and in 1997
was $180.0 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 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.

36
<PAGE>
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 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.

LNTERCOMPANY 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 $5.8
million in 1995, $5.9 million in 1996 and $6.1 million in 1997. 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 1995, 1996 and 1997.

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 $296,000 in 1995, $244,000 in 1996 and $72,000 in 1997.

37
<PAGE>
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 indemnity 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 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 nonpaying
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

38
<PAGE>
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 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. The
Company paid insurance premiums of $329,000, $604,000 and $756,000 in 1995, 1996
and 1997, respectively.

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.

FEES AND EXPENSES

The following is an estimate of expenses to be incurred in connection with
the Offer and the Merger, other than: (i) the fees and expenses of PaineWebber
(see "SPECIAL FACTORS--Opinion of Financial Advisor to the Special Committee and
"THE TENDER OFFER--14. Fees and Expenses"); and (ii) the fees and expenses of
CSFB (see "SPECIAL FACTORS--Analysis of Financial Advisor to TDS" and "THE
TENDER OFFER--14. Fees and Expenses"). The Merger Agreement provides that all
costs and

39
<PAGE>
expenses incurred in connection with the Offer and the Merger will be paid by
the party incurring such costs and expenses.

<TABLE>
<S> <C>
Expenses to be paid by Purchaser and its affiliates:
Legal Fees.............................................................. $ 200,000
Printing and Mailing.................................................... $ 250,000
Advertising............................................................. $ 71,430
Filing Fees............................................................. $ 1,824
Depositary Fees......................................................... $ 10,000
Information Agent Fees.................................................. $ 5,000
Miscellaneous........................................................... $ 6,500
---------
Total............................................................... $ 544,754

Expenses to be paid by the Company:

Legal Fees and Expenses................................................. $ 40,000
Printing and Mailing.................................................... $ 30,000
Miscellaneous........................................................... $ 2,500
---------
Total............................................................... $ 72,500
</TABLE>

40
<PAGE>
THE TENDER OFFER

1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment, and pay for, (and thereby purchase) all Common Shares validly tendered
prior to the Expiration Date and not withdrawn as permitted by "THE TENDER
OFFER--4. Withdrawal Rights".

Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, (i)
to delay acceptance for payment of, or, regardless of whether such Common Shares
were theretofore accepted for payment, payment for, any Common Shares, pending
receipt of any regulatory approval specified in "THE TENDER OFFER--13. Certain
Legal Matters and Regulatory Approval", (ii) to terminate the Offer and not
accept for payment any Common Shares upon the occurrence of any of the
conditions specified in "THE TENDER OFFER--12. Certain Conditions of the Offer"
and (iii) to waive any condition or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination, waiver or amendment to
the Depositary and by making a public announcement thereof. The Merger Agreement
provides that, without the consent of the Company, Purchaser will not (i) reduce
the number of Common Shares to be purchased in the Offer, (ii) reduce the price
per Common Share payable pursuant to the Offer or change the form of
consideration to be paid in the Offer, or (iii) modify or add conditions to the
Offer in addition to those set forth in "THE TENDER OFFER--12. Certain
Conditions of the Offer" (other than to waive any conditions to the extent
permitted by the Merger Agreement) or (iv) except as set forth in this Section
1, extend the Offer. In the event all conditions set forth in the Merger
Agreement shall have been satisfied other than the Minimum Condition, Purchaser
may extend the Offer for a period or periods aggregating not more than 20
business days after the later of (i) initial Expiration Date and (ii) the date
on which all other conditions set forth in the Merger Agreement shall have been
satisfied, after which time Purchaser shall waive the Minimum Condition.
Purchaser acknowledges that (i) Rule 14e-l(c) under the Exchange Act requires
Purchaser to pay the consideration offered or return the Common Shares tendered
promptly after the termination or withdrawal of the Offer and (ii) Purchaser may
not delay acceptance for payment of, or payment for (except as provided in
clause (i) of the first sentence of this paragraph), any Common Shares upon the
occurrence of any of the conditions specified in "THE TENDER OFFER--12. Certain
Conditions of the Offer" without extending the period of time during which the
Offer is open.

Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act, which require that material changes be promptly disseminated to
shareholders in a manner reasonably designed to inform them of such changes) and
without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.

41
<PAGE>
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act.

Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to decrease the number of Common Shares being
sought or to increase or decrease the consideration being offered in the Offer,
such decrease in the number of Common Shares being sought or such increase or
decrease in the consideration being offered will be applicable to all
shareholders whose Common Shares are accepted for payment pursuant to the Offer
and, if at the time notice of any such decrease in the number of Common Shares
being sought or such increase or decrease in the consideration being offered is
first published, sent or given to holders of such Common Shares, the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first published,
sent or given, the Offer will be extended at least until the expiration of such
ten business day period. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.

The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Common Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Common Shares whose names appear on the
Company's shareholder list and will be furnished, for subsequent transmittal to
beneficial owners of Common Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing.

2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR COMMON SHARES. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any such extension or amendment),
Purchaser will accept for payment, and will pay for, all Common Shares validly
tendered prior to the Expiration Date and not properly withdrawn, promptly after
the latest to occur of (i) the Expiration Date and (ii) the satisfaction or
waiver of the conditions to the Offer set forth in "THE TENDER OFFER--12.
Certain Conditions of the Offer". Subject to applicable rules of the Commission
and the terms and conditions of the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Common
Shares pending receipt of any regulatory approval specified in "THE TENDER
OFFER--13. Certain Legal Matters and Regulatory Approvals" or in order to comply
in whole or in part with any other applicable law.

In all cases, payment for Common Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Common Shares (the "Common Share
Certificates") or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Common Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in "THE TENDER OFFER--3.
Procedures for Accepting the Offer and Tendering Common Shares", (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message (as defined below) in lieu of the Letter of Transmittal and
(iii) any other documents required under the Letter of Transmittal.

42
<PAGE>
payments from Purchaser and transmitting such payments to tendering shareholders
whose Common Shares have been accepted for payment. Under no circumstances will
interest on the purchase price for Common Shares be paid, regardless of any
delay in making such payment.

If any tendered Common Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer, or if Common Share
Certificates are submitted evidencing more Common Shares than are tendered,
Common Share Certificates evidencing unpurchased Common Shares will be returned,
without expense to the tendering shareholder (or, in the case of Common Shares
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedure set forth in "THE TENDER OFFER--3.
Procedures for Accepting the Offer and Tendering Common Shares", such Common
Shares will be credited to an account maintained at such Book-Entry Transfer
Facility), as promptly as practicable following the expiration or termination of
the Offer.

If, prior to the Expiration Date, Purchaser shall increase the consideration
offered to any holders of Common Shares pursuant to the Offer, such increased
consideration shall be paid to all holders of Common Shares that are purchased
pursuant to the Offer, whether or not such Common Shares were tendered prior to
such increase in consideration.

Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Common Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Common Shares validly tendered and accepted for payment
pursuant to the Offer.

3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING COMMON SHARES. In
order for a holder of Common Shares validly to tender Common Shares pursuant to
the Offer, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message in lieu of the
Letter of Transmittal) and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase and either (i) the Common
Share Certificates evidencing tendered Common Shares must be received by the
Depositary at such address or such Common Shares must be tendered pursuant to
the procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary (including an Agent's Message if
the tendering shareholder has not delivered a Letter of Transmittal), in each
case prior to the Expiration Date, or (ii) the tendering shareholder must comply
with the guaranteed delivery procedures described below. The term "Agent's
Message" means a message, transmitted by a Book-Entry Transfer Facility to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Common Shares which are the subject of such book-entry
confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.

THE METHOD OF DELIVERY OF COMMON SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.

BOOK-ENTRY TRANSFER. The Depositary will establish accounts with respect to
the Common Shares at the Book-Entry Transfer Facilities for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of any Book-Entry
Transfer Facility may make a book-entry delivery of Common Shares by causing
such Book-Entry Transfer Facility

43
<PAGE>
to transfer such Common Shares into the Depositary's account at such Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Common Shares may be
effected through book-entry transfer at a Book-Entry Transfer Facility, either
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution", as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing referred
to as an "Eligible Institution"), except in cases where Common Shares are
tendered (i) by a registered holder of Common Shares who has not completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If a Common Share Certificate is registered
in the name of a person other than the signer of the Letter of Transmittal, or
if payment is to be made, or a Common Share Certificate not accepted for payment
or not tendered is to be returned, to a person other than the registered
holder(s), then the Common Share Certificate must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Common Share Certificate, with the
signature(s) on such Common Share Certificate or stock powers guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.

GUARANTEED DELIVERY. If a shareholder desires to tender Common Shares
pursuant to the Offer and the Common Share Certificates evidencing such
shareholder's Common Shares are not immediately available or such shareholder
cannot deliver the Common Share Certificates and all other required documents to
the Depositary prior to the Expiration Date, or such shareholder cannot complete
the procedure for delivery by book-entry transfer on a timely basis, such Common
Shares may nevertheless be tendered, provided that all the following conditions
are satisfied:

(i) such tender is made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and

(iii) the Common Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Common Shares, in proper form for transfer, in each case
together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature
guarantees, and any other documents required by the Letter of
Transmittal are received by the Depositary within three Amex trading
days after the date of execution of such Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.

In all cases, payment for Common Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of the Common Share Certificates evidencing such Common Shares, or a Book-Entry
Confirmation of the delivery of such Common Shares, and the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and any other documents required by the
Letter of Transmittal.

44
<PAGE>
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Common Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Subject to the terms of the Merger Agreement, Purchaser
also reserves the absolute right to waive any condition of the Offer or any
defect or irregularity in the tender of any Common Shares of any particular
shareholder, whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Common Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of Purchaser, TDS, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.

OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such shareholder's
rights with respect to the Common Shares tendered by such shareholder and
accepted for payment by Purchaser (and with respect to any and all other Common
Shares or other securities issued or issuable in respect of such Common Shares
on or after February 11, 1998). All such proxies shall be considered coupled
with an interest in the tendered Common Shares. Such appointment will be
effective when, and only to the extent that, Purchaser accepts such Common
Shares for payment. Upon such acceptance for payment, all prior proxies given by
such shareholder with respect to such Common Shares (and such other Common
Shares and securities) will be revoked without further action, and no subsequent
proxies may be given nor any subsequent written consent executed by such
shareholder (and, if given or executed, will not be deemed to be effective) with
respect thereto. The designees of Purchaser will, with respect to the Common
Shares for which the appointment is effective, be empowered to exercise all
voting and other rights of such shareholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's shareholders or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Common Shares to be deemed validly tendered, immediately upon Purchaser's
payment for such Common Shares, Purchaser must be able to exercise full voting
rights with respect to such Common Shares.

The acceptance for payment by Purchaser of Common Shares pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.

TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF COMMON SHARES PURCHASED PURSUANT
TO THE OFFER, EACH SUCH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH
SHAREHOLDERS CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. IF BACKUP
WITHHOLDING APPLIES WITH RESPECT TO A SHAREHOLDER, THE DEPOSITARY IS REQUIRED TO
WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH SHAREHOLDER. SEE INSTRUCTION 9 OF THE
LETTER OF TRANSMITTAL.

4. WITHDRAWAL RIGHTS. Tenders of Common Shares made pursuant to the Offer
are irrevocable except that such Common Shares may be withdrawn at any time
prior to the Expiration Date and, unless theretofore accepted for payment by
Purchaser pursuant to the Offer, may also be withdrawn at any time after April
18, 1998. If Purchaser extends the Offer, is delayed in its acceptance for
payment of Common Shares or is unable to accept Common Shares for payment
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer, the Depositary may, nevertheless, on behalf of

45
<PAGE>
Purchaser, retain tendered Common Shares, and such Common Shares may not be
withdrawn except to the extent that tendering shareholders are entitled to
withdrawal rights as described in this Section 4.

For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Common Shares to be withdrawn, the number of Common Shares to be withdrawn
and the name of the registered holder of such Common Shares, if different from
that of the person who tendered such Common Shares. If Common Share Certificates
evidencing Common Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Common
Share Certificates, the serial numbers shown on such Common Share Certificates
must be submitted to the Depositary and the signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution, unless such Common
Shares have been tendered for the account of an Eligible Institution. If Common
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in "THE TENDER OFFER--3. Procedures for Accepting the Offer and
Tendering Common Shares", any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Common Shares.

All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, TDS, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.

Any Common Shares properly withdrawn will thereafter be deemed not to have
been validly tendered for purposes of the Offer. However, withdrawn Common
Shares may be re-tendered at any time prior to the Expiration Date by following
one of the procedures described in "THE TENDER OFFER--3. Procedures for
Accepting the Offer and Tendering Common Shares".

5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. Sales of Common Shares
pursuant to the Offer will be taxable transactions for federal income tax
purposes. A holder of Common Shares who tenders such shares will recognize gain
or loss in an amount equal to the difference between the amount of cash received
and such holder's tax basis in his or her shares. Any gain or loss recognized on
the sale will be capital gain or loss, assuming that the tendering shareholder's
Common Shares were "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code") at the time of sale. The
excess of long-term capital gains over net short-term capital losses is
generally taxed at a lower rate than ordinary income for noncorporate taxpayers.
Such taxpayers generally are subject to a maximum rate of 28% on gain realized
on the disposition of a capital asset held for more than one year but not more
than 18 months, and a maximum rate of 20% on gain realized on the disposition of
a capital asset held for more than 18 months.

The Merger is structured to qualify as a tax-free reorganization under the
Code. Assuming the Merger so qualifies, for federal income tax purposes (i) no
gain or loss will be recognized by the Purchaser or the Company as a result of
the Merger, (ii) none of TDS, the Company, the Purchaser or any direct or
indirect wholly owned subsidiary of TDS or the Company will recognize gain or
loss as a result of the conversion of its common stock, par value $1.00 per
share, of Purchaser into Company capital stock, (iii) the holding period and
basis applicable to any Company capital stock received in the Merger will be the
same as the holding period and basis attributable to the Common Stock of
Purchaser that is converted into such Company capital stock in the Merger, (iv)
each holder of Common Shares (other than TDS, the Company, the Purchaser, or any
direct or indirect wholly owned subsidiary of TDS or the Company) will recognize
gain or loss equal to the difference between the amount of cash such holder
receives upon the Merger and such holder's tax basis in such shares, and (v)
each holder of Common Shares who dissents from the Merger, and demands and
perfects his or her appraisal rights under Delaware Law, will recognize gain or

46
<PAGE>
loss measured by the difference between the deemed "fair value" and such
holder's tax basis in such shares. Assuming that the holder's Common Shares were
"capital assets" within the meaning of Section 1221 of the Code, any gain or
loss the holder recognizes as a result of the Merger will be capital gain or
loss, and generally will be subject to tax at the rates discussed in the
preceding paragraph.

THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY, AND DOES
NOT PURPORT TO BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL TAX
EFFECTS OF THE OFFER OR THE MERGER. IN ADDITION, THE DISCUSSION DOES NOT ADDRESS
ALL OF THE TAX CONSEQUENCES THAT MAY BE RELEVANT TO PARTICULAR TAXPAYERS IN
LIGHT OF THEIR PERSONAL CIRCUMSTANCES OR TO TAXPAYERS SUBJECT TO SPECIAL
TREATMENT UNDER THE CODE (FOR EXAMPLE, INSURANCE COMPANIES, FINANCIAL
INSTITUTIONS, DEALERS IN SECURITIES, TAX-EXEMPT ORGANIZATIONS, FOREIGN ENTITIES
AND INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES). IT ALSO
DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE OFFER OR THE
MERGER.

THE DISCUSSION SET FORTH ABOVE IS BASED ON CURRENTLY EXISTING PROVISIONS OF
THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT
ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT TO
CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THE
DISCUSSION. NO RULINGS HAVE BEEN, OR WILL BE, SOUGHT FROM THE INTERNAL REVENUE
SERVICE CONCERNING THE TAX CONSEQUENCES OF THE OFFER OR THE MERGER.

EACH SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE
SPECIFIC CONSEQUENCES OF THE OFFER OR THE MERGER TO HIM OR HER, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.

6. PRICE RANGE OF COMMON SHARES; DIVIDENDS. The Common Shares principally
are traded on Amex under the symbol "APP" and listed in the newspapers as
"AmPaging." As of February 11, 1997, the Company's Common Shares were held by
111 record owners. All of the Series A Common Shares were held by TDS. No public
trading market exists for the Series A Common Shares, but the Series A Common
Shares are convertible on a share-for-share basis into Common Shares.

The high and low sales prices of the Common Shares as reported by the Amex
were as follows:

<TABLE>
<CAPTION>
COMMON SHARES
--------------------
CALENDAR PERIOD HIGH LOW
- -------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
1996
First Quarter............................................................................. $ 7.375 $ 6.250
Second Quarter............................................................................ 10.000 6.500
Third Quarter............................................................................. 7.563 5.500
Fourth Quarter............................................................................ 6.125 4.625

1997
First Quarter............................................................................. $ 5.125 $ 3.438
Second Quarter............................................................................ 4.000 1.313
Third Quarter............................................................................. 3.125 1.500
Fourth Quarter............................................................................ 2.875 1.875

First Quarter (through February 13, 1998)................................................. $ 2.500 $ 2.000
</TABLE>

The Company has never paid any cash dividends and currently intends to
retain any future earnings for use in the Company's business. In addition, the
Revolving Credit Agreement with TDS prohibits the payment of dividends on the
Company's Common Shares and Series A Common Shares, except to the

47
<PAGE>
extent of one-half of the cumulative consolidated net income, if any, of the
Company for the period after December 31, 1993.

On December 22, 1997, the last full trading day prior to the announcement of
TDS's original offer to acquire the Company, the closing price per Common Share
as reported Amex was $2.125. On February 10, 1998, the last full trading day
prior to the public announcement of the execution of the Merger Agreement, the
closing price per Common Share as reported on Amex was $2.375. On February 17,
1998, the last full trading day prior to the commencement of the Offer, the
closing price per Common Share as reported on Amex was $2.44.

SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE COMMON
SHARES.

7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser nor TDS
assumes any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or TDS.

GENERAL. The Company was formed in 1980 under Delaware Law as a wholly
owned subsidiary of TDS. The Company provides one-way and two-way wireless
communication and messaging services in 21 states and the District of Columbia
through 35 sites and service offices, with operations concentrated in Florida
and in the mid-Atlantic and Midwest regions. In 1994, the Company completed an
initial public offering of Common Shares and, since that time, has made no
additional underwritten public offerings of Common Shares.

FINANCIAL INFORMATION. Set forth below is certain selected financial
information relating to the Company which has been excerpted or derived from the
audited financial statements for the fiscal years ended 1997 and 1996. In
addition, Schedule V hereto sets forth the Company's audited financial
statements for the fiscal years ended December 31, 1997 and 1996.

48
<PAGE>
AMERICAN PAGING, INC.
SELECTED FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Service Revenue.............................................................. $ 85,937 $ 93,841 $ 93,034
---------- ---------- ----------
Service Operating Expenses
Cost of services........................................................... 27,822 26,712 22,294
Sales and marketing........................................................ 32,767 32,862 20,661
General and administrative................................................. 29,322 37,579 34,403
Depreciation and amortization.............................................. 32,040 33,777 24,692
---------- ---------- ----------
121,951 130,930 102,050
---------- ---------- ----------
Service Operating Loss....................................................... (36,014) (37,089) (9,016)
---------- ---------- ----------
Equipment Sales
Revenue.................................................................... 8,476 10,346 14,116
Cost of equipment sold..................................................... 7,769 9,883 14,097
---------- ---------- ----------
Equipment Sales Income....................................................... 707 463 19
---------- ---------- ----------
Operating Loss............................................................... (35,307) (36,626) (8,997)
---------- ---------- ----------
Investment and Other Income/(Expense)
Investment loss in joint venture........................................... (459) (1,201) (1,151)
Interest income............................................................ 128 259 175
Other, net................................................................. 75 33 121
---------- ---------- ----------
(256) (909) (855)
---------- ---------- ----------
Loss Before Interest and Income Taxes........................................ (35,563) (37,535) (9,852)
Interest expense--affiliates................................................. 16,073 7,650 5,533
---------- ---------- ----------
Loss Before Income Taxes..................................................... (51,636) (45,185) (15,385)
Income tax expense........................................................... -- 342 325
---------- ---------- ----------
Net Loss..................................................................... $ (51,636) $ (45,527) $ (15,710)
---------- ---------- ----------
---------- ---------- ----------
Weighted Average Common Shares and Series A Common Shares (000s)............. 20,111 20,048 20,017
Net Loss per Common Shares and Series A Common Share......................... $ (2.57) $ (2.27) $ (0.78)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

49
<PAGE>
CONSOLIDATED BALANCE SHEETS

LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current Liabilities
Due to affiliates
Accounts payable...................................................................... $ 1,483 $ 1,486
Accrued interest...................................................................... 1,527 1,169
Accounts payable........................................................................ 942 3,401
Unearned revenue and deposits........................................................... 6,827 10,527
Accrued taxes........................................................................... 477 357
Accrued compensation.................................................................... 3,551 1,266
Other current liabilities............................................................... 2,521 2,841
---------- ----------
17,328 21,047
---------- ----------
Revolving Credit Agreement--TDS........................................................... 179,990 139,960
---------- ----------
Common Shareholders' Equity
Common Shares, par value $1 per share; authorized 50,000,000 shares; issued and
outstanding 7,645,446 shares in 1997 and 7,559,633 shares in 1996..................... 7,645 7,560
Series A Common Shares, par value $1 per share; authorized 50,000,000 shares; issued and
outstanding 12,500,000 shares......................................................... 12,500 12,500
Additional paid-in capital.............................................................. 72,777 72,589
Retained deficit........................................................................ (154,087) (102,451)
---------- ----------
(61,165) (9,802)
---------- ----------
Total Liabilities and Common Shareholders' Equity......................................... $ 136,153 $ 151,205
---------- ----------
---------- ----------
</TABLE>

50
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES; BOOK VALUE PER SHARE. The ratio of
earnings to fixed charges for the two most recent fiscal years is not relevant
for the Company, given that the Company has had negative earnings in the last
two fiscal years. The book value per Common Share was $(3.04) at December 31,
1997 and $(0.49) per Common Share at December 31, 1996.

The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
shareholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials may also be obtained by
mail, upon payment of the Commission's customary fees, by writing to its
principal office at 450 Fifth Street, N.W., Washington, D. C. 20549. The
information should also be available for inspection at the principal offices of
the Company located at 1300 Godward Street, N.E., Suite 3100, Minneapolis, MN
55413.

8. CERTAIN INFORMATION CONCERNING PURCHASER, TDS AND THE VOTING
TRUST. Purchaser is a corporation organized under the laws of Delaware and has
not carried on any activities other than in connection with the Offer and the
Merger. The principal offices of Purchaser are located at 30 North LaSalle
Street, Suite 4000, Chicago, Illinois 60602. Purchaser is an direct, wholly
owned subsidiary of TDS and was organized by TDS for the purpose of acquiring
the Common Shares pursuant to the Offer.

Purchaser currently owns 12,500,000 Series A Common Shares which have a
fifteen votes per share on all matters and are convertible on a share-for-share
basis into Common Shares and 4,000,000 Common Shares, constituting 100% of the
currently outstanding Series A Common Shares and approximately 52.3% of the
outstanding Common Shares for a combined total of approximately 81.9% of the
Company's outstanding classes of capital stock and approximately 98.1% of their
combined voting power.

TDS is a corporation organized under the laws of Iowa. Its principal office
is located at 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
TDS's principal business is that of providing diversified telecommunications
services. TDS, directly and through its subsidiaries, has established local
telephone, cellular telephone and radio paging operations, and is developing
personal communications services.

The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Purchaser and TDS and certain other information are set forth in
Schedule I hereto.

The Voting Trust was created under an Agreement dated June 30, 1989 ("The
Voting Trust"). The principal business address of The Voting Trust is c/o TDS,
30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602. The Voting Trust
holds TDS's Series A Common Shares, par value $1.00 per share (the "TDS Series A
Common Shares") and was created to facilitate long-standing relationships among
the trusts' certificate holders. Under the terms of The Voting Trust, the
trustees hold and vote the TDS Series A Common Shares held in the trust.

The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the trustees of The Voting Trust
are set forth in Schedule I hereto.

Except as described in this Offer to Purchase, (i) none of Purchaser, TDS,
The Voting Trust nor, to the best knowledge of Purchaser, TDS and The Voting
Trust, any of the persons listed in Schedule I to this Offer to Purchase or any
associate or majority-owned subsidiary of Purchaser, TDS, The Voting Trust or
any of the persons so listed beneficially owns or has any right to acquire,
directly or indirectly, any

51
<PAGE>
Common Shares and (ii) none of Purchaser, TDS, The Voting Trust nor, to the best
knowledge of Purchaser, TDS and The Voting Trust, any of the persons or entities
referred to above nor any director, executive officer or subsidiary of any of
the foregoing has effected any transaction in the Common Shares during the past
60 days.

Except as provided in the Merger Agreement, the Asset Contribution Agreement
and as otherwise described in this Offer to Purchase, none of Purchaser, TDS,
The Voting Trust nor, to the best knowledge of Purchaser, TDS and The Voting
Trust, any of the persons listed in Schedules I and II to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guaranties against
loss, guaranties of profits, division of profits or loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
January 1, 1996, neither Purchaser, TDS nor The Voting Trust nor, to the best
knowledge of Purchaser, TDS and The Voting Trust, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1996, there have been no contacts, negotiations or transactions
between any of Purchaser, TDS, The Voting Trust or any of their subsidiaries or,
to the best knowledge or Purchaser, TDS and The Voting Trust, any of the persons
listed in Schedule I to this Offer to Purchase, on the one hand, and the Company
or its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.

9. FINANCING OF THE OFFER AND THE MERGER. The total amount of funds
required by Purchaser to consummate the Offer and the Merger and to pay related
fees and expenses is estimated to be approximately $10 million. TDS will ensure
that Purchaser has sufficient funds to acquire all the outstanding Common Shares
pursuant to the Offer and the Merger. TDS will provide such funds from its
working capital or its affiliates' working capital or from existing credit
facilities or new credit facilities established for this purpose or from a
combination of the foregoing. No decision has been made concerning which of the
foregoing sources TDS will utilize. Such decision will be made based on TDS's
review from time to time of the advisability of particular actions, as well as
on prevailing interest rates and financial and other economic conditions and
such other factors as TDS may deem appropriate.

TDS anticipates that any indebtedness incurred through borrowings under
credit facilities will be repaid from a variety of sources, which may include,
but may not be limited to, funds generated internally by TDS and its affiliates
bank refinancing, and the public or private sale of debt or equity securities.
No decision has been made concerning the method TDS will employ to repay such
indebtedness. Such decision will be made based on TDS's review from time to time
of the advisability of particular actions, as well as on prevailing interest
rates and financial and other economic conditions and such other factors as TDS
may deem appropriate.

10. DIVIDENDS AND DISTRIBUTIONS. If, on or after February 11, 1998, the
Company should declare or pay any dividend on the Common Shares or make any
other distribution (including the issuance of additional shares of capital stock
pursuant to a stock dividend or stock split, the issuance of other securities or
the issuance of rights for the purchase of any securities) with respect to the
Common Shares that is payable or distributable to shareholders of record on a
date prior to the transfer to the name of Purchaser or its nominee or transferee
on the Company's stock transfer records of the Common Shares purchased pursuant
to the Offer, then, without prejudice to Purchaser's rights under "THE TENDER
OFFER--12. Certain Conditions of the Offer", (i) the purchase price per Common
Share payable by Purchaser pursuant to the Offer will be reduced (subject to the
Merger Agreement) to the extent any such dividend or distribution is payable in
cash and (ii) any non-cash dividend, distribution or right shall be received and
held by the tendering shareholder for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering shareholder
to the Depositary for the account of Purchaser,

52
<PAGE>
accompanied by appropriate documentation of transfer. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all the rights and
privileges as owner of any such non-cash dividend, distribution or right and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.

11. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON SHARES; AMERICAN STOCK
EXCHANGE, INC. AND EXCHANGE ACT REGISTRATION. The purchase of Common Shares by
Purchaser pursuant to the Offer will reduce the number of Common Shares that
might otherwise trade publicly and will reduce the number of holders of Common
Shares, which could adversely affect the liquidity and market value of the
remaining Common Shares held by the public.

The Common Shares are currently listed on the Amex. Depending upon the
aggregate market value of Common Shares not acquired pursuant to the Offer and
the number of Common Shares held by other parties, the Common Shares may no
longer meet the requirements for continued listing on the Amex and may be
delisted from the Amex. Amex-published guidelines indicate that the Amex
normally considers delisting a security in the event that, among other things,
the total number of public shareholders is less than 300, or the number of
publicly held shares (exclusive of holdings of officers, directors, controlling
shareholders or other family or concentrated holdings) is less than 200,000, or
the aggregate market value of shares publicly held is less than $1.0 million.

TDS intends to cause the Common Shares to be delisted for quotation by Amex
following consummation of the Offer. Moveover, pursuant to the Asset
Contribution Agreement, TDS is obligated to use its best efforts to cause
Purchaser to complete the Merger, subject to the approval of the Merger by the
Special Committee and TDS is not required to complete a Merger which does not
have the recommendation of the Special Committee.

The Common Shares are currently "margin securities", as such term is defined
under the rules of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such securities. Depending upon
factors similar to those described above regarding listing and market
quotations, following the Offer it is possible that the Common Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Common Shares could no longer be
used as collateral for loans made by brokers.

The Common Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Common Shares are not listed on a national securities exchange and there
are fewer than 300 record holders. The termination of the registration of the
Common Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Common Shares and to the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Common Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended. If
registration of the Common Shares under the Exchange Act were terminated, the
Common Shares would no longer be "margin securities" or be eligible for Amex
listing of the Common Shares under the Exchange Act as soon after consummation
of the Offer as the requirements for termination of registration are met.

12. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term or
provision of the Offer or the Merger Agreement, Purchaser shall not be required
to accept for payment or pay for any Common Shares tendered pursuant to the
Offer, and may terminate or amend the Offer, at any time on or after February
11, 1998, and before the acceptance of the Common Shares for payment, if (i) the
Asset Contribution Agreement Condition is not satisfied or (ii) any of the
following events or facts shall have occurred:

53
<PAGE>
(a) there shall be threatened, instituted or pending any action, proceeding
or application by any governmental authority, or by any other person, domestic
or foreign, before any court or governmental authority (which, if brought by
such other person, has a reasonable likelihood of success), (i)(A) challenging
or seeking to, or which is reasonably likely to, make illegal, delay or
otherwise directly or indirectly restrain or prohibit, or seeking to, or which
is reasonably likely to, impose voting, procedural, price or other requirements,
in addition to those required by Federal securities laws and Delaware Law each
as in effect on the date of the Offer, in connection with the making of the
Offer, the acceptance for payment of, or payment for, some of or all the Common
Shares by TDS, Purchaser or any other affiliate of TDS or the consummation by
TDS, Purchaser or any other affiliate of TDS of the Merger, (B) seeking to
obtain material damages or otherwise directly or indirectly relating to the
transactions contemplated by the Offer or the Merger, (ii) seeking to impose or
confirm limitations on the ability of TDS, Purchaser or any other affiliate of
TDS effectively to exercise full rights of ownership of Common Shares,
including, without limitation, the right to vote any Common Shares acquired or
owned by TDS, Purchaser or any other affiliate of TDS on all matters properly
presented to the Company's shareholders, (iii) seeking any material diminution
in the benefits expected to be derived by TDS, Purchaser or any other affiliate
of TDS as a result of the transactions contemplated by the Offer or the Merger,
(iv) otherwise directly or indirectly relating to the Offer or the Offer
Documents or which otherwise, in the sole judgment of Purchaser, might
materially adversely affect the Company or any of its subsidiaries or TDS,
Purchaser or any other affiliate of TDS or the value of Common Shares or (v) in
the sole judgment of Purchaser, materially adversely affect the business,
assets, liabilities, capitalization, results of operations, shareholders'
equity, condition (financial or otherwise) or prospects of the Company or any of
its subsidiaries; or

(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed, enacted,
entered, enforced, promulgated, amended or issued with respect to, or deemed
applicable to, (i) TDS, Purchaser or any other affiliate of TDS or the Company
or (ii) the Offer or the Merger by any government, legislative body or court,
domestic, foreign or supranational, or Governmental Authority, that is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or

(c) there shall have occurred any material adverse change, or any condition,
event or development that is reasonably likely to result in a material adverse
change, in the business, assets, liabilities, capitalization, results of
operations, shareholders' equity, condition (financial or otherwise) or
prospects of the Company; or

(d) there shall have occurred or been threatened (i) any general suspension
of trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United States, (ii)
any extraordinary or material adverse change in the financial markets or major
stock exchange indices in the United States or abroad, (iii) any change in the
general political, market, economic or financial conditions in the United States
that is reasonably likely to have a material adverse effect upon the business,
properties, assets, liabilities, capitalization, shareholders' equity, condition
(financial or otherwise), operations, licenses or franchises, results of
operations or prospects of the Company or of TDS or the trading in, or value of,
Common Shares, (iv) any material change in United States currency exchange rates
or a suspension of, or limitation on, the markets therefor, (v) a declaration of
a banking moratorium or any suspension of payments in respect of banks in the
United States, (vi) any limitation (whether or not mandatory) by any government,
domestic, foreign or supranational, or Governmental Authority on, or other event
that is reasonably likely to affect the extension of credit by banks or other
lending institutions in the United States, (vii) a commencement of a war or
armed hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or

(e) any required approval, permit, authorization, favorable review or
consent of any Governmental Authority shall not have been obtained on terms
satisfactory to Purchaser; or

54
<PAGE>
(f) (i) it shall have been publicly disclosed or TDS shall have otherwise
learned that beneficial ownership (determined for the purposes of this paragraph
as set forth in Rule 13d-3 promulgated under the Exchange Act) of more than 15%
of the outstanding Common Shares has been acquired by another person, entity or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) or (ii) (x)
the Board of Directors of the Company or any committee thereof (including the
API Special Committee) shall have withdrawn or modified in a manner adverse to
TDS or Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Proposed API Acquisition Transaction
(other than this Agreement), (y) the Company shall have entered into any
agreement with respect to any Proposed API Acquisition Transaction (other than
this Agreement) or (z) the Board of Directors of the Company or any committee
(including the Special Committee) thereof shall have resolved to do any of the
foregoing; or

(g) any of the representations and warranties of the Company set forth in
this Agreement that are qualified as to materiality shall not be true and
correct or any such representations and warranties that are not so qualified
shall not be true and correct in any material respect, in each case as if such
representations and warranties were made as of such time; or

(h) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under this Agreement; or

(i) this Agreement shall have been terminated in accordance with its terms;
or

(j) Purchaser and the Company (with the approval of the Special Committee)
shall have agreed that Purchaser shall terminate the Offer or postpone the
acceptance for payment or payment for Common Shares thereon;

which, in the judgment of Purchaser, in any such case, and regardless of the
circumstances (including any action or inaction by TDS, Purchaser, or any of
their affiliates) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.

The foregoing conditions are for the sole benefit of Purchaser and TDS and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances will not be deemed a waiver with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time. Any determination by Purchaser
concerning the events described in this Annex II will be final and binding upon
all parties.

13. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. GENERAL. Based upon
its examination of publicly available information with respect to the Company
and the review of certain information furnished by the Company to TDS and
discussions of representatives of TDS with representatives of the Company during
TDS's investigation of the Company (see "SPECIAL FACTORS-- Background of the
Offer and the Merger"), neither Purchaser nor TDS is aware of any license or
other regulatory permit that appears to be material to the business of the
Company, which might be adversely affected by the acquisition of Common Shares
by Purchaser pursuant to the Offer or, except as set forth below, of any
approval or other action by any domestic (federal or state) or foreign
governmental, administrative or regulatory authority or agency which would be
required prior to the acquisition of Common Shares by Purchaser pursuant to the
Offer. Should any such approval or other action be required, it is Purchaser's
present intention to seek such approval or action. Purchaser does not currently
intend, however, to delay the purchase of Common Shares tendered pursuant to the
Offer pending the outcome of any such action or the receipt of any such approval
(subject to Purchaser's right to decline to purchase Common Shares if any of the
conditions in Section 12 shall have occurred). There can be no assurance that
any such approval

55
<PAGE>
or other action, if needed, would be obtained without substantial conditions or
that adverse consequences might not result to the business of the Company,
Purchaser or TDS or that certain parts of the businesses of the Company,
Purchaser or TDS might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or other
action or in the event that such approval was not obtained or such other action
was not taken. Purchaser's obligation under the Offer to accept for payment and
pay for Common Shares is subject to certain conditions, including conditions
relating to the legal matters discussed in this Section 13. See "THE TENDER
OFFER--12. Certain Conditions of the Offer".

STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested shareholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
shareholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested shareholder became an interested
shareholder. TDS was the only shareholder when the Company went public and thus
is exempt from the three-year limitation on a business combination between the
Company and TDS is no longer in effect. Accordingly, Section 203 is inapplicable
to the Offer and the Merger.

A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS CORP V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of shareholders in the state and were incorporated
there.

The Company conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. Purchaser does not know
whether any of these laws will, by their terms, apply to the Offer or the Merger
and has not complied with any such laws. Should any person seek to apply any
state takeover law, Purchaser will take such action as then appears desirable,
which may include challenging the validity or applicability of any such statute
in appropriate court proceedings. In the event it is asserted that one or more
state takeover laws are applicable to the Offer or the Merger, and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, Purchaser might be required to file certain information
with, or receive approval from, the relevant state authorities. In addition, if
enjoined, Purchaser might be unable to accept for payment any Common Shares
tendered pursuant to the Offer, or be delayed in continuing or consummating the
Offer and the Merger. In such case, Purchaser may not be obligated to accept for
payment any Common Shares tendered. See "THE TENDER OFFER--12. Certain
Conditions of the Offer".

ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), and the rules that have been promulgated thereunder by the
Federal Trade Commission (the "FTC"), certain transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. The acquisition of Common Shares by Purchaser
pursuant to the Offer, however, is not subject to such requirements because
Purchaser currently owns in excess of 50% of the outstanding Common Shares. See
"THE TENDER OFFER--2. Acceptance for Payment and Payment for Common Shares". The

56
<PAGE>
combination by TDS and TSR Paging of their respective paging businesses in
accordance with the terms and conditions of the Asset Contribution Agreement is
also not subject to these requirements because the FTC is of the view that such
combinations that occur in connection with the formation of a limited liability
company are not subject to the reporting requirements of the HSR Act.

The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Common
Shares by Purchaser pursuant to the Offer and such as the proposed contributions
contemplated by the Asset Contribution Agreement. At any time before or after
the purchase of Common Shares pursuant to the Offer by Purchaser or before or
after the contributions contemplated by the Asset Contribution Agreement, the
FTC or the Antitrust Division could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Common Shares pursuant to the Offer, seeking the
divestiture of Common Shares purchased by Purchaser or the divestiture of
substantial assets of TDS, the Company or their respective subsidiaries seeking
to enjoin the contributions pursuant to the Asset Contribution Agreement, or
seeking the divestiture of substantial assets acquired by TSR Wireless pursuant
to the Asset Contribution Agreement. Private parties and state attorneys general
may also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to TDS
relating to the businesses in which TDS, the Company and their respective
subsidiaries are engaged, TDS and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or contribution on antitrust grounds will not be made or,
if such a challenge is made, what the result would be. See "THE TENDER
OFFER--12. Certain Conditions of the Offer".

FCC. Pursuant to the Asset Contribution Agreement, Purchaser is not
required to accept for payment or pay for any Common Shares unless, among other
things, the Asset Contribution Agreement Condition is satisfied and the Asset
Contribution Agreement is in full force and effect and all of the conditions to
the closing of the transactions contemplated by the Asset Contribution Agreement
shall have been satisfied. It is a condition to the obligations of both TDS and
TSR Paging under the Asset Contribution Agreement that all authorizations,
consents and permits of the FCC necessary to effect the transfer of the assets
of the Company and TSR Paging to TSR Wireless and the performance of the other
obligations of the parties under the Asset Contribution Agreement shall have
been obtained.

The transactions contemplated by the Asset Contribution Agreement, including
but not necessarily limited to the assignment of the FCC licenses of TSR Paging
to TSR Wireless and the assignment of the FCC licenses of the Company to TSR
Wireless, can only be accomplished upon receipt of prior FCC consent. TSR Paging
and the Company have filed applications to obtain FCC grant by final FCC order
of all required FCC consents to assignment of the FCC licenses of TSR Paging and
of the FCC licenses of the Company. Under FCC rules, many of the foregoing
applications may not be granted until the statutory thirty day period to permit
public comment on these applications expires in early March. Assuming that no
public comments are filed, grants of all required FCC consents could be obtained
as early as mid-March. Under the terms of the Asset Contribution Agreement, the
assignments of FCC licenses of TSR Paging and FCC licenses of the Company are
not required to be consummated until these FCC consents are final,
non-appealable and no longer subject to administrative or judicial
reconsideration, review or appeal. Absent waiver of finality, the closing of the
foregoing assignments would not take place until late-April at the earliest.
This schedule could also be substantially delayed if grant of any of the
required FCC consents is opposed or otherwise challenged at the FCC.

14. FEES AND EXPENSES. Except as set forth below, Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Common Shares pursuant to the Offer.

CFSB is acting as Dealer Manager in connection with the Offer and as
financial advisor to TDS in connection with the Merger and the TSR Transaction,
for which services CSFB will receive an aggregate fee of $1,750,000. TDS also
has agreed to reimburse CSFB for its out-of-pocket expenses, including the fees
and expenses of legal counsel and other advisors, incurred in connection with
its engagement, and to

57
<PAGE>
indemnify CSFB and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the federal securities laws. CSFB has in the past provided, and is currently
providing, investment banking services to TDS unrelated to the proposed TSR
Transaction, Offer and Merger, for which services CSFB has received and will
receive compensation.

PaineWebber is acting as financial advisor to the Special Committee in
connection with the Offer and Merger. In accordance with the engagement letter
dated January 8, 1998 between the Special Committee and PaineWebber, the Special
Committee will pay PaineWebber an aggregate fee of $450,000 for its services and
will also reimburse PaineWebber for certain of its out-of-pocket expenses
incurred in connection with its engagement. The Special Committee also agreed,
under separate agreement, to indemnify PaineWebber and certain related persons
against certain liabilities in connection with its engagement, including certain
liabilities under the federal securities laws.

15. MISCELLANEOUS. Purchaser is not aware of any jurisdiction in which the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Common
Shares pursuant thereto, Purchaser will make a good faith effort to comply with
any such state statute. If, after such good faith effort, Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Common Shares in such
state. In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of Purchaser by the Dealer Manager or by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, TDS OR THE COMPANY NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, TDS and Purchaser have filed with the Commission the Schedule
14D-1 together with exhibits, furnishing additional information with respect to
the Offer. Pursuant to Rule 14d-9 promulgated under the Exchange Act, the
Company has filed with the Commission the Schedule 14D-9 with respect to the
Offer, and may file amendments thereto. TDS, Purchaser and the Company have
filed a statement on Schedule 13E-3 with respect to the Offer and may file
amendments to the Schedule 13E-3. Such statements, including exhibits and any
amendments thereto, which furnish certain additional information with respect to
the Offer, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in "THE TENDER OFFER--7. Certain Information
Concerning the Company" (except that they will not be available at the regional
offices of the Commission).

API MERGER CORP.

February 18, 1998

58
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF TDS AND PURCHASER
AND THE TRUSTEES OF THE VOTING TRUST

DIRECTORS AND EXECUTIVE OFFICERS OF TDS. The following table sets forth the
name, current business address, present principal occupation or employment, and
material occupations, positions, offices or employments and business addresses
thereof for the past five years of each director and executive officer of TDS.
Each person is a citizen of the United States.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
James Barr III Director of TDS and President of TDS Telecommunications Corporation, a
wholly-owned subsidiary of TDS, located at TDS Telecommunications Corporation,
301 South Westfield Road, Madison, Wisconsin 53705-0158. James Barr III has had
the principal occupation listed above for more than the past five years.

Donald R. Brown Retired December 1997 and can be reached at the business address at 834 Ethan's
Glen Drive, Knoxville, Tennessee 37923. Prior to his retirement, Donald R. Brown
had been President of the Wholesale Market Groups of TDS Telecommunications
Corporation, a subsidiary of TDS which operates local telephone companies,
between 1995 and 1997. He was also Senior Vice President of TDS Telecom between
1992 and 1997. TDS Telecom is located at 834 Ethan's Glen Drive, Knoxville,
Tennessee 37923.

LeRoy T. Carlson Director and Chairman of TDS, located at Telephone and Data Systems, Inc., 30
North LaSalle Street, Suite 4000, Chicago, Illinois 60602. LeRoy T. Carlson has
had the principal occupation listed above for more than the past five years.

LeRoy T. Carlson, Jr. Director and President (Chief Executive Officer) of TDS, located at Telephone and
Data Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
LeRoy T. Carlson, Jr. has had the principal occupation listed above for more than
the past five years.

Letitia G.C. Carlson Director of TDS, Medical Doctor and Assistant Professor, George Washington
University Medical Center, located at George Washington University, Medical
Center, 2150 Pennsylvania Ave. N.W., Washington, D.C. 20037. Letitia G.C. Carlson
has had the principal occupation listed above for more than the past five years.

Walter C.D. Carlson Director of TDS and Partner in the law firm of Sidley & Austin, located at Sidley
& Austin, One First National Plaza, Chicago, Illinois 60603. Walter C.D. Carlson
has had the principal occupation listed above for more than the past five years.

Michael K. Chesney Vice President--Corporate Development of TDS located at 1014 South Briarcliffe
Circle, Maryville, Tennessee 37803. Michael K. Chesney was appointed a Vice
President--Corporate Development of TDS in 1994. Prior to that he was Director of
Corporate Development of TDS for more than five years.
</TABLE>

I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
George L. Dienes Vice President--Corporate Development of TDS, located at Telephone and Data
Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
George L. Dienes has had the principal occupation listed above for more than the
past five years.

C. Theodore Herbert Vice President--Human Resources of TDS, located at Telephone and Data Systems,
Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602. C. Theodore
Herbert has had the principal occupation listed above for more than the past five
years.

Rudolph E. Hornacek Director and Vice President--Engineering of TDS, located at Telephone and Data
Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
Rudolph E. Hornacek has had the principal occupation listed above for more than
the past five years.

Michael G. Hron Secretary of TDS and Partner in the law firm of Sidley & Austin, located at
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603. Michael G.
Hron has been Secretary of TDS and has had the principal occupation listed above
for more than the past five years.

Donald C. Nebergall Director and Consultant to TDS and other companies, at 2919 Applewood Place,
N.E., Cedar Rapids, Iowa 52402. Donald C. Nebergall has had the principal
occupation listed above for more than the past five years.

H. Donald Nelson President of United States Cellular Corporation, an over 80%-owned subsidiary of
TDS, located at United States Cellular Corporation, 8410 West Bryn Mawr, Suite
700, Chicago, Illinois 60631-3415. H. Donald Nelson has had the principal
occupation listed above for more than the past five years.

George W. Off Director of TDS and President and Chief Executive Officer of Catalina Marketing
Corporation, located at Catalina Marketing Corporation, 11300 Ninth Street,
North, St. Petersburg, Florida 33716. George W. Off became President and Chief
Executive Officer of the Catalina Marketing Corporation in 1994. Prior to that,
Mr. Off was its President and Chief Operating Officer between 1992 and 1994.

Martin L. Solomon Private Investor, located at 2665 South Bayshore Drive, Suite 906, Coconut Grove,
Florida 33133. Martin L. Solomon has had the principal occupation listed above
for more than the past five years.

Karen M. Stewart Vice President--Investor Relations of TDS, located at Telephone and Data Systems,
Inc., 8401 Greenway Boulevard, Middleton, Wisconsin 53562. Karen M. Stewart was
appointed Vice President--Investor Relations of TDS in July 1995. Prior to that
she was Assistant Controller--External Reporting of TDS between November 1995 and
July 1995. Before that, Ms. Stewart was Director--Financial Reporting of TDS
between January 1991 and November 1994.

Terrence T. Sullivan President of American Paging, Inc., an over 80%-owned subsidiary of TDS, located
at American Paging, Inc., 1300 Godward Street, N.E., Suite 3100, Minneapolis,
Minnesota 55413-1767. Terrence T. Sullivan has been a director and President and
Chief Executive Officer of the
</TABLE>

I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
Company since September 1996. Prior to that, Mr. Sullivan was Vice
President-Finance (CFO) & Treasurer of the Company from January 1996 to September
1996. Prior to that time, Mr. Sullivan was Vice President of Finance and
Administration, CFO and Treasurer of Microelectronics and Computer Technology
Corporation, a consortium which conducts research and development, located at
3500 W. Balcones Center Drive, Austin, Texas 98759, from February 1995 to January
1996. Before that, Mr. Sullivan was Vice President of Finance, Administration and
Contract Programs of Minnesota Supercomputer Center, Inc., which provides remote
supercomputing services and software and is located at 1200 Washington Avenue,
Minneapolis, Minnesota 55413, for more than five years.
<S> <C>

Murray L. Swanson Director and Executive Vice President--Finance of TDS, located at Telephone and
Data Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
Murray L. Swanson has had the principal occupation listed above for more than the
past five years.

Edward W. Towers Vice President--Cellular Development of TDS, located at Telephone and Data
Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
Edward W. Towers was appointed Vice President--Corporate Development and
Operations of the Company in May 1997. Immediately prior thereto, Mr. Towers was
Vice President--Market and Business Development of United States Cellular
Corporation, an over 80%-owned subsidiary of TDS located at 8410 West Bryn Mawr,
Suite 700, Chicago, Illinois 60631-3415.

Herbert S. Wander Director of TDS and Partner in the law firm of Katten, Muchin & Zavis, located at
Katten, Muchin & Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois
60606-3693. Herbert S. Wander has had the principal occupation listed above for
more than the past five years.

Donald W. Warkentin President of Aerial Communications, Inc., an over 80%-owned subsidiary of TDS,
located at Aerial Communications, Inc., 8410 West Bryn Mawr, Suite 1100, Chicago,
Illinois 60631-3415. Donald W. Warkentin was appointed President of Aerial
Communications, Inc. in 1995. Prior to that time Mr. Warkentin was Vice President
of Multimedia Marketing for US West Communications, at P.O. Box 173754, Denver,
Colorado 80217-3754, from 1994 to 1995. Before that, Mr. Warkentin was Head of
Marketing for U.S. West Communications Mercury One-2-One in the United Kingdom,
the world's first major market PCS venture.

Byron A. Wertz Vice President--Corporate Development of TDS, located at Telephone and Data
Systems, Inc., 8000 West 78th Street, Suite 400, Minneapolis, Minnesota 55439.
Byron A. Wertz was appointed a Vice President-- Corporate Development of TDS in
1994. Prior to that he was Director-- Telecommunications Development of TDS for
more than the past five years.

Gregory J. Wilkinson Vice President and Corporate Controller of TDS, located at TDS Corporate Madison,
8410 Greenway Boulevard, P.O. Box 628010,
</TABLE>

I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
Madison, Wisconsin 53562-8010. Wilkinson has had the principal occupation listed
above for more than five years.
<S> <C>

Scott H. Williamson Vice President--Acquisitions of TDS, located at Telephone and Data Systems, Inc.,
30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602. Scott H. Williamson
was appointed Vice President--Acquisitions of TDS in November 1995. Prior to that
he was Vice President, Corporate Development, of FMC Corporation, a manufacturer
of machinery and chemicals located at 200 East Randolph Drive, Chicago, Illinois
60601, between 1993 and 1995. Before that, Mr. Williamson was Vice President of
Acquisitions and Development of Anixter International (formerly Itel
Corporation), a diversified holding company located at 2 North Riverside Plaza,
Chicago, Illinois 60606 for more than five years.
</TABLE>

DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The sole director and the
executive officers of Purchaser are set forth below. The table above for
"Directors and Executive Officers of TDS" sets forth the name, current business
address, present principal occupation or employment, and material occupations,
positions, offices or employments and business addresses thereof for the past
five years of each director and executive officer of Purchaser. Each person is a
citizen on the United States.

<TABLE>
<CAPTION>
NAME POSITION
- ------------------------------ -----------------------------------------------------------------------
<S> <C>
LeRoy T. Carlson, Jr. Director and President of Purchaser
Murray L. Swanson Vice President and Treasurer of Purchaser
Scott H. Williamson Vice President of Purchaser
Michael G. Hron Secretary of Purchaser
</TABLE>

TRUSTEES OF THE VOTING TRUST

The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employments and business addresses thereof for the past five years for each
trustee of the Voting Trust. Each person is a citizen of the United States.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
LeRoy T. Carlson, Jr. President (Chief Executive Officer) of TDS, located at Telephone and Data
Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602.
LeRoy T. Carlson, Jr. has had the principal occupation listed above for more than
the past five years.

Letitia G.C. Carlson Medical Doctor and Assistant Professor, George Washington University Medical
Center, located at George Washington University, Medical Center, 2150
Pennsylvania Avenue, N.W., Washington, D.C. 20037. Letitia G.C. Carlson has had
the principal occupation listed above for more than the past five years.

Walter C.D. Carlson Partner in the law firm of Sidley & Austin, located at Sidley & Austin, One First
National Plaza, Chicago, Illinois 60603. Walter C.D. Carlson has had the
principal occupation listed above for more than the past five years.
</TABLE>

I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Melanie J. Heald Homemaker, at 7410 Longmeadow Road, Madison, Wisconsin 53717. Melanie J. Heald
has had the principal occupation listed above for more than the past five years.

Donald C. Nebergall Consultant to TDS and other companies, located at 2919 Applewood Place, N.E.,
Cedar Rapids, Iowa 52402. Donald C. Nebergall has had the principal occupation
listed above for more than the past five years.
</TABLE>

I-5
<PAGE>
SCHEDULE II

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY. The following table sets
forth the name, current business address, present principal occupation or
employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years of each director and
executive officer of the Company. Each person is a citizen of the United States.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
James Barr III Director of the Company and President and Chief Executive Officer of TDS
Telecommunications Corporation, a wholly-owned subsidiary of TDS, located at TDS
Telecommunications Corporation, 301 South Westfield Road, Madison, Wisconsin
53705-0158. James Barr III has had the principal occupation listed above for more
than the past five years.

Dennis M. Beste Vice President--Finance, Chief Financial Officer and Treasurer of the Company,
located at American Paging, Inc., 1300 Godward Street, N.E., Suite 3100,
Minneapolis, Minnesota 55413-1767. Dennis M. Beste has been the Vice
President--Finance, Chief Financial Officer and Treasurer of the Company since
January 1997. Prior to that, Mr. Beste was Chief Operating Officer of Jacobs
Trading Company, a wholesaler and retailer of excess and returned merchandise
located at 1405 Highway 169, Plymouth, Minnesota, from October 1993 to December
1996. Before that, 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 located at 3654
Glenhurst, St. Louis Park, Minnesota, from February 1992 to November 1993.

LeRoy T. Carlson, Jr. Chairman and Director of the Company and President (Chief Executive Officer) of
TDS, located at Telephone and Data Systems, Inc., 30 North LaSalle Street, Suite
4000, Chicago, Illinois 60602. LeRoy T. Carlson, Jr. has had the principal
occupation listed above for more than the past five years.

Debora M. de Hoyos Director of the Company and Partner in the law firm of Mayer, Brown & Platt,
located at Mayer, Brown & Platt, 190 S. LaSalle Street, Chicago, Illinois 60603.
Debora M. de Hoyos has had the principal occupation listed above for more than
the past five years.

Michelle M. Haupt Vice President and Controller of the Company, located at American Paging, Inc.,
1300 Godward Street, N.E., Suite 3100, Minneapolis, Minnesota 55413-1767.
Michelle M. Haupt has been Vice President of the Company since January 1998 and
Controller of the Company since September 1996. Prior to that, Ms. Haupt was
Financial Reporting Manager of the Company from January 1995 to September 1996.
Before that, Ms. Haupt was employed by Echo Bay Mines Ltd., a publicly-held gold
mining company located at 705 Continental Drive, New Brighton, Minnesota, from
May 1989 to June 1993 as Manager, Financial Accounting and Reporting, and from
September 1988 to April 1989 as a Senior Internal Auditor.

Michael G. Hron Secretary of the Company and Partner in the law firm of Sidley & Austin, located
at Sidley & Austin, One First National Plaza, Chicago,
</TABLE>

II-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
Illinois 60603. Michael G. Hron has been secretary of the Company and has had the
principal occupation listed above for more than the past five years.
<S> <C>

Jean Burhardt Keffeler Director of the Company and Business and Management Consultant and President of
The Keffeler Company, located at The Keffeler Company, 3424 Zenith Avenue, South,
Minneapolis, Minnesota 55416. Jean Burhardt Keffeler has had the principal
occupation listed above for more than the past five years.

Lawrence J. Larsen Vice President--Human Resources of the Company, located at American Paging, Inc.,
1300 Godward Street, N.E., Suite 3100, Minneapolis, Minnesota 55413-1767.
Lawrence J. Larsen has been Vice President-- Human Resources of the Company since
September 1997. Prior to that, Mr. Larsen was employed by the Waldorf
Corporation, located at 2250 Wabash Avenue, St. Paul, Minnesota, for more than
five years, most recently as Vice President of Human Resources.

Larry A. Piumbroeck Vice President--Development and Engineering of the Company, located at American
Paging, Inc., 1300 Godward Street, N.E., Suite 3100, Minneapolis, Minnesota
55413-1767. Larry A. Piumbroeck has been Vice President--Development and
Engineering of the Company since September 1996. Prior to that, Mr. Piumbroeck
was Vice President-- Business Development of the Company from April 1996 to
September 1996. Before that, Mr. Piumbroeck was Director of PCS Development and
General Manager of the Company's Minnesota operations from January 1994 to April
1996. Prior to that time, Mr. Piumbroeck was Vice President--Regional Manager for
United States Cellular Corporation, TDS's subsidiary which provides cellular
service, located at Appletree Square, Bloomington, Minnesota, from September 1987
to January 1994.

Edwin L. Russell Director of the Company and Chairman, President and Chief Executive Officer of
Minnesota Power, located at Minnesota Power, 30 West Superior Street, Duluth,
Minnesota 55802. Edwin L. Russell has been President of Minnesota Power since May
1995 and Chairman and Chief Executive Officer of Minnesota Power since May 1996.
Prior to that, Mr. Russell was employed by J.M. Huber Corporation, a privately
held, broadly diversified manufacturing and natural resources company located at
Edison, New Jersey, between 1989 and 1994 in various capacities, including Vice
President of Corporate Development and Group Vice President.

Terrence T. Sullivan Director, President and Chief Executive Officer of the Company, located at
American Paging, Inc., 1300 Godward Street, N.E., Suite 3100, Minneapolis,
Minnesota 55413-1767. Terrence T. Sullivan has been a director and President and
Chief Executive Officer of the Company since September 1996. Prior to that, Mr.
Sullivan was Vice President--Finance (CFO) & Treasurer of the Company from
January 1996 to September 1996. Prior to that time, Mr. Sullivan was Vice
President of Finance and Administration, CFO and Treasurer of Microelectronics
and Computer Technology Corporation, a consortium which conducts research and
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
development located at 3500 W. Balcones Center Drive, Austin, Texas 98759, from
February 1995 to January 1996. Before that, Mr. Sullivan was Vice President of
Finance, Administration and Contract Programs of Minnesota Supercomputer Center,
Inc., which provides remote supercomputing services and software and is located
at 1200 Washington Avenue, Minneapolis, Minnesota 55413, for more than five
years.
<S> <C>

Murray L. Swanson Director of the Company and Executive Vice President--Finance of TDS, located at
Telephone and Data Systems, Inc., 30 North LaSalle Street, Suite 4000, Chicago,
Illinois 60602. Murray L. Swanson has had the principal occupation listed above
for more than the past five years.
</TABLE>

II-3
<PAGE>
SCHEDULE III

OPINION OF PAINEWEBBER INCORPORATED

Investment Banking Division

PaineWebber Incorporated

1285 Avenue of the Americas

New York, New York

212 713-2000

[LOGO]

February 10, 1998

Special Committee of the Board of Directors

American Paging, Inc.

1300 Godward Street North, Suite 3100

Minneapolis, MN 55413-1767

Members:

American Paging, Inc. (the "Company"), Telephone and Data Systems, Inc. (the
"Acquiring Company") and API Merger Corp., a wholly-owned subsidiary of the
Acquiring Company (the "Purchaser"), propose to enter into an Agreement and Plan
of Merger (the "Agreement") pursuant to which the Purchaser will commence a
tender offer (the "Offer") for all shares of the Company's common stock, par
value $1.00 per share (the "Shares") not owned by the Acquiring Company at a
price of $2.50 per Share (the "Consideration"). The Offer is expected to
commence on or prior to February 18, 1998. The Agreement also provides that,
following consummation of the Offer, the Company will be merged with the
Purchaser (the "Merger"). In the Merger, each Share will be converted into the
right to receive the Consideration.

You have asked us whether or not, in our opinion, the Consideration to be
received by the shareholders of the Company pursuant to the Offer and the Merger
is fair to the shareholders of the Company other than the Purchaser and the
Acquiring Company from a financial point of view.

In arriving at the opinion set forth below, we have, among other things:

(1) Reviewed, among other public information, the Company's Annual Reports,
Forms 10-K and related financial information for the three fiscal years
ended December 31, 1996 and the Company's Form 10-Q and the related
unaudited financial information for the nine months ended September 30,
1997;

(2) Reviewed the Company's unaudited financial information for the fiscal year
ended December 31, 1997;

(3) Reviewed certain information, including a 1998 financial budget, relating to
the business, earnings, cash flow, and assets of the Company, furnished to
us by the Company;

(4) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;

(5) Reviewed the historical market prices and trading activity for the Shares
and compared them with that of certain publicly traded companies which we
deemed to be relevant;

(6) Compared the results of operations of the Company with that of certain
companies which we deemed to be relevant;

(7) Compared the proposed financial terms of the transactions contemplated by
the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;

III-1
<PAGE>
(8) Reviewed the draft of the Agreement dated February 10, 1998; and

(9) Reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as we deemed
necessary, including our assessment of regulatory, economic, market and
monetary conditions.

In preparing our opinion, we have relied on the accuracy and completeness of
all information, publicly available, supplied or otherwise communicated to us by
or on behalf of the Company, and we have not assumed any responsibility to
independently verify such information. We have assumed, with your consent, that
the 1998 financial budget examined by us was reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the management of the Company as to the future performance of the Company. We
have also relied upon assurances of the management of the Company that they are
unaware of any facts that would make the information or 1998 financial budget
provided to us incomplete or misleading. We have also assumed, with your
consent, that any material liabilities (contingent or otherwise, known or
unknown) are as set forth in the financial statements of the Company. We have
not been engaged to make, nor have we made, an independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of the Company,
nor have we been furnished with any such evaluations or appraisals. Our opinion
is based upon regulatory, economic, market and monetary conditions existing on
the date hereof.

This opinion is directed to the Special Committee of the Board of Directors
of the Company (the "Special Committee") and does not constitute a
recommendation to any shareholder of the Company as to whether or not such
shareholder should tender its Shares in the Offer. This opinion does not address
the relative merits of the Offer and any other transactions or business
strategies discussed by the Special Committee as alternatives to the Offer or
the decision of the Special Committee with respect to the Offer.

This opinion has been prepared for the information of the Special Committee
in connection with the Offer and shall not be reproduced, summarized, described
or referred to or provided to any other person or otherwise made public without
the prior written consent of PaineWebber Incorporated ("PaineWebber"); provided,
however, that the opinion may be reproduced in full in the Schedule 14D-9 and
Offer to Purchase related to the Offer.

Paine Webber is currently acting as financial advisor to the Special
Committee in connection with the Offer and will receive a fee upon the delivery
of this opinion.

In the ordinary course of our business, we may trade the securities of the
Company for our own account and for the accounts of our customers and,
accordingly, may at any time hold long or short positions in such securities.

On the basis of, and subject to the foregoing, we are of the opinion that
the Consideration to be received by the shareholders of the Company pursuant to
the Offer and the Merger is fair to the shareholders of the Company other than
the Purchaser and the Acquiring Company from a financial point of view.

Very truly yours,

PAINEWEBBER INCORPORATED

/s/ PAINEWEBBER INCORPORATED

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

III-2
<PAGE>
SCHEDULE IV

SUMMARY OF STOCKHOLDER APPRAISAL RIGHTS AND
TEXT OF SECTION 262 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE

SUMMARY OF STOCKHOLDER APPRAISAL RIGHTS. No appraisal rights are available
in connection with the Offer. However, if the Merger is consummated,
shareholders will have certain rights under Delaware Law to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Common
Shares. Such rights to dissent, if the statutory procedures are complied with,
could lead to a judicial determination of the fair value of the Common Shares,
as of the day prior to the date on which the shareholders' vote was taken
approving the Merger or similar business combination (excluding any element of
value arising from the accomplishment or expectation of the Merger), required to
be paid in cash to such dissenting holders for their Common Shares. In addition,
such dissenting shareholders would be entitled to receive payment of a fair rate
of interest from the date of consummation of the Merger on the amount determined
to be the fair value of their Common Shares. In determining the fair value of
the Common Shares, the court is required to take into account all relevant
factors. Accordingly, such determination could be based upon considerations
other than, or in addition to, the market value of the Common Shares, including,
among other things, asset values and earning capacity. In WEINBERGER v. UOP,
INC., the Delaware Supreme Court stated, among other things, that "proof of
value by any techniques or methods which are generally considered acceptable in
the financial community and otherwise admissible in court" should be considered
in an appraisal proceeding. Therefore, the value so determined in any appraisal
proceeding could be the same, more or less than the purchase price per Common
Share in the Offer or the Merger Consideration.

In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling shareholder of a company involved in a merger has a
fiduciary duty to other shareholders. In determining whether a merger is fair to
minority shareholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the shareholders and whether
there was a fair dealing among the parties. The Delaware Supreme Court stated in
WEINBERGER and RABKIN v. PHILIP A. HUNT CHEMICAL CORP. that the remedy
ordinarily available to minority shareholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.

GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

262 APPRAISAL RIGHTS.

(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.

IV-1
<PAGE>
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Sections 251 (other than a merger effected pursuant to
Section 251(g) of this title), 252, 254, 257, 258, 263 or 264 of this title:

(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the holders of the surviving corporation as provided in
subsection (f) of Section 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to Section
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (OR DEPOSITORY RECEIPTS IN
RESPECT THEREOF) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

1. If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on

IV-2
<PAGE>
the merger or consolidation, a written demand for appraisal of his shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of stock
of such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective
date of the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within twenty days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the
merger or consolidation notifying each of the holders of any class or series
of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice
has been given shall, in the absence of fraud, be prima facie evidence of
the facts stated therein. For purposes of determining the stockholders
entitled to receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior to the date
the notice is given; provided that, if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to
the effective date, the record date shall be the close of business on the
day next preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which

IV-3
<PAGE>
demands for appraisal have been received and the aggregate number of holders of
such shares. Such written statement shall be mailed to the stockholder within 10
days after his written request for such a statement is received by the surviving
or resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.

(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

IV-4
<PAGE>
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
share of the surviving or resulting corporation. (Last amended by Ch. 120, L.
'97, eff. 7-l-97.)

IV-5
<PAGE>
SCHEDULE V

AUDITED FINANCIAL STATEMENTS

FOR THE COMPANY FOR THE YEARS ENDED

DECEMBER 31, 1996 AND DECEMBER 31, 1997

REPORT OF ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS

V-1
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Service Revenue.............................................................. $ 85,937 $ 93,841 $ 93,034
---------- ---------- ----------
Service Operating Expenses
Cost of services........................................................... 27,822 26,712 22,294
Sales and marketing........................................................ 32,767 32,862 20,661
General and administrative................................................. 29,322 37,579 34,403
Depreciation and amortization.............................................. 32,040 33,777 24,692
---------- ---------- ----------
121,951 130,930 102,050
---------- ---------- ----------
Service Operating Loss....................................................... (36,014) (37,089) (9,016)
---------- ---------- ----------
Equipment Sales
Revenue.................................................................... 8,476 10,346 14,116
Cost of equipment sold..................................................... 7,769 9,883 14,097
---------- ---------- ----------
Equipment Sales Income....................................................... 707 463 19
---------- ---------- ----------
Operating Loss............................................................... (35,307) (36,626) (8,997)
---------- ---------- ----------
Investment and Other Income/(Expense)
Investment loss in joint venture........................................... (459) (1,201) (1,151)
Interest income............................................................ 128 259 175
Other, net................................................................. 75 33 121
---------- ---------- ----------
(256) (909) (855)
---------- ---------- ----------
Loss Before Interest and Income Taxes........................................ (35,563) (37,535) (9,852)
Interest expense--affiliates................................................. 16,073 7,650 5,533
---------- ---------- ----------
Loss Before Income Taxes..................................................... (51,636) (45,185) (15,385)
Income tax expense........................................................... -- 342 325
---------- ---------- ----------
Net Loss..................................................................... $ (51,636) $ (45,527) $ (15,710)
---------- ---------- ----------
---------- ---------- ----------
Weighted Average Common and Series A Common shares (000s) (See Note 2)....... 20,111 20,048 20,017
Net Loss per Common and Series A Common share................................ $ (2.57) $ (2.27) $ (0.78)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

V-2
<PAGE>
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............................................................... $ 3,058 $ 557
Temporary investments................................................................... 61 150
Accounts receivable:
Customers, net of reserves of $2,300 and $1,883, respectively......................... 9,051 12,639
Other................................................................................. 224 234
Inventory............................................................................... 6,851 8,548
Prepaid expenses and other.............................................................. 1,076 1,231
---------- ----------
20,321 23,359
---------- ----------
Investments
Investment in joint venture............................................................. 185 193
Marketable securities................................................................... 244 286
---------- ----------
429 479
---------- ----------
Property, Plant and Equipment
In service and under construction....................................................... 118,275 113,000
Less accumulated depreciation........................................................... 75,045 61,528
---------- ----------
43,230 51,472
---------- ----------
Intangible Assets
PCS licenses............................................................................ 60,901 60,901
Other intangibles, net of accumulated amortization of $21,227 and $17,543,
respectively.......................................................................... 10,959 14,681
---------- ----------
71,860 75,582
---------- ----------
Net Deferred Tax Asset.................................................................... 313 313
---------- ----------
Total Assets.............................................................................. $ 136,153 $ 151,205
---------- ----------
---------- ----------
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current Liabilities
Due to affiliates
Accounts payable...................................................................... $ 1,483 $ 1,486
Accrued interest...................................................................... 1,527 1,169
Accounts payable........................................................................ 942 3,401
Unearned revenue and deposits........................................................... 6,827 10,527
Accrued taxes........................................................................... 477 357
Accrued compensation.................................................................... 3,551 1,266
Other current liabilities............................................................... 2,521 2,841
---------- ----------
17,328 21,047
---------- ----------
Revolving Credit Agreement--TDS........................................................... 179,990 139,960
---------- ----------
Common Shareholders' Equity
Common shares, par value $1 per share; authorized 50,000,000 shares; issued and
outstanding 7,645,446 shares in 1997 and 7,559,633 shares in 1996..................... 7,645 7,560
Series A Common shares, par value $1 per share; authorized 50,000,000 shares; issued and
outstanding 12,500,000 shares......................................................... 12,500 12,500
Additional paid-in capital.............................................................. 72,777 72,589
Retained deficit........................................................................ (154,087) (102,451)
---------- ----------
(61,165) (9,802)
---------- ----------
Total Liabilities and Common Shareholders' Equity......................................... $ 136,153 $ 151,205
---------- ----------
---------- ----------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

V-3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss.................................................................... $ (51,636) $ (45,527) $ (15,710)
Add (deduct) adjustments to reconcile net loss to net cash (required)
provided by operating activities:
Depreciation and amortization............................................... 32,040 33,777 24,692
Deferred income taxes, net.................................................. -- (6) 263
Investment loss............................................................. 459 1,201 1,151
Other noncash expense....................................................... 352 4,473 4,030
Change in accounts receivable............................................... 3,598 (975) (998)
Change in accounts payable.................................................. (2,461) (2,269) 167
Change in unearned revenue.................................................. (3,700) (302) 788
Change in accrued taxes..................................................... 121 262 (281)
Change in accrued interest.................................................. 359 (1,222) 1,887
Change in employee benefit obligations...................................... -- -- (2,096)
Change in other assets and liabilities...................................... 2,116 (186) (104)
---------- ---------- ----------
(18,752) (10,774) 13,789
---------- ---------- ----------
Cash Flows from Financing Activities
Change in Revolving Credit Agreement--TDS................................... 40,030 45,437 67,548
Common shares issued........................................................ 273 149 268
---------- ---------- ----------
40,303 45,586 67,816
---------- ---------- ----------
Cash Flows from Investing Activities
Additions to property, plant and equipment, net............................. (18,624) (32,517) (26,527)
Acquisitions, excluding cash acquired....................................... -- -- (5,539)
Investment in PCS licenses.................................................. -- (4,285) (45,412)
Other investments........................................................... (558) (1,297) (2,131)
Change in temporary investments and marketable securities................... 132 (436) --
---------- ---------- ----------
(19,050) (38,535) (79,609)
---------- ---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents.......................... 2,501 (3,723) 1,996
Cash and Cash Equivalents
Beginning of period......................................................... 557 4,280 2,284
---------- ---------- ----------
End of period............................................................... $ 3,058 $ 557 $ 4,280
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

V-4
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Common shares
Balance at beginning of period........................................... $ 7,560 $ 7,537 $ 7,500
Add Employee stock ownership plans....................................... 85 23 37
----------- ----------- -----------
Balance at end of period................................................. $ 7,645 $ 7,560 $ 7,537
----------- ----------- -----------
----------- ----------- -----------
Series A Common shares
Balance at beginning of period........................................... $ 12,500 $ 12,500 $ 12,500
Issued during the year................................................... -- -- --
----------- ----------- -----------
Balance at end of period................................................. $ 12,500 $ 12,500 $ 12,500
----------- ----------- -----------
----------- ----------- -----------
Additional Paid-in Capital
Balance at beginning of period........................................... $ 72,589 $ 72,463 $ 72,232
Add Employee stock ownership plans....................................... 188 126 231
----------- ----------- -----------
Balance at end of period................................................. $ 72,777 $ 72,589 $ 72,463
----------- ----------- -----------
----------- ----------- -----------
Retained Deficit
Balance at beginning of period........................................... $ (102,451) $ (56,924) $ (41,214)
Add Net loss............................................................. (51,636) (45,527) (15,710)
----------- ----------- -----------
Balance at end of period................................................. $ (154,087) $ (102,451) $ (56,924)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

V-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. PROPOSED COMMON STOCK BUYBACK AND MERGER

On December 23, 1997, American Paging,Inc. ("the Company") announced that
its parent company, Telephone and Data Systems, Inc. ("TDS") had made an offer
to the Company to negotiate and enter into a merger agreement pursuant to which
TDS would acquire all of the issued and outstanding Common shares of the Company
held by persons other than TDS (the "Minority Shareholders") for cash in an
amount equal to $2.25 per Common share.

The offer by TDS was made in connection with a definitive asset contribution
agreement which TDS has entered into with TRS Paging, Inc. ("TSR"). In
accordance with the terms of such asset contribution agreement, subject to
consummation of the proposed merger, TDS and TSR will combine their respective
paging businesses. TDS will contribute substantially all of the assets and
certain liabilities of the Company and its subsidiaries, and TSR will contribute
all of its assets and liabilities, to a limited liability company called TSR
Wireless, LLC ("TSR Wireless"). TSR Wireless will not assume the approximately
$180 million of debt owed by the Company to TDS. The asset contribution
agreement provides that, subject to adjustment, TDS will have a 30% interest and
TSR will have a 70% interest in the new company.

TDS's offer was considered by a special committee of the Board of Directors
of the Company, which consists of two independent directors of the Company.
Following review of the offer by the special committee and negotiations between
TDS and the special committee, TDS increased its offer to $2.50 per Common
share. On February 10, 1998, the special committee approved the revised offer
and recommended that the full Board of Directors of the Company approve the
revised offer. As a result, on February 10, 1998, the Board of Directors of each
of the Company and TDS approved a merger agreement providing for the acquisition
by TDS (through a wholly-owned subsidiary ("TDS Sub")) of all of the issued and
outstanding Common shares held by the Minority Shareholders for cash in an
amount equal to $2.50 per Common share.

Pursuant to the merger agreement, on February 18, 1998, TDS Sub commenced a
tender offer for each of the Common shares held by the Minority Shareholders in
exchange for $2.50 in cash. If, after the consummation of such tender offer, TDS
is not the owner of at least 90% of the Common shares, TDS will convert some of
its Series A Common shares of the Company into Common shares such that TDS will
own at least 90% of the Common shares of the Company. In such event, the Board
of Directors of TDS Sub will approve a merger of the Company with a subsidiary
of TDS pursuant to the short-form merger procedures permitted under Delaware
law. Approval of the merger by shareholders of the Company would not be required
in such event. In the event TDS does not for any reason own at least 90% of the
Common shares following such tender offer, TDS will cause the Company to call a
special meeting of the shareholders to approve the merger agreement. In such
event, the Company will prepare and distribute a proxy statement to
shareholders. However, since TDS controls over 98% of the voting power of the
Company, TDS has sufficient voting power in the Company to assure approval of
the merger if a special meeting of shareholders is required for any reason.

In either event, in such merger, all Minority Shareholders will receive
$2.50 in cash for each Common share. Upon the effectiveness of such merger, the
Common shares will be delisted from the American Stock Exchange and American
Paging will become an indirect, wholly-owned subsidiary of TDS and cease to be a
reporting company under the Securities and Exchanges Act of 1934.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American Paging, Inc. is currently an 81.9%-owned subsidiary of Telephone
and Data Systems, Inc.

The Company provides local, statewide, regional and nationwide advanced,
one-way digital wireless messaging communications services in 21 states and the
District of Columbia. The Company offers local

V-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and regional paging coverage throughout the Midwest, the Mid-Atlantic, and in
the states of Florida, Oklahoma, Texas, Arizona and Utah. Nationwide one-way and
two-way paging services are offered through the Company's alliances with
non-affiliated service providers. As of December 31, 1997, the Company had
811,100 units in service through 35 sales and service offices.

PRINCIPLES OF CONSOLIDATION

The accounting policies of the Company conform to generally accepted
accounting principles. The consolidated financial statements include the
accounts of American Paging, Inc. and its subsidiaries. All material
intercompany accounts and transactions have been eliminated.

Certain amounts reported in prior years have been reclassified to conform to
current period presentation.

USE OF ESTIMATES

The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

SERVICE REVENUE AND EQUIPMENT SALES

Service revenue includes all regular monthly charges to customers for
subscriber device rental and dispatch services. Rental and dispatch revenues are
recognized in the month in which service is provided. Equipment sales revenue
includes all charges for subscriber devices sold to customers.

UNEARNED REVENUE AND DEPOSITS

Unearned revenue and deposits primarily represent monthly charges to
customers for subscriber device rental and dispatch services billed in advance.
Such revenue is recognized in the following months when service is provided and
deposits are applied against the customer's final bill.

NET LOSS PER COMMON AND SERIES A COMMON SHARE

The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings per Share," effective December 31, 1997. The implementation of
SFAS No. 128 had no effect on reported Loss per Common and Series A Common share
due to the current Net Loss. In 1997, 1996 and 1995, respectively, approximately
287,000, 189,000, and 280,000 stock options were not included in computing
diluted Net loss per Common and Series A Common share because their effects were
antidilutive.

Net loss per Common and Series A Common share is computed by dividing Net
loss by the weighted average number of Common and Series A Common shares
outstanding during the periods.

CASH AND CASH EQUIVALENTS, TEMPORARY INVESTMENTS AND MARKETABLE SECURITIES

Cash and cash equivalents include cash and those short term, highly-liquid
investments with original maturities of three months or less. Those investments
with original maturities of more than three months and less than 12 months are
classified as temporary investments and are stated at cost, which approximates

V-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
market. Those investments with original maturities of more than 12 months are
classified as marketable securities and are stated at amortized cost.

INVENTORY

Inventory consists of subscriber devices on hand. Subscriber device cost is
determined by the average cost method.

INVESTMENT IN JOINT VENTURE

The Company has invested in a joint venture, American Messaging Services,
LLC ("AMS"), with Nexus Telecommunications Systems, Ltd. of Israel ("Nexus").
AMS, a development stage entity, was formed to develop a patented communications
network that provides two-way paging, location and telemetry service. The
Company's 50% share of the net losses of the joint venture has been stated as
Investment loss in joint venture in the Consolidated Statement of Operations.
The Company stopped funding AMS as of June 30, 1997. As a result, the Company's
interest in AMS will become diluted as Nexus contributes additional capital to
the joint venture. (See Note 8--Legal Proceedings)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at original cost. Depreciation is
provided based on the straight-line method over the estimated useful lives of
the assets, which range from two to five years.

Property, plant and equipment is composed of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Subscriber devices.................................................... $ 41,059 $ 39,714
Terminals and transmitters............................................ 48,181 44,251
Computer equipment.................................................... 16,402 16,595
Furniture and fixtures................................................ 10,515 10,314
Other................................................................. 2,118 2,126
---------- ----------
Subtotal............................................................ 118,275 113,000
Less accumulated depreciation......................................... 75,045 61,528
---------- ----------
Total............................................................... $ 43,230 $ 51,472
---------- ----------
---------- ----------
</TABLE>

See Note 6--Commitments for a discussion of property leased by the Company.

INTANGIBLE ASSETS

The Company has capitalized certain start-up costs in connection with the
development and acquisition of paging systems. Costs of developing new paging
systems are deferred pending the outcome of license applications which grant
authority to provide paging services in a particular area. Upon acceptance of
the application the Company amortizes these deferred start-up costs over a
period of ten years commencing with the date of commercial operation. If the
application is not granted, all costs incurred are charged to expense in the
current period. In the case of trades for or acquisitions of operating paging
systems, certain costs are included in other intangible assets. Covenants not to
compete are amortized over the term of the agreements. Goodwill is amortized
over a period of 25 years. Customer lists are amortized over a period of five
years.

V-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Other intangible assets are composed of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Customer lists......................................................... $ 15,406 $ 15,411
Deferred start-up costs................................................ 5,755 5,748
Goodwill............................................................... 6,559 6,599
Covenants not to compete............................................... 2,409 2,409
Other.................................................................. 2,057 2,057
--------- ---------
Subtotal............................................................. 32,186 32,224
Less accumulated amortization.......................................... 21,227 17,543
--------- ---------
Total................................................................ $ 10,959 $ 14,681
--------- ---------
--------- ---------
</TABLE>

In November 1994, the Company was the successful bidder for five regional
narrowband Personal Communications Services ("PCS") licenses, providing coverage
equivalent to that of a nationwide license, at auction by the Federal
Communications Commission ("FCC"). The FCC granted the licenses in May 1995. The
Company's cost of the licenses aggregated $53.6 million. The Company also
capitalized $1.7 million of start-up costs in connection with the development of
the narrowband PCS licenses.

Pursuant to SFAS No. 34, American Paging capitalized interest on the
borrowings for the purchase of these licenses while it undertook development
activities. Interest capitalized for the year ended December 31, 1995 was $1.4
million. Interest capitalized for the nine months ended September 30, 1996 was
$4.2 million. Effective October 1, 1996, the Company stopped capitalizing
interest as the Company suspended the development of its narrowband PCS licenses
pending commercial availability of the supporting infrastructure and related
subscriber device equipment.

OTHER CURRENT LIABILITIES

Other current liabilities at December 31, 1997 and 1996 includes primarily
accrued invoices for subscriber device orders as well as various accrued
expenses. Other current liabilities at December 31, 1996 also includes accrued
restructuring expenses of $1.3 million.

RESTRUCTURING

American Paging began restructuring its sales and operating areas during the
third quarter of 1995 which continued throughout 1996. During 1995, the Company
recorded restructuring-related expense totaling $2.9 million, primarily for
employee severance payments, lease costs and consulting fees of $2.1 million
included in general and administrative expense. In addition, approximately
$800,000 in depreciation expense was recorded during 1995 for the reduction in
the useful lives of fixed assets which were no longer required upon completion
of the restructuring.

During 1996, the Company recorded restructuring-related expense totaling
$9.3 million, primarily for additional depreciation related to obsolete
inventory of $2.8 million and the write-off of the customer management and
billing system of $2.2 million. Also recorded were accruals for other
restructuring costs included in general and administrative expense of $4.0
million.

V-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SUPPLEMENTAL CASH FLOW DISCLOSURES

The Company acquired three paging companies in 1995. In conjunction with
these acquisitions, the following assets were acquired and liabilities assumed:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Goodwill................................................................... $ 2,193
Customer lists............................................................. 2,022
Licenses................................................................... 775
Covenants not to compete................................................... 500
Property, plant and equipment.............................................. 216
Accounts receivable........................................................ 181
Inventory.................................................................. 103
Advance billings and customer deposits..................................... (123)
Unearned revenue........................................................... (330)
Other assets and liabilities, excluding cash acquired...................... 2
------
Decrease in cash due to acquisitions....................................... $ 5,539
------
------
</TABLE>

The following table summarizes interest and income taxes paid.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest paid to affiliates................................... $ 15,715 $ 13,039 $ 3,645
Income taxes paid............................................. $ -- $ 96 $ 205
--------- --------- ---------
</TABLE>

Other noncash expenses included in the statements of cash flows consist
primarily of lost pager expense of $350,000, $2.9 million and $2.4 million for
the years ended December 31, 1997, 1996 and 1995, respectively, and
restructuring expense of $1.5 million and $1.7 million for the years ended
December 31, 1996 and 1995, respectively.

3. INCOME TAXES

The Company is included in a consolidated federal income tax return with
other members of the TDS consolidated group.

TDS and American Paging entered into a Tax Allocation Agreement (the
"Agreement") which provides that American Paging and its subsidiaries be
included in a consolidated federal income tax return and in state income or
franchise tax returns in certain situations with the TDS affiliated group.
American Paging and its subsidiaries calculate their losses and credits as if
they comprised a separate affiliated group. Under the Agreement, American Paging
is able to carry forward its losses and credits and use them to offset any
future income tax liabilities to TDS. The amount of federal net operating loss
carry forward available to offset future taxable income aggregated $106.1
million at December 31, 1997 and expires between 2010 and 2012. The amount of
state net operating loss carry forward available to offset future taxable income
aggregated $111.1 million at December 31, 1997 and expires between 1998 and
2012.

V-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INCOME TAXES (CONTINUED)
Income tax expense is summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Federal income taxes:
Current.......................................................... $ -- $ -- $ (39)
Deferred......................................................... -- -- 60
State income taxes:
Current.......................................................... -- 348 101
Deferred......................................................... -- (6) 203
--------- --------- ---------
Income tax expense................................................. $ -- $ 342 $ 325
--------- --------- ---------
--------- --------- ---------
</TABLE>

The components of the Company's noncurrent deferred tax assets and
liabilities are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Deferred tax asset:
Net operating loss carryforwards..................................... $ 45,248 $ 24,797
Property, plant and equipment........................................ 4,549 831
Deferred charges..................................................... 4,399 3,295
Unearned revenue..................................................... 1,448 2,482
AMT credit carryforward.............................................. 313 313
Other................................................................ 202 417
--------- ---------
56,159 32,135
Less: valuation allowance............................................ (49,090) (26,683)
--------- ---------
Total deferred tax asset........................................... 7,069 5,452
--------- ---------
Deferred tax liability:
Licenses............................................................. 6,756 5,139
--------- ---------
Net deferred tax asset............................................. $ 313 $ 313
--------- ---------
--------- ---------
</TABLE>

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
established a valuation allowance primarily for the federal and state net
operating loss carryforwards that may expire before they are utilized. The
valuation allowance increased by $22.4 million and $17.3 million in 1997 and
1996, respectively. At December 31, 1997, the Company had $313,000 of federal
alternative minimum tax ("AMT") credit carryforwards available to offset regular
income tax payable in future years.

V-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INCOME TAXES (CONTINUED)
The statutory federal income tax rate is reconciled to the Company's
effective income tax rate from net loss before the cumulative effect of a change
in accounting principle below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Statutory federal income tax rate..................................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit............................ -- (0.8) (2.0)
Federal deferred tax asset adjustment................................. (35.7) (36.6) (36.0)
Other, net............................................................ 0.7 1.6 0.9
--------- --------- ---------
Effective tax rate.................................................... 0.0% (0.8)% (2.1)%
--------- --------- ---------
--------- --------- ---------
</TABLE>

4. REVOLVING CREDIT AGREEMENT

The Company has unsecured notes payable to TDS and Telecommunications
Technologies Fund, Inc., a wholly owned subsidiary of TDS, pursuant to a
Revolving Credit Agreement.

The Company entered into the Revolving Credit Agreement with TDS effective
January 1, 1994, at which date all of the outstanding obligations of the Company
to TDS were incorporated thereunder. Pursuant to the Revolving Credit Agreement,
as amended effective January 13, 1998, the Company may borrow up to an aggregate
of $185 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 (for a
rate of 10.0% at December 31, 1997) on the unpaid principal amount. Interest is
payable on demand on any overdue principal or overdue installment of interest at
a rate equal to 3 1/2% above such prime rate. 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 as 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.

During 1996, the Company 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 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.

Subject to provisions of the asset contribution agreement between TDS and
TSR, TDS agreed to fund the Company's construction and operating resource needs
through the closing of the agreement which is expected to occur in the first
half of 1998.

5. RELATED PARTY TRANSACTIONS

The Company is billed for all services it receives from TDS and its
affiliates, consisting primarily of information processing and general
management services. Such billings are based on expenses specifically identified
to the Company and on allocations of common expenses. Such allocations are based
on the relationship of the Company's assets, employees, investment in plant and
expenses to the total assets, employees, investment in plant and expenses of
TDS. Management believes the method used to allocate common expenses is
reasonable.

V-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. RELATED PARTY TRANSACTIONS (CONTINUED)
TDS and certain of its affiliates provided the Company with centralized
management, accounting, engineering, billing and data processing services
aggregating $6.1 million, $5.9 million and $5.8 million in 1997, 1996 and 1995,
respectively.

The Company has a Cash Management Agreement with TDS under which the Company
may from time to time deposit its excess cash with TDS for investment under
TDS's Cash Management program. Deposits made under the agreement are generally
available to the Company on demand and bear interest each month equal to the
daily weighted average rate earned on all securities held on behalf of the
participants in the program. For financial reporting purposes, the Company
reports its proportionate amount of cash, temporary investments and marketable
securities invested in the program.

6. COMMITMENTS

According to provisions of the asset contribution agreement between TDS and
TSR, TDS agreed to fund capital expenditures of the Company up to $20.5 million
for 1998. The capital expenditures are for purchases of subscriber devices,
enhancements to existing systems and construction of new systems. Upon
completion of the merger between TDS and TSR, which is expected to occur in the
first half of 1998, TSR may, at its discretion, reduce the level of capital
expenditures.

The Company and its subsidiaries lease office and transmitter sites at
various locations in the United States under operating leases. Future minimum
rental payments required under operating leases that have noncancelable lease
terms in excess of one year, as of December 31, 1997, are as follows:

<TABLE>
<CAPTION>
MINIMUM FUTURE RENTAL
PAYMENTS
---------------------
(DOLLARS IN
THOUSANDS)
<S> <C>
1998.................................................................... $ 2,836
1999.................................................................... 2,403
2000.................................................................... 1,705
2001.................................................................... 1,148
2002.................................................................... 768
Thereafter.............................................................. 1,759
</TABLE>

Rent expense totaled $7.0 million, $6.7 million and $5.7 million in 1997,
1996 and 1995, respectively.

7. COMMON STOCK

EMPLOYEE BENEFIT PLANS

The following table summarizes Common shares issued for the year ended
December 31, 1997, 1996 and 1995 for the employee benefit plans described below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Common shares:
Tax deferred savings plan........................................ 72,698 18,970 31,453
Employee stock purchase plan..................................... 13,115 3,732 5,478
--------- --------- ---------
85,813 22,702 36,931
--------- --------- ---------
--------- --------- ---------
</TABLE>

V-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMON STOCK (CONTINUED)
TAX-DEFERRED SAVINGS PLAN

The Company has reserved 150,000 Common shares for issuance under the TDS
Tax-Deferred Savings Plan, a qualified profit-sharing plan pursuant to Sections
401(a) and 401(k) of the Internal Revenue Code. Participating employees have the
option of investing their contributions in American Paging Common shares, TDS
Common shares, United States Cellular Corporation (an 81.1%-owned subsidiary of
TDS) Common shares, Aerial Communications, Inc. (an 82.5%-owned subsidiary of
TDS) Common shares or five non-affiliated funds. During 1997, 1996 and 1995, the
Company issued 72,698, 18,970 and 31,453 Common shares under this plan,
respectively.

EMPLOYEE STOCK PURCHASE PLAN

During 1996 and 1995, the Company issued 3,732 and 5,478 Common shares,
respectively, to employees under the 1994 Employee Stock Purchase Plan ("1994
ESPP"). The termination date of this plan was December 31, 1996. During 1996,
the 1997 Employee Stock Purchase Plan ("1997 ESPP") was approved which became
effective January 1, 1997. The Company reserved 100,000 Common shares for sale
to employees of American Paging and its subsidiaries under the 1997 ESPP. During
1997, the Company issued 13,115 Common shares under the 1997 ESPP.

EMPLOYEE STOCK OPTION PLAN

The Company has reserved 700,000 Common shares for sale to officers and
employees through stock options in connection with the 1994 Long-Term Incentive
Plan (the "1994 Plan"), as amended and restated as of April 1, 1996. As of
December 31, 1997, no shares had been issued under the 1994 Plan. The options
are exercisable over a specified period not in excess of ten years. The options
expire from 2000 to 2006, or the date of the employee's termination of
employment, if earlier.

The Company accounts for stock options and employee stock purchase plans
under Accounting Principles Board Opinion No. 25. No compensation costs have
been recognized for these plans. Had compensation cost for all plans been
determined consistent with SFAS No. 123 "Accounting for Stock-Based
Compensation," the Company's Net loss and Net loss per Common and Series A
Common share would have been the following pro forma amounts:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net loss............................... As reported $ (51,636) $ (45,527) $ (15,710)
Pro forma (51,767) (45,639) (15,746)
Net loss per
Common and Series A Common share..... As reported $ (2.57) $ (2.27) $ (0.78)
Pro forma (2.57) (2.28) (0.79)
---------- ---------- ----------
</TABLE>

Because the method of accounting prescribed by SFAS No. 123 has not been
applied to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.

V-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. COMMON STOCK (CONTINUED)
A summary of the status of the Company's stock option plan as of December
31, 1997, 1996 and 1995, and changes during the years then ended is presented in
the following table:

<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
NUMBER OF AVERAGE AVERAGE
SHARES OPTION PRICES FAIR VALUES
----------- ------------- -----------
<S> <C> <C> <C>
STOCK OPTIONS:
Outstanding--January 1, 1995 .......................... 282,500 $ 14.00
(no shares exercisable)
Granted............................................ 85,500 $ 7.58 $ 4.02
Cancelled.......................................... (88,500) $ 14.00
Outstanding--December 31, 1995 ........................ 279,500 $ 12.04
(42,000 shares exercisable)
Granted............................................ 33,000 $ 6.73 $ 3.43
Cancelled.......................................... (123,875) $ 11.43
Outstanding--December 31, 1996 ........................ 188,625 $ 11.49
(88,400 shares exercisable)
Granted............................................ 226,022 $ 5.06 $ 1.87
Cancelled.......................................... (127,575) $ 8.83
Outstanding--December 31, 1997 ........................ 287,072 $ 7.35
(104,322 shares exercisable)
</TABLE>

The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1997, 1996 and 1995, respectively: risk-free
interest rates of 6.1%, 5.6% and 7.6%; expected dividend yield of 0.0% for all
three years; expected lives of 3.6 years, 7.4 years and 5.5 years; and expected
volatility of 39.2%, 38.6% and 38.6%.

In accordance with provisions of the 1994 ESPP, shares issued in 1996 and
1995 under the 1994 ESPP were issued at 100% of the fair market value as this
was below the offering price as of the grant date on October 1, 1994. In
accordance with provisions of the 1997 ESPP, shares issued in 1997 under the
1997 ESPP were issued at 100% of the fair market value as this was below the
offering price of the grant date on January 1, 1997. As a result, there is no
compensation cost to be recognized under SFAS No. 123 for these shares.

SERIES A COMMON SHARES

The holders of Common shares are entitled to one vote per share. The holders
of Series A Common shares are entitled to fifteen votes per share. Series A
Common shares are convertible on a share-for-share basis into Common shares. As
of December 31, 1997, all of the Company's Series A Common shares were held by
TDS.

8. LEGAL PROCEEDINGS

On February 3, 1998, Nexus Telecommunications Systems, Ltd. ("Nexus") filed
a claim for arbitration with the American Arbitration Association in New York,
New York. The statement of claim alleges that the Company has damaged Nexus'
business and has breached fiduciary duties to Nexus related to American
Messaging Services, LLC joint venture agreement between Nexus and the Company.
The statement of claim seeks (i) an award declaring that the joint venture
agreement has been terminated; (ii) an award in the amount of at least
$41,850,000 in gross profit on lost equipment sales and $50,872,500

V-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. LEGAL PROCEEDINGS (CONTINUED)
in usage fees (prior to discounting to present value); (iii) an award
reimbursing Nexus for one-half of an unspecified amount of royalties claimed to
have been paid by Nexus; (iv) an award for unspecified amount of joint venture
costs from December 31, 1996 through June 30, 1997; (v) punitive damages in
amount to be determined by the arbitration panel; (vi) interest, costs and
attorneys' fees; and (vii) such other relief as the arbitration panel may deem
to be warranted. The Company intends to vigorously defend against this claim.

V-16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
YEAR ENDED OR AT DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE, PER UNIT AND PER
EMPLOYEE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating Data
Service revenue.................................... $ 85,937 $ 93,841 $ 93,034 $ 77,520 $ 64,384
Equipment sales revenue............................ 8,476 10,346 14,116 14,545 10,979
Operating loss..................................... (35,307) (36,626) (8,997) (169) (721)
Net loss before cumulative effect of a change in
accounting principle............................. (51,636) (45,527) (15,710) (1,332) (3,058)
Cumulative effect of a change in accounting
principle........................................ -- -- -- -- (178)
Net loss........................................... $ (51,636) $ (45,527) $ (15,710) $ (1,332) $ (3,236)
Weighted average Common and Series A Common shares
(000s)(1)........................................ 20,111 20,048 20,017 19,621 16,500
Loss per Common and Series A Common share:
Before cumulative effect of a change in
accounting principle........................... $ (2.57) $ (2.27) $ (0.78) $ (0.07) $ (0.19)
Cumulative effect of a change in accounting
principle...................................... -- -- -- -- (0.01)
Net loss......................................... $ (2.57) $ (2.27) $ (0.78) $ (0.07) $ (0.20)
Effective tax rate................................. 0.0% (0.8)% (2.1)% 37.0% 31.8%
Other Data
Operating cash flow (Earnings before interest,
taxes, depreciation and amortization) (2)........ $ (3,267) $ (2,849) $ 15,695 $ 17,009 $ 12,671
Operating cash flow margin (2)..................... (3.8)% (3.0)% 16.9% 21.9% 19.7%
Balance Sheet Data
Working capital (3)................................ $ 2,993 $ 2,312 $ (3,949) $ (42,008) $ (41,811)
Property, plant and equipment, net................. 43,230 51,472 59,452 53,661 43,083
Intangible assets, net............................. 71,860 75,582 76,220 71,258 9,862
Total assets....................................... 136,153 151,205 159,149 147,056 75,225
Revolving Credit Agreement--TDS.................... 179,990 139,960 94,523 28,113 --
Common shareholders' equity........................ $ (61,165) $ (9,802) $ 35,576 $ 51,018 $ 7,769
Other Company Statistics
Customer units in service.......................... 811,100 777,400 784,500 652,800 460,900
Average monthly service revenue per unit
("ARPU")......................................... $ 9.17 $ 9.88 $ 10.57 $ 11.92 $ 13.65
Average monthly operating cost per unit............ $ 6.09 $ 6.77 $ 6.44 $ 7.27 $ 8.61
Subscriber devices in service per employee......... 1,305 893 1,007 853 685
Average monthly service revenue per employee....... $ 11,166 $ 8,980 $ 12,457 $ 10,171 $ 9,388
Transmitters in service............................ 1,049 1,048 1,018 943 685
Capital expenditures............................... $ 18,624 $ 28,940 $ 35,107 $ 27,403 $ 24,813
Average monthly disconnect rate ("churn").......... 2.6% 3.1% 2.5% 2.6% 2.9%
Current ratio...................................... 1.2 1.2 0.9 0.3 0.3
</TABLE>

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

(1) Weighted average Common and Series A Common shares outstanding give
retroactive effect to the recapitalization in conjunction with the Company's
1994 initial public offering, as if this transaction had occurred at January
1, 1993.

V-17
<PAGE>
(2) Although operating cash flow and operating cash flow margin are commonly
used as measures of performance in the paging industry and by financial
analysts and others who follow the industry, they should not be considered
in isolation or used as performance and liquidity measures pursuant to
generally accepted accounting principles.

(3) Working capital includes Due to FCC--PCS licenses of $42.9 million at
December 31, 1994. Working capital includes Notes payable--affiliates of
$44.4 million at December 31, 1993.

V-18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of
Directors of American Paging, Inc.:

We have audited the accompanying consolidated balance sheets of American
Paging, Inc. (a Delaware corporation) and its subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of operations, changes in
common shareholders' equity and cash flows for each of the three years in the
period ended December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Paging, Inc. and
its subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois

January 28, 1998 (except with respect to the matters
discussed in paragraphs three, four and five of Note 1;
and in Note 8, as to which the date is February 18, 1998)

V-19
<PAGE>
CONSOLIDATED QUARTERLY INCOME INFORMATION
(UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
1997
Service revenue................................................. $ 22,310 $ 21,684 $ 21,118 $ 20,825
Operating loss.................................................. (8,411) (7,129) (9,305) (10,462)
Net loss........................................................ $ (12,129) $ (11,260) $ (13,395) $ (14,852)
Weighted average Common and Series A Common shares (000s)....... 20,080 20,100 20,119 20,139
Loss per Common and Series A Common share....................... $ (0.60) $ (0.56) $ (0.67) $ (0.74)

1996
Service revenue................................................. $ 23,708 $ 23,493 $ 23,766 $ 22,784
Restructuring charges........................................... 778 1,465 7,087 --
Operating loss.................................................. (4,086) (6,567) (16,694) (9,279)
Net loss........................................................ $ (5,344) $ (8,340) $ (18,636) $ (13,207)
Weighted average Common and Series A Common shares (000s)....... 20,041 20,047 20,050 20,053
Loss per Common and Series A Common share....................... $ (0.27) $ (0.42) $ (0.93) $ (0.66)
</TABLE>

SHAREHOLDER'S INFORMATION

AMERICAN PAGING STOCK AND DIVIDEND INFORMATION

The Company's Common shares are listed on the American Stock Exchange under
the symbol "APP" and in the newspapers as "AmPaging." As of February 11, 1998,
the Company's Common shares were held by 111 record owners. All of the Series A
Common shares were held by TDS. No public trading market exists for the Series A
Common shares, but the Series A Common shares are convertible on a share-for-
share basis into Common shares.

The high and low sales prices of the Common shares as reported by the
American Stock Exchange were as follows:

<TABLE>
<CAPTION>
COMMON SHARES
--------------------
CALENDAR PERIOD HIGH LOW
- -------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
1997
First Quarter............................................................................... $ 5.125 $ 3.438
Second Quarter.............................................................................. 4.000 1.313
Third Quarter............................................................................... 3.125 1.500
Fourth Quarter.............................................................................. 2.875 1.875

1996
First Quarter............................................................................... $ 7.375 $ 6.250
Second Quarter.............................................................................. 10.000 6.500
Third Quarter............................................................................... 7.563 5.500
Fourth Quarter.............................................................................. 6.125 4.625
</TABLE>

V-20
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Common Shares and any other required
documents should be sent or delivered by each shareholder or such shareholder's
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.

The Depositary for the Offer is:

HARRIS TRUST AND SAVINGS BANK

<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE BY HAND/BY OVERNIGHT
c/o Harris Trust TRANSMISSION: DELIVERY:
Company (212) 701-7636 c/o Harris Trust Company
of New York CONFIRM BY TELEPHONE: of New York
Wall Street Station (212) 701-7624 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>

Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent or the Dealer Manager. A shareholder may also contact brokers,
dealers, commercial banks or trust companies for assistance concerning the
Offer.

The Information Agent for the Offer is:

[LOGO]

156 Fifth Avenue
New York, NY 10010
Banks and Brokers Call Collect:
(212) 929-5500
All Others Call Toll Free:
(800) 322-2885

The Dealer Manager for the Offer is:

CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll Free (800) 881-8320

<PAGE>
LETTER OF TRANSMITTAL

To Tender Common Shares

of
American Paging, Inc.

Pursuant to the Offer to Purchase Dated February 18, 1998
of

API Merger Corp.

a direct wholly owned subsidiary of

Telephone and Data Systems, Inc.

---------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, MARCH 17, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK

<TABLE>
<S> <C>
BY MAIL: BY HAND/BY OVERNIGHT DELIVERY:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
</TABLE>

BY FACSIMILE TRANSMISSION:
(212) 701-7636
(for Eligible Institutions Only)
CONFIRM BY TELEPHONE:
(212) 701-7624

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE
THE SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.

This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Common Shares (as defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined below) is utilized, if
delivery of Common Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry
transfer procedure described under "THE TENDER OFFER--3. Procedures for
Accepting the Offer and Tendering Common Shares" in the Offer to Purchase.
Delivery of Documents to a Book-Entry Transfer Facility Does Not Constitute
Delivery to the Depositary.

Shareholders whose certificates evidencing Common Shares ("Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined under "THE TENDER OFFER--1. Terms of the Offer;
Expiration Date" in the Offer to Purchase) or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis and who wish to tender
their Common Shares must do so pursuant to the guaranteed delivery procedure
described under "THE TENDER OFFER--3. Procedures for Accepting the Offer and
Tendering Common Shares" in the Offer to Purchase. See Instruction 2.
<PAGE>
/ / CHECK HERE IF COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:

Name of Tendering Institution ______________________________________________
Check Box of Applicable Book-Entry Transfer Facility:

(CHECK ONE) / / DTC / / PDTC

Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF COMMON SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:

Name(s) of Registered Holder(s) ____________________________________________
Window Ticket No. (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF COMMON SHARES TENDERED
- ------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)OF REGISTERED OWNER(S)
PLEASE FILL IN, BLANK, EXACTLY AS NAME(S) COMMON SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
TOTAL NUMBER
OF COMMON
SHARES NUMBER OF
CERTIFICATE REPRESENTED BY COMMON SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------

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

----------------------------------------------
Total Common
Shares

- ------------------------------------------------------------------------------------------------------
</TABLE>

* Need not be completed by shareholders delivering Common Shares by
book-entry transfer.

** Unless otherwise indicated, it will be assumed that all Common Shares
evidenced by each Share Certificate delivered to the Depositary are being
tendered hereby. See Instruction 4.

The names and addresses of the registered holders should be printed, if
not already printed above, exactly as they appear on the certificates
representing Common Shares tendered hereby. The certificates and the number of
Common Shares that the undersigned wishes to tender should be indicated in the
appropriate boxes.

/ / CHECK HERE IF TENDER IS BEING MADE PURSUANT TO LOST OR MUTILATED
SECURITIES. SEE INSTRUCTION 10.

2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

The undersigned hereby tenders to API Merger Corp., a Delaware corporation
("Purchaser") and a direct wholly owned subsidiary of Telephone and Data
Systems, Inc., an Iowa corporation, the above-described Common Shares, par
value $1.00 per share (the "Common Shares"), of American Paging, Inc., a
Delaware corporation (the "Company"), pursuant to Purchaser's offer to
purchase all Common Shares, at $2.50 per Common Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated February 18, 1998 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer"). The undersigned understands that Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Common Shares tendered pursuant to the Offer.

Subject to, and effective upon, acceptance for payment of the Common
Shares tendered herewith, in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all the Common Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Common Shares) and rights declared,
paid or distributed in respect of such Common Shares on or after February 11,
1998, 1998 (collectively, "Distributions") and irrevocably appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Common Shares and all Distributions, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver Share Certificates evidencing such
Common Shares and all Distributions, or transfer ownership of such Common
Shares and all Distributions on the account books maintained by a Book-Entry
Transfer Facility, together, in either case, with all accompanying evidences
of transfer and authenticity, to or upon the order of Purchaser, (ii) present
such Common Shares and all Distributions for transfer on the books of the
Company and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Common Shares and all Distributions, all in
accordance with the terms of the Offer.

The undersigned hereby irrevocably appoints LeRoy T. Carlson, Jr., Murray
L. Swanson and Scott H. Williamson and each of them, as the attorneys and
proxies of the undersigned, each with full power of substitution, to vote in
such manner as each such attorney and proxy or his substitute shall, in
his/her sole discretion, deem proper and otherwise act (by written consent or
otherwise) with respect to all the Common Shares tendered hereby which have
been accepted for payment by Purchaser prior to the time of such vote or other
action and all Common Shares and other securities issued in Distributions in
respect of such Common Shares, which the undersigned is entitled to vote at
any meeting of shareholders of the Company (whether annual or special and
whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise. This proxy and power of attorney is coupled with an
interest in the Common Shares tendered hereby, is irrevocable and is granted
in consideration of, and is effective upon, the acceptance for payment of such
Common Shares by Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Common Shares (and
all Common Shares and other securities issued in Distributions in respect of
such Common Shares), and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the undersigned with respect thereto. The undersigned
understands that, in order for Common Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance of such Common Shares for payment,
Purchaser must be able to exercise full voting and other rights with respect
to such Common Shares, including, without limitation, voting at any meeting of
the Company's shareholders then scheduled.

The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Common
Shares tendered hereby and all Distributions, that when such Common Shares are
accepted for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Common
Shares and Distributions will be subject to any adverse claim. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Common Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly
to the Depositary for the account of Purchaser all Distributions in respect of
the Common Shares tendered hereby, accompanied by appropriate documentation of
transfer, and pending such remittance and transfer or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the
Common Shares tendered hereby, or deduct from such purchase price the amount
or value of such Distribution as determined by Purchaser in its sole
discretion.

No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.

3
<PAGE>
The undersigned understands that tenders of Common Shares pursuant to any
one of the procedures described in the Offer to Purchase under "THE TENDER
OFFER--3. Procedures for Accepting the Offer and Tendering Common Shares" and
in the instructions hereto will constitute the undersigned's acceptance of the
terms and conditions of the Offer. Purchaser's acceptance of such Common
Shares for payment will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.

Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Common
Shares purchased, and return all Share Certificates evidencing Common Shares
not purchased or not tendered in the name(s) of the registered holder(s)
appearing above under "Description of Common Shares Tendered". Similarly,
unless otherwise indicated in the box entitled "Special Delivery
Instructions", please mail the check for the purchase price of all Common
Shares purchased and all Share Certificates evidencing Common Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Common Shares Tendered". In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Common Shares purchased and
return all Share Certificates evidencing Common Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions". The undersigned recognizes that Purchaser has
no obligation, pursuant to the Special Payment Instructions, to transfer any
Common Shares from the name of the registered holders thereof if Purchaser
does not purchase any of the Common Shares tendered hereby.

--------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Common
Shares or Share Certificates evidencing Common Shares not tendered or not
purchased are to be issued in the name of someone other than the
undersigned.

Issue / / check / / Share Certificate(s) to:

Name _____________________________________________________________________
(PLEASE PRINT)

Address __________________________________________________________________
__________________________________________________________________________

Zip Code _________________________________________________________________
__________________________________________________________________________
RECIPIENT'S TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER

--------------------------------------------------
--------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)

To be completed ONLY if the check for the purchase price of Common
Shares purchased or Share Certificates evidencing Common Shares not
tendered or not purchased are to be mailed to someone other than the
undersigned, or the undersigned at an address other than that shown under
"Description of Common Shares Tendered".

Mail / / check / / Share Certificate(s) to:

Name _____________________________________________________________________
(PLEASE PRINT)

Address __________________________________________________________________

__________________________________________________________________________

Zip Code _________________________________________________________________

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

4
<PAGE>
--------------------------------------------------------------------------
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

__________________________________________________________________________

__________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))

Dated: ____________, 199__

(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Common Share Certificates or on a security position listing or by a
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please
provide the following information. See Instruction 5.)

Name(s): _________________________________________________________________
(PLEASE PRINT)

Capacity (full title) ____________________________________________________

Address:
__________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone No.: _____________________________________________

Tax Identification or Social Security No.: _______________________________
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)

Authorized Signature: ____________________________________________________

Name: ____________________________________________________________________
(PLEASE TYPE OR PRINT)

Title: ___________________________________________________________________

Name of Firm: ____________________________________________________________

Address: _________________________________________________________________

FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW.

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

5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of the Medallion Signature
Guarantee Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (each of the foregoing being referred to as an "Eligible Institution"),
unless (i) this Letter of Transmittal is signed by the registered holder(s) of
the Common Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Common Shares) tendered hereby and such
holder(s) has (have) completed neither the box entitled "Special Payment
Instructions" nor the box entitled "Special Delivery Instructions" on the
reverse hereof or (ii) such Common Shares are tendered for the account of an
Eligible Institution. See Instruction 5.

2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Common Shares are to be delivered by book-entry transfer pursuant
to the procedure set forth under "THE TENDER OFFER--3. Procedures for Accepting
the Offer and Tendering Common Shares" in the Offer to Purchase. Share
Certificates evidencing all physically tendered Common Shares, or a confirmation
of a book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility of all Common Shares delivered by book-entry transfer as well as a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the reverse
hereof prior to the Expiration Date (as defined under "THE TENDER OFFER--1.
Terms of the Offer; Expiration Date" in the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Common
Shares pursuant to the guaranteed delivery procedure described under "THE TENDER
OFFER--3. Procedures for Accepting the Offer and Tendering Common Shares" in the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Common Shares
in proper form for transfer by delivery, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Common Shares delivered by book-entry transfer, in each case together with a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message (as defined under "THE TENDER OFFER--3.
Procedures for Accepting the Offer and Tendering Shares" in the Offer to
Purchase)), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery, all as described under "THE
TENDER OFFER--3. Procedures for Accepting the Offer and Tendering Common Shares"
in the Offer to Purchase.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted and no
fractional Common Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile hereof), all tendering shareholders waive any right
to receive any notice of the acceptance of their Common Shares for payment.

3. INADEQUATE SPACE. If the space provided herein under "Description of
Common Shares Tendered" is inadequate, the Share Certificate numbers, the number
of Common Shares evidenced by such Share Certificates and the number of Common
Shares tendered should be listed on a separate schedule and attached hereto.

4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Common Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Common Shares which are to be tendered in the box entitled
"Number of Common Shares Tendered". In such cases, new Share Certificate(s)
evidencing the remainder of the Common Shares that were evidenced by the Share
Certificates delivered to the Depositary herewith will be sent to the person(s)
signing this Letter of Transmittal, unless otherwise provided in the box
entitled "Special Delivery Instructions" on the reverse hereof, as soon as
practicable after the expiration or termination of the Offer. All Common Shares
evidenced by Share Certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Common
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the Share Certificates evidencing such Common Shares
without alteration, enlargement or any other change whatsoever. Do not sign the
back of the Share Certificates.

If any Common Share tendered hereby is owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.

If any of the Common Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Common Shares.

If this Letter of Transmittal is signed by the registered holder(s) of the
Common Shares tendered hereby, no endorsements of Share Certificates or separate
stock powers are required, unless payment is to be made to, or Share
Certificates evidencing Common Shares not tendered or not purchased are to be
issued in the name of, a person other than the registered holder(s), in which
case, the Share Certificate(s) evidencing the Common Shares tendered hereby must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificate(s). Signatures on such Share Certificate(s) and stock powers must be
guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Shares tendered hereby, the Share
Certificate(s) evidencing the Common Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.

If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.

6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Common Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price of any Common Shares purchased is to be
made to, or Share Certificate(s) evidencing Common Shares not tendered or not
purchased are to be issued in the name of, a person other than the registered
holder(s), the amount of any stock transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Common Shares purchased, unless evidence satisfactory to Purchaser of the
payment of such taxes, or exemption therefrom, is submitted. Except as provided
in this Instruction 6, it will not be necessary for transfer tax stamps to be
affixed to the Share Certificates evidencing the Common Shares tendered hereby.

7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Common Shares tendered hereby is to be issued, or Share
Certificate(s) evidencing Common Shares not tendered or not purchased are to be
issued, in the name of a person other than the person(s) signing this Letter of
Transmittal or if such check or any such Share Certificate is to be sent to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Common Shares Tendered" on the reverse
hereof, the appropriate boxes on the reverse of this Letter of Transmittal must
be completed.

8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and other tender offer materials may be obtained from the Information Agent or
the Dealer Manager, and copies will be furnished promptly at Purchaser's
expense. No fees or commissions will be paid to brokers, dealers or other
persons (other than the Information Agent and the Dealer Manager) for soliciting
tenders of Common Shares pursuant to the Offer.

9. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the
<PAGE>
payment of the purchase price of all Common Shares purchased from such
shareholder. If the tendering shareholder has not been issued a TIN and has
applied for one or intends to apply for one in the near future, such shareholder
should write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price to
such shareholder until a TIN is provided to the Depositary.

10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificates have
been lost, destroyed or stolen, the shareholder should promptly notify the
Depositary. The shareholder will then be instructed by the Depositary as to the
steps that must be taken in order to replace the Share Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedure for replacing lost, destroyed or stolen Share Certificates has been
followed.

11. WAIVER OF CONDITIONS. The conditions of the Offer may be waived, in
whole or in part, by Purchaser, in its sole discretion, at any time and from
time to time, in the case of any Common Shares tendered.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN THE OFFER TO PURCHASE).

IMPORTANT TAX INFORMATION

Under the federal income tax law, a shareholder whose tendered Common Shares
are accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service and
payments that are made to such shareholder with respect to Common Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%. In
addition, if a shareholder makes a false statement that results in no imposition
of backup withholding, and there was no reasonable basis for such a statement, a
$500 penalty may also be imposed by the Internal Revenue Service.

Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individuals exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions. A shareholder should consult his or her tax advisor as
to such shareholder's qualification for an exemption from backup withholding and
the procedure for obtaining such exemption.

If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.

PURPOSE OF SUBSTITUTE FORM W-9

To prevent backup withholding on payments that are made to a shareholder
with respect to Common Shares purchased pursuant to the Offer, the shareholder
is required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying that (a) the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN) and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.

WHAT NUMBER TO GIVE THE DEPOSITARY

The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Common
Shares tendered hereby. If the Common Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering shareholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, the shareholder should write "Applied For" in the
space provided for the TIN in Part I, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part I and the Depositary is not provided with a
TIN within 60 days, the
<PAGE>
Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.

PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK

<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
PART I--Taxpayer Identification Number--For all accounts, enter
SUBSTITUTE taxpayer identification number in the box at right. (For most
FORM W-9 individuals, this is your social security number. If you do not
have a number see Obtaining a Number in the enclosed GUIDELINES.)
Certify by signing and dating below. Note: If the account is in
more than one name, see the chart in the enclosed GUIDELINES to
determine which number to give the payer.
- ---------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II--For Payees Exempt From Social Security Number
IDENTIFICATION NUMBER (TIN) Backup Withholding, see the OR -------------------------
enclosed GUIDELINES and Taxpayer Identification Number
complete as instructed therein. (If awaiting TIN write "Applied
For")
- ---------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:

(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and

(2) I am not subject to backup withholding either because I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a result of failure to
report all interest or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.

CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of under reporting interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the enclosed GUIDELINES.)

SIGNATURE ------------------------------------------------- DATE-------------,1998
- ---------------------------------------------------------------------------------------------------
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

Facsimiles of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal certificates evidencing Common
Shares and any other required documents should be sent or delivered by each
shareholder or such shareholder's broker, dealer, commercial bank, trust company
or other nominee to the Depositary at one of its addresses set forth below.
<PAGE>
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager, and copies will be furnished promptly
at Purchaser's expense. No fees or commissions will be paid to brokers, dealers
or other persons (other than the Information Agent and the Dealer Manager) for
soliciting tenders of Common Shares pursuant to the Offer. A shareholder may
also contact brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.

The Information Agent for the Offer is:

[LOGO]

156 Fifth Avenue
New York, NY 10010
Banks and Brokers Call Collect:
(212) 929-5500
All Others Call Toll Free:
(800) 322-2885

The Dealer Manager for the Offer is:

CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
Call Toll Free (800) 881-8320

February 18, 1998

<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF COMMON SHARES
OF
AMERICAN PAGING, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)

This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Share
Certificates") evidencing Common Shares, par value $1.00 per share (the "Common
Shares"), of American Paging, Inc., a Delaware corporation, are not immediately
available, (ii) if Share Certificates and all other required documents cannot be
delivered to Harris Trust and Savings Bank, as Depositary (the "Depositary"),
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase
(as defined below)) or (iii) if the procedure for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or mail or transmitted by telegram or
facsimile transmission to the Depositary. See "THE TENDER OFFER--3. Procedures
for Accepting the Offer and Tendering Common Shares" in the Offer to Purchase.

The Depositary for the Offer Is:

HARRIS TRUST AND SAVINGS BANK

<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND/BY OVERNIGHT DELIVERY:
c/o Harris Trust Company (For Eligible Institutions c/o Harris Trust Company
of New York Only) of New York
Wall Street Station (212) 701-7636 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005

CONFIRM BY TELEPHONE:
(212) 701-7624
</TABLE>

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.

THE GUARANTEE INCLUDED HEREIN MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:

The undersigned hereby tenders to API Merger Corp., a Delaware corporation
and a direct wholly owned subsidiary of Telephone and Data Systems, Inc., an
Iowa corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated February 18, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"), receipt
of each of which is hereby acknowledged, the number of Common Shares specified
below pursuant to the guaranteed delivery procedure described under "THE TENDER
OFFER--3. Procedures for Accepting the Offer and Tendering Shares" in the Offer
to Purchase.

<TABLE>
<S> <C>
Name(s) of Holders:
--------------------------------------------
Please Type or Print
Number of Common Shares: --------------------------------------------
- ------------------------ Address(es)
Certificate Nos. (if available): --------------------------------------------
- ------------------------ Zip Code
Please check one box if Common Shares will be --------------------------------------------
delivered by book-entry transfer: Area Code and Telephone No.
/ / The Depository Trust Company --------------------------------------------
/ / Philadelphia Depository Trust Company Signature(s) of Holder(s)
Account No. Dated: ----------------, 1998
- ------------------------
</TABLE>

2
<PAGE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED

GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees to deliver to the Depositary, at one of its addresses set
forth above, Share Certificates evidencing the Common Shares tendered hereby, in
proper form for transfer, or confirmation of book-entry transfer of such Shares
into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company , in each case with delivery of a Letter
of Transmittal (or facsimile thereof) properly completed and duly executed, and
any other required documents, all within three trading days of the date hereof.

<TABLE>
<S> <C>
- -------------------------------------------- --------------------------------------------
Name of Firm Authorized Signature

- -------------------------------------------- --------------------------------------------
Address Title

- -------------------------------------------- Name ------------------------------------
Zip Code (Please Type or Print)

Area Code and Tel. No. --------------------- Dated ---------------------------------
</TABLE>

DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

<PAGE>
[LOGO]

[LOGO]

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
AMERICAN PAGING, INC.
AT
$2.50 NET PER COMMON SHARE
BY
API MERGER CORP.
A DIRECT WHOLLY OWNED SUBSIDIARY OF
TELEPHONE AND DATA SYSTEMS, INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, MARCH 17, 1998, UNLESS THE OFFER IS EXTENDED.

February 18, 1998

To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:

We have been appointed by API Merger Corp., a Delaware corporation
("Purchaser") and a direct wholly owned subsidiary of Telephone and Data
Systems, Inc., an Iowa corporation ("TDS"), to act as Dealer Manager in
connection with Purchaser's offer to purchase all outstanding Common Shares, par
value $1.00 per share (the "Common Shares"), of American Paging, Inc., a
Delaware corporation (the "Company"), at a price of $2.50 per Common Share, net
to the seller in cash, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated February 18, 1998 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute the
"Offer") enclosed herewith. Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Common Shares registered in
your name or in the name of your nominee.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF COMMON SHARES THAT WHEN ADDED TO THE COMMON SHARES OWNED BY TDS AND
PURCHASER SHALL CONSTITUTE 90% OF THE COMMON SHARES THEN OUTSTANDING (THE
"MINIMUM CONDITION") AND (II) THAT THE ASSET CONTRIBUTION AGREEMENT, DATED AS OF
DECEMBER 22, 1997 (THE "ASSET CONTRIBUTION AGREEMENT"), AMONG TDS, TSR PAGING,
INC., A DELAWARE CORPORATION, AND TSR WIRELESS LLC, A DELAWARE LIMITED LIABILITY
COMPANY, BE IN FULL FORCE AND EFFECT AND NOT TERMINATED IN ACCORDANCE WITH THE
TERMS THEREOF AND ALL OF THE CONDITIONS SET FORTH IN ARTICLES XI AND XII THEREOF
SHALL HAVE BEEN SATISFIED OR WAIVED. PURCHASER HAS AGREED TO WAIVE THE MINIMUM
CONDITION UNDER CERTAIN CIRCUMSTANCES DESCRIBED IN THE OFFER TO PURCHASE.

Enclosed for your information and use are copies of the following documents:

1. Offer to Purchase, dated February 18, 1998;

2. Letter of Transmittal for your use and for the information of your
clients; facsimile copies of the Letter of Transmittal may be used to tender
Common Shares;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Common Shares and all other required documents are not immediately available or
cannot be delivered to Harris Trust and Savings Bank (the "Depositary") by the
Expiration Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed by the Expiration Date;

4. A letter to shareholders of the Company from Terrence T. Sullivan,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;

5. A printed form of letter which may be sent to your clients for whose
accounts you hold Common Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;

6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and

7. Return envelope addressed to the Depositary.

YOUR PROMPT ATTENTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, MARCH 17, 1998, UNLESS THE OFFER
IS EXTENDED.

In all cases, payment for Common Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
evidencing such Common Shares (or a confirmation of a book-entry transfer of
such Common Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase)), a Letter of
Transmittal (or facsimile thereof) properly completed and duly executed and any
other required documents.

If holders of Common Shares wish to tender, but it is impracticable for them
to forward their certificates or other required documents, or, if applicable,
comply with the procedure for book-entry transfer, prior to the expiration of
the Offer, a tender of Common Shares may be effected by following the guaranteed
delivery procedure described under "THE TENDER OFFER -- 3. Procedures for
Accepting the Offer and Tendering Common Shares" in the Offer to Purchase.

Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the solicitation
of tenders of Common Shares pursuant to the Offer. However, Purchaser will
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any stock transfer taxes payable with respect to the transfer
of Common Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.

Any inquiries you may have with respect to the Offer should be addressed to
the undersigned or MacKenzie Partners, Inc. (the "Information Agent") at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase.

Additional copies of the enclosed material may be obtained from the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.

VERY TRULY YOURS,
Credit Suisse First Boston Corporation

2
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU,
OR ANY OTHER PERSON, THE AGENT OF TDS, PURCHASER, THE COMPANY, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.

<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
AMERICAN PAGING, INC.
AT
$2.50 NET PER COMMON SHARE
BY
API MERGER CORP.
A DIRECT WHOLLY OWNED SUBSIDIARY OF
TELEPHONE AND DATA SYSTEMS, INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, MARCH 17, 1998, UNLESS THE OFFER IS EXTENDED.

February 18, 1998

To Our Clients:

Enclosed for your consideration are an Offer to Purchase, dated February 18,
1998 (the "Offer to Purchase"), and a related Letter of Transmittal in
connection with the offer by API Merger Corp., a Delaware corporation
("Purchaser") and a direct wholly owned subsidiary of Telephone and Data
Systems, Inc., an Iowa corporation ("TDS"), to purchase all outstanding Common
Shares, par value $1.00 per share (the "Common Shares"), of American Paging,
Inc., a Delaware corporation (the "Company"), at a price of $2.50 per Common
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer").

We are (or our nominee is) the holder of record of Common Shares held by us
for your account. A TENDER OF SUCH COMMON SHARES CAN BE MADE ONLY BY US OR OUR
NOMINEE AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER COMMON SHARES HELD BY US FOR YOUR ACCOUNT.

We request instruction as to whether you wish to have us tender on your
behalf any or all of the Common Shares held by us for your account, upon the
terms and subject to the conditions set forth in the Offer.

Your attention is invited to the following:

1. The tender price is $2.50 per Common Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer.

2. The Offer is being made for all outstanding Common Shares.

3. The Board of Directors of the Company has unanimously determined that
each of the Offer and the Merger (as defined in the Offer to Purchase) is fair
to the shareholders of the Company, and recommends that shareholders accept the
Offer and tender their Common Shares pursuant to the Offer. The unanimous vote
of the Board of Directors of the Company is based upon, among other things, the
unanimous recommendation of the Offer by a Special Committee of the Board of
Directors of the Company consisting of the independent directors of the Company
who are not directors, officers or employees of TDS or Purchaser or otherwise
affiliated with TDS or Purchaser nor officers or employees of the Company.

4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Tuesday, March 17, 1998, unless the Offer is extended.
<PAGE>
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer at least
the number of Common Shares that when added to the Common Shares owned by TDS
and Purchaser shall constitute 90% of the Common Shares then outstanding (the
"Minimum Condition") and (ii) that the Asset Contribution Agreement, dated as of
December 22, 1998, among TDS, TSR Paging, Inc., a Delaware corporation, and TSR
Wireless, LLC, a Delaware limited liability company, be in full force and effect
and not terminated in accordance with the terms thereof and all of the
conditions set forth in Articles XI and XII thereof shall have been satisfied or
waived (the "Asset Contribution Agreement Condition"). Purchaser has agreed to
waive the Minimum Condition under certain circumstances described in the Offer
to Purchase.

6. Except as otherwise provided in Instruction 6 of the Letter of
Transmittal, tendering shareholders will not be obligated to pay brokerage fees,
commissions or stock transfer taxes with respect to the purchase of Common
Shares by Purchaser pursuant to the Offer. However, federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is provided or
unless the required taxpayer identification information is provided (see
Instruction 9 to the Letter of Transmittal).

7. In all cases, payment for Common Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for, or
a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to,
such Common Shares and a Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
all other documents required by the Letter of Transmittal. See "THE TENDER
OFFER--Procedures for Accepting the Offer and Tendering Common Shares" of the
Offer to Purchase.

If you wish to have us tender any or all of your Common Shares, please so
instruct us by completing, executing and returning to us the instruction form
contained in this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize the tender of your Common Shares, all such Common
Shares will be tendered unless otherwise specified in your instructions. YOUR
INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A
TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.

The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Common Shares and is not being
made to, nor will tenders be accepted from or on behalf of, shareholders in any
jurisdiction where the making of the Offer or acceptance thereof is not in
compliance with the laws of such jurisdiction. In those jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by
Credit Suisse First Boston Corporation or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.

2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES OF
AMERICAN PAGING, INC.

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 18, 1998, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer") in connection with the Offer by API Merger Corp., a Delaware
corporation and a direct wholly owned subsidiary of Telephone and Data Systems,
Inc., an Iowa corporation, to purchase all outstanding Common Shares, par value
$1.00 per share (the "Common Shares"), of American Paging, Inc., a Delaware
corporation, at a price of $2.50 per Common Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase.

This will instruct you to tender the number of Common Shares indicated below
(or, if no number is indicated below, all Common Shares) that are held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer to Purchase.

<TABLE>
<S> <C>
SIGN HERE
Number of Common Shares ----------------------------------------
To be Tendered: ----------------------------------------
------------* (SIGNATURE(S))

Please type or print name:
----------------------------------------

Dated: , 1998 ----------------------------------------
Please type or print address:
----------------------------------------
----------------------------------------
Area Code and Telephone no:
----------------------------------------
Taxpayer identification or social
security no.:
----------------------------------------
</TABLE>

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

*Unless otherwise indicated, it will be assumed that all Common Shares held by
us for your account are to be tendered.

<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.

<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF--
--------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined funds,
any one of the individuals(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint funds,
either person(1)
4. Custodian account of a minor (Uniform Gift to The minor(2)
Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor(1)
6. Account in the name of guardian or committee for a The ward, minor, or incompetent person(3)
designated ward, minor, or incompetent person
7. a. The usual revocable savings trust account The grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a legal or The actual owner(1)
valid trust under State law
8. Sole proprietorship The owner(4)
9. A valid trust, estate, or pension trust Legal entity (Do not furnish the number of the
personal representative or trustee unless the legal
entity itself is not designated in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable or educational organization The organization
account
12. Partnership account held in the name of the The partnership
business
13. Association, club or other tax-exempt organization The organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a state or local
government, school district, or prison) that
receives agricultural program payments
</TABLE>

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

(1) List first and circle the name of the person whose number you furnish.

(2) Circle the minor's name and furnish the minor's social security number.

(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.

(4) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number.

(5) List first and circle the name of the legal trust, estate or pension trust.

NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
OBTAINING A NUMBER

If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.

PAYEES EXEMPT FROM BACKUP WITHHOLDING

Payees specifically exempted from backup withholding on ALL payments include
the following:

- A corporation.

- A financial institution.

- An organization exempt from tax under section 501(a), of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.

- The United States or any agency or instrumentality thereof.

- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.

- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.

- An international organization or any agency, or instrumentality thereof.

- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.

- A real estate investment trust.

- A common trust fund operated by a bank under section 584(a) of the Code.

- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.

- An entity registered at all times under the Investment Company Act of
1940.

- A foreign central bank of issue.

PAYMENTS NOT GENERALLY SUBJECT TO BACKUP WITHHOLDING

Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:

- Payments to nonresident aliens subject to withholding under section 1441
of the Code.

- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.

- Payments of patronage dividends where the amount received is not paid in
money.

- Payments made by certain foreign organizations.

- Payments made to a nominee.

Payments of interest not generally subject to backup withholding include the
following:

- Payments of interest on obligations issued by individuals. Note: A Payee
may be subject to backup withholding if this interest is $600 or more and
is paid in the course of the payer's trade or business and such payee has
not provided its correct taxpayer identification number to the payer.

- Payments of tax-exempt interest (including exempt-interest dividends under
section 852) of the Code.

- Payments described in section 6049(b)(5) to nonresident aliens.

- Payments on tax-free covenant bonds under section 1451 of the Code.

- Payments made by certain foreign organizations. Payments made to a
nominee.

EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FORM W-9 WITH THE
PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE
OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST,
DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.

Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A of the Code.

PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividends, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to IRS. IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.

PENALTIES

(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.

(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make
a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.

(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.

(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. If you fail to
include any portion of an includable payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to
that failure.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE

<PAGE>

This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Common Shares. The Offer is made solely by the
Offer to Purchase dated February 18, 1998 and the related Letter of
Transmittal, and any amendments and supplements thereto, and is being
made to all holders of Common Shares. The Offer is not being made to,
nor will tenders be accepted from or on behalf of, holders of Common
Shares in any jurisdiction where the making of the Offer or
acceptance thereof is not in compliance with the laws of such
jurisdiction. In those jurisdictions where securities, blue sky or
other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Credit Suisse First Boston Corporation ("Credit Suisse
First Boston"), or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.

NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES
OF
AMERICAN PAGING, INC.
AT
$2.50 NET PER COMMON SHARE
BY

API MERGER CORP.
A DIRECT WHOLLY OWNED SUBSIDIARY OF
TELEPHONE AND DATA SYSTEMS, INC.

API Merger Corp., a Delaware corporation ("Purchaser"), and a direct
wholly owned subsidiary of Telephone and Data Systems, Inc., an Iowa
corporation ("TDS"), is offering to purchase all outstanding common shares,
par value $1.00 per share (the "Common Shares"), of American Paging, Inc., a
Delaware corporation (the "Company"), at a price of $2.50 per Common Share,
net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February
18, 1998(the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer"). Tendering shareholders who have Common Shares registered in their
name and who tender directly will not be charged brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Common Shares pursuant to the Offer.
Following the Offer, Purchaser intends to effect the Merger described below.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, MARCH 17, 1998, UNLESS THE OFFER IS EXTENDED.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) AT
LEAST THE NUMBER OF COMMON SHARES THAT WHEN ADDED TO THE COMMON SHARES OWNED BY
TDS AND PURCHASER SHALL CONSTITUTE 90% OF THE COMMON SHARES THEN OUTSTANDING
(THE "MINIMUM CONDITION") AND (II) THAT THE ASSET CONTRIBUTION AGREEMENT, DATED
AS OF DECEMBER 22, 1997 (THE "ASSET CONTRIBUTION AGREEMENT"), AMONG TDS, TSR
PAGING, INC., A DELAWARE CORPORATION ("TSR PAGING"), AND TSR WIRELESS LLC, A
DELAWARE LIMITED LIABILITY COMPANY ("TSR WIRELESS"), BE IN FULL FORCE AND EFFECT
AND NOT TERMINATED IN ACCORDANCE WITH THE TERMS THEREOF AND ALL OF THE
CONDITIONS SET FORTH IN ARTICLES XI AND XII THEREOF SHALL HAVE BEEN SATISFIED OR
WAIVED (THE "ASSET CONTRIBUTION AGREEMENT CONDITION"). PURCHASER HAS AGREED TO
WAIVE THE MINIMUM CONDITION UNDER CERTAIN CIRCUMSTANCES DESCRIBED BELOW. SEE
SECTION 12 UNDER "THE TENDER OFFER" IN THE OFFER TO PURCHASE.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 11, 1998 (the "Merger Agreement"), by and among TDS, Purchaser
and the Company. The Merger Agreement provides that, among other things, as soon
as practicable after the purchase of Common Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
become a direct wholly owned subsidiary of TDS. At the effective time of the
Merger (the "Effective Time"), each Common Share issued and outstanding
immediately prior to the Effective Time (other than Common Shares held in the
treasury of the Company or owned by Purchaser, TDS or any direct or indirect
wholly owned subsidiary of TDS or the Company, and other than Common Shares held
by shareholders who shall have properly demanded and perfected appraisal rights
under Section 262 of Delaware Law) will be canceled and converted automatically
into the right to receive $2.50 in cash, or any higher or lower price that may
be paid per Common Share pursuant to the Offer, without interest.

Upon consummation of the Merger, TDS and TSR Wireless, in accordance with
the terms and conditions of the Asset Contribution Agreement, will combine their
respective paging businesses, and TDS will cause the Company to contribute
substantially all of the assets and certain limited liabilities of the Company,
and TSR Paging will contribute all of its assets and liabilities into TSR
Wireless. TSR Wireless would not assume debt owed by the Company to TDS pursuant
to the Revolving Credit Agreement between the Company and TDS (approximately
$185 million at January 31, 1998). The Company, which would then be a wholly
owned subsidiary of TDS, would have a 30% interest and TSR Paging will have a
70% interest in TSR Wireless, subject to adjustment pursuant to the terms of the
Asset Contribution Agreement.

THE BOARD OF DIRECTORS OF THE COMPANY, BY UNANIMOUS VOTE, BASED UPON, AMONG
OTHER THINGS, THE UNANIMOUS RECOMMENDATION AND APPROVAL OF THE SPECIAL COMMITTEE
OF THE COMPANY CONSISTING OF THE INDEPENDENT DIRECTORS OF THE COMPANY WHO ARE
NOT DIRECTORS, OFFICERS OR EMPLOYEES OF TDS OR PURCHASER OR OTHERWISE AFFILIATED
WITH TDS OR PURCHASER NOR OFFICERS OR EMPLOYEES OF THE COMPANY (THE "SPECIAL
COMMITTEE"), HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO,
AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY (OTHER THAN TDS
AND PURCHASER), AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER
THEIR COMMON SHARES PURSUANT TO THE OFFER.

As of February 10, 1998, TDS owned 12,500,000 Series A Common Shares, par
value $1.00 per share (the "Series A Common Shares"), which have fifteen votes
per share on all matters and are convertible on a share-per-share basis into
Common Shares, and 4,000,000 Common Shares, constituting 100% of the currently
outstanding Series A Common Shares and approximately 52.3% of the outstanding
Common Shares for a combined total of approximately 81.9% of the Company's
outstanding classes of capital stock and approximately 98.1% of their combined
voting power. If required to achieve ownership of 90% of the Common Shares then
outstanding, Purchaser currently intends to convert its existing 12,500,000
Series A Common Shares into an equivalent number of Common Shares in accordance
with the Company's Restated Certificate of Incorporation.

<PAGE>

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Common Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to Harris Trust
and Savings Bank (the "Depositary") of Purchaser's acceptance for payment of
such Common Shares pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Common Shares accepted for payment pursuant
to the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payments from Purchaser and transmitting such payments to tendering
shareholders whose Common Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Common Shares be paid,
regardless of any delay in making such payment. In all cases, payment for Common
Shares tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates evidencing such
Common Shares (the "Share Certificates") or timely confirmation of a book-entry
transfer of such Common Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities (as defined in Section 2 under "THE TENDER OFFER"
in the Offer to Purchase) pursuant to the procedure set forth in Section 3 under
the "THE TENDER OFFER" in the Offer to Purchase, (ii) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in Section 3 under "THE TENDER OFFER" in the Offer
to Purchase) and (iii) any other documents required under the Letter of
Transmittal.

Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any condition specified in Section 12 under
"THE TENDER OFFER" in the Offer to Purchase, by giving oral or written notice of
such extension to the Depositary. Any such extension will be followed as
promptly as practicable by public announcement thereof, such announcement to be
made no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date. During any such extension, all Common
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering shareholder to withdraw such shareholder's
Common Shares. Pursuant to the Merger Agreement, in the event all conditions set
forth in the Merger Agreement shall have been satisfied other than the Minimum
Condition, Purchaser may extend the Offer for a period or periods aggregating
not more than 20 business days after the later of (i) the Expiration Date and
(ii) the date on which all other conditions set forth in the Merger Agreement
shall have been satisfied, after which time Purchaser shall waive the Minimum
Condition.

The term "Expiration Date" means 12:00 Midnight, New York City time, on March
17, 1998, unless and until Purchaser shall have extended the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire.

Tender of Common Shares made pursuant to the Offer are irrevocable, provided
that Common Shares tendered pursuant to the Offer may be withdrawn at any time
prior to 12:00 Midnight, New York City time, on Tuesday, March 17, 1998 (or the
latest time and date at which the Offer, if extended by Purchaser, shall expire)
and, unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after April 18, 1998. For the withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover page of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Common Shares to be withdrawn,
the number of Common Shares to be withdrawn and the name of the registered
holder of such Common Shares, if different from that of the person who tendered
such Common Shares. If Share Certificates evidencing Common Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such Share Certificates, the serial numbers
shown on such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 3 under "THE TENDER OFFER" in the Offer to
Purchase), unless such Common Shares have been tendered for the account of an
Eligible Institution. If Common Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3 under "THE TENDER
OFFER" in the Offer to Purchase, any notice of withdrawal must specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Common Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures. Any Common Shares properly withdrawn will be
deemed not to be validly tendered for purposes of the Offer. Withdrawn Common
Shares may, however, be returned by repeating one of the procedures in Section 3
of the Offer to Purchase at any time before the Expiration Date. All questions
as to the form and validity (including the time of receipt) of any notice of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination will be final and binding. None of Purchaser, TDS, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give such notification.

The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.

The Company has provided Purchaser the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Common Shares. The Offer to Purchase and the related Letter of Transmittal
and other related materials will be mailed to record holders of Common Shares
whose names appear on the Company's shareholder list and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Common
Shares.

THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.

Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager, and copies will be furnished promptly
at Purchaser's expense. No fees or commissions will be paid to brokers, dealers
or other persons (other than the Information Agent and the Dealer Manager) for
soliciting tenders of Common Shares pursuant to the Offer.

THE INFORMATION AGENT FOR THE OFFER IS:

MACKENZIE PARTNERS, INC.

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 Call Collect:
or
Call Toll Free: (800) 322-2885

THE DEALER MANAGER FOR THE OFFER IS:

CREDIT SUISSE FIRST BOSTON

Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free (800) 881-8320

February 18, 1998

<PAGE>
Corporate Office
30 N. LaSalle Street
NEWS RELEASE 40th Floor
Chicago, Illinois 60602-2507
Amex Symbol: TDS
[LOGO] NEWSPAPER LISTING TELDTA
Contact: Murray L. Swanson Karen M. Stewart
Executive Vice President - Finance Vice President - Investor
Relations
(312) 630-1900 (608) 828-8316
e-mail: [email protected] e-mail: [email protected]

FOR RELEASE: IMMEDIATE

TDS TO ACQUIRE REMAINING INTEREST IN AMERICAN PAGING, INC.

FEBRUARY 11, 1998, CHICAGO, ILLINOIS - Telephone and Data Systems, Inc.
[AMEX:TDS] and American Paging, Inc. [AMEX:APP] announced today that they
have entered into a definitive agreement for TDS to acquire all of the issued
and outstanding shares of common stock of APP not already owned by TDS for
$2.50 per share in cash. The transaction was recommended by a Special
Committee of APP's independent directors and approved by APP's board of
directors. PaineWebber Incorporated acted as financial advisor to the
Special Committee of independent directors of APP.

TDS's offer was made in connection with a definitive agreement announced
December 23, 1997 between TDS and TSR Paging, Inc. ("TSR") to combine the
businesses of APP and TSR. The agreement with TSR requires that TDS acquire
the outstanding shares of common stock of APP not already owned by TDS for
cash prior to the combination of APP and TSR. The parties are currently
seeking FCC approvals in connection with that transaction, which is subject
to other customary closing conditions as well.

TDS currently owns 16.5 million shares of APP common stock, which, on
February 9, 1998, represented 81.9% of the issued and outstanding shares.
Under the agreement with APP, a subsidiary of TDS will commence a tender
offer on or prior to February 18, 1998, to acquire the APP shares. The
tender offer will be subject to satisfaction of the closing conditions in the
TDS/TSR agreement and to other customary conditions. Credit Suisse First
Boston Corporation acted as financial advisor to TDS.

All shares not purchased in the tender offer will be converted into the right
to receive $2.50 per share in a second-step merger to be consummated as soon
as practicable after the tender offer.

TDS is a Chicago-based telecommunications company with established cellular
telephone, local telephone and radio paging operations and developing PCS
operations. TDS strives to build value for its shareholders by providing
excellent communications services in attractive, closely related segments of
the telecommunications industry.

<PAGE>

Contacts: Murray L. Swanson Karen M. Stewart
Executive Vice President-Finance Vice President-Investor Relations
(312) 630-1900 (608) 828-8316 Madison
e-mail: [email protected] e-mail: [email protected]

FOR RELEASE: IMMEDIATE

TDS BEGINS TENDER OFFER TO PURCHASE AMERICAN PAGING SHARES

FEBRUARY 18, 1998, CHICAGO, ILLINOIS - Telephone and Data Systems, Inc.
[AMEX:TDS] announced that pursuant to its previously reported definitive
Merger Agreement with American Paging, Inc. [AMEX:APP], API Merger Corp., a
wholly owned subsidiary of TDS ("API Merger"), today began a tender offer to
purchase for cash all outstanding Common Shares of APP not already owned by
TDS at a price of $2.50 per Common Share. The tender offer is being made in
connection with a previously reported definitive Asset Contribution Agreement
with TSR Paging, Inc. which, subject to acquisition by TDS of all Common
Shares of APP not already owned by TDS and to certain other conditions, will
combine its paging operations with that of APP.

The offer and withdrawal rights will expire at 12:00 midnight EST on
March 17, 1998, unless extended.

The offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn at least the number of shares that, when added to
the Common Shares of APP already owned by TDS, shall equal 90% of the Common
Shares of APP outstanding and (2) the Asset Contribution Agreement with TSR
Paging shall be in full force and effect and not terminated in accordance
with its terms and certain closing conditions contained therein shall have
been satisfied or waived. All APP Common Shares not purchased in the tender
offer will be converted into the right to receive $2.50 per Common Share in a
second-step merger to be consummated as soon as practicable after the offer.

Credit Suisse First Boston Corporation is the Dealer Manager for the offer.

TDS Internet Home Page: http://www.teldta.com

<PAGE>
[API LOGO]

February 18, 1998

Dear Shareholders:

I am pleased to inform you that on February 11, 1998, the Company entered
into an Agreement and Plan of Merger with Telephone and Data Systems, Inc.
("TDS") and API Merger Corp. ("API Merger"), a direct wholly-owned subsidiary of
TDS, pursuant to which API Merger is commencing a cash tender offer (the
"Offer") to purchase all outstanding Common Shares of the Company it does not
already own at $2.50 net per share. The Offer is conditioned upon, among other
things, satisfaction of the conditions that (1) there be validly tendered and
not withdrawn at least the number of shares that when added to the shares owned
by TDS and API Merger shall constitute 90% of the outstanding Common Shares of
the Company and (2) the Asset Contribution Agreement with TSR Paging shall be in
full force and effect and not terminated in accordance with its terms and
certain closing conditions contained therein shall have been satisfied or
waived. Following the completion of the Offer, upon the terms and subject to the
conditions of the Merger Agreement, API Merger will be merged into the Company
(the "Merger"), and each Common Share of the Company not purchased in the Offer
(other than those shares held in the Company's treasury or owned by TDS, its
affiliates, or by any dissenting shareholders) will be converted into the right
to receive $2.50 net per share in cash, without interest. Upon consummation of
these transactions, TDS will own the entire equity interest in the Company.

THE BOARD OF DIRECTORS, BASED IN PART ON THE UNANIMOUS RECOMMENDATION OF THE
SPECIAL COMMITTEE (COMPRISED OF DIRECTORS WHO ARE NOT OFFICERS OR EMPLOYEES OF
THE COMPANY NOR OFFICERS OR DIRECTORS OF TDS OR ITS AFFILIATES), HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, DETERMINED THAT EACH OF THE OFFER AND MERGER IS
FAIR TO THE COMPANY'S PUBLIC SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.

In arriving at their decisions, the Special Committee and the Board of
Directors gave careful consideration to a number of factors described in the
attached Schedule 14D-9 that is being filed today with the Securities and
Exchange Commission. Among other things, the Special Committee and the Board of
Directors considered the opinion of PaineWebber, the financial advisor to the
Special Committee, that the consideration to be offered to the public
shareholders of the Company in the Offer and the Merger is fair, from a
financial point of view, to the holders of Common Shares (other than TDS and its
affiliates).

Accompanying this letter, in addition to the attached Schedule 14D-9
relating to the Offer, is the Offer to Purchase, dated February 18, 1998, of API
Merger, together with related materials including a Letter of Transmittal to be
used for tendering your shares. These documents set forth the terms and
conditions of the Offer and the Merger, provide detailed information about these
transactions and include instructions as to how to tender your shares. I urge
you to read the enclosed materials carefully.

Very truly yours,

[SIGNATURE]

Terrence T. Sullivan
President

<PAGE>

AGREEMENT AND PLAN OF MERGER

among

TELEPHONE AND DATA SYSTEMS, INC.,

API MERGER CORP.

and

AMERICAN PAGING, INC.

Dated as of February 11, 1998

<PAGE>

TABLE OF CONTENTS
PAGE
----

ARTICLE I THE TENDER OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2 API Action . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Effective Time of the Merger . . . . . . . . . . . . . . . . 5
Section 2.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . 6
Section 2.4 Certificate of Incorporation and By-Laws . . . . . . . . . . 6
Section 2.5 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Conversion of Capital Stock. . . . . . . . . . . . . . . . . 7
Section 3.2 Surrender and Payment. . . . . . . . . . . . . . . . . . . . 8
Section 3.3 No Further Ownership Rights in API Common Shares . . . . . . 9
Section 3.4 Closing of API Transfer Books. . . . . . . . . . . . . . . . 9
Section 3.5 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.6 Lost, Stolen or Destroyed Certificates . . . . . . . . . . .10
Section 3.7 Further Assurances . . . . . . . . . . . . . . . . . . . . .10

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF API. . . . . . . . . . . . . . .11
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . .11
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . .11
Section 4.3 Authority. . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 4.4 Absence of Certain Changes or Events . . . . . . . . . . . .13
Section 4.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Section 4.6 API Real Property. . . . . . . . . . . . . . . . . . . . . .14
Section 4.7 Contracts and Commitments. . . . . . . . . . . . . . . . . .15
Section 4.8 Customers, Distributors and Suppliers. . . . . . . . . . . .17
Section 4.9 Operation of the API Business. . . . . . . . . . . . . . . .17
Section 4.10 Inventory . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 4.11 Absence of Certain Business Practices . . . . . . . . . . .17
Section 4.12 No Conflict or Violation. . . . . . . . . . . . . . . . . .18
Section 4.13 Regulatory Matters. . . . . . . . . . . . . . . . . . . . .18
Section 4.14 Financial Statements; Receivables; Public Filings . . . . .21
Section 4.15 Books and Records . . . . . . . . . . . . . . . . . . . . .21
Section 4.16 Litigation. . . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.17 Compliance with Law . . . . . . . . . . . . . . . . . . . .22
Section 4.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . .22

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<PAGE>

Section 4.19. No Other Agreements to Sell the API Assets . . . . . . . .22
Section 4.20 Proprietary Rights. . . . . . . . . . . . . . . . . . . . .22
Section 4.21 Environmental Matters . . . . . . . . . . . . . . . . . . .23
Section 4.22 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . .24
Section 4.23 Information in Disclosure Documents . . . . . . . . . . . .25
Section 4.24 Benefit Plans; Labor Matters. . . . . . . . . . . . . . . .25
Section 4.25 Opinion of Financial Advisor. . . . . . . . . . . . . . . .27
Section 4.26 Certain Agreements . . . . . . . . . . . . . . . . . . . .27

ARTICLE V REPRESENTATIONS AND WARRANTIES OF TDS AND
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 5.1 Organization; Ownership. . . . . . . . . . . . . . . . . . .28
Section 5.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 5.3 Consents and Approvals; No Violations. . . . . . . . . . . .28
Section 5.4 Information in Disclosure Documents. . . . . . . . . . . . .29
Section 5.5 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . .29

ARTICLE VI COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 6.1 Conduct of API Business. . . . . . . . . . . . . . . . . . .29
Section 6.2 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . .31
Section 6.3 Access to Information. . . . . . . . . . . . . . . . . . . .32
Section 6.4 Shareholder Approval . . . . . . . . . . . . . . . . . . . .33
Section 6.5 API Option Plans . . . . . . . . . . . . . . . . . . . . . .34
Section 6.6 No Solicitation. . . . . . . . . . . . . . . . . . . . . . .35
Section 6.7 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . .36
Section 6.8 Notification of Certain Matters. . . . . . . . . . . . . . .36
Section 6.9 Public Announcements . . . . . . . . . . . . . . . . . . . .37
Section 6.10 State Takeover Laws . . . . . . . . . . . . . . . . . . . .37
Section 6.11 Indemnification of Officers and Directors . . . . . . . . .37
Section 6.12 Shareholder Litigation. . . . . . . . . . . . . . . . . . .37

ARTICLE VII CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 7.1 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 7.2 Conditions to TDS's Obligation to Effect the Merger. . . . .38

ARTICLE VIII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . .38
Section 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . .40

ARTICLE IX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 9.1 Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 9.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 9.3 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . .41

- ii -
<PAGE>

PAGE
----

Section 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . .42
Section 9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.7 Entire Agreement; No Third Party Beneficiaries . . . . . . .43
Section 9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.9 Specific Performance . . . . . . . . . . . . . . . . . . . .43
Section 9.10 Assignment. . . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.11 Validity. . . . . . . . . . . . . . . . . . . . . . . . . .43

Annex I Definitions
Annex II Conditions to the Offer

- iii -
<PAGE>

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of February 11, 1998 (this
"AGREEMENT"), among Telephone and Data Systems, Inc., an Iowa corporation
("TDS"), API Merger Corp., a Delaware corporation and a direct, wholly-owned
subsidiary of TDS ("PURCHASER"), and American Paging, Inc., a Delaware
corporation ("API"; together with Purchaser, the "CONSTITUENT CORPORATIONS").

W I T N E S S E T H:

WHEREAS, the capitalized terms used herein shall have the respective
meanings specified or referred to herein or in ANNEX I;

WHEREAS the Purchaser owns an aggregate of 12,500,000 Series A Common
Shares, par value $1.00 per share (the "SERIES A COMMON SHARES"), of API
constituting 100% of the outstanding Series A Common Shares and 4,000,000 Common
Shares, par value $1.00 per share (the "COMMON SHARES"), of API constituting
approximately 81.9% of the outstanding Common Shares;

WHEREAS, TDS has entered into an Asset Contribution Agreement, dated
as of December 22, 1997 (the "ASSET CONTRIBUTION AGREEMENT"), with TSR Paging
Inc., a Delaware corporation ("TSR"), and TSR Wireless LLC, a Delaware limited
liability company ("TSR WIRELESS");

WHEREAS, in accordance with the terms and conditions of the Asset
Contribution Agreement, (i) TDS is to propose to negotiate and enter into a
merger agreement with API pursuant to which a wholly owned subsidiary of TDS
would acquire all of the issued and outstanding stock of API not owned by TDS
and (ii) upon consummation of such proposed merger, TDS and TSR would combine
their respective paging businesses and TDS would contribute substantially all of
the assets and certain, limited liabilities of API to TSR Wireless for a 30%
interest (subject to adjustment) in TSR Wireless and TSR would contribute all of
its assets and liabilities to TSR Wireless for a 70% interest (subject to
adjustment) in TSR Wireless;

WHEREAS, in accordance with the terms and conditions of the Asset
Contribution Agreement, TDS and Purchaser have proposed to API that Purchaser
acquire all of the remaining issued and outstanding Common Shares not owned by
Purchaser;

WHEREAS, in furtherance thereof, it is proposed that Purchaser will
make, in compliance with Section 14(d)(1) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and in compliance with the rules and
regulations

<PAGE>

promulgated thereunder, a cash tender offer (as it may be amended from time to
time as permitted hereunder, the "OFFER") to acquire all of the issued and
outstanding Common Shares for $2.50 per Common Share (such amount, or any other
greater amount per Common Share offered pursuant to the Offer, being hereinafter
referred to as the "PER SHARE AMOUNT"), net to the seller in cash, in accordance
with the terms and subject to the conditions provided herein and in the Offer
Documents (as defined in SECTION 1.1(b));

WHEREAS, based in part on the opinion of PaineWebber, Inc. that the
consideration to be received by the holders for the Common Shares (other than
TDS and Purchaser) pursuant to each of the Offer and the Merger is fair to such
holders from a financial point of view, a special committee of the Board of
Directors of API, consisting of the independent directors of the Board of
Directors that are not directors, officers or employees of TDS or otherwise
affiliated with TDS and are not officers or employees of API (the "API SPECIAL
COMMITTEE"), has recommended, with the assistance of its independent financial
and legal advisors, to the Board of Directors of API that the Offer and the
Merger be approved by the Board of Directors of API;

WHEREAS, the respective Boards of TDS, Purchaser and API have
determined that it is in the best interests of their respective stockholders for
the Purchaser to acquire all of the remaining issued and outstanding Common
Shares;

WHEREAS, the Board of Directors of API has, by unanimous vote of all
directors present and voting, approved the making of the Offer and resolved and
agreed to recommend that the holders of the Common Shares tender their Common
Shares pursuant to the Offer; and

WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of TDS, Purchaser and API have each approved the merger (the
"Merger") of Purchaser with and into API in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") following the consummation
of the Offer and upon the terms and subject to the conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:

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<PAGE>

ARTICLE I
THE TENDER OFFER

Section 1.1 THE OFFER.

(a) Provided that this Agreement has not been terminated in
accordance with SECTION 8.1 and none of the events or facts set forth in ANNEX
II hereto shall have occurred or be existing, Purchaser will commence the Offer
as promptly as reasonably practicable after the date hereof, but in no event
later than five business days after the initial public announcement of
Purchaser's intention to commence the Offer. The obligation of Purchaser to
commence the Offer and accept for payment, and pay for, any Common Shares
tendered pursuant to the Offer will be subject to (i) the condition (the
"MINIMUM CONDITION") that at least the number of Common Shares that when added
to the Common Shares already owned by TDS and Purchaser shall constitute not
less than 90% (or such other amount which would allow the Merger to be effected
without a meeting of the Company's shareholders in accordance with Section 253
of the Delaware Law) of the issued and outstanding Common Shares shall have been
validly tendered and not withdrawn prior to the expiration of the Offer, (ii)
the condition that the Asset Contribution Agreement be in full force and effect
and not terminated in accordance with the terms thereof and all the conditions
set forth in Articles XI and XII thereof shall have been satisfied or waived
(the "ASSET CONTRIBUTION AGREEMENT CONDITION") and (iii) the satisfaction of the
conditions set forth in ANNEX II hereto (any of which may be waived by Purchaser
in its sole discretion) and to the terms and conditions of this Agreement.
Purchaser expressly reserves the right to modify the terms of the Offer, except
that, without the consent of API (unless API takes any action permitted to be
taken pursuant to the second sentence of SECTION 6.6(b)), Purchaser shall not
(i) reduce the number of Common Shares subject to the Offer, (ii) reduce the Per
Share Amount, (iii) modify or add to the conditions set forth in ANNEX II (other
than to waive any conditions to the extent permitted by this Agreement), (iv)
except as specifically provided in this SECTION 1.1(a), extend the Offer or (v)
change the form of consideration payable in the Offer. Notwithstanding the
foregoing, Purchaser may, without the consent of API, (i) extend the Offer if at
the scheduled expiration date of the Offer any of the conditions to Purchaser's
obligation to purchase the Common Shares shall not be satisfied until such time
as such conditions are satisfied or waived, (ii) extend the Offer for any period
required by any order, decree or ruling of, or any rule, regulation,
interpretation or position of, any Governmental Authority applicable to the
Offer and/or (iii) extend the Offer for any reason for a period of not more than
10 business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence; PROVIDED, HOWEVER, in the
event that all conditions set forth in ANNEX II shall have been satisfied other
than the Minimum Condition, the Purchaser may extend the term of the Offer for a
period or periods aggregating not more than 20 business days after the later of
(x) the initial expiration date of the Offer and (y) the date on which all the
other conditions set forth in ANNEX

-3-
<PAGE>

II shall be satisfied after which time the Purchaser shall waive the Minimum
Condition. The Offer will be made by means of an offer to purchase (the "OFFER
TO PURCHASE") and related letter of transmittal containing the terms set forth
in this Agreement and the conditions set forth in ANNEX II hereto. Subject to
the terms of the Offer and this Agreement and the satisfaction or waiver of all
the conditions of the Offer set forth in ANNEX II hereto as of the final
expiration date of the Offer, Purchaser will accept for payment and pay for all
Common Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after such expiration date. The Per Share Amount shall, subject
to applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer.

(b) On the date of commencement of the Offer, Purchaser will file
with the SEC (i) a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer and (ii) a Rule 13e-3 Transaction Statement on Schedule 13E-3 (together
with all amendments and supplements thereto, the "SCHEDULE 13E-3") with respect
to the Offer and other transactions contemplated hereby. The Schedule 14D-1 and
the Schedule 13E-3 will contain or will incorporate by reference the Offer to
Purchase and forms of the related letter of transmittal and summary
advertisement (which Schedule 14D-1, Schedule 13E-3, the Offer to Purchase and
such other documents pursuant to which the Offer will be made, together with any
supplements or amendments thereto, are referred to herein collectively as the
"OFFER DOCUMENTS"). TDS and Purchaser will disseminate the Offer to Purchase,
the related letter of transmittal and other Offer Documents to holders of Common
Shares. Each of TDS, Purchaser and API will promptly correct any information
provided by it for use in the Offer Documents that becomes false or misleading
in any material respect, and each of TDS and Purchaser will take all steps
necessary to cause the Schedule 14D-1 and Schedule 13E-3 as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Common Shares, in each case as and to the extent
required by applicable law. Purchaser will provide API and its counsel in
writing with any comments Purchaser or its counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.

Section 1.2 API ACTION.

(a) API hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors of API, at a meeting duly called and
held, acting on the unanimous recommendation of the API Special Committee, has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to and in the best interest
of the Company's shareholders, (ii) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and (iii)
unanimously resolved to recommend acceptance of the Offer and approval and

-4-
<PAGE>

adoption of this Agreement and the Merger by its shareholders. API further
represents and warrants that PaineWebber, Inc. has delivered to the API Special
Committee its written opinion that the consideration to be received by API's
shareholders pursuant to the Offer and the Merger is fair to such shareholders
from a financial point of view, and a complete and correct copy of such opinion
has been delivered by API to TDS and Purchaser.

(b) On the date of the commencement of the Offer, API will file with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect
to the Offer (such Schedule 14D-9, together with all amendments and supplements
thereto, the "SCHEDULE 14D-9") containing the recommendations described in
SECTION 1.2(a) above and will disseminate the Schedule 14D-9 as required by Rule
14d-9 promulgated under the Exchange Act. Each of API, TDS and Purchaser will
promptly correct any information provided by it for use in the Schedule 14D-9
that becomes false or misleading in any material respect, and API will further
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to API's shareholders, in each case as and to the
extent required by applicable law. API will provide TDS and Purchaser and their
counsel in writing with any comments API or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments. API and its counsel will provide TDS and Purchaser and their
counsel with a reasonable opportunity to participate in all communications with
the SEC and its staff, including any meetings and telephone conferences relating
to the Schedule 14D-9, the Offer, the Merger or this Agreement.

(c) API will (i) promptly furnish TDS and Purchaser with mailing
labels containing the names and addresses of all record holders of Common Shares
as of a recent date and of those persons becoming record holders after such
date, together with copies of all security position listings and computer files
and all other information in API's control regarding the beneficial owners of
Common Shares that TDS or Purchaser may reasonably request and (ii) furnish to
TDS or Purchaser such other information and assistance as TDS or Purchaser or
their agents may reasonably request in expeditiously communicating the Offer to
holders of Common Shares.

ARTICLE II
THE MERGER

Section 2.1 EFFECTIVE TIME OF THE MERGER.

(a) Upon the terms and subject to the conditions hereof, and in
accordance with the DGCL, at the Effective Time Purchaser shall be merged with
and into API whereupon the separate existence of Purchaser shall cease and API
shall

-5-
<PAGE>

continue as the surviving corporation (the "SURVIVING CORPORATION") and
succeeding to and assuming all the rights and obligations of Purchaser in
accordance with the DGCL.

(b) Upon the terms and subject to the conditions hereof, a
certificate of merger or other appropriate documents (the "CERTIFICATE OF
MERGER") will be duly prepared and executed by API and Purchaser and thereafter
delivered to the Secretary of State of the State of Delaware (the "Delaware
Secretary") for filing as provided in the DGCL as soon as practicable on the
Closing Date. The Merger will become effective upon the filing of the
Certificate of Merger with the Delaware Secretary or at such other later date or
time as Purchaser and API shall agree and as specified in the Certificate of
Merger (the time the Merger becomes effective being the "EFFECTIVE TIME").

Section 2.2 CLOSING. Unless this Agreement is terminated and the
transactions contemplated herein abandoned pursuant to SECTION 8.1, the closing
of the Merger (the "CLOSING") will take place on a date and time to be specified
by the parties, which date will be no later than the second business day
following the satisfaction or, if permissible, waiver of each of the conditions
set forth in Article VII (the "CLOSING DATE"), at the offices of Sidley &
Austin, 875 Third Avenue, New York, New York 10022, unless another date or place
is agreed to by the parties hereto.

Section 2.3 EFFECTS OF THE MERGER. The Merger will have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of API and the Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of API and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.

Section 2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS.

(a) At the Effective Time the Certificate of Incorporation of
Purchaser previously delivered to API shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation.

(b) The By-Laws of Purchaser, as in effect immediately prior to the
Effective Time, will be the By-Laws of the Surviving Corporation until amended
in accordance therewith and with applicable law.

Section 2.5 DIRECTORS. The directors of Purchaser at the Effective
Time will be the directors of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation and until his or her successor is duly
elected and qualified.

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<PAGE>

Section 2.6 OFFICERS. The officers of API at the Effective Time will
be the officers of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation and until his or her successor is duly appointed
and qualified.

ARTICLE III
CONVERSION OF SECURITIES

Section 3.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of TDS, Purchaser, API
or the holder of any of the following securities:

(a) Each Common Share issued and outstanding immediately prior to the
Effective Time (other than any Common Shares to be cancelled pursuant to SECTION
3.1(b) and any Dissenting Shares shall be cancelled and shall be converted
automatically into the right to receive an amount equal to the Per Share Amount
in cash (the "Merger Consideration") payable, without interest, to the holder of
such Common Share, less any applicable withholding taxes, upon surrender, in the
manner provided in SECTION 3.2, of the certificate that formerly evidenced such
Common Share;

(b) Each Common Share held in the treasury of API and each Common
Share owned by Purchaser, TDS or any direct or indirect wholly owned subsidiary
of TDS or API immediately prior to the Effective Time shall be cancelled without
any conversion thereof and will cease to exist and no shares of capital stock of
the Surviving Corporation or other consideration will be delivered in exchange
therefor;

(c) Each Series A Common Share of API shall be cancelled without any
conversion thereof and will cease to exist and no shares of capital stock of the
Surviving Corporation or other consideration will be delivered in exchange
therefor; and

(d) Each share of common stock of the Purchaser, par value $1.00 per
share, issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.

(e) Notwithstanding any provision of this Agreement to the contrary,
Common Shares that are outstanding immediately prior to the Effective Time and
which are held by shareholders who shall have not voted in favor of the Merger
or consented thereto in writing and who shall have demanded properly in writing
appraisal for such Common Shares in accordance with Section 262 of the DGCL
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration, unless such shareholder fails to
perfect or withdraws or loses its

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right to appraisal. Such shareholders shall be entitled to receive payment of
the appraised value of such Common Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Common Shares under such
Section 262 shall thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration, without any interest thereon, upon surrender, in the
manner provided in SECTION 3.2 of the certificate or certificates that formerly
evidenced such Common Shares. API shall give TDS (i) prompt notice of any
demands for appraisal received by API, withdrawals of such demands, and any
other instruments served pursuant to the DGCL and received by API and (ii) the
opportunity to direct all negotiations and proceedings with respect to demand
for appraisal under the DGCL. API shall not, except with the prior written
consent of TDS, make any payment with respect to any demands for appraisal or
offer to settle or settle any such demands.

Section 3.2 SURRENDER AND PAYMENT. (a) PAYING AGENT. Prior to the
Effective Time, Purchaser shall authorize a commercial bank (or such other
person or persons as shall be reasonably acceptable to TDS and API) to act as
paying agent (the "PAYING AGENT") for API and agent for the holders of Common
Shares in connection with the Merger to receive and pay the funds necessary to
make the payments contemplated by SECTION 3.1(a).

(b) SURVIVING CORPORATION TO PROVIDE FUNDS. At the Effective Time,
TDS shall take all steps necessary to enable and cause the Surviving Corporation
to provide to the Paying Agent funds necessary to pay for the Common Shares
pursuant to SECTION 3.1(a). The funds held by the Paying Agent pursuant to this
SECTION 3.2 shall not be used for any purpose other than payment of the Merger
Consideration.

(c) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate of
Common Shares, other than TDS, API, any Subsidiary of TDS or API and any holder
of Dissenting Shares (a certificate or certificates held by such holders are
sometimes referred to herein as "CERTIFICATE" or "CERTIFICATES"), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Paying Agent, and shall be in a form and have such other
provisions as TDS may reasonably specify) and (ii) instructions for use in
effecting the surrender of such Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the Surviving
Corporation, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount of
cash into

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which the Common Shares theretofore represented by such Certificate shall have
been converted pursuant to SECTION 3.1, and the Certificates so surrendered
shall forthwith be cancelled. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate. If payment is to be made to
a person other than the person in whose name the Certificate so surrendered is
registered, it shall be a condition of payment that such Certificate shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
SECTION 3.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Common Shares theretofore represented by
such Certificate shall have been converted pursuant to SECTION 3.1.

(d) RETURN OF FUNDS. At any time following the sixth month after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of Common Shares (including, without
limitation, all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat and other similar laws) only as general creditors thereof with respect
to any Merger Consideration that may be payable upon due surrender of the
Certificates held by them. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Common Share
for any Merger Consideration delivered in respect of such Common Share to a
public official pursuant to any abandoned property, escheat or other similar
law.

Section 3.3 NO FURTHER OWNERSHIP RIGHTS IN API COMMON SHARES. All
cash paid upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Common Shares theretofore represented by such Certificates.

Section 3.4 CLOSING OF API TRANSFER BOOKS. At the Effective Time,
the stock transfer books of API shall be closed and no registration of transfers
of Common Shares or Series A Common Shares shall thereafter be made on the stock
transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this ARTICLE III.

Section 3.5 WITHHOLDING. The Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable

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pursuant to this Agreement to any holder of Common Shares such amounts as the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "CODE"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
the Paying Agent, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the Common Shares in respect of
which such deduction and withholding was made by the Surviving Corporation or
the Paying Agent.

Section 3.6 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and subject to such other conditions as the Board of
Directors of the Surviving Corporation may impose, the Surviving Corporation
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
herewith. When authorizing such issue of the Merger Consideration in exchange
therefor, the Board of Directors of the Surviving Corporation (or any authorized
officer thereof) may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to give the Surviving Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.

Section 3.7 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF API

API represents and warrants to TDS and Purchaser as follows:

Section 4.1 ORGANIZATION.

(a) API is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. Except as set forth on API
Disclosure Letter Schedule 4.1, API is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities make
such qualification necessary, except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. Copies of the
Certificate of Incorporation and Bylaws of API, and all amendments thereto,
heretofore delivered to TDS and TSR Wireless are accurate and complete as of the
date hereof. API Disclosure Letter Schedule 4.1 lists all jurisdictions in
which API is qualified to do business as a foreign corporation.

(b) API has all requisite corporate power and authority to own, lease
and operate the API Assets and to conduct the API Business as it is presently
being conducted.

(c) API Disclosure Letter Schedule 4.1 is a correct and complete list
of API's Subsidiaries, each of which is a corporation or limited liability
company duly organized or formed, validly existing and in good standing under
the laws of its jurisdiction of incorporation or formation (as applicable) (as
identified on API Disclosure Letter Schedule 4.1), and has the requisite
corporate or limited liability company power and authority to conduct its
business as it is presently being conducted and to own and lease its properties
and assets. API Disclosure Letter Schedule 4.1 contains a true, correct and
complete list of all jurisdictions in which each Subsidiary is qualified to do
business as a foreign corporation or limited liability company. Except as set
forth in API Disclosure Letter Schedule 4.1, each of the Subsidiaries is duly
qualified to do business as a foreign corporation or limited liability company
(as applicable) and is in good standing in each jurisdiction where the character
of its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. Copies of the Certificate or
Articles of Incorporation and Bylaws or other organizational documents of each
Subsidiary of API have been made available to TDS and TSR Paging and are
accurate and complete. API owns of record and beneficially all of the issued
and outstanding capital stock of each free and clear of any Encumbrances, except
as set forth on API Disclosure Letter Schedule 4.1.

Section 4.2 CAPITALIZATION.

(a) As of the date of this Agreement, the total number of shares of
all classes of stock which API is authorized to issue is 160,000,000 shares,
consisting of

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50,000,000 Common Shares, 50,000,000 Series A Common Shares, 50,000,000
Series B Common Shares, par value $1.00 per share (the "SERIES B COMMON
SHARES") and 10,000,000 shares of Preferred Stock, par value $1.00 per share
(the "PREFERRED SHARES"). As of the date hereof, (i) 12,500,000 Series A
Common Shares are issued and outstanding, (ii) no Series B Common Shares are
issued and outstanding, (iii) no Preferred Shares are issued and outstanding,
(iv) 7,645,446 Common Shares are issued and outstanding, (v) no Common Shares
are held in the treasury of API, (vi) 150,000 Common Shares are reserved for
future issuance pursuant to the TDS Tax-Deferred Savings Plan, (vii) 100,000
Common Shares are reserved for future issuance for sale to employees of API
and its subsidiaries under the 1997 Employee Stock Purchase Plan, (viii)
700,000 shares are reserved for future issuance under the 1994 Long Term
Incentive Plan, as amended and restated as of April 1, 1996 (with respect to
which options to acquire 287,072 Common Shares are issued and outstanding)
and (ix) 12,500,000 Common Shares are reserved for issuance upon conversion
of the Series A Common Shares. All the outstanding shares of API's capital
stock are duly authorized, validly issued, fully paid and nonassessable and
not subject to any preemptive rights of third parties in respect thereto.

(b) As of the date of this Agreement, (i) no bonds, debentures, notes
or other indebtedness having the right to vote under ordinary circumstances (or
convertible into securities having such right to vote) ("VOTING DEBT") of API
are issued or outstanding, (ii) except as set forth above, and except as
provided in the Exchange Agreement, dated January 1, 1994, between API and TDS,
and the Registration Rights Agreement, dated January 1, 1994, between API and
TDS, there are no existing options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character (collectively,
"WARRANTS") relating to the issued or unissued capital stock or Voting Debt of
API or obligating API to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interests in, API or securities convertible into or exchangeable for such
shares, Voting Debt or equity interests or obligating API to grant, extend or
enter into any such Warrant and (iii) there are no outstanding contractual
obligations of API to repurchase, redeem or otherwise acquire any shares of
capital stock of API or any Warrants.

Section 4.3 AUTHORITY. API has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder to consummate the transactions contemplated hereby, subject to, with
respect to the Merger, the approval and adoption of this Agreement and the
Merger by the affirmative vote of the holders of Common Shares and Series A
Common Shares entitled to cast at least a majority of the total number of votes
entitled to be cast by holders of Common Shares and Series A Common Shares. The
execution and delivery of this Agreement and the consummation of the Merger and
of the other transactions contemplated hereby have been duly approved by the
Board of Directors of API. No other corporate proceedings on the part of API
are necessary to authorize the entering into and the performance of this
Agreement and the transactions contemplated hereby, other than, with respect to
the Merger, the approval and adoption of this Agreement

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and the Merger by API's shareholders as described in the preceding sentence and
the filing and recordation of appropriate merger documents as required by the
DGCL. This Agreement has been duly executed and delivered by API and
constitutes a legal, valid and binding obligation of API. The restrictions on
business combinations contained in Section 203 of the DGCL are not applicable to
the transactions contemplated hereby.

Section 4.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim
Balance Sheet Date, except as contemplated by this Agreement, there has not been
any:

4.4.1 Material Adverse Change in respect of API, or any of
its Subsidiaries, the FCC Licenses and/or the FCC License Applications.

4.4.2 change in accounting methods, principles or practices
by API or any of its Subsidiaries, except as required by law or by generally
applicable changes instituted in the accounting profession;

4.4.3 material damage, destruction or loss (whether or not
covered by insurance) adversely affecting the API Assets or the API Business;

4.4.4 cancellation, individually or the aggregate of any
material indebtedness or waiver or release of any material right or claim of API
or its Subsidiaries;

4.4.5 cancellation or termination of any material Contract of
API or its Subsidiaries or entry into any material Contract by API or its
Subsidiaries, other than in respect of the API Excluded Assets;

4.4.6 sale, assignment or transfer of (i) any transmitters
and paging terminals of API or its Subsidiaries included in the Interim Balance
Sheet of API, whether in use or in storage or (ii) any material portion of the
API Assets other than sales of Inventory in the ordinary course of business;

4.4.7 failure to replenish API's inventories and supplies in
a normal and customary manner consistent with prior practice and prudent
business practices prevailing in the industry, except for reductions in API's
and its Subsidiaries' Inventory not exceeding ten percent of such Inventory on
the Interim Balance Sheet Date consistent with prudent business practice, or any
purchase commitment made by API or its Subsidiaries in excess of the normal,
ordinary and usual requirements of its business or at any price in excess of the
then current market price or upon terms and conditions more onerous than those
usual and customary in the industry, or any change in the selling, pricing,
advertising or personnel practices of API and its Subsidiaries inconsistent with
their prior practice and prudent business practices prevailing in the industry;

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4.4.8 institution of settlement of or agreement to settle any
Action relating to the API Business (other than the API Excluded Assets) or the
API Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $200,000 in the
aggregate;

4.4.9 agreement by API or its Subsidiaries to do, or any
action or omission by API or its Subsidiaries which is likely to result in, any
of the representations and warranties set forth in the preceding clauses 4.4.1
through 4.4.8 becoming untrue other than as expressly provided for herein.

Section 4.5 ASSETS. API and its Subsidiaries have good and
marketable title to the API Assets and, upon the consummation of the
transactions contemplated by the Asset Contribution Agreement, TSR Wireless will
acquire good title to all the API Assets, free and clear of any Encumbrances
other than Permitted Encumbrances. The API Assets include all assets necessary
for the conduct of the API Business as presently conducted.

Section 4.6 API REAL PROPERTY. API and its Subsidiaries do not own
any Real Property. API Disclosure Letter Schedule 4.6 also contains a complete
and accurate list of all Real Property Leases distinguishing between the stores,
transmission sites, office premises and other Real Property Leases.

4.6.1 ACTIONS. There are no pending or, to the knowledge of
API, threatened condemnation proceedings or other Actions with respect to any
Real Property Leases.

4.6.2 REAL PROPERTY LEASES OR OTHER AGREEMENTS. Except for
the Real Property Leases listed on API Disclosure Letter Schedule 4.6, there are
no material leases, subleases, licenses, occupancy agreements, options, rights,
concessions or other agreements or arrangements, written or oral, granting to
any Person the right to purchase, use or occupy any Real Property Leases.
Except as set forth in API Disclosure Letter Schedule 4.6, with respect to each
Real Property Lease, API or its Subsidiaries have and will transfer to TSR
Wireless at the Closing (as defined in the Asset Contribution Agreement) a valid
leasehold interest in the leasehold estate, free and clear of all Encumbrances
other than Permitted Encumbrances. Except as set forth on API Disclosure Letter
Schedule 4.6, all Real Property Leases are valid, binding and enforceable in all
material respects in accordance with their terms and are in full force and
effect. Except as set forth on API Disclosure Letter Schedule 4.6, API and its
Subsidiaries enjoy peaceful and undisturbed possession of all real property
subject to such Real Property Leases, and API and its Subsidiaries have in all
material respects performed all the material obligations required to be
performed by them through the date hereof with respect to such Real Property
Leases, and each Real Property Lease is assignable (upon receipt of necessary
landlord Consents) in connection with the transactions contemplated by the Asset
Contribution Agreement.

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4.6.3 CERTIFICATE OF OCCUPANCY. API and its Subsidiaries
have received all required material approvals of Governmental Authorities
(including, without limitation, Permits and material certificates of occupancy
or other similar certificates permitting lawful occupancy of the Real Property
Leases) required in connection with the present use of the Real Property Leases
and all improvements thereon.

4.6.4 UTILITIES. All Real Property Leases and the
improvements thereon are supplied with utilities and other services necessary
for the operation of such facilities as currently operated.

4.6.5 IMPROVEMENTS, FIXTURES AND EQUIPMENT. All Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by API or its Subsidiaries on the Real Property Leases are
sufficient in all material respects for the operation of the API Business as
presently conducted.

4.6.6 NO SPECIAL ASSESSMENT. Other than to the extent such
Contracts relate to the API Excluded Assets, API and its Subsidiaries have not
received notice of any special assessment relating to any Real Property Leases
or any portion thereof, and API has no knowledge of any pending or threatened
special assessment, other than any special assessments disclosed in API
Disclosure Letter Schedule 4.6.

Section 4.7 CONTRACTS AND COMMITMENTS.

4.7.1 CONTRACTS. Other than to the extent such Contracts relate
to the API Excluded Assets, API Disclosure Letter Schedule 4.7 sets forth a
complete and accurate list of all Contracts of API and its Subsidiaries of the
following categories:

(i) Reseller Contracts (provided, that, with respect to
reseller agreements with customers only reseller agreements with customers for
at least 2,000 or more pagers and with respect to reseller agreements with third
party vendors only material national reseller agreements along with totals by
region of reseller agreements with third party vendors), distribution,
franchise, lease and license (other than with respect to software that is
available in consumer retail stores and subject to "shrink wrap" license
agreements) Contracts;

(ii) Sales, commission, consulting, agency or advertising
Contracts which are not cancelable on thirty (30) calendar days notice;

(iii) Options to buy any property, real or personal, or
options to sell or sublet any Real Property Leases or personal property included
in the API Assets;

(iv) Contracts involving expenditures or Liabilities in
excess of $250,000 over the life of the Contract or otherwise material to API
and its Subsidiaries;

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(v) Contracts containing covenants limiting the freedom
of API or its Subsidiaries to engage in any line of business or compete with any
Person;

(vi) Intentionally omitted;

(vii) All Contracts with LECs for provision of
Interconnection to API ("API INTERCONNECTION CONTRACTS"), including: (a) all
such API Interconnection Contracts regardless of whether such agreements have
yet been submitted to or approved by the relevant PUCs; (b) a listing of any
requests for interconnection filed by API with PUC(s) pursuant to Section 252(a)
of the Communications Act and a brief description of the status of the PUC
proceeding with respect to each such request; (c) a brief description of
outstanding negotiations between API and LECs regarding provision of
Interconnection by LECs regardless of whether such negotiations are pursuant to
a request for interconnection submitted by API pursuant to Section 252(a) of the
Communications Act; and (d) any related agreements between API and LECs
regarding Interconnection.

(viii) All Personal Property Leases excluding Contracts with
customers for lease of pagers; and

(ix) All Contracts not listed pursuant to SECTIONS 4.7.1
(i) through 4.7.1 (viii) but which are (a) material to the API Business; or (b)
not made in the ordinary course of the API Business.

Except as set forth in API Disclosure Letter Schedule 4.7, API has delivered or
made available to TDS and TSR Paging true, correct and complete copies of each
of the Contracts listed on API Disclosure Letter Schedule 4.7 and API Disclosure
Letter Schedule 4.8, including all amendments and supplements thereto other than
Personal Property Leases with individual customers on standard forms (the
standard forms having been supplied).

4.7.2 ABSENCE OF BREACHES OR DEFAULTS. Except as set forth in
API Disclosure Letter Schedule 4.7, all of the Contracts are valid and in full
force and effect. API or its Subsidiaries have duly performed all of their
material obligations under such Contracts to the extent those obligations to
perform have accrued, and no material violation of, or material default or
breach under, such Contracts by API or its Subsidiaries, or, to API's knowledge,
any other party has occurred and neither API nor its Subsidiaries, nor, to API's
knowledge, any other party has repudiated any material provisions thereof.

4.7.3 PRODUCT WARRANTY. API and its Subsidiaries have
committed no act, and there has been no omission, which would result in, and
there has been no occurrence which would give rise to, any material product
liability or material liability for breach of warranty (whether covered by
insurance or not) on the part of API or its Subsidiaries, with respect to
products sold, or services rendered prior to the Closing.

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Section 4.8 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. API Disclosure
Letter Schedule 4.8 sets forth a complete and accurate list of the names and
addresses of API and its Subsidiaries' (i) ten (10) largest direct customers and
the ten (10) largest reseller customers for November 1997 for each sales region,
showing the approximate recurring revenue in dollars by API and its Subsidiaries
to each such customer during such month; and (ii) five (5) largest suppliers for
January through November 1997 showing the approximate total purchases in dollars
by API and its Subsidiaries from each such supplier during such period. As of
the date hereof, neither API nor any of its Subsidiaries has received any
communication from any customer or supplier named on API Disclosure Letter
Schedule 4.8 of any intention to terminate or reduce purchases from or supplies
to API and its Subsidiaries.

Section 4.9 OPERATION OF THE API BUSINESS. Except as set forth in
API Disclosure Letter Schedule 4.9, (i) API has conducted the API Business only
through API and its Subsidiaries and not through any other divisions or any
direct or indirect Subsidiary or Affiliate of TDS and (ii) no part of the API
Business is operated by TDS or API through any entity other than API and its
Subsidiaries.

Section 4.10 INVENTORY. All Inventory is of good, usable and
merchantable quality and, except as set forth on API Disclosure Letter Schedule
4.10, does not include obsolete or discontinued items not otherwise saleable for
ten dollars ($10) or more in the ordinary course of business. Except as set
forth on API Disclosure Letter Schedule 4.10 or in amounts which are not
material;

4.10.1 all Inventory is of such quality as to meet the quality
control standards of API and any applicable governmental quality control
standards;

4.10.2 all Inventory is saleable as current Inventory at the
current prices thereof in the ordinary course of business;

4.10.3 all Inventory is recorded on the books of the API
Business and in the API Interim Balance Sheet at the net book value determined
in accordance with GAAP;

4.10.4 except for a write-down made in September 1996, and
September 1997 no write-down in inventory has been made or should have been made
pursuant to GAAP during the past two years. Except for items undergoing repair
off premises, in the possession of employees or customers all Inventory is
located at the Real Property Leases.

Section 4.11 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither API or
any Subsidiaries of API, nor any officer, employee or agent of API or its
Subsidiaries, nor any other Person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other Person
who is or may be in a position to help or hinder the API Business (or assist in
connection with any actual or proposed

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transaction relating to the API Business) (i) which subjected or might have
subjected API or any of its Subsidiaries to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which if not given in
the past, might have had a Material Adverse Effect, (iii) which if not continued
in the future, might have a Material Adverse Effect or subject TDS or TSR
Wireless to suit or penalty in any private or governmental litigation or
proceeding, (iv) for any of the purposes described in Section 162(c) of the Code
or (v) for the purpose of establishing or maintaining any concealed fund or
concealed bank account.

Section 4.12 NO CONFLICT OR VIOLATION. Except for (i) the filing
with the SEC of the SCHEDULE 14D-9 and, if required by applicable law, the API
Proxy Statement in connection with this Agreement and the transactions
contemplated hereby and (ii) the filing of the Certificate of Merger with the
Delaware Secretary and appropriate documents with the relevant states in which
API is qualified to do business and except as set forth on API Disclosure Letter
Schedule 4.12 and as required pursuant to the API/TDS Agreements, neither the
execution, delivery or performance of this Agreement by API nor the consummation
by API of the transactions contemplated hereby, including the Merger, will (a)
violate or conflict with any provision of the Restated Certificate of
Incorporation or Bylaws of API or any of API's Subsidiaries, (b) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance (other than a Permitted
Encumbrance) (any such violations, conflicts, breaches, defaults, terminations,
accelerations, or creation of Encumbrances are herein referred to collectively,
as "VIOLATIONS") upon any of the API Assets under, or require any Consent under
any of the terms, conditions or provisions of any Contract, any Financing
Obligation of API, any Authorization, any Real Property Lease, Personal Property
Lease, franchise, Permit, agreement, or other instrument or obligation (i) to
which API or any of its Subsidiaries is a party or (ii) by which the API Assets
are bound, (c) violate any statute, rule, regulation, ordinance, code, order,
judgment, ruling, writ, injunction, decree or award to which API or any of its
Subsidiaries or the API Assets is subject, (d) impose any Encumbrance (other
than a Permitted Encumbrance) on the API Assets. Except as specified in API
Disclosure Letter Schedule 4.12, or in connection with necessary corporate
approvals by API of the Merger and transactions contemplated hereby, no Consent
is required to be obtained or made by API or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.

Section 4.13 REGULATORY MATTERS.

4.13.1 FCC LICENSES.

(i) API Disclosure Letter Schedule 4.13.1 lists (a) each
FCC License and, in each case, the name of the licensee, the call sign, the
operating frequency or frequencies, the location and the expiration date of the
FCC License; and

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(b) each FCC License Application as of the date hereof and, in each case, the
name of the applicant, the proposed frequency or frequencies, the proposed
location and the FCC file number of the FCC License Application. API has made
available to TDS and TSR Paging for inspection copies of each FCC License and
FCC License Application.

(ii) Except as set forth on API Disclosure Letter Schedule
4.13.1, (A) none of the FCC Licenses or FCC License Applications is subject to
any purchase, sale, option or right of first refusal agreements; (B) API has
good and marketable title, to the extent allowed by law, to the FCC Licenses;
and (C) subject to the regulatory jurisdiction of the FCC , API holds all FCC
Licenses free and clear of all Encumbrances.

(iii) API Disclosure Letter Schedule 4.13.1 lists each 929
MHz one-way paging frequency for which API or any of its Subsidiaries currently
has nationwide exclusivity ("API 929 MHz EXCLUSIVE FREQUENCY"). Except as set
forth in API Disclosure Letter Schedule 4.13.1, for each API 929 MHz Exclusive
Frequency: (i) API and its Subsidiaries timely constructed and placed into
operation in accordance with FCC Rules sufficient transmitters to comply with
929 MHz frequency exclusivity requirements imposed by the FCC (collectively,
"FCC 929 MHz EXCLUSIVITY REQUIREMENTS") as specified, INTER ALIA, in FCC Rules
and FCC decisions in AMENDMENT OF THE COMMISSION'S RULES TO PROVIDE CHANNEL
EXCLUSIVITY TO QUALIFIED PRIVATE PAGING SYSTEMS AT 929-930 MHz, REPORT AND
ORDER, PR Docket No. 93-35, 8 FCC Rcd 8318 (1993), RECON. 11 FCC Rcd 3091
(1996), and WIRELESS TELECOMMUNICATIONS BUREAU ANNOUNCES 929-930 MHz PAGING
LICENSEES THAT HAVE MET CONSTRUCTION REQUIREMENTS FOR NATIONWIDE EXCLUSIVITY,
PUBLIC NOTICE, DA 96-748 (released May 10, 1996); REVISION OF PART 22 AND PART
90 OF THE COMMISSION'S RULES TO FACILITATE FUTURE DEVELOPMENT OF PAGING SYSTEMS,
WT Docket No. 96-18, FCC 97-59 (released February 24, 1997); (ii) API and its
Subsidiaries have continued to operate sufficient transmitters to comply with
the terms and conditions of such FCC Licenses and Authorizations, the
Communications Act, the FCC Rules and all applicable state laws and regulations.

4.13.2 FILINGS, ETC.

(i) The FCC Licenses and FCC License Applications and are
the only FCC and PUC Permits and Authorizations necessary to conduct the API
Business. Except as set forth on API Disclosure Letter Schedule 4.13.2, API and
its Subsidiaries have duly and in a timely fashion secured or filed under
applicable law all necessary Permits and Authorizations from, and have filed all
required registrations, applications, reports and any other documents with, the
FCC, and, if applicable, any PUC and any other Governmental Authority exercising
jurisdiction or having jurisdiction over API and its Subsidiaries, in each case,
with respect to the API Business. Except as set forth on API Disclosure Letter
Schedule 4.13.2, (a) the FCC Licenses (b) all other Authorizations are in full
force and effect, are valid for the balances of the current license term, are
not impaired by acts or failures to make required filings on the part of API or
any of its Subsidiaries, and are free and clear of restrictions that may
reasonably

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be expected to limit the full operation of the FCC Licenses or Authorizations,
in each case without adverse conditions, restrictions or impairments, except for
such conditions as are generally applicable to holders of such FCC Licenses and
Authorizations. No renewal of any FCC License would constitute a major
environmental action under the rules of the FCC.

(ii) Except as set forth on API Disclosure Letter Schedule
4.13.2, neither API nor its Subsidiaries is subject to any Order or any pending
or, to the knowledge of API, threatened, Action (excluding rule making that has
general industry applicability) which affects or would be expected to affect, in
any material respect, the validity of any FCC License, or result in the
revocation, termination, or adverse modification thereof, or impair the renewal
thereof. Except as set forth on API Disclosure Letter Schedule 4.13.2, no event
has occurred and is continuing (excluding rule making that has general industry
applicability) that could reasonably be expected to (a) result in the
revocation, termination, non-renewal or adverse modification of any FCC License
or (b) materially and adversely affect any rights of API or its Subsidiaries
thereunder.

4.13.3 FEES. API and its Subsidiaries have paid all franchise,
license, regulatory or other fees and charges which have become due and payable
pursuant to any applications, filings, recordings and registrations with, and
all Authorizations and Permits from, the FCC, any PUC or any other Governmental
Authority, in respect of the API Business.

4.13.4 SHARING AGREEMENTS. Except as set forth on API
Disclosure Letter Schedule 4.13.4, neither API nor any of its Subsidiaries is a
party to any agreement for the shared use of facilities or equipment used in
connection with the API Business.

4.13.5 OPERATIONS. The equipment operating pursuant to the FCC
Licenses or PUC Authorizations of API and its Subsidiaries is operating in all
material respects in accordance with the terms and conditions of such FCC
License or Authorizations, the Communications Act, the FCC Rules and all
applicable state laws and regulations.

4.13.6 CONSTRUCTION. Except as set forth on API Disclosure
Letter Schedule 4.13.6 all construction for facilities that API intends to place
in service proposed in any FCC License is proceeding in a manner that may
reasonably be expected to allow compliance with applicable FCC construction
benchmarks, the completion of such construction and commencement of operations
within the time specified in the relevant FCC License.

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Section 4.14 FINANCIAL STATEMENTS; RECEIVABLES; PUBLIC FILINGS.

4.14.1 FINANCIAL STATEMENTS. The API Financial Statements are
attached as API Disclosure Letter Schedule 4.14.1. The API Financial Statements
(a) were prepared in accordance with the Books and Records of API and its
Subsidiaries, (b) were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby subject,
in the case of the API Unaudited Financial Statements, to the absence of
footnotes and to normal year-end adjustments and (c) fairly present (i) the
consolidated assets, liabilities (including all reserves) and financial position
of API and its Subsidiaries (other than AMS) and (ii) the assets, Liabilities
(including all reserves) and financial position of AMS in each case as of the
respective dates thereof and the results of operations and changes in cash
flows for the periods then ended, consolidated as appropriate. The API Audited
Financial Statements have been audited by Arthur Anderson LLP, independent
certified public accountants, whose reports thereon are included with such API
Audited Financial Statements.

4.14.2 RECEIVABLES. All of the receivables of API and its
Subsidiaries (including accounts receivable, loans receivable and advances)
which have arisen in connection with the API Business and which are reflected in
the Interim Financial Statements, and all such receivables which will have
arisen since the Interim Balance Sheet Date, have arisen only from BONA FIDE
transactions in the ordinary course of business. All receivables of API and its
Subsidiaries on the date of this Agreement are, and on the Closing Date will be,
good and collectible in the ordinary course of business of API within 120 days
of their incurrence, subject to any applicable reserves set forth in the Interim
Balance Sheet of API. API has no knowledge of any facts or circumstances
generally which would result in any material increase in the uncollectability of
such receivables as a class in excess of the reserves therefor set forth on the
Interim Financial Statements. API Disclosure Letter Schedule 4.14.2 accurately
lists as of November 28, 1997 all receivables arising out of or relating to the
API Business in excess of $1,000, the amount owing and the aging of such
receivable and the name and last known address of the party from whom such
receivable is owing.

4.14.3 FILINGS. API Disclosure Letter Schedule 4.14.3 sets
forth a list of all reports filed by API with the SEC under the Exchange Act
during the period from January 1, 1995 to the date hereof (collectively, the
"SEC REPORTS"), true and correct copies of which have been made available to TDS
and TSR Paging. None of the SEC Reports, as of their respective dates (as
amended through the date hereof) contained any untrue statement of material fact
or omitted to state a material fact with respect to the API Business required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.

Section 4.15 BOOKS AND RECORDS. API and its Subsidiaries have made
and kept (and given TDS and TSR Paging access to) the Books and Records of API,

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which, in all material respects accurately and fairly reflect the activities of
API and its Subsidiaries that would be so recorded.

Section 4.16 LITIGATION. Except as set forth on API Disclosure
Letter Schedules 4.13.2 and 4.16 there is no Action or Order, pending or to the
knowledge of API threatened (a) against, related to or affecting (i) API or any
of its Subsidiaries or the API Assets, or (ii) any shareholders (including TDS)
officers or directors of API or any of its Subsidiaries (in each case, in such
capacity) and which either (A) may be reasonably expected to result in damages
in excess of $100,000 in respect of any individual Order for the payment of
money damages (or $200,000 in the aggregate), or (B) seeks as of the date hereof
to delay, limit or enjoin the transactions contemplated by this Agreement or (b)
in which API or any of its Subsidiaries is a plaintiff, including any derivative
suits brought by or on behalf of API or any of its Subsidiaries. None of API or
any of its Subsidiaries is in default with respect to or subject to any Order,
and to the knowledge of API, there are no unsatisfied Orders against API or any
of its Subsidiaries or the API Assets.

Section 4.17 COMPLIANCE WITH LAW. API and its Subsidiaries are and
have been in compliance in all material respects with all Authorizations,
Regulations, and Permits in respect of the API Assets and the API Business; IT
BEING UNDERSTOOD that nothing in this representation is intended to address any
compliance issues that are the subject of any other representation or warranty
set forth herein.

Section 4.18 BROKERS. Except for the fees payable to PaineWebber,
Inc., in connection with the transactions contemplated hereby, which shall be
paid by API, no broker, investment banker or other person is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of API. A true, correct and complete copy of the engagement letter or
other agreement between API and PaineWebber, Inc. has been delivered to
Purchaser.

Section 4.19. NO OTHER AGREEMENTS TO SELL THE API ASSETS. Except as
contemplated by TDS in the Asset Contribution Agreement, neither API nor any of
its officers, directors or affiliates have any commitment or legal obligation,
absolute or contingent, to any other Person other than TSR Wireless and TSR
Paging to sell, assign, transfer or effect a sale of the API Assets (other than
sales of Inventory in the ordinary course of business), to sell or effect a sale
of the capital stock of API or any of its Subsidiaries (other than in connection
with existing employee stock option and stock purchase plans) to effect any
merger, consolidation, exclusive license, liquidation, dissolution or other
reorganization of API or any of its Subsidiaries, or to enter into any agreement
or cause the entering into of an agreement with respect to any of the foregoing
business combination transactions.

Section 4.20 PROPRIETARY RIGHTS.

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4.20.1 PROPRIETARY RIGHTS. API Disclosure Letter Schedule 4.20
lists all of API and its Subsidiaries' domestic and foreign registrations of
trademarks and of other marks, trade names or other trade rights, and all
pending applications for any such registrations, all of API's and its
Subsidiaries' registered copyrights and all of API's and its Subsidiaries'
patents and pending patent applications, and all agreements under which API or
its Subsidiaries are licensed to use Proprietary Rights.

4.20.2 OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. API or
one of its Subsidiaries owns and/or has the right to use each of the Proprietary
Rights listed on API Disclosure Letter Schedule 4.20. The Proprietary Rights
listed on API Disclosure Letter Schedule 4.20 constitute all of the Proprietary
Rights necessary to conduct the API Business in the manner presently conducted.
None of the Proprietary Rights is involved in any pending or, to the knowledge
of API, threatened litigation. No other Person (i) has the right to use any of
the Proprietary Rights, except pursuant to the Contracts; or (ii) to API's
knowledge, except as set forth in API Disclosure Letter Schedule 4.20, is
infringing upon any Proprietary Rights. To API's knowledge, the use by API and
its Subsidiaries of the Proprietary Rights is not infringing upon or otherwise
violating the rights of any third party. No proceedings have been instituted
against or notices received by API or any of its Subsidiaries that are presently
outstanding alleging that the use by API or any of its Subsidiaries of the
Proprietary Rights infringes upon or otherwise violates any rights of a third
party in or to such Proprietary Rights. All Proprietary Rights are assignable
by API and its Subsidiaries to TSR Wireless in the manner contemplated by the
Asset Contribution Agreement.

Section 4.21 ENVIRONMENTAL MATTERS.

4.21.1 COMPLIANCE WITH ENVIRONMENTAL LAW. Each of API and its
Subsidiaries has complied and is in compliance in all material respects with all
applicable Environmental Laws pertaining to any of the properties and assets of
the API Business (including the Facilities) and the use and ownership thereof,
and to the operation of the API Business. No violation by API or any of its
Subsidiaries is being alleged of any applicable Environmental Law relating to
any of the properties and assets of the API Business including the Facilities or
the use, occupation or ownership thereof, or to the operation of the API
Business.

4.21.2 OTHER ENVIRONMENTAL MATTERS. Neither API nor to the
knowledge of API any other Person (including any tenant or subtenant) has caused
or taken any action that will result in, and neither API nor any of its
Subsidiaries is subject to, any material Liability relating (i) environmental
conditions on, under, or about the Facilities, including without limitation, the
air, soil and groundwater conditions at such Facilities or (ii) the past or
present use, management, handling, transport, treatment, generation, storage,
disposal or Release of any Hazardous Materials. API has disclosed and made
available to TDS and TSR Paging all information, including, without limitation,
all studies, analyses and test results, in the possession, custody or control of
or otherwise known to API relating to (x) the environmental conditions on, under
or about the Facilities, and (y) any Hazardous Materials used, managed,

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handled, transported, treated, generated, stored or Released by API or any other
Person on, under, about or from any of the Facilities, or otherwise in
connection with the use or operation of the API Business.

Section 4.22 TAX MATTERS.

4.22.1 API has (or by the Closing will have) duly and timely
filed all Tax returns relating to the API Business with respect to Taxes through
the Closing Date for which TDS or TSR Wireless could have post-closing liability
("API PCD TAXES") required to be filed on or before the Closing Date ("API PCD
TAX RETURNS"). Except for API PCD Taxes set forth on API Disclosure Letter
Schedule 4.22, which are being contested in good faith and by appropriate
proceedings, the following API PCD Taxes have (or by the Closing Date will have)
been duly and timely paid: (i) all API PCD Taxes shown to be due on the API PCD
Tax Returns, (ii) all deficiencies and assessments of API PCD Taxes of which API
has or by the Closing Date will have received written notice. All Taxes
required to be withheld by or on behalf of API in connection with amounts paid
or owing to any employee, independent contractor, creditor or other party with
respect to API ("API WITHHOLDING TAXES") have been withheld, and such withheld
taxes have either been duly and timely paid to the proper Governmental
Authorities or set aside in accounts for such purpose.

4.22.2 Except as set forth on API Disclosure Letter Schedule
4.22, (i) all API PCD Tax Returns have been examined by the relevant taxing
authority or the period for assessment of the Taxes in respect of which such Tax
returns were required to be filed has expired, and (ii) no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any API PCD Taxes or API Withholding Taxes, and no power of
attorney with respect to any such Taxes, has been filed with the Internal
Revenue Service ("IRS") or any other Governmental Authority.

4.22.3 Except as set forth on API Disclosure Letter Schedule
4.22, (i) there are no API PCD Taxes or API Withholding Taxes for which a
deficiency has been asserted in writing by any Governmental Authority to be due
and (ii) no issue has been raised in writing by any Governmental Authority in
the course of any audit with respect to API PCD Taxes or API Withholding Taxes.
Except as set forth on API Disclosure Letter Schedule 4.22, no API PCD Taxes and
no API Withholding Taxes are currently under audit by any Governmental Authority
of which API has, or will have by the Closing, received written notice.

4.22.4 Except as set forth on API Disclosure Letter Schedule
4.22, there is no assessment or Action or administrative appeal pending, or
threatened of which API has received assessment or written notice against or
relating to API in connection with API PCD Taxes.

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Section 4.23 INFORMATION IN DISCLOSURE DOCUMENTS.

(a) Neither the Schedule 14D-9 nor the information statement to be
filed by API in connection with the Offer pursuant to Rule 14f-1 under the
Exchange Act (the "INFORMATION STATEMENT") nor any of the information supplied
by API specifically for inclusion in the Offer Documents or the Schedule 13E-3
will, at the respective times the Schedule 14D-9, the Information Statement, the
Offer Documents or the Schedule 13E-3 are filed with the SEC or are first
published, sent or given to shareholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Schedule
14D-9 and the Information Statement will comply as to form in all material
respects with the applicable requirements of the Exchange Act and the applicable
rules and regulations thereunder.

(b) The proxy or information statement relating to any meeting of
API's shareholders that may be required to be held in connection with the Merger
(as it may be amended from time to time, the "API PROXY STATEMENT") will not, at
the date mailed to API's shareholders and at the time of the meeting of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies or otherwise. The API Proxy Statement will, when filed
with the SEC by API, comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.

Section 4.24 BENEFIT PLANS; LABOR MATTERS. (a) API Disclosure Letter
Schedule 4.24 contains a complete and accurate list of all Benefit Plans
sponsored, maintained, participated in or contributed to by API or any of its
Subsidiaries ("API BENEFIT PLANS"). Neither API nor any of its Subsidiaries is
now sponsoring, maintaining, participating in or contributing to or has ever
sponsored, maintained, participated in or been obligated to contribute to any
Benefit Plan subject to either Title IV of ERISA or the minimum funding
standards of Section 302 of ERISA, including without limitation any defined
benefit plan (as such term is defined in Section 3(35) of ERISA) or
multiemployer plan (as such term is defined in Section 3(37) of ERISA).

(b) API Disclosure Letter Schedule 4.24 contains a complete and
accurate list of all API Benefit Plans which are sponsored or maintained by API
or one of its Subsidiaries and not by TDS ("API SPONSORED BENEFIT PLANS"). With
respect to each API Sponsored Benefit Plan, API has delivered to Purchaser a
true and correct copy, if applicable, of (i) all plan documents and amendments
thereto, trust agreements and amendments thereto and insurance and annuity
contracts and policies, (ii) the current summary plan description or related
materials given to employees of API and the Subsidiaries to describe such Plan,
(iii) the most recent annual report (Form 5500 series) and accompanying
schedules, (iv) the most recent financial statement, (v) the

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most recent actuarial report, (vi) the most recent determination letter issued
by the IRS and application submitted with respect to such letter, and (vii) all
correspondence with the IRS and Department of Labor concerning any controversy.

(c) With respect to all employees of API and its Subsidiaries, to the
best knowledge of API, each API Benefit Plan has been administered in all
material respects in accordance with its terms and complies in all material
respects with all the requirements prescribed by any and all statutes, orders
and governmental rules and regulations applicable to such API Benefit Plan,
including, but not limited to, ERISA and the Code.

(d) Each API Sponsored Benefit Plan intended to qualify under Section
401(a) and 401(k) of the Code has heretofore been determined by the Internal
Revenue Service to so qualify or a timely application for such determination has
been made, and the trusts created thereunder have heretofore been determined to
be exempt from tax under the provisions of Section 501(a) of the Code or an
application for such determination has been made, and to the knowledge of API no
circumstance has occurred or exists which may reasonably be expected to cause
the loss of such qualifications or exemption.

(e) With respect to all employees of API and its Subsidiaries, there
is no pending or, to the best knowledge of API, threatened claim in respect of
any of the API Benefit Plans other than claims for benefits in the ordinary
course of business.

(f) API and its Subsidiaries have complied in all material respects
with the health care continuation requirements of Part 6 of Title I of ERISA.

(g) Neither API nor any of its Subsidiaries has engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code which could result in a material liability.

(h) Except as described in API Disclosure Letter Schedule 4.24,
neither API nor any of its Subsidiaries maintains or contributes to any employee
welfare benefit plan within the meaning of Section 3(i) of ERISA which provides
benefits to employees or their beneficiaries after termination of employment
other than as required by Part 6 of Title I of ERISA.

(i) Except as described in API Disclosure Letter Schedule 4.24 or in
API SEC Documents filed prior to the date of this Agreement, API is not a party
to or bound by any oral or written:

(i) employee collective bargaining agreement, employment agreement
(other than employment agreements terminable by API without premium or
penalty on notice of 30 days or less under which the only monetary
obligation of API is to make current wage or salary payments and provide
current fringe

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benefits), consulting, advisory or service agreement, deferred compensation
agreement, confidentiality agreement or covenant not to compete;

(ii) contract or agreement with any officer, director or employee
(other than employment agreements disclosed in response to clause (i) or
excluded from the scope of clause (i)), agent, or attorney-in-fact of API;
or

(iii) stock option, stock purchase, bonus or other incentive plan or
agreement.

(j) Except as set forth in API Disclosure Letter Schedule 4.24, API
has complied in all material respects with all applicable laws, rules and
regulations which relate to prices, wages, hours, discrimination in employment
and collective bargaining and to its operations and none of them is liable in
any material respect for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing. API believes that its and its
Subsidiaries' relations with their employees are satisfactory. API is not a
party to, and is not affected by or threatened with, any dispute or controversy
with a union or with respect to unionization or collective bargaining or other
labor matters involving its employees. API is not materially affected by any
dispute or controversy with a union or with respect to unionization or
collective bargaining involving any supplier or customer. API Disclosure Letter
Schedule 4.24 sets forth a description of any union organizing or election
activities involving any non-union employees of API which have occurred since
December 31, 1995 or, to the knowledge of API, are threatened as of the date
hereof.

Section 4.25 OPINION OF FINANCIAL ADVISOR. API has received the
opinion of PaineWebber, Inc., its financial advisor, to the effect that, as of
February 10, 1998, the consideration to be received in the Offer and the Merger,
taken as a whole, by API's shareholders is fair to API's shareholders (other
than TDS) from a financial point of view, a copy of which opinion has been
delivered to TDS.

Section 4.26 CERTAIN AGREEMENTS. Except as set forth in API
Disclosure Letter Schedule 4.26, neither API nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including without limitation any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, under which any compensation or benefits will be increased,
or the vesting of compensation or benefits will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any compensation or benefits will be calculated on the basis of any of
the transactions contemplated by this Agreement.

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TDS AND PURCHASER

TDS and Purchaser represent and warrant to API as follows:

Section 5.1 ORGANIZATION; OWNERSHIP. (a) Each of TDS and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is presently being conducted.

(b) As of the date hereof and immediately prior to the consummation
of the Offer, (i) TDS beneficially owns and will own 12,500,000 Series A Common
Shares and 4,000,000 Common Shares and (ii) TDS owns and will own all of the
outstanding shares of Purchaser.

Section 5.2 AUTHORITY. Each of TDS and Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each of TDS (as a party
hereto and as the sole shareholder of Purchaser) and Purchaser and the
consummation of the Merger and of the other transactions contemplated hereby
have been duly approved by the Board of Directors of each of TDS and Purchaser
and by TDS in its capacity as the sole shareholder of TDS. No other corporate
proceedings on the part of TDS or Purchaser are necessary to authorize the
entering into and the performance of this Agreement and the transactions
contemplated hereby, other than with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the DGCL. This
Agreement has been duly executed and delivered by each of TDS and Purchaser and
constitutes a valid and binding obligation of each of TDS and Purchaser.

Section 5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required by or with respect to TDS or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by TDS and Purchaser or the consummation by TDS and Purchaser of the Merger or
the other transactions contemplated hereby, except for (i) the filing with the
SEC by TDS and Purchaser of the Offer Documents and of such reports as may be
required by Sections 13 and 16(a) of the Exchange Act in connection with this
Agreement and the transactions contemplated hereby, (ii) the filing of the
Certificate of Merger with the Delaware Secretary and appropriate documents with
the relevant authorities of states in which API is qualified to do business and
(iii) such filings, approvals, orders, notices, registrations, declarations and
consents as may be required under any applicable state takeover or similar laws,
and any applicable state environmental laws or laws with respect to the
ownership by a foreign entity of real property. Neither the execution, delivery
or performance of this Agreement nor the consummation of the transactions
contemplated hereby will result in

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any Violation of any of the terms, conditions or provisions of (i) the
respective certificates or articles of incorporation or by-laws or comparable
organizational documents of TDS or Purchaser, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, license, lease, contract, agreement or other
instrument, permit concession, franchise or obligation to which TDS or any of
its Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or affected or (iii) any judgment, order,
writ, injunction, decree, law, statute, rule or regulation applicable to TDS or
any of its Subsidiaries or their respective properties or assets except, in the
case of clause (ii), for Violations that would not prevent or impair the
consummation of the Offer or the Merger in any respect and would not,
individually or in the aggregate, have a material adverse effect on TDS and its
Subsidiaries or on the ability of TDS and Purchaser to perform their obligations
under this Agreement.

Section 5.4 INFORMATION IN DISCLOSURE DOCUMENTS.

(a) None of the Offer Documents or the information supplied by TDS or
Purchaser specifically for inclusion in the Schedule 14D-9 will, at the
respective times the Offer Documents (including any amendments or supplements
thereto) or the Schedule 14D-9 are filed with the SEC or are first published,
sent or given to shareholders, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.

(b) None of the information supplied by TDS or Purchaser specifically
for inclusion or incorporation by reference in API Proxy Statement will, at the
date mailed to API's shareholders and at the time of the meeting of
shareholders, if required by applicable law to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.

Section 5.5 BROKERS. Except for the fees payable to Credit Suisse
First Boston and BancBoston Securities, Inc. in connection with the transactions
contemplated hereby, which shall be paid by TDS, no broker, investment banker or
other person is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of TDS and Purchaser.

ARTICLE VI
COVENANTS

Section 6.1 CONDUCT OF API BUSINESS. From the date hereof through
the Closing API, except as contemplated by this Agreement, or as consented to by
TDS in writing, shall operate its business in the ordinary course and
substantially in accordance with past practice (except with respect to certain
FCC Licenses and FCC

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License Applications and certain reductions in planned License build-outs as
described in API Disclosure Letter Schedule 4.12.6) and will use its best
efforts not to take any action inconsistent with this Agreement. Without
limiting the generality of the foregoing, API and each of its Subsidiaries shall
not, except as specifically contemplated by this Agreement:

6.1.1 change or amend the Certificate of Incorporation or Bylaws
of API or any of API's Subsidiaries, except as otherwise required by law;

6.1.2 issue, reissue, sell or pledge or authorize or propose the
issuance, reissuance, sale or pledge of any of its capital stock of any class,
or securities convertible or exchangeable into capital stock of any class, or
any rights, warrants or options to acquire any convertible or exchangeable
securities or capital stock, other than the issuance of Common Shares upon the
exercise of stock options outstanding on the date of this Agreement under API
Option Plans in accordance with their present terms;

6.1.3 declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) on or in respect of any class or series of its capital stock or
otherwise make any payments to its shareholders in their capacity as such;

6.1.4 (i) adjust, split, combine, subdivide or reclassify any of
its capital stock or (ii) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any shares of capital stock of API or of
any of its Subsidiaries or any other securities thereof or any rights, options
or warrants to acquire such shares or other securities;

6.1.5 enter into, extend, modify, terminate or renew any
Contract disclosed, or which would have been required to be disclosed on API
Disclosure Letter Schedule 4.7 if entered into, extended or modified prior to
the date of this Agreement, or any Real Property Lease;

6.1.6 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any FCC License, FCC License Application except
those previously identified in API Disclosure Letter Schedule 6.1.6 or any other
API Assets, or any interests therein other than sales and leases of Inventory in
the ordinary course of business;

6.1.7 acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any Person;

6.1.8 fail to expend funds for budgeted capital expenditures or
commitments as set forth in the budget of API attached as Exhibit I to the Asset
Contribution Agreement including, without limitation, maintaining levels of
spare parts

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sufficient to maintain and upgrade the network infrastructure as reasonably
necessary and maintain the present level of Pagers in Service;

6.1.9 fail to maintain the API Assets in substantially their
current state of repair, excepting normal wear and tear, or fail to replace
consistent with API's past practice inoperable, worn-out or obsolete or
destroyed API Assets or fail to maintain the Inventory levels of API and its
Subsidiaries at the levels on the Interim Balance Sheet Date (subject to
reductions in Inventory not exceeding ten (10) percent of such Inventory on the
Interim Balance Sheet Date in accordance with prudent business practice);

6.1.10 make any loans or advances to any Person, except for
normal advances in respect of expenses incurred by employees in the ordinary
course of business.

6.1.11 take or omit to take any action which will result in the
further default under (not otherwise waived) or any acceleration of any API
Intercompany Liabilities or any other Financing Obligations;

6.1.12 fail to take all commercially reasonable actions
reasonably necessary to retain employees of API and its Subsidiaries in the
employment of API or the applicable Subsidiary through the Closing;

6.1.13 do any other act which would cause any representation or
warranty of API in this Agreement to be or become untrue in any material
respect;

6.1.14 except as may be required by applicable law, enter into
or amend any employment, severance or similar agreements or arrangements with
any of their respective directors or executive officers;

6.1.15 except as may be required by applicable law, amend in any
material respect the terms of their respective employee benefit plans, programs
or arrangements or any severance or similar agreements or arrangements in
existence on the date hereof, enter into or amend any employment or consulting
agreement, adopt or enter into any new employee benefit programs or arrangements
or any severance or similar agreements or arrangements; or

6.1.16 enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder.

Section 6.2 REASONABLE BEST EFFORTS. Upon the terms and subject to
the conditions of this Agreement, each of the parties hereto will use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including
(i) the obtaining of all

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necessary actions or non-actions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by any Governmental Authority, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any claims, investigations, actions, lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by this Agreement. Each party will promptly consult with the other
with respect to, provide any necessary information with respect to and provide
the other (or its counsel) copies of, all filings made by such party with any
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby. In addition, if at any time prior to the Effective Time
any event or circumstance relating to any of API, TDS or Purchaser or any of
their respective Subsidiaries, or any of their respective officers or directors,
should be discovered by API, TDS or Purchaser, as the case may be, and which
should be set forth in an amendment or supplement to the Offer Documents, the
discovering party will promptly inform the other party of such event or
circumstance.

Section 6.3 ACCESS TO INFORMATION.

6.3.1 From the date hereof through the Closing, API shall, and
shall cause its officers, directors and employees to, afford TDS and TSR Paging
and their respective Representatives, during normal business hours and upon
reasonable notice to API and in a manner which will not interfere with the
operation of the API Business, complete access at all reasonable times to the
API Assets and the API Business for the purpose of inspecting the same, and to
the officers and employees of API, and shall furnish TDS and TSR Paging and its
authorized representatives all financial, operating and other data and
information as TDS or TSR Paging, as the case may be, may reasonably request,
except to the extent that such access would violate any governmental regulation,
law or order to which API, its employees or the API Assets are subject; PROVIDED
that API shall have the right to have Representatives present at all such times;
and PROVIDED FURTHER that such access shall be at the expense of TDS or TSR
Paging, as the case may be.

6.3.2 TSR Paging shall have the right, at its sole cost and
expense to (i) after consultation with and with the consent of API (not to be
unreasonably withheld or delayed) conduct tests of the soil surface or
subsurface waters and air quality at, in, on, beneath or about the Real Property
Leases, and such other procedures as may be recommended by an independent
environmental consultant selected by TSR Paging (the "CONSULTANT") based on its
reasonable professional judgment, in a manner consistent with good engineering
practice, (ii) inspect records, reports, permits, applications, monitoring
results, studies, correspondence, data and any other information or documents
relevant to

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environmental conditions or environmental noncompliance, and (iii) inspect all
buildings and equipment at the Facilities, including without limitation the
visual inspection of the Facilities for asbestos-containing construction
materials; PROVIDED, in each case, such tests and inspections shall be conducted
only (a) during regular business hours; and (b) in a manner which will not
interfere with the operation of the API Business and/or the use of, access to or
egress from the Facilities.

6.3.3 TSR Paging's right to conduct tests, inspect records
and other documents, and visually inspect all buildings and equipment at the
Facilities shall also be subject to the following terms and conditions:

(i) All testing performed on TSR Paging's behalf shall be
conducted by the Consultant;

(ii) A Representative of TDS shall have the right to
accompany the Consultant as it performs testing;

(iii) Except as otherwise required by law, any information
concerning the Real Property Leases gathered by TSR Paging or the Consultant as
the result of, or in connection with, the testing shall be kept confidential in
accordance with subsection (iv) below and shall not be revealed to, or discussed
with, anyone other than Representatives of TSR Paging or Representatives of TDS
who agree to comply with the provisions of subsection (iv) below; and

(iv) In the event that any party to this Agreement or any
party set forth in subsection 6.3.3(iii) is requested or required to disclose
information described in subsection 6.3.2, TSR Paging shall provide API and TDS
or TDS or API shall provide TSR Paging, as the case may be, with prompt notice
of such request so that TDS, API or TSR Paging, as the case may be, may seek an
appropriate protective order or waiver by the other party's compliance with this
Agreement. If, in the absence of a protective order or the receipt of a waiver
hereunder, such party is nonetheless, in the opinion of its counsel, compelled
to disclose such information to any tribunal or else stand liable for contempt
or suffer other censure or penalty, such party will furnish only that portion of
the information which is legally required and will exercise its reasonable
efforts to obtain reliable assurance that confidential treatment will be
afforded to the disclosed information. The requirements of this subsection
6.3.3(iv) shall not apply to information in the public domain or lawfully
acquired on a nonconfidential basis from others.

Section 6.4 SHAREHOLDER APPROVAL. (a) If approval of this Agreement
and the Merger by the shareholders of API is required by law, API will, at TDS's
request, duly call a special meeting of its shareholders for the purpose of
voting upon this Agreement (insofar as it relates to the Merger), the Merger and
related matters and use its reasonable best efforts duly to give notice of,
convene and hold such meeting as soon as practicable following consummation of
the Offer. API will, through its Board of Directors, recommend to its
shareholders approval and adoption of this Agreement and

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approval of the Merger, except to the extent that the Board of Directors of API
shall have withdrawn its approval or recommendation of this Agreement or the
Merger as permitted by SECTION 6.6(b). At the shareholders' meeting, TDS and
Purchaser shall cause all Series A Common Shares and Common Shares then owned by
them and their subsidiaries to be voted in favor of the approval of this
Agreement and the Merger. Notwithstanding the foregoing, if Purchaser or any
other Subsidiary of TDS shall acquire at least 90% of the outstanding Common
Shares, the parties shall, subject to Article VII, at the request of TDS, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the consummation of the Offer without a meeting of
shareholders in accordance with Section 253 of the DGCL.

(b) If approval of this Agreement and the Merger by the shareholders
of API is required by law, API will, at TDS's request, as soon as practicable
following the consummation of the Offer, prepare and file a preliminary API
Proxy Statement with the SEC and will use its reasonable best efforts to respond
to any comments of the SEC or its staff and to cause the API Proxy Statement to
be mailed to API's shareholders. API will notify TDS promptly of the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the API Proxy Statement or for additional
information and will supply TDS with copies of all correspondence between API or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the API Proxy Statement or the Merger. If at any
time prior to the approval of this Agreement by API's shareholders there shall
occur any event that should be set forth in an amendment or supplement to the
API Proxy Statement, API will promptly notify TDS thereof and prepare and mail
to its shareholders such an amendment or supplement. API will not mail any API
Proxy Statement, or any amendment or supplement thereto, to which TDS reasonably
objects.

Section 6.5 API OPTION PLANS. (a) Subject to the next sentence, API
shall use its reasonable best efforts to cause each holder of an outstanding
option with an exercise price less than the Merger Consideration (collectively,
the "EMPLOYEE OPTIONS") to purchase Common Shares granted under API Option Plans
to agree in writing prior to the Effective Time that (i) such holder shall be
entitled to receive from API on the Closing Date, in lieu of such Employee
Option, an amount in cash in respect of each Common Share subject to such
Employee Option equal to the excess, if any, of the Merger Consideration over
the per share exercise price of such Employee Option (it being understood that
if there is no such excess with respect to any such Employee Option, such holder
will not be entitled to receive any cash, securities or other consideration with
respect thereto) and (ii) such Employee Option shall be canceled immediately
prior to the Effective Time. Notwithstanding the foregoing, API shall use its
reasonable best efforts to cause each person, if any, subject to Section 16(b)
of the Exchange Act to whom an Employee Option was granted six months or less
before the Effective Time, whether or not then exercisable, to agree in writing
prior to the Effective Time (but effective as of and upon the Effective Time)
that (i) each such Employee Option shall be canceled as of the date of such
agreement; (ii) no Common Shares shall be issued in respect thereof; and (iii)
such person shall be entitled to receive from API on the date (the "OPTION
PAYMENT DATE") that is six months and one day following

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the date of grant of such option (but in no event earlier than the Closing
Date), in lieu of such Employee Option, a payment equal to the aggregate amount
of cash, if any, determined under the preceding sentence; PROVIDED that such
person shall not be entitled to receive any such amount if prior to the Option
Payment Date such person (x) terminates his employment by the Surviving
Corporation or any of its Subsidiaries, otherwise than as a result of death or
disability or (y) is terminated by the Surviving Corporation or any of its
Subsidiaries for cause. All amounts payable pursuant to this SECTION 6.5(a)
shall be subject to any applicable withholding taxes and shall be paid without
interest.

(b) API shall use its reasonable best efforts to ensure that from and
after the Effective Time neither the Surviving Corporation nor any of its
Subsidiaries is or will be bound by any options, warrants, rights or agreements
which would entitle any person, other than TDS, Purchaser or their wholly owned
Subsidiaries, to beneficially own, or receive any payments (other than as
otherwise contemplated by SECTION 3.1 and this SECTION 6.5) in respect of, any
capital stock of API or the Surviving Corporation.

Section 6.6 NO SOLICITATION. (a) From the date hereof through the
Effective Time or the earlier termination of this Agreement, API shall not, and
shall use its best efforts to cause its Representatives not to, directly or
indirectly, enter into, solicit, initiate or continue any discussions or
negotiations with, or encourage or respond to any inquires or proposals by, or
participate in any negotiations with, or provide any information to, or
otherwise cooperate in any other way with, any Person, other than TDS or TSR
Paging and their respective Representatives, concerning any sale of all or any
substantial portion of the API Assets or the API Business, or of any shares of
capital stock of API or its Subsidiaries, or any merger, consolidation,
liquidation, dissolution or exclusive licensing arrangement or similar
transaction involving API or its Subsidiaries (each such transaction being
referred to herein as a "PROPOSED API ACQUISITION TRANSACTION"); PROVIDED,
HOWEVER, that prior to the acceptance for payment of Common Shares pursuant to
the Offer, to the extent required by the fiduciary obligations of the Board of
Directors of API, as determined in good faith by the Board of Directors based on
the written advice of outside counsel (a copy of which written advice shall be
promptly furnished to TDS), API may, in response to unsolicited requests
therefor, participate in discussions or negotiations with, or furnish
information pursuant to an appropriate confidentiality agreement approved by
API's Board of Directors to, any person.

(b) Neither the Board of Directors of API nor any committee thereof
(including the API Special Committee) shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to TDS or Purchaser, the approval or
recommendation by the Board of Directors of API or any such committee of the
Offer, this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or

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recommend, any Proposed API Acquisition Transaction. Notwithstanding the
foregoing, the Board of Directors of API or any committee thereof, to the extent
required by the fiduciary obligations thereof, as determined in good faith by
the Board of Directors of API or such committee, as the case may be, based on
the written advice of outside counsel (a copy of which written advice shall be
promptly furnished to TDS), may approve or recommend (and, in connection
therewith, withdraw or modify its approval or recommendation of the Offer, this
Agreement or the Merger) a superior proposal and API may take such actions as
are contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the Exchange
Act. For purposes of this Agreement, "superior proposal" means a bona fide
written proposal made by a third party to acquire API pursuant to a tender or
exchange offer, a merger, a statutory share exchange, a sale of all or
substantially all its assets or otherwise on terms which the API Special
Committee determines in its good faith reasonable judgment (based on the advice
of independent financial advisors) to be more favorable to API and its
shareholders than the Offer and the Merger and for which financing, to the
extent required, is then fully committed or which, in the reasonable good faith
judgment of the API Special Committee (based on the advice of independent
financial advisors), is reasonably capable of being financed by such third
party.

(c) API shall promptly notify TDS if any discussions or negotiations
are sought to be initiated, any inquiry or proposal is made, or any information
is requested with respect to any Proposed API Acquisition Transaction and notify
TDS of the terms of any proposal which it may receive in respect of any such
Proposed API Acquisition Transaction, including, without limitation, the
identity of the prospective purchaser or soliciting party, except to the extent
that any such notification would violate any now existing agreement of API.

Section 6.7 FEES AND EXPENSES. All fees and expenses incurred in
connection with the Offer, the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.

Section 6.8 NOTIFICATION OF CERTAIN MATTERS. API shall give prompt
notice to TDS and Purchaser, and TDS (or Purchaser, as the case may be) shall
give prompt notice to API, of (a) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be reasonably likely to
cause (i) any representation or warranty contained in this Agreement that is
qualified as to materiality to be untrue or incorrect or any representation or
warranty that is not so qualified to be untrue or incorrect in any material
respect or (ii) any covenant, condition or agreement contained in this Agreement
not to be complied with or satisfied in any material respect, (b) any failure of
API, TDS or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect and (c) any change or event which has or is
reasonably likely to have a material adverse effect on API or TDS and its
Subsidiaries, as the case may be; PROVIDED, HOWEVER, that the delivery of any
notice pursuant to this SECTION 6.8 will not

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limit or otherwise affect the remedies available hereunder to the party
receiving such notice.

Section 6.9 PUBLIC ANNOUNCEMENTS. API, TDS and Purchaser will
consult with each other before issuing any press releases or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press releases or make any such public
statements prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any securities
exchange.

Section 6.10 STATE TAKEOVER LAWS. If any "fair price", "control
share acquisition" or "business combination" statute or other takeover or tender
offer statute or regulation shall become applicable to the transactions
contemplated by this Agreement, TDS, Purchaser and API and their respective
Boards of Directors shall use their reasonable best efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of such statute or
regulation on the transactions contemplated hereby.

Section 6.11 INDEMNIFICATION OF OFFICERS AND DIRECTORS. For six
years from and after the Effective Time, TDS agrees, to the extent permitted by
law, to cause the Surviving Corporation to indemnify and hold harmless all
current officers and directors of API and of its Subsidiaries to the same extent
such persons are currently indemnified by API pursuant to API's Restated
Certificate of Incorporation and By-Laws for acts or omissions occurring at or
prior to the Effective Time. TDS will cause to be maintained for a period of
not less than six years from the Effective Time the current directors' and
officers' insurance and indemnification policy of TDS to the extent that it
provides coverage for events occurring prior to the Effective Time (the "TDS D&O
Insurance") for all directors and officers of API on the date hereof. The
provisions of this SECTION 6.11 are for the benefit of and may be enforced after
the Effective Time by such officers and directors.

Section 6.12 SHAREHOLDER LITIGATION. Each of TDS and API shall use
their reasonable best efforts to settle, and API shall give TDS the opportunity
to direct the defense of, any shareholder litigation against API and its
directors relating to the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that no such settlement shall be agreed to without TDS's consent, which
shall not be unreasonably withheld; and PROVIDED FURTHER that no settlement
requiring a payment by a director shall be agreed to without such director's
consent.

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ARTICLE VII
CONDITIONS

Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of the parties to effect the Merger are
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:

(a) Purchaser shall have accepted for purchase and paid for all
Common Shares validly tendered and not withdrawn pursuant to the Offer;
PROVIDED, HOWEVER, that this condition shall not be applicable to the
obligations of TDS or Purchaser if, in breach of this Agreement or the terms of
the Offer, Purchaser fails to accept for payment the Common Shares tendered
pursuant to the Offer.

(b) If required by applicable law, this Agreement (insofar as it
relates to the Merger) and the Merger shall have been approved and adopted by
the requisite affirmative vote or consent of the holders of Common Shares in
accordance with applicable law and API's Restated Certificate of Incorporation.

(c) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or governmental body or authority which prohibits the
consummation of the transactions contemplated herein substantially on the terms
contemplated hereby. In the event any order, decree or injunction shall have
been issued, each party shall use its reasonable efforts to remove any such
order, decree or injunction.

Section 7.2 CONDITIONS TO TDS'S OBLIGATION TO EFFECT THE MERGER.
TDS's obligation to effect the Merger is subject to the Asset Contribution
Agreement being in full force and effect and not terminated in accordance with
the terms thereof and all of the conditions set forth in Articles XI and XII
thereof shall have been satisfied or waived.

ARTICLE VIII
TERMINATION

Section 8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of any
matters presented in connection with the Merger by the shareholders of API:

(a) by mutual written consent duly authorized by the Board of
Directors of TDS and API, if such termination is also approved by the API
Special Committee;

(b) by either TDS or API if:

(i) the Effective Time shall not have occurred on or before
September 30, 1998; PROVIDED, HOWEVER, that the right to terminate this
Agreement under

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this SECTION 8.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date or

(ii) there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or any court of competent
jurisdiction or other Governmental Authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or

(c) By TDS if due to an occurrence or circumstance that would result
in a failure to satisfy any condition set forth in ANNEX II hereto, Purchaser
shall have:

(i) failed to commence the Offer within 60 days following the date
of this Agreement,

(ii) terminated the Offer without having accepted any Common Shares
for payment thereunder, or

(iii) failed to pay for Common Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure to pay
for Common Shares shall have been caused by or resulted from the failure of
TDS or Purchaser to perform in any material respect any material covenant
or agreement of either of them contained in this Agreement or the material
breach by TDS or Purchaser of any material representation or warranty of
either of them contained in this Agreement; or

(d) By API, upon approval of the Board of Directors and the API
Special Committee, if due to an occurrence or circumstance that would result in
a failure to satisfy any of the conditions set forth in ANNEX II hereto,
Purchaser shall have:

(i) failed to commence the Offer within 60 days following the date
of this Agreement,

(ii) terminated the Offer without having accepted any Common Shares
for payment thereunder, or

(iii) failed to pay for Common Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure to pay
for Shares shall have been caused by or resulted from the failure of API to
perform in any material respect any material covenant or agreement of it
contained in this Agreement or the material breach by API of any material
representation or warranty of it contained in this Agreement; or

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(e) By API, upon approval of the Board of Directors of API and the
API Special Committee, if any representation or warranty of TDS and Purchaser in
this Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified shall
not be true and correct in any material respect, in each case as if such
representation or warranty was made as of such time on or after the date of this
Agreement; or TDS or Purchaser shall have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of TDS or Purchaser to be performed or complied with by it under
this Agreement.

(f) By TDS, upon approval of the Board of Directors of TDS, if any
representation or warranty of API in this Agreement which is qualified as to
materiality shall not be true and correct or any such representation or warranty
that is not so qualified shall not be true and correct in any material respect,
in each case as if such representation or warranty was made as of such time on
or after the date of this Agreement; or API shall have failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of API to be performed or complied with by it under this
Agreement.

(g) By TDS if the Board of Directors of API or any committee thereof
(including the Special Committee) (A) shall withdraw, modify or change in any
adverse manner (including by amendment of the Schedule 14D-9) to TDS or
Purchaser its approval of this Agreement, the Offer or the Merger, (B) shall
approve or recommend any Proposed API Acquisition Transaction in each case,
other than by TDS or an Affiliate of TDS or (C) shall resolve to take any of the
actions specified in clauses (A) or (B) above.

The party desiring to terminate this Agreement pursuant to this SECTION 8.1
(other than pursuant to SECTION 8.1(a)) shall give notice of termination to the
other party in accordance with SECTION 9.4.

Section 8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either API or TDS as provided in SECTION 8.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of TDS, Purchaser or API, and each shall be responsible
for its own expenses except (a) the agreements contained in this SECTION 8.2 and
SECTION 6.7 and ARTICLE IX shall survive termination hereof and (b) nothing
herein will relieve any party from liability for any willful breach hereof.

ARTICLE IX
MISCELLANEOUS

Section 9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. SECTION 6.11 and this ARTICLE IX and, without limitation by the
specific enumeration of the foregoing, each and every other agreement contained
in this

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Agreement or any instrument or other document delivered pursuant to this
Agreement and which contemplates performance after the Effective Time shall
survive the Merger. None of the representations, warranties and agreements
(other than those agreements referred to in the previous sentence of this
SECTION 9.1 in the event of the Merger and those agreements referred to in
SECTION 8.2 in the event of the termination of this Agreement in accordance with
SECTION 8.1) in this Agreement or in any instrument or other document delivered
pursuant to this Agreement shall survive the earlier of the Effective Time or
the termination of this Agreement pursuant to SECTION 8.1, as the case may be.

Section 9.2 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of API, but, after any such approval, no
amendment will be made which by law requires further approval by such
shareholders without such further approval; PROVIDED, HOWEVER, that such
amendment shall be approved by the API Special Committee. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.

Section 9.3 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver will be
valid only if set forth in a written instrument signed on behalf of such party
and, in the case of any waiver or extension by which API is to be bound, only if
approved by the Special Committee.

Section 9.4 NOTICES. All notices under this Agreement shall be in
writing and shall be deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by telecopy, electronic or digital
transmission method provided that such transmission is confirmed by telephone;
the day after it is sent, if sent for next day delivery to a domestic address by
overnight mail; and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:

(a) if to TDS or Purchaser, addressed to:

30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602
Telecopy No.: (312) 630-9299
Attention: Chief Financial Officer

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with a copy to:

Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: James G. Archer
Telecopy No.: (212) 906-2021

1300 Godward Street Northeast
Suite 3100
Minneapolis, Minnesota 55413-1767
Attention: President
Telecopy No.: (612) 623-4413

with a copy to:

Ms. Jean B. Keffeler
Independent Management Consultant
3424 Zenith Avenue, South
Minneapolis, Minnesota 55416

and a copy to:

Mr. Edwin L. Russell
Chairman
Minnesota Power and Light Company
30 West Superior Street
Duluth, Minnesota 55802

and a copy to:

Mr. Richard L. Williams III
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle Street
Suite 2600
Chicago, Illinois 60601
Telecopy No.: (312) 609-5005

or to such other address as any party may have specified to the others using the
procedures specified in this SECTION 9.4.

Section 9.5 INTERPRETATION. When a reference is made in this
Agreement to a Section, such reference will be to a Section of this Agreement
unless otherwise

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indicated. The headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation of this
Agreement.

Section 9.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same agreement
and will become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

Section 9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) other than SECTION 6.11 (which is intended to be
for the benefit of the persons covered thereby and may be enforced by such
persons), are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.

Section 9.8 GOVERNING LAW. Except to the extent that Delaware Law is
mandatorily applicable to the transactions contemplated by this Agreement, this
Agreement will be governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts made, executed, delivered and
performed wholly within the State of New York, without regard to any applicable
conflicts of law.

Section 9.9 SPECIFIC PERFORMANCE. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties will be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.

Section 9.10 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that TDS and Purchaser may assign
all or any of their rights and obligations hereunder to any Affiliate of TDS
provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.

Section 9.11 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provisions hereof, which will remain in full force and effect.

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IN WITNESS WHEREOF, TDS, Purchaser and API have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.

TELEPHONE AND DATA SYSTEMS, INC.

By: /s/ LeRoy T. Carlson, Jr.
------------------------------------
Name: LeRoy T. Carlson, Jr.
Title: President

API MERGER CORP.

By: /s/ Scott H. Williamson
------------------------------------
Name: Scott H. Williamson
Title: Vice President

AMERICAN PAGING, INC.

By: /s/ Terrence T. Sullivan
------------------------------------
Name: Terrence T. Sullivan
Title: President

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ANNEX I

DEFINITIONS

1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.

"ACTION" shall mean any action, claim, suit, litigation,
administrative appeal, proceeding, labor dispute, arbitral action, governmental
audit, inquiry, criminal prosecution, investigation or unfair labor practice
charge or complaint.

"AFFILIATE" of a Person shall mean a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.

"AMS" shall mean American Messaging Services, LLC, a Minnesota limited
liability company.

"API ASSETS" shall mean all the right, title and interest of API and
its Subsidiaries in and to properties, assets and rights of any kind, whether
tangible or intangible, real or personal, except for the API Excluded Assets.

"API BUSINESS" shall mean the business and operations of API and its
Subsidiaries relating generally to the provision of paging and wireless
messaging services, the sale and support of pagers and other
telecommunications-related products and services and the provision of technical
and repair services in connection therewith.

"API DISCLOSURE LETTER" shall mean the letter delivered by API dated
as of the date hereof which set forth certain exceptions to the representations
and warranties contained in Article IV and certain other information called for
by this Agreement.

"API EXCLUDED ASSETS" shall mean (i) all stock and other ownership
interests of API and its Subsidiaries (other than AMS) in Subsidiaries of API
(other than AMS), (ii) the API assets listed on Schedule 1.1 to the Asset
Contribution Agreement, (iii) any Liabilities of TDS (or its Subsidiaries, other
than API and its Subsidiaries) to API and its Subsidiaries; (iv) all insurance
policies of API and its Subsidiaries, (v) all refunds of any Tax that API, or
any member of an affiliated, consolidated, combined or unitary group of which
API is also a member, paid pursuant to Section 6.22, Section

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14.4.2 or Section 14.5.2 of the Asset Contribution Agreement and (vi) any
deferred Tax Liability as described in note 2 to the 1996 API Financial
Statements.

"API FINANCIAL STATEMENTS" shall mean (i) the audited consolidated
balance sheet of API and its Subsidiaries (other than AMS) as of December 31,
1997, the related consolidated statements of income and cash flow of API and its
Subsidiaries (other than AMS) for the year ended December 31, 1997, the audited
balance sheet of AMS as of December 31, 1996 and the related statement of income
and cash flow of AMS for the year ended December 31, 1996 (and, following
delivery thereof to TDS, for the year ended December 31, 1997) (collectively,
the "API AUDITED FINANCIAL STATEMENTS"), and (ii) the unaudited consolidated
balance sheet of API and its Subsidiaries (other than AMS) dated September 30,
1997, and the related unaudited consolidated statements of income of API and its
Subsidiaries (other than AMS) for the nine (9) months ended September 30, 1997,
the cash flow statement of API and its Subsidiaries (other than AMS) for the
nine (9) months ended September 30, 1997, the unaudited balance sheet of AMS
dated September 30, 1997, and the related unaudited statement of income of AMS
for the nine (9) months ended September 30, 1997 and the cash flow statement of
AMS for the nine (9) months ended September 30, 1997 (the "API UNAUDITED
FINANCIAL STATEMENTS").

"API INTERCOMPANY LIABILITIES" shall mean all Liabilities of API (or
its Subsidiaries) to TDS or its other Subsidiaries including, without
limitation, Liabilities under the API Note.

"API NOTE" shall mean that certain revolving credit agreement between
TDS and API, effective as of January 1, 1994 and that certain loan note made by
API in favor of TDS pursuant thereto.

"API/TDS AGREEMENTS" shall mean the agreements between API and TDS
listed in Item 4 of Schedule 1.1 of the Asset Contribution Agreement.

"AUTHORIZATION" of a Person shall mean any consent, approval, waiver
or authorization of, expiration or termination of any waiting period requirement
(including pursuant to the HSR Act) of, or filing, registration, qualification,
declaration or designation with or by, any Governmental Authority.

"BENEFIT PLAN" shall mean any retirement, savings, profit sharing,
deferred compensation, severance, stock ownership, stock purchase, stock option,
performance, bonus, incentive, vacation or holiday pay, hospitalization or other
medical, disability, life or other insurance, or other welfare benefit or fringe
benefit plan, policy, trust, understanding or arrangement of any kind, whether
written or oral, with or for the benefit of any present or prior officer,
director, employee, agent or consultant (including, without limitation, each
employment, compensation, deferred compensation, severance or consulting
agreement or arrangement associated with a change in ownership or control of
API, but excluding employment agreements terminable by API

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without premium or penalty on notice of 30 days or less under which the only
monetary obligation of API is to make current wage or salary payments and
provide current fringe benefits), with respect to which API is or will be
required to make any payment.

"BOOKS AND RECORDS" of API shall mean (a) all records and lists of API
and its Subsidiaries pertaining to the API Assets, as applicable, (b) all
records and lists of API and its Subsidiaries pertaining to the API Business,
customers, suppliers or personnel of API and its Subsidiaries, (c) all product,
business and marketing plans of API and its Subsidiaries and (d) all books,
ledgers, files, reports, plans, drawings and operating records of every kind
maintained by API and its Subsidiaries, but excluding the originals of API's
minute books, stock books and tax returns, and books and records pertaining to
API Excluded Assets.

"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended.

"CONSENT" shall mean any consent, approval or waiver of a Person, not
including the Authorization of any Governmental Authority.

"CONTRACTS" shall mean all contracts, leases, licenses (other than
Permits), commitments, understandings and agreements to which API or any of its
Subsidiaries is a party or is bound, whether oral or written, including, without
limitation, all reseller agreements, the Real Property Leases and the Personal
Property Leases.

"DEFAULT" shall mean (i) a breach of or default under any Contract,
FCC License, Real Property Lease or Personal Property Lease or other agreement
to which a Person is party or subject, (ii) the occurrence of an event that with
the passage of time or the giving of notice or both would constitute a breach of
or default under any of the foregoing, or (iii) the occurrence of an event that
with or without the passage of time or the giving of notice or both would give
rise to a right of termination, renegotiation or acceleration under any of the
foregoing.

"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.

"ENVIRONMENTAL LAWS" shall mean all Regulations which regulate or
relate to the protection or clean-up of the environment, the use, treatment,
storage, transportation, generation, manufacture, processing, distribution,
handling or disposal of, or emission, discharge or other release or threatened
release of, Hazardous Substances or otherwise dangerous substances, wastes,
pollution or materials (whether, gas, liquid or solid), the preservation or
protection of waterways,

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groundwater, drinking water, air, wildlife, plants or other natural resources,
or the health and safety of Persons or property, including without limitation
protection of the health and safety of employees. Environmental Laws shall
include, without limitation, the Federal Insecticide, Fungicide, Rodenticide
Act, Resource Conservation & Recovery Act, Clean Water Act, Safe Drinking Water
Act, Atomic Energy Act, Occupational Safety and Health Act, Toxic Substances
Control Act, Clean Air Act, Comprehensive Environmental Response, Compensation
and Liability Act, Emergency Planning and Community Right-to-Know Act, Hazardous
Materials Transportation Act and all analogous or related federal, state or
local law, each as amended.

"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

"ERISA AFFILIATE" of API shall mean any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, API as
defined in Section 414(b), (c), (m) or (o) of the Code.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

"FACILITIES" shall mean all real property or facilities owned, leased
or used anytime by API and/or its Subsidiaries (or a predecessor or Affiliate of
API and/or its Subsidiaries).

"FCC" shall mean the Federal Communications Commission or any
successor body thereto.

"FCC LICENSE" shall mean any license, construction permit, consent,
certificate of compliance, approval or Authorization of API issued by the FCC
authorizing operations in, INTER ALIA, Public Mobile Services pursuant to Part
22 of the FCC Rules, Personal Communications Services pursuant to Part 24 of
the FCC Rules, Domestic Fixed Satellite Service pursuant to Part 25 of the FCC
Rules, Private Land Mobile Radio Services pursuant to Part 90 of the FCC Rules
(including one-way paging operations on exclusive and non-exclusive channels in
the 929-930 MHz frequency band), and Fixed Microwave Radio Services pursuant to
Part 101 of the FCC Rules, or other license, permit, consent, certificate of
compliance, franchise approval or Authorization of the FCC or construction
permit in respect of any of the foregoing.

"FCC LICENSE APPLICATION" shall mean an application by API for an FCC
License.

"FCC RULES" shall mean the Rules and Regulations of the FCC
promulgated under the Communications Act, as amended.

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"FINANCING OBLIGATIONS" shall mean (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, notes, debentures or similar
instruments (other than surety or similar bonds), (iii) obligations under
capitalized leases, (iv) obligations under conditional sale, title retention or
similar agreements or arrangements creating an obligation with respect to the
deferred purchase price of property (other than customary trade credit), and
(v) obligations to guarantee any of the foregoing types of obligations on behalf
of others.

"FIXTURES AND EQUIPMENT" shall mean all of the furniture, fixtures,
furnishings, machinery, automobiles, trucks, spare parts, supplies, equipment
and other tangible personal property owned or used by API and its Subsidiaries.

"FULLY DILUTED SHARES" shall mean all outstanding securities entitled
generally to vote in the election of directors of API on a fully diluted basis,
after giving effect to the exercise or conversion of all options, rights and
securities exercisable or convertible into such voting securities. .

"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied in accordance with past practice, as in
effect on the date hereof.

"GOVERNMENTAL AUTHORITY" shall mean any governmental or political
subdivision or department thereof, any governmental or regulatory body,
commission, board, bureau, agency or instrumentality, or any court or arbitrator
or alternative dispute resolution body, in each case whether domestic or
foreign, federal, state or local.

"HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, chemical,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitible or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including, without limitation, any quantity
of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, pesticide waste waters, sludges,
slag and any other substance, material or waste that is subject to regulation,
control or remediation under any Environmental Laws.

"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.

"INTERIM BALANCE SHEET" shall mean the unaudited consolidated balance
sheet of API as of the Interim Balance Sheet Date, as included in the API
Unaudited Financial Statements.

"INTERIM BALANCE SHEET DATE" shall mean September 30, 1997.

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"INVENTORY" shall mean all of API's and its Subsidiaries' inventory
held for resale, lease or repair including all pagers, phones, phone
accessories, two-way radios and their related accessories, crystals, phone
cards, spare parts, wrapping, supply and packaging items and similar items, in
each case wherever the same may be located or in transit.

"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements
situated in or on the real property covered by the Real Property Leases.

"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, responsibility, commitment, expense, claim, loss,
damage, deficiency, guaranty or endorsement of or by any Person, whether fixed
or unfixed, choate or inchoate, liquidated or unliquidated, known or unknown,
secured or unsecured, accrued or unaccrued, joint, several, joint and several,
due or to become due, vested or unvested, executory, determined, determinable,
absolute, contingent, matured, unmatured or other and whether or not required by
GAAP to be set forth in a financial statement of a Person.

"MATERIAL ADVERSE CHANGE" shall mean any significant and substantial
adverse change in the financial condition, business or operations of the API
Business or on the ability of API to consummate the transactions contemplated
hereby.

"MATERIAL ADVERSE EFFECT" shall mean any significant and substantial
adverse effect on the financial condition, business or operations of the API
Business to be acquired hereunder or on the ability of API to consummate the
transactions contemplated hereby.

"ORDER" shall mean any judgment, decision, consent decree, injunction,
ruling or order of any Governmental Authority that is binding on any Person or
its property under applicable law.

"PAGERS IN SERVICE" shall mean activated pagers in service of API and
its Subsidiaries (whether direct or indirect through resellers, dealers or other
agents) billable for the subsequent month, excluding any pagers that are not on
billing or are billed at $0.00 (including, without limitation, pagers with
employees and demo or spare pagers with customers) or in respect of which the
customer's account is more than 90 days delinquent and for which no payment has
been received for 60 days.

"PERMITS" shall mean all licenses, permits, approvals, authorizations
or consents, certificates of compliance, franchise approvals or other similar
authorizations of any Governmental Authority necessary for the conduct of the
API Business, other than FCC Licenses.

"PERMITTED ENCUMBRANCES" shall mean (i) minor liens which in aggregate
are not substantial in amount, do not materially detract from the value or
transferability

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of the property or assets subject thereto and (ii) liens arising pursuant to
Personal Property Leases.

"PERSON" or "PERSON" shall mean any individual, partnership,
corporation, trust, association, unincorporated organization, government or any
department or agency thereof or any other entity.

"PERSONAL PROPERTY LEASES" shall mean all of the existing leases with
respect to the personal property of API and its Subsidiaries.

"PROPRIETARY RIGHTS" shall mean API's and its Subsidiaries' (i)
domestic and foreign registrations of trademarks and other marks, trade names
and trade rights, (ii) pending applications for such registrations, (iii)
patents and applications therefor, (iv) trademarks and other marks, trade names
and other trade rights whether or not registered, (v) copyrights and
registrations thereof, (vi) trade secrets, designs, plans, specifications,
technical information and other proprietary rights and (vii) rights under any
licenses to API or its Subsidiaries to use any copyrights, marks, trade names,
trade rights, patents or other proprietary rights.

"PUC" shall mean any state public utilities commission, public service
commission or other similar agency.

"REAL PROPERTY LEASES" shall mean all real property leases entered
into by API or any of its Subsidiaries.

"REGULATIONS" or "REGULATIONS" shall mean any laws, statutes,
ordinances, regulations, rules, notice requirements, court decisions, agency
guidelines, principles of law and orders of any foreign, federal, state or local
government and any other governmental department or agency, including without
limitation Environmental Laws, energy, motor vehicle safety, public utility,
zoning, building and health codes, occupational safety and health and laws
respecting employment practices, employee documentation, terms and conditions of
employment and wages and hours.

"REPRESENTATIVE" or "REPRESENTATIVE" of any Person shall mean any
officer, director, principal, attorney, agent, analyst, consultant or other
representative of such Person.

"RELEASE" shall mean and include any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Substance,
and otherwise as defined in any Environmental Law.

"SEC" shall mean the Securities and Exchange Commission or any
successor body thereto.

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"SUBSIDIARY" shall mean each corporation or other Person in which a
Person owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or other
equity interests. Unless otherwise specified, for the purposes of this
Agreement AMS shall be considered a Subsidiary of API.

"TAX" shall mean any federal, state, local, foreign or other tax,
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.

1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections set forth below:

TERM SECTION
---- -------

"API" Preamble
"API BENEFIT PLANS" Section 4.24(a)
"API 929 MHZ EXCLUSIVE FREQUENCY" Section 4.13.1(iii)
"API PCD TAX RETURNS" Section 4.22.1
"API PCD TAXES" Section 4.22.1
"API PROXY STATEMENT" Section 4.23(b)
"API SPECIAL COMMITTEE" Recitals
"API WITHHOLDING TAXES" Section 4.22.1
"ASSET CONTRIBUTION AGREEMENT" Recitals
"ASSET CONTRIBUTION AGREEMENT CONDITION" Section 1.1
"ASSETS" Section 13.1
"CERTIFICATE" Section 3.2(c)
"CLOSING" Section 4.1
"CLOSING DATE" Section 2.2
"CODE" Section 3.5
"COMMON SHARES" Recitals
"CONSTITUENT CORPORATIONS" Preamble
"CONSULTANT" Section 6.3.2
"DELAWARE SECRETARY" Section 2.1(b)
"DGCL" Recitals
"DISSENTING SHARES" Section 3.1(e)
"EFFECTIVE TIME" Section 2.1(b)
"ERISA" Section 4.24
"ERISA AFFILIATE" Section 4.24
"EXCHANGE ACT" Recitals
"FCC 929 MHZ EXCLUSIVE FREQUENCY" Section 4.13.1(iii)
"IRS" Section 4.22.2

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"MERGER" Recitals
"MERGER CONSIDERATION" Section 3.1(a)
"OFFER" Recitals
"OFFER DOCUMENTS" Section 1.1(b)
"PER SHARE AMOUNT" Recitals
"PREFERRED SHARES" Section 4.2(a)
"PROPOSED API ACQUISITION TRANSACTION" Section 6.6(a)
"PURCHASER" Preamble
"SEC REPORTS" Section 4.4.13
"SCHEDULE 14D-1" Section 1.1(b)
"SCHEDULE 14D-9" Section 1.2(b)
"SCHEDULE 13E-3" Section 1.1(b)
"SERIES A COMMON SHARES" Recitals
"SERIES B COMMON SHARES" Section 4.2(a)
"SURVIVING CORPORATION" Section 2.1(a)
"TDS" Preamble
"TSR PAGING" Recitals
"TSR WIRELESS" Recitals
"VIOLATION" Section 4.12
"VOTING DEBT" Section 4.2(b)

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ANNEX II

TENDER OFFER CONDITIONS

Notwithstanding any other term or provision of the Offer or this
Agreement, Purchaser will not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer), to pay for any Common Shares tendered pursuant to the Offer and
may terminate or amend the Offer if, at any time on or after the date of this
Agreement, and before the acceptance of such Common Shares for payment, (i) the
Asset Contribution Agreement Condition is not satisfied or (ii) any of the
following events or facts shall have occurred:

(a) there shall be threatened, instituted or pending any action,
proceeding or application by any Governmental Authority, or by any other
person, domestic or foreign, before any court or Governmental Authority
(which, if brought by such other person, has a reasonable likelihood of
success), (i)(A) challenging or seeking to, or which is reasonably likely
to, make illegal, delay or otherwise directly or indirectly restrain or
prohibit, or seeking to, or which is reasonably likely to, impose voting,
procedural, price or other requirements, in addition to those required by
Federal securities laws and the DGCL each as in effect on the date of the
Offer, in connection with the making of the Offer, the acceptance for
payment of, or payment for, some of or all the Common Shares by TDS,
Purchaser or any other affiliate of TDS or the consummation by TDS,
Purchaser or any other affiliate of TDS of the Merger, (B) seeking to
obtain material damages or otherwise directly or indirectly relating to the
transactions contemplated by the Offer or the Merger, (ii) seeking to
impose or confirm limitations on the ability of TDS, Purchaser or any other
affiliate of TDS effectively to exercise full rights of ownership of Common
Shares, including, without limitation, the right to vote any Common Shares
acquired or owned by TDS, Purchaser or any other affiliate of TDS on all
matters properly presented to API's shareholders, (iii) seeking any
material diminution in the benefits expected to be derived by TDS,
Purchaser or any other affiliate of TDS as a result of the transactions
contemplated by the Offer or the Merger, (iv) otherwise directly or
indirectly relating to the Offer or the Offer Documents or which otherwise,
in the sole judgment of Purchaser, might materially adversely affect API or
any of its Subsidiaries or TDS, Purchaser or any other affiliate of TDS or
the value of Common Shares or (v) in the sole judgment of Purchaser,
materially adversely affect the business, assets, liabilities,
capitalization, results of operations, shareholders' equity, condition
(financial or otherwise) or prospects of API or any of its Subsidiaries; or

II-1
<PAGE>

(b) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
proposed, enacted, entered, enforced, promulgated, amended or issued with
respect to, or deemed applicable to, (i) TDS, Purchaser or any other
affiliate of TDS or API or (ii) the Offer or the Merger by any government,
legislative body or court, domestic, foreign or supranational, or
Governmental Authority, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above; or

(c) there shall have occurred any material adverse change, or any
condition, event or development that is reasonably likely to result in a
material adverse change, in the business, assets, liabilities,
capitalization, results of operations, shareholders' equity, condition
(financial or otherwise) or prospects of API; or

(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad, (iii) any change in the general political, market, economic or
financial conditions in the United States that is reasonably likely to have
a material adverse effect upon the business, properties, assets,
liabilities, capitalization, shareholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of API or of TDS or the trading in, or value of, Common Shares,
(iv) any material change in United States currency exchange rates or a
suspension of, or limitation on, the markets therefor, (v) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States, (vi) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or Governmental Authority
on, or other event that is reasonably likely to affect the extension of
credit by banks or other lending institutions in the United States, (vii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (viii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or

(e) any required approval, permit, authorization, favorable review or
consent of any Governmental Authority shall not have been obtained on terms
satisfactory to Purchaser; or

(f) (i) it shall have been publicly disclosed or TDS shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 15% of the outstanding Common Shares has been acquired by
another person,

II-2
<PAGE>

entity or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) or (ii) (x) the Board of Directors of API or any committee thereof
(including the API Special Committee) shall have withdrawn or modified in a
manner adverse to TDS or Purchaser its approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any
Proposed API Acquisition Transaction (other than this Agreement), (y) API
shall have entered into any agreement with respect to any Proposed API
Acquisition Transaction (other than this Agreement) or (z) the Board of
Directors of API or any committee (including the API Special Committee)
thereof shall have resolved to do any of the foregoing; or

(g) any of the representations and warranties of API set forth in
this Agreement that are qualified as to materiality shall not be true and
correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time;
or

(h) API shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of API to be performed or complied with by it under this
Agreement; or

(i) this Agreement shall have been terminated in accordance with its
terms; or

(j) Purchaser and API (with the approval of the API Special
Committee) shall have agreed that Purchaser shall terminate the Offer or
postpone the acceptance for payment or payment for Common Shares thereon.

The foregoing conditions are for the sole benefit of Purchaser and TDS and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances will not be deemed a waiver with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time. Any determination by Purchaser
concerning the events described in this ANNEX II will be final and binding upon
all parties.

II-3

<PAGE>

CORPORATE OFFICE
30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602-2507
Office: 312-630-1900
FAX: 312-630-1908
312-630-9299

TELEPHONE AND
[LOGO] DATA SYSTEMS, INC.
_____________________________________________________________________
January 13, 1998

American Paging, Inc.
1300 Godward Street NE #3100
Minneapolis, MN 55413

RE: Revolving Credit Agreement dated January 1, 1994, as amended (the
"Revolving Credit Agreement"), between American Paging, Inc. ("API") and
Telephone and Data Systems, Inc. ("TDS")

Ladies and Gentlemen:

This letter will constitute TDS's agreement to amend the Revolving Credit
Agreement by changing all of the references to "$180,000,000" in the
Revolving Credit Agreement to "$185,000,000." All of the other terms and
conditions of the Revolving Credit Agreement shall remain in full force and
effect.

The amendment is subject to completion of American Paging's business plan and
budget for 1998 and approval of an extension of credit from TDS to American
Paging by the TDS Board of Directors.

Please acknowledge your agreement to this amendment by executing the copy of
this letter and return it to the undersigned.

Very truly yours,

TELEPHONE AND DATA SYSTEMS, INC. TELEPHONE AND DATA SYSTEMS, INC.

By: /s/ LEROY T. CARLSON, JR. By: /s/ MURRAY L. SWANSON
------------------------- --------------------------
LeRoy T. Carlson, Jr. Murray L. Swanson
President Executive Vice President, Finance

Accepted and agreed to as of the date set forth above.

AMERICAN PAGING, INC.

By: /s/ TERRENCE T. SULLIVAN
------------------------------------
Terrence T. Sullivan
President and Chief Executive Officer