DAKOTA TELECOMMUNICATIONS GROUP DELAWARE INC, S-4/A, 1997-06-12

DAKOTA TELECOMMUNICATIONS GROUP DELAWARE INC
S-4/A, 1997-06-12

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As filed with the Securities and Exchange Commission on June 12, 1997
Registration No. 333-22025
===========================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 3 TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
(TO BECOME DAKOTA TELECOMMUNICATIONS GROUP, INC.)
(Exact Name of Small Business Issuer as Specified in its Charter)

SOUTH DAKOTA 4813 46-0234208
(State or Other Juris- (Primary Standard (I.R.S. Employer
diction of Incorpora- Industrial Classification Identification No.)
tion or Organization) Code Number)

AND

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.
(Exact Name of Small Business Issuer as Specified in its Charter)

DELAWARE 4813 APPLIED FOR
(State or Other Juris- (Primary Standard (I.R.S. Employer
diction of Incorpora- Industrial Classification Identification No.)
tion or Organization) Code Number)

29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066
(605) 263-3301
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)

THOMAS W. HERTZ PLEASE SEND COPIES OF
CRAIG A. ANDERSON COMMUNICATIONS TO:
29705 453RD AVENUE TRACY T. LARSEN
IRENE, SOUTH DAKOTA 57037-0066 JEFFREY A. OTT
(605) 263-3301 WARNER NORCROSS & JUDD LLP
(Name, Address, Including Zip Code, 900 OLD KENT BUILDING
and Telephone Number, Including 111 LYON STREET, N.W.
Area Code, of Agents for Service) GRAND RAPIDS, MICHIGAN 49503-2487
(616) 752-2000

Approximate date of commencement of proposed sale of the securities
to the public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT
BECOMES EFFECTIVE.
<PAGE>
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]

________________

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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

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PROSPECTUS AND BALLOT/PROXY STATEMENT

SPECIAL MEETING OF MEMBERS OF SPECIAL MEETING OF SHAREHOLDERS OF
DAKOTA COOPERATIVE DAKOTA TELECOMMUNICATIONS
TELECOMMUNICATIONS, INC. GROUP, INC.
IN CONNECTION WITH AN OFFERING OF IN CONNECTION WITH AN OFFERING OF
UP TO 1,087,064 SHARES UP TO 1,087,064 SHARES
DAKOTA TELECOMMUNICATIONS DAKOTA TELECOMMUNICATIONS
GROUP, INC. GROUP (DELAWARE), INC.
COMMON STOCK, WITHOUT PAR VALUE COMMON STOCK, WITHOUT PAR VALUE

The Board of Directors of Dakota Cooperative Telecommunications, Inc.,
a South Dakota cooperative association (the "Cooperative"), is furnishing
this Prospectus and Ballot/Proxy Statement and the accompanying form of
Ballot/Proxy on or about June 23, 1997, to solicit votes at the special
meeting of members of the Cooperative ("Members") to be held on July 21,
1997, and at any adjournment of that meeting. The Board of Directors of the
Cooperative, as the board of what will become Dakota Telecommunications
Group, Inc., a South Dakota business corporation ("DTG"), if the proposed
Conversion (described below) is adopted and consummated, is also furnishing
this Prospectus and Ballot/Proxy Statement and the accompanying form of
Ballot/Proxy on or about June 23, 1997, to solicit proxies to vote at
the special meeting of shareholders of DTG which will also be held on
July 21, 1997, and at any adjournment of that meeting. At the special
meetings, Members of the Cooperative will consider and vote upon a proposal
to adopt an amendment to the Cooperative's articles of incorporation to
convert the Cooperative into a South Dakota business corporation, which
would be DTG (the "Conversion"). If the Conversion is adopted,
shareholders of DTG will then consider and vote upon a proposal to approve
an Agreement and Plan of Merger (the "Plan of Merger") pursuant to which
DTG would be merged with and into Dakota Telecommunications Group
(Delaware), Inc. ("DTG Delaware"), a newly formed Delaware business
corporation which is currently a wholly owned subsidiary of the Cooperative
(the "Merger"). A vote by a Member of the Cooperative to adopt the
Conversion and a vote by a shareholder to approve the Plan of Merger also
constitute a vote for approval of the 1997 Stock Incentive Plan and a vote
for approval of the form of Indemnity Agreement, both of which are
described in this Prospectus and Ballot/Proxy Statement and attached as
Appendices J and K, respectively.

This Prospectus and Ballot/Proxy Statement is a prospectus of DTG
relating to an offering of DTG common stock in connection with the proposed
Conversion and a prospectus of DTG Delaware relating to an offering of DTG
Delaware common stock in connection with the proposed Merger. This
offering is made only to Members of the Cooperative and, if the Conversion
is adopted and consummated, shareholders of DTG. (See "THE CONVERSION" and
"THE MERGER.") SHARES OF EITHER DTG COMMON STOCK OR DTG DELAWARE COMMON
STOCK, BUT NOT BOTH, WOULD BE ISSUED AS A RESULT OF THE PROPOSED CONVERSION
AND PROPOSED MERGER DESCRIBED IN THIS PROSPECTUS AND BALLOT/PROXY

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STATEMENT. The company whose shares of common stock are issued pursuant to
the proposed Conversion or the proposed Merger is referred to as the
"Resulting Company" in this Prospectus and Ballot/Proxy Statement.

If the Conversion is adopted and consummated, (i) each share of common
stock, $5.00 par value, of the Cooperative ("Cooperative Common Stock")
issued and outstanding immediately prior to the effective time of the
Conversion would automatically become and be converted into the right to
receive one validly issued, fully paid and nonassessable share of DTG
common stock, without par value ("DTG Common Stock"); (ii) each share of
preferred stock, $100.00 par value, of the Cooperative ("Preferred Stock")
issued and outstanding immediately prior to the effective time of the
Conversion would automatically become and be converted into the right to
receive 80.8216445 validly issued, fully paid and nonassessable shares of
DTG Common Stock and (iii) each dollar credited on the books of the
Cooperative to the capital account of each current and former Member (a
"Capital Credit") immediately prior to the effective time of the Conversion
would be retired in full and automatically become and be converted into the
right to receive 0.2 of a validly issued, fully paid and nonassessable
share of DTG Common Stock, all subject to payment in cash for fractional
shares. (See "THE CONVERSION.") If the Merger is approved and
consummated, each right to receive a whole share of DTG Common Stock
issuable in the Conversion would automatically become and be converted into
the right to receive one validly issued, fully paid and nonassessable share
of DTG Delaware common stock, without par value ("DTG Delaware Common
Stock"). (See "THE MERGER.")

MEMBERS OF THE COOPERATIVE AND FORMER MEMBERS WHO WILL BECOME
SHAREHOLDERS OF DTG IF THE CONVERSION IS ADOPTED SHOULD SEE "RISK FACTORS"
BEGINNING ON PAGE 16 FOR A DISCUSSION OF VARIOUS FACTORS THEY SHOULD
CONSIDER WITH RESPECT TO THE DTG COMMON STOCK AND DTG DELAWARE COMMON STOCK
OFFERED BY THIS PROSPECTUS AND BALLOT/PROXY STATEMENT.

Consummation of the Conversion is subject to adoption by the Members
of the Cooperative and certain other conditions. Consummation of the
Merger is subject to consummation of the Conversion, approval by the
shareholders of DTG and certain other conditions. (See "THE CONVERSION--
Conditions to the Conversion and Abandonment" and "THE MERGER--Conditions
to the Merger and Abandonment.")

YOUR VOTE IS IMPORTANT. THE CONVERSION CANNOT OCCUR UNLESS A MAJORITY
OF THE MEMBERS OF THE COOPERATIVE VOTING AT THE SPECIAL MEETING VOTE FOR
THE ADOPTION OF THE PROPOSED AMENDMENT TO THE COOPERATIVE'S ARTICLES OF
INCORPORATION. THE MERGER CANNOT OCCUR UNLESS THE CONVERSION IS ADOPTED
AND THE HOLDERS OF A MAJORITY OF THE SHARES OF DTG COMMON STOCK ISSUABLE IN
THE CONVERSION VOTE FOR THE APPROVAL OF THE PLAN OF MERGER. WHETHER OR NOT
YOU EXPECT TO ATTEND THE SPECIAL MEETINGS IN PERSON, PLEASE SIGN AND DATE
THE ENCLOSED BALLOT/PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE.

<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS AND BALLOT/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus and Ballot/Proxy Statement is dated June 13, 1997.

<PAGE>
AVAILABLE INFORMATION

Neither DTG nor DTG Delaware is currently subject to the information
and reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). DTG and DTG Delaware have filed a
Registration Statement with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the DTG Common Stock and DTG Delaware Common Stock
offered in connection with the proposed Conversion and proposed Merger,
respectively, described in this Prospectus and Ballot/Proxy Statement.
This Prospectus and Ballot/Proxy Statement does not contain all of the
information set forth in the Registration Statement, certain portions of
which and exhibits are omitted in accordance with the rules and regulations
of the Commission. Reference is made to the Registration Statement and
exhibits for further information about the Cooperative, DTG, DTG Delaware
and their respective securities. Any person may inspect the Registration
Statement without charge at the public reference facilities maintained by
the Commission (Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549)
and at the Commission's Regional Offices in New York (7 World Trade Center,
Suite 1300, New York, New York 10048) and Chicago (Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661). Copies of all
or any part of the Registration Statement can also be obtained from the
Commission at prescribed rates by writing to the Commission's public
reference facilities. The Registration Statement was filed with the
Commission electronically through the EDGAR system. The Commission
maintains a Web site that contains registration statements, reports and
other information regarding companies that file materials electronically
with the Commission at http://www.sec.gov.

REPORTS TO STOCKHOLDERS

Neither DTG nor DTG Delaware is currently required and, if the
proposed Conversion and/or proposed Merger is consummated and shares of DTG
Common Stock or DTG Delaware Common Stock, as applicable, are issued, the
Resulting Company may not be required to deliver an annual report to
stockholders pursuant to Section 14 of the Exchange Act or the regulations
issued by the Commission. Even if the Resulting Company is not required to
deliver an annual report, it nonetheless expects to prepare and deliver an
annual report to stockholders, although the voluntary annual report might
not contain all information that would otherwise be required under
Commission Rule 14a-3. The Resulting Company expects that any such annual
report would contain financial information that has been audited by
independent public or certified public accountants.

Certain information included under "DAKOTA COOPERATIVE TELECOMMUNI-
CATIONS, INC.," particularly the subheadings "Business," "Competition,"
"Regulation" and "Management's Discussion and Analysis or Plan of

ii
<PAGE>
Operation," may constitute or include forward-looking statements, such as
information relating to the Company's 1997 development plans and the
effects on the Cooperative of future regulation and competition. Such
forward-looking information involves important known and unknown risks
and uncertainties and other factors that may cause the actual results,
performance or achievements of the Cooperative to be materially different
from any future results, performance or achievements expressed or implied
by such forward-looking statements. These risks and uncertainties
include, but are not limited to, uncertainties relating to economic
conditions, acquisitions and divestitures, government and regulatory
policies, the pricing and availability of equipment, materials, inventories
and programming, technological developments and changes in the competitive
environment in which the Company operates. Members and holders of
Preferred Stock and Capital Credits are cautioned not to place undue
reliance on the forward-looking statements made in this Prospectus and
Ballot/Proxy Statement, which speak only as of the date hereof. See "RISK
FACTORS" for a description of specific risks applicable to the Company."
As used in this Prospectus and Ballot/Proxy Statement, the term "Company"
means the Cooperative and its subsidiaries before the Conversion and the
Resulting Company and its subsidiaries after the Conversion or Merger.

iii
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DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.

POST OFFICE BOX 66
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066

NOTICE OF SPECIAL MEETING OF MEMBERS

To the Members of Dakota Cooperative Telecommunications, Inc.:

A special meeting of the Members of Dakota Cooperative Telecommunica-
tions, Inc. (the "Cooperative") will be held in the gymnasium at Irene
Public School, 130 E. State Street, Irene, South Dakota, on Monday, July
21, 1997, at 7:00 p.m., local time, for the following purposes:

1. To consider and vote upon a proposal to adopt an amendment to
the Cooperative's articles of incorporation to convert the
Cooperative into a South Dakota business corporation which would
be named Dakota Telecommunications Group, Inc. (the
"Conversion").

2. To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed the close of business on June 5,
1997, as the record date for the determination of Members entitled to
notice of and to vote at the meeting and any adjournment of the meeting.

By Order of the Board of Directors,

John A. Schaefer, Secretary

Irene, South Dakota
June 23, 1997

YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO
ATTEND THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED BALLOT/PROXY PROMPTLY.

iv
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DAKOTA TELECOMMUNICATIONS GROUP, INC.

POST OFFICE BOX 66
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of Dakota Telecommunications Group, Inc.:

A special meeting of the shareholders of Dakota Telecommunications
Group, Inc. will be held in the gymnasium at Irene Public School, 130 E.
State Street, Irene, South Dakota, on Monday, July 21, 1997, at 7:30 p.m.,
local time, immediately following a special meeting of Members of Dakota
Cooperative Telecommunications, Inc. (the "Cooperative") if the Members of
the Cooperative adopt a proposed amendment to the Cooperative's articles
of incorporation to convert the Cooperative into a South Dakota business
corporation (the "Conversion") at the special meeting of Members. The
special meeting of shareholders will be held for the following purposes:

1. To consider and vote upon a proposal to approve an Agreement and
Plan of Merger (the "Plan of Merger") pursuant to which Dakota
Telecommunications Group, Inc. ("DTG") would be merged with and
into Dakota Telecommunications Group (Delaware), Inc., a newly
formed Delaware business corporation which is currently a wholly
owned subsidiary of the Cooperative and will be a wholly owned
subsidiary of DTG if the Conversion is adopted (the "Merger").

2. To transact such other business as may properly come before the
meeting.

A vote for approval of the Plan of Merger also constitutes a vote for
approval of the 1997 Stock Incentive Plan and a vote for approval of the
form of Indemnity Agreement, both of which are described in the Prospectus
and Ballot/Proxy Statement distributed with this Notice.

The special meeting of shareholders of DTG will not be held if Members
of the Cooperative do not adopt an amendment to the Cooperative's articles
of incorporation to effect the Conversion.

The Board of Directors of Dakota Cooperative Telecommunications,
Inc., the predecessor to DTG if the Conversion is adopted, has fixed the
close of business on June 5, 1997, as the record date for the
determination of shareholders entitled to notice of and to vote at the
meeting and any adjournment of the meeting. Shareholders who comply with
certain provisions of the South Dakota Business Corporation Act (the "SDBCA")

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may dissent from the Merger and demand payment of the fair value of their
shares. A copy of the applicable provisions of the SDBCA is attached as
Appendix I to the accompanying Prospectus and Ballot/Proxy Statement.

By Order of the Board of Directors,

John A. Schaefer, Secretary

Irene, South Dakota
June 23, 1997

YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO
ATTEND THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED BALLOT/PROXY PROMPTLY.

vi
<PAGE>
PROSPECTUS AND BALLOT/PROXY STATEMENT

SPECIAL MEETING OF MEMBERS OF

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
POST OFFICE BOX 66
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066
(605) 263-3301

TO VOTE TO ADOPT AN AMENDMENT TO THE ARTICLES OF INCORPORATION
INVOLVING AN OFFERING OF COMMON STOCK, WITHOUT PAR VALUE, OF

DAKOTA TELECOMMUNICATIONS GROUP, INC.
POST OFFICE BOX 66
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066
(605) 263-3301

AND

SPECIAL MEETING OF SHAREHOLDERS OF

DAKOTA TELECOMMUNICATIONS GROUP, INC.
POST OFFICE BOX 66
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066
(605) 263-3301

TO VOTE TO APPROVE AN AGREEMENT AND PLAN OF MERGER
INVOLVING AN OFFERING OF COMMON STOCK, WITHOUT PAR VALUE, OF

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.
POST OFFICE BOX 66
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066
(605) 263-3301

INTRODUCTION AND SUMMARY

INTRODUCTION

The Board of Directors of Dakota Cooperative Telecommunications, Inc.
(the "Cooperative") is furnishing this Prospectus and Ballot/Proxy
Statement and the accompanying form of Ballot/Proxy on or about
June 23, 1997, to solicit votes at a special meeting of Members of
the Cooperative to be held on July 21, 1997, and at any adjournment
of that meeting. The Board of Directors of the Cooperative, as the board
of what will become Dakota Telecommunications Group, Inc., a South Dakota
business corporation ("DTG"), if the Conversion is adopted and consummated,
<PAGE>
is also furnishing this Prospectus and Ballot/Proxy Statement and the
accompanying form of Ballot/Proxy on or about June 23, 1997, to
solicit proxies to vote at a special meeting of shareholders of DTG which
also will be held on July 21, 1997, if the Conversion is adopted,
and at any adjournment of that meeting. The special meetings will be held
in the gymnasium at Irene Public School, 130 E. State Street, Irene, South
Dakota, beginning at 7:00 p.m. and 7:30 p.m. local time, respectively. This
Prospectus and Ballot/Proxy Statement and the accompanying form of Ballot/
Proxy are being furnished to holders of shares ("Members") of common stock,
$5.00 par value, of the Cooperative ("Cooperative Common Stock") of record
at the close of business on June 5, 1997, and the individuals and entities
who would be record holders of shares of common stock, without par value,
of DTG ("DTG Common Stock") if the Conversion is adopted and consummated.
Each Member is the record owner of one share of Cooperative Common Stock.

The purpose of the special meeting of Members of the Cooperative is
to consider and vote upon a proposal to adopt an amendment to the
Cooperative's articles of incorporation attached as Appendix A to this
Prospectus and Ballot/Proxy Statement to convert the Cooperative into a
South Dakota business corporation, which would be DTG (the "Conversion").
If the Conversion is adopted, the purpose of the special meeting of DTG
shareholders is to consider and vote upon a proposal to approve an
Agreement and Plan of Merger (the "Plan of Merger") attached as Appendix D
to this Prospectus and Ballot/Proxy Statement pursuant to which DTG would
be merged with and into Dakota Telecommunications Group (Delaware), Inc.
("DTG Delaware"), a newly formed Delaware business corporation which is
currently a wholly owned subsidiary of the Cooperative and which would be
a wholly owned subsidiary of DTG if the Conversion is consummated (the
"Merger"). The special meeting of DTG shareholders will not be held if the
Conversion is not adopted by the Members of the Cooperative. A vote by a
Member of the Cooperative to adopt the Conversion and a vote by a
shareholder of DTG to approve the Plan of Merger also constitute a vote
for approval of the 1997 Stock Incentive Plan and a vote for approval of
the form of Indemnity Agreement, both of which are described in this
Prospectus and Ballot/Proxy Statement.

In the proposed Conversion, (i) each share of Cooperative Common Stock
issued and outstanding immediately prior to the effective time of the
Conversion would automatically become and be converted into the right to
receive one validly issued, fully paid and nonassessable share of DTG
Common Stock, (ii) each share of preferred stock, $100.00 par value, of the
Cooperative ("Preferred Stock") issued and outstanding immediately prior to
the effective time of the Conversion would automatically become and be
converted into the right to receive 80.8216445 validly issued, fully paid
and nonassessable shares of DTG Common Stock and (iii) each dollar credited
on the books of the Cooperative to the capital account of each current and
former Member (a "Capital Credit") immediately prior to the effective time
of the Conversion would be retired in full and automatically become and be
converted into the right to receive 0.2 of a validly issued, fully paid and

2
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nonassessable share of DTG Common Stock, all subject to payment in cash for
fractional shares. (See "THE CONVERSION.") Under the Plan of Merger, each
whole share of DTG Common Stock issuable in the Conversion would
automatically become and be converted into the right to receive one validly
issued, fully paid and nonassessable share of DTG Delaware common stock,
without par value ("DTG Delaware Common Stock"). (See "THE MERGER.") Each
share of DTG Delaware Common Stock outstanding immediately prior to the
effective time of the Merger would be canceled. SHARES OF EITHER DTG
COMMON STOCK OR DTG DELAWARE COMMON STOCK, BUT NOT BOTH, WOULD BE ISSUED
AS A RESULT OF THE PROPOSED CONVERSION AND THE PROPOSED MERGER DESCRIBED IN
THIS PROSPECTUS AND BALLOT/PROXY STATEMENT. The company whose shares of
common stock are issued pursuant to the proposed Conversion and the
proposed Merger is referred to as the "Resulting Company" in this
Prospectus and Ballot/Proxy Statement.

The adoption of the proposed amendment to the Cooperative's articles
of incorporation to effect the Conversion requires the affirmative vote of
a majority of the Members of the Cooperative voting at the special meeting.
The presence in person or by ballot of 50 Members constitutes a quorum for
purposes of the vote required at the special meeting of Members. The
Cooperative does not anticipate that any matter other than as specified in
the Notice accompanying this Prospectus and Ballot/Proxy Statement will
come before the special meeting. (See "GENERAL VOTING INFORMATION--Voting
Rights and Record Date for the Conversion.")

Approval of the Plan of Merger requires that the Conversion be adopted
and the affirmative vote of the holders of a majority of the shares of DTG
Common Stock issuable in the Conversion. The presence in person or by
proxy of a majority of the shares of DTG Common Stock issuable in the
Conversion constitutes a quorum for purposes of the vote required at the
special meeting of DTG shareholders. DTG does not anticipate that any
other matter other than as specified in the Notice accompanying this
Prospectus and Ballot/Proxy Statement will come before the special
meeting. (See "GENERAL VOTING INFORMATION--Voting Rights and Record Date
for the Merger.")

The Cooperative's Board of Directors, on behalf of the Cooperative,
unanimously recommended that the proposed amendment to the Cooperative's
articles of incorporation be submitted for adoption by the Members and, on
behalf of DTG, unanimously voted to approve the Plan of Merger at a special
meeting held on February 11, 1997. (See "THE CONVERSION" and "THE
MERGER.")

THE BOARD OF DIRECTORS OF THE COOPERATIVE
UNANIMOUSLY RECOMMENDS A VOTE FOR ADOPTION OF THE PROPOSED
AMENDMENT TO THE ARTICLES OF INCORPORATION AND THE
BOARD OF DIRECTORS OF THE COOPERATIVE, ON BEHALF
OF DTG, UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE PLAN OF MERGER.

3
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DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND DAKOTA TELECOMMUNICATIONS
GROUP, INC.

The Cooperative is a stock-based South Dakota cooperative association
that was formed on April 3, 1952. The Cooperative is a diversified
telecommunications services company, which, directly or through wholly
owned subsidiaries, currently provides wireline local and network access
services, long distance telephone services, operator assisted calling
services, telecommunications equipment sale and leasing services, cable
television services and Internet access and related services. (See "DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC.--Business.") The Cooperative is owned
by its Members, each of whom has one vote on matters submitted for Member
action. The mailing address of the Cooperative's principal executive
offices is Post Office Box 66, 29705 453rd Avenue, Irene, South Dakota
57037-0066, and its telephone number is (605) 263-3301.

If the proposed amendment to the Cooperative's articles of
incorporation is adopted and the Conversion is consummated, the Cooperative
would be converted into DTG, a South Dakota business corporation. Under
the laws of South Dakota, the Cooperative would be required to change its
name after the Conversion because the name of a business corporation cannot
contain the word "cooperative." DTG would be the successor to the
Cooperative, would assume all of the operations, assets and liabilities of
the Cooperative and would have a consolidated financial position
substantially identical to that of the Cooperative immediately before the
Conversion. After the Conversion, the directors, officers, employees,
businesses, properties and operations of DTG would be substantially similar
to those of the Cooperative, except as otherwise indicated in this
Prospectus and Ballot/Proxy Statement. The mailing address of DTG's
principal executive offices would remain Post Office Box 66, 29705 453rd
Avenue, Irene, South Dakota 57037-0066, and its telephone number will be
(605) 263-3301.

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.

DTG Delaware is a business corporation formed under Delaware law with
general business purposes and is currently a wholly owned subsidiary of the
Cooperative. Currently, before the proposed Merger, DTG Delaware has nominal
assets and liabilities and no income. If the Conversion is adopted and the
Merger is approved and consummated, DTG Delaware would assume all of the
operations, assets and liabilities of DTG and would have a consolidated
financial position substantially identical to that of DTG immediately
before the Merger. After the Merger, the directors, officers, employees,
businesses, properties and operations of DTG Delaware would be
substantially similar to those of DTG, except as otherwise indicated in
this Prospectus and Ballot/Proxy Statement. The mailing address of DTG
Delaware's principal executive offices is Post Office Box 66, 29705 453rd
Avenue, Irene, South Dakota 57037-0066, and its telephone number is (605)
263-3301.

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SUMMARY OF CERTAIN ASPECTS OF THE CONVERSION

Members of the Cooperative should consider the following summary in
conjunction with the more detailed information appearing elsewhere in this
Prospectus and Ballot/Proxy Statement concerning the proposed Conversion.
(See "THE CONVERSION.")

BACKGROUND OF AND REASONS FOR THE CONVERSION. The Cooperative's Board
of Directors, together with management and with the advice of the
Cooperative's financial and legal advisers, has been studying the
possibility of converting the Cooperative from a cooperative association
into a general business corporation in an effort to enhance the value of
the investments in the Cooperative of its Members and holders of Preferred
Stock and Capital Credits and to increase the Cooperative's competitive
position in its markets. The Board of Directors has considered industry
trends of rapid changes in technology and increasing competition in the
provision of many services offered by the Cooperative. The Board also has
considered recent changes in the regulatory environment affecting the
telecommunications services industry that the Board believes may
significantly increase competition in the markets that the Cooperative
currently serves. The Board believes that the Cooperative must retain
existing customers and increase the markets served and services offered in
order to remain competitive in light of such technological changes,
increased competition and changes in the regulatory environment. After
considering various alternatives, the Board unanimously approved the
proposed amendment to the Cooperative's articles of incorporation to effect
the Conversion and recommended that the proposed amendment be submitted for
adoption by the Members at a special meeting.

The Board of Directors of the Cooperative believes that the proposed
Conversion would be in the best interests of the Cooperative and its
Members and holders of Preferred Stock and Capital Credits. The Board
believes that to realize the full potential of its operations and to
finance its growth strategy, the Cooperative would benefit by having access
to potential additional capital resources. The Board believes that the
Conversion may help to provide the Cooperative greater access to capital
markets and increased options in connection with potential acquisitions,
partnerships and alliances. The Board also believes that the Conversion
would assist the Cooperative in becoming a more effective competitor in its
markets.

Further, the Board of Directors believes that the Conversion would
provide Members and holders of Preferred Stock and Capital Credits with an
opportunity to have an interest in a more flexible business organization
and could provide them an opportunity to realize in the future the value of
their investments in the Cooperative, although there can be no assurance
that a market for DTG Common Stock would develop following the Conversion
or, if it did, that it would provide DTG shareholders a meaningful
opportunity to liquidate their equity interests in DTG at a fair value.

5
<PAGE>
The Board also considered the potential disadvantages of converting
the Cooperative into a business corporation. The only potential material
disadvantage of the Conversion identified by the Board was the loss of the
Cooperative's tax exempt status. However, the Board discounted this
disadvantage because, due to a change in the Cooperative's revenue sources,
the Board believes that the Cooperative would likely lose its tax exempt
status in fiscal year 1997 and thereafter, even if the Cooperative retained
its cooperative status. In addition, the anticipated continued shift in
the Cooperative's revenue sources would further reduce any benefits of
remaining a cooperative. The Board was unable to identify any other
potential material disadvantages to the Conversion.

The Board was considering the Conversion at the time the Cooperative
acquired TCIC Communications, Inc. and Iway, Inc. and established the manner
of converting the Preferred Stock issued as part of those acquisitions into
shares of DTG Common Stock if the Conversion was ever effected. However,
the Conversion was not a condition to or part of the consideration for such
acquisitions and the Cooperative is under no contractual obligation to
effect the Conversion. The Cooperative would be obligated to make certain
"non-liquidity" payments to the Sellers if the Conversion is not consummated.
See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Certain Agreements
Affecting Capital Stock."

The Board considered these potential advantages and limitations in light
of the restrictions currently contained in the South Dakota Cooperative
Association Act (the "Cooperative Act") and the Cooperative's articles of
incorporation and bylaws concerning the sale or transfer of the stock of
and Capital Credits in the Cooperative. (See "THE CONVERSION--Background
of the Conversion" and "--Board Recommendation and Reasons for the
Conversion.")

NATURE OF DTG SHAREHOLDERS' INTERESTS. The Cooperative is organized
and operated on a cooperative basis. If the Conversion is adopted and
consummated, DTG would operate as a business corporation rather than as a
cooperative. As a business corporation, the nature of the shareholders'
interests in the business enterprise would differ significantly from the
interests of Members and holders of Preferred Stock and Capital Credits in
the Cooperative. (See "THE CONVERSION--Comparison of Rights of Members of
the Cooperative to Rights of Shareholders of DTG.")

The Cooperative has accounted for the equity of its Members through
Capital Credits for all of its 45-year history. No dividends have been or
are currently paid on Capital Credits. Capital Credits are accumulated on
the books of the Cooperative rather than paid in cash. The bylaws of the
Cooperative permit retirement of Capital Credits in any method, basis,
priority and order of retirement as may be determined by the Board,
although the bylaws currently place certain restrictions upon the ability
of the Board to retire Capital Credits for cash. In the proposed
Conversion, each Capital Credit on the books of the Cooperative immediately

6
<PAGE>
prior to the effective time of the Conversion would be retired in full and
automatically become and be converted into the right to receive 0.2 of a
validly issued, fully paid and nonassessable share of DTG Common Stock,
subject to payment in cash for fractional shares.

The Cooperative has not retired Capital Credits accumulated for any
year after December 31, 1985. Capital Credits for the years prior to
January 1, 1986 have been retired in full. The last actual cash payment
to Members for the purpose of retiring Capital Credits for the 1985 fiscal
year occurred in 1992. The Board pays accumulated Capital Credits to the
estates of deceased Members, who were natural persons, on a discounted
current value basis. The current discount is 58 percent, calculated on a
12-year, 7.5 percent basis. Such retirements of Capital Credits are
current on a month-to-month basis. If the Conversion is consummated,
Capital Credits would cease to exist and, accordingly, would not
accumulate. No Capital Credits would be allocated for the 1997 fiscal
year. (See "THE CONVERSION--Conversion of Current and Former Members'
Capital Credits.")

After the Conversion, DTG would be permitted by law to pay dividends
to its shareholders, although certain covenants in existing loan agreements
between the Cooperative and the Rural Utilities Service of the United
States Department of Agriculture ("RUS"), as well as federal statutes and
regulations which apply to RUS borrowers, could limit the circumstances
under which DTG would be permitted to pay dividends or make other
distributions to its shareholders. The RUS must authorize distributions
other than in shares of stock unless certain financial ratio requirements
are met. The amount and timing of future dividend payments, if any, would
be based on a number of factors, including the capital requirements of
DTG's business and the financial condition of DTG. There can be no
assurance that DTG would pay any dividends at any time, and DTG has no
intention of paying cash dividends in the foreseeable future. In the
future, it is possible that agreements with lenders would continue to limit
or restrict, or could place additional limitations or restrictions upon,
DTG's ability to pay dividends or the amount of dividends that DTG may pay
to its shareholders.

CONSIDERATION TO BE RECEIVED IN THE CONVERSION. If the proposed
amendment to the Cooperative's articles of incorporation is adopted and the
Conversion is consummated, the Cooperative would be converted into DTG.
Following the Conversion, DTG would own all of the assets and assume all of
the liabilities of the Cooperative.

In the Conversion, (i) each share of Cooperative Common Stock issued
and outstanding immediately prior to the effective time of the Conversion
would automatically become and be converted into the right to receive one
validly issued, fully paid and nonassessable share of DTG Common Stock,
(ii) each share of Preferred Stock issued and outstanding immediately prior
to the effective time of the Conversion would automatically become and be

7
<PAGE>
converted into the right to receive 80.8216445 validly issued, fully paid
and nonassessable shares of DTG Common Stock and (iii) each Capital Credit
recorded on the books of the Cooperative immediately prior to the effective
time of the Conversion would be retired in full and automatically become
and be converted into the right to receive 0.2 of a validly issued, fully
paid and nonassessable share of DTG Common Stock, all subject to payment in
cash for fractional shares. The Board of Directors carefully considered
various methods of determining the conversion ratios for shares of
Cooperative Common Stock and Preferred Stock and Capital Credits and
believes that using the stated dollar value per share or Capital Credit is
a reasonable and appropriate method of allocating the value of the
Cooperative among the Members and holders of Preferred Stock and Capital
Credits. (See "THE CONVERSION.")

For purposes of determining the number of shares of DTG Common Stock
that would be issuable in the Conversion as a result of the retirement of
Capital Credits, the number of Capital Credits held by each Capital Credit
holder would be determined by allocating Capital Credits for 1996 (Capital
Credits would not be allocated for 1997), and then offsetting any unpaid,
overdue amounts owed to the Cooperative by such holder for past services
(with interest). Capital Credit holders would have the option to pay over-
due amounts (with interest) in cash to avoid a reduction in their Capital
Credits. The balance, if positive, would be divided by $5.00 to determine
the number of shares of DTG Common Stock that would be issuable in the
Conversion to retire the holder's Capital Credits. If the Cooperative does
not have current addresses for holders of Capital Credits, such Capital
Credits would be allocated into a Cooperative Equity Suspense Account
immediately prior to the Conversion. DTG would attempt to locate such
holders following applicable laws and regulations, and if it is unsuccess-
ful, amounts in the Cooperative Equity Suspense Account would be forfeited
and reallocated as additional paid-in capital.

DTG would not issue fractional shares of DTG Common Stock in the
Conversion. A Member or holder of Preferred Stock or Capital Credits who
would otherwise be entitled to receive a fraction of a share of DTG Common
Stock in the Conversion would receive instead an amount of cash determined
by multiplying that fraction by $5.00.

CONSUMMATION OF THE CONVERSION. Consummation of the Conversion is
subject to certain conditions, including that the required number of
Members of the Cooperative adopt the proposed amendment to the
Cooperative's articles of incorporation, that all required regulatory
approvals are obtained and that no proceeding seeking to prevent the
Conversion is pending or threatened. At any time prior to the effective
time of the Conversion, the Board of Directors of the Cooperative may
abandon the Conversion. (See "THE CONVERSION--Conditions to the Conversion
and Abandonment.") It is currently expected that the Conversion, if
adopted by the Members of the Cooperative, would become effective during
the third quarter of 1997.

8
<PAGE>
VOTE REQUIRED. Pursuant to the South Dakota Business Corporation Act
(the "SDBCA") and the Cooperative Act, adoption of the proposed amendment
to the Cooperative's articles of incorporation requires the affirmative
vote of a majority of the Members of the Cooperative voting at the special
meeting. (See "GENERAL VOTING INFORMATION--Voting Rights and Record Date
for the Conversion.") The presence in person or by ballot of 50 Members
constitutes a quorum for purposes of the vote required by Members at the
special meeting. The Board of Directors of the Cooperative has fixed
June 5, 1997, as the record date (the "Record Date") for purposes of
determining those Members who will be entitled to notice of and vote at the
special meeting. Each Member of the Cooperative on the Record Date will
be entitled to one vote on each matter submitted for Member action at the
special meeting. As of December 31, 1996, the Cooperative had 5,237
Members. As of that date, the Cooperative's directors and executive
officers and their respective affiliates and associates represented eight
Members, or less than one percent of the total number of Members. (See
"VOTING AND MANAGEMENT INFORMATION--Interests of Certain Persons.")

DISSENTERS' RIGHTS. Under the provisions of the Cooperative Act and
the SDBCA, Members and holders of Preferred Stock and Capital Credits are
not entitled to dissenters' rights in connection with the proposed
Conversion.

FEDERAL INCOME TAX CONSEQUENCES. The Cooperative has not requested a
private letter ruling from the Internal Revenue Service as to the federal tax
consequences of the Conversion and, thus, there can be no assurance that the
Conversion would constitute a tax-free exchange for federal income tax
purposes. Olsen Thielen & Co., Ltd., independent auditors, has issued an
opinion to the Cooperative regarding the federal income tax consequences of
the Conversion. It is the opinion of Olsen Thielen & Co., Ltd., based on
their review of rulings and court opinions involving transactions with
similar but not identical characteristics, that Members would not recognize
taxable gain or loss by reason of the conversion of Cooperative Common Stock,
Preferred Stock or Capital Credits into the right to receive shares of DTG
Common Stock in the Conversion and that shares of DTG Common Stock issuable
in the Conversion would have the same basis and holding period as the shares
of Cooperative Common Stock and Preferred Stock and Capital Credits
surrendered in exchange for them. The opinion of Olsen Thielen & Co., Ltd.
indicates that the basis for their opinion is derived from their review of
previously issued private letter rulings by the Internal Revenue Service and
court opinions involving transactions with similar but not identical
characteristics. Because the Internal Revenue Service has not previously
ruled on a transaction involving the conversion of a Section 501(c)(12)
cooperative, the opinion states that there is a lack of direct precedent for
the stated tax treatment. The opinion of Olsen Thielen & Co., Ltd. states,
however, that existing precedent involving transactions with similar but not
identical characteristics would, if followed, cause the Conversion to be
treated as and constitute a tax free exchange and that Olsen Thielen & Co.,
Ltd. has no reason to believe that the Internal Revenue Service would not

9
<PAGE>
follow this precedent. Cash received in lieu of fractional shares of DTG
Common Stock would be taxable. (See "THE CONVERSION--Federal Income Tax
Consequences.")

Due to the complexities of federal, state and local income tax laws,
it is strongly recommended that Members and holders of Preferred Stock and
Capital Credits consult their own tax advisers concerning the particular
federal, state and local tax consequences of the Conversion to them.

ACCOUNTING TREATMENT. The Conversion would be accounted for as a
capital restructuring. Therefore, the Conversion would not affect the
valuation of the assets or liabilities of the Cooperative in the hands of
DTG, nor would DTG record any income or expense as a result of the
Conversion.

REGULATORY APPROVAL. Consummation of the Conversion is subject to
the approval of the RUS pursuant to certain loan agreements between the
Cooperative and the RUS. The Cooperative requested approval of the
Conversion from the RUS on January 24, 1997.

SUMMARY OF CERTAIN ASPECTS OF THE MERGER

If the Members adopt the proposed amendment to the Cooperative's
articles of incorporation and the Conversion is consummated, Members and
holders of Preferred Stock and Capital Credits of the Cooperative would
become shareholders of DTG. Shareholders of DTG should consider the
following summary in conjunction with the more detailed information
appearing elsewhere in this Prospectus and Ballot/Proxy Statement
concerning the proposed Merger of DTG with and into DTG Delaware.
(See "THE MERGER.")

BACKGROUND OF AND REASONS FOR THE MERGER. The Cooperative's Board of
Directors, in connection with studying the possibility of converting the
Cooperative into a general business corporation, also has considered
possible methods of trying to promote the development of a market in the
stock of a business corporation. The Board believes that encouraging and
promoting the development of a market in the capital stock of DTG (into
which the Cooperative would be converted) would promote the interests of
DTG and its shareholders by helping to provide an opportunity for a
potential new source of capital. The Board believes that encouraging the
development of a market for the stock of DTG also would promote the
interests of its shareholders by helping to enhance the liquidity of their
investment in DTG, helping to promote valuations of their stock for gift,
estate planning and other purposes and helping to provide a means by which
DTG shareholders may be able to evaluate the value of their investment in
DTG.

The Board of Directors believes that brokers, other potential market
makers and investors are more familiar with, and therefore may be more

10
<PAGE>
comfortable with, making a market and investing in the stock of a Delaware
corporation as compared to a South Dakota corporation. The Board believes
that, due to the substantial number of corporations incorporated in
Delaware, brokers, other potential market makers and investors are familiar
with Delaware corporations generally. The Board believes that because
there are relatively few publicly traded South Dakota corporations,
brokers, other potential market makers and investors may be unfamiliar with
South Dakota corporate law and therefore may be hesitant to invest in, or
perhaps even reject an investment in, a South Dakota corporation. In
addition, the Board believes that Delaware corporate law is relatively
well developed, which would lend predictability to both DTG and its
shareholders in matters related to corporate governance and management.

The Board also believes that certain provisions of the SDBCA could
limit DTG's flexibility or even hinder its ability to react to changing
business needs and opportunities and could create increased expense for DTG
in conducting fairly routine business matters. The SDBCA's requirements
for a shareholder vote before a corporation may increase its indebtedness
or in connection with small mergers in which the corporation is the
acquiring and surviving entity are examples of provisions that are not
contained in the corporate laws of Delaware. (See "THE MERGER--Comparison
of Rights of Shareholders of DTG to Rights of Stockholders of DTG
Delaware.")

The Board does not believe that there are any material disadvantages
of being incorporated under the laws of the State of Delaware and, likewise,
did not identify any material advantages of being incorporated under the
laws of the State of South Dakota.

For the reasons set forth in the preceding paragraphs, the Board
believes it would be in the best interests of DTG and its shareholders for
DTG to be incorporated in Delaware. The proposed Merger is designed to
reincorporate DTG under Delaware law. If the Merger is consummated, the
primary place of business and the corporate headquarters of DTG Delaware
would remain in South Dakota. The Cooperative, on behalf of DTG, and DTG
Delaware entered into the Plan of Merger on February 14, 1997,
following approval of the Plan of Merger by their respective Boards of
Directors. (See "THE MERGER--Background of the Merger" and "--Board
Recommendation and Reasons for the Merger.")

CONSIDERATION TO BE RECEIVED IN THE MERGER. If the proposed Merger is
approved and consummated, DTG would be merged with and into DTG Delaware
and the name of DTG Delaware would be changed to "Dakota Telecommunications
Group, Inc." DTG Delaware would own all of the assets and assume all of
the liabilities of DTG.

In the Merger, each whole share of DTG Common Stock issuable in the
Conversion would automatically become and be converted into the right to
receive one validly issued, fully paid and nonassessable share of DTG

11
<PAGE>
Delaware Common Stock. Each share of DTG Delaware Common Stock which is
outstanding immediately prior to the effective time of the Merger would be
canceled. (See "THE MERGER.") No fractional shares would result from or
be issued in the Merger.

CONSUMMATION OF THE MERGER. Consummation of the Merger is subject
to certain conditions, including that the Conversion be adopted and
consummated, that the shareholders of DTG approve the Merger, that all
required regulatory approvals are obtained, that holders of not more than
five percent of the shares of DTG issuable in the Conversion shall have
asserted dissenters' rights with respect to the Merger under Section
47-6-23 of the SDBCA and that no proceeding seeking to prevent the Merger
is pending or threatened. At any time prior to the effective time of the
Merger, the Boards of Directors of DTG (or the Cooperative on behalf of
DTG) and DTG Delaware may by mutual consent abandon the Merger or, except
as required by law, waive any condition, including the condition concerning
the exercise of dissenters' rights. (See "THE MERGER--Conditions to the
Merger and Abandonment.") It is currently expected that the Merger, if
approved by DTG's shareholders, would become effective during the third
quarter of 1997.

VOTE REQUIRED. Pursuant to the SDBCA, approval of the Merger requires
the affirmative vote of the holders of a majority of the shares of DTG
issuable in the Conversion. (See "GENERAL VOTING INFORMATION--Voting
Rights and Record Date for the Merger.") The presence in person or by
proxy of a majority of the shares of DTG Common Stock issuable in the
Conversion constitutes a quorum for purposes of the vote required by DTG's
shareholders at the special meeting. The Board of Directors has fixed
June 5, 1997, as the record date (the "Record Date") for purposes of
determining the individuals and entities who would be holders of shares of
DTG Common Stock (if the Conversion is adopted and consummated) entitled to
notice of and vote at the special meeting. Each share of DTG Common Stock
issuable in the Conversion entitles the holder to one vote on each matter
submitted for shareholder action at the special meeting. As of
December 31, 1996, the Cooperative's directors and executive officers and
their affiliates (who will be the directors, executive officers and
affiliates of DTG after the Conversion) would have beneficially owned less
than one percent of the total number of shares of DTG Common Stock
issuable in the Conversion if the Conversion had been adopted and
consummated as of that date. (See "VOTING AND MANAGEMENT INFORMATION--
Interests of Certain Persons.")

DISSENTERS' RIGHTS. Under the provisions of Section 47-6-23 of the
SDBCA, any shareholder of DTG may dissent from the proposed Merger and be
paid the "fair value" of the shareholder's shares if the Plan of Merger is
approved by the shareholders and the proposed Merger is consummated by
complying with the procedures set forth in Sections 47-6-23 through
47-6-50 of the SDBCA. To be entitled to payment of the fair value of the
shareholder's shares, a shareholder of DTG must not vote for approval of

12
<PAGE>
the Plan of Merger at the special meeting and must deliver written notice
of dissent to DTG before the vote on the Merger at the special meeting. A
shareholder may not dissent as to less than all of the shares beneficially
owned by that shareholder. A dissenting shareholder also must submit a
written demand for payment, accompanied by certain representations (and the
person's stock certificates that represented shares of Cooperative Common
Stock and Preferred Stock, if any), to DTG within 30 days (or such longer
period as may be permitted by DTG in the notice) after notice is given to
the shareholder of approval of the Plan of Merger. (See "DISSENTERS'
RIGHTS.") If dissenters' rights are asserted with respect to more than
five percent of the number of shares of DTG Common Stock issuable in the
Conversion, either DTG or DTG Delaware may terminate the Plan of Merger and
abandon the Merger. The Boards of Directors of DTG and DTG Delaware may,
in their sole discretion, waive the foregoing condition concerning the
exercise of dissenters' rights.

FEDERAL INCOME TAX CONSEQUENCES. The Cooperative has not requested a
private letter ruling from the Internal Revenue Service as to the federal
tax consequences of the Merger and, thus, there can be no assurance that the
Merger would constitute a tax-free exchange for federal income tax
purposes. However, Olsen Thielen & Co., Ltd., independent auditors, has
issued an opinion to the Cooperative regarding the federal income tax
consequences of the Merger. The opinion of Olsen Thielen & Co., Ltd.
provides that DTG shareholders would not recognize taxable gain or loss
by reason of receiving shares of DTG Delaware Common Stock in the Merger
and that shares of DTG Delaware Common Stock received by DTG shareholders
in the Merger would have the same basis and holding period as the
respective shares of DTG Common Stock surrendered in exchange for them.
(See "THE MERGER--Federal Income Tax Consequences.")

Due to the complexities of federal, state and local income tax laws,
it is strongly recommended that shareholders of DTG consult their own tax
advisers concerning the particular federal, state and local tax
consequences of the Merger to them.

ACCOUNTING TREATMENT. The Merger will be accounted for as a capital
restructuring. Therefore, the Merger would not affect the valuation of the
assets or liabilities of DTG in the hands of DTG Delaware, nor would DTG
Delaware record any income or expense as a result of the Merger.

REGULATORY APPROVAL. Consummation of the Merger is subject to the
approval of the RUS pursuant to certain loan agreements between the
Cooperative and the RUS, which would apply to DTG as a successor in
interest. The Cooperative, on behalf of DTG, requested approval of the
Merger from the RUS on January 24, 1997.

13
<PAGE>
MARKET INFORMATION

No public trading market currently exists for shares of Cooperative
Common Stock or Preferred Stock or Capital Credits, and shares of
Cooperative Common Stock and Preferred Stock and Capital Credits are
currently subject to substantial restrictions on transferability. If the
Conversion or Merger is consummated, the Resulting Company intends to enter
into negotiations with one or more regional brokerage firms to act as a
market maker for shares of the Resulting Company's common stock. In
addition, if the Conversion or Merger is consummated, the Resulting Company
intends to apply to have shares of the Resulting Company's common stock
quoted for trading on The Nasdaq Stock Market. There can be no assurance
that the Resulting Company would be successful in finding a brokerage firm
to act as a market maker for its common stock or that shares of the
Resulting Company's common stock would ever be quoted for trading on The
Nasdaq Stock Market. Similarly, there can be no assurance that a trading
market would develop or be maintained for shares of the Resulting Company's
common stock or, if it did, that it would provide the stockholders of the
Resulting Company a meaningful opportunity to liquidate their equity
interests in the Resulting Company at a fair value.

The Cooperative has historically operated as a Member-owned
cooperative rather than as a for-profit enterprise and its articles of
incorporation have prohibited the declaration of dividends on shares of
Cooperative Common Stock. The Cooperative has not previously paid
dividends on any of the currently issued and outstanding shares of
Preferred Stock or on Capital Credits.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected historical financial information has been
derived from the consolidated financial statements of the Cooperative for
each of the years in the five-year period ended December 31, 1996, which
were examined by Olsen Thielen & Co., Ltd., and the three months ended
March 31, 1996 and 1997, which have not been audited. The selected his-
torical financial information should be read in conjunction with "DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC.--Management's Discussion and Analysis
or Plan of Operation" and the Consolidated Financial Statements and related
notes thereto with respect to the Cooperative included as Appendices G and
H to this Prospectus and Ballot/Proxy Statement. In the opinion of manage-
ment of the Cooperative, the unaudited information for the three months
ended March 31, 1996 and 1997 includes all adjustments, consisting only of
normal recurring adjustments, necessary for fair presentation of the
information. The results for the three month periods are not necessarily
indicative of full year performance. No historical financial statements
of DTG are included in this Prospectus and Ballot/Proxy Statement since
DTG merely would be the successor to the Cooperative if the Conversion is
adopted and does not exist as an entity separate from the Cooperative.
No historical financial statements of DTG Delaware are included in this

14
<PAGE>
Prospectus and Ballot/Proxy Statement since DTG Delaware has no significant
assets or liabilities and has had no operating history.

The following selected PRO FORMA financial information includes
Cooperative operations as if the acquisition of TCIC Communications, Inc.
and I-Way Partners, Inc. had occurred on January 1, 1996.

The following selected PRO FORMA financial information for the
Resulting Company also gives effect to the Conversion and/or the Merger.
The PRO FORMA financial information for the Resulting Company will be
identical if only the Conversion is adopted or if both the Conversion is
adopted and the Merger is approved. This information should be read in
conjunction with the PRO FORMA financial statements and notes thereto
included elsewhere in this Prospectus and Ballot/Proxy Statement. The PRO
FORMA financial information gives effect to the Conversion or the
Conversion and the Merger as if the Conversion or the Conversion and the
Merger, as applicable, occurred on January 1 of the year presented. The
PRO FORMA financial information may not be indicative of the results that
actually would have occurred if the Conversion or the Conversion and the
Merger had been in effect on that date or which may be attained in the
future. (See "UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.")

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
HISTORICAL PRO FORMA
--------------------------------------------------------------------------- -----------
1992 1993 1994 1995 1996 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Revenues $ 4,817,571 $ 4,822,235 $ 5,335,351 $ 6,115,529 $ 7,808,842 $ 9,474,178

Costs and Expenses 3,508,881 3,797,835 3,807,320 5,273,657 7,730,992 9,665,506

Operating Income (Loss) 1,308,690 1,024,400 1,528,031 841,872 77,850 (191,328)

Other Income
(Expenses), Net<F1><F2> (308,276) (479,404) (85,654) 593,449 (413,796) (601,110)

Income (Loss) Before
Income Taxes 1,000,414 544,996 1,442,377 1,435,321 (335,946) (792,438)

Income Taxes -- 4,909 11,666 301,859 (175,712) (277,000)

Net Income (Loss) 1,000,414 540,087 1,430,711 1,133,462 (160,234) (515,438)

15
<PAGE>
PRO FORMA Net Income (Loss)
Per Share -- -- -- -- -- (.49)<F3>

BALANCE SHEET DATA:

Working Capital $ 2,764,772 $ 3,146,402 $ 5,641,071 $ 7,242,678 $ 4,946,121 $ 4,946,121

Property, Plant and
Equipment 11,365,290 11,760,785 11,241,422 11,041,284 14,441,104 14,441,104

Total Assets 15,828,294 16,871,076 18,494,208 20,121,675 23,504,875 23,504,875

Long-Term Debt 12,584,682 12,918,003 13,028,945 13,504,725 15,338,395 15,338,395

Stockholders' Equity 2,272,614 2,827,100 4,257,396 5,415,305 6,412,216 6,412,216
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
- -------------------------------------------
HISTORICAL PRO FORMA
- --------------------------- -----------
1996 1997 1997
- ---------- ----------- -----------
<S> <C> <C>
$ 1,648,024 $ 2,751,979 $ 2,751,979

1,567,413 2,835,079 2,835,076

80,611 (83,097) (83,097)

(75,052) (151,065) (151,065)

5,559 (234,162) (234,162)

5,500 (36,499) (82,000)

59 (197,663) (152,162)

-- -- (.14)<F3>

$ 6,060,872 $ 4,191,328 $ 4,191,328

12,372,712 14,608,404 14,608,404

21,002,352 23,600,594 23,600,594

13,945,297 15,279,176 15,279,176

5,458,978 6,234,103 6,234,103
16
<PAGE>
<FN>
<F1> Gains on sale of cellular investments were $240,811 in 1994
and $686,336 in 1995.

<F2> Income (Loss) from cellular partnerships were:

1992 $ 77,881
1993 (33,404)
1994 125,377
1995 168,788

<F3> PRO FORMA per share loss was computed by dividing the PRO FORMA
net loss by the PRO FORMA number of shares of common stock
outstanding (1,051,013 shares).
</FN>
</TABLE>

GLOSSARY

The following list of definitions includes terms which are defined
in this Prospectus and Ballot/Proxy Statement and used principally in the
"RISK FACTORS" and "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Business,"
and "--Competition" and "--Regulation" sections of this Prospectus and
Ballot/Proxy Statement. This Glossary is intended merely to aid in the
readability of this Prospectus and Ballot/Proxy Statement:
<TABLE>
<CAPTION>
TERM DEFINITION
- ---- ----------
<S> <C>
1984 Cable Act Cable Communications Policy Act of 1984

1992 Cable Act Cable Television Consumer Protection and
Competition Act of 1992

1996 Act Telecommunications Act of 1996

America Online America Online, Inc.

AT&T AT&T Corp.

AT&T Divestiture Decree AT&T divestiture decree, which required the
divestiture by AT&T of its 22 Bell operating
companies and divided the country into 201 LATAs

ATM Asynchronous Transfer Mode

BBN BBN Corporation

BST basic tier of cable service
17
<PAGE>
TERM DEFINITION
- ---- ----------
CATV Community Antenna Television (Cable)

CCL Carrier Common Line

CommNet SommNet Cellular, Inc.

CompuServe CompuServe Corporation

CPST cable programming service tier

DBS direct broadcast satellites

DSI Dakota Systems, Inc.

DWS Dakota Wireless Systems, Inc.

EPA United States Environmental Protection Agency

FCC Interconnection Order First Report and Order in the Matter of
Implementation of the Local Competition
Provisions

FCC United States Federal Communications
Commission

GTOCs GTE Corporation Operating Companies

HSDs home satellite dishes

Iway Iway, Inc.

IXCs national and regional interexchange carriers

LATA Local Access and Transport Area

LECs local exchange companies

LFAs local franchising authorities

MATV Master Antenna Television

MCI MCI Communications Corporation

MMDS multi-channel, multi-point distribution systems

MTA Major Trade Areas
18
<PAGE>
TERM DEFINITION
- ---- ----------

NAPs Internet National Access Points

NECA National Exchange Carrier Association

NETCOM NETCOM On-Line Communication Services, Inc.

OVS open video system

PCS Broad and Personal Communications Services

PEG public access, educational and government

PSI PSINet Inc.

RBOCs Regional Bell Operating Companies

ROR rate-of-return

RTFC Rural Telephone Finance Cooperative

RUS Rural Utilities Service of the United States
Department of Agriculture

SFLP Sioux Falls Cellular Limited Partnership

SMATV Satellite MATV

SONET Synchronous Optical Network

Sprint Sprint Corporation

SS7 Signaling System 7 Common Channel Signaling

TCIC TCIC Communications, Inc.

TCP/IP Transmission Control Protocol/Internet
Protocol

USF Universal Service Fund

US WEST US West Communications, Inc.

UUNET UUNET Technologies, Inc.

Web World Wide Web
</TABLE>

19
<PAGE>
RISK FACTORS

In addition to the other information contained in this Prospectus and
Ballot/Proxy Statement, the following factors should be considered
carefully in evaluating the Cooperative and its business which will be
assumed by DTG if the Conversion is consummated or by DTG Delaware if the
Merger is consummated. In this Prospectus and Ballot/Proxy Statement, the
term "Company" means the Cooperative and its subsidiaries before the
Conversion, DTG and its subsidiaries after the Conversion and DTG Delaware
and its subsidiaries after the Conversion and the Merger.

COMPETITION

GENERAL. The Company faces intense competition in providing
telecommunications and cable television services both within and outside of
its local exchanges. The Company competes with AT&T Corp. ("AT&T"), MCI
Communications Corporation ("MCI"), Sprint Corporation ("Sprint") and other
national and regional interexchange carriers ("IXCs"), where permissible.
Other potential competitors include cable television companies, wireless
telephone companies, electric utilities, microwave carriers and private
networks of large end-users. Most of these companies have substantially
greater market share and financial, technical, marketing and other
resources than the Company and some of them are the source of the
telecommunications network capacity used by the Company to provide a
portion of its own long distance services. (See "DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.--Competition.")

LOCAL TELEPHONE SERVICE. Historically, the Company's local telephone
operations have not experienced significant competition. As a result of
the enactment of the federal Telecommunications Act of 1996 (the "1996
Act"), the Company anticipates that its local telephone operations will
experience increased competition from various sources, including resellers
of the Company's local exchange services, large end-users installing their
own networks, IXCs, satellite transmission services, cellular
communications providers, cable television companies, radio-based personal
communications companies, competitive access providers and other systems
capable of completely or partially bypassing the local telephone
facilities. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--
Regulation.") In 1996, the South Dakota Public Utilities Commission
approved numerous applications to provide and resell local exchange
services, including applications made by the Company to enter other local
exchanges. Many such applications are pending and the Company anticipates
that additional filings will be made by other companies. The Company has
received two formal interconnection requests under the 1996 Act from two
cellular service companies operating in the Cooperative's service area.
The Company cannot predict the specific effects of competition on its local

20
<PAGE>
telephone business at this time. An increase in such competition could
have a material adverse effect on the Company's business, financial
condition and results of operations.

LONG DISTANCE TELECOMMUNICATIONS SERVICES. The United States long
distance telecommunications industry is highly competitive and is
significantly influenced by the marketing and pricing decisions of larger
industry participants. The industry has relatively insignificant barriers
to entry, numerous entities competing for the same customers and high
attrition rates (customer turnover) since customers frequently change long
distance providers in response to offers by competitors of lower rates or
promotional incentives. Most of the Company's competitors are
significantly larger, have substantially greater financial, technical,
marketing and other resources and have larger networks than the Company.

In October 1995, the United States Federal Communications Commission
(the "FCC") reclassified AT&T as a "non-dominant" carrier for domestic
interstate services, which substantially reduced the regulatory constraints
on AT&T. This reclassification may make it easier for AT&T to compete
directly with the Company for long distance subscribers. AT&T was
reclassified as a "non-dominant" carrier for international services on May
14, 1996. The Company also currently competes with US West, a Regional Bell
Operating Company, and other local exchange companies ("LECs") in the
provision of "short haul" toll calls completed within a local access and
transport area ("LATA") (or intra-LATA calls). In addition, as a result of
the 1996 Act, the Regional Bell Operating Companies ("RBOCs") and the GTE
Corporation Operating Companies ("GTOCs") will be allowed to compete for
the provision of "long haul" inter-LATA toll calls upon receipt of all
necessary regulatory approvals and the satisfaction of applicable
conditions. The FCC has not yet finalized all of the rules necessary to
implement the 1996 Act and therefore it is unclear at this time what
impact the 1996 Act and the rules under the 1996 Act will have on the
Company. Depending on the exact nature and timing of GTOC and RBOC entry
into the long distance market and the impact on access rates, such entry
could have a material adverse effect on the Company's business, results
of operations and financial condition. Certain of the RBOCs have already
taken steps to provide in-region inter-LATA long distance services and
have filed applications with the FCC seeking authority to provide such
services in certain states. The Company expects that most or all of the
RBOCs will file applications for inter-LATA long distance service
authority. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--
Regulation.")

The ability of the Company to compete effectively in long distance
telecommunications services will depend upon, among other factors, its
continued ability to provide high quality services at competitive prices,
and there can be no assurance that the Company will be able to compete

21
<PAGE>
successfully in the future in its markets. The Company's competitors may
reduce rates or offer incentives to existing and potential customers of the
Company, whether as a result of general competitive pressures or the entry
of the RBOCs, GTOCs and other LECs into the long distance market. Since
the Company believes that to maintain its competitive position it must be
able to reduce its prices to meet reductions in rates by others, a decrease
in the rates for long distance services charged by others could have a
material adverse effect on the Company's business, results of operations
and financial condition. The Company expects price competition to continue
to increase, which could have a material adverse effect on the Company's
business, financial condition and results of operations, including a
reduction in the Company's response rates and higher customer attrition.

The Company also expects to encounter increasing competition from the
development of new technologies and the increased availability of domestic
and international transmission capacity. For example, even though fiber
optic networks, such as the Company's new system, are now widely used for
long distance transmission, it is possible that the desirability of such
networks could be adversely affected by changes in technology. The
telecommunications industry is in a period of rapid technological
evolution, marked by the introduction of new product and service offerings
and increasing satellite and fiber optic transmission capacity for services
similar to those provided by the Company. The Company cannot predict which
of many possible future product and service offerings will be important to
maintain its competitive position or what expenditures will be required to
develop and provide such products and services.

INTERNET-RELATED SERVICES. The market for data communications
services, including Internet access and on-line services, is extremely
competitive. There are no substantial barriers to entry, and the Company
expects that competition will intensify in the future. The Company
believes that its ability to compete successfully depends on a number of
factors, including: (i) market presence in smaller regional markets;
(ii) the ability to execute a rapid expansion strategy; (iii) the capacity,
reliability and security of its network infrastructure; (iv) ease of access
to and navigation of the Internet; (v) the pricing policies of its
competitors and suppliers; (vi) the timing of the introduction of new
products and services by the Company and its competitors; (vii) the
Company's ability to meet industry standards for technology and service;
and (viii) industry and general economic trends. The success of the
Company in this market will depend heavily upon its ability to provide high
quality Internet connectivity and value-added Internet services at
competitive prices.

The Company's current and potential competitors generally may be
divided into three groups: (i) telecommunications companies, such as AT&T,
MCI, Sprint, the RBOCs, @Home (a joint venture between Tele-Communications,
Inc. and a venture capital firm) and various other cable companies; (ii)

22
<PAGE>
other Internet access providers, such as UUNET Technologies, Inc.
("UUNET"), BBN Corporation ("BBN"), NETCOM On-Line Communication Services,
Inc. ("NETCOM"), PSINet Inc. ("PSI") and other national and regional
providers; and (iii) on-line services providers, such as America Online,
Inc. ("America Online"), CompuServe Corporation ("CompuServe"), Intuit
Inc., Microsoft Corp. and Prodigy Services Company. Most of these
competitors have greater market presence, engineering and marketing
capabilities, and financial, technological, personnel and other resources,
than those available to the Company and some provide services relied upon
by the Company in its Internet business. As a result, these companies
may be able to develop and expand their communications and network
infrastructures more quickly, adapt more swiftly to new or emerging
technologies and changes in customer requirements, take advantage of
acquisition and other opportunities more readily and devote greater
resources to the marketing and sale of their services than can the Company.

The Company expects that all of the major on-line services providers
and telecommunications companies will expand their current services to
compete fully in the Internet access market. The Company also anticipates
that new competitors, including large computer hardware, software, media
and other technology and telecommunications companies, will enter the
Internet access market, resulting in even greater competition. Certain
companies, including America Online, AT&T, UUNET, BBN and PSI, have
obtained or expanded their Internet access products and services as a
result of acquisitions and strategic investments. Such acquisitions and
investments may permit the Company's competitors to devote greater
resources to the development and marketing of new competitive products and
services and the marketing of existing competitive products and services.
The Company expects these acquisitions and strategic investments to
increase, thus creating significant new competitors. In addition, the
ability of some of the Company's competitors to bundle other services and
products with Internet access services, such as the Internet service
offerings recently announced by AT&T and MCI, could place the Company at a
competitive disadvantage.

As a result of increased competition in the Internet services
industry, the Company expects that it will continue to encounter
significant pricing pressure, which in turn could result in significant
reductions in the average selling price of its Internet services. The
Company previously has reduced prices on certain of its Internet access
options and may do so in the future. There can be no assurance that the
Company will be able to offset the effects of any such price reductions
with an increase in the number of its customers, higher revenues from
enhanced services, cost reductions or otherwise. In addition, the Company
believes that the data communications business, and in particular the
Internet access and on-line services businesses, are likely to encounter
consolidation in the near future, which could result in increased price and
other competition in the industry. Increased price or other competition

23
<PAGE>
could result in erosion of the Company's market share and could have a
material adverse effect on the Company's Internet business, financial
condition and results of operations. There can be no assurance that the
Company will have the financial resources, technical expertise, marketing
and support capabilities or expansion and acquisition possibilities to
continue to compete successfully.

CABLE TELEVISION SERVICES. Cable television providers compete for
customers in local markets with other providers of entertainment, news and
information. The competitors in these local markets include broadcast
television and radio, newspapers, magazines and other printed material,
motion picture theaters, video cassettes and other sources of information
and entertainment, including directly-competitive cable television
operations. The extent to which the Company's cable television service is
competitive depends upon its ability to provide, on a cost-effective basis,
an even greater variety of programming than that available off-air or
through other alternative delivery sources.

Regulatory changes also impact competition in the cable industry.
(See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.") Both the
Cable Television Consumer Protection and Competition Act of 1992 ("1992
Cable Act") and the 1996 Act are designed to increase competition in the
cable television industry. These regulatory changes have encouraged the
development and deployment of alternative methods of distributing the same
or similar video programming offered by cable television systems. These
technologies include: (i) medium power and higher power direct broadcast
satellites ("DBS") using high frequencies to transmit signals that can be
received by dish antennas much smaller in size than traditional home
satellite dishes ("HSDs"); (ii) multi-channel, multi-point distribution
systems ("MMDS") that deliver programming services over microwave channels
received by subscribers with special antennas; and (iii) Master Antenna
Television ("MATV") systems and Satellite MATV ("SMATV") systems that
provide multi-channel program services directly to hotel, motel, apartment,
condominium and similar multi-unit complexes. The Company already has
experienced competition in its cable system territories from MMDS and DBS
companies.

Within the cable television industry, cable operators may compete with
other cable operators or others seeking franchises for competing cable
television systems at any time during the terms of existing franchises or
upon expiration of such franchises in the expectation that an existing
franchise will not be renewed. The 1992 Cable Act promotes the grant of
competitive franchises. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
- --Regulation.") In addition, an increasing number of cities are exploring
the feasibility of owning their own cable systems in a manner similar to
city-provided utility services.

24
<PAGE>
The 1996 Act eliminated the statutory and regulatory restrictions that
prevented telephone companies from competing with cable operators for the
provision of video services through any means. The 1996 Act also allows
local telephone companies, including RBOCs, to compete with cable
television operators both inside and outside of their telephone service
areas. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.")
The Company expects that it will face substantial competition from
telephone companies in the provision of video services, whether through the
acquisition of cable systems, the provision of wireless cable or the
provision of upgraded telephone networks. The Company assumes that all
major telephone companies have already entered or soon will enter the
business of providing video services. Most major telephone companies have
greater financial resources than the Company and the 1992 Cable Act ensures
that telephone companies and other providers of video services will not be
precluded from providing significant cable television programming services.
Additionally, the 1996 Act eliminates certain federal restrictions on
utility holding companies and thus permits utility companies to provide
cable television services. The Company expects that utility companies
could become another source of competition in the delivery of video
services. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.")

REGULATORY AND LEGISLATIVE

GENERAL. Regulations, regulatory actions and court decisions have
had, and in the future may have, both positive and negative effects on the
Company and its ability to compete. The recent trend in federal and state
regulation of telecommunications service providers has been toward lessened
regulation. However, the general recent trend toward lessened regulation
also has given AT&T, the largest long distance carrier in the United
States, increased pricing flexibility that has permitted it to compete more
effectively with smaller companies, such as the Company. In addition, the
1996 Act opened the Company's local service and cable markets to
increased competition. There can be no assurance that future regulatory,
judicial and legislative changes will not have a material adverse effect on
the Company.

TELECOMMUNICATIONS SERVICES. The Company's local and long distance
businesses are subject to varying degrees of federal, state, local and
international regulation. This regulatory environment varies substantially
by jurisdiction and is in rapid change due to legislative and technological
changes. In the United States, the Company is most heavily regulated by
the various states, in particular the South Dakota Public Utilities
Commission, especially in the provision of local exchange services. The
Company must be separately certified in each state to offer local exchange
and intrastate long distance services in that state.

The 1996 Act substantially changed the regulatory environment for
telecommunications services. The 1996 Act (i) permits RBOCs to provide

25
<PAGE>
domestic and international long distance services to customers located
outside of the RBOCs' home regions; (ii) permits a petitioning RBOC to
provide domestic and international long distance service to customers
within its home region upon a finding by the FCC that the RBOC has
satisfied certain criteria for opening up its local exchange network to
competition and that its provision of long distance services would further
the public interest; and (iii) removes existing barriers to entry into
local service markets, including the Company's local exchanges.
Additionally, there have been significant changes in the manner in which
carrier-to-carrier arrangements are regulated at the federal and state
level, the procedures to revise universal service standards and the
penalties for unauthorized switching of customers. The 1996 Act also
substantially changes the regulation of cable television systems. The FCC
and the South Dakota Public Utilities Commission, as well as many other
state public utilities commissions, have instituted proceedings to
investigate the changes needed in state regulation necessary to comply
with the 1996 Act.

On March 8, 1996, the FCC initiated a rulemaking proceeding and
established a Federal-State Joint Board to recommend changes to the
existing mechanisms for universal service support. On November 8, 1996,
the Joint Board released its recommended decision, and on May 8, 1997, the
FCC released a Report and Order substantially adopting the Joint Board's
recommendations. The FCC also indicated its intent to issue a further
notice of proposed rulemaking in June 1997 to establish a universal service
support mechanism for non-rural carriers based on the forward-looking
economic cost of constructing and operating the network used to provide the
supported services. The FCC further indicated its intent to commence a
separate proceeding by October 1998 to establish forward-looking economic
cost mechanisms for rural carriers. Non-rural carriers would begin to
receive support based on forward-looking economic cost on January 1, 1999,
whereas rural carriers would shift to such an approach beginning no sooner
than January 1, 2001. Modifications to the existing universal service
support mechanism could adversely affect the amounts the Company receives
under the current Universal Service Fund ("USF") rules. The Company cannot
predict the outcome of these proceedings or whether the FCC's actions will
have a material adverse effect on its operations, although the Company
historically has not received a significant portion of its revenue from the
current universal support funds (less than two percent of gross revenue in
1996).

On August 8, 1996, the FCC released its First Report and Order in the
Matter of Implementation of the Local Competition Provisions in the 1996
Act (the "FCC Interconnection Order"). In the FCC Interconnection Order,
the FCC established nationwide rules designed to encourage new entrants to
participate in the local service markets through interconnection with the
incumbent local exchange carriers, including the Company, and resale of the
local exchange carriers' retail services and unbundled network elements.
The Company cannot predict the effect such legislation or the implementing

26
<PAGE>
regulations will have on its operations or the industry. Motions to stay
implementation of the FCC Interconnection Order were filed with the FCC and
federal courts of appeal. Appeals challenging, among other things, the
validity of the FCC Interconnection Order were filed in several federal
courts of appeal and consolidated before the United States Circuit Court
of Appeals for the Eighth Circuit for disposition. The Eighth Circuit has
stayed the pricing provisions of the FCC Interconnection Order, and the
United States Supreme Court denied an application to vacate the stay. On
January 17, 1997, the Eighth Circuit heard oral argument in the case. The
Company cannot predict either the outcome of these challenges and appeals
or the eventual effect on its business or the industry in general.

On December 24, 1996, the FCC initiated a rulemaking proceeding to
address the reform of access charges. Access charges are a principal
component of the Company's local telephone exchange operating revenues as
well as its long distance business line cost expense. On May 16, 1997, the
FCC released its First Report and Order adopting changes to the existing
access charge structure. With limited exceptions, those modifications apply
only to price cap incumbent LECs, which generally are the nation's largest
telephone companies. In the First Report and Order, the FCC also stated its
intention to issue a subsequent Report and Order to provide additional rules
to implement access charge reform, and to initiate separate proceedings to
examine historical cost recovery issues and access charge reform for rate-of-
return carriers, such as the Company. On June 3, 1997, Pacific Bell, Nevada
Bell, and Southwestern Bell Telephone Company jointly petitioned the FCC to
stay the First Report and Order pending judicial review and indicated their
intent to seek such review. The Company cannot predict whether the result
of these proceedings will have a material impact upon its operations.

FCC approval is required for the operation of the Company's
international long distance services. The Company believes that it has all
the necessary FCC authorizations for its current operations. There can be
no assurance, however, that the Company will receive all authorizations or
licenses necessary for new communications services or that delays in the
licensing process will not adversely affect the Company's business.

INTERNET SERVICES. The Company's Internet-related services are not
currently subject to direct regulation by the FCC or any other United
States agency, other than regulation applicable to businesses generally.
The FCC recently requested comments on a petition filed by the America's
Carriers Telecommunication Association which requests that the FCC regulate
certain voice transmissions over the Internet as telecommunications
services. In its access charge reform proceeding, the FCC also concluded
that incumbent LECs may not assess interstate access charges on information
service providers, but stated that it planned to address issues relating to
information service providers' use of the public switched network as part
of a broader set of issues under review in a related proceeding. Changes
in the regulatory environment relating to the telecommunications or
Internet-related services industry could have an adverse effect on the

27
<PAGE>
Company's Internet-related services business. The 1996 Act may permit
telecommunications companies, RBOCs or others to increase the scope or
reduce the cost of their Internet access services. The Company cannot
predict the effect that the 1996 Act or any future legislation, regulation
or regulatory changes may have on its Internet business.

CABLE SERVICES. The operation of cable television systems is
extensively regulated through a combination of federal legislation and FCC
regulations, by a number of state governments and by most local government
franchising authorities such as municipalities and counties. The 1996 Act,
which alters federal, state and local laws and regulations regarding
telecommunications providers and cable television service providers, can be
expected to have a profound effect on the regulation of cable television
operations. The Cable Communications Policy Act of 1984 (the "1984 Cable
Act") and the 1992 Cable Act also extensively regulated the cable
television industry and much of that regulation remains unchanged by the
1996 Act. In addition, because cable television systems use local streets
and rights-of-way, cable systems are generally licensed or franchised by
local municipal or county governments and, in some cases, by centralized
state authorities. These franchises are granted for fixed periods of time
subject to extension or renewal and, while the Company believes that its
relationships with its franchising authorities are good, there can be no
assurance that its franchise agreements will be extended or renewed, or
that any extension or renewal will be on substantially similar terms and
conditions.

The regulation of cable television systems at the federal, state and
local levels is subject to the political process and has been in constant
flux over the past decade. Material changes in the law and regulatory
requirements must be anticipated and there can be no assurance that the
Company's business will not be affected adversely by future legislation,
new regulation or deregulation. (See "DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.--Regulation.")

RAPID TECHNOLOGICAL CHANGES; DEPENDENCE UPON PRODUCT DEVELOPMENT

The telecommunications industry is subject to rapid and significant
changes in technology. While the Company does not believe that, for the
foreseeable future, these changes will either materially and adversely
affect the continued use of fiber optic cable or materially hinder its
ability to acquire necessary technologies, the effect of technological
changes, including changes relating to emerging wireline and wireless
transmission and switching technologies, on the Company's businesses cannot
be predicted.

The market for the Company's Internet-related products and services is
particularly characterized by rapidly changing technology, evolving
industry standards, emerging competition and frequent new product and
service introductions. There can be no assurance that the Company will

28
<PAGE>
successfully identify new product and service opportunities and develop and
introduce new products and services to the market in a timely manner. The
Company is also at risk resulting from fundamental changes in the way
Internet access services are marketed and delivered. The Company's
Internet service strategy assumes that the Transmission Control
Protocol/Internet Protocol ("TCP/IP"), utilizing fiber optic or copper-
based telecommunications infrastructures, will continue to be the primary
protocol and transport infrastructure for Internet-related services.
Emerging transport alternatives include cable modems and satellite delivery
of Internet information; alternative open protocol and proprietary protocol
standards have been or are being developed. The Company's pursuit of
technological advances may require substantial time and expense, and there
can be no assurance that the Company will succeed in adapting its Internet
services business to alternate access devices, conduits and protocols.

DEPENDENCE UPON TECHNOLOGY

The Company's business is dependent upon its ability to procure
technology that will permit it to offer existing and new services that are
competitive with other entities in its various markets. The Company
currently does not engage in any independent research and development and
may not have the resources necessary to acquire the best available or
necessary technology in the future. The Company's competitors also could
have proprietary rights in technology that the Company could require in the
future, which could cause such technology to be unavailable to the Company
or available only at a high cost. The inability of the Company to procure
or develop required technology in the future could have a material adverse
effect on the Company's business, financial condition and results of
operations.

SIGNIFICANT CAPITAL REQUIREMENTS

The development of the Company's businesses and the expansion and
integration of its telephone and cable networks require significant capital
expenditures. During 1996, the Company's capital expenditures, which were
primarily for the acquisition of Community Antenna Television (Cable)
("CATV") systems and for construction of networks and the purchase of
related equipment, were approximately $5,700,000. In 1997, the Company
currently intends to undertake initiatives designed to take advantage of
opportunities created by changes in telecommunications laws and the rapid
development of fiber optic technology-based communications networks.
These initiatives involve expanding the Company's fiber optic network,
accelerating central office interconnection and integration with its cable
television systems, deploying additional switches, providing high-speed
local Internet access and acquiring complementary businesses, technologies
or products. Expenditures for these initiatives would be subject to the
Company's assessment of a number of factors, including the cost of any
additional capital required, technological developments and market
conditions. In addition, each initiative may be implemented in whole or

29
<PAGE>
in part, and independently of any other initiative, ensuring that the
Company retains maximum financial and operating flexibility. There can
be no assurance that increased capital expenditures will result in
enhanced profitability.

The Company anticipates that implementation of these initiatives will,
together with currently anticipated expenditures, result in total capital
expenditures of approximately $15,000,000 in 1997. The current anticipated
capital expenditures are primarily for a network construction program.
Current anticipated expenditures are for fiber optic cable and switching
equipment (approximately $11,000,000), head end equipment and cabling
(approximately $4,000,000) and miscellaneous equipment and building
improvements (approximately $500,000). Depending on a number of factors,
significant additional capital expenditures could be required in the
future. Since a significant portion of the Company's capital expenditures
are success-based (that is, related directly to revenue growth), actual
capital expenditures may vary significantly depending on the level of
incremental sales and the results of 1997 capital improvements. These
expenditures also would be subject to a number of additional factors,
including the pace and extent of network development, as well as
regulatory actions by state, federal and international authorities,
which, individually or in the aggregate, could cause material changes
in capital expenditure requirements. The Company will need to finance
these capital expenditures through outside sources.

The Company historically has utilized low interest government loans to
finance its capital expenditure programs. In March 1997, the Company
received loan commitments, and in May 1997 approvals, from the Rural
Telephone Finance Cooperative, part of which would be used to finance the
Company's contemplated network construction project. See "RISK FACTORS--
Dividend Restrictions and Other Restrictive Covenants." There is no
assurance, however, that such loans or other normal commercial loans will
be available to cover the Company's anticipated plans. Failure to have
access to sufficient funds for capital expenditures may require the Company
to delay or abandon some of its future expansion or expenditures. Delay or
abandonment of its future expansion would make it impossible for the
Company to expand into new markets, which could have a material adverse
effect on the Company's growth and future business, financial condition and
results of operations. The delay or abandonment of its future expansion
would have no impact on the Company's current operations and markets.

FINANCIAL LEVERAGE; DEBT SERVICE, INTEREST RATE FLUCTUATIONS, POSSIBLE
REDUCTION IN LIQUIDITY

At December 31, 1996, the Company reported $15,300,000 of long-term
debt (including capital leases and excluding current maturities) and a
long-term debt-to-equity ratio of 2.4 to 1. Borrowings under existing
long-term credit facilities are primarily at fixed interest rates, although
a small portion of such borrowings are at variable rates. The Company

30
<PAGE>
anticipates that any borrowings that may be required for future capital
expenditures would likely bear interest at variable rates. Increases in
interest rates, economic downturns and other adverse developments, which
include many factors beyond the Company's control, could impair the
Company's ability to service its indebtedness. In addition, the cash flow
required to service the Company's debt may reduce its ability to fund
internal growth, additional acquisitions and capital improvements.

DIVIDEND RESTRICTIONS AND OTHER RESTRICTIVE COVENANTS

Certain covenants in existing loan agreements between the Company and
the RUS, as well as federal statutes and regulations which apply to RUS
borrowers, limit the circumstances under which the Company is or will be
permitted to pay dividends or make other distributions with respect to its
equity. Specifically, the RUS Mortgage, Security Agreement and Financing
Statement provides that no distributions shall be made without prior RUS
consent unless, after the distribution, the Cooperative's current assets equal
or exceed its current liabilities and the Cooperative's adjusted net worth
equals the smaller of (i) 40 percent of the Cooperative's adjusted assets
or (ii) the sum of 10 percent of its adjusted net assets plus 30 percent of
its adjusted net worth (in excess of 10 percent of its adjusted net assets)
plus 30 percent of any reduction in adjusted net worth resulting from the
declaration or payment of any dividend or other distribution, the purchase,
redemption or retirement of capital stock, membership certificates or equity
capital certificates or investments in affiliated companies. Existing loan
agreements further restrict the payment of cash dividends and otherwise
limit the Company's financial flexibility. Additional debt required to fund
the Company's capital expenditure plans would likely extend these
restrictions indefinitely.

In March 1997, the Company received loan commitments from the Rural
Telephone Finance Cooperative ("RTFC") in the aggregate amount of
approximately $28,421,000. Approximately $14,737,000 of such amount would
be used to finance the Company's contemplated network construction project
(including the installation of fiber optic cable and the purchase of new
switching equipment) and the remainder would be used to finance existing
RUS long-term debt. The commitments are independent, such that the Company
could borrow funds necessary to finance the contemplated construction
project without retiring existing RUS long-term debt. The interest rates
on the new loan may be fixed or variable, as selected by the Company at
the time of initial advance. Each loan would have a 15 year maturity, with
principal and interest payments due quarterly. The loans would be secured
by a first mortgage lien on the assets and revenue of the Company and a
pledge of the stock of each of the Company's subsidiaries. The RTFC
commitment letter provides that the loan would be subject to various
covenants. In particular, the commitment letter provides that the Company
must on a consolidated basis maintain a minimum annual debt coverage service
ratio (total net income or margins plus depreciation and interest on long-
term debt for a year divided by principal and interest on long-term debt

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payable in that year) and a minimum average ratio of net income to total
interest expense on long-term debt. In addition, the commitment letter
provides that the Company would be subject to certain minimum net worth
requirements, and in some cases would be required to obtain prior written
consent from the RTFC, in order for the Company to pay any dividends or
distributions to Members or shareholders or incur additional indebtedness.
Closing of the contemplated loans from the RTFC is subject to various
conditions, including the negotiation and execution of definitive loan
agreements (including the various covenants and restrictions). There can be
no assurance that such loan agreements will be finalized or that sums would
be borrowed from the RTFC. The Company has received approval of such loans
from the RTFC.

OPERATING LOSSES

A substantial portion of the expenditures related to the development
of the Company's business, the installation and expansion of its telephone
and cable networks and the recently proposed linking of these networks
through the acquisition or construction of facilities, will be incurred
before the Company realizes revenues. These expenditures, together with the
associated up-front operating expenses, will result in negative cash flows
until an adequate customer base is established. The Company reported a net
loss of approximately $160,234 for the year ended December 31, 1996.
Although its gross revenues increased in 1996, the Company has incurred
significant increases in expenses associated with the acquisition of new
cable systems and the development and expansion of its cable and fiber
optic networks, services and customer base.

VARIABILITY OF QUARTERLY OPERATING RESULTS

As a result of the significant expenses associated with the expansion
and development of its networks and services, the Company's operating
results could vary significantly from period to period. Additional factors
contributing to variability of operating results include the pricing and
mix of services and products sold by the Company, customer terminations of
service, the timing and costs of the expansion of the Company's network
infrastructure, the timing and costs of marketing and advertising efforts
and the timing and costs of any acquisitions of businesses, products or
technologies. Accordingly, these revenues and expenses are likely to
fluctuate from period to period.

ACQUISITION STRATEGY

In furtherance of its current business strategy, the Company has
entered and may continue to enter into strategic alliances with, acquire
assets or businesses from or make investments in companies that are
complementary to its current operations. The Company has no present
commitments or agreements with respect to any such strategic alliance,
investment or acquisition. Any future strategic alliances, investments or

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acquisitions would be accompanied by the risks commonly encountered in such
transactions. Such risks include, among other things, the difficulty of
assimilating the operations and personnel of the companies, the potential
disruption of the Company's ongoing business, costs associated with the
development and integration of such operations, the inability of management
to maximize the financial and strategic position of the Company by the
successful incorporation of licensed or acquired technology into the
Company's service offerings, the maintenance of uniform standards,
controls, procedures and policies and the impairment of relationships with
employees and customers as a result of changes in management. In addition,
the Company may experience higher customer attrition with respect to
customers obtained through acquisitions. There can be no assurance that
products, technologies or businesses of acquired companies will be
effectively assimilated into the business or product offerings of the
combined company. In addition, the Company may incur significant expense
to complete acquisitions and to support the acquired products and
businesses. There can be no assurance that any acquired products,
technologies or businesses will contribute to the Company's revenues or
earnings to any material extent or, due to the factors noted above, that
they will not adversely affect the Company's business, financial condition
and results of operations.

NETWORK EXPANSION AND IMPLEMENTATION

The Company is continually engaged in the expansion and development of
its networks and services. In 1997, the Company currently intends to
extensively rebuild both its telecommunications and cable system networks.
This expansion will depend on, among other things, the Company's ability
to access markets, design fiber optic network backbone routes, install
facilities and obtain rights-of-way, building access and any required
government authorizations and/or permits, all in a timely manner, at
reasonable costs and on satisfactory terms and conditions. In addition,
this expansion will depend on the Company's ability to expand, train and
manage its growing employee base. Such expansion has placed, and is
expected to continue to place, significant demands on the Company's
management and operational and financial resources. As a result, there can
be no assurance that the Company will be able to expand its existing
networks or install new networks. If the Company is not able to expand its
networks or install or acquire new networks, there likely would be a
material adverse effect on the Company's growth and there may be a
materially adverse effect on the Company's business, financial condition
and results of operation.

DEPENDENCE ON AVAILABILITY OF TRANSMISSION FACILITIES

Most telephone calls made by the Company's long distance customers are
connected via transmission lines leased by the Company from transmission
facilities-based long distance carriers. These carriers, such as AT&T and
WorldCom, Inc., compete with the Company. The Company's profitability will

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continue to depend, in part, on its ability to obtain and utilize leased
capacity on a cost-effective basis. The Company leases its capacity
pursuant to agreements with terms ranging from one to 24 months.
Accordingly, the Company is vulnerable to changes in its lease
arrangements, such as price increases and service cancellations. Although
the Company believes that it has and will continue to enjoy favorable
relationships with the transmission facilities-based long distance carriers
from which the Company leases transmission lines, there can be no assurance
that leased capacity will continue to be available at cost-effective rates.
Due to the possibility of unforeseen changes in industry conditions, the
continued availability of leased transmission facilities at historical
rates cannot be assured. The Company has, from time to time, experienced
delays in receiving leased telecommunications services, and there can be no
assurance that the Company will be able to obtain such services on the
scale and within the time frames required by the Company at an affordable
cost, or at all. Any failure to obtain such services or additional
capacity on a timely basis and at an affordable cost, or at all, could have
a material adverse effect on the Company's business, financial condition
and results of operations.

DEPENDENCE UPON NETWORK INFRASTRUCTURE; RISK OF SYSTEM FAILURE; SECURITY
RISKS

The success of the Company in marketing its services to business and
government users requires that the Company provide superior reliability,
capacity and security via its network infrastructure. The Company's
telephone and cable networks are subject to physical damage, power loss,
capacity limitations, software defects, breaches of security (by computer
virus, break-ins or otherwise) and other factors, certain of which have
caused, and will continue to cause, interruptions in service or reduced
capacity for the Company's customers. Similarly, the Company's Internet
business relies on the availability of its network infrastructure for the
provision of Internet access services. Interruptions in service, capacity
limitations or security breaches could have a material adverse effect on
the Company's business, financial condition and results of operations.

DEPENDENCE UPON SUPPLIERS; SOLE AND LIMITED SOURCES OF SUPPLY FOR INTERNET
OPERATIONS

The Company relies on other companies to supply certain key components
of its Internet network infrastructure, including telecommunications
services and networking equipment, which, in the quantities and quality
demanded by the Company, are available only from sole or limited sources.
The Company has, from time to time, experienced delays in receiving these
products and services, and there can be no assurance that the Company will
be able to obtain such services on the scale and within the time frames
required by the Company at an affordable cost, or at all. Any failure to
obtain such services or additional capacity on a timely basis and at an
affordable cost, or at all, could have a material adverse effect on the

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Company's business, financial condition and results of operations. The
Company's Internet business also is dependent on its suppliers' abilities
to provide necessary products and components that comply with various
Internet and telecommunications standards, interoperate with products and
components from other vendors and function as intended when installed as
part of the network infrastructure. Any failure of the Company's sole or
limited source suppliers to provide products or components that comply with
Internet standards, interoperate with other products or components used by
the Company in its network infrastructure or by its customers or fulfill
their intended function as a part of the network infrastructure could have
a material adverse effect on the Company's business, financial condition
and results of operations.

EXPANSION OF SALES AND MARKETING ACTIVITIES

As part of its growth strategy, the Company intends to seek to further
develop and expand its sales and marketing activities, primarily by
expanding its direct sales force. The Company has historically focused
primarily on providing local telephone and cable services to residential
and business customers in its local exchanges and its marketing efforts
have primarily relied upon direct mail marketing and advertising. The
Company's future success will depend upon, among other things, the
Company's ability to build an effective direct sales force, including its
ability to attract, retain and train effective direct sales marketing
personnel, and to offer competitively-priced services that are attractive
to its customers. The Company expects to incur significant expenses and
possibly negative cash flows as it expands its direct sales force and
builds its customer base. Although certain members of management have
experience in direct sales marketing, the Company itself does not have
experience in this distribution channel or market segment. There can be no
assurance that expansion costs will not exceed the Company's budgeted
amounts, that the Company will be able to successfully expand its sales and
marketing efforts or that any such expansion will prove profitable.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant degree upon the
continued contributions of its management team, as well as its technical,
marketing and sales personnel. The Company's businesses are managed by a
number of key executive officers, the loss of certain of whom, particularly
Thomas W. Hertz, the Company's Chief Executive Officer and General Manager
and Craig A. Anderson, the Company's Executive Vice President - Marketing
and Chief Financial Officer, could have a material adverse effect on the
Company. While certain of the Company's employees, including Messrs. Hertz
and Anderson, have entered into employment agreements with the Company, the
Company's employees may voluntarily terminate their employment with the
Company at any time. The Company's success also will depend on its ability
to continue to attract and retain qualified management, marketing,
technical and sales personnel. The process of locating such personnel with

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the combination of skills and attributes required to effectuate the
Company's strategies can be lengthy. Competition for qualified employees
and personnel in the telecommunications industry is intense and, from time
to time, there are a limited number of persons with knowledge of and
experience in particular sectors of the telecommunications industry. There
can be no assurance that the Company will be successful in attracting and
retaining such executives and personnel. The loss of the services of key
personnel, or the inability to attract additional qualified personnel,
could have a material adverse effect on the Company's results of
operations, development efforts and ability to expand.

POTENTIAL LIABILITY OF ON-LINE SERVICE PROVIDERS

The law in the United States relating to the liability of on-line
services providers and Internet access providers for information carried
on, disseminated through or hosted on their systems is currently unsettled.
Several private lawsuits seeking to impose liability on such providers are
currently pending. In one case brought against an Internet access
provider, RELIGIOUS TECHNOLOGY CENTER V. NETCOM ON-LINE COMMUNICATION
SERVICES, INC., the United States District Court for the Northern District
of California ruled in a preliminary phase that under certain circumstances
Internet access providers could be held liable for copyright infringement.
The case has been settled by the parties.

The 1996 Act prohibits and imposes criminal penalties and civil
liability for using an interactive computer service for transmitting
certain types of information and content, such as indecent or obscene
communications. On June 12, 1996, however, a panel of three federal judges
granted a preliminary injunction barring enforcement of this portion of the
1996 Act, to the extent that enforcement is based upon allegations other
than obscenity or child pornography, as an impermissible restriction on the
First Amendment's right of free speech. The case currently is pending
before the United States Supreme Court. In addition, Congress, in
consultation with the United States Patent and Trademark Office and the
Clinton Administration's National Information Infrastructure Task Force, is
currently considering legislation to address the liability of on-line
service providers and Internet access providers, and numerous states have
adopted or are currently considering similar types of legislation. The
imposition upon Internet access providers or Web hosting sites of potential
liability for materials carried on or disseminated through their systems
could require the Company to implement measures to reduce its exposure to
such liability, which may require the expenditure of substantial resources
or the discontinuation of certain product or service offerings. The Company
believes that it is currently unsettled whether the 1996 Act prohibits and
imposes liability for any services provided by the Company should the
content or information transmitted be subject to the statute.

The law relating to the liability of on-line service providers and
Internet access providers in relation to information carried, disseminated

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or hosted also is being discussed by the World Intellectual Property
Organization in the context of ongoing consideration of updating existing,
and adopting new, international copyright treaties. Similar developments
are ongoing in the United Kingdom and other jurisdictions. The scope of
authority of various regulatory bodies in relation to on-line services is
at present uncertain. The Office of Telecommunications in the United
Kingdom recently published a consultative document setting forth a
number of issues for discussion, including the roles of traditional
telecommunications and broadcasting regulators with respect to on-line
services. The Securities Investment Board in the United Kingdom is
investigating the status of on-line services and the transmission of
investment information over networks controlled by access providers. Such
transmissions may make an access provider liable for any violation of
securities and other financial services legislation and regulations.
Decisions regarding regulation, enforcement, content liability and the
availability of Internet access in other countries may significantly affect
the ability to offer certain services worldwide and the development and
profitability of companies offering Internet and on-line services in the
future. For example, CompuServe recently removed certain content from its
services worldwide in reaction to law enforcement activities in Germany,
and it has been reported that an Internet access provider in Germany has
been advised by prosecutors that it may have liability for disseminating
neo-Nazi writings by providing access to the Internet where these materials
are available.

The increased attention focused upon liability issues as a result of
these lawsuits, legislation and legislative proposals could affect the
growth of Internet use. Any costs incurred as a result of liability or
asserted liability for information carried on or disseminated through its
systems could have a material adverse effect on the Company's business,
financial condition and results of operations.

ANTI-TAKEOVER CONSIDERATIONS

The Resulting Company's articles of incorporation and bylaws would
include certain provisions which may have the effect of delaying, deterring
or preventing a future takeover or change in control of the Resulting
Company without the approval of the Resulting Company's Board of Directors.
(See "THE CONVERSION--Other Provisions Affecting Control of DTG" and "THE
MERGER--Other Provisions Affecting Control of DTG Delaware.") Such
provisions also may render the removal of directors and management more
difficult. Among other things, the Resulting Company's articles or
certificate of incorporation and/or bylaws: (i) provide for a classified
Board of Directors serving staggered three-year terms; (ii) impose
restrictions on who may call a special meeting of stockholders; (iii)
include a requirement that stockholder action be taken only by unanimous
written consent or at stockholder meetings; (iv) specify certain advance
notice requirements for stockholder nominations of candidates for election
to the Board of Directors and certain other stockholder proposals; and (v)

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impose certain restrictions and supermajority voting requirements in
connection with specified business combinations not approved in advance
by the Resulting Company's Board of Directors. In addition, the Resulting
Company's Board of Directors, without further action by the stockholders,
may cause the Resulting Company to issue up to 250,000 shares of preferred
stock on such terms and with such rights, preferences and designations as
the Board of Directors may determine. Issuance of such preferred stock,
depending upon the rights, preferences and designations thereof, may have
the effect of delaying, deterring or preventing a change in control of the
Resulting Company. (See "ADDITIONAL SECURITIES OF THE RESULTING
COMPANY--Preferred Stock Purchase Rights Plan.") Further, certain
provisions of the SDBCA or the Delaware General Corporation Law (the
"Delaware Law") impose restrictions on the ability of a third party to
effect a change in control of the Resulting Company and may be considered
disadvantageous by a stockholder. (See "THE CONVERSION--Statutory
Provisions Affecting Control of DTG" and "THE MERGER--Statutory Provisions
Affecting Control of DTG Delaware.") Finally, the Board of Directors
intends to cause the Resulting Company to enact a stockholder rights plan
to protect stockholders of the Resulting Company against unsolicited
attempts to acquire control of the Resulting Company in a manner that does
not offer a fair price to all stockholders. (See "ADDITIONAL SECURITIES
OF THE RESULTING COMPANY--Preferred Stock Purchase Rights Plan.") Certain
federal and state regulations requiring prior approval of transfers of
control may also have the effect of delaying, deterring or preventing a
change in control of the Company. (See "RISK FACTORS--Regulatory and
Legislative" and "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--
Regulation.")

ABSENCE OF PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE

There has never been a public market for Cooperative Common Stock,
Preferred Stock or Capital Credits, and there currently is no public market
for the Resulting Company's stock. Although the Resulting Company intends
to apply to have shares of the Resulting Company's common stock quoted for
trading on The Nasdaq Stock Market, there can be no assurance that a
trading market would develop or be maintained or, if it did, that it would
provide the Resulting Company's stockholders a meaningful opportunity to
liquidate their equity interests in the Resulting Company at a fair value.
The public trading price of shares of the Resulting Company's common stock
would be determined by trading among the Resulting Company's stockholders
and the Resulting Company would not have control over these trades. The
market price of the Resulting Company's stock may be highly volatile.
Factors such as fluctuations in the Resulting Company's operating results,
announcements of technological innovations or new products or services by
the Resulting Company or its competitors, changes in the regulatory
framework or in the cost of long distance service or other operating costs
and changes in general market conditions may have a significant effect on
the market price of the stock, should a market for the Resulting Company's
common stock ever develop.

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SHARES ELIGIBLE FOR FUTURE SALE

The proposed articles or certificate of incorporation of the Resulting
Company provide for a substantial number of authorized shares of common
stock and preferred stock which could be issued upon resolution of the
Board of Directors without any additional stockholder action or approval.
Future sales of substantial numbers of shares of the Resulting Company's
stock in the public market or otherwise (including in connection with
acquisitions), or the perception that such sales could occur, could
adversely affect the market price of the stock and make it more difficult
for the Resulting Company to raise funds through equity offerings in the
future and, if such sales are made, could dilute the relative equity
interests of the stockholders of the Resulting Company. If the Conversion
or the Merger is consummated, several principal stockholders would hold a
significant portion of the outstanding shares of the Resulting Company's
common stock, or a right to acquire a significant portion of such shares,
and a decision by one or more of these stockholders to sell their shares,
under Rule 144 issued under the Securities Act or otherwise, could
materially adversely affect the market price of the stock. (See
"ADDITIONAL SECURITIES OF THE RESULTING COMPANY--Stock Options" and
"--Warrants.") If the Conversion or the Merger is consummated, there would
be up to 1,050,000 shares of the Resulting Company's common stock outstand-
ing and an additional 200,000 shares subject to stock options and warrants.
All of these shares would be freely tradeable without restriction or
further registration under the Securities Act, except for any shares held
by "affiliates" of the Company or persons who have been "affiliates" within
the three months preceding consummation of the Conversion or the Merger and
shares subject to certain existing standstill agreements. (See "ADDITIONAL
SECURITIES OF THE RESULTING COMPANY--Standstill Agreements.")

If the Conversion or the Merger is consummated, it is currently
intended that the Resulting Company would file a Registration Statement on
Form S-8 under the Securities Act to register approximately 175,000 shares
of the Resulting Company's common stock issuable under the 1997 Stock
Incentive Plan described in this Prospectus and Ballot/Proxy Statement.
(See "1997 STOCK INCENTIVE PLAN.")

CERTAIN STANDSTILL AGREEMENTS

In connection with the Cooperative's acquisition of TCIC Communica-
tions, Inc. ("TCIC") and I-Way Partners, Inc. (renamed "Iway, Inc.")
("Iway"), the Cooperative issued to the former shareholders of TCIC and
Iway (collectively, the "Sellers") shares of Cooperative Preferred Stock
which automatically upon consummation of the Conversion or Merger, will
be converted into 94,727 shares of common stock of the Resulting Company.
In addition, the Sellers collectively received warrants which would be
converted into warrants to purchase an additional 38,956 shares of common
stock of the Resulting Company. Assuming that such warrants were fully
exercised, the Sellers would collectively own 12% of the common stock of

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the Resulting Company outstanding immediately upon consummation of the
Conversion or Merger. No individual Seller would own more than 5% of the
outstanding common stock of the Resulting Company. Due to the relative
amount of common stock of the Resulting Company that would be owned by
the Sellers, the Board does not believe that the Sellers, individually or
collectively, would be able to exercise control over the Resulting Company's
management or policies, although the Sellers would collectively own more
shares of Resulting Company common stock than the Resulting Company's
management. See "VOTING AND MANAGEMENT INFORMATION." In connection with
the issuance of the Cooperative Preferred Stock and warrants to the Sellers,
the Cooperative entered into standstill agreements (the "Standstill
Agreements") with the Sellers. Pursuant to the Standstill Agreements, the
Sellers are restricted in their ability to dispose of shares of Resulting
Company common stock and have agreed to refrain from certain other actions
related to Resulting Company common stock. For a description of these
restrictions, see "ADDITIONAL SECURITIES OF THE RESULTING COMPANY--
Standstill Agreements." Due to the restrictions contained in the Standstill
Agreement, the Standstill Agreements could affect the development of a
market for Resulting Company common stock by limiting the sale of or trading
in the common stock of the Resulting Company owned by the Sellers and may
have the effect of delaying, deterring or preventing a change in control of
the Resulting Company by limiting the Sellers' abilities to initiate or
participate in any transaction that might result in a change in control.

COVENANTS IN RURAL UTILITIES SERVICE LOAN AGREEMENTS

Current loan agreements between the Cooperative and the RUS, as well
as federal statutes and regulations which apply to RUS borrowers, each of
which would be applicable to the Resulting Company, have the potential to
adversely impact the Resulting Company's operations. Contractual
provisions requiring RUS approvals of a wide range of business decisions,
including contracts, personnel and materials, and permitting the RUS to
require procedures that are not customary in non-governmental commercial
loan contracts, if enforced, could adversely impact the Resulting Company's
ability to timely adapt or respond to changes in the business or regulatory
environment in the future. Such provisions require the Cooperative to
obtain RUS approval of detailed construction plans prior to the beginning
of construction, to follow detailed bidding procedures and to submit
detailed engineering completion certificates prior to the payment of any
project construction invoices. In addition, prior RUS approval is required
for any contracts relating to engineering services, the interchange of
telecommunications traffic and the division of toll revenues, the joint
use of any telephone facilities, the purchase in excess of $2,000 in any
one instance of materials, equipment or supplies for use in connection with
the construction or operation of financed facilities, any management,
accounting or other like services and operator assistance services.

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CERTAIN CREDIT RISKS

In the ordinary course of its business, the Company maintains
substantial cash balances at various depository institutions. At times
such deposits may exceed federally insured limits. While the Company has
not experienced any losses as a result of such deposits, the insolvency or
failure of such a financial institution could result in a substantial loss
for the Company, depending on the size of the uninsured portion of the
deposit.

GENERAL VOTING INFORMATION

PURPOSE

The special meeting of the Cooperative's Members will be held for the
purpose of considering and voting upon a proposal to adopt an amendment to
the articles of incorporation of the Cooperative to convert the Cooperative
into a South Dakota business corporation, which would be DTG, and to
transact such other business that may properly come before the meeting or
any adjournment of the meeting. The special meeting of shareholders of DTG
will be held for the purpose of considering and voting upon a proposal to
approve the Plan of Merger and to transact such other business that may
properly come before the meeting or any adjournment of the meeting. The
special meeting of DTG shareholders will be held only if the Conversion is
adopted.

VOTING BY BALLOT

If a Member of record as of the Record Date properly executes and
returns a ballot in the form distributed by the Cooperative, the ballot
will be voted at the special meeting and at any adjournment of that meeting
as specified in the ballot. A vote for adoption of the Conversion also
will constitute a vote for approval of the 1997 Incentive Stock Plan and a
vote for approval of the form of Indemnity Agreement. (See "1997 INCENTIVE
STOCK PLAN" and "INDEMNITY AGREEMENTS.") The Cooperative's management
presently does not know of any other matter to be presented at the special
meeting. If other matters are presented, only the Members present in
person at the meeting may vote on such other matters. A Member may revoke
a ballot at any time prior to the special meeting by written notice
delivered to the Secretary of the Cooperative or by attending and voting in
person at the special meeting.

VOTING BY PROXY

If a holder of shares of DTG Common Stock issuable in the Conversion
properly executes and returns a proxy in the form distributed, the shares
represented by that proxy will be voted at the special meeting of DTG
shareholders and at any adjournment of that meeting. If a shareholder

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specifies a choice, the proxy will be voted in accordance with the
shareholder's specifications. If no specification is made, the shares
represented by the proxy will be voted for approval of the Plan of Merger.
A vote for approval of the Merger also will constitute a vote for approval
of the 1997 Incentive Stock Plan and a vote for approval of the form of
Indemnity Agreement (See "1997 INCENTIVE STOCK PLAN" and "INDEMNITY
AGREEMENTS.") Proxies that indicate a vote against approval of the Plan of
Merger will not be used by management of DTG to vote for any proposed
adjournment of the special meeting.

Management currently is not aware of any other matter to be presented
at the special meeting. If other matters are presented, the shares for
which proxies have been received will be voted in accordance with the
judgment of the persons named as proxies. A shareholder may revoke a proxy
at any time prior to its exercise by written notice delivered to the
Secretary of the Cooperative or by attending and voting in person at the
special meeting.

BALLOT AND PROXY SOLICITATION

The directors, officers and employees of the Cooperative initially
will solicit ballots by mail. If they deem it advisable, directors,
officers and employees of the Cooperative also may solicit ballots in
person or by telephone or facsimile without additional compensation. All
expenses of solicitation of ballots will be paid by the Cooperative.

The individuals who will constitute the directors, officers and
employees of DTG if the Conversion is adopted initially will solicit
proxies by mail. If they deem it advisable, such individuals also may
solicit proxies in person or by telephone or facsimile without additional
compensation. The individuals who will constitute the directors, officers
and employees of DTG are the same individuals who constitute the directors,
officers and employees of the Cooperative and DTG Delaware, except as
otherwise noted in this Prospectus and Ballot/Proxy Statement. All
expenses of solicitation of proxies will be paid by the Cooperative or DTG
(as applicable).

VOTING RIGHTS AND RECORD DATE FOR THE CONVERSION

Only Members of the Cooperative at the close of business on
June 5, 1997 (the "Record Date"), are entitled to notice of and to
vote at the special meeting of the Cooperative's Members and at any
adjournment of that meeting. At the close of business on the Record Date,
there were 5,199 Members of the Cooperative. As of December 31, 1996,
directors and executive officers of the Cooperative and their respective
affiliates and associates accounted for less than one percent of the total
number of Members. Each Member on the Record Date will be entitled to one
vote on each matter presented for a vote of the Members at the special
meeting. The Conversion must be adopted by the affirmative vote of a

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majority of the Members present in person or by ballot and voting on the
proposal at the special meeting. The presence in person or by ballot of 50
Members constitutes a quorum for purposes of the special meeting. For the
purpose of counting votes on this proposal, failure of a Member to attend
the meeting in person or submit a ballot will not be counted for purposes
of determining the presence of a quorum and will not be counted as a vote
on this proposal, and the number of Members who fail to attend the meeting
or submit a ballot will not be included in the number of Members of which a
majority is required to adopt the proposal. If a Member attends the
meeting or submits a ballot, an abstention will not be counted as a vote on
this proposal, and the number of Members who fail to vote will not be
included in the number of Members of which a majority is required.

VOTING RIGHTS AND RECORD DATE FOR THE MERGER

Only persons who would have been shareholders of record of DTG Common
Stock at the close of business on the Record Date are entitled to notice of
and to vote at the special meeting of DTG's shareholders and at any
adjournment of that meeting. At the close of business on the Record Date,
not more than 1,050,000 shares of DTG Common Stock and warrants and options
to purchase not more than 200,000 shares of DTG Common Stock would have been
issuable in the Conversion. As of December 31, 1996, less than one percent
of the number of shares of DTG Common Stock issuable if the Conversion was
then adopted and consummated would have been beneficially owned by the
individuals who would constitute the directors and executive officers of
DTG and their respective affiliates and associates. Each person who would
have been a holder of record of DTG Common Stock had the Conversion been
consummated on the Record Date would be entitled to one vote for each share
of DTG Common Stock registrable in the person's name on each matter
presented for a vote of the shareholders at the special meeting. The
Merger must be approved by the affirmative vote of the holders of a
majority of the number of shares of DTG Common Stock issuable in the
Conversion. For the purpose of counting votes on the proposed Merger,
failure of a shareholder to vote in person or by proxy at the special
meeting will not be counted for purposes of determining the presence of a
quorum at the special meeting and will have the same effect as a vote
against the Merger. If a shareholder attends the meeting in person or by
proxy, an abstention will have the same effect as a vote against the
Merger.

EXPENSES

The Cooperative will pay all printing expenses and filing fees
pertaining to the Registration Statement and the Prospectus and
Ballot/Proxy Statement, including all expenses for postage, labor and
materials.

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THE CONVERSION

The Board of Directors of the Cooperative has unanimously approved and
recommended that the Cooperative's Members consider and vote upon a
proposal to adopt an amendment to the Cooperative's articles of
incorporation to convert the Cooperative into a South Dakota business
corporation, which would be DTG (the "Conversion"). The Board unanimously
voted to approve the proposed amendment at its February 11, 1997 meeting.

The following discussion summarizes certain provisions of the proposed
amendment and other aspects of the Conversion. This summary discussion is
not intended to be a complete description of the proposed amendment or the
Conversion and is qualified in its entirety by reference to the text of the
proposed amendment, which is attached as Appendix A and incorporated by
reference in this Prospectus and Ballot/Proxy Statement.

BACKGROUND OF THE CONVERSION

The Cooperative's Board of Directors, together with management and
with the advice of the Cooperative's financial and legal advisers, has been
studying the possibility of converting the Cooperative from a cooperative
association into a general business corporation in an effort to enhance the
value of the investments in the Cooperative of its Members and holders of
Preferred Stock and Capital Credits and to increase the Cooperative's
competitive position in its markets. The Board of Directors has considered
industry trends of rapid changes in technology and increasing competition
in the provision of many services offered by the Cooperative. The Board
also considered recent changes in the regulatory environment affecting
the telecommunications services industry that the Board believes may
significantly increase competition in the markets that the Cooperative
currently serves. The Board believes that the Cooperative must retain
existing customers and increase the markets served and services offered in
order to remain competitive in light of such technology changes, increased
competition and changes in the regulatory environment. After considering
various alternatives, the Board unanimously approved the proposed amendment
to the Cooperative's articles of incorporation to effect the Conversion and
recommended that the proposed amendment be submitted for adoption by the
Members at a special meeting.

BOARD RECOMMENDATION AND REASONS FOR THE CONVERSION

The Board of Directors of the Cooperative believes that the proposed
Conversion is in the best interests of the Cooperative and its Members and
holders of Preferred Stock and Capital Credits. The Board believes that to
realize the full potential of its operations and to finance its current
growth strategy, the Cooperative would benefit by having access to
additional capital resources. As a cooperative, few options for raising
capital have been available to the Cooperative. For many years, the
Cooperative's main source of equity capital has been the capital provided

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by current and former Members. The Board believes that this lack of access
to financial markets could place the Cooperative at a significant
competitive disadvantage in the future. If the Conversion is adopted and
consummated, the Board believes that the Cooperative would have access to
public capital markets that may provide additional resources to promote
growth and to fund currently anticipated financing projects. In addition,
as an issuer of transferable securities, the Board believes that the
Cooperative would have greater flexibility and increased options in
connection with potential acquisitions, partnerships and alliances. The
Board also believes that the Conversion would assist the Cooperative in
becoming a more effective competitor in its markets.

The Board of Directors also believes that the Conversion would provide
Members and holders of Preferred Stock and Capital Credits with an
opportunity to have an interest in a more flexible business organization
and could provide them an opportunity to realize the value of their
investments in the Cooperative. While there can be no assurance that a
market for DTG Common Stock would develop if the Conversion is adopted and
consummated or, if it did, that it would provide DTG shareholders a
meaningful opportunity to liquidate their equity interests in DTG at a fair
value, management intends at a future date to enter into negotiations with
brokers and other potential market makers and apply to have DTG Common
Stock quoted for trading on The Nasdaq Stock Market.

In the course of reaching its decision to approve the proposed
amendment to effect the Conversion, the Board consulted with legal counsel
and financial advisers to the Cooperative, as well as with management of
the Cooperative. Without assigning any relative or specific weights, the
Board considered numerous factors, including but not limited to the
following: (i) the changing nature of the telecommunications industry
generally; (ii) the need for the Cooperative to finance growth; (iii) the
desirability of the Cooperative having access to public capital markets to
potentially provide additional resources to promote growth and support
operating needs; (iv) the changing regulatory environment surrounding the
telecommunications services industry; (v) the desirability of providing
Members and holders of Preferred Stock and Capital Credits an opportunity
for liquidity and the ability to recognize the value of their investments
in the Cooperative in the future; (vi) historical and current financial and
economic conditions; (vii) historical market prices, reported trading
volumes and dividend histories of publicly traded companies in the
Cooperative's industry; and (viii) the limitations currently placed on
Members with respect to their equity interests in the Cooperative by the
Cooperative Act and the Cooperative's articles of incorporation and bylaws.

The Board was considering the Conversion at the time the Cooperative
acquired TCIC and Iway and established the manner of converting the
Preferred Stock issued as part of those acquisitions into shares of DTG
Common Stock if the Conversion was ever effected. However, the Conversion
was not a condition to or part of the consideration for such acquisitions

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and the Cooperative is under no contractual obligation to effect the
Conversion. The Cooperative would be obligated to make certain "non-
liquidity" payments to the Sellers if the Conversion is not consummated.
See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Certain Agreements
Affecting Capital Stock."

The Board does not believe that there are any material disadvantages
to the Conversion. The only potential material disadvantage of the Conversion
identified by the Board was the loss of the Cooperative's tax exempt status.
The Cooperative is exempt from Federal income taxation by virtue of Section
501(c)(12) of the Internal Revenue Code, which makes the exemption available
to irrigation cooperatives, rural electric cooperatives and telephone cooper-
atives which do not receive more than 15 percent of their revenues from non-
member sources. While the Cooperative was able to meet this test for 1996
and prior years, it has subsequently broadened its customer base to include
substantial revenues from non-Members through its various wholly-owned
subsidiaries. The Board believes that such diversification and broadening of
goods and services sold is essential to the ability of the Cooperative to
respond to competitive challenges. The Board has, therefore, discounted the
loss of tax-exempt status as a potential disadvantage because the changes in
the Cooperative's revenue sources would likely cause the Cooperative to lose
its tax-exempt status under Section 501(c)(12) of the Internal Revenue Code
in fiscal year 1997 and thereafter, regardless of whether or not it retains
its cooperative status. As a nonexempt Cooperative, it would be entitled to
a deduction for Member sourced income allocated to Members. Therefore, a
nonexempt cooperative would pay tax on non-Member sourced income at regular
corporate income tax rates. As a regular corporation, it would pay tax on
all of its income at regular corporate income tax rates. As the
Cooperative's revenues from non-Member sources increase and the goods and
services offered by the Cooperative expand into various non-telephone related
goods and services, the Board believes the amount of Member sourced income
will decrease relative to total income and that any tax benefit of remaining
a nonexempt cooperative would be outweighed by increases in administrative
costs and burdens. Cooperatives historically were formed to provide
financial benefits to their members resulting from the economics of group
purchasing and group marketing. As revenue sources diversify and broaden,
the difficulties of accounting for, and allocating among, various classes
of Members and non-Members and various levels and classes of goods and
services sold intensify significantly, with corresponding increases in
administrative costs. The Board believes, therefore, that the continued
shift in the Cooperative's revenue sources would further reduce any benefits
of remaining a cooperative. The Board was unable to identify any other
potential material disadvantages of the Conversion.

As of the date of this Prospectus and Ballot/Proxy Statement, the
directors and executive officers of the Cooperative, together with their
respective affiliates and associates, as a group, constituted less than one
percent of the total number of Members of the Cooperative. These persons
would be entitled to receive the same consideration for their shares and

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Capital Credits as any other Member and holder of Preferred Stock and
Capital Credits at the effective time of the Conversion. Upon consummation
of the Conversion, the Cooperative's directors, executive officers and
their respective affiliates and associates as a group would beneficially
own less than one percent of the shares of DTG Common Stock issuable in the
Conversion.

THE COOPERATIVE'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE MEMBERS VOTE FOR ADOPTION OF THE
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO EFFECT
THE CONVERSION.

CONVERSION OF SHARES OF COOPERATIVE COMMON STOCK AND PREFERRED STOCK

The Cooperative's Board of Directors is soliciting ballots from
Members for the purpose of adopting the proposed amendment to the articles
of incorporation to effect the Conversion. The amendment to the articles
of incorporation must be adopted by the affirmative vote of a majority of
the Members of the Cooperative voting on the proposal at the special
meeting or any adjournment of that meeting.

If the amendment to the articles of incorporation of the Cooperative
is adopted and the Conversion is consummated, the Cooperative would be
converted into DTG. DTG would own all of the assets and assume all of the
liabilities of the Cooperative. The articles of incorporation of DTG would
be the Amended Articles of Incorporation of DTG that are included as
Appendix B to this Prospectus and Ballot/Proxy Statement. The bylaws of
DTG would be the Amended Bylaws of DTG attached as Appendix C to this
Prospectus and Ballot/Proxy Statement.

At the time the Conversion becomes effective, (i) each share of
Cooperative Common Stock issued and outstanding immediately prior to the
effective time of the Conversion would automatically become and be
converted into the right to receive one validly issued, fully paid and
nonassessable share of DTG Common Stock and (ii) each share of Preferred
Stock issued and outstanding immediately prior to the effective time of the
Conversion would automatically become and be converted into the right to
receive 80.8216445 validly issued, fully paid and nonassessable shares of
DTG Common Stock, all subject to payment in cash for fractional shares.
The one-to-one ratio for converting the existing Cooperative Common Stock
into DTG Common Stock was approved by the Board because each Member already
owned one share of Cooperative Common Stock (par value $5.00 per share).
Since each Member paid $5.00 for each share of Cooperative Common Stock,
the Board determined that each Capital Credit holder would receive one share
of DTG Common Stock for each $5.00 of Capital Credits. The manner for
determining the Preferred Stock exchange rate was established by agreement
between the Cooperative and the former shareholders of TCIC and Iway at
the time the Cooperative acquired such entities. This was determined by
the Board and the former shareholders pursuant to arms-length negotiations.

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Although the manner for determining the Preferred Stock exchange rate was
fixed as part of the TCIC and Iway acquisitions, the Cooperative is under
no contractual obligation to consummate the Conversion.

CONVERSION OF CURRENT AND FORMER MEMBERS' CAPITAL CREDITS

If the proposed amendment to the articles of incorporation of the
Cooperative is adopted and the Conversion is consummated, current and
former Members who have positive balances credited to their accounts on the
books of the Cooperative representing Capital Credits would be entitled to
receive shares of DTG Common Stock and the Capital Credits would be retired
in full. In the Conversion, each Capital Credit recorded on the books of
the Cooperative immediately prior the effective time of the Conversion
would be retired in full and automatically become and be converted into the
right to receive 0.2 of a validly issued, fully paid and nonassessable
share of DTG Common Stock, all subject to payment in cash for fractional
shares. Capital Credits of the Cooperative currently have no stated term,
earn no interest or dividends, are only assignable on the books of the
Cooperative pursuant to written instructions of the assignor and only to
successors in interest or successors in occupancy of all or part of such
Member's premises served by the Cooperative, unless the Board of Directors
acting under policies of general application may determine otherwise, and,
for capital furnished after December 31, 1983, may be retired by the Board
of Directors pursuant to such method, basis, priority and order as the
Board of Directors may determine in its sole discretion. The Board of
Directors has determined that, if the Conversion is adopted and
consummated, all outstanding Capital Credits shall be retired in full in
exchange for shares of DTG Common Stock. Capital Credits for periods prior
to January 1, 1986, have already been retired in full.

To calculate the number of shares of DTG Common Stock that would be
issuable upon retirement of outstanding Capital Credits, the Cooperative
will start with each holder's Capital Credit balance on the conversion date.
Next, any unpaid overdue amounts owed to the Cooperative for past services,
plus interest on such amounts calculated in accordance with Section 9.02 of
the Cooperative's bylaws, would be offset against the holder's Capital
Credit account. Alternatively, each holder would have the option of
paying any overdue amounts plus interest, thereby preventing a reduction
in the holder's Capital Credit balance. The resulting Capital Credit
balances, if positive, would be divided by $5.00 to determine the number
of shares of DTG Common Stock issuable in the Conversion to retire Capital
Credits. Fractional shares would not be issued. Any remaining amounts
would be paid in cash.

In the event that the Cooperative is unable to locate the holders of
Capital Credits, such Capital Credits will be allocated into a special
Cooperative Equity Suspense Account immediately prior to the Conversion.
Following the forfeiture provisions of Section 46-16-54 of the Cooperative
Act, the Resulting Company would attempt to locate the holders. If it is

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unable to do so, amounts in the Cooperative Equity Suspense Account would
be forfeited and reallocated as additional paid-in capital.

NO FRACTIONAL SHARES

DTG will not issue fractional shares of DTG Common Stock in the
Conversion. A Member or holder of Preferred Stock or Capital Credits who
would otherwise be entitled to receive a fraction of a share of DTG Common
Stock in the Conversion will receive instead an amount of cash determined
by multiplying that fraction by $5.00.

DISTRIBUTION OF DTG COMMON STOCK

At the effective time of the Conversion, the Cooperative would be
converted into DTG and the Cooperative would cease to exist. As of the
effective time of the Conversion, holders of Cooperative Common Stock
outstanding immediately prior to the effective time of the Conversion would
cease to be Members of the Cooperative and consequently would have no
rights as Members. Instead, former Members of the Cooperative would have
rights as shareholders of DTG. It is anticipated that the Conversion
itself would have no adverse impact on the services provided and rates
charged by the Cooperative. Certificates that represented shares of
Cooperative Common Stock and Preferred Stock and accounts on the books of
the Cooperative that represented Capital Credits outstanding immediately
prior to the effective time of the Conversion would then represent the
right to receive shares of DTG Common Stock having all of the voting and
other rights of shares of DTG Common Stock and the right to receive cash in
lieu of fractional shares as provided in the resolution adopting the
amendment to the articles of incorporation.

If the Conversion is consummated but the Plan of Merger is not
approved, as soon as practicable after the Conversion becomes effective or
after a Capital Credit holder is located, DTG would send or cause to be sent
to record holders of Cooperative Common Stock and Preferred Stock, and each
holder of a Capital Credit as reflected on the books of the Cooperative,
transmittal materials to be used to exchange certificates that represented
shares of Cooperative Common Stock and Preferred Stock outstanding
immediately prior to the effective time of the Conversion ("Cooperative
Certificates") for stock certificates representing shares of DTG Common
Stock and to have certificates issued in connection with the retirement of
accounts representing Capital Credits. The transmittal materials would
contain instructions with respect to the surrender of Cooperative
Certificates. DTG would issue and deliver new stock certificates together
with checks for the amount of cash payable for fractional shares of DTG
Common Stock to Members or holders of Preferred Stock and Capital Credits.
DTG would issue and deliver certificates and checks in the name and to the
address appearing on the Cooperative's stock records as of the effective
time of the Conversion, or in such other name or to such other address as
may be specified in the transmittal materials received by DTG. DTG would

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not be required to, and would not, issue and deliver certificates and
checks until it has received properly executed transmittal materials and,
with respect to a Member or holder of Preferred Stock, until it has
received all of the Cooperative Certificates held of record by that Member
or holder of Preferred Stock, or an affidavit of loss and indemnity bond
for such certificate or certificates. Such Cooperative Certificates,
transmittal materials and affidavits must be in a form and condition
reasonably acceptable to DTG.

DTG would have discretion to determine reasonable rules and procedures
relating to the issuance and delivery of certificates of DTG Common Stock
into which shares of Cooperative Common Stock and Preferred Stock and
Capital Credits would be converted in the Conversion and governing the
payment for fractional shares.

If the proposed Plan of Merger described in "THE MERGER" is approved
and consummated, no shares of DTG Common Stock would physically be issued
in the Conversion. Instead, holders of rights to receive shares of DTG
Common Stock would instead receive shares of DTG Delaware Common Stock as
provided in the Plan of Merger, together with checks for the amount of cash
payable for fractional shares of DTG Common Stock. (See "THE MERGER--
Cessation of Shareholder Status and Distribution of DTG Delaware Common
Stock.")

EFFECTIVE TIME OF THE CONVERSION

The Conversion would be consummated on the date and time specified in
a Certificate of Amendment to the articles of incorporation issued by the
Secretary of the State of South Dakota in accordance with the SDBCA and the
Cooperative Act. If the Members of the Cooperative adopt the Conversion at
the special meeting and the other conditions to the Conversion are
satisfied, the effective time of the Conversion would occur as soon after
the special meeting as is possible (which may be the same date as the
special meeting), provided that the Conversion has not been abandoned prior
to such time. It is anticipated that the Conversion, if adopted, would
become effective during the third quarter of 1997.

COOPERATIVE STOCK OPTIONS AND WARRANTS

Before the effective time of the Conversion, each outstanding stock
option and warrant entitling the holder to purchase shares of Preferred
Stock would be amended, if necessary, so that it would become, if and when
the Conversion becomes effective, an option or warrant to purchase, for an
equivalent price, that number of shares of DTG Common Stock that the holder
would have acquired pursuant to the Conversion had the holder exercised the
option or warrant immediately prior to the effective time of the
Conversion. The options and warrants would in all other respects contain
the same terms and conditions as they do presently.

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As of the date of this Prospectus and Ballot/Proxy Statement, there
were stock options and warrants outstanding to purchase an aggregate of
2,016 shares of Preferred Stock, which, if exercised prior to the
Conversion, would be convertible into 162,936 shares of common stock of
the Resulting Company in connection the Conversion. (See "ADDITIONAL
SECURITIES OF THE RESULTING COMPANY--Stock Options" and "--Warrants.")

MANAGEMENT AFTER THE CONVERSION

Upon the consummation of the Conversion, the directors, officers and
employees of the Cooperative who were engaged immediately prior to the
effective time of the Conversion would continue immediately after the
effective time of the Conversion as the directors, officers and employees
of DTG, except as otherwise indicated in this Prospectus and Ballot/Proxy
Statement.

CONDITIONS TO THE CONVERSION AND ABANDONMENT

The obligations of the Cooperative to consummate the Conversion are
subject to the fulfillment of the following conditions:

(i) an affirmative vote of a majority of the Members of the
Cooperative voting at the special meeting is required to adopt the
proposed amendment to the articles of incorporation;

(ii) the Cooperative must not be subject to any order, decree or
injunction of a court or agency enjoining or prohibiting the Conversion;

(iii) the Cooperative must have obtained any required regulatory
approvals with respect to the Conversion; and

(iv) there must not be any suit or proceeding pending or threatened
that challenges the Conversion.

The Cooperative and DTG may waive the condition set forth in clause (iv).

DESCRIPTION OF DTG CAPITAL STOCK

Under the proposed Amended Articles of Incorporation of DTG, DTG's
authorized capital stock would consist of 5,000,000 shares of common stock,
without par value ("DTG Common Stock"), and 250,000 shares of preferred
stock, without par value ("DTG Preferred Stock"). As of the date of this
Prospectus and Ballot/Proxy Statement, DTG does not exist as a separate
entity and therefore there are no outstanding shares of DTG Common Stock
and no outstanding shares of DTG Preferred Stock. DTG expects that no more
than 1,050,000 shares of DTG Common Stock and warrants and options to
purchase no more than 200,000 shares of DTG Common Stock would be issuable
in the Conversion.

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DTG COMMON STOCK. Holders of DTG Common Stock would be entitled to
dividends out of funds legally available for that purpose if, as and when
declared by the Board of Directors of DTG. Certain covenants in existing
loan agreements between the Cooperative and the RUS to which DTG would be
subject following the Conversion, as well as federal statutes and
regulations which apply to RUS borrowers, would limit the circumstances
under which DTG would be permitted to pay dividends or make other
distributions to DTG shareholders. Under these agreements, the RUS must
authorize distributions other than in shares of stock unless certain
financial ratio requirements are met. The dividend rights of DTG Common
Stock also would be subject to the rights of any DTG Preferred Stock that
may be issued. Each holder of DTG Common Stock would be entitled to one
vote for each share held on each matter presented for shareholder action.
DTG Common Stock would have no preemptive rights, conversion rights or
redemption provisions. DTG Common Stock would entitle the holder to
cumulate votes with respect to the election of directors as provided in
the South Dakota Constitution and the SDBCA.

In the case of any liquidation, dissolution or winding up of the
affairs of DTG, holders of DTG Common Stock would be entitled to receive,
pro rata, any assets distributable to common shareholders in respect of the
number of shares held by them. The liquidation rights of DTG Common Stock
would be subject to the rights of holders of any DTG Preferred Stock that
may be issued in the future.

All shares of DTG Common Stock issuable in the Conversion, if and when
issued, would be fully paid and nonassessable.

DTG PREFERRED STOCK. DTG would be authorized to issue, without
further shareholder approval, up to 250,000 shares of DTG Preferred Stock
from time to time in one or more series with such designations, powers,
preferences and relative voting, distribution, dividend, liquidation,
transfer, redemption, conversion and other rights, preferences,
qualifications, limitations or restrictions as may be provided for the
issue of such series by resolution adopted by DTG's Board of Directors.
Such DTG Preferred Stock could have priority over DTG Common Stock as to
dividends and as to the distribution of DTG's assets upon any liquidation,
dissolution or winding up of DTG.

STATUTORY PROVISIONS AFFECTING CONTROL OF DTG

The following discussion concerns the provisions of the SDBCA which
would affect control of DTG if the Conversion is adopted and consummated
but the Merger is not consummated. If the Merger is consummated, the
statutory provisions of the Delaware Law would apply. (See "THE MERGER--
Statutory Provisions Affecting Control of DTG Delaware.")

The matters discussed below may have an anti-takeover impact and may
make tender offers, proxy contests and certain mergers more difficult to
consummate.
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CONTROL SHARE ACT. Under Sections 47-33-8 through 47-33-16 of the
SDBCA (the "Control Share Act"), the shares of stock acquired by an
acquiring person in a "control share acquisition" that exceed certain
thresholds of voting power do not have voting rights unless the holders of
the other voting shares vote to grant voting rights to the acquiring
person's shares. The Control Share Act also contains other provisions
applicable to a control share acquisition. A South Dakota "public
corporation" (such as DTG) may opt out of the Control Share Act and elect
not be subject to its provision. The proposed Amended Articles of
Incorporation of DTG would opt out of the Control Share Act, and therefore
the Control Share Act would not be applicable to DTG unless DTG's Amended
Articles of Incorporation were subsequently amended to "opt in" to the
Control Share Act as provided in the SDBCA.

FAIR PRICE ACT. Under Sections 47-33-17 through 47-33-19 of the SDBCA
(the "Fair Price Act"), a South Dakota "public corporation" (such as DTG)
may not engage in a "business combination" with an "interested shareholder"
unless certain conditions are met. An "interested shareholder" is one that
(i) directly or indirectly beneficially owns 10 percent or more of the
outstanding voting shares of the corporation or (ii) is an affiliate or
associate of the corporation and at any time within the last four years was
the beneficial owner, directly or indirectly, of 10 percent or more of the
corporation's voting stock. A "business combination" means any of the
following:

(i) any merger or consolidation of the domestic corporation or
any subsidiary with (A) the interested shareholder or (B) any other
corporation (whether or not itself an interested shareholder) that is,
or after the merger or consolidation would be, an affiliate or
associate of the interested shareholder, but excluding (1) the merger
of a wholly owned subsidiary of the domestic corporation into the
corporation, (2) the merger of two or more wholly owned subsidiaries
of the domestic corporation or (3) the merger of another corporation,
other than an interested shareholder or an affiliate or associate of
an interested shareholder, with a wholly owned subsidiary of the
domestic corporation pursuant to which the surviving corporation,
immediately after the merger, becomes a wholly owned subsidiary of the
domestic corporation;

(ii) any exchange, pursuant to a plan of exchange, of shares of
the domestic corporation or any subsidiary for equity securities of
either (A) the interested shareholder or (B) any other corporation,
whether or not itself an interested shareholder of the domestic
corporation, that is, or after the exchange would be, an affiliate or
associate of the interested shareholder;

(iii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition, in one transaction or a series of transactions, to
or with the interested shareholder or any affiliate or associate of

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the interested shareholder, of assets of the domestic corporation or
any subsidiary: (A) having an aggregate market value equal to 10
percent or more of the aggregate market value of all the assets,
determined on a consolidated basis, of the domestic corporation; (B)
having an aggregate market value equal to 10 percent or more of the
aggregate market value of all of the outstanding shares of the
domestic corporation or (C) representing 10 percent or more of the
earning power or net income, determined on a consolidated basis, of
the domestic corporation;

(iv) the issuance or transfer by the domestic corporation or any
subsidiary, in one or more transactions, of any shares of the domestic
corporation or any subsidiary that have an aggregate market value
equal to five percent or more of the aggregate market value of all the
outstanding shares of the domestic corporation to the interested
shareholder (or any affiliate or associate of the interested
shareholder), except pursuant to the exercise of rights or options to
purchase shares offered, or a dividend or distribution paid or made,
pro rata to all shareholders of the domestic corporation other than
for the purpose of facilitating or effecting a subsequent transaction
that would have been a business combination if the dividend or
distribution had not been made;

(v) the adoption of any plan or proposal for the liquidation or
dissolution of the domestic corporation, or any reincorporation of the
domestic corporation in another state or jurisdiction, proposed by or
on behalf of, or pursuant to any written or unwritten agreement,
arrangement, relationship, understanding or otherwise with, the
interested shareholder or any affiliate or associate of the interested
shareholder;

(vi) any reclassification of securities, including any share
dividend or split, reverse share split or other distribution of shares
in respect of shares, any recapitalization of the domestic
corporation, any merger or consolidation of the domestic corporation
with any subsidiary, or any other transaction, whether or not with or
into or otherwise involving the public corporation or any subsidiary
that is, directly or indirectly, owned by the interested shareholder
or any affiliate or associate of the interested shareholder, except as
a result of immaterial changes due to fractional share adjustments; or

(vii) any receipt by the interested shareholder or any affiliate
or associate of the interested shareholder of the benefit, directly or
indirectly, except proportionately as a shareholder of the domestic
corporation, of any loans, advances, guarantees, pledges or other
financial assistance, or any tax credits or other tax advantages
provided by or through the domestic corporation. However, the term
"business combination" does not include the receipt of any of the
foregoing benefits by the domestic corporation or any of that

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corporation's subsidiaries arising from transactions, such as
intercompany loans or tax sharing arrangements, between the domestic
corporation and its subsidiaries in the ordinary course of business.

Certain business combinations are excluded from the Fair Price Act,
including (i) a business combination approved by the board of directors of
the domestic corporation prior to the interested shareholder's share
acquisition date, or where the purchase of shares made by the interested
shareholder on the interested shareholder's share acquisition date has been
approved by the board of directors prior to the interested shareholder's
share acquisition date; (ii) a business combination approved: (A) by the
affirmative vote of the holders of a majority of the outstanding voting
shares, not including any voting shares beneficially owned by the
interested shareholder or any affiliate or associate of the interested
shareholder, at a meeting called for such purpose no earlier than three
months after the interested shareholder became, and if at the time of the
meeting the interested shareholder is, the beneficial owner, directly or
indirectly, of at least 80 percent of the voting shares, if the business
combination also satisfies all of the conditions of Section 47-33-18
(discussed below) or (B) by the affirmative vote of all of the holders of
all of the outstanding voting shares; (iii) a business combination approved
by the affirmative vote of the holders of a majority of the outstanding
voting shares, not including any voting shares beneficially owned by the
interested shareholder or any affiliate or associate of the interested
shareholder, at a meeting called for such purpose no earlier than four
years after the interested shareholder's share acquisition date and (iv) a
business combination approved by a majority of the outstanding voting
shares at a shareholders' meeting called for such purpose no earlier than
four years after the interested shareholder's share acquisition date, if
the business combination also satisfies all of the conditions of Section
47-33-18 of the Fair Price Act.

With respect to business combinations specified in clauses (ii)(A) and
(iv) above, each of the following additional requirements must be met under
Section 47-33-18:

(i) The aggregate amount of the cash and the market value as of
the consummation date of consideration other than cash to be received
per share by holders of outstanding common shares in the business
combination is at least equal to the higher of the following: (A)
the highest per share price, including any brokerage commissions,
transfer taxes and soliciting dealer's fees, paid by the interested
shareholder for any common shares of the same class or series acquired
by it: (1) within the three-year period immediately prior to the
announcement date with respect to such business combination or (2)
within the three-year period immediately prior to, or in, the
transaction in which the interested shareholder became an interested
shareholder, whichever is higher; plus, in either case, interest
compounded annually from the earliest date on which the highest

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per-share acquisition price was paid through the consummation date at
the rate for one-year United States Treasury obligations from time to
time in effect, less the aggregate amount of any cash dividends paid,
and the market value of any dividends paid other than in cash, per
common share since such earliest date, up to the amount of the
interest or (B) the market value per common share on the announcement
date with respect to the business combination or on the interested
shareholder's share acquisition date, whichever is higher; plus
interest compounded annually from such date through the consummation
date at the rate for one-year United States Treasury obligations from
time to time in effect, less the aggregate amount of any cash
dividends paid, and the market value of any dividends paid other than
in cash, per common share since such date, up to the amount of the
interest.

(ii) The aggregate amount of the cash and the market value as of
the consummation date of consideration other than cash to be received
per share by holders of outstanding shares of any class or series of
shares, other than common shares, of the corporation is at least equal
to the highest of the following: (A) the higher per-share price,
including any brokerage commission, transfer taxes and soliciting
dealer's fees, paid by the interested shareholder for any shares of
such class or series of shares acquired by it: (1) within the three-
year period immediately prior to the announcement date with respect to
the business combination or (2) within the three-year period
immediately prior to, or in, the transaction in which the interested
shareholder became an interested shareholder, whichever is higher;
plus, in either case, interest compounded annually from the earliest
date on which the highest per-share acquisition price was paid through
the consummation date at the rate for one-year United States Treasury
obligations from time to time in effect, less the aggregate amount of
any cash dividends paid, and the market value of any dividends paid
other than in cash, per share of such class or series of shares since
such earliest date, up to the amount of the interest; (B) the highest
preferential amount per share to which the holders of shares of such
class or series of shares are entitled in the event of any voluntary
liquidation, dissolution or winding up of the corporation, plus the
aggregate amount of any dividends declared or due as to which such
holders are entitled prior to payment of dividends on some other class
or series of shares, unless the aggregate amount of the dividends is
included in such preferential amount or (C) the market value per share
of such class or series of shares on the announcement date with
respect to the business combination or on the interested shareholder's
share acquisition date, whichever is higher; plus interest compounded
annually from such date through the consummation date at the rate for
one-year United States Treasury obligations from time to time in
effect; less the aggregate amount of any cash dividends paid, and the
market value of any dividends paid other than in cash, per share of
such class or series of shares since such date, up to the amount of
the interest.
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(iii) The consideration to be received by holders of a particular
class or series of outstanding shares, including common shares, of the
corporation in the business combination is in cash or in the same form
as the interested shareholder has used to acquire the largest number
of shares of such class or series of shares previously acquired by it,
and the consideration shall be distributed promptly.

(iv) The holders of all outstanding shares of the corporation not
beneficially owned by the interested shareholder immediately prior to
the consummation of the business combination are entitled to receive
in the business combination cash or other consideration for such
shares in compliance with subsections (i), (ii) and (iii) above.

(v) After the interested shareholder's share acquisition date
and prior to the consummation date with respect to the business
combination, the interested shareholder has not become the beneficial
owner of any additional voting shares of such corporation except: (A)
as part of the transaction which resulted in such interested
shareholder becoming an interested shareholder; (B) by virtue of
proportionate splits of shares, share dividends or other distributions
of shares in respect of shares not constituting a business
combination; (C) through a business combination meeting all of the
conditions to be excluded from the Fair Price Act; (D) through
purchase by the interested shareholder at any price which, if the
price had been paid in an otherwise permissible business combination
the announcement date and consummation date of which were the date of
such purchase, would have satisfied the requirements of subsections
(i), (ii) and (iii) above or (E) through purchase required by and
pursuant to the provisions of, and at no less than the fair value
including interest to the date of payment as determined by the court
in accordance with the SDBCA or, if such fair value was not then so
determined, then at a price that would satisfy the conditions in
subparagraph (D) of this subsection.

There are additional exclusions from the Fair Price Act. One of these
provisions provides that the Fair Price Act does not apply to corporations
that have opted out of its provisions, either in their original articles of
incorporation or in a later-adopted amendment to the articles that was
approved by two-thirds of the voting shares (excluding the shares held by
an interested shareholder and the person's respective affiliates and
associates). However, with respect to later-adopted amendments the opt-out
is not effective until 18 months after it is adopted and is also not
effective as to persons who were interested shareholders at the time of the
opt-out. The Board of Directors has no present intention to opt out of the
provisions of the Fair Price Act should it become applicable to DTG. There
would be no 10 percent shareholder immediately upon consummation of the
Conversion.

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OTHER PROVISIONS AFFECTING CONTROL OF DTG

If the Conversion is adopted and consummated, certain provisions of
DTG's proposed Amended Articles of Incorporation, Bylaws and other plans
may also affect control of DTG. Many of the following provisions will be
similar as applied to DTG Delaware if the Merger is approved and
consummated. (See "THE MERGER--Other Provisions Affecting Control of DTG
Delaware.") The following provisions may have an anti-takeover impact and
may make tender offers, proxy contests and certain mergers more difficult
to consummate.

PROVISIONS REGARDING THE BOARD OF DIRECTORS

CLASSIFIED BOARD. The proposed Amended Articles of Incorporation
of DTG classify DTG's Board of Directors into three classes serving
staggered, three-year terms. Classification of the Board could have
the effect of extending the time during which the existing Board of
Directors could control the operating policies of DTG even though
opposed by the holders of a majority of the outstanding shares of DTG
Common Stock. (See "THE MERGER--Comparison of Rights of Shareholders
of DTG to Rights of Stockholders of DTG Delaware.") The Cooperative
currently has a classified Board of Directors.

NOMINATION OF DIRECTORS. Under the proposed Amended Articles of
Incorporation of DTG, all nominations for directors by shareholders
would be required to be delivered to DTG in writing at least 120 days
prior to the notice of an annual meeting of shareholders or, in the
case of a special meeting of shareholders at which a director or
directors would be elected, at least seven days after the notice of
the special meeting. A nomination that is not received prior to these
deadlines would not be placed on the ballot. The Board believes that
advance notice of nominations by shareholders would afford a
meaningful opportunity to consider the qualifications of the proposed
nominees and, to the extent deemed necessary or desirable by the Board
of Directors, would provide an opportunity to inform shareholders
about such qualifications. Although this nomination procedure would
not give the Board of Directors any power to approve or disapprove
shareholder nominations for the election of directors, the nomination
procedure could have the effect of precluding a nomination for the
election of directors at a particular meeting if the proper procedures
were not followed.

REMOVAL OF DIRECTORS. The SDBCA does not specifically provide
for the removal of directors. However, under the proposed Amended
Articles of Incorporation of DTG, subject to the rights of any class
of stock then outstanding, any director could be removed from office,
but only for cause, and only by shareholder action. Generally, the
vote for removal would require the affirmative vote of a majority of
shares entitled to vote at an election of directors. However, if less

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than the entire board was to be removed, no single director could be
removed if the votes cast against the director's removal would be
sufficient to elect the director if then cumulatively voted at an
election of the class of directors of which the director is a part.
"Cause" for removal could only be present in the circumstances
specified in the proposed Amended Articles of Incorporation of DTG.
"Cause" is present when: (i) the director whose removal is proposed
has been convicted of a felony by a court of competent jurisdiction
and such conviction is no longer subject to direct appeal; (ii) the
director has been adjudicated by a court of competent jurisdiction to
be liable for negligence, or misconduct, in the performance of such
person's duty to the corporation in a matter of substantial importance
to the corporation and such adjudication is no longer subject to a
direct appeal; (iii) the director has become mentally incompetent,
whether or not so adjudicated, which mental incompetency directly
affects such person's ability as a director of the corporation; or
(iv) the director's actions or failure to act have been in derogation
of the director's duties, as provided in the bylaws of DTG or
otherwise provided by law. Any proposal for removal pursuant
to (iii) or (iv) that is initiated by the Board of Directors for
submission to the shareholders would require the affirmative vote of
at least two-thirds of the total number of directors then in office,
excluding the director who is the subject of the removal action and
who shall not be entitled to vote thereon.

QUALIFICATION OF DIRECTORS. Under Article XI of the proposed
Amended Articles of Incorporation of DTG, no person who has asserted
or asserts any "Claim" (defined below) against the corporation or any
subsidiary (a "Plaintiff"), and no person who was or became associated
or affiliated with any Plaintiff (a "Related Person"), would be
eligible to be elected or to serve as a director until the Claim was
"Finally Resolved" (defined below). A director who was validly
nominated and elected as a director and who thereafter became a
Plaintiff or Related Person would continue as a director for the
remainder of the term for which the director was elected or until the
director's resignation or removal. A director who was or became a
Plaintiff or a Related Person would be required to either (i) promptly
take all steps necessary to cause the director to be neither a
Plaintiff nor Related Person or (ii) if the director cannot do so and
the Claim has not been Finally Resolved within the "Resolution Period"
(defined below), resign as a director, effective immediately, at or
before the end of such Resolution Period.

A "Claim" means any claim, cross-claim, counterclaim or third-
party claim pled in any action, suit or proceeding before any court,
governmental agency or instrumentality, arbitrator or similar body or
authority. However, certain claims are excluded, including: (i) one
which, when aggregated with all other claims asserted by the Plaintiff
or any Related Person of such Plaintiff against the corporation or any

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subsidiary that have not been Finally Resolved, could not, if decided
adversely to the corporation or a subsidiary, along with all other
aggregated claims, cross-claims, counterclaims and third-party claims,
result in liability in excess of 10 percent of the consolidated
current assets of the corporation as of the most recent quarter or
render the corporation insolvent; (ii) one arising pursuant to a
contract between the corporation and the pertinent Plaintiff or
Related Person that was approved by a majority of the Continuing
Directors (as defined below), including without limitation, claims
arising under any indemnity or employment contract; and (iii) claims
asserted in the right of the corporation (i.e., derivative actions).

The term "Finally Resolved" means that a final order has been
rendered with respect to the Claim and all available appeals from such
order have been exhausted or the time for seeking such review has
expired. The term "Resolution Period" means the 30-day period
beginning on the earlier of (i) the date on which a director of the
corporation notifies the Board that the director has become a
Plaintiff or Related Person or (ii) the date on which the Board
determines that a director has become a Plaintiff or Related Person.
However, the Board could (but would not be required to) extend a
Resolution Period by up to 15 days if the director establishes to the
Board's satisfaction a reasonable likelihood that the Claim would be
Finally Resolved or such director would cease to be both a Plaintiff
and a Related Person during that extra 15-day period.

The Board of Directors would not nominate any person for election
as a director unless (i) the prospective nominee has provided the
Board with (A) all information necessary or appropriate to enable the
Board to determine whether the nominee is a Plaintiff or a Related
Person and (B) a signed statement that the prospective nominee is not
aware of any reason not disclosed to the Board why the prospective
nominee would or might be considered a Plaintiff or Related Person and
(ii) after receipt of the items the Board determines that the
prospective nominee is not a Plaintiff or Related Person.

Any shareholder who is uncertain whether any person the
shareholder desires to nominate for election as a director is a
Plaintiff or Related Person could request a determination from the
Board concerning that matter, upon delivering to the Board certain
information and other items and complying with certain deadlines.
Within 10 days after receiving a properly submitted request (or, if it
is impossible or impracticable to do so during such period, as soon as
practicable thereafter), the Board would be required to consider the
request and determine whether or not the candidate is a Plaintiff or
Related Person who could not be nominated for election to the Board.

If a candidate who was the subject of a proper and timely
submitted request was determined not to be a Plaintiff or Related

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Person and the request was submitted at least five days in advance of
the last date on which the requesting shareholder otherwise would have
been entitled to give notice of intent to nominate the candidate, then
the Board's determination would operate as a waiver of the time limits
otherwise applicable to the giving of such notice of intent to the
extent, if any, necessary to afford the shareholder a period of five
days after receipt of the Board's notice within which to give notice
of intent to nominate the candidate.

If the Board determined that the candidate was a Plaintiff or
Related Person and the request was submitted at least five days in
advance of the last date on which the requesting shareholder otherwise
would have been entitled to give notice of intent to nominate, then
the Board's determination would operate as a waiver of the time limits
otherwise applicable to the giving of notice of intent to nominate to
the extent, if any, necessary to afford the requesting shareholder a
period of 15 days after receipt of the Board's notice within which to
give notice of intent to nominate another person in lieu of the
ineligible candidate.

Whenever any shareholder was afforded an additional time period
within which to give notice of intention to nominate, the Board may
afford the other shareholders of the corporation a comparable
additional period of time within which to give such notice.

While the Board of Directors believes that Article XI ensures
that directors and nominees for election as directors will not have
significant conflicts of interest with the corporation, Article XI may
have the effect of making shareholder nominations of director
candidates more difficult.

BOARD EVALUATION OF CERTAIN OFFERS. Article XIII of the proposed
Amended Articles of Incorporation of DTG provides that the Board of
Directors would not initiate, approve, adopt or recommend any offer of any
person or entity (other than DTG) to make a tender or exchange offer for
any DTG Common Stock or DTG Preferred Stock, to merge or consolidate DTG
with any other entity, or to purchase or acquire all or substantially all
of DTG's assets, unless and until the Board has evaluated the offer and
determined that it would be in compliance with all applicable laws and that
the offer is in the best interests of DTG and its shareholders. In doing
so, the Board could rely on an opinion of legal counsel who is independent
from the offeror, and/or may test such legal compliance in front of any
court or agency that may have appropriate jurisdiction over the matter.

In making its determination as to whether the transaction would be in
the best interests of the corporation and its shareholders, the Board would
be required to consider all factors it deemed relevant, including but not
limited to: (i) the adequacy and fairness of the consideration to be
received by DTG and/or its shareholders, considering historical trading

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prices of DTG Common Stock, the price that could be achieved in a
negotiated sale of DTG as a whole, past offers to other corporations and
the future prospects of DTG; (ii) the possible social and economic impact
of the proposed transaction on DTG, its employees, customers and suppliers;
(iii) the potential social and economic impact of the proposed transaction
on the communities in which DTG and its subsidiaries operate or are
located; (iv) the business and financial condition and earnings prospects
of the offering party; (v) the competence, experience and integrity of the
offering party and its management and (vi) the intentions of the offering
party regarding the use of the assets of DTG to finance the transaction.

"BLANK CHECK" PREFERRED STOCK AND PREFERRED STOCK RIGHTS PLAN. DTG
would be authorized to issue, without further shareholder approval, up to
250,000 shares of DTG Preferred Stock from time to time in one or more
series with such designations, powers, preferences and relative voting,
distribution, dividend, liquidation, transfer, redemption, conversion and
other rights, preferences, qualifications, limitations or restrictions as
may be provided for the issue of such series by resolution adopted by DTG's
Board of Directors. Such DTG Preferred Stock could have priority over DTG
Common Stock as to dividends and as to distribution of DTG's assets upon
any liquidation, dissolution or winding up of DTG.

While no DTG Preferred Stock would be outstanding at the effective
time of the Conversion, the proposed Amended Articles of Incorporation
designate 15,000 shares of DTG Preferred Stock as Series A Junior
Participating Preferred Stock for possible future issuance in connection
with a preferred stock purchase rights plan which the Board of Directors of
DTG presently intends to implement as soon as is practicable following the
consummation of the Conversion. (See "ADDITIONAL SECURITIES OF THE
RESULTING COMPANY--Preferred Stock Purchase Rights Plan.")

SUPERMAJORITY VOTE PROVISIONS. The proposed Amended Articles of
Incorporation of DTG contain "supermajority" vote requirements for certain
business combinations. Article XII provides that, in addition to any vote
required by law or other provisions of the proposed Amended Articles of
Incorporation, the affirmative vote of not less than 80 percent of the
outstanding shares of "voting stock" (which is defined as all shares of DTG
stock that are entitled to vote generally in the election of directors,
voting as a single class) would be required for the approval of certain
"business combinations" between the corporation or a subsidiary and any
"interested shareholder."

A "business combination" is generally defined for purposes of Article
XII as including mergers, sales of all or substantially all of the assets
of the corporation and certain other transactions. An "interested
shareholder" is defined as a person (other than DTG, its majority-owned
subsidiaries or their employee benefit plans), who, alone or together with
affiliated persons, beneficially owns 10 percent or more of the voting
stock of the corporation, as well as certain other persons that are
affiliated with an interested shareholder.
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These requirements would not apply when the transaction was approved
by a majority of the "continuing directors," which are directors who are
not affiliated with an interested shareholder and who were either (i)
elected to the Board prior to the time that the interested shareholder
became an interested shareholder or (ii) designated, before their initial
election as directors, as continuing directors by a majority of the then-
continuing directors. The term excludes, however, certain persons that
became directors as a result of election contests within the meaning of
Rule 14a-11 under the Exchange Act or other types of proxy solicitations.

In addition, Article XIV provides that, in addition to any vote
required by law or other provisions of the proposed Amended Articles of
Incorporation, the affirmative vote of at least 80 percent of the shares
held by persons who are not interested shareholders (as defined in Article
XII) would be required to approve business combinations (as defined in
Article XII) of the corporation or a majority owned subsidiary with any
interested shareholder. This requirement would not apply if (i) the
business combination was approved by a majority of the continuing directors
(as defined in Article XII) or (ii) certain other detailed conditions are
satisfied.

RESTRICTIONS ON AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION AND
BYLAWS OF DTG. Several provisions of DTG's proposed Amended Articles of
Incorporation require a greater-than-majority vote to be amended.
Specifically, Article XVIII(A) provides that no amendment to the Articles
of Incorporation could alter, modify or repeal any or all of the provisions
of Article XIV (supermajority vote/fair price requirement for certain
business combinations) or Article XVIII(A), unless the amendment is adopted
by the affirmative vote of not less than 80 percent of the outstanding
shares of voting stock held by shareholders who are not interested
shareholders.

Also, Article XVIII(B) of DTG's proposed Amended Articles of
Incorporation provides that no amendment shall alter, modify or repeal any
or all of the provisions of Articles VIII (powers of the Board of
Directors), IX (indemnification), XI (Board of Directors classification,
nomination, qualification, etc.), XII (supermajority vote required for
certain business combinations), XIII (non-shareholder constituency
provision) or XV (limitation of certain director liability), and the
shareholders would not have the right to alter, modify or repeal any or
all provisions of the Bylaws of the corporation, unless such amendment,
alteration, modification or repeal is adopted by the affirmative vote of
the holders of not less than 80 percent of the outstanding shares of voting
stock. However, the provisions of Article XVIII(B) would not apply to, and
such 80 percent vote would not be required for, any amendment, alteration,
modification or repeal which has first been approved by (i) the affirmative
vote of 80 percent of the entire Board of Directors, including the
affirmative vote of at least one director of each class of the Board of
Directors and (ii) the affirmative vote of two-thirds of the continuing
directors.
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STANDSTILL AGREEMENTS. In connection with the Cooperative's
acquisition of TCIC and Iway, the Cooperative entered into standstill
agreements (the "Standstill Agreements") with the former shareholders of
TCIC and of Iway (collectively, the "Sellers"). These Standstill
Agreements would be applicable to shares of DTG Common Stock issuable to
the Sellers in connection with the Conversion, and would restrict their
ability to dispose of shares of DTG Common Stock and would require them to
refrain from certain other actions related to DTG Common Stock. For a
description of these restrictions, see "ADDITIONAL SECURITIES OF THE
RESULTING COMPANY--Standstill Agreements." The Standstill Agreements could
have the effect of delaying, deterring or preventing a change in control of
DTG.

COMPARISON OF RIGHTS OF MEMBERS OF THE COOPERATIVE TO RIGHTS OF
SHAREHOLDERS OF DTG

At the special meeting, Members of the Cooperative will vote on a
proposal to amend the articles of incorporation to convert the Cooperative
into a South Dakota business corporation, which would be DTG. The
Cooperative is organized as a cooperative association under South Dakota
law. DTG would be regulated as a business corporation under South Dakota
law. The following discussion describes certain significant differences
between the rights of cooperative association members under provisions of
South Dakota law relating to cooperatives as compared to the rights of
shareholders under provisions of South Dakota law relating to business
corporations.

MEMBERS VERSUS SHAREHOLDERS. A South Dakota cooperative association
has members whereas a business corporation has shareholders. Under the
provisions of South Dakota law applicable to cooperatives, a cooperative
may have one or more classes of members. A South Dakota cooperative may,
as does the Cooperative, require that each member own a share of
membership stock. A member of a South Dakota cooperative is entitled to
only one vote on matters on which members must vote, regardless of the
number of shares of membership stock that the member owns. A member who
owns numerous shares of membership stock is not thereby entitled to any
additional voting power. A South Dakota cooperative is not required to
issue capital stock (as opposed to membership stock). However, if the
cooperative does issue capital stock, that capital stock has no voting
power. The Preferred Stock previously issued by the Cooperative is capital
stock without voting power.

The Cooperative's articles of incorporation provide that each Member
of the Cooperative is entitled to one vote on all matters submitted for
Member action. The Cooperative's articles of incorporation and bylaws
require its Members to purchase telecommunications services from the
Cooperative and permit Members to own only one share of Cooperative Common
Stock. The articles of incorporation of the Cooperative further provide
that any Member who desires to dispose of the Member's share of Cooperative

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Common Stock must first offer such share to the Cooperative, which has the
exclusive option to buy the share for 30 days. Thereafter, the Member is
permitted to sell the share to an individual that is eligible for
membership in the Cooperative.

A South Dakota business corporation must have at least one class of
voting capital stock. However, it may issue shares of capital stock
divided into different classes or series. In general, a holder of shares
of voting stock is entitled to one vote for each share of voting stock that
the person owns. This is significantly different from the law applicable
to South Dakota cooperatives, which, as discussed above, provides that each
member may only have one vote and that shares of capital stock do not
confer voting rights. The general rule for South Dakota cooperatives is
one vote per member, whereas the general rule for a business corporation is
one vote per share.

TRANSFERABILITY OF SHARES. The owner of shares of membership stock in
a South Dakota cooperative is generally not able to transfer that stock,
except to other persons or entities that are eligible to become members in
the cooperative, and only when such transferees satisfy the cooperative's
membership requirements (if any). Capital stock of a South Dakota
cooperative may be transferred unless the terms of the stock otherwise
prohibit transfer, although capital stock does not have voting power. This
arrangement is significantly different from the laws applicable to South
Dakota business corporations, which generally provide that shares of stock
in a business corporation may be freely transferred, unless the transferor
has agreed in some way or is required by applicable securities laws not to
transfer the stock or to transfer it only in certain circumstances.

CUMULATIVE VOTING FOR DIRECTORS. In an election of directors under
cumulative voting, each share of stock normally having one vote is entitled
to a number of votes equal to the number of directors to be elected. A
shareholder may cast all such votes for a single nominee or may allocate
the votes among as many nominees as the shareholder may choose. Without
cumulative voting, the holders of a majority of shares present at an annual
meeting or any special meeting held to elect directors would have the power
to elect all of the directors to be elected at that meeting and no nominee
could be elected without the support of a majority of the shares voting at
the meeting. Under the South Dakota Constitution and the SDBCA, cumulative
voting is mandatory for all South Dakota business corporations. DTG
shareholders would have cumulative voting rights if the Conversion is
adopted. Cumulative voting is not mandatory for South Dakota cooperatives
and neither the Cooperative's articles of incorporation nor its bylaws
provide for cumulative voting.

QUORUM REQUIREMENTS. A quorum for a meeting of the members of a South
Dakota cooperative is 10 percent of the first 100 members, plus five
percent of additional members. However, a quorum may never be more than 50
members, or a majority of members, whichever is smaller. Thus, in a South

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Dakota cooperative that has numerous members, such as the Cooperative, 50
members would constitute a quorum at a meeting of members and the majority
of a quorum may take action at the meeting (unless the articles of
incorporation or other provisions of law require a higher percentage for
member actions).

The quorum requirements applicable to South Dakota business
corporations are much different. In general, under the SDBCA a quorum of
shareholders in a business corporation is present when the holders of a
majority of the shares entitled to vote at the meeting are present in
person or by proxy, although the corporation's articles of incorporation or
bylaws may specify a different percentage (so long as it is greater than
one-third of the shares entitled to vote). The SDBCA does not specify a
maximum percentage of shares or number of shareholders that may constitute
a quorum.

ABILITY TO CALL SPECIAL MEETINGS. Special meetings of the members of
a cooperative may be called by the president, the board of directors or
members having 20 percent of the votes entitled to be cast at the meeting.
Special meetings of the shareholders of a South Dakota business corporation
may be called by the president, the board of directors, the holders of not
less than 10 percent of the shares entitled to vote at the meeting or any
additional persons that are authorized in the articles of incorporation to
call special meetings.

MEMBER OR SHAREHOLDER ACTION WITHOUT A MEETING. Any action which may
be taken at a meeting of the members of a South Dakota cooperative may be
taken without a meeting if a majority of the members entitled to vote
thereon sign a written consent setting forth the action taken.
Shareholders of a South Dakota business corporation may only take action
without a meeting upon unanimous written consent.

DIVIDENDS AND DISTRIBUTIONS. A business corporation is not required
to pay dividends on shares of its capital stock. Instead, except to the
extent restricted in the corporation's articles of incorporation or by
covenants in agreements with lenders or others, dividends and distributions
are within the discretion of the corporation's board of directors, provided
that the corporation is solvent at the time of paying the dividend and that
paying the dividend would not render the corporation insolvent. In
general, dividends and distributions may be paid only out of the
corporation's unreserved and unrestricted earned surplus.

South Dakota law regarding cooperatives is much different. At least
once annually, the directors of a cooperative must determine and distribute
net proceeds. In determining net proceeds, certain items, such as
operating expenses and costs, taxes and other expenses and reserves for
depreciation and depletion of property and other assets, are first deducted
from total proceeds. Afterward, the net proceeds may be distributed, after
certain additional deductions, with respect to the capital stock (if any)

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as authorized in its articles of incorporation, unless the capital is
impaired or the payment would result in the impairment of capital.
Thereafter, unless the cooperative's articles of incorporation or bylaws
expressly provide otherwise, the remaining amount is distributed to
members. A member is a person who purchases goods or services from the
cooperative in the ordinary course of business. In distributing the
remaining amount to members, the cooperative may reserve an amount for
necessary purposes, although this reserve is still credited to members in
accordance with the level of their capital. The remaining proceeds are
paid back to members based on the ratio that their capital bears to total
capital. A cooperative is not required, however, to distribute this amount
in cash. Rather, it may distribute the amount in cash, credits, stock, in
other property or any combination thereof. The Cooperative has accounted
for the equity of its Members through Capital Credits for all of its 45-
year history. Each year after its annual meeting, the Cooperative has
mailed a statement to each Capital Credit holder showing such holder's
Capital Credits account balance. In accordance with this practice, an
annual statement will be mailed to each Capital Credit holder prior to the
special meeting. No Capital Credits are issued on initial membership. To
determine a Member's Capital Credits, at the end of each year each Member's
total patronage (i.e. amounts paid to the Cooperative for services rendered)
is calculated and then compared to total Member patronage for the year,
creating an allocation ratio which is then applied to the Cooperative's
net income. The resulting share of net income is then reflected on each
Member's individual Capital Credit account and becomes part of that Member's
Capital Credit account balance. No dividends have been or are currently
paid on Capital Credits. Such credits are accumulated on the books of the
Cooperative rather than paid in cash. The Cooperative's bylaws permit
retirement of Capital Credits in any method, basis, priority and order of
retirement as may be determined by the Board. The Cooperative's bylaws
currently restrict in certain respects the ability of the Board to retire
Capital Credits by payment in cash. The Cooperative has not retired Capital
Credits accumulated for any year after December 31, 1985. Capital Credits
for the years prior to January 1, 1986 have been retired in full. The last
actual cash payment to Members for the purpose of retiring Capital Credits
for the 1985 fiscal year occurred in 1992. The Board pays accumulated
Capital Credits to the estates of deceased Members, who were natural
persons, on a discounted current value basis. The current discount is 58
percent, calculated on a 12 year, 7.5 percent basis. These estate
retirements are current on a month-to-month basis. If the Conversion is
adopted and consummated, Capital Credits would cease to exist and,
accordingly, would not accumulate.

AMENDMENT OF GOVERNING INSTRUMENTS. A South Dakota cooperative may
amend its articles of incorporation or its bylaws by a majority vote of the
members voting at a meeting at which a quorum is present (provided that the
number of members actually voting on the amendment is sufficient to
constitute a quorum).

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With certain exceptions, an amendment to the articles of incorporation
of a South Dakota business corporation must first be adopted by a
resolution of its board of directors. The amendment must then be adopted
by the corporation's shareholders. The amendment is adopted upon receiving
the affirmative vote of a majority of the shares entitled to vote thereon,
unless the articles of incorporation specify a higher percentage, or unless
any class of shares is entitled to vote as a class on the amendment, in
which case the amendment is adopted upon receiving the affirmative vote of
the holders of a majority of shares of each class entitled to vote as a
class and of the total number of shares entitled to vote. As described
above, the proposed Amended Articles of Incorporation of DTG would require
a supermajority vote to amend certain designated Articles and for
shareholders to amend the Bylaws. The SDBCA also contains provisions which
require a supermajority vote on certain actions. (See "THE CONVERSION--
Statutory Provisions Affecting Control of DTG" and "Other Provisions
Affecting Control of DTG--Restrictions on Amendments to Articles of
Incorporation and Bylaws of DTG.")

A South Dakota business corporation's bylaws may be amended or
repealed by the board of directors, unless the corporation's articles of
incorporation reserve that power to the shareholders of the corporation.
DTG's Bylaws provide that they may be adopted, amended or repealed at any
regular or special meeting of the shareholders or at any regular or special
meeting of the board of directors.

QUALIFICATIONS AND NUMBER OF DIRECTORS. A director of a South Dakota
business corporation is not required to be a shareholder, unless the
corporation's articles of incorporation require otherwise. A director of a
cooperative, however, must be a member or a representative of a person that
is a member. A cooperative's board of directors may not consist of less
than five directors (unless the cooperative has less than 50 members, in
which case there must be at least three directors). There generally are no
minimum limits on the number of directors of a South Dakota business
corporation, except as the corporation may provide in its articles of
incorporation or unless the corporation has a classified board of directors
(in which case there must be at least nine directors). As described above,
the proposed Amended Articles of Incorporation of DTG would include various
provisions concerning the qualifications of a director of DTG. (See "THE
CONVERSION--Other Provisions Affecting Control of DTG--Qualification of
Directors.")

ISSUANCE OF STOCK IN SERIES. A South Dakota cooperative is not
required to issue capital stock. If it does, however, it may issue two or
more classes of stock, with such designations, preferences, limitations and
relative rights as stated in the cooperative's articles of incorporation.
A South Dakota business corporation may also issue different classes of
stock. However, a business corporation has the additional ability to
divide any preferred or special class of stock into different series, with
different designations, preferences, limitations and relative rights among

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the various series. (See "THE CONVERSION--Other Provisions Affecting
Control of DTG--Blank Check Preferred Stock and Preferred Stock Rights
Plan.")

MERGERS AND OTHER MAJOR TRANSACTIONS. Like South Dakota business
corporations, cooperatives may merge with other cooperatives. To do so,
the board of directors of each cooperative involved in the merger must
approve a written plan of merger. Before the merger may take place, the
plan of merger must be approved by the members of the cooperatives involved
in the merger. Member approval is obtained in the same manner as an
amendment to the articles of incorporation: a majority of a quorum of the
members must vote for approval of the plan of merger. A quorum may be no
more than 50 members.

The provisions of the SDBCA applicable to mergers involving business
corporations are much more complex. In general, the principal terms of a
merger must first be approved by the board of directors of each corporation
that is a party to the merger. Then the shareholders of each corporation
must approve the merger by the affirmative vote of a majority of the shares
entitled to vote thereon, unless the articles of incorporation or the SDBCA
require a higher percentage. Where any class of shares is entitled to vote
as a class on the merger, then the merger is approved by that corporation
only upon receiving the affirmative vote of the holders of a majority of
the shares of each class entitled to vote as a class and of the total
number of shares entitled to vote on the merger. For a discussion of the
circumstances in which a class of shares will be entitled to vote as a
class, see "THE MERGER--Comparison of Rights of Shareholders of DTG to
Rights of Stockholders of DTG Delaware." As described above, the proposed
Amended Articles of Incorporation of DTG would, in certain instances,
require a supermajority vote of DTG's shareholders to oppose certain
business combinations. (See "THE CONVERSION--Other Provisions Affecting
Control of DTG--Supermajority Vote Provisions.")

DISSENTERS' RIGHTS. Shareholders of a South Dakota business
corporation have the right to dissent from, and to receive payment for
their shares in the event of, certain transactions to which the corporation
is a party, including mergers, sales of all or substantially all of the
corporation's assets outside the ordinary course of business and certain
amendments to the corporation's articles of incorporation that adversely
affect the rights of the shareholders' shares. The right to dissent does
not apply to the shareholders of a corporation surviving a merger if the
vote of the shareholders of the surviving corporation was not required to
approve the merger. Members of cooperatives do not have rights to dissent
from any action under South Dakota law.

INDEMNIFICATION AND LIMITATION OF LIABILITY

INDEMNIFICATION. A South Dakota cooperative has the power to
indemnify a present or former director, officer or agent against actual

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expenses incurred in the defense of an action brought against the person
because of that status, except where the person is adjudged liable for
negligence or misconduct in the performance of the person's duties,
provided that the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
cooperative and, with respect to a criminal proceeding, had no reasonable
cause to believe that the person's conduct was unlawful. No
indemnification may be made with respect to actions brought by or in the
name of the cooperative (i.e., derivative actions). The Cooperative's
bylaws contain provisions requiring the indemnification of all directors
and the General Manager (Thomas W. Hertz) to the fullest extent permitted
by the SDBCA. The Cooperative's articles of incorporation do not contain
provisions with respect to indemnification.

These rules are generally the same with respect to South Dakota
business corporations. However, with respect to derivative actions
involving business corporations, no indemnification may be made when a
person is adjudged liable to the corporation in the performance of that
person's duty to the corporation and its shareholders, unless a court
determines that the person is entitled to indemnification for expenses in
view of all the circumstances, and then indemnification may be made only to
the extent that the court determines.

As is the case with South Dakota cooperatives, indemnification is
permitted only for acts that the person seeking indemnification in good
faith believed to be in the best interests of the corporation and its
shareholders, and with respect to a criminal proceeding, that the person
had no reasonable cause to believe the person's conduct was unlawful. This
determination is made by a majority vote of a quorum of disinterested
directors, independent legal counsel in a written opinion (whether or not a
quorum of disinterested directors is obtainable) or by the shareholders.
Furthermore, indemnification of expenses is required when the individual
has successfully defended the action on the merits. Both the proposed
Amended Articles of Incorporation and Bylaws of DTG contain provisions
relating to indemnification and, in general, require indemnification of
directors and executive officers to the full extent permitted by law and
permit indemnification of other persons serving the corporation to the
extent permissible by law and by the Amended Articles of Incorporation and
authorized by the Board of Directors.

It is intended that DTG would enter into an Indemnity Agreement with
each of its directors and executive officers effective upon consummation of
the Conversion, which may provide rights additional to those that would be
provided by the SDBCA or DTG's proposed Amended Articles of Incorporation
or Bylaws. (See "INDEMNITY AGREEMENTS.")

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Cooperative and DTG pursuant to the foregoing provisions, or

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otherwise, the Cooperative and DTG have been advised in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

LIMITATION OF LIABILITY. The Cooperative's articles of incorporation
provide that directors of the Cooperative shall not be liable to the
Cooperative or its Members for monetary damages for breaches of fiduciary
duty as a director, except for certain breaches involving actions or
omissions not in good faith, intentional misconduct or violations of law,
certain unauthorized dividends or distributions of assets or transactions
from which the director derived an improper personal benefit. This
provision eliminates the personal liability of directors of the Cooperative
in their capacity as directors (but not in their capacity as officers) to
the Cooperative and its Members to the full extent provided by South Dakota
law.

The SDBCA permits corporations to adopt a provision in their articles
of incorporation eliminating, with certain exceptions, the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of the director's fiduciary duty as a director.
However, a corporation may not eliminate or limit director monetary
liability where such liability is based on: (i) breach of the director's
duty of loyalty to the corporation or its shareholders for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (ii) improper dividends or distributions,
unauthorized purchases of shares, improper loans or commencing business be-
fore the corporation obtains its minimum capital; or (iii) any transaction
from which the director derived an improper personal benefit. The proposed
Amended Articles of Incorporation of DTG eliminate the liability of
directors to DTG to the full extent permissible under South Dakota law.

FEDERAL INCOME TAX CONSEQUENCES

Following is a summary of the federal income tax consequences
resulting from the Conversion. The Cooperative has not requested a private
letter ruling from the Internal Revenue Service as to the federal income
tax consequences of the Conversion and, thus, there can be no assurance that
the transaction would constitute a tax-free exchange for federal income tax
purposes. However, the Cooperative has requested and received the opinion
of Olsen Thielen & Co., Ltd. as to the federal income tax consequences of
the Conversion.

Olsen Thielen & Co., Ltd. has advised the Cooperative that the
conversion of the Cooperative from a South Dakota cooperative association
into DTG, a South Dakota business corporation, through an amendment to the
Cooperative's articles of incorporation, would constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Code. In addition, Olsen
Thielen & Co., Ltd. has advised the Cooperative as to the matters listed
below.

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(i) no gain or loss would be recognized by the Cooperative
upon the Conversion and the Cooperative's basis in its assets,
holding period for its assets, annual accounting period and
accounting methods would not be affected by the Conversion;

(ii) the exchange of Cooperative Common Stock for DTG Common
Stock issuable in the Conversion would constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Code. No gain
or loss would be recognized by DTG upon the exchange, no gain or
loss would be recognized by the Members upon the exchange (except
to the extent of cash received in lieu of fractional shares), the
basis of the DTG Common Stock issuable to the Members would be the
same as the basis of Cooperative Common Stock surrendered in the
Conversion and the holding period of the DTG Common Stock issuable
to the Members would include the holding period of the shares
of Cooperative Common Stock surrendered in the Conversion;

(iii) the exchange of Preferred Stock for DTG Common Stock
issuable in the Conversion would constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Code. No gain
or loss would be recognized to DTG upon the Conversion, no gain
or loss would be recognized by the holders of Preferred Stock upon
the Conversion (except to the extent of cash received in lieu of
fractional shares), the basis of the DTG Common Stock issuable
to the holders of Preferred Stock would be the same as the basis
of the Preferred Stock surrendered in the Conversion and the
holding period of the DTG Common Stock issuable to the holders
of Preferred Stock would include the holding period of the
shares of Preferred Stock surrendered in the Conversion; and

(iv) the exchange of Capital Credits for DTG Common Stock
issuable in the Conversion would constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Code. No
gain or loss would be recognized to DTG upon the Conversion, no
gain or loss would be recognized by the holders of Capital
Credits upon the Conversion (except to the extent of cash
received in lieu of fractional shares), the basis of the DTG
Common Stock issuable to the holders of Capital Credits would
be the same as the basis of their Capital Credits surrendered
in the Conversion and the holding period of the DTG Common
Stock issuable to the holders of Capital Credits would include
the holding period of their Capital Credits surrendered in the
Conversion.

The opinion of Olsen Thielen & Co., Ltd. indicates that the basis for
their opinion is derived from their review of previously issued private
letter rulings by the Internal Revenue Service and court opinions involving
transactions with similar but not identical characteristics. Because the
Internal Revenue Service has not previously ruled on a transaction involving

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the conversion of a Section 501(c)(12) cooperative, the opinion states that
there is a lack of direct precedent for the stated tax treatment. The
opinion of Olsen Thielen & Co., Ltd. states, however, that existing precedent
involving transactions with similar but not identical characteristics would,
if followed, cause the Conversion to be treated as and constitute a tax free
exchange and that Olsen Thielen & Co., Ltd. has no reason to believe that the
Internal Revenue Service would not follow this precedent.

EACH MEMBER OF THE COOPERATIVE AND HOLDERS OF PREFERRED STOCK AND
CAPITAL CREDITS SHOULD CONSULT A PROFESSIONAL TAX ADVISER ON THE FEDERAL,
STATE AND LOCAL TAX CONSEQUENCES OF THE CONVERSION TO SUCH PERSON OR
ENTITY.

ACCOUNTING TREATMENT

The Conversion would be accounted for as a capital restructuring.
Therefore, the Conversion would not affect the valuation of the assets or
liabilities of the Cooperative in the hands of DTG, nor would DTG record
any income or expense as a result of the Conversion.

DISSENTERS' RIGHTS

Neither Members of the Cooperative nor holders of Preferred Stock or
Capital Credits would be entitled to dissenters' rights under the
Cooperative Act in connection with the Conversion. (See "DISSENTERS'
RIGHTS.")

THE MERGER

The Cooperative's Board of Directors has approved and recommended that
the Cooperative's Members consider and vote upon a proposal to approve the
Plan of Merger. The Board unanimously voted to approve the Plan of Merger
at its February 11, 1997 meeting. The Cooperative (which if the Conversion
is adopted and consummated would become DTG) and DTG Delaware entered into
the Plan of Merger effective as of February 14, 1997, following approval of
the Plan of Merger by their respective Boards of Directors.

The following discussion summarizes certain provisions of the Plan of
Merger and aspects of the Merger. This summary discussion is not intended
to be a complete description of the Merger and is qualified in its entirety
by reference to the Plan of Merger, which is attached as Appendix D and
incorporated by reference in this Prospectus and Ballot/Proxy Statement.

BACKGROUND OF THE MERGER

The Cooperative's Board of Directors, in connection with studying the
possibility of converting the Cooperative into a general business
corporation, also has considered possible methods of trying to promote the

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development of a market in the stock of a business corporation. The Board
believes that encouraging and promoting the development of a market in the
capital stock of DTG (into which the Cooperative would be converted) would
promote the interests of DTG and its shareholders by helping to provide an
opportunity for a potential new source of capital. The Board believes that
encouraging the development of a market for the stock of DTG also would
promote the interests of its shareholders by helping to enhance the
liquidity of their investment in DTG, helping to promote valuations of
their stock for gift, estate planning and other purposes and helping to
provide a means by which DTG shareholders may be able to evaluate the value
of their investment in DTG.

BOARD RECOMMENDATION AND REASONS FOR THE MERGER

The Boards of Directors of the Cooperative, on behalf of DTG, and DTG
Delaware have each unanimously determined that the proposed Merger is
desirable and in the best interests of DTG and DTG Delaware and their
respective stockholders. The Board of the Cooperative, as the Board of DTG
if the Conversion is consummated, believes that brokers, other potential
market makers and investors are more familiar with Delaware corporations
generally and therefore may be more comfortable making a market and
investing in the stock of a Delaware corporation as compared to a South
Dakota corporation. The Board believes that, due to the substantial number
of corporations incorporated in Delaware, brokers, other potential market
makers and investors are familiar with Delaware corporations generally.
The Board believes that because there are relatively few publicly traded
South Dakota corporations, brokers, other potential market makers and
investors may be unfamiliar with South Dakota corporate laws and therefore
may be hesitant to invest in, or perhaps even reject an investment in, a
South Dakota corporation. In addition, the Board believes that Delaware
corporate law is relatively well developed, which would lend predictability
to both DTG and its shareholders in matters related to corporate governance
and management.

The Board also believes that certain provisions of the SDBCA could
limit DTG's flexibility or even hinder its ability to react to changing
business needs and opportunities and could create increased expense for DTG
in conducting fairly routine matters. The SDBCA's requirements for a
shareholder vote before a corporation may increase its indebtedness or in
connection with small mergers in which the corporation is the acquiring and
surviving entity are examples of provisions that are not contained in the
Delaware Law. (See "THE MERGER--Comparison of Rights of Shareholders of
DTG to Rights of Stockholders of DTG Delaware.")

The Board did not identify any material factors that would not favor
the Merger. In particular, the Board does not believe there are any
material disadvantages of being incorporated under the laws of the State
of Delaware and, likewise, did not identify any material advantages of
being incorporated under the laws of the State of South Dakota.

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For the reasons set forth in the preceding paragraphs, the Board
believes it would be in the best interests of DTG and its shareholders for
DTG to be incorporated in Delaware. The proposed Merger is designed to
reincorporate DTG under Delaware law. If the Merger is consummated, the
primary place of business and the corporate headquarters of DTG Delaware
would remain in South Dakota. The Boards of Directors of the Cooperative
and DTG Delaware did not assign any particular weight to any one of the
foregoing factors.

If the Conversion had been consummated as of the date of this Prospectus
and Ballot/Proxy Statement, the directors and executive officers of the
Cooperative, together with their respective affiliates and associates, as a
group, would have beneficially owned less than one percent of the total
number of shares of DTG Common Stock issuable in the Conversion. (See
"VOTING AND MANAGEMENT INFORMATION--Interests of Certain Persons.") These
persons would be entitled to receive the same consideration for their
shares as any other DTG shareholder in connection with the Merger. If the
Merger had been consummated as of the date of this Prospectus and
Ballot/Proxy Statement, these persons would have beneficially owned less
than one percent of the total number of outstanding shares of DTG Delaware
to be issued in connection with the Merger. All of the directors and
officers of the Cooperative are also directors and officers of DTG
Delaware. These persons currently do not own any shares of DTG Delaware
Common Stock. DTG Delaware is a wholly owned subsidiary of the
Cooperative.

THE BOARD OF DIRECTORS OF THE COOPERATIVE, WHICH WILL BECOME THE
BOARD OF DIRECTORS OF DTG IF THE CONVERSION IS ADOPTED AND
CONSUMMATED, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN OF MERGER.

CONVERSION OF RIGHTS TO RECEIVE SHARES OF DTG COMMON STOCK

The Cooperative's Board of Directors, on behalf of DTG, is soliciting
proxies from the individuals and entities who will be DTG's shareholders
if the Conversion is consummated for the purpose of approving the Plan of
Merger. The affirmative vote of the holders of a majority of the shares of
DTG Common Stock issuable in the Conversion is required to approve the Plan
of Merger.

At the time that the Merger becomes effective, DTG would be merged
with and into DTG Delaware. The surviving corporation would be DTG
Delaware, which would own all of the assets and assume all of the
liabilities of DTG. In the Merger, DTG Delaware's Certificate of
Incorporation would be amended to change the name of DTG Delaware to
"Dakota Telecommunications Group, Inc." and to increase DTG's authorized
capital to 5,000,000 shares of common stock, without par value ("DTG
Delaware Common Stock"), of which approximately 1,050,000 shares would be

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issued and outstanding at the effective time of the Merger and an
additional approximately 200,000 shares would be subject to stock options
and warrants, and up to 250,000 shares of preferred stock, without par
value ("DTG Delaware Preferred Stock"), of which no shares would be
outstanding at the effective time of the Merger. Except for the amendment
to change its name and increase its authorized capital, the surviving
corporation's certificate of incorporation after the Merger would be
identical to DTG Delaware's Certificate of Incorporation attached as
Appendix E to this Prospectus and Ballot/Proxy Statement. The bylaws of
the surviving corporation would be the Bylaws of DTG Delaware as in effect
immediately prior to the effective time of the Merger, which are attached
as Appendix F to this Prospectus and Ballot/Proxy Statement.

Each whole share of DTG Common Stock issuable in the Conversion, at
the time that the Merger becomes effective, would be converted into the
right to receive one validly issued, fully paid and nonassessable share of
DTG Delaware Common Stock. Each share of DTG Delaware Common Stock which
is outstanding immediately prior to the effective time of the Merger would
be canceled. DTG Delaware would not issue fractional shares of DTG
Delaware Common Stock in the Merger.

CESSATION OF SHAREHOLDER STATUS AND DISTRIBUTION OF DTG DELAWARE COMMON
STOCK

As of the effective time of the Merger, holders of rights to receive
shares of DTG Common Stock issuable in the Conversion would cease to be
shareholders of DTG and consequently would have no rights as DTG
shareholders. Certificates representing shares of DTG Common Stock would
not be issued. Certificates that represented shares of Cooperative Common
Stock and Preferred Stock and accounts on the books of the Cooperative that
represented Capital Credits outstanding immediately prior to the effective
time of the Conversion would then represent the right to receive shares of
DTG Delaware Common Stock having all of the voting and other rights of
shares of DTG Delaware Common Stock, subject to the rights of a dissenting
shareholder under the SDBCA. (See "DISSENTERS' RIGHTS.")

As soon as practicable after the Merger becomes effective, DTG
Delaware would send or cause to be sent to individuals and entities
entitled to receive DTG Common Stock in connection with the Conversion
transmittal materials to be used to exchange certificates that represented
shares of Cooperative Common Stock and Preferred Stock outstanding
immediately prior to the effective time of the Conversion for stock
certificates representing shares of DTG Delaware Common Stock and to have
certificates issued as appropriate to evidence the retirement of Capital
Credits. The transmittal materials would contain instructions with respect
to the surrender of Cooperative Certificates. DTG Delaware would issue and
deliver new stock certificates and checks for the amount of cash payable
for fractional shares of DTG Common Stock to Members or holders of
Preferred Stock. DTG Delaware would issue and deliver certificates and

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checks in the name and to the address appearing on the Cooperative's stock
records as of the effective time of the Conversion, or in such other name
or to such other address as may be specified in the transmittal materials
received by DTG Delaware. DTG Delaware would not be required to, and would
not, issue and deliver certificates and checks until it has received
properly executed transmittal materials and, with respect to a Member or
holder of Preferred Stock, until it has received all of the Cooperative
Certificates held of record by that Member or holder of Preferred Stock, or
an affidavit of loss and indemnity bond for such certificate or
certificates. Such Cooperative Certificates, transmittal materials and
affidavits must be in a form and condition reasonably acceptable to DTG
Delaware.

DTG Delaware would have discretion to determine reasonable rules and
procedures relating to the issuance and delivery of certificates of DTG
Delaware Common Stock into which rights to receive shares of DTG Common
Stock would be converted in the Merger and governing the payment for
fractional shares.

EFFECTIVE TIME OF THE MERGER

The Merger would be consummated on the date and time specified in a
Certificate of Merger issued by the Secretary of the State of South Dakota
in accordance with the SDBCA and at the date and time specified in a
Certificate of Merger filed in accordance with the Delaware Law. If the
shareholders of DTG approve the Plan of Merger at the special meeting and
the other conditions to the Merger set forth in the Plan of Merger and
summarized under "THE MERGER--Conditions to the Merger and Abandonment" in
this Prospectus and Ballot/Proxy Statement are satisfied, the effective
time of the Merger would occur as soon after the special meeting as is
possible (which could be the same date as the special meeting), provided
that the Plan of Merger has not been terminated prior to such time. It is
anticipated that the Merger, if approved, would become effective during the
third quarter of 1997.

DTG STOCK OPTIONS AND WARRANTS

Before the effective time of the Merger, each outstanding stock option
and warrant entitling the holder to purchase shares of DTG Common Stock
would be amended, if necessary, so that it would become, if and when the
Merger becomes effective, an option or warrant to purchase, for an
equivalent price, that number of shares of DTG Delaware Common Stock that
the holder would have acquired pursuant to the Merger had the holder
exercised the option or warrant immediately prior to the effective time of
the Merger. The options and warrants would in all other respects contain
the same terms and conditions as they do presently.

As of the date of this Prospectus and Ballot/Proxy Statement, there
were stock options and warrants outstanding to purchase an aggregate of

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2,016 shares of Preferred Stock, which if exercised prior to the Merger,
would be convertible into 162,936 shares of common stock of the Resulting
Company in connection with the Merger. (See "ADDITIONAL SECURITIES OF THE
RESULTING COMPANY--Stock Options" and "--Warrants.")

MANAGEMENT AFTER THE MERGER

Upon the consummation of the Merger, the directors and officers of DTG
Delaware would be the persons who were the directors and officers of DTG
Delaware immediately prior to the effective time of the Merger, except as
otherwise indicated in this Prospectus and Ballot/Proxy Statement. Upon
consummation of the Merger, the employees of DTG Delaware would be the
persons who were the employees of DTG immediately prior to the effective
time of the Merger, except as otherwise indicated in this Prospectus and
Ballot/Proxy Statement.

CONDITIONS TO THE MERGER AND ABANDONMENT

The obligations of DTG Delaware and DTG to consummate the Merger are
subject to the fulfillment of the following conditions:

(i) the amendment to the Cooperative's articles of
incorporation must be adopted by its Members as required by law
and the Conversion must be consummated according to its terms;

(ii) the holders of a majority of the shares of DTG Common
Stock issuable in the Conversion and the holders of a majority of
the outstanding shares of DTG Delaware Common Stock must have
voted for approval of the Plan of Merger;

(iii) neither DTG Delaware nor DTG shall be subject to any
order, decree or injunction of a court or agency enjoining or
prohibiting the Merger;

(iv) DTG and DTG Delaware must have obtained any required
regulatory approvals with respect to the Merger; and

(v) demands for payment for shares under Section 47-6-23 of
the SDBCA shall have been made, perfected and not withdrawn by
the holders of not more than five percent of the number of shares
of DTG Common Stock issuable in the Conversion.

Either DTG Delaware or DTG, whichever is entitled to the benefit of
the foregoing conditions, may waive one or more of those conditions except
where satisfaction of the condition is required by law. In particular, DTG
Delaware and DTG may, in their sole discretion, waive the condition that
holders of not more than five percent of the number of shares of DTG Common
Stock issuable in the Conversion shall have asserted dissenters' rights
under the SDBCA. The Boards of Directors of DTG Delaware and DTG may by

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mutual consent terminate the Plan of Merger and abandon the Merger at any
time before the effective time of the Merger.

DESCRIPTION OF DTG DELAWARE CAPITAL STOCK

If the Plan of Merger is approved and the Merger is consummated, DTG
Delaware's authorized capital stock would consist of 5,000,000 shares of
"DTG Delaware Common Stock," and 250,000 shares of DTG Delaware Preferred
Stock. As of the date of this Prospectus and Ballot/Proxy Statement, DTG
Delaware had 100 shares of DTG Delaware Common Stock outstanding and no
shares of DTG Delaware Preferred Stock outstanding. DTG Delaware expects
to issue no more than 1,050,000 shares of DTG Delaware Common Stock and
warrants and options to purchase no more than 200,000 shares of DTG
Delaware Common Stock in the Merger.

DTG DELAWARE COMMON STOCK. Holders of DTG Delaware Common Stock are
entitled to dividends out of funds legally available for that purpose if,
as and when declared by the Board of Directors of DTG Delaware. Certain
covenants in existing loan agreements between the Cooperative and the RUS
to which DTG Delaware would be subject following the Merger, as well as
federal statutes and regulations which apply to RUS borrowers, would limit
the circumstances under which DTG Delaware would be permitted to pay
dividends or make other distributions to DTG Delaware stockholders. Under
these agreements, the RUS must authorize distributions other than in shares
of stock unless certain financial ratio requirements are met. The dividend
rights of DTG Delaware Common Stock also are subject to the rights of any
DTG Delaware Preferred Stock which has been or may be issued. Each holder
of DTG Delaware Common Stock is entitled to one vote for each share held on
each matter presented for stockholder action. DTG Delaware Common Stock
has no preemptive rights, cumulative voting rights, conversion rights or
redemption provisions.

In the case of any liquidation, dissolution or winding up of the
affairs of DTG Delaware, holders of DTG Delaware Common Stock would be
entitled to receive, pro rata, any assets distributable to common
stockholders in respect of the number of shares held by them. The
liquidation rights of DTG Delaware Common Stock would be subject to the
rights of holders of any DTG Delaware Preferred Stock which could be
issued in the future.

All outstanding shares of DTG Delaware Common Stock are, and shares to
be issued pursuant to the Merger will be, when issued, fully paid and
nonassessable.

DTG DELAWARE PREFERRED STOCK. DTG Delaware would be authorized to
issue, without further stockholder approval, up to 250,000 shares of DTG
Delaware Preferred Stock from time to time in one or more series with such
designations, powers, preferences and relative voting, distribution,
dividend, liquidation, transfer, redemption, conversion and other rights,

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preferences, qualifications, limitations or restrictions as may be provided
for the issue of such series by resolution adopted by DTG Delaware's Board
of Directors. Such DTG Delaware Preferred Stock could have priority over
DTG Delaware Common Stock as to dividends and as to the distribution of DTG
Delaware's assets upon any liquidation, dissolution or winding up of DTG
Delaware.

The Board of Directors intends to implement a preferred stock purchase
rights plan as soon as is practicable following the consummation of the
Merger. In connection with such plan, the Certificate of Incorporation of
DTG Delaware designates 15,000 shares of preferred stock as Series A Junior
Participating Preferred Stock for use in connection with such plan. (See
"ADDITIONAL SECURITIES OF THE RESULTING COMPANY--Preferred Stock Purchase
Rights Plan").

STOCK OPTIONS AND WARRANTS

Upon the consummation of the Merger, stock options and warrants to
purchase an aggregate of 162,936 shares (or approximately 13 percent of
the stock outstanding on such date on a fully diluted basis) of DTG
Delaware Common Stock would be outstanding. (See "ADDITIONAL SECURITIES
OF THE RESULTING COMPANY--Stock Options" and "--Warrants").

STATUTORY PROVISIONS AFFECTING CONTROL OF DTG DELAWARE

The following discussion concerns a provision of the Delaware Law that
would affect control of the surviving corporation if the Merger is
consummated. DTG Delaware is currently subject to the provisions of the
Delaware Law and the surviving corporation will be subject to the same
provisions after the Merger.

Section 203 of the Delaware Law prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for three years following the time that such person becomes an
"interested stockholder" unless certain requirements are met or unless
certain exceptions apply. The term "business combination" generally
includes (i) any merger or consolidation of the corporation or any
majority-owned subsidiary of the corporation with (A) the interested
stockholder, or (B) with any other corporation or other entity if the
merger or consolidation is caused by the interested stockholder and as a
result of the merger or consolidation Section 203 is not applicable to the
surviving entity; (ii) with certain exceptions, any sale, lease or other
disposition to or with the interested stockholder of assets of the
corporation or of any majority-owned subsidiary of the corporation where
the assets have an aggregate market value equal to 10 percent or more of
either the aggregate market value of all the assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of the corporation; (iii) any transaction which results
in the issuance or transfer by the corporation or by any majority-owned

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subsidiary of the corporation of any stock of the corporation or of such
subsidiary to the interested stockholder, with certain exceptions; (iv) any
transaction involving the corporation or any majority-owned subsidiary of
the corporation which increases the proportionate share of the stock which
is owned by the interested stockholder; or (v) any receipt by the
interested stockholder of the benefit, directly or indirectly (except
proportionately as a stockholder of the corporation), of any loans,
advances, guarantees, pledges or other financial benefits (with certain
exceptions) provided by or through the corporation or any majority-owned
subsidiary.

An "interested stockholder" is generally defined as any person (other
than the corporation or a majority-owned subsidiary) that (i) owns 15
percent or more of the outstanding voting stock of the corporation, or (ii)
is an affiliate or associate of the corporation and was the owner of 15
percent or more of the outstanding voting stock of the corporation at any
time within the past three years and the affiliates and associates of such
person. Among the exceptions from the definition of "interested
stockholder" is any person whose ownership of shares in excess of the 15
percent limit was the result of action taken solely by the corporation,
unless that such person thereafter acquired additional shares of voting
stock of the corporation (except as a result of further corporate action
not caused, directly or indirectly, by such person).

There are a number of exceptions to the prohibitions of Section 203.
The first exception applies where, prior to the time that the interested
stockholder became an interested stockholder, the board of directors
approved either the business combination or the transaction which resulted
in the stockholder becoming an interested stockholder.

The second exception is where, upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85 percent of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding
those shares owned (i) by persons who are directors and also officers and
(ii) certain employee stock plans. The third exception is where, at or
subsequent to the time the person became an interested stockholder, the
business combination was approved by the board of directors and authorized
at an annual or special meeting of stockholders (and not by written
consent) by the affirmative vote of at least 66 2/3 percent of the
outstanding voting stock which is not owned by the interested stockholder.

Section 203 also does not apply: (i) if the corporation's original
certificate of incorporation contains a provision expressly electing not to
be governed by Section 203; (ii) if the stockholders adopt an amendment to
the certificate of incorporation or bylaws expressly electing not to be
governed by Section 203; (iii) if the corporation does not have a class of
voting stock that is (A) listed on a national securities exchange, (B)
authorized for quotation on The Nasdaq Stock Market, or (C) held of record

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by more than 2,000 stockholders, unless any of the foregoing results from
action taken by an interested stockholder or from a transaction in which a
person becomes an interested stockholder; (iv) if a stockholder becomes an
interested stockholder inadvertently and (A) as soon as practicable divests
itself of ownership of sufficient shares so that the stockholder ceases to
be an interested stockholder; and (B) would not, at any time within the
three-year period immediately prior to a business combination between the
corporation and such stockholder, have been an interested stockholder but
for the inadvertent acquisition of ownership; (v) pursuant to the
"competitive bidding" exception; or (vi) if the business combination is
with an interested stockholder who became an interested stockholder at a
time when the restrictions contained in Section 203 did not apply (with
certain exceptions).

The "competitive bidding exception" referred to above provides that
(assuming the satisfaction of certain criteria) any person, including one
about to become and one who is an interested stockholder, may propose a
transaction free from the restrictions of Section 203 in certain
situations. The basic policy behind this exception is that once the board
of directors has decided to sell the corporation or a majority of its
assets or has approved (or not opposed) a tender or exchange offer for 50
percent or more of the corporation's outstanding stock, the stockholders
are benefitted by the promotion of bidding contests. Subsequent bidders
are excepted from Section 203 if certain conditions are met. This
exception allows a bidder who announces a transaction after the
announcement of a management-approved transaction and prior to the
completion or abandonment of the management-approved transaction to be free
of the provisions of Section 203.

Under this exception, the corporation must give at least 20 days'
notice to all interested stockholders prior to the consummation of (i) a
merger or consolidation of the corporation (except for those mergers or
consolidations where no stockholder vote is required), (ii) a sale, lease
or other disposition of assets of the corporation or a majority-owned
subsidiary having an aggregate market value at least equal to 50 percent of
either the aggregate market value of all of the corporation's assets
(determined on a consolidated basis) or the aggregate market value of 50
percent of the corporation's outstanding stock, or (iii) a proposed tender
or exchange offer for 50 percent or more of the corporation's outstanding
stock. This notice requirement ensures that an interested stockholder will
have the opportunity to decide whether to bid against a management-approved
transaction prior to the time that the transaction is approved by the
stockholders.

There are three prerequisites to the application of the "competitive
bidding exception." First, there must be board approval of one of the
three types of transactions described above. The second necessary element
is the approval of (or lack of opposition to) a proposed transaction with a
person who was not an interested stockholder during the preceding three

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years or who became an interested stockholder with board approval. The
third prerequisite is that the potentially triggering transaction must
either be approved or not opposed by a majority of the members of the board
who were directors before any person became an interested stockholder in
the preceding three years. Alternatively, directors approving or not
opposing the transaction may include those who were elected or recommended
by a majority of the continuing directors to succeed such continuing
directors.

OTHER PROVISIONS AFFECTING CONTROL OF DTG DELAWARE

Upon consummation of the Merger, the certificate of incorporation of
the surviving corporation would be the Certificate of Incorporation of DTG
Delaware and the bylaws of the surviving corporation would be the Bylaws of
DTG Delaware. Some provisions of DTG Delaware's Certificate of
Incorporation may have an anti-takeover impact and may make tender offers,
proxy contests and certain mergers more difficult to consummate.

The Certificate of Incorporation of DTG Delaware, as the same would
be amended pursuant to the Plan of Merger, contains various provisions that
are virtually identical to those contained in the proposed Amended Articles
of Incorporation of DTG, which are described above in "THE CONVERSION--
Other Provisions Affecting Control of DTG." Such provisions are briefly
summarized below, and the following should be read in conjunction with the
more detailed descriptions set forth in "THE CONVERSION--Other Provisions
Affecting Control of DTG."

PROVISIONS REGARDING THE BOARD OF DIRECTORS. The Certificate of
Incorporation of DTG Delaware classifies the Board of Directors into three
classes serving staggered, three-year terms. The Certificate also contains
detailed provisions pertaining to the nomination, removal (which may only
be for "cause") and qualification of directors. These provisions are
virtually identical to those described in "THE CONVERSION--Other
Provisions Affecting Control of DTG--Provisions Regarding the Board of
Directors."

BOARD EVALUATION OF CERTAIN OFFERS. The Certificate of Incorporation
of DTG Delaware requires the Board, when evaluating certain proposed
business combinations, to consider a variety of enumerated factors,
including the impact of the proposed business combination on non-
stockholder constituencies. This provision is virtually identical to
that described in "THE CONVERSION--Other Provisions Affecting Control
of DTG--Board Evaluation of Certain Offers."

"BLANK CHECK" PREFERRED STOCK AND PREFERRED STOCK RIGHTS PLAN. Like
the proposed Amended Articles of Incorporation of DTG, the Certificate of
Incorporation of DTG Delaware would authorize the Board of Directors to
issue up to 250,000 shares of DTG Delaware Preferred Stock from time to
time in one or more series with such designations, powers, preferences

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and relative voting, distribution, dividend, liquidation, transfer,
redemption, conversion and other rights, preferences, qualifications,
limitations or restrictions as may be provided for the issue of such
series by resolution adopted by DTG Delaware's Board of Directors. The
Certificate of Incorporation would also designate 15,000 shares as Series A
Junior Participating Preferred Stock for possible issuance in connection
with a preferred stock purchase rights plan which the Board of Directors
of DTG Delaware currently intends to enact as soon as is practicable
following the consummation of the Merger. No stockholder vote would be
taken in connection with the implementation of such plan. (See "ADDITIONAL
SECURITIES OF THE RESULTING COMPANY--Preferred Stock Purchase Rights Plan.")

SUPERMAJORITY VOTE PROVISIONS. The Certificate of Incorporation of
DTG Delaware contains certain provisions that impose a supermajority vote
requirement to approve certain "business combinations" involving an
"interested stockholder." These provisions are virtually identical to
those embodied in the proposed Amended Articles of Incorporation of DTG.
(See "THE CONVERSION--Other Provisions Affecting Control of DTG--
Supermajority Vote Provisions.")

RESTRICTIONS ON AMENDMENTS TO CERTIFICATE OF INCORPORATION AND
BYLAWS OF DTG DELAWARE. Like the proposed Amended Articles of Incorpora-
tion of DTG, the Certificate of Incorporation of DTG Delaware imposes
certain supermajority vote requirements to amend specified Articles in
the Certificate of Incorporation or for the stockholders to amend the
Bylaws. For a description of such provisions, see "THE CONVERSION--
Other Provisions Affecting Control of DTG--Restrictions on Amendments
to Amended Articles of Incorporation and Bylaws of DTG." In addition,
the DTG Delaware's Certificate of Incorporation requires supermajority
stockholder approval to amend, modify or repeal the provision requiring
the unanimous consent of the stockholders if action is taken without a
meeting of stockholders. A similar provision is not contained in the
proposed Amended Articles of Incorporation of DTG because unanimous
written consent is required by the SDBCA.

STANDSTILL AGREEMENTS. In connection with the Cooperative's
acquisition of TCIC and Iway, the Cooperative entered into standstill
agreements (the "Standstill Agreements") with the former shareholders of
TCIC and of Iway (collectively, the "Sellers"). These Standstill
Agreements would be applicable to shares of DTG Delaware Common Stock
issued to the Sellers in connection with the Merger, and would restrict
the Sellers' abilities to dispose of shares of DTG Delaware Common Stock
and would require them to refrain from certain other actions related to DTG
Delaware Common Stock. For a description of these restrictions, see
"ADDITIONAL SECURITIES OF THE RESULTING COMPANY--Standstill Agreements."
The Standstill Agreements could have the effect of delaying, deterring or
preventing a change in control of DTG Delaware.

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COMPARISON OF RIGHTS OF SHAREHOLDERS OF DTG TO RIGHTS OF STOCKHOLDERS OF
DTG DELAWARE

If the Merger is consummated, DTG would be merged with and into DTG
Delaware and DTG shareholders would become stockholders in DTG Delaware.
DTG would be governed by the laws of South Dakota, its Amended Articles of
Incorporation and its Bylaws. DTG Delaware is incorporated under and is
governed by the laws of Delaware, its Certificate of Incorporation and its
Bylaws.

While the rights and privileges of shareholders of a South Dakota
corporation are, in many instances, comparable to those of stockholders of
a Delaware corporation, there are differences. The following is a summary
of certain significant differences between the provisions of the
Certificate of Incorporation of DTG Delaware and the proposed Amended
Articles of Incorporation of DTG, as well as differences between the
corporation laws of Delaware and South Dakota.

AMENDMENTS TO GOVERNING DOCUMENTS. With certain exceptions, an
amendment to the articles of incorporation of a South Dakota corporation
must first be adopted by a resolution of its board of directors. The
directors' resolution must set forth the proposed amendment and direct that
it be submitted to a vote of the shareholders at either an annual or a
special meeting of shareholders. The amendment is adopted upon receiving
the affirmative vote of a majority of the shares entitled to vote, unless
the articles of incorporation specify a higher percentage, or unless any
class of shares is entitled to vote as a class on the amendment, in which
case the amendment is adopted upon receiving the affirmative vote of the
holders of a majority of shares of each class entitled to vote as a class
and of the total number of shares entitled to vote.

The SDBCA provides that shares of one class are entitled to vote as a
class if the amendment would do any of the following: (i) increase or
decrease the aggregate number of authorized shares of such class; (ii)
increase or decrease the par value of the shares of such class; (iii)
effect an exchange, reclassification or cancellation of all or parts of the
shares of such class; (iv) effect an exchange, or create a right of
exchange, of all or any part of the shares of another class into the shares
of such class; (v) change the designations, preferences, limitations or
relative rights of the shares of such class; (vi) change the shares of such
class, whether with or without par value, into the same or a different
number of shares, either with or without par value, of the same class or
another class or classes; (vii) create a new class of shares having rights
and preferences prior and superior to the shares of such class, or increase
the rights and preferences of any class having rights and preferences prior
or superior to the shares of such class; (viii) in the case of a preferred
or special class of shares, divide the unissued shares of such class into
series and fix and determine the designation of such series and the
variations in the relative rights and preferences between the shares of

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such series or authorize the board of directors to do so; (ix) limit or
deny the existing preemptive rights of the shares of such class; or (x)
cancel or otherwise affect dividends on the shares of such class which have
accrued but have not been declared.

Under the SDBCA, a corporation's bylaws may be amended or repealed by
the board of directors, unless the corporation's articles of incorporation
reserve that power to the shareholders of the corporation. The Bylaws of
DTG provide that they may be altered or repealed at any regular or special
meeting of the shareholders subject to certain notice requirements, or at
any regular or special meeting of the board of directors.

For a Delaware corporation to amend its certificate of incorporation,
its board of directors must first adopt a resolution declaring the
advisability of the proposed amendment and submitting the proposed
amendment to the stockholders at either an annual or special meeting of
stockholders. The amendment is adopted upon the affirmative vote of a
majority of the outstanding stock entitled to vote, and a majority of each
class entitled to vote as a class on the amendment, unless a higher vote is
required by the corporation's certificate of incorporation. If an
amendment would increase or decrease the aggregate number of authorized
shares of a class of stock or change the par value for shares of a class,
such shares are entitled to vote as a class on the amendment. Furthermore,
if an amendment would alter the powers, preferences or special rights of a
particular class or series of stock so as to affect them adversely, that
class or series has the power to vote as a class, notwithstanding the
absence of any specifically enumerated power in the certificate of
incorporation. The Delaware Law also states that the stockholders have the
power to adopt, amend or repeal the bylaws of a corporation, provided that
the certificate of incorporation also may confer such power on the board of
directors. Even if the board has the power to amend the bylaws, however,
this does not divest the stockholders of that power. DTG Delaware's
Certificate of Incorporation provides that the board of directors may amend
the Bylaws of DTG Delaware.

Both the proposed Amended Articles of DTG and the Certificate of
Incorporation of DTG Delaware require a supermajority vote to amend certain
provisions of each charter and for stockholders to amend the Bylaws.
(See "THE CONVERSION--Other Provisions Affecting Control of DTG--
Restrictions on Amendments to Articles of Incorporation and Bylaws of DTG
and "THE MERGER--Other Provisions Affecting Control of DTG Delaware--
Restrictions on Amendments to Certificate of Incorporation and Bylaws of
DTG Delaware.")

VOTE REQUIRED FOR EXTRAORDINARY TRANSACTIONS. The SDBCA requires that
the principal terms of a merger first be approved by the board of directors
of each corporation that is a party to the merger. Thereafter, the
shareholders of each corporation, after receiving a specified notice at
least 20 days in advance of a special or annual meeting of shareholders,

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must approve the merger. The merger is approved by the shareholders of a
corporation upon the affirmative vote of a majority of the shares entitled
to vote thereon, unless any class of shares is entitled to vote as a class
on the merger, in which case, as to that corporation, the merger is
approved upon receiving the affirmative vote of the holders of a majority
of the shares of each class entitled to vote as a class and of the total
number of shares entitled to vote on the merger. A class of shares is
generally entitled to vote as a class on a merger if the plan of merger
contains any provision that would entitle that class to vote as a class if
it was contained in a proposed amendment to the articles of incorporation,
as described above. No vote of shareholders of either corporation involved
in a merger is required where one corporation that is a party to the merger
owns at least 90 percent of the outstanding shares of the other corporation
involved in the merger and the corporation owning 90 percent or more of the
outstanding shares will be the surviving corporation in the merger.

Under the Delaware Law, a plan of merger must also first be approved
by the board of directors of each corporation that is a party to the merger
and then submitted for a vote of the stockholders of the affected
corporations. Stockholders must receive notice of the meeting at least 20
days prior to the meeting. A plan of merger is approved upon the majority
vote of the outstanding shares of each corporation entitled to vote on the
merger. Unlike the SDBCA, the Delaware Law provides that the stockholders
of a corporation are not required to approve a merger if (i) the plan of
merger does not amend the corporation's certificate of incorporation in any
respect, (ii) each share of stock of that corporation immediately
outstanding will continue as one identical share of stock of the surviving
corporation after the merger and (iii) either (A) no shares of common stock
(or securities convertible into such shares) of the surviving corporation
are to be issued or delivered under the plan of merger or (B) the
authorized unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of merger,
plus those initially issuable upon conversion of any other shares,
securities or obligations to be issued or delivered under the plan, do not
exceed 20 percent of the shares of common stock of such constituent
corporation outstanding immediately prior to the effective date of the
merger.

Both the SDBCA and the Delaware Law contain similar vote requirements
applicable to proposed sales of all or substantially all of a corporation's
assets and property outside the ordinary course of business.

STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS. Section 203 of
the Delaware Law prohibits a publicly held corporation from engaging in a
"business combination" with an "interested stockholder" for a period of
three years from the time that such person becomes an "interested
stockholder," subject to certain exceptions as more fully described in
"THE MERGER--Statutory Provisions Affecting Control of DTG Delaware."

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The SDBCA does not contain a similar provision. However, the SDBCA
does contain other provisions governing business combinations which are
not contained in Delaware Law. For a description of such provisions, see
"THE CONVERSION--Statutory Provisions Affecting Control of DTG."

DISSENTERS' AND APPRAISAL RIGHTS. Under both the SDBCA and the
Delaware Law, a stockholder of a corporation participating in certain major
corporate transactions such as mergers may, under varying circumstances, be
entitled to dissenters' or appraisal rights pursuant to which the
stockholder may receive cash in the amount of the fair value of the
stockholder's shares in lieu of the consideration the stockholder would
otherwise receive in the transaction. Under the Delaware Law, appraisal
rights are not available with respect to the sale, lease or exchange of all
or substantially all of the assets of a corporation. With respect to
mergers and consolidations, appraisal rights also are not available under
the Delaware Law as to shares that are either listed on a national
securities exchange or designated as a national market system security on
The Nasdaq Stock Market or that are held of record by more than 2,000
holders if, in either case, the stockholders receive only shares of the
surviving corporation or shares of any other corporation which are either
listed on a national securities exchange or designated as a national
market system security on The Nasdaq Stock Market or held of record by
more than 2,000 holders, plus cash in lieu of fractional shares.

In addition, appraisal rights are not available under the Delaware Law
to the stockholders of a corporation surviving a merger if no vote of the
stockholders of the surviving corporation is required to approve the
merger, such as where the plan of merger does not amend the existing
certificate of incorporation, each share of the surviving corporation
outstanding prior to the merger is an identical share after the merger, and
the number of shares to be issued in the merger does not exceed 20 percent
of the shares of the surviving corporation outstanding immediately prior to
the merger and if certain other conditions are met.

The limitations on the availability of dissenters' rights under the
SDBCA are different from those under the Delaware Law. Shareholders of a
South Dakota corporation (such as DTG) have the right to dissent from, and
to receive payment for their shares in the event of certain transactions
to which the corporation is a party, including mergers, sales of all or
substantially all of the corporation's assets outside the ordinary course
of business and certain amendments to the corporation's articles of
incorporation that adversely affect the rights of the shareholders' shares.
The right to dissent does not apply to the shareholders of a corporation
surviving a merger if the vote of the shareholders of the surviving
corporation was not required to approve the merger. As discussed above,
shareholders of each South Dakota corporation involved in a merger
generally must approve the merger, except where one of the corporations
owns at least 90 percent of the outstanding stock of the other corporation
involved in the merger and the corporation owning such stock will be the

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surviving corporation. Unlike the Delaware Law, the SDBCA does not provide
other exceptions from the right to dissent from certain transactions.

SIZE OF THE BOARD OF DIRECTORS. The Delaware Law permits the board of
directors of a Delaware corporation to change the authorized number of
directors by amendment to the corporation's bylaws or in the manner
provided in the bylaws. However, if the number of directors is set in the
corporation's certificate of incorporation, the number of directors may be
changed only by amending the certificate of incorporation. DTG Delaware's
Certificate does not fix the number of directors, except to say that the
number of directors shall be as fixed by a resolution of the Board of
Directors. DTG Delaware's Bylaws provide that the number of directors
shall not be less than three and shall be determined from time to time by
resolution of the Board of Directors. As a result, the Board of Directors
of DTG Delaware may change the authorized number of directors without
stockholder approval by resolution. As discussed below, the SDBCA requires
that the board of directors consist of at least nine members before the
board can classify itself into different classes. The Delaware Law does
not contain such a requirement.

Under the SDBCA, the articles of incorporation or bylaws of a
corporation may fix the number of directors. However, the corporation's
articles of incorporation must establish the number of directors on the
corporation's initial board of directors. If the bylaws fix the number of
directors, the number of directors may thereafter be increased or decreased
from time to time by amendment to the bylaws. However, if the bylaws do
not set the number of directors, then the original designation in the
articles of incorporation control. The proposed Amended Articles of
Incorporation of DTG provide that the number of DTG directors shall be as
fixed in a bylaw but shall not be less than nine, provided that any
amendment to such a bylaw must be adopted by the affirmative vote of at
least 80 percent of the entire Board of Directors of DTG.

CUMULATIVE VOTING AND CLASSIFIED BOARD OF DIRECTORS. In an election
of directors under cumulative voting, each share of stock normally having
one vote is entitled to a number of votes equal to the number of directors
to be elected. A stockholder may cast all such votes for a single nominee
or may allocate the votes among as many nominees as the stockholder may
choose. Without cumulative voting, the holders of a majority of shares
present at an annual or special meeting held to elect directors would have
the power to elect all of the directors to be elected at that meeting and
no nominee could be elected without the support of a majority of the shares
voting at the meeting.

Under the Delaware Law, cumulative voting in the election of directors
is not mandatory. While Delaware corporations may include in their
certificate of incorporation a provision allowing for such cumulative
voting rights, DTG Delaware's Certificate of Incorporation does not permit
cumulative voting. Under the South Dakota Constitution and the SDBCA,

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cumulative voting is a right for the shareholders of all corporations.
South Dakota corporations cannot eliminate cumulative voting in the
election of directors through their articles of incorporation, bylaws or
otherwise. As such, shareholders of DTG would be able to elect directors
by cumulative voting.

A classified board is one for which a certain number, but not all, of
the directors are elected on a rotating basis each year. A classified
board makes changes in the composition of the board of directors more
difficult and thus a potential change in control of a corporation more
difficult. The Delaware Law permits, but does not require, a classified
board of directors, divided into as many as three classes. DTG Delaware's
Certificate of Incorporation provides that the Board of Directors is
classified into three classes. Thus, in any given year, only one-third of
the directors would be elected by the stockholders. A director elected to
the Board of Directors would serve a three-year term (unless earlier
removed as discussed below).

The SDBCA also permits a corporation with a board of directors
consisting of at least nine persons to divide its board of directors into
as many as three classes. The proposed Amended Articles of Incorporation
of DTG provide that DTG's Board is divided into three classes, each of
which will serve three-year terms.

REMOVAL OF DIRECTORS. Under the Delaware Law, a director of a
corporation generally may be removed, with or without cause, by the holders
of a majority of the shares entitled to vote at an election of directors.
However, unless the corporation's certificate of incorporation provides
otherwise, if the corporation's board of directors is classified, directors
may be removed only for cause. Also, in the case of a corporation having
cumulative voting, if less than the entire board is to be removed, no
director may be removed without cause if the votes cast against the
director's removal would be sufficient to elect the director if then
cumulatively voted at an election of the entire board of directors, or, if
there are classes of directors, at any election of the class of directors
of which the director is a part. DTG Delaware's Certificate of
Incorporation provides that directors may be removed only for cause. DTG
Delaware's Certificate does not provide for cumulative voting.

The SDBCA does not specifically provide for the removal of directors.
Under the proposed Amended Articles of Incorporation of DTG, subject to the
rights of any class of stock then outstanding, any director may be removed
from office, but only for cause and only by shareholder action. Generally,
the vote for removal must be by a majority of shares entitled to vote on
the election of directors. However, if less than the entire Board is to be
removed, no single director may be removed if the votes cast against his
removal would be sufficient to elect the director if then cumulatively
voted at an election of the class of directors of which the director is a
part. "Cause" for removal is only present in the circumstances specified

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in the proposed Amended Articles of Incorporation of DTG. (See "THE
CONVERSION--Other Provisions Affecting Control of DTG.")

FILLING VACANCIES ON THE BOARD OF DIRECTORS. Under the Delaware Law,
vacancies may be filled by a majority of the directors then in office (even
though less than a quorum) unless otherwise provided in the corporation's
certificate of incorporation or bylaws. As permitted by the Delaware Law,
the DTG Delaware Certificate of Incorporation provides that vacancies shall
be filled by a majority of the directors then in office, subject to the
rights of the holders of any class or series of preferred stock then
outstanding. In the case of a corporation (such as DTG Delaware) whose
board of directors is divided into classes, a newly appointed director
holds office for the remainder of the term of the director that the newly
appointed director replaced.

The Delaware Law also provides that if, at the time of filling any
vacancy, the directors then in office constitute less than a majority of
the board (as constituted immediately prior to any increase), the Delaware
Court of Chancery may, upon application of any holder or holders of at
least 10 percent of the total number of the shares at the time outstanding
having the right to vote for directors, summarily order a special election
to be held to fill any such vacancy or to replace directors chosen by the
board to fill such vacancies.

Under the SDBCA, any vacancy on the board of directors may be filled
by the affirmative vote of a majority of the remaining directors, though
less than a quorum. Each director elected to fill a vacancy is elected for
the unexpired part of the term of the person's predecessor.

INTERESTED DIRECTOR TRANSACTIONS. Under Delaware law, contracts or
transactions between a corporation and one or more of its directors, or
between a corporation and any other entity in which one or more of its
directors have a financial interest or are directors, are not void or
voidable simply because of such interest or because the director is present
at a meeting of the board which authorizes or approves the contract or
transaction, provided that either: (i) the material facts as to the
director's interest are disclosed to or known by the board (or committee)
and the board (or committee) in good faith authorizes the transaction by a
majority vote of "disinterested" directors; (ii) the stockholders approve
the contract or transaction in good faith after full disclosure of the
material facts relating to the director's interest; or (iii) the contract
or transaction was "fair" to the corporation at the time it was approved.
The SDBCA does not contain a similar provision.

DERIVATIVE SUITS. In Delaware, a stockholder may bring a derivative
action if the person was a stockholder at the time of the transaction in
question. A stockholder may not bring a derivative action unless the
stockholder first makes a demand on the corporation that it bring suit
and the corporation refuses, unless the demand would have been "futile."

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Under the SDBCA, a shareholder-plaintiff in a derivative action must
allege in the complaint that the person was a shareholder at the time of
the transaction or that the person's shares devolved on the person
thereafter by operation of law. The complaint also must set forth the
efforts, if any, that the shareholder made to obtain the action the
shareholder desires from the directors and, if necessary, from the
shareholders, and the shareholder's reasons for the shareholder's failure
to obtain that action or not making the effort.

POWER TO CALL SPECIAL STOCKHOLDERS' MEETING. Under the Delaware Law, a
special meeting of stockholders may be called by the board of directors or
by any other person authorized to do so in the certificate of incorporation
or the bylaws. The DTG Delaware Bylaws provide that special meetings may
be called by an executive officer of DTG Delaware whenever directed by the
Board of Directors.

Under the SDBCA, a special meeting of shareholders may be called by
the president, the board of directors, the holders of shares of not less
than 10 percent of the shares entitled to vote at such meeting or such
additional persons as are authorized by the articles of incorporation. The
proposed Amended Articles of Incorporation of DTG authorize any executive
officer of DTG to call a special meeting whenever directed by the Board of
Directors.

STATEMENT OF PURPOSE. Under the Delaware Law, a corporation's
certificate of incorporation may provide that the corporation is formed for
the purpose of engaging in any one or more lawful acts for which
corporations may be organized under Delaware law. The South Dakota
Constitution, however, provides that no corporation shall engage in any
business other than that expressly stated in its articles of incorporation.

INCREASE OF INDEBTEDNESS. Under the South Dakota Constitution and
the SDBCA, a corporation may not increase its indebtedness without first
obtaining approval of the shareholders at a meeting held after not less
than 60 days' notice. The Delaware Law does not contain a similar
provision. The proposed Amended Articles of Incorporation of DTG provide
that DTG may incur up to $100,000,000 in debt without the necessity of
seeking shareholder approval.

LOANS TO NON-EMPLOYEE DIRECTORS. Under the SDBCA, a corporation may
not lend money or use its credit to assist a director who is not also an
employee of the corporation without shareholder approval. The Delaware Law
does not contain a similar provision.

INDEMNIFICATION AND LIMITATION OF LIABILITY

LIMITATION OF LIABILITY. The SDBCA and the Delaware law permit
corporations to adopt a provision in their articles or certificate
of incorporation eliminating, with certain exceptions, the personal

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liability of a director to the corporation or its stockholders for monetary
damages for breach of the director's fiduciary duty as a director. Under
the Delaware Law, a corporation may not eliminate or limit director
monetary liability for (i) breaches of the director's duty of loyalty to
the corporation or its stockholders, (ii) acts or omissions not in good
faith or involving intentional misconduct or a knowing violation of law,
(iii) unlawful dividends, stock repurchases or redemptions, or (iv)
transactions from which the director received an improper personal benefit.
This provision also may not limit a director's liability for violation of,
or otherwise relieve a corporation or its directors from the necessity of
complying with, federal or state securities laws, or affect the
availability of non-monetary remedies such as injunctive relief or
rescission. DTG Delaware's Certificate of Incorporation contains a
provision stating that directors shall not be personally liable for
monetary damage to the corporation, except to the extent required by the
Delaware Law.

The SDBCA does not permit the elimination of monetary liability where
such liability is based on: (i) a breach of the director's duty of loyalty
to the corporation or its shareholders for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law; (ii) improper dividends or distributions, unauthorized purchases of
shares, improper loans or commencing business before the corporation
obtains its minimum capital; or (iii) any transaction from which the
director derived an improper personal benefit. The proposed Amended
Articles of Incorporation of DTG eliminate the liability of directors to
DTG to the full extent permissible under the SDBCA.

INDEMNIFICATION. South Dakota and Delaware have similar laws
respecting indemnification by a corporation of its directors, officers,
employees and other agents. There are nonetheless certain differences
between the laws of the two states.

The Delaware Law generally permits indemnification of expenses
incurred in the defense or settlement of a derivative or third-party
action, provided that there is a determination by a majority vote of
disinterested directors (even though less than a quorum) or, if there are
no such directors, or if such directors so direct, by independent legal
counsel in a written opinion or by the stockholders, that the person
seeking indemnification acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to a criminal proceeding, which the person
had no reasonable cause to believe the person's conduct was unlawful.
Without court approval, however, no indemnification may be made in respect
of any derivative action in which the person is adjudged liable to the
corporation. The Delaware Law requires indemnification of expenses when
the individual being indemnified has successfully defended the action on
the merits or otherwise. DTG Delaware's Certificate of Incorporation
provides that directors and executive officers shall be indemnified to the

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full extent provided by the Delaware Law. As to other persons who are not
directors or executive officers but who may be eligible for
indemnification, the Certificate of Incorporation provides that such
persons may be indemnified by DTG Delaware to the extent permissible by
law and the Certificate and authorized by the Board of Directors. The
Certificate further provides that DTG Delaware may purchase and maintain
insurance to cover such expenses, whether or not indemnification would be
permissible under the Delaware Law in the absence of insurance.

Like the Delaware Law, the SDBCA permits indemnification of expenses
incurred in derivative or third-party actions, except that with respect to
derivative actions, no indemnification may be made when a person is
adjudged liable to the corporation for negligence or misconduct in the
performance of that person's duty to the corporation, unless a court
determines that the person is entitled to indemnity for expenses in view of
all the circumstances, and then indemnification may be made only to the
extent that the court determines.

Indemnification is permitted by the SDBCA only for acts that the
person seeking indemnification in good faith believed to be in the best
interests of the corporation and its shareholders, and with respect to a
criminal proceeding, that the person had no reasonable cause to believe the
person's conduct was unlawful, as determined by a majority vote of a quorum
of disinterested directors, independent legal counsel in a written opinion
(whether or not a quorum of disinterested directors is obtainable) or by
the shareholders. Indemnification of expenses is required when the
individual has successfully defended the action on the merits. The
proposed Amended Articles of Incorporation of DTG contain a clause that
directors and executive officers shall be indemnified to the full extent
provided by law and that other persons who are not directors or executive
officers but who may be eligible for indemnification may be indemnified by
DTG to the extent permissible by law and the Articles and authorized by the
Board of Directors.

It is intended that DTG Delaware would enter into an Indemnity
Agreement with each of its directors and executive officers effective upon
consummation of the Merger, which may provide rights additional to those
that would be provided by the Delaware Law or DTG Delaware's Certificate of
Incorporation or Bylaws (See "INDEMNITY AGREEMENTS.")

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of DTG and DTG Delaware pursuant to the foregoing provisions, or
otherwise, DTG and DTG Delaware have been advised in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

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FEDERAL INCOME TAX CONSEQUENCES

Following is a summary of the federal income tax consequences
resulting from the Merger. The Cooperative, on behalf of DTG, and DTG
Delaware have not requested a private letter ruling from the Internal
Revenue Service as to the federal income tax consequences of the Merger
and, thus, there can be no assurance that the transaction would constitute a
tax-free exchange for federal income tax purposes. However, the
Cooperative has requested and received the opinion of Olsen Thielen & Co.,
Ltd. as to the federal income tax consequences of the Merger.

In particular, Olsen Thielen & Co., Ltd. has advised the Cooperative
that the merger of DTG with and into DTG Delaware would constitute a
reorganization within the meaning of Section 368(a)(1)(F) of the Code, and
each corporation would be a "party to a reorganization" within the meaning
of Section 368(b) of the Code, and that:

(i) no gain or loss would be recognized to DTG Delaware
upon receipt of the assets of DTG in exchange for the DTG
Delaware Common Stock and the assumption by DTG Delaware of the
liabilities of DTG;

(ii) the basis of the assets of DTG in the hands of DTG
Delaware would be the same as the basis of those assets in the
hands of DTG immediately prior to the Merger;

(iii) the holding period of the assets of DTG Delaware would
include the holding period of those assets in the hands of DTG
immediately prior to the Merger;

(iv) no gain or loss would be recognized by the shareholders
of DTG upon the exchange of their rights to receive shares of DTG
Common Stock for shares of DTG Delaware Common Stock;

(v) the basis of the DTG Delaware Common Stock to be received
by shareholders of DTG would be the same as the basis of the
rights to receive shares of DTG Common Stock surrendered in the
Merger; and

(vi) the holding period of the DTG Delaware Common Stock
received by shareholders of DTG would include the holding period
of the rights to receive shares of DTG Common Stock surrendered
in the Merger.

EACH SHAREHOLDER OF DTG SHOULD CONSULT A PROFESSIONAL TAX ADVISER
ON THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE MERGER TO SUCH
SHAREHOLDER.

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ACCOUNTING TREATMENT

The Merger would be accounted for as a capital restructuring.
Therefore, the Merger would not affect the valuation of the assets or
liabilities of DTG in the hands of DTG Delaware, nor would DTG Delaware
record any income or expense as a result of the Merger.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited PRO FORMA condensed consolidated balance sheet
as of March 31, 1997 and the unaudited PRO FORMA condensed consolidated
statement of operations for the three months ended March 31, 1997 and the
year ended December 31, 1996, include operations of the Cooperative and
TCIC and Iway as if the acquisition of these companies had occurred on January
1, 1996. The unaudited PRO FORMA condensed consolidated financial statements
also give effect to the Conversion or the Conversion and the Merger. The PRO
FORMA information is based on the historical financial statements of the
Cooperative, giving effect to the proposed Conversion or the Conversion and
the Merger. The PRO FORMA financial information for the Resulting Company
will be identical if only the Conversion is adopted or if both the Conversion
is adopted and the Merger is approved. The PRO FORMA financial information
gives effect to the Conversion or the Conversion and the Merger as if the
Conversion or the Conversion and the Merger occurred on January 1, 1996.

The PRO FORMA financial statements were prepared using a conversion
ratio of one share of Resulting Company common stock for each share of
Cooperative Common Stock, 80.8216445 shares of Resulting Company common
stock for each share of Preferred Stock and 0.2 of a share of Resulting
Company common stock for each Capital Credit. All PRO FORMA share and per
share information was calculated assuming the issuance of 1,051,013 shares
of Resulting Company common stock in the Conversion and/or the Merger and
assuming no shareholder of DTG asserts dissenters' rights in connection
with the Merger. These numbers have been rounded for convenience of
presentation.

The PRO FORMA financial statements may not be indicative of the
results that actually would have occurred if the acquisitions and the
Conversion or the Conversion and the Merger had been in effect on the dates
indicated or which may be attained in the future. The PRO FORMA financial
statements should be read in conjunction with the financial statements and
notes thereto of the Cooperative included as Appendix G and Appendix H to
this Prospectus and Ballot/Proxy Statement. No historical financial
statements of DTG are included in this Prospectus and Ballot/Proxy
Statement since DTG would be the successor entity to the Cooperative if
the Conversion is adopted and does not exist as an entity separate from
the Cooperative. No historical financial statements of DTG Delaware are
included in this Prospectus and Ballot/Proxy Statement since DTG Delaware
has no significant assets or liabilities and has no operating history.

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<PAGE>

<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
===========================================================================

ASSETS
<CAPTION>
PRO FORMA PRO FORMA
ACQUISITION ACQUISITION CONVERSION CONVERSION
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,650,922 $ $ 2,650,922 $ $ 2,650,922
Temporary Cash Investments 1,249,000 1,249,000 1,249,000
Accounts Receivable, Net 1,189,504 1,189,504 1,189,504
Deposit
Income Taxes Receivable 300,091 300,091 300,091
Materials and Supplies 590,392 590,392 590,392
Prepaid Expenses 126,912 126,912 126,912
----------- --------- ----------- ----------- -----------
Total Current Assets 6,106,821 -- 6,106,821 -- 6,106,821
----------- --------- ----------- ----------- -----------

INVESTMENTS AND OTHER ASSETS:
Excess of Cost Over Net Assets
Acquired 1,800,273 1,800,273 1,800,273
Other Intangible Assets 500,036 500,036 500,036
Deposits 61,905 61,905 61,905
Other Investments 47,576 47,576 47,576
Deferred Charges 475,579 475,579 475,579
----------- --------- ----------- ----------- -----------
Total Investments and Other
Assets 2,885,369 -- 2,885,369 -- 2,885,369
----------- --------- ----------- ----------- -----------

PROPERTY, PLANT AND EQUIPMENT, NET 14,608,404 -- 14,608,404 -- 14,608,404
----------- --------- ----------- ----------- -----------

TOTAL ASSETS $23,600,594 $ -- $23,600,594 $ -- $23,600,594
=========== ========= =========== =========== ===========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C>
CURRENT LIABILITIES:
Current Portion of Long-Term
Debt $ 697,700 $ $ 697,700 $ $ 697,700
Accounts Payable 471,844 471,844 471,844
Other Current Liabilities 745,949 745,949 745,949
----------- --------- ----------- ----------- -----------
Total Current Liabilities 1,915,493 -- 1,915,493 -- 1,915,493
----------- --------- ----------- ----------- -----------

LONG-TERM DEBT 15,279,176 -- 15,279,176 -- 15,279,176
----------- --------- ----------- ----------- -----------

DEFERRED CREDITS 171,822 -- 171,822 -- 171,822
----------- --------- ----------- ----------- -----------

STOCKHOLDERS' EQUITY:
Common Stock, No Par Value -- -- 5,953,864 5,953,864
Common Stock 26,060 26,060 (26,060) --
Preferred Stock 1,172,000 1,172,000 (1,172,000) --
Patronage Capital 4,755,804 4,755,804 (4,755,804) --
Retained Earnings 280,239 280,239 -- 280,239
----------- --------- ----------- ----------- -----------
Total Stockholders' Equity 6,234,103 -- 6,234,103 -- 6,234,103
----------- --------- ----------- ----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $23,600,594 $ -- $23,600,594 $ -- $23,600,594
=========== ========= =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of the unaudited PRO FORMA
condensed consolidated financial statements.

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<PAGE>

<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
===========================================================================

<CAPTION>
PRO FORMA PRO FORMA
ACQUISITION ACQUISITION CONVERSION CONVERSION
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES $ 2,751,979 $ -- $ 2,751,979 $ -- $ 2,751,979
----------- ---------- ----------- ----------- -----------

COSTS AND EXPENSES 2,835,076 -- 2,835,076 -- 2,835,076
----------- ---------- ----------- ----------- -----------

OPERATING LOSS (83,097) -- (83,097) -- (83,097)
----------- ---------- ----------- ----------- -----------

OTHER INCOME (EXPENSES):
Interest and Dividend Income 48,072 48,072 48,072
Interest Expense (199,137) (199,137) (199,137)
----------- ---------- ----------- ----------- -----------
Net Other Income (Expenses) (151,065) -- (151,065) -- (151,065)
----------- ---------- ----------- ----------- -----------

LOSS BEFORE INCOME
TAXES (234,162) -- (234,162) -- (234,162)

INCOME TAX EXPENSE (BENEFIT) (36,499) -- (36,499) (45,501) (82,000)
----------- ---------- ----------- ----------- -----------

NET INCOME (LOSS) $ (197,663) $ -- $ (197,663) $ (45,501) $ (152,162)
=========== ========== =========== =========== ===========

NET LOSS PER SHARE $ (.14)
</TABLE>

The accompanying notes are an integral part of the unaudited PRO FORMA
condensed consolidated financial statements.

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<PAGE>
<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
YEAR ENDED DECEMBER 31, 1996
===========================================================================

<CAPTION>
PRO FORMA PRO FORMA
ACQUISITION ACQUISITION CONVERSION CONVERSION
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES $ 7,808,842 $1,665,336 $ 9,474,178 $ -- $ 9,474,178
----------- ---------- ----------- ----------- -----------

COSTS AND EXPENSES 7,730,992 1,934,514 9,665,506 -- 9,665,506
----------- ---------- ----------- ----------- -----------

OPERATING INCOME (LOSS) 77,850 (269,178) (191,328) -- (191,328)
----------- ---------- ----------- ----------- -----------

OTHER INCOME (EXPENSES):
Interest and Dividend Income 309,982 -- 309,982 309,982
Interest Expense (723,778) (187,314) (911,092) (911,092)
----------- ---------- ----------- ----------- -----------
Net Other Income (Expenses) (413,796) (187,314) (601,110) -- (601,110)
----------- ---------- ----------- ----------- -----------

INCOME (LOSS) BEFORE INCOME
TAXES (335,946) (456,492) (792,438) (792,438)

INCOME TAX EXPENSE (BENEFIT) (175,712) -- (175,712) (101,288) (277,000)
----------- ---------- ----------- ----------- -----------

NET INCOME (LOSS) $ (160,234) $ (456,492) $ (616,726) $ (101,288) $ (515,438)
=========== ========== =========== =========== ===========

NET LOSS PER SHARE $ (.49)
</TABLE>

The accompanying notes are an integral part of the unaudited PRO FORMA
condensed consolidated financial statements.

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<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
===========================================================================

ACQUISITION

The historical consolidated balance sheet includes the acquisition of
TCIC Communications, Inc. and I-Way Partners, Inc. as of December 1, 1996.

The unaudited pro forma acquisition condensed consolidated statement
of operations for the year ended December 31, 1996 includes the following
adjustments to reflect the acquisition of TCIC Communications, Inc. and
I-Way Partners, Inc. assuming the acquisition was consummated on January
1, 1996:

(1) Operations of TCIC Communications, Inc. and I-Way Partners, Inc. for
the period prior to their acquisition (the eleven months ended
November 30, 1996).

(2) Additional amortization of $112,500 of the excess of cost over net
assets acquired resulting from the acquisitions.

CONVERSION

The unaudited pro forma conversion condensed consolidated balance
sheet reflects the exchange of existing common stock, preferred stock and
capital credits for new shares of common stock assuming the conversion was
consummated on March 31, 1997.

The unaudited pro forma conversion condensed consolidated statements of
operations reflect a provision for income taxes using a 35% effective
rate.

The PRO FORMA per share loss was computed by dividing the PRO FORMA
net loss by the PRO FORMA number of shares of common stock outstanding
(1,051,013 shares).

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DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.

The following description of Dakota Cooperative Telecommunications,
Inc. (the "Cooperative") should be considered carefully in evaluating the
Cooperative and its business which will be assumed by the Resulting Company
if either the Conversion is consummated or if both the Conversion and the
Merger are consummated. In this Prospectus and Ballot/Proxy Statement, the
term "Company" means the Cooperative and its subsidiaries before the
Conversion, DTG and its subsidiaries after the Conversion and DTG Delaware
and its subsidiaries after the Conversion and the Merger.

Certain information included under this caption, particularly the
subheadings "Business," "Competition," "Regulation" and "Management's
Discussion and Analysis or Plan of Operation," may constitute or include
forward-looking statements, such as information relating to the Company's
1997 development plans and the effects of future regulation and
competition. Such forward-looking information involves important known
and unknown risks and uncertainties and other factors that may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to, uncertainties relating to
economic conditions, acquisitions and divestitures, government and
regulatory policies, the pricing and availability of equipment,
materials, inventories and programming, technological developments and
changes in the competitive environment in which the Company operates.
Members and holders of Preferred Stock and Capital Credits are cautioned
not to place undue reliance on the forward-looking statements made in this
Prospectus and Ballot/Proxy Statement, which speak only as of the date
hereof. See "RISK FACTORS" for a description of specific risks
applicable to the Company.

BUSINESS

The Cooperative was incorporated as a stock cooperative in South
Dakota on April 3, 1952, and has operated since that date at its current
location. The Cooperative was formed to consolidate several small
independent telephone companies in Southeastern South Dakota. The
Cooperative and its predecessors have been engaged in the
telecommunications business since 1903. From the date of formation through
1979, the Cooperative operated principally as a telephone company. Today
the Cooperative continues these operations and has expanded into cable
television and other related telecommunications services. In 1979, the
Cooperative expanded into CATV by building cable systems in its local

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markets. In the mid-1980s, the Cooperative expanded into the cellular
market through partnerships with cellular companies serving the
Cooperative's market area. The Cooperative sold its rural cellular
operations in 1994 and its Sioux Falls, South Dakota operations in 1995,
in an effort to focus on new personal communication service ("PCS")
technology. The Cooperative expanded its cable operations in 1995 and
1996, and further expanded with the acquisitions in 1996 of TCIC
(long distance and operator services) and Iway (Internet services),
as described below.

Today, the Company is a diversified telecommunications services
company. The Company provides wireline local and network access service,
long distance telephone service, operator-assisted calling service,
telecommunications equipment sale and leasing services, cable television
service and Internet access and related services.

The Company's local exchange services in South Dakota provide a
majority of the Company's revenues and income. In 1996, the Company made
the strategic decision to expand its operations into related
telecommunications businesses, including expansion of its cable television
services. During 1996, the Company acquired the assets of 19 additional
community cable television systems that were sold by three companies that
provided cable services for various communities in addition to the assets
purchased by the Company. In December 1996, the Company, through a wholly
owned subsidiary, merged with TCIC, a South Dakota-based provider of long
distance and operator services. Also in December 1996, in a similar
transaction, a wholly owned subsidiary of the Company merged with Iway,
South Dakota's largest Internet service provider. Both TCIC and Iway
continue to operate as wholly owned subsidiaries of the Company. The
Company intends to continue to explore expansion through strategic
acquisitions and business alliances in an effort to facilitate the growth
of the Company.

The telecommunications services industry is in the process of
substantial change, providing significant opportunities and risks to its
participants. Evolving and newly-developed technology, emerging
significant competition in the market for long distance and local
telecommunications services, as well as the increasing desire of customers
to have a majority or all of their various communication needs fulfilled by
one supplier, are causing many companies, including the Company, that
offer services primarily in one part of the communication services market
to seek to offer, either directly or through alliances with others, new
services to complement their primary service offerings.

A key growth strategy for the Company is to provide integrated
telecommunications services for its customers. These integrated services
include long distance, wireless, cable television, data and local telephone
service, as well as selected products and services that the Company will
remarket to customers as a single source provider. The Company is in the

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process of substantially upgrading its network and supporting facilities to
provide these integrated telecommunications services. The Company is
committed to attempting to grow through expansion of its existing
businesses, the development of value-added products and services and
selected acquisitions, although there can be no assurance that the Company
will be successful in attaining the profitable growth that is desired.
(See "RISK FACTORS.")

The principal executive offices of the Company are located at 29705
453rd Avenue, Irene, South Dakota 57037-0066. The telephone number is
(605) 263-3301.

TELECOMMUNICATIONS INDUSTRY OVERVIEW. From the formation of the
telephone industry in the late 1800s until the breakup of AT&T in 1984, the
telecommunications industry was largely dominated by AT&T through its
ownership and operation of the Bell operating companies. Rural areas which
provided little market share for AT&T were left to be served by small
independent telephone companies like the Company and its predecessors. In
1984, the structure of the industry was significantly changed by the AT&T
divestiture decree, which required the divestiture by AT&T of its 22 Bell
operating companies and divided the country into 201 LATAs (the "AT&T
Divestiture Decree"). The Bell operating companies were combined into
seven Regional Bell Operating Companies ("RBOCs") and were permitted to
provide local telephone service, local access service to long distance
carriers and long distance ("intra-LATA") service within the LATAs.
However, the Bell operating companies were prohibited from providing
inter-LATA long distance service, or service between LATAs.

The AT&T Divestiture Decree had a profound effect on the long distance
portion of the telecommunications industry in the United States. To
encourage competition in the long distance market, the AT&T Divestiture
Decree and certain FCC regulations require most LECs to provide carriers
with access to local exchange service that is "equal in type, quality and
price" to that provided by AT&T and to allow customers to select their
preferred long distance service provider. As a result, a large number of
companies specializing in long distance services entered the market.

For each long distance call, the originating and terminating LECs
charge an access fee to the long distance carrier. The long distance
carrier charges its customers a fee for its transmission of the call, a
portion of which covers the cost of the access fees charged by the LECs.
Access charges represent a significant portion of the Company's gross
revenues from its local exchange operations as well as a significant
portion of the Company's cost of providing long distance services.
Generally, the FCC and the states regulate such access charges. The FCC
has undertaken a comprehensive review of its regulation of LEC access
charges to better account for increasing levels of local competition.
(See "RISK FACTORS--Regulatory and Legislative" and "DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.--Regulation.")

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In 1996, President Clinton signed the 1996 Act. The 1996 Act
significantly changed the telecommunications industry by (among other
things) removing certain of the restrictions concerning the provision of
long distance service by the RBOCs. The RBOCs, however, are required
to obtain specific FCC approval and satisfy other conditions, including
a checklist of interconnection and other requirements applicable to
LECs, prior to providing long distance service in the regions in which
the LECs provide local exchange service. (See "RISK FACTORS--
Competition" and "--Regulatory and Legislative.") In addition, the 1996
Act opened local service telecommunications markets to competition by
preempting state and local laws to the extent that such laws prevent
competition in the provision of any telecommunications service, and by
imposing a variety of new duties on LECs to promote competition in local
exchange services. Among other requirements, all LECs, including the
Company, are required, on a non-discriminatory basis, to permit resale of
their telecommunications services without unreasonable restrictions or
conditions. The law and its accompanying regulations will enable the
Company, upon receipt of all necessary regulatory approvals, to resell
local telecommunications services in exchanges outside of the Company's
traditional service territories in addition to its existing long distance
services. The bases upon which such local services will be available to
carriers, such as the Company, for resale are to be determined in proceedings
of various state public utilities commissions. The Company believes that
the opening of the local telecommunications services market to resellers
provides the Company with significant growth opportunities while posing a
much smaller threat in its small rural local exchanges.

BUSINESS STRATEGY. The Company's business strategy is to attempt to
achieve continued growth by developing and marketing a broad array of
competitively priced telecommunications services. The Company's primary
objectives in pursuing this strategy are to:

(i) develop new and enhanced products and services through
upgrading the Company's existing network and expanding such
network, where feasible, into new markets. The Company is in the
process of substantially rebuilding its existing network
infrastructure, a process which it currently anticipates will be
completed in late 1997;

(ii) expand the Company's sales and marketing activities by
increasing its advertising and promotional activities and
enlarging its sales force to include direct and independent sales
representatives and telesales marketing agents who would target
commercial and residential accounts. The Company intends to
supplement its sales force by rebuilding its customer support
functions, enhancing its strong field service operations and
improving its direct billing capabilities; and

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(iii) expand its revenue base through selected acquisitions
of companies and facilities in the telecommunications and cable
television industries and other related industries.

There can be no assurance that the Company will be successful in
implementing its business strategy or attaining the profitable growth that
is desired. (See "RISK FACTORS.")

LOCAL TELECOMMUNICATIONS SERVICES. The Company's local
telecommunications services are provided directly by the Company. As of
December 31, 1996, the Company provided services to approximately 6,000
access lines located in nine counties in Southeastern South Dakota. The
Company's service area is generally rural, covering approximately 1,100
square miles, with an average of 5.4 access lines per square mile. The
Company is classified as a "rural company" under the 1996 Act and receives
Universal Service Fund monies, although such funds constituted less than
two percent of the Company's gross revenues in 1996.

The Company's local telecommunications services include: (i) local
dial tone; (ii) local private line and public telephone services (including
dial tone service for pay telephones owned by the Company and other pay
phone providers); (iii) data transmission services; (iv) the sale,
installation and maintenance of customer premise equipment; and (v) related
services such as directory listing services. In connection with the
Company's continuing strategy to provide a greater selection of value-added
products, the Company has also introduced advanced services such as Caller
ID, distinctive ringing, call waiting, call forwarding and three-way
calling. The Company also introduced its new Distance Learning program,
which the Company currently anticipates by the end of 1997 will link 14
local schools with the University of South Dakota's School of Education to
allow these local schools to share interactive televised classroom
sessions. The Company desires to implement a similar system to link
hospitals and medical clinics throughout rural communities in Southeastern
South Dakota.

In addition to providing local telephone service, the Company also
provides network access services to interexchange carriers IXCs.
Network access service refers to the link provided by LECs between a
customer's premises and the transmission facilities of other
telecommunications carriers, generally inter-LATA long distance carriers.
Examples of exchange access services include switched access and special
access services. Network access revenues are billed directly to long
distance carriers based on the number of conversation minutes generated by
their customers located in the Company's exchanges. The interstate portion
of these revenues is based on switched, common-line and special access
tariffs approved by the FCC. The tariffs imposed by the FCC include end-
user access charges to residential and business customers. State access is
based on similar rate structures that are subject to approval by the South

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Dakota Public Utilities Commission. Unlike many LECs, the Company does not
provide billing or collection services for interexchange long distance
carriers operating in the Company's local exchanges.

In addition to its current local service business, the Company also is
attempting to position itself to resell local exchange services in
exchanges where it currently does not operate. The Company has filed an
application in South Dakota, and currently intends in the future to file
applications with the public utilities commissions in several states,
seeking authorization to resell local exchange telecommunications products
and services. As of December 31, 1996, the Company obtained local exchange
resale authorization in South Dakota. The Company currently anticipates
that it will have filed applications for authorization to resell local
exchange telecommunications services and products in a number of states
surrounding South Dakota by the end of 1997. There can be no assurance
that the public utilities commissions in other states will authorize the
Company to resell local exchange telecommunications services and products
in those states.

Local service, including network access services, has historically
been the Company's core business. In 1996, revenues from local services
were approximately $4.3 million, representing approximately 55 percent of
the Company's aggregate revenues. The Company currently anticipates that
these revenues will continue to account for a substantial portion of the
Company's revenues in the future, subject to possible regulatory change.
(See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.") Although
network bypass and alternative local access telephone service providers are
potential competitive threats to the Company, no significant competition
has occurred to date.

LONG DISTANCE TELECOMMUNICATION SERVICES. The Company provides a wide
range of long distance telecommunications services to both residential and
commercial customers. These services include: (i) basic long distance
calling service; (ii) voice and data services; (iii) dedicated private line
services; (iv) collect calling, operator assistance and calling card
services, including prepaid calling cards; (v) toll free or 800 services;
and (vi) switched and dedicated Internet access services. The Company
offers these services individually and in combinations. Through combined
offerings, the Company is able to provide customers with added benefits
such as single billing, unified services for multi-location companies and
customized calling plans.

The Company operates its own switches, develops and implements its own
products, monitors and deploys its transmission facilities and prepares and
designs its own billing and reporting systems. All of the Company's
customers are identified by their telephone number, dedicated trunk or
validated access code, and have a rating which is used to determine the
price per minute that they pay on their outbound or inbound long distance
calls. Rates typically vary by the type of service, the volume of usage,

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the distance of the calls, the time of day that calls are made, the region
that originates the call and whether the product is being provided on a
promotional basis. In 1996, long distance revenues were approximately
$1,900,000, representing 24 percent of the Company's gross revenues. The
Company anticipates that its long distance revenues will grow significantly
in 1997, primarily as a result of its acquisition of TCIC in December 1996.

The Company provides long distance services in various ways. For
customers located in the Company's local South Dakota exchanges, long
distance services are provided primarily by the Company as part of its
local service. For customers located outside of the Company's local
exchanges or using operator assisted services, all long distance services
are provided by TCIC, the Company's wholly owned subsidiary. Currently
TCIC is authorized to sell long distance services in North Dakota, South
Dakota, Iowa, Nebraska, Minnesota, Montana and several other states.
However, most of the Company's long distance revenues are derived from
South Dakota. Internet long distance services are provided by Iway.

WIRELESS SERVICES. The Company intends to expand its existing
telecommunications services by providing PCS. PCS is, from a customer
standpoint, similar to existing cellular radio services ("cell phones").
The primary difference between PCS and cell phones is that PCS is a
digital service rather than an analog service (although current cellular
providers are moving to digital service as well) using different
technology and a different licensed portion of the frequency spectrum.
The FCC has, between December 1994 and January 1997, auctioned six
blocks of frequency for PCS that will compete with the two existing
cellular licensees in each of the FCC-designated markets.

On December 13, 1996, the FCC adopted rules to permit geographic
partitioning and spectrum disaggregation for all broadband PCS licensees.
These rules will give the existing licensees and potential new entrants
greater flexibility to determine how much spectrum they will need for the
geographic areas in which they provide service. The Company entered
negotiations with the winners of the A- and B-Block auctions for the
Minneapolis, Minnesota and the Des Moines, Iowa Major Trade Areas ("MTA")
to partition or disaggregate portions of the blocks that cover areas of
interest to the Company in Southeastern South Dakota, Northwestern Iowa and
Southwestern Minnesota. These negotiations have not reached a definitive
point, and there are no existing financial or other commitments between the
parties.

The Company has an agreement to share frequency with US WEST Wireless
for participation in the PCS D- and E-Block auction. This auction
concluded on January 14, 1997, with US WEST Wireless being the successful
bidder on BTA-421 (Sioux City) for the E-Block at $2.44 per population
point. The Company's agreement covers 104,900 population points in the
Company's area of interest in Southeastern South Dakota and Northwestern
Iowa outside of the municipal boundaries of Sioux City. This amounts to a

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commitment of $255,956 for the Company's share of the population points and
of the license. The Company has made an escrow deposit with US WEST
Wireless of $61,905, all of which is available for, and will be applied to,
the bid commitment. The Company has entered negotiations with US WEST
Wireless for additional portions of the BTA, but there is no assurance that
these negotiations will be successful for the Company.

Currently, there are no active PCS operations in the Company's
markets. The two cellular companies that cover the Company's market are
Western Wireless, Inc. d/b/a Cellular One and CommNet Cellular, Inc.
("CommNet"). Since there will be six PCS licensees competing with two
established cellular licensees in each market area, the Company expects the
wireless service market to be highly competitive. The Company initially
plans to focus on the use of its PCS services to provide fixed wireless
services in its existing markets and surrounding areas, and to use the
wireless services as a complement and supplement to other services offered
by the Company. The Company has not yet established its final PCS
development plan. There can be no assurance that the Company will be able
to make wireless services a profitable part of its overall business.

The Company had an interest in the Sioux Falls Cellular Limited
Partnership ("SFLP") together with several other independent telephone
companies and CommNet of Englewood, Colorado. The Company had a nine
percent limited partnership interest, and a 20 percent interest in Dakota
Systems, Inc. ("DSI"), a South Dakota corporation, which in turn held a
four percent minority general partner interest in SFLP. In 1995, the
Company sold, at a substantial gain over its initial investment, its
entire interest in SFLP and in DSI to the remaining partners and share-
holders of DSI. The Company's decision to sell its interest was
influenced by (i) the limited control and influence available because of
the structure of the limited partnership and (ii) Dakota's decision to
focus on new technology and new markets, including PCS.

INTERNET SERVICES. The Company is the largest provider of Internet
services in South Dakota. The Company provides a wide range of Internet
services including Internet access options (both dial-up and dedicated),
Web page development and hosting services, Internet applications
development and training and consulting services to businesses,
professionals and other on-line services providers. As of December 31,
1996, the Company hosted 93 Web sites with an additional 10 sites under
development. The Company estimates that its access services are used by
approximately 4,100 users.

In December 1994, Iway started its Internet operations, which the
Company purchased in December 1996. Iway operates as a wholly owned
subsidiary of the Company. The Company anticipates that in the future it
may attempt to consummate additional acquisitions to expand its Internet
service base.

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The Internet is a global collection of computer networks cooperating
to enable commercial organizations, educational institutions, government
agencies and individuals to communicate electronically, access and share
information and conduct business. The Internet originated with the
ARPAnet, a restricted network started in 1969 by the United States
Department of Defense Advanced Research Projects Agency to provide
efficient and reliable long distance data communications among the
disparate computer systems used by government-funded researchers and
organizations. Unlike other public and private telecommunications networks
that are managed by businesses, government agencies and other entities, the
Internet is a cooperative interconnection of many such public and private
networks. The networks that comprise the Internet are connected in a
variety of ways, including public switched telephone network and high-
speed, dedicated leased lines. Communications on the Internet are enabled
by TCP/IP, an Internet-working standard that enables communications across
the Internet regardless of the hardware and the software used.

Recent technological advances, including increased microprocessor
speeds and the development of easy-to-use graphic interfaces, combined with
cultural and business changes, have led to the Internet being integrated
into the activities of a multitude of individuals and the operations and
strategies of numerous business organizations. For example, a growing
number of employees within organizations have access to corporate networks,
thereby increasing the amount of electronic communication both within and
between organizations. In addition, the rapid growth of the installed base
of home personal computers equipped with communication devices such as
modems has created the ability to communicate electronically from home.
These technological and business trends have led to an increase in the
number of on-line services and Internet access providers.

More recently, the development of World Wide Web ("Web")technology and
associated easy-to-use software has made the Internet easier to navigate
and more accessible to a larger number of users and for a broader range of
applications. While there has been significant media interest in the use
of the Internet by consumers, business and professional organizations
currently represent a more significant percentage of Internet use. These
organizations increasingly are recognizing that the Internet can enhance
communications, both among their geographically distributed locations and
employees, and with their business partners and customers. In addition,
businesses are realizing that the Internet can enable many applications
which were previously unavailable or cost-prohibitive. For example, small
and medium-sized businesses can establish and maintain a global presence
and market and distribute their products and services electronically.

Despite the growing interest in the many commercial uses of the
Internet, the Company believes that many businesses, especially small
businesses, have been deterred from purchasing Internet access services for
a number of reasons, including: (i) inconsistent quality of service; (ii)

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lack of availability of cost-effective high-speed options; (iii) limited
number of local access points for corporate users and customers; (iv)
inability to integrate business applications on the Internet; (v) need to
deal with multiple and frequently incompatible vendors; (vi) inadequate
protection of the confidentiality of stored data and information moving
across the Internet; and (vii) lack of tools to simplify Internet access
and use.

To address the needs of small businesses in South Dakota and
surrounding states, the Company offers a comprehensive range of Internet
access options, applications, training and consulting services tailored to
meet the needs of small and medium-sized businesses and their customers.
The products and services provided by the Company include dial-up and
dedicated access, Web page development, Web page hosting, client software
and security products and training. This array of products and services
enables Internet users to purchase access, applications and services,
including integration services, through a single source. The Company's
products and services are supported by a technical staff that it believes
is highly experienced in Internet operations and services, especially as
they relate to small businesses. The Company's objective is to continue to
develop and market value-added Internet services in the smaller markets in
South Dakota and the surrounding states. Rates for the Company's Internet
services vary depending on the type and range of service options.

CABLE TELEVISION SERVICES. Through its subsidiaries, the Company owns
and operates 26 cable television systems located in Southeastern South
Dakota, Northwestern Iowa and Southwestern Minnesota ranging in capacity
from 300 to 750/MHZ. These systems provide service to approximately 5,500
subscribers. No single community accounts for more than 12 percent of the
Company's total basic CATV subscribers. The Company believes that this
geographic diversity reduces its exposure to adverse economic, competitive
and regulatory factors in any particular community. The Company has been
engaged in the cable television business since 1979. In 1996, as part of
its expansion strategy, the Company acquired the assets of 19 of its total
cable television systems, accounting for approximately 3,600 of the 5,500
current subscribers. The Company anticipates that in the future it may
attempt to consummate additional acquisitions to expand its customer base
and service markets.

Cable television systems receive video, audio and data signals
transmitted by nearby television and radio broadcast stations, terrestrial
microwave relay services and communications satellites. Such signals are
then amplified and distributed by coaxial cable and optical fiber to the
premises of customers who pay a monthly fee for the service. The Company
does not hold any dedicated spectrum licenses issued by the FCC related to
its cable television operations, although the Company does hold all other
necessary licenses to operate its systems. The number of channels provided

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by the Company varies by service area. The sources of the Company's cable
television programming consist of the signals received from national
television networks, local and other independent television stations that
operate in or near the Company's service areas, satellite-delivered
non-broadcast channels and public service channels and announcements.

The Company provides programming to its subscribers pursuant to
contracts with programming suppliers. The Company generally pays a flat
monthly fee per subscriber for programming on its basic and premium
services. A number of programming suppliers provide volume discount
pricing structures and/or offer marketing support to the Company through
the Company's participation in a purchasing pool with other small cable
system operators. The Company's programming contracts generally are for
fixed periods of time ranging from three to 10 years and are subject to
negotiated renewal. The costs to the Company to provide cable programming
have increased in recent years and are expected to continue to increase due
to additional programming being provided to basic subscribers, increased
costs to produce or purchase cable programming, inflationary increases and
other factors. Effective in May 1994, the FCC's rate regulations under the
1992 Cable Act permitted operators to pass through to customers increases
in programming costs in excess of the inflation rate. Management believes
that the Company will continue to have access to programming services at
reasonable price levels, although there can be no assurance that the
Company can in the future maintain its access at reasonable price levels.
(See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.")

Monthly fees for cable services vary depending on the nature and type
of service. The Company offers a basic cable service package (primarily
comprised of local broadcast signals, popular national satellite channels
and public, educational and governmental access channels) and premium movie
channels. The monthly fee for basic service generally ranges from $17.95
to $22.74 depending on the number of channels offered, and the monthly
service fee for premium channels is $7.95 per channel. Also, the Company
generally assesses a nonrecurring installation charge of up to $35.00.
Customers are free to discontinue service at any time without penalty. The
Company currently does not offer Pay-TV or "pay-per-view" services, but
currently anticipates doing so in the future as it upgrades the capacity of
its systems.

The Company's cable television business is dependent to a large extent
on its ability to obtain and renew its franchise agreements with local
government authorities on acceptable terms. The Company believes that it
has maintained good relations with its local franchise authorities. The
Company has never had a franchise revoked and as of the date of this
Prospectus and Ballot/Proxy Statement all of its franchises have been
renewed or extended at their expirations. Most of the Company's present
franchises had initial terms of approximately 10 to 15 years. As of the

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date of this Prospectus and Ballot/Proxy Statement, all of the Company's
franchises have been renewed or extended, generally at or prior to their
stated expirations and on terms which are acceptable to the Company. In
this regard, during 1996, the Company completed negotiations with 19
communities resulting in franchise renewals. Federal law, including the
1984 Cable Act and the 1992 Cable Act, limits the power of the franchising
authorities to impose certain conditions upon cable television operators as
a condition of the granting or renewal of a franchise. The Company has 26
franchises, three of which are up for franchise renewal within the next
three years. No one cable television franchise accounts for more than 10
percent of the Company's total revenue.

Franchise agreements contain varying provisions relating to
construction and operation of cable television systems, including: (i) time
limitations on the commencement and/or completion of construction; (ii)
quality of service, including (in certain circumstances) requirements as to
the number of channels and broad categories of programming offered to
subscribers; (iii) rate regulation; (iv) provision of services to certain
institutions; (v) provision of channels for public access and commercial
leased-use; and (vi) maintenance of insurance and/or indemnity bonds. The
Company's franchises also typically provide for periodic payments of fees,
generally ranging from zero to three percent of revenues, to the
governmental authority which grants the franchise. Franchises usually
require the consent of the franchising authority prior to a transfer of the
franchise or a transfer or change in ownership or operating control of the
franchisee.

Subject to applicable law, a franchise may be terminated prior to its
expiration date if the cable television operator fails to comply with the
material terms and conditions of the franchise. Under the 1984 Cable Act,
if a franchise is lawfully terminated, and if the franchising authority
acquires ownership of the cable television system or effects a transfer of
ownership to a third party, such acquisition or transfer must be at an
equitable price or, in the case of a franchise existing on the effective
date of the 1984 Cable Act, at a price determined in accordance with the
terms of the franchise, if any.

In connection with a renewal of a franchise, the franchising authority
may require the cable operator to comply with different and more stringent
conditions than those originally imposed, subject to the provisions of the
1984 Cable Act and other applicable federal, state and local law. The 1984
Cable Act, as supplemented by the renewal provisions of the 1992 Cable Act,
establishes an orderly process for franchise renewal which protects cable
operators against unfair denial of renewal when the operator's past
performance and proposal for future performance meet the standards
established by the 1984 Cable Act. The Company believes that its cable
television systems generally have been operated in a manner which satisfies

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such standards and allows for the renewal of such franchises; however,
there can be no assurance that the franchises for such systems will be
successfully renewed as they expire.

The Company traditionally has used coaxial cable for transmission of
television signals to subscribers. Optical fiber is a technologically-
advanced transmission medium capable of carrying cable television signals
via light waves generated by a laser. The Company currently uses fiber
optic technology to serve six communities with two CATV head-end facili-
ties. The Company currently intends in 1997 to install optical fiber
technology in four of its cable systems and anticipates that it will
convert several additional systems over the next several years. The
systems, which facilitate digital transmission of voice, video and data
signals as discussed below, will have optical fiber to neighborhood nodes
tied to the Company's telecommunications network with coaxial cable
distribution downstream to subscribers' homes from that point.

The optical fiber technology includes compressed digital video
technology that is capable of converting up to 10 analog signals (now used
to transmit video and voice) into a digital format and compressing such
signals (which is accomplished primarily by eliminating the redundancies in
television imagery) into the space normally occupied by one analog signal.
This digitally compressed signal would be distributed, via optical fiber
and coaxial cable, to the customer's home. At the home, a set-top video
terminal would convert the digital signal back into analog channels that
could be viewed on a normal television set. The Company currently
anticipates that it will begin offering such optical fiber technology to
its cable subscribers in four markets in late 1997.

MAIN NETWORK OPERATIONS. The Company provides its local services and
related long distance services primarily over its proprietary network. The
Company operates an advanced digital telecommunications network consisting
of nine Northern Telecom DMS 10 switches for its local services network,
one Summa Logic digital switch for operator services and advanced long
distance services, leased transmission lines to complete calls for its
domestic and international long distance services and sophisticated network
management systems designed to optimize traffic routing. The Company's
proprietary network encompasses approximately 2,240 miles of copper trunk
lines and customer connections and 150 miles of fiber optic cabling.

The Company seeks to actively manage and improve its network. The
Company currently anticipates spending approximately $10 million in 1997 to
complete the deployment of Synchronous Optical Network ("SONET") fiber
rings within its network and centralize and upgrade its switching equipment
through the construction of a new switching center and the installation of
a Lucent 5Ess switching platform with advanced digital switching
technologies, including Asynchronous Transfer Mode ("ATM") technology.

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SONET technology substantially increases the speed at which data is
carried on the Company's network, thereby allowing the Company to provide
high-speed multimedia applications and information services throughout its
network. In addition, SONET permits the Company to install customer
circuits more quickly and improves monitoring of the network by
anticipating certain problems before they occur. Further, when deployed in
a ring design, SONET allows the Company to provide its customers with
millisecond restoration of traffic in the event of a network outage.

ATM switching technology facilitates the provision of a wide range of
data communication services. This technology increases the Company's
network switching capabilities, permitting its customers to simultaneously
transmit voice, data and video communications over the same line. The
Company currently intends to have ATM available throughout its domestic
network by the end of 1997.

INTERNET NETWORK OPERATIONS. The Company's Internet network is based
on redundant leased T-1 and frame-relay based network access to the
Internet National Access Points ("NAPs") in Minneapolis, Minnesota and
Omaha, Nebraska. This network is controlled by a Bay Networks router
located in the Company's Internet network operations center in Sioux Falls,
South Dakota. Customers are able to access this network through dedicated
lines or by placing a local or long distance call (dial-up) through a modem
to the Sioux Falls switching center. Once connected, the customer's
traffic is routed through the operation center modem banks to the Bay
Networks router and into the Internet via the Company's NAP connections.

The Company continues to upgrade its network infrastructure in
response to the increased number of customers purchasing Internet access
and Web page hosting services. The Company also currently plans to
increase its NAP access speeds to handle larger levels of customer traffic
at higher data transfer speeds.

CABLE NETWORK OPERATIONS. The majority of the Company's cable systems
currently operate on a stand-alone basis with each community system
supported by its own signal processing center, known as a cable "head-end."
Six community systems (two clusters of three) have been linked using fiber
optic technology to a common head-end. A typical Company system consists
of signal receiving, encoding and decoding apparatus, distribution systems
and subscriber house-drop equipment. The signal receiving apparatus
typically includes a tower, antenna, ancillary electronic equipment and
earth stations for reception of satellite signals. Head-ends, consisting of
associated electronic equipment necessary for the reception, amplification
and modulation of signals, are located near the receiving devices. The
Company's distribution systems consist of coaxial cables and related
electronic equipment. Subscriber equipment consists of taps, house drops,
converters and analog addressable converters.

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The Company currently intends to rebuild four of its cable systems in
1997 using advanced digital fiber optic/coax cabling techniques that would
allow it to offer both cable television and additional telecommunications
services, such as local and long distance calling and high speed data
transmission and Internet access services, over the same network. These
systems would be interconnected to the Company SONET fiber optic network
and switched from its new centralized switching facility. In addition, the
Company currently plans to replace many of the individual cable head-end
systems by interconnecting these systems either to advanced fiber optic
links or to its new SONET fiber network and distributing the cable
programming signals from a central head-end facility collocated in the
Company's new switching facility. The Company also currently plans to
install digital advertising insertion equipment in its central switching
center. This equipment would allow the Company to download advertisements
electronically to certain head-ends, thereby significantly enhancing the
flexibility and reliability of its advertising sales. The Company believes
these enhancements would enable the Company to offer increased programming
channels with a higher quality signal and at a lower per channel cost.

MARKETING. The Company's telecommunications services and cable system
operations generally have been free from competition. Accordingly, the
Company historically has relied on telemarketing, direct mail and,
occasionally, door-to-door solicitation and radio, cable television and
newspaper advertising for its marketing efforts. These marketing
activities have been supported by customer service activities in the
Company's headquarters and by an active field technician force. The
Company believes it historically has enjoyed a high reputation for quality
and responsive service and has emphasized quality customer service for many
years.

In 1996, the Company recognized that the regulatory environment was
changing and that it would have to adapt to a more active and competitive
market environment. In 1996, the Company created a formal marketing
department and in December 1996, the Company acquired TCIC, a long distance
company with over six years of competitive selling experience, and Iway,
which operates in the highly competitive Internet services market. The
Company also is beginning to develop other marketing channels for its
products, including alliances with other independent Internet service
providers and computer services companies. The Company currently intends
to continue to expand its direct sales force and to market its products
more aggressively as competition enters the Company's previously protected
markets.

COMPETITION

The telecommunications industry is highly competitive and affected by
rapid regulatory and technological change. Regulatory trends have had, and

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may have in the future, significant effects on competition in the Company's
industry. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.")
New technology is continuing to expand the types of available
communications services and equipment and the number of competitors
offering such services. The Company faces actual and potential competition
in all of its businesses. Most of the Company's competitors are large
companies which have considerably greater financial, technological,
marketing and other resources than the Company.

The Company believes that the factors critical to a customer's choice
of a telecommunications services provider are cost, ease of use, speed of
installation, quality, reputation and, in some cases, geography and network
size. The Company's objective is to be one of the most responsive service
providers in the telecommunications industry, particularly when providing
customized communications services. The Company recognizes that it must
grow to be able to compete effectively in the changing telecommunications
industry and to avail itself of greater economies of scale and increased
scope in its transport and local access requirements and in its back office
operations. It is for this reason that the Company expanded its business
through the purchase of additional cable television systems and the
acquisition of companies in the long distance and Internet long distance
industries (i.e., TCIC and Iway). These additions have expanded the
Company's product line and service abilities which should enhance its
ability to compete more effectively in its changing business and regulatory
environment.

LOCAL SERVICE COMPETITION. Historically, the Company's local telephone
operations have not experienced significant competition. The Company's
local telephone operations may experience increased competition from
various sources, including resellers of the Company's local exchange
services, large end-users installing their own networks, IXCs, satellite
transmission services, cellular communications providers, cable television
companies, radio-based personal communications service companies,
competitive access providers and other systems capable of completely or
partially bypassing local telephone facilities. In 1996, the South Dakota
Public Utilities Commission approved numerous applications to provide and
resell local exchange services, including applications made by the Company
to compete in other local exchanges throughout South Dakota. Numerous such
applications are pending and the Company anticipates that other companies
will make additional filings. The Company cannot predict the specific
effects of competition on its local telephone business, but intends to
attempt to take advantage of the various opportunities that competition
should provide, including expanding into additional market areas, if it is
able to do so. The Company is currently attempting to address potential
competition by focusing on improved customer satisfaction, reducing costs,
increasing efficiency, improving its digital network, restructuring rates
and examining new product offerings and new markets for entry.

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LONG DISTANCE AND OPERATOR SERVICE COMPETITION. The long distance and
operator services industries are highly competitive and dominated on a
volume basis by the nation's three largest long distance providers: AT&T,
MCI and Sprint. In 1996, AT&T, MCI and Sprint generated an aggregate of
approximately 80 percent of the nation's long distance revenue of $79.3
billion. Behind these providers, four other companies had annual revenues
of $430 million to $2.2 billion each in 1996. In addition, during the same
year there were more than 300 companies with annual revenues of less than
$430 million each, the majority with revenues below $50 million each. Most
of these companies surpass the Company in size and available financial,
technological, marketing and other resources. All of these companies
potentially can compete with the Company in the long distance and operator
services markets in which the Company currently operates.

In addition, the 1996 Act permits RBOCs to provide long distance
telecommunications services internationally and domestically in territories
outside of the RBOCs' respective local service regions. RBOCs also may
provide long distance telecommunications services that are incidental to
certain other services, such as wireless and video services, in their
local regions. The authority to provide long distance telecommunications
services originating outside of the RBOCs' respective regions does not
currently include calls that terminate in-region, such as private line
services, 800 services or any equivalent service, and allows the contacted
party to choose the inter-LATA carrier. RBOCs are prohibited from
providing a full range of long distance telecommunication services in their
local regions until certain important conditions are met. RBOCs own
extensive facilities in their regions and have long-standing customer
relationships and substantial capital resources, which permit them to
expend funds on technological and marketing improvements. The Company
believes that in the future RBOCs will become substantial competitors for
long distance telecommunications services, especially in their local
regions.

INTERNET COMPETITION. The market for data communications services,
including Internet access and on-line services, is extremely competitive.
There are no substantial barriers to entry, and the Company expects that
competition will intensify in the future. The Company believes that its
ability to compete successfully will depend on a number of factors,
including: (i) market presence; (ii) the ability to execute a rapid
expansion strategy; (iii) the capacity, reliability and security of its
network infrastructure; (iv) ease of access to and navigation of the
Internet; (v) the pricing policies of its competitors and suppliers; (vi)
the timing of the introduction of new products and services by the Company
and its competitors; (vii) the Company's ability to support industry
standards; and (viii) industry and general economic trends. The Company
believes that its success in the data communications services market will
depend heavily upon its ability to provide high-quality Internet
connectivity and value-added Internet services at competitive prices.

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The Company's current and potential competitors headquartered in the
United States may be divided into the following three groups: (i)
telecommunications companies, such as AT&T, MCI, Sprint, RBOCs and @Home
(a joint venture between Tele-Communications, Inc. and a venture capital
firm), and various other cable companies; (ii) other Internet access
providers, such as BBN, NETCOM, PSI and other national and regional
providers; and (iii) on-line services providers, such as America Online,
CompuServe, Intuit Inc., Microsoft Corp. and Prodigy Services Company.
Most of these competitors have greater market presence, engineering and
marketing capabilities, and financial, technological, personnel and other
resources than those available to the Company. As a result, they may be
able to develop and expand their communications and network
infrastructures more quickly, adapt more swiftly to new or emerging
technologies and changes in customer requirements, take advantage of
acquisition and other opportunities more readily and devote greater
resources to the marketing and sale of their services.

The Company expects that most of the major on-line services providers
and telecommunications companies will expand their current services to
compete fully in the Internet access market. The Company believes that new
competitors, including large computer hardware, software, media and other
technology and telecommunications companies, will enter the Internet access
market, resulting in even greater competition to the Company. Certain
companies, including America Online, AT&T, BBN and PSI, have obtained or
expanded their Internet access products and services as a result of
acquisitions and strategic investments. Such acquisitions or investments
may permit these companies to devote greater resources to the development
and marketing of new competitive products and services and the marketing of
existing competitive products and services. The Company expects
acquisitions and strategic investments by its competitors to increase, thus
creating significant new competitors. In addition, the ability of some of
the Company's competitors to bundle other services and products with
Internet access services, such as the Internet service offerings recently
offered by AT&T and MCI, could place the Company at a further competitive
disadvantage.

As a result of increased competition in the Internet access and on-
line services industry, the Company expects that it will continue to
encounter significant pricing pressure, which in turn could result in
significant reductions in the average selling price of its Internet
services. The Company previously has reduced prices on certain of its
Internet access options and may consider doing so in the future. There can
be no assurance that the Company will be able to offset the effects of any
such price reductions with an increase in the number of its customers,
higher revenue from enhanced services, cost reductions or otherwise. In
addition, the Company believes that the data communications business, and
in particular the Internet access and on-line services businesses, are
likely to encounter consolidation in the near future, which could result in

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increased price and other competition in the industry. Increased price or
other competition could erode the Company's market share and could have a
material adverse effect on its business, financial condition and results of
operations. There can be no assurance that the Company will have the
financial resources, technical expertise, marketing and support
capabilities or the expansion and acquisition possibilities to continue to
compete successfully in this or any market.

CABLE TELEVISION COMPETITION. Cable television competes for customers
in local markets with other providers of entertainment, news and
information. The competitors in these markets include broadcast television
and radio, newspapers, magazines and other printed material, motion picture
theaters, video cassettes and other sources of information and entertain-
ment, including directly competitive cable television operations.

Cable television service initially was offered as a means of improving
television reception in markets where terrain factors or distance from
major cities limited the availability of off-air television. In some of
the areas served by cable television systems, a substantial variety of
television programming can be received off-air, including low-power UHF
television stations, which have increased the number of television signals
in the country and provided off-air television programs to limited local
areas. The extent to which cable television service is competitive depends
upon a cable television system's ability to provide, on a cost-effective
basis, a greater variety of programming than that available off-air or
through other alternative delivery sources. Regulatory changes also impact
competition in the cable industry. Both the 1992 Cable Act and the 1996
Act are designed to increase competition in the cable television industry.
(See "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation.")

There are alternative methods of distributing the same or similar
video programming offered by cable television systems. Further, these
technologies have been encouraged by Congress and the FCC to offer services
in direct competition with existing cable systems. A significant
competitive impact is expected from medium power and higher power DBSs
that use high frequencies to transmit signals that can be received by
dish antennas much smaller in size than traditional home satellite
dishes ("HSDs"). There are currently five national DBS providers
offering services in the United States, and at least one additional
provider has announced plans to provide DBS service in the future.
These services are generally available throughout the continental
U.S., including areas in which the Company operates its cable systems.

DBS has both advantages and disadvantages as an alternative means of
distributing video signals to a customer's home. Among the advantages are
that (i) the capital investment (although initially high) for the satellite
and uplinking segment of a DBS system is fixed and does not increase with
the number of subscribers receiving satellite transmissions, (ii) DBS is
not currently subject to local regulation of service and prices or required

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to pay franchise fees and (iii) the capital costs for the ground segment of
a DBS system (the reception equipment) are directly related to, and limited
by, the number of service subscribers. DBS's disadvantages presently
include (i) limited ability to tailor the programming package to the
interests of different geographic markets, such as providing local news,
other local origination services and local broadcast stations, (ii) signal
reception being subject to line-of-sight angles and (iii) intermittent
interference from atmospheric conditions and terrestrially generated radio
frequency noise.

Although the effect of competition from DBS services cannot be
specifically predicted, there has been significant growth in DBS
subscribers and the Company anticipates that such DBS competition will
increase in the future as developments in technology continue to increase
satellite transmitter power, decrease the cost and size of equipment needed
to receive these transmissions and enable DBS to overcome the disadvantages
discussed above. Further, the extensive national advertising of DBS
programming packages, including certain sports packages not currently
available on cable television systems, will likely continue the rapid
growth in DBS subscribers.

The 1996 Act eliminated the statutory and regulatory restrictions that
prevented telephone companies from competing with cable operators for the
provision of video services. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS,
INC.--Regulation.") The 1996 Act allows local telephone companies,
including RBOCs, to compete with cable television operators both inside and
outside of their telephone service areas. The Company expects that it may
face substantial competition from telephone companies for the provision of
video services, whether it is through the acquisition of cable systems, the
provision of wireless cable or the provision of upgraded telephone
networks. Most major telephone companies have greater financial resources
than the Company, and the 1992 Cable Act ensures that telephone company
providers of video services will be able to acquire significant cable
television programming services. The specific manner in which
telephone company provision of video services will be regulated is
described in "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Regulation."
Additionally, the 1996 Act eliminates certain federal restrictions on
utility holding companies and thus permits all utility companies to provide
cable television services. The Company expects that the elimination of
these federal restrictions could result in another source of significant
competition in the delivery of video services.

Another alternative method of distributing cable television is MMDS,
which deliver programming services over microwave channels received by
subscribers with special antennas. MMDS systems are less capital
intensive, are not required to obtain local franchises or pay franchise
fees and are subject to fewer regulatory requirements than cable
television systems. The 1992 Cable Act also ensures that MMDS systems

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have the ability to provide all significant cable television programming
services. Although there are relatively few MMDS systems in the United
States currently in operation, virtually all markets have been licensed
or tentatively licensed.

The FCC has taken a series of actions intended to facilitate the
development of wireless cable systems as an alternative means of
distributing video programming, including reallocating the use of certain
frequencies to these services and expanding the permissible use of certain
channels reserved for educational purposes. The FCC's actions enable a
single entity to develop MMDS systems with a potential of up to 35
channels, which permits the MMDS systems to compete more effectively with
cable television. Developments in compression technology will
significantly increase the number of channels that MMDS can offer.
Further, in 1995, several large telephone companies acquired significant
ownership in numerous MMDS companies. This infusion of capital into the
MMDS industry can be expected to accelerate its growth and its competitive
impact. Recently, the Company has experienced increased competition from
an MMDS provider operating in several of the Company's existing cable
system communities.

Within the cable television industry, cable operators may compete with
other cable operators or other entities seeking franchises for competing
cable television systems at any time during the terms of existing
franchises or upon expiration of such franchises in the expectation that an
existing franchise will not be renewed. The 1992 Cable Act promotes the
grant of competitive franchises. Furthermore, an increasing number of
cities are exploring the feasibility of owning their own cable systems in a
manner similar to city-provided utility services.

Although there is no legal prohibition preventing long distance
telephone companies from providing video services, historically they have
not provided such services in competition with cable systems. However,
such companies may prove to be a source of competition in the future.
The long distance companies are expected to expand into local markets
with local telephone and other offerings (including video services) in
competition with RBOCs, which under the terms and conditions of the 1996
Act are permitted to enter the long distance service market subject to
satisfying certain requirements.

In addition to competition for subscribers, the cable television
industry competes for advertising revenue with broadcast television, radio,
print media and other sources of information and entertainment. As the
cable television industry has developed additional programming, its
advertising revenue has increased. Cable operators sell advertising spots
primarily to local and regional advertisers. To date, the Company's
advertising efforts have been limited to local public service announcements
due to the limited capabilities of its existing systems. The Company

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currently intends to expand its advertising efforts as it completes the
upgrade of many of its systems.

The Company has no basis upon which to estimate the number of cable
television companies and other entities with which it competes or may
potentially compete. There are a large number of individual and multiple
system cable television operators in the United States that are capable of
competing with the Company and that have substantially greater financial,
technological, marketing and other resources.

The full extent to which other media or home delivery services will
compete with cable television systems may not be known for some time and
there can be no assurance that existing, proposed or as yet undeveloped
technologies will not become dominant in the future.

REGULATION

OVERVIEW. Telephone companies that are organized as cooperative
associations are regulated in the same manner as telephone companies that
are organized as business corporations. Such regulation is based on the
size of the entity, rather than on the form of the entity.

The Company operates in a highly regulated industry and its services
are subject to varying degrees of federal, state and local regulation. The
FCC exercises jurisdiction over all facilities of, and services offered by,
telecommunications common carriers to the extent that they involve the
provision, origination or termination of interstate or international
communications. The FCC also regulates many aspects of the Company's cable
television operations. The South Dakota Public Utilities Commission
retains jurisdiction over the Company's telecommunications operations in
South Dakota while other state public utilities commissions regulate the
intrastate aspects of the Company's long distance business in their state.
Finally, certain cities and municipal governments regulate by franchise the
Company's cable television operations within their jurisdiction.

The regulation of the telecommunications industry is changing rapidly
and the regulatory environment varies substantially from state to state.
There can be no assurance that recent or future regulatory changes will not
have a material adverse impact on the Company. Recent developments
include, without limitation (i) enactment of the 1996 Act which modifies
the AT&T Divestiture Decree restrictions on the provision of long distance
services by RBOCs between LATAs as defined in the AT&T Divestiture Decree;
(ii) FCC and state public utilities commissions actions changing access
rates charged by LECs and making other related changes to access and
interconnection policies, certain of which could have adverse consequences
for the Company's long distance and local service businesses; (iii) related
FCC and state regulatory proceedings considering additional deregulation of
LEC access pricing; (iv) pending FCC "billed party preference" rules that

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could affect the Company's provision of operator services; and (v) various
legislative and regulatory proceedings that would result in new local
exchange competition.

As the following discussion illustrates, the regulation of the
telecommunications and cable industries at the federal, state and local
levels is subject to the political process and has been in constant flux
over the past decade. Material changes in the law and regulatory
requirements must be anticipated and there can be no assurance that the
Company's business will not be affected adversely by future legislation,
new regulation or deregulation.

TELECOMMUNICATIONS ACT OF 1996. On February 8, 1996, President
Clinton signed into law the 1996 Act. Among other things, this legislation
(i) permits RBOCs to provide domestic and international long distance
services in their own regions upon a finding that the petitioning RBOC has
satisfied certain criteria for opening up its local exchange network to
competition and that its provision of long distance services would further
the public interest, (ii) removes existing barriers to entry into local
service markets, (iii) significantly changes the manner in which carrier-
to-carrier interconnection arrangements are regulated at the federal and
state level and (iv) establishes procedures to revise universal service
standards.

The 1996 Act has particular relevance to the Company in four areas.
First, the 1996 Act creates a duty on the part of the Company to
interconnect its networks with those of its competitors and, in particular,
creates a duty on the part of the Company's local exchange operations to
negotiate in good faith the terms and conditions of such interconnection.
On August 8, 1996, the FCC released its FCC Interconnection Order. In
the FCC Interconnection Order, the FCC adopted a national framework for
interconnection but left to the individual states the task of implementing
the FCC's rules. Because implementation of the rules will be at the state
level, it is uncertain how these new requirements will affect the Company.
The order is subject to petitions for reconsideration filed at the FCC and
petitions for review that have been consolidated before the United States
Court of Appeals for the Eighth Circuit. On October 15, 1996, the Eighth
Circuit stayed substantial portions of the FCC's order pending judicial
review. On November 1, 1996, the United States Supreme Court denied
applications to lift the stay. On January 17, 1997, the Eighth Circuit
heard oral arguments on the merits of the petitions for review.

Second, the 1996 Act contains a number of provisions that are intended
to reduce barriers to entry and promote competition in a variety of
telecommunications markets, including both long distance and local exchange
operations. As a part of this effort, the 1996 Act provides a framework

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under which RBOCs may enter the interexchange communications business from
which they were barred under the terms of the AT&T Divestiture Decree.
Under this framework, an RBOC may provide long distance services in the
states where it provides telephone service upon demonstrating to the affected
state regulatory authority and to the FCC that: (i) it faces competition
for local telephone service from at least one facilities-based competitor
and (ii) that it satisfies a 14 point checklist that would purport to show
that the affected RBOC's local exchange operations are open to competition.
The 1996 Act establishes deadlines within which both the affected state
regulatory agency and the FCC must act upon applications filed by an RBOC
to enter the long distance business. Certain of the RBOCs already have
taken steps to provide in-region long distance services, and have filed
applications with the FCC seeking authority to provide such services in
certain states. The Company expects that most or all of the RBOCs will
file applications for authority to provide in-region long distance service.
The RBOCs can provide long distance services immediately in other states,
and also with certain restrictions, cellular, video and incidental
services.

Third, although the 1996 Act generally prohibits long distance
companies from marketing their services jointly with local telephone
services provided by an RBOC (at least until that RBOC is permitted to
enter the long distance business), it contains an exception for companies,
such as the Company, that serve less than five percent of the nation's
presubscribed access lines. Thus, the 1996 Act permits the Company to
continue to market its long distance services jointly with local telephone
services whether provided by the Company or provided by an RBOC or
non-affiliated company.

Finally, the 1996 Act modifies many of the regulations governing the
Company's cable television operations and addresses some of the issues
arising out of the combination of cable and telephone service.

The Company cannot predict the effect that this legislation and the
FCC's implementing regulations, many of which are still forthcoming, will
have on the Company or the industry as a whole. However, the Company
believes that it is positioned to pursue business opportunities in the
rapidly changing telecommunications market.

LOCAL SERVICE REGULATION. Historically, the Company's local telephone
operations have been governed by regulation and oversight of the South
Dakota Public Utilities Commission. The South Dakota Public Utilities
Commission has had primary jurisdiction over various matters including
intrastate toll and access rates, quality of service, issuance of
securities, depreciation rates, disposition of public utility property,
issuance of debt and accounting systems used by the Company. The Company
has, however, been statutorily exempt from many of these requirements by
virtue of its size. The FCC historically has had primary jurisdiction over
the interstate toll and access rates of the Company and issues related to
interstate telephone service.
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The 1996 Act has substantially modified both the states' and the FCC's
jurisdictions in the regulation of local exchange telephone companies. The
1996 Act prohibits any state legislative or regulatory restrictions or
barriers to entry regarding the provision of local telephone service. The
1996 Act requires the FCC to develop regulations to implement various
sections of the 1996 Act including: (i) the obligations imposed on
incumbent LECs to interconnect with the networks of other
telecommunications carriers (including competing telecommunications
carriers); (ii) unbundling of services into network elements; (iii)
repricing of their services at wholesale rates for the purpose of
permitting resale of those services; (iv) allowing other telecommunications
carriers physically to collocate their equipment on the premises of the
incumbent LEC; and (v) requiring telecommunications carriers to compensate
each other based on their own costs for the transport and termination of
calls on the other carriers' networks.

As a rural telephone company, the Company is currently exempt from
certain of the foregoing obligations unless, in response to a bona fide
request, the South Dakota Public Utilities Commission removes that
exemption. The Company, by petitioning the South Dakota Public Utilities
Commission, also may qualify for exemption from certain other obligations
of the 1996 Act. In addition, pursuant to the 1996 Act, the FCC instituted
and referred to a federal-state joint board a proceeding to recommend
changes to the current method of subsidizing universal service to assure
the availability of quality telephone services at just, reasonable and
affordable rates. The federal-state joint board released an initial
"recommended decision" on November 8, 1996, and on May 8, 1997, the FCC
released a Report and Order substantially adopting the Joint Board's
recommendations. The FCC also indicated its intent to issue a further
notice of proposed rulemaking in June 1997 to establish a universal
service support mechanism for non-rural carriers based on the forward-
looking economic cost of constructing and operating the network used to
provide the supported services. The FCC further indicated its intent to
commence a separate proceeding by October 1998 to establish forward-looking
economic cost mechanisms for rural carriers. Non-rural carriers would
begin to receive support based on forward-looking economic cost on January
1, 1999, whereas rural carriers would shift to such an approach beginning
no sooner than January 1, 2001. The Company cannot predict the terms or
the effect that the FCC's actions will have on the Company or on the
industry as a whole. However, the Company believes that it is taking
proper steps to reduce its exposure to potential declines in universal
service support.

The 1996 Act requires that all telecommunications providers (including
cable operators that provide telecommunications services) must contribute
equitably to a USF, although the FCC may exempt an interstate carrier or
class of carriers if their contribution would be minimal under the USF
formula. The 1996 Act allows states to determine which intrastate
telecommunications providers contribute to the USF. The purpose of

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the USF is to provide consumers in all regions, including low-income
consumers and those consumers in rural, insular and high-cost areas,
access to telecommunications and information services that are reasonably
comparable to those services in urban areas at reasonably comparable rates.

The South Dakota Public Utilities Commission approved an intrastate
access rate increase for the Company effective December 10, 1996. There
are no rate requests of the Company currently pending before any regulatory
commission.

NETWORK ACCESS REGULATION. The Company is subject to the jurisdiction
of the FCC with respect to its provision of interstate network access
services and certain related services. The FCC prescribes a uniform system
of accounts for telephone companies, interstate depreciation rates and the
principles and standard procedures used to separate plant investment,
expenses, taxes and reserves of interstate services under the jurisdiction
of the FCC and of intrastate services under the jurisdiction of the
respective state regulatory authorities ("separations procedures"). The
FCC also prescribes procedures for allocating costs and revenues between
regulated and unregulated activities. The FCC has indicated that it
intends to initiate a proceeding shortly to review separations reform.

The FCC has prescribed structures for exchange access tariffs to
specify the access charges for use and availability of the Company's
facilities for the origination and termination of interstate long distance
service. In general, the tariff structures prescribed by the FCC provide
that interstate costs which do not vary based on usage ("non-traffic
sensitive costs") are recovered from subscribers through flat monthly
charges ("subscriber line charges"), and from IXCs through usage-sensitive
Carrier Common Line ("CCL") charges. Traffic-sensitive interstate costs
are recovered from carriers through variable access charges based on
several factors, primarily usage.

On December 24, 1996, the FCC initiated a rule-making proceeding to
address access charge reform. On May 16, 1997, the FCC released its First
Report and Order adopting changes to the existing access charge structure.
With limited exceptions, those modifications apply only to price cap
incumbent LECs, which generally are the nation's largest telephone
companies. In the First Report and Order, the FCC also stated its
intention to issue a subsequent Report and Order to provide additional
rules to implement access charge reform, and to initiate separate
proceedings to examine historical cost recovery issues and access charge
reform for rate-of-return carriers, such as the Company. On June 3, 1997,
Pacific Bell, Nevada Bell, and Southwestern Bell Telephone Company jointly
petitioned the FCC to stay the First Report and Order pending judicial
review and indicated their intent to seek such review.

The FCC authorizes a rate-of-return ("ROR") that telephone companies
such as the Company may earn on the interstate services they provide. The

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current ROR is 11.25 percent for companies remaining under ROR regulation.
The FCC is currently considering changing the 11.25 percent ROR as a result
of lower market interest rates. Effective January 1, 1991, the FCC
replaced ROR regulation with price-cap regulation for the RBOCs and GTE
Corporation and allowed all other companies that did not remain in the
National Exchange Carrier Association ("NECA") Common Line and Traffic
Sensitive Pools the option of price-cap regulation. The Company, like most
small local exchange carriers, has elected to remain within the NECA tariff
scheme.

In 1992, the FCC initiated a rule-making proceeding (CC Docket No.
92-135) to address regulatory alternatives for mid-size and small LECs.
This proceeding resulted in rules, adopted in September 1993, that
provide for a non-price cap form of alternative regulation. The Company
would be eligible for this form of regulation. The Company has not elected
price cap regulation for interstate purposes and continues to evaluate the
various forms of alternative regulation.

The effect of the 1996 Act on the FCC's regulations concerning ROR
regulation and alternative regulation is not yet clear, although, as a
result of the enactment of the 1996 Act, the FCC is reexamining its rules
to reflect the provisions of the 1996 Act and the associated increased
competitive market conditions.

The 1996 Act requires each LEC to continue to provide access services
in accordance with requirements effective on the date immediately preceding
the effective date of the 1996 Act, until those requirements are
specifically superseded by FCC regulations. Pursuant to the 1996 Act, the
FCC established regulations to implement the interconnection, unbundled
access, resale and collocation requirements of the 1996 Act. The 1996 Act
requires that interconnection and unbundled network elements be priced at
just and reasonable rates, based on costs, and that compensation for
transport and termination of traffic be reciprocal among carriers and be
just and reasonable.

In addition to the matters discussed above, FCC rules also govern:
(i) the allocation of costs between the regulated and unregulated
activities of a communications common carrier and (ii) transactions between
the regulated and unregulated affiliates of a communications common
carrier.

The cost allocation rules apply to certain activities that have never
been regulated as communications common carrier offerings and activities
that have been preemptively deregulated by the FCC. The costs of these
activities are removed prior to the separations procedures process and are
assigned to unregulated activities in the aggregate, rather than to
specific services, for pricing purposes. Other activities must be
accounted for as regulated activities, and their costs are subject to
separations procedures.

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The affiliate transaction rules govern the pricing of assets
transferred to and services provided by affiliates. These rules generally
require that assets be transferred between affiliates at "market price," if
such price can be established through a tariff or a prevailing price
actually charged to third parties. In the absence of a tariff or
prevailing price, "market price" cannot be established, in which case (i)
asset transfers from a regulated to an unregulated affiliate must be valued
at the higher of cost or fair market value and (ii) asset transfers from an
unregulated to a regulated affiliate must be valued at the lower of cost or
fair market value. The Company prices transactions to and between its
subsidiaries at cost.

The FCC has not attempted to make its cost allocation or affiliate
transaction rules preemptive. State regulatory authorities are free to use
different cost allocation methods and affiliate transaction rules for
intrastate rate-making and to require carriers to keep separate allocation
records.

The Company's local and intrastate operations are regulated by the
South Dakota Public Utilities Commission. Like many state regulatory
authorities, the South Dakota Public Utilities Commission is conducting
proceedings concerning the rules under which carriers may operate in an
increasingly competitive environment. The issues that the South Dakota
Public Utilities Commission is examining include unbundling and
interconnection, dialing parity for intra-LATA (or short-haul) toll
traffic, number portability, resale of local exchange service and universal
service. The 1996 Act has begun to have an effect on the timing and
outcome of proceedings in many states, including South Dakota. The Company
actively monitors the South Dakota proceedings as well as the proceedings
in other states. However, the Company cannot, at this time, predict how
these proceedings will ultimately be resolved and their effect on the
Company, or when a decision will be forthcoming.

The Company's telephone operating subsidiaries currently receive
compensation from long distance companies for intrastate long distance
services through access charges or toll settlements that are subject to
state regulatory commission approval.

LONG DISTANCE REGULATION. The FCC has classified the Company as a
non-dominant IXC for purposes of all long distance operations conducted
outside of its existing local service exchanges. As a non-dominant carrier,
the Company may provide domestic interstate communications in these areas
without prior FCC authorization, although FCC authorization is required for
the provision of international telecommunications by non-dominant carriers.
Generally the FCC has chosen not to exercise its statutory power to closely
regulate the charges or practices of non-dominant carriers. Nevertheless,
non-dominant carriers are required by statute to offer interstate and
international services under rates, terms and conditions that are just,
reasonable and not unduly discriminatory, and the FCC acts upon complaints

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against such carriers for failure to comply with statutory obligations or
with the FCC's rules, regulations and policies. The FCC also has the power
to impose more stringent regulatory requirements on the Company and to
change its regulatory classification, although the Company believes that,
in the current regulatory environment, the FCC is unlikely to do so.

Historically, both domestic and international non-dominant long
distance carriers maintained tariffs on file with the FCC. Pursuant to this
requirement, the Company filed and maintained with the FCC a tariff for its
interstate and international services. The Company also has obtained FCC
authority to provide international services through the resale of switched
services of various carriers. On March 21, 1996, the FCC initiated a rule-
making proceeding in which it proposed to eliminate the requirement that
non-dominant interstate carriers, such as the Company, maintain tariffs on
file with the FCC for domestic interstate services. On October 29, 1996,
the FCC announced that, following a nine-month transition period, long
distance carriers were no longer required to file tariffs for interstate
domestic long distance service, and that the relationship between carriers
and their customers would be governed by individual contracts. Carriers
also had the option immediately to cease filing tariffs. The Company
did not elect to cease filing interstate tariffs. Following a judicial
stay of the FCC's detariffing order, the FCC on March 6, 1997 released a
public notice stating that the tariffing rules in place prior to December
22, 1996 are once again in effect. Thus, nondominant carriers providing
interstate, domestic interexchange services, such as the Company, continue
to be required to file tariffs pursuant to the FCC's rules.

The FCC also imposes prior approval requirements on transfers of
control and assignments of operating authorizations. The FCC has the
authority to generally condition, modify, cancel, terminate or revoke
operating authority for failure to comply with federal laws and/or the
rules, regulations and policies of the FCC. Fines or other penalties also
may be imposed for such violations. Although the Company believes that it
has complied in all material respects with applicable laws and regulations,
there can be no assurance that the FCC or third parties will not raise
issues with regard to the Company's compliance with applicable laws and
regulations.

The intrastate long distance telecommunications operations of the
Company also are subject to various state laws and regulations, including
certification requirements. Generally, the Company must obtain and
maintain certificates of public convenience and necessity from regulatory
authorities as well as file tariffs in most states in which it offers
intrastate long distance services, and in most of these jurisdictions,
also must file and obtain prior regulatory approval of tariffs for its
intrastate offerings. Many states also impose various reporting
requirements and/or require prior approval for transfers of control of
certified carriers, and/or for corporate reorganizations; acquisitions of
telecommunications operations; assignments of carrier assets, including

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subscriber bases; carrier stock offerings; and incurrence by carriers of
significant debt obligations. Certificates of authority can generally be
conditioned, modified, canceled, terminated or revoked by state regulatory
authorities for failure to comply with state law and/or the rules,
regulations and policies of the state regulatory authorities. Fines and
other penalties also may be imposed for such violations.

At the present time, the Company is authorized to provide originating
long distance services to customers in all states except Alaska and Hawaii.
Those services may terminate in any state in the United States and may
also terminate in countries abroad. Only 31 states have public utility
commissions that actively assert regulatory oversight over intrastate
services such as those currently offered by the Company. Like the FCC,
many of these regulating jurisdictions are relaxing the regulatory
restrictions currently imposed on telecommunications carriers for
intrastate service. While some of these states restrict the offering of
intra-LATA services by the Company and other IXCs, the general trend is
toward opening up these markets to the Company and other IXCs. Those
states that permit the offering of intra-LATA services by IXCs generally
require that end-users desiring to access these services dial special
access codes which place the Company and other IXCs at a disadvantage as
compared to LEC intra-LATA toll service which generally requires no access
code.

WIRELESS SERVICES. The Company, through its wholly owned subsidiary,
DWS, has a Spectrum Agreement with US WEST Wireless for participation in
the FCC's PCS D- and E-Block spectrum auction. This auction concluded on
January 14, 1997, with US WEST Wireless being the successful bidder on
BTA-421 (Sioux City) for the E-Block at $2.44 per population point. The
Company's agreement covers a 104,900 population point in the Company's area
of interest in Southeastern South Dakota and Northwestern Iowa outside of
the municipal boundaries of Sioux City. This amounts to a commitment of
$255,956 for the Company's share of the population points and of the
license. The Company has made an escrow deposit with US WEST Wireless of
$61,905, all of which is available for, and will be applied to, the bid
commitment. The Company has entered negotiations with US WEST Wireless for
additional portions of the BTA, but there is no assurance that these
negotiations will be successful for the Company.

On December 13, 1996, the FCC adopted rules to permit geographic
partitioning and spectrum disaggregation for all broadband PCS licensees.
This rule will give the existing licensees and potential new entrants
greater flexibility to determine how much spectrum they will need for the
geographic areas in which they provide service. The Company has entered
negotiations with the winners of the FCC's A- and B-Block auctions for the
Minneapolis, Minnesota and the Des Moines, Iowa MTAs to partition or
disaggregate portions of the blocks that cover areas of interest to the
Company in Southeastern South Dakota, Northwestern Iowa and Southwestern
Minnesota. These negotiations have not reached a definitive point, and

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there are no existing financial or other commitments between the parties.
There can be no assurance that these negotiations will be successful
for the Company.

Since there will be up to six PCS licensees competing with two
established cellular licensees in each market area, the Company expects
the wireless service market to be highly competitive. The Company
initially plans to focus on the use of its PCS services to provide fixed
wireless services in non-metropolitan areas, and to use the wireless
services as a complement and supplement to other services offered by
the Company. There can be no assurance that the Company will be able to
make wireless services a profitable part of its overall business.

The licensing, construction, operation, acquisition and sale of PCS
networks, as well as the number of PCS, cellular and other wireless
licensees permitted in each market, are regulated by the FCC. Federal
law prohibits the states from regulating the rates charged by wireless
telecommunications carriers (including PCS and cellular). Although some
states petitioned the FCC for authority to regulate wireless rates, thus
far no such petitions have been successful. Federal law also expressly
prohibits the states from regulating the entry of wireless carriers.
However, to the extent not otherwise preempted, the states are permitted to
regulate any other terms and conditions of wireless services, including but
not limited to customer billing information and practices; consumer
protection matters; bundling of service and equipment; availability of
wholesale capacity; and facilities siting issues. There can be no
assurance that state agencies having jurisdiction over the Company's
business will not adopt regulations, impose taxes on PCS licenses or take
other actions that would adversely affect the business of the Company.
Federal and state regulators also will determine important aspects of the
Company's operations, such as technical aspects of and payments for
interconnection with landline and other wireless networks.

On July 26, 1996, the FCC released a report and order establishing
timetables for making emergency 911 services available by PCS and other
mobile services providers, including "enhanced 911" services that provide
the caller's telephone number, location and other useful information. By
late 1997, PCS providers must be able to process and transmit 911 calls
(without call validation), including those from callers with speech or
hearing disabilities. Assuming a cost recovery mechanism is in place, by
mid-1998 such providers must have completed actions enabling them to relay
a caller's automatic number identification and cell site, and by 2001 they
must be able to identify the location of a 911 caller within 125 meters in
67 percent of all cases. State actions incompatible with these FCC rules
are subject to preemption. Various parties have petitioned the FCC to
reconsider certain requirements imposed in the order.

On August 1, 1996, the FCC released a report and order expanding the
flexibility of PCS and other commercial mobile radio services to provide

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fixed as well as mobile services. Such fixed services include, but need
not be limited to, "wireless local loop" services, for example for services
to apartment and office buildings, and wireless backup of PBXs and local
area networks, to be used in the event of interruptions due to weather or
other emergencies. A petition for reconsideration or clarification of
aspects of the FCC's order presently is pending.

PCS licenses are granted for a 10-year period, at the end of which
period the licensee may apply for renewal. The Company must obtain a
number of approvals, licenses and permits for the operation of its PCS
business, including land use regulatory approvals and licenses from the
Federal Aviation Administration in connection with its PCS towers.
Additionally, the wireless telecommunications industry is subject to
certain state and local governmental regulations. Operating costs also are
affected by other government actions that are beyond the Company's control.
There is no assurance that the various federal, state and local agencies
responsible for granting such licenses, approvals and permits will do so or
that, once granted, those agencies will not revoke or fail to renew them.
Failure to obtain such licenses, approvals and permits would adversely
affect, delay commencement of or prohibit certain business operations
proposed by the Company.

CABLE TELEVISION REGULATION. The operation of cable television
systems is extensively regulated through a combination of federal
legislation and FCC regulations, by some state governments and by most
local government franchising authorities such as municipalities and
counties. The 1996 Act also is expected to have a profound effect on the
regulation of cable television operations. This new law will alter federal,
state and local laws and regulations regarding telecommunications providers
and cable television service providers, including the Company. The
discussion below summarizes the relevant provisions of the 1996 Act and
reviews the pre-existing federal cable television regulation as revised by
the 1996 Act.

THE TELECOMMUNICATIONS ACT OF 1996. The following is a summary
of certain provisions of the 1996 Act which could materially affect
the growth and operation of the cable television industry and the
cable and telecommunications services provided by the Company. The
FCC has undertaken, and continues to undertake, numerous rule-making
proceedings to interpret and implement the provisions discussed below.
It is not possible at this time to predict the effects of such rule-
making proceedings on the Company.

CABLE RATE REGULATION. Rate regulation of the Company's cable
television services is divided between the FCC and local units of
government, primarily the local municipalities in which the Company
provides services. The FCC's jurisdiction extends to the cable
programming service tier ("CPST"), which consists largely of
satellite-delivered programming (excluding basic tier programming and

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programming offered on a per-channel or per-program basis). Local
units of government (commonly referred to as "local franchising
authorities" or "LFAs") are primarily responsible for regulating rates
for the basic tier of cable service ("BST"), which typically will
contain at least the local broadcast stations and public access,
educational and government ("PEG") channels. Equipment rates are also
regulated by LFAs. The FCC retains appeal jurisdiction from LFA
decisions. Cable services offered on a per-channel or per-program-
only basis remain unregulated. By virtue of its small size, the
Company is currently exempt from these regulations.

Because of the Company's rate structure and small size, there is
no CPST regulation of the Company's rates at the current time. If the
Company's cable operations were to increase above the thresholds
established in 1996 or if the Company were to change its rate
structure with respect to cable services, additional regulations may
apply. Those additional regulations would include CPST rate
regulations, which would be triggered only by an LFA complaint. An
LFA complaint must be based upon more than one subscriber complaint.
Prior to the 1996 Act, a FCC review of CPST rates could be occasioned
by a single subscriber complaint to the FCC. The 1996 Act does not
disturb existing or pending CPST rate settlements between the Company
and the FCC. The Company's BST rates remain subject to LFA regulation
under the 1996 Act. Existing law precludes rate regulation wherever a
cable operator faces effective competition. The 1996 Act expands the
definition of effective competition to include any franchise area
where a LEC (or affiliate) provides video programming services to
subscribers by any means other than through direct broadcast satellite
service. There is no penetration minimum for the LEC to qualify as an
effective competitor, but it must provide comparable programming
services (12 channels including some broadcast channels) in the
franchise area. By virtue of its small size, the Company is currently
exempt from most of the regulations under the 1996 Act.

Under the 1996 Act, the Company will be allowed to aggregate on a
franchise, system, regional or company level its equipment costs into
broad categories, such as converter boxes, regardless of the varying
levels of functionality of the equipment within each such broad
category. The 1996 Act will allow the Company to average together
costs of different types of converters including non-addressable,
addressable and digital. The statutory changes will also facilitate
the rationalizing of equipment rates across jurisdictional boundaries.
These cost-aggregation rules do not apply to the limited equipment
used by "BST-only" subscribers.

CABLE UNIFORM RATE REQUIREMENTS. The 1996 Act immediately
relaxes the uniform rate requirements of the 1992 Cable Act by
specifying that such requirements do not apply where the operator
faces effective competition, and by exempting bulk discounts to

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multiple dwelling units, although complaints regarding predatory
pricing may be made to the FCC. Upon a prima facie showing that there
are reasonable grounds to believe that the discounted price is
predatory, the cable system operator will have the burden of proving
otherwise.

SYSTEM SALES. The 1996 Act changes the definition of a cable
system so that competitive providers of video services will only be
regulated and franchised as a cable system if they use public
rights-of-way.

CABLE POLE ATTACHMENTS. Under the 1996 Act, investor-owned
utilities must make poles and conduits available to cable systems
under delineated terms. Electric utilities are given the right to
deny access to particular poles on a nondiscriminatory basis for lack
of capacity, safety, reliability and generally accepted engineering
purposes. On March 14, 1997, the FCC released a notice of proposed
rulemaking to amend its rules and policies governing pole attachments.
In its notice, the FCC proposed a new formula for determining rates
applicable to attachments on poles, within ducts, conduit or rights-
of-way by both cable systems and telecommunications carriers until a
separate methodology is proposed for telecommunications carriers. In
the 1996 Act, Congress directed the FCC to issue a new pole attachment
formula relating to telecommunications carriers within two years of
the effective date of the 1996 Act, to become effective five years
after enactment, and the FCC has noted its intent to propose those
new rules in a subsequent proceeding. Those rules will result in
higher pole rental rates for cable operators. Any increases pursuant
to this formula may not begin for five years and will be phased-in in
equal increments over the fifth through the tenth years. This new
FCC formula does not apply in states which certify that they
regulate pole rents. Pole owners must impute pole rentals to
themselves if they offer telecommunications or cable services.
Cable operators need not pay future make-ready on poles currently
contracted if the make-ready is required to accommodate the
attachments of another user, including the pole owner.

CABLE ENTRY INTO TELECOMMUNICATIONS. The 1996 Act declares that
no state or local laws or regulations may prohibit or have the effect
of prohibiting the ability of any entity to provide any interstate or
intrastate telecommunications service. States are authorized to
impose competitively neutral requirements regarding universal service,
public safety and welfare, service quality and consumer protection.
The 1996 Act further provides that cable operators and affiliates
providing telecommunications services are not required to obtain a
separate franchise from LFAs for such services. The 1996 Act
prohibits LFAs from requiring cable operators to provide
telecommunications service or facilities as a condition of a grant of
a franchise, franchise renewal or franchise transfer, except that LFAs

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can seek institutional networks as part of such franchise
negotiations. The 1996 Act clarifies that traditional cable franchise
fees may only be based on revenues related to the provision of cable
television services. However, when cable operators provide
telecommunications services, LFAs may require reasonable,
competitively neutral compensation for management of the public
rights-of-way.

To facilitate the entry of new telecommunications providers
(including cable operators), the 1996 Act imposes interconnection
obligations on all telecommunications carriers. All carriers must
interconnect their networks with other carriers and may not deploy
network features and functions that interfere with interoperability.
Existing LECs also have the following obligations: (i) good faith
negotiation with carriers seeking interconnection; (ii) unbundling,
equal access and non-discrimination requirements; (iii) resale of
services, including resale at wholesale rates (with an exception for
certain low-priced residence services to business customers); (iv)
notice of changes in the network that would affect interconnection and
interoperability; and (v) physical collocation unless the LEC
demonstrates that practical technical reasons, or space limitations,
make physical collocation impractical. The 1996 Act also directs the
FCC, within one year of enactment, to adopt regulations for existing
LECs to share infrastructure with qualifying carriers, and the FCC
released those regulations on February 7, 1997. Under the 1996 Act,
individual interconnection rates must be just and reasonable, based on
cost, and may include a reasonable profit. Cost of interconnection
will not be determined in an ROR proceeding. Traffic termination
charges shall be mutual and reciprocal. The 1996 Act contemplates
that interconnection agreements will be negotiated by the parties
and submitted to a state public utilities commission for approval.
A public utilities commission may become involved, at the request
of either party, if negotiations fail. If the state regulator
refuses to act, the FCC may determine the matter. If the public
utilities commission acts, an aggrieved party's remedy is to file a
case in federal district court.

TELEPHONE COMPANY ENTRY INTO CABLE TELEVISION. The 1996 Act
allows telephone companies to compete directly with cable operators by
repealing the previous telephone company/cable cross-ownership ban and
the FCC's video dialtone regulations. This will allow LECs, including
the RBOCs, to compete with cable operators both inside and outside of
their telephone service areas. If a LEC provides video via radio
waves, it is subject to broadcast jurisdiction. If a LEC provides
common carrier channel service it is subject to common carrier
jurisdiction. An LEC providing video programming to subscribers is
otherwise regulated as a cable operator (including franchising, leased
access and customer service requirements), unless the LEC elects to
provide its programming via an open video system. LEC owned

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programming services will also be fully subject to program access
requirements.

The 1996 Act replaces the FCC's video dialtone rules with an open
video system ("OVS") plan by which LECs can provide cable service in
their telephone service area. LECs complying with the FCC OVS
regulations will receive relaxed oversight. The 1996 Act requires the
FCC to act on any such OVS certification within 10 days of its filing.
Only the program access, negative option billing prohibition,
subscriber privacy, EEO, PEG, must-carry and retransmission consent
provisions of the Communications Act of 1934, as amended, will apply
to LECs providing OVS. Franchising, rate regulation, consumer service
provisions, leased access and equipment compatibility will not apply.
Cable copyright provisions will apply to programmers using OVS. LFAs
may require OVS operators to pay franchise fees only to the extent
that the OVS provider or its affiliates provide cable services over
the OVS. OVS operators will be subject to LFA general right-of-way
management regulations. Such fees may not exceed the franchise fees
charged to cable operators in the area, and the OVS provider may pass
through the fees as a separate subscriber bill item.

The FCC has adopted regulations prohibiting an OVS operator from
discriminating among programmers, and ensuring that OVS rates, terms
and conditions for service are reasonable and nondiscriminatory.
Further, the FCC has adopted regulations prohibiting an LEC-OVS
operator, or its affiliates, from occupying more than one-third of the
system's activated channels when demand for channels exceeds supply,
although there are no numeric limits. The 1996 Act also mandates OVS
regulations governing channel sharing, extending the FCC's sports
exclusivity, network nonduplication and syndicated exclusivity
regulations and controlling the positioning of programmers on menus
and program guides. The 1996 Act does not require LECs to use
separate subsidiaries to provide incidental inter-LATA video or audio
programming services to subscribers or for their own programming
ventures. The validity of the FCC's rules currently is under review
in consolidated cases pending before the United States Court of
Appeals for the Fifth Circuit.

While there remains a general prohibition on LEC buyouts of cable
systems (any ownership interest exceeding 10 percent), cable operator
buyouts of LEC systems and joint ventures between cable operators and
LECs in the same market, the 1996 Act provides exceptions to this
prohibition. A rural exception permits buyouts where the purchased
system serves an area with fewer than 35,000 inhabitants outside an
urban area. Where an LEC purchases a cable system, that system, in
addition to any other system in which the LEC has an interest, may not
serve 10 percent or more of the LEC's telephone service area.
Additional exceptions are also provided for similar buyouts. The 1996
Act also provides the FCC with the power to grant waivers of the

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buyout provisions in cases where (i) the cable operator or LEC would
be subject to undue economic distress, (ii) the system or facilities
would not be economically viable or (iii) the anticompetitive effects
of the proposed transaction are clearly outweighed by the effect of
the transaction in meeting community needs. The LFA must approve any
such waiver.

ELECTRIC UTILITY ENTRY INTO TELECOMMUNICATIONS/CABLE TELEVISION.
The 1996 Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act.
Electric utilities must establish separate subsidiaries, known as
exempt telecommunications companies, and must apply to the FCC for
operating authority. The Company anticipates that large utility
holding companies will become significant competitors to both cable
television and other telecommunications providers as a result of the
1996 Act.

CROSS-OWNERSHIP AND MUST-CARRY. The 1996 Act eliminates
broadcast/cable cross-ownership restrictions (including broadcast
network/cable restrictions), but leaves in place FCC regulations
prohibiting local cross-ownership between television stations and
cable systems. The FCC is empowered by the 1996 Act to adopt rules to
ensure carriage, channel positioning and non-discriminatory treatment
of non-affiliated broadcast stations by cable systems affiliated with
a broadcast network. Previous SMATV and MMDS cable cross-ownership
restrictions have been eliminated for cable operators subject to
effective competition. By virtue of its small size, the Company is
currently exempt from these regulations. The 1996 Act preserves local
television broadcasters' rights to signal carriage on cable systems
("must-carry"), and clarifies that the geographic scope of must-carry
is to be based on commercial publications which delineate television
markets based on viewing patterns. The FCC is directed to grant or
deny must-carry requests within 120 days of a complaint being filed
with the FCC.

CABLE EQUIPMENT COMPATIBILITY AND SCRAMBLING REQUIREMENTS. The
1996 Act directed the FCC to establish an equipment comparability rule
emphasizing that (i) narrow technical standards, mandating a minimum
degree of common design among televisions, VCRs and cable systems, and
relying heavily on the open marketplace, should be pursued, (ii)
competition for all converter features unrelated to security
descrambling should be maximized and (iii) adopted standards should
not affect unrelated telephone and computer features. The 1996 Act
directed the FCC to adopt regulations which assure the competitive
availability of converters ("navigation devices") from vendors other
than cable operators. The FCC's rules may not impinge upon signal
security concerns or theft of service protections. Waivers from these
requirements will be available if the cable operator shows the waiver

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is necessary for the introduction of new services. Once the equipment
market becomes competitive, FCC regulations in this area will be
terminated.

The 1996 Act requires cable operators, upon subscriber request,
to fully scramble or block at no charge the audio and video portion of
any channel not specifically subscribed to by a household. Further,
the 1996 Act provides that sexually explicit programming must be fully
scrambled or blocked. If the cable operator cannot fully scramble or
block its signal, it must restrict transmission to those hours of the
day when children are unlikely to view such programming.

PRE-EXISTING FEDERAL REGULATION. The 1984 Cable Act and the 1992
Cable Act regulated the cable television industry and the vast
majority of that regulation remains unchanged by the 1996 Act. The
1984 Cable Act created uniform national standards and guidelines for
the regulation of cable systems. Among other things, the 1984 Cable
Act generally preempted local control over cable rates in most areas.
In addition, the 1984 Cable Act affirmed the right of franchising
authorities (state or local, depending on the practice in individual
states) to award one or more franchises within their jurisdictions.
It also prohibited non-grandfathered cable systems from operating
without a franchise in such jurisdiction. The 1984 Cable Act (i)
requires cable television systems with 36 or more activated channels
to reserve a percentage of such channels for commercial use by
unaffiliated third parties, (ii) permits franchise authorities to
require the cable operator to provide channel capacity, equipment and
facilities for public, educational and governmental access and (iii)
regulates the renewal of franchises.

The 1992 Cable Act greatly expanded federal and local regulation
of the cable television industry. Certain of the more significant
areas of regulation imposed by the 1992 Cable Act are discussed below.

REGULATION OF PROGRAM LICENSING. The 1992 Cable Act directed the
FCC to promulgate regulations regarding the sale and acquisition of
cable programming between multichannel video program distributors
(including cable operators) and programming services in which a cable
operator has an attributable interest. The legislation and the
implementing regulations adopted by the FCC preclude most exclusive
programming contracts (unless the FCC first determines the contract
serves the public interest) and generally prohibit a cable operator
that has an attributable interest in a programmer from improperly
influencing the terms and conditions of sale to unaffiliated
multichannel video program distributors. Further, the 1992 Cable Act
requires that such cable affiliated programmers make their programming
services available to cable operators and competing video technologies
such as MMDS and DBS, and to telephone company providers of video

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services, on terms and conditions that do not unfairly discriminate
among such competitors.

REGULATION OF CARRIAGE OF PROGRAMMING. Under the 1992 Cable Act,
the FCC adopted regulations prohibiting cable operators from requiring
a financial interest in a program service as a condition to carriage
of such service, coercing exclusive rights in a programming service or
favoring affiliated programmers so as to restrain unreasonably the
ability of unaffiliated programmers to compete.

REGULATION OF CABLE SERVICE RATES. The 1992 Cable Act subjected
the Company's cable systems to rate regulation, except in those cases
where they face "effective competition." The FCC was required to
establish standards and procedures governing regulation of rates for
basic cable service, equipment and installation, which were then to be
implemented by state and local franchising authorities. The 1992
Cable Act also required the FCC, upon complaint from a franchising
authority or a cable subscriber, to review the reasonableness of rates
for CPSTs. The 1996 Act amended the 1992 Cable Act to allow only LFAs
to file complaints. Services offered on an individual basis, such as
pay television and pay-per-view services, were not subject to rate
regulation.

On April 1, 1993, the FCC adopted rate regulations governing
virtually all cable systems, which were revised on February 22, 1994.
Under these regulations, existing basic and CPST service rates
typically are evaluated against benchmark rates established by the FCC
and are subject to mandatory reductions. Equipment and installation
charges are regulated based on actual costs. As noted above, the 1996
Act provides that rate regulation of the CPST automatically sunsets on
March 31, 1999.

The FCC also allowed cable operators to elect to justify rates
under cost-of-service rules, which allow high cost systems to
establish rates in excess of the benchmark level. The FCC's interim
cost-of-service rules allowed a cable operator to recover through
rates for regulated cable services its normal operating expenses plus
a rate of return equal to 11.25 percent on the rate base. However,
the FCC significantly limited the inclusion in the rate base of
acquisition costs in excess of the book value of tangible assets. As
a result, the Company pursued cost-of-service justifications in only a
few cases. On December 15, 1995, the FCC adopted slightly more
favorable cost-of-service rules.

The FCC's rate regulations generally permit cable operators to
adjust rates to account for inflation and increases in certain
external costs, including programming costs, to the extent such
increases exceed the rate of inflation. However, a cable operator may
pass through increases in the cost of programming services affiliated

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with such cable operator to the extent such costs exceed the rate of
inflation only if the price charged by the programmer to the
affiliated cable operator reflects either prevailing prices offered in
the marketplace by the programmer to unaffiliated third parties or the
fair market value of the programming. The FCC's revised regulations
confirm that increases in pole attachment fees ordinarily will not be
accorded external cost treatment. The FCC recently adopted a method
for recovering external costs and inflation on an annual basis. The
new method minimizes the need for frequent rate adjustments and the
regulatory lag problems associated with the previous rate adjustment
methodology.

The regulations also provide mechanisms for adjusting rates when
regulated tiers are affected by channel additions or deletions.
Additional programming costs resulting from channel additions can be
accorded the same external treatment as other program costs increases,
and cable operators presently are permitted to recover a mark-up on
their programming expenses. Under one option, operators were allowed
a flat fee increase ($.20) per channel added to an existing CPST, with
an aggregate cap on such increases ($1.20) plus a license fee reserve
($.30) through 1996. In 1997, an additional flat fee increase ($.20)
is available, and the license fees for additional channels and for
increases in existing channels are no longer subject to the aggregate
cap. This optional approach for adding services is scheduled to expire
on December 31, 1997.

The FCC adopted additional rules that permit channels of new
programming services to be added to cable systems in a separate new
product tier which the FCC has determined that it will not rate
regulate at this time. The FCC also has adopted rules allowing
operators to raise rates based on costs incurred in connection with a
substantial upgrade of the cable system. The FCC provided additional
rate relief for small operators, including the Company, and to any
additional systems that the Company acquires to the extent that the
systems are already eligible for this favorable treatment.

REGULATION OF CUSTOMER SERVICE. As required by the 1992 Cable
Act, the FCC has adopted comprehensive regulations establishing
minimum standards for customer service and technical system
performance. Local franchising authorities are allowed to enforce
stricter customer service requirements than the FCC standards.

REGULATION OF CARRIAGE OF BROADCAST STATIONS. The 1992 Cable Act
granted commercial broadcasters a choice of must-carry rights or
retransmission-consent rights, and gave noncommercial educational
broadcasters must-carry rights. By October 1993, cable operators
were required to secure permission from broadcasters that elected
retransmission-consent rights before retransmitting the broadcasters'
signals. Local and distant broadcasters can require cable operators

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to make a payment as a condition to carriage of such broadcasters'
stations on a cable system. Established superstations were not granted
such rights.

The 1992 Cable Act also imposed obligations to carry local
broadcast stations for such stations which chose a must-carry right,
as distinguished from the retransmission-consent right described
above. The 1992 Cable Act and the rules adopted by the FCC generally
provided for mandatory carriage by cable systems of all local full-
power commercial television broadcast signals selecting must-carry,
including the signals of stations carrying home-shopping programming
and, depending on a cable system's channel capacity, non-commercial
television broadcast signals. On March 31, 1997, the United States
Supreme Court upheld the constitutionality of the must-carry
provisions of the 1992 Cable Act.

OWNERSHIP REGULATIONS. The 1992 Cable Act required the FCC to:
(i) promulgate rules and regulations establishing reasonable limits on
the number of cable subscribers which may be served by a single
multiple system cable operator or entities in which it has an
attributable interest; (ii) prescribe rules and regulations
establishing reasonable limits on the number of channels on a cable
system that will be allowed to carry programming in which the owner of
such cable system has an attributable interest; and (iii) consider the
necessity and appropriateness of imposing limitations on the degree to
which multichannel video programming distributors (including cable
operators) may engage in the creation or production of video
programming. On September 23, 1993, the FCC adopted regulations
establishing a 30 percent limit on the number of homes nationwide that
a cable operator may reach through cable systems in which it holds an
attributable interest (attributable for these purposes is defined as a
five percent or greater ownership interest or the existence of any
common directors), with an increase to 35 percent if the additional
cable systems are minority controlled. However, the FCC stayed the
effectiveness of its ownership limits pending the appeal of a
September 16, 1993 decision by the United States District Court for
the District of Columbia which, among other things, found
unconstitutional the provision of the 1992 Cable Act requiring the FCC
to establish such ownership limits. On appeal, however, the United
States Court of Appeals for the District of Columbia Circuit upheld
the provision. As a result, the Company's ability to acquire
interests in additional cable systems may be affected.

On September 23, 1993, the FCC also adopted regulations limiting
carriage by a cable operator of national programming services in which
that operator holds an attributable interest (using the same
attribution standards as discussed above) to 40 percent of the first
75 activated channels on each of the cable operator's systems. The
rules provide for the use of two additional channels or a 45 percent

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limit, whichever is greater, provided that the additional channels
carry minority controlled programming services. The regulations also
grandfather existing carriage arrangements which exceed the channel
limits, but require new channel capacity to be devoted to unaffiliated
programming services until the system achieves compliance with the
regulations. Channels beyond the first 75 activated channels are not
subject to such limitations, and the rules do not apply to local or
regional programming services.

In the same rule-making proceeding, the FCC concluded that
additional restrictions on the ability of multichannel distributors to
engage in the creation or production of video programming presently
are unwarranted.

Under the 1992 Cable Act and the FCC's regulations, a cable
operator could not hold a license for MMDS and DBS systems within the
same geographic area in which it provides cable service. The 1996 Act
would allow such ownership if effective competition exists in that
geographic area.

The 1992 Cable Act contains numerous other provisions which,
together with the 1984 Cable Act, create a comprehensive regulatory
framework. Violation by a cable operator of the statutory provisions
or the rules and regulations of the FCC can subject the operator to
substantial monetary penalties and other significant sanctions such as
suspension of licenses and authorizations, issuance of cease and
desist orders and imposition of penalties. Many of the specific
obligations imposed on the operation of cable television systems under
these laws and regulations are complex, burdensome and increase the
Company's cost of doing business.

COPYRIGHT REGULATIONS. The Copyright Revision Act of 1976 (the
"Copyright Act") provides cable television operators with a compulsory
license for retransmission of broadcast television programming without
having to negotiate with the stations or individual copyright owners
for retransmission consent for the programming. The availability of
the compulsory license is conditioned upon the cable operators'
compliance with applicable FCC regulations, certain reporting
requirements and payment of appropriate license fees, including
interest charges for late payments, pursuant to the schedule of fees
established by the Copyright Act and regulations issued thereunder.
The Copyright Act also empowers the Copyright Office to periodically
review and adjust copyright royalty rates based on inflation and/or
petitions for adjustments due to modifications of FCC rules. The FCC
has recommended to Congress the abolition of the compulsory license
for cable television carriage of broadcast signals, a proposal that
has received substantial support from members of Congress. Any
material change in the existing statutory copyright scheme could

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significantly increase the costs of programming and be adverse to the
business interests of the Company.

PRIVACY. The 1984 Cable Act imposes a number of restrictions on
the manner in which cable system operators can collect and disclose
data about individual system customers. The statute also requires
that the system operator must periodically provide all customers with
written information about its policies regarding the collection and
handling of customer data, their privacy rights under federal law and
their enforcement rights. In the event that a cable operator is found
to have violated the customer privacy provisions of the 1984 Cable
Act, it could be required to pay damages, attorneys' fees and other
costs. Under the 1992 Cable Act, the privacy requirements are
strengthened to require that cable operators take such actions as are
necessary to prevent unauthorized access to personally identifiable
information.

STATE AND LOCAL REGULATION. Because cable television systems
use local streets and rights-of-way, cable television systems are
generally licensed or franchised by local municipal or county
governments and, in some cases, by centralized state authorities with
such franchises being given for fixed periods of time subject to
extension or renewal largely at the discretion of the issuing
authority. The specific terms and conditions of such franchises vary
significantly depending on the locality, population, competitive
services and a number of other factors. While this variance takes
place among systems of essentially the same size in the same state,
franchises generally are comprehensive in nature and impose
requirements on the cable operator relating to all aspects of cable
service including franchise fees, technical requirements, channel
capacity, subscriber rates, consumer and service standards, access
channel and studio facilities, insurance and penalty provisions.
Local franchise authorities generally control the sale or transfer of
cable systems to third parties. The franchising process, like the
federal regulatory climate, is highly politicized and no assurances
can be given that the Company's franchises will be extended or renewed
or that other problems will not be encountered at the local level. In
connection with the franchise renewal process, LFAs commonly request
the provision of enhanced cable system technology as a condition of
franchise renewal. The 1984 Cable Act grants certain protective
procedures in connection with renewal of cable franchises, which
procedures were further clarified by the renewal provisions of the
1992 Cable Act.

PROPOSED CHANGES IN REGULATION. The regulation of cable
television systems at the federal, state and local levels is subject
to the political process and has been in constant flux over the past
decade. Material changes in the law and regulatory requirements must
be anticipated and there can be no assurance that the Company's

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business will not be affected adversely by future legislation, new
regulation or deregulation. Legislative, administrative and/or
judicial action may change all or portions of the foregoing statements
relating to competition and regulation.

CABLE PROVISION OF INTERNET SERVICES. Transmitting indecent
material via the Internet is made criminal by the 1996 Act. However,
on-line access providers are exempted from criminal liability for
simply providing interconnection service; they are also granted an
affirmative defense from criminal or other action where in "good
faith" they restrict access to indecent materials. The 1996 Act
further exempts on-line access providers from civil liability for
actions taken in good faith to restrict access to obscene, excessively
violent or otherwise objectionable material.

REGULATION OF INTERNET SERVICES. Internet-related services are not
currently subject to direct regulation by the FCC or any other United
States agency, other than regulation applicable to businesses generally.
The FCC recently requested comments on a petition filed by the America's
Carriers Telecommunication Association which requests that the FCC regulate
certain voice transmissions over the Internet as telecommunications
services. Changes in the regulatory environment relating to the
telecommunications or Internet-related services industry could have an
adverse effect on the Company's Internet-related services business. The
1996 Act may permit telecommunications companies, RBOCs or others to
increase the scope or reduce the cost of their Internet access services.
In its recent access charge reform proceeding, the FCC concluded that
incumbent LECs may not assess interstate access charges on information
service providers, but stated that it planned to address issues relating
to information service providers' use of the public switched network as
part of a broader set of issues under review in a related proceeding.
Given the present unsettled nature of the regulation of Internet services,
the Company cannot predict the effect that the 1996 Act or any future
legislation, regulation or regulatory changes may have on its business.

In addition to the regulatory uncertainties, the law relating to the
liability of on-line services providers and Internet access providers for
information carried on, disseminated through or hosted on their systems is
currently unsettled. Several private lawsuits seeking to impose such
liability are currently pending. In one action brought against an
Internet access provider, RELIGIOUS TECHNOLOGY CENTER V. NETCOM ON-LINE
COMMUNICATION SERVICES, INC., the United States District Court for the
Northern District of California ruled in a preliminary phase that under
certain circumstances Internet access providers could be held liable for
copyright infringement. The case has been settled by the parties.

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communications. On June 12, 1996, however, a panel of three federal judges
granted a preliminary injunction barring enforcement of this portion of the
1996 Act to the extent that enforcement is based upon allegations other
than obscenity or child pornography as an impermissible restriction on the
First Amendment's right of free speech. That decision has been appealed to
the United States Supreme Court. In addition, Congress, in consultation
with the United States Patent and Trademark Office and the Clinton
Administration's National Information Infrastructure Task Force, is
currently considering legislation to address the liability of on-line
service providers and Internet access providers, and numerous states have
adopted or are currently considering similar types of legislation. The
imposition upon Internet access providers or Web hosting sites of potential
liability for materials carried on or disseminated through their systems
could require the Company to implement measures to reduce its exposure to
such liability, which may require the expenditure of substantial resources
or the discontinuation of certain product or service offerings. The Company
believes that it is currently unsettled whether the 1996 Act prohibits and
imposes liability for any services provided by Iway should the content or
information transmitted be subject to the 1996 Act.

The law relating to the liability of on-line service providers and
Internet access providers in relation to information carried, disseminated
or hosted also is being discussed by the World Intellectual Property
Organization in the context of ongoing consideration of updating existing,
and adopting new, international copyright treaties. Similar developments
are ongoing in the United Kingdom and other jurisdictions. The scope of
authority of various regulatory bodies in relation to on-line services is
currently uncertain.

The Office of Telecommunications in the United Kingdom recently has
published a consultative document setting out a number of issues for
discussion, including the roles of traditional telecommunications and
broadcasting regulators with respect to on-line services. The Securities
Investment Board in the United Kingdom is investigating the status of on-
line services and the transmission of investment information over networks
controlled by access providers. Such transmissions may make an access
provider liable for any violation of securities and other financial
services legislation and regulations. Decisions regarding regulation,
enforcement, content liability and the availability of Internet access in
other countries may significantly affect the ability to offer certain
services worldwide and the development and profitability of companies
offering Internet and on-line services in the future. For example, it has
been reported that CompuServe recently removed certain content from its
services worldwide in reaction to law enforcement activities in Germany,
and it has been reported that an Internet access provider in Germany has
been advised by prosecutors that it may have liability for disseminating
neo-Nazi writings by providing access to the Internet where these materials
are available.

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The increased attention focused upon liability issues as a result of
these lawsuits, legislation and legislative proposals could affect the
growth of Internet use. Any costs incurred as a result of liability or
asserted liability for information carried on or disseminated through its
systems could have a material adverse effect on the business, financial
condition and results of operations of the Company.

SUMMARY ONLY. The foregoing is only a summary of some of the present
and proposed federal, state and local regulations and legislation relating
to the Company's businesses. Other existing federal regulations, copyright
licensing and, in many jurisdictions, state and local regulatory
requirements, currently are the subject of a variety of judicial
proceedings, legislative hearings and administrative and legislative
proposals which could change, in varying degrees, the manner in which the
Company operates. Neither the outcome of these proceedings nor their impact
upon the Company can be predicted at this time.

EMPLOYEES

As of December 31, 1996, the Company employed 76 employees in the
United States, none of whom were subject to any collective bargaining
agreements.

ENVIRONMENTAL AND OTHER MATTERS

Except for site-specific issues, environmental issues tend to impact
members of the telecommunications industry in consistent ways. The
United States Environmental Protection Agency ("EPA") and other agencies
regulate a number of chemicals and substances that may be present in
facilities used in the provision of telecommunications services. These
include preservatives which may be present in certain wood poles, asbestos
which may be present in certain underground duct systems and lead which may
be present in certain cable sheathing. Components of the Company's network
may include one or more of these chemicals or substances. The Company
believes that in their present uses, none of such facilities of the Company
poses any significant environmental or health risk that derives from EPA
regulated substances. If EPA regulation of any such substance is
increased, or if any facilities are disturbed or modified in such a way
as to require removal of the substance(s), special handling, storage and
disposal may be required for any such facilities removed from use. At
this time the Company is not subject to any environmental litigation.

PROPERTIES

The tangible assets of the Company include a substantial investment
in telecommunications and cable equipment. The net book value of the
Company's fixed assets was $14.4 million at December 31, 1996.

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The principal properties of the Company do not lend themselves to
simple description by character and location. The Company's investment in
property, plant and equipment consisted of the following at December 31,
1995 and 1996:
<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
(IN THOUSANDS)
<CAPTION>
FIXED ASSETS 1996 1995
<S> <C> <C>
Telecommunications Plant $16,923 $15,452
Cable Systems 4,870 1,355
Other Equipment 2,510 2,100
Land and Buildings 1,604 1,581
Other 354 462
</TABLE>

Telecommunications plant consists of switching equipment, transmission
equipment and related facilities, aerial cable, underground cable, conduit
and wiring. Cable systems consist of head-end, distribution and subscriber
equipment. Other equipment consists of public telephone instruments and
telephone equipment (including PBXs) used or leased by the Company in its
operations, poles, furniture, office equipment, vehicles and other work
equipment. Land and buildings consist of land owned in fee and
improvements thereto, principally central office buildings. Other property
consists primarily of plant under construction, capital leases and
leasehold improvements.

The Company's rights-of-way for its telecommunications and cable
transmission systems are typically held under leases, easements, licenses
or governmental permits. All other major equipment and physical facilities
are owned in fee and are operated, constructed and maintained pursuant to
rights-of-way, easements, permits, licenses or consents on or across
properties owned by others.

The Company believes that standard practices prevailing in the
telephone industry are followed by the Company's telephone operating
subsidiaries in the construction and maintenance of plant and facilities,
and that all properties presently being used for operations of the Company
are suitable, well maintained and adequately equipped for the purposes for
which they are used. Substantially all of the Company's properties are
subject to mortgage liens held by the RUS and the RTFC.

The following property is owned in fee by the Company:

Headquarters building - Irene, South Dakota
13,000 sq. ft., single story brick structure, with 8,500 sq. ft.
for offices, 3,500 sq. ft. being remodeled for office space and
1,200 sq. ft. for storage. Originally built in 1977 and expanded
twice since then.
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Main warehouse - Irene, South Dakota
5,000 square feet, metal structure.

Service building - Irene, South Dakota
3,000 square feet, metal structure, with 600 sq. ft. in office space
and the balance in storage.

Network switching center - Lennox, South Dakota
1,360 sq. ft. for switching, 2,000 sq. feet for storage.

New network switching center - Viborg, South Dakota
Under construction (site preparation only to date), 7,000 sq. ft.,
single story brick structure, on six-acre site in an industrial
park.

Switching and equipment buildings
Irene, South Dakota - telephone 900 sq. ft.
Wakonda, South Dakota - 800 sq. ft.
Gayville, South Dakota - 600 sq. ft.
Parker, South Dakota - 1,400 sq. ft.
Alsen, South Dakota - 1,000 sq. ft., plus 400 sq. ft. for storage.
Flyger, South Dakota - 900 sq. ft.
Worthing, South Dakota - 1,100 sq. ft.
Beresford, South Dakota - 700 sq. ft.
Hurley, South Dakota - 900 sq. ft.
Sundowner site - Sioux Falls, South Dakota - 200 sq. ft. with
additional 250 sq. ft. building on order, one-hundred foot
wireless equipment tower under construction, on 2.5 acre site
(owned by the Company).

The following property is leased by the Company:

Beresford, South Dakota - 250 sq. ft. (office)
9th & Phillips site - Sioux Falls, South Dakota - 3,000 sq. ft.
(office - TCIC and Iway operations).

The Company also has various CATV equipment buildings, all of which
are small (less than 300 sq. ft.) and most of which are on leased land in
various communities served by the Company. This list of properties does
not include properties owned or leased by subsidiaries of the Company, none
of which is material. All properties owned by the Company are subject to
liens for loans obtained in the ordinary course of business.

LEGAL PROCEEDINGS

There are no material pending legal proceedings against the Company.
The Company is subject from time to time to legal proceedings and claims
that arise in the ordinary course of business and frequently participates
in regulatory proceedings in front of the South Dakota Public Utilities

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Commission. However, in the opinion of management, none of these
proceedings is material to the Company's consolidated financial condition
or results of operations.

MARKET FOR COMMON AND PREFERRED STOCK AND DIVIDENDS

MARKET INFORMATION AND HOLDERS. There is no established public
trading market for Cooperative Common Stock. Shares of Cooperative Common
Stock may only be sold to individuals or entities who are eligible for
membership in the Cooperative at the $5.00 par value, and only after
providing the Cooperative a right of first refusal. Members are entitled
to own only one share of Cooperative Common Stock. There are no
outstanding options or warrants to purchase shares of Cooperative Common
Stock, nor are there any outstanding securities that are convertible into
shares of Cooperative Common Stock. The Cooperative has not agreed to
register under the Securities Act any Cooperative Common Stock for sale by
security holders and Rule 144 issued pursuant to such act is not available
for sales of Cooperative Common Stock by Members. As of December 31, 1996,
there were 5,237 Members of record of the Cooperative.

There also is no established public trading market for Preferred
Stock. Shares of Preferred Stock currently outstanding are subject to
substantial restrictions on transferability. At the date of this
Prospectus and Ballot/Proxy Statement, there are outstanding options and
warrants to purchase up to 2,016 shares of Preferred Stock. There are no
outstanding securities that are convertible into shares of Preferred Stock.
The Cooperative has not agreed to register under the Securities Act any
Preferred Stock for sale by security holders and Rule 144 issued pursuant
to such act is not available for sales of Preferred Stock. As of the date
of this Prospectus and Ballot/Proxy Statement, there were seven holders of
record of Preferred Stock.

If the Conversion or the Merger is consummated, the Resulting Company
expects to issue up to 1,050,000 shares of Resulting Company common stock
and warrants and options to purchase no more than 200,000 shares of
Resulting Company common stock in connection with the transaction. (See
"THE CONVERSION" and "THE MERGER.")

DIVIDENDS. The Cooperative's articles of incorporation prohibit the
Cooperative from paying dividends on Cooperative Common Stock. Although
the Resulting Company, as a business corporation, would have the ability to
pay dividends, certain covenants in existing loan agreements between the
Cooperative and the RUS to which the Resulting Company would be subject, as
well as federal statutes and regulations which apply to RUS borrowers,
limit the circumstances under which the Resulting Company would be
permitted to pay dividends or make other distributions to stockholders.
The RUS must authorize distributions other than in shares of stock unless
certain financial ratio requirements are met. The Cooperative's articles
of incorporation permit the Cooperative to pay dividends on Preferred

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Stock, although dividends have never been declared or paid on Preferred
Stock.

CERTAIN AGREEMENTS AFFECTING CAPITAL STOCK

TCIC AND IWAY AGREEMENTS. In connection with the Cooperative's
acquisition of TCIC and Iway, the Cooperative entered into two agreements,
one with the former shareholders of TCIC (the "TCIC Agreement") and another
with the former shareholders (collectively, together with the former TCIC
shareholders, the "Sellers") of Iway (the "Iway Agreement."). Under the
terms of these agreements, the Cooperative issued an aggregate of 931 shares
of Preferred Stock to the TCIC Sellers and an aggregate of 241 shares of
Preferred Stock to the Iway Sellers.

The Preferred Stock has no voting rights, except as otherwise provided
by SDBCA, and has no right to dividends unless the Cooperative's Board
of Directors declares dividends on the Preferred Stock. In the event
that the Cooperative liquidates, dissolves or otherwise winds up its
affairs, the holders of the Preferred Stock would receive a liquidation
preference in the amount of $1,000 per share of Preferred Stock. This
liquidation preference would be paid to the holders of the Preferred Stock
prior to any payment to the holders of Cooperative Common Stock.

Furthermore, the TCIC Agreement and the Iway Agreement expressly
acknowledge that the Cooperative anticipates converting itself into a
business corporation and becoming a public corporation with shares of stock
registered under the Securities Act. If the Conversion or the Merger is
not consummated prior to September 1, 1997, the holders of the Preferred
Stock issued under the TCIC Agreement and the Iway Agreement are entitled
to a "Non-Liquidity Fee" in the amount of $80 annually per share until the
Conversion or the Merger is consummated. Non-Liquidity Fees accrue on June
15 and December 15 of each year during the terms of the agreements (with
certain exceptions). The first accrual date is December 15, 1997, and the
Non-Liquidity Fee accrued on that date would be $26.67 per share of
Preferred Stock. On each subsequent accrual date, if any, prior to the
consummation of the Conversion and/or the Merger, the Non-Liquidity Fee
accrued would be $40 per share of Preferred Stock. Non-Liquidity Fees may
be paid in any form that the Cooperative's Board of Directors determines,
including cash or the issuance of one additional share of Preferred Stock
for each $1,000 of Non-Liquidity Fees. No interest is payable on Non-
Liquidity Fees accrued but not paid. Any dividends paid with respect to
shares of Preferred Stock reduce the amount of accrued but unpaid Non-
Liquidity Fees.

In the event that the Conversion or the Merger is consummated, the
Preferred Stock would automatically be converted into shares of Resulting
Company common stock. Under the TCIC Agreement, the number of shares of
Resulting Company common stock to be issued in exchange for the Preferred
Stock would be such that the TCIC Sellers, as the sole owners of the 931

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shares of Preferred Stock, would collectively receive a number of shares of
Resulting Company common stock that would equal 6.75 percent of the
outstanding Resulting Company common stock immediately after the Conversion
or the Merger, assuming (i) that the Conversion or the Merger took place on
November 30, 1996, and (ii) that all Capital Credits outstanding on the
books of the Cooperative on that date, reduced by the amount of cash used
by the Cooperative to retire Capital Credits or cash out odd-lot holders
(subject to a $500,000 limit), were converted into additional shares of
Resulting Company common stock. An identical provision is contained in the
Iway Agreement, except that the percentage of outstanding Resulting Company
common stock that the Iway Sellers would receive immediately after the
Conversion or the Merger, as the sole owners of 241 shares of Preferred
Stock, is 1.75 percent rather than 6.75 percent.

STOCK OPTIONS. As part of its executive compensation of Thomas W.
Hertz, Chief Executive Officer and General Manager of the Cooperative, and
Craig A. Anderson, Executive Vice President - Marketing and Chief Financial
Officer of the Cooperative, the Board of Directors of the Cooperative has
granted to each of Messrs. Hertz and Anderson stock options to purchase 767
shares of Preferred Stock, which would automatically become options to
purchase Resulting Company common stock if the Conversion or the Merger is
consummated. (See "ADDITIONAL SECURITIES OF THE RESULTING COMPANY--Stock
Options.")

WARRANTS. Pursuant to the TCIC Agreement and the Iway Agreement, and
as part of the consideration therefor, the Board of Directors of the
Cooperative granted to the TCIC Sellers and the Iway Sellers warrants to
purchase up to an aggregate of 482 shares of Preferred Stock ("Warrants"),
which would automatically become Warrants to purchase Resulting Company
common stock if the Conversion or the Merger is consummated. (See
"ADDITIONAL SECURITIES OF THE RESULTING COMPANY--Warrants.")

STANDSTILL AGREEMENTS. In connection with the issuance of shares of
Preferred Stock to the TCIC Sellers and Iway Sellers, the Cooperative
entered into standstill agreements ("Standstill Agreements") with each of
such persons that restrict the abilities of the TCIC Sellers and Iway
Sellers from selling such stock and taking various other actions, as
specified in the Standstill Agreements. The restrictions embodied in the
Standstill Agreements would continue to be applicable to shares of
Resulting Company common stock issuable to the TCIC Sellers and Iway
Sellers in exchange for their Preferred Stock if the Conversion or the
Merger is consummated. (See "ADDITIONAL SECURITIES OF THE RESULTING
COMPANY--Standstill Agreements.")

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion is provided by the Cooperative's management
as its analysis of the Cooperative's financial condition and results of

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operations. This analysis should be read in conjunction with the separate
historical financial statements of the Cooperative and notes thereto
included as Appendices G and H to this Prospectus and Ballot/Proxy Statement.

OVERVIEW

The Company is a diversified telecommunications services company. The
Company, either directly or through wholly owned subsidiaries, currently
provides local and network access services, long distance telephone
services, operator assisted calling services, telecommunications equipment
sale and leasing services, cable television services and Internet
access and related services. (See "DAKOTA COOPERATIVE TELECOMMUNICATIONS,
INC.--Business.")

The Company's local exchange services in South Dakota provide a
majority of the Company's revenue and income. In 1996, the Company made
the strategic decision to expand its operations into related
telecommunications businesses, including expanding its cable television
services. During 1996, the Company purchased the assets of 19 cable
television systems from three companies that provided cable service to
various communities in addition to the assets purchased by the Company.
In December 1996, the Company, through a wholly owned subsidiary, merged
with TCIC, a South Dakota-based provider of long distance and operator
services. Also in December 1996 the Company merged with Iway, one of
South Dakota's largest Internet service providers. Both TCIC and Iway
continue to operate as wholly owned subsidiaries of the Cooperative.

The Company repositioned itself during 1996. In late 1995, the
Company finalized its plans to substantially rebuild its telecommunications
network to increase the number and quality of the telecommunications
services it can offer and to provide an infrastructure for future expansion
into new markets. As a result, the Company reassessed the remaining useful
life of its existing facilities in 1995 and significantly increased its
capital expenditures in 1996. In addition, to implement its growth plans,
the Company acquired additional operator services, Internet and cable
television businesses and expanded its employee base from 34 employees at
December 31, 1995, to 76 employees at December 31, 1996 and to 83 employees
at March 31, 1997, resulting in additional increases in amortization
expense and employee-related operating expenses. The Company's rebuilding
plans call for a substantial increase in capital expenditures in 1997 to
approximately $16,000,000, which the Company plans to finance primarily
through additional long-term debt. While the Company anticipates that its
revenue base will continue to grow in 1997 and 1998 as it markets new
services, the resultant higher expense levels from a combination of higher
amortization, depreciation and interest expense, as well as additional
employee expense, will likely cause the Company to recognize net after-tax
losses in those years.

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<PAGE>
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
Dollars in Thousands FOR THE YEAR ENDED DECEMBER 31, FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------- ------------------------------------
1995 1996 1996 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Capital Expenditures $ 1,554.1 $ 5,751.6 $ 1,704.1 $ 888.5
Cash Provided From Operations 1,950.2 1,961.8 963.4 1,324.6
Cash Used for Investment 725.7 7,516.2 2,509.3 1,016.3
Cash Provided From Financing 103.3 1,353.0 832.5 221.3
Long-Term Debt Incurred 342.0 4,399.3 1,631.3 --
Total Capital Structure $19,049.1 $22,448.3 $19,983.4 $22,211.0
Percent of Debt to Total Capital 72% 71% 73% 72%
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 AND 1997

The Company's total capital structure, composed of total equity plus
outstanding long term debt, was $22,211,000 at March 31, 1997 compared to
$19,983,400 at March 31, 1996. The increase in total capital structure at
March 31, 1997 of $2,227,600 was composed primarily of additional outstanding
long-term debt used to acquire additional cable television system assets in
July 1996 and $1,172,000 in additional capital from the issuance of preferred
stock in the acquisitions of TCIC and Iway in December 1996.

Cash provided from operations, which is the Company's primary source
of liquidity, increased from $963,400 during the first quarter of 1996 to
$1,324,600 during the first quarter of 1997. This increase reflects the
operating results from the additional cable television systems purchased in
1996 and the addition of operating results from the TCIC and Iway
subsidiaries acquired in December 1996.

Cash used for investment decreased from $2,509,300 in the first
quarter of 1996 to $1,016,300 in the first quarter of 1997, primarily due to
the purchase of cable television assets in February 1996.

Cash provided from financing decreased from $832,500 during the first
quarter of 1996 to $221,300 in the first quarter of 1997. This decrease
was primarily due to the $1,631,300 in long-term debt incurred in 1996 to
finance the purchase of cable system assets.

154
<PAGE>
TWELVE MONTHS ENDED DECEMBER 31, 1995 AND 1996

The Company's total capital structure was $22,448,300 at December 31,
1996, compared to a total capital structure of $19,049,100 at December 31,
1995. The increase in total capital in 1996 of $3,399,200 consisted primarily
of additional outstanding long-term debt of $2,284,000 and $1,172,000 in
additional capital from the issuance of preferred stock to acquire TCIC and
Iway in December 1996.

Cash provided from operations was $1,962,000 in 1996 compared to
$1,951,000 in 1995, largely unchanged. Cash used in investing activities
was $7,516,000 in 1996, up from $725,700 in 1995. This increase is primarily
due to increased capital expenditures in 1996 as the Company began
rebuilding its transmission network. Investing activities for 1995 also
included cash totaling $1,142,000 that was received from the sale of the
Company's investment in certain cellular operations. Cash provided from
financing activities was $1,353,000 in 1996, up from $103,300 in 1995. The
increase in 1996 was primarily attributable to increased long-term
borrowings to finance the Company's 1996 capital expenditures program. The
Company believes that it has adequate internal and external resources
available to finance its ongoing operating requirements, but will need
additional long-term financing to meet its planned $15,000,000 network
construction program. The current anticipated capital expenditures for the
network construction program are planned for fiber optic cable and
switching equipment (approximately $10,000,000), head end equipment and
cabling (approximately $4,000,000) and miscellaneous equipment and building
improvements (approximately $1,500,000). The Company has obtained a
financing commitment from the RTFC to provide this financing. (See "RISK
FACTORS--Significant Capital Requirements," "--Competition" and "--Dividend
Restrictions and Other Restrictive Covenants"). This financing is subject to
negotiation and various other contingencies and may or may not be used by the
Company. The Company has obtained approval of this financing.

The Company's existing long-term debt consists primarily of a series
of loans from the RUS (formerly the Rural Electrification Association)
which impose numerous restrictive covenants on the Company and its
operations. (See "RISK FACTORS--Covenants in Rural Utilities Service Loan
Agreements"). The weighted average interest rate on these loans at December
31, 1996 was 4.4 percent. The Company had an unused borrowing capacity
under its current RUS loan commitment of $3,983,000 at December 31, 1996
and $3,929,645 at March 31, 1997. In addition, in 1996 the Company applied
to the RUS to redesign and increase the commitment of the RUS to $28,000,000
to finance the Company's network upgrade program. The RUS has not yet
approved this request and there is no assurance that such approval can be
obtained. The Company has contacted several other lenders to discuss
possible financing for its 1997 construction program and has received a
commitment letter and approval from the RTFC to cover all of the Company's
anticipated 1997 capital expenditure requirements as well as to refinance the
Company's outstanding RUS loan amounts. See "RISK FACTORS--Significant

155
<PAGE>
Capital Requirements," "--Competition" and "--Dividend Restrictions and Other
Restrictive Covenants."

During 1996, the Company and its subsidiaries increased long-term debt
by $4,399,000, compared to a $342,000 increase in 1995. Approximately
$3,300,000 of the 1996 increase was related to the acquisition of the
assets of 19 additional cable television systems and was obtained from the
RTFC. The balance of the 1996 loans and the 1995 borrowings were obtained
from the RUS. The Company and its subsidiaries expect these and other
sources to continue to be available for future borrowings.

RESULTS OF OPERATIONS

SUMMARY OF CONSOLIDATED OPERATIONS.

<TABLE>
<CAPTION>
Dollars in Thousands FOR THE YEAR ENDED DECEMBER 31, FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------- ------------------------------------
1995 1996 1996 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Total Revenues $ 6,115.5 $ 7,808.8 $ 1,648.0 $ 2,752.0
Depreciation and Amortization 1,701.0 2,434.4 557.9 761.4
Other Costs and Expenses 3,572.6 5,296.5 1,009.5 2,073.7
Operating Income (Loss) 841.9 77.9 80.6 (83.1)
Other Income (Expense) 593.5 (413.8) (75.1) (151.1)
Income Tax Expense (Benefit) 301.9 (175.7) 5.5 (36.5)
Net Income (Loss) $ 1,133.5 $ (160.2) $ -- $ (197.7)
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 AND 1997

Revenues increased from $1,648,000 in the first quarter of 1996 to
$2,752,000 in the first quarter of 1997, an increase of $1,104,000, or 67
percent. This increase reflects the impact of access rate increases in the
Company's telephone operations, the operation of the new cable system assets
purchased in 1996 and additional revenues of $313,200 and $220,000 from
the TCIC and Iway operations, respectively.

Depreciation and amortization increased from $557,900 in the first
quarter of 1996 to $761,400 in 1997, an increase of $203,500, or 36 percent.
Approximately $30,700 of this increase was due to the amortization of the
excess of cost over net assets acquired from the acquisitions of TCIC and
Iway. An additional $19,500 of this increase is due to the depreciation of
assets used in the TCIC and Iway operations. The balance of this increase
is due primarily to the depreciation of additional cable television assets

156
<PAGE>
purchased in 1996 and other assets installed by the Company during 1996 as
part of its network construction program.

Other costs and expenses increased from $1,009,500 in the first
quarter of 1996 to $2,073,700 in the first quarter of 1997, an increase of
$1,064,200, or 105 percent. Of this increase, $365,300 and $185,900 is due to
the additional costs and expenses from the operations of TCIC and Iway,
respectively. The remaining increase is primarily due to increased employee
costs in the Company's telephone and cable television operations.

Other expense approximately doubled in the first quarter of 1997 from
$75,100 in the first quarter of 1996 to $151,100 in 1997. This increase is
primarily due to increased interest expenses associated with the increase in
long-term debt incurred by the Company to purchase cable television assets in
1996 and to fund the Company's 1996 capital expenditures. See the discussion
of "Interest Expense," below, for additional information related to changes
in interest expense levels.

Income tax expense decreased from an expense of $5,500 in the first
quarter of 1996 to additional income of $36,500 in the first quarter of
1997 due to the carryback of certain net operating losses to prior years.
See the discussion of "Income Taxes," below, for additional information
related to the Company's tax status.

See the discussion of "Results of Business Segment Operations," below,
for a more detailed explanation of the results of operations in the Company's
telephone and cable television operations.

TWELVE MONTHS ENDED DECEMBER 31, 1995 AND 1996

In 1996, revenues increased to $7,809,000, up from $6,116,000 in 1995.
This represents an increase of 28 percent in 1996 compared to 1995. This
increase reflects the addition of 19 new cable systems during 1996 as well as
rate increases for the Company's local telephone services. Total costs and
expenses increased to $7,731,000, up from $5,274,000 in 1995. This
represents an increase of 47 percent in 1996 compared to 1995. The increase
in 1996 expenses reflects the additional operating expense associated with
the new cable assets purchased during that year as well as an increase in
depreciation and amortization expense and employee costs for the Company's
telephone operations. The Company's consolidated net income or loss for 1996
was a loss of $160,000, compared to net income of $1,133,000 in 1995, a
decrease of 114 percent in 1996 compared to 1995. The 1995 results include a
one-time pre-tax net gain in the amount of $686,000 related to the sale of a
cellular investment made by the Company.

Other income and expense consists primarily of interest and dividend
income, interest expense and gains and losses from the disposition of
non-operating assets and investments. Other income decreased $1,000,000, or
170 percent, in 1996 primarily due to the unusual net after-tax increase in

157
<PAGE>
1995 from the one-time sale of the Company's investment in cellular telephone
operations. The 1996 decrease also reflects additional interest expense
from the Company's increased long-term debt over 1995.

RESULTS OF BUSINESS SEGMENT OPERATIONS

The Company currently operates with two major business segments:
telephone operations, which includes all operations other than cable
television; and cable television operations. The following sections
discuss the operating results for these two segments.

TELEPHONE OPERATIONS

<TABLE>
<CAPTION>
Dollars in Thousands FOR THE YEAR ENDED DECEMBER 31, FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------- -------------------------------------
1995 1996 1996 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Local Service $ 856.1 $ 1,058.7 $ 221.5 $ 306.9
Long Distance Toll Service 1,931.7 1,996.3 485.2 772.3
Access Service 2,761.8 3,267.0 689.1 882.6
Other Revenues 34.5 140.8 28.9 398.5
--------- --------- --------- ---------
Total Revenue 5,584.1 6,462.7 1,424.7 2,360.3
Depreciation and Amortization 1,632.2 2,011.0 493.3 628.4
Other Costs and Expenses 3,220.0 3,997.6 776.7 1,722.4
--------- --------- --------- ---------
Operating Income $ 731.9 $ 454.1 $ 154.7 $ 9.5
Access Lines 5,935 5,973 5,958 5,999
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 AND 1997

Local service revenues are earned by the Company from the provision of
local exchange, local private line and public telephone services. Local
service revenues increased $85,400, or .04 percent, in the first quarter of
1997 compared to the first quarter of 1996. This increase was due to a local
service rate increase approved by the Company's Board of Directors in
December 1995 and implemented in two steps in February and July 1996.

Long distance toll revenues are received from customers who elect to
use the Company to complete their intrastate and interstate long distance
calls. Long distance toll revenues increased $287,100, or 59 percent, in the
first quarter of 1997 compared to the same period in 1996. This increase was
due primarily to the additional long distance revenues from the Company's
TCIC operations.
158
<PAGE>
Access revenues are received from IXCs for their use of the Company's
local exchange facilities to provide long distance services to the IXCs'
customers. Access service revenues increased $193,500, or 28 percent, in the
first quarter of 1997 from the first quarter of 1996. Approximately eight
percent of this increase was attributable to increased usage of IXC long
distance services by IXC customers living in the Company's local service
area. The remaining 20% increase was due to rate increases put into effect
by the Company in the fourth quarter of 1996.

Other revenues increased substantially from $28,900 in the first
quarter of 1996 to $398,500 in the first quarter of 1997. Of this increase,
$222,100 and $137,300 were due to additional Internet service and
operator services revenue from Iway and TCIC, respectively.

Depreciation and amortization expense increased $135,100, or 27 percent,
in the first quarter of 1997 compared to the first quarter of 1996. This
increase was caused by the depreciation of additional assets placed in
service by the Company during 1996.

Other costs and expenses increased $945,700, or 122 percent, in the
first quarter of 1997 compared to the first quarter of 1996. Approximately
$60,000 of this increase was attributable to increased engineering and
consulting fees incurred by the Company to plan for its new billing system
and 1997 network construction projects. Of this increase, $262,000 and
$125,300 were due to normal additional operating expenses of TCIC and Iway,
respectively. The remaining increase is primarily due to increased employee
expenses associated with the expansion of the Company's employee base from
41 employees at March 31, 1996, to 83 employees at March 31, 1997, an
increase of 102 percent.

TWELVE MONTHS ENDED DECEMBER 31, 1995 AND 1996

Local service revenues increased $202,600, or 24 percent, in 1996
compared to 1995. The 1996 increase was due primarily to a local service
rate increase approved by the Board of Directors in December 1995 and
implemented in February and July 1996. There are no local rate requests
currently pending for the Company nor does the Company currently anticipate
any local rate increases during 1997. The Company's local service rates are
not currently regulated by the FCC or the South Dakota Public Utilities
Commission.

Long distance toll revenues increased $64,600, or three percent, in 1996
compared to 1995. These changes primarily reflect fluctuations in minutes
of use by the Company's customers.

Access revenues increased $505,200, or 18 percent, in 1996 compared to
1995. The Company reassesses its access rates and underlying cost studies
annually and adjusts its tariff rate filings and participation in NECA and
USF revenue pools accordingly. In late 1996, the Company received approval
from the South Dakota Public Utilities Commission to increase its
159
<PAGE>
intrastate access rates approximately 20 percent. The Company anticipates
that its operating costs will continue to increase in 1997 and, accordingly,
anticipates that its access revenue will increase in 1997.

Depreciation and amortization expenses increased by $378,800, or
23 percent, in 1996 as a result of the Company's additional capital
expenditures for the year, changes in the estimated useful lives of certain
assets and the amortization of costs associated with its acquisitions of TCIC
and Iway. Approximately $75,000 of this increase was due to a change in the
Company's estimate of the useful life of certain of its central office and
other telecommunications equipment. See Note 12 to the Company's
Consolidated Financial Statements.

Other telephone costs and expenses increased $777,600, or 24 percent for
1996, primarily due to the expense of $550,000 of costs associated with the
abandonment of the acquisition of eight wireline telephone exchanges. The
other expense increase of $227,600 in 1996 was primarily due to an increase
in network repair maintenance activities which were postponed in earlier
years.

CABLE TELEVISION OPERATIONS

<TABLE>
<CAPTION>
Dollars in Thousands FOR THE YEAR ENDED DECEMBER 31, FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------- ------------------------------------
1995 1996 1996 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Cable Service Revenue $ 469.4 $ 1,300.5 $ 213.6 $ 389.3
Other Revenue 61.9 45.6 9.7 2.4
--------- --------- --------- ---------
Total Cable Revenue 531.3 1,346.1 223.3 391.7
Depreciation and Amortization 68.8 423.4 64.6 133.0
Other Costs and Expenses 352.6 1,298.9 232.8 351.3
--------- --------- --------- ---------
Operating Income (Loss) $ 110.0 $ (376.2) $ (74.1) $ (92.6)
Subscribers 1,740 5,474 3,642 5,404
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 AND 1997

Cable service revenues increased $175,700, or 82 percent, in the first
quarter of 1997 compared to the first quarter of 1996. This increase was
attributable to an increase of 1,726 customers in the Company's cable
television subscriber base in February 1996 and an additional 1,762
customers in July 1996 made possible by the purchase of additional cable
system assets in those months.
160
<PAGE>
Depreciation and amortization increased $68,400, or 106 percent, in the
first quarter of 1997 compared to the first quarter of 1996. This increase
was primarily caused by the depreciation of additional operating assets
purchased by the Company in February and July of 1996.

Other costs and expenses increased $118,500, or 51 percent, in the first
quarter of 1997 compared to the first quarter of 1996. This increase was due
to additional normal operating expenses associated with operating the
additional cable system assets purchased in 1996.

TWELVE MONTHS ENDED DECEMBER 31, 1995 AND 1996

The Company's cable service revenues increased $831,000, or 177 percent,
in 1996 due to the purchase of the assets of 19 additional cable systems
during the year.

Depreciation and amortization expenses increased by $354,600, or 515
percent, in 1996 as a result of the Company's purchase of additional cable
system assets during the year, with $113,900 primarily due to the Company's
reassessment of the remaining useful life of its existing cable system
assets. See Note 12 to the Company's Consolidated Financial Statements.

Other costs and expenses increased $946,400, or 268 percent, in 1996
compared to 1995. Operating expenses increased in 1996 primarily due to the
increased level of all expenses associated with the operation of the
additional assets purchased in 1996.

INTEREST EXPENSE

THREE MONTHS ENDED MARCH 31, 1996 AND 1997

Interest expense increased $55,800, or 39 percent, in the first quarter
of 1997 compared to the first quarter of 1996. Of this increase, $22,600 was
attributable to the $1,025,500 in long-term debt assumed by the Company in
its acquisitions of TCIC and Iway in December 1996. The balance of this

161
<PAGE>
increase is due to the increase in long-term debt incurred by the Company
in 1996 to purchase additional cable system assets and to fund its 1996
capital expenditures.

TWELVE MONTHS ENDED DECEMBER 31, 1995 AND 1996

Interest expense increased $131,700, or 22 percent, in 1996 due to the
addition of long-term borrowings to finance the Company's 1996 capital
expenditures and the purchase of additional cable system assets and the
business operations of TCIC and Iway. The Company anticipates that it will
borrow substantial additional long-term funds in 1997 to finance its network
rebuilding project and, accordingly, anticipates that future interest
expense will increase significantly.

INCOME TAXES

The Company historically has operated as a stock cooperative and has
been granted tax exempt status under Section 501(c)(12) of the Code.
Accordingly, income tax expense has been related only to certain ancillary
operations, such as the Company's cable television operations and its prior
investments in cellular operations. Income tax expense decreased $477,500,
or 158 percent, in 1996 due to net operating losses in those operations.

FINANCIAL STATEMENTS

The audited consolidated financial statements of Dakota Cooperative
Telecommunications, Inc. for the years ended December 31, 1996 and 1995,
together with the notes thereto and the report of Olsen Thielen & Co., Ltd.
dated January 18, 1997, are included as Appendix G to this Prospectus and
Ballot/Proxy Statement. The unaudited consolidated financial statements of
Dakota Cooperative Telecommunications, Inc. for the three months ended
March 31, 1997 and 1996, together with the notes thereto, are included as
Appendix H to this Prospectus and Ballot/Proxy Statement.

DAKOTA TELECOMMUNICATIONS GROUP, INC.

BUSINESS

DTG would be the successor to the Cooperative if the Conversion is
consummated and currently does not exist as a separate entity. If the
Conversion is consummated, the business of DTG initially would be identical
to the business of the Cooperative. For a description of the business of
the Cooperative, see "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Business."

PROPERTIES AND LEGAL PROCEEDINGS

If the Conversion is consummated, the properties and legal proceedings
of DTG would be identical to those of the Cooperative. (See "DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC.--Properties" and "--Legal Proceedings.")
162
<PAGE>
MARKET FOR COMMON STOCK AND DIVIDENDS

MARKET INFORMATION AND HOLDERS. There would be no established trading
market for DTG Common Stock as the successor to the Cooperative. (See
"DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Market for Common and
Preferred Stock and Dividends.") If the Conversion is adopted but the Plan
of Merger is not approved, DTG intends to enter into negotiations with one
or more regional brokerage firms to act as a market maker for shares of DTG
Common Stock and intends, at a future date, to apply to have shares of DTG
Common Stock quoted for trading on The Nasdaq Stock Market. There can be
no assurance that DTG would be successful in finding a brokerage firm to
act as a market maker for DTG Common Stock or that shares of DTG Common
Stock would ever be quoted for trading on The Nasdaq Stock Market.
Similarly, there can be no assurance that a trading market would develop or
be maintained for shares of DTG Common Stock or, if it did, that it would
provide holders of DTG Common Stock a meaningful opportunity to liquidate
their equity interests in DTG at a fair value.

DIVIDENDS. As the successor to the Cooperative, DTG would have no
history of paying dividends. Unlike the Cooperative, after the Conversion
DTG would be permitted by law to pay dividends to its shareholders,
although certain covenants in existing loan agreements between the Coopera-
tive and the RUS, to which DTG would become subject, as well as federal
statutes and regulations which apply to RUS borrowers, limit the
circumstances under which DTG would be permitted to pay dividends or make
other distributions to shareholders. The RUS must authorize distributions
other than in shares of stock unless certain financial ratio requirements
are met. The amount and timing of any future dividend payments would be
based on a number of factors, including the capital requirements of DTG's
business and the financial condition of DTG. There can be no assurance
that DTG would pay any dividends at any time. DTG does not intend to pay
dividends at any time in the foreseeable future. In the future, it is
possible that agreements with lenders could continue to limit or restrict,
or place additional limitations or restrictions upon, DTG's ability to pay
dividends or the amount of dividends that DTG may pay to its shareholders.
The dividend rights of DTG Common Stock also would be subject to the rights
of any DTG Preferred Stock which may be issued in the future.

STOCK OPTIONS. If the Conversion is consummated, the options described
in "DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Certain Agreements
Affecting Capital Stock" would automatically become options to purchase
shares of DTG Common Stock. (See "ADDITIONAL SECURITIES OF THE RESULTING
COMPANY--Stock Options.")

WARRANTS. If the Conversion is consummated, the Warrants described in
"DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Certain Agreements Affecting
Capital Stock" would automatically become Warrants to purchase shares of DTG
Common Stock. (See "ADDITIONAL SECURITIES OF THE RESULTING COMPANY--
Warrants.")

163
<PAGE>
FINANCIAL STATEMENTS

DTG does not exist as an entity separate from the Cooperative and,
therefore, it does not have historical financial statements. DTG would be
the successor to the Cooperative. See Appendices G and H to this Prospectus
and Ballot/Proxy Statement for historical financial statements of the
Cooperative and "UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS" for pro forma financial statements that give effect to the
Conversion.

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.

BUSINESS

DTG Delaware is a business corporation formed under Delaware law with
general business purposes and is currently a wholly owned subsidiary of the
Cooperative. Before the proposed Merger, DTG Delaware will have no
business history. If the Merger is consummated, the business of DTG
Delaware would be identical to the business of DTG (which would be
identical to the business of the Cooperative prior to the Conversion).
For a description of the business of the Cooperative, see "DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC.--Business."

PROPERTIES AND LEGAL PROCEEDINGS

If the Merger is approved and consummated, the properties and legal
proceedings of DTG Delaware would be identical to those of DTG, which,
after the Conversion, would be identical to those of the Cooperative. (See
"DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Properties" and "--Legal
Proceedings.")

MARKET FOR COMMON STOCK AND DIVIDENDS

MARKET INFORMATION AND HOLDERS. There is no trading market for DTG
Delaware Common Stock. At the date of this Prospectus and Ballot/Proxy
Statement, there are no options or warrants to purchase, or securities
convertible into, shares of DTG Delaware Common Stock. DTG Delaware has not
agreed to register under the Securities Act any securities for sale by the
security holder and Rule 144 pursuant to such act is not available for
sales of DTG Delaware Common Stock by its stockholder. If the Merger is
consummated, DTG Delaware intends, at a future date, to enter into
negotiations with one or more regional brokerage firms to act as a market
maker for shares of DTG Delaware Common Stock and intends to apply to have
shares of DTG Delaware Common Stock quoted for trading on The Nasdaq Stock
Market. There can be no assurance that DTG Delaware would be successful in
finding a brokerage firm to act as a market maker for DTG Delaware Common
Stock or that shares of DTG Delaware Common Stock would ever be quoted for
trading on The Nasdaq Stock Market. Similarly, there can be no assurance

164
<PAGE>
that a trading market would develop or be maintained for shares of DTG
Delaware Common Stock or, if it did, that it would provide holders of DTG
Delaware Common Stock a meaningful opportunity to liquidate their equity
interests in DTG Delaware at a fair value.

DIVIDENDS. Under the Delaware Law and DTG Delaware's Certificate
of Incorporation, DTG Delaware is permitted to pay dividends to its
stockholders. DTG Delaware currently has no business history, has only
nominal assets and liabilities and has not paid dividends on DTG Delaware
Common Stock. If the Merger is consummated, holders of DTG Delaware Common
Stock would be entitled to receive dividends if, as and when declared by
DTG Delaware's Board of Directors out of funds legally available for that
purpose. However, certain covenants in existing loan agreements between
the Cooperative and the RUS, to which DTG Delaware would become subject,
as well as federal statutes and regulations which apply to RUS borrowers,
limit the circumstances under which DTG Delaware would be permitted to pay
dividends or make other distributions to stockholders. The RUS must
authorize distributions other than in shares of stock unless certain
financial ratio requirements are met. The amount and timing of any future
dividend payments would be based on a number of factors, including the
capital requirements of DTG Delaware's business and the financial condition
of DTG Delaware. There can be no assurance that DTG Delaware would pay any
dividends at any time. DTG Delaware does not intend to pay dividends at
any time in the foreseeable future. In the future, it is possible that
agreements with lenders could continue to limit or restrict, or place
additional limitations or restrictions upon, DTG Delaware's ability to pay
dividends or the amount of dividends that DTG Delaware may pay to its
stockholders. The dividend rights of DTG Delaware Common Stock are subject
to the rights of any DTG Delaware Preferred Stock which may be issued in
the future.

STOCK OPTIONS. If the Merger is consummated, the options described in
"DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Agreements Affecting Capital
Stock" would automatically become options to purchase shares of DTG
Delaware Common Stock. (See "ADDITIONAL SECURITIES OF THE RESULTING
COMPANY--Stock Options.")

WARRANTS. If the Merger is consummated, the Warrants described in
"DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.--Certain Agreements Affecting
Capital Stock" would automatically become Warrants to purchase shares of
DTG Delaware Common Stock. (See "ADDITIONAL SECURITIES OF THE RESULTING
COMPANY--Warrants.")

FINANCIAL STATEMENTS

DTG Delaware has nominal assets and liabilities and no income. If the
Merger is consummated, DTG Delaware would assume all of the operations,
assets and liabilities of DTG and DTG Delaware's consolidated financial
position would be substantially identical to that of DTG immediately prior

165
<PAGE>
to the Merger (which in turn would be substantially identical to the
Cooperative's consolidated financial position immediately prior to the
Conversion.) For this reason, historical financial statements of DTG
Delaware have not been included in this Prospectus and Ballot/Proxy
Statement. See Appendices G and H to this Prospectus and Ballot/Proxy
Statement for historical financial statements of the Cooperative and
"UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS" for pro
forma financial statements that give effect to the Merger.

DISSENTERS' RIGHTS

Under the provisions of the SDBCA and the Cooperative Act, Members of
the Cooperative and holders of Preferred Stock and Capital Credits are not
entitled to assert dissenters' rights in connection with the Conversion.

Under the provisions of Section 47-6-23 of the SDBCA, any shareholder
of DTG may dissent from the proposed Merger and be paid the "fair value" of
that person's shares of DTG Common Stock issuable in the Conversion by
complying with the procedures set forth in Sections 47-6-23 through 47-6-50
of the SDBCA. Any shareholder who delivers written notice of dissent to
the Cooperative, on behalf of DTG, at or before the special meeting and who
does not vote for approval of the Plan of Merger at the special meeting has
the right to receive the fair value of the person's shares if the Plan of
Merger is approved and the proposed Merger is consummated. A shareholder
may not dissent as to less than all of the shares beneficially owned by him
or her.

A shareholder who wishes to dissent must follow certain required
procedures. To claim dissenters' rights, a shareholder initially must:

(i) refrain from voting in favor of the Plan of Merger
(there is no requirement that a shareholder vote against approval
of the Plan of Merger); and

(ii) deliver to the Cooperative, on behalf of DTG, before
the vote is taken on the Plan of Merger at the special meeting, a
written notice of dissent (voting against approval of the Plan of
Merger will not satisfy this requirement). The notice must state
that the shareholder intends to demand payment for the person's
shares if the Plan of Merger is approved and the transactions
contemplated by the Plan of Merger are consummated.

If the Plan of Merger is approved, DTG must thereafter give notice of
such approval to each shareholder who properly demanded the right to
receive the fair value of the person's shares. Within 30 days (or such
longer period as may be permitted by DTG in the notice) of the date the
notice is delivered, the shareholder must file with DTG a written demand
for payment (in the form contained in the notice), including a

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<PAGE>
certification as to the date that the shareholder acquired beneficial
ownership of the shares and deposit Cooperative Certificates (if any)
in accordance with the terms of the notice.

A shareholder who properly demands payment and deposits the person's
Cooperative Certificates (if any) retains all other rights of a shareholder
until those rights are canceled or modified by the taking of the actions
contemplated by the Plan of Merger. A shareholder who does not demand
payment or deposit the person's Cooperative Certificates as required in the
notice loses his or her dissenters' rights.

If the transactions contemplated by the Plan of Merger do not occur, a
court determines that the shareholder is not entitled to payment or the
shareholder otherwise loses dissenters' rights, the shareholder will not be
entitled to receive the payment demanded for the person's shares. If the
transactions contemplated by the Plan of Merger do not occur, a dissenting
shareholder will be reinstated to the person's rights as a shareholder.

Immediately upon consummation of the transactions contemplated by the
Plan of Merger or receipt by DTG of the demand for payment if the
transactions contemplated by the Plan of Merger have already been
consummated, DTG must send to the dissenting shareholder the amount that
DTG estimates to be the fair value of the person's shares, plus accrued
interest, if any. The payment must be accompanied by (i) DTG's balance
sheet and statement of income for a fiscal year ended not more than 16
months before the date of payment, together with the latest available
interim financial statements, (ii) a statement of DTG's estimate of the
fair value of the shares and (iii) a notice of the dissenter's right to
demand payment based on the dissenting shareholder's estimate of the fair
value of the person's shares, accompanied by a copy of Sections 47-6-23
through 47-6-50 of the SDBCA.

Within 30 days after DTG has made payment for the shares, the
shareholder may notify DTG in writing of the person's own estimate of the
fair value of the shares and the amount of interest due, and demand payment
of that estimate, less any payment already forwarded to him or her. The
shareholder's right to pursue further a differing amount for the person's
shares terminates if the shareholder fails to act within that 30-day
period.

If the shareholder demands an amount for the person's shares
different than that paid by DTG, then, within 60 days after receiving the
shareholder's demand for payment of a different amount, DTG may file an
action in an appropriate court to determine the fair value of the
shareholder's shares and accrued interest. If DTG does not file the action
within the 60-day period, DTG will be required to pay the dissenting
shareholder the amount the shareholder has demanded.

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<PAGE>
This summary discussion of Sections 47-6-23 through 47-6-50 is not
intended to be a complete description of the provisions of those sections
and is qualified in its entirety by reference to Sections 47-6-23 through
47-6-50 of the SDBCA, a copy of which is attached as Appendix I to this
Prospectus and Ballot/Proxy Statement and incorporated by reference in this
Prospectus and Ballot/Proxy Statement.

DTG AND DTG DELAWARE ARE NOT OBLIGATED TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE PLAN OF MERGER IF DISSENTERS' RIGHTS ARE ASSERTED WITH
RESPECT TO MORE THAN FIVE PERCENT OF THE NUMBER OF SHARES OF DTG COMMON
STOCK ISSUABLE IN THE CONVERSION. DTG AND DTG DELAWARE WILL REQUIRE STRICT
COMPLIANCE WITH SECTIONS 47-6-23 THROUGH 47-6-50 OF THE SDBCA BY ANY
SHAREHOLDER SEEKING TO ASSERT DISSENTERS' RIGHTS.

THE ABOVE DISCUSSION OF RIGHTS OF DISSENTING SHAREHOLDERS
DOES NOT CONSTITUTE LEGAL ADVICE. SHAREHOLDERS SEEKING TO EXERCISE
AND PERFECT DISSENTERS' RIGHTS SHOULD SEEK LEGAL COUNSEL.

VOTING AND MANAGEMENT INFORMATION

VOTING SECURITIES AND MEMBERS OF THE COOPERATIVE

Each member of record of the Cooperative at the close of business on
the Record Date will be entitled to one vote for each matter presented for
Member action at the special meeting. As of December 31, 1996, there were
5,237 Members of the Cooperative.

No Member can own more than one share of Cooperative Common Stock.
The following table shows certain information concerning the number of
shares of Cooperative Common Stock held as of the date of this Prospectus
and Ballot/Proxy Statement by each of the Cooperative's directors, each of
the named executive officers and all of the Cooperative's directors and
executive officers as a group:

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<PAGE>
<TABLE>
<CAPTION>
DTG COMMON STOCK
ISSUABLE IN THE
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP<F1> CONVERSION
--------------------------------------------- ----------------------
SOLE SHARED
VOTING AND VOTING OR TOTAL PERCENT TOTAL PERCENT
DISPOSITIVE DISPOSITIVE BENEFICIAL OF FOLLOWING OF
NAME OF BENEFICIAL OWNER POWER POWER<F2> OWNERSHIP CLASS CONVERSION<F3> CLASS<F4>
- ------------------------ ----------- ----------- ---------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Craig A. Anderson --- --- --- <F*> 606 <F*>

Ross L. Benson --- 1 1 <F*> 150 <F*>

Dale Q. Bye 1 --- 1 <F*> 132 <F*>

Edward D. Christensen, Jr. 1 --- 1 <F*> 265 <F*>

Jeffrey J. Goeman --- 1 1 <F*> 821 <F*>

Thomas W. Hertz --- --- --- <F*> 1,212 <F*>

James H. Jibben 1 --- 1 <F*> 256 <F*>

Palmer O. Larson 1 --- 1 <F*> 93 <F*>

John A. Roth 1 --- 1 <F*> 892 <F*>

John A. Schaefer 1 --- 1 <F*> 192 <F*>

All directors and executive
officers as a group 6 2 8 <F*> 4,619 <F*>

____________________________
<FN>
<F*>Less than one percent
(Footnotes begin on page 122.)
</FN>
</TABLE>

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<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF DTG

Holders of record of rights to receive shares of DTG Common Stock
issuable in the Conversion as of the Record Date will be entitled to vote
at the special meeting. If the Conversion is adopted by the Members of the
Cooperative, approximately 1,050,000 shares of DTG Common Stock and
warrants and options to purchase no more than 200,000 shares of DTG Common
Stock would be issuable as of the Record Date. Each share of DTG Common
Stock is entitled to one vote on each matter presented for shareholder
action at the special meeting.

To the knowledge of the Cooperative, no person would own more than
five percent of the shares of DTG Common Stock issuable in the Conversion.

The following table shows certain information concerning the number of
shares of DTG Common Stock that would be held as of the date of this
Prospectus and Ballot/Proxy Statement by each of the individuals who will
be DTG's directors, each of the named individuals who will be executive
officers of DTG and all of the individuals who will be DTG's directors and
executive officers upon consummation of the Conversion as a group:

<TABLE>
<CAPTION>
DTG DELAWARE COMMON
STOCK TO BE RECEIVED
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP<F1> IN THE MERGER
--------------------------------------------- --------------------
SOLE SHARED
VOTING AND VOTING OR TOTAL PERCENT TOTAL PERCENT
DISPOSITIVE DISPOSITIVE BENEFICIAL OF FOLLOWING OF
NAME OF BENEFICIAL OWNER POWER<F3> POWER<F2><F3> OWNERSHIP<F3> CLASS<F4> MERGER<F5> CLASS<F6>
- ------------------------ ----------- ------------- ------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Craig A. Anderson 606 0 606 <F*> 606 <F*>

Ross L. Benson 0 150 150 <F*> 150 <F*>

Dale Q. Bye 132 0 132 <F*> 132 <F*>

Edward D. Christensen, Jr. 265 0 265 <F*> 265 <F*>

Jeffrey J. Goeman 0 821 821 <F*> 821 <F*>

Thomas W. Hertz 1,212 0 1,212 <F*> 1,212 <F*>

James H. Jibben 256 0 256 <F*> 256 <F*>

Palmer O. Larson 93 0 93 <F*> 93 <F*>

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<PAGE>
John A. Roth 892 0 892 <F*> 892 <F*>

John A. Schaefer 192 0 192 <F*> 192 <F*>

All directors and executive
officers as a group 3,648 971 4,619 <F*> 4,619 <F*>
<FN>
____________________________
<F*>Less than one percent
(Footnotes begin on page 122.)
</FN>
</TABLE>

VOTING SECURITIES AND PRINCIPAL STOCKHOLDER OF DTG DELAWARE

As of the date of this Prospectus and Ballot/Proxy Statement, there
were 100 shares of DTG Delaware Common Stock issued and outstanding. Each
share of DTG Delaware Common Stock is entitled to one vote on each matter
presented for stockholder action.

The following table sets forth information concerning the number of
shares of DTG Delaware Common Stock held as of the date of this Prospectus
and Ballot/Proxy Statement by the only stockholder of record as of that
date. No director or executive officer of DTG Delaware currently owns any
shares of DTG Delaware Common Stock.
<TABLE>
<CAPTION>
DTG DELAWARE COMMON
STOCK TO BE RECEIVED
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP<F1> IN THE MERGER
--------------------------------------------- --------------------
TOTAL
NAME AND ADDRESS SOLE VOTING AND TOTAL BENEFICIAL PERCENT FOLLOWING PERCENT
OF BENEFICIAL OWNER DISPOSITIVE POWER OWNERSHIP OF CLASS MERGER<F7> OF CLASS
- ------------------- ----------------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Dakota Cooperative 100 100 100% 0 <F*>
Telecommunications, Inc.
Post Office Box 66
29705 453rd Avenue
Irene, South Dakota 57037-0066
________________________________
<FN>
<F*>Less than one percent

<F1> The numbers of shares stated are based on information furnished by
each person listed and include shares personally owned of record by
that person and shares which under applicable regulations are deemed
to be otherwise beneficially owned by that person. Under these

171
<PAGE>
regulations, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares voting power or
dispositive power with respect to the security. Voting power includes
the power to vote or to direct the voting of the security.
Dispositive power includes the power to dispose or to direct the
disposition of the security. A person also will be considered the
beneficial owner of a security if the person has a right to acquire
beneficial ownership of the security within 60 days.

<F2> These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or property right, and shares held
by spouses and children over whom the listed person may have
substantial influence by reason of relationship.

<F3> This column reflects the number of shares of DTG Common Stock issuable
to the specified person in the Conversion based upon a conversion
ratio of one share of DTG Common Stock for each share of Cooperative
Common Stock, 80.8216445 shares of DTG Common Stock for each share of
Preferred Stock and 0.2 of a share of DTG Common Stock for each
Capital Credit.

<F4> This column reflects the percentage of the shares of DTG Common Stock
issuable in the Conversion which the specified person will hold
following consummation of the Conversion. These percentages were
computed with reference to a total of 1,046,505 shares of DTG Common
Stock and warrants and options to purchase no more than 200,000 shares
of DTG Common Stock issuable in the Conversion based on the conversion
ratios listed in Footnote 3 above.

<F5> This column reflects the number of shares of DTG Delaware Common Stock
that would be issued to the specified person in exchange for the
number of shares of DTG Common Stock shown in the "Total Beneficial
Ownership" column for such person, based upon a conversion ratio of
one share of DTG Delaware Common Stock for each share of DTG Common
Stock.

<F6> This column reflects the percentage of the outstanding shares of DTG
Delaware Common Stock which the specified person would hold following
consummation of the Merger. These percentages were computed with
reference to a total of 1,046,505 shares of DTG Delaware Common Stock
outstanding, representing 1,046,505 shares of DTG Delaware Common
Stock and warrants and options to purchase no more than 200,000 shares
of DTG Delaware Common Stock to be issued in the Merger based on the
conversion ratio (one-to-one) and the number of shares of DTG Common Stock
issuable in the Conversion.

172

<PAGE>
<F7> All currently outstanding shares of DTG Delaware Common Stock, each of
which is held by the Cooperative, would be canceled in the Merger.
[/FN]
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS

The Cooperative's current Board is and the Resulting Company's Board
of Directors following the Conversion or the Merger would be divided into
three classes, which will be as nearly equal in number as possible. Each
class of directors serves a successive three-year term of office.

Biographical information concerning the persons who are now or would
be directors or executive officers of the Resulting Company after the
consummation of the Conversion or the Merger is presented below. Thomas W.
Hertz and Craig A. Anderson do not currently serve as directors of the
Cooperative. Except as otherwise indicated, all of the named individuals
have had the same principal employment for over five years. Executive
officers are and would be appointed annually and serve at the pleasure of
the Board of Directors of the Cooperative or the Resulting Company (as
applicable).

DIRECTORS WITH TERMS EXPIRING IN 2000

Thomas W. Hertz (age 50) has been a director and Chief Executive
Officer and President of DTG Delaware since its formation (February 1997),
Chief Executive Officer of the Cooperative since July 1996 and General
Manager of the Cooperative since December 1995. Prior to December 1995,
Mr. Hertz was an attorney in private practice with the law firm of Ulmer,
Hertz & Bertsch, P.C. Mr. Hertz's law firm provided services to the
Cooperative during 1995 in the amount of $68,708 while Mr. Hertz was a
shareholder in that firm. Mr. Hertz's proportionate interest in such
fees was $41,225. Mr. Hertz would be the Chief Executive Officer and
President of the Resulting Company. Mr. Hertz will continue as a
director of DTG Delaware if the Merger is consummated. The Board of
Directors of DTG intends to add Mr. Hertz to the Board of DTG if only
the Conversion is consummated to fill a vacancy in the class of
directors whose terms will expire in 2000.

Palmer O. Larson (age 73) has been a director of the Cooperative since
1976 and a director of DTG Delaware since its formation (February 1997).
Mr. Larson is a semi-retired agribusiness (farm) owner and operator.

John (Jack) A. Roth (age 66) has been a director of the Cooperative
since 1970 and a director of DTG Delaware since its formation (February
1997). Mr. Roth retired as an agent for State Farm Insurance in Parker,
South Dakota, after working as an insurance agent for 33 years.

173
<PAGE>
DIRECTORS WITH TERMS EXPIRING IN 1999

Ross L. Benson (age 62) has been a director of the Cooperative since
1980 and a director of DTG Delaware since its formation (February 1997).
Mr. Benson is an agribusiness (farm) owner and operator.

Dale Q. Bye (age 66) has been a director of the Cooperative since 1975
and a director of DTG Delaware since its formation (February 1997). Mr.
Bye is Treasurer of the Cooperative. Mr. Bye is a semi-retired
agribusiness (farm) owner and operator.

James H. Jibben (age 46) has been a director of the Cooperative since
1988 and a director of DTG Delaware since its formation (February 1997).
Mr. Jibben is President of the Cooperative. Mr. Jibben is an agribusiness
(farm) owner and operator.

DIRECTORS WITH TERMS EXPIRING IN 1998

Craig A. Anderson (age 41) has been a director and Executive Vice
President - Marketing, Chief Financial Officer and Treasurer of DTG
Delaware since its formation (February 1997) and Executive Vice President -
Marketing and Chief Financial Officer of the Cooperative since January 1,
1997. Prior to January 1, 1997, Mr. Anderson was Vice President -
Marketing of the Cooperative from September 1996 to January 1, 1997. From
January 1994 until September 1996, Mr. Anderson was an independent business
consultant and from May 1994 until December 1995 attended the
University of South Dakota, earning a Masters of Business Administration
and Masters in Professional Accounting. From November 1992 until January
1994, Mr. Anderson was a director and Vice President - Chief Financial
Officer and Secretary of the Austad Company (a catalog retailer of golf
equipment). From July 1989 to September 1992, Mr. Anderson served as a
director and Vice President - Chief Financial Officer, General Counsel and
Secretary of Dial-Net, Inc. (a long distance reseller). Mr. Anderson would
be Executive Vice President - Marketing, Chief Financial Officer and
Treasurer of the Resulting Company. Mr. Anderson will continue as a
director of DTG Delaware if the Merger is consummated. The Board of
Directors of DTG intends to add Mr. Anderson to the Board of DTG if only
the Conversion is consummated to fill a vacancy in the class of directors
whose terms will expire in 1998.

Jeffrey J. Goeman (age 39) has been a director of the Cooperative
since 1988 and a director of DTG Delaware since its formation (February
1997). Mr. Goeman is Vice President of the Cooperative. Mr. Goeman is
President of and has owned and operated Goeman Auction Service and Real
Estate, Inc. in Lennox, South Dakota (a real estate brokerage and
appraisal and auction firm) since 1980.

Edward D. Christensen, Jr. (age 71) has been a director of the
Cooperative since 1975 and a director of DTG Delaware since its formation

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<PAGE>
(February 1997). Mr. Christensen is a semi-retired agribusiness (farm)
owner and operator.

John A. Schaefer (age 71) has been a director of the Cooperative since
1974 and a director of DTG Delaware since its formation (February 1997).
Mr. Schaefer is the Secretary of the Cooperative. Mr. Schaefer is retired.
He formerly was an agribusiness (farm) owner and operator.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS OF THE COOPERATIVE

The following table shows certain information concerning the
compensation paid to Thomas W. Hertz, Chief Executive Officer and General
Manager of the Cooperative, for services rendered during the years ended
December 31, 1996 and 1995. No other executive officer of the Cooperative
earned cash compensation in excess of $100,000 during 1996.

<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>

ANNUAL COMPENSATION
-------------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION<F1>
- --------------------------- ---- -------- ----- ----------------
<S> <C> <C> <C> <C>
Thomas W. Hertz 1996 $117,501 $15,000 $1,439.00
Chief Executive Officer 1995 $ 20,455 -- $ 72.00
and General Manager

<FN>
_________________________________

<F1> All other compensation for 1996 and 1995 represents premiums paid by
the Cooperative for life insurance for the benefit of Mr. Hertz.
</FN>
</TABLE>

PREFERRED STOCK OPTIONS

The Cooperative has adopted stock option agreements granting to each
of Thomas W. Hertz, Chief Executive Officer and General Manager of the
Cooperative, and Craig A. Anderson, Executive Vice President - Marketing
and Chief Financial Officer of the Cooperative, options to purchase 767
shares of Preferred Stock at a price of $1,000 per share, which options
would be converted in connection with the Conversion or the Merger into
options to purchase common stock of the Resulting Company at a price of
$12.37 per share. (See "ADDITIONAL SECURITIES OF THE RESULTING COMPANY--
Stock Options")

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<PAGE>
During 1996, the Cooperative compensated its directors at the rate of
$500 per regular monthly board meeting attended, $250 per special board
meeting attended and $100.00 per telephonic board meeting attended. Directors
also are provided with travel and accident insurance at a cost of $125 per
year per director. Directors are eligible to participate in the
Cooperative's medical reimbursement plan.

DTG would be the successor to the Cooperative and currently has no
directors or executive officers and has paid no compensation to directors
or executive officers. DTG Delaware currently does not compensate its
directors and executive officers.

INTERESTS OF CERTAIN PERSONS

As of the date of this Prospectus and Ballot/Proxy Statement,
directors and executive officers of the Cooperative are entitled to eight
votes on matters presented for Member action, or less than one percent of
the total Member votes. (See "VOTING AND MANAGEMENT INFORMATION--Voting
Securities and Members of the Cooperative.")

As of the date of this Prospectus and Ballot/Proxy Statement,
individuals who would be the directors and executive officers of DTG would
beneficially own less than one percent of the shares of DTG Common Stock
issuable in the Conversion, assuming that the Conversion was consummated on
such date. (See "VOTING AND MANAGEMENT INFORMATION--Voting Securities and
Principal Shareholders of DTG.")

As of the date of this Prospectus and Ballot/Proxy Statement,
directors and executive officers of DTG Delaware would hold less than one
percent of the shares of DTG Delaware Common Stock to be issued in the
Merger, assuming that the Merger was consummated as of such date. (See
"VOTING AND MANAGEMENT INFORMATION--Voting Securities and Principal
Stockholder of DTG Delaware.")

EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

The Cooperative has entered into separate but substantially identical
Employment Agreements ("Agreements") with its Chief Executive Officer and
General Manager, Thomas W. Hertz, and its Executive Vice President -
Marketing and Chief Financial Officer, Craig A. Anderson (the
"Executives"). Each Agreement is for a three-year term of employment,
expiring December 31, 2000. The employment term under each Agreement will
be automatically extended for an additional year at the end of each year,
unless either party gives written notice that the employment term under the
Agreement is not to be extended further, in which case the employment term
under the Agreement will expire at the end of two additional years, except
that the employment term under the Agreement will also be extended

176
<PAGE>
automatically for three years following the date of any Change in Control
(defined as described under "INDEMNITY AGREEMENTS") occurring during the
employment term under the Agreement.

The Agreements provide minimum salaries of $135,000 per year for
Thomas W. Hertz and $100,000 per year for Craig A. Anderson, and also
provide for an annual bonus to each of the Executives equal to 15 percent
of the increase, if any, in corporate net income over prior year net
income. "Net income," for purposes of the bonus calculations, is pre-tax
net income before depreciation, amortization and other non-cash expenses,
before annual bonuses under the two Agreements and after eliminating the
effect of extraordinary items.

Under the Agreements, the Cooperative or the Executive may terminate
the Executive's employment at any time upon 30 days' notice. If the
Cooperative terminates the Executive's employment involuntarily during the
term of the employment under the Agreements other than as the result of a
Disability or for Cause, or if the Executive terminates the employment for
Good Reason during the employment term under the Agreements, the Agreements
entitle the terminated Executive to Severance Pay. "Disability" is defined
as the Executive's inability to substantially perform his duties for a
continuous period of nine months. "Cause" is defined as willful and
continued failure by the Executive to substantially perform his duties
after notice of the deficiency, or willful misconduct by the Executive that
is materially injurious to the Cooperative and occurs without good-faith
belief by the Executive that the action was in the best interests of the
Cooperative. Termination for Cause requires the affirmative vote of two-
thirds of the Board of Directors. "Good Reason" is defined to include:
(i) a material breach by the Cooperative of the Agreements or any other
agreement with the Executive; (ii) assignment to the Executive of duties
inconsistent with his position; (iii) removal of the Executive from his
position; (iv) relocation of the Cooperative's principal executive offices
outside a 60-mile radius from Irene, South Dakota or any requirement by the
Cooperative that Executive be located other than at the executive offices
or that he engage in substantially increased job related travel; or (v)
failure of the Cooperative to obtain the agreement of any successor to
assume the Agreements. The Executive may not terminate his employment with
Good Reason without first giving the Cooperative notice and 10 days'
opportunity to cure any occurrence constituting Good Reason.

"Severance Pay" under the Agreements consists of continuation of the
Executive's salary, bonus and benefits for the unexpired employment term
under the Agreements at the time of the termination (with a minimum annual
bonus each year equal to that of the year before the termination),
reasonable out-placement services and immediate vesting of all restricted
stock and stock option rights. Severance Pay is not reduced by any post-
termination employment or other income of the Executive. If the Executive
dies while entitled to receive Severance Pay, the remaining Severance Pay

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<PAGE>
is to be paid to the Executive's estate. If a termination entitling the
Executive to Severance Pay occurs after a Change in Control, or if the
Cooperative defaults on Severance Pay obligations, the monthly salary and
bonus payments are accelerated and become payable immediately in a lump
sum.

The Agreements prohibit the Executive from competing with the
Cooperative during his employment, and after his employment while he is
receiving Severance Pay. The Executive may end the post-employment
noncompetition period at any time by renouncing any right to further
Severance Pay.

The Agreements provide for payment of the Executive's reasonable legal
fees and expenses incurred in seeking to enforce the Executive's rights
under the Agreements, to the extent the Executive is successful in his
claims, with payment made contemporaneously but with the Executive required
to repay any amount to which he is ultimately found not to be entitled.
The Agreements also provide that the Cooperative will make the Executive
whole for any taxes, interest or penalties incurred by the Executive on
account of the characterization of any payment to which the Executive is
entitled from the Cooperative as an "excess parachute payment" under
Section 280G of the Code or any successor provision of the Code, so that
the net payments to the Executive after all such taxes, interest and
penalties will be the same as if no such characterization had occurred.

If the Conversion and/or Merger is consummated, the Resulting Company
would assume the Agreements according to their terms.

ADDITIONAL SECURITIES OF THE RESULTING COMPANY

PREFERRED STOCK PURCHASE RIGHTS PLAN

If the Conversion or the Merger is consummated, the Board of Directors
of the Resulting Company currently intends to enact as soon as is
reasonably practicable a preferred stock purchase rights plan that is
designed to protect stockholder interests in the event the Resulting
Company is confronted with coercive or unfair takeover tactics. The plan
would be implemented by the dividend of one Series A Preferred Stock
Purchase Right to each stockholder of record on a record date to be fixed
by the Board of Directors of the Resulting Company. The plan would not
be submitted for stockholder approval. The following description sets
forth the principal terms of the rights plan which the Board of
Directors currently intends to enact.

Under the plan as currently contemplated, one Series A Preferred Stock
Purchase Right (a "Right") would attach to each share of Resulting Company
common stock outstanding on the date the plan is implemented. Each Right

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would entitle the registered holder to purchase from the Resulting Company
one one-hundredth of a share (a "Unit") of Series A Junior Participating
Preferred Stock at a price of $100.00 per Unit (the "Purchase Price"),
subject to adjustment. An aggregate of 15,000 shares of Series A Junior
Participating Preferred Stock is authorized in the corporate charter of the
Resulting Company specifically for use in connection with the rights plan.
Upon issuance, each share of Series A Junior Participating Preferred Stock
would have 100 votes and a preferential quarterly dividend equal to the
greater of $10 per share or 100 times the dividend declared on Resulting
Company common stock. The description and terms of the Rights would be set
forth in a Rights Agreement (the "Rights Agreement") between the Resulting
Company and a third party (typically a bank or other financial institution)
as rights agent (the "Rights Agent").

Under the intended rights plan, until the earlier to occur of (i) 10
days following a public announcement that a person or group of affiliated
or associated persons acquired, or obtained the right to acquire,
beneficial ownership of 15 percent or more of the outstanding shares of
Resulting Company common stock (such person is referred to as an "Acquiring
Person" and the date upon which such person becomes an Acquiring Person is
referred to as the "Stock Acquisition Date"), (ii) 10 business days
following the commencement or announcement of an intention to commence a
tender or exchange offer, the consummation of which would result in
beneficial ownership by a person of 15 percent or more of the outstanding
shares of Resulting Company common stock or (iii) 10 business days after
the Board of Directors determined, pursuant to certain criteria set forth
in the Rights Agreement, that a person beneficially owning 10 percent or
more of the outstanding shares of Resulting Company common stock was an
"Adverse Person" (the earlier of such dates is the "Distribution Date"),
the Rights would be evidenced with respect to any of the Resulting Company
common stock certificates outstanding by such Resulting Company common
stock certificates. Until the Distribution Date, the Rights would be
transferred with and only with such Resulting Company common stock
certificates. New Resulting Company common stock certificates issued after
the date the plan is implemented, but prior to the Distribution Date (or,
if earlier, the redemption or expiration of the Rights), would contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or, if earlier, the redemption or expiration of the
Rights), the surrender for transfer of any certificates for Resulting
Company common stock also would constitute the transfer of the Rights
associated with the Resulting Company common stock represented by such
certificates. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights (the "Rights Certificates")
would be mailed to holders of record of the Resulting Company common stock
as of the close of business on the Distribution Date and such separate
Rights Certificates alone would evidence the Rights. Except as otherwise
determined by the Board of Directors, only shares of Resulting Company
common stock issued prior to the Distribution Date would be issued with
Rights.

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The Rights would not be exercisable until the Distribution Date. The
Rights would expire 10 years from the date of issuance, unless earlier
redeemed by the Resulting Company as described below.

The Purchase Price payable, and the number of one one-hundredths of a
share of Series A Junior Participating Preferred Stock or other securities
or property issuable, upon exercise of a Right would be subject to
adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of,
the Series A Junior Participating Preferred Stock, (ii) upon the grant to
holders of the Series A Junior Participating Preferred Stock of certain
rights or warrants to subscribe for Series A Junior Participating Preferred
Stock or convertible securities at less than the current market price of
the Series A Junior Participating Preferred Stock or (iii) upon the
distribution to holders of the Series A Junior Participating Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic
cash dividends out of earnings or retained earnings at a rate not in excess
of 125 percent of the rate of the last cash dividend theretofore paid or
dividends payable in Series A Junior Participating Preferred Stock) or of
subscription rights or warrants (other than those referred to above).

With certain exceptions, no adjustment in the Purchase Price would be
required until cumulative adjustments require an adjustment of at least one
percent in such Purchase Price. No fractional shares of Series A Junior
Participating Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Series A Junior Participating
Preferred Stock) would be issued and, in lieu thereof, an adjustment in
cash would be made based on the market price of the Series A Junior
Participating Preferred Stock on the last trading date prior to the date of
exercise.

If at any time following the Stock Acquisition Date, the Resulting
Company is acquired in a merger or other business combination transaction
or if 50 percent or more of its assets or earning power are sold, proper
provision would be made so that each holder of a Right would thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right. Alternatively, if at
any time following the Distribution Date, (i) the Resulting Company was the
surviving corporation in a merger with an Acquiring Person and its
Resulting Company common stock was not changed or exchanged, (ii) an
Acquiring Person engaged in certain specified self-dealing transactions
with the Resulting Company, (iii) an Acquiring Person became the beneficial
owner of more than 15 percent of the then outstanding shares of Resulting
Company common stock or (iv) a person had been or was designated as an
Adverse Person by the Resulting Company's Board of Directors in accordance
with the criteria set forth in the Rights Agreement, proper provision would

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be made so that each holder of a Right, other than the Acquiring Person,
Adverse Person and certain related parties (whose Rights would thereafter
be void), would thereafter have the right to receive upon exercise of a
Right that number of shares of Resulting Company common stock having a
market value of two times the exercise price of such Right.

At any time prior to the designation of a person as an Adverse Person
under the Rights Agreement or the close of business on the 15th day after
the Stock Acquisition Date, the Resulting Company could redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). Immediately upon the action of the Board of Directors electing to
redeem the Rights, the Resulting Company would make announcement thereof,
and upon such election, the right to exercise the Rights would terminate
and the only right of the holders of Rights would be to receive the
Redemption Price.

Until a Right is exercised, the holder thereof, as such, would have
no rights as a stockholder of the Resulting Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights would not be taxable to stockholders or to the
Resulting Company, stockholders would recognize taxable income if the
Rights are redeemed and may, depending on the circumstances, recognize
taxable income when the Rights become exercisable or are exercised.

Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement would be
subject to amendment by the Board of Directors of the Resulting Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement could be amended by the Board to cure
any ambiguity, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person or
Adverse Person) or to shorten or lengthen any time period under the Rights
Agreement, except that no amendment to adjust the time period governing
redemption could be made at a time when the Rights are not redeemable.

In connection with the implementation of the intended rights plan, the
Rights Agreement would be executed and a copy filed with the Commission as
an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights
Agreement also would be available from the Resulting Company.

STOCK OPTIONS

To provide an incentive for Thomas W. Hertz, Chief Executive Officer
and General Manager of the Cooperative, and Craig A. Anderson, Executive
Vice President - Marketing and Chief Financial Officer of the Cooperative
(collectively, the "Optionees"), to operate the Cooperative to promote the
Cooperative's long-term growth and profitability and to help align the
economic interests with those of Members and holders of Preferred Stock and

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Capital Credits, effective as of January 1, 1997, the Board of Directors of
the Cooperative adopted stock option agreements granting options to each
Optionee to purchase up to an aggregate of 767 shares of Preferred Stock at
a price of $1,000 per share. These options would automatically become
options to purchase Resulting Company common stock (converted on the same
basis as currently outstanding shares of Preferred Stock, i.e.
approximately 80.8-to-1) if the Conversion or Merger is consummated.

The options call for delayed vesting so that 20 percent of each option
becomes exercisable at the earlier of (i) 90 days after the date the
Preferred Stock is converted into Resulting Company common stock, assuming
the Conversion or Merger is consummated or (ii) January 1, 1998.
Thereafter, an additional 20 percent of each option becomes exercisable
on each anniversary date of the stock option agreements if the Optionees
are then employed by the Cooperative (or the Resulting Company, as
applicable) until the total number of shares subject to each option become
exercisable. Each option remains outstanding for 10 years from the date
it was granted. The options are non-transferable.

Under the terms of the stock option agreements, the options are not
incentive stock options under Section 422 of the Code. The options were
not subject to tax when they were granted. Upon exercise, the Optionees
will recognize compensation income in the amount of the spread between the
market value of the options and the option exercise price. The Cooperative
(or the Resulting Company, as applicable) will receive a corresponding
deduction. The option price must be paid in cash or shares of stock of the
Cooperative (or the Resulting Company, as applicable), valued at the market
value on the date of exercise.

If the Conversion or the Merger is consummated, the options auto-
matically will become options to purchase Resulting Company common stock.
On a fully diluted basis, assuming that all vesting periods and other
restrictions contained in the options have been satisfied or lapsed and all
the options were exercised in full, each Optionee would own approximately
five percent of the total number of shares of Resulting Company common stock
that would be outstanding after the Conversion or the Merger. The exercise
price of Resulting Company common stock under the stock option agreements
would be $12.37 per share.

WARRANTS

Pursuant to the TCIC Agreement and the Iway Agreement, and as part of
the consideration therefor, the Board of Directors of the Cooperative
granted warrants to purchase shares of Preferred Stock to each of the
former shareholders of TCIC and Iway ("Warrants"), which would
automatically become Warrants to purchase Resulting Company common stock if
the Conversion or the Merger is consummated. The Warrants allow each
holder to purchase a specified number of shares (a total of 482 shares

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under all Warrants) of Preferred Stock at a price of $1,000 per share. The
number of shares that each holder may purchase was based on the person's
share ownership of TCIC and Iway, respectively, at the time of the mergers.

The Warrants are exercisable immediately and remain outstanding until
the later of (i) six months after the public registration of Resulting
Company common stock into which the Preferred Stock would be mandatorily
converted if the Conversion or the Merger is consummated or (ii) January
2, 1998. The Warrants are non-transferable.

Upon exercise, each Warrant holder would be deemed to have purchased
the underlying stock which will then have a basis equal to the purchase
price plus any basis that the holder has in the holder's Warrant. Upon
subsequent sale, the proceeds will be capital gain or loss to the holder
with no tax impact on the Cooperative or the Resulting Company, as
applicable. The Cooperative or the Resulting Company, as applicable, would
receive the purchase price for the exercise of each Warrant as an addition
to its capital.

If the Conversion or the Merger is consummated, the Warrants would
automatically become Warrants to purchase an aggregate of 38,956 shares of
Resulting Company common stock at a price of $12.37 per share. The
exercise price for the Warrants must be paid in cash.

STANDSTILL AGREEMENTS

In connection with the Cooperative's acquisition of TCIC and Iway, the
Cooperative entered into standstill agreements (the "Standstill
Agreements") with each of the former shareholders of TCIC and Iway
(collectively, the "Sellers"). The Sellers received shares of Preferred
Stock and Warrants to purchase shares of Preferred Stock as a result of the
TCIC Agreement and the Iway Agreement. Those agreements contemplated that
the Preferred Stock would be converted in the future into Resulting Company
common stock.

Under the Standstill Agreements, the Sellers agreed to refrain from
certain actions, including: (i) acquiring any Resulting Company common
stock in excess of five percent of the Resulting Company common stock
outstanding at any time during the term of the Standstill Agreements, with
certain exceptions such as the sale or transfer of shares among the
Sellers; (ii) making or participating in any "solicitation of proxies," as
that term is defined in Regulation 14A under the Exchange Act; (iii)
forming, joining or participating in a "group," as that term is defined in
Section 13(d)(3) of the Exchange Act, with respect to any Resulting Company
common stock; (iv) initiating or participating in any stockholder proposal
to be voted upon by the holders of Resulting Company common stock or
calling any special meeting of stockholders of the Resulting Company;
(v) depositing any shares of Resulting Company common stock into a voting

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trust or subjecting them to a voting agreement; or (vi) seeking in any way
to gain control of the Resulting Company or its Board of Directors or
seeking to influence the Resulting Company's management or policies.

The Standstill Agreements further provide that the Sellers will not
dispose of any shares of Resulting Company common stock (with certain
exceptions) except in accordance with certain provisions of the Standstill
Agreements. The Standstill Agreements grant to the Resulting Company a
"First Purchase Option" to buy all, but not less than all, of the Sellers'
shares of Resulting Company common stock that they wish to sell ("First
Option Shares") for a period of three years following the date that the
Preferred Stock is converted into Resulting Company common stock. Under
the First Purchase Option, if a Seller desires to sell any of the person's
shares of Resulting Company common stock, the Seller must first notify the
Resulting Company, which then has 30 days to determine whether to purchase
the First Option Shares. If the Resulting Company exercises its option, it
must purchase all of the First Option Shares. If the Resulting Company
does not exercise its First Purchase Option, the Seller who gave the notice
may then sell those First Option Shares to a third party at the same price
specified in the person's initial notice to the Resulting Company.
However, if the Seller fails to sell the First Option Shares to a third
party within 60 days after the Resulting Company's option expires, then the
process must start over.

Under the Standstill Agreements, in the event that a third party makes
a tender offer (a "Tender Offer") for shares of Resulting Company common
stock, then the Sellers must grant the Resulting Company an option (the
"Tender Offer Option") to purchase all, but not less than all, of the
shares that the Sellers wish to sell in the Tender Offer. This process
works much the same as for a First Purchase Option, except that the
deadlines are much shorter. In addition, if a competing tender offer
arises prior to the closing of the sale pursuant to the Tender Offer Option
at a higher per-share price, the Sellers can withdraw their notice of the
Tender Offer Option, after which the process starts over. The price per
share pursuant to the Tender Offer Option is the product of (i) the number
of shares subject to the Tender Offer Option with respect to which the
Resulting Company exercises its option, multiplied by (ii) the Tender
Offer price per share as in effect on the last day specified in the Tender
Offer on which the offeror may accept shares of Resulting Company common
stock for payment or exchange. If the Resulting Company fails to exercise
its Tender Offer Option, then the Sellers can sell their shares in the
Tender Offer, but at a price not less than that specified in the notice
of the Tender Offer Option.

The provisions of the Standstill Agreements that prevent the Sellers
from acquiring additional shares of Resulting Company common stock, seeking
to acquire control of the Resulting Company, etc. (all of which are
described above) apply for a period of five years beginning on the
"Conversion Date," which is defined in the Standstill Agreements as the

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date on which the Sellers' Preferred Stock is converted into Resulting
Company common stock. The provisions that prevent the Sellers from
disposing of any shares of Resulting Company common stock (all of which
are described above) apply for three years following the Conversion Date.
The Standstill Agreements do not contain any specific termination
provisions.

1997 STOCK INCENTIVE PLAN

The Board of Directors of the Cooperative firmly believes that the
Resulting Company's long-term interests will be best advanced by aligning
the interests of its business leaders and employees with the interests of
its stockholders. Therefore, to attract and retain directors, officers and
other management employees of exceptional abilities, and to provide an
increased incentive for such directors, officers and employees to make
significant and extraordinary contributions to the long-term performance
and growth of the Resulting Company and its subsidiaries, the Board of
Directors of the Cooperative, on behalf of DTG, and the Board of Directors
of DTG Delaware adopted the 1997 Stock Incentive Plan (the "Plan").
The Boards of Directors believe that adoption of the Plan is advisable to
make shares of the Resulting Company's stock available for awards and stock
options.

It is presently contemplated that the Plan would primarily be used to
grant stock options. However, the Plan also would permit the grant of
other forms of long-term incentive compensation if determined to be
desirable to advance the purposes of the Plan. These other forms of long-
term incentive compensation include stock appreciation rights, tax benefit
rights, restricted stock and stock awards (together with stock options,
collectively referred to as "Incentive Awards"). By combining in a single
plan many of the types of incentives commonly used in long-term incentive
compensation programs, it is intended that the Plan would provide
significant flexibility for the Resulting Company to tailor specific long-
term incentives that would best promote the objectives of the Plan and in
turn promote the interests of the Resulting Company's stockholders.

The following is a summary of the principal features of the Plan. The
summary is qualified in its entirety by reference to the terms of the Plan
set forth in Appendix J to this Prospectus and Ballot/Proxy Statement.

Persons eligible to receive Incentive Awards under the Plan (with
certain limitations discussed below) would include nonemployee directors
(currently eight persons), corporate executive officers (currently five
persons) and other corporate, divisional and subsidiary officers and
employees (currently approximately 71 persons) of the Resulting Company and
its subsidiaries in consideration of the services of these persons to the
Resulting Company. Except as described herein, the Board of Directors has
not determined to grant Incentive Awards to any eligible recipient. A

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maximum of 175,000 shares of the Resulting Company's common stock (either
DTG Common Stock if the Conversion is consummated or DTG Delaware Common
Stock if the Merger is consummated) ("Common Stock"), would be available
for Incentive Awards under the Plan (subject to certain antidilution
adjustments). Additional individuals may become executive officers,
corporate, divisional or subsidiary officers, or employees in the future
and could participate in the Plan. Because nonemployee directors, officers
and employees of the Resulting Company and its subsidiaries may receive
Incentive Awards under the Plan, they may be deemed to have an interest in
the Plan. The benefits payable under the Plan presently are not
determinable and the benefits that would have been payable had the Plan
been in effect during the most recent fiscal year are similarly not
determinable. The Plan would not be qualified under Section 401(a) of the
Code, and would not be subject to the Employee Retirement Income Security
Act of 1974 ("ERISA").

The Plan would be administered by the Compensation Committee of the
Board of Directors of the Resulting Company or such other committee as the
Board may designate for that purpose (the "Committee"). It is currently
intended that the Committee would consist of not less than two directors,
all of whom shall be "Non-Employee Directors" as defined in Rule 16b-3
issued by the Commission. As discussed below, members of the Committee
would receive nondiscretionary stock option grants based upon a specified
formula. The Committee would make determinations, subject to the terms
of the Plan, as to the persons to receive Incentive Awards, the amount of
Incentive Awards to be granted to each person, the time of each grant,
the terms and duration of each grant and all other determinations
necessary or advisable for administration of the Plan. The Committee
could amend the terms of Incentive Awards granted under the Plan from
time to time in a manner consistent with the Plan.

The principal stock option features of the Plan provide that the
Resulting Company may grant to participants options to purchase shares of
Common Stock at stated prices for specified periods of time. Certain stock
options that could be granted to employees under the Plan may qualify as
incentive stock options as defined in Section 422 of the Code. Other stock
options, including all options that could be granted to directors who are
not employees, would not be incentive stock options within the meaning of
the Code. Stock options could be granted at any time prior to the
termination date for making Incentive Awards according to the terms of the
Plan or termination of the Plan by action of the Committee or the Board of
Directors.

The Committee would set forth the terms of individual grants of stock
options in stock option agreements. The stock option agreements would
contain terms, conditions and restrictions consistent with the provisions
of the Plan that the Committee determined appropriate. These restrictions
could include vesting requirements to encourage long-term ownership of
shares. The stock option price per share would be determined by the

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Committee and would be a price equal to or higher than the par value of
Common Stock on the date of grant. Options qualified as incentive stock
options under the Code must be at prices at least equal to market value on
the date of grant. As of the date of this Prospectus and Ballot/Proxy
Statement, there was no market for Common Stock. When exercising all or a
portion of a stock option, a participant could pay with cash or, with the
consent of the Committee, with shares of Common Stock or other
consideration substantially equal to cash. If shares of Common Stock are
used to pay the exercise price and the Committee consents, a participant
could use the value of shares received upon exercise for further exercises
in a single transaction, permitting a participant to fully exercise a large
stock option with a relatively small initial cash or stock payment. The
Committee also could authorize payment of all or a portion of the stock
option price in the form of a promissory note or installments on terms
approved by the Committee. The Board of Directors could restrict or
suspend the power of the Committee to permit these loans and could require
that adequate security be provided.

Each nonemployee director of the Resulting Company would be entitled
to receive semi-annually, on June 30 and December 31 of each year, stock
options to purchase 200 shares of Common Stock at 100 percent of the market
value on the date of grant. The stock options would be issued for a term
of 10 years using a form of agreement substantially similar to the standard
form of stock option agreement established by the Compensation Committee
for executive officers, adjusted as necessary due to the recipient's status
as a nonemployee director. The formula grant provisions for nonemployee
directors may be amended by the Board of Directors not more than once every
six months, other than to comport with changes in the Code, the Exchange
Act or the rules thereunder. Nonemployee directors may pay the exercise
price using previously held shares of Common Stock to the extent that other
participants are permitted to do so.

Although the term of each stock option would be determined by the
Committee, no stock option would be exercisable under the Plan after the
expiration of 10 years from the date it was granted. Stock options
generally would be exercisable for limited periods of time in the event a
stock option holder died, became disabled or was terminated without cause.
If a stock option holder was terminated for cause, the stock option holder
would forfeit all rights to exercise any outstanding stock options. If a
stock option holder retired, the option holder could exercise the option
for the remainder of the term of the option unless the term of the option
agreement or grant provided otherwise. Incentive stock options granted to
participants under the Plan generally could not be transferred except by
will or by the laws of descent and distribution. Any other stock option
granted to participants under the Plan would be transferable unless
transfer is restricted by the terms of the grant.

Under the Code, a participant exercising an incentive stock option
would not recognize income at the time of the exercise. The difference

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between the market value and the exercise price would, however, be a tax
preference item for purposes of calculating alternative minimum tax. Upon
sale of the stock, as long as the participant held the stock for at least
one year after the exercise of the stock option and at least two years
after the grant of the stock option, the participant's basis would equal
the stock option price, and the participant would pay tax on the difference
between the sale proceeds and the stock option price as capital gain. The
Resulting Company would receive no deduction for federal income tax
purposes. If, before the expiration of either of the above holding
periods, the participant sold shares acquired under an incentive stock
option, the tax deferral would be lost and the participant would recognize
compensation income equal to the difference between the stock option price
and the fair market value at the time of exercise, but not more than the
maximum amount that would not result in a loss on the disposition. The
Resulting Company would then receive a corresponding deduction for federal
income tax purposes. Additional gains, if any, recognized by the
participant would result in the recognition of short- or long-term capital
gain.

Federal income tax laws provide different rules for stock options that
do not qualify as incentive stock options ("Nonqualified Options"). Under
current federal income tax laws, a participant would not recognize any
income and the Resulting Company would not receive a deduction at the time
a Nonqualified Option is granted. If a Nonqualified Option is exercised,
the participant would recognize compensation income in the year of exercise
equal to the difference between the stock option price and the fair market
value on the date of exercise. The Resulting Company would receive a
corresponding deduction for federal income tax purposes. The participant's
tax basis in the shares acquired would be increased by the amount of
compensation income recognized. Sale of the stock after exercise would
result in recognition of short- or long-term capital gain or loss.

In addition to the authority to grant stock options under the Plan,
the Committee also could grant stock appreciation rights and tax benefit
rights, which would be subject to such terms and conditions as the
Committee determined appropriate. A stock appreciation right could relate
to a particular option and could be granted at the same time or after a
related option was granted. A stock appreciation right granted in tandem
with an option would permit a participant to receive, in exchange for the
right to exercise a related option, a payment from the Resulting Company in
cash or stock equal to the difference between the market value of the
shares at the time of exercise of the stock appreciation right and the
option price of such shares. A tax benefit right is a cash payment
received by a participant upon exercise of a stock option. The amount of
the payment would not exceed the amount determined by multiplying the
ordinary income realized by the participant (and deductible by the
Resulting Company) upon exercise of stock options that are not incentive
stock options, or upon a disqualifying disposition of an incentive stock
option, by the maximum federal income tax rate (including any surtax or

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similar charge or assessment) for corporations plus the applicable state
and local tax imposed on the exercise of the stock option or disqualifying
disposition. Unless the Committee provided otherwise, the net amount of a
tax benefit right, subject to withholding, could be used to pay a portion
of the stock option price. Tax benefit rights could be issued under the
Plan with respect to stock options granted under the Plan and also
with respect to existing stock options awarded under any other plan of the
Resulting Company that is approved by the stockholders as of the date
of the Plan.

The Plan also would give the Committee authority to make stock awards.
A stock award is an award of Common Stock that is subject to terms and
conditions determined by the Committee at the time of the award. Stock
award recipients would generally have all voting, dividend, liquidation and
other rights with respect to shares of Common Stock received upon becoming
the holder of record of the Common Stock. However, the Committee could
impose restrictions on the assignment or transfer of Common Stock awarded
under a stock award.

Finally, the Plan would allow the Committee to award restricted stock,
subject to such terms and conditions, consistent with the provisions of the
Plan, that the Committee from time to time determined. As with stock
option grants, the Committee would set forth the terms of individual awards
of restricted stock in restricted stock agreements. Unless the Committee
provided otherwise in a restricted stock agreement, if a participant's
employment is terminated during the restricted period set by the Committee
for any reason other than death, disability or retirement (as defined in
the Plan), the participant's restricted stock would be entirely forfeited.
If the participant's employment terminated during the restricted period by
reason of death, disability or retirement, the restrictions on the
participant's shares would terminate automatically with respect to that
number of shares (rounded to the nearest whole number) equal to the total
number of shares of restricted stock awarded to the participant multiplied
by the number of full months that have elapsed since the date of grant
divided by the maximum number of full months of the Restricted Period. All
remaining shares would be forfeited and returned to the Company, unless the
Committee provided otherwise.

Without Committee authorization, a recipient of restricted stock would
not be allowed to sell, exchange, transfer, pledge, assign or otherwise
dispose of the stock other than to the Resulting Company or by will or the
laws of descent or distribution. In addition, the Committee could impose
other restrictions on shares of restricted stock. However, holders of
restricted stock would enjoy all other rights of a stockholder with respect
to restricted stock, including the right to vote restricted shares at
stockholders' meetings and the right to receive all dividends paid with
respect to shares of Common Stock. Any securities received by a holder of
restricted stock pursuant to a stock dividend, stock split,
recapitalization, merger, consolidation, combination or exchange of shares

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would be subject to the same terms, conditions and restrictions that were
applicable to the restricted stock for which the shares were received.

Generally, a participant would not recognize income upon the award of
restricted stock. However, a participant would be required to recognize
compensation income on the value of restricted stock at the time the
restricted stock vested (when the restrictions lapse). At the time the
participant recognized this compensation income, the Resulting Company
would be entitled to a corresponding deduction for federal income tax
purposes. If restricted stock is forfeited by a participant, the
participant would not recognize income and the Resulting Company would not
receive a deduction. Prior to the lapse of restrictions, dividends paid on
restricted stock would be reported as compensation income to the
participant and the Resulting Company would receive a corresponding
deduction.

A participant could, within 30 days after the date of an award of
restricted stock, elect to report compensation income for the tax year in
which the award of restricted stock occurred. If the participant made such
an election, the amount of compensation income would be the value of the
restricted stock at the time of the award. Any later appreciation in the
value of the restricted stock would be treated as capital gain and realized
only upon the sale of the restricted stock. Dividends received after such
an election is made would be taxable as dividends and not treated as
additional compensation income. If, however, restricted stock is
forfeited after the participant made an election as described above,
the participant would not be allowed any deduction for the amount earlier
taken into income. Upon the sale of restricted stock, a participant would
realize capital gain (or loss) in the amount of the difference between the
sale price and the value of the stock previously reported by the
participant as compensation income.

Upon the occurrence of a "Change in Control" of the Resulting Company
(as defined in the Plan and under "INDEMNITY AGREEMENTS"), all outstanding
stock options would become immediately exercisable in full and would remain
exercisable in accordance with their terms and all other outstanding
Incentive Awards under the Plan would immediately become fully vested and
nonforfeitable. In addition, the Committee, without the consent of any
affected participant, could determine that some or all participants holding
outstanding stock options would receive cash in an amount equal to the
greater of the excess over the exercise price per share of each stock
option of: (i) the maximum price of the shares on The Nasdaq Stock Market
immediately before the effective date of the change in control or (ii) the
price per share actually paid in connection with any change in control of
the Resulting Company.

If Incentive Awards are made under the Plan, the Resulting Company
could withhold from any cash otherwise payable to a participant or require
a participant to remit to the Resulting Company an amount sufficient to

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satisfy federal, state and local withholding taxes. Tax withholding
obligations could be satisfied by withholding Common Stock to be received
upon exercise of an option or the vesting of restricted stock or by
delivery to the Resulting Company of previously owned shares of Common
Stock.

The Board of Directors could terminate the Plan at any time and could
from time to time amend the Plan as it considered proper and in the best
interests of the Resulting Company, provided that no amendment could impair
any outstanding Incentive Award without the consent of the participant
except according to the terms of the Plan or Incentive Award. No
termination, amendment or modification could become effective with respect
to any Incentive Award outstanding under the Plan without the prior written
consent of the participant holding the award unless the amendment or
modification operated to the benefit of the participant. Subject to
stockholder approval, the Plan would take effect on the effective date of
the Conversion, and, unless previously terminated by the Board of
Directors, no awards could be made under the Plan after 10 years following
that date.

The Resulting Company intends to register shares covered by the Plan
under the Securities Act before any Incentive Award could be exercised.

A vote for the Conversion or the Merger will be deemed to be a vote
for the Plan.

INDEMNITY AGREEMENTS

As an additional measure to strengthen the protection afforded the
directors and executive officers of the Resulting Company, the Board of
Directors of the Cooperative, on behalf of DTG, and the Board of Directors
of DTG Delaware believe it is in the best interests of the Resulting
Company to enter into an indemnity agreement (the "Indemnity Agreement")
with each of its directors and executive officers ("Business Leaders"). If
the Conversion or the Merger is consummated, it is anticipated that the
Indemnity Agreement would be entered into between the Resulting Company and
each of its director and executive officers.

Set forth below is a summary of certain key provisions of the
Indemnity Agreement. The summary is qualified in its entirety by reference
to the full text of the Indemnity Agreements set forth in Appendix K to this
Prospectus and Ballot/Proxy Statement. The Indemnity Agreement is based on
the indemnification provisions set forth in Section 145 of the Delaware Law
and Sections 47-2-58.2 through 47-2-58.7 of the SDBCA, with certain
changes or additions discussed below.

The Indemnity Agreement establishes a presumption that a Business
Leader has met the applicable standard of conduct required for

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indemnification under either the SDBCA or the Delaware Law, as the case may
be. Under the Indemnity Agreement, a Business Leader will be indemnified
unless a majority of a quorum of disinterested directors or, in the event
of a Change in Control (as defined below) of the Resulting Company or if a
quorum of disinterested directors cannot be obtained, independent legal
counsel, determines that the applicable standard of conduct has not been
met. The burden of proof is on the Board of Directors or independent
counsel, as the case may be, to overcome the presumption that a Business
Leader is entitled to indemnification. If the Board of Directors or
independent legal counsel determines that a Business Leader did not meet
the standard of conduct required for indemnification, the Indemnity
Agreement allows the Business Leader to petition a court for an
independent determination of whether the Business Leader is entitled to
indemnification under the Indemnity Agreement. In such a proceeding, the
Resulting Company has the burden of proving that the Executive did not
meet the applicable standard of conduct.

The Indemnity Agreement also provides that litigation and
investigation expenses will be advanced to a Business Leader upon the
Business Leader's request, provided that the Business Leader undertakes to
repay amounts advanced if it is ultimately determined that the Business
Leader is not entitled to indemnification for such expenses.

The Indemnity Agreement further provides that the Resulting Company
will indemnify a Business Leader for costs, including the satisfaction of a
judgment, fine or penalty incurred in, or any amount paid in settlement of,
any proceeding, including a proceeding brought by or in the name of the
Resulting Company (such as a stockholder derivative suit), if such expenses
and costs (i) would have been covered under the liability insurance policy
presently covering the Business Leader or under any future policy
maintained by the Resulting Company or (ii) are indemnifiable under the
SDBCA or the Delaware Law (as the case may be), as those laws may change or
be interpreted from time to time.

Without limiting a Business Leader's right to indemnification under
any other provisions of the Indemnity Agreement, the Indemnity Agreement
provides that a Business Leader involved in a derivative suit shall be
indemnified for expenses and amounts paid in settlement unless (i) the
Board of Directors or independent legal counsel, as the case may be,
determines that the Business Leader did not act in good faith or acted in a
manner opposed to the best interests of the Resulting Company or (ii) the
Business Leader was adjudged liable to the Resulting Company, in which case
any indemnification must be authorized by a court. If the Board of
Directors or independent legal counsel finds that the Business Leader did
not meet the applicable standard of conduct, the Business Leader may
petition a court to make an independent determination of whether the
Business Leader is entitled to indemnification under the Indemnity
Agreement.

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The Indemnity Agreement also provides for partial indemnification of
costs and expenses in the event a Business Leader is not entitled to full
indemnification under the terms of the Indemnity Agreement. Under the
Indemnity Agreement, a Business Leader is automatically entitled to
indemnification for expenses incurred in successfully defending against any
claim, whether on the merits or otherwise.

In addition, the Indemnity Agreement provides that, in the event of a
Change in Control or a potential Change of Control of the Resulting Company
as described below, the Resulting Company must establish, upon a Business
Leader's request, a trust funded in an amount sufficient to satisfy the
Resulting Company's anticipated indemnification obligations to the
Business Leader. Thus, each Business Leader who will be the beneficiary
of the trust will determine whether the trust will be established or
funded. The trust is to be used to advance expenses to a Business Leader
and to pay any amount subject to indemnification under the Indemnity
Agreement. The amount or amounts to be deposited in the trust
will be determined by a majority vote of a quorum of disinterested directors,
the Executive Committee of the Board of Directors or the Chief Executive
Officer of the Resulting Company, or, if none of those individuals is
disinterested, by independent legal counsel.

Funds placed into such a trust will revert to the Resulting Company if
(i) a Change in Control has not occurred and (ii) the Executive Committee
of the Board of Directors or the Chief Executive Officer determines that
the need for the trust no long exists. Prior to a Change in Control of the
Resulting Company, a Business Leader may not be indemnified in connection
with an action, suit or proceeding initiated by the Business Leader against
the Resulting Company or other Business Leaders unless the Resulting
Company consents to such action or joins in it.

The term "Change in Control" as used in the Indemnity Agreement means
the following: (i) the failure of the "Continuing Directors" at any time
to constitute at least a majority of the members of the Board of Directors;
(ii) the acquisition by any "person" (as defined in Section 13(d) and
14(d)(2) of the Exchange Act), other than the Resulting Company, its
subsidiaries or their employee benefit plans, of beneficial ownership of 20
percent or more of the outstanding common stock or the combined voting
power of the Resulting Company's securities entitled to vote generally in
the election of directors; (iii) the approval by the stockholders of the
Resulting Company of a reorganization, merger or consolidation, unless with
or into certain permitted successor entities; or (iv) the approval by the
stockholders of a complete liquidation or dissolution of the Resulting
Company or the sale or disposition of all or substantially all of the
Resulting Company's assets, other than to certain permitted successor
entities. For purposes of this definition, the term "Continuing Directors"
means the persons who are directors at the time the Indemnity Agreement is
signed, as well as subsequent directors whose election or nomination as a

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director was approved by two-thirds of the then-Continuing Directors. The
term excludes certain persons that became directors as a result of election
contests within the meaning of Rule 14a-11 under the Exchange Act or other
types of proxy solicitations.

A Business Leader's rights under the Indemnity Agreement are not
exclusive of any other rights that the Business Leader may have under the
SDBCA or the Delaware Law (as the case may be), the Resulting Company's
certificate or articles of incorporation or bylaws, any other agreement or
any vote of stockholders or disinterested directors. The Indemnity
Agreement does prevent, however, double payment and specifically provides
that if the Resulting Company pays a Business Leader pursuant to the
Indemnity Agreement, the Resulting Company will be subrogated to the
Business Leader's rights to recover from third parties.

In accordance with Article IX of DTG's proposed Amended Articles of
Incorporation and Article XIV of DTG Delaware's Certificate of
Incorporation, the Indemnity Agreement is designed to provide the maximum
protection allowed by law. The indemnification required under the
Indemnity Agreement could include indemnification for liabilities arising
under the Securities Act. Although the enforceability of the provisions
of the Indemnity Agreement has not been tested in court and remains subject
to public policy considerations, the Board of Directors believes that such
provisions are permitted under the SDBCA and the Delaware Law.

The Indemnity Agreement is intended to supplement the protection from
liability presently provided to Business Leaders in light of: (i) the
increasing hazard of litigation, and its related expense, directed against
directors and officers of publicly held companies; (ii) the decrease in
dollar amounts of insurance and the broadening of exclusions and increase
in deductibles under the directors' and officers' liability insurance
policies of many companies, together with a dramatic rise in the cost of
such insurance; and (iii) the potential inability to continue to attract
and retain qualified directors and officers in light of such
developments.

In the event that the Resulting Company is required under the
Indemnity Agreement to reimburse a Business Leader for a large damage award
entered against such individual, the Indemnity Agreement could adversely
affect the stockholders' holdings in the Resulting Company by reducing
the Resulting Company's equity. In addition, to the extent that the
Resulting Company is required to indemnify Business Leaders under the
Indemnity Agreement for liability in situations not covered by the
Resulting Company's liability insurance, the Resulting Company's obligation
to pay such amounts of liability could adversely affect the equity of the
Resulting Company and therefore could be detrimental to its stockholders.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Resulting Company pursuant to the foregoing provisions, or otherwise, the
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Cooperative, DTG and DTG Delaware have been advised in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.

The Cooperative's Board of Directors believes that it is essential
that the Resulting Company provide the maximum possible protection to its
directors and officers to be able to attract and retain qualified
individuals to serve as its business leaders. In light of these
considerations, the Board of Directors of the Cooperative, on behalf of
DTG, and the Board of Directors of DTG Delaware have determined that the
Indemnity Agreement is reasonable, fair and prudent to the Business Leaders
and the stockholders of the Resulting Company and is necessary to promote
and ensure the best interests of the Resulting Company and its
stockholders.

At present, there is no pending litigation or proceeding involving a
director or officer of the Cooperative, DTG or DTG Delaware where
indemnification would be required or permitted under the Indemnity
Agreement, nor is the Board of Directors of the Cooperative or DTG Delaware
aware of any threatened litigation or proceeding which could result in a
claim for indemnification. The Boards of Directors did not approve the
Indemnity Agreement in response to any specific resignation, threat of
resignation or refusal to serve by any current or potential director or
officer.

A vote for the Conversion or the Merger will be deemed to be a vote
for approval of the form of the Indemnity Agreement.

GENERAL INFORMATION

INDEPENDENT PUBLIC ACCOUNTANTS

The consolidated combined financial statements and schedules of the
Cooperative included in this Prospectus and Ballot/Proxy Statement have
been audited by Olsen Thielen & Co., Ltd., independent auditors, as stated
in their report, and have been so used in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

LEGAL OPINIONS

Certain legal matters in connection with the proposed Conversion and
the proposed Merger will be passed upon for the Cooperative, DTG and DTG
Delaware by their legal counsel, Warner Norcross & Judd LLP of Grand
Rapids, Michigan.

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APPENDIX A

AMENDMENTS TO ARTICLES OF INCORPORATION
OF DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
TO EFFECT CONVERSION TO BUSINESS CORPORATION
AND RECLASSIFICATION OF SHARES

WHEREAS, the Board of Directors of Dakota Cooperative
Telecommunications, Inc. (the "Cooperative") believes it is in the best
interests of the Cooperative and its members ("Members") and holders of
Preferred Stock (defined below) and Capital Credits (defined below) for the
Cooperative to convert from a South Dakota cooperative association into a
South Dakota business corporation and become subject to the provisions of
the South Dakota Business Corporation Act (the "Conversion"); and

WHEREAS, the South Dakota Business Corporation Act provides that
a cooperative association may convert itself into a business corporation by
adopting an amendment to its articles of incorporation by which it elects
to become subject to the provisions of the South Dakota Business
Corporation Act; and

WHEREAS, the Board of Directors of the Cooperative has approved
the amendments to the Cooperative's articles of incorporation set forth
below (the "Amendments") to effect the Conversion and directed the
Amendments be submitted to the Cooperative's Members for approval in
accordance with the provisions of the South Dakota Cooperative Association
Act and the Cooperative's articles of incorporation;

IT IS THEREFORE RESOLVED, that the articles of incorporation of
the Cooperative be amended in their entirety to provide as set forth in
EXHIBIT A to these Amendments, which Exhibit is hereby incorporated by
reference;

FURTHER RESOLVED, that, at the Effective Time of the Conversion
(as defined below), each share of the Cooperative's common stock, $5.00 par
value per share ("Old Common Stock"), issued and outstanding immediately
before the Effective Time will automatically become and be converted into
the right to receive one validly issued, fully paid and nonassessable share
of common stock, without par value, of the resulting business corporation
("New Common Stock");

FURTHER RESOLVED, that, at the Effective Time of the Conversion,
each share of the Cooperative's Non-Voting Non-Cumulative Preferred Stock,
$100.00 par value per share ("Preferred Stock"), issued and outstanding
immediately before the Effective Time will automatically become and be
converted into the right to receive 80.8216445 validly issued, fully paid
and nonassessable shares of New Common Stock;

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FURTHER RESOLVED, that, at the Effective Time of the Conversion,
each Warrant to purchase shares of Preferred Stock issued and outstanding
immediately before the Effective Time will automatically become and be
converted into an issued and outstanding Warrant to purchase 80.8216445
validly issued, fully paid and nonassessable shares of New Common Stock
upon the same terms as set forth in each existing Warrant;

FURTHER RESOLVED, that, at the Effective Time of the Conversion,
each Option to purchase shares of Preferred Stock issued and outstanding at
the Effective Time will automatically become and be converted into an
issued and outstanding Option to purchase 80.8216445 validly issued, fully
paid and nonassessable shares of New Common Stock upon the same terms as
set forth in each existing Option;

FURTHER RESOLVED, that, at the Effective Time of the Conversion,
each dollar credited on the books of the Cooperative to the capital account
of each Member and former Member (a "Capital Credit") will be retired in
full and will automatically become and be converted into the right to
receive 0.2 of a validly issued, fully paid and nonassessable share of New
Common Stock;

FURTHER RESOLVED, that, at the Effective Time of the Conversion,
each share of Old Common Stock and Preferred Stock outstanding immediately
prior to the Effective Time shall be deemed to be no longer outstanding and
each Capital Credit recorded immediately prior to the Effective Time shall
be deemed retired in full, and shall represent solely the right to receive
shares of New Common Stock, together with any dividends and other
distributions payable as provided in these Amendments, but subject to
payment of cash in lieu of fractional shares or credits as provided in
these Amendments;

FURTHER RESOLVED, that, after the Effective Time of the
Conversion, certificates representing shares of Old Common Stock or
Preferred Stock ("Old Certificates") shall be exchangeable by the holders
thereof for, and holders of Capital Credits shall be entitled to receive in
consideration for retirement of Capital Credits, stock certificates
representing the number of shares of New Common Stock to which such holders
shall be entitled in the following manner:

(i) Each person's total Capital Credit balance will be
determined by first allocating the person's portion of all unallocated
Capital Credits for the year ended December 31, 1996 to the person's
capital account based on the person's total patronage in 1996. No
Capital Credits will be allocated for 1997. Next, any unpaid overdue
amounts owed to the Cooperative for past services, plus interest on
such amounts calculated in accordance with Section 9.02 of the
Cooperative's bylaws, will be offset against the person's capital
account. As an alternative, each holder will have the option of

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paying such overdue amounts, plus interest due thereon, and preventing
a reduction in the holder's Capital Credit balance. The resulting
Capital Credit balance, if positive, will be divided by $5.00 to
determine the number of shares of New Common Stock to be issued in the
Conversion to retire Capital Credits. Fractional shares will not be
issued. Each person who would otherwise have been entitled to receive
a fraction of a share of New Common Stock in the Conversion will
receive instead cash in an amount equal to that fraction multiplied by
$5.00. If the Cooperative has no record of the current address of
holders of accounts with positive Capital Credit balances, the
resulting business corporation will allocate such amounts into a
special Cooperative Equity Suspense Account. Following the forfeiture
provisions of Section 47-16-54 of the South Dakota Cooperative
Association Act, the resulting business corporation will attempt to
locate the holders of such accounts. If it is unable to do so, the
amounts in the Cooperative Equity Suspense Account will be forfeited
and reallocated as additional paid-in capital.

(ii) As soon as practicable after the Effective Time of the
Conversion or after a Capital Credit holder is located, the resulting
business corporation shall send or cause to be sent to each record
holder of Old Common Stock and Preferred Stock outstanding immediately
prior to the Effective Time of the Conversion, and each holder of a
Capital Credit as reflected on the books of the Cooperative,
transmittal materials for use in exchanging that holder's Old
Certificates for, or for obtaining in consideration of Capital
Credits, New Common Stock certificates. The transmittal materials
will contain instructions with respect to the surrender of Old
Certificates.

(iii) The resulting business corporation shall issue and
deliver stock certificates together with checks for the amount of cash
payable for fractional shares of New Common Stock to Members and
holders of Preferred Stock and Capital Credits in the names and to the
addresses that appear on the Cooperative's stock records as of the
Effective Time of the Conversion, or in such other name or to such
other address as may be specified by the holder in transmittal
documents received by the resulting business corporation; provided,
that:

(a) The resulting business corporation shall have received
properly executed transmittal materials and, with respect to each
Member or holder of Preferred Stock, all of the Old Certificates
held by that holder, or an affidavit of loss and indemnity bond
for such certificate or certificates; and

(b) Such transmittal materials, certificates, affidavits
and bonds are in a form and condition reasonably acceptable to
the resulting business corporation.

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(iv) On or after the Effective Time, there shall be no transfers
on the Cooperative's stock transfer books or books of account of the
shares of Old Common Stock or Preferred Stock or Capital Credits which
were issued and outstanding immediately prior to the Effective Time.
If, after the Effective Time, Old Certificates are properly presented
for transfer, or a request is made for transfer of a Capital Credit,
then they shall be canceled or retired, as applicable, and exchanged
for stock certificates representing shares of New Common Stock as
provided in these Amendments.

(v) The resulting business corporation shall have discretion to
determine reasonable rules and procedures relating to the exchange of
Old Certificates and the issuance and delivery of certificates of New
Common Stock into which shares of Old Common Stock and Preferred Stock
and Capital Credits are converted in the Conversion and governing the
payment for fractional shares or interests;

FURTHER RESOLVED, that, notwithstanding any other provision of
these Amendments, no certificates or scrip representing fractional shares
of New Common Stock shall be issued in the Conversion (taking into account
all shares and Capital Credits held by a particular holder) upon the
surrender of Old Certificates or retirement of Capital Credits. No
fractional interest in any share of New Common Stock resulting from the
Conversion shall be entitled to any part of a dividend, distribution or
stock split with respect to shares of New Common Stock nor entitle the
record holder to vote or exercise any rights of a shareholder with respect
to that fractional interest. In lieu of issuing any fractional share, each
holder of an Old Certificate or Capital Credit who would otherwise have
been entitled to a fractional share of New Common Stock upon surrender of
all Old Certificates and retirement of Capital Credits shall be paid an
amount in cash (without interest) equal to such fraction of a share
multiplied by $5.00;

FURTHER RESOLVED, that the Conversion shall become effective at
the date and time (the "Effective Time") set forth in a Certificate of
Amendment of the Articles of Incorporation to be issued by the Secretary of
the State of South Dakota;

FURTHER RESOLVED, that, at the Effective Time, the Bylaws of the
Cooperative shall be amended in their entirety to provide as set forth in
EXHIBIT B to these Amendments, which Exhibit is hereby incorporated by
reference;

FURTHER RESOLVED, that, if the proposed Agreement and Plan of
Merger between the Cooperative, on behalf of the resulting business
corporation, and Dakota Telecommunications Group (Delaware), Inc. ("DTG
Delaware"), dated as of February 14, 1997 (the "Plan of Merger"), is
approved, no shares of New Common Stock will be issued in the Conversion;

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instead, holders of rights to receive shares of New Common Stock, or rights
to purchase shares of New Common Stock, will instead receive shares of
common stock, without par value, of DTG Delaware ("DTG Delaware Common
Stock"), or rights to purchase shares of DTG Delaware Common Stock, as
provided in the Plan of Merger, together with checks for the amount of cash
payable for fractional shares of New Common Stock; and

FURTHER RESOLVED, that the Cooperative's directors and officers
are hereby authorized to perform any and all acts, execute any and all
documents, agreements, contracts and certificates for and in the name of
the Cooperative and to do any and all things as they, in their sole
discretion, deem necessary, desirable or convenient to give effect and to
implement or carry out the intent and purposes of these resolutions; and
all actions already taken on behalf of the Cooperative to implement these
Amendments are hereby fully ratified, approved and confirmed.

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APPENDIX B

AMENDED ARTICLES OF INCORPORATION

DAKOTA TELECOMMUNICATIONS GROUP, INC.
(A SOUTH DAKOTA CORPORATION)

Pursuant to the provisions of Sections 47-15-8 of the South
Dakota Cooperative Association Act, as amended, the undersigned corporation
executes the following Amended Articles of Incorporation:

ARTICLE I

The name of the corporation is DAKOTA TELECOMMUNICATIONS GROUP,
INC.

ARTICLE II

The corporation shall be subject to the South Dakota Business
Corporation Act.

ARTICLE III

The period of duration of the corporation shall be perpetual.

ARTICLE IV

The purpose of the corporation is: (i) to engage in the business
of telecommunications, internet communications, cable television and other
cable communications, and any business relating thereto, and to hold the
securities of other companies who engage in such businesses or other
business permissible under the laws of their states of incorporation, and
(ii) to engage in any other business incidental or related thereto, and
such other business or business activities as shall be considered desirable
by the directors, and to make and execute any and all agreements for the
purpose outlined, including agreements for borrowing of money, to
construct, own, purchase, maintain, operate, sell, lease or dispose of real
and personal property which may be necessary or advisable for the carrying
on of the business of the corporation; and to do all other things
subsidiary, necessary or contingent for carrying out and into effect the
main purposes of the corporation; to enter into partnerships; and any and
all other lawful purposes for which corporations may be incorporated under
the South Dakota Business Corporation Act.

<PAGE>
ARTICLE V

The total authorized capital stock of the corporation is five
million (5,000,000) shares of common stock without par value, and two
hundred fifty thousand (250,000) shares of preferred stock without par
value, of which fifteen thousand (15,000) shares shall be designated as
Series A Junior Participating Preferred Stock.

The following provisions are applicable to the authorized stock
of the corporation:

(A) PROVISIONS APPLICABLE TO COMMON STOCK:

(1) All shares of common stock shall be of one class. Each
holder of common stock shall be entitled to one vote for each
share held by the shareholder.

(2) Subject to the preferential dividend rights, if any,
applicable to shares of preferred stock and subject to applicable
requirements, if any, with respect to the setting aside of sums
for purchase, retirement or sinking funds for preferred stock,
the holders of common stock shall be entitled to receive, to the
extent permitted by law, such dividends as may be declared from
time to time by the Board of Directors.

(3) In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding up of
the corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of
preferred stock, holders of common stock shall be entitled to
receive all of the remaining assets of the corporation of
whatever kind available for distribution to shareholders ratably
in proportion to the number of shares of common stock held by
them. The Board of Directors may distribute in kind to the
holders of common stock such remaining assets of the corporation
or may sell, transfer or otherwise dispose of all or any part of
such remaining assets to any person and may sell all or any part
of the consideration so received and distribute any balance
thereof in kind to holders of common stock. The merger or
consolidation of the corporation into or with any other
corporation, or the merger or consolidation of any other
corporation into it, or any purchase or redemption of shares of
stock of the corporation of any class, shall not be deemed to be
a dissolution, liquidation or winding up of the corporation for
the purposes of this paragraph.

(4) The holders of common stock shall not have any
preemptive or other preferential right to additional or treasury
shares of the corporation.

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(B) PROVISIONS APPLICABLE TO PREFERRED STOCK:

(1) Provisions to be fixed by the Board of Directors:

The Board of Directors is expressly authorized at any time,
and from time to time, to provide for the issuance of shares of
preferred stock in one or more series, each with such voting
powers, full or limited, or without voting powers, and with such
designations, preferences and relative, participating,
conversion, optional or other rights, and such qualifications,
limitations or restrictions thereof, as shall be stated in the
resolution or resolutions providing for the issue thereof adopted
by the Board of Directors, and as are not stated in these Amended
Articles of Incorporation, or any amendments thereto, including
(without limiting the generality of the foregoing) the following:

(a) The distinctive designation and number of shares
comprising such series, which number may (except where
otherwise provided by the Board of Directors in creating
such series) be increased or decreased (but not below the
number of shares then outstanding) from time to time by
action of the Board of Directors.

(b) The stated value of the shares of such series.

(c) The dividend rate or rates on the shares of such
series and the relation which such dividends shall bear to
the dividends payable on any other class of capital stock or
on any other series of preferred stock, the terms and
conditions upon which and the periods in respect of which
dividends shall be payable, whether and upon what conditions
such dividends shall be cumulative and, if cumulative, the
date or dates from which dividends shall accumulate.

(d) Whether the shares of such series shall be
redeemable and, if redeemable, whether redeemable for cash,
property or rights, including securities of any other
corporation, and whether redeemable at the option of the
holder or the corporation or upon the happening of a
specified event, the limitations and restrictions with
respect to such redemption, the time or times when, the
price or prices or rate or rates at which, the adjustments
with which and the manner in which such shares shall be
redeemable, including the manner of selecting shares of such
series for redemption if less than all shares are to be
redeemed.

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(e) The rights to which the holders of shares of such
series shall be entitled, and the preferences, if any, over
any other series (or of any other series over such series),
upon the voluntary or involuntary liquidation, dissolution,
distribution or winding up of the corporation, which rights
may vary depending on whether such liquidation, dissolution,
distribution or winding up is voluntary or involuntary, and,
if voluntary, may vary at different dates.

(f) Whether the shares of such series shall be subject
to the operation of a purchase, retirement or sinking fund
and, if so, whether and upon what conditions such fund shall
be cumulative or noncumulative, the extent to which and the
manner in which such fund shall be applied to the purchase
or redemption of the shares of such series for retirement or
to other corporation purposes and the terms and provisions
relative to the operation thereof.

(g) Whether the shares of such series shall be
convertible into or exchangeable for shares of any other
class or of any other series of any class of capital stock
of the corporation or any other corporation, and, if so
convertible or exchangeable, the price or prices or the rate
or rates of conversion or exchange and the method, if any,
of adjusting the same, and any other terms and conditions of
such conversion or exchange.

(h) The voting powers, if any, of the shares of such
series, and whether and under what conditions the shares of
such series (alone or together with the shares of one or
more of other series having similar provisions) shall be
entitled to vote separately as a single class, for the
election of one or more additional directors of the
corporation in case of dividend arrearages or other
specified events, or upon other matters.

(i) Whether the issuance of any additional shares of
such series, or of any shares of any other series, shall be
subject to restrictions as to issuance, or as to the powers,
preferences or rights of any such other series.

(j) Any other preferences, privileges and powers and
relative participating, optional or other special rights,
and qualifications, limitations or restrictions of such
series, as the Board of Directors may deem advisable and as
shall not be inconsistent with the provisions of these
Amended Articles of Incorporation.

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<PAGE>
(2) Provisions Applicable to All Preferred Stock:

(a) All preferred stock shall rank equally and be
identical in all respects except as to the matters permitted
to be fixed by the Board of Directors, and all shares of any
one series thereof shall be identical in every particular
except as to the date, if any, from which dividends on such
shares shall accumulate.

(b) Shares of preferred stock redeemed, converted,
exchanged, purchased, retired or surrendered to the
corporation, or which have been issued and reacquired in any
manner, may, upon compliance with any applicable provisions
of the South Dakota Business Corporation Act, be given the
status of authorized and unissued shares of preferred stock
and may be reissued by the Board of Directors as part of the
series of which they were originally a part or may be
reclassified into and reissued as part of a new series or as
a part of any other series, all subject to the protective
conditions or restrictions of any outstanding series of
preferred stock.

(3) Provisions Applicable To Series A Junior Participating
Preferred Stock:

(a) DESIGNATION AND AMOUNT. The shares of such
series shall be designated as "Series A Junior Participating
Preferred Stock" and the number of shares constituting such
series shall be 15,000.

(b) DIVIDENDS AND DISTRIBUTIONS.

(i) Subject to the prior and superior rights of
the holders of any shares of any series of Preferred
Stock ranking prior and superior to the shares of
Series A Junior Participating Preferred Stock,
the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors
out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth
day of March, June, September and December in each
year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A
Junior Participating Preferred Stock, in an amount per

B-5
<PAGE>
share (rounded to the nearest cent) equal to the
greater of (A) $10 or (B) subject to the provision for
adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on
the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of
Series A Junior Participating Preferred Stock. In the
event the corporation shall at any time after the
declaration of rights to purchase Series A Junior
Participating Preferred Stock (a "Rights Declaration
Date") (x) declare any dividend on Common Stock payable
in shares of Common Stock, (y) subdivide the
outstanding Common Stock, or (z) combine the
outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which
holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such
event under clause (B) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of
Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to
such event.

(ii) The corporation shall declare a dividend or
distribution on the Series A Junior Participating
Preferred Stock as provided in paragraph (i) above
immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been
declared on the Common Stock during the period between
any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend
of $10 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

(iii) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior

B-6
<PAGE>
Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue
of such shares of Series A Junior Participating
Preferred Stock, unless the date of issue of such
shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders
of shares of Series A Junior Participating Preferred
Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A
Junior Participating Preferred Stock in an amount less
than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders
of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall
be no more than 30 days prior to the date fixed for the
payment thereof.

(c) VOTING RIGHTS. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following
voting rights:

(i) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of
the stockholders of the corporation. In the event the
corporation shall at any time after the Rights Declaration
Date (A) declare any dividend on Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common
Stock, or (C) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number
of votes per share to which holders of shares of Series A
Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which
is the number of shares of Common Stock outstanding

B-7
<PAGE>
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.

(ii) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred
Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the corporation.

(iii) (A) If at any time dividends on any Series A
Junior Participating Preferred Stock shall be in arrears in
an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock
(including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount
equal to six (6) quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect
two (2) Directors.

(B) During any default period, such voting right
of the holders of Series A Junior Participating Preferred
Stock may be exercised initially at a special meeting called
pursuant to subparagraph (C) below or at any annual meeting
of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor
the right of the holders of any other series of Preferred
Stock, if any, to increase, in certain cases, the authorized
number of Directors shall be exercised unless the holders of
ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock of
such voting right. At any meeting at which the holders of
Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the
right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then
exist up to two (2) Directors or, if such right is exercised
at an annual meeting, to elect two (2) Directors. If the
number which may be so elected at any special meeting does

B-8
<PAGE>
not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase
in the number of Directors as shall be necessary to permit
the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during
the continuance of such period, the number of Directors
shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or
PARI PASSU with the Series A Junior Participating Preferred
Stock.

(C) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may
order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total
number of shares of Preferred Stock outstanding,
irrespective of series, may request the calling of a
special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the President, a Vice
President or the Secretary of the corporation. Notice of
such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this
paragraph (C) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to the
holder at his or her last address as the same appears on the
books of the corporation. Such meeting shall be called for
a time not earlier than 20 days and not later than 60 days
after such order or request or in default of the calling of
such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions
of this paragraph (C), no such special meeting shall be
called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the
stockholders.

(D) In any default period, the holders of Common
Stock, and other classes of stock of the corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (X) the
Directors so elected by the holders of Preferred Stock shall

B-9
<PAGE>
continue in office until their successors shall have been
elected by such holders or until the expiration of the
default period, and (Y) any vacancy in the Board of
Directors may (except as provided in subparagraph (B) above)
be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become
vacant. References in this paragraph to Directors elected
by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as
provided in clause (Y) of the foregoing sentence.

(E) Immediately upon the expiration of a default
period, (X) the right of the holders of Preferred Stock as a
class to elect Directors shall cease, (Y) the term of any
Directors elected by the holders of Preferred Stock as a
class shall terminate, and (Z) the number of Directors shall
be such number as may be provided for in the certificate of
incorporation or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (B) above (such
number being subject, however, to change thereafter in any
manner provided by law or in the articles of incorporation
or by-laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (Y) and (Z) in the
preceding sentence may be filled by a majority of the
remaining Directors.

(iv) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.

(d) Certain Restrictions:

(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 3(b) are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been
paid in full, the corporation shall not

(A) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock;

B-10
<PAGE>
(B) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;

(C) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, provided that the corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior
Participating Preferred Stock;

(D) Purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock,
or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.

(ii) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration
any shares of stock of the corporation unless the corporation
could, under paragraph (i) above, purchase or otherwise acquire
such shares at such time and in such manner.

(e) REACQUIRED SHARES; SUBSEQUENT BOARD ACTIONS. Any
shares of Series A Junior Participating Preferred Stock purchased
or otherwise acquired by the corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors, subject

B-11
<PAGE>
to the conditions and restrictions on issuance set forth herein.
In addition, at any time that there are no shares of Series A
Junior Participating Preferred Stock or rights to purchase the
same are outstanding, the Board of Directors, acting by
resolution duly adopted, may file a Certificate of Designation,
Preferences and Rights pursuant to the South Dakota Business
Corporation Act providing that the Series A Junior Participating
Preferred Stock shall become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on
issuance set forth herein.

(f) LIQUIDATION, DISSOLUTION OR WINDING UP.

(i) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the corporation, no
distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred
Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such
payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Common
Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing
(x) the Series A Liquidation Preference by (y) 100 (as
appropriately adjusted as set forth in subparagraph (iii)
below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common
Stock) (such number in clause (y), the "Adjustment Number").
Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect
of all outstanding shares of Series A Junior Participating
Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.

B-12
<PAGE>
(ii) In the event, however, that there are no
sufficient assets available to permit payment in full of the
Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any,
which rank on the parity with the Series A Junior
Participating Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation
preferences. In the event, however, that there are no
sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.

(iii) In the event the corporation shall at any time
after the Rights Declaration Date (x) declare any dividend
on Common Stock payable in shares of Common Stock,
(y) subdivide the outstanding Common Stock, or (z) combine
the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(g) CONSOLIDATION, MERGER, ETC. In case the corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which
or for each share of Common Stock is changed or exchanged. In
the event the corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

B-13
<PAGE>
(h) NO REDEMPTION. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.

(i) RANKING. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the corporation's
Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall
provide otherwise.

(j) AMENDMENT. The Articles of Incorporation of the
corporation shall not be further amended in any manner which
would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred
Stock so as to affect them adversely without the affirmative vote
of the holders of a majority or more of the outstanding shares of
Series A Junior Participating Preferred Stock, voting separately
as a class.

(k) FRACTIONAL SHARES. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holders fractional
shares, to exercise voting rights, receive dividends, participate
in distributions and to have the benefit of all other rights of
holders of Series A Junior Participating Preferred Stock.

ARTICLE VI

The street address (which is the mailing address) of the
registered office of the corporation is 29705 453rd Avenue, Post Office Box
66, Irene, South Dakota 57037. The name of the resident agent at the
registered office is Craig A. Anderson.

ARTICLE VII

When a compromise or arrangement or a plan of reorganization of
this corporation is proposed between this corporation and its creditors or
any class of them or between this corporation and its shareholders or any
class of them, a court of equity jurisdiction within the state, on
application of this corporation or of a creditor or shareholder thereof, or
on application of a receiver appointed for the corporation, may order a
meeting of the creditors or class of creditors or of the shareholders or
class of shareholders to be affected by the proposed compromise or
arrangement or reorganization, to be summoned in such manner as the court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, or of the shareholders or class of
shareholders to be affected by the proposed compromise or arrangement or a

B-14
<PAGE>
reorganization, agree to a compromise or arrangement or a reorganization of
this corporation as a consequence of the compromise or arrangement, the
compromise or arrangement and the reorganization, if sanctioned by the
court to which the application has been made, shall be binding on all the
creditors or class of creditors, or on all the shareholders or class of
shareholders and also on this corporation.

ARTICLE VIII

In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:

(A) To make, alter or repeal the Bylaws of the corporation.

(B) To authorize and cause to be executed mortgages and
liens upon the real and personal property of the corporation.

(C) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which it
was created.

(D) By a majority of the whole Board, to designate one or
more committees, each committee to consist of one or more of the
directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. The Bylaws may provide that in the absence or
disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to
act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in the
resolution of the Board of Directors, or in the Bylaws of the
corporation, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power to
authorize amending the Articles of Incorporation, adopting an
agreement of merger or consolidation, recommending to the
shareholders the sale, lease, exchange or other disposition of
all or substantially all of the corporation's property and assets
other than in the usual and regular course of its business,
recommending to the shareholders a dissolution of the corporation
or a revocation of a dissolution, or amending the Bylaws of the

B-15
<PAGE>
corporation; and, unless the resolution or Bylaws expressly so
provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.

(E) When and as authorized by the shareholders in
accordance with statute, to sell, lease or exchange all or
substantially all of the property and assets of the corporation,
including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may
consist in whole or in part of money or property including shares
of stock in, and/or other securities of, any other corporation or
corporations, as the Board of Directors shall deem expedient and
for the best interests of the corporation.

(F) To elect and determine the duties of the officers of
the corporation and to establish the rights, powers, duties,
rules and procedures that (1) govern the Board of Directors,
including without limitation the vote required for any action by
the Board of Directors; and (2) affect the directors' power to
manage the affairs of the corporation.

(G) To create and issue, by way of distributions to
shareholders, as dividends or otherwise, rights or options
entitling the holders thereof to purchase from the corporation
shares of any class or series of the corporation's capital stock.
Such rights or options shall be evidenced in such manner as the
board shall approve and shall set forth the terms upon which, the
time within which, and the price at which such shares may be
purchased from the corporation upon the exercise of any such
right or option. The terms and conditions of such rights or
options may include, without limitation, provisions which adjust
the option price or number of shares issuable under such rights
or options in the event of an acquisition of shares or a
reorganization, merger, consolidation, sale of assets, or other
occurrence involving the corporation, and restrictions or
conditions that preclude or limit the entitlement, exercise, or
transfer of such rights or options by any person or persons who,
after the date of creation or issuance of such rights or options,
acquires, obtains the right to acquire, or offers to acquire,
directly or indirectly, beneficial ownership of a specified
number or percentage of the corporation's outstanding voting
shares or other shares of the corporation, or that invalidate or
void such rights or options held by any such person or persons.

(H) No Bylaw shall be adopted by shareholders which shall
impair or impede the implementation of the foregoing.

B-16
<PAGE>
ARTICLE IX

Directors and executive officers (as such term may be defined in
the Bylaws of the corporation governing indemnification) of the corporation
shall be indemnified as of right to the fullest extent now or hereafter
permitted by law in connection with any actual or threatened civil,
criminal, administrative or investigative action, suit or proceeding
(whether brought by or in the name of the corporation, a subsidiary or
otherwise) arising out of their service to the corporation or a subsidiary,
or to another organization or other enterprise at the request of the
corporation or a subsidiary. Persons who are not directors or executive
officers of the corporation may be similarly indemnified in respect of such
service to the extent authorized at any time by the Board of Directors of
the corporation. The corporation may purchase and maintain insurance to
protect itself and any such director, officer or other person against any
liability asserted against such person and incurred by such person in
respect of such service whether or not the corporation would have the power
to indemnify such person against such liability by law or under the
provisions of this paragraph. The provisions of this paragraph shall be
applicable to directors, officers and other persons who have ceased to
render such service, and shall inure to the benefit of the heirs, executors
and administrators of the directors, officers and other persons referred to
in this paragraph. The provisions of this paragraph are not exclusive of
any other rights to which those seeking indemnification may be entitled
pursuant to law, contract, agreement, Bylaw, vote of the shareholders or
otherwise.

ARTICLE X

Any action required or permitted to be taken by the shareholders
of the corporation must be effected at a duly called annual or special
meeting of shareholders of the corporation and may not be effected by any
consent in writing by such shareholders, except that any such action may be
taken upon the signing of a consent in writing by all the shareholders of
the corporation entitled to vote thereon. Except as otherwise required by
law and subject to the rights of the holders of preferred stock, special
meetings of shareholders of the corporation may be called by an executive
officer whenever directed by the Board of Directors. Such request shall
state the purpose of the proposed meeting.

ARTICLE XI

Members of the Board of Directors of the corporation shall be
selected, replaced and removed as follows:

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<PAGE>
(A) NUMBER OF DIRECTORS. The number of the directors of
the corporation shall be as fixed in a Bylaw, but shall not be
less than 9, provided that any amendment to such Bylaw must be
adopted by the affirmative vote of at least 80 percent of the
entire Board of Directors.

(B) CLASSIFICATION. The Board of Directors shall be
divided into three classes as nearly equal in number as possible,
with the term of office of one class expiring each year. At each
annual meeting of the shareholders, the successors of the class
of directors whose term expires at that meeting shall be elected
to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their
election.

(1) Nominations of candidates for election as
directors of the corporation at any meeting of shareholders
called for election of directors (an "Election Meeting") may
be made by the Board of Directors or by any shareholder
entitled to vote at such Election Meeting.

(2) Nominations made by the Board of Directors shall
be made at a meeting of the Board of Directors, or by
written consent of directors in lieu of a meeting, not less
than 30 days prior to the date of the Election Meeting, and
such nominations shall be reflected in the minute books of
the corporation as of the date made. At the request of the
Secretary of the corporation, each proposed nominee shall
provide the corporation with such information concerning
himself as is required under the rules of the Securities and
Exchange Commission to be included in the corporation's
proxy statements soliciting proxies for his election as a
director.

(3) Any shareholder who intends to make a nomination
at an Election Meeting shall deliver, not less than 120 days
prior to the date of notice of the Election Meeting in the
case of an annual meeting, and not more than 9 days
following the date of notice of the meeting in the case of a
special meeting, a notice to the Secretary of the
corporation setting forth: (i) the name, age, business
address and residence address of each nominee proposed in
such notice; (ii) the principal occupation or employment of
each such nominee; (iii) the number of shares of capital
stock of the corporation which are beneficially owned by
each such nominee; (iv) a statement that each such nominee

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<PAGE>
is willing to be nominated and serve; and (v) such other
information concerning each such nominee as would be
required under the rules of the Securities and Exchange
Commission in a proxy statement soliciting proxies for the
election of such nominees.

(4) If the chairman of the Election Meeting determines
that a nomination was not made in accordance with the
foregoing procedures, such nomination shall be void.

(D) VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to
the rights of the holders of any series of Preferred Stock then
outstanding, any vacancy occurring in the Board of Directors
caused by resignation, removal, death, disqualification or other
incapacity, and any newly created directorships resulting from an
increase in the number of directors, shall be filled by a
majority vote of directors then in office whether or not a
quorum. Each director chosen to fill a vacancy shall hold office
for the unexpired term of such person's predecessor in office and
each director chosen to fill a newly created directorship shall
hold office until the next election of directors. When the
number of directors is changed, any newly created or eliminated
directorships shall be so apportioned among the classes as to
make all classes as nearly equal in number as possible. No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director and
any such incumbent director shall serve out the remainder of such
director's term.

(E) REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any director may be
removed from office at any time, but only for cause, and only by
shareholder action. The vote for removal shall be by a majority
of shares entitled to vote at an election of directors except as
provided below. If less than the entire board is to be removed,
no one of the directors may be removed if the votes cast against
his or her removal would be sufficient to elect him or her if
then cumulatively voted at an election of the class of directors
of which he or she is a part. If holders of a class or series of
stock are entitled to elect one or more directors, this paragraph
applies, with respect to removal of a director so elected, to the
vote of the holders of the outstanding shares of that class or
series of stock.

Except as may be provided otherwise by law, cause for
removal shall be construed to exist only if: (1) the director
whose removal is proposed has been convicted of a felony by a
court of competent jurisdiction and such conviction is no longer

B-19
<PAGE>
subject to direct appeal; (2) such director has been adjudicated
by a court of competent jurisdiction to be liable for negligence,
or misconduct, in the performance of such person's duty to the
corporation in a matter of substantial importance to the
corporation and such adjudication is no longer subject to a
direct appeal; (3) such director has become mentally incompetent,
whether or not so adjudicated, which mental incompetency directly
affects such person's ability as a director of the corporation;
or (4) the director's actions or failure to act have been in
derogation of the director's duties, as provided in the Bylaws of
the corporation or otherwise provided by law. Any proposal for
removal pursuant to (3) or (4) of this paragraph which is
initiated by the Board of Directors for submission to the
shareholders shall require the affirmative vote of at least two-
thirds of the total number of directors then in office, exclusive
of the director who is the subject of the removal action and who
shall not be entitled to vote thereon.

(F) QUALIFICATIONS AND DUTIES OF DIRECTORS.

(1) No person who has asserted or hereafter asserts
any Claim against the corporation or any Subsidiary (a
"Plaintiff"), and no person who is or becomes an Affiliate
or Associate of any Plaintiff, so long as such person
continues to be such an Affiliate or Associate (a "Related
Person"), shall be eligible to be elected or to serve as a
director of the corporation until after such Claim is
Finally Resolved, PROVIDED, that a director of the
corporation who is validly nominated and elected a director
and who thereafter becomes a Plaintiff or Related Person
shall not solely by reason of becoming a Plaintiff or
Related Person cease to be a director, but rather shall
continue as a director for the remainder of the term for
which he or she was elected or until his or her resignation
or removal; PROVIDED FURTHER, that it shall be the duty of
any such director promptly to notify the Board of Directors
that he or she is or has become a Plaintiff or Related
Person and to either promptly take all steps as may be
necessary to cause himself or herself to be neither a
Plaintiff nor Related Person or, if all such steps cannot be
or have not been taken and he or she continues to be either
a Plaintiff or Related Person and the pertinent Claim has
not been Finally Resolved within the pertinent Resolution
Period, resign as a director of the corporation, effective
immediately, at or before the end of such Resolution Period.

(2) For purposes of this Section, the definitions set
forth in Article XII shall apply to such terms used in this

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<PAGE>
Article as if the definitions were fully restated in this
Article. In addition, the following terms shall have the
following respective meanings:

(a) In addition to the definition of "Control"
set forth in Article XII, for purposes of this Article,
a controlling relationship between any person and
another person shall be deemed to exist whenever (but
shall not be limited to a situation in which) the
former person directly or indirectly holds or owns at
least 15 percent of the outstanding securities of any
class or series of voting securities issued by, or at
least 15 percent of the aggregate voting power with
respect to, the latter person.

(b) "Claim" means any claim, cross-claim,
counterclaim or third-party claim pled in any action,
suit or proceeding (whether at law, in equity or
otherwise and regardless of the character of the relief
sought) before or subject to the jurisdiction of any
court, governmental agency or instrumentality,
arbitrator or similar body or authority, other than:

(i) one which, when aggregated with all
other claims, cross-claims, counterclaims and
third-party claims asserted by the pertinent
Plaintiff or any Related Person of such Plaintiff
against the corporation or any Subsidiary that
have not been Finally Resolved, if decided
adversely to the corporation or a Subsidiary,
along with all other aggregated claims, cross-
claims, counterclaims and third-party claims,
could not result in an order or orders compelling
the corporation and/or any of its Subsidiaries to
pay out or otherwise dispose of cash or any other
assets having an aggregate value in excess of
10 percent of the consolidated current assets of
the corporation as of the quarter then most
recently ended or render the corporation
insolvent;

(ii) one arising pursuant to a contract
between the corporation and the pertinent
Plaintiff or Related Person that was approved
by a majority of the Continuing Directors (as
defined in Article XII of these Amended Articles
of Incorporation), including without limitation
claims arising under any indemnity or employ-
ment contract; or

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<PAGE>
(iii) one asserted in the right of the
corporation.

(c) When used with respect to any particular
Claim, the term "Finally Resolved" means that a final
order has been rendered with respect to such Claim and
all available appeals from such order have been
exhausted or the time for seeking such review has
expired.

(d) "Resolution Period" means, in any case, the
30-day period beginning on the earlier of (i) the date
on which a director of the corporation notifies the
Board of Directors that such director has become a
Plaintiff or Related Person or (ii) the date on which
the Board of Directors determines that a director of
the corporation has become a Plaintiff or Related
Person; PROVIDED, that the Board of Directors may (but
is not required to) extend a Resolution Period for one
period not to exceed 15 additional days if the director
establishes to the Board's satisfaction a reasonable
likelihood that during such extended period the
pertinent Claim will be Finally Resolved or such
director will cease to be both a Plaintiff and a
Related Person.

(3) The Board of Directors of the corporation (acting
by at least a majority of all directors, excluding any who
have acknowledged themselves to be or have been determined
to be Plaintiffs or Related Persons at the time of such
Board action and excluding any director or directors whose
status as Plaintiff or Related Person is the subject of such
action) shall have the authority to determine whether any
director of the corporation is or is not or has ceased to be
a Plaintiff or Related Person, and the Board of Directors
(acting by at least a majority of all directors, excluding
any who have acknowledged themselves to be or have been
determined to be Plaintiffs or Related Persons and, if the
matter at issue relates to the next annual meeting of
shareholders of the corporation to occur after such Board
action, excluding any director whose term of office would
expire at such meeting and who at the time of such action
has not irrevocably decided not to stand for reelection)
shall have the authority to determine whether any person
nominated or proposed for nomination as a director or who is
the subject of a shareholder request as provided below is
ineligible to be so nominated and elected by virtue of being
a Plaintiff or Related Person. Each such Board
determination shall be based upon such information as has

B-22
<PAGE>
been brought to the attention of the Board (whether in a
shareholder request or otherwise) at the time such
determination is made, and no Board determination that any
director or other person is or is not or has ceased to be a
Plaintiff or Related Person shall preclude the Board from
reconsidering the matter and making the contrary
determination in light of any facts or circumstances first
coming to the attention of the Board after the prior
determination was made.

(4) The Board of Directors shall not nominate any
person for election as a director of the corporation unless
such prospective nominee has provided the Board with (i) all
such information as the Board (or any member thereof not
excluded from determining the status of such person as a
Plaintiff or Related Person) has deemed necessary or
appropriate to enable the Board to determine such status;
and (ii) a signed statement by the prospective nominee that
such person, having reviewed this Section, is aware of no
reason not disclosed to the Board why he or she would or
might be considered a Plaintiff or Related Person (which
statement also shall include an undertaking by such person
that if he or she is nominated, such person promptly will
inform the Board, by written notice to the Chairman of the
Board or the Secretary of the corporation, if at any time
prior to the election to which such person's nomination
relates he or she becomes aware of any fact or circumstance,
whether in existence on the date such undertaking is given
or arising afterward, which has given such person any reason
to believe that he or she is or might be considered a
Plaintiff or Related Person), and unless after receipt of
such information and such statement, the Board has
determined that the prospective nominee is not a Plaintiff
or Related Person.

(5) Any shareholder who is uncertain whether any
person the shareholder desires to nominate for election as a
director of the corporation (a "candidate") is a Plaintiff
or Related Person may request a determination from the Board
concerning that matter. Any such request must be in
writing, identify the candidate, set forth all reasons why
the shareholder has such uncertainty concerning the
candidate, explain why the shareholder believes that the
candidate should not be considered a Plaintiff or Related
Person and include an undertaking by or on behalf of the
shareholder that, if the candidate is determined not to be a
Plaintiff or Related Person, the shareholder promptly will
inform the Board in the manner specified in Paragraph (4)
above if any time prior to the election of directors next

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<PAGE>
occurring the shareholder learns of any fact or circumstance
(whether in existence on the date of the request or arising
afterward) which has given the shareholder any other reason
to believe that or to be uncertain whether the candidate is
or might be considered a Plaintiff or Related Person. Any
such request also must be accompanied by a signed statement
of the candidate to which the request relates stating that,
having reviewed this Section and the request, the candidate
knows of no reason not stated in the request why the
candidate would or might be considered a Plaintiff or
Related Person and believes for the reasons stated in the
request that he or she should not be considered a Plaintiff
or Related Person, which statement also shall include an
undertaking by the candidate comparable to that of the
requesting shareholder. With respect to any meeting at which
directors are to be elected, a shareholder may submit
requests as to any number of candidates up to and including
five times the number of directors to be elected at such
meeting. A request may be submitted at any time at which
the shareholder properly may give notice of intent to
nominate a candidate for election as a director (other than
a time at which such giving of notice of intent is proper
only by virtue of the provisions of Paragraph (7) of this
Section) and no request may be submitted at any other time.
No request shall be deemed "submitted" for any purposes
hereunder unless and until it is delivered in person to the
Chairman of the Board or the Secretary of the corporation or
delivered to the principal offices of the corporation
addressed to the attention of the Chairman or the Secretary.
No request shall constitute a notice of intent to nominate
any candidate unless it expressly states that it is intended
as such a notice and it otherwise complies with all
applicable requirements for such a notice. Neither
submission of a request, nor any action taken thereafter
with respect to such request, shall operate as a waiver of
or otherwise relieve any shareholder of any otherwise
applicable procedural requirements respecting nomination of
director candidates, except as and to the extent
contemplated in Paragraph (7).

(6) If any request satisfying the requirements of
Paragraph (5) is timely and properly submitted, the Board of
Directors, within 10 days following the date such request is
submitted (or, if it is impossible or impracticable to do so
during such period, as soon as practicable thereafter),
shall consider the request and determine whether the
candidate who is the subject of the request is ineligible to
be nominated or elected a director by virtue of being a
Plaintiff or Related Person. As promptly as possible

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<PAGE>
following such action, the requesting shareholder shall be
notified in writing of the nature of such determination and,
if the determination made is that the candidate is a
Plaintiff or Related Person, the basis for such
determination. In any other case in which the Board
determines that any candidate as to which a notice of intent
to nominate has been given is ineligible to be nominated or
elected a director by virtue of being a Plaintiff or Related
Person (including any case in which a contrary determination
previously has been made in response to a shareholder
request), the shareholder that gave such notice of intent
shall be notified in writing of such determination and the
basis therefor as promptly as possible thereafter.

(7) If a candidate who is the subject of a proper and
timely submitted request meeting the requirements of
Paragraph (5) is determined by the Board not to be a
Plaintiff or Related Person and the request was submitted at
least 5 days in advance of the last date on which the
requesting shareholder otherwise would have been entitled to
give notice of intent to nominate such candidate, then the
Board's determination shall operate as a waiver of the time
limits otherwise applicable to the giving of such notice of
intent to the extent, if any, necessary to afford the
shareholder a period of 5 days following the date on which
notice of the Board's determination is given to the
shareholder within which to give notice of intent to
nominate such candidate. If, in response to a timely and
properly submitted request, the Board determines that the
candidate who is the subject of the request is a Plaintiff
or Related Person and the request was submitted at least 5
days in advance of the last date on which the requesting
shareholder otherwise would have been entitled to give
notice of intent to nominate, then the Board's determination
shall operate as a waiver of the time limits otherwise
applicable to the giving of notice of intent to nominate to
the extent, if any, necessary to afford the requesting
shareholder a period of 15 days following the date on which
notice of the Board's determination is given to the
shareholder within which to give notice of intent to
nominate another person in lieu of the ineligible candidate.
In any other case in which the Board determines that a
candidate is a Plaintiff or Related Person, such
determination shall operate as a waiver if and only to the
extent expressly so provided in the resolutions setting
forth such determination or subsequent Board resolution.
Whenever any shareholder is afforded an additional time
period within which to give notice of intention to nominate,
the Board may afford the other shareholders of the

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<PAGE>
corporation a comparable additional period of time within
which to give such notice.

ARTICLE XII

(A) HIGHER VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
In addition to any affirmative vote required by (1) law, and
(2) these Amended Articles of Incorporation, including, without
limitation, Article XIV, and except as otherwise expressly
provided in Section (B) of this Article, the affirmative vote of
the holders of not less than 80 percent of the outstanding shares
of Voting Stock shall be required for the approval or
authorization of any Business Combination of the corporation or
any Subsidiary of the corporation with any Interested Shareholder
(as these terms are defined below).

(B) WHEN HIGHER VOTE NOT REQUIRED. The provisions of
paragraph (A) of this Article shall not apply to any transaction
which shall have been approved by a majority of the Continuing
Directors (as defined below).

(C) DEFINITIONS. For the purposes of this Article and
Articles XIII through XVIII, the following definitions shall
apply:

(1) An "Affiliate" of a specified person is any person
that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the specified person;

(2) An "Associate" of a specified person is:

(a) Any corporation or organization, other than
this corporation or a Subsidiary of this corporation,
in which the person is an officer, director or partner,
or is, directly or indirectly, the beneficial owner of
10 percent or more of any class of equity securities;

(b) Any officer, director, partner, trustee or
similar fiduciary of the specified person, or any
Affiliate or other Associate of the person;

(c) Any trust or other estate in which the person
has a beneficial interest of 10 percent or more or as
to which such specified person serves as trustee or in
a similar fiduciary capacity in connection with the
trust or estate; or

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<PAGE>
(d) Any relative or spouse of the person, or any
relative of the spouse, who has the same home as the
person or who is a director or officer of the
corporation or any of its Affiliates.

(3) A person shall be a "beneficial owner" of any
Voting Stock:

(a) Which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly,
whether of record or not;

(b) Which such person or any of its Affiliates or
Associates has, directly or indirectly, (i) the right
to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding upon the
exercise of conversion rights, exchange rights,
warrants or options or otherwise; or (ii) the right to
vote pursuant to any agreement, arrangement or
understanding; or

(c) Which is beneficially owned, directly or
indirectly (including shares deemed owned through
application of clauses (a) and (b) above), by any other
person with which such person or any of its Affiliates
or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of Voting Stock.

(4) The term "Business Combination" means:

(a) Any merger or consolidation of the
corporation or any Subsidiary into or with an
Interested Shareholder or any Affiliate or Associate of
such Interested Shareholder or into or with another
person which, after such merger or consolidation, would
be an Affiliate or an Associate of an Interested
Shareholder, in each case irrespective of which person
is the surviving entity in such merger or
consolidation;

(b) The sale, exchange, lease, mortgage, pledge,
transfer or other disposition to or with an Interested
Shareholder or any Affiliate or Associate of such
Interested Shareholder by the corporation or any of its
Subsidiaries (in a single transaction or a series of
related transactions) of all or substantially all, or
any Substantial Part (as defined below), of the assets

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<PAGE>
of the corporation or any Subsidiary (including,
without limitation, any securities issued by a
Subsidiary);

(c) Any purchase, exchange, lease or other
acquisition by the corporation or any Subsidiary (in a
single transaction or a series of related transactions)
of all or substantially all, or any Substantial Part,
of the assets or business of an Interested Shareholder
or any Affiliate or Associate of such Interested
Shareholder;

(d) The adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed
by or on behalf of an Interested Shareholder or any
Affiliate or Associate of an Interested Shareholder;

(e) The acquisition of beneficial ownership by an
Interested Shareholder or any Affiliate or Associate of
an Interested Shareholder upon issuance or transfer by
the corporation or any Subsidiary (in one transaction
or a series of transactions) of any securities of the
corporation or any Subsidiary or any rights, warrants
or options to acquire any such securities;

(f) The acquisition by the corporation or any
Subsidiary of any securities of an Interested
Shareholder or any Affiliate or Associate of an
Interested Shareholder;

(g) Any reclassification of securities (including
any reverse stock split), recapitalization or
reorganization of the corporation, any merger or
consolidation with any Subsidiary, any partial
liquidation, spin-off, split-off or split-up of the
corporation or any Subsidiary or any other transaction
(whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly
or indirectly, of increasing the proportionate share of
the outstanding shares of any class of equity or
convertible securities of the corporation or any
Subsidiary which is directly or indirectly owned by an
Interested Shareholder or any Affiliate or Associate of
an Interested Shareholder;

(h) Any loan or other extension of credit by the
corporation or any Subsidiary to an Interested
Shareholder or any guarantees by the corporation or any

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<PAGE>
Subsidiary of any loan or other extension of credit by
any person to an Interested Shareholder;

(i) Any transaction or series of related
transactions having, directly or indirectly, the same
effect as any of the foregoing; or

(j) Any agreement, contract or other arrangement
providing for any of the transactions described in this
definition of Business Combination.

As used in this definition, a "series of related
transactions" shall be deemed to include not only a series
of transactions with the same Interested Shareholder, but
also a series of separate transactions with an Interested
Shareholder or any Affiliate or Associate of such Interested
Shareholder.

(5) A "Continuing Director" is a member of the Board
of Directors who is not an Affiliate, Associate or a
representative of the Interested Shareholder and was either
(a) first elected as a director prior to the time that the
Interested Shareholder became an Interested Shareholder, or
(b) was designated, before his or her initial election as a
director, as a Continuing Director by a majority of the then
Continuing Directors; PROVIDED, HOWEVER, that the term
"Continuing Director" specifically excludes any individual
whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as that
term is used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended) or
other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the
corporation's Board of Directors.

(6) "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.

(7) "Equity security" means any one of the following:

(a) Any stock or similar security, certificate of
interest or participation in any profit-sharing
agreement, voting trust certificate or voting share;

(b) Any security convertible, with or without
consideration, into an equity security or any warrant

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<PAGE>
or other security carrying any right to subscribe to or
purchase an equity security;

(c) Any put, call, straddle or other option or
privilege of buying an equity security from or selling
an equity security to another without being bound to do
so.

(8) The term "Interested Shareholder" means:

(a) Any person (other than the corporation, any
Subsidiary or any employee benefit plan of the
corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in
such capacity) who or which, together with any
Affiliates and Associates, is the beneficial owner of 10
percent or more of the outstanding shares of Voting
Stock of the corporation as of: (i) the time any
definitive agreement relating to a Business Combination
is entered into; (ii) the record date for the
determination of shareholders entitled to notice of and
to vote on a Business Combination; or (iii) immediately
prior to the consummation of a Business Combination;

(b) Any Affiliate or Associate of the person in
the foregoing subparagraph (8)(a) of this Section;

(c) Any Affiliate of the corporation which at any
time within the 2-year period immediately prior to the
date in question was the beneficial owner, directly or
indirectly, of 10 percent or more of the outstanding
Voting Stock of the corporation; or

(d) Any person who is an assignee of or has
otherwise succeeded to any shares of Voting Stock which
were at any time within the 2-year period immediately
prior to the date in question beneficially owned by any
Interested Shareholder, if such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a
public offering within the meaning of the Securities
Act of 1933, as amended.

(9) The term "person" means any individual,
corporation, group or other entity.

(10) The term "Subsidiary" means any corporation of
which a majority of any class of equity security is owned,
directly or indirectly, by the corporation; provided, that

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<PAGE>
for the purposes of the definition of Interested Shareholder
set forth in paragraph (8) of this Section (C), the term
"Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly
or indirectly, by the corporation.

(11) The term "Substantial Part" shall mean more than
10 percent of the total consolidated assets of the
corporation in question as of the end of the most recent
fiscal year ended prior to the time the determination is
being made.

(12) The term "Voting Stock" shall mean all outstanding
shares of capital stock of the corporation entitled to vote
generally in the election of directors of the corporation
considered for the purposes of this Article as one class.
Each reference in this Article to a percentage of shares of
Voting Stock shall refer to the percentage of the votes
entitled to be cast by such shares.

(D) INTERESTED SHAREHOLDER. For purposes of determining
whether a person is an Interested Shareholder, the number of
shares of Voting Stock deemed to be outstanding shall include
shares deemed owned by that person through application of
paragraph (C)(3), defining "beneficial owner," but shall not
include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options or otherwise.

(E) DETERMINATIONS BY CONTINUING DIRECTORS. A majority of
the Continuing Directors shall have the power and duty to
determine, for purposes of this Article and Article XIV, on the
basis of information known to them:

(1) The number of Voting Shares of which any person is
the beneficial owner;

(2) Whether a person is an Affiliate or Associate of
another;

(3) Whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in
the definition of "beneficial owner" set forth above;

(4) Whether the assets subject to any Business
Combination constitute a "Substantial Part" as defined
above;

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<PAGE>
(5) Whether two or more transactions constitute a
"series of related transactions" as described above; and

(6) Such other matters with respect to which a
determination is required under this Article and Article
XIV.

Any such determination shall be conclusive and binding for all
purposes of this Article and Article XIV.

ARTICLE XIII

The Board of Directors shall not initiate, approve, adopt or
recommend any offer of any party other than the corporation to make a
tender or exchange offer for any equity security of the corporation, or to
engage in any Business Combination, unless and until it shall have first
evaluated the proposed offer and determined in its judgment that the
proposed offer would be in compliance with all applicable laws. In
evaluating a proposed offer to determine whether it would be in compliance
with law, the Board of Directors shall consider all aspects of the proposed
offer, including the manner in which the offer is proposed to be made, the
documents proposed for the communication of the offer and the effects and
consequences of the offer if consummated, in the light of the laws of the
United States of America and affected states and foreign countries. In
connection with this evaluation, the Board may seek and rely upon the
opinion of independent legal counsel and it may test the legality of the
proposed offer in any state, federal or foreign court or before any state,
federal or foreign administrative agency which may have jurisdiction. If
the Board of Directors determines in its judgment that a proposed offer
would be in compliance with all applicable laws, the Board of Directors
shall then evaluate the proposed offer and determine whether the proposed
offer is in the best interests of the corporation and its shareholders; the
Board of Directors shall not initiate, approve, adopt or recommend any such
offer which in its judgment would not be in the best interests of the
corporation and its shareholders. In evaluating a proposed offer to
determine whether it would be in the best interests of the corporation and
its shareholders, the Board of Directors shall consider all factors which
it deems relevant including, without limitation:

(A) The fairness of the consideration to be received by the
corporation and its shareholders under the proposed offer, taking
into account the trading price of the corporation's stock
immediately prior to the announcement of the proposed offer, the
historical trading prices of the corporation's stock, the price
that might be achieved in a negotiated sale of the corporation as
a whole, premiums over the trading price of their securities
which have been proposed or offered to other companies in the

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past in connection with similar offers and the future prospects
of the corporation;

(B) The possible social and economic impact of the proposed
offer and its consummation on the corporation and its employees,
customers and suppliers;

(C) The possible social and economic impact of the proposed
offer and its consummation on the communities in which the
corporation and its subsidiaries operate or are located;

(D) The business and financial conditions and earnings
prospects of the offering party, including, without limitation,
debt service and other existing or likely financial obligations
of the offering party;

(E) The competence, experience and integrity of the
offering party and its management; and

(F) The intentions of the offering party regarding the use
of the assets of the corporation to finance the transaction.

ARTICLE XIV

(A) In addition to any affirmative vote required by
(1) law, and (2) the other provisions of these Amended Articles
of Incorporation, including without limitation Article XII and
except as otherwise expressly provided in paragraph (B) of this
Article, the affirmative vote of not less than 80 percent of the
outstanding shares of Voting Stock held by shareholders who are
not Interested Shareholders shall be required for the approval or
authorization of any Business Combination of the corporation or
any Subsidiary with any Interested Shareholder (as these terms
are defined in Article XII).

(B) The provisions of paragraph (A) of this Article shall
not apply to any particular Business Combination, and such
Business Combination shall require only such affirmative vote as
is required by law and any other provision of these Amended
Articles of Incorporation, if either of the following
paragraphs (1) or (2) apply:

(1) The Business Combination shall have been approved
by a majority of the Continuing Directors; or

(2) All of the following conditions shall have been
met:

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(a) The Business Combination will result in an
involuntary sale, redemption, cancellation or other
termination of ownership of shares of any class of
Voting Stock of the corporation owned by shareholders
who do not vote in favor of the Business Combination
and the aggregate amount of the cash and the market
value as of the valuation date of other readily
marketable consideration to be received by such
shareholders for such shares shall be at least equal to
the Minimum Price Per Share;

(b) The consideration to be received by holders
of a particular class of outstanding Voting Stock shall
be in cash or in the same form as the Interested
Shareholder has previously paid for shares of such
class of Voting Stock. If the Interested Shareholder
has paid for shares of any class of Voting Stock in
varying forms of consideration, the form of
consideration of such class of Voting Stock shall be
either cash or the form used to acquire the largest
number of shares of such class of Voting Stock
previously acquired by it;

(i) Such Interested Shareholder shall have
taken steps to ensure that the corporation's Board
of Directors included at all times representation
by Continuing Directors proportionate to the stock
holdings of the corporation's holders of Voting
Stock not affiliated with such Interested
Shareholder (with a Continuing Director to occupy
any resulting fractional board position);

(ii) There shall have been no reduction in
the rate of dividends payable on the corporation's
stock except as may have been approved by
unanimous vote of the directors;

(iii) The Interested Shareholder shall not
have acquired any newly issued shares of stock,
directly or indirectly, from the corporation
(except upon conversion of convertible securities
acquired by it prior to becoming an Interested
Shareholder or as a result of a prorated stock
dividend or stock split);

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(iv) The Interested Shareholder shall not
have acquired any additional shares of the
corporation's outstanding stock or securities
convertible into stock except as a part of the
transaction which resulted in such person becoming
an Interested Shareholder; and

(v) The Interested Shareholder shall not
have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any
loans, advances, guarantees, pledges or other
financial assistance or tax credits provided by
the corporation, nor made any major change in the
corporation's business or equity capital structure
without the unanimous approval of the directors,
in either case prior to the consummation of the
Business Combination;

(d) A proxy statement responsive to the
requirements of the Securities Exchange Act of 1934, as
amended, shall have been mailed to all shareholders of
the corporation for the purpose of soliciting
shareholder approval of the Business Combination
containing at the front thereof in a prominent place
any recommendations as to the advisability (or
inadvisability) of the Business Combination which the
Continuing Directors, or any of them, may choose to
state and, if deemed advisable by a majority of the
Continuing Directors, an opinion of a reputable
investment banking firm as to the fairness (or not) of
the terms of the Business Combination, from the point
of view of the remaining public shareholders of the
corporation (such investment banking firm to be
selected by a majority of the Continuing Directors and
to be paid a reasonable fee for its services by the
corporation upon receipt of such opinion); and

(e) There has been 5 years between the date that the
Interested Shareholder became an Interested Shareholder and
the date that the Business Combination is consummated.

(1) All the definitions set forth in Article XII(C)
shall apply as if fully restated here;

(2) "Minimum Price Per Share" means the sum of (a) the
highest per share price as determined below, and (b) the

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aggregate amount, if any, by which 6 percent per year of
such highest per share price exceeds the aggregate amount of
all stock dividends per share paid in cash since the
Determination Date. For Common Stock, the highest per share
price is the highest of the following:

(a) The highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder
within the 5-year period immediately prior to the
Announcement Date, or in the transaction in which the
shareholder became an Interested Shareholder, whichever
is higher.

(b) The highest per share price bid in the public
market for such common stock during the 5 years
immediately preceding the Announcement Date.

For any class or series of outstanding stock other than
Common Stock, whether or not the Interested Shareholder has
previously acquired any shares of a particular class or
series of stock, the highest per share price is the highest
of the following:

(a) The highest per share price, including any
brokerage, commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for
any shares of the class or series of stock acquired by
it within the 5-year period immediately prior to the
Announcement Date, or in the transaction in which the
shareholder became an Interested Shareholder, whichever
is higher.

(b) The highest preferential amount per share to
which the holders of shares of the class or series of
stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
the corporation.

(c) The highest per share price bid in the public
market for such class or series of stock during the 5
years immediately preceding the Announcement Date.

The calculation of the Minimum Price Per Share shall
require appropriate adjustments for capital changes,
including without limitation stock splits, stock dividends
and reverse stock splits.

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(3) "Announcement Date" means the first general public
announcement or the first communication generally to
shareholders of the corporation, whichever is earlier, of
the proposal or intention to make a proposal concerning a
Business Combination.

(4) "Determination Date" means the date on which an
Interested Shareholder first became an Interested
Shareholder.

(5) "Market Value" means either of the following:

(a) With respect to shares, the highest closing
sale price during the 30-day period immediately
preceding the date in question of a share:

(i) As listed on the composite tape for New
York Stock Exchange-listed securities.

(ii) If not listed pursuant to
subparagraph (i), as listed on the composite tape
for American Stock Exchange-listed securities.

(iii) If not listed pursuant to
subparagraph (i) or (ii), as listed on the
composite tape for the principal United States
security exchange registered under the Securities
Exchange Act of 1934, as amended.

(iv) If not listed pursuant to
subparagraph (i), (ii), or (iii), the highest
closing bid quotation during the 30-day period
preceding the date in question as listed on The
Nasdaq Stock Market or any other system then in
use.

(v) If a listing is not available pursuant
to sub-paragraphs (i) through (iv), then the fair
market value of the shares on the date in
question, as determined by the Continuing
Directors.

(b) With respect to property other than cash or
shares, the fair market value of the property on the
day in question, as determined by the Continuing
Directors.

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(6) "Valuation Date" means:

(a) In a Business Combination voted upon by
shareholders, the day prior to the date of the
shareholder vote or the day which is 20 calendar days
prior to the consummation of the Business Combination,
whichever is later.

(b) In a Business Combination not voted upon by
shareholders, the date of the consummation of the Business
Combination.

(D) A majority of the Continuing Directors shall have the
power and duty to determine, for purposes of this Article, on the
basis of information known to them:

(1) All the matters set forth in Article XII(E);

(2) The market value of any consideration other than
cash to be received by shareholders;

(3) Whether or not any consideration other than cash
to be received by shareholders is readily marketable;

(4) The amount of the Minimum Price Per Share;

(5) Whether or not the consideration to be received by
shareholders is equal to the Minimum Price Per Share; and

(6) Such other matters with respect to which a
determination is required under this Article.

Any such determination shall be conclusive and binding for all
purposes of this Article.

(E) Nothing contained in this Article shall be construed to
relieve any Interested Shareholder from any fiduciary and other
standards of conduct and obligations imposed by law. The fact
that any Business Combination complies with the provisions of
paragraph (B)(2) of this Article shall not be construed to impose
any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business
Combination or recommend its adoption or approval to the
shareholders of the corporation, nor shall such compliance limit,
prohibit or otherwise restrict in any manner the Board of
Directors, or any member thereof, with respect to evaluations of,
or actions and responses taken with respect to, such Business
Combination.

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<PAGE>
ARTICLE XV

Except to the extent prohibited by the South Dakota Business
Corporation Act, as amended, no director of the corporation shall be
personally liable to the corporation or its shareholders for monetary
damages for breach of fiduciary duty by such director as a director.

ARTICLE XVI

The provisions of Sections 47-33-8 through 47-33-16, inclusive,
of the South Dakota Business Corporation Act, applicable generally to
control share acquisitions, shall not apply to the acquisition of any
shares or class of shares of the corporation's capital stock.

ARTICLE XVII

To the extent that Article XVII, Section 8 of the South Dakota
Constitution and Section 47-4-5 of the South Dakota Business Corporation
Act may be construed to limit the increase in the indebtedness of the
corporation, at any time after the date of these Amended Articles of
Incorporation and from time to time thereafter, the indebtedness of the
corporation may be increased to up to One Hundred Million Dollars
($100,000,000) without consent or approval under such laws.

ARTICLE XVIII

The corporation will not commence business until consideration
of the value of at least One Thousand Dollars ($1,000) has been received
for the issuance of shares.

ARTICLE XIX

The number of directors constituting the initial board of directors
shall be ten (10). The names and addresses of the persons who are to serve
as directors until the first annual meeting of shareholders or until their
successors are elected and qualified are:

Ross Benson
28403 454th Avenue
Hurley, SD 57036-6030

Dale Q. Bye
P.O. Box 204
Gayville, SD 57031-0204

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<PAGE>
Edward D. Christensen, Jr.
R.R. 2 Box 52
Freeman, SD 57029-9408

Jeff Goeman
220 E. Boynton
R.R. 1 Box 7
Lennox, SD 57039-9702

James H. Jibben
46285 277th Street
Chancellor, SD 57015-5759

Palmer O. Larson
47516 279th Street
Worthing, SD 57077-5431

John A. Roth
P.O. Box 177
Parker, SD 57053-0177

John Schaefer
30318 456th Avenue
Wakonda, SD 57073

Thomas W. Hertz
29081 County Road 11
Menno, SD 57045-7221

Craig A. Anderson
2501 E. Slaten Park Circle
Sioux Falls, SD 57103

ARTICLE XX

The name and address of the incorporator is Craig A. Anderson, of
2501 E. Slaten Park Circle, Sioux Falls, South Dakota 57103.

ARTICLE XXI

The corporation reserves the right to amend, alter, change or
repeal any provision contained in these Amended Articles of Incorporation,
in the manner now or hereafter prescribed by statute and these Amended
Articles of Incorporation, and all rights conferred upon shareholders
herein are granted subject to this reservation.

(A) No amendment to these Amended Articles of Incorporation
shall alter, modify or repeal any or all of the provisions of
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<PAGE>
Article XIV of these Amended Articles of Incorporation, or this
paragraph (A) of Article XXI, unless adopted by the affirmative
vote of not less than 80 percent of the outstanding shares of
Voting Stock held by shareholders who are not Interested
Shareholders.

(B) No amendment to these Amended Articles of Incorporation
shall alter, modify or repeal any or all of the provisions of
Articles VIII, IX, XI, XII, XIII or XV of these Amended Articles of
Incorporation, or this paragraph (B) of Article XXI, and the
shareholders of the corporation shall not have the right to
alter, modify or repeal any or all provisions of the Bylaws of
the corporation, unless such amendment, alteration, modification
or repeal is adopted by the affirmative vote of the holders of
not less than 80 percent of the outstanding shares of Voting
Stock; provided, that this paragraph (B) shall not apply to, and
such 80 percent vote shall not be required for, any amendment,
alteration, modification or repeal which has first been approved
by (1) the affirmative vote of 80 percent of the entire Board of
Directors, which shall include the affirmative vote of at least
one director of each class of the Board of Directors, and (2) the
affirmative vote of two-thirds of the Continuing Directors.

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APPENDIX C

BYLAWS

DAKOTA TELECOMMUNICATIONS GROUP, INC.

ARTICLE I

OFFICES

The corporation may have offices at such places, both within and
without the State of South Dakota, as the Board of Directors may from time
to time determine or the business of the corporation may require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

SECTION 1. TIMES AND PLACES OF MEETINGS. All meetings of the
shareholders shall be held, except as otherwise provided by statute or
these Bylaws, at such time and place as may be fixed from time to time by
the Board of Directors. Meetings of shareholders shall be held in the
State of South Dakota, or such other state as may be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.

SECTION 2. ANNUAL MEETINGS. Annual meetings of the shareholders
shall be held on the fourth Thursday of April if not a legal holiday, and
if a legal holiday, then on the next secular day following, at such hour as
shall be stated in the notice of the meeting, or on such other date as may
be fixed from time to time by the Board of Directors, at which they shall
elect the successors of the class of directors whose term expires at the
meeting, together with directors to fill newly created directorships,
and transact such other business as may properly be brought before the
meeting.

SECTION 3. NOTICE OF ANNUAL MEETING. Except as otherwise
required by statute, written notice of the annual meeting shall be given
personally or by mail to each shareholder entitled to vote thereat at least
ten (10) but not more than fifty (50) days before the date of the meeting.
Attendance of a shareholder at a meeting shall constitute both (a) a waiver
of notice or defective notice, except when the shareholder attends a
meeting for the express purpose of objecting, at the beginning of the
meeting, to holding the meeting or transacting any business because the
meeting has not been lawfully called or convened, and (b) waiver of
objection to consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting notice, except
when the shareholder objects to considering the matter when it is presented.

<PAGE>
SECTION 4. SHAREHOLDER LIST. The officer or agent who has
charge of the stock ledger of the corporation shall prepare and make before
every meeting of shareholders a complete list of the shareholders entitled
to vote at the meeting, arranged by class or series in alphabetical order,
showing the address of and the number of shares registered in the name of
each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during the whole time
thereof and may be inspected by any shareholder who is present.

SECTION 5. SPECIAL MEETINGS. Special meetings of the
shareholders may be called by an executive officer whenever directed by the
Board of Directors. Such request shall state the purpose of the proposed
meeting.

SECTION 6. NOTICE OF SPECIAL MEETINGS. Written notice of a
special meeting of shareholders, stating the time, place and object
thereof, shall be given personally or by mail to each shareholder entitled
to vote thereat at least ten (10) but not more than fifty (50) days before
the date fixed for the meeting.

SECTION 7. QUORUM. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided
by statute or by the Amended Articles of Incorporation. The shareholders
present in person or by proxy at such meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders
to leave less than a quorum. Whether or not a quorum is present, the
meeting may be adjourned by a vote of the shares present.

Except when the holders of a class or series of shares are
entitled to vote separately on an item of business, shares of all classes
and series entitled to vote shall be combined as a single class and series
for the purpose of determining a quorum. When the holders of a class or
series of shares are entitled to vote separately on an item of business,
shares of that class or series e.titled to cast a majority of the votes of
that class or series at a meeting constitute a quorum of that class or
series at that meeting, unless a greater or lesser quorum is provided by
statute or the Amended Articles of Incorporation.

SECTION 8. VOTE REQUIRED. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting
power, present in person or represented by proxy, shall decide any question
brought before such meeting, unless the question is one upon which, by
express provision of the statutes or of the Amended Articles of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.

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<PAGE>
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the
Articles of Incorporation or the resolution or resolutions of the Board of
Directors creating any class of stock, each shareholder shall at every
meeting of shareholders be entitled to one (1) vote in person or by proxy
for each share of the capital stock having voting power held by such
shareholder. In all elections for directors the vote shall be taken by
ballot. A proxy shall be valid only with respect to the particular
meeting, or any adjournment or adjournments thereof, to which it
specifically pertains.

SECTION 10. CONDUCT OF MEETINGS. Meetings of shareholders
generally shall follow any accepted rules of parliamentary procedure,
subject to the following:

(a) The person presiding at the meeting (the "chairman")
shall have absolute authority over matters of procedure and there
shall be no appeal from the ruling of the chairman. If in his
absolute discretion, the chairman deems it advisable to dispense
with the rules of parliamentary procedure as to any one (1)
meeting of shareholders or part thereof, he shall so state and
shall clearly state the rules under which the meeting or
appropriate part thereof shall be conducted.

(b) If disorder should arise which, in the absolute
discretion of the chairman, prevents the continuation of the
legitimate business of the meeting, the chairman may quit the
chair and announce the adjournment of the meeting; and upon his
or her so doing, the meeting is immediately adjourned without the
necessity of any vote or further action of the shareholders.

(c) The chairman may ask or require anyone not a bona fide
shareholder of record on the record date, or a validly appointed
proxy of such a shareholder, to leave the meeting.

(d) The chairman may introduce nominations, resolutions or
motions submitted by the Board of Directors for consideration by
the shareholders without a motion or second. Except as the
chairman shall direct, a resolution or motion not submitted by
the Board of Directors shall be considered for vote only if
proposed by a shareholder of record on the record date or a
validly appointed proxy of such a shareholder and seconded by
such a shareholder or proxy other than the individual who
proposed the resolution or motion.

(e) Except as the chairman shall direct, and subject to any
other provisions of the Amended Articles of Incorporation, no matter
may be presented to the meeting which has not been submitted in
writing to the Secretary for inclusion in the agenda at least 10
days before the date of the meeting.

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(f) When all shareholders present at a meeting in person or
by proxy have been offered an opportunity to vote on any matter
properly before a meeting, the chairman may at his discretion
declare the polls to be closed and no further votes may be cast
or changed after such declaration. If no such declaration is
made by the chairman, the polls shall remain open and
shareholders may cast additional votes or change votes until the
inspectors of election have delivered their final report to the
chairman.

(g) When the chairman has declared the polls to be closed
on all matters then before a meeting, the chairman may declare
the meeting to be adjourned pending determination of the results
by the inspectors of election. In such event, the meeting shall
be considered adjourned for all purposes, and the business of the
meeting shall be finally concluded upon delivery of the final
report of the inspectors of election to the chairman at or after
the meeting.

(h) When the chairman determines that no further matters
may properly come before a meeting, he may declare the meeting to
be adjourned, without motion, second or vote of the shareholders.

(i) When the chairman has declared a meeting to be
adjourned, unless the chairman has declared the meeting to be
adjourned until a later date, no further business may properly be
considered at the meeting even though shareholders or holders of
proxies representing a quorum may remain at the site of the
meeting.

SECTION 11. INSPECTORS OF ELECTION. The Board of Directors or,
if they shall not have so acted, the Chief Executive Officer may appoint,
at or prior to any meeting of shareholders, one or more persons (who may be
directors and/or employees of the corporation) to serve as inspectors of
election. The inspectors so appointed shall determine the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the validity and effect of proxies and
shall receive votes or ballots, hear and determine challenges and questions
arising in connection with the right to vote, count and tabulate votes or
ballots, determine the result and do such acts as are proper to conduct the
election or vote with fairness to all shareholders.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of
directors which shall constitute the whole Board shall be ten (10) and in no

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event less than nine (9). The directors, other than those who may be elected
by the holders of any class or series of stock having a preference over
Common Stock as to dividends or upon liquidation, shall be divided into
three (3) classes, as nearly equal in number as possible, with the term of
office of one (1) class expiring each year. At each annual meeting of the
shareholders, the successors of the class of directors whose term expires
at that meeting shall be elected to hold office for a term expiring at the
annual meeting of shareholders held in the third year following the year of
their election. Directors need not be shareholders.

SECTION 2. POWERS. The business of the corporation shall be
managed by its Board of Directors, which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by
statute or by the Amended Articles of Incorporation or by these Bylaws
directed or required to be exercised or done by the shareholders.

SECTION 3. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled as provided in the Amended Articles of Incorporation.

SECTION 4. RESIGNATION AND REMOVAL. Any director may resign at
any time and such resignation shall take effect upon receipt of written
notice thereof by the corporation or at such subsequent time as set forth
in the notice of resignation. Any or all of the directors may be removed,
but only for cause, as provided in the Amended Articles of Incorporation.

SECTION 5. COMPENSATION OF DIRECTORS. Each director who is not
a salaried officer of the corporation may receive as compensation for his
services in that capacity such sums and such benefits as shall from time to
time be determined by the Board of Directors, plus traveling expenses and
other expenses necessary for attendance at regular or special meetings of
the Board of Directors and committees of the Board. Members of special or
standing committees may be allowed like compensation for attending
committee meetings. Nothing herein shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.

SECTION 6. PLACE OF MEETINGS. The Board of Directors of the
corporation may hold meetings, both regular and special, either within or
without the State of South Dakota.

SECTION 7. FIRST MEETING OF NEWLY ELECTED BOARD. The first
meeting of each newly elected Board of Directors shall be held following
the annual meeting of shareholders and no notice of such meeting shall be
necessary to the newly elected directors legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of shareholders, the meeting may
be held at such time and place as shall be specified in a notice given as

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hereinafter provided for special meetings of the Board of Directors or as
shall be specified in a written waiver signed by all of the directors.

SECTION 8. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as
shall from time to time be determined by the Board.

SECTION 9. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman, Chief Executive Officer, or
Secretary or by any two (2) directors on two (2) days' notice to each
director, either personally, by mail, by telegram or by facsimile
transmission.

SECTION 10. PURPOSE NEED NOT BE STATED. Neither the business to
be transacted at nor the purpose of any regular or special meeting of the
Board of Directors need be specified in the notice of such meeting.

SECTION 11. QUORUM. At all meetings of the Board of Directors a
majority of the directors shall constitute a quorum for the transaction of
business and the acts of a majority of the directors present at any meeting
at which there is a quorum shall be acts of the Board of Directors except
as may be otherwise specifically provided by statute or by the Amended
Articles of Incorporation. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

SECTION 12. ACTION WITHOUT A MEETING. Unless otherwise
restricted by the Amended Articles of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if,
before or after the action, all members of the Board or of such committee,
as the case may be, consent thereto in writing and such written consent is
filed with the minutes of the proceedings of the Board or committee.

SECTION 13. MEETING BY TELEPHONE OR SIMILAR EQUIPMENT. The
Board of Directors or any committee designated by the Board of Directors
may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means through
which all persons participating in the meeting can communicate with each
other and participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.

SECTION 14. WRITTEN NOTICE. Notices to directors shall be in
writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram or by facsimile transmission.

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SECTION 15. WAIVER OF NOTICE. Whenever any notice is required
to be given under the provisions of the statutes or of the Amended Articles
of Incorporation or of these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. The attendance of
a director at or participation in a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting, at the beginning of the meeting or upon his
arrival, to the meeting or the transaction of any business because the
meeting has not been lawfully called or convened and the person does not
thereafter vote for or assent to any action taken at the meeting.

ARTICLE IV

COMMITTEES OF DIRECTORS

SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the directors present at any meeting at
which there is a quorum, may appoint an Executive Committee whose
membership shall consist of two (2) or more members of the Board of Directors
as it may deem advisable from time to time to serve at the pleasure of the
Board. The Board of Directors may also appoint directors to serve as
alternates for members of the committee in the absence or disability of
regular members. The Board of Directors may fill any vacancies as they
occur. The executive committee shall have and may exercise the powers of
the Board of Directors in the management of the business affairs and
property of the corporation during the intervals between meetings of the
Board of Directors, subject to law and to such limitations and controls as
the Board of Directors may impose from time to time.

SECTION 2. AUDIT COMMITTEE. The Audit Committee, if there be
one, shall cause a suitable examination of the financial records and
operations of the corporation and its subsidiaries to be made by the
internal auditor of the corporation. The Audit Committee shall also
recommend to the Board of Directors the employment of independent certified
public accountants to examine the financial statements of the corporation
and its subsidiaries, review examination reports of the corporation and its
subsidiaries prepared by regulatory authorities and report to the Board of
Directors at least once each calendar year.

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recommendations related to such plans and review all material pension plan
changes. The Compensation Committee shall also recommend to the Board of
Directors the retainer and attendance fee for nonemployee directors.

SECTION 4. NOMINATING COMMITTEE. The Nominating Committee, if
there be one, shall develop and recommend to the Board of Directors
criteria for the selection of candidates for directors, seek out and
receive suggestions concerning possible candidates, review and evaluate the
qualifications of possible candidates and recommend to the Board candidates
for vacancies occurring from time to time and for the slate of directors to
be proposed on behalf of the Board of Directors at the annual meeting of
shareholders. The Nominating Committee will consider nominees recommended
by the shareholders as properly submitted to the Secretary of the
corporation.

SECTION 5. OTHER COMMITTEES. The Board of Directors may
designate such other committees as it may deem appropriate and such
committees shall exercise the authority delegated to them.

SECTION 6. COMMITTEE MEETINGS. Each committee provided for
above shall meet as often as its business may require and may fix a day and
time each week or at other intervals for regular meetings, notice of which
shall not be required. Whenever the day fixed for a meeting shall fall on
a holiday, the meeting shall be held on the business day following or on
such other day as the committee may determine. Special meetings of the
committees may be called by the chairman of the committee or any two (2)
members other than the chairman and notice thereof may be given to the
members by telephone, telegram, letter or facsimile transmission. A
majority of its members shall constitute a quorum for the transaction of
the business of any committee. A record of the proceedings of each
committee shall be kept and presented to the Board of Directors.

SECTION 7. SUBSTITUTES. In the absence or disqualification of a
member of a committee, the members thereof present at a meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at a meeting in
place of such absent or disqualified member.

ARTICLE V

OFFICERS

SECTION 1.

(a) CENTRAL STAFF. The executive officers of the
corporation shall be a Chairman of the Board, a President, one or
more Vice Presidents, a Secretary and a Treasurer who shall be

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appointed by the Board of Directors at its first meeting after
each regular annual meeting of shareholders. The Board of
Directors may also appoint such other officers as it may deem
necessary. The dismissal of an officer, the appointment of an
officer to fill the place of one who has been dismissed or has
ceased for any reason to be an officer, the appointment of any
additional officers and the change of an officer to a different
office may be made by the Board of Directors at any later
meeting. Each officer shall hold office at the pleasure of the
Board. The Chairman of the Board and President shall be chosen
from among the directors, but no other officer need be a
director. Either the Chairman of the Board or the President
shall also be designated as the Chief Executive Officer. Any two
(2) of the above offices, except those of the President and Vice
President, may be held by the same person.

(b) DIVISIONAL OFFICERS. The Board of Directors or the
Chief Executive Officer may, as they shall deem necessary,
designate certain individuals as divisional officers. Any titles
so given to divisional officers may be withdrawn at any time with
or without cause by the Board of Directors or the Chief Executive
Officer.

SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall preside at all meetings of the shareholders and at all meetings of
the Board of Directors, shall be an ex officio voting member of all
standing committees designated by the Board of Directors, except the Audit
Committee and the Compensation Committee, and shall have such other duties
and powers as may be imposed or given by the Board of Directors. In the
case of absence or inability to act of the President or Chief Executive
Officer, the Chairman of the Board shall exercise all of the duties and
responsibilities of such officer until the Board of Directors shall
otherwise direct.

SECTION 3. PRESIDENT. The President shall, subject to the
direction of the Board of Directors, see that all orders and resolutions of
the Board of Directors are carried into effect and shall perform all other
duties necessary or appropriate to his office, subject, however, to his
right (unless otherwise limited by the Board of Directors) and the right of
the directors to delegate any specific powers to any other officer or
officers of the corporation. In the case of absence or inability to act of
the Chairman of the Board or the Chief Executive Officer, the President
shall exercise all of the duties and responsibilities of such officer until
the Board of Directors shall otherwise direct. The President shall be an
ex officio voting member of all standing committees designated by the Board
of Directors, except the Audit Committee and the Compensation Committee.

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SECTION 4. CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer, in addition to his duties as Chairman of the Board or President,
as the case may be, shall have final authority, subject to the control of
the Board of Directors, over the general policy and business of the
corporation and shall have the general control and management of the
business and affairs of the corporation. The Chief Executive Officer shall
have the power, subject to the control of the Board of Directors, to
appoint, suspend or discharge and to prescribe the duties and to fix the
compensation of such agents and employees of the corporation, other than
the officers appointed by the Board, as he may deem necessary.

SECTION 5. CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall, subject only to the control of the Board of Directors, have general
charge, control and supervision over the financial policy and
administration of the corporation and shall have such other duties and
powers as may be imposed or given by the Board of Directors. The Chief
Financial Officer shall report only and directly to the Board of Directors.

SECTION 6. CHIEF OPERATING OFFICER. There may be elected a
Chief Operating Officer who shall, if elected, have general charge, control
and supervision over the administration and operations of the corporation
and shall have such other duties and powers as may be imposed or given by
the Board of Directors. If no Chief Operating Officer is elected, the
duties and powers of the Chief Operating Officer shall be performed by the
Chief Executive Officer.

SECTION 7. VICE PRESIDENTS. The Vice President or Vice
Presidents shall perform such duties and have such powers as the Chief
Executive Officer or the Board of Directors may from time to time
prescribe. The Board of Directors may at its discretion designate one (1)
or more of the Vice Presidents to be an Executive Vice President or Senior
Vice President. Any Vice President so designated shall have such duties
and responsibilities as the Board shall prescribe.

SECTION 8. SECRETARY. The Secretary shall attend all meetings
of the shareholders, and of the Board of Directors and the Executive
Committee, and shall preserve in the books of the corporation true minutes
of the proceedings of all such meetings. He or she shall safely keep in
his or her custody the seal of the corporation, if any, and shall have
authority to affix the same to all instruments where its use is required or
appropriate. The Secretary shall give all notices required or appropriate
pursuant to statute, the Amended Articles of Incorporation, Bylaws or
resolution. The Secretary shall perform such other duties as may be delegated
by the Board of Directors or by the Executive Committee.

SECTION 9. TREASURER. The Treasurer, who shall also be the
Chief Financial Officer, shall have custody of all corporate funds and
securities and shall keep in books belonging to the corporation full and

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accurate accounts of all receipts and disbursements. The Treasurer shall
deposit all moneys, securities and other valuable effects in the name of
the corporation in depositories as may be designated for that purpose by
the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors at the regular meetings of the Board, and whenever
requested by them, an account of all his or her transactions as Treasurer
and of the financial condition of the corporation. If required by the
Board of Directors, the Treasurer shall deliver to the Chief Executive
Officer of the corporation and keep in force a bond in form, amount and
with a surety or sureties satisfactory to the Board of Directors,
conditioned for faithful performance of the duties of his or her office,
and for restoration to the corporation in case of his or her death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and property of whatever kind in his or her possession or
under his or her control belonging to the corporation.

SECTION 10. ASSISTANT SECRETARY AND ASSISTANT TREASURER. There
may be elected an Assistant Secretary and Assistant Treasurer who shall, in
the absence, disability or nonfeasance of the Secretary or Treasurer,
perform the duties and exercise the powers of such persons, respectively.

SECTION 11. OTHER OFFICERS. All other officers, as may from
time to time be appointed by the Board of Directors pursuant to paragraph
(a) of Section 1 of this Article V, shall perform such duties and exercise
such authority as the Board of Directors shall prescribe. All divisional
officers, as may from time to time be appointed by the Board of Directors
or the Chief Executive Officer pursuant to paragraph (b) of Section 1 of
this Article V, shall perform such duties and exercise such authority as
the Board of Directors or the Chief Executive Officer shall prescribe.

ARTICLE VI

INDEMNIFICATION

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not, shall be indemnified by the corporation against expenses (including
attorneys' fees), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection
with such action, suit or proceeding if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation or its shareholders, and with respect to
any criminal action or proceeding, had no reasonable cause to believe such
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere
or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation
or its shareholders and, with respect to any criminal action or proceeding,
that he or she had reasonable cause to believe that such conduct was
unlawful. Persons who are not directors or executive officers of the
corporation may be similarly indemnified in respect of such service to the
extent authorized at any time by the Board of Directors, except as
otherwise provided by statute or the Amended Articles of Incorporation.

SECTION 2. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director or executive officer of the
corporation or, while serving as such a director or executive officer, is
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, limited liability company, joint venture, trust
or other enterprise, whether for profit or not, shall be indemnified by the
corporation against expenses (including attorneys' fees) and amounts paid
in settlement actually and reasonably incurred by him or her in connection
with such action or suit if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests
of the corporation or its shareholders. Indemnification shall not be made
for a claim, issue or matter in which the person has been found liable to
the corporation except to the extent authorized in Section 6 of this
Article. Persons who are not directors or executive officers of the
corporation may be similarly indemnified in respect of such service to the
extent authorized at any time by the Board of Directors, except as
otherwise provided by statute or the Amended Articles of Incorporation.

SECTION 3. EXPENSES. To the extent that a director or executive
officer, or other person whose indemnification is authorized by the Board
of Directors, has been successful on the merits or otherwise, including the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Section 1 or 2 of this Article, or in defense of
any claim, issue or matter therein, he or she shall be indemnified against

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all expenses (including attorneys fees) actually and reasonably incurred by
him or her in connection therewith and any action, suit or proceeding
brought to enforce the mandatory indemnification provided in this Section.

SECTION 4. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Section 1 or 2 of this Article (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification is proper in the
circumstances because the person acted in good faith and in a manner that
he or she reasonably believed to be in or not opposed to the best interests
of the corporation, and with respect to any criminal proceeding, that he or
she had no reasonable cause to believe that his conduct was unlawful and
upon an evaluation of the reasonableness of expenses and amounts paid in
settlement. Such determination and evaluation shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of directors
who are not parties or threatened to be made parties to such action, suit
or proceeding, or if such a quorum cannot be obtained, by a majority vote
of a committee duly designated by the Board consisting solely of two (2) or
more directors not at the time parties or threatened to be made parties to
such action, suit or proceeding; (b) by independent legal counsel (who may
be the regular counsel of the corporation) in a written opinion, which
counsel shall be selected as provided in (a) above, provided that if a
committee cannot be designated as provided in (a) above, then the Board
shall select such independent counsel; or (c) by the shareholders, but
shares held by directors, officers, employees or agents who are parties or
threatened to be made parties to such action, suit or proceeding may not be
voted. In designating a committee under (a) above, or in the selection of
independent legal counsel in the event a committee cannot be designated
pursuant to (b) above, all directors may participate. The corporation may
indemnify a person for a portion of expenses (including reasonable
attorneys' fees), judgments, penalties, fines and amounts paid in
settlement for which the person is entitled to indemnification under
Sections 1 or 2 of this Article, even though the person is not entitled to
indemnification for the total amount of such expenses, judgments,
penalties, fines and amounts paid in settlement.

SECTION 5. ADVANCING OF EXPENSES. Expenses incurred in
defending a civil or criminal action, suit or proceeding described in
Sections 1 or 2 of this Article shall be paid by the corporation in advance
of the final disposition of such action, suit or proceeding if (a) the
person furnishes the corporation a written affirmation of his or her good
faith belief that he or she has met the applicable standard of conduct set
forth in Sections 1 and 2 of this Article; (b) the person furnishes the
corporation a written undertaking, executed personally or on his or her
behalf, to repay the advance if it is ultimately determined that he or she
did not meet the applicable standard of conduct; and (c) a determination is
made that the facts then known to those making the determination would not
preclude indemnification under the South Dakota Business Corporation Act.

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Determinations under this Section shall be made in the manner specified in
Section 4 of this Article. Notwithstanding the foregoing, in no event
shall any advance be made in instances where the Board or independent legal
counsel reasonably determines that such person deliberately breached his or
her duty to the corporation or its shareholders.

SECTION 6. RIGHT TO INDEMNIFICATION UPON APPLICATION; PROCEDURE
UPON APPLICATION. A director, executive officer or other person who is a
party or threatened to be made a party to an action, suit or proceeding may
apply for indemnification to the court conducting the proceeding. On
receipt of an application, the court may order indemnification if it
determines that the person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not
he or she met the applicable standard of conduct set forth in Sections 1
and 2 of this Article or was adjudged liable as described in Section 2 of
this Article, provided, that if he was adjudged liable, his or her
indemnification shall be limited to reasonable expenses incurred.

SECTION 7. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The
indemnification or advancement of expenses provided by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the
Amended Articles of Incorporation, any Bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her
heirs, executors and administrators. The total amount of expenses advanced
or indemnified from all sources shall not exceed the amount of actual
expenses incurred by the person seeking indemnification or advancement of
expenses. All rights to indemnification under this Article shall be deemed
to be provided by a contract between the corporation and the director,
officer, employee or agent who serves in such capacity at any time while
these Bylaws and other relevant provisions of the South Dakota Business
Corporation Act and other applicable law, if any, are in effect. Any
repeal or modification thereof shall not affect any rights or obligations
then existing.

SECTION 8. INSURANCE. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising out
of his or her status as such, whether or not the corporation would have the
power to indemnify him or her against such liability under the provisions
of this Article.

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SECTION 9. MERGERS. For the purposes of this Article,
references to the "corporation" include all constituent corporations
absorbed in a consolidation or merger, as well as the resulting or
surviving corporation, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, limited liability company, joint venture, trust
or other enterprise, whether for profit or not, shall stand in the same
position under the provisions of this Article with respect to the resulting
or surviving corporation if he or she had served the resulting or surviving
corporation in the same capacity.

SECTION 10. EXECUTIVE OFFICERS. For purposes of this Article,
the "executive officers" of the corporation shall be the Chairman of the
Board, the President, the Chief Executive Officer, the Chief Financial
Officer, one or more Vice Presidents, the Secretary and the Treasurer. The
Board of Directors may by resolution designate such other persons as
"executive officers" for purposes of this Article as the Board of Directors
may in its sole discretion determine to be desirable.

SECTION 11. SAVINGS CLAUSE. If this Article or any portion
thereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify each
director, executive officer or other person whose indemnification is
authorized by the Board of Directors as to expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding and an action by the
corporation, to the full extent permitted by any applicable portion of this
Article that shall not have been invalidated or by any other applicable
law.

ARTICLE VII

SUBSIDIARIES

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Directors may cause to be elected to the Board of Directors of any such
subsidiary corporation such persons as they shall designate, any of whom
may, but need not be, directors, executive officers or other employees or
agents of the corporation. The Board of Directors, the Chief Executive
Officer or any executive officer designated by the Board of Directors may
instruct the directors of any such subsidiary corporation as to the manner
in which they are to vote upon any issue properly coming before them as the
directors of such subsidiary corporation and such directors shall have no
liability to the corporation as the result of any action taken in
accordance with such instructions.

SECTION 2. SUBSIDIARY OFFICERS NOT EXECUTIVE OFFICERS. The
officers of any subsidiary corporation shall not, by virtue of holding such
title and position, be deemed to be executive officers of the corporation,
nor shall any such officer of a subsidiary corporation, unless he or she
shall also be a director or executive officer of the corporation, be
entitled to have access to any files, records or other information relating
or pertaining to the corporation, its business and finances or to attend or
receive the minutes of any meetings of the Board of Directors or any
committee of the corporation, except as and to the extent expressly
authorized and permitted by the Board of Directors or the Chief Executive
Officer.

ARTICLE VIII

CERTIFICATES OF STOCK

SECTION 1. FORM. Every holder of stock in the corporation shall
be entitled to have a certificate in the name of the corporation, signed by
the President or a Vice President and the Secretary or an Assistant
Secretary of the corporation, certifying the number of shares owned by him
or her in the corporation.

SECTION 2. FACSIMILE SIGNATURE. Where a certificate is signed
(a) by a transfer agent or an assistant transfer agent, or (b) by a
transfer clerk acting on behalf of the corporation and a registrar, the
signature of any such President, Vice President, Secretary or Assistant
Secretary may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been placed upon
a certificate, shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent
or registrar at the date of issue.

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lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to agree to indemnify the
corporation and/or give the corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.

SECTION 4. TRANSFERS OF STOCK. Upon surrender to the
corporation or the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.

SECTION 5. FIXING OF RECORD DATE BY BOARD. For the purpose of
determining the shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or to express consent
to or dissent from any corporate action in writing without a meeting, or
for the purpose of determining shareholders entitled to receive payments of
any dividend or the distribution or allotment of any rights or evidences of
interests arising out of any change, conversion or exchange of capital
stock, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than fifty (50) days nor less
than ten (10) days before the date of any such meeting, nor more than fifty
(50) days prior to effectuation of any other action proposed to be taken.
Only shareholders of record on a record date so fixed shall be entitled to
notice of and to vote at such meeting or to receive payment of any dividend
or the distribution or allotment of any rights or evidences of interests
arising out of any change, conversion or exchange of capital stock.

SECTION 6. PROVISION FOR RECORD DATE IN THE ABSENCE OF BOARD
ACTION. If a record date is not fixed by the Board of Directors: (a) the
record date for determination of shareholders entitled to notice of or to
vote at a meeting of shareholders shall be the close of business on the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; and (b) the record date for determining shareholders
entitled to express consent to corporate action in writing, without a
meeting, when no prior action by the Board of Directors is necessary, shall
be the day on which the first written consent is expressed; and (c) the
record date for determining shareholders for any other purpose shall be the
close of business on the day on which the resolution of the Board relating
thereto is adopted.

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SECTION 7. ADJOURNMENTS. When a determination of shareholders
of record entitled to notice of or to vote at a meeting of shareholders has
been made as provided in this Article, the determination applies to any
adjournment of the meeting, unless the Board fixes a new record date for
the adjourned meeting.

SECTION 8. REGISTERED SHAREHOLDERS. The corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends and to vote as such owner
and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of South Dakota.

ARTICLE IX

GENERAL PROVISIONS

SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the Amended Articles of
Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting pursuant to law. Dividends may be paid in cash,
in property or in shares of capital stock, subject to the provisions of the
Amended Articles of Incorporation.

SECTION 2. RESERVES. Before payment of any dividends, there may
be set aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies,
for equalizing dividends, for repairing or maintaining any property of the
corporation or for such other purpose as the directors shall think
conducive to the interests of the corporation and the directors may modify
or abolish any such reserve in the manner in which it was created.

SECTION 3. CHECKS. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.

SECTION 4. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.

SECTION 5. SEAL. The corporate seal, if any, shall have
inscribed thereon the name of the corporation, and the words "Corporate
Seal, South Dakota." The seal may be used by causing it or a facsimile
thereof to be impressed, affixed, reproduced or otherwise.

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ARTICLE X

AMENDMENTS

Subject to any provisions of the Amended Articles of Incorporation,
these Bylaws may be amended, altered, changed or repealed at any regular or
special meeting of the Board of Directors. Subject to any provisions of
the Amended Articles of Incorporation, these Bylaws may also be amended,
altered, changed or repealed at any regular or special meeting of
shareholders provided that notice that amendment of the Bylaws is a purpose
of the meeting, and the proposed amendment, has been provided to the
shareholders as required under these Bylaws and applicable law.

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APPENDIX D

AGREEMENT AND PLAN OF MERGER

BETWEEN

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
(TO BECOME DAKOTA TELECOMMUNICATIONS GROUP, INC.)

AND

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.

Dated as of February 14, 1997

<PAGE>
AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the "PLAN OF MERGER") is made as of
February 14, 1997, between DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC., a
South Dakota cooperative association (the "COOPERATIVE") on behalf of
DAKOTA TELECOMMUNICATIONS GROUP, INC., an anticipated successor by law to
the Cooperative and South Dakota corporation ("DTG"), and DAKOTA
TELECOMMUNICATIONS GROUP (DELAWARE), INC., a Delaware corporation ("DTG
DELAWARE"). The executive offices of the Cooperative, DTG and DTG Delaware
are located at 29705 453rd Avenue, Irene, South Dakota.

The Board of Directors of the Cooperative believes that it would be in
the best interests of the Cooperative and its members ("MEMBERS") to
convert from a cooperative association into a business corporation, and has
approved proposed amendments to the Cooperative's articles of incorporation
to effect such a conversion (the "CONVERSION") and has submitted such
amendments to the Members for adoption. If the Conversion is adopted and
consummated, DTG would be the successor, by operation of law, to the
Cooperative. The Board of Directors of the Cooperative also believes that,
if the Conversion is consummated, it would be in the best interests of DTG
and its shareholders to change its state of incorporation to Delaware.
Accordingly, the Cooperative's Board of Directors, on behalf of DTG, has
adopted and approved this Plan of Merger providing that, if the Conversion
is adopted and consummated, DTG be merged with and into DTG Delaware in
accordance with this Plan of Merger and in accordance with the Business
Corporation Act of the State of South Dakota, as amended (the "SDBCA"), and
the General Corporation Law of the State of Delaware, as amended (the
"DGCL"), and has directed that this Plan of Merger be submitted to DTG's
shareholders for approval. The transactions contemplated by and described
in this Plan of Merger are referred to as the "MERGER." The Merger will
not be submitted for approval to DTG's shareholders, and this Plan of
Merger will become null and void, if the Conversion is not adopted and
consummated.

If the Conversion is consummated, DTG will be the successor to the
Cooperative and will be a business corporation governed by the SDBCA. DTG
will have authorized capital stock consisting of 5,000,000 shares of common
stock, without par value ("DTG COMMON STOCK"), and 250,000 shares of
preferred stock, without par value ("DTG PREFERRED STOCK"), 15,000 of which
will be designated as Series A Junior Participating Preferred Stock. As
of the date of this Plan of Merger, there are no shares of DTG Common Stock
issued and outstanding and no shares of DTG Preferred Stock issued and
outstanding. If the Conversion is adopted, up to 1,087,064 shares of DTG
Common Stock and no shares of DTG Preferred Stock will be issuable. The
number of shares of DTG Common Stock issuable in the Conversion is subject
to change upon the occurrence of certain events, including, without
limitation, an increase or decrease in the number of Members of the
Cooperative and the issuance of additional shares of Cooperative Preferred

<PAGE>
Stock from the date of this Plan of Merger through the Effective Time of
the Merger (as defined in Section 1.2 of this Plan of Merger). Each share
of DTG Common Stock issuable in the Conversion will be entitled to one vote
on all matters submitted for a vote of the shareholders, including the
approval of this Plan of Merger.

DTG Delaware is a business corporation formed under the DGCL with
general business purposes and is a wholly-owned subsidiary of the
Cooperative. As of the date of this Plan of Merger, DTG Delaware has
authorized capital stock consisting of 750 shares of common stock, without
par value ("DTG DELAWARE COMMON STOCK"), ofwhich 100 are issued and
outstanding and owned by the Cooperative. The number of issued and
outstanding shares of DTG Delaware Common Stock is not subject to change
before the Effective Time of the Merger. Each share of DTG Delaware Common
Stock is entitled to one vote on all matters submitted for a vote of the
stockholder, including the approval of this Plan of Merger. Subject to the
approval of this Plan of Merger, and by operation hereof, at the Effective
Time of the Merger the authorized capital stock of DTG Delaware will
consist of 5,000,000 shares of DTG Delaware Common Stock, and 250,000
shares of preferred stock ("DTG DELAWARE PREFERRED STOCK"), 15,000 of which
shall be designated as Series A Junior Participating Preferred Stock.

ACCORDINGLY, in consideration of the foregoing and of the premises
contained in this Plan of Merger, the parties agree:

ARTICLE I - THE TRANSACTION

Subject to the terms and conditions of this Plan of Merger, the Merger
shall be carried out in the following manner:

1.1 APPROVAL OF PLAN OF MERGER. As soon as practicable after this
Plan of Merger has been executed and delivered, a registration statement to
be filed by the Cooperative, on behalf of DTG, and DTG Delaware with the
Securities and Exchange Commission (the "SEC") has become effective (the
"REGISTRATION STATEMENT"), and the Conversion has been adopted and
consummated, this Plan of Merger shall be submitted to DTG's shareholders
and DTG Delaware's stockholder for approval at a meeting properly called,
noticed and held for that purpose (the "SHAREHOLDERS' MEETINGS"). At the
respective Shareholders' Meetings and in any proxy materials used in
connection therewith, the Board of Directors of the Cooperative, on behalf
of DTG, shall recommend that DTG's shareholders vote for approval of this
Plan of Merger and the Board of Directors of DTG Delaware shall recommend
that DTG Delaware's stockholder vote for approval of this Plan of Merger.

1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall be consummated as
promptly as possible following approval by the shareholders of DTG and
stockholder of DTG Delaware by executing and filing certificates of merger
(the "CERTIFICATES OF MERGER") and such other documents and instruments as
may be required under the SDBCA and DGCL in the manner required by law.

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The "EFFECTIVE TIME OF THE MERGER" shall be the time and date specified in
the Certificates of Merger to be issued by or filed with the respective
Secretaries of State of the states of South Dakota and Delaware.

1.3 MERGER OF DTG WITH AND INTO DTG DELAWARE. At the Effective Time
of the Merger, DTG shall be merged with and into DTG Delaware. DTG and DTG
Delaware are each sometimes referred to as a "CONSTITUENT CORPORATION"
prior to the Merger. At the Effective Time of the Merger, the Constituent
Corporations shall become a single corporation, which shall be DTG Delaware
(the "SURVIVING CORPORATION").

1.4 EFFECTS OF THE MERGER. The effect of the Merger upon each of the
Constituent Corporations and the Surviving Corporation shall be as provided
in Chapter 47-6 of the SDBCA and as provided in Subchapter IX of the DGCL
with respect to the merger of a domestic and a foreign corporation where
the surviving corporation will be subject to the laws of the State of
Delaware.

1.5 ADDITIONAL ACTIONS. If, at any time after the Effective Time of
the Merger, the Surviving Corporation shall determine that further
assignments or assurances or any other acts are necessary or desirable to
vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its rights, title or interest in, to or under any of the
rights, properties or assets of DTG acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger, or
to otherwise carry out the purposes of this Plan of Merger, then DTG shall
be deemed to have granted to the Surviving Corporation an irrevocable power
of attorney to execute and deliver all such deeds, assignments and
assurances and to do all acts necessary, proper or convenient to accomplish
this purpose. This limited power of attorney shall only be operative
following the Effective Time of the Merger. The proper officers and
directors of the Surviving Corporation shall be fully authorized in the
name of DTG to take any and all such action contemplated by this Section.

1.6 SURVIVING CORPORATION. Immediately after the Effective Time of
the Merger, the Surviving Corporation shall have the following attributes
until the attributes are subsequently changed in the manner provided by
law:

1.6.1 NAME. The name of the Surviving Corporation is "Dakota
Telecommunications Group (Delaware), Inc.," which in the Merger shall
be changed to "Dakota Telecommunications Group, Inc."

1.6.2 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of DTG Delaware as in effect immediately prior to the
Effective Time of the Merger except as follows (and subject to future
amendment as provided therein or under applicable law):

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(i) Article I of the Certificate of Incorporation shall be
restated in its entirety to read:

The name of the corporation shall be "Dakota
Telecommunications Group, Inc."

(ii) Article IV of the Certificate of Incorporation shall be
restated in its entirety to read:

The total number of shares which the corporation shall have
authority to issue is five million two hundred fifty thousand
(5,250,000) shares, which shall be divided into two classes as
follows: (A) five million (5,000,000) shares of Common Stock without
par value ("Common Stock"); and (B) two hundred fifty thousand
(250,000) shares of Preferred Stock without par value ("Preferred
Stock"), of which 15,000 shall be designated as Series A Junior
Participating Preferred Stock.

The designations, voting powers, preferences and relative
participating, optional or other special rights, and the
qualifications, limitations or restrictions of the above classes of
stock and other general provisions relating thereto shall be as
follows:

A. PROVISIONS APPLICABLE TO COMMON STOCK

1. Except as otherwise required by law or by any amendment to
this Certificate of Incorporation, each holder of Common Stock shall
have one vote for each share of stock held by the stockholder on all
matters voted upon by the stockholders.

2. Subject to the preferential dividend rights, if any,
applicable to shares of Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for
purchase, retirement or sinking funds for Preferred Stock, the holders
of Common Stock shall be entitled to receive, to the extent permitted
by law, such dividends as may be declared from time to time by the
Board of Directors.

3. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the corporation,
after distribution in full of the preferential amounts, if any, to be
distributed to the holders of shares of Preferred Stock, holders of
Common Stock shall be entitled to receive all of the remaining assets
of the corporation of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of Common
Stock held by them respectively. The Board of Directors may
distribute in kind to the holders of Common Stock such remaining

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assets of the corporation or may sell, transfer or otherwise dispose
of all or any part of such remaining assets to any corporation, trust
or entity, or any combination thereof, and may sell all or any part of
the consideration so received and distribute any balance thereof in
kind to holders of Common Stock. The merger or consolidation of the
corporation into or with any other corporation, or the merger or
consolidation of any other corporation into it, or any purchase or
redemption of shares of stock of the corporation of any class, shall
not be deemed to be a dissolution, liquidation or winding up of the
corporation for the purposes of this paragraph.

4. The holders of Common Stock shall not have any preemptive or
other preferential right to additional or treasury shares of the
corporation.

5. Such numbers of shares of Common Stock as may from time to
time be required for such purpose shall be reserved for issuance (1)
upon conversion of any shares of Preferred Stock or any obligation of
the corporation convertible into shares of Common Stock which is at
the time outstanding or issuable upon exercise of any options or
warrants at the time outstanding and (2) upon exercise of any options
or warrants at the time outstanding to purchase shares of Common
Stock.

B. PROVISIONS APPLICABLE TO PREFERRED STOCK GENERALLY

1. Shares of Preferred Stock may be issued in one or more
series at such time or times and for such consideration or
considerations as the Board of Directors may determine. All shares of
any one series shall be of equal rank and identical in all respects
except that the dates from which dividends accrue or accumulate with
respect thereto may vary.

2. The Board of Directors is expressly authorized at any time,
and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, each with such voting powers,
full or limited, or without voting powers, and with such designations,
preferences and relative participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof,
as shall be stated in the resolution or resolutions providing for the
issue thereof adopted by the Board of Directors, and as are not stated
in this Certificate of Incorporation, or any amendment thereto,
including (without limiting the generality of the foregoing) the
following:

(a) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be

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<PAGE>
increased or decreased (but not below the number of shares then
outstanding) from time to time by action of the Board of Directors.

(b) The stated value of the shares of such series.

(c) The dividend rate or rates on the shares of such series
and the relation which such dividends shall bear to the dividends
payable on any other class of capital stock or on any other series of
Preferred Stock, the terms and conditions upon which and the periods
in respect of which dividends shall be payable, whether and upon what
conditions such dividends shall be cumulative and, if cumulative, the
date or dates from which dividends shall accumulate.

(d) Whether the shares of such series shall be redeemable
and, if redeemable, whether redeemable for cash, property or rights,
including securities of any other corporation, and whether redeemable
at the option of the holder or the corporation or upon the happening
of a specified event, the limitations and restrictions with respect to
such redemption, the time or times when, the price or prices or rate
or rates at which, the adjustments with which and the manner in which
such shares shall be redeemable, including the manner of selecting
shares of such series for redemption if less than all shares are to be
redeemed.

(e) The rights to which the holders of shares of such
series shall be entitled, and the preferences, if any, over any other
series (or of any other series over such series), upon the voluntary
or involuntary liquidation, dissolution, distribution or winding up of
the corporation, which rights may vary depending on whether such
liquidation, dissolution, distribution or winding up is voluntary or
involuntary, and, if voluntary, may vary at different dates.

(f) Whether the shares of such series shall be subject to
the operation of a purchase, retirement or sinking fund and, if so,
whether and upon what conditions such fund shall be cumulative or
noncumulative, the extent to which and the manner in which such fund
shall be applied to the purchase or redemption of the shares of such
series for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof.

(g) Whether the shares of such series shall be convertible
into or exchangeable for shares of any other class or of any other
series of any class of capital stock of the corporation, and, if so
convertible or exchangeable, the price or prices or the rate or rates
of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of such conversion or
exchange.

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(h) The voting powers, if any, of the shares of such
series, and whether and under what conditions the shares of such
series (alone or together with the shares of one or more of other
series having similar provisions) shall be entitled to vote separately
as a single class, for the election of one or more additional
directors of the corporation in case of dividend arrearages or other
specified events, or upon other matters.

(i) Whether the issuance of any additional shares of such
series, or of any shares of any other series, shall be subject to
restrictions as to issuance, or as to the powers, preferences or
rights of any such other series.

(j) Any other preferences, privileges and powers and
relative participating, optional or other special rights, and
qualifications, limitations or restrictions of such series, as the
Board of Directors may deem advisable and as shall not be inconsistent
with the provisions of this Certificate of Incorporation.

3. Shares of Preferred Stock redeemed, converted, exchanged,
purchased, retired or surrendered to the corporation, or which have
been issued and reacquired in any manner, may, upon compliance with
any applicable provisions of the General Corporation Law of the State
of Delaware, be given the status of authorized and unissued shares of
Preferred Stock and may be reissued by the Board of Directors as part
of the series of which they were originally a part or may be
reclassified into and reissued as part of a new series or as a part of
any other series, all subject to the protective conditions or
restrictions of any outstanding series of Preferred Stock.

C. PROVISIONS APPLICABLE TO SERIES A JUNIOR PARTICIPATING PREFERRED
STOCK

1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" and
the number of shares constituting such series shall be 15,000.

2. DIVIDENDS AND DISTRIBUTIONS.

(a) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Junior Participating Preferred
Stock with respect to the holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend

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<PAGE>
Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $10 or
(ii) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in kind) of all non-
cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Junior Participating Preferred Stock. In the event the
corporation shall at any time after the declaration of rights to
purchase Series A Junior Participating Preferred Stock (a "Rights
Declaration Date") (x) declare any dividend on Common Stock payable in
shares of Common Stock, (y) subdivide the outstanding Common Stock or
(z) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares
of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (ii) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.

(b) The corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock as
provided in paragraph (a) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $10 per
share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.

(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment

D-8
<PAGE>
Date or is a date after the record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
no more than 30 days prior to the date fixed for the payment thereof.

3. VOTING RIGHTS. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:

(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to 100 votes on all matters submitted
to a vote of the stockholders of the corporation. In the event the
corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(b) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred Stock and
the holders of shares of Common Stock shall vote together as one class
on all matters submitted to a vote of stockholders of the corporation.

(c) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal
to six quarterly dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a "default
period") which shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and for
the current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been

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<PAGE>
declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the
Series A Junior Participating Preferred Stock) with dividends in
arrears in an amount equal to six quarterly dividends thereon, voting
as a class, irrespective of series, shall have the right to elect two
Directors.

(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(c) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders
of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised
unless the holders of 10% in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by
the holders of Preferred Stock of such voting right. At any meeting
at which the holders of Preferred Stock shall exercise such voting
right initially during an existing default period, they shall have the
right, voting as a class, to elect Directors to fill such vacancies,
if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to
elect two Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the holders of
the Preferred Stock shall have the right to make such increase in the
number of Directors as shall be necessary to permit the election by
them of the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or PARI PASSU with
the Series A Junior Participating Preferred Stock.

(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting
of the holders of Preferred Stock, which meeting shall thereupon be
called by the President, a Vice President or the Secretary of the
corporation. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this
subparagraph (iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to the holder at his

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<PAGE>
or her last address as the same appears on the books of the
corporation. Such meeting shall be called for a time not earlier than
20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order
or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this subparagraph (iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
the stockholders.

(iv) In any default period, the holders of Common
Stock, and other classes of stock of the corporation if applicable,
shall continue to be entitled to elect the whole number of Directors
until the holders of Preferred Stock shall have exercised their right
to elect two Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of Preferred Stock
shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period
and (y) any vacancy in the Board of Directors may (except as provided
in subparagraph (ii) of this Section 3(c)) be filled by vote of a
majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall
have become vacant. References in this subparagraph to Directors
elected by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.

(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by
the holders of Preferred Stock as a class shall terminate and (z) the
number of Directors shall be such number as may be provided for in the
Certificate of Incorporation or Bylaws irrespective of any increase
made pursuant to the provisions of subparagraph (ii) of this Section
3(c) (such number being subject, however, to change thereafter in any
manner provided by law or in the Certificate of Incorporation or
Bylaws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.

(d) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.

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4. CERTAIN RESTRICTIONS.

(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the corporation shall not

(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;

(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;

(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, provided that the
corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of
the corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Junior
Participating Preferred Stock;

(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.

(b) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any
shares of stock of the corporation unless the corporation could, under

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paragraph (a) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.

5. REACQUIRED SHARES; SUBSEQUENT BOARD ACTIONS. Any shares of
Series A Junior Participating Preferred Stock purchased or otherwise
acquired by the corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on
issuance set forth herein. In addition, at any time that there are no
shares of Series A Junior Participating Preferred Stock or rights to
purchase the same outstanding, the Board of Directors, acting by
resolution duly adopted, may file a Certificate of Designation,
Preferences and Rights pursuant to Section 151 of the General
Corporation Law of the State of Delaware providing that the Series A
Junior Participating Preferred Stock shall become authorized but
unissued shares of Preferred Stock and may be reissued as part of a
new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.

6. LIQUIDATION, DISSOLUTION OR WINDING UP.

(a) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the corporation, no distribution shall be
made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series
A Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall
have received an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (c) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders

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<PAGE>
of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to one with respect to such Series A
Junior Participating Preferred Stock and Common Stock, on a per share
basis, respectively.

(b) In the event, however, that there are no sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on the parity with the Series A
Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event,
however, that there are no sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.

(c) In the event the corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.

7. CONSOLIDATION, MERGER, ETC. In case the corporation shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any
such case the shares of Series A Junior Participating Preferred Stock
shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may be,
into which or for each share of Common Stock is changed or exchanged.
In the event the corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Junior Participating Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

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<PAGE>
8. NO REDEMPTION. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.

9. RANKING. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms
of any such series shall provide otherwise.

10. AMENDMENT. The Certificate of Incorporation of the
corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights
of the Series A Junior Participating Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.

11. FRACTIONAL SHARES. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holders fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.

1.6.3 BYLAWS. The bylaws of the Surviving Corporation shall
be the Bylaws of DTG Delaware as in effect immediately prior to the
Effective Time of the Merger, subject to future amendment as provided
therein or under applicable law.

1.6.4 DIRECTORS. The directors of the Surviving Corporation
shall be the same as the directors of DTG Delaware immediately prior to
the Effective Time of the Merger.

1.6.5 OFFICERS. The officers of the Surviving Corporation
shall be the same as the officers of DTG Delaware immediately prior to
the Effective Time of the Merger.

ARTICLE II - CONVERSION AND EXCHANGE OF SHARES

Subject to the terms and conditions of this Plan of Merger, the
exchange of DTG Common Stock for DTG Delaware Common Stock shall be
effected as follows:

2.1 CONVERSION OF SHARES. At the Effective Time of the Merger:

2.1.1 CONVERSION OF DTG COMMON STOCK. Each whole share of DTG
Common Stock issuable in the Conversion shall automatically become and
be converted into the right to receive one validly issued, fully paid

D-15
<PAGE>
and nonassessable share of DTG Delaware Common Stock (the "CONVERSION
RATIO").

2.1.2 CONVERSION OF DTG DELAWARE COMMON STOCK. Each share of
DTG Delaware Common Stock outstanding immediately prior to the
Effective Time of the Merger shall be canceled and no consideration
shall be issuable or payable with respect to any such share.

2.2 CESSATION OF SHAREHOLDER STATUS. As of the Effective Time of
the Merger, record holders of shares of DTG Common Stock issuable in the
Conversion shall cease to be shareholders of DTG and shall have no rights
as DTG shareholders, except as provided in Section 47-6-23 of the SDBCA.
Certificates representing shares of DTG Common Stock will not be issued.
Certificates that represented shares of Cooperative Common Stock and
Preferred Stock ("COOPERATIVE CERTIFICATES") outstanding immediately prior
to the effective time of the Conversion will then represent the right to
receive shares of DTG Delaware Common Stock in accordance with Section
2.1.1 of this Plan of Merger.

2.3 SURRENDER OF COOPERATIVE CERTIFICATES AND DISTRIBUTION OF DTG
DELAWARE COMMON STOCK. After the Effective Time of the Merger, Cooperative
Certificates shall be exchangeable by the holders thereof for new stock
certificates representing the number of shares of DTG Delaware Common Stock
to which such holders shall be entitled in the following manner:

2.3.1 TRANSMITTAL MATERIALS. As soon as practicable after the
Effective Time of the Merger, DTG Delaware shall send or cause to be
sent to each person to whom shares of DTG Common Stock are issuable in
connection with the Conversion transmittal materials for use in
exchanging that holder's Cooperative Certificates (as applicable) for
DTG Delaware Common Stock certificates. The transmittal materials
will contain instructions with respect to the surrender of Cooperative
Certificates.

2.3.2 DELIVERY OF NEW CERTIFICATES. As soon as practicable
following the Effective Time of the Merger, and following receipt of
the proper transmittal documents and Cooperative Certificates (as
applicable), DTG Delaware will issue and deliver new stock
certificates in the names and to the addresses that appear on the
stock records of DTG as of the Effective Time of the Merger, or in
such other name or to such other address as may be properly specified
in the transmittal documents received by DTG Delaware, provided, that:

(i) RECEIPT OF COOPERATIVE CERTIFICATES. With respect to
each DTG shareholder, DTG Delaware shall have received all of the
applicable Cooperative Certificates or an affidavit of loss and
indemnity bond for such certificate or certificates, together
with properly executed transmittal materials; and

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<PAGE>
(ii) SATISFACTORY FORM. Such certificates, transmittal
materials, affidavits and bonds are in a form and condition
reasonably acceptable to DTG Delaware.

2.4 DIVIDENDS PENDING SURRENDER. Subject to applicable laws of
escheat, whenever a dividend is declared by DTG Delaware on DTG Delaware
Common Stock which is payable to the stockholders of record of DTG Delaware
as of a record date on or after the Effective Time of the Merger, the
declaration shall include dividends on all shares issuable under this Plan
of Merger, provided that no person shall be entitled to receive a
distribution of any such dividend until the physical exchange of such
Cooperative Certificates for new DTG Delaware Common Stock certificates
shall have been effected. Upon the physical exchange of such Cooperative
Certificates, DTG Delaware shall pay an amount equal to all such dividends
(without interest thereon and less the amount of taxes, if any, which may
have been imposed or paid thereon) declared and paid with respect to the
shares of DTG Delaware Common Stock represented thereby.

2.5 STOCK TRANSFERS. On or after the Effective Time of the Merger,
there shall be no transfers on the Cooperative's or DTG's stock transfer
books of the shares of DTG Common Stock which were issuable immediately
prior to the Effective Time of the Merger. If, after the Effective Time of
the Merger, Cooperative Certificates are properly presented for transfer,
then they shall be canceled and exchanged for stock certificates
representing shares of DTG Delaware Common Stock as provided in this Plan
of Merger. After the Effective Time of the Merger, ownership of such
shares as are represented by any Cooperative Certificates may be
transferred only on the stock transfer records of DTG Delaware.

2.6 DTG DELAWARE'S DISCRETION. DTG Delaware shall have sole
discretion to determine reasonable rules and procedures relating to the
exchange of Cooperative Certificates and the issuance and delivery of new
certificates of DTG Delaware Common Stock into which shares of DTG Common
Stock are converted in the Merger.

ARTICLE III - CONDITIONS PRECEDENT TO MERGER

All obligations of the parties under this Plan of Merger are subject
to the fulfillment (or waiver in writing by a duly authorized officer of
the party entitled to the benefit of the applicable condition) of each of
the following conditions:

3.1 ADOPTION OF THE CONVERSION BY MEMBERS. The amendment to the
articles of incorporation of the Cooperative to effect the Conversion must
be adopted by the Members as required by the Cooperative Association Act of
the State of South Dakota and the Conversion must be consummated.

D-17
<PAGE>
3.2 REQUIRED APPROVALS. The Cooperative, on behalf of DTG, and DTG
Delaware shall have received:

3.2.1 REGULATORY. Any and all such approvals, consents,
authorizations and licenses of all regulatory and other governmental
authorities having jurisdiction as may be required to permit the
performance by DTG Delaware and DTG of their respective obligations
under this Plan of Merger and the consummation of the Merger.

3.2.2 SHAREHOLDER OR STOCKHOLDER. Requisite approval of the
shareholders or stockholder, as the case may be, of this Plan of
Merger and the Merger.

3.3 ORDER, DECREE, ETC. Neither DTG Delaware nor DTG shall be
subject to any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation of the
Merger.

3.4 DISSENTERS' RIGHTS. Holders of not more than 5% of the number of
shares of DTG Common Stock issuable in the Conversion shall have asserted
dissenters' rights under Section 47-6-23 of the SDBCA with respect to the
Merger.

3.5 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and shall not be subject to a stop order
or any threatened stop order.

ARTICLE IV - ABANDONMENT OF MERGER

This Plan of Merger may be terminated and the Merger abandoned at any
time prior to the Effective Time of the Merger (notwithstanding that
approval of this Plan of Merger by the shareholders of DTG and the
stockholder of DTG Delaware may have previously been obtained) by mutual
consent of the Boards of Directors of DTG Delaware and DTG or, prior to the
consummation of the Conversion, the Board of Directors of the Cooperative,
on behalf of DTG.

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<PAGE>
In Witness Whereof, the undersigned parties hereto have duly executed
and acknowledged this Plan of Merger as of the date first written above.

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.

By /S/ THOMAS W. HERTZ
Thomas W. Hertz
President and Chief Executive Officer

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. (TO
BECOME DAKOTA TELECOMMUNICATIONS GROUP, INC.)

By /S/ THOMAS W. HERTZ
Thomas W. Hertz
Chief Executive Officer and General Manager

D-19
<PAGE>
APPENDIX E

CERTIFICATE OF INCORPORATION

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.

The undersigned, Craig A. Anderson, for the purposes of
incorporating and organizing a corporation under the General Corporation
Law of the State of Delaware, does execute this Certificate of
Incorporation and does hereby certify as follows:

ARTICLE I. The name of the corporation is DAKOTA
TELECOMMUNICATIONS GROUP (DELAWARE), INC.

ARTICLE II. The address of the corporation's registered office
in the State of Delaware is 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.

ARTICLE III. The nature of the business or purposes to be
conducted or promoted by the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.

ARTICLE IV. The total number of shares of stock which the
corporation shall have authority to issue is 750 shares. All such shares
are to be Common Stock, no par value per share, and are to be of one class.

ARTICLE V. The incorporator of the corporation is Craig A.
Anderson, whose mailing address is P.O. Box 66, 29705 453rd Avenue, Irene,
South Dakota 57037-0066.

ARTICLE VI. Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or
between this corporation and its stockholders or any class of them, a court
of equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this corporation under <Section>291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under <Section>279 of
Title 8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said

<PAGE>
court directs. If a majority in number representing three fourths in value
of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this corporation, as the case may be, agree to such
compromise or arrangement and to any reorganization of this corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court
to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.

ARTICLE VII. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized:

(A) To make, amend or repeal the Bylaws of the corporation.

(B) To authorize and cause to be executed mortgages and liens
upon the real and personal property of the corporation.

(C) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve in the manner in which it was created.

(D) To designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board
may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee. The Bylaws may provide that in the absence
or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not the member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at
the meeting in place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board
of Directors, or in the Bylaws of the corporation, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers
which may require it; but no such committee shall have the power or
authority in reference to the following matters: (1) approving or
adopting, or recommending to the stockholders, any action or matter
expressly required by the Delaware General Corporation Law to be
submitted to stockholders for approval or (2) adopting, amending or
repealing any Bylaw of the corporation.

(E) When and as authorized by the stockholders in accordance
with law, to sell, lease or exchange all or substantially all of the
property and assets of the corporation, including its goodwill and its

E-2
<PAGE>
corporate franchises, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or
property including shares of stock in, and/or other securities of, any
other corporation or corporations, as the Board of Directors shall
deem expedient and in the best interests of the corporation.

(F) To appoint and determine the duties of the officers of the
corporation and to establish the rights, powers, duties, rules and
procedures that (1) govern the Board of Directors, including without
limitation the vote required for any action by the Board of Directors
and (2) affect the directors' power to manage the affairs of the
corporation.

(G) To create and issue, by way of distributions to
stockholders, as dividends or otherwise, rights or options entitling
the holders thereof to purchase from the corporation shares of any
class or series of the corporation's capital stock. Such rights or
options shall be evidenced in such manner as the Board shall approve
and shall set forth the terms upon which, the time within which and
the price at which such shares may be purchased from the corporation
upon the exercise of any such right or option. The terms and
conditions of such rights or options may include, without limitation,
provisions which adjust the option price or number of shares issuable
under such rights or options in the event of an acquisition of shares
or a reorganization, merger, consolidation, sale of assets or other
occurrence involving the corporation, and restrictions or conditions
that preclude or limit the entitlement, exercise or transfer of such
rights or options by any person or persons who, after the date of
creation or issuance of such rights or options, acquires, obtains the
right to acquire or offers to acquire, directly or indirectly,
beneficial ownership of a specified number or percentage of the
corporation's outstanding voting shares or other shares of the
corporation, or that invalidate or void such rights or options held by
any such person or persons.

(H) No Bylaw shall be adopted by stockholders which shall impair
or impede the implementation of the foregoing.

ARTICLE VIII. Members of the Board of Directors of the
corporation shall be elected, replaced and removed as follows:

(A) The number of directors shall be determined from time to
time by resolution of the Board of Directors, provided that a vacancy
in the Board of Directors need not be filled immediately, and until
filled, such lesser number shall constitute the entire Board of
Directors. Except as otherwise provided in this Article, directors
shall be elected at the annual meeting of stockholders, and each such
director elected shall hold office until the annual meeting for the
year in which the director's term expires and until the director's

E-3
<PAGE>
successor is elected. A director need not be a stockholder, a citizen
of the United States or a resident of the State of Delaware.

(B) The Board of Directors shall be divided into three classes
as nearly equal in number as possible, with the term of office of one
class expiring each year. At each annual meeting of the stockholders,
the successors of the class of directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the
year of their election.

(C) Subject to the rights of holders of any classes or series of
Preferred Stock then outstanding, only persons who are nominated in
accordance with the following procedures shall be eligible for
election as directors:

(1) Nominations of candidates for election as
directors of the corporation at an annual meeting may be
made at the annual meeting of stockholders by or at the
direction of the Board of Directors by any nominating
committee or person appointed by the Board or by any
stockholder of the corporation entitled to vote for the
election of Directors at the annual meeting who complies
with any notice procedures contained in the corporation's
Bylaws.

(2) Nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely
notice in writing to the Secretary of the corporation. To
be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of
the corporation not less than 120 days prior to the date of
the meeting in the case of an annual meeting, and not more
than seven days following the date of notice of the meeting
in the case of a special meeting. Such stockholder's notice
to the Secretary shall set forth: (a) as to each person
whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business
address and residence address of the person; (ii) the
principal occupation or employment of the person; (iii) the
class and number of shares of capital stock of the
corporation which are beneficially owned by the person and
(v) such other information relating to the person that is
required to be disclosed in solicitations for proxies for
election of directors pursuant to Rule 14a under the
Securities Exchange Act of 1934, as amended; and (b) as to
the stockholder giving the notice (i) the name and record
address of the stockholder and (ii) the class and number of
shares of capital stock of the corporation which are

E-4
<PAGE>
beneficially owned by the stockholder. The corporation may
require any proposed nominee to furnish such other
information as may reasonably be required by the corporation
to determine the eligibility of such proposed nominee to
serve as director of the corporation. No person shall be
eligible for election as a director of the corporation
unless nominated in accordance with the procedures set forth
herein.

(3) The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing
procedure, and if the chairman so determines, the chairman
shall so declare to the meeting and the defective nomination
shall be disregarded.

(D) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any vacancy occurring in the Board
of Directors caused by resignation, removal, death, disqualification
or other incapacity, and any newly created directorships resulting
from an increase in the number of directors, shall be filled by a
majority vote of directors then in office whether or not a quorum and
shall not be filled by the stockholders. When the number of directors
is changed, any newly created or eliminated directorship shall be so
apportioned among the classes of directors as to make all classes as
nearly equal in number as possible. Each director chosen to fill a
vacancy or newly created directorship shall hold office for the term
coinciding with the class of his or her directorship and until his
successor shall be elected and qualify. No decrease in the number of
directors constituting the Board of Directors shall shorten the term
of any incumbent director.

(E) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director may be removed from
office at any time by the holders of a majority of the shares entitled
to vote on the election of directors, but only for cause. "Cause" is
present when: (1) the director whose removal is proposed has been
convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal; (2) the director has
been adjudicated by a court of competent jurisdiction to be liable for
negligence, or misconduct, in the performance of the director's duty
to the corporation in a matter of substantial importance to the
corporation and such adjudication is no longer subject to a direct
appeal; (3) the director has become mentally incompetent, whether or
not so adjudicated, which mental incompetency directly affects the
director's ability as a director of the corporation or (4) the
director's actions or failure to act have been in derogation of the
director's duties, as provided in the Bylaws of the corporation or
otherwise provided by law. Any proposal for removal pursuant

E-5
<PAGE>
to (3) or (4) that is initiated by the Board of Directors for
submission to the stockholders requires the affirmative vote of at
least two-thirds of the total number of directors then in office,
excluding the director who is the subject of the removal action and
who shall not be entitled to vote thereon.

(F) Any director may resign at any time and such resignation
shall take effect upon receipt thereof by the Chief Executive Officer
or the Secretary unless otherwise specified in the resignation.

(G) Notwithstanding any provision to the contrary, the
provisions contained in this Section shall not be amended, altered,
modified or repealed, and no provision inconsistent with this Article
may be adopted, except upon either (1) the affirmative vote of the
holders of not less than two-thirds of the outstanding stock of the
corporation entitled to vote in elections of directors or (2) the
affirmative vote of a majority of the whole Board of Directors and the
affirmative vote of the holders of a majority of such outstanding
stock present in person or represented by proxy at any meeting of
stockholders.

(H) (1) No person who has asserted or hereafter asserts
any Claim against the corporation or any Subsidiary (a
"Plaintiff"), and no person who is or becomes an Affiliate
or Associate of any Plaintiff, so long as such person
continues to be such an Affiliate or Associate (a "Related
Person"), shall be eligible to be elected or to serve as a
director of the corporation until after such Claim is
Finally Resolved, PROVIDED, that a director of the
corporation who is validly nominated and elected a director
and who thereafter becomes a Plaintiff or Related Person
shall not solely by reason of becoming a Plaintiff or
Related Person cease to be a director, but rather shall
continue as a director for the remainder of the term for
which the person was elected or until the person's
resignation or removal; PROVIDED FURTHER, that it shall be
the duty of any such director promptly to notify the Board
of Directors that the person is or has become a Plaintiff or
Related Person and to either promptly take all steps as may
be necessary to cause himself or herself to be neither a
Plaintiff nor Related Person or, if all such steps cannot be
or have not been taken and the person continues to be either
a Plaintiff or Related Person and the pertinent Claim has
not been Finally Resolved within the pertinent Resolution
Period, resign as a director of the corporation, effective
immediately, at or before the end of such Resolution Period.

(2) For purposes of this Section, the definitions set
forth in Article X shall apply to such terms used in this

E-6
<PAGE>
Article as if the definitions were fully restated in this
Article. In addition, the following terms shall have the
following respective meanings:

(a) In addition to the definition of "Control"
set forth in Article X, for purposes of this Article, a
controlling relationship between any person and another
person shall be deemed to exist whenever (but shall not
be limited to a situation in which) the former person
directly or indirectly holds or owns at least 15% of
the outstanding securities of any class or series of
voting securities issued by, or at least 15% of the
aggregate voting power with respect to, the latter
person.

(i) one which, when aggregated with all
other claims, cross-claims, counterclaims and
third-party claims asserted by the pertinent
Plaintiff or any Related Person of such Plaintiff
against the corporation or any Subsidiary that
have not been Finally Resolved, if decided
adversely to the corporation or a Subsidiary,
along with all other aggregated claims, cross-
claims, counterclaims and third-party claims,
could not result in an order or orders compelling
the corporation and/or any of its Subsidiaries to
pay out or otherwise dispose of cash or any other
assets having an aggregate value in excess of 10%
of the consolidated current assets of the
corporation as of the quarter then most recently
ended or render the corporation insolvent; or

(ii) one arising pursuant to a contract between
the corporation and the pertinent Plaintiff or
Related Person that was approved by a majority of
the Continuing Directors (as defined in Article X
of this Certificate of Incorporation), including
without limitation claims arising under any
indemnity or employment contract; or

E-7
<PAGE>
(iii) one asserted in the right of the
corporation.

(3) The Board of Directors of the corporation (acting
by at least a majority of all directors, excluding any who
have acknowledged themselves to be or have been determined
to be Plaintiffs or Related Persons at the time of such
Board action and excluding any director or directors whose
status as Plaintiff or Related Person is the subject of such
action) shall have the authority to determine whether any
director of the corporation is or is not or has ceased to be
a Plaintiff or Related Person, and the Board of Directors
(acting by at least a majority of all directors, excluding
any who have acknowledged themselves to be or have been
determined to be Plaintiffs or Related Persons and, if the
matter at issue relates to the next annual meeting of
stockholders of the corporation to occur after such Board
action, excluding any director whose term of office would
expire at such meeting and who at the time of such action
has not irrevocably decided not to stand for reelection)
shall have the authority to determine whether any person
nominated or proposed for nomination as a director or who is
the subject of a stockholder request as provided below is
ineligible to be so nominated and elected by virtue of being
a Plaintiff or Related Person. Each such Board
determination shall be based upon such information as has

E-8
<PAGE>
been brought to the attention of the Board (whether in a
stockholder request or otherwise) at the time such
determination is made, and no Board determination that any
director or other person is or is not or has ceased to be a
Plaintiff or Related Person shall preclude the Board from
reconsidering the matter and making the contrary
determination in light of any facts or circumstances first
coming to the attention of the Board after the prior
determination was made.

(4) The Board of Directors shall not nominate any
person for election as a director of the corporation unless
such prospective nominee has provided the Board with (i) all
such information as the Board (or any member thereof not
excluded from determining the status of such person as a
Plaintiff or Related Person) has deemed necessary or
appropriate to enable the Board to determine such status and
(ii) a signed statement by the prospective nominee that such
person, having reviewed this Section, is aware of no reason
not disclosed to the Board why he or she would or might be
considered a Plaintiff or Related Person (which statement
also shall include an undertaking by such person that if he
or she is nominated, such person promptly will inform the
Board, by written notice to the Chairman of the Board or the
Secretary of the corporation, if at any time prior to the
election to which such person's nomination relates he or she
becomes aware of any fact or circumstance, whether in
existence on the date such undertaking is given or arising
afterward, which has given such person any reason to believe
that the person is or might be considered a Plaintiff or
Related Person), and unless after receipt of such
information and such statement, the Board has determined
that the prospective nominee is not a Plaintiff or Related
Person.

(5) Any stockholder who is uncertain whether any
person the stockholder desires to nominate for election as a
director of the corporation (a "candidate") is a Plaintiff
or Related Person may request a determination from the Board
concerning that matter. Any such request must be in
writing, identify the candidate, set forth all reasons why
the stockholder has such uncertainty concerning the
candidate, explain why the stockholder believes that the
candidate should not be considered a Plaintiff or Related
Person and include an undertaking by or on behalf of the
stockholder that, if the candidate is determined not to be a
Plaintiff or Related Person, the stockholder promptly will
inform the Board in the manner specified in Paragraph (4)
above if any time prior to the election of directors next

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<PAGE>
occurring the stockholder learns of any fact or circumstance
(whether in existence on the date of the request or arising
afterward) which has given the stockholder any other reason
to believe that or to be uncertain whether the candidate is
or might be considered a Plaintiff or Related Person. Any
such request also must be accompanied by a signed statement
of the candidate to which the request relates stating that,
having reviewed this Section and the request, the candidate
knows of no reason not stated in the request why the
candidate would or might be considered a Plaintiff or
Related Person and believes for the reasons stated in the
request that he or she should not be considered a Plaintiff
or Related Person, which statement also shall include an
undertaking by the candidate comparable to that of the
requesting stockholder. With respect to any meeting at which
directors are to be elected, a stockholder may submit
requests as to any number of candidates up to and including
five times the number of directors to be elected at such
meeting. A request may be submitted at any time at which
the stockholder properly may give notice of intent to
nominate a candidate for election as a director (other than
a time at which such giving of notice of intent is proper
only by virtue of the provisions of Paragraph (7) of this
Section) and no request may be submitted at any other time.
No request shall be deemed "submitted" for any purposes
hereunder unless and until it is delivered in person to the
Chairman of the Board or the Secretary of the corporation or
delivered to the principal offices of the corporation
addressed to the attention of the Chairman or the Secretary.
No request shall constitute a notice of intent to nominate
any candidate unless it expressly states that it is intended
as such a notice and it otherwise complies with all
applicable requirements for such a notice. Neither
submission of a request, nor any action taken thereafter
with respect to such request, shall operate as a waiver of
or otherwise relieve any stockholder of any otherwise
applicable procedural requirements respecting nomination of
director candidates, except as and to the extent
contemplated in Paragraph (7).

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following such action, the requesting stockholder shall be
notified in writing of the nature of such determination and,
if the determination made is that the candidate is a
Plaintiff or Related Person, the basis for such
determination. In any other case in which the Board
determines that any candidate as to which a notice of intent
to nominate has been given is ineligible to be nominated or
elected a director by virtue of being a Plaintiff or Related
Person (including any case in which a contrary determination
previously has been made in response to a stockholder
request), the stockholder that gave such notice of intent
shall be notified in writing of such determination and the
basis therefor as promptly as possible thereafter.

(7) If a candidate who is the subject of a proper and
timely submitted request meeting the requirements of
Paragraph (5) is determined by the Board not to be a
Plaintiff or Related Person and the request was submitted at
least five days in advance of the last date on which the
requesting stockholder otherwise would have been entitled to
give notice of intent to nominate such candidate, then the
Board's determination shall operate as a waiver of the time
limits otherwise applicable to the giving of such notice of
intent to the extent, if any, necessary to afford the
stockholder a period of five days following the date on
which notice of the Board's determination is given to the
stockholder within which to give notice of intent to
nominate such candidate. If, in response to a timely and
properly submitted request, the Board determines that the
candidate who is the subject of the request is a Plaintiff
or Related Person and the request was submitted at least
five days in advance of the last date on which the
requesting stockholder otherwise would have been entitled to
give notice of intent to nominate, then the Board's
determination shall operate as a waiver of the time limits
otherwise applicable to the giving of notice of intent to
nominate to the extent, if any, necessary to afford the
requesting stockholder a period of 15 days following the
date on which notice of the Board's determination is given
to the stockholder within which to give notice of intent to
nominate another person in lieu of the ineligible candidate.
In any other case in which the Board determines that a
candidate is a Plaintiff or Related Person, such
determination shall operate as a waiver if and only to the
extent expressly so provided in the resolutions setting
forth such determination or subsequent Board resolution.
Whenever any stockholder is afforded an additional time
period within which to give notice of intention to nominate,

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<PAGE>
the Board may afford the other stockholders of the
corporation a comparable additional period of time within
which to give such notice.

ARTICLE IX. Any action required to be taken or which may be
taken at any annual or special meeting of stockholders of the corporation
may be taken without a meeting by written consents setting forth the action
so taken signed by the holders of all shares of stock of the corporation
entitled to vote thereon.

ARTICLE X.

(A) In addition to any affirmative vote required by (1) law and
(2) this Certificate of Incorporation, including, without limitation,
Article XII, and except as otherwise expressly provided in Section (B)
of this Article, the affirmative vote of the holders of not less than
80% of the outstanding shares of Voting Stock shall be required for
the approval or authorization of any Business Combination of the
corporation or any Subsidiary of the corporation with any Interested
Stockholder (as these terms are defined below).

(B) The provisions of paragraph (A) of this Article shall not
apply to any transaction which shall have been approved by a majority
of the Continuing Directors (as defined below).

(2) An "Associate" of a specified person is:

(a) Any corporation, partnership, unincorporated
association or other entity of which such person is a
director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of
Voting Stock;

(b) Any trust or other estate in which the person
has a beneficial interest of 20% or more or as to which
such specified person serves as trustee or in a similar
fiduciary capacity in connection with the trust or
estate; or

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<PAGE>

relative of the spouse, who has the same residence as
such person.

(3) The term "Business Combination" means:

(a) Any merger or consolidation of the
corporation or any Subsidiary with an Interested
Stockholder or any other corporation, partnership,
unincorporated association or other entity if the
merger or consolidation is caused by the Interested
Stockholder and as a result of such merger or
consolidation Section 203(a) of the General Corporation
Law of the State of Delaware is not applicable to the
surviving entity;

(b) The sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions), except proportionately as a
stockholder of such corporation, to or with an
Interested Stockholder, whether as part of a
dissolution or otherwise, of assets of the corporation
or of any Subsidiary which assets have an aggregate
market value equal to 10% or more of either the
aggregate market value of all the assets of the
corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of
the corporation;

(c) Any transaction which results in the issuance
or transfer by the corporation or by any Subsidiary of
any stock of the corporation or of such Subsidiary to
an Interested Stockholder, except (i) pursuant to the
exercise, exchange or conversion of securities
exercisable for, exchangeable for or convertible into
stock of such corporation or any such Subsidiary which
securities were outstanding prior to the time that the
Interested Stockholder became such; (ii) pursuant to a
merger under Section 251(g) of the General Corporation
Law of the State of Delaware; (iii) pursuant to a
dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for,
exchangeable for or convertible into stock of such
corporation or any such Subsidiary which security is
distributed, pro rata to all holders of a class or
series of stock of such corporation subsequent to the
time the Interested Stockholder became such; (iv)
pursuant to an exchange offer by the corporation to
purchase stock made on the same terms to all holders of

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<PAGE>
said stock; or (v) any issuance or transfer of stock by
the corporation, PROVIDED, HOWEVER, that in no case
under (iii)-(v) above shall there be an increase in the
Interested Stockholder's proportionate share of the
stock of any class or series of the corporation or of
the voting stock of the corporation;

(d) Any transaction involving the corporation or
any Subsidiary which has the effect, directly or
indirectly, of increasing the proportionate share of
the stock of any class or series, or securities
convertible into the stock of any class or series, of
the corporation or of any Subsidiary which is owned by
the Interested Stockholder, except as a result of
immaterial changes due to fractional share adjustments
or as a result of any purchase or redemption of any
shares of stock not caused, directly or indirectly, by
the Interested Stockholder; or

(e) Any receipt by the Interested Stockholder of
the benefit, directly or indirectly (except
proportionately as a stockholder of such corporation)
of any loans, advances, guarantees, pledges or other
financial benefits (other than those expressly
permitted in (a)-(d) above) provided by or through the
corporation or any Subsidiary.

As used in this definition, a "series of related
transactions" shall be deemed to include not only a series
of transactions with the same Interested Stockholder, but
also a series of separate transactions with an Interested
Stockholder or any Affiliate or Associate of such Interested
Stockholder.

(4) A "Continuing Director" is a member of the Board
of Directors who is not an Affiliate, Associate or a
representative of the Interested Stockholder and was either
(a) first elected as a director prior to the time that the
Interested Stockholder became an Interested Stockholder or
(b) was designated, before the person's initial election as
a director, as a Continuing Director by a majority of the
then Continuing Directors; PROVIDED, HOWEVER, that the term
"Continuing Director" specifically excludes any individual
whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as that
term is used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended) or
other actual or threatened solicitation of proxies or

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<PAGE>
consents by or on behalf of any person other than the
corporation's Board of Directors.

(5) "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a person, whether through the
ownership of voting stock, by contract or otherwise. A
person who is the owner of 20% or more of the outstanding
Voting Stock of any corporation, partnership, unincorporated
association or other entity shall be presumed to have
control of such entity, in the absence of proof by a
preponderance of the evidence to the contrary.

(6) "Equity security" means any one of the following:

(a) Any stock or similar security, certificate of
interest or participation in any profit-sharing
agreement, voting trust certificate or voting share;

(b) Any security convertible, with or without
consideration, into an equity security or any warrant
or other security carrying any right to subscribe to or
purchase an equity security;

(c) Any put, call, straddle or other option or
privilege of buying an equity security from or selling
an equity security to another without being bound to do
so.

(7) The term "Interested Stockholder" means:

(a) Any person (other than the corporation and
any Subsidiary) that is the owner of 10% or more of the
corporation's outstanding voting stock; or

(b) Any person that is an Affiliate or Associate
of the corporation and was the owner of 10% or more of
the corporation's outstanding voting stock at any time
within the three-year period immediately prior to the
date on which it is sought to be determined whether
such person is an Interested Stockholder, and the
Affiliates and Associates of such person.

(8) A person shall be an "owner" of any Voting Stock
if the person individually or with or through any of its
Affiliates or Associates:

(a) beneficially owns such stock, directly or
indirectly;

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<PAGE>
(b) has (i) the right to acquire such stock
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise; PROVIDED, HOWEVER, that a person
shall not be deemed the owner of stock tendered
pursuant to a tender or exchange offer made by such
person or any of such person's Affiliates or Associates
until such tendered stock is accepted for purchase or
exchange or (ii) the right to vote such stock pursuant
to any agreement, arrangement or understanding,
PROVIDED, HOWEVER, that a person shall not be deemed
the owner of any stock because of such person's right
to vote such stock if the agreement, arrangement or
understanding to vote such stock arises solely from a
revocable proxy or consent given in response to a proxy
or consent solicitation made to 10 or more persons; or

(c) has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting (except voting pursuant to a revocable proxy or
consent as described in item (ii) of clause (b) of this
paragraph), or disposing of such stock with any other
person that beneficially owns, or whose affiliates or
associates beneficially own, directly or indirectly,
such stock.

(9) The term "person" means any individual,
corporation, partnership, unincorporated association or
other entity.

(10) The term "Subsidiary" means any corporation of
which a majority of any class of equity security is owned,
directly or indirectly, by the corporation; provided, that
for the purposes of the definition of Interested Stockholder
set forth in paragraph (7) of this Section (C), the term
"Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly
or indirectly, by the corporation.

(11) The term "Substantial Part" shall mean more than
10% of the total consolidated assets of the corporation in
question as of the end of the most recent fiscal year ended
prior to the time the determination is being made.

(12) The term "Voting Stock" shall mean stock of any
class or series entitled to vote generally in the election

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<PAGE>
of directors and, with respect to any entity that is not a
corporation, any equity interest entitled to vote generally
in the election of the governing body of such entity. Each
reference in this Article to a percentage of shares of
Voting Stock shall refer to the percentage of the votes
entitled to be cast by such shares.

(D) For purposes of determining whether a person is an
Interested Stockholder, the number of shares of Voting Stock deemed to
be outstanding shall include shares deemed owned by that person
through application of paragraph (C), defining "owner," but shall not
include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options or otherwise.

(E) A majority of the Continuing Directors shall have the power
and duty to determine, for purposes of this Article and Article XII,
on the basis of information known to them:

(1) The number of Voting Stock of which any person is
the beneficial owner;

(2) Whether a person is an Affiliate or Associate of
another;

(3) Whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in
the definition of "owner" set forth above;

(4) Whether the assets subject to any Business
Combination constitute a "Substantial Part" as defined
above;

(5) Whether two or more transactions constitute a
"series of related transactions" as described above; and

(6) Such other matters with respect to which a
determination is required under this Article and Article
XII.

Any such determination shall be conclusive and binding for all
purposes of this Article and Article XII.

ARTICLE XI. The Board of Directors shall not initiate, approve,
adopt or recommend any offer of any party other than the corporation to
make a tender or exchange offer for any equity security of the corporation,
or to engage in any Business Combination, unless and until it shall have
first evaluated the proposed offer and determined in its judgment that the

E-17
<PAGE>
proposed offer would be in compliance with all applicable laws. In
evaluating a proposed offer to determine whether it would be in compliance
with law, the Board of Directors shall consider all aspects of the proposed
offer, including the manner in which the offer is proposed to be made, the
documents proposed for the communication of the offer and the effects and
consequences of the offer if consummated, in the light of the laws of the
United States of America and affected states and foreign countries. In
connection with this evaluation, the Board may seek and rely upon the
opinion of independent legal counsel and it may test the legality of the
proposed offer in any state, federal or foreign court or before any state,
federal or foreign administrative agency which may have jurisdiction. If
the Board of Directors determines in its judgment that a proposed offer
would be in compliance with all applicable laws, the Board of Directors
shall then evaluate the proposed offer and determine whether the proposed
offer is in the best interests of the corporation and its stockholders; the
Board of Directors shall not initiate, approve, adopt or recommend any such
offer which in its judgment would not be in the best interests of the
corporation and its stockholders. In evaluating a proposed offer to
determine whether it would be in the best interests of the corporation and
its stockholders, the Board of Directors shall consider all factors which
it deems relevant including, without limitation:

(A) The fairness of the consideration to be received by the
corporation and its stockholders under the proposed offer, taking into
account the trading price of the corporation's stock immediately prior
to the announcement of the proposed offer, the historical trading
prices of the corporation's stock, the price that might be achieved in
a negotiated sale of the corporation as a whole, premiums over the
trading price of their securities which have been proposed or offered
to other companies in the past in connection with similar offers and
the future prospects of the corporation;

(B) The possible social and economic impact of the proposed
offer and its consummation on the corporation and its employees,
customers and suppliers;

(C) The possible social and economic impact of the proposed
offer and its consummation on the communities in which the corporation
and its Subsidiaries operate or are located;

(D) The business and financial conditions and earnings prospects
of the offering party, including, without limitation, debt service and
other existing or likely financial obligations of the offering party;

(E) The competence, experience and integrity of the offering
party and its management; and

(F) The intentions of the offering party regarding the use of
the assets of the corporation to finance the transaction.

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<PAGE>
ARTICLE XII.

(A) In addition to any affirmative vote required by (1) law and
(2) the other provisions of this Certificate of Incorporation,
including without limitation Article X and except as otherwise
expressly provided in paragraph (B) of this Article, the affirmative
vote of not less than 80% of the outstanding shares of Voting Stock
held by stockholders who are not Interested Stockholders shall be
required for the approval or authorization of any Business Combination
of the corporation or any Subsidiary with any Interested Stockholder
(as these terms are defined in Article X).

(B) The provisions of paragraph (A) of this Article shall not
apply to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by
law and any other provision of this Certificate of Incorporation, if
either of the following paragraphs (1) or (2) apply:

(1) The Business Combination shall have been approved
by a majority of the Continuing Directors; or

(2) All of the following conditions shall have been
met:

(a) The Business Combination will result in an
involuntary sale, redemption, cancellation or other
termination of ownership of shares of any class of
Voting Stock of the corporation owned by stockholders
who do not vote in favor of the Business Combination
and the aggregate amount of the cash and the market
value as of the valuation date of other readily
marketable consideration to be received by such
stockholders for such shares shall be at least equal to
the Minimum Price Per Share;

(b) The consideration to be received by holders
of a particular class of outstanding Voting Stock shall
be in cash or in the same form as the Interested
Stockholder has previously paid for shares of such
class of Voting Stock. If the Interested Stockholder
has paid for shares of any class of Voting Stock in
varying forms of consideration, the form of
consideration of such class of Voting Stock shall be
either cash or the form used to acquire the largest
number of shares of such class of Voting Stock
previously acquired by it;

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<PAGE>
(c) From the time the Interested Stockholder
became an Interested Stockholder:

(i) Such Interested Stockholder shall have
taken steps to ensure that the corporation's Board
of Directors included at all times representation
by Continuing Directors proportionate to the stock
holdings of the corporation's holders of Voting
Stock not affiliated with such Interested
Stockholder (with a Continuing Director to occupy
any resulting fractional board position);

(ii) There shall have been no reduction in
the rate of dividends payable on the corporation's
stock except as may have been approved by
unanimous vote of the directors;

(iii) The Interested Stockholder shall not
have acquired any newly issued shares of stock,
directly or indirectly, from the corporation
(except upon conversion of convertible securities
acquired by it prior to becoming an Interested
Stockholder or as a result of a prorated stock
dividend or stock split);

(iv) The Interested Stockholder shall not
have acquired any additional shares of the
corporation's outstanding stock or securities
convertible into stock except as a part of the
transaction which resulted in such person becoming
an Interested Stockholder; and

(v) The Interested Stockholder shall not
have received the benefit, directly or indirectly
(except proportionately as a stockholder), of any
loans, advances, guarantees, pledges or other
financial assistance or tax credits provided by
the corporation, nor made any major change in the
corporation's business or equity capital structure
without the unanimous approval of the directors,
in either case prior to the consummation of the
Business Combination.

(d) A proxy statement responsive to the
requirements of the Securities Exchange Act of 1934, as
amended, shall have been mailed to all stockholders of
the corporation for the purpose of soliciting
stockholder approval of the Business Combination
containing at the front thereof in a prominent place

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<PAGE>
any recommendations as to the advisability (or
inadvisability) of the Business Combination which the
Continuing Directors, or any of them, may choose to
state and, if deemed advisable by a majority of the
Continuing Directors, an opinion of a reputable
investment banking firm as to the fairness (or not) of
the terms of the Business Combination, from the point
of view of the remaining public stockholders of the
corporation (such investment banking firm to be
selected by a majority of the Continuing Directors and
to be paid a reasonable fee for its services by the
corporation upon receipt of such opinion); and

(e) There has been five years between the date
that the Interested Stockholder became an Interested
Stockholder and the date that the Business Combination
is consummated.

(1) All the definitions set forth in Article X(C)
shall apply as if fully restated here;

(2) "Minimum Price Per Share" means the sum of (a) the
highest per share price as determined below, and (b) the
aggregate amount, if any, by which 6% per year of such
highest per share price exceeds the aggregate amount of all
stock dividends per share paid in cash since the
Determination Date. For Common Stock, the highest per share
price is the highest of the following:

(a) The highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Stockholder
within the five-year period immediately prior to the
Announcement Date, or in the transaction in which the
stockholder became an Interested Stockholder, whichever
is higher.

(b) The highest per share price bid in the public
market for such Common Stock during the five years
immediately preceding the Announcement Date.

For any class or series of outstanding stock other than
Common Stock, whether or not the Interested Stockholder has
previously acquired any shares of a particular class or

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<PAGE>
series of stock, the highest per share price is the highest
of the following:

(a) The highest per share price, including any
brokerage, commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Stockholder for
any shares of the class or series of stock acquired by
it within the five-year period immediately prior to the
Announcement Date, or in the transaction in which the
stockholder became an Interested Stockholder, whichever
is higher.

(c) The highest per share price bid in the public
market for such class or series of stock during the
five years immediately preceding the Announcement Date.

The calculation of the Minimum Price Per Share shall
require appropriate adjustments for capital changes,
including without limitation stock splits, stock dividends
and reverse stock splits.

(3) "Announcement Date" means the first general public
announcement or the first communication generally to
stockholders of the corporation, whichever is earlier, of
the proposal or intention to make a proposal concerning a
Business Combination.

(4) "Determination Date" means the date on which an
Interested Stockholder first became an Interested
Stockholder.

(5) "Market Value" means either of the following:

(a) With respect to shares, the highest closing
sale price during the 30-day period immediately
preceding the date in question of a share:

(i) As listed on the composite tape for New
York Stock Exchange-listed securities.

(ii) If not listed pursuant to
subparagraph (i), as listed on the composite tape
for American Stock Exchange-listed securities.

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<PAGE>

(iv) If not listed pursuant to
subparagraph (i), (ii), or (iii), the highest
closing bid during the 30-day period preceding
the date in question as listed on the Nasdaq
Stock Market or any other system then in use.

(v) If a listing is not available pursuant
to sub-paragraphs (i) through (iv), then the fair
market value of the shares on the date in
question, as determined by the Continuing
Directors.

(b) With respect to property other than cash or
shares, the fair market value of the property on the
day in question, as determined by the Continuing
Directors.

(6) "Valuation Date" means:

(a) In a Business Combination voted upon by
stockholders, the day prior to the date of the
stockholder vote or the day which is 20 calendar days
prior to the consummation of the Business Combination,
whichever is later.

(b) In a Business Combination not voted upon by
stockholders, the date of the consummation of the
Business Combination.

(D) A majority of the Continuing Directors shall have the
power and duty to determine, for purposes of this Article, on the
basis of information known to them:

(1) All the matters set forth in Article X(E);

(2) The market value of any consideration other than
cash to be received by stockholders;

(3) Whether or not any consideration other than cash
to be received by stockholders is readily marketable;

(4) The amount of the Minimum Price Per Share;

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<PAGE>
(5) Whether or not the consideration to be received by
stockholders is equal to the Minimum Price Per Share; and

(6) Such other matters with respect to which a
determination is required under this Article.

Any such determination shall be conclusive and binding for all
purposes of this Article.

(E) Nothing contained in this Article shall be construed to
relieve any Interested Stockholder from any fiduciary and other
standards of conduct and obligations imposed by law. The fact
that any Business Combination complies with the provisions of
paragraph (B)(2) of this Article shall not be construed to impose
any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business
Combination or recommend its adoption or approval to the
stockholders of the corporation, nor shall such compliance limit,
prohibit or otherwise restrict in any manner the Board of
Directors, or any member thereof, with respect to evaluations of,
or actions and responses taken with respect to, such Business
Combination.

ARTICLE XIII. No director of the corporation shall be personally
liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty by such director as a director; PROVIDED, HOWEVER,
that his Article shall not eliminate or limit the liability of a director
to the extent provided by applicable law (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment to or
repeal of this Article shall apply to or have any effect on the liability
or alleged liability of any director of the corporation for or with respect
to any acts or omissions of such director occurring prior to such amendment
or repeal.

ARTICLE XIV. Directors and executive officers of the
corporation shall be indemnified as of right, and shall be entitled to the
advancement of expenses, to the fullest extent now or hereafter permitted
by law in connection with any actual or threatened civil, criminal,
administrative or investigative action, suit or proceeding, (whether
brought by or in the name of the corporation, a subsidiary, or otherwise)
arising out of their service to the corporation or a subsidiary, or to
another organization at the request of the corporation or a subsidiary.
Persons who are not directors or executive officers of the corporation may
be similarly indemnified in respect of such service to the extent
authorized at any time by the Board of Directors of the corporation. The

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corporation may purchase and maintain insurance to protect itself and any
such director, officer or other person against any liability asserted
against him or her and incurred by him or her in respect of such service
whether or not the corporation would have the power to indemnify him
against such liability by law or under the provisions of this Article. The
provisions of this Article shall be deemed contractual and shall be
applicable to actions, suits or proceedings, whether arising from acts or
omissions occurring before or after the adoption hereof, and to directors,
officers and other persons who have ceased to render such service, and
shall inure to the benefit of the heirs, executors and administrators of
the directors, officers and other persons referred to in this Article.

ARTICLE XV. The corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute and
this Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation.

(A) No amendment to this Certificate of Incorporation shall
alter, modify or repeal any or all of the provisions of Article XII of
this Certificate of Incorporation, or this paragraph (A) of
Article XV, unless adopted by the affirmative vote of not less than
80% of the outstanding shares of Voting Stock held by stockholders who
are not Interested Stockholders.

(B) No amendment to this Certificate of Incorporation shall
alter, modify or repeal any or all of the provisions of Articles VII,
VIII, IX, X, XI or XIII of this Certificate of Incorporation, or this
paragraph (B) of Article XV, and the stockholders of the corporation
shall not have the right to alter, modify or repeal any or all
provisions of the Bylaws of the corporation, unless such amendment,
alteration, modification or repeal is adopted by the affirmative vote
of the holders of not less than 80% of the outstanding shares of
Voting Stock; provided, that this paragraph (B) shall not apply to,
and such 80% vote shall not be required for, any amendment,
alteration, modification or repeal which has first been approved by
(1) the affirmative vote of 80 percent of the entire Board of
Directors, which shall include the affirmative vote of at least one
director of each class of the Board of Directors and (2) the
affirmative vote of two-thirds of the Continuing Directors.

Dated: February 13, 1997 /S/ CRAIG A. ANDERSON
Craig A. Anderson

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APPENDIX F

BYLAWS

DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office of the
corporation shall be in the City of Wilmington, County of New Castle, State
of Delaware.

SECTION 2. OTHER OFFICES. The corporation may have offices
at such places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or the business of the
corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. TIMES AND PLACES OF MEETINGS. All meetings of the
stockholders shall be held, except as otherwise provided by statute, the
Certificate of Incorporation or these Bylaws, at such time and place as may
be fixed from time to time by the Board of Directors. Meetings of
stockholders may be held within or without the State of Delaware as shall
be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.

SECTION 2. ANNUAL MEETINGS. Annual meetings of the
stockholders shall be held each year at such time and on such day as may be
designated by the Board of Directors. Annual meetings shall be held to
elect, by a plurality vote, successors to those members of the Board of
Directors whose terms expire at the meeting and to transact only such other
business as may be properly brought before the meeting in accordance with
these Bylaws.

SECTION 3. SPECIAL MEETINGS. Special meetings of the
stockholders may be called by an executive officer whenever directed by the
Board of Directors. Such request shall state the purpose of the proposed
meeting.

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SECTION 4. WRITTEN NOTICE. Written notice of all meetings of
stockholders, stating the place, date and hour, and in the case of a
special meeting, the purpose or purposes thereof, shall be given to each
stockholder entitled to vote thereat, not less than 10 nor more than 60
days before the date fixed for the meeting.

SECTION 5. WAIVER OF NOTICE. Whenever notice is required to
be given under the provisions of the statutes or of the Certificate of
Incorporation or by these Bylaws, a written waiver, signed by the person
entitled to notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a stockholder at a meeting
shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice unless so
required by the Certificate of Incorporation or by these Bylaws.

SECTION 6. STOCKHOLDER LIST. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at least 10
days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to
the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list
shall be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.

SECTION 7. QUORUM. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided
by statute or by the Certificate of Incorporation. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the officer of the corporation presiding as chairman of the
meeting shall have the power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall
be present or represented. At such adjourned meetings at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified.

SECTION 8. VOTE REQUIRED. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting

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power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the Certificate of Incorporation a
different vote is required, in which case such express provision shall
govern and control the decision of such question.

SECTION 9. VOTING RIGHTS. Except as otherwise provided by
the Certificate of Incorporation or the resolution or resolutions of the
Board of Directors creating any class of stock, each stockholder shall at
every meeting of stockholders be entitled to one vote in person or by proxy
for each share of the capital stock having voting power held by such
stockholder.

SECTION 10. ACTION WITHOUT A MEETING. Unless otherwise
provided in the Certificate of Incorporation, no action required or
permitted to be taken at any annual or special meeting of stockholders of
the corporation may be taken by written consents without a meeting.

SECTION 11. CONDUCT OF MEETINGS. Meetings of stockholders
generally shall follow accepted rules of parliamentary procedure, subject
to the following:

(a) The chairman of the meeting shall have absolute
authority over matters of procedure and there shall be no appeal
from the ruling of the chairman. If, in his or her absolute
discretion, the chairman deems it advisable to dispense with the
rules of parliamentary procedure as to any one meeting of
stockholders or part thereof, the chairman shall so state and
shall clearly state the rules under which the meeting or
appropriate part thereof shall be conducted.

(c) The chairman may ask or require anyone not a bona fide
stockholder of record on the record date, or a validly appointed
proxy of such a stockholder, to leave the meeting.

(d) The chairman may introduce nominations, resolutions or
motions submitted by the Board of Directors for consideration by
the stockholders without a motion or second. Except as the
chairman shall direct, a resolution or motion not submitted by
the Board of Directors shall be considered for vote only if
proposed by a stockholder of record on the record date or a

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validly appointed proxy of such a stockholder and seconded by
such a stockholder or proxy other than the individual who
proposed the resolution or motion.

SECTION 12. INSPECTORS OF ELECTION. The Board of Directors
or, if they shall not have so acted, the Chief Executive Officer shall
appoint, prior to any meeting of stockholders, one or more inspectors (who
may be directors and/or employees of the corporation) to act at the meeting
and make a written report thereof. The corporation may designate one or
more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to
the best of the inspector's ability.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of
directors which shall constitute the whole Board shall be not less than
three and shall be determined from time to time by resolution of the Board
of Directors as provided in the Certificate of Incorporation. The
directors, other than those who may be elected by the holders of any class
or series of stock having a preference over Common Stock as to dividends or
upon liquidation, shall be divided into three classes, as nearly equal in
number as possible, with the term of office of one class expiring each
year. At each annual meeting of the stockholders, the successors of the
class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held
in the third year following the year of their election. Directors need not
be stockholders.

SECTION 2. POWERS. The business of the corporation shall be
managed by its Board of Directors, which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these Bylaws directed
or required to be exercised or done by the stockholders.

SECTION 3. VACANCIES. Vacancies and newly created
directorships resulting from any increase in the authorized number of
directors may be filled as provided in the Certificate of Incorporation.

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SECTION 4. RESIGNATION AND REMOVAL. Any director may resign
at any time as provided in the Certificate of Incorporation. Any or all of
the directors may be removed, but only for cause, as provided in the
Certificate of Incorporation.

SECTION 5. COMPENSATION OF DIRECTORS. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, the Board
of Directors shall have the authority to fix the compensation of directors.
The directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board or a stated salary as director. No
such payment shall preclude any director from serving the corporation in
any other capacity and receiving compensation therefor. Members of special
or standing committees may be allowed like compensation for attending
committee meetings.

SECTION 6. PLACE OF MEETINGS. The Board of Directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Delaware.

SECTION 7. FIRST MEETING OF NEWLY ELECTED BOARD. The first
meeting of each newly elected Board of Directors shall be held following
the annual meeting of stockholders and no notice of such meeting shall be
necessary to the newly elected directors legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of stockholders, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors or as
shall be specified in a written waiver signed by all of the directors.

SECTION 8. REGULAR MEETINGS. Regular meetings of the Board
of Directors may be held without notice at such time and at such place as
shall from time to time be determined by the Board.

SECTION 9. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called by the Chairman, Chief Executive Officer or
Secretary or by any two directors on two days' notice to each director,
either personally, by mail, by telegram or by facsimile transmission.

SECTION 10. PURPOSE NEED NOT BE STATED. Neither the business
to be transacted at nor the purpose of any regular or special meeting of
the Board of Directors need be specified in the notice of such meeting.

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Certificate of Incorporation. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.

SECTION 12. ACTION WITHOUT A MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors
or of any committee thereof may be taken without a meeting, if a written
consent thereto is signed by all members of the Board or of such committee,
as the case may be, and such written consent is filed with the minutes of
the proceedings of the Board or committee.

SECTION 13. MEETING BY TELEPHONE OR SIMILAR EQUIPMENT. The
Board of Directors or any committee designated by the Board of Directors
may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means through
which all persons participating in the meeting can hear each other and
participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.

SECTION 15. WAIVER OF NOTICE. Whenever notice is required to
be given under the provisions of the statutes or of the Certificate of
Incorporation or by these Bylaws, a written waiver, signed by the person
entitled to notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except when a director
attends a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the directors or members
of a committee of directors need be specified in any written waiver of
notice unless so required by the Certificate of Incorporation or by these
Bylaws.

ARTICLE IV

COMMITTEES OF DIRECTORS

SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the directors present at any meeting at

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which there is a quorum, may appoint an Executive Committee whose
membership shall consist of two or more members of the Board of Directors
as it may deem advisable from time to time to serve at the pleasure of the
Board. The Board of Directors may also appoint directors to serve as
alternates for members of the committee in the absence or disability of
regular members. The Board of Directors may fill any vacancies as they
occur. The Executive Committee shall have and may exercise the powers of
the Board of Directors in the management of the business affairs and
property of the corporation during the intervals between meetings of the
Board of Directors, subject to law and to such limitations and controls as
the Board of Directors may impose from time to time.

SECTION 2. AUDIT COMMITTEE. The Audit Committee, if there
be one, shall cause a suitable examination of the financial records and
operations of the corporation and its subsidiaries to be made by the
internal auditor of the corporation. The Audit Committee shall also
recommend to the Board of Directors the employment of independent certified
public accountants to examine the financial statements of the corporation
and its subsidiaries, review examination reports of the corporation and its
subsidiaries prepared by regulatory authorities and report to the Board of
Directors at least once each calendar year.

SECTION 3. COMPENSATION COMMITTEE. The Compensation Committee,
if there be one, shall review the personnel policies, plans and programs of
the corporation, including individual salaries of executive officers, and
submit recommendations to the Board of Directors. The Compensation
Committee shall also review the administration and results of operation of
the corporation's pension plans, confer with and receive reports from the
actuaries and investment managers of the pension plans, make
recommendations related to such plans and review all material pension plan
changes. The Compensation Committee shall also recommend to the Board of
Directors the retainer and attendance fee for nonemployee directors.

SECTION 4. NOMINATING COMMITTEE. The Nominating Committee, if
there be one, shall develop and recommend to the Board of Directors
criteria for the selection of candidates for directors, seek out and
receive suggestions concerning possible candidates, review and evaluate the
qualifications of possible candidates and recommend to the Board candidates
for vacancies occurring from time to time and for the slate of directors to
be proposed on behalf of the Board of Directors at the annual meeting of
stockholders. The Nominating Committee will consider nominees recommended
by the stockholders as properly submitted to the Secretary of the
corporation.

SECTION 5. OTHER COMMITTEES. The Board of Directors may
designate such other committees as it may deem appropriate and such
committees shall exercise the authority delegated to them.

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SECTION 6. COMMITTEE MEETINGS. Each committee provided for
above shall meet as often as its business may require and may fix a day and
time each week or at other intervals for regular meetings, notice of which
shall not be required. Whenever the day fixed for a meeting shall fall on
a holiday, the meeting shall be held on the business day following or on
such other day as the committee may determine. Special meetings of the
committees may be called by the chairman of the committee or any two
members other than the chairman and notice thereof may be given to the
members by telephone, telegram, letter or facsimile transmission. A
majority of its members shall constitute a quorum for the transaction of
the business of any committee. A record of the proceedings of each
committee shall be kept and presented to the Board of Directors.

SECTION 7. SUBSTITUTES. In the absence or disqualification
of a member of a committee, the members thereof present at a meeting and
not disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at a meeting in
place of such absent or disqualified member.

ARTICLE V

OFFICERS

SECTION 1.

(a) CENTRAL STAFF. The officers of the corporation shall
be chosen by the Board of Directors at its first meeting after
the annual meeting of stockholders, or as soon as practicable
after the annual election of directors in each year, and shall
include a Chairman of the Board, a President, a Secretary and a
Treasurer. The Board of Directors may also appoint one or more
Vice Presidents, one or more Assistant Secretaries and Assistant
Treasurers, and such other officers as the Board may deem
necessary. The Chairman of the Board and President shall be
chosen from among the directors, but no other officer need be a
director. Either the Chairman of the Board or the President
shall also be designated as the Chief Executive Officer. Any two
of the above offices, except those of the President and Vice
President, may be held by the same person.

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SECTION 2. TERM OF OFFICE. Each officer shall hold office
at the pleasure of the Board. The Board of Directors may remove any
officer for cause or without cause. Any officer may resign his or her
office at any time, such resignation to take effect upon receipt of written
notice thereof by the corporation unless otherwise specified in the
resignation. If the office of any officer becomes vacant for any reason,
the vacancy may be filled by the Board.

SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall, when present, preside at all meetings of the stockholders and at all
meetings of the Board of Directors, and shall have such other duties and
powers as may be imposed or given by the Board of Directors. In the case
of absence or inability to act of the President or Chief Executive Officer,
the Chairman of the Board shall exercise all of the duties and
responsibilities of such officer until the Board of Directors shall
otherwise direct.

SECTION 4. PRESIDENT. The President shall, subject to the
direction of the Board of Directors, see that all orders and resolutions of
the Board of Directors are carried into effect and shall perform all other
duties necessary or appropriate to the President's office, subject,
however, to his right (unless otherwise limited by the Board of Directors)
and the right of the directors to delegate any specific powers to any other
officer or officers of the corporation. In the case of absence or
inability to act of the Chairman of the Board or the Chief Executive
Officer, the President shall exercise all of the duties and
responsibilities of such officer until the Board of Directors shall
otherwise direct.

SECTION 5. CHIEF EXECUTIVE OFFICER. The Chief Executive
Officer, in addition to his duties as Chairman of the Board or President,
as the case may be, shall have final authority, subject to the control of
the Board of Directors, over the general policy and business of the
corporation and shall have the general control and management of the
business and affairs of the corporation. The Chief Executive Officer shall
have the power, subject to the control of the Board of Directors, to
appoint, suspend or discharge and to prescribe the duties and to fix the
compensation of such agents and employees of the corporation, other than
the officers appointed by the Board, as he or she may deem necessary.

SECTION 6. CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall, subject only to the control of the Board of Directors, have
general charge, control and supervision over the financial policy and
administration of the corporation and shall have such other duties and
powers as may be imposed or given by the Board of Directors. The Chief
Financial Officer shall report only and directly to the Board of Directors.

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SECTION 7. CHIEF OPERATING OFFICER. There may be elected a
Chief Operating Officer who shall, if elected, have general charge, control
and supervision over the administration and operations of the corporation
and shall have such other duties and powers as may be imposed or given by
the Board of Directors. If no Chief Operating Officer is elected, the
duties and powers of the Chief Operating Officer shall be performed by the
Chief Executive Officer.

SECTION 8. VICE PRESIDENTS. The Vice President or Vice
Presidents shall perform such duties and have such powers as the Chief
Executive Officer or the Board of Directors may from time to time
prescribe. The Board of Directors may at its discretion designate one or
more of the Vice Presidents to be an Executive Vice President or Senior
Vice President. Any Vice President so designated shall have such duties
and responsibilities as the Board shall prescribe.

SECTION 9. SECRETARY. The Secretary shall attend all
meetings of the stockholders, and of the Board of Directors and the
Executive Committee, and shall preserve in the books of the corporation
true minutes of the proceedings of all such meetings. The Secretary shall
safely keep in his or her custody the seal of the corporation, if any, and
shall have authority to affix the same to all instruments where its use is
required or appropriate. The Secretary shall give all notices required or
appropriate pursuant to statute, the Certificate of Incorporation, Bylaws
or resolution. The Secretary shall perform such other duties as may be
delegated by the Board of Directors or by the Executive Committee.

SECTION 10. TREASURER. The Treasurer, who shall also be the
Chief Financial Officer, shall have custody of all corporate funds and
securities and shall keep in books belonging to the corporation full and
accurate accounts of all receipts and disbursements. The Treasurer shall
deposit all moneys, securities and other valuable effects in the name of
the corporation in depositories as may be designated for that purpose by
the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and directors at the regular meetings of the Board, and whenever
requested by them, an account of all his or her transactions as Treasurer
and of the financial condition of the corporation. If required by the
Board of Directors, the Treasurer shall deliver to the Chief Executive
Officer of the corporation and keep in force a bond in form, amount and
with a surety or sureties satisfactory to the Board of Directors,
conditioned for faithful performance of the duties of his or her office,
and for restoration to the corporation in case of his or her death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and property of whatever kind in his or her possession or
under his or her control belonging to the corporation.

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SECTION 11. ASSISTANT SECRETARY AND ASSISTANT TREASURER.
There may be elected an Assistant Secretary and Assistant Treasurer who
shall, in the absence, disability or nonfeasance of the Secretary or
Treasurer, perform the duties and exercise the powers of such persons,
respectively.

SECTION 12. OTHER OFFICERS. All other officers, as may from
time to time be appointed by the Board of Directors, shall perform such
duties and exercise such authority as the Board of Directors shall
prescribe. All divisional officers, as may from time to time be appointed
by the Board of Directors or the Chief Executive Officer, shall perform
such duties and exercise such authority as the Board of Directors or the
Chief Executive Officer shall prescribe.

ARTICLE VI

INDEMNIFICATION

SECTION 1. INDEMNIFICATION OTHER THAN IN ACTIONS BY OR IN THE
RIGHT OF THE CORPORATION. Any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that the person is or was a director, or executive officer of the
corporation or, is or was a director or executive officer of the
corporation and is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
limited liability company, joint venture, trust or other enterprise,
whether for profit or not, shall be indemnified by the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection
with such action, suit or proceeding if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe such conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, that the person had
reasonable cause to believe that such conduct was unlawful. Persons who
are not directors or executive officers of the corporation may be similarly
indemnified in respect of such service to the extent authorized at any time
by the Board of Directors, except as otherwise provided by law.

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SECTION 2. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF
THE CORPORATION. Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that the person is or was a director or executive officer of
the corporation, or is or was a director or executive officer of the
corporation and is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
limited liability company, joint venture, trust or other enterprise,
whether for profit or not, shall be indemnified by the corporation against
expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or
suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification shall not be made for a claim, issue or matter in which the
person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery of the State of Delaware or
the court in which such action or suit was brought shall determine upon
application, that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery of the State of
Delaware or such other court shall deem proper. Persons who are not
directors or executive officers of a corporation may be similarly
identified in respect of such service to the extent authorized at any time
by the Board of Directors, except as otherwise provided by law.

SECTION 3. EXPENSES. To the extent that a director, officer
or other person whose indemnification is authorized by the Board of
Directors, has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1 or 2 of this Article,
or in defense of any claim, issue or matter therein, he or she shall be
indemnified against all expenses (including attorneys fees) actually and
reasonably incurred by him or her in connection therewith.

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SECTION 5. ADVANCEMENT OF EXPENSES. Expenses incurred in
defending a civil or criminal action, suit or proceeding described in
Sections 1 or 2 of this Article shall be paid by the corporation in advance
of the final disposition of such action, suit or proceeding as authorized
by the Board of Directors in the manner provided in Section 4 upon receipt
of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined that
he or she is not entitled to be indemnified by the corporation as authorized
in this section.

SECTION 6. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The
indemnification and advancement of expenses provided by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the
Certificate of Incorporation, any Bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in the person's
official capacity and as to action in another capacity while holding such
office and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her
heirs, executors and administrators.

SECTION 7. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under the
provisions of this Article.

SECTION 8. MERGERS. For the purposes of this Article,
references to the "corporation" include all constituent corporations
absorbed in a consolidation or merger, as well as the resulting or
surviving corporation, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture, trust or other enterprise, whether for
profit or not, shall stand in the same position under the provisions of
this Article with respect to the resulting or surviving corporation if he
or she had served the resulting or surviving corporation in the same
capacity.

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ARTICLE VII

SUBSIDIARIES

SECTION 1. SUBSIDIARIES. The Board of Directors, the Chief
Executive Officer or any executive officer designated by the Board of
Directors may vote the shares of stock owned by the corporation in any
subsidiary, whether wholly or partly owned by the corporation, in such
manner as they may deem in the best interests of the corporation,
including, without limitation, for the election of directors of any
subsidiary corporation, for any amendments to the charter or bylaws of any
such subsidiary corporation or for the liquidation, merger or sale of
assets of any such subsidiary corporation. The Board of Directors, the
Chief Executive Officer or any executive officer designated by the Board of
Directors may cause to be elected to the Board of Directors of any such
subsidiary corporation such persons as they shall designate, any of whom
may, but need not be, directors, executive officers or other employees or
agents of the corporation. The Board of Directors, the Chief Executive
Officer or any executive officer designated by the Board of Directors may
instruct the directors of any such subsidiary corporation as to the manner
in which they are to vote upon any issue properly coming before them as the
directors of such subsidiary corporation and such directors shall have no
liability to the corporation as the result of any action taken in
accordance with such instructions.

SECTION 2. SUBSIDIARY OFFICERS NOT EXECUTIVE OFFICERS. The
officers of any subsidiary corporation shall not, by virtue of holding such
title and position, be deemed to be officers of the corporation, nor shall
any such officer of a subsidiary corporation, unless such officer shall
also be a director or officer of the corporation, be entitled to have
access to any files, records or other information relating or pertaining to
the corporation, its business and finances or to attend or receive the
minutes of any meetings of the Board of Directors or any committee of the
corporation, except as and to the extent expressly authorized and permitted
by the Board of Directors or the Chief Executive Officer.

ARTICLE VIII

CERTIFICATES OF STOCK

SECTION 1. FORM. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the Chief Executive Officer, President or a Vice President
and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the corporation, certifying the number of shares
owned by such stockholder in the corporation.

F-14
<PAGE>
SECTION 2. FACSIMILE SIGNATURE. Where a certificate is
signed (a) by a transfer agent or an assistant transfer agent, or (b) by a
transfer clerk acting on behalf of the corporation and a registrar, the
signature of any such Chief Executive Officer, President, Vice President,
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be a
facsimile. In case any officer, transfer agent or registrar who has
signed, or whose facsimile signature has been placed upon a certificate,
shall have ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation with the
same effect as if the person were such officer, transfer agent or registrar
at the date of issue.

SECTION 3. LOST CERTIFICATES. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged
to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost or
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost
or destroyed certificate or certificates, or the person's legal
representative, to give the corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.

SECTION 5. FIXING OF RECORD DATE BY BOARD. For the purpose
of determining the stockholders entitled to notice of or to vote at any
meeting of stockholders, or any adjournment thereof, or to express consent
to or dissent from any corporate action in writing without a meeting, or
for the purpose of determining stockholders entitled to receive payments of
any dividend or the distribution or allotment of any rights or evidences of
interests arising out of any change, conversion or exchange of capital
stock, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
stockholders. Such date shall not be more than 60 days nor less than 10
days before the date of any such meeting, nor more than 60 days prior to
effectuation of any other action proposed to be taken. Only stockholders
of record on a record date so fixed shall be entitled to notice of and to
vote at such meeting or to receive payment of any dividend or the
distribution or allotment of any rights or evidences of interests arising
out of any change, conversion or exchange of capital stock.

F-15
<PAGE>
SECTION 6. ADJOURNMENTS. When a determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders has been made as provided in this Article, the determination
applies to any adjournment of the meeting, unless the Board fixes a new
record date for the adjourned meeting.

SECTION 7. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends and to vote as such owner
and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.

ARTICLE IX

GENERAL PROVISIONS

SECTION 1. DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting pursuant to law. Dividends may be paid in cash,
in property or in shares of capital stock, subject to the provisions of the
Certificate of Incorporation.

SECTION 2. RESERVES. Before payment of any dividends, there
may be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, for equalizing dividends, for repairing or maintaining any
property of the corporation or for such other purpose as the directors
shall think conducive to the interests of the corporation and the directors
may modify or abolish any such reserve in the manner in which it was
created.

SECTION 3. CHECKS. All checks or demands for money and notes
of the corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.

SECTION 4. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.

SECTION 5. SEAL. The corporate seal, if any, shall have
inscribed thereon the name of the corporation, and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof
to be impressed, affixed, reproduced or otherwise.

F-16
<PAGE>
ARTICLE X

AMENDMENTS

Subject to any provisions of the Certificate of Incorporation,
these Bylaws may be amended, altered, changed or repealed at any regular or
special meeting of the Board of Directors. Subject to any provisions of the
Certificate of Incorporation, these Bylaws may also be amended, altered,
changed or repealed at any regular or special meeting of stockholders
provided that notice that amendment of the Bylaws is a purpose of the
meeting, and the proposed amendment has been provided to the stockholders
as required under these Bylaws and applicable law.

F-17
<PAGE>
APPENDIX G

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
AND SUBSIDIARIES
IRENE, SOUTH DAKOTA

CONSOLIDATED FINANCIAL STATEMENTS
TOGETHER WITH INDEPENDENT
AUDITORS' REPORT

DECEMBER 31, 1996

[LOGO] OLSEN THIELEN & CO., LTD.
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

G-1
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

CONTENTS
===========================================================================

PAGE

INDEPENDENT AUDITORS' REPORT G-3

FINANCIAL STATEMENTS:
Consolidated Balance Sheet G-4

Consolidated Statement of Operations G-5

Consolidated Statement of Stockholders' Equity G-6

Consolidated Statement of Cash Flows G-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS G-8-15

G-2
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
Dakota Cooperative Telecommunications, Inc.
and Subsidiaries
Irene, South Dakota

We have audited the accompanying consolidated balance sheet of Dakota
Cooperative Telecommunications, Inc. (a South Dakota Cooperative) and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
then ended. These 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dakota
Cooperative Telecommunications, Inc. and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash flows for
the years then ended, in conformity with generally accepted accounting
principles.

/s/OLSEN THIELEN & CO., LTD.
St. Paul, Minnesota
January 18, 1997 OLSEN THIELEN & CO., LTD.

G-3
<PAGE>
<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996 AND 1995
===========================================================================

ASSETS
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,121,444 $ 6,322,884
Temporary Cash Investments 1,249,000 --
Accounts Receivable, Less Allowance for
Uncollectibles of $152,300 and $80,700 1,784,895 1,223,123
Deposits 274,889 719,708
Income Taxes Receivable 248,500 --
Materials and Supplies 694,097 417,709
Prepaid Expenses 168,078 110,136
----------- -----------
Total Current Assets 6,540,903 8,793,560
----------- -----------

INVESTMENTS AND OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 1,830,959 --
Other Intangible Assets 509,559 --
Deposit 61,905 --
Other Investments 63,817 30,840
Deferred Charges 56,628 255,991
----------- -----------
Total Investments and Other Assets 2,522,868 286,831
----------- -----------

PROPERTY, PLANT AND EQUIPMENT, NET 14,441,104 11,041,284
----------- -----------

TOTAL ASSETS $23,504,875 $20,121,675
=========== ===========
</TABLE>

G-4
<PAGE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 697,700 $ 579,100
Accounts Payable 399,694 449,384
Accrued Income Taxes -- 260,655
Other Current Liabilities 497,388 261,743
----------- -----------
Total Current Liabilities 1,594,782 1,550,882
----------- -----------

LONG-TERM DEBT 15,338,395 13,054,725
----------- -----------

DEFERRED CREDITS 159,482 100,763
----------- -----------

STOCKHOLDERS' EQUITY:
Common Stock 26,185 26,125
Preferred Stock 1,172,000 --
Capital Credits 4,732,723 4,643,909
Retained Earnings 481,308 745,271
----------- -----------
Total Stockholders' Equity 6,412,216 5,415,305
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $23,504,875 $20,121,675
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.

G-5
<PAGE>
<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
===========================================================================
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
REVENUES:
Local Network $ 1,058,667 $ 856,133
Network Access 3,266,969 2,761,839
Long Distance Network 1,996,301 1,931,722
Cable Television Service 1,300,512 469,440
Other 186,393 96,395
----------- -----------
Total Operating Revenues 7,808,842 6,115,529
----------- -----------
COSTS AND EXPENSES:
Plant Operations 2,114,266 1,472,697
Depreciation and Amortization 2,434,416 1,701,020
Customer 500,802 405,673
General and Administrative 1,817,869 1,325,025
Other Operating Expenses 863,639 369,242
----------- -----------
Total Operating Expenses 7,730,992 5,273,657
----------- -----------

OPERATING INCOME 77,850 841,872
----------- -----------
OTHER INCOME AND (EXPENSES):
Interest and Dividend Income 309,982 330,395
Interest Expense (723,778) (592,070)
Income From Cellular Investments -- 168,788
Gain on Sale of Cellular Investments -- 686,336
----------- -----------
Net Other Income and (Expenses) (413,796) 593,449
----------- -----------

INCOME (LOSS) BEFORE INCOME TAXES (335,946) 1,435,321

INCOME TAX EXPENSE (BENEFIT) (175,712) 301,859
----------- -----------

NET INCOME (LOSS) $ (160,234) $ 1,133,462
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.

G-6
<PAGE>
<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
===========================================================================
<CAPTION>
COMMON PREFERRED CAPITAL RETAINED
STOCK STOCK CREDITS EARNINGS TOTAL
------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
BALANCE on December 31, 1994 $25,835 $ -- $4,049,248 $182,421 $4,257,504

Net Income 570,612 562,850 1,133,462
Common Stock Issued, Net 290 290
Retirement of Capital
Credits to Estates (16,772) (16,772)
Excise Tax Refund 40,821 40,821
------- ---------- ---------- -------- ----------

BALANCE on December 31, 1995 26,125 -- 4,643,909 745,271 5,415,305

Net Income (Loss) 103,729 (263,963) (160,234)
Common Stock Issued, Net 60 60
Preferred Stock Issued
(1,172 Shares) 1,172,000 1,172,000
Retirement of Capital
Credits to Estates (14,915) (14,915)
------- ---------- ---------- -------- ----------

BALANCE on December 31, 1996 $26,185 $1,172,000 $4,732,723 $481,308 $6,412,216
======= ========== ========== ======== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

G-7
<PAGE>
<TABLE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
===========================================================================
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (160,234) $1,133,462
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided By Operating Activities:
Depreciation and Amortization 2,469,873 1,735,090
Deferred Charges 208,248 --
Deposits 274,889 --
Income From Cellular Investments -- (168,788)
Gain on Sale of Cellular Investments -- (686,336)
Receivables (155,521) (450,599)
Income Taxes Receivable (248,500) --
Other Current Assets (52,618) (3,340)
Accounts Payable (379,143) 21,254
Accrued Income Taxes (260,655) 260,655
Other Current Liabilities 206,778 76,610
Deferred Credits 58,719 32,159
---------- ----------
Net Cash Provided By
Operating Activities 1,961,836 1,950,167
---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property, Plant and Equipment, Net (5,751,604) (1,554,131)
Sale of Cellular Investment -- 1,141,620
Deposits 107,822 (212,464)
Purchase of Temporary Cash Investments (1,249,000) --
Purchase of Other Investments (32,977) (12,063)
Purchase of Other Intangible Assets (541,300) --
Deferred Charges (8,885) (88,677)
Acquisition Costs, Net of Cash Acquired (40,295) --
---------- ----------
Net Cash Used In Investing Activities (7,516,239) (725,715)
---------- ----------

G-8
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Long-Term Debt 4,399,270 342,000
Principal Payments of Long-Term Debt (2,844,967) (562,942)
Construction Contracts Payable (182,912) 299,822
Retirement of Capital Credits (14,915) (16,772)
Excise Tax Refund -- 40,821
Other (3,513) 399
---------- ----------
Net Cash Provided by Financing Activities 1,352,963 103,328
---------- ----------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (4,201,440) 1,327,780

CASH AND CASH EQUIVALENTS at Beginning of Year 6,322,884 4,995,104
---------- ----------

CASH AND CASH EQUIVALENTS at End of Year $2,121,444 $6,322,884
========== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

G-9
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. NATURE OF OPERATIONS - The Company is a diversified telecommunications
services company, which, directly or through wholly-owned subsidiaries,
provides wireline local and network access services, long-distance
telephone services, operator assisted calling services,
telecommunications equipment sale and leasing services, cable
television services, Internet access and related services. The
principal market for these telecommunications and cable services are
local residential and business customers residing in southeastern South
Dakota, with a portion of its cable television customers in northwestern
Iowa and southwestern Minnesota.

Local service rates charged to telephone customers are established by
the Company and are subject to approval of Rural Utilities Service
before becoming effective. Toll and access rates are subject to state
and Federal Communications Commission regulation. Rates charged cable
television customers are established by the Company.

B. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of Dakota Cooperative Telecommunications, Inc. and
its wholly owned subsidiaries, Dakota Telecom, Inc., Iway, Inc., TCIC
Communications, Inc. and Dakota Telecommunications Systems, Inc. and its
wholly owned subsidiary, Dakota Wireless Systems, Inc. All significant
intercompany transactions and accounts have been eliminated.

C. BASIS OF ACCOUNTING - The accounting policies of the Company are in
conformity with generally accepted accounting principles and the Company
does not have any regulatory assets or liabilities as defined by
Financial Accounting Standards Board Statement No. 71, "Accounting for
the Effects of Certain Types of Regulation".

D. ACCOUNTING ESTIMATES - The presentation of 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 at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

E. CASH INVESTMENTS - Cash and cash equivalents include general funds and
short-term investments with original maturities of three months or less.
Investments with original maturities of three months to twelve months are

G-10
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

classified as temporary cash investments. Cash investments are valued at
market value.

F. MATERIALS AND SUPPLIES - Inventories are recorded at average unit cost.

G. PROPERTY, PLANT AND DEPRECIATION - Property, plant and equipment are
recorded at original cost. Additions, improvements or major renewals
are capitalized. If the telecommunication and cable television utility
plant is sold, retired or otherwise disposed of in the ordinary course
of business, the cost plus removal costs less salvage, is charged to
accumulated depreciation.

Depreciation is computed using principally the straight-line method
based upon the estimated service lives of the depreciable assets.

H. EXCESS OF COST OVER NET ASSETS ACQUIRED - The excess of cost over net
assets of acquired companies is being expensed equally over fifteen
years and is shown net of accumulated amortization of $10,032 at
December 31, 1996.

I. OTHER INTANGIBLE ASSETS - Other intangible assets consist of customer
lists and is being expensed equally over fifteen years and shown net of
accumulated amortization of $31,741 at December 31, 1996.

J. OTHER INVESTMENTS - Other investments are recorded at cost.

K. CAPITAL CREDITS - The Company operates as a cooperative. Amounts
received from the furnishing of telephone service, interest income and
other nonoperating operations in excess of costs and expenses are
assigned to telephone patrons on a patronage basis to the extent they are
not needed to offset prior losses.

Dividend income from the subsidiaries will be allocated to telephone
patrons on a patronage basis when received.

L. REVENUE RECOGNITION - Revenues are recognized when earned, regardless
of the period in which they are billed. Network access and long distance
revenues are furnished in conjunction with interexchange carriers and are
determined by cost separation studies. Revenues include estimates
pending finalization of cost studies. Network access revenues are based
upon interstate tariffs filed with the Federal Communications Commission by
the National Exchange Carriers Association and state tariffs filed with

G-11
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

state regulatory agencies. Management believes recorded revenues are
reasonable based on estimates of final cost separation studies which are
typically settled within two years.

M. INCOME TAXES AND EXCISE TAX REFUNDS - The Parent Company operates as a
cooperative and has been granted tax exempt status under Section 501(c)12
of the Internal Revenue Code; therefore the Parent Company income is not
taxable. Under the Internal Revenue Code a tax exempt telephone company
is entitled to a refund for overpayment of federal excise taxes by its
patrons. Excise tax refunds are allocated to telephone patrons' along
with net income. The State of South Dakota does not have an income tax.

The wholly owned subsidiaries, Dakota Telecom, Inc., Iway, Inc., TCIC
Communications, Inc., Dakota Telecommunications Systems, Inc., (and its
wholly owned subsidiary Dakota Wireless Systems, Inc.) are taxable at the
federal level and in Minnesota and Iowa for operations in those states.
Income taxes for these companies are provided for the tax effects of
transactions reported in the financial statements and include taxes
currently payable and deferred income taxes which reflect the estimated
income tax consequences of the differences between the income tax bases of
assets and liabilities and their financial reporting bases. The
differences relate to taxable subsidiaries' property and equipment.

N. CREDIT RISK - Financial instruments which potentially subject the
Company to concentrations of credit risk consist principally of temporary
cash investments. The Company places its temporary cash investments with
high credit quality financial institutions and, by policy, generally
limits the amount of credit exposure to any one financial institution.
Concentrations of credit risk with respect to trade receivables are
limited due to the Company's large number of customers. The Company
maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant
credit risk on temporary cash investments.

O. RECLASSIFICATIONS - Certain reclassifications have been made to the
1995 financial statements to conform to the 1996 presentations. These
reclassifications had no effect on net income.

G-12
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 2 - INVESTMENT IN CELLULAR ENTITIES AND GAIN ON SALE OF CELLULAR
INVESTMENTS

In 1995, the Company sold its investment in Sioux Falls Cellular Limited
Partnership and Dakota Systems, Inc. for cash. The gain on the sale of the
investments was $686,336 ($456,413 net of income taxes).

The Company's share of operating gains for the cellular franchises were
$168,788 in 1995.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

The cost and estimated useful lives of property, plant and equipment are as
follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIFE 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Land $ 101,573 $ 98,072
Buildings 16-33 years 1,486,491 1,483,236
Leasehold Improvements 3-5 15,677 --
Machinery and Equipment 5-7 1,499,518 1,173,137
Furniture and Fixtures 3-20 1,010,234 926,621
Telecommunications Plant 4-25 16,922,589 15,451,807
Cable Television Plant 8-12 4,869,851 1,355,252
Construction In Progress -- 354,025 461,819
----------- -----------
26,259,958 20,949,944
Less Accumulated
Depreciation 11,818,854 9,908,660
----------- -----------

Total $14,441,104 $11,041,284
=========== ===========
</TABLE>
Depreciation included in costs and expenses was $2,392,643 in 1996 and
$1,701,020 in 1995.

The Company intends to add new construction in 1997 of approximately
$16,000,000.

G-13
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 4 - LONG-TERM DEBT

Long-term debt is as follows:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Rural Utilities Service (RUS) mortgage notes:
2% payable in quarterly installments $ 2,595,175 $ 2,845,775
5% payable in monthly installments 10,756,343 10,158,861
----------- -----------
13,351,518 13,004,636

RUS - Rural Communication Development
Fund 5% mortgage note -- 217,955

Rural Telephone Finance Cooperative (RTFC)
Mortgage Note, matures 2006, variable
interest rate (6.3% at December 31, 1996) 1,537,537 --

Norwest Bank South Dakota, N.A. matures 1998,
variable interest rate (prime plus one percent,
9.25% at December 31, 1996) payable upon
maturity 330,000 --

Norwest Bank South Dakota, N.A. matures 1998,
variable interest rate (prime plus one percent,
9.25% at December 31, 1996) payable upon
maturity 650,469

Unsecured Notes to a Preferred Shareholder,
matures 1998, variable interest rate (prime
plus one percent, 9.25% at December 31,
1996), payable upon maturity 45,000 --

Other 4,661 111,412

G-14
<PAGE>
Construction Contracts Payable 116,910 299,822
----------- -----------
16,036,095 13,633,825
Amount Due Within One Year (697,700) (579,100)
----------- -----------

Total Long-Term Debt $15,338,395 $13,054,725
=========== ===========
</TABLE>

G-15

<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 4 - LONG-TERM DEBT (CONTINUED)

Substantially all telephone company assets are pledged as security for the
RUS mortgage notes. RUS mortgage notes mature in twenty to thirty-five
years at various dates ranging from 1997 to 2021. No principal payments on
RUS notes are required for the first two to three years after issuance. The
RTFC loan is collaterialized by the cable plant located in ten cities in
southeastern South Dakota.

The $330,000 Norwest Bank loan is secured by the assets of Iway, Inc. and
guaranteed by the former shareholders of I-Way Partners, Inc. and the
$650,469 Norwest Bank loan is secured by the assets of two of the former
shareholders of TCIC Communications, Inc. and their personal guarantees.
The former shareholders of I-Way Partners, Inc. and TCIC Communications,
Inc. are preferred shareholders of the Company.

Approximate annual principal payments on the existing debt for the next
five years are: 1997 - $697,700; 1998 - $1,744,700; 1999 - $738,600; 2000
- - $754,600 and 2001 - $768,800.

Unadvanced loan funds of $3,983,175 are available to the Company on loan
commitments from RUS. Loan proceeds will be used to refinance current
construction and to finance future construction.

G-16
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 5 - CAPITAL STOCK

<TABLE>
<CAPTION>
COMMON PREFERRED
---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ -------- ------ ----------
<S> <C> <C> <C> <C>
BALANCE - December 31, 1994 5,167 $25,835 -- $ --

Issued 457 2,285
Redeemed (399) (1,995)
----- -------

BALANCE - December 31, 1995 5,225 26,125

Issued 456 2,280 1,172 1,172,000
Redeemed (444) (2,220)
----- ------- ----- ----------

BALANCE - December 31, 1996 5,237 $26,185 1,172 $1,172,000
===== ======= ===== ==========
</TABLE>

The Company's common stock has a par value of $5.00 per share. There are
15,000 shares authorized. No person may own more than one share of common
stock and each holder of common stock has one vote in the affairs of the
Company. Nonvoting preferred stock has a par value of $100.00 per share and
there are 63,000 shares authorized. The preferred stock is shown on the
balance sheet at its redemption value of $1,000 per share. Preferred
shareholders are entitled to a Non-Liquidity Fee of $80 per share payable
semi-annually in cash or preferred stock at the discretion of the Company.
The first non-liquidity fee payment will be made December 15, 1997, and will
be prorated for the period from September 1, 1997, if the conversion (Note
15) has not been consummated by that date. Preferred shareholders also
were granted warrants which entitled them to purchase additional preferred
stock at $1,000 per share. At December 31, 1996 there were warrants
outstanding which may be exercised through January 2, 1998 to purchase
482 shares of preferred stock. Effective January 1, 1997, the Company
granted management options to purchase up to 1,534 shares of preferred
stock at $1,000 per share.

G-17

<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 6 - CAPITAL CREDITS

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Assignable $ 103,729 $ 611,433
Assigned to date 5,577,780 4,966,236
---------- ----------
Total 5,681,509 5,577,669
Retired to date (948,786) (933,760)
---------- ----------

Balance $4,732,723 $4,643,909
========== ==========
</TABLE>

The long-term debt agreements with the Rural Utilities Service contain
restrictions on retirements of capital credits, capital stock, and equity
capital. The restrictions are related in general to the Company's adjusted
net worth and assets as defined in the agreements. The Company may,
however, make distributions in any calendar year equal to twenty-five
percent of the net income of the immediate preceding calendar year.

NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and temporary cash investments approximates
their fair value due to the short maturity of the instruments. The fair
value of the Company's long-term debt, after deducting current maturities,
is estimated to be $12,905,145 at December 31, 1996 and $10,068,719 at
December 31, 1995, compared to carrying values of $15,338,395 and
$13,054,725, respectively. The fair value estimates are based on the
overall weighted rates and maturity compared to rates and terms currently
available in the long-term financing markets.

NOTE 8 - DEPOSITS

In October, 1996 Dakota Wireless Systems, Inc. entered into an agreement
with another company to bid on a license for a Broadband Personal
Communications Services System to provide service to Southeastern South
Dakota and Northwestern Iowa and on January 14, 1997 was awarded the
license. The Company made a deposit of $61,905 as of December 31, 1996 and
has a future commitment of $194,051.

G-18

<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 8 - DEPOSITS (CONTINUED)

On December 7, 1994, the Company and its wholly owned subsidiary, Dakota
Telecommunications Systems, Inc., entered into an agreement with U S West
Communications, Inc. to purchase the assets and acquire the right to
provide and operate wireline telecommunication services in eight exchanges
in the state of South Dakota for $10,144,884. In 1996, the Company
canceled the agreement. The Company has a $549,778 earnest money deposit
on the purchase. The deposit was written down by $274,889 to the estimated
recoverable amount of $274,889. In addition, the Company charged $275,252
of related acquisition costs to net income in 1996.

NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
CASH PAYMENTS FOR:
Interest $ 730,633 $592,067
Income Taxes $ 283,415 $ 18,875

NONCASH FINANCING ACTIVITY:
Preferred Stock Issued for Acquisition of I-Way
Partners, Inc. and TCIC Communications, Inc. $1,172,000
</TABLE>

NOTE 10 - INCOME TAXES

Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Current $ (225,740) $279,530
Deferred 50,028 22,329
---------- --------

Total $ (175,712) $301,859
========== ========
</TABLE>

G-19

<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 10 - INCOME TAXES (CONTINUED)

The differences between the statutory federal rate and the effective tax
rate were as follows:

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Consolidated Income (Loss) Before Income Taxes $ (335,946) $1,435,321
Less Tax Exempt Income (100,729) (534,077)
---------- ----------

Taxable Income (Loss) $ (436,675) $ 901,244
========== ==========

Statutory Tax Rate 35.0% 35.0%
Effect of Graduated Rates and Other 5.2 (1.5)
---------- ----------

Effective Tax Rate 40.2% 33.5%
========== ==========
</TABLE>

Deferred tax liabilities of $88,932 and $38,904 as of December 31, 1996 and
1995 are included on the balance sheet as deferred credits.

NOTE 11 - PENSION PLANS

Pension benefits for substantially all employees are provided through the
National Telephone Cooperative Association Retirement and Security Program
(a defined benefit plan) and Savings Plan (a defined contribution plan).
The Company makes annual contributions to the plans equal to the amounts
accrued for pension expense. The Retirement and Security Program is a
multi-employer plan and the accumulated benefits and plan assets are not
determined or allocated separately by individual employer. The total
pension costs for 1996 and 1995 were $150,220 and $114,663.

NOTE 12 - CHANGE IN ACCOUNTING ESTIMATE

Effective January 1, 1996, the Company revised its estimate of the useful
lives of telecommunication computers and fiber optic cable which were being

G-20

<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 12 - CHANGE IN ACCOUNTING ESTIMATE (CONTINUED)

depreciated over 12 and 25 years. The revised useful lives are 4 and 10
years.

Effective February 1, 1996, the Company revised its estimate of the useful
lives of cable television plant. Previously the plant was depreciated over
20 years. The revised useful life of the plant ranges from eight to twenty
years. These changes were made to better reflect the estimated periods
during which such assets will remain in service. The 1996 changes
increased depreciation expense by approximately $189,000 in 1996.

Effective January 1, 1995, the Company revised its estimate of the useful
lives of central office equipment. Previously central office equipment was
depreciated over 16.67 years and the revised useful life was three years.
The change increased depreciation expense approximately $660,000 in 1995.

NOTE 13 - ACQUISITIONS

In the first half of 1996, Dakota Telecom, Inc. purchased the assets of
nineteen cable service areas from three companies that provided cable
services to various communities in addition to the assets purchased by
Dakota Telecom, Inc. in three separate purchase transactions and one asset
exchange transaction. These acquisitions were accounted for using the
purchase method of accounting. The total purchase price was $3,858,704.
Customer lists acquired for $541,300 are being expensed equally over
fifteen years. No goodwill was recorded as a result of these acquisitions.
Operations of the service areas purchased are included in the consolidated
statements of operations subsequent to their purchase.

In December, 1996 the Company acquired I-Way Partners, Inc. and TCIC
Communications, Inc. in exchange for 1,172 shares of preferred stock valued
at $1,172,000. The acquisitions were accounted for as purchases. The
excess of the aggregate purchase price and liabilities assumed exceed the
fair value of the assets by $1,840,991 and is being expensed equally over
fifteen years. Operations of the companies acquired are included in the
consolidated statement of operations subsequent to their purchase. The
following table summarizes the unaudited consolidated pro forma results of
operations, assuming the acquisition had occurred at the beginning of each
of the following years:

G-21

<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 13 - ACQUISITIONS (CONTINUED)

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Total Revenues $9,474,178 $7,455,901
Net Income (Loss) (616,726) 477,417
</TABLE>

NOTE 14 - SEGMENT INFORMATION

The Company operates in two businesses: telecommunications and cable
television. Industry segment information is as follows:

G-22
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 14 - SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Telecommunications $ 6,462,704 $ 5,584,155
Cable Television 1,346,138 531,374
----------- -----------

$ 7,808,842 $ 6,115,529
=========== ===========

Operating Income (Loss):
Telecommunications $ 454,097 $ 731,944
Cable Television (376,247) 109,928
----------- -----------

$ 77,850 $ 841,872
=========== ===========

Identifiable Assets:
Telecommunications $18,246,345 $18,084,644
Cable Television 5,258,530 2,037,031
----------- -----------

$23,504,875 $20,121,675
=========== ===========
Depreciation and Amortization Expense:
Telecommunications $ 2,011,046 $ 1,632,197
Cable Television 423,370 68,823
----------- -----------

$ 2,434,416 $ 1,701,020
=========== ===========
Capital Expenditures:
Telecommunications $ 1,930,389 $ 1,516,061
Cable Television 3,821,215 38,070
----------- -----------

$ 5,751,604 $ 1,554,131
=========== ===========
</TABLE>
G-23
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
===========================================================================

NOTE 15 - CHANGE IN CORPORATE STRUCTURE

The Company intends to file a registration statement with the Securities
and Exchange Commission under the Securities Act of 1933 and to submit to
its common stockholders (members) a proposal to convert from a tax exempt
cooperative into a taxable business corporation.

In the proposed conversion, owners of the Cooperative's common stock,
capital credits and preferred stock, issued and outstanding, would receive
common shares of the business corporation.

G-24
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
TCIC Communications, Inc.
I-Way Partners, Inc.
Sioux Falls, South Dakota

We have audited the accompanying combined statements of operations and
accumulated deficit, and cash flows of TCIC Communications, Inc. and I-Way
Partners, Inc. for the eleven months ended November 30, 1996. These
financial statements are the responsibility of the Companies management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audit 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 audit
provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of TCIC Communications, Inc. and I-
Way Partners, Inc. combined operations and cash flows for the eleven months
ended November 30, 1996, in conformity with generally accepted accounting
principles.

St. Paul, Minnesota /s/OLSEN THIELEN & CO., LTD.
January 18, 1997 OLSEN THIELEN & CO., LTD.

G-25
<PAGE>
<TABLE>
TCIC COMMUNICATIONS, INC.
AND
I-WAY PARTNERS, INC.

COMBINED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
ELEVEN MONTHS ENDED NOVEMBER 30, 1996
===========================================================================
<CAPTION>
<S> <C>
REVENUE $ 1,665,336

COSTS AND EXPENSES 1,822,014
-----------

OPERATING LOSS (156,678)

INTEREST EXPENSE 187,314
-----------

NET LOSS (343,992)

ACCUMULATED DEFICIT, at Beginning of Period (1,828,423)
-----------

ACCUMULATED DEFICIT, at End of Period $(2,172,415)
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

G-26
<PAGE>
<TABLE>
TCIC COMMUNICATIONS, INC.
AND
I-WAY PARTNERS, INC.

COMBINED STATEMENT OF CASH FLOWS
ELEVEN MONTHS ENDED NOVEMBER 30, 1996
===========================================================================
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (343,992)
Adjustments to Reconcile Net Loss to Net Cash Used in
Operating Activities:
Depreciation and Amortization 78,444
(Increase) Decrease In:
Accounts Receivable (75,559)
Prepaid Expense (86)
Increase (Decrease) In:
Accounts Payable 90,723
Accrued Interest Payable 105,054
Other Accrued Expenses (1,829)
----------
Net Cash Used In Operating Activities (147,245)
----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment (203,109)
----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Line of Credit (144,998)
Proceeds from Long-Term Debt 375,000
Payments of Long-Term Debt (68,845)
Payments of Shareholder Notes Payable (190,667)
Proceeds of Shareholder Notes Payable 361,667
----------
Net Cash Provided By Financing Activities 332,157
----------

NET DECREASE IN CASH (18,197)

CASH at Beginning of Period 24,325
----------

CASH at End of Period $ 6,128
==========

G-27
<PAGE>
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest Paid $ 89,880
==========

Common Stock Exchanged for Shareholder Notes Payable
and Accrued Interest, a Non-Cash Financing Activity $1,443,616
==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

G-28
<PAGE>
TCIC COMMUNICATIONS, INC.
AND
I-WAY PARTNERS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
===========================================================================

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. NATURE OF BUSINESS - TCIC Communications, Inc. is a provider of
operator and interexchange telecommunications services and I-Way
Partners, Inc. is a provider of internet hardware and access with offices
in Sioux Falls, South Dakota. The Companies grant credit to customers,
substantially all of whom are local residents or businesses in
southeastern South Dakota. Concentrations of credit risk with respect to
trade receivables are limited due to the Company's large number of
customers.

B. PRINCIPLES OF COMBINATION - The Companies are owned and controlled by a
group of similar shareholders. All intercompany transactions and
accounts have been eliminated.

C. ACCOUNTING ESTIMATES - The presentation of 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 at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

D. PROPERTY AND DEPRECIATION - Property and equipment are recorded at
original cost. Additions, improvements or major renewals are
capitalized. Any gains or losses on property and equipment retirements
are reflected currently in operations.

Depreciation is computed using the straight-line method at rates based
on recommended service lives for income tax reporting which approximate
the assets' useful lives as follows:

<TABLE>
<CAPTION>
<S> <C> <C>
Telecommunications Equipment 5 Years
Computers 5 Years
Office Furniture and Equipment 5-7 Years
Leasehold Improvements 3-5 Years
</TABLE>

G-29
<PAGE>
E. REVENUE RECOGNITION - Revenue is recognized when earned. Revenue
earned and unbilled is included in accounts receivable and was $15,370
at November 30, 1996.

F. INCOME TAXES - The Companies have elected to have their income taxed to
the shareholders under Subchapter S of the Internal Revenue Code.
Therefore, the statements do not include a provision for income taxes.

NOTE 2 - RELATED PARTY TRANSACTIONS

I-Way Partners, Inc. purchased goods and services for $14,091 and equipment
for $135,539 from Datanet, Inc., which is owned by shareholders of the
Companies.

NOTE 3 - CAPITAL STOCK

In 1996, the articles of incorporation of TCIC Communications, Inc. were
amended to increase the authorized stock to 2,500,000 shares and in
November 1996, $1,089,000 of notes payable to shareholders and $354,616 of
unpaid interest were exchanged for 1,443,616 shares of common stock.

NOTE 4 - MERGER

On December 2, 1996, the Companies were merged into a subsidiaries of
Dakota Cooperative Telecommunications, Inc. The names of the surviving
companies are TCIC Communications, Inc. and Iway, Inc.

NOTE 5 - LEASE

TCIC rents its principal office. This lease is on a month to month basis.
The rent expense was $35,897 in 1996.

G-30
<PAGE>
APPENDIX H

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
AND SUBSIDIARIES
IRENE, SOUTH DAKOTA

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997

H-1
<PAGE>

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
===========================================================================
<CAPTION>
ASSETS
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,650,922 $ 2,121,444
Temporary Cash Investments 1,249,000 1,249,000
Accounts Receivable, Less Allowance for
Uncollectibles of $142,700 and $152,300 1,189,504 1,784,895
Deposits -- 274,889
Income Taxes Receivable 300,091 248,500
Materials and Supplies 590,392 694,097
Prepaid Expenses 126,912 168,078
----------- -----------
Total Current Assets 6,106,821 6,540,903
----------- -----------

INVESTMENTS AND OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 1,800,273 1,830,959
Other Intangible Assets 500,036 509,559
Deposit 61,905 61,905
Other Investments 47,576 63,817
Deferred Charges 475,579 56,628
----------- -----------
Total Investments and Other Assets 2,885,369 2,522,868
----------- -----------

PROPERTY, PLANT AND EQUIPMENT, NET 14,608,404 14,441,104
----------- -----------

TOTAL ASSETS $23,600,594 $23,504,875
=========== ===========
</TABLE>

H-2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY

1997 1996
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 697,700 $ 697,700
Accounts Payable 471,844 399,694
Other Current Liabilities 745,949 497,388
----------- -----------
Total Current Liabilities 1,915,493 1,594,782
----------- -----------

LONG-TERM DEBT 15,279,176 15,338,395
----------- -----------

DEFERRED CREDITS 171,822 159,482
----------- -----------

STOCKHOLDERS' EQUITY:
Common Stock 26,060 26,185
Preferred Stock 1,172,000 1,172,000
Capital Credits 4,755,804 4,732,723
Retained Earnings 280,239 481,308
----------- -----------
Total Stockholders' Equity 6,234,103 6,412,216
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $23,600,594 $23,504,875
=========== ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

H-3
<PAGE>

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
===========================================================================
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
REVENUES:
Local Network $ 306,911 $ 221,505
Network Access 882,550 689,086
Long Distance Network 772,292 485,174
Cable Television Service 389,302 213,614
Other 400,924 38,645
----------- -----------
Total Operating Revenues 2,751,979 1,648,024
----------- -----------

COSTS AND EXPENSES:
Plant Operations 817,822 377,252
Depreciation and Amortization 761,425 557,892
Customer 207,849 51,059
General and Administrative 718,181 387,837
Other Operating Expenses 329,799 193,373
----------- -----------
Total Operating Expenses 2,835,076 1,567,413
----------- -----------

OPERATING INCOME (LOSS) (83,097) 80,611
----------- -----------

OTHER INCOME AND (EXPENSES):
Interest and Dividend Income 48,072 68,266
Interest Expense (199,137) (143,318)
----------- -----------
Net Other Income and Expenses (151,065) (75,052)
----------- -----------

INCOME (LOSS) BEFORE INCOME TAXES (234,162) 5,559

INCOME TAX EXPENSE (BENEFIT) (36,499) 5,500
----------- -----------
NET INCOME (LOSS) $ (197,663) $ 59
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.

H-4
<PAGE>

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
===========================================================================
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (197,663) $ 59
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided By Operating Activities:
Depreciation and Amortization 761,425 557,892
Receivables 595,391 411,971
Income Taxes Receivable (51,591) --
Other Current Assets 41,166 466
Accounts Payable 72,150 (233,133)
Accrued Income Taxes -- (260,655)
Other Current Liabilities 91,341 469,423
Deferred Credits 12,340 17,389
---------- ----------
Net Cash Provided By Operating Activities 1,324,559 963,412
---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property, Plant and Equipment, Net (888,517) (1,704,117)
Purchase of Other Investments 16,241 --
Decrease in Deposits 274,889 --
Purchase of Other Intangible Assets -- (541,299)
Increase in Deferred Charges (418,951) (263,887)
---------- ----------
Net Cash Used In Investing Activities (1,016,338) (2,509,303)
---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Long-Term Debt -- 1,631,270
Principal Payments of Long-Term Debt (147,076) (457,911)
Construction Contracts Payable 245,077 (282,787)
Retirement of Patronage Capital (2,372) (2,958)
Other 125,628 (55,084)
---------- ----------
Net Cash Provided By Financing Activities 221,257 832,530
---------- ----------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 529,478 (713,361)

H-5
<PAGE>
CASH AND CASH EQUIVALENTS at Beginning of Year 2,121,444 6,322,884
---------- ----------

CASH AND CASH EQUIVALENTS at End of Year $2,650,922 $5,609,523
========== ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest Expense $ 199,137 $ 143,318
Income Taxes $ 18,000 $ 272,500
</TABLE>

The accompanying notes are an integral part of the financial statements.

H-6
<PAGE>
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
===========================================================================

NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS

The balance sheet as of March 31, 1997 and the statements of income and
cash flows for the three month period ended March 31, 1997 and 1996 have been
prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and cash flows
at March 31, 1997 and 1996 have been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed financial
statements should be read in conjunction with the financial statements and
accompanying notes for the years ended December 31, 1996 and 1995. The
results of operations for the periods ended March 31, 1997 and 1996 are not
necessarily indicative of the operating results for the entire year.

NOTE 2 - ACQUISITIONS

In the first quarter of 1996, Dakota Telecom, Inc. purchased ten cable
service areas in two separate purchase transactions and one asset exchange
transaction. In the second quarter of 1996, Dakota Telecom, Inc. purchased
an additional nine cable service areas. Operations of the ten cable
service areas purchased are included in the consolidated statements of
operations for the three months ended March 31, 1996 subsequent to their
purchase. Operations of the nineteen cable service areas are included in
the consolidated statement of operations for the three months ended March
31, 1997.

In December, 1996 the Company acquired I-Way Partners, Inc. and TCIC
Communications, Inc. in exchange for 1,172 shares of preferred stock valued
at 1,172,000. Operations of the companies acquired are included in the
consolidated statement of operations for the three months ended March 31,
1997.

H-7
<PAGE>
APPENDIX I

47-6-23. DISSENT BY SHAREHOLDER - RIGHT TO RECEIVE PAYMENT FOR SHARES.

Any shareholder of a domestic corporation shall have the right to
dissent from, and to obtain payment for his shares in the event of, any of
the following corporate actions:
(1) Any plan of merger or consolidation to which the corporation is a
party;
(2) Any sale or exchange of all or substantially all of the property
and assets of the corporation not made in the usual and regular course of
its business, including a sale in dissolution, but not including a sale
pursuant to an order of a court having jurisdiction in the premises or a
sale for cash on terms requiring that all or substantially all of the net
proceeds of sale be distributed to the shareholders in accordance with
their respective interests within one year after the date of sale;
(3) Any plan of exchange to which the corporation is a party as the
corporation the shares of which are to be acquired;
(4) Any amendment of the articles of incorporation which materially
and adversely affects the rights appurtenant to the shares of the
dissenting shareholder in that it:
(a) Alters or abolishes a preferential right to such shares;
(b) Creates, alters or abolishes a right in respect of the
redemption of such shares, including a provision respecting a sinking
fund for the redemption or repurchase of such shares;
(c) Alters or abolishes a preemptive right of the holder of such
shares to acquire shares or other securities;
(d) Excludes or limits the right of the holder of such shares to
vote on any matter, or to cumulate his votes, except as such right may
be limited by dilution through the issuance of shares or other
securities with similar voting rights; or
(5) Any other corporate action taken pursuant to a shareholder vote
with respect to which the articles of incorporation, the bylaws, or a
resolution of the board of directors directs that dissenting shareholders
shall have a right to obtain payment for their shares.

47-6-23.1. DISSENT AS TO LESS THAN ALL SHARES HELD - BENEFICIAL OWNER.

A record holder of shares may assert dissenters' rights as to less
than all of the shares registered in his name only if he dissents with
respect to all the shares beneficially owned by any one person, and
discloses the name and address of the person or persons on whose behalf he
dissents. In that event, his rights shall be determined as if the shares
as to which he has dissented and his other shares were registered in the
names of different shareholders.
A beneficial owner of shares who is not the record holder may assert
dissenters' rights with respect to shares held on his behalf, and shall be
treated as a dissenting shareholder under the terms of this section if he
submits to the corporation at the time of or before the assertion of these
rights a written consent of the record holder.

<PAGE>
47-6-23.2. RIGHTS OF SHAREHOLDERS NOT ENTITLED TO VOTE ON MERGER.

The right to obtain payment under <Section> 47-6-23 does not apply to
the shareholders of the surviving corporation in a merger if a vote of the
shareholders of such corporation is not necessary to authorize such merger.

47-6-23.3. SHAREHOLDER ENTITLED TO PAYMENT MAY NOT ATTACK VALIDITY OF
ACTION.

A shareholder of a corporation who has a right under <Section> 47-6-23
to obtain payment for his shares may not, at law or in equity, attack the
validity of the corporate action that gives rise to his right to obtain
payment, have the action set aside or rescinded, unless the corporate
action is unlawful or fraudulent with regard to the complaining shareholder
or to the corporation.

47-6-40. DEFINITIONS.

Terms used in this chapter mean:
(1) "Corporation," the issuer of the shares held by the dissenter
before the corporate action, or the successor by merger or consolidation of
that issuer;
(2) "Dissenter," a shareholder or beneficial owner who is entitled to
and does assert dissenters' rights under this chapter, and who has
performed every act required up to the time involved for the assertion of
such rights;
(3) "Fair value" of shares, their value immediately before the
effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of such
corporate action unless such exclusion would be inequitable;
(4) "Interest," interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans, or, if none, at such rate as is
fair and equitable under all the circumstances.

47-6-41. NOTICE TO SHAREHOLDERS OF RIGHT TO DISSENT AND OBTAIN PAYMENT.

If a proposed corporate action which would give rise to dissenters'
rights under this chapter is submitted to a vote at a meeting of
shareholders, the notice of meeting shall notify all shareholders that they
have or may have a right to dissent and obtain payment for their shares by
complying with the terms of this chapter, and shall be accompanied by a
copy of <Sections> 47-6-23 to 47-6-23.3, inclusive, and <Sections> 47-6-40
to 47-6-50, inclusive.

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47-6-42. NOTICE OF INTENT TO DISSENT - REFRAINING FROM VOTING - EFFECT OF
FAILURE.

If the proposed corporate action is submitted to a vote at a meeting
of shareholders, any shareholder who wishes to dissent and obtain payment
for his shares shall file with the corporation, prior to the vote, a
written notice of intention to demand that he be paid fair compensation for
his shares if the proposed action is effectuated, and shall refrain from
voting his shares in approval of such action. A shareholder who fails in
either respect acquires no right to payment of his shares under this
section or <Sections> 47-6-23 to 47-6-23.3, inclusive.

47-6-43. NOTICE OF PROCEDURE FOR DEMANDING PAYMENT AND DEPOSITING
CERTIFICATES.

If the proposed corporate action is approved by the required vote at a
meeting of shareholders, the corporation shall mail a further notice to all
shareholders who gave due notice of intention to demand payment and who
refrained from voting in favor of the proposed action. If the proposed
corporate action is to be taken without a vote of shareholders, the
corporation shall send to all shareholders who are entitled to dissent and
demand payment for their shares a notice of the adoption of the plan of
corporate action. The notice shall (1) state where and when a demand for
payment shall be sent and certificates of certificated shares shall be
deposited in order to obtain payment, (2) inform holders of uncertificated
shares to what extent transfer of shares will be restricted from the time
that demand for payment is received, (3) supply a form for demanding
payment which includes a request for certification of the date on which the
shareholder, or the person on whose behalf the shareholder dissents,
acquired beneficial ownership of the shares, and (4) be accompanied by a
copy of <Sections> 47-6-23 to 47-6-23.3, inclusive, and <Sections> 47-6-40
to 47-6-50, inclusive. The time set for the demand and deposit shall be
not less than thirty days from the mailing of the notice.

47-6-44. FAILURE TO DEMAND PAYMENT OR DEPOSIT CERTIFICATES - WAIVER -
RESTRICTIONS ON TRANSFERS.

A shareholder who fails to demand payment, or fails, in the case of
certificated shares, to deposit certificates, as required by a notice
pursuant to <Section> 47-6-43 has no right under this chapter to receive
payment for his shares. If the shares are not represented by certificates,
the corporation may restrict their transfer from the time of receipt of
demand for payment until effectuation of the proposed corporate action, or
the release of restrictions under the terms of <Sections> 47-6-45 and 47-6-
46. The dissenter shall retain all other rights of a shareholder until
these rights are modified by effectuation of the proposed corporate action.

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<PAGE>
47-6-45. RETURN OF CERTIFICATES OR RELEASE OF RESTRICTIONS ON FAILURE TO
EFFECTUATE ACTION - NEW NOTICE.

Within sixty days after the date set for demanding payment and
depositing certificates, if the corporation has not effectuated the
proposed corporate action and remitted payment for shares pursuant to this
chapter, it shall return any certificates that have been deposited, and
release uncertificated shares from any transfer restriction imposed by
reason of the demand for payment.
If uncertificated shares have been released from transfer
restrictions, and deposited certificates have been returned, the
corporation may at any later time send a new notice conforming to the
requirements of <Section> 47-6-43 with like effect.

47-6-46. REMITTANCE OF PAYMENT TO DISSENTING SHAREHOLDERS - INFORMATION TO
ACCOMPANY REMITTANCE.

Immediately upon effectuation of the proposed corporate action, or
upon receipt of demand for payment if the corporate action has already been
effectuated, the corporation shall remit to dissenters who have made demand
and, if their shares are certificated, have deposited their certificates
the amount which the corporation estimates to be the fair value of the
shares, with interest if any has accrued. The remittance shall be
accompanied by:
(1) The corporation's closing balance sheet and statement of income
for a fiscal year ending not more than sixteen months before the date of
remittance, together with the latest available interim financial
statements;
(2) A statement of the corporation's estimate of fair value of the
shares; and
(3) A notice of the dissenter's right to demand supplemental payment,
accompanied by a copy of <Sections> 47-6-23 to 47-6-23.3, inclusive, and
<Sections> 47-6-40 to 47-6-50, inclusive.

47-6-47. DEMAND FOR DEFICIENCY - FAILURE TO DEMAND AS WAIVER.

If the corporation fails to remit as required by <Section> 47-6-46 or
if the dissenter believes that the amount remitted is less than the fair
value of his shares, or that the interest is not correctly determined, he
may send the corporation his own estimate of the value of the shares or of
the interest and demand payment of the deficiency.
If the dissenter does not file such an estimate within thirty days
after the corporation's mailing of its remittance, he shall be entitled to
no more than the amount remitted.

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<PAGE>
47-6-48. PETITION FOR JUDICIAL DETERMINATION OF VALUE OF SHARES - PARTIES
- PROCEDURE - EFFECT OF FAILURE TO FILE.

Within sixty days after receiving a demand for payment pursuant to
<Section> 47-6-47, if any such demands for payment remained unsettled, the
corporation shall file in an appropriate court a petition requesting that
the fair value of the shares and interest thereon be determined by the
court.
An appropriate court shall be a court of competent jurisdiction in the
county of this state where the registered office of the corporation is
located. If, in the case of a merger or consolidation or exchange of
shares, the corporation is a foreign corporation without a registered
office in this state the petition shall be filed in the county where the
registered office of the domestic corporation was last located.
All dissenters, wherever residing, whose demands have not been settled
shall be made parties to the proceeding as in an action against their
shares. A copy of the petition shall be served on each such dissenter; if
a dissenter is a nonresident, the copy may be served on him by registered
or certified mail or by publication as provided by law.
The jurisdiction of the court shall be plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers shall
have such power and authority as shall be specified in the order of their
appointment or in any amendment thereof. The dissenters shall be entitled
to discovery in the same manner as parties in other civil suits.
All dissenters who are made parties shall be entitled, after a hearing
without a jury, to judgment for the amount by which the fair value of their
shares is found to exceed the amount previously remitted with interest.
If the corporation fails to file a petition as provided in this
section, each dissenter who made a demand and who has not already settled
his claim against the corporation shall be paid by the corporation the
amount demanded by him with interest, and may sue therefor in an
appropriate court.

47-6-49. ASSESSMENT OF COSTS AND EXPENSES OF ACTION.

The costs and expenses of any proceeding under <Section> 47-6-48,
including the reasonable compensation and expenses of appraisers appointed
by the court, shall be determined by the court and assessed against the
corporation, except that any part of the costs and expenses may be
apportioned and assessed as the court considers equitable against all or
some of the dissenters who are parties and whose action in demanding
supplemental payment the court finds to be arbitrary, vexatious, or not in
good faith.
Fees and expenses of counsel and of experts for the respective parties
may be assessed as the court considers equitable against the corporation
and in favor of any or all dissenters if the corporation failed to comply
substantially with the requirements of this section, and may be assessed

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against either the corporation or a dissenter in favor of any other party,
if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith in respect to
the rights provided by <Sections> 47-6-23 to 47-6-23.3, inclusive, and
<Sections> 47-6-40 to 47-6-50, inclusive.
If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated and should
not be assessed against the corporation it may award to these counsel
reasonable fees to be paid out of the amounts awarded to the dissenters who
were benefited.

47-6-50. VALUE OF SHARES NOT BENEFICIALLY OWNED BY DISSENTER ON DATE OF
FIRST ANNOUNCEMENT.

Notwithstanding <Sections> 47-6-40 to 47-6-49, inclusive, the
corporation may elect to withhold the remittance required by <Section> 47-
6-46 from any dissenter with respect to shares of which the dissenter or
the person on whose behalf the dissenter acts was not the beneficial owner
on the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action. With respect to such shares,
the corporation shall, upon effectuating the corporate action, state to
each dissenter its estimate of the fair value of the shares, state the rate
of interest to be used, explaining the basis thereof, and offer to pay the
resulting amounts on receiving the dissenter's agreement to accept them in
full satisfaction.
If the dissenter believes that the amount offered is less than the
fair value of the shares and interest determined according to this section,
he may within thirty days after the date of mailing of the corporation's
offer, mail the corporation his own estimate of fair value and interest,
and demand their payment. If the dissenter fails to do so, he shall be
entitled to no more than the corporation's offer.
If the dissenter makes a demand as provided herein the provisions of
<Sections> 47-6-48 and 47-6-49 shall apply to further proceedings on the
dissenter's demand.

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<PAGE>
APPENDIX J

DAKOTA TELECOMMUNICATIONS GROUP, INC.

1997 STOCK INCENTIVE PLAN

SECTION 1

ESTABLISHMENT OF PLAN; PURPOSE OF PLAN

1.1 ESTABLISHMENT OF PLAN. The Corporation hereby establishes the
1997 STOCK INCENTIVE PLAN (the "Plan") for its directors, corporate,
divisional and Subsidiary officers and other key employees. The Plan
permits the grant and award of Stock Options, Stock Appreciation Rights,
Restricted Stock, Stock Awards and Tax Benefit Rights.

1.2 PURPOSE OF PLAN. The purpose of the Plan is to provide
directors, officers and key management employees of the Corporation, its
divisions and its Subsidiaries with an increased incentive to make
significant and extraordinary contributions to the long-term performance
and growth of the Corporation and its Subsidiaries, to join the interests
of directors, officers and key employees with the interests of the
Corporation's shareholders through the opportunity for increased stock
ownership and to attract and retain officers and key employees of
exceptional abilities. The Plan is further intended to provide flexibility
to the Corporation in structuring long-term incentive compensation to best
promote the foregoing objectives.

SECTION 2

DEFINITIONS

The following words have the following meanings unless a
different meaning is plainly required by the context:

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

2.2 "Board" means the Board of Directors of the Corporation.

2.3 "Change in Control" means (a) the failure of the Continuing
Directors at any time to constitute at least a majority of the
members of the Board; (b) the acquisition by any Person other
than an Excluded Holder of beneficial ownership (within the
meaning of Rule 13d-3 issued under the Act) of 20% or more of the
outstanding Common Stock or the combined voting power of the
Corporation's outstanding securities entitled to vote generally
in the election of directors; (c) the approval by the
shareholders of the Corporation of a reorganization, merger or
consolidation, unless with or into a Permitted Successor; or
<PAGE>
(d) the approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation or the
sale or disposition of all or substantially all of the assets of
the Corporation other than to a Permitted Successor.

2.4 "Code" means the Internal Revenue Code of 1986, as amended.

2.5 "Committee" means the Compensation Committee of the Board or such
other committee as the Board shall designate to administer the
Plan. The Committee shall consist of at least two members of the
Board and all of its members shall be "Non-Employee Directors" as
defined in Rule 16b-3 issued under the Act.

2.6 "Common Stock" means the Common Stock of the Corporation, no par
value.

2.7 "Corporation" means Dakota Telecommunications Group, Inc. and its
successors and assigns.

2.8 "Continuing Directors" mean the individuals constituting the
Board as of the date this Plan was adopted and any subsequent
directors whose election or nomination for election by the
Corporation's shareholders was approved by a vote of two-thirds
of the individuals who are then Continuing Directors, but
specifically excluding any individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as the term is used in Rule 14a-11 of
Regulation 14A issued under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board.

2.9 "Employee Benefit Plan" means any plan or program established by
the Corporation or a Subsidiary for the compensation or benefit
of employees of the Corporation or any of its Subsidiaries.

2.10 "Excluded Holder" means (a) any Person who at the time this Plan
was adopted was the beneficial owner of 20% or more of the
outstanding Common Stock; or (b) the Corporation, a Subsidiary or
any Employee Benefit Plan of the Corporation or a Subsidiary or
any trust holding Common Stock or other securities pursuant to
the terms of an Employee Benefit Plan.

2.11 "Incentive Award" means the award or grant of a Stock Option,
Stock Appreciation Right, Restricted Stock, Stock Award or Tax
Benefit Right to a Participant pursuant to the Plan.

2.12 "Market Value" shall have the following meanings. If Common
Stock is listed for trading on The Nasdaq Stock Market (or any

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successor exchange that is the primary stock exchange for trading
of Common Stock), "Market Value" shall equal the mean of the
highest and lowest sales prices of shares of Common Stock
reported on The Nasdaq Stock Market (or any successor exchange
that is the primary stock exchange for trading of Common Stock)
on the date of grant, or if The Nasdaq Stock Market (or any such
successor) is closed on that date, the last preceding date on
which The Nasdaq Stock Market (or any such successor) was open
for trading and on which shares of Common Stock were traded. If
Common Stock is not listed on The Nasdaq Stock Market, "Market
Value" of Common Stock shall be an amount determined by the
Committee, in its discretion.

2.13 "Participant" means a corporate officer, divisional officer or
any key employee of the Corporation, its divisions or its
Subsidiaries who the Committee determines is eligible to
participate in the Plan and who is designated to be granted an
Incentive Award under the Plan.

2.14 "Permitted Successor" means a corporation which, immediately
following the consummation of a transaction specified in clauses
(c) and (d) of the definition of "Change in Control" above,
satisfies each of the following criteria: (a) 60% or more of the
outstanding common stock of the corporation and the combined
voting power of the outstanding securities of the corporation
entitled to vote generally in the election of directors (in each
case determined immediately following the consummation of the
applicable transaction) is beneficially owned, directly or
indirectly, by all or substantially all of the Persons who were
the beneficial owners of the Corporation's outstanding Common
Stock and outstanding securities entitled to vote generally in
the election of directors (respectively) immediately prior to the
applicable transaction; (b) no Person other than an Excluded
Holder beneficially owns, directly or indirectly, 20% or more of
the outstanding common stock of the corporation or the combined
voting power of the outstanding securities of the corporation
entitled to vote generally in the election of directors (for
these purposes the term Excluded Holder shall include the
corporation, any Subsidiary of the corporation and any Employee
Benefit Plan of the corporation or any such Subsidiary or any
trust holding common stock or other securities of the corporation
pursuant to the terms of any such Employee Benefit Plan); and (c)
at least a majority of the board of directors is comprised of
Continuing Directors.

2.15 "Person" has the same meaning as set forth in Sections 13(d) and
14(d)(2) of the Act.

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<PAGE>
2.16 "Restricted Period" means the period of time during which
Restricted Stock awarded under the Plan is subject to
restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect
to shares of Common Stock covered by the same Incentive Award.

2.17 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to Section 7 of the Plan.

2.18 "Retirement" means the voluntary termination of all employment by
a Participant, or the voluntary termination of a Participant as a
director of the Corporation (as applicable), after the
Participant has attained 62 years of age, or such other age as
shall be determined by the Committee in its sole discretion or as
otherwise may be set forth in the Incentive Award agreement or
other grant document with respect to a Participant and a
particular Incentive Award.

2.19 "Stock Appreciation Right" means any right granted to a
Participant pursuant to Section 6 of the Plan.

2.20 "Stock Award" means an award of Common Stock awarded to a
Participant pursuant to Section 8 of the Plan.

2.21 "Stock Option" means the right to purchase Common Stock at a
stated price for a specified period of time. For purposes of the
Plan, a Stock Option may be either an incentive stock option
within the meaning of Section 422(b) of the Code or a
nonqualified stock option.

2.22 "Subsidiary" means any corporation or other entity of which 50%
or more of the outstanding voting stock or voting ownership
interest is directly or indirectly owned or controlled by the
Corporation or by one or more Subsidiaries of the Corporation.

2.23 "Tax Benefit Right" means any right granted to a Participant
pursuant to Section 9 of the Plan.

SECTION 3

ADMINISTRATION

3.1 POWER AND AUTHORITY. The Committee shall administer the Plan,
shall have full power and authority to interpret the provisions of the Plan
and Incentive Awards granted under the Plan and shall have full power and
authority to supervise the administration of the Plan and Incentive Awards
granted under the Plan. All determinations, interpretations and selections

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made by the Committee regarding the Plan shall be final and conclusive.
The Committee shall hold its meetings at such times and places as it deems
advisable. Action may be taken by a written instrument signed by a
majority of the members of the Committee and any action so taken shall be
fully as effective as if it had been taken at a meeting duly called and
held. The Committee shall make such rules and regulations for the conduct
of its business as it deems advisable. The members of the Committee shall
not be paid any additional fees for their services.

3.2 GRANTS OR AWARDS TO PARTICIPANTS. In accordance with and subject
to the provisions of the Plan, the Committee shall have the authority to
determine all provisions of Incentive Awards as the Committee may deem
necessary or desirable and as are consistent with the terms of the Plan,
including, without limitation, the following: (a) the persons who shall be
selected as Participants; (b) the nature and the extent of the Incentive
Awards to be made to each Participant (including the number of shares of
Common Stock to be subject to each Incentive Award, any exercise price, the
manner in which an Incentive Award will vest or become exercisable and the
form of payment for the Incentive Award); (c) the time or times when
Incentive Awards will be granted; (d) the duration of each Incentive Award;
and (e) the restrictions and other conditions to which payment or vesting
of Incentive Awards may be subject.

3.3 AMENDMENTS OR MODIFICATIONS OF AWARDS. The Committee shall have
the authority to amend or modify the terms of any outstanding Incentive
Award in any manner, provided that the amended or modified terms are not
prohibited by the Plan as then in effect, including, without limitation,
the authority to: (a) modify the number of shares or other terms and
conditions of an Incentive Award; (b) extend the term of an Incentive
Award; (c) accelerate the exercisability or vesting or otherwise terminate
any restrictions relating to an Incentive Award; (d) accept the surrender
of any outstanding Incentive Award; and (e) to the extent not previously
exercised or vested, authorize the grant of new Incentive Awards in
substitution for surrendered Incentive Awards. Notwithstanding the
foregoing or any other provision of the Plan, the terms of Stock Options
automatically granted to nonemployee directors under the Plan shall not be
amended or modified without the approval of the Board, except as necessary
or desirable to comply with applicable laws, rules and regulations.

3.4 INDEMNIFICATION OF COMMITTEE MEMBERS. Each person who is or
shall have been a member of the Committee shall be indemnified and held
harmless by the Corporation from and against any cost, liability or expense
imposed or incurred in connection with such person's or the Committee's
taking or failing to take any action under the Plan. Each such person
shall be justified in relying on information furnished in connection with
the Plan's administration by any appropriate person or persons.

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<PAGE>
SECTION 4

SHARES SUBJECT TO THE PLAN

4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section
4.3 of the Plan, a maximum of one hundred seventy-five thousand (175,000)
shares of Common Stock shall be available for Incentive Awards under the
Plan. Such shares shall be authorized and may be either unissued or
treasury shares.

4.2 ADJUSTMENTS. If the number of shares of Common Stock outstanding
changes by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or any other change
in the corporate structure or shares of the Corporation, the number and
kind of securities subject to and reserved under the Plan, together with
applicable exercise prices, shall be appropriately adjusted. No fractional
shares shall be issued pursuant to the Plan and any fractional shares
resulting from adjustments shall be eliminated from the respective
Incentive Awards, with an appropriate cash adjustment for the value of any
Incentive Awards eliminated. If an Incentive Award is canceled,
surrendered, modified, exchanged for a substitute Incentive Award or
expires or terminates during the term of the Plan but prior to the exercise
or vesting of the Incentive Award in full, the shares subject to but not
delivered under such Incentive Award shall be available for other Incentive
Awards. If shares subject to and otherwise deliverable upon the exercise
of an Incentive Award are surrendered to the Corporation in connection with
the exercise or vesting of an Incentive Award, the surrendered shares
subject to the Incentive Award shall be available for other Incentive
Awards.

SECTION 5

STOCK OPTIONS

5.1 GRANT. A Participant may be granted one or more Stock Options
under the Plan. The Committee, in its discretion, may provide in the
initial grant of a Stock Option for the subsequent automatic grant of
additional Stock Options for the number of shares, if any, that are subject
to the initial Stock Option and surrendered to the Corporation in
connection with the exercise of the initial or any subsequently granted
Stock Option. Stock Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by
the Committee in its sole discretion. In addition, the Committee may vary,
among Participants and among Stock Options granted to the same Participant,
any and all of the terms and conditions of the Stock Options granted under
the Plan. The Committee shall have complete discretion in determining the

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number of Stock Options granted to each Participant. The Committee may
designate whether or not a Stock Option is to be considered an incentive
stock option as defined in Section 422(b) of the Code.

5.2 GRANTS TO NONEMPLOYEE DIRECTORS. All nonemployee directors who
are serving on the applicable date shall automatically receive semi-
annually, on June 30 and December 31 of each year, a Stock Option to
purchase 200 shares of Common Stock at 100% of the Market Value on the date
of grant. Such Stock Options shall be issued for a term of 10 years using
a form of agreement substantially similar to the standard form of Stock
Option agreement established by the Committee for executive officer
Participants, adjusted as necessary due to the recipient's status as a
nonemployee director. These formula grant provisions for nonemployee
directors may be amended by the Board of Directors not more than once every
six months, other than to comply with changes to the Code, the Act or the
rules thereunder. Nonemployee directors may pay the exercise price in any
manner permitted for exercises by other Participants. Stock Options
granted to nonemployee directors of the Company shall not qualify as
incentive stock options.

5.3 STOCK OPTION AGREEMENTS. Stock Options shall be evidenced by
stock option agreements containing such terms and conditions, consistent
with the provisions of the Plan, as the Committee shall from time to time
determine. To the extent not covered by the stock option agreement, the
terms and conditions of this Section 5 shall govern.

5.4 STOCK OPTION PRICE. The per share Stock Option price shall be
determined by the Committee, but shall be a price that is equal to or
higher than the par value of the Corporation's Common Stock; provided, that
the per share Stock Option price for any shares designated as incentive
stock options shall be equal to or greater than 100% of the Market Value on
the date of grant.

5.5 MEDIUM AND TIME OF PAYMENT. The exercise price for each share
purchased pursuant to a Stock Option granted under the Plan shall be
payable in cash or, if the Committee consents, in shares of Common Stock
(including Common Stock to be received upon a simultaneous exercise) or
other consideration substantially equivalent to cash. The time and terms
of payment may be amended with the consent of a Participant before or after
exercise of a Stock Option. The Committee may from time to time authorize
payment of all or a portion of the Stock Option price in the form of a
promissory note or other deferred payment installments according to such
terms as the Committee may approve. The Board may restrict or suspend the
power of the Committee to permit such loans and may require that adequate
security be provided.

5.6 STOCK OPTIONS GRANTED TO TEN PERCENT SHAREHOLDERS. No Stock
Option granted to any Participant who at the time of such grant owns,

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together with stock attributed to such Participant under Section 424(d) of
the Code, more than 10% of the total combined voting power of all classes
of stock of the Corporation or any of its Subsidiaries may be designated as
an incentive stock option, unless such Stock Option provides an exercise
price equal to at least 110% of the Market Value of the Common Stock and
the exercise of the Stock Option after the expiration of five years from
the date of grant of the Stock Option is prohibited by its terms.

5.7 LIMITS ON EXERCISABILITY. Stock Options shall be exercisable for
such periods, not to exceed ten years from the date of grant, as may be
fixed by the Committee. At the time of the exercise of a Stock Option, the
holder of the Stock Option, if requested by the Committee, must represent
to the Corporation that the shares are being acquired for investment and
not with a view to the distribution thereof. The Committee may in its
discretion require a Participant to continue the Participant's service with
the Corporation and its Subsidiaries for a certain length of time prior to
a Stock Option becoming exercisable and may eliminate such delayed vesting
provisions.

5.8 RESTRICTIONS ON TRANSFERABILITY.

(a) GENERAL. Unless the Committee otherwise consents
(before or after the option grant) or unless the stock option
agreement or grant provides otherwise; (i) no incentive stock
option granted under the Plan may be sold, exchanged,
transferred, pledged, assigned or otherwise alienated or
hypothecated except by will or the laws of descent and
distribution; and (ii) all Stock Options that are not incentive
stock options may be transferred; PROVIDED, that as a condition
to any such transfer the transferee must execute a written
agreement permitting the Corporation to withhold from the shares
subject to the Incentive Award a number of shares having a Market
Value at least equal to the amount of any federal, state or local
withholding or other taxes associated with or resulting from the
exercise of a Stock Option.

(b) OTHER RESTRICTIONS. The Committee may impose other
restrictions on any shares of Common Stock acquired pursuant to
the exercise of a Stock Option under the Plan as the Committee
deems advisable, including, without limitation, restrictions
under applicable federal or state securities laws.

5.9 TERMINATION OF EMPLOYMENT OR DIRECTOR OR OFFICER STATUS.

(a) GENERAL. If a Participant ceases to be employed by or
an officer of the Corporation or one of its Subsidiaries for any
reason or if a director ceases to serve as a director of the
Corporation for any reason, other than the Participant's or

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director's death, disability, Retirement or termination for
cause, the Participant or director may exercise his Stock Options
only for a period of three months after such termination of
employment or director or officer status, but only to the extent
the Participant or director was entitled to exercise the Stock
Options on the date of termination, unless the Committee
otherwise consents or the terms of the stock option agreement or
grant provide otherwise. For purposes of the Plan, the following
shall not be deemed a termination of employment or director or
officer status: (i) a transfer of an employee from the
Corporation to any Subsidiary; (ii) a leave of absence, duly
authorized in writing by the Corporation, for military service or
for any other purpose approved by the Corporation if the period
of such leave does not exceed 90 days; (iii) a leave of absence
in excess of 90 days, duly authorized in writing by the
Corporation, provided that the employee's right to reemployment
is guaranteed either by statute or contract; or (iv) a
termination of employment with continued service as an officer.

(b) DEATH. If a Participant dies either while an employee
or officer of the Corporation or one of its Subsidiaries or after
the termination of employment other than for cause but during the
time when the Participant could have exercised a Stock Option
under the Plan, or if a director dies while serving as a director
of the Corporation or after ceasing to be a director but during
such time as the director or former director could have exercised
a Stock Option under the Plan, the Stock Option issued to such
Participant, director or former director shall be exercisable by
the personal representative of such Participant, director or
former director or other successor to the interest of the
Participant, director or former director for one year after the
Participant's, director's or former director's death, but only to
the extent that the Participant, director or former director was
entitled to exercise the Stock Option on the date of death or
termination of employment or status as a director, whichever
first occurred, unless the Committee otherwise consents or the
terms of the stock option agreement or grant provide otherwise.

(c) DISABILITY. If a Participant ceases to be an employee
or officer of the Corporation or one of its Subsidiaries, or a
director ceases to be a director, due to the Participant's or
director's disability, the Participant or director may exercise a
Stock Option for a period of one year following such termination of
employment or director status, but only to the extent that the
Participant or director was entitled to exercise the Stock Option
on the date of such event, unless the Committee otherwise
consents or the terms of the Stock Option agreement or grant
provide otherwise.

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(d) PARTICIPANT RETIREMENT. If a Participant Retires as an
employee or officer of the Corporation or one of its Subsidiaries
or if a director retires, any Stock Option granted under the Plan
may be exercised during the remaining term of the Stock Option,
unless the terms of the stock option agreement or grant provide
otherwise.

(e) TERMINATION FOR CAUSE. If a Participant is terminated
for cause, the Participant shall have no further right to
exercise any Stock Option previously granted, unless the
Committee and the Board determine otherwise.

SECTION 6

STOCK APPRECIATION RIGHTS

6.1 GRANT. A Participant may be granted one or more Stock
Appreciation Rights under the Plan and such Stock Appreciation Rights shall
be subject to such terms and conditions, consistent with the other
provisions of the Plan, as shall be determined by the Committee in its sole
discretion. A Stock Appreciation Rights may relate to a particular Stock
Option and may be granted simultaneously with or subsequent to the Stock
Option to which it relates. Stock Appreciation Rights shall be subject to
the same restrictions and conditions as Stock Options under subsections
5.6, 5.7 and 5.8 of the Plan. To the extent granted in tandem with a Stock
Option, the exercise of a Stock Appreciation Right shall, in exchange for
the right to exercise a related Stock Option, entitle a Participant to an
amount equal to the appreciation in value of the shares covered by the
related Stock Option surrendered. Such appreciation in value shall be
equal to the excess of the Market Value of such shares at the time of the
exercise of the Stock Appreciation Right over the option price of such
shares.

6.2 EXERCISE; PAYMENT. To the extent granted in tandem with a Stock
Option, Stock Appreciation Rights may be exercised only when a related
Stock Option could be exercised and only when the Market Value of the stock
subject to the Stock Option exceeds the exercise price of the Stock Option.
The Committee shall have discretion to determine the form of payment made
upon the exercise of a Stock Appreciation Right, which could take the form
of shares of Common Stock.

SECTION 7

RESTRICTED STOCK

7.1 GRANT. A Participant may be granted Restricted Stock under the
Plan. Restricted Stock shall be subject to such terms and conditions,

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consistent with the other provisions of the Plan, as shall be determined by
the Committee in its sole discretion. The Committee may impose such
restrictions or conditions, consistent with the provisions of the Plan, to
the vesting of Restricted Stock as it deems appropriate.

7.2 TERMINATION OF EMPLOYMENT OR OFFICER STATUS.

(a) GENERAL. In the event of termination of employment or
officer status during the Restricted Period for any reason other
than death, disability, Retirement or termination for cause, then
any shares of Restricted Stock still subject to restrictions at
the date of such termination shall automatically be forfeited and
returned to the Corporation; PROVIDED, that in the event of a
voluntary or involuntary termination of the employment or officer
status of a Participant by the Corporation, the Committee may, in
its sole discretion, waive the automatic forfeiture of any or all
such shares of Restricted Stock and/or may add such new
restrictions to such shares of Restricted Stock as it deems
appropriate. For purposes of the Plan, the following shall not
be considered a termination of employment or officer status: (i)
a transfer of an employee from the Corporation to any Subsidiary;
(ii) a leave of absence, duly authorized in writing by the
Corporation, for military service or for any other purpose
approved by the Corporation if the period of such leave does not
exceed 90 days; (iii) a leave of absence in excess of 90 days
duly authorized in writing by the Corporation, provided that the
employee's right to reemployment is guaranteed either by statute
or contract; and (iv) a termination of employment with continued
service as an officer.

(b) DEATH, RETIREMENT OR DISABILITY. Unless the Committee
otherwise consents or unless the terms of the restricted stock
agreement or grant provide otherwise, in the event a Participant
terminates his employment with the Corporation because of death,
disability or Retirement during the Restricted Period, the
restrictions applicable to the shares of Restricted Stock shall
terminate automatically with respect to that number of shares
(rounded to the nearest whole number) equal to the total number
of shares of Restricted Stock granted to such Participant
multiplied by the number of full months that have elapsed since
the date of gant divided by the maximum number of full months of
the Restricted Period. All remaining shares shall be forfeited
and returned to the Corporation; PROVIDED, that the Committee
may, in its sole discretion, waive the restrictions remaining on
any or all such remaining shares of Restricted Stock either
before or after the death, disability or Retirement of the
Participant.

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<PAGE>
(c) TERMINATION FOR CAUSE. If a Participant's employment
is terminated for cause, the Participant shall have no further
right to exercise or receive any Restricted Stock and all
Restricted Stock still subject to restrictions at the date of
such termination shall automatically be forfeited and returned to
the Corporation, unless the Committee and the Board determine
otherwise.

7.3 RESTRICTIONS ON TRANSFERABILITY.

(a) GENERAL. Unless the Committee otherwise consents or
unless the terms of the restricted stock agreement or grant
provide otherwise: (i) shares of Restricted Stock shall not be
sold, exchanged, transferred, pledged, assigned or otherwise
alienated or hypothecated during the Restricted Period except by
will or the laws of descent and distribution; and (ii) all rights
with respect to Restricted Stock granted to a Participant under
the Plan shall be exercisable during the Participant's lifetime
only by such Participant, his guardian or legal representative.

(b) OTHER RESTRICTIONS. The Committee may impose other
restrictions on any shares of Common Stock acquired pursuant to
an award of Restricted Stock under the Plan as the Committee
deems advisable, including, without limitation, restrictions
under applicable federal or state securities laws.

7.4 LEGENDING OF RESTRICTED STOCK. Any certificates evidencing
shares of Restricted Stock awarded pursuant to the Plan shall bear the
following legend:

The shares represented by this certificate were issued
subject to certain restrictions under the Dakota
Telecommunications Group, Inc. 1997 Stock Incentive Plan (the
"Plan"). A copy of the Plan is on file in the office of the
Secretary of the Corporation. This certificate is held subject
to the terms and conditions contained in a restricted stock
agreement that includes a prohibition against the sale or
transfer of the stock represented by this certificate except in
compliance with that agreement and that provides for forfeiture
upon certain events.

7.5 REPRESENTATIONS AND WARRANTIES. A Participant who is awarded
Restricted Stock shall represent and warrant that the Participant is
acquiring the Restricted Stock for the Participant's own account and
investment and without any intention to resell or redistribute the
Restricted Stock. The Participant shall agree not to resell or distribute
such Restricted Stock after the Restricted Period except upon such
conditions as the Corporation may reasonably specify to ensure compliance
with federal and state securities laws.

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<PAGE>
7.6 RIGHTS AS A SHAREHOLDER. A Participant shall have all voting,
dividend, liquidation and other rights with respect to Restricted Stock
held of record by such Participant as if the Participant held unrestricted
Common Stock; PROVIDED, that the unvested portion of any award of
Restricted Stock shall be subject to any restrictions on transferability or
risks of forfeiture imposed pursuant to Sections 7.2 and 7.3 of the Plan.
Unless the Committee otherwise determines or unless the terms of the
restricted stock agreement or grant provide otherwise, any noncash
dividends or distributions paid with respect to shares of unvested
Restricted Stock shall be subject to the same restrictions as the shares to
which such dividends or distributions relate.

SECTION 8

STOCK AWARDS

8.1 GRANT. A Participant may be granted one or more Stock Awards
under the Plan in lieu of, or as payment for, the rights of a Participant
under any other compensation plan, policy or program of the Corporation or
its Subsidiaries. Stock Awards shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.

8.2 RIGHTS AS A SHAREHOLDER. A Participant shall have all voting,
dividend, liquidation and other rights with respect to shares of Common
Stock issued to the Participant as a Stock Award under this Section 8 upon
the Participant becoming the holder of record of the Common Stock granted
pursuant to such Stock Awards; provided, that the Committee may impose such
restrictions on the assignment or transfer of Common Stock awarded pursuant
to a Stock Award as it deems appropriate.

SECTION 9

TAX BENEFIT RIGHTS

9.1 GRANT. A Participant may be granted Tax Benefit Rights under the
Plan to encourage a Participant to exercise Stock Options and provide
certain tax benefits to the Corporation. A Tax Benefit Right entitles a
Participant to receive from the Corporation or a Subsidiary a cash payment
not to exceed the amount calculated by multiplying the ordinary income, if
any, realized by the Participant for federal tax purposes as a result of
the exercise of a nonqualified stock option, or the disqualifying
disposition of shares acquired under an incentive stock option, by the
maximum federal income tax rate (including any surtax or similar charge or
assessment) for corporations, plus the applicable state and local tax
imposed on the exercise of the Stock Option or the disqualifying
disposition.

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<PAGE>
9.2 RESTRICTIONS. A Tax Benefit Right may be granted only with
respect to a Stock Option issued and outstanding or to be issued under the
Plan or any other plan of the Corporation or its Subsidiaries that has been
approved by the shareholders as of the date of the Plan and may be granted
concurrently with or after the grant of the Stock Option. Such rights with
respect to outstanding Stock Options shall be issued only with the consent
of the Participant if the effect would be to disqualify an incentive stock
option, change the date of grant or the exercise price or otherwise impair
the Participant's existing Stock Options.

9.3 TERMS AND CONDITIONS. The Committee shall determine the terms
and conditions of any Tax Benefit Rights granted and the Participants to
whom such rights will be granted with respect to Stock Options under the
Plan or any other plan of the Corporation. The Committee may amend,
cancel, limit the term of or limit the amount payable under a Tax Benefit
Right at any time prior to the exercise of the related Stock Option, unless
otherwise provided under the terms of the Tax Benefit Right. The net
amount of a Tax Benefit Right, subject to withholding, may be used to pay a
portion of the Stock Option price, unless otherwise provided by the
Committee.

SECTION 10

CHANGE IN CONTROL

10.1 ACCELERATION OF VESTING. If a Change in Control of the
Corporation shall occur, then, unless the Committee or the Board otherwise
determines with respect to one or more Incentive Awards, without action by
the Committee or the Board: (a) all outstanding Stock Options shall become
immediately exercisable in full and shall remain exercisable during the
remaining term thereof, regardless of whether the Participants to whom such
Stock Options have been granted remain in the employ or service of the
Corporation or any Subsidiary; and (b) all other outstanding Incentive
Awards shall become immediately fully vested and nonforfeitable.

10.2 CASH PAYMENT FOR STOCK OPTIONS. If a Change in Control of the
Corporation shall occur, then the Committee, in its sole discretion, and
without the consent of any Participant affected thereby, may determine that
some or all Participants holding outstanding Stock Options shall receive,
with respect to some or all of the shares of Common Stock subject to such
Stock Options, as of the effective date of any such Change in Control of
the Corporation, cash in an amount equal to the greater of the excess of
(a) the highest sales price of the shares on The Nasdaq Stock Market on the
date immediately prior to the effective date of such Change in Control of
the Corporation or (b) the highest price per share actually paid in
connection with any Change in Control of the Corporation over the exercise
price per share of such Stock Options.

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<PAGE>
SECTION 11

GENERAL PROVISIONS

11.1 NO RIGHTS TO AWARDS. No Participant or other person shall have
any claim to be granted any Incentive Award under the Plan and there is no
obligation of uniformity of treatment of Participants or holders or
beneficiaries of Incentive Awards under the Plan. The terms and conditions
of Incentive Awards of the same type and the determination of the Committee
to grant a waiver or modification of any Incentive Award and the terms and
conditions thereof need not be the same with respect to each Participant.

11.2 WITHHOLDING. The Corporation or a Subsidiary shall be entitled
to: (a) withhold and deduct from future wages of a Participant (or from
other amounts that may be due and owing to a Participant from the
Corporation or a Subsidiary), or make other arrangements for the collection
of, all legally required amounts necessary to satisfy any and all federal,
state and local withholding and employment-related tax requirements
attributable to an Incentive Award, including, without limitation, the
grant, exercise or vesting of, or payment of dividends with respect to, an
Incentive Award or a disqualifying disposition of Common Stock received
upon exercise of an incentive stock option; or (b) require a Participant
promptly to remit the amount of such withholding to the Corporation before
taking any action with respect to an Incentive Award. Unless the Committee
determines otherwise, withholding may be satisfied by withholding Common
Stock to be received upon exercise or by delivery to the Corporation of
previously owned Common Stock. The Corporation may establish such rules
and procedures concerning timing of any withholding election as it deems
appropriate to comply with Rule 16b-3 under the Act.

11.3 COMPLIANCE WITH LAWS; LISTING AND REGISTRATION OF SHARES. All
Incentive Awards granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to all applicable
laws, rules and regulations, and to the requirement that if at any time the
Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares covered thereby upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the grant of such Incentive Award or
the issue or purchase of shares thereunder, such Incentive Award may not be
exercised in whole or in part, or the restrictions on such Incentive Award
shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.

11.4 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Corporation or any Subsidiary from adopting
or continuing in effect other or additional compensation arrangements,

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including the grant of stock options and other stock-based awards, and such
arrangements may be either generally applicable or applicable only in
specific cases.

11.5 NO RIGHT TO EMPLOYMENT. The grant of an Incentive Award shall
not be construed as giving a Participant the right to be retained in the
employ of the Corporation or any Subsidiary. The Corporation or any
Subsidiary may at any time dismiss a Participant from employment, free from
any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any written agreement with a Participant.

11.6 GOVERNING LAW. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of South Dakota and applicable
federal law.

11.7 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.

SECTION 12

TERMINATION AND AMENDMENT

The Board may terminate the Plan at any time, or may from time to
time amend the Plan as it deems proper and in the best interests of the
Corporation, provided that no such amendment may impair any outstanding
Incentive Award without the consent of the Participant, except according to
the terms of the Plan or the Incentive Award. No termination, amendment or
modification of the Plan shall become effective with respect to any
Incentive Award previously granted under the Plan without the prior written
consent of the Participant holding such Incentive Award unless such
amendment or modification operates solely to the benefit of the
Participant.

SECTION 13

EFFECTIVE DATE AND DURATION OF THE PLAN

This Plan shall take effect on the Effective Date of
Conversion/Merger. Unless earlier terminated by the Board of Directors,
the Plan shall terminate on the date ten years after the Effective Date of
Conversion/Merger. No Incentive Award shall be granted under the Plan
after such date.

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<PAGE>
APPENDIX K

INDEMNITY AGREEMENT

THIS AGREEMENT ("Agreement") is made as of ___________, 1997,
by and between DAKOTA TELECOMMUNICATIONS GROUP, INC., a [South
Dakota/Delaware] corporation (the "Corporation"), and __________________
("Indemnitee").

It is essential to the Corporation to attract and retain as
directors and officers the most capable persons available. The substantial
increase in corporate litigation subjects directors and officers of
publicly-traded companies to expensive litigation risks at the same time
that the availability of economic directors' and officers' liability
insurance has been severely limited. In furtherance of the express policy
of the Corporation to indemnify its directors and officers so as to provide
them with the maximum possible protection permitted by law, and in
consideration of Indemnitee's agreement to serve as a director or officer
of the Corporation, the parties are entering into this Agreement.

ACCORDINGLY, the parties agree as follows:

SECTION 1. DEFINITIONS. As used in this Agreement:

(a) "Expenses" means all costs, expenses and obligations paid or
incurred in connection with investigating, litigating, being a witness
in, defending or participating in, or preparing to litigate, defend,
be a witness in or participate in any matter that is the subject of a
Proceeding (as defined below), including attorneys' and accountants'
fees and court costs.

(b) "Proceeding" means any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation, whether
brought by or in the right of the Corporation or otherwise and whether
of a civil, criminal, administrative or investigative nature, in which
Indemnitee may be or may have been involved as a party or otherwise by
reason of the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Corporation, or by reason of any
action taken by Indemnitee or any inaction on Indemnitee's part while
acting as a director, officer, employee, agent or fiduciary of the
Corporation, or by reason of the fact that Indemnitee is or was
serving at the request of the Corporation as a director, officer,
employee, agent or fiduciary of another corporation, partnership,
joint venture, trust or other enterprise.

<PAGE>
(c) "Resolution Costs" includes any amount paid in connection
with a Proceeding and in satisfaction of a judgment, fine, penalty or
any amount paid in settlement.

SECTION 2. AGREEMENT TO SERVE. Indemnitee agrees to serve as a
director and/or officer of the Corporation for so long as Indemnitee is
duly elected or appointed or until the tender of Indemnitee's written
resignation.

SECTION 3. INDEMNIFICATION. The indemnification provided under this
Agreement shall be as follows:

(a) The Corporation shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by Indemnitee in connection
with any Proceeding. Additionally, in any Proceeding other than a
Proceeding by or in the right of the Corporation, the Corporation
shall indemnify Indemnitee against all Resolution Costs actually and
reasonably incurred by Indemnitee in connection with the Proceeding.
No indemnification shall be made under this subsection:

(i) with respect to remuneration paid to Indemnitee if it
is determined by a final judgment or other final adjudication
that the remuneration was in violation of law;

(ii) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Corporation
pursuant to the provisions of Section 16 of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions
of any federal, state or local law;

(iii) on account of Indemnitee's conduct that is determined
by a final judgment or other final adjudication to have been
knowingly fraudulent, deliberately dishonest or willful
misconduct;

(iv) on account of Indemnitee's conduct that a final
judgment or other final adjudication is determined to have been
in bad faith, in opposition to best interests of the Corporation
or produced an unlawful personal benefit;

(v) with respect to a criminal proceeding if the Indemnitee
knew or reasonably should have known that Indemnitee's conduct
was illegal; or

(vi) if a final decision by a court having jurisdiction in
the matter determines that indemnification under this Agreement
is not lawful.

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<PAGE>
(b) In addition to any indemnification provided under Subsection
3(a) above, the Corporation shall indemnify Indemnitee against any
Expenses or Resolution Costs incurred by Indemnitee, regardless of the
nature of the Proceeding that Expenses and/or Resolution Costs were
incurred, if the Expenses or Resolution Costs would have been covered
under any directors' and officers' liability insurance policies in
effect on the effective date of this Agreement or that become
effective on any later date.

(c) In addition to any indemnification provided under
Subsections 3(a) and 3(b) above, the Corporation shall provide
Indemnitee, to the fullest extent allowed by law as now or later
enacted or interpreted, with indemnification against any Expenses
and/or Resolution Costs incurred by Indemnitee in connection with any
Proceeding. To the extent a change in the laws of the State of [South
Dakota/Delaware] (whether by statute or judicial decision) permits
greater indemnification, either by agreement or otherwise, than
presently provided by law or this Agreement, it is the intent of the
parties that Indemnitee shall enjoy by this Agreement the greater
benefits afforded by the change.

(d) Without limiting Indemnitee's right to indemnification under
any other provision of this Agreement, the Corporation shall indemnify
Indemnitee in accordance with the provisions of this subsection if
Indemnitee is a party to or threatened to be made a party to or
otherwise involved in any Proceeding by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact
that Indemnitee was or is a director and/or officer of the Corporation
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against all Expenses actually and
reasonably incurred by Indemnitee and any amounts paid by Indemnitee
in settlement of the Proceeding, but only if Indemnitee acted in good
faith in a manner that Indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no
indemnification shall be made under this subsection in respect of any
claim, issue or matter that Indemnitee shall have been adjudged to be
liable to the Corporation in the performance of his duty to the
Corporation, unless and only to the extent that any court in which the
Proceeding was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnity, in
which event indemnification shall be limited to expenses actually and
reasonably incurred.

(e) Notwithstanding anything in this Agreement to the contrary,
before a Change in Control (as defined in Section 5 below), Indemnitee
shall not be entitled to indemnification pursuant to this Agreement in

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connection with any Proceeding initiated by Indemnitee against the
Corporation or any director, officer, employee, agent or fiduciary of
the Corporation (in such capacity) unless the Corporation has joined
in or consented to the initiation of the Proceeding.

SECTION 4. PAYMENT OF INDEMNIFICATION.

(a) Expenses incurred by the Indemnitee and subject to
indemnification under Section 3 above shall be paid directly by the
Corporation or reimbursed to the Indemnitee within two (2) days after
the receipt of a written request of the Indemnitee providing that
Indemnitee undertakes to repay any amount paid or advanced under this
Section to the extent that it is ultimately determined that Indemnitee
is not entitled to indemnification under Section 3.

(b) Except as otherwise provided in Section 4(a) above, any
indemnification under Section 3 above shall be made no later than
thirty (30) days after receipt by the Corporation of the written
request of Indemnitee, unless within that 30-day period the Board of
Directors, by a majority vote of a quorum consisting of directors who
are not parties to the Proceeding, determines that the Indemnitee is
not entitled to the indemnification set forth in Section 3 or unless
the Board of Directors refers the Indemnitee's indemnification request
to independent legal counsel. In cases where there are no directors
who are not parties to the Proceeding, the indemnification request
shall be referred to independent legal counsel. If the
indemnification request is referred to independent legal counsel, then
Indemnitee shall be paid no later than forty-five (45) days after
Indemnitee's initial request to the Corporation unless within that
time independent legal counsel presents to the Board of Directors a
written opinion stating in unconditional terms that indemnification is
not allowed under Section 3 of this Agreement. If a Change in Control
occurs and results in individuals who were directors before the
circumstances giving rise to the Change in Control ceasing for any
reason to constitute a majority of the Board of Directors, the above
determination, if any, shall be made by independent legal counsel and
not the Board of Directors. The Corporation agrees to pay the
reasonable fees of the independent legal counsel and to fully
indemnify that counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant to this
Agreement. If there has not been a Change in Control, independent
legal counsel shall be selected by the Board of Directors, and if
there has been a Change in Control, the independent legal counsel
shall be selected by Indemnitee.

(c) The right to indemnification payments as provided by this
Agreement shall be enforceable by Indemnitee in any court of competent

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jurisdiction. The burden of proving that indemnification is not
permitted by this Agreement shall be on the Corporation or on the
person challenging the indemnification. Neither the failure of the
Corporation, including its Board of Directors, to have made a
determination prior to the commencement of any Proceeding that
indemnification is proper, nor an actual determination by the
Corporation, including its Board of Directors or independent legal
counsel, that indemnification is not proper, shall bar an action by
Indemnitee to enforce this Agreement or create a presumption that
Indemnitee is not entitled to indemnification under this Agreement.
If the Board of Directors or independent legal counsel determines in
accordance with Section 4(b) above that Indemnitee would not be
permitted to be indemnified in whole or in part, Indemnitee shall have
the right to commence litigation in any court in the State of South
Dakota having subject matter jurisdiction and that venue is proper
seeking an independent determination by the court or challenging the
determination by the Board of Directors or independent legal counsel,
and the Corporation hereby consents to service of process and to
appear in that Proceeding. Expenses incurred by Indemnitee in
connection with successfully establishing Indemnitee's right to
indemnification, in whole or in part, shall also be reimbursed by the
Corporation.

SECTION 5. ESTABLISHMENT OF TRUST. In the event of a Potential
Change in Control of the Corporation (as defined below), the Corporation
shall, upon written request by Indemnitee, create a trust for the benefit
of the Indemnitee and from time to time upon written request of Indemnitee
shall fund the trust in an amount sufficient to satisfy any and all
Expenses or Resolution Costs that may properly be subject to
indemnification under Section 3 above anticipated at the time of each
request. The amount or amounts to be deposited in the trust pursuant to
this funding obligation shall be determined by a majority vote of a quorum
consisting of directors who are not parties to the Proceeding or the Chief
Executive Officer of the Corporation. If all of those individuals are
parties to the Proceeding, the amount or amounts to be deposited in the
trust shall be determined by independent legal counsel. The terms of the
trust shall provide that upon a Change in Control (i) the trust shall not
be revoked or the principal of the trust fund invaded, without the written
consent of the Indemnitee; (ii) the trustee shall advance, within two (2)
business days of a request by the Indemnitee, any amount properly payable
to Indemnitee under Subsection 4(a) of this Agreement; (iii) the trust
shall continue to be funded by the Corporation in accordance with the
funding obligation set forth above; (iv) the trustee shall promptly pay to
the Indemnitee all amounts that the Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise; and (v) all
unexpended funds in the trust shall revert to the Corporation upon a final
determination by a court of competent jurisdiction that the Indemnitee has
been fully indemnified under the terms of this Agreement. The trustee

K-5
<PAGE>
shall be chosen by the Indemnitee and shall be a national or state bank
having a combined capital and surplus of not less than $50,000,000. At the
time of each draw from the trust fund, the Indemnitee shall provide the
trustee with a written request providing that Indemnitee undertakes to
repay the amount to the extent that it is ultimately determined that
Indemnitee is not entitled to indemnification. Any funds, including
interest or investment earnings, remaining in the trust fund shall revert
and be paid to the Corporation if (i) a Change in Control has not occurred;
and (ii) if the Board of Directors or the Chief Executive Officer of the
Corporation determines that the circumstances giving rise to that
particular funding of the trust no longer exists. Nothing in this section
shall relieve the Corporation of any of its obligations under this
Agreement.

For purposes of this Agreement, the following definitions shall
apply:

(a) "Change in Control" shall mean (i) the failure of the
Continuing Directors at any time to constitute at least a majority of
the members of the Corporation's Board of Directors; (ii) the
acquisition by any Person (as defined in Section 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Act")) other than
an Excluded Holder of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Act) of twenty percent (20%) or more of
the outstanding Common Stock or the combined voting power of the
Corporation's outstanding securities entitled to vote generally in the
election of directors; (iii) the approval by the shareholders of the
Corporation of a reorganization, merger or consolidation, unless with
or into a Permitted Successor; or (iv) the approval by the
shareholders of the Corporation of a complete liquidation or
dissolution of the Corporation or the sale or disposition of all or
substantially all of the assets of the Corporation other than to a
Permitted Successor.

(b) "Continuing Directors" mean the individuals constituting the
Corporation's Board of Directors as of the date of this Agreement and
any subsequent directors whose election or nomination for election by
the Corporation's shareholders was approved by a vote of two-thirds
(2/3) of the individuals who are then Continuing Directors, but
specifically excluding any individual whose initial assumption of
office occurs as a result of either an actual or threatened election
contest (as the term is used in Rule 14a-11 of Regulation 14A
promulgated under the Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the
Corporation's Board of Directors.

(c) "Excluded Holder" means the Corporation, a Subsidiary or any
employee benefit plan (i.e., any plan or program established by the

K-6
<PAGE>
Corporation or a Subsidiary for the compensation or benefit of
employees of the Corporation or any of its Subsidiaries) of the
Corporation or a Subsidiary or any trust holding Common Stock or other
securities pursuant to the terms of an employee benefit plan.

(d) "Permitted Successor" means a corporation which, immediately
following the consummation of a transaction specified in clauses (iii)
and (iv) of the definition of "Change in Control" above, satisfies
each of the following criteria: (A) sixty percent (60%) or more of
the outstanding common stock of the corporation and the combined
voting power of the outstanding securities of the corporation entitled
to vote generally in the election of directors (in each case
determined immediately following the consummation of the applicable
transaction) is beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the beneficial owners of the
Corporation's outstanding Common Stock and outstanding securities
entitled to vote generally in the election of directors (respectively)
immediately prior to the applicable transaction, (B) no Person other
than an Excluded Holder beneficially owns, directly or indirectly,
twenty percent (20%) or more of the outstanding common stock of the
corporation or the combined voting power of the outstanding securities
of the corporation entitled to vote generally in the election of
directors (for these purposes the term Excluded Holder shall include
the corporation, any Subsidiary of the corporation and any employee
benefit plan of the corporation or any such Subsidiary or any trust
holding common stock or other securities of the corporation pursuant
to the terms of any such employee benefit plan), and (C) at least a
majority of the board of directors is comprised of Continuing
Directors.

(e) "Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization or other entity or governmental body.

(f) A "Potential Change in Control" shall be deemed to have
occurred if (i) the Corporation enters into an agreement, the
consummation of that would result in the occurrence of a Change in
Control; (ii) any person (including the Corporation) publicly
announces an intention to take or to consider taking actions that once
consummated would constitute a Change in Control; or (iii) the Board
of Directors adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.

(g) "Subsidiary" means any corporation or other entity of which
fifty percent (50%) or more of the outstanding voting stock or voting
ownership interest is directly or indirectly owned or controlled by
the Corporation or by one or more Subsidiaries of the Corporation.

K-7
<PAGE>
SECTION 6. PARTIAL INDEMNIFICATION; SUCCESSFUL DEFENSE. If
Indemnitee is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the Expenses or
Resolution Costs actually and reasonably incurred by Indemnitee but not,
however, for the total amount, the Corporation shall nevertheless indemnify
Indemnitee for the portion of the Expenses or Resolution Costs that
Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any or all claims relating in whole or in
part to a Proceeding or in defense of any issue or matter in a Proceeding,
including dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection with that Proceeding.

SECTION 7. CONSENT. Unless a Change in Control has occurred, the
Corporation shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding made without
the Corporation's written consent. The Corporation shall not settle any
Proceeding in any manner that would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither the Corporation
nor the Indemnitee shall unreasonably withhold their consent to any
proposed settlement.

SECTION 8. SEVERABILITY. If this Agreement or any portion of this
Agreement (including any provision within a single section, subsection or
sentence) shall be held to be invalid, void or otherwise unenforceable on
any ground by any court of competent jurisdiction, the Corporation shall
nevertheless indemnify Indemnitee as to any Expenses or Resolution Costs
with respect to any Proceeding to the full extent permitted by law or any
applicable portion of this Agreement that shall not have been invalidated,
declared void or otherwise held to be unenforceable.

SECTION 9. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The
indemnification provided by this Agreement shall be in addition to any
other rights that Indemnitee may be entitled under the
[Articles/Certificate] of Incorporation, the Bylaws, any agreement, any
vote of shareholders or disinterested directors, the [South Dakota Business
Corporation Act/Delaware General Corporation Law], or otherwise, both as to
actions in Indemnitee's official capacity and as to actions in another
capacity while holding office.

SECTION 10. NO PRESUMPTION. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon
a plea of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.

K-8
<PAGE>
SECTION 11. SUBROGATION. In the event of payment under this
Agreement, the Corporation shall be subrogated to the extent of the payment
to all of the rights of recovery of Indemnitee, who shall execute all
documents required and shall do everything that may be necessary to secure
those rights, including the execution of all documents necessary to enable
the Corporation to effectively bring suit to enforce those rights.

SECTION 12. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
liable under this Agreement to make any payment to the extent Indemnitee
has otherwise actually received payment (under any insurance policy, Bylaw
or otherwise) of the amounts otherwise indemnifiable under this Agreement.

SECTION 13. NOTICE. Indemnitee shall, as a condition precedent to
his right to be indemnified under this Agreement, give to the Corporation
notice in writing as soon as practicable of any claim for which indemnity
will or could be sought under this Agreement. Notice to the Corporation
shall be directed to Dakota Telecommunications Group, Inc., P.O. Box 66,
Highway 46, Irene, South Dakota 57037, Attention: Chairman of the Board,
with a copy to the President (or to any other individual or address that
the Corporation designates in writing to Indemnitee). Notice shall be
deemed received three (3) days after the date postmarked if sent by prepaid
mail properly addressed. In addition, Indemnitee shall give the
Corporation any information and cooperation that it may reasonably require
and is within Indemnitee's power to give.

SECTION 14. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original, and all
of which taken together shall constitute a single document.

SECTION 15. CONTINUATION OF INDEMNIFICATION. The indemnification
rights provided to Indemnitee under this Agreement, including the right
provided under Subsection 4(a) above, shall continue after Indemnitee has
ceased to be a director, officer, employee, agent or fiduciary of the
Corporation or any other corporation, partnership, joint venture, trust or
other enterprise that Indemnitee served in any of those capacities at the
request of the Corporation.

SECTION 16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Corporation and Indemnitee and their
respective successors and assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Corporation, spouses,
heirs, and personal and legal representatives.

SECTION 17. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of [South
Dakota/Delaware] applicable to contracts made and to be performed in that
State without giving effects to the principles of conflicts of laws.

K-9
<PAGE>
SECTION 18. LIABILITY INSURANCE. To the extent the Corporation
maintains an insurance policy or policies providing directors' and
officers' liability insurance, Indemnitee shall be covered by the policy or
policies, in accordance with its or their terms, to the maximum extent of
the coverage available for any officer, employee, agent or fiduciary of the
Corporation.

SECTION 19. PERIOD OF LIMITATIONS. No legal action shall be brought
and no cause of action shall be asserted by or on behalf of the Corporation
or any affiliate of the Corporation against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after the
expiration of two (2) years from the date of accrual of the cause of
action, and any claim or cause of action of the Corporation or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within the two (2) year period; provided,
however, that if any shorter period of limitations is otherwise applicable
to any cause of action the shorter period shall govern.

SECTION 20. AMENDMENTS; WAIVER. No supplement, modification,
amendment, or waiver of this Agreement or any of its terms shall be binding
unless executed in writing by all of the parties to this Agreement or, in
the case of waiver, by the party against whom the waiver is asserted. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions of this Agreement (whether or
not similar) nor shall any waiver constitute a continuing waiver.

The parties have executed this Agreement as of the date stated in the
first paragraph of this Agreement.

ATTEST: DAKOTA TELECOMMUNICATIONS
GROUP, INC.

_____________________________ By _____________________________________
Secretary Its _________________________________

INDEMNITEE

________________________________________

K-10
<PAGE>
===========================================================================

No person is authorized to give any information or to make any
representation not contained in this Prospectus and Ballot/Proxy Statement
in connection with the offering and solicitation made hereby. If given or
made, such information or representation should not be relied upon as
having been authorized. This Prospectus and Ballot/Proxy Statement does
not constitute an offer to sell, or a solicitation of an offer to purchase,
the securities offered by this Prospectus and Ballot/Proxy Statement, or
the solicitation of a ballot/proxy, in any jurisdiction to or from any
person to whom it is unlawful to make such offer, or solicitation of an
offer, or ballot/proxy solicitation in such jurisdiction. Neither the
delivery of this Prospectus and Ballot/Proxy Statement nor any distribution
of the securities this Prospectus and Ballot/Proxy Statement offers shall,
under any circumstances, create any implication that there has not been a
change in the information contained herein or in the affairs of the
Cooperative, DTG or DTG Delaware since the date hereof.

TABLE OF CONTENTS
PAGE

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . .1
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Dakota Cooperative Telecommunications, Inc. and Dakota
Telecommunications Group, Inc.. . . . . . . . . . . . . . . . . . .3
Dakota Telecommunications Group (Delaware), Inc.. . . . . . . . . . .4
Summary of Certain Aspects of the Conversion. . . . . . . . . . . . .4
Summary of Certain Aspects of the Merger. . . . . . . . . . . . . . .8
Market Information. . . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Consolidated Financial Data. . . . . . . . . . . . . . . . 11
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Regulatory and Legislative. . . . . . . . . . . . . . . . . . . . . 19
Rapid Technological Changes; Dependence Upon
Product Development. . . . . . . . . . . . . . . . . . . . . . . . 21
Dependence Upon Technology. . . . . . . . . . . . . . . . . . . . . 21
Significant Capital Requirements. . . . . . . . . . . . . . . . . . 22
Financial Leverage; Debt Service, Interest Rate
Fluctuations, Possible Reduction in Liquidity. . . . . . . . . . . 22
Dividend Restrictions and Other Restrictive Covenants . . . . . . . 23
Operating Losses. . . . . . . . . . . . . . . . . . . . . . . . . . 23
Variability of Quarterly Operating Results. . . . . . . . . . . . . 23
Acquisition Strategy . . . . . . . . . . . . . . . . . . . . . . . 24
Network Expansion and Implementation. . . . . . . . . . . . . . . . 24
Dependence on Availability of Transmission Facilities . . . . . . . 24
Dependence upon Network Infrastructure; Risk of
System Failure; Security Risks . . . . . . . . . . . . . . . . . . 25

<PAGE>
Dependence upon Suppliers; Sole and Limited Sources
of Supply for Internet Operations. . . . . . . . . . . . . . . . . 25
Expansion of Sales and Marketing Activities . . . . . . . . . . . . 25
Dependence on Key Personnel . . . . . . . . . . . . . . . . . . . . 26
Potential Liability of On-line Service Providers. . . . . . . . . . 26
Anti-Takeover Considerations. . . . . . . . . . . . . . . . . . . . 27
Absence of Prior Trading Market; Potential Volatility
of Stock Price . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shares Eligible for Future Sale . . . . . . . . . . . . . . . . . 28
Certain Standstill Agreements . . . . . . . . . . . . . . . . . . . 28
Covenants in Rural Utilities Services Loan Agreements . . . . . . . 29
Certain Credit Risks. . . . . . . . . . . . . . . . . . . . . . . . 29

GENERAL VOTING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 29
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Voting by Ballot. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Voting by Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Ballot and Proxy Solicitation . . . . . . . . . . . . . . . . . . . 30
Voting Rights and Record Date for Conversion. . . . . . . . . . . . 30
Voting Rights and Record Date for Merger. . . . . . . . . . . . . . 31
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

THE CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Background of the Conversion. . . . . . . . . . . . . . . . . . . . 32
Board Recommendation and Reasons for the
Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Conversion of Shares of Cooperative Common Stock
and Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . 34
Conversion of Current and Former Members'
Capital Credits. . . . . . . . . . . . . . . . . . . . . . . . . . 34
No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . 35
Distribution of DTG Common Stock. . . . . . . . . . . . . . . . . . 35
Effective Time of the Conversion. . . . . . . . . . . . . . . . . . 36
Cooperative Stock Options and Warrants. . . . . . . . . . . . . . . 36
Management After the Conversion . . . . . . . . . . . . . . . . . . 36
Conditions to the Conversion and Abandonment. . . . . . . . . . . . 36
Description of DTG Capital Stock. . . . . . . . . . . . . . . . . . 37
Statutory Provisions Affecting Control of DTG . . . . . . . . . . . 38
Other Provisions Affecting Control of DTG . . . . . . . . . . . . . 41
Comparison of Rights of Members of the Cooperative
to Rights of Shareholders of DTG . . . . . . . . . . . . . . . . . 45
Indemnification and Limitation of Liability . . . . . . . . . . . . 49
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . 50
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . 51
Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . . 52

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Background of the Merger. . . . . . . . . . . . . . . . . . . . . . 52
Board Recommendation and Reasons for the Merger . . . . . . . . . . 52

<PAGE>
Conversion of Rights to Receive Shares of DTG Common Stock. . . . . 53
Cessation of Shareholder Status and Distribution of
DTG Delaware Common Stock. . . . . . . . . . . . . . . . . . . . . 54
Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . 54
DTG Stock Options and Warrants. . . . . . . . . . . . . . . . . . . 55
Management After the Merger . . . . . . . . . . . . . . . . . . . . 55
Conditions to the Merger and Abandonment. . . . . . . . . . . . . . 55
Description of DTG Delaware Capital Stock . . . . . . . . . . . . . 56
Stock Options and Warrants. . . . . . . . . . . . . . . . . . . . . 57
Statutory Provisions Affecting Control of DTG Delaware. . . . . . . 57
Other Provisions Affecting Control of DTG Delaware. . . . . . . . . 58
Comparison of Rights of Shareholders of DTG to
Rights of Stockholders of DTG Delaware . . . . . . . . . . . . . . 60
Indemnification and Limitation of Liability . . . . . . . . . . . . 65
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . 66
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . 67

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . 67

DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.. . . . . . . . . . . . . . . . . . . . . . 73
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Environmental and Other Matters . . . . . . . . . . . . . . . . . .104
Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .106
Market for Common and Preferred Stock and
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Certain Agreements Affecting Capital Stock. . . . . . . . . . . . .106
Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . . . . . . .108
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .115

DAKOTA TELECOMMUNICATIONS
GROUP, INC. . . . . . . . . . . . . . . . . . . . . . . . . . . . .115
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115
Properties and Legal Proceedings. . . . . . . . . . . . . . . . . .115
Market for Common Stock and Dividends . . . . . . . . . . . . . . .115
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .116

DAKOTA TELECOMMUNICATIONS
GROUP (DELAWARE), INC.. . . . . . . . . . . . . . . . . . . . . . .116
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116
Properties and Legal Proceedings. . . . . . . . . . . . . . . . . .117
Market for Common Stock and Dividends . . . . . . . . . . . . . . .117
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .118

<PAGE>
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . .118

VOTING AND MANAGEMENT INFORMATION. . . . . . . . . . . . . . . . . . . .119
Voting Securities and Members of the Cooperative. . . . . . . . . .119
Voting Securities and Principal Shareholders
of DTG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
Voting Securities and Principal Stockholder of
DTG Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . .121
Directors and Executive Officers. . . . . . . . . . . . . . . . . .123
Compensation of Executive Officers and Directors
of the Cooperative . . . . . . . . . . . . . . . . . . . . . . . .124
Preferred Stock Options . . . . . . . . . . . . . . . . . . . . . .125
Interests of Certain Persons. . . . . . . . . . . . . . . . . . . .125
Employment Agreements, Termination of Employment
and Change in Control Arrangements . . . . . . . . . . . . . . . .126

ADDITIONAL SECURITIES OF THE
RESULTING COMPANY . . . . . . . . . . . . . . . . . . . . . . . . .127
Preferred Stock Purchase Rights Plan. . . . . . . . . . . . . . . .127
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . .129
Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130
Standstill Agreements . . . . . . . . . . . . . . . . . . . . . . .130

1997 STOCK INCENTIVE PLAN. . . . . . . . . . . . . . . . . . . . . . . .131

INDEMNITY AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .136

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . .139
Independent Public Accountants. . . . . . . . . . . . . . . . . . .139
Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . .139

Appendix A--Proposed Amendment to Articles of Incorporation of the
Cooperative
Appendix B--Proposed Amended Articles of Incorporation of DTG
Appendix C--Proposed Bylaws of DTG
Appendix D--Agreement and Plan of Merger
Appendix E--Certificate of Incorporation of DTG Delaware
Appendix F--Bylaws of DTG Delaware
Appendix G--Consolidated Financial Statements
Appendix H--Unaudited Consolidated Financial Statements
Appendix I--Dissenters' Rights
Appendix J--1997 Stock Incentive Plan
Appendix K--Indemnity Agreements

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

<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Cooperative is subject to the South Dakota Cooperative Association
Act (the "Cooperative Act"). For a description of the provisions of the
Cooperative Act related to indemnification of a director or officer of a
cooperative, see "THE CONVERSION--Indemnification and Limitation of
Liability." The Cooperative's bylaws contain provisions with respect to
indemnification. The Cooperative's articles of incorporation do not
contain provisions with respect to indemnification. (See "THE CONVERSION--
Indemnification and Limitation of Liability.")

If the Conversion is consummated, DTG would be subject to the South
Dakota Business Corporation Act (the "SDBCA.") For a description of the
provisions of the SDBCA related to indemnification of a director or officer
of a South Dakota business corporation, see "THE MERGER--Indemnification
and Limitation of Liability" and "THE CONVERSION--Indemnification and
Limitation of Liability." DTG's proposed Amended Articles of Incorporation
and Bylaws contain provisions regarding the indemnification of DTG's
directors and officers. (See "THE MERGER--Indemnification and Limitation
of Liability" and "THE CONVERSION--Indemnification and Limitation of
Liability.")

If the Merger is consummated, DTG Delaware would be subject to the
Delaware General Corporation Law (the "Delaware Law"). For a description
of the provisions of the Delaware Law related to indemnification of a
director or officer of a Delaware business corporation, see "THE MERGER--
Indemnification and Limitation of Liability." DTG Delaware's Certificate
of Incorporation and Bylaws contain provisions regarding the
indemnification of DTG Delaware's directors and executive officers.
(See "THE MERGER--Indemnification and Limitation of Liability.")

II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS. The following exhibits are filed as part of this
Registration Statement:

NUMBER EXHIBIT
- ------ -------

2.1<F**> PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION OF DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC. Attached as Appendix A
to the Prospectus and Ballot/Proxy Statement.

2.2<F**> AGREEMENT AND PLAN OF MERGER. Attached as Appendix D to the
Prospectus and Ballot/Proxy Statement.

2.3<F**> MERGER AGREEMENT DATED NOVEMBER 27, 1996 BETWEEN DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC., DAKOTA ACQUISITION CORP.
#2 AND I-WAY PARTNERS, INC.

2.4<F**> MERGER AGREEMENT DATED NOVEMBER 27, 1996 BETWEEN DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC., DAKOTA ACQUISITION CORP.
#1 AND TCIC COMMUNICATIONS, INC.

3.1<F**> AMENDED ARTICLES OF INCORPORATION OF DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.

3.2<F**> AMENDED BYLAWS OF DAKOTA COOPERATIVE TELECOMMUNICATIONS,
INC.

3.3<F**> AMENDED ARTICLES OF INCORPORATION OF DAKOTA TELECOMMUNICATIONS
GROUP, INC. Attached as Appendix B to the Prospectus and
Ballot/Proxy Statement.

3.4<F**> BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP, INC. Attached as
Appendix C to the Prospectus and Ballot/Proxy Statement.

3.5<F**> CERTIFICATE OF INCORPORATION OF DAKOTA TELECOMMUNICATIONS GROUP
(DELAWARE), INC. Attached as Appendix E to the Prospectus and
Ballot/Proxy Statement.

3.6<F**> BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.
Attached as Appendix F to the Prospectus and Ballot/Proxy
Statement.

4.1<F**> ARTICLES OF INCORPORATION OF DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC. (included in Exhibit 3.1).

4.2<F**> BYLAWS OF DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. (included
in Exhibit 3.2).

II-2
<PAGE>
NUMBER EXHIBIT
- ------ -------

4.3<F**> AMENDED ARTICLES OF INCORPORATION OF DAKOTA TELECOMMUNICATIONS
GROUP, INC. (included in Exhibit 3.3).

4.4<F**> BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP, INC. (included in
Exhibit 3.4).

4.5<F**> CERTIFICATE OF INCORPORATION OF DAKOTA TELECOMMUNICATIONS GROUP
(DELAWARE), INC. (included in Exhibit 3.5).

4.6<F**> BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.
(included in Exhibit 3.6).

4.7<F**> STANDSTILL AGREEMENT DATED NOVEMBER 27, 1996 AMONG DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC. AND THE SELLING
SHAREHOLDERS OF TCIC COMMUNICATIONS, INC.

4.8<F**> STANDSTILL AGREEMENT DATED NOVEMBER 27, 1996 AMONG DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC. AND THE SELLING
SHAREHOLDERS OF I-WAY, PARTNERS, INC.

4.9<F**> DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. COMMON STOCK
CERTIFICATE.

4.10<F**> DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. PREFERRED STOCK
CERTIFICATE (SPECIMEN).

4.11<F**> DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. FORM OF WARRANT
AGREEMENT.

4.12<F**> DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. FORM OF OPTION
AGREEMENT.

4.13<F**> AGREEMENT REGARDING STOCK (I-WAY PARTNERS, INC.) DATED
NOVEMBER 27, 1996.

4.14<F**> AGREEMENT REGARDING STOCK (TCIC COMMUNICATIONS, INC.)
DATED NOVEMBER 27, 1996.

4.15<F**> DAKOTA TELECOMMUNICATIONS GROUP, INC. COMMON STOCK
CERTIFICATE.

4.16<F**> DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC. COMMON STOCK
CERTIFICATE.

4.17<F**> TELEPHONE LOAN CONTRACT 515-A DATED SEPTEMBER 4, 1952

II-3
<PAGE>
NUMBER EXHIBIT
- ------ -------

4.18<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-B DATED AUGUST 11,
1955

4.19<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-C DATED OCTOBER 9,
1958

4.20<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-D DATED MARCH 8,
1961

4.21<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-E DATED AUGUST 20,
1964

4.22<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-F DATED JUNE 1,
1967

4.23<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-G DATED DECEMBER 20,
1968

4.24<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-H DATED DECEMBER 8,
1970

4.25<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-K1 DATED OCTOBER 2,
1972

4.26<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-L8 DATED JUNE 4,
1973

4.27<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-M8 DATED AUGUST 29,
1973

4.28<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-N8 DATED MAY 13,
1976

4.29<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-P8 DATED JULY 20,
1977

4.30<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-R8 DATED NOVEMBER 22,
1982

4.31<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-S8 DATED FEBRUARY 4,
1986

4.32<F**> AMENDMENT TO TELEPHONE LOAN CONTRACT 515-T8 DATED SEPTEMBER 25,
1991

II-4
<PAGE>
NUMBER EXHIBIT
- ------ -------

4.33<F**> DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. RESTATED MORTGAGE,
SECURITY AGREEMENT, AND FINANCING STATEMENT (515-S8) AND
SUPPLEMENT DATED APRIL 13, 1992

4.34<F**> DAKOTA TELECOM, INC. LOAN AGREEMENT WITH RURAL TELEPHONE
FINANCE COOPERATIVE (JANUARY 29, 1996)

4.35<F**> DAKOTA TELECOM, INC. LOAN AGREEMENT WITH RURAL TELEPHONE
FINANCE COOPERATIVE (JUNE 27, 1996)

4.36<F**> The Registrant has several classes of long-term debt
instruments outstanding in addition to that described in
Exhibits 4.17 through 4.34 above. The amount of these classes
of debt outstanding on Februray 18, 1997 does not exceed 10
percent of the Registrant's total consolidated assets. The
Registrant agrees to furnish copies of any agreement defining
the rights of holders of any such long-term indebtedness to the
Securities and Exchange Commission upon request.

4.37<F**> FINANCING COMMITMENT FROM RURAL TELEPHONE FINANCE
COOPERATIVE

4.38<F**> NOTICE OF APPROVAL OF FINANCING FROM RURAL TELEPHONE FINANCE
COOPERATIVE.

5<F**> OPINION OF COUNSEL REGARDING THE LEGALITY OF THE SECURITIES BEING
REGISTERED.

8<F**> OPINION OF OLSEN, THIELEN & CO., LTD. REGARDING TAX MATTERS.

10.1<F**> 1997 STOCK INCENTIVE PLAN. <F*>Attached as Appendix J to the
Prospectus and Ballot/Proxy Statement.

10.2<F**> FORM OF INDEMNITY AGREEMENT. <F*>Attached as Appendix K to
the Prospectus and Ballot/Proxy Statement.

10.3<F**> EMPLOYMENT AGREEMENT OF THOMAS W. HERTZ.<F*>

10.4<F**> EMPLOYMENT AGREEMENT OF CRAIG A. ANDERSON.<F*>

10.5<F**> EARLY RETIREMENT AND CONSULTING AGREEMENT OF ROBERT R.
DENEUI.<F*>

10.6<F**> The registrant is a party to a number of loan contracts that
are material to the registrant's business (included in Exhibits
4.16 through 4.35).

II-5
<PAGE>
NUMBER EXHIBIT
- ------ -------

21<F**> SUBSIDIARIES OF REGISTRANT.

23.1<F**> CONSENT OF COUNSEL (included in Exhibit 5).

23.2 CONSENT OF INDEPENDENT ACCOUNTANTS (COOPERATIVE FINANCIAL
STATEMENTS).

23.3<F**> CONSENT OF OLSEN THIELEN & CO., LTD. (included in Exhibit
8).

24<F**> LIMITED POWERS OF ATTORNEY.

27<F**> FINANCIAL DATA SCHEDULE.

99.1 COOPERATIVE PRESIDENT'S LETTER TO MEMBERS.

99.2 COOPERATIVE PRESIDENT'S LETTER TO CAPITAL CREDIT HOLDERS AND
HOLDERS OF PREFERRED STOCK

99.3 FORM OF BALLOT FOR DAKOTA COOPERATIVE TELECOMMUNICATIONS,
INC.

99.4 FORM OF PROXY FOR DAKOTA TELECOMMUNICATIONS GROUP, INC.

99.5 FORM OF SECOND NOTICE OF MEETING.
_______________

<F*>Managemecontract or compensatory plan or arrangement
<F**>Previously filed.

(b) FINANCIAL STATEMENT SCHEDULES. Financial statement schedules
have been omitted because they are not applicable.

II-6
<PAGE>
ITEM 22. UNDERTAKINGS.

(1) The registrant will:

(a) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement
to:

(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation form the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price present no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) Include any additional or changed material information
on the plan of distribution.

(b) For determining liability under the Securities Act, treat
each post-effect amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.

(c) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.

(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
small business issuer of expenses incurred or paid by a director, officer
or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of

II-7
<PAGE>
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.

(3) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
Prospectus and Ballot/Proxy Statement pursuant to Item 4, 10(b), 11,
or 13 of this form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement
through the date of responding to the request.

(4) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.

II-8
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Irene,
State of South Dakota, on June 11, 1997.

DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
(TO BECOME DAKOTA TELECOMMUNICATIONS GROUP,
INC.)
(Registrant)

By /S/ THOMAS W. HERTZ
Thomas W. Hertz, Chief Executive Officer and
General Manager

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

June 11, 1997 */S/ ROSS J. BENSON
Ross L. Benson, Director

June 11, 1997 */S/ DALE Q. BYE
Dale Q. Bye, Director and Treasurer

June 11, 1997 */S/ EDWARD D. CHRISTENSEN, JR.
Edward D. Christensen, Jr., Director

June 11, 1997 */S/ JEFFREY J. GOEMAN
Jeffrey J. Goeman, Director and Vice President

June 11, 1997 */S/ JAMES H. JIBBEN
James H. Jibben, Director and President

June 11, 1997 */S/ PALMER O. LARSON
Palmer O. Larson, Director

June 11, 1997 */S/ JOHN (JACK) A. ROTH
John (Jack) A. Roth, Director

June 11, 1997 */S/ JOHN A. SCHAEFER
John A. Schaefer, Director and Secretary

II-9
<PAGE>
June 11, 1997 /S/ THOMAS W. HERTZ
Thomas W. Hertz, Chief Executive Officer and
General Manager

June 11, 1997 /S/ CRAIG A. ANDERSON
Craig A. Anderson, Executive Vice President -
Marketing and Chief Financial Officer
(Principal Accounting and Financial
Officer)

*By /S/ THOMAS W. HERTZ
Thomas W. Hertz
Attorney-in-Fact

II-10
<PAGE>
EXHIBIT INDEX