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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 22, 1997
DAKOTA TELECOMMUNICATIONS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
333-22025 DELAWARE APPLIED FOR
(Commission File Number) (State or Other Jurisdiction (IRS Employer
of Incorporation) Identification Number)
AND
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
333-22025 SOUTH DAKOTA 46-0234208
(Commission File Number) (State or Other Jurisdiction (IRS Employer
of Incorporation) Identification Number)
29705 453RD AVENUE
IRENE, SOUTH DAKOTA 57037-0066
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (605) 263-3301
DAKOTA TELECOMMUNICATIONS GROUP (DELAWARE), INC.
(Former Name of Dakota Telecommunications Group, Inc.,
if Changed Since Last Report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On February 19, 1997, Dakota Telecommunications Group (Delaware), Inc.
(the "Company") and Dakota Cooperative Telecommunications, Inc. (the
"Cooperative") filed a Registration Statement on Form S-4 (Registration
Statement No. 333-22025) with respect to the proposed conversion of the
Cooperative into a South Dakota business corporation (the "Conversion") and
the proposed merger of the resulting South Dakota business corporation with
and into the Company (the "Merger"). The description of the Conversion set
forth under the heading "The Conversion" in the Registration Statement is
here incorporated by reference. The description of the Merger set forth
under the heading "The Merger" in the Registration Statement is here
incorporated by reference.
At a special meeting of the members of the Cooperative held on July
21, 1997, the members of the Cooperative voted to approved and adopt the
amendment to the articles of incorporation of the Cooperative to effect the
Conversion. The Conversion became effective on July 22, 1997. In the
Conversion, (i) each share of common stock, $5 par value, of the
Cooperative issued and outstanding immediately prior to the effective time
of the Conversion became and was converted into the right to receive a
validly issued, fully paid and nonassessable share of common stock of the
South Dakota business corporation, (ii) each share of preferred stock, $100
par value, of the Cooperative ("Preferred Stock") issued and outstanding
immediately prior to the effective time of the Conversion became and was
converted into the right to receive 80.8216445 validly issued, fully paid
and nonassessable shares of common stock of the South Dakota business
corporation 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 was
retired in full and automatically became and was converted into the right
to receive 0.2 of a validly issued, fully paid and nonassessable share of
common stock of the South Dakota business corporation, all subject to
payment in cash for fractional shares.
Immediately following the special meeting of members of the
Cooperative, a special meeting of the shareholders of the resulting South
Dakota business corporation was held on July 21, 1997. At that meeting,
the shareholders of the South Dakota business corporation voted to approve
an Agreement and Plan of Merger pursuant to which the South Dakota business
corporation would be merged with and into the Company. In the Merger, each
right to receive a whole share of common stock of the South Dakota business
corporation issuable in the Conversion automatically became and was
converted into the right to receive one validly issued, fully paid and
nonassessable share of the Company's common stock, without par value. The
outstanding shares of common stock of the Company held by the South Dakota
business corporation were canceled in the Merger. The Merger became
effective on July 25, 1997.
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As a result of the Conversion, the Cooperative was converted into a
South Dakota business corporation and control of the entity shifted from
the members of the Cooperative to a larger group of individuals and
entities consisting of the members of the Cooperative and the former
holders of Capital Credits and Preferred Stock. No additional
consideration was paid by any of these individuals or entities in
connection with the Conversion. No single individual or entity was
entitled to receive more than five percent of the shares of the resulting
South Dakota business corporation issuable in the Conversion.
As a result of the Merger, the Company ceased to be a wholly owned
subsidiary of the South Dakota business corporation that resulted from the
Conversion. Control of the Company is now held by all of the individuals
and entities who were shareholders of the South Dakota business corporation
immediately before the effective time of the Merger in the same proportions
and to the same extent that those individuals and entities exercised
control of the South Dakota business corporation immediately before the
effective time of the Merger. No single individual or entity owns more
than five percent of the outstanding shares of the Company's common stock.
No additional consideration was paid by these individuals or entities in
connection with the Merger.
To the best knowledge of the Company and the Cooperative, there are no
arrangements or understandings among members of the former and new control
groups and their associates with respect to the election of directors or
other matters. To the best knowledge of the Company and the Cooperative,
there are no arrangements that may result in a change in control of the
Company.
On July 24, 1997, a shareholder derivative action was filed in the
Circuit Court for the County of Clay, South Dakota, First Judicial Circuit,
by Ronald "Skip" Graff, on behalf of the Cooperative, against the
Cooperative and Ross Benson, Dale Bye, Edward Christensen, Jr., Jeff
Goeman, James Jibben, Palmer Larson, John Roth, John Schaefer, Thomas Hertz
and Craig Anderson (the "individual defendants"). The Complaint was filed
against the individual defendants both individually and in their capacities
as members of the Board of Directors of the Cooperative.
In the Complaint, Mr. Graff alleges, on behalf of the Cooperative,
that the individual defendants negligently and knowingly breached their
fiduciary duties of care and loyalty to the Cooperative in allegedly
violating the Bylaws of the Cooperative by permitting voting by proxy at
the special meeting of members of the Cooperative. Mr. Graff also alleges
that the Bylaws of the Cooperative require that the Board obtain three
independent appraisers to place a value on the Cooperative's assets if
there is to be a "sale, lease, lease-sale, exchange, transfer, or other
disposition of all or a substantial portion of the Cooperative's property."
Mr. Graff alleges that the individual defendants breached their fiduciary
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duties of care and loyalty to the Cooperative in allegedly violating the
Bylaws because they failed to obtain three independent appraisers to place
a value on the Cooperative's assets. Mr. Graff also alleges that the
individual defendants engaged in ultra vires acts because each individual
defendant allegedly allowed the Cooperative to exceed the authority granted
to it under the Bylaws of the Cooperative.
As relief, Mr. Graff has requested that the Court (i) find that the
individual defendants breached their fiduciary duties to the Cooperative,
(ii) hold the acts of the individual defendants to be ultra vires, (iii)
appoint Mr. Graff agent for the Cooperative to represent the Cooperative in
the action, (iv) render a judgment in favor of Mr. Graff and the
Cooperative against the individual defendants, (v) permanently enjoin the
individual defendants from converting the Cooperative to a business
corporation, filing any articles of conversion for the Cooperative, meeting
for the purpose of voting to merge the Cooperative into the Company or
actually merging the Cooperative into the Company, (vi) reimburse Mr. Graff
for his costs and expenses, including attorney fees, associated with
bringing the action, (vii) determine that the individual defendants are not
entitled to indemnification by the Cooperative for their actions and that
each individual defendant be required to post a bond for attorney fees and
(viii) award such other equitable relief as the Court may deem just and
proper. Mr. Graff has demanded a jury trial.
At a hearing held on July 25, 1997, the Honorable Lee A. Tappe,
Circuit Court Judge, vacated a previously issued temporary injunction nunc
pro tunc as of July 22, 1997, and denied Mr. Graff's motion for a
preliminary injunction in all respects.
The Company and the Cooperative, and their respective boards of
directors, believe that Mr. Graff's claims are totally without merit and
intend to vigorously defend the claims. If Mr. Graff is successful in this
action and the Court grants some or all of the relief requested, the award
of such relief could have a material adverse effect on the business,
financial condition, results of operations and future prospects of the
Company and the Cooperative and could result in a reversal of the
Conversion transaction and/or the Merger transaction.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION. Not applicable.
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(c) EXHIBITS. The following exhibits are incorporated by
reference as exhibits to this Current Report from the Form S-4
Registration Statement (Registration Statement No. 333-22025) that
became effective on June 13, 1997.
EXHIBIT NO. DOCUMENT
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2.1 AMENDMENT TO ARTICLES OF INCORPORATION OF
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
Attached as Appendix A to the Prospectus and
Ballot/Proxy Statement filed as part of the
Registration Statement.
2.2 AGREEMENT AND PLAN OF MERGER. Attached as
Appendix D to the Prospectus and Ballot/Proxy
Statement filed as part of the Registration
Statement.
4.1 CERTIFICATE OF INCORPORATION OF DAKOTA
TELECOMMUNICATIONS GROUP, INC. Attached as
Appendix E to the Prospectus and Ballot/Proxy
Statement filed as a part of the Registration
Statement.
4.2 BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP,
INC. Attached as Appendix F to the
Prospectus and Ballot/Proxy Statement filed
as part of the Registration Statement.
4.3 STANDSTILL AGREEMENT DATED NOVEMBER 27, 1996,
AMONG DAKOTA COOPERATIVE TELECOMMUNICATIONS,
INC. AND THE SELLING SHAREHOLDERS OF TCIC
COMMUNICATIONS, INC. Filed as Exhibit 4.7 to
the Registration Statement.
4.4 STANDSTILL AGREEMENT DATED NOVEMBER 27, 1996,
AMONG DAKOTA COOPERATIVE TELECOMMUNICATIONS,
INC. AND THE SELLING SHAREHOLDERS OF I-WAY,
PARTNERS, INC. Filed as Exhibit 4.8 to the
Registration Statement.
4.5 DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
FORM OF WARRANT AGREEMENT. Filed as Exhibit
4.11 to the Registration Statement.
4.6 DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
FORM OF OPTION AGREEMENT. Filed as Exhibit
4.12 to the Registration Statement.
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4.7 AGREEMENT REGARDING STOCK (I-WAY PARTNERS,
INC.) DATED NOVEMBER 27, 1996. Filed as
Exhibit 4.13 to the Registration Statement.
4.8 AGREEMENT REGARDING STOCK (TCIC
COMMUNICATIONS, INC.) DATED NOVEMBER 27,
1996. Filed as Exhibit 4.14 to the
Registration Statement.
4.9 DAKOTA TELECOMMUNICATIONS GROUP, INC. COMMON
STOCK CERTIFICATE. Filed as Exhibit 4.16 to
the Registration Statement.
4.10 TELEPHONE LOAN CONTRACT 515-A DATED SEPTEMBER
5, 1952. Filed as Exhibit 4.17 to the
Registration Statement.
4.11 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-B
DATED AUGUST 11, 1955. Filed as Exhibit 4.18
to the Registration Statement.
4.12 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-C
DATED OCTOBER 9, 1958. Filed as Exhibit 4.19
to the Registration Statement.
4.13 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-D
DATED MARCH 8, 1961. Filed as Exhibit 4.20
to the Registration Statement.
4.14 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-E
DATED AUGUST 20, 1964. Filed as Exhibit 4.21
to the Registration Statement.
4.15 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-F
DATED JUNE 1, 1967. Filed as Exhibit 4.22 to
the Registration Statement.
4.16 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-G
DATED DECEMBER 20, 1968. Filed as Exhibit
4.23 to the Registration Statement.
4.17 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-H
DATED DECEMBER 8, 1970. Filed as Exhibit
4.24 to the Registration Statement.
4.18 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-K1
DATED OCTOBER 2, 1972. Filed as Exhibit 4.25
to the Registration Statement.
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4.19 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-L8
DATED JUNE 4, 1973. Filed as Exhibit 4.26 to
the Registration Statement.
4.20 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-M8
DATED AUGUST 29, 1973. Filed as Exhibit 4.27
to the Registration Statement.
4.21 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-N8
DATED MAY 13, 1976. Filed as Exhibit 4.28 to
the Registration Statement.
4.22 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-P8
DATED JULY 20, 1977. Filed as Exhibit 4.29
to the Registration Statement.
4.23 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-R8
DATED NOVEMBER 22, 1982. Filed as Exhibit
4.30 to the Registration Statement.
4.24 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-S8
DATED FEBRUARY 4, 1986. Filed as Exhibit
4.31 to the Registration Statement.
4.25 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-T8
DATED SEPTEMBER 25, 1991. Filed as Exhibit
4.32 to the Registration Statement.
4.26 DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC.
RESTATED MORTGAGE, SECURITY AGREEMENT, AND
FINANCING STATEMENT (515-S8) AND SUPPLEMENT
DATED APRIL 13, 1992. Filed as Exhibit 4.33
to the Registration Statement.
4.27 DAKOTA TELECOM, INC. LOAN AGREEMENT WITH
RURAL TELEPHONE FINANCE COOPERATIVE DATED
JANUARY 29, 1996. Filed as Exhibit 4.34 to
the Registration Statement.
4.28 DAKOTA TELECOM, INC. LOAN AGREEMENT WITH
RURAL TELEPHONE FINANCE COOPERATIVE DATED
JUNE 27, 1996. Filed as Exhibit 4.35 to the
Registration Statement.
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4.29 The Company has several classes of long-term
debt instruments outstanding in addition to
that described in Exhibits 4.10 through 4.31.
The amount of these classes of debt
outstanding on June 30, 1997, does not exceed
10 percent of the Company's total
consolidated assets. The Company 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.
4.30 FINANCING COMMITMENT FROM RURAL TELEPHONE
FINANCE COOPERATIVE. Filed as Exhibit 4.37
to the Registration Statement.
4.31 NOTICE OF APPROVAL OF FINANCING FROM RURAL
TELEPHONE FINANCE COOPERATIVE. Filed as
Exhibit 4.38 to the Registration Statement
4.32 AMENDED ARTICLES OF INCORPORATION OF DAKOTA
TELECOMMUNICATIONS GROUP, INC. Attached as
Appendix B to the Prospectus and Ballot/Proxy
Statement filed as part of the Registration
Statement.
4.33 BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP,
INC. Attached as Appendix C to the
Prospectus and Ballot/Proxy Statement filed
as part of the Registration Statement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
DAKOTA TELECOMMUNICATIONS
GROUP, INC.
Date: August 6, 1997 By /S/ CRAIG A. ANDERSON
Craig A. Anderson
Executive Vice President - Marketing
and Chief Financial Officer
DAKOTA COOPERATIVE
TELECOMMUNICATIONS, INC.
Date: August 6, 1997 By /S/ CRAIG A. ANDERSON
Craig A. Anderson
Executive Vice President - Marketing
and Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT
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2.1 AMENDMENT TO ARTICLES OF INCORPORATION OF DAKOTA
COOPERATIVE TELECOMMUNICATIONS, INC. Attached as
Appendix A to the Prospectus and Ballot/Proxy Statement
filed as part of the Registration Statement.
2.2 AGREEMENT AND PLAN OF MERGER. Attached as Appendix D
to the Prospectus and Ballot/Proxy Statement filed as
part of the Registration Statement.
4.1 CERTIFICATE OF INCORPORATION OF DAKOTA
TELECOMMUNICATIONS GROUP, INC. Attached as Appendix E
to the Prospectus and Ballot/Proxy Statement filed as a
part of the Registration Statement.
4.2 BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP, INC.
Attached as Appendix F to the Prospectus and
Ballot/Proxy Statement filed as part of the
Registration Statement.
4.3 STANDSTILL AGREEMENT DATED NOVEMBER 27, 1996, AMONG
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND THE
SELLING SHAREHOLDERS OF TCIC COMMUNICATIONS, INC.
Filed as Exhibit 4.7 to the Registration Statement.
4.4 STANDSTILL AGREEMENT DATED NOVEMBER 27, 1996, AMONG
DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. AND THE
SELLING SHAREHOLDERS OF I-WAY, PARTNERS, INC. Filed as
Exhibit 4.8 to the Registration Statement.
4.5 DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. FORM OF
WARRANT AGREEMENT. Filed as Exhibit 4.11 to the
Registration Statement.
4.6 DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. FORM OF
OPTION AGREEMENT. Filed as Exhibit 4.12 to the
Registration Statement.
4.7 AGREEMENT REGARDING STOCK (I-WAY PARTNERS, INC.) DATED
NOVEMBER 27, 1996. Filed as Exhibit 4.13 to the
Registration Statement.
4.8 AGREEMENT REGARDING STOCK (TCIC COMMUNICATIONS, INC.)
DATED NOVEMBER 27, 1996. Filed as Exhibit 4.14 to the
Registration Statement.
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4.9 DAKOTA TELECOMMUNICATIONS GROUP, INC. COMMON STOCK
CERTIFICATE. Filed as Exhibit 4.16 to the Registration
Statement.
4.10 TELEPHONE LOAN CONTRACT 515-A DATED SEPTEMBER 5, 1952.
Filed as Exhibit 4.17 to the Registration Statement.
4.11 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-B DATED AUGUST
11, 1955. Filed as Exhibit 4.18 to the Registration
Statement.
4.12 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-C DATED
OCTOBER 9, 1958. Filed as Exhibit 4.19 to the
Registration Statement.
4.13 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-D DATED MARCH
8, 1961. Filed as Exhibit 4.20 to the Registration
Statement.
4.14 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-E DATED AUGUST
20, 1964. Filed as Exhibit 4.21 to the Registration
Statement.
4.15 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-F DATED JUNE
1, 1967. Filed as Exhibit 4.22 to the Registration
Statement.
4.16 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-G DATED
DECEMBER 20, 1968. Filed as Exhibit 4.23 to the
Registration Statement.
4.17 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-H DATED
DECEMBER 8, 1970. Filed as Exhibit 4.24 to the
Registration Statement.
4.18 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-K1 DATED
OCTOBER 2, 1972. Filed as Exhibit 4.25 to the
Registration Statement.
4.19 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-L8 DATED JUNE
4, 1973. Filed as Exhibit 4.26 to the Registration
Statement.
4.20 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-M8 DATED
AUGUST 29, 1973. Filed as Exhibit 4.27 to the
Registration Statement.
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4.21 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-N8 DATED MAY
13, 1976. Filed as Exhibit 4.28 to the Registration
Statement.
4.22 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-P8 DATED JULY
20, 1977. Filed as Exhibit 4.29 to the Registration
Statement.
4.23 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-R8 DATED
NOVEMBER 22, 1982. Filed as Exhibit 4.30 to the
Registration Statement.
4.24 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-S8 DATED
FEBRUARY 4, 1986. Filed as Exhibit 4.31 to the
Registration Statement.
4.25 AMENDMENT TO TELEPHONE LOAN CONTRACT 515-T8 DATED
SEPTEMBER 25, 1991. Filed as Exhibit 4.32 to the
Registration Statement.
4.26 DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. RESTATED
MORTGAGE, SECURITY AGREEMENT, AND FINANCING STATEMENT
(515-S8) AND SUPPLEMENT DATED APRIL 13, 1992. Filed as
Exhibit 4.33 to the Registration Statement.
4.27 DAKOTA TELECOM, INC. LOAN AGREEMENT WITH RURAL
TELEPHONE FINANCE COOPERATIVE DATED JANUARY 29, 1996.
Filed as Exhibit 4.34 to the Registration Statement.
4.28 DAKOTA TELECOM, INC. LOAN AGREEMENT WITH RURAL
TELEPHONE FINANCE COOPERATIVE DATED JUNE 27, 1996.
Filed as Exhibit 4.35 to the Registration Statement.
4.29 The Company has several classes of long-term debt
instruments outstanding in addition to that described
in Exhibits 4.10 through 4.31 above. The amount of
these classes of debt outstanding on June 30, 1997,
does not exceed 10 percent of the Company's total
consolidated assets. The Company 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.
4.30 FINANCING COMMITMENT FROM RURAL TELEPHONE FINANCE
COOPERATIVE. Filed as Exhibit 4.37 to the Registration
Statement.
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4.31 NOTICE OF APPROVAL OF FINANCING FROM RURAL TELEPHONE
FINANCE COOPERATIVE. Filed as Exhibit 4.38 to the
Registration Statement
4.32 AMENDED ARTICLES OF INCORPORATION OF DAKOTA
TELECOMMUNICATIONS GROUP, INC. Attached as Appendix B
to the Prospectus and Ballot/Proxy Statement filed as
part of the Registration Statement.
4.33 BYLAWS OF DAKOTA TELECOMMUNICATIONS GROUP, INC.
Attached as Appendix C to the Prospectus and
Ballot/Proxy Statement filed as part of the
Registration Statement.
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