SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1997
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to __________
COMMISSION FILE NO. 333-23769
DOBSON COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
OKLAHOMA 73-1110531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13439 NORTH BROADWAY EXTENSION
SUITE 200
OKLAHOMA CITY, OKLAHOMA 73114
(Address of principal executive offices) (Zip Code)
(405)391-8500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES NO X
At June 10, 1997, there were 473,152 shares of the registrant's $1.00 par
value Class A Common Stock outstanding.
<PAGE>
DOBSON COMMUNICATIONS CORPORATION
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets at March 31, 1997 and
December 31, 1996
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1997 and 1996
Condensed Consolidated Statement of Stockholders' Equity
for the Three Months Ended March 31, 1997
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1997 and 1996
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure about Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
ASSETS March 31, December 31,
1997 1996
---------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $2,944,481 $1,609,221
Accounts receivable, net 9,092,690 6,584,103
Restricted investments 11,846,575 -
Receivables - affiliates 1,564,645 1,704,033
Other current assets 2,464,631 10,059,098
----------- -----------
Total current assets 27,913,022 19,956,455
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, net 69,850,167 61,929,904
----------- -----------
OTHER ASSETS:
Receivables - affiliates 3,409,042 3,494,806
Restricted investments 26,792,720 -
Cellular license acquisition
costs, net 163,758,003 23,465,128
Other intangibles, net 20,692,080 6,723,598
Investments in unconsolidated
subsidiaries and other 1,910,744 1,378,134
----------- -----------
Total other assets 216,562,589 35,061,666
----------- -----------
Total assets $ 314,325,778 $ 116,948,025
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(UNAUDITED)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
1997 1996
-------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 6,131,215 $ 4,718,124
Accrued liabilities 5,758,894 3,014,737
Current portion of long-term debt 1,210,802 1,190,924
-------------- -------------
Total current liabilities 13,100,911 8,923,785
-------------- -------------
LONG-TERM DEBT, net of current portion 309,268,400 104,303,802
DEFERRED CREDITS 1,096,290 1,077,864
MINORITY INTERESTS 2,697,597 2,444,176
CLASS B CONVERTIBLE PREFERRED STOCK 10,000,000 10,000,000
CLASS C PREFERRED STOCK 1,623,329 -
STOCKHOLDERS' EQUITY:
Class A Preferred Stock 100,000 -
Class A Common Stock, $1 par value
1,000,000 shares authorized and
473,152 shares issued and outstanding 473,152 473,152
Paid-in capital 5,508,285 5,508,285
Retained deficit (17,529,186) (3,870,039)
-------------- -------------
(11,447,749) 2,111,398
Less-
Class A Preferred Stock owned by
Dobson Telephone (100,000) -
Class A Common Stock held in treasury,
at cost (11,913,000) (11,913,000)
-------------- --------------
Total stockholders' equity (23,460,749) (9,801,602)
-------------- --------------
Total liabilities and stockholders'
equity $ 314,325,778 $ 116,948,025
============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three months ended March 31,
----------------------------
1997 1996
------------ -------------
<S> <C> <C>
OPERATING REVENUE:
Cellular service $ 6,283,676 $ 4,109,111
Cellular roaming 3,373,288 1,212,176
Cellular equipment sales 139,598 245,400
Wireline telephone service 3,574,487 3,259,044
Fiber service 801,953 473,953
Other 170,328 318,454
------------ ------------
Total operating revenue 14,343,330 9,618,138
------------ ------------
OPERATING EXPENSES:
Cellular service 1,813,022 823,721
Cellular equipment 790,435 473,885
Wireline telephone service 502,103 428,016
Fiber service 67,207 49,742
Marketing and selling 1,577,256 814,533
General and administrative 3,997,780 2,357,656
Depreciation and amortization 3,596,012 1,733,065
------------ ------------
Total operating expenses 12,343,815 6,680,618
------------ ------------
OPERATING INCOME 1,999,515 2,937,520
------------ ------------
OTHER INCOME (EXPENSES):
Interest expense (3,901,925) (1,084,513)
Other 270,741 (312,179)
------------ ------------
Total other expenses (3,631,184) (1,396,692)
------------ ------------
INCOME (LOSS) BEFORE MINORITY INTERESTS IN INCOME
OF SUBSIDIARIES, INCOME TAXES AND EXTRAORDINARY
ITEMS (1,631,669) 1,540,828
MINORITY INTERESTS IN INCOME OF SUBSIDIARIES (242,738) (159,777)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS (1,874,407) 1,381,051
INCOME TAX (PROVISION) BENEFIT 74,976 (490,363)
------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS (1,799,431) 890,688
EXTRAORDINARY EXPENSE, net of income tax benefit
of $93,887 in 1997, and $287,361 in 1996 (2,403,711) (542,055)
------------ ------------
NET INCOME (LOSS) (4,203,142) 348,633
DIVIDENDS ON PREFERRED STOCK (199,056) (127,473)
------------ ------------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ (4,402,198) $ 221,160
============ ============
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS PER COMMON SHARE $ (7.68) $ .46
============ ============
WEIGHTED AVERAGE COMMON SHARES AND COMMON
SHARE EQUIVALENTS OUTSTANDING 573,152 476,440
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<CAPTION>
Class A Class A Treasury
PREFERRED STOCK COMMON STOCK Paid-in Stock, at Retained
Shares Amount Shares Amount Capital Cost Deficit
--------- --------- -------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996 473,152 $473,152 $5,508,295 $(11,913,000) $ (3,870,039)
Net loss - - - - - - (4,203,142)
Cash dividends declared on
preferred stock - - - - - - (199,056)
Cash dividends declared on
common stock - - - - - - (7,633,620)
Preferred stock dividend - - - - - - (1,623,329)
Reorganization 100,000 $100,000 - - - (100,000) -
-------- -------- -------- -------- ---------- ------------ ------------
MARCH 31, 1997 100,000 $100,000 473,152 $473,152 $5,508,295 $(12,013,000) $(17,529,186)
======== ======== ======== ======== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
DOBSON COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited)
Three months ended March 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 3,845,855 $ 4,833,209
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,363,168) (2,597,898)
Acquisitions of selected cellular systems (155,579,346) (30,000,000)
Decrease (increase) in
receivables - affiliate 225,152 (399,741)
Refund of deposits 6,350,000 -
Investments in unconsolidated subsidiaries
and other (532,610) (147,364)
------------ ------------
Net cash used by investing activities (151,899,972) (33,145,003)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 205,250,000 32,765,921
Repayments of long-term debt (265,524) (264,659)
Cash dividends (7,832,676) (264,765)
Issuance of preferred stock - 10,000,000
Purchase of treasury stock - (5,913,000)
Restricted investments (38,639,295) -
Deferred costs (9,123,128) (3,525,625)
------------ ------------
Net cash provided by financing
activities 149,389,377 32,797,872
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,335,260 4,486,078
CASH AND CASH EQUIVALENTS, beginning of
period 1,609,221 1,116,773
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 2,944,481 $ 5,602,851
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated balance sheets of Dobson Communications
Corporation ("DCC") and subsidiaries (collectively with DCC, the "Company")
as of March 31, 1997 and December 31, 1996, the condensed consolidated
statements of operations for the three months ended March 31, 1997 and
1996, the condensed consolidated statement of stockholders' equity for the
three months ended March 31, 1997, and the condensed consolidated
statements of cash flows for the three months ended March 31, 1997 and 1996
are unaudited. In the opinion of management, such financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of financial position, results of
operations, and cash flows for the periods presented. The condensed
balance sheet data at December 31, 1996 was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. The financial statements presented herein
should be read in connection with the Company's December 31, 1996
consolidated financial statements included in the Company's Prospectus
dated May 14, 1997, as filed with the Securities and Exchange Commission
under Rule 424(b) of the Securities Act of 1933.
1. REORGANIZATION:
DCC was incorporated as an Oklahoma corporation in February 1997. Under an
Agreement and Plan of Reorganization effective February 28, 1997, DCC
acquired all of the outstanding Class A Common Stock, Class C Common Stock
and Class B Convertible Preferred Stock of Dobson Operating Company
("DOC"). In exchange, the holders of the Class A Common Stock and Class B
Convertible Preferred Stock of DOC received equivalent shares of stock of
DCC. The holders of Class C Common Stock received 100,000 shares of Class
A Preferred Stock of DCC. In addition, DCC assumed all DOC outstanding
stock options, substituting shares of DCC Class B Common Stock for the DOC
stock subject to options. As a result of the reorganization, DCC is the
parent company of DOC.
As part of the reorganization, the stock of certain subsidiaries of DOC was
distributed to DCC. DOC continues to be the holding company for the
Company's cellular, local exchange and wholly-owned fiber subsidiaries.
2. ACQUISITIONS OF SELECTED CELLULAR SYSTEMS:
RECENT ACQUISITIONS
On March 19, 1996, the Company purchased the FCC cellular licenses for, and
certain assets relating to, one RSA located in Kansas and three RSAs and a
portion of another RSA located in Missouri for $30 million. The
properties (the "Kansas/Missouri Cluster") are located in northeastern
Kansas and northwestern Missouri near Kansas City.
On February 28, 1997, the Company purchased the FCC cellular licenses for,
and certain assets relating to, two MSAs and two RSAs located in Maryland
and Pennsylvania for $77.7 million. The properties are located immediately
outside the Washington/Baltimore metropolitan area.
On March 3, 1997, the Company purchased the FCC cellular license for, and
certain assets relating to, the Maryland RSA 2 for $75.8 million. The
property is located to the east of the Washington/Baltimore metropolitan
area.
The acquisition transactions were accounted for as purchases and, accord-
ingly, their results of operations have been included in the accompanying
consolidated statements of operations from the respective dates of acquisi-
tion. The unaudited pro forma information set forth below includes the first
quarter 1997 acquisitions and the 1996 acquisition accounted for as if the
purchases occurred at the beginning of the respective periods presented.
The unaudited pro forma information is presented for informational purposes
only and is not necessarily indicative of the results of operations that
actually would have been achieved had the acquisitions been consummated at
that time:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Operating revenue $19,268,000 $14,460,000
Loss before extraordinary items (4,875,000) (3,955,000)
Net loss (7,279,000) (4,406,000)
Net loss applicable to common stockholders (7,478,000) (4,624,000)
Net loss applicable to common stockholders
per common share (13.05) (9.71)
</TABLE>
PENDING ACQUISITION
On February 28, 1997, the Company signed a definitive agreement to purchase
for $53.1 million a 100% interest in the Gila River Cellular General
Partnership (the "Arizona 5 Partnership") which owns the cellular license
for Arizona RSA 5 as well as the associated tangible operating assets.
Gila River Telecommunications, Inc. ("GRTI") owns 41.95% of Arizona 5
Partnership and Associated Telecommunications and Technologies, Inc, an
affiliate of the Company, owns 49% of GRTI. In connection with this
acquisition, the Company will loan $5.2 million to one of the current
partners which, concurrent with other equity contributions, will acquire a
25% interest in the Arizona 5 Partnership. Upon completion of these
transactions, the Company will have paid a net amount of $39.8 million
and it will own a 75% interest in the Arizona 5 Partnership.
Regulatory approval of the transaction has been received. Management
of the Company expects that this acquisition will close as soon as all
closing conditions have been satisfied.
3. LONG-TERM DEBT:
The Company's long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Revolving credit facility $121,000,000 $ 75,750,000
Senior notes 160,000,000 -
------------ ------------
Mortgage notes payable 29,479,202 29,744,726
------------- ------------
Total debt $310,479,202 $105,494,726
Less- Current maturities 1,210,802 1,190,924
------------ ------------
Total long-term debt $309,268,400 $104,303,802
============ ============
</TABLE>
REVOLVING CREDIT FACILITY
On February 28, 1997, the Company's bank credit agreement was amended and
restated to provide the Company with a $200,000,000 revolving credit
facility maturing in 2005. Interest on borrowings under the new credit
agreement accrue at a variable rate (8.54% at March 31, 1997). Initial
proceeds were used to refinance existing indebtedness, finance the 1997
acquisitions described above and for general corporate purposes, including
$7.6 million to pay a dividend to holders of its Class A Common Stock.
$6.0 million of the dividend was used to repay a loan which had been
guaranteed by the Company and approximately $.5 million was used to repay
indebtedness owed to the Company with respect to certain legal fees. As a
result of the $7.6 million dividend, the holders of Class B Convertible
Preferred Stock were entitled to a make-whole dividend of approximately
$1.6 million. In lieu of such dividend, the holders of Class B Convertible
Preferred Stock were issued 100,000 shares of Class C Preferred Stock,
having a liquidation preference of approximately $1.6 million. In
connection with the closing of the revolving credit facility, the Company
extinguished its then existing credit facility, and recognized a pretax
loss of approximately $2.5 million as a result of writing off previously
capitalized financing costs associated with the revolving credit facility.
This loss has been reflected as an extraordinary item, net of tax, in the
Company's statement of operations for the three months ended March 31,
1997.
SENIOR NOTES
On February 28, 1997, the company issued $160,000,000 of 11.75% Senior
Notes maturing in 2007 to finance the 1997 acquisitions described above and
approximately $38.3 million placed in an escrow account and which will be
used to pay the first four semi-annual interest payments on the notes,
which begin on October 15, 1997. Amounts in the escrow account are
reflected as "restricted investments" in the Company's balance sheet. The
senior notes are redeemable at the option of the Company in whole or in
part, on or after April 15, 2002, initially at 105.875%. Prior to April
15, 2000, the Company may redeem up to 35% of the principal amount of the
senior notes at 111.750% with proceeds from sales of stock, provided that
after any such redemption at least $104 million remains outstanding. On
June 16, 1997, the Company completed an offer to exchange all of the
outstanding senior notes for substantially identical notes registered under
the Securities Act of 1933.
4. TAXES:
The income tax benefit for the three months ended March 31, 1997 differs
from amounts computed at the statutory rate due primarily to net operating
losses for which no benefit has been recognized.
5. EARNINGS PER COMMON SHARE:
For purposes of calculating reported weighted average number of common and
common equivalent shares outstanding, shares of convertible Class B
Preferred Stock issued on March 19, 1996 are considered common equivalent
shares outstanding.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No.
128"). SFAS No. 128 specifies the computation, presentation, and
disclosure requirements of earnings per share and supersedes Accounting
Principles Board Opinion No. 15, Earnings Per Share. SFAS No. 128 requires
a dual presentation of basic and diluted earnings per share. Basic
earnings per share, which excludes the impact of common stock equivalents
will replace primary earnings per share. Diluted earnings per share, which
utilizes the average market price per share as opposed to the greater of
the average market price per share or ending market price per share when
applying the treasury stock method in determining common stock equivalents,
will replace fully-diluted earnings per share. SFAS No. 128 will be
effective for both interim and annual periods ending after December 15,
1997. The following pro forma earnings per common share information
assumes SFAS No. 128 was adopted in 1996:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1996
<S> <C> <C>
Reported:
Primary net income (loss) applicable to
common shareholders per common share $ (7.68) $ 0.46
Weighted average number of common and
common equivalent shares outstanding 573,152 476,440
Pro forma:
Basic net income (loss) per common share $ (9.30) $ 0.47
Basic weighted average shares 473,152 473,152
Diluted net income (loss) pet common share $ (7.68) $ 0.46
Diluted weighted average shares 573,152 476,440
</TABLE>
6. SUBSEQUENT EVENTS:
In April 1997, the Company was granted PCS licenses for nine markets,
adjacent to and overlapping the Company's existing cellular footprint, in
the FCC "F" Block auction. The aggregate bid for these licenses was $5.1
million after a 15% discount. The Company has paid 20% of the winning bid
amount. The balance will be financed by the U.S. Government at the U.S.
Treasury ten-year rate. The obligations will be due in quarterly
installments over an eight year amortization beginning in 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
Dobson Communications Corporation (the "Company"), through its
subsidiaries, provides diversified telecommunication products and services.
The Company currently provides rural cellular telephone services in
Oklahoma and Texas (the "Oklahoma/Texas Cluster"), in Kansas and Missouri
(the "Kansas/Missouri Cluster") and in Maryland and Pennsylvania (the
"Maryland Cluster"). Upon consummation of the pending acquisition
described below, the Company will also own and operate a cellular system in
Arizona. The Company also owns interests in, and operates, regional
fiberoptic transmission networks in Oklahoma, Texas and Colorado, and owns
and operates local telephone exchanges in Oklahoma, and intends to resell
local, long distance and wireless services in Oklahoma.
RECENT EVENTS
On February 28, 1997, the Company purchased the FCC cellular licenses for,
and certain assets relating to, two MSAs and two RSAs located in Maryland
and Pennsylvania for $77.7 million. The properties are located immediately
outside the Washington/Baltimore metropolitan area. On March 3, 1997, the
Company purchased the FCC cellular license for, and certain assets relating
to, Maryland RSA 2 for $75.8 million. The property is located to the east
of the Washington/Baltimore metropolitan area.
On February 28, 1997, the Company signed a definitive agreement to purchase
for $53.1 million a 100% interest in the Gila River Cellular General
Partnership (the "Arizona 5 Partnership"), which owns the cellular license
for Arizona RSA 5 as well as the associated tangible operating assets.
Certain affiliates of the Company indirectly own a 20.6% interest in the
Arizona 5 Partnership and will receive approximately $9.5 million in
connection with the acquisition. In addition, the Company will loan $5.2
million to one of the current partners which will acquire a 25% interest in
the Arizona 5 Partnership. Upon completion of these transactions, the
Company will have paid a net amount of $39.8 million and will own a 75%
interest in the Arizona 5 Partnership. The closing is subject to certain
regulatory approvals and the satisfaction of certain closing conditions.
On February 28, 1997, the Company's bank credit agreement was amended and
restated to provide the Company with a $200 million revolving credit
facility maturing in 2005 (the "Bank Facility"). Interest on borrowings
under the Bank Facility accrue at a variable rate (8.54% at March 31,
1997). Initial loan proceeds were used to refinance existing indebtedness,
finance the Maryland Cluster acquisitions described above and for general
corporate purposes, including the payment of a $7.6 million dividend to
holders of the Company's Class A Common Stock. The principal stockholder
used $6.0 million of the dividend to repay a loan which had been guaranteed
by the Company and approximately $.5 million to repay indebtedness owed to
the Company with respect to certain legal fees. As a result of the $7.6
million dividend, the holders of Class B Convertible Preferred Stock were
issued 100,000 shares of Class C Preferred Stock, having a liquidation
preference of approximately $1.6 million. In connection with the closing
of the Bank Facility, the Company extinguished its then existing credit
facility. The Company will finance the Arizona 5 Partnership acquisition
with borrowings under the Bank Facility.
On February 28, 1997, the Company issued pursuant to a private offering
$160 million of 11.75% Senior Notes maturing in 2007 and used the net
proceeds ($155.2 million) to finance the acquisitions described above
($116.9 million) and to purchase securities ($38.3 million) which have
been pledged and escrowed to secure payment of the first four semi-annual
interest payments on the notes, which begin on October 15, 1997. Except
for the first four interest payments, the senior notes are unsecured
obligations of the Company, redeemable at the option of the Company,
in whole or in part, on or after April 15, 2002 at 105.875% of the principal
amount outstanding, declining ratably to 100% on or after April 15, 2004,
plus accrued interest. In addition, at any time prior to April 15, 2000,
the Company may redeem up to 35% of the aggregate principal amount with
the net proceeds of sales of capital stock of the Company at 111.750% of
principal amount, plus accrued interest; provided that after any such
redemption at least $104 million aggregate principal amount remains out-
standing.
On June 16, 1997, the Company completed an offer to exchange all of the
outstanding senior notes for substantially identical notes registered under
the Securities Act of 1933.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the period-to-
period change in dollars and percent for the various Condensed Consolidated
Statements of Operations line items:
<TABLE>
<CAPTION>
Period-to-Period
Change for the
Three Months Ended
March 31,
1997 and 1996
Increase/(Decrease)
--------------------------
<S> <C> <C>
Operating Revenue:
Cellular service $ 2,174,565 52.9%
Cellular roaming 2,161,112 178.3%
Cellular equipment sales (105,802) (43.1)%
Wireline telephone service 315,443 9.7%
Fiber service 328,000 69.2%
Other (148,126) (46.5)%
------------ --------
Total operating revenue 4,725,192 49.1%
------------ --------
Operating Expenses:
Cellular service 989,301 120.1%
Cellular equipment 316,550 66.8%
Wireline telephone service 74,087 17.3%
Fiber service 17,465 35.1%
Marketing and selling 762,723 93.6%
General and administrative 1,640,124 69.6%
Depreciation and amortization 1,862,947 107.5%
------------ --------
Total operating expenses 5,663,197 84.8%
------------ --------
Operating income (938,005) (31.9)%
------------ --------
Other income (expenses):
Interest expense 2,817,412 259.8%
Other 582,920 186.7%
------------ --------
Total other expenses 2,234,492 160.0%
------------ --------
Income (loss) before minority interests
in income of subsidiaries, income taxes
and extraordinary items (3,172,497) (205.9)%
Minority interests in income of subsidiaries 82,961 51.9%
------------ --------
Income (loss) before income taxes and
extraordinary items (3,255,458) (235.7)%
Income tax (provision) benefit 565,339 115.3%
------------ --------
Income (loss) before extraordinary items (2,690,119) (302.0)%
Extraordinary expense, net of income
tax benefit (1,861,656) (343.4)%
------------ --------
Net income (loss) $ (4,551,775) (1,305.6)%
============ ========
</TABLE>
OPERATING REVENUE. For the three months ended March 31, 1997, total
operating revenue increased $4.7 million, or 49.1%, to $14.3 million from
$9.6 million for the comparable period in 1996.
CELLULAR. The Company's operating revenue from its cellular operations
(service, roaming, and equipment) increased $4.2 million in the first
quarter of 1997 compared to 1996. Cellular service revenue increased $2.2
million, or 52.9%, to $6.3 million in 1997 from $4.1 million in 1996. Of
the increase, $1.8 million was attributable to the acquisition of the
Maryland Cluster in 1997 and the inclusion of the operations of the
Kansas/Missouri Cluster, which was acquired March 19, 1996, for all of
1997. The remaining $.4 million was primarily attributable to increased
penetration and usage in the Oklahoma/Texas Cluster. The Company's cellular
subscriber base increased 165.0% to 78,852 at March 31, 1997, from 29,753
at March 31, 1996. 42,608 subscribers were added as a result of the
acquisition of the Maryland Cluster. However, the Company's average monthly
cellular service revenue per subscriber decreased 13.6% to $42.51 for the
three months ended March 31, 1997 from $49.22 for the comparable period in
1996 due to competitive market pressures and the addition of new lower rate
subscribers in the Maryland Cluster. At the date of acquisition, the
average monthly cellular service revenue per subscriber for the businesses
now making up the Company's Maryland Cluster was approximately $36.
Cellular roaming revenue increased $2.1 million, or 178.3%, to $3.3 million
in 1997 from $1.2 million in 1996. Of the increase, $1.6 million was
attributable to the acquisition of the Maryland Cluster in 1997 and the
inclusion of the operations of the Kansas/Missouri Cluster, which was
acquired on March 19, 1996, for all of the first quarter of 1997. The
remaining $.5 million was primarily attributable to increased roaming
minutes in the Oklahoma/Texas Cluster. Cellular equipment sales of $.1
million in 1997 represented a slight decrease from 1996. Although the
Company sold more equipment during the first quarter of 1997, the Company
increased its use of discounted equipment and free phone promotions with
the signing of one-year service contracts.
WIRELINE. Wireline operations revenue increased $.3 million, or 9.7%, to
$3.6 million for the three months ended March 31, 1997 compared to
$3.3 million for the same period in 1996 due primarily to an increase in
toll charges and a slight increase in the number of access lines.
FIBER. The Company's revenue from its fiber operations increased $.3
million, or 69.2%, to $.8 million in the first quarter of 1997 from
$.5 million in 1996 primarily as a result of an increase in the number of
fiber lines, bringing the total lines leased to an equivalent of 48 DS3s at
March 31, 1997.
OTHER. For the three months ended March 31, 1997 and 1996, other income
of $.2 million and $.3 million, respectively, included rental revenue for
the use of Company-owned facilities, interest on loans to Company employees
and affiliates, management fees from affiliates and revenue from
telemarketing and other telecommunications services such as internet and
voice mail.
COST OF SERVICE AND EQUIPMENT SALES. For the three month period ended
March 31 1997, the total cost of service and equipment sales increased
$1.4 million, or 78.7%, to $3.2 million from $1.8 million for the
comparable period in 1996.
CELLULAR. Cost of cellular service increased $1.0 million, or 120.1% to
$1.8 million during the three months ended March 31, 1997 from the same
period in 1996. Of the increase $.8 million was attributable to the
acquisition of the Maryland Cluster in 1997 and the inclusion of the
operations of the Kansas/Missouri Cluster, which was acquired March 19,
1996, for all of 1997. The remaining $.2 million was primarily
attributable to increased subscribers and minutes of use in the
Oklahoma/Texas Cluster. Cost of cellular equipment increased $.3 million
in 1997 primarily from increases in the volume of equipment sold due to the
growth in subscribers.
WIRELINE. Cost of wireline telephone service increased $.1 million, or
17.3%, to $.5 million in 1997 from $.4 million in 1996. The increase was a
result of increased maintenance costs of wireline plant and costs
associated with continued customer growth.
FIBER. Cost of fiber service remained fairly constant for the period.
MARKETING AND SELLING COSTS. Marketing and selling costs increased
$.8 million, or 93.6%, to $1.6 million in the first quarter of 1997 from
$.8 million in 1996. The increase was primarily due to the higher level of
cellular subscribers added period to period. Gross cellular subscribers
added in the first quarter of 1997 was 4,802 with the Maryland Cluster
making up 1,409 of the gross cellular subscribers added since its
acquisition. The number of gross cellular subscribers added in the first
quarter of 1996 was 2,186.
GENERAL AND ADMINISTRATIVE COSTS. For the three month period ended March
31, 1997, general and administrative costs increased $1.6 million, or
69.6%, to $4.0 million from $2.4 million for 1996. The increase was
primarily due to increased billing costs as a result of the growth in
cellular subscribers, the acquisition of the Maryland Cluster, the
inclusion of the Kansas/Missouri Cluster for all of 1997, and increased
salary costs resulting from additional personnel in the Company's cellular
and fiber operations.
DEPRECIATION AND AMORTIZATION EXPENSE. For the three month period ended
March 31, 1997, depreciation and amortization expense increased
$1.9 million to $3.6 million from $1.7 million in 1996. Approximately
$1.7 million of the increase was the result of the amortization of assets
acquired in the Maryland and Kansas/Missouri Clusters, with the remainder
due primarily to an increase in equipment in the Company's cellular,
wireline and fiber businesses.
INTEREST EXPENSE. For the first quarter of 1997, interest expense
increased $2.8 million to $3.9 million from $1.1 million in the comparable
period of 1996. The increase was primarily a result of increased borrowings
to finance the Maryland Cluster acquisition.
EXTRAORDINARY EXPENSE. In the first quarter of 1997 and 1996, the Company
incurred a pretax loss of approximately $2.5 million and $.8 million,
respectively, as a result of writing off previously capitalized financing
costs associated with a revolving credit facility that was refinanced in
February 1997 and March 1996.
LIQUIDITY AND CAPITAL RESOURCES
The cellular telephone business requires substantial capital to acquire,
construct, and expand cellular telephone systems and to fund operating
requirements. The Company historically has financed its acquisitions and
other capital needs through vendor financing, bank debt and proceeds from
the sale of debt and equity. The Company's wireline business has
historically been financed through government loans. During the first
quarter of 1997, the Company established a $200 million reducing revolving
bank credit facility maturing in 2005 and issued $160 million of 11.75%
Senior Notes due 2007 pursuant to a private offering. See "- Recent
Events."
At March 31, 1997, the Company had working capital of $14.8 million (ratio
of current assets to current liabilities of 2.1:1) and a cash balance of
$2.9 million, which compares to working capital of $11.0 million (a ratio
of current assets to current liabilities of 2.2:1) and a cash balance of
$1.6 million at December 31, 1996. The Company's net cash provided by
operating activities for the three month periods ended March 31, 1997 and
1996 was $3.8 million and $4.8 million, respectively. The net cash
provided by operating activities in 1997 primarily relates to net changes
in current assets and liabilities and depreciation and amortization, offset
by the Company's first quarter net loss. The increase in net cash used in
investing activities and net cash provided by financing activities from
1997 to 1996 is primarily the result of the Company's acquisition of
cellular systems in the Maryland Cluster which was financed through the
issuance of additional long-term debt.
In April 1997, the Company entered into an interest rate hedge agreement to
hedge the Company's interest expense on $160 million of its indebtedness
under the Bank Facility. The agreement provides for a rate cap of 8%
terminating on the earlier of April 24, 2000 or the date an option to enter
into an interest rate swap transaction is exercised. Under the swap
agreement, the interest rate would be fixed at 6.13% or a floating LIBOR
rate, terminating on April 24, 2002.
The Company's capital expenditures (excluding cost of acquisitions) were
$2.4 million for the three month period ended March 31, 1997 and the
Company expects its capital expenditures (excluding cost of acquisitions)
to be approximately $19 million for 1997. Capital expenditures for its
cellular operations include buildout of new cell sites and new store
locations. Fiber operations capital expenditures will be for electronics
to increase capacity and the Company expects to invest only maintenance
capital for its wireline operations. The Company also expects to invest
approximately $4.9 million in high capacity switches and other
communications equipment in 1997 for use in its business to resell local,
long-distance and wireless services in Oklahoma City and Tulsa, and in its
wireline operations.
In April 1997, the Company was granted PCS licenses in nine markets
adjacent to and overlapping the Company's existing cellular footprint. The
aggregate bid for these licenses was $5.1 million after a discount of 15%.
The Company has paid 20% of the net winning bid amount and has financed the
balance with the government at the U.S. Treasury rate for ten-year
obligations with a quarterly amortization over eight years beginning in
1999. The Company is required to build out systems covering 25% of the
licensed population by 2002. The Company currently anticipates that the
cost to build out the minimum PCS system will be $10 million to
$30 million. The actual amount of expenditures will depend on the PCS
technology selected by the Company, the extent of the Company's buildout,
the costs at the time of buildout and the extent the Company must relocate
incumbent microwave licensees.
The amount and timing of capital expenditures may vary depending on the
rate at which the Company expands and develops its cellular systems,
whether the Company consummates additional acquisitions, the rate at which
the Company builds out a PCS system and whether the Company expands its
fiberoptic network or local exchange operations.
Although there can be no assurance, management believes the proceeds
available from the Bank Facility, together with cash on hand, and cash flow
from operations will be sufficient to fund the pending acquisition of the
Arizona 5 Partnership, the Company's capital expenditures and its working
capital and debt service requirements. At March 31, 1997, the Company had
approximately $79.0 million of funds available under the Bank Facility.
The Company may require additional financing for future acquisitions and to
meet the required PCS buildout. Sources of additional capital may include
cash flows from operations and public or private debt or equity financings.
There can be no assurance that any additional financing will be available
to the Company or, if available, that it can be obtained on terms
acceptable to the Company and within the limitations contained in the
Company's financing arrangements. The successful implementation of the
Company's strategy, including the further development of its cellular
systems and significant and sustained growth in the Company's cash flows,
is necessary for the Company to meet its debt service requirements.
The Company is a holding company with no direct operations and no
significant assets other than the stock of its subsidiaries. The Company
is dependent on the cash flows of its subsidiaries to meet its obligations,
including the payment of interest and principal on the Senior Notes (except
with respect to the first four interest payments for which provision has
been made). The Bank Facility contains certain restrictions on the ability
of the Company's primary subsidiary to distribute funds to the Company.
The indenture under which the Senior Notes were issued and the Bank
Facility impose certain limits on the ability of the Company to, among
other things, incur additional indebtedness.
FORWARD-LOOKING STATEMENTS
The description of the Company's capital expenditure plans set forth above
are forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. These plans
involve a number of risks and uncertainties. The important factors that
could cause actual capital expenditures or the Company's performance to
differ materially from the plans include, without limitation, the Company's
continued ability to satisfy the financial covenants of the Bank Facility;
the Company's ability to manage its rapid growth successfully and to
compete effectively in its cellular, fiber and resale businesses against
competitors with greater financial, technical, marketing and other
resources; changes in end-user requirements and preferences; the
development of other technologies and products that may gain more
commercial acceptance than those of the Company; and adverse regulatory
changes. For further information regarding these and other risk factors,
see "Risk Factors" and "Business" in the Company's Prospectus dated May 14,
1997 filed with the Securities and Exchange Commission under Rule 424(b) of
the Securities Act of 1933.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- - Not applicable
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- - Not applicable
ITEM 2. CHANGES IN SECURITIES
- - Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- - Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - Not applicable
ITEM 5. OTHER INFORMATION
- - Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as a part of this report:
EXHIBIT NUMBER DESCRIPTION
3.1 - Registrant's Amended and Restated Certificate of
Incorporation.
3.2 - Registrant's Bylaws. Incorporated herein by
reference to Exhibit 3.2 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
4.1 - Second Amended and Restated Credit Agreement
dated February 28, 1997, as amended by Amendment
No. 1 thereto dated April 22, 1997, among the
Registrant, Dobson Operating Company and
CoreStates Bank, N.A., First Union National Bank
of North Carolina, Nationsbank of Texas, N.A.
and the other banks listed therein.
Incorporated herein by reference to Exhibits 4.1
and 4.1.1 to Registrant's registration statement
on Form S-4 (No. 333-23769).
4.2 - Telephone Loan Contract dated as of November 7,
1958 between Dobson Telephone Company, Inc. and
United States of America. Incorporated herein
by reference to Exhibit 4.2 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
4.3 - Telephone Loan Contract dated as of March 19,
1956 between McLoud Telephone Company and United
States of America. Incorporated herein by
reference to Exhibit 4.3 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
4.4 - Telephone Loan Contract Amendment dated as of
January 15, 1993 between Dobson Telephone
Company, Inc., Rural Telephone Bank and United
States of America. Incorporated herein by
reference to Exhibit 4.4 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
4.5 - Restated Mortgage, Security Agreement and
Financing Statement dated as of May 15, 1993
between Dobson Telephone Company and United
States of America. Incorporated herein by
reference to Exhibit 4.5 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
4.6 - Indenture dated as of February 28, 1997 between
the Registrant, as Issuer, and United States
Trust Company of New York, as Trustee.
Incorporated herein by reference to Exhibit 4.6
to Registrant's registration statement on Form
S-4 (No. 333-23769).
4.7 - Registration Rights Agreement dated February 25,
1997 between the Registrant and Morgan Stanley &
Co. Incorporated, Alex. Brown & Sons
Incorporated, First Union Capital Markets Corp.
and NationsBanc Capital Markets, Inc.
Incorporated herein by reference to Exhibit 4.8
to Registrant's registration statement on Form
S-4 (No. 333-23769).
4.8 - Escrow and Security Agreement dated February 28,
1997 among the Registrant, as Pledgor, and
Morgan Stanley & Co. Incorporated, Alex. Brown &
Sons Incorporated, First Union Capital Markets
Corp. and NationsBanc Capital Markets, Inc., as
Placement Agents, and United States Trust
Company of New York, as Trustee. Incorporated
herein by reference to Exhibit 4.9 to
Registrant's registration statement on Form S-4
(No. 333-23769).
10.1<F1> - Registrant's 1996 Stock Option Plan.
Incorporated herein by reference to Exhibit 10.1
to Registrant's registration statement on Form
S-4 (No. 333-23769).
10.2.1 - Promissory Note dated February 10, 1997 of G.
Edward Evans in the amount of $300,000 in favor
of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.1 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.2.2 - Promissory Note dated March 19, 1996 of Everett
R. Dobson in the amount of $1,400,000 in favor
of Dobson Operating Company. Incorporated
herein by reference to Exhibit 10.2.2 to
Registrant's registration statement on Form S-4
(No. 333-23769).
10.2.3 - Promissory Note dated March 15, 1997 of Russell
L. Dobson in the amount of $297,179.33 in favor
of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.3 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.2.4 - Promissory Note dated December 31, 1996 of
Russell L. Dobson in the amount of $12,908 in
favor of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.4 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.2.5 - Promissory Note dated March 15, 1997 of Russell
L. Dobson in the amount of $116,163.78 in favor
of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.5 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.2.6 - Promissory Note dated December 31, 1996 of
Everett R. Dobson in the amount of $339,884.26
in favor of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.6 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.2.7 - Lease Agreement dated July 17, 1995 between
WillRuss Limited Liability Company and Western
Financial Services Corp. Incorporated herein by
reference to Exhibit 10.2.7 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
10.2.8 - Promissory Note dated December 31, 1996 of
Associated Telecommunications and Technologies,
Inc. (ATTI) in the amount of $263,494.78 in
favor of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.8 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.2.9 - Promissory Note dated December 31, 1996 of
National Telecommunications Technologies, Inc.
(Natelco) in the amount of $307,050.30 in favor
of Western Financial Services Corp.
Incorporated herein by reference to Exhibit
10.2.9 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.3.1<F1> - Letter dated December 26, 1996 from Registrant
to G. Edward Evans describing employment
arrangement. Incorporated herein by reference
to Exhibit 10.3.1 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.3.2<F1> - Letter dated June 3, 1996 from Registrant to
Bruce Knooihuizen describing employment
arrangement. Incorporated herein by reference
to Exhibit 10.3.2 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.3.3<F1> - Letter dated October 15, 1996 from Fleet Equity
Partners to Justin Jaschke regarding director
compensation. Incorporated herein by reference
to Exhibit 10.3.3 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.4.1 - Agreement for DS-3 service dated December 16,
1993 between Dobson Fiber Company and NTS
Communications, Inc. Incorporated herein by
reference to Exhibit 10.4.1 to Registrant's
registration statement on Form S-4 (No. 333-
23769).
10.4.2 - North American Cellular Network Services
Agreement dated August 26, 1992 by and between
North American Cellular Network, Inc. and Dobson
Cellular, Inc. Incorporated herein by reference
to Exhibit 10.4.2 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.4.3 - Trademark Sublicense Agreement dated February
28, 1997 between WMC Partners L.P. and Dobson
Cellular of Arizona, Inc. and Registrant.
Incorporated herein by reference to Exhibit
10.4.3 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.4.4 - Affiliation Agreement dated February 28, 1997 by
and between Registrant and Dobson Cellular of
Arizona, Inc. and WMC Partners L.P.
Incorporated herein by reference to Exhibit
10.4.4 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.4.5 - Form of Cellular One License Agreement between
Cellular One Group and Dobson Cellular of Enid,
Inc., Dobson Cellular of Woodward, Inc. and
Dobson Cellular of Kansas/Missouri, Inc.
Incorporated herein by reference to Exhibit
10.4.5 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.5.1 - Asset Purchase Agreement dated as of November
19, 1996, as amended by Amendment No. 1 thereto
effective as of January 17, 1997 and Amendment
No. 2 thereto dated February 6, 1997, among
Horizon Cellular Telephone Company of Hagerstown
L.P., Cumberland Cellular Partnership and Dobson
Cellular of Maryland, Inc., and Dobson Operating
Company. Incorporated herein by reference to
Exhibit 10.5.1 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.5.2 - Asset Purchase Agreement dated September 25,
1996 among Maryland Wireless Communications
L.P., Wendy C. Coleman, Dobson Cellular of
Maryland, Inc. and Dobson Operating Company.
Incorporated herein by reference to Exhibit
10.5.2 to Registrant's registration statement on
Form S-4 (No. 333-23769).
10.5.3 - Purchase Agreement dated February 28, 1997 among
Aztel, Inc., Gila River Communications, Inc., US
West, New Vector Group, Inc., Tohono Oldham
Utility Authority and Dobson Cellular of
Arizona, Inc. Incorporated herein by reference
to Exhibit 10.5.3 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.6.1 - Securities Purchase Agreement dated as of March
19, 1996, as amended by Amendment No. 1 thereto
dated as of February 25, 1997, among Registrant,
Dobson Operating Company, Fleet Equity Partners
VI, L.P., Fleet Venture Resources, Inc., and
Kennedy Plaza Partners. Incorporated herein by
reference to Exhibits 10.6.1 and 10.6.2 to
Registrant's registration statement on Form S-4
(No. 333-23769).
10.6.2 - Shareholders' Agreement dated as of February 26,
1997 between the Registrant and its
shareholders. Incorporated herein by reference
to Exhibit 10.6.3 to Registrant's registration
statement on Form S-4 (No. 333-23769).
10.6.3 - Option Agreement dated as of March 19, 1996
among Dobson Operating Company, Kennedy Plaza
Partners, Fleet Venture Resources, Inc. and
Fleet Equity Partners VI, L.P. Incorporated
herein by reference to Exhibit 10.6.4 to
Registrant's registration statement on Form S-4
(No. 333-23769).
21 - Subsidiaries. Incorporated herein by reference
to Exhibit 21 to Registrant's registration
statement on Form S-4 (No. 333-23769).
27 - Financial Data Schedule
___________________
<F1> Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March
31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: June 20, 1997 Dobson Communications Corporation
(registrant)
EVERETT R. DOBSON
Everett R. Dobson
Chairman of the Board, President and
Chief Executive Officer
Date: June 20, 1997 BRUCE R. KNOOIHUIZEN
Bruce R. Knooihuizen
Vice President and Chief Financial
Officer (principal financial
officer)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Method of Filing
- ----------- ----------------
<S> <C> <C>
3.1 Registrant's Amended and Restated Filed herewith electronically
Certificate of Incorporation.
3.2 Registrant's Bylaws. Incorporated herein by
reference
4.1 Second Amended and Restated Incorporated herein by
Credit Agreement dated February reference
28, 1997, as amended by Amendment
No. 1 thereto dated April 22, 1997,
among the Registrant, Dobson
Operating Company and CoreStates
Bank, N.A., First Union National
Bank of North Carolina, Nationsbank
of Texas, N.A. and the other banks
listed therein.
4.2 Telephone Loan Contract dated as Incorporated herein by
of November 7, 1958 between Dobson reference
Telephone Company, Inc. and
United States of America.
4.3 Telephone Loan Contract dated as Incorporated herein by
of March 19, 1956 between McLoud reference
Telephone Company and United
States of America.
4.4 Telephone Loan Contract Amendment Incorporated herein by
dated as of January 15, 1993 reference
between Dobson Telephone Company,
Inc., Rural Telephone Bank and
United States of America.
4.5 Restated Mortgage, Security Incorporated herein by
Agreement and Financing Statement reference
dated as of May 15, 1993 between
Dobson Telephone Company and United
States of America.
4.6 Indenture dated as of February 28, Incorporated herein by
1997 between the Registrant, as reference
Issuer, and United States Trust
Company of New York, as Trustee.
4.7 Registration Rights Agreement Incorporated herein by
dated February 25, 1997 between reference
the Registrant and Morgan Stanley &
Co. Incorporated, Alex. Brown &
Sons
4.8 Escrow and Security Agreement Incorporated herein by
dated February 28, 1997 among reference
the Registrant, as Pledgor, and
Morgan Stanley & Co. Incorporated,
Alex. Brown & Sons Incorporated,
First Union Capital Markets
Corp. and NationsBanc Capital
Markets, Inc., as Placement Agents,
and United States Trust Company
of New York, as Trustee.
10.1 Registrant's 1996 Stock Option Incorporated herein by
Plan. reference
10.2.1 Promissory Note dated February Incorporated herein by
10, 1997 of G. Edward Evans in reference
the amount of $300,000 in favor
of Western Financial Services Corp.
10.2.2 Promissory Note dated March 19, Incorporated herein by
1996 of Everett R. Dobson in the reference
amount of $1,400,000 in favor
of Dobson Operating Company.
10.2.3 Promissory Note dated March 15, Incorporated herein by
1997 of Russell L. Dobson in the reference
amount of $297,179.33 in favor
of Western Financial Services Corp.
10.2.4 Promissory Note dated December 31, Incorporated herein by
1996 of Russell L. Dobson in the reference
amount of $12,908 in favor of
Western Financial Services Corp.
10.2.5 Promissory Note dated March 15, Incorporated herein by
1997 of Russell L. Dobson in reference
the amount of $116,163.78 in favor
of Western Financial Services Corp.
10.2.6 Promissory Note dated December 31, Incorporated herein by
1996 of Everett R. Dobson in the reference
amount of $339,884.26 in favor of
Western Financial Services Corp.
10.2.7 Lease Agreement dated July 17, Incorporated herein by
1995 between WillRuss Limited reference
Liability Company and Western
Financial Services Corp.
10.2.8 Promissory Note dated December 31, Incorporated herein by
1996 of Associated Telecommunica- reference
tions and Technologies, Inc. (ATTI)
in the amount of $263,494.78 in
favor of Western Financial Services
Corp.
10.2.9 Promissory Note dated December 31, Incorporated herein by
1996 of National Telecommunications reference
Technologies, Inc. (Natelco) in
the amount of $307,050.30 in favor
of Western Financial Services Corp.
10.3.1 Letter dated December 26, 1996 from Incorporated herein by
Registrant to G. Edward Evans reference
describing employment arrangement.
10.3.2 Letter dated June 3, 1996 from Incorporated herein by
Registrant to Bruce Knooihuizen reference
describing employment arrangement.
10.3.3 Letter dated October 15, 1996 Incorporated herein by
from Fleet Equity Partners to reference
Justin Jaschke regarding director
compensation.
10.4.1 Agreement for DS-3 service dated Incorporated herein by
December 16, 1993 between Dobson reference
Fiber Company and NTS Communications,
Inc.
10.4.2 North American Cellular Network Incorporated herein by
Services Agreement dated August 26, reference
1992 by and between North American
Cellular Network, Inc. and Dobson
Cellular, Inc.
10.4.3 Trademark Sublicense Agreement Incorporated herein by
dated February 28, 1997 between reference
WMC Partners L.P. and Dobson
Cellular of Arizona,Inc. and
Registrant.
10.4.4 Affiliation Agreement dated Incorporated herein by
February 28, 1997 by and between reference
Registrant and Dobson Cellular of
Arizona, Inc. and WMC Partners L.P.
10.4.5 Form of Cellular One License Incorporated herein by
Agreement between Cellular One reference
Group and Dobson Cellular of Enid,
Inc., Dobson Cellular of Woodward,
Inc. and Dobson Cellular of Kansas/
Missouri, Inc.
10.5.1 Asset Purchase Agreement dated as Incorporated herein by
of November 19, 1996, as amended reference
by Amendment No. 1 thereto
effective as of January 17, 1997
and Amendment No. 2 thereto dated
February 6, 1997, among Horizon
Cellular Telephone Company of
Hagerstown L.P., Cumberland
Cellular Partnership and Dobson
Cellular of Maryland, Inc., and Dobson
Operating Company.
10.5.2 Asset Purchase Agreement dated Incorporated herein by
September 25, 1996 among Maryland reference
Wireless Communications L.P.,
Wendy C. Coleman, Dobson Cellular
of Maryland, Inc. and Dobson
Operating Company.
10.5.3 Purchase Agreement dated February Incorporated herein by
28, 1997 among Aztel, Inc., Gila reference
River Communications, Inc., US
West, New Vector Group, Inc.,
Tohono Oldham Utility Authority
and Dobson Cellular of Arizona, Inc.
10.6.1 Securities Purchase Agreement Incorporated herein by
dated as of March 19, 1996, as reference
amended by Amendment No. 1 thereto
dated as of February 25, 1997,
among Registrant, Dobson Operating
Company, Fleet Equity Partners
VI, L.P., Fleet Venture Resources,
Inc., and Kennedy Plaza Partners.
10.6.2 Shareholders' Agreement dated as Incorporated herein by
of February 26, 1997 between the reference
Registrant and its shareholders.
10.6.3 Option Agreement dated as of March Incorporated herein by
19, 1996 among Dobson Operating reference
Company, Kennedy Plaza Partners,
Fleet Venture Resources, Inc. and
Fleet Equity Partners VI, L.P.
21 Subsidiaries. Incorporated herein by
reference
27 Financial Data Schedule Filed herewith
electronically
</TABLE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[GREAT SEAL OF THE STATE OF OKLAHOMA -- 1907]
AMENDED & RESTATED
CERTIFICATE OF INCORPORATION
WHEREAS, the Amended and Restated Certificate of Incorporation of
DOBSON COMMUNICATIONS CORPORATION
has been filed in the office of the Secretary of State as provided by the
laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue
this certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
[Great Seal of the State Filed in the City of Oklahoma City this
of Oklahoma -- 1907] 25th day of February, 1997.
TOM COLE
Secretary of State
By: BETH GARNER
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DOBSON COMMUNICATIONS CORPORATION
The undersigned, Everett R. Dobson and Stephen T. Dobson, certify that
they are the President and Secretary, respectively, of DOBSON
COMMUNICATIONS CORPORATION, a corporation organized and existing under the
laws of the State of Oklahoma (the "Corporation"), and do hereby further
certify as follows:
1. The Corporation has not received any payment for any of its
stock.
2. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Section 1076 (B) and 1080 of
the General Corporation Act of Oklahoma (the "Act") by Consent to Action of
the Board of Directors Without a Meeting.
3. The text of the Certificate of Incorporation of the Corporation
is amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is Dobson Communications
Corporation.
SECOND: The address of the Corporation's registered office in the
State of Oklahoma is 13439 North Broadway Extension, Oklahoma City,
Oklahoma, 73114. The name of the Corporation's registered agent at such
address is Everett R. Dobson.
THIRD: The purpose of 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 Oklahoma. The Corporation is authorized to
exercise and enjoy all powers, rights, and privileges which corporations
organized under the Act may have as in force from time to time, including,
without limitation, all powers, rights and privileges necessary or
convenient to carry out the purposes of the Corporation.
FOURTH: CAPITAL STOCK.
A. The total number of shares of capital stock which the Corporation
has authority to issue is one million three hundred thirty one thousand
(1,331,000), to be divided into two classes consisting of (i) one million
thirty one thousand (1,031,000) shares of Common Stock, of which one
million (1,000,000) shares will be Class A Common Stock, $1.00 par value
per share ("Class A Common Stock") and thirty-one thousand (31,000) shares
will be Class B Non-Voting Common Stock, $1.00 par value per share ("Class
B Common Stock"), and (ii) three hundred thousand (300,000) shares of
Preferred Stock with a $1.00 par value per share.
B. Except as otherwise required by the Oklahoma General Corporation
Act, the holders of Class B Common Stock shall have no voting powers
whatsoever, and no holder of Class B Common Stock shall vote on or
otherwise participate in any proceedings in which actions shall be taken by
the Corporation or the shareholders thereof or be entitled to notification
as to any meeting of the Board of Directors of the shareholders.
C. The Board of Directors of the Corporation (the "Board") 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 classes or series,
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 qualifications, expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board, and as
are not stated and expressed in this Certificate of Incorporation, or any
amendment thereto, including (but without limiting the generality of the
foregoing) the following:
(1) The designation of and number of shares constituting such class or
series;
(2) The dividend rate of such class or series, the conditions and
dates upon which such dividends shall be payable, the preference or
relation which such dividends shall bear to the dividends payable on
any other series of the same class or of any other class or series of
any class of capital stock and whether such dividends shall be
cumulative or noncumulative;
(3) Whether the shares of such class or series shall be subject to
redemption by the Corporation, and, if made subject to such
redemption, the times, prices, and other terms and conditions of such
redemption;
(4) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such class or series;
(5) Whether or not the shares of such class or series shall be
convertible into or exchangeable for shares of any other class or of
any other series of any class or classes of capital stock of the
Corporation, and if provision be made for conversion or exchange, the
times, prices, rates, adjustments, and other terms and conditions of
such conversion or exchange;
(6) Whether or not the shares of such class or series shall have
voting rights, in addition to the voting rights provided by law, and,
if so, the terms and conditions of such voting rights;
(7) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(8) The rights of the holders of the shares of such class or series
upon the dissolution of, or upon the distribution of assets of, the
Corporation; and
(9) Such other powers, preferences and relative, participating,
optional and other special rights, and the qualifications,
limitations, and restrictions thereof, as the board shall determine.
FIFTH: A director of the Corporation shall not be personally liable
to the Corporation or its shareholders for damages for breach of fiduciary
duty as a director, except for personal liability for (i) acts or omissions
by such director not in good faith or which involve intentional misconduct
or a knowing violation of law; (ii) the payment of dividends or the
redemption or purchase of stock in violation of Section 1041 or Section
1052 of the Act; (iii) any breach of such director's duty of loyalty to the
Corporation or its shareholders; or (iv) any transaction from which such
director derived an improper personal benefit.
SIXTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
(a) To adopt, amend or repeal the Bylaws of the corporation;
but the powers of such directors in this regard shall at all times be
subject to the rights of the shareholders to alter or repeal such
Bylaws at any meeting of shareholders;
(b) To authorize and cause to be executed or granted mortgages,
security interests 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 of Directors, to designate
one or more committees, each committee to consist of one (1) or more
of the directors of the corporation. The board may designate one (1)
or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the
resolution or in the Bylaws of the corporation, shall have and may
exercise the powers 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;
provided, however, the Bylaws may provide that in the absence or
disqualification of any member of such committee or committees, 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 the place of any such absent or disqualified member;
and
(e) When and as authorized by the affirmative vote of the
holders of a majority of the stock issued and outstanding having
voting power given at a shareholders' meeting duly called upon such
notice as is required by law, or when authorized by the written
consent of the holders of a majority of the voting stock issued and
outstanding, 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 other
securities of, any other corporation or corporations, as its Board of
Directors shall deem expedient and for the best interests of the
corporation.
SEVENTH: 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 shareholders or any class of them, any court of
equitable jurisdiction within the State of Oklahoma, on the application in
a summary way of this corporation or of any creditor or shareholder
thereof, or on the application of any receiver or receivers appointed for
this corporation under the provisions of Section 1106 of Title 18 of the
Oklahoma Statutes or on the application of trustees in dissolution or of
any receiver or receivers appointed for this corporation under the
provisions of Section 1100 of Title 18 of the Oklahoma Statutes order a
meeting of the creditors or class of creditors, and/or of the shareholders
or class of shareholders of this corporation, as the case may be, to be
summoned in such manner as the court directs. If a majority in number
representing three-fourths (3/4ths) in value of the creditors or class of
creditors, and/or of the shareholders or class of shareholders of this
corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this corporation as consequence of such compromise
or arrangement, the compromise or arrangement and the reorganization shall,
if sanctioned by the court to which the application has been made, be
binding on all the creditors or class of creditors and/or on all the
shareholders or class of shareholders of this corporation, as the case may
be, and also this corporation.
EIGHTH: Meetings of shareholders may be held within or without of the
State of Oklahoma, as the Bylaws may provide. The books of the corporation
may be kept (subject to applicable law) inside or outside the State of
Oklahoma at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the corporation. Elections of
directors need not be by written ballot unless the Bylaws of the
corporation shall so provide.
NINTH: To the extent permitted by law, no contract or transaction
between the corporation and one or more of its directors or officers, or
between the corporation and any other corporation, partnership, association
or other organization in which one or more of its directors or officers are
directors or officers or have a financial interest, shall be void or
voidable solely for this reason, or solely because the directors or
officers are present at or participate in the meeting of the board or
committee thereof which authorized the contract or transaction, or solely
because the directors or officers or their votes are counted for such
purpose.
TENTH: INDEMNIFICATION.
A. The Corporation shall indemnify 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 he 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, joint venture, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in the best interest of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe that his 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 itself create a presumption
that the person did not act in good faith and in a manner which he
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
reasonable cause to believe that his conduct was unlawful.
B. The Corporation shall indemnify 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 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, joint venture, trust or other enterprise against
expenses (including attorney's fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit, if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine, upon application, that despite
the adjudication of liability, but in the view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper.
C. Expenses, including fees and expenses of counsel, incurred in
defending a civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized herein.
D. The Corporation may purchase (upon resolution duly adopted by the
Board of Directors) 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, joint venture, trust
or other enterprise against any liability asserted against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability.
E. To the extent that a director, officer, employee or agent of, or
any other person entitled to indemnity hereunder by, the Corporation has
been successful on the merits or otherwise in defense of any action, suit,
or proceeding referred to herein or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
therewith.
F. Every such person shall be entitled, without demand by him upon
the Corporation or any action by the Corporation, to enforce his right to
such indemnity in an action at law against the Corporation. The right of
indemnification and advancement of expenses hereinabove provided shall not
be deemed exclusive of any rights to which any such person may now or
hereafter be otherwise entitled and specifically, without limiting the
generality of the foregoing, shall not be deemed exclusive of any rights
pursuant to statute or otherwise, of any such person in any such action,
suit or proceeding to have assessed or allowed in his favor against the
Corporation or otherwise, his costs and expenses incurred therein or in
connection therewith or any part thereof.
ELEVENTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Oklahoma, the Board of Directors is
expressly authorized to adopt, amend, repeal or rescind the Bylaws of the
Corporation. In addition, the Bylaws of the Corporation may be adopted,
repealed, altered, amended, or rescinded by the affirmative vote of the
holders of a majority of each class of the outstanding capital stock of the
Corporation entitled to vote thereon.
TWELFTH: The corporation reserves the right to amend, alter, change
or repeal any provision contained in this Amended and Restated Certificate
of Incorporation, in the manner now or hereafter prescribed by law, and all
rights conferred upon the shareholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Everett Dobson, its President, and attested to by Stephen T.
Dobson, its Secretary this 24th day of February, 1997.
By: EVERETT R. DOBSON
Everett R. Dobson President
Attest:
STEPHEN T. DOBSON
Stephen T. Dobson
Secretary
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[GREAT SEAL OF THE STATE OF OKLAHOMA -- 1907]
CERTIFICATE OF DESIGNATION
WHEREAS, the Certificate of Designation for
DOBSON COMMUNICATIONS CORPORATION
has been filed in the office of the Secretary of State as provided by the
laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue this
certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
[Great Seal of the State Filed in the City of Oklahoma City this
of Oklahoma -- 1907] 25th day of February, 1997.
TOM COLE
Secretary of State
By: BRENDA L. GOFF
<PAGE>
DOBSON COMMUNICATIONS CORPORATION
(FORMERLY, DOBSON HOLDINGS CORPORATION)
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE AND OTHER SPECIAL RIGHTS,
AND QUALIFICATIONS, LIMITATIONS, AND
RESTRICTIONS OF CLASS A PREFERRED STOCK
____________________________
Pursuant to Title 18, Section 1032(G) of the
General Corporation Act of the State of Oklahoma
____________________________
DOBSON COMMUNICATIONS CORPORATION (the "Corporation"), a corporation
organized and existing under the General Corporation Act of the State of
Oklahoma, does hereby certify that pursuant to the authority vested in the
Board of Directors of the Corporation by its Certificate of Incorporation,
and pursuant to the provisions of Title 18, Section 1032(G) of the General
Corporation Act of the State of Oklahoma, said Board of Directors, by
unanimous written consent, adopted the following resolution which remains
in full force and effect as of the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation (the "Board of Directors") by its Certificate
of Incorporation (hereinafter referred to as the "Certificate of
Incorporation"), the Board of Directors does hereby authorize and provide
for the issuance of Class A Preferred Stock, $1.00 par value per share,
consisting of 100,000 shares, having the following designations,
preferences and relative and other special rights, qualifications,
limitations and restrictions:
1. DESIGNATION. The designation of such class is "Class A 5% Non-
Cumulative, Non-Voting, Non-Convertible Preferred Stock" (hereinafter in
this Certificate of Designation called the "Class A Preferred Stock"), and
the number of shares constituting such class shall be 100,000, which number
may not be decreased or increased by the Board of Directors without a vote
of stockholders. All capitalized terms used in this Certificate of
Designation and not otherwise defined shall have the meaning given to such
terms in Section 10 hereof.
2. DIVIDENDS. (a) The holders of shares of Class A Preferred
Stock shall be entitled to receive, out of funds at the time legally
available for the payment of dividends in the State of Oklahoma, a non-
cumulative dividend at the rate of 5% of the Liquidation Value per annum
per share, if and when declared and paid by the Board of directors.
3. LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, either
voluntarily or involuntarily, each holder of Class A Preferred Stock shall
be entitled, after provision for the payment of the Corporation's debts and
other liabilities, to be paid in cash, before any distribution is
made on any Junior Securities, the aggregate Liquidation Value of all
shares of Class A Preferred Stock held by such holder. If, upon any such
liquidation, dissolution or other winding up of the affairs of the
Corporation, the net assets of the corporation distributable among the
holders of all outstanding shares of the Class A Preferred Stock shall be
insufficient to permit the payment in full to such holders of the
preferential amounts to which they are entitled under the Certificate of
Incorporation, then the entire net assets of the Corporation remaining
after the provision for the payment of the Corporation's debts and other
liabilities shall be distributed among the holders of the Class A Preferred
Stock ratably in proportion to the full amounts to which they would other-
wise be respectively entitled.
(b) Holders of Class A Preferred Stock shall not be entitled to any
additional distribution in the event of any liquidation, dissolution or
winding up of the affairs of the Corporation in excess of the preferential
amount referred to in Section 3(a) above.
(c) The assets available for distribution pursuant to the Section 3
shall be determined by applicable law.
4. VOTING. Except as otherwise required by law, the holders
of the Class A Preferred Stock shall have no voting powers whatsoever, and
no holder of Class A Preferred Stock shall vote on or otherwise participate
in any proceedings in which actions shall be taken by the Corporation or
the shareholders thereof or be entitled to notification as to any meeting
of the Board of Directors of the shareholders.
5. CONVERSION RIGHTS. Except as otherwise required by law, the
holders of Class A Preferred Stock shall have no rights of conversion of
the Class A Preferred Stock into any other class of preferred or common
stock.
6. REDEMPTION. (a) At any time, the Class A Preferred Stock may
be redeemed, in whole or in part, at the option of the Corporation by vote
of its Board of Directors, at any time or from time to time, at the
Liquidation Value thereof. In case of the redemption of a part of the
outstanding Class A Preferred Stock, such redemption shall be allocated
among the holders of the Class A Preferred Stock in proportion to each
holders ownership.
(b) At least 30 days prior to the date fixed for redemption, a
written notice shall be provided to each holder of record of Class A
Preferred Stock to be redeemed. Such notice shall provide the date fixed
for redemption, and call upon such holder to surrender to the Corporation
on such date fixed the certificate or certificates representing the number
of shares to be redeemed. On the date fixed for redemption, each holder of
Class A Preferred Stock to be redeemed shall present and surrender the
certificate or certificates representing such shares to the Corporation.
In case less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares.
7. STATUS OF REACQUIRED SHARES. Shares of Class A Preferred Stock
which have been issued and reacquired in any manner shall have the status
of authorized and unissued shares of Class A Preferred Stock.
8. RANK. The Class A Preferred Stock shall rank senior upon
liquidation, dissolution or winding up to all Junior Securities, whenever
issued.
9. CERTIFICATES. So long as any shares of the Class A Preferred
Stock are outstanding, there shall be set forth on the face or back of each
stock certificate issued by the Corporation a statement that the
Corporation shall furnish without charge to each shareholder who so
requests, a full statement of the designation and relative rights,
preferences and limitations of each class of stock or series thereof that
the Corporation is authorized to issue and of the authority of the Board of
Directors to designate and fix the relative rights, preferences and
limitations of each series.
10. DEFINITIONS.
"Applicable Rate" means 5% per annum.
"Certificate of Designation" means this Certificate of
Designations, Preferences and Relative and Other Special Rights and
Qualifications, Limitations and Restrictions of the Class A Preferred
Stock.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company.
"Class A Common Stock" means the Corporation's Class A Common
Stock, $1.00 par value per share.
"Class A Preferred Stock" means the Corporation's Class A 5% Non-
Cumulative Preferred Stock, $1.00 par value per share.
"Class B Common Stock" means the Corporation's Class B Common
Stock, $1.00 par value per share.
"Class B Preferred Stock" means the Corporation's Class B
Preferred Stock, $1.00 par value per share.
"Class C Preferred Stock" means the Corporation's Class C 8%
Cumulative, Non-Voting, Non-Convertible Preferred Stock, $1.00 par value
per share, as in effect the date hereof.
"Common Stock" means the Class A Common Stock and Class B Common
Stock.
"Junior Securities" means any of the Corporation's Common Stock
and all other equity securities of the Corporation other than Class B
Preferred Stock and Class C Preferred Stock.
"Liquidation Value" of any share of Class A Preferred Stock shall
be seventy dollars per share. ($70.00).
"Person" means an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization and any
government, governmental department or agency or political subdivision
thereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a partnership, association, or other business entity if such Person or
Persons shall be allocated a majority of partnership, association or other
business entity gains or losses or shall be or control the managing general
partner of such partnership, association or other business entity.
11. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Class A Preferred Stock set forth in this Resolution (as
such Resolution may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule, law or public policy,
all other rights, preferences and limitations set forth in this Resolution
(as so amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain
in full force and effect, and no right, preference or limitation herein set
forth shall be deemed dependent upon any other right, preference or
limitation unless so expressed herein.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Everett Dobson, its President, and attested to by Stephen T.
Dobson, its Secretary this 24th day of February, 1997.
By: EVERETT R. DOBSON
Everett R. Dobson
President
ATTEST:
STEPHEN T. DOBSON
Stephen T. Dobson
Secretary
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[GREAT SEAL OF THE STATE OF OKLAHOMA -- 1907]
CERTIFICATE OF DESIGNATION
WHEREAS, the Certificate of Designation for
DOBSON COMMUNICATIONS CORPORATION
has been filed in the office of the Secretary of State as provided by the
laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue this
certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
[Great Seal of the State Filed in the City of Oklahoma City this
of Oklahoma -- 1907] 25th day of February, 1997.
TOM COLE
Secretary of State
By: BRENDA L. GOFF
<PAGE>
DOBSON COMMUNICATIONS CORPORATION
(FORMERLY, DOBSON HOLDINGS CORPORATION)
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE AND OTHER SPECIAL RIGHTS,
AND QUALIFICATIONS, LIMITATIONS, AND
RESTRICTIONS OF CLASS B CONVERTIBLE
PREFERRED STOCK
____________________________
Pursuant to Title 18, Section 1032(G) of the
General Corporation Act of the State of Oklahoma
____________________________
DOBSON COMMUNICATIONS CORPORATION (the "Corporation"), a corporation
organized and existing under the General Corporation Act of the State of
Oklahoma, does hereby certify that pursuant to the authority vested in the
Board of Directors of the Corporation by its Certificate of Incorporation,
and pursuant to the provisions of Title 18, Section 1032(G) of the General
Corporation Act of the State of Oklahoma, said Board of Directors, by
unanimous written consent, adopted the following resolution which remains
in full force and effect as of the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation (the "Board of Directors") by its Certificate
of Incorporation (hereinafter referred to as the "Certificate of
Incorporation"), the Board of Directors does hereby create, authorize and
provide for the issuance of Class B Convertible Preferred Stock, $1.00 par
value per share, consisting of 100,000 shares, having the following
designations, preferences and relative and other special rights,
qualifications, limitations and restrictions:
1. DESIGNATION. The designation of such class is "Class B
Convertible Preferred Stock" (hereinafter in this Certificate of
Designation called the "Class B Preferred Stock"), and the number of shares
constituting such class shall be 100,000, which number may be decreased
(but not increased) by the Board of Directors without a vote of
stockholders; PROVIDED, HOWEVER, that such number may not be decreased
below the number of then currently outstanding shares of Class B Preferred
Stock and shares of Class B Preferred Stock subject to outstanding rights
and options, if any. All capitalized terms used in this Certificate of
Designation and not otherwise defined shall have the meaning given to such
terms in Section 9 hereof.
2. DIVIDENDS. (a) The holders of shares of Class B Preferred
Stock, in preference to the holders of the Junior Securities, shall be
entitled to receive, out of funds legally available for the purpose,
cumulative dividends as provided in this Section 2. Dividends on each
share of Class B Preferred Stock shall accrue on a daily basis at the
Applicable Rate on the sum of (i) the Liquidation Value and (ii) all
accumulated and unpaid dividends thereon from the date of issuance to the
end of the immediately preceding calendar year and shall be payable as
provided in subparagraph (b) of this Section 2. Accrued but unpaid
dividends will be compounded annually on December 31 of each year (each a
"dividend date") (the initial such calculation to be made at the Applicable
Rate for the number of days elapsed from the date of issue of the Class B
Preferred Stock to and including the 31st day of December, 1997). Such
dividends shall commence to accrue on each share of Class B Preferred Stock
from the date of issuance thereof whether or not declared by the Board of
Directors, and whether or not there are profits, surplus or other funds of
the Corporation legally available for the payment of dividends, and shall
continue to accrue thereon until the date the Liquidation Value of such
share (plus all accrued and unpaid dividends thereon) is paid. For
purposes of determining the amount of dividends accrued on the Class B
Preferred Stock pursuant to this Section 2 in connection with the sale,
redemption or repurchase of any Class B Preferred Stock which may occur
prior to December 31 of any year, the Applicable Rate for such period shall
be multiplied by a fraction, the numerator of which is the actual number of
days elapsed in the then current year and the denominator of which is 365.
(b) Subject to any applicable prohibition on the payment of dividends
in the Financing Agreement, dividends accrued on each outstanding share of
Class B Preferred Stock may be paid when, as and if declared by the Board
of Directors. Further, upon the earliest to occur of (i) the conversion of
Class B Preferred Stock into Class A Common Stock pursuant to Section 5
hereof, (ii) a voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, (iii) a merger or consolidation of
the Corporation into or with another corporation in which the shareholders
of this Corporation shall own less than 50% of the voting securities of the
surviving corporation or its parent, (iv) the sale, transfer or lease (but
not including a transfer or lease by pledge or mortgage to a bona fide
lender) of all or substantially all of the assets of the Corporation, and
(v) the consummation of a Public Offering of the Corporation's Common
Stock, each holder of Class B Preferred Stock shall be entitled to receive
dividends on each share of the Class B Preferred Stock then held by such
holder (including shares of Class B Preferred Stock to be converted to
Common Stock effective upon such Public Offering) in an amount equal to the
accumulated and unpaid dividends on such Class B Preferred Stock from the
date of issuance to the date of such payment (as used in this Section 2,
the "Accrued Dividend"). The Accrued Dividend shall be paid in cash.
(c) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Class B Preferred Stock, such payment shall be distributed
ratably among the holders thereof based upon the aggregate accrued but
unpaid dividends on the Class B Preferred Stock held by each holder.
(d) Except as otherwise may be specifically provided in this
Certificate of Designation, the Purchase Agreement or the Shareholders'
Agreement, so long as any shares of Class B Preferred Stock are
outstanding, the Corporation will not declare, pay or set apart for payment
any dividends or make any other distribution on or redeem any Junior
Securities and will not permit any Subsidiary or other Affiliate to redeem,
purchase or otherwise acquire for value, or set apart for any sinking or
other analogous fund for the redemption or purchase of, any Junior
Securities.
3. LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, either
voluntarily or involuntarily, each holder of Class B Preferred Stock shall
be entitled, after provision for the payment of the Corporation's debts
and other liabilities, to be paid in cash, before any distribution is made
on any Junior Securities (including, without limitation any other class of
Preferred Stock), the aggregate Liquidation Value of all shares of Class
B Preferred Stock held by such holder plus an amount equal to the sum of all
accrued and unpaid dividends thereon, whether or not declared to the date
of such payment. If, upon any such liquidation, dissolution or other winding
up of the affairs of the Corporation, the net assets of the corporation
distributable among the holders of all outstanding shares of the Class B Pre-
ferred Stock shall be insufficient to permit the payment in full to such
holders of the preferential amounts to which they are entitled under the
Certificate of Incorporation, then the entire net assets of the Corporation
remaining after the provision for the payment of the Corporation's debts and
other liabilities shall be distributed among the holders of the Class B
Preferred Stock ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
(b) Holders of Class B Preferred Stock shall not be entitled to any
additional distribution in the event of any liquidation, dissolution or
winding up of the affairs of the Corporation in excess of the preferential
amount referred to in Section 3(a) above.
(c) The assets available for distribution pursuant to this Section 3
shall be determined by applicable law and prior to payment of any
liquidation preference the Corporation shall first satisfy its outstanding
obligations concerning rights, if any, of holders of Class B Preferred
Stock which have been exercised to have purchased, redeemed or otherwise
retired any capital stock.
(d) The merger or consolidation of the Corporation into or with
another corporation in which the shareholders of this Corporation shall own
less than 50% of the voting securities of the surviving corporation or its
parent or the sale, transfer or lease (but not including a transfer or
lease by pledge or mortgage to a bona fide lender) of all or substantially
all of the assets of the Corporation may be deemed by the holders of the
Class B Preferred Stock to be a liquidation, dissolution or winding up of
the Corporation as those terms are used in this Section 3. In the event of
such merger, consolidation or sale of substantially all of the Company's
assets, the holders of shares of Class B Preferred Stock shall have the
right to preference in the merger or consolidation or upon the distribution
of assets as provided in this Section 3, or alternatively at such holder's
election, shall have the right to convert to shares of Class A Common Stock
and receive distribution of assets as holders of Class A Common Stock as
provided in Section 5 hereof.
(e) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the
Corporation's assets to another person or other transaction which is
effected in such a manner that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities
or assets (other than solely cash and/or publicly traded securities) with
respect to or in exchange for Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the
Corporation shall make appropriate provisions (in form and substance
reasonably satisfactory to the holders of a majority of the Class B
Preferred Stock then outstanding voting separately) to ensure that each of
the holders of Class B Preferred Stock shall thereafter have the right to
acquire and receive, in lieu of or in addition to (as the case may be) the
shares of Class A Common Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Class B Preferred Stock,
such shares of stock, securities or assets as such holder would have
received in connection with such Organic Change if such holder had
converted its Class B Preferred Stock into Class A Common Stock immediately
prior to the Organic Change or, if the Organic Change is to be deemed a
liquidation pursuant to subsection 3(d), the preference upon distribution
of assets as provided in this Section 3. In each such case, the
Corporation shall also make appropriate provisions (in form and substance
reasonably satisfactory to the holders of a majority of the Class B
Preferred Stock then outstanding) to ensure that the provisions of Section
5 hereof shall thereafter be applicable to the Class B Preferred Stock and
to the shares of stock, securities or assets received by each holder upon
such Organic Change (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity is other
than the Corporation, an immediate adjustment of the Conversion Price to
the value for the Class A Common Stock reflected by the terms of such
consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Class A Common Stock acquirable and receivable upon
conversion of Class B Preferred Stock, if the value so reflected is less
than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from
consolidation or merger or the corporation purchasing such assets assumes
by written instrument (in form and substance reasonably satisfactory to the
holders of a majority of the Class B Preferred Stock then outstanding
voting separately), the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
(f) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Corporation shall within
ten (10) days after the date the Board of Directors approves such action,
or twenty (20) days prior to any shareholders' meeting called to approve
such action, or twenty (20) days after the commencement of an involuntary
proceeding, whichever is earliest, give each holder of shares of Class B
Preferred Stock initial written notice of the proposed action. Such
initial written notice shall describe the material terms and conditions of
such proposed action, including a description of the stock, cash and
property to be received by the holders of shares of Class B Preferred Stock
upon consummation of the proposed action and the date of delivery thereof.
If any material change in the facts set forth in the initial notice shall
occur, the Corporation shall promptly give written notice to each holder of
shares of Class B Preferred Stock of such material change.
(g) The Corporation shall not consummate any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation before the
expiration of thirty (30) days after the mailing of the initial notice
referred to in subparagraph (f) above or ten (10) days after the mailing of
any subsequent written notice, whichever is later; provided, that any such
30-day or 10-day period may be shortened upon the written consent of the
holders of a majority of the outstanding shares of the Class B Preferred
Stock voting as a single class.
(h) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involve the
distribution of assets other than cash, the Corporation shall promptly
engage competent independent appraisers to determine the value of the
assets to be distributed to the holders of shares of Class B Preferred
Stock and the holders of shares of Common Stock (it being understood that
with respect to such valuation, the Corporation shall engage such appraiser
as shall be approved by the holders of a majority of shares of the
Corporation's outstanding Common Stock and Class B Preferred Stock voting
separately). The Corporation shall, upon receipt of such appraiser's
valuation, give prompt written notice to each holder of shares of Common
Stock and Class B Preferred Stock of the appraiser's valuation.
4. VOTING. (a) Except as otherwise required by law or as set
forth herein and subject to the rights of any class or series of preferred
stock which may from time to time come into existence hereafter, the shares
of the Class B Preferred Stock shall vote together with the shares of the
Corporation's Class A Common Stock at any annual or special meeting of
shareholders of the Corporation, or may act by written consent in the same
manner as the Corporation's Class A Common Stock, upon the following basis:
each holder of shares of Class B Preferred Stock shall be entitled to such
number of votes for the Class B Preferred Stock held by him on the record
date fixed for such meeting, or on the effective date of such written
consent, as shall be equal to the whole number of shares of the
Corporation's Class A Common Stock into which his shares of Class B
Preferred Stock are convertible, in accordance with the terms of Section 5
hereof, immediately after the close of business on the record date fixed
for such meeting or the effective date of such written consent.
(b) In the election of directors, two (2) directors shall be elected
by the holders of the Class B Preferred Stock voting as a separate class,
subject to compliance with any applicable provisions of the Shareholders'
Agreement.
(c) As long as at least 50% of the shares of Class B Preferred Stock
purchased pursuant to the Purchase Agreement remain outstanding, the
holders of shares of Class B Preferred Stock also shall have the following
voting rights:
(i) The affirmative vote of the holders of a majority of the
outstanding shares of Class B Preferred Stock, voting separately as a
single class, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to (t)
authorize or increase the authorized number of shares of, or issue,
any class or series of the Corporation's capital stock ranking prior
to, or on a parity with, the Class B Preferred Stock, including shares
of Class B Preferred Stock authorized pursuant to this Certificate of
Designation and issued after the date of original issuance of the
Class B Preferred Stock, or (u) amend, repeal or change, directly or
indirectly, any of the provisions of the Certificate of Incorporation
of the Corporation, as amended, in any manner which would alter or
change the powers, preferences or special rights of the shares of
Class B Preferred Stock so as to affect them adversely, or (v)
authorize or effect the sale of all or substantially all of the assets
of the Corporation, or (w) authorize or effect the merger or
consolidation of the Corporation with any other Person as the result
of which the shareholders of the Corporation shall own less than 50.1%
of the voting securities of the surviving corporation or its parent,
or (x) authorize or effect the liquidation (whether complete or
partial), dissolution or winding up of the Corporation, or (y) amend
the Bylaws of the Corporation to change the authorized number of
directors, or (z) amend this Section 4.
(ii) The rights of holders of shares of Class B Preferred Stock to
vote or take any other actions as provided in this Section 4 may be
exercised at any annual meeting of stockholders or at a special
meeting of stockholders held for such purpose. At each meeting of
stockholders at which the holders of shares of Class B Preferred Stock
shall have the right, voting separately as a single series, to take
any action as provided in this Section 4, the presence in person or by
proxy of the holders of record of a majority of the total number of
shares of Class B Preferred Stock then outstanding and entitled to
vote on the matter shall be necessary and sufficient to constitute a
quorum. At any such meeting or at any adjournment thereof, in the
absence of a quorum of the holders of shares of Class B Preferred
Stock, a majority of the holders of such shares present in person or
by proxy shall have the power to adjourn the meeting as to the actions
to be taken by the holders of shares of Class B Preferred Stock from
time to time and place to place without notice other than announcement
at the meeting until a quorum shall be present.
5. CONVERSION RIGHTS.
(a) CONVERSION PROCEDURE.
(i) At any time and from time to time, any holder of Class B
Preferred Stock may convert all or any portion of the Class B Preferred
Stock (including any fraction of a share) held by such holder into a number
of shares of Class A Common Stock equal to the product of (x) the number of
shares of Class B Preferred Stock to be converted into Class A Common Stock
and (y) a fraction the numerator of which is $100.00 and the denominator is
the Conversion Price then in effect.
(ii) Each conversion of Class B Preferred Stock shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Class B Preferred Stock to be
converted have been surrendered at the principal office of the Corporation
or at such other place as may be designated by the Corporation. At such
time as such conversion has been effected, the rights of the holder of such
Class B Preferred Stock as such holder shall cease and the Person or
Persons in whose name or names any certificate or certificates for shares
of Class A Common Stock are to be issued upon such conversion shall be
deemed to have become the holder or holders of record of the shares of
Class A Common Stock represented thereby.
(iii) The conversion rights of any share of Class B Preferred
Stock repurchased by the Corporation pursuant to the Shareholders'
Agreement shall terminate on the date the repurchase price for such share
is paid in full.
(iv) Notwithstanding any other provision hereof, if a conversion
of shares is to be made in connection with a Public Offering, the
conversion of such shares may, at the election of the holder thereof, be
conditioned upon the consummation of the Public Offering, in which case
such conversion shall not be deemed to be effective until the consummation
of the Public Offering.
(v) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (y)
below), the Corporation shall deliver to the converting holder:
(y) a certificate or certificates representing, in the aggregate, the
number of shares of Class A Common Stock issuable by reason of such
conversion, in the same name or names as the certificates representing
the converted shares and in such denomination or denominations as the
converting holder has specified; and
(z) a certificate representing any shares which were represented by
the certificate or certificates delivered to the Corporation in
connection with such conversion but which were not converted.
(vi) The issuance of certificates of shares of Class A Common
Stock upon conversion of Class B Preferred Stock shall be made without
charge to the holders of such Class B Preferred Stock for any issuance tax
in respect thereof or other cost incurred by the Corporation in connection
with such conversion and the related issuance of shares of Class A Common
Stock. Upon conversion of any shares of Class B Preferred Stock, the
Corporation shall take all such actions as are necessary in order to ensure
that the Class A Common Stock issuable with respect to such conversion
shall be validly issued, fully paid and nonassessable.
(vii) The Corporation shall not close its books against the
transfer of Class B Preferred Stock or of Class A Common Stock issued or
issuable upon conversion of Class B Preferred Stock in any manner which
interferes with the timely conversion of Class B Preferred Stock. The
Corporation shall assist and cooperate with any holder of shares of Class B
Preferred Stock required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of
shares of Class B Preferred Stock hereunder (including, without limitation,
making any filings required to be made by the Corporation).
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Class A Common
Stock, solely for the purpose of issuance upon the conversion of the Class
B Preferred Stock, such number of shares of Class A Common Stock as are
issuable upon the conversion of all outstanding Class B Preferred Stock.
All shares of Class A Common Stock which are so issuable shall, when
issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of Class A
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities
exchange upon which shares of Class A Common Stock may be listed (except
for official notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance).
(b) CONVERSION PRICE.
(i) The initial conversion price shall be $100.00, which may be
adjusted from time to time hereafter (the "Conversion Price"). If and
whenever on or after the original date of issuance of the Class B Preferred
Stock the Corporation issues or sells, or in accordance with Section 5(c)
is deemed to have issued or sold, any shares of its Common Stock or other
capital stock convertible into Common Stock (other than Permitted
Issuances) for a consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then forthwith
upon such issue or sale the Conversion Price shall be reduced to the
Conversion Price determined by dividing (a) the sum of (1) the product
derived by multiplying the Conversion Price in effect immediately prior to
such issue or sale times the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale, plus (2) the
consideration, if any, received (or deemed received pursuant to Section
5(c) below) by the Corporation upon such issue or sale, (b) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or
sale. Notwithstanding the foregoing, if a Texas 2 Event occurs prior to
March 19, 1999, the then Conversion Price shall be adjusted to an amount
equal to 100.45% of the then Conversion Price.
(c) EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under Section 5(b), the following
shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any manner
grants any rights or options, other than Permitted Issuances, to
subscribe for or to purchase Common Stock or any stock or other
securities convertible into or exchangeable for Common Stock (such
rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "CONVERTIBLE
SECURITIES") and the price per share for which Common Stock is issuable
upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities is less than the conversion Price in
effect immediately prior to the time of the granting of such Options,
then the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon conversion or exchange of the
total maximum amount of such convertible Securities shall be deemed to
be outstanding and to have been issued and sold by the corporation at
the time of the granting of such Options for such price per share.
For purposes of this paragraph, the "PRICE PER SHARE FOR WHICH COMMON
STOCK IS ISSUABLE" shall be determined by dividing (a) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon exercise of all such Options, plus in the case of
such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof (such amount is the
consideration "deemed received" for purposes of Section 5(b) above),
by (b) the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon the conversion or exchange
of all such Convertible Securities issuable upon the exercise of such
Options. No further adjustment of the Conversion Price shall be made
when Convertible Securities are actually issued upon the exercise of
such Options or when Common Stock is actually issued upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in any
manner issues or sells any Convertible Securities and the price per
share for which Common Stock is issuable upon such conversion or
exchange is less than the Conversion Price in effect immediately prior
to the time of such issue or sale, then the maximum number of shares
of Common Stock issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the
purposes of this paragraph, the "PRICE PER SHARE FOR WHICH COMMON
STOCK IS ISSUABLE" shall be determined by dividing (a) the total
amount received or receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof (such amount is
the consideration "deemed received" for purposes of Section 5(b)
above), by (b) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Conversion Price shall be
made when Common Stock is actually issued upon the conversion or
exchange of such Convertible Securities, and if any such issue or sale
of such Convertible Securities is made upon exercise of any Options
for which adjustments of the Conversion Price had been or are to be
made pursuant to other provisions of this Section 5, no further
adjustment of the Conversion Price shall be made by reason of such
issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION PRICE. If the purchase
price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock change at any time,
the Conversion Price in effect at the time of such change shall be
readjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time initially
granted, issued or sold; provided that if such adjustment would result
in an increase of the Conversion Price then in effect, such adjustment
shall not be effective until 30 days after written notice thereof has
been given by the Corporation to all holders of the Class B Preferred
Stock.
(d) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation
at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise), one or more classes of its outstanding
shares of Common Stock into a greater number of shares, or if the
Corporation at any time combines (by reverse stock split or otherwise), one
or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
subdivision or combination shall be proportionately adjusted.
(e) CERTAIN EVENTS. If an event not specifically enumerated in
this Section 5 occurs which has substantially the same economic effect on
the Class B Preferred Stock as those specifically enumerated shall occur,
then this Section 5 shall be construed liberally, MUTATIS MUTANDIS, in
order to give the Class B Preferred Common Stock the benefit of the
protections provided under this Section 5. The Corporation's Board of
Directors shall make an appropriate adjustment in the Conversion Price so
as to protect the rights of the holders of Class B Preferred Stock;
provided, that no such adjustment shall increase the Conversion Price as
otherwise determined pursuant to this Section 5 or decrease the number of
shares of Class A Common Stock issuable upon conversion of each share of
Class B Preferred Stock.
(f) NOTICES.
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Class B
Preferred Stock, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Corporation shall give written notice to all holders of
Class B Preferred Stock at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any
dividend or distribution upon Common Stock, (b) with respect to any pro
rata subscription offer to holders of Common Stock or (c) for determining
rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii) The Corporation shall also give written notice to the
holders of Class B Preferred Stock at least 20 days prior to the date on
which any Organic Change shall take place.
6. STATUS OF REACQUIRED SHARES. Shares of Class B Preferred Stock
which have been issued and reacquired in any manner shall have the status
of authorized and unissued shares of Class B Preferred Stock.
7. RANK. The Class B Preferred Stock shall rank senior as to
dividends and upon liquidation, dissolution or winding up to all Junior
Securities, whenever issued.
8. CERTIFICATES. So long as any shares of the Class B Preferred
Stock are outstanding, there shall be set forth on the face or back of each
stock certificate issued by the Corporation a statement that the
Corporation shall furnish without charge to each shareholder who so
requests, a full statement of the designation and relative rights,
preferences and limitations of each class of stock or series thereof that
the Corporation is authorized to issue and of the authority of the Board of
Directors to designate and fix the relative rights, preferences and
limitations of each series.
9. DEFINITIONS.
"Affiliate" shall have the meaning given such term in the
Purchase Agreement.
"Applicable Rate" means 8% per annum, except during any period a
Noncompliance Event exists, the Applicable Rate shall mean 15% per annum.
"Certificate of Designation" means this Certificate of
Designations, Preferences and Relative and Other Special Rights and
Qualifications, Limitations and Restrictions of the Class B Preferred
Stock.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Corporation, as amended.
"Class A Common Stock" means the Corporation's Class A Common
Stock, $1.00 par value per share.
"Class A Preferred Stock" means the Corporation's Class A 5% Non-
Cumulative, Non-Voting, Non-Convertible Preferred Stock, $1.00 par value
per share.
"Class B Common Stock" means the Corporation's Class B Common
Stock, $1.00 par value per share.
"Class B Preferred Stock" means the Corporation's Class B
Preferred Stock, $1.00 par value per share.
"Common Stock" means the Class A Common Stock and Class B Common
Stock.
"Conversion Price" shall have the meaning set forth in Section
5(b) hereof.
"Common Stock Deemed Outstanding" means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus
the number of shares of Common Stock issuable upon conversion of the Class
B Preferred Stock, plus the number of shares of Common Stock deemed to be
outstanding with respect to Options or Convertible Securities whether or
not the Options are actually exercisable at such time.
"DCC" means Dobson CC Limited Partnership, an Oklahoma limited
partnership.
"Financing Agreement" means that certain Second Amended and
Restated Credit Agreement dated as of February 26, 1997, between CoreStates
Bank, N.A., in its capacity as Administrative Agent and a Bank, the other
Banks listed therein, the Corporate Borrowers listed therein or any credit
agreement evidencing a senior debt facility which replaces the facility
evidenced by such Second Amended and Restated Credit Agreement.
"Junior Securities" means any of the Corporation's Common Stock
and all other equity securities of the Corporation other than the Class B
Preferred Stock and Class C Preferred Stock.
"Liquidation Value" of any share of Class B Preferred Stock shall
be One Hundred Dollars ($100.00).
"Noncompliance Event" shall have the meaning given such term in
the Purchase Agreement.
"Organic Change" shall have the meaning set forth in Section 3(e)
hereof.
"Permitted Issuances" means the issuance to key employees of the
Corporation or any Subsidiary acceptable to the holders of Class B
Preferred Stock of options to purchase an aggregate of 30,166 shares of
Class B Common Stock in the amounts, at the price and on other terms and
conditions acceptable to the holders of Class B Preferred Stock and the
issuance of Class B Common Stock pursuant to the exercise of such options.
"Person" means an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization and any
government, governmental department or agency or political subdivision
thereof.
"Public Offering" means any offering by the Corporation of its
equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933 or any comparable statement
under any similar federal statute then in force, other than an offering of
shares being issued as consideration in a business acquisition or
combination or an offering in connection with an employee benefit plan.
"Purchase Agreement" means that certain Securities Purchase
Agreement dated as of March 19, 1996, among the purchasers named therein
and Dobson Operating Company (formerly known as Dobson Communication
Corporation), as amended by that certain Amendment No.1 to Securities
Purchase Agreement dated as of February 26, 1997, as it may be amended from
time to time.
"Shareholders' Agreement" means that certain Shareholders'
Agreement dated as of February 24, 1997 among this Corporation and the
shareholders of this Corporation, as it may be amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a partnership, association, or other business entity if such Person or
Persons shall be allocated a majority of partnership, association or other
business entity gains or losses or shall be or control the managing general
partner of such partnership, association or other business entity.
"Texas 2 Event" shall have the meaning set forth in the
Securities Purchase Agreement.
10. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Class B Preferred Stock set forth in this Resolution (as
such Resolution may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule, law or public policy,
all other rights, preferences and limitations set forth in this Resolution
(as so amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain
in full force and effect, and no right, preference or limitation herein set
forth shall be deemed dependent upon any other right, preference or
limitation unless so expressed herein.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Everett Dobson, its President, and attested to by Stephen T.
Dobson, its Secretary this 24th day of February, 1997.
By: EVERETT R. DOBSON
Everett R. Dobson
President
ATTEST:
STEPHEN T. DOBSON
Stephen T. Dobson
Secretary
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[GREAT SEAL OF THE STATE OF OKLAHOMA -- 1907]
CERTIFICATE OF DESIGNATION
WHEREAS, the Certificate of Designation of,
DOBSON COMMUNICATIONS CORPORATION
has been filed in the office of the Secretary of State as provided by the
laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of Oklahoma,
by virtue of the powers vested in me by law, do hereby issue this certificate
evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the Great
Seal of the State of Oklahoma.
[Great Seal of the State Filed in the City of Oklahoma City this
of Oklahoma -- 1907] 27th day of February, 1997.
TOM COLE
Secretary of State
By: BETH GARNER
<PAGE>
DOBSON COMMUNICATIONS CORPORATION
(FORMERLY, DOBSON HOLDINGS CORPORATION)
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE AND OTHER SPECIAL RIGHTS,
AND QUALIFICATIONS, LIMITATIONS, AND
RESTRICTIONS OF CLASS C PREFERRED STOCK
____________________________
Pursuant to Title 18, Section 1032(G) of the
General Corporation Act of the State of Oklahoma
____________________________
DOBSON COMMUNICATIONS CORPORATION (the "Corporation"), a corporation
organized and existing under the General Corporation Act of the State of
Oklahoma, does hereby certify that pursuant to the authority vested in the
Board of Directors of the Corporation by its Certificate of Incorporation,
and pursuant to the provisions of Title 18, Section 1032(G) of the General
Corporation Act of the State of Oklahoma, said Board of Directors, by
unanimous written consent, adopted the following resolution which remains
in full force and effect as of the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation (the "Board of Directors") by its Certificate
of Incorporation (hereinafter referred to as the "Certificate of
Incorporation"), the Board of Directors does hereby authorize and provide
for the issuance of Class C Preferred Stock, $1.00 par value per share,
consisting of 100,000 shares, having the following designations,
preferences and relative and other special rights, qualifications,
limitations and restrictions:
1. DESIGNATION. The designation of such class is "Class C 8%
Cumulative, Non-Voting, Non-Convertible Preferred Stock" (hereinafter in
this Certificate of Designation called the "Class C Preferred Stock"), and
the number of shares constituting such class shall be 100,000, which number
may not be decreased or increased by the Board of Directors without a vote
of stockholders. All capitalized terms used in this Certificate of
Designation and not otherwise defined shall have the meaning given to such
terms in Section 10 hereof.
2. DIVIDENDS. (a) The holders of shares of Class C Preferred
Stock, in preference to the holders of the Junior Securities, shall be
entitled to receive, out of funds legally available for the purpose,
cumulative dividends as provided in this Section 2. Dividends on each
share of Class C Preferred Stock shall accrue on a daily basis at the
Applicable Rate on the sum of (i) the Liquidation Value and (ii) all
accumulated and unpaid dividends thereon from the date of issuance to the
end of the immediately preceding calendar year and shall be payable as
provided in subparagraph (b) of this Section 2. Accrued but unpaid
dividends will be compounded annually on December 31 of each year (each a
"dividend date") (the initial such calculation to be made at the Applicable
Rate for the number of days elapsed from the date of issue of the Class C
Preferred Stock to and including the 31st day of December, 1997). Such
dividends shall commence to accrue on each share of Class C Preferred Stock
from the date of issuance thereof whether or not declared by the Board of
Directors, and whether or not there are profits, surplus or other funds of
the Corporation legally available for the payment of dividends, and shall
continue to accrue thereon until the date the Liquidation Value of such
share (plus all accrued and unpaid dividends thereon) is paid. For
purposes of determining the amount of dividends accrued on the Class C
Preferred Stock pursuant to this Section 2 in connection with the sale,
redemption or repurchase of any Class C Preferred Stock which may occur
prior to December 31 of any year, the Applicable Rate for such period shall
be multiplied by a fraction, the numerator of which is the actual number of
days elapsed in the then current year and the denominator of which is 365.
(b) Subject to any applicable prohibition on the payment of dividends
in the Financing Agreement, dividends accrued on each outstanding share of
Class C Preferred Stock may be paid when, as and if declared by the Board
of Directors. Further, upon the earliest to occur of (i) a voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, (ii) a merger or consolidation of the Corporation into or with
another corporation in which the shareholders of this Corporation shall own
less than 50% of the voting securities of the surviving corporation or its
parent, (iii) the sale, transfer or lease (but not including a transfer or
lease by pledge or mortgage to a bona fide lender) of all or substantially
all of the assets of the Corporation, and (iv) the consummation of a Public
Offering of the Corporation's Common Stocks (each a "Trigger Event"), each
holder of Class C Preferred Stock shall be entitled to receive dividends on
each share of the Class C Preferred Stock then held by such holder in an
amount equal to the accumulated and unpaid dividends on such Class C
Preferred Stock from the date of issuance to the date of such payment (as
used in this Section 2, the "Accrued Dividend"). The Accrued Dividend
shall be paid in cash.
(c) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Class C Preferred Stock, such payment shall be distributed
ratably among the holders thereof based upon the aggregate accrued but
unpaid dividends on the Class C Preferred Stock held by each holder.
3. LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, either
voluntarily or involuntarily, each holder of Class C Preferred Stock shall
be entitled, after provision for the payment of the Corporation's debts
and other liabilities, to be paid in cash, before any distribution is made
on any Junior Securities, the aggregate Liquidation Value of all shares of
Class C Preferred Stock held by such holder plus an amount equal to the Ac-
crued Dividend, whether or not declared to the date of such payment. If,
upon any such liquidation, dissolution or other winding up of the affairs of
the Corporation, the net assets of the corporation distributable among the
holders of all outstanding shares of the Class C Preferred Stock shall be
insufficient to permit the payment in full to such holders of the preferential
amounts to which they are entitled under the Certificate of Incorporation,
then the entire net assets of the Corporation remaining after the pro-
vision for the payment of the Corporation's debts and other liabilities
shall be distributed among the holders of the Class C Preferred Stock ratably
in proportion to the full amounts to which they would otherwise be re-
spectively entitled.
(b) Holders of Class C Preferred Stock shall not be entitled to any
additional distribution in the event of any liquidation, dissolution or
winding up of the affairs of the Corporation in excess of the preferential
amount referred to in Section 3(a) above.
(c) The assets available for distribution pursuant to the Section 3
shall be determined by applicable law.
(d) The merger or consolidation of the Corporation into or with
another corporation in which the shareholders of this Corporation shall own
less than 50% of the voting securities of the surviving corporation or its
parent or the sale, transfer or lease (but not including a transfer or
lease by pledge or mortgage to a bona fide lender) of all or substantially
all of the assets of the Corporation may be deemed by the holders of the
Class C Preferred Stock to be a liquidation, dissolution or winding up of
the Corporation as those terms are used in this Section 3. In the event of
such merger, consolidation or sale of substantially all of the Company's
assets, the holders of shares of Class C Preferred Stock shall have the
right to preference in the merger or consolidation or upon the distribution
of assets as provided in this Section.
(e) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Corporation shall within
ten (10) days after the date of the Board of Directors approves such
action, or twenty (20) days prior to any shareholders' meeting called to
approve such action, or twenty (20) days after the commencement of an
involuntary proceeding, whichever is earliest, give each holder of shares
of Class C Preferred Stock initial written notice of the proposed action.
Such initial written notice shall describe the material terms and
conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of shares of Class C
Preferred Stock upon consummation of the proposed action and the date of
delivery thereof. If any material change in the facts set forth in the
initial notice shall occur, the Corporation shall promptly give written
notice to each holder of shares of Class C Preferred Stock of such material
change.
(f) The Corporation shall not consummate any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation before the
expiration of thirty (30) days after the mailing of the initial notice
referred to in subparagraph (e) above or ten (10) days after the mailing of
any subsequent written notice, whichever is later; provided, that any such
30-day or 10-day period may be shortened upon the written consent of the
holders of a majority of the outstanding shares of the Class B Preferred
Stock voting as a single class.
(g) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involve
distribution of assets other than cash, the Corporation shall promptly
engage competent independent appraisers to determine the value of the
assets to be distributed to the holders of shares of Class B Preferred
Stock, Class C Preferred Stock and the holders of shares of Common Stock
(it being understood that with respect to such valuation, the Corporation
shall engage such appraiser as shall be approved by the holders of a
majority of shares of the Corporation's outstanding Common Stock and by the
holders of a majority of the outstanding shares of Class B Preferred Stock
voting as separate classes). The Corporation shall, upon receipt of such
appraiser's valuation, give prompt written notice to each holder of shares
of Common Stock, Class B Preferred Stock and Class C Preferred Stock of the
appraiser's valuation.
4. VOTING. Except as otherwise required by law, the holders
of the Class C Preferred Stock shall have no voting powers whatsoever, and
no holder of Class C Preferred Stock shall vote on or otherwise participate
in any proceedings in which actions shall be taken by the Corporation or
the shareholders thereof or be entitled to notification as to any meeting
of the Board of Directors of the shareholders.
5. CONVERSION RIGHTS. Except as otherwise required by law, the
holders of Class C Preferred Stock shall have no rights of conversion of
the Class C Preferred Stock into any other class of preferred or common
stock.
6. REDEMPTION. (a) At any time, the Class C Preferred Stock may
be redeemed, in whole or in part, at the option of the Corporation by vote
of its Board of Directors, at any time or from time to time, at the
Liquidation Value thereof plus an amount equal to the sum of the Accrued
Dividends thereon, whether or not declared to the date of such payment. In
case of the redemption of a part of the outstanding Class C Preferred
Stock, such redemption shall be allocated among the holders of the Class C
Preferred Stock in proportion to each holders ownership.
(b) Upon the earlier to occur of a Trigger Event or February 28,
2002, the Corporation shall redeem all the outstanding shares of Class C
Preferred Stock at the Liquidation Value thereof plus an amount equal to
the sum of the Accrued Dividend thereof, whether or not declared to the
date of payment.
(c) At least 30 days prior to the date fixed for redemption, a
written notice shall be provided to each holder of record of Class C
Preferred Stock to be redeemed. Such notice shall provide the date fixed
for redemption, and call upon such holder to surrender to the Corporation
on such date fixed the certificate or certificates representing the number
of shares to be redeemed. On the date fixed for redemption, each holder of
Class C Preferred Stock to be redeemed shall present and surrender the
certificate or certificates representing such shares to the Corporation.
In case less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares.
7. STATUS OF REACQUIRED SHARES. Shares of Class C Preferred Stock
which have been issued and reacquired in any manner shall have the status
of authorized and unissued shares of Class C Preferred Stock.
8. RESTRICTIONS. So long as any shares of Class C Preferred Stock
are outstanding, no dividends or distributions shall be made on or in
respect of any Junior Securities and no Junior Securities shall be
purchased or redeemed directly or indirectly by the Corporation or any
Subsidiary without the prior written consent of the holders of a majority
of the outstanding shares of Class C Preferred Stock.
9. RANK. The Class C Preferred Stock shall rank senior upon
liquidation, dissolution or winding up to all Junior Securities, whenever
issued.
10. CERTIFICATES. So long as any shares of the Class C Preferred
Stock are outstanding, there shall be set forth on the face or back of each
stock certificate issued by the Corporation a statement that the
Corporation shall furnish without charge to each shareholder who so
requests, a full statement of the designation and relative rights,
preferences and limitations of each class of stock or series thereof that
the Corporation is authorized to issue and of the authority of the Board of
Directors to designate and fix the relative rights, preferences and
limitations of each series.
11. DEFINITIONS.
"Applicable Rate" means 8% per annum.
"Certificate of Designation" means this Certificate of
Designations, Preferences and Relative and Other Special Rights and
Qualifications, Limitations and Restrictions of the Class C Preferred
Stock.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company.
"Class A Common Stock" means the Corporation's Class A Common
Stock, $1.00 par value per share.
"Class B Common Stock" means the Corporation's Class B Common
Stock, $1.00 par value per share.
"Class B Preferred Stock" means the Corporation's Class B
Preferred Stock, $1.00 par value per share.
"Class C Common Stock" means the Corporation's Class C Non-Voting
Common Stock, $1.00 par value per share.
"Class C Preferred Stock" means the Corporation's Class C 8%
Cumulative, Non-Voting, Non-Convertible Preferred Stock, $1.00 par value
per share, as in effect the date hereof.
"Common Stock" means the Class A Common Stock, Class B Common
Stock and Class C Common Stock.
"Financing Agreement" means that certain Second Amended and
Restated Credit Agreement dated as of February 26, 1997, between
CoreStates Bank, N.A., in its capacity as Administrative Agent and a Bank,
the other Banks listed therein, and the Corporate Borrowers listed therein,
or any credit agreement evidencing a senior debt facility which replaces
the facility evidenced by such Second Amended and Restated Credit
Agreement.
"Junior Securities" means any of the Corporation's Common Stock
and all other equity securities of the Corporation other than Class C
Preferred Stock.
"Liquidation Value" of any share of Class C Preferred Stock shall
be sixteen dollars and fifty-six cents ($16.56).
"Person" means an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization and any
government, governmental department or agency or political subdivision
thereof.
"Public Offering" means any offering by the Corporation of its
equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933 or any comparable statement
under any similar federal statute then in force, other than an offering of
shares being issued as consideration in a business acquisition or
combination or an offering in connection with an employee benefit plan.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a partnership, association, or other business entity if such Person or
Persons shall be allocated a majority of partnership, association or other
business entity gains or losses or shall be or control the managing general
partner of such partnership, association or other business entity.
11. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Class C Preferred Stock set forth in this Resolution (as
such Resolution may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule, law or public policy,
all other rights, preferences and limitations set forth in this Resolution
(as so amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain
in full force and effect, and no right, preference or limitation herein set
forth shall be deemed dependent upon any other right, preference or
limitation unless so expressed herein.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Everett Dobson, its President, and attested to by Stephen T.
Dobson, its Secretary this 24th day of February, 1997.
By: EVERETT R. DOBSON
Everett R. Dobson
President
ATTEST:
STEPHEN T. DOBSON
Stephen T. Dobson
Secretary
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[GREAT SEAL OF THE STATE OF OKLAHOMA -- 1907]
CERTIFICATE OF CORRECTION
WHEREAS, the Certificate of Correction of,
DOBSON COMMUNICATIONS CORPORATION
has been filed in the office of the Secretary of State as provided by the
laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue this
certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
[Great Seal of the State Filed in the City of Oklahoma City this
of Oklahoma -- 1907] 23rd day of May, 1997.
TOM COLE
Secretary of State
By: BETH GARNER
<PAGE>
DOBSON COMMUNICATIONS CORPORATION
(FORMERLY, DOBSON HOLDINGS CORPORATION)
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE AND OTHER SPECIAL RIGHTS,
AND QUALIFICATIONS, LIMITATIONS, AND
RESTRICTIONS OF CLASS A PREFERRED STOCK
Pursuant to Section 7 of the Oklahoma General Corporation Act, this
Certificate of Correction is filed with the Oklahoma Secretary of State to
correct an inaccurate recording of a corporate action of the above named
corporation.
The inaccurate portions of the corporate record are contained in the
Certificate of Designations, Preferences and Relative and Other Special
Rights, and Qualifications, Limitations, and Restrictions of Class A
Preferred Stock of Dobson Communications Corporation filed with the
Oklahoma Secretary of State on February 25, 1997. Such portions stated as
follows:
"8. RANK. The Class A Preferred Stock shall rank senior upon
liquidation, dissolution or winding up to all Junior Securities, whenever
issued."
(Under 10. DEFINITIONS.)
"Applicable Rate" means 5% per annum.
Such portions of the Certificate of Designations of the Class A
Preferred Stock are inaccurate and should be deleted and replaced with the
following:
"8. RANK. The Class A Preferred Stock shall rank senior upon
liquidation, dissolution or winding up to all Junior Securities, whenever
issued. The Class A Preferred Stock shall rank junior as to dividends and
upon liquidation, dissolution or winding up to the Class B Preferred Stock
and the Class C Preferred Stock."
(Under 10. DEFINITIONS.)
THE TERM "APPLICABLE RATE" IS TO BE DELETED.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Correction to be signed by Everett Dobson, its President, and attested to
by Stephen T. Dobson, its Secretary this 22nd day of May, 1997.
By: EVERETT R. DOBSON
Everett R. Dobson
President
ATTEST:
STEPHEN T. DOBSON
Stephen T. Dobson
Secretary
<PAGE>
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[GREAT SEAL OF THE STATE OF OKLAHOMA -- 1907]
WHEREAS, the Certificate of Correction of,
DOBSON COMMUNICATIONS CORPORATION
has been filed in the office of the Secretary of State as provided by the
laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of
Oklahoma, by virtue of the powers vested in me by law, do hereby issue this
certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be affixed the
Great Seal of the State of Oklahoma.
[Great Seal of the State Filed in the City of Oklahoma City this
of Oklahoma -- 1907] 23rd day of May, 1997.
TOM COLE
Secretary of State
By: BETH GARNER
<PAGE>
DOBSON COMMUNICATIONS CORPORATION
(FORMERLY, DOBSON HOLDINGS CORPORATION)
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE AND OTHER SPECIAL RIGHTS,
AND QUALIFICATIONS, LIMITATIONS, AND
RESTRICTIONS OF CLASS C PREFERRED STOCK
Pursuant to Section 7 of the Oklahoma General Corporation Act, this
Certificate of Correction is filed with the Oklahoma Secretary of State to
correct an inaccurate recording of a corporate action of the above named
corporation.
The inaccurate portion of the corporate record is contained in the
Certificate of Designations, Preferences and Relative and Other Special
Rights, and Qualifications, Limitations, and Restrictions of Class C
Preferred Stock of Dobson Communications Corporation filed with the
Oklahoma Secretary of State on February 27, 1997. Such portion stated as
follows:
(Under 10. DEFINITIONS.)
"Liquidation Value" of any share of Class C Preferred Stock shall
be sixteen dollars and fifty-six cents ($16.56).
Such portion of the Certificate of Designations of the Class C
Preferred Stock is inaccurate and should be deleted and replaced with the
following:
(Under 10. DEFINITIONS.)
"Liquidation Value" of any share of Class C Preferred Stock shall
be $16.23329.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Correction to be signed by Everett Dobson, its President, and attested to
by Stephen T. Dobson, its Secretary this 22nd day of May, 1997.
By: EVERETT R. DOBSON
Everett R. Dobson
President
ATTEST:
STEPHEN T. DOBSON
Stephen T. Dobson
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001035985
<NAME> DOBSON COMMUNICATIONS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,944
<SECURITIES> 0
<RECEIVABLES> 9,093
<ALLOWANCES> 0
<INVENTORY> 812
<CURRENT-ASSETS> 27,913
<PP&E> 107,671
<DEPRECIATION> 37,821
<TOTAL-ASSETS> 314,326
<CURRENT-LIABILITIES> 13,101
<BONDS> 309,268
0
11,623
<COMMON> 473
<OTHER-SE> 5,508
<TOTAL-LIABILITY-AND-EQUITY> 314,326
<SALES> 0
<TOTAL-REVENUES> 14,343
<CGS> 2,382
<TOTAL-COSTS> 12,344
<OTHER-EXPENSES> (271)
<LOSS-PROVISION> 380
<INTEREST-EXPENSE> 3,902
<INCOME-PRETAX> (1,874)
<INCOME-TAX> (75)
<INCOME-CONTINUING> (1,799)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,822)
<CHANGES> 0
<NET-INCOME> (4,203)
<EPS-PRIMARY> ( 7.68)
<EPS-DILUTED> ( 7.68)
</TABLE>
