<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HECTOR COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
/ / Items 22(a)(2) of
Schedule A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C> <C>
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
</TABLE>
<PAGE>
HECTOR COMMUNICATIONS CORPORATION
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
------------------------
Notice is hereby given that the Annual Meeting of Shareholders of Hector
Communications Corporation will be held at The Marquette Hotel, 50th Floor IDS
Center, 7th and Marquette, Minneapolis, Minnesota 55402, on Tuesday, May 19,
1998 at 2:00 p.m., Central Daylight Time, for the following purposes:
1. To elect three (3) directors to hold office until the 2001 Annual
Meeting of Shareholders or until their successors are elected.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 27, 1998 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
By Order of the Board of Directors
Richard A. Primuth,
SECRETARY
Hector, Minnesota
April 9, 1998
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN
PERSON IF THEY SO DESIRE.
<PAGE>
HECTOR COMMUNICATIONS CORPORATION
211 SOUTH MAIN STREET
HECTOR, MINNESOTA 55342
(612) 848-6611
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished to the shareholders of Hector
Communications Corporation ("HCC" or the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be voted at
the Annual Meeting of Shareholders to be held at The Marquette Hotel, 50th Floor
IDS Center, 7th and Marquette, Minneapolis, Minnesota 55402 on Tuesday, May 19,
1998, beginning at 2:00 p.m. or at any adjournment or adjournments thereof. The
cost of this solicitation will be paid by the Company. In addition to
solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegraph or in person. The Company may also
request banks and brokers to solicit their customers who have a beneficial
interest in the Company's Common Stock registered in the names of nominees and
will reimburse such banks and brokers for their reasonable out-of-pocket
expenses.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by revocation
of a written proxy by request in person at the Annual Meeting. If not so
revoked, the shares represented by such proxy will be voted by the persons
designated as proxies in favor of the matters indicated. In the event any other
matters properly come before the meeting calling for a vote of shareholders, the
persons named as proxies will vote in accordance with their judgment on such
matters. The Company's corporate offices are located at 211 South Main Street,
Hector, Minnesota 55342, and its telephone number is (612) 848-6611. The mailing
of this Proxy Statement to shareholders of the Company commenced on or about
April 9, 1998.
The total number of shares outstanding and entitled to vote at the meeting
as of March 27, 1998 consisted of 2,103,226 shares of $.01 par value Common
Stock. Each share of Common Stock is entitled to one vote. Cumulative voting in
the election of directors is not permitted. Only shareholders of record at the
close of business on March 27, 1998 will be entitled to vote at the meeting. The
presence in person or by proxy of the holders of a majority of the shares
entitled to vote at the Annual Meeting of Shareholders constitutes a quorum for
the transaction of business. In addition to its outstanding Common Stock, the
Company had outstanding on the record date 374,100 shares of non-voting
convertible preferred stock. See "Security Ownership of Certain Beneficial
Owners and Management" herein.
Under Minnesota law, each item of business properly presented at a meeting
of shareholders generally must be approved by the affirmative vote of the
holders of a majority of the voting power of the shares present, in person or by
proxy, and entitled to vote on that item of business. However, if the shares
present and entitled to vote on any particular item of business would not
constitute a quorum for the transaction of business at the meeting, then that
item must be approved by holders of a majority of the minimum number of shares
that would constitute such a quorum. Votes cast by proxy or in person at the
Annual Meeting of Shareholders will be tabulated at the meeting to determine
whether or not a quorum is present. Abstentions on a particular item of business
will be treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of determining
the approval of the matter. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's common
stock by each person known by the Company to own of record or beneficially five
percent (5%) or more of the Company's common stock, and all officers and
directors of the Company as a group based upon information available as of March
15, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS*
- -------------------------------------- -------------------- ------------
<S> <C> <C>
Curtis A. Sampson 545,870(1) 26.0%
211 South Main Street
Hector, MN 55342
Mario J. Gabelli 443,200(2) 17.89%
One Corporate Center
Rye, New York 10580
Perkins Capital Management Inc. 437,901(3) 20.9%
730 E Lake Street
Wayzata, MN 55391
Golden West Cablevision, Inc. 171,425 8.2%
P.O. Box 411
Wall, South Dakota 57790
Paul N. Hanson 148,105(4) 7.1%
211 South Main Street
Hector, MN 55342
John C. Ortman 132,337 6.3%
1506 17th Street
Lawrenceville, IL 62439
All directors and officers 744,190(5) 35.5%
as a group (9 persons)
</TABLE>
- ------------------------
* There are currently outstanding 374,100 shares of the Company's Series A
Convertible Preferred Stock. The holders of preferred stock have no voting
rights, except in limited circumstances, but each share of preferred stock
is convertible at any time at the option of the holder into one share of
common stock. The percent calculations do not give effect to the conversion
of any shares of preferred stock, all of which are issued to persons and
entities directly or indirectly controlled by or affiliated with Mr. Mario
J. Gabelli, except for the percentage calculation applicable to Mr. Gabelli.
See footnote 2. Each such percentage calculation would decline approximately
17% if such conversion were assumed.
(1) The shares listed above include 374,517 shares owned by Mr. Sampson
directly, 50,000 shares which may be purchased within 60 days pursuant to
outstanding stock options, 562 shares issuable upon conversion of the
Company, 8.5% Convertible Subordinated Debentures due 2002, 7,062 shares
owned by Mr. Sampson's wife, 57,981 shares owned by the Communications
Systems, Inc. Employee Stock Ownership Plan ("CSI ESOP") of which Mr.
Sampson is a trustee and 55,748 shares owned by the Hector Communications
Corporation Employee Stock Ownership Plan ("Hector ESOP") of which Mr.
Sampson is a trustee. See "Certain Transactions" below. Mr. Sampson
disclaims any
2
<PAGE>
beneficial ownership of the shares owned by his wife and disclaims any
beneficial ownership of the shares owned by the CSI ESOP and the Hector ESOP
in excess of the shares allocated to his account, which totaled 9,045 shares
at December 31, 1997.
(2) The aggregate number of shares listed includes shares respectively held by
various persons or entities which are deemed to be controlled, direct or
indirectly, by or affiliated with Mr. Gabelli. The aggregate number of
shares listed above include 347,200 shares of the Company's non-voting
Convertible Preferred Stock (which are convertible on a one for one basis at
any time into the Company's common stock) which are held by the following
persons in the amounts respectively indicated: Gabelli Performance
Partnership, 223,200 shares; Lynch Corporation, 124,000 shares. In addition,
the following persons hold shares of the Company's common stock in the
amounts respectively indicated: Gabelli Performance Partnership, 29,000
shares; GAMCO Investors, Inc., 35,200 shares; and Lynch Corporation, 31,800
shares.
(3) The shares indicated include 425,901 shares deemed to be owned by Perkins
Capital Management, Inc. as the beneficial holder of $3,782,000 Hector
Communications Corporation 8.5% Convertible Subordinated Debentures due 2002
and a warrant to purchase 4,000 shares.
(4) The shares listed above include 11,876 shares owned by Mr. Hanson directly,
22,500 shares which may be purchased within 60 days pursuant to outstanding
stock options, 57,981 shares owned by the CSI ESOP of which Mr. Hanson is a
trustee and 55,248 shares owned by the Hector ESOP of which Mr. Hanson is a
trustee. Mr. Hanson disclaims any beneficial ownership of the shares owned
by the CSI and Hector ESOP's in excess of the shares allocated to his
account, which totaled 2,440 shares at December 31, 1997.
(5) Includes 113,729 shares owned collectively by the CSI ESOP and the Hector
ESOP of which Messrs. C. A. Sampson and Hanson are trustees, and 133,700
shares deemed outstanding pursuant to options exercisable within 60 days.
Mr. Sampson and Mr. Hanson disclaim any beneficial ownership of the shares
owned by the CSI ESOP and the Hector ESOP in excess of shares allocated to
their respective accounts as described under footnotes 1 and 4 above.
ELECTION OF DIRECTORS
The Board of Directors has nominated and recommends for election as
directors of the Company the three persons named below. Messrs. Paul N. Hanson
and Wayne E. Sampson have served as directors since 1990. Mr. James O. Ericson
has served as director since 1995. It is intended that proxies will be voted for
such nominees. The Board of Directors believes that each nominee named below
will be able to serve, but should a nominee be unable to serve as a director,
the persons named in the proxies have advised that they will vote for the
election of such substitute nominee as the Board of Directors may propose.
Information regarding the nominees and other directors filling unexpired
terms, including information regarding their principal occupations currently and
for the preceding five years, is set forth below and on the following page.
Ownership of Common Stock of the Company is given as of March 15, 1998. To the
3
<PAGE>
best of the Company's knowledge, unless otherwise indicated below, the persons
indicated possess sole voting and investment power with respect to their stock
ownership.
<TABLE>
<CAPTION>
YEAR
CURRENT AMOUNT OF PERCENT OF
PRINCIPAL OCCUPATION DIRECTOR TERM STOCK OUTSTANDING
NAME AND AGE AND OTHER DIRECTORSHIPS SINCE EXPIRES OWNERSHIP STOCK
- ------------------------ ------------------------------------------ ----------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
NOMINEES PROPOSED FOR ELECTION FOR TERM EXPIRING IN 2001
James O. Ericson Business consultant and private investor 1995 1998 25,810(1) 1.2%
(62)
Paul N. Hanson Vice President and Treasurer of the 1990 1998 148,105(2) 7.1%
(51) Company; Chief Financial Officer, Vice
President of Finance and Treasurer of
Communications Systems, Inc. (manufacturer
of telephone connecting and wiring
devices) since 1982.
Wayne E. Sampson Management consultant; director of 1990 1998 65,981(3) 3.1%
(68)+ Communications Systems, Inc.
DIRECTORS SERVING UNEXPIRED TERMS
Curtis A. Sampson Chairman and Chief Executive Officer of 1990 1999 545,870 (4) 26.0 %
(64)+ the Company; Chairman of the Board,
President and Chief Executive Officer of
Communications Systems, Inc.; Chairman of
the Board of Canterbury Park Holding
Corporation (thoroughbred racetrack).
Steven H. Sjogren President and Chief Operating Officer of 1990 1999 98,024 (5) 4.7 %
(55)+ the Company.
Charles R. Dickman Retired Pharmacist, Hector, Minnesota. 1990 2000 54,161 (6) 2.6 %
(77)
Paul A. Hoff Chief Executive Officer, Park Regional 1993 2000 3,000 (7) *
(50) Mutual Telephone Company, Underwood,
Minnesota.
Edward E. Strickland Business and management consultant; 1990 2000 14,750 (8) *
(71) Director of: Green Isle Environmental
Services, Inc. (manufacturing);
Bio-Vascular, Inc. (medical devices);
Communications Systems, Inc.; and Avecor
Cardiovascular, Inc. (medical devices).
</TABLE>
- ------------------------
+ Wayne E. Sampson and Curtis A. Sampson are brothers and each is a first
cousin to Mr. Sjogren.
4
<PAGE>
* Indicates ownership of less than one percent.
(1) Includes 3,310 shares owned by Mr. Ericson's spouse, as to which beneficial
ownership is disclaimed and 2,000 shares deemed outstanding pursuant to
options exercisable within sixty days.
(2) See footnote 4 to "Security Ownership of Certain Beneficial Owners and
Management" above.
(3) Includes 3,500 shares owned by Mr. W. E. Sampson directly, 4,500 shares
which may be purchased within 60 days pursuant to outstanding stock options,
and 57,981 shares owned by the CSI ESOP, of which Mr. Sampson is a trustee.
Mr. Sampson disclaims any beneficial ownership of the shares owned by the
CSI ESOP.
(4) See footnote 1 to "Security Ownership of Certain Beneficial Owners and
Management" above.
(5) Includes 10,076 shares owned by Mr. Sjogren directly, 32,200 shares deemed
outstanding pursuant to options exercisable within 60 days and 55,748 shares
owned by the Hector ESOP of which Mr. Sjogren is a trustee. Mr. Sjogren
disclaims any beneficial ownership of the shares owned by the Hector ESOP in
excess of the shares allocated to his account, which totaled 5,250 shares at
December 31, 1997.
(6) Includes 14,334 shares owned by Mr. Dickman's wife, as to which beneficial
ownership is disclaimed, and 4,500 shares deemed outstanding pursuant to
options exercisable within 60 days.
(7) Represents shares deemed outstanding pursuant to options exercisable within
60 days.
(8) Includes 4,500 shares deemed outstanding pursuant to options exercisable
within 60 days and 2,250 shares upon conversion of convertible dentures.
INFORMATION REGARDING BOARD AND BOARD COMMITTEES
The Board of Directors of the Company met 4 times during 1997. Each director
nominee and each continuing director attended at least 75% of the meetings of
the Board and each committee on which such director served.
Each non-employee members of the Board is paid an annual fee of $3,600, plus
$300 for each meeting attended. Messrs. Curtis A. Sampson, Sjogren and Hanson,
who are otherwise employed by the Company, receive no additional compensation
for service on the Board.
Each non-employee member of the Board of Directors nominated for reelection
or continuing in office receives at the time of each annual meeting of the
shareholders an option to purchase 1,000 shares of the Company's Common Stock.
Each director's option is to purchase 1,000 shares of Common Stock at a price
equal to the fair market value of the Company's Common Stock on the date of
grant exercisable over a ten-year period beginning six months after the date the
option is granted.
The Company has an Audit Committee consisting of Messrs. Hoff, Wayne E.
Sampson and Strickland. The Audit Committee recommends to the full Board of
Directors the selection of independent accountants and reviews the activities
and reports of the independent accountants, as well as the internal accounting
controls of the Company. The Audit Committee met once in 1997.
The Company has a Compensation Committee consisting of Messrs. Hoff, Wayne
E. Sampson and Sjogren. The Compensation Committee met once during 1997. The
Compensation Committee recommends to the Board of Directors compensation for
executive officers and key personnel and reviews the Company's compensation
policies and practices. Mr. Sjogren does not participate in the consideration by
the committee of his own compensation.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following tables show, for the fiscal years ending December 31, 1997,
1996 and 1995, the cash and other compensation paid to or accrued by the Company
for the Company's chief executive officer and chief operating officer in all
capacities served, as well as information relating to option grants, option
exercises and fiscal year end option values applicable to such persons.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION OPTIONS
-------------------------------- (NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SHARES) COMPENSATION(2)
- -------------------------------------------------- --------- ---------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Curtis A. Sampson ................................ 1997 $ 122,308 $ 20,000 10,000 $ 9,536
Chief Executive Officer (1) 1996 $ 113,654 $ 15,000 10,000 $ 7,618
1995 $ 110,854 $ 25,000 10,000 $ 7,970
Steven H. Sjogren ................................ 1997 $ 96,576 $ 10,000 8,100 $ 7,436
Chief Operating Officer 1996 $ 89,385 $ 9,000 8,100 $ 6,501
1995 $ 84,642 $ 7,500 8,000 $ 6,726
</TABLE>
- ------------------------
Note: Certain columns have not been included in this table because the
information called for therein is not applicable to the Company or the
individual named above for the periods indicated.
(1) Mr. Sampson devotes approximately 40% of his working time to the Company.
The balance of his working time Mr. Sampson serves as Chairman and
Executive Officer of Communications Systems, Inc., for which he is
separately compensated. See "Certain Transactions."
(2) All other compensation for Messrs. Sampson and Sjogren consisted of
Company contributions to the Company's 401(k) Plan and Employee Stock
Ownership Plan.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF ANNUAL RATES OF
TOTAL OPTIONS MARKET STOCK PRICE
GRANTED TO EXERCISE PRICE ON APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE PER DATE OF EXPIRATION OPTION TERM
NAME GRANTED FISCAL YEAR SHARE GRANT DATE 5% 10%
- --------------------------------- ----------- --------------- ----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Curtis A. Sampson................ 10,000 16.2% $ 8.25 $ 7.50 3/24/02 $ 13,221 $ 38,288
Steven H. Sjogren................ 8,100 13.1% 7.50 7.50 3/24/02 16,784 37,088
</TABLE>
OPTION EXERCISES IN 1997
There were no option exercises by the named executives in 1997.
6
<PAGE>
1997 YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
NUMBER OF UNEXERCISED AT FY-END (BASED ON
OPTIONS AT 12/31/97 12/31/97 PRICE OF $9.25)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Curtis A. Sampson..................... 40,000 10,000 $ 65,208 $ 13,666
Steven H. Sjogren..................... 31,033 8,067 74,575 16,875
</TABLE>
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement effective August 1, 1990
with Mr. Steven H. Sjogren, the Company's President, which has a term of 10
years. Current compensation under the contract is $98,000 per annum which is
subject to increase pursuant to annual salary reviews. In addition to other
customary terms and conditions, the employment agreement requires that any early
termination of the agreement by the Company be "for cause."
CERTAIN TRANSACTIONS
TRANSACTIONS AND SHARED MANAGEMENT WITH COMMUNICATIONS SYSTEMS, INC.
The Company receives certain staff services and systems, such as payroll and
pension plan administration, from Communications Systems, Inc. pursuant to an
agreement entered into in August 1990 with the costs and expenses of such
services paid by the Company. CSI has continued to make available to the Company
certain centralized staff services and systems, such as payroll and pension plan
administration, with the related costs and expenses being paid by the Company.
In 1997 and 1996 the Company paid CSI, respectively, $264,000 and $258,000 for
such services, amounts which management believes is less than what the Company
would pay if it was required to pay for such services from another vendor.
Three of the Company's executive officers, Curtis A. Sampson, Paul N. Hanson
and Charles A. Braun, each devote approximately 40% of their working time to the
Company. Messrs. Sampson, Hanson and Braun devote the remainder of their working
time to CSI, of which Mr. Sampson serves as Chairman and Chief Executive
Officer. Mr. Hanson serves as Chief Financial Officer, Vice President of Finance
and Treasurer, and Mr. Braun serves as Controller. These officers are separately
compensated for their services to CSI.
REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION
The Company's officers, directors and beneficial holders of 10% or more of
the Company's securities are required to file reports of their beneficial
ownership with the Securities and Exchange Commission on SEC Forms 3, 4 and 5.
According to the Company's records, during the period from January 1, 1997 to
December 31, 1997, officers, directors and ten percent beneficial holders of the
Company filed all reports with the Securities and Exchange Commission required
under Section 16(a) to report their beneficial ownership.
THE COMPANY'S AUDITORS
Olsen Thielen & Co., Ltd. have been the auditors for the Company since 1969
and have been selected by the Board of Directors, upon recommendation of the
Audit Committee, to serve as such for the current
7
<PAGE>
fiscal year. A representative of Olsen Thielen & Co., Ltd. is expected to be
present at the Annual Meeting of Shareholders and will have an opportunity to
make a statement and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The proxy rules of the Securities and Exchange Commission permit
shareholders of the Company, after timely notice to the Company, to present
proposals for shareholder action in the Company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate for
shareholder action and are not properly omitted by Company action in accordance
with the Commission's proxy rules. The next annual meeting of the shareholders
of Hector Communications Corporation is expected to be held on or about May 15,
1999 and proxy materials in connection with that meeting are expected to be
mailed on or about March 31, 1999. Shareholder proposals prepared in accordance
with the Commission's proxy rules must be received at the Company's corporate
office, 211 South Main Street, Hector, Minnesota 55342, Attention: President, by
December 15, 1998, in order to be considered for inclusion in the Board of
Directors' Proxy Statement and proxy card for the 1999 Annual Meeting of
Shareholders. Any such proposals must be in writing and signed by the
shareholder.
The Bylaws of the Company establish an advance notice procedure with regard
to (i) certain business to be brought before an annual meeting of shareholders
of the Company and (ii) the nomination by shareholders of candidates for
election as directors.
PROPERLY BROUGHT BUSINESS. The Bylaws provide that at the annual meeting
only such business may be conducted as is of a nature that is appropriate for
consideration at an annual meeting and has been either specified in the notice
of the meeting, otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or otherwise properly brought before the
meeting by a shareholder who has given timely written notice to the Secretary of
the Company of such shareholder's intention to bring such business before the
meeting. To be timely, the notice must be given by such shareholder to the
Secretary of the Company not less than 45 days nor more than 75 days prior to a
meeting date corresponding to the previous year's annual meeting. Notice
relating to the conduct of such business at an annual meeting must contain
certain information as described in Section 2.9 of the Company's Bylaws, which
are available for inspection by shareholders at the Company's principal
executive offices pursuant to Section 302A.461, subd. 4 of the Minnesota
Statutes. Nothing in the Bylaws precludes discussion by any shareholder of any
business properly brought before the annual meeting in accordance with the
Company's Bylaws.
SHAREHOLDER NOMINATIONS. The Bylaws provide that a notice of proposed
shareholder nominations for the election of directors must be timely given in
writing to the Secretary of the Company prior to the meeting at which directors
are to be elected. To be timely, the notice must be given by such shareholder to
the Secretary of the Company not less than 45 days nor more than 75 days prior
to a meeting date corresponding to the previous year's annual meeting. The
notice to the Company from a shareholder who intends to nominate a person at the
meeting for election as a director must contain certain information as described
in Section 3.7 of the Company's Bylaws, which are available for inspection by
shareholders as described above. If the presiding officer of a meeting of
shareholders determines that a person was not nominated in accordance with the
foregoing procedure, such person will not be eligible for election as a
director.
8
<PAGE>
OTHER MATTERS
Management knows of no other matters that will be presented at the meeting.
If any other matters arise at the meeting, it is intended that the shares
represented by the proxies in the accompanying form will be voted in accordance
with the judgment of the persons named in the proxy.
The Company is transmitting with this Proxy Statement its Annual Report for
the year ended December 31, 1997. SHAREHOLDERS MAY RECEIVE, WITHOUT CHARGE, A
COPY OF THE COMPANY'S 1997 FORM 1O-K REPORT AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION BY WRITING TO ASSISTANT SECRETARY, HECTOR COMMUNICATIONS
CORPORATION, 211 SOUTH MAIN STREET, HECTOR, MINNESOTA 55342.
By Order of the Board of Directors,
Richard A. Primuth,
SECRETARY
9
<PAGE>
HECTOR COMMUNICATIONS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON MAY 19, 1998
The undersigned hereby appoints Charles R. Dickman, Paul A. Hoff and Edward
E. Strickland or any of them, as proxies, with full power of substitution to
vote all the shares of common stock which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders of Hector
Communications Corporation, to be held Tuesday, May 19, 1998, at 2:00 p.m.
Central Daylight Time at The Marquette Hotel, 50th Floor IDS Center, 7th and
Marquette, Minneapolis, Minnesota 55402, or at any adjournments thereof, upon
any and all matters which may properly be brought before the meeting or
adjournment thereof, hereby revoking all former proxies.
<TABLE>
<S> <C> <C>
1. ELECTION
OF
DIRECTORS.
/ /
/ /
(INSTRUCTIONS: TO
WITHHOLD AUTHORITY
TO VOTE FOR ANY
INDIVIDUAL NOMINEE
WRITE THAT NOMINEE'S
NAME IN THE SPACE
PROVIDED BELOW.)
James
O.
Ericson Paul
N.
Hanson Wayne
E. Sampson
2.
<CAPTION>
1.
WITH AUTHORITY to vote for all nominees listed below (except as indicated to the contrary) for a three year
term ending at the 2001 Annual Meeting of Shareholders
WITHOUT AUTHORITY to vote for nominees listed below
(INSTRUC
WITHHOLD
TO VOTE
INDIVIDU
WRITE THA
NAME IN
PROVIDE
O.
Ericson
N.
Hanson
E. Sampso
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2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before
the meeting.
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS NAMED ON THE REVERSE SIDE OF THIS CARD UNLESS OTHERWISE SPECIFIED.
PLEASE DATE AND SIGN exactly as your name(s) appears below indicating, where
proper, official position or representative capacity in which you are signing.
When signing as executor, administrator, trustee or guardian, give full title as
such; when shares have been issued in names of two or more persons, all should
sign.
Dated ______________________, 1998
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Signature
__________________________________
Signature if held jointly
