UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Hector Communications Corporation
(Exact name of registrant as specified in its charter)
Minnesota 41-166660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
211 South Main Street
Hector, Minnesota 55342
(Address of Principal Executive Offices and zip code)
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HECTOR COMMUNICATIONS CORPORATION 1990 STOCK PLAN
(Full title of the Plan)
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Curtis A. Sampson Copy to:
Chief Executive Officer Richard A. Primuth, Esq.
Hector Communications Corporation Lindquist & Vennum P.L.L.P.
211 South Main Street 4200 IDS Center
Hector, Minnesota 55342 80 South Eighth Street
(612) 848-6611 Minneapolis, MN 55402
(Name, address and telephone (612) 371-3211
number, including area code,
of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
<S> <C> <C> <C> <C> <C>
Common Stock, 250,000 shares(2) $ 9.25 $2,312,500 $683
$.01 par value,
to be issued pursuant
to Hector Communications
Corporation 1990 Stock Plan
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and based upon the average of the closing price of
the Company's Common Stock on the Nasdaq National Market System on
February 4, 1998.
(2) 250,000 shares were registered on Form S-8 (File No. 33-39865) on
April 8, 1991 and 250,000 shares are being registered herewith.
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INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT
BY REFERENCE
A Registration Statement on Form S-8 (File No. 33-39865) was filed with the
Securities and Exchange Commission on April 8, 1991 covering the registration of
250,000 shares initially authorized for issuance under the Company's 1990 Stock
Plan (the "Plan"). A filing fee of $449.33 was paid at the time that
Registration Statement was filed. Pursuant to General Instruction E of Form S-8
and Rule 429, this Registration Statement is being filed to register an
additional 250,000 shares authorized under the Plan. An amendment to the Plan to
increase the reserved and authorized number of shares under the Plan by 250,000
was authorized by the Company's Board of Directors on February 25, 1997 and such
amendment was approved by the Company's shareholders on May 22, 1997. This
Registration Statement should also be considered a post-effective amendment to
the prior Registration Statement. The contents of the prior Registration
Statement are incorporated herein by reference.
PART I
Pursuant to the Note to Part I of Form S-8, the information required by Items 1
and 2 of Form S-8 is not filed as a part of this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange Commission are
hereby incorporated by reference herein:
(a) The Annual Report of the Company on Form 10-K for the fiscal year ended
December 31, 1996.
(b) The Definitive Proxy Statement dated April 15, 1997 for the 1997 Annual
Meeting of Shareholders held on May 22, 1997.
(c) The Quarterly Reports of the Company on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
(d) The description of the Company's Common Stock as set forth in the
Company's Registration Statement on Form 10 (File No. 0-18587).
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
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Item 5. Interests of Named Experts and Counsel.
Richard A. Primuth, Secretary of the Company, is a partner in Lindquist & Vennum
P.L.L.P., which is the law firm passing on the validity of the securities issued
under the Plan.
Item 6. Indemnification of Directors and Officers.
The Company Bylaws provide that the Registrant shall indemnify any person made
or threatened to be made a party to any threatened, pending or completed civil,
criminal, administrative, arbitration or investigative proceeding, including a
proceeding by or in the right of the corporation, by reason of the former or
present official capacity of the person, provided the person seeking
indemnification meets five criteria set forth in Section 302A.521 of the
Minnesota Business Corporation Act.
The Company's Bylaws also authorize the Board of Directors, to the extent
permitted by applicable law, to indemnify any person or entity not described in
the Bylaws pursuant to, and to the extent described in, an agreement between the
Company and such person, or as otherwise determined by the Board of Directors in
its discretion.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify the person against judgments, penalties, fines
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorneys' fees and disbursements, incurred by such person in
connection with the proceeding if, with respect to the acts or omissions of such
person complained of in the proceeding, such person (i) has not been indemnified
by another organization or employee benefit plan for the same expenses with
respect to the same acts or omissions; (ii) acted in good faith; (iii) received
no improper personal benefit and Section 302A.255 (regarding conflicts of
interest), if applicable, has been satisfied; (iv) in the case of a criminal
proceeding, has no reasonable cause to believe the conduct was unlawful; and (v)
in the case of acts or omissions by persons in their official capacity for the
corporation, reasonably believed that the conduct was in the best interests of
the corporation, or in the case of acts or omissions by persons in their
capacity for other organization, reasonably believed that the conduct was not
opposed to the best interests of the corporation.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
4.1 Hector Communications Corporation 1990 Stock Plan, as amended
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P.
23.1 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1)
23.2 Consent of Olsen Thielen & Co., Ltd., independent public accountants
24.1 Power of Attorney (set forth on signature page hereof)
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Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person connected with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hector, State of Minnesota, on February 6, 1998.
HECTOR COMMUNICATIONS CORPORATION
By /s/ Curtis A. Sampson
Curtis A. Sampson, Chairman and
Chief Executive Officer
Principal Executive Officer)
POWER OF ATTORNEY
The undersigned officers and directors of Hector Communications Corporation
hereby constitute and appoint Curtis A. Sampson and Paul N. Hanson, or either of
them, with power to act one without the other, our true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for us and in our stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and all documents relating thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing necessary or
advisable to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on
February 6, 1998 and in the capacities indicated.
Signature Title
/s/ Curtis A. Sampson Chairman of the Board of Directors,
Curtis A. Sampson Chief Executive Officer and Director
/s/ Steven H. Sjogren President, Chief Operating Officer,
Steven H. Sjogren and Director
/s/ Paul N. Hanson Vice President, Treasurer
Paul N. Hanson and Director
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/s/ Charles A. Braun Chief Financial Officer and
Charles A. Braun Principal Accounting Officer
/s/ Charles R. Dickman Director
Charles R. Dickman
/s/ James O. Ericson Director
James O. Ericson
/s/ Paul A. Hoff Director
Paul A. Hoff
/s/ Wayne E. Sampson Director
Wayne E. Sampson
/s/ Edward E. Strickland Director
Edward E. Strickland
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Exhibit 4.1
HECTOR COMMUNICATIONS CORPORATION
1990 STOCK PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the Hector Communications Corporation 1990 Stock Plan
(the "Plan"). The purpose of the Plan is to enable Hector Communications
Corporation (the "Company") and its Subsidiaries to retain and attract
executives and other key employees and non-employee directors who contribute to
the Company's success by their ability, ingenuity and industry, and to enable
such individuals to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
a. "Board" means the Board of Directors of the Company.
b. "Cause" means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or a participant's willful
misconduct or dishonesty, any of which is directly and materially harmful to
the business or reputation of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means the Committee referred to in Section 2 of the Plan. If at
any time no Committee shall be in office, then the functions of the Committee
specified in the Plan shall be exercised by the Board.
e. "Company" means the Hector Communications Corporation, a corporation
organized under the laws of the State of Minnesota (or any successor
corporation).
f. "Deferred Stock" means an award made pursuant to Section 8 below of the right
to receive Stock at the end of a specified deferral period.
g. "Disability" means permanent and total disability as determined by the
Committee.
h. "Disinterested Person" shall have the meaning set forth in Rule 16b-3(d)(3)
as promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, or any successor definition adopted by the Commission.
i. "Early Retirement" means retirement, with consent of the Committee at the
time of retirement, from active employment with the Company and any
Subsidiary or Parent Corporation of the Company.
j. "Fair Market Value" means the value of the Stock on a given date as
determined by the Committee in accordance with the applicable Treasury
Department regulations under Section 422A of the Code with respect to
"incentive stock options."
k. "Incentive Stock Option" means any Stock Option intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422A of the
Code.
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l. "Non-Employee Director" means any member of the Board who is not an employee
of the Company, any Parent Corporation or Subsidiary.
m. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option, and is intended to be and is designated as a "Non-Qualified
Stock Option."
n. "Normal Retirement" means retirement from active employment with the Company
and any Subsidiary or Parent Corporation of the Company on or after age 60.
o. "Parent Corporation" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of the
corporations (other than the Company)owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
p. "Restricted Stock" means an award of shares of Stock that are subject to
restrictions under Section 7 below.
q. "Retirement" means Normal Retirement or Early Retirement.
r. "Stock" means the Common stock, $.01 par value per share, of the Company.
s. "Stock Appreciation Right" means the right pursuant to an award granted under
Section 6 below to surrender to the Company all or a portion of a Stock
Option in exchange for an amount equal to the difference between (i) the Fair
Market Value, as of the date such Stock Option or such portion thereof is
surrendered, of the shares of Stock covered by such Stock Option or such
portion thereof, and (ii) the aggregate exercise price of such Stock Option
or such portion thereof.
t. "Stock Option" means any option to purchase shares of Stock granted pursuant
to Section 5 below.
u. "Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
(other than the last corporation in the unbroken chain) owns stock possessing
50% or more of the total combined voting power of all classes of stock in one
of the other corporations in the chain.
SECTION 2. Administration.
The Plan shall be administered by the Board of Directors or by a Committee of
not less than three Disinterested Persons, who shall be appointed by the Board
of Directors of the company and who shall serve at the pleasure of the Board.
The Committee shall have the power and authority to grant to eligible employees,
pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, or (iv) Deferred Stock awards.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of the Company and its
Subsidiaries to whom Stock Options, Stock Appreciation Rights, Restricted
Stock and/or Deferred Stock awards may from time to time be granted
hereunder;
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(ii) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock
or Deferred Stock awards, or a combination of the foregoing, are to be
granted hereunder;
(iii) to determine the number of shares to be covered by each such award granted
hereunder;
(iv) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any award granted hereunder (including, but not limited to,
any restriction on any Stock Option or other award and/or the shares of
Stock relating thereto); and
(v) to determine whether, to what extent and under what circumstances Stoc
and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the Plan shall
be final and binding on all persons, including the company and Plan
participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 500,000. Such shares may consist, in whole or in part,
of authorized and unissued shares.
Subject to paragraph (b)(iv) of Section 6 below, if any shares that have been
optioned ceased to be subject to Options, or if any shares subject to any
Restricted Stock or Deferred Stock award granted hereunder are forfeited or such
award otherwise terminates without a payment being made to the participant, such
shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, other change in corporate structure affecting the Stock, or
spin-off or other distribution of assets to shareholders, such substitution or
adjustment shall be made in the aggregate number of shares reserved for issuance
under the Plan, in the number and option price of shares subject to outstanding
options granted under the Plan, and in the number of shares subject to
Restricted Stock or Deferred Stock awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right associated with
any Option.
SECTION 4. Eligibility.
Officers, other key employees of the Company and Subsidiaries and Non-Employee
Directors who are responsible for or contribute to the management, growth and/or
profitability of the business of the Company and its Subsidiaries are eligible
to be granted Stock Options, Stock Appreciation Rights, Restricted Stock or
Deferred Stock awards under the Plan. Except for NonEmployee Directors, whose
participation in the Plan shall be limited as provided in paragraph (k) of
Section 5, the optionees and participants under the Plan shall be selected from
time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares covered by each award.
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SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
The Stock options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock options
shall be granted under the Plan after July 19, 2000.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of options (in each case
with or without Stock Appreciation Rights). To the extent that any option does
not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify either the Plan or any Incentive Stock Option under Section
422A of the Code. The preceding sentence shall not preclude any modification or
amendment to an outstanding Incentive Stock Option, whether or not such
modification or amendment results in disqualification of such Option as an
Incentive Stock Option, provided the optionee consents in writing to the
modification or amendment.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable under a Stock
Option shall be determined by the Committee at the time of grant and may, except
as provided in this paragraph, be less than the Fair Market Value of the Stock
on the date of the grant of the Option. In no event shall the option price per
share of Stock purchasable under an Incentive Stock Option be less than 100% of
the Fair Market Value of the Stock on the date of the grant of the option. If an
employee owns or is deemed to own (by reason of the attribution rules applicable
under Section 425(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company or any Parent Corporation or Subsidiary and
an Incentive Stock Option is granted to such employee, the option price shall be
no less than 110% of the Fair Market Value of the Stock on the date the option
is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Incentive Stock Option shall be exercisable more than ten years after the
date the option is granted. If an employee owns or is deemed to own (by reason
of the attribution rules of Section 425(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from the date
of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or times as
determined by the Committee at or after grant. If the Committee provides, in its
discretion, that any option is exercisable only in installments, the Committee
may waive such installment exercise provisions at any time. Notwithstanding the
foregoing, unless the Stock Option Agreement provides otherwise, any Stock
Option granted under this Plan shall be exercisable in full, without regard to
any installment exercise provisions, for a period specified by the Company, but
not to exceed sixty (60) days, prior to the occurrence of any of the following
events: (i) dissolution or liquidation of the Company other than in conjunction
with a bankruptcy of the Company or any similar occurrence, (ii) any merger,
consolidation, acquisition, separation, reorganization, or similar occurrence,
where the Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 75% or more of the outstanding
stock of the Company.
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(d) Method of Exercise. Stock Options may be exercised in whole or in part at
any time during the option period by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by certified or
bank check, or by any other form of legal consideration deemed sufficient by the
Committee and consistent with the Plan's purpose and applicable law, including
promissory notes or a properly executed exercise notice together with
irrevocable instructions to a broker acceptable to the Company to promptly
deliver to the Company the amount of sale or loan proceeds to pay the exercise
price. As determined by the Committee, in its sole discretion, payment in full
or in part may also be made in the form of unrestricted Stock already owned by
the optionee or, in the case of the exercise of a Non-Qualified Stock Option,
Restricted Stock or Deferred Stock subject to an award hereunder (based, in each
case, on the Fair Market Value of the Stock on the date the option is exercised,
as determined by the Committee), provided, however, that, in the case of an
Incentive Stock option, the right to make a payment in the form of already owned
shares may be authorized only at the time the option is granted, and provided
further that in the event payment is made in the form of shares of Restricted
Stock or a Deferred Stock award, the optionee will receive a portion of the
option shares in the form of, and in an amount equal to, the Restricted Stock or
Deferred Stock award tendered as payment by the optionee. If the terms of an
option so permit, an optionee may elect to pay all or part of the option
exercise price by having the Company withhold from the shares of Stock that
would otherwise be issued upon exercise that number of shares of Stock having a
Fair Market Value equal to the aggregate option exercise price for the shares
with respect to which such election is made. No shares of Stock shall be issued
until full payment therefor has been made. An optionee shall generally have the
rights to dividends and other rights of a shareholder with respect to shares
subject to the option when the optionee has given written notice of exercise,
has paid in full for such shares, and, if requested, has given the
representation described in paragraph (a) of Section 12.
(e) Non-transferability of Options. No Stock Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee.
(f) Termination by Death. If an optionee's employment by the Company and any
Subsidiary or Parent Corporation terminates by reason of death, the Stock Option
may thereafter be immediately exercised, to the extent then exercisable (or an
such accelerated basis as the Committee shall determine at or after grant), by
the legal representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of three years (or such shorter period as
the Committee shall specify at grant) from the date of such death or until the
expiration of the stated term of the option, whichever period is shorter.
(g) Termination by Reason of Disability. If an optionee's employment by the
Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after three years (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is the shorter. In the event of termination of employment by reason of
Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422A of the Code, the
option will thereafter be treated as a Non-Qualified Stock Option.
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(h) Termination by Reason of Retirement. If an optionee's employment by the
Company and any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised
to the extent it was exercisable at the time of such Retirement, but may not be
exercised after three years (or such shorter period as Committee shall specify
at grant) from the date of such termination of employment or the expiration of
the stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422A of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if an
optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than death, Disability or Retirement, the Stock
Option shall thereupon terminate, except that the option may be exercised to the
extent it was exercisable at such termination for the lesser of three months or
the balance of the option's term if the optionee is involuntarily terminated
without Cause by the Company and any Subsidiary or Parent Corporation.
(j) Annual Limit on Incentive Stock Options. The aggregate Fair Market Value
(determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.
(k) Non-Employee Directors. Each Non-Employee Director who (a) is elected,
reelected or serving an unexpired term as a director of the Company at (i)
August 1, 1990, or (ii) any annual meeting of holders of the Stock of the
Company after August 1, 1990 or (b) is elected as a Director of the Company at
any special meeting of holders of Stock of the Company, shall as of the date of
such election, reelection, or annual or special meeting automatically be granted
an Option to purchase 1000 shares of Stock at an option price per share equal to
100% of the Fair Market Value of a share of Stock on such date. In the case of
an annual meeting, the action of the holders of Stock of the Company in electing
a Non-Employee Director who qualifies for an Option according to this paragraph
(k) shall constitute the granting of the option to such director (if such
Director qualifies for an Option under this paragraph (k)) and to any other
qualifying Non-Employee Director who shall be designated as serving an unexpired
term as a director of the Company in the notice or proxy materials for the
meeting; and the date when the holders shall take such action shall be the date
of grant of the Option. All such Options shall be designated as Non-Qualified
Options and shall be subject to the same terms and provisions as are then in
effect with respect to granting of Non-Qualified Options to officers and key
employees of the Company, except that (i) the term of each such Option shall be
equal to ten (10) years, which term shall not expire upon the termination of
service as a director, (ii) the Option shall become exercisable as to all or any
part of the shares subject to the Option beginning six (6) months after the date
the Option is granted, and (iii) no Stock Appreciation Rights may be granted to
any Non-Employee Director under this paragraph (k) or in any other manner under
this Plan. Subject to the foregoing, all provisions of this Plan not
inconsistent with the foregoing shall apply to options granted to Non-Employee
Directors.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Except as set forth in paragraph (k) of Section 5, Stock
Appreciation Rights may be granted in conjunction with all or part of any Stock
Option granted under the Plan. In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such Option.
In the case of an Incentive Stock option, such rights may be granted only at the
time of the grant of the option.
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A Stock Appreciation Right or applicable portion thereof granted with respect to
a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that a Stock
Appreciation Right granted with respect to less than the full number of shares
covered by a related stock option shall not be reduced until the exercise or
termination of the related Stock Option exceeds the number of shares not covered
by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in accordance with
paragraph (b) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(b) of this Section 6. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock Options to which
they relate shall be exercisable in accordance with the provisions of
Section 5 and this Section 6 of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not more than, an
amount in cash or shares of stock equal in value to the excess of the
Fair Market Value of one share of Stock over the option price per share
specified in the related option multiplied by the number of shares in
respect of which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form of
payment.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 5 of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
stock option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 of the Plan on the number of shares
of Stock to be issued under the Plan, but only to the extent of the
number of shares issued or issuable under the Stock Appreciation Right
at the time of exercise based on the value of the Stock Appreciation
Right at such time.
(v) A Stock Appreciation Right granted in connection with an
Incentive Stock Option may be exercised only if and when the market
price of the Stock subject to the Incentive Stock Option exceeds the
exercise price of such Option.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the officers and key employees of the Company and Subsidiaries to whom, and the
time or times at which, grants of Restricted Stock will be made, the number of
shares to be awarded, the time or times within which such awards may be subject
to forfeiture, and all other conditions of the awards. The Committee may also
condition the grant of Restricted Stock upon the attainment of specified
performance goals. The provisions of Restricted Stock awards need not be the
same with respect to each recipient.
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(b) Awards and Certificates. The prospective recipient of an award of shares of
Restricted Stock shall not have any rights with respect to such award, unless
and until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate in
respect of shares of Restricted Stock awarded under the Plan. Such
certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Hector Communications
Corporation 1990 Stock Plan and an Agreement entered into
between the registered owner and Hector Communications
Corporation. Copies of such Plan and Agreement are on file in
the offices of Hector Communications Corporation, 211 South
Main, Hector, Minnesota 55342."
(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded pursuant
to the Plan shall be subject to the following restrictions and conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted stock awarded under the Plan. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this Section 7,
the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional shares of Restricted Stock (to the
extent shares are available under Section 3 and subject to paragraph
(f) of Section 12). Certificates for shares of unrestricted Stock shall
be delivered to the grantee promptly after, and only after, the period
of forfeiture shall have expired without forfeiture in respect of such
shares of Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (c)(iv) of this Section 7, upon termination of employment for
any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant.
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(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause),
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to such participant's
shares of Restricted Stock.
(v) Notwithstanding the foregoing, all restrictions with
respect to any participant's shares of Restricted Stock shall lapse, on
the date determined by the Committee, prior to, but in no event more
than sixty (60) days prior to, the occurrence of any of the following
events: (i) dissolution or liquidation of the Company, other than in
conjunction with a bankruptcy of the Company or any similar occurrence,
(if) any merger, consolidation, acquisition, separation,
reorganization, or similar occurrence, where the Company will not be
the surviving entity or (iii) the transfer of substantially all of the
assets of the Company or 75% or more of the outstanding Stock of the
Company.
SECTION 8. Deferred Stock Awards.
(a) Administration. Deferred Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee shall determine the officers
and key employees of the Company and Subsidiaries to whom and the time or times
at which Deferred Stock shall be awarded, the number of Shares of Deferred Stock
to be awarded to any participant or group of participants, the duration of the
period (the "Deferral Period") during which, and the conditions under which,
receipt of the Stock will be deferred, and the terms and conditions of the award
in addition to those contained in paragraph (b) of this Section 8. The Committee
may also condition the grant of Deferred Stock upon the attainment of specified
performance goals. The provisions of Deferred Stock awards need not be the same
with respect to each recipient.
(b) Terms and Conditions.
(i) Subject to the provisions of this Plan and the award
agreement, Deferred Stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Deferral
Period. At the expiration of the Deferral Period (or Elective Deferral
Period, where applicable), share certificates shall be delivered to the
participant, or his legal representative, in a number equal to the
shares covered by the Deferred Stock award.
(ii) Amounts equal to any dividends declared during the
Deferral Period with respect to the number of shares covered by a
Deferred Stock award will be paid to the participant currently or
deferred and deemed to be reinvested in additional Deferred Stock or
otherwise reinvested, all as determined at the time of the award by the
Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and
paragraph (b)(iv) of this Section 8, upon termination of employment for
any reason during the Deferral Period for a given award, the Deferred
Stock in question shall be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause)
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all of the remaining deferral limitations imposed hereunder with
respect to any or all of the participant's Deferred Stock.
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(v) A participant may elect to further defer receipt of the
award for a specified period or until a specified event (the "Elective
Deferral Period"), subject in each case to the Committee's approval and
to such terms as are determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the Committee, such
election must generally be made prior to completion of one half of the
Deferral Period for a Deferred Stock award (or for an installment of
such an award).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the Company and the
participant.
SECTION 9. Transfer, Leave of Absence, etc.
For purposes of the Plan, the following events shall not be deemed a termination
of employment:
(a) a transfer of an employee from the Company to a Parent Corporation or
Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or from
one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for military
service or sickness, or for any other purpose approved by the Company if the
period of such leave does not exceed ninety (90) days (or such longer period as
the Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days, approved in writing by the
Committee, but only if the employee's right to reemployment is guaranteed either
by a statute or by contract, and provided that, in the case of any leave of
absence, the employee returns to work within 30 days after the end of such
leave.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option, Stock Appreciation Right,
Restricted Stock, Deferred Stock or other Stock-based award theretofore granted,
without the optionee's or participant's consent, or (ii) which without the
approval of the stockholders of the Company would cause the Plan to no longer
comply with Rule 16b-3 under the Securities Exchange Act of 1934, Section 422A
of the Code or any other regulatory requirements.
The Committee may amend the terms of any award or option theretofore granted,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or
optionee by the Company, nothing contained herein shall give any such
participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
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SECTION 12. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to a Stock
Option under the Plan to represent to and agree with the Company in writing that
the optionee is acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan pursuant to any
Restricted Stock, Deferred Stock or other Stock-based awards shall be subject to
such stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Stock is then listed,
and any applicable Federal or state securities laws, and the Committee may cause
a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted Stock, Deferred
Stock and other Stock-based awards under the Plan (other than Stock Options) are
not required to make any payment or provide consideration other than the
rendering of services.
(c) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any employee of the Company or any Subsidiary any
right to continued employment with the Company or a Subsidiary, as the case may
be, nor shall it interfere in any way with the right of the Company or a
subsidiary to terminate the employment of any of its employees at any time.
(d) Each participant shall, no later than the date as of which any part of the
value of an award first becomes includible as compensation in the gross income
of the participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld with respect to
the award. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements and the Company and Subsidiaries shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant. With respect to any award
under the Plan, if the terms of such award so permit, a participant may elect by
written notice to the Company to satisfy part or all of the withholding tax
requirements associated with the award by (i) authorizing the Company to retain
from the number of shares of Stock that would otherwise be deliverable to the
participant, or (ii) delivering to the Company from shares of Stock already
owned by the participant, that number of shares having an aggregate Fair Market
Value equal to part or all of the tax payable by the participant under this
Section 12(d). Any such election shall be in accordance with, and subject to,
applicable tax and securities laws, regulations and rulings.
(e) At the time of grant, the Committee may provide in connection with any grant
made under this Plan that the shares of Stock received as a result of such grant
shall be subject to a repurchase right in favor of the Company, pursuant to
which the participant shall be required to offer to the Company upon termination
of employment for any reason any shares that the participant acquired under the
Plan, with the price being the then Fair Market Value of the Stock or, in the
case of a termination for Cause, an amount equal to the cash consideration paid
for the Stock, subject to such other terms and conditions as the Committee may
specify at the time of grant. The Committee may, at the time of the grant of an
award under the Plan, provide the Company with the right to repurchase, or
require the forfeiture of, shares of Stock acquired pursuant to the Plan by any
participant who, at any time within two years after termination of employment
with the Company, directly or indirectly competes with, or is employed by a
competitor of, the Company.
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(f) The reinvestment of dividends in additional Restricted Stock (or in Deferred
Stock or other types of Plan awards) at the time of any dividend payment shall
only be permissible if the Committee (or the Company's chief financial officer)
certifies in writing that under Section 3 sufficient shares are available for
such reinvestment (taking into account then outstanding Stock Options and other
Plan awards).
SECTION 13. Effective Date of Plan.
The Plan shall be effective on the date it is approved by a vote of the holders
of a majority of the Stock present and entitled to vote at a meeting of the
Company's shareholders.
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Exhibit 5.1
February 6, 1998
Hector Communications Corporation
211 South Main Street
Hector, Minnesota 55342
Re: Opinion of Counsel as to Legality of 250,000 Shares of Common Stock
to be registered under the Securities Act of 1933
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933 on Form S-8 of 250,000 shares of Common Stock, $.01 par
value, of Hector Communications Corporation (the "Company") offered to employees
of the Company pursuant to the Hector Communications Corporation 1990 Stock Plan
(the "Plan").
As general counsel for the Company, we advise you that it is our opinion,
based on our familiarity with the affairs of the Company and upon our
examination of pertinent documents, that the 250,000 shares of Common Stock to
be offered to employees by the Company under the Plan, will, when paid for and
issued, be validly issued and lawfully outstanding, fully paid and nonassessable
shares of Common Stock of the Company.
The undersigned hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the Registration Statement
with respect to said shares of Common Stock under the Securities Act of 1933.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
/s/ Lindquist & Vennum P.L.L.P.
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Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Hector Communications Corporation on Form S-8 relating to the increase in
authorized shares of common stock under the Hector Communications Corporation
1990 Stock Plan of our report dated February 20, 1997 on the 1996 financial
statements, appearing in the Annual Report on Form 10-K of Hector Communications
Corporation for the year ended December 31, 1996 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
Olsen Thielen & Co., Ltd.
February 9, 1998
St. Paul, Minnesota
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