UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HECTOR COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1666660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
211 South Main Street
Hector, Minnesota 55342
(320) 848-6611
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
Curtis A. Sampson
Chairman and Chief Executive Officer
Hector Communications Corporation
211 South Main Street
Hector, Minnesota 55342
(320) 848-6611
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
COPIES TO:
Richard A. Primuth, Esq.
Kristin L. Johnson, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Telephone: (612) 371-3211
Approximate date of commencement of proposed sale to public: From time to time
after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. ___
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. _X_
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering: ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: ___
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Offering Aggregate Amount of
Securities to be Amount to be Price Offering Registration
Registered Registered Per Unit Price Fee
- --------------------------------------------------------------------------------
Common Stock,$.01 par value 171,425 $ 9.25(1) $1,585,682(1) $468
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of determining the registration fee
and based on the closing price of the Company's Common Stock on the
Nasdaq National Market on February 4, 1998 pursuant to Rule 457(c).
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment that specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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================================================================================
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
================================================================================
SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1998
PROSPECTUS
HECTOR COMMUNICATIONS CORPORATION
171,425 Shares of
Common Stock
This Prospectus relates to the sale of up to 171,425 shares (the
"Shares") of Common Stock of Hector Communications Corporation (the "Company")
which may be offered from time to time by the shareholder named herein (the
"Selling Shareholder"). The Company will not receive any proceeds from the sale
of the Shares by the Selling Shareholder. See "Use of Proceeds."
The Company will bear all expenses of the offering hereunder, excluding
the underwriting discounts and commissions incurred in connection with the sale
of the Shares by the Selling Shareholder. The Company's Common Stock is traded
on the Nasdaq National Market under the symbol "HCCO." The last reported sale
price of the Company's Common Stock on February 3, 1998 was $ 9.25 per share, as
reported by Nasdaq.
THIS OFFERING INVOLVES INVESTMENT RISK. SEE "RISK FACTORS".
The Selling Shareholder has advised the Company that it intends to sell
the Shares from time to time in transactions on the Nasdaq National Market at
prices prevailing at the time of the sale or otherwise as set forth below. The
Selling Shareholder has also advised the Company that, as of the date hereof, it
has made no arrangement with any brokerage firm for the sale of the Shares. See
"Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is______________, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information can be inspected and copied at the public
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C., and the Commission's regional offices located at 7 World Trade
Center, 14th Floor, New York, New York 10048, and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Electronic
filings made through the Electronic Data Gathering Analysis and Retrieval System
are also publicly available through the Securities and Exchange Commission's Web
Site (http://www.sec.gov).
The Company has filed with the Commission a registration statement
under the Securities Act of 1933 with respect to the shares offered hereby. This
Prospectus does not contain all information set forth in such registration
statement. For further information with respect to the Company and the shares
offered hereby, reference is made to such registration statement, including the
exhibits and financial schedules filed as part thereof. Such information may be
inspected at the Chicago regional office of the Commission at Northwestern
Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and at the
public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies thereof may be obtained from the Commission at prescribed prices.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (ii) the
Company's Proxy Statement dated April 15, 1997 for the 1997 Annual Meeting of
Shareholders on May 22, 1997; and (iii) the Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1997, June 30, 1997 and September 30,
1997. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15 of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of securities contemplated hereby shall also be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded hereby to the extent that a
statement contained herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference into this Prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents.)
Requests for such copies should be directed to Assistant Secretary, Hector
Communications Corporation, 211 South Main Street, Hector, Minnesota 55342,
telephone number (320) 848-6611.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus and
in documents incorporated herein by reference.
The Company
Hector Communications Corporation ("HCC" or "Company") is a
diversified telecommunications holding company which, through its wholly-owned
and majority-owned subsidiaries, is principally engaged in providing local
telephone service. At September 30, 1997, the Company's wholly and majority
owned telephone subsidiaries (generally referred to as "local exchange carriers"
or "LECs") served approximately 32,000 access lines and provided telephone
service to 34 rural communities in Minnesota, Wisconsin, South Dakota and Iowa.
In addition, through its cable television subsidiaries and one LEC subsidiary,
the Company provided cable television services to approximately 8,300
subscribers in Minnesota, South Dakota and Wisconsin. The Company is also an
investor in partnerships and corporations providing wireless telephone (cellular
and PCS) and other telecommunications related services.
Since becoming a publicly-held company in 1990, HCC has owned and
operated five wholly-owned local exchange company subsidiaries which served
6,700 access lines at September 30, 1997. On April 25, 1996, HCC, through its
68% owned subsidiary, Alliance Telecommunications Corporation ("Alliance"),
acquired Ollig Utilities Company ("Ollig"), a privately owned telecommunications
holding company. At September 30, 1997, Ollig subsidiaries served approximately
25,200 access lines and 3,500 cable television subscribers in Minnesota, Iowa,
North Dakota and South Dakota. In addition to the Company's 68% ownership
position, the remaining interests in Alliance are owned by Golden West
Telecommunications Cooperative, Inc. of Wall, South Dakota, and Split Rock
Telecom Cooperative, Inc. of Garretson, South Dakota.
The Company's principal executive offices are located at 211 South Main
Street, Hector, Minnesota 55342, and its telephone number is (320) 848-6611.
The Offering
The Shares being offered by the Selling Shareholder consist of 171,425
shares of Common Stock. The Shares offered hereunder were issued by the Company
on December 31, 1997 pursuant to a Stock Purchase Agreement dated December 22,
1997 between the Company and the Selling Shareholder (the "Agreement").
Common Stock offered by Selling Shareholder... ................ 171,425
Common Stock outstanding after offering (1).................... 2,079,364
Nasdaq National Market Symbol.................................. HCCO
(1) Excludes shares of Common Stock issuable upon exercise of outstanding
warrants and stock options.
Use of Proceeds
The Company will not receive any proceeds from the sale of the Common Stock. See
"Use of Proceeds."
Risk Factors
This offering involves substantial investment risk. See "Risk Factors."
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RISK FACTORS
Investors should carefully consider the following matters in connection
with an investment in the Shares in addition to the other information contained
or incorporated by reference in the Prospectus. Information contained in or
incorporated by reference into this Prospectus contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may," "will," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
in such forward-looking statements.
Business Strategy Risk
The Company's business strategy is to expand its existing operations
through internal growth and acquisitions, particularly the acquisition of
additional rural telephone exchanges, and to explore other communications
business opportunities, including the acquisition of cable television
properties. Future growth in existing telephone and cable operations is expected
to come from providing service to new or presently unserved homes and
businesses, from upgrading existing customers to higher grades of service and
from providing new services made possible by improvements in technology.
The Company continually assesses acquisition opportunities. Competition
to acquire attractive telephone or cable television properties is intense.
Further, acquisitions of rural telephone exchanges are subject to the approval
of regulatory agencies in some states and, in some cases, to federal waivers
that may affect the form of regulation or amount of interstate cost recovery of
acquired telephone exchanges. While management will aggressively pursue
acquisitions of telephone exchanges, there can be no assurance that the Company
will be able to negotiate acquisitions on acceptable terms or that regulatory
approvals, where required, will be received.
Need for Additional Financing
The Company's business strategy requires that its local exchange
carrier subsidiaries borrow funds to finance the principal portion of the
purchase price of any rural exchanges for which the Company is the successful
bidder. While to date the Company has obtained financing on terms it considers
reasonable, there can be no assurance that the Company will be able to obtain
all additional financing that may be required in the future in order to finance
the purchase of the various properties for which it is a successful bidder or
that such financing, if available, will be on terms satisfactory to the Company.
Limitations on Revenues Imposed by Regulatory Authorities
The Company's LEC subsidiaries are subject to significant regulation by
Minnesota and Wisconsin regulatory agencies, as well as the Federal
Communications Commission ("FCC"). Such regulation has the effect of limiting
the amount the Company may charge for local service and directly bears on the
Company's revenues received from access charges paid by interexchange carriers
("IXCs") for intrastate and interstate exchange services provided to such IXCs
so as to enable them to provide long distance telephone services to end users in
the local exchange network. Such regulation also has enabled the Company's LECs
to receive subsidies via interstate and intrastate support mechanisms related to
the high cost of providing telephone service to rural areas. This regulation of
telecommunications is currently undergoing reexamination and modification. No
assurance can be given that this process may not result in a reduction in the
rates the Company is authorized to charge or a reduction in revenues the Company
otherwise receives.
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Competition
In February 1996, the Telecommunications Act of 1996 was enacted. The new
law represents the biggest change in the rules governing local service since
Congress imposed federal regulation and established the FCC in 1934. Under its
provisions, the monopoly on local service enjoyed by LECs was eliminated and
LECs must allow competitors access to the local network facilities. The Company
does not know to what extent it will be subject to local competition in the
markets it serves under the new rules. The final results of the changes made by
the new law will not be known for some time until new rule making by the FCC and
state regulatory agencies is complete. The Company is monitoring developments
regarding the new regulatory climate closely, and expects its operations will be
materially affected by the new rules, but cannot predict what effect the new
rules will have on its business.
The Company is presently the only provider of local telephone service in
the areas it serves. Technological developments in competing technologies such
as cellular telephone, digital microwave, coaxial cable, fiber optics and other
wireless and wired technologies may result in new forms of competition to the
Company's landline services. The Company and many other members of the local
exchange carrier industry are seeking to maintain a strong, universally
affordable public telecommunications network through policies and programs that
are sensitive to the needs of small communities and rural areas served by the
Company's telephone subsidiaries.
All of the Company's cable television franchises are non-exclusive and
the Company competes with a municipally owned cable system in one community it
serves. In addition to competition from off-air television, other technologies
also supply services provided by cable television. These include low power
television stations, multi-point distribution systems, over-the-air subscription
television and direct broadcast satellite ("DBS"). The Company believes that
cable television presently offers a wider variety of programming at lower cost
than any competing technology. However, the Company is unable to predict the
effect current or developing sources of competition may have on its business.
Investment in Wireless Telephone Operations
At September 30, 1997, the Company was an investor in four ventures
which provide cellular telephone service in Minnesota, North Dakota and South
Dakota. In addition, at September 30, 1997, the Company was an investor in a
venture which will provide PCS service in thirteen different markets. The
licensing (including renewal of licenses), construction, operation, sale,
interconnection arrangements and acquisition of cellular systems are regulated
by the FCC and various state public utility commissions. Changes in the
regulation of wireless telephone operators or their activities and competition
from other wireless service providers could have a material adverse effect on
the Company's investment in wireless telephone operations.
Effects of Inflation
In connection with its acquisition of Ollig Utilities Company ("Ollig")
through Alliance Telecommunications Corporation ("Alliance"), Alliance incurred
debt of $55,250,000, of which approximately $13,000,000 of the Company's
acquisition loan for the purchase of Ollig is on a floating interest rate based
on St. Paul Bank's cost of money. Should inflation rates significantly exceed
the Company's expectations it could increase interest rates and the Company's
debt service expenses beyond acceptable limits or make St. Paul Bank unwilling
to continue extending credit to the Company.
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Reliance on Key Personnel; Shared Management
The Company relies upon certain key management employees, including its
Chief Executive Officer, Curtis A. Sampson, and the loss of any of such
individuals could adversely affect the Company. The Company does not maintain
key person life insurance on any member of the Company's management. The Company
believes that its future success will depend on its ability to retain key
members of management and to attract experienced management in the future. There
can be no assurance that it will be able to do so. See "Management." Certain
members of the Company's management, including the Company's Chief Executive
Officer, Curtis A. Sampson, devote only a portion of their working time to the
affairs of the Company. While the Company believes that this has not materially
adversely affected the Company to date, no assurance can be given that this will
not have an adverse impact on management of the Company in the future.
Anti-takeover Provisions
The Board of Directors is authorized to issue up to 3,000,000 shares of
authorized but undesignated Preferred Stock and to fix the powers, preferences,
rights and restrictions, including voting rights, of those shares without any
further vote or action by the Company's shareholders. The persons acquiring
Preferred Stock could have preferential rights with respect to voting,
liquidation, dissolution or dividends over existing shareholders. In addition,
the Company is authorized to issue 10,000,000 shares of common stock, of which
2,079,364 shares are outstanding and approximately 2,000,000 shares are reserved
for issuance upon exercise of options and warrants and upon conversion of
debentures, and approximately 6,000,000 shares remain available for issuance.
The Company's Articles of Incorporation also require the approval of any
"business combination" by holders of at least 75% of the voting power generally
entitled to vote in the election of directors. Furthermore, the staggered
three-year terms of the Board of Directors of the Company have the effect of
lengthening the time necessary to change the composition of the Board. Finally,
the Company is subject to certain provisions of the Minnesota Business
Corporation Act which limit the voting rights of shares acquired in "control
share acquisitions" and restrict certain "business combinations." Accordingly,
provisions of the Company's Articles of Incorporation and the Minnesota Business
Corporation Act, as well as the ability of the Company to issue undesignated
Preferred Stock and additional shares of common stock, could operate or could be
utilized to deter or delay a takeover or other change in control of the Company.
Absence of Dividends
HCC has not paid cash dividends on its common stock or preferred stock
since it began operating as a public company in 1990, nor does HCC have any
obligations to pay dividends on its preferred stock. At the present time, HCC
intends to retain earnings to finance the expansion of its business, and does
not anticipate any cash dividends will be paid in the foreseeable future. The
financing agreements between HCC's subsidiaries and their lenders restrict their
ability to pay dividends to HCC, thereby limiting HCC's ability to pay dividends
to its shareholders.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Shares by
the Selling Shareholder.
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SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by the Selling Shareholder as
of January 1, 1998.
<TABLE>
<CAPTION>
Number of
Shares Maximum Number of Shares to be
Name Beneficially Shares to be Sold (1) Beneficially
---- ------------------
Owned Prior Owned After
to Offering the Offering(1)
---------------- -----------------
Number Percent Number Percent
-------------- ---------- ----------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
GOLDEN WEST CABLEVISION, INC. (2) 171,425 8.2 171,425 -0- *
P.O. Box 411
Wall, SD 57790
- -------------------------------------------- -------------- ---------- ----------------------- ---------------- -----------------
</TABLE>
(1) Assumes the sale of all Shares offered hereunder.
(2) Golden West Cablevision, Inc. is a wholly-owned subsidiary of
Golden West Telecommunications Cooperative, Inc. which is also a
20 percent owner of Allliance Telecommunications Corporation
which is 68 percent owned by the Company.
* Indicates less than one percent.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholder may sell
Shares from time to time in one or more transactions (which may include block
transactions) on the Nasdaq National Market at market prices prevailing at the
time of the sale or at prices otherwise negotiated.
The Shares may, without limitation, be sold by one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers.
The Company has been advised that, as of the date hereof, the Selling
Shareholder has made no arrangement with any broker for the sale of the Shares.
Underwriters, brokers or dealers may participate in such transactions as agents
and may, in such capacity, receive brokerage commissions from the Selling
Shareholder or purchasers of such securities. Such underwriters, brokers or
dealers may also purchase Shares and resell such Shares for their own account in
the manner described above. The Selling Shareholder and such underwriters,
brokers or dealers may be considered "underwriters" as that term is defined by
the Securities Act of 1933, although the Selling Shareholder disclaims such
status. Any commissions, discounts or profits received by such underwriters,
brokers or dealers in connection with the foregoing transactions may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933.
DESCRIPTION OF SECURITIES
Common Stock. The Company has one class of Capital Stock registered
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange
Act"), Common Stock, $.01 par value. The Company is authorized to issue up to
10,000,000 shares of Common Stock. No share of Common Stock is entitled to
preference over any other share, and each share is equal to any other share in
all respects. Holders are entitled to one vote for each share held of record at
each meeting of shareholders. In any distribution of capital assets, whether
voluntary or involuntary, holders are entitled to receive pro rata the assets
remaining after creditors have been paid in full. Holders of Common Stock have
no preemptive rights. The outstanding shares are, and the Common Stock offered
hereby upon payment therefore will be, fully paid and nonassessable.
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Cumulative Voting. There is no cumulative voting for the election of
directors. Accordingly, the owners of a majority of shares of Common Stock
outstanding may elect all of the directors, if they choose to do so, and the
owners of the balance of such shares will not be able to elect any directors.
Dividend Policy. The Company has adopted the policy of retaining all of
its earnings to finance the growth of its business and, accordingly, does not
anticipate payment of any dividends in the foreseeable future.
Preferred Stock. The Company has a total of 378,100 shares of
Convertible Series A Preferred Stock (the "Series A") issued out of a total of
3,000,000 shares of undesignated Preferred Stock, $1.00 par value per share,
authorized. The holders of Preferred Stock have no voting rights, except that
the Company may not alter or amend the rights or preferences of the Preferred
Stock without the affirmative vote of the holders of at least two-thirds of the
Preferred Stock. The Preferred Stock is not entitled to receive any distribution
or dividend separately from common stock. Each share is entitled to share
ratably in any and all distributions and dividends, including distributions and
dividends upon liquidation or dissolution of the Company, as if each share of
Preferred Stock had been converted to common stock immediately prior to such
distribution or dividend.
Debentures. The Company has $12,650,000 in convertible subordinated
debentures (the "Debentures") which it sold in a public offering completed in
February 1995. The Debentures carry an interest rate of 8.5% and mature February
15, 2002. The Debentures are convertible into the Company's Common Stock at a
rate of 112.5 common shares per $1,000 par value debenture. The Debentures are
callable under certain circumstances and include restrictions on payment of
dividends to the Company's shareholders.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby
will be passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota, of which Richard A. Primuth, Secretary of the Company, is a partner.
EXPERTS
The financial statements incorporated in this prospectus by reference
from the Company's 1996 Annual Report on Form 10-K have been audited by Olsen
Thielen & Co., Ltd, independent auditors, as of and for the years ended December
31, 1996 and 1995, as stated in its reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon its authority as experts in accounting and auditing.
INDEMNIFICATION
The Company's Articles of Incorporation eliminate or limit certain
liabilities of its directors and the Company's Bylaws provide for
indemnification of directors, officers and employees of the Company in certain
instances. Insofar as exculpation of, or indemnification for, liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such exculpation or indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC registration fee . . . . . . . . . . . . . . . . . $ 468
Accounting fees and expenses . . . . . . . . . . . . . 2,000
Legal fees and expenses . . . . . . . . . . . . . . . . 6,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 1,532
Total . . . . . . . . . . . . . . . . . . . . . . $ 10,000
Except for the SEC fee, all of the foregoing expenses have been estimated.
Item 15. 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 16. Exhibits
Exhibit No. Description
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to the Company
23.1 Consent of Lindquist & Vennum P.L.L.P. (see Exhibit 5.1 above)
23.2 Consent of Olsen Thielen & Co., Ltd., independent auditors
24.1 Power of Attorney
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Item 17. 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-3 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 5.1
February 6, 1998
Hector Communications Corporation
211 South Main
Hector, Minnesota 55342
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3 to be filed
by Hector Communications Corporation (the "Company") with the Securities and
Exchange Commission on February 10, 1998 relating to an offering of up to
171,425 shares of Common Stock, par value $.01 per share, to be offered by the
Selling Shareholder, please be advised that as counsel to the Company, upon
examination of such corporate documents and records as we have deemed necessary
or advisable for the purposes of this opinion, it is our opinion that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Minnesota.
2. The shares of Common Stock being offered by the Selling
Shareholder have been validly issued and are fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising a part of the Registration
Statement.
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-3 relating to the sale of 171,425
shares of common stock 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.
/s/ Olsen Thielen & Co., Ltd.
Olsen Thielen & Co., Ltd.
February 9, 1998
St. Paul, Minnesota
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