Amendment to Rights Agreement

 

Exhibit 4.1

 

AMENDMENT TO RIGHTS AGREEMENT

This AMENDMENT (this “Amendment”)is being entered into as of June 27, 2006 between Hector CommunicationsCorporation, a Minnesota corporation (the “Company”), and Wells Fargo Bank,N.A. a National Association (formerly Norwest Bank Minnesota, N.A., a NationalAssociation) as rights agent (the “Rights Agent”).

The Company and RightsAgent are parties to a Rights Agreement dated as of July 27, 1999 (the “RightsAgreement”). Pursuant to Section 27 of the Rights Agreement, the Companyand the Rights Agent may, prior to the Distribution Date, amend any provisionof the Rights Agreement, which the Board of Directors deems desirable, withoutthe approval of any holders of Rights Certificates.

Effective as of the datehereof the Company has entered into an Agreement and Plan of Merger (the “MergerAgreement”) with Blue Earth Valley Communications, Inc., Arvig Enterprises, Inc.and New Ulm Telecom, Inc. (collectively, “Parent”) and with HectorAcquisition Corp., a Minnesota corporation and directly owned by Parent (“Newco”),with respect to the merger of Newco into the Company.

The Board of Directors ofthe Company has determined that, in connection with entering into the MergerAgreement, it is necessary and appropriate to amend the Rights Agreement as setforth in this Amendment.

Unless otherwise definedherein, capitalized terms shall have the meanings set forth in the RightsAgreement.

NOW THEREFORE, inconsideration of the premises and the mutual agreement herein set forth, theparties hereby agree as follows:

1.            AMENDMENT OF SECTION 1(a).The definition of Acquiring Person in Section 1(a) of the RightsAgreement is hereby amended to add the following sentence at the end thereof:

“Notwithstanding anything in this Rights Agreementto the contrary, neither Parent nor any of its existing or future Affiliates orAssociates, including, but not limited to Newco, shall be deemed to be anAcquiring Person by virtue of (i) the approval, execution or delivery ofthe Merger Agreement, (ii) the announcement, commencement or acceptanceand payment for shares in any tender offer Newco may conduct that is consistentwith terms of the Merger Agreement, (iii) the consummation of the Merger,or (iv) the consummation of the other transactions contemplated by theMerger Agreement.”

2.             AMENDMENT OF SECTION 1(n).The definition of Triggering Event in Section 1(n) of the RightsAgreement is hereby amended to add the following proviso at the end thereof:

“; provided, however,that no Triggering Event shall result by virtue of (i) the approval,execution or delivery of the Merger Agreement, (ii) the announcement,commencement or



 

acceptance and payment for shares in any tender offerNewco may conduct that is consistent with terms of the Merger Agreemen, (iii) theconsummation of the Merger or (iv) the consummation of the othertransactions contemplated by the Merger Agreement, the Shareholders Agreement.”

3.             AMENDMENT OF SECTION 1.Section 1 of the Rights Agreement is hereby further amended to add thefollowing subparagraphs at the end thereof:

(p)         “Effective Time of theMerger” shall have the meaning set forth in the Merger Agreement.

(q)         “Merger” shall have themeaning set forth in the Merger Agreement.

(r)            “Merger Agreement”shall have the meaning set forth in Section 35 hereof.

(s)          “Newco” shall have themeaning set forth in Section 35 hereof.

4.             AMENDMENT OF SECTION 3(a). Section 3(a) of the RightsAgreement is hereby amended to add the following sentence at the end thereof:

“Notwithstandinganything in this Rights Agreement to the contrary, a Distribution Date shallnot be deemed to have occurred by virtue of (i) the approval, execution ordelivery of the Merger Agreement, (ii) the announcement, commencement oracceptance and payment for shares in any tender offer Newco mayconduct that is consistent with terms of the Merger Agreement, (iii) the consummation of the Merger or (iv) theconsummation of the other transactions contemplated by the Merger Agreement.”

5.             AMENDMENT OF SECTION 7(a). Section 7(a) of the RightsAgreement is hereby amended and restated to read in its entirety as follows:

“(a)  Theregistered holder of any Rights Certificate may exercise the Rights evidencedthereby (except as otherwise provided herein including without limitation, therestrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) andSection 23(a) hereof) in whole or in part at any time after theDistribution Date upon surrender of the Rights Certificate, with the form ofelection to exercise on the reverse side thereof duly executed, to the RightsAgent at the office or offices of the Rights Agent designated for such purpose,together with payment of the Purchase Price for each one one-hundredth of ashare of Preferred Stock (or, if applicable, such other number of shares orother securities) as to which the Rights are exercised, at or prior to theearliest of (i) the close of business on July 27, 2009 (the “FinalExpiration Date”), or (ii) the time at which the Rights are redeemed asprovided in Section 23 hereof, or (iii) the Effective Time of theMerger (such earliest time being herein referred to as the “Expiration Date”).Any Person who prior to the Distribution Date becomes a record holder of sharesof Common Stock may exercise all of the rights of a registered holder of aRights Certificate with respect to the Rights associated with such shares ofCommon Stock in accordance with and subject to the provisions of thisAgreement, including the provisions of Section 7(e) hereof, as of thedate such Person becomes a record holder of shares of Common Stock. Notwithstandinganything in this Rights Agreement to the contrary, none of (i) theapproval, execution or delivery of the Merger

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Agreement, (ii) theannouncement, commencement or acceptance and payment for shares inany tender offer Newco may conduct that is consistent with terms of the MergerAgreement, (iii) the consummation of theMerger or (iv) the consummation of the other transactions contemplated bythe Merger Agreement shall be deemed to be events that cause the Rights tobecome exercisable pursuant to the provisions of this Section 7 orotherwise.”

6.             AMENDMENT OF SECTION 11. Section 11 of the Rights Agreement isamended to add the following sentence after the first sentence of said Section:

“Notwithstandinganything in this Rights Agreement to the contrary, none of (i) theapproval, execution or delivery of the Merger Agreement, (ii) theannouncement, commencement or acceptance and payment for shares inany tender offer Newco may conduct that is consistent with terms of the MergerAgreement, (iii) the consummation of theMerger or (iv) the consummation of the other transactions contemplated bythe Merger Agreement shall be deemed to be events of the type described in thisSection 11 or to cause the Rights to be adjusted or to become exercisablein accordance with this Section 11.”

7.             AMENDMENT OF SECTION 13. Section 13 of the Rights Agreement isamended to add the following sentence as the first sentence of said Section:

“Notwithstanding anythingin this Rights Agreement to the contrary, none of (i) the approval,execution or delivery of the Merger Agreement, (ii) the announcement,commencement or acceptance and payment for shares in any tenderoffer Newco may conduct that is consistent with terms of the Merger Agreement, (iii) the consummation of the Merger or (iv) theconsummation of the other transactions contemplated by the Merger Agreementshall be deemed to be events of the type described in this Section 13 orto cause the Rights to be adjusted or to become exercisable in accordance withthis Section 13.”

8.             ADDITION OF SECTION 35. The Rights Agreement is hereby modified,supplemented and amended to add the following new Section 35:

“Section 35. MergerWith Blue Earth Valley Communications, Inc., ArvigEnterprises, Inc. and New Ulm Telecom, Inc. Blue Earth Valley Communications, Inc., Arvig Enterprises, Inc., and New Ulm Telecom, Inc. (collectively, “Parent”),Hector Acquisition Corp., a Minnesota corporation and a wholly owned subsidiaryof Parent (“Newco”), and the Company have entered into an Agreement and Plan ofMerger, dated as of June 27, 2006 (such agreement, as it may be amendedfrom time to time, the “Merger Agreement”), pursuant to which Newco shall mergewith and into the Company. Pursuant to the Merger Agreement, Newco has theright, under specified terms and conditions, to commence a tender offer to theCompany’s shareholders to purchase Common Stock and Rights. Notwithstandinganything in this Rights Agreement to the contrary, if the Merger Agreementshall be terminated for any reason, then (a) the last sentence of Section 1(a) hereofshall be deemed repealed and deleted without any further action on the part ofthe Company or the Rights Agent and (b) the proviso at the end of Section 1(n) hereofshall be deemed repealed and deleted without any further action on the part ofthe Company or the Rights Agent.”

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9.             EFFECTIVENESS. This Amendment shall be deemed effective as of the datefirst written above, as if executed on such date. Except as amended hereby, theRights Agreement shall remain in full force and effect and shall be otherwiseunaffected hereby.

10.           MISCELLANEOUS. This Amendment shall be deemed to be a contract made underthe laws of the State of Minnesota and for all purposes shall be governed byand construed in accordance with the laws of the State of Minnesota applicableto contracts to be made and performed entirely within the State of Minnesotawithout giving effect to the principles of conflict of laws thereof. ThisAmendment may be executed in any number of counterparts, each of suchcounterparts shall for all purposes be deemed to be an original, and all suchcounterparts shall together constitute but one and the same instrument. If anyprovision, covenant or restriction of this Agreement is held by a court ofcompetent jurisdiction or other authority to be invalid, illegal orunenforceable, the remainder of the terms, provisions, covenants andrestrictions of this Amendment shall remain in full force and effect and shallin no way be affected, impaired or invalidated.

EXECUTEDas of the date first set forth above.

Attest:

 

HECTOR COMMUNICATIONS CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Its

 

 

 

 

 

 

 

 

 

 

Attest:

 

RIGHTS AGENT: WELLS FARGO BANK, N.A.

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

Its:

 

 

 

Its:

 

 

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