UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the fiscal year ended September 1, 2007
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission file number: 0-10078
HEI, Inc.
(Exact name of registrant as specified in its Charter)
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Minnesota
(State or other jurisdiction of
incorporation or organization)
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41-0944876
(I.R.S. Employer
Identification No.)
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P.O. Box 5000,
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1495 Steiger Lake Lane,
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Victoria, MN
(Address of principal executive offices)
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55386
(Zip Code)
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Registrant’s telephone number, including area code:
(952) 443-2500
Securities registered pursuant to Section 12(b) of the Act:
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Common Stock, Par Value $.05 Per Share
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NASDAQ Capital Market
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(Title of Each Class)
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(Name of Each Exchange on Which
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Registered)
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by a check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act of 1933. Yes
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No
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Indicate by a check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934. Yes
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No
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer or a non- accelerated filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
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Non-accelerated filer
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act). Yes
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No
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The aggregate market value of the voting and non-voting common equity held by non-affiliates
as of the last business day of the registrant’s most recently completed second fiscal quarter
(March 3, 2007) was approximately $10.1 million.
As of December 28, 2007, 9,542,887 of the registrant’s common shares, par value $.05 per
share, were outstanding.
Explanatory Note
This Amendment No. 1 to the Annual Report of HEI, Inc. (“HEI” or the “Company”) on Form 10-K
for the fiscal year ended September 1, 2007 (the “2007 Form 10-K”) is filed to amend the following
items in their entirety:
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Item 10 (Directors, Executive Officers and Corporate Governance),
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Item 11 (Executive Compensation),
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Item 12 (Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters),
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Item 13 (Certain Relationships and Related Transactions, and Director Independence),
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Item 14 (Principal Accountant Fees and Services),
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Item 15 (Exhibits and Financial Statement Schedules) and
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Exhibit 23 (Consent of Independent Registered Public Accounting Firm).
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Other than the items listed above, there are no other changes to the 2007 Form 10-K. All
information contained in this Amendment No. 1 is subject to updating and supplementing as provided
in HEI’s reports filed with the Securities and Exchange Commission (the Commission) for periods
subsequent to the date of the original filing of the 2007 Form 10-K.
TABLE OF CONTENTS
Documents Incorporated By Reference
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors
The names and ages of all directors and the positions held by each with the Company are as follows:
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Name
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Age
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Position
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Thomas F. Leahy
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65
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Chairman of the Board
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Robert W. Heller
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61
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Director
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Michael J. Evers, Ph.D.
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72
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Director
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Mark B. Thomas
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45
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Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and
Director
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Timothy F. Floeder
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49
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Director
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George M. Heenan
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68
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Director
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Thomas F. Leahy
, age 65, has served as a director and the Chairman of the Company since
February 2006. A private investor, he has served as a director of a number of public companies. Mr.
Leahy is a former director and officer of Advance Circuits, Inc., a printed circuit board
manufacturer.
Robert (Bob) W. Heller
, age 61, has served as a director of the Company since March 2005. Mr.
Heller is currently the owner and president of Heller Capital, Inc, a personal investment company,
which he founded in 1999. His business focuses on providing and coordinating capitalization and
advisory services to growing companies. Mr. Heller worked as a Management Consultant for Arthur
Andersen & Co. (now known as Accenture), where he specialized in manufacturing. From 2001 to 2003,
Mr. Heller served as the Chief Executive Officer of Work Force ROI, Inc. From 1977 to 1996, Mr.
Heller served in a variety of positions, including Chief Executive Officer and Chief Operating
Officer, for Advance Circuits, Inc., a manufacturer of printed circuit boards and a pioneer of chip
packaging using laminate materials. Following his tenure at Advance Circuits, Inc., Mr. Heller
served as interim CEO at two companies until permanent arrangements could be made. Additionally, he
spent 18 months as Vice President of Operations for a computer manufacturing company. Mr. Heller
obtained his Bachelor of Science degree from North Dakota State University where he majored in
Industrial Engineering. He completed his Master’s degree in Industrial Administration at Krannert
School of Management, with an emphasis in Operations Management. Mr. Heller currently serves on the
Board of Directors for Electro-Sensors, Inc. (NASDAQ: ELSE) and PPT Vision, Inc. (OTC BB: PPTV),
both publicly-held companies, as well as on the Board of Directors of two privately-held companies:
Horton, Inc. and Skipperliner Industries.
Michael J. Evers, Ph.D.
, age 72, has served as a director of the Company since June 2003. Dr.
Evers is Dean Emeritus and Professor of Strategic Management at the College of Business at the
University of St. Thomas. He served as Dean of the Graduate School of Business from 1984 to 1995,
growing the graduate programs and application-oriented education centers to be one of the largest
graduate business schools in the United States. He was instrumental in the development of the
Minneapolis campus of the University of St. Thomas. From 1998 to 2000, he served as interim
President/Chief Executive Officer of the Minnesota Center for Corporate Responsibility and led the
re-invention of the non-profit business association into the Center for Ethical Business Cultures,
affiliated with St. Thomas and the University of Minnesota. Prior to his university positions, he
held managerial positions in manufacturing, engineering, program management and marketing at North
American Rockwell, McDonnell-Douglas, Emerson Electric and National Distribution Services,
respectively. He served thirty years in the Active and Reserve U.S. Air Force as a Senior
Contracting Officer and Detachment Commander, retiring in the rank of Colonel. He received his
Ph.D., MBA and BBA from the University of Minnesota. He also currently serves on the Board of
Directors for Minnesota Scientific, Inc. and Wavecrest Corporation, both privately-held companies,
and Infinite Graphics, Inc. (Pink Sheets: INFG.PK), a publicly-held company. Mr. Evers also serves
as a member of the Compensation Committee for Wavecrest Corporation.
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Mark B. Thomas
, age 45, has served as a director since May 2007 and as our Chief Executive
Officer since October 2006 and as our Chief Financial Officer since July 2006. From October 2004 to
July 2006, Mr. Thomas served as President of Mark Thomas Enterprises, LLC, a Minneapolis-based
consulting firm which focuses on turnaround and financial management for both publicly-traded and
privately-held companies. From 1992 through 2004, Mr. Thomas was President, CEO, CFO and a director
of Ballistic Recovery Systems, Inc. (OTC BB: BRSI), a publicly-held provider of whole-aircraft
emergency parachute systems to the general aviation and recreational aviation markets. Mr. Thomas
is a certified public accountant (inactive) and holds a bachelor’s degree in accounting from
Moorhead State University.
Timothy F. Floeder
, age 49, served as a director of the Company from December 2002 to December
2007. Through January 2007, Mr. Floeder was the Vice President of Business Development for Compex
Technologies, Inc., a wholly-owned subsidiary of Encore Medical Corporation. Compex designs,
manufactures and sells home-use devices for pain management, rehabilitation, fitness, health and
wellness for healthcare and consumer markets in the USA and Europe. Mr. Floeder previously was an
investment banker, serving as Managing Director of Mergers and Acquisitions for Miller Johnson
Steichen Kinnard, Inc., a regional investment securities firm, from 1996 until 2002. He also served
in a variety of financial positions, including Chief Financial Officer and Director for a large
privately-held regional electrical contractor and industrial products distributor, from 1984 to
1996, and held both public and private accounting positions from 1980 to 1984. Mr. Floeder is a CPA
(inactive) and has received an MBA in finance from the Carlson School of Management, a BSB in
accounting from the University of Minnesota, and completed the Management Executive Program at the
Carlson School of Management.
Mr. Floeder resigned from the Company’s board of directors and its committees on December 5, 2007.
George M. Heenan,
age 68, served as a director of the Company from June 2003 to October 2007.
Mr. Heenan is Chairman and CEO of Excelsius Partners, Ltd., a business development company. He has
served in this position since 2004. From 1986 until 2004, Mr. Heenan served as the Chairman and
Founder of Heenan Investments, a private investment company, when Heenan Investment’s activities
were merged into Excelsius Partners in 2004. He also serves as an Executive Fellow for the College
of Business at the University of St. Thomas. Mr. Heenan is the former Director of the Institute of
Strategic Management at the University of St. Thomas. He served as the Director from 1996 to 2004.
Mr. Heenan is also an instructor in the certified franchise program at Nova Southeastern
University. Mr. Heenan’s background includes experience in start-up, emerging growth, Fortune 500
and Fortune 200 companies, as well as management of venture capital partnerships. Mr. Heenan has
previously held a number of management and executive positions at Medtronic Inc., Control Data,
Medical Industrial Capital, Clarus Medical, Bissell Healthcare Company and Camp Preston Group. Mr.
Heenan also serves on a number of private and advisory boards, including the Board of Directors of
Minnesota Scientific, Inc. a privately-held supplier of surgical equipment, since 1998 and the
Advisory Board of Adayana, Inc. He is a graduate of St. Ambrose College with a B.S. in Physics. He
also attended University of Wisconsin-Madison and has completed the Operations Management Program
at Harvard University.
Mr. Heenan resigned from the Company’s board of directors and its committees on October 24,
2007.
Meetings of the Board
During the fiscal year ended September 1, 2007 (“Fiscal 2007”), the Board held a total of 17
meetings and took action by written action or consent resolution 9 times. Each director attended at
least 75% of the aggregate of the total number of meetings of the Board and the total number of
meetings of all committees of the Board on which each director served from the date elected to the
Board.
Audit Committee
As of the end of Fiscal 2007, the members of the Audit Committee were Messrs. Floeder (Chair),
Heenan and Heller, each of whom was “independent” as that
term is defined in the NASDAQ Marketplace Rules and satisfies the audit committee independence standard under
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Rule 10a-3(b)(1) of the
Exchange Act. The Audit Committee held 5 meetings during Fiscal 2007. The Audit Committee operates
under a written Audit Committee Charter that was approved by the Board, upon recommendation of the
Audit Committee, on March 2, 2005. The Audit Committee reviewed and discussed the Company’s
audited consolidated financial statements for Fiscal 2007 with the management of the Company.
Additionally, the Audit Committee discussed with Virchow Krause & Company, LLP (“Virchow Krause”),
the Company’s independent registered accounting firm for Fiscal 2007, the matters required by SAS
No. 61. The Audit Committee also received the written disclosures and the letter from Virchow
Krause required by the Independence Standards Board Standard No. 1 and discussed with the auditing
firm its independence. Based on the discussions and reviews noted above, the Audit Committee
recommended to the Board that the Company’s audited consolidated financial statements be included
in the Company’s Annual Report on Form 10-K for Fiscal 2007.
During Fiscal 2007, Timothy Floeder was the “audit committee financial expert” as defined by
Item 407(d) of Regulation S-K. We acknowledge that the designation of Mr. Floeder as the audit
committee financial expert does not impose on Mr. Floeder any duties, obligations or liability that
are greater than the duties, obligations and liability imposed on Mr. Floeder as a member of the
Audit Committee and the Board of Directors in the absence of such designation or identification.
Mr. Heenan resigned from the Company’s board of directors and its committees on October 24,
2007. Effective November 7, 2007, Mr. Michael Evers filled the vacancy on the Company’s Audit
Committee that was caused by Mr. Heenan’s resignation.
Mr. Floeder resigned from the Company’s board of directors and its committees on December 5,
2007. Following Mr. Floeder’s resignation, the Company no longer met the requirements for
independence for the Board of Directors or its committees and no longer has a designated “audit
committee financial expert”, and has no plans to comply with these requirements at the present
time.
Compensation Committee
The Compensation Committee, consists of Dr. Evers (Chair), Mr. Heller and Mr. Leahy. Dr.
Evers and Mr. Heller are “independent” as that term is defined in the NASDAQ Marketplace Rules.
The Compensation Committee is responsible for administering the Company’s equity compensation plans
and for determining and reviewing executive compensation. The Compensation Committee held 2
meetings during Fiscal 2007.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee, consists of Mr. Heller (Chair) and Dr.
Evers, each of whom is “independent” as that term is defined in the NASDAQ Marketplace Rules. The
Nominating and Corporate Governance Committee is responsible for, among other things, creating and
maintaining the overall corporate governance policies for the Company, nominating persons to serve
on the Board, determining compensation for non-employee directors, and for overseeing performance
evaluation for directors. The Nominating and Corporate Governance Committee acts pursuant to a
charter, a current copy of which is available to shareholders at the Company’s website at
http://www.heii.com/investor.aspx
. The Nominating and Corporate Governance Committee held a
total of 1 meeting during Fiscal 2007.
Shareholder Communication with the Board
The Company welcomes communications from shareholders of the Company. Any shareholder who
wishes to communicate with the Board or one or more members of the Board should do so in writing to
the Chief Executive Officer of the Company, at the principal office of the Company, 1495 Steiger
Lake Lane, Victoria, Minnesota, 55386. The Chief Executive Officer is directed to forward each
communication to the director or directors of the Company for whom it is intended.
5
Executive Officers
Set forth below are the names and ages of current executive officers of HEI, Inc., as well as
information regarding their positions with HEI and their business experience as of end of Fiscal
2007. There are no family relationships among any of the officers named, nor is there any
arrangement or understanding pursuant to which any person was selected as an officer.
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Name
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Age
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Position
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Mark B. Thomas
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45
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Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and Director
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Mark B. Thomas
, age 45, has served as a director since May 2007 and as our Chief Executive
Officer since October 2006 and as our Chief Financial Officer since July 2006. From October 2004 to
July 2006, Mr. Thomas served as President of Mark Thomas Enterprises, LLC, a Minneapolis-based
consulting firm which focuses on turnaround and financial management for both publicly-traded and
privately-held companies. From 1992 through 2004, Mr. Thomas was President, CEO, CFO and a director
of Ballistic Recovery Systems, Inc. (OTC BB: BRSI), a publicly-held provider of whole-aircraft
emergency parachute systems to the general aviation and recreational aviation markets. Mr. Thomas
is a certified public accountant (inactive) and holds a bachelor’s degree in accounting from
Moorhead State University.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics, which applies to all of our
directors, officers and employees, including our principal executive officer and our principal
financial and accounting officer. The Company has also adopted a Code of Ethics for Senior
Financial Officers. The Board is responsible for overseeing both codes. Any waivers of the codes
for directors and executive officers must be approved by the Board of Directors. The codes are
available, free of charge, on our website at
http://www.heii.com/investor.aspx
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provide, free of charge to any person, a copy of our codes. Requests should be sent to Mark B.
Thomas at HEI, Inc., 1495 Steiger Lake Lane, Victoria, Minnesota 55386.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and
persons who own more than ten percent (10%) of the registered class of our equity securities, to
file reports of ownership and changes in ownership with the Securities and Exchange Commission (the
SEC). Officers, directors and greater than ten-percent shareholders are required by SEC regulation
to furnish us with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based on a review of the copies of such reports furnished to the
Company during the fiscal year ended September 1, 2007 and other information available to it, its
officers, directors, and greater than ten-percent beneficial owners complied with all Section 16(a)
filing requirements.
Item 11. Executive Compensation
Compensation Discussion and Analysis
Decisions on compensation of the Company’s executive officers generally have been made by the
Compensation Committee of the Board. The current members of the Compensation Committee are Dr.
Evers (Chair), Mr. Heller and Mr. Leahy.
The Compensation Committee’s executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Company’s long-term goals, reward
above average corporate performance, recognize individual initiative and achievements, assist the
Company in attracting and retaining qualified executives and align the long-term interests of
management with those of the Company’s shareholders. Executive compensation is set at levels that
the Compensation Committee believes to be competitive with those offered by employers of comparable
size, growth and profitability in our industry.
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Elements of Compensation
Executive compensation consists of the following elements:
Base Salary
. Base salaries for our executives are generally established based on the scope of
their responsibilities, level of experience and individual performance, taking into account both
external competitiveness and internal equity considerations. The goal for the base salary component
is to compensate employees at a level that approximates the salaries of individuals in comparable
positions and markets. Base salaries are reviewed annually, and adjusted from time to time to
address inflation and to take into account individual responsibilities, performance and experience.
The compensation of Mr. Thomas, who served as the Company’s Chief Executive Officer and Chief
Financial Officer for Fiscal 2007, was approved for a base salary of $225,000. The Compensation
Committee has not finalized the annual compensation of Mr. Thomas for Fiscal 2008.
Annual Management Bonus Program
. Due to the past operating losses of the Company, the
Compensation Committee was not able to establish annual incentive compensation that was
specifically tied to the Company’s financial performance. Instead, the objectives for Fiscal 2007
were to assess the Company’s current divisions including their revenues, operations and expense
structures to determine how to achieve breakeven performance and position the Company for growth.
The Compensation Committee has not determined the bonus to be paid to Mr. Thomas for Fiscal
2007 as of yet, but the bonus will not exceed 20% of Mr. Thomas’s annual base salary and may take
the form of either cash and/or a restricted stock grant. For Fiscal 2008, the Compensation
Committee is developing a program that focuses on achieving profitability at increasing levels
based upon the reorganization of the Company that took place in Fiscal 2007.
Long-Term Incentive Compensation
. We believe that long-term incentives are an integral part of
the overall executive compensation program and that the Company’s long-term performance will be
enhanced through the use of equity awards that reward our executives for maximizing stockholder
value over time. While we previously used stock options as the primary long-term equity incentive
vehicle, in 2006 we began using restricted stock awards instead. The Company does not have equity
ownership requirements or currently established guidelines.
Restricted Stock.
We expect to continue to use restricted stock as our primary long-term incentive vehicle
because:
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restricted stock and the related vesting period help attract and retain executives;
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the value received by the recipient of a restricted stock award can be
enhanced by the growth of the stock price; therefore, restricted stock
enhances the executives’ incentive to increase our stock price and
maximize stockholder value; and
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restricted stock helps to provide a balance to the overall executive
compensation program as base salary and our annual bonus plan focus on
short-term compensation, while stock options reward executives for
increases in stockholder value over the longer term.
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In determining the number of shares of restricted stock to be granted to executives, we take
into account the individual’s position, scope of responsibility, ability to affect profits and
stockholder value and the value of restricted stock in relation to other elements of the individual
executive’s total compensation. All awards of restricted stock are made by the Compensation
Committee, except that our full Board will take action with respect to any equity awards made to
our non-employee directors.
During Fiscal 2007, the Compensation Committee made no awards of restricted shares or stock
options to the Company’s executive officers.
Other Benefits
. Our executives are eligible to participate in all of our employee benefit
plans, such as medical, dental, vision, long and short-term disability and life insurance, in each
case on the same basis as our other employees.
Compensation Committee Report
We have reviewed and
discussed with management the Compensation Discussion and Analysis
provisions to be included in this report on Form 10-K/A. Based on the reviews and discussions referred to above,
we recommend to the board of directors that the Compensation Discussion and Analysis referred to
above be included in this report.
The foregoing has been furnished by the Compensation Committee.
Michael J. Evers
Robert W. Heller
Thomas F. Leahy
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Messrs. Evers, Heller and Leahy. No interlocking
relationship exists between any member of the Compensation Committee and any member of any other
company’s board of directors.
Summary Compensation Table
The following table sets forth information concerning the compensation of our named executive
officers for fiscal year 2007:
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Non-Equity
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Option
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Incentive Plan
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All Other
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Name and Principal
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Bonus
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Awards
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Compensation
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Compensation
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Position
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Year
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Salary ($)
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($)
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($)
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($)
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($)
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Total ($)
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Mark B. Thomas (1)
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2007
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195,577
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195,577
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Chief Executive Officer and Chief
Financial Officer
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Scott M. Stole (2)
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2007
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137,534
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30,000
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167,534
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Vice President- RFID Division
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Mack V. Traynor, III (3)
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2007
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31,538
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—
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145,000
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176,538
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Former Chief Executive Officer
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(1)
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Mr. Thomas was named the Company’s Chief Executive Officer effective October 20, 2007. Mr. Thomas is eligible to receive an incentive bonus based on Fiscal 2007
performance at the sole discretion of the board of directors. Said bonus has not been determined as of yet, but will not exceed 20% of Mr. Thomas’s
annual base salary and may take the form of either cash and/or a restricted stock grant.
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(2)
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Mr. Stole was the Company’s Vice President — RFID Division until his employment was terminated on August 31, 2007 when the Company sold that business unit. The “All
Other Compensation” represented a severance payment of $30,000.
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(3)
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Mr. Traynor resigned his position as the Company’s
Chief Executive Officer and Director effective October 20, 2006. The “All Other Compensation” represented a
severance payment of $145,000.
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Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards
for the year ended September 1, 2007 to the named executive officers.
Grants of Plan-Based Awards
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Awards:
|
|
Number of
|
|
or Base
|
|
Grant Date
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive Plan
|
|
Number of
|
|
Securities
|
|
Price of
|
|
Fair Value
|
|
|
|
|
|
|
|
Plan Awards
|
|
Awards
|
|
Shares of
|
|
Underlying
|
|
Option
|
|
of Stock
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or
|
|
Options
|
|
Awards
|
|
and Option
|
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Units (#)
|
|
(#)
|
|
($/Sh)
|
|
Awards
|
|
Mark B. Thomas
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
— Chief Executive
Officer and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott M. Stole
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
— Vice President
— RFID Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mack V. Traynor, III
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
— Former Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
Employment Contracts
The
Company has written no Employment Contracts with the named
executives. Mr. Thomas is employed as the Company's Chief Executive
Officer and Chief Financial Officer on an "at will" basis with no
written employment contract. There are no provisions for change of
control or severance for Mr. Thomas. These arrangements for Mr. Thomas were recommended by the Compensation Committee and approved by the full board prior to Mr. Thomas's appointment as the Company's Chief Executive Officer.
Equity Incentive Plans
1998 Plan.
Under the Company’s 1998 Stock Option Plan (the “1998 Plan”), a maximum of
2,000,000 shares of common stock may be issued pursuant to qualified and nonqualified stock
options. Stock options granted become exercisable in varying increments with a portion tied to the
closing stock price or up to a maximum of ten years, whichever comes first. The exercise price for
options granted is equal to the closing market price of the common stock on the date of the grant.
At September 1, 2007, the number of shares available for grant under the 1998 Plan was 1,794,000.
1989 Plan.
Under the Company’s 1989 Omnibus Stock Compensation Plan (the “1989 Plan”), a
maximum of 2,000,000 shares of common stock may be issued pursuant to qualified and nonqualified
stock options, stock purchase rights and other stock-based awards. Stock options granted become
exercisable in varying increments with a portion tied to the closing stock price or up to a maximum
of ten years, whichever comes first. Generally, the exercise price for options granted is equal to
the closing market price of the common stock on the date of the grant.
Under the 1989 Plan, substantially all regular full-time employees are given the opportunity
to designate up to 10% of their annual compensation to be withheld, through payroll deductions, for
the purchase of common stock at 85% of the lower of (i) the market price at the beginning of the
plan year, or (ii) the market price at the end of the plan year. During our fiscal years ended
September 1, 2007, September 2, 2006 and August 31, 2005, 0, 0 and 37,000 shares at prices of $0,
$0 and $2.50, respectively, were purchased under the 1989 Plan in connection with the employee
stock purchase plan. At September 1, 2007, the number of shares available for grant under the 1989
Plan was 30,000.
Directors’ Plan.
During Fiscal 1999, the shareholders approved the 1998 Stock Option Plan for
Non-employee Directors (the “Director’s Plan”). Under the Director’s Plan, 425,000 shares are
authorized for issuance, with an initial year grant of 55,000 shares and an annual grant thereafter
of 10,000 shares to each non-employee director. These grants are effective each year upon
adjournment of the annual shareholders’ meeting at an exercise price equal to the market price on
the date of grant. The options become exercisable at the earlier of seven years after the grant
date or on the first day the market value equals or exceeds $25.00. These options expire ten years
after the grant date. There have been no shares available for grant under this plan since Fiscal
2004.
2005 HEI, Inc. Employee Stock Purchase Plan.
During Fiscal 2006, the shareholders approved
the 2005 HEI, Inc. Employee Stock Purchase Plan, which includes a total of 300,000 shares of the
Company’s Common Stock reserved for issuance under the Plan. The purpose of the Plan is to provide
eligible employees with an opportunity to increase their proprietary interest in the success of the
Company by purchasing Common Stock from the Company on favorable terms and paying for such
purchases through periodic payroll deductions. No shares were purchased under this Plan in Fiscal
2006. The 2005 HEI, Inc. Employee Stock Purchase Plan was terminated effective December 31, 2006 as
the plan was never implemented and no shares were purchased under the Plan during Fiscal 2006.
Change of Control.
Under the terms and conditions of the Company’s 1989 Plan and the
Director’s Plan, a change of control in the Company’s Board of Directors, under certain
circumstances, requires a vesting of all unexercised stock options. As of September 1, 2007,
approximately 713,000 of the 883,000 outstanding options are fully vested and have expiration dates
ranging from November 2008 through November 2015. None of the options outstanding at September 1,
2007 were in-the-money.
Outstanding Equity Awards
The following table sets forth certain information with respect to outstanding equity awards
at September 1, 2007 with respect to the named executive officers.
9
Outstanding Equity Awards at Fiscal Year-End Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Number
|
|
Market
|
|
Number of
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
of
|
|
Value of
|
|
Unearned
|
|
Unearned
|
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Shares
|
|
Shares or
|
|
Shares or
|
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
of Stock
|
|
Other
|
|
Other
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
That
|
|
That
|
|
Rights
|
|
Rights
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
|
|
Have
|
|
Have
|
|
That Have
|
|
That
|
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
Not
|
|
Have Not
|
|
|
|
(#)
|
|
(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Mark B. Thomas —
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
Chief Executive
Officer and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott M. Stole—
|
|
|
50,500
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
8.85
|
|
|
|
11/29/07
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
Vice President —
RFID Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mack V. Traynor, III
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
— Former Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Exercises and Shares Vested
The following table sets forth certain information with respect to option and stock exercises
during the fiscal year ended August 31, 2007 with respect to the named executive officers.
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Acquired
|
|
Value Realized on
|
|
Name and Principal Position
|
|
on Exercise (#)
|
|
on Exercise ($)
|
|
on Vesting (#)
|
|
Vesting ($)
|
|
Mark B. Thomas —
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
Chief Executive Officer and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott M. Stole—
|
|
|
0
|
|
|
|
|
|
|
|
750
|
|
|
$
|
1,1250
|
|
|
Vice President — RFID Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mack V. Traynor, III —
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
Former Chief Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
We do not have any plan that provides for payments or other benefits at, following, or in
connection with, retirement.
Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
We do not have any plan that provided for deferred compensation.
10
Compensation of Directors
Each non-employee, non-officer director receives an annual fee of $20,000 with $12,000 paid in cash
and $8,000 paid in the form of restricted stock grants. The annual fee for Fiscal 2008 is expected
to remain the same.
Compensation of our directors during fiscal year 2007 appears in the following table:
Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
Earned
|
|
Restricted
|
|
|
|
|
|
or Paid
|
|
Stock
|
|
|
|
|
|
in Cash
|
|
Awards
|
|
Total
|
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
Thomas Leahy
|
|
$
|
12,000
|
|
|
$
|
8,000
|
|
|
$
|
20,000
|
|
|
Robert Heller
|
|
|
12,000
|
|
|
|
8,000
|
|
|
|
20,000
|
|
|
Michael Evers
|
|
|
12,000
|
|
|
|
8,000
|
|
|
|
20,000
|
|
|
Mark Thomas
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Timothy Floeder
|
|
|
12,000
|
|
|
|
8,000
|
|
|
|
20,000
|
|
|
George Heenan
|
|
|
12,000
|
|
|
|
8,000
|
|
|
|
20,000
|
|
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Security Ownership of Certain Beneficial Owners and Management
The following table shows as of December 28, 2007 information regarding the beneficial
ownership of the Common Stock by: (i) each person or group known to HEI to own beneficially more
than five percent of the outstanding shares of Common Stock, (ii) each director of the Company,
(iii) each Named Executive Officer, and (iv) all current directors and executive officers as a
group.
Except as otherwise indicated, the Company believes that the persons listed in the following
table have sole voting and investment powers with respect to the Common Stock owned. Unless
otherwise indicated, the address of each shareholder listed in the following table is c/o HEI,
Inc., 1495 Steiger Lake Lane, Victoria, Minnesota 55386.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Name
|
|
of Shares(1)
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
Mark B. Thomas, Chief Executive Officer and Chief
Financial Officer (2)
|
|
|
—
|
|
|
|
*
|
|
|
Mack V. Traynor, III, Former Chief Executive
Officer, President and Director (3)
|
|
|
4,051
|
|
|
|
*
|
|
|
Scott M. Stole, Vice President-RFID Division (4)
|
|
|
5,150
|
|
|
|
*
|
|
|
Thomas F. Leahy, Chairman of the Board, Director (5)
|
|
|
1,133,768
|
|
|
|
11.8
|
%
|
|
Robert W. Heller, Director (6)
|
|
|
23,714
|
|
|
|
*
|
|
|
Michael J. Evers, Director (7)
|
|
|
33,714
|
|
|
|
*
|
|
|
Timothy F. Floeder, Director (8)
|
|
|
76,464
|
|
|
|
*
|
|
|
George M. Heenan, Director (9)
|
|
|
29,464
|
|
|
|
*
|
|
|
Minneapolis Portfolio Management Group, LLC (10)
|
|
|
894,101
|
|
|
|
9.3
|
|
|
All current directors and executive officers as a
group
(4 persons) (11)
|
|
|
1,191,196
|
|
|
|
12.4
|
%
|
11
|
|
|
|
|
(1)
|
|
Based on 9,542,887 shares of Common Stock outstanding as of December 28,
2007. Such number does not include the Common Stock issuable upon
exercise of stock options and warrants outstanding as of December 28,
2007. Each figure showing the percentage of outstanding Common Stock
owned beneficially has been calculated by treating as outstanding and
owned the Common Stock which could be purchased by the indicated person
on December 28, 2007 or within 60 days of December 28, 2007 upon the
exercise of such stock options and warrants.
|
|
|
|
(2)
|
|
Effective October 20, 2006, Mr. Thomas was named Chief Executive Officer.
|
|
|
|
(3)
|
|
Effective October 20, 2006, Mr. Traynor resigned as President, Chief
Executive Officer and Director.
|
|
|
|
(4)
|
|
Effective August 31, 2007, Mr. Stole’s employment was terminated in
conjunction with the sale of the Company’s RFID business unit.
|
|
|
|
(5)
|
|
Includes unvested restricted stock awards for 4,500 shares.
|
|
|
|
(6)
|
|
Consists of: (i) 15,000 shares issuable upon exercise of options that
are currently exercisable or exercisable within 60 days and (ii)
unvested restricted stock awards for 2,250 shares.
|
|
|
|
(7)
|
|
Consists of: (i) 20,000 shares issuable upon exercise of options that
are currently exercisable or exercisable within 60 days and (ii)
unvested restricted stock awards for 2,250 shares.
|
|
|
|
(8)
|
|
Consists of 70,000 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days. Effective December
5, 2007, Mr. Floeder resigned from the Company’s board of directors and
its committees.
|
|
|
|
(9)
|
|
Consists of 20,000 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days. Effective October
24, 2007, Mr. Heenan resigned from the Company’s board of directors and
its committees.
|
|
|
|
(10)
|
|
Based on information provided by Minneapolis Portfolio Management Group,
LLC in a Form 13G filed with the Securities and Exchange Commission (the
“SEC”) on February 13, 2007. The address provided in the Form 13G for
Minneapolis Portfolio Management Group, LLC is 80 South 8th Street,
Suite 1902, Minneapolis, MN 55402.
|
|
|
|
(11)
|
|
Includes: (i) 35,000 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days and (ii) 9,000
shares subject to unvested restricted stock awards owned by Messrs.
Leahy, Evers and Heller. Includes directors and executive officers as of
December 28, 2007.
|
|
|
|
*
|
|
Denotes share ownership of less than 1%
|
Securities Authorized for Issuance Under Equity Compensation Plans
Equity compensation plan information can be found in Item 5 of Part II of this report.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
Under its charter, the Audit Committee has the responsibility to review and approve all
related party transactions to which the Company may be a party prior to their implementation. To
management’s knowledge, the only transaction requiring disclosure under Item 404 of Regulation S-K
involving a director, officer or five percent shareholder or any family members of such persons in fiscal
year 2006 or
12
2007, or currently has, any material interest, direct or indirect, in any transaction
in which HEI was involved, is as follows:
On November 3, 2006, Thomas F. Leahy, the Chairman of the Board of Directors of the Company,
loaned the Company $5,000,000 dollars (the “Secured Loan”). The Company’s obligations under the
Secured Loan were evidenced by a promissory note (the “Note”) and a security agreement. The Note
had an original principal amount of $5,000,000, and required the Company to pay monthly
installments of interest, and a maturity of November 2, 2007. Unpaid principal due under the Note
bore interest at the rate of fifteen percent (15%) per annum, commencing on November 3, 2006 with
such interest rate increasing by one percent (1%) each calendar month, beginning January 1, 2007,
up to a maximum of twenty percent (20%) per annum. The Company used $2,200,000 of the proceeds of
the Secured Loan to satisfy the Company’s obligations under the Credit Agreement with Beacon Bank.
The remainder of the proceeds were available for general working capital needs. The Secured Loan
was paid off in full on May 15, 2007. During the period of time that this related party Note was
outstanding, the Company paid Mr. Leahy a total of $451,000 in interest payments.
On May 15, 2007, the Company entered into a three year $8.0 million revolving credit facility
pursuant to a Credit and Security Agreement with Wells Fargo Business Credit, and a three year
$340,000 term loan. Borrowings under these facilities were used to repay the $5 million loan to the
Company by Thomas F. Leahy, the Company’s Chairman of the Board, to repay certain obligations of
the Company and for general operating purposes. Mr. Leahy guaranteed the financing package in an
amount not to exceed $4 million and provided collateral to secure the guarantee in the amount of $4
million. In return, he is paid a guarantee fee in the amount of $8,000 per month by the Company in
consideration for the guarantee and collateral pledge. During Fiscal 2007, the Company paid Mr.
Leahy a total of $28,000 in guarantee fees.
Director Independence
During Fiscal 2007, a majority of the Company’s Board of Directors were “independent” as
defined by the listing standards of the Nasdaq Stock Market. To the knowledge of the Board of
Directors, no independent directors had any relationships that would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. As of the end of Fiscal
2007, our independent directors were Robert Heller, Michael Evers, George Heenan and Timothy
Floeder. The Board of Directors had also determined that it satisfied the independence standards of
the Nasdaq Stock Market during Fiscal 2007 with respect to the membership of the Board’s Audit
Committee, Nominating Committee and Compensation Committee.
Subsequent to the end of Fiscal 2007, George Heenan and Timothy Floeder resigned from the
Company’s Board of Directors. As of December 5, 2007, the Company no longer met the requirements
for independence for the Board of Directors or its committees.
Item 14. Principal Accountant Fees and Services
Virchow Krause & Company, LLP (Virchow Krause) provided services to the Company during Fiscal
2007 and Fiscal 2006, which included, among other things, the audit of the Company’s Fiscal 2007
and Fiscal 2006 consolidated financial statements, reading of the Company’s Annual Report on Form
10-K for Fiscal 2007 and Fiscal 2006, reviews of the Company’s Quarterly Reports on Form 10-Q, and
review of registration statements and other filings made with the SEC. The Company has selected
Virchow Krause to continue as the Company’s auditors for Fiscal Year 2008.
Audit Fees
The following table presents the aggregate fees billed to the Company in each of Fiscal 2006
and Fiscal 2007 for professional services rendered by Virchow Krause.
13
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2006
|
|
|
Fiscal 2007
|
|
|
Audit Fees
|
|
$
|
126,576
|
(1)
|
|
$
|
143,055
|
(1)
|
|
Audit Related Fees
|
|
|
3,900
|
(2)
|
|
|
2,877
|
(3)
|
|
Tax Fees
|
|
|
550
|
(4)
|
|
|
—
|
|
|
All Other Fees
|
|
|
7,800
|
(5)
|
|
|
485
|
(6)
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
138,826
|
|
|
$
|
146,417
|
|
|
|
|
|
|
(1)
|
|
Audit Fees for both Fiscal 2006 and 2007 included fees relating to quarterly reviews.
|
|
|
|
(2)
|
|
In Fiscal 2006, Audit Related Fees consisted of fees relating to the Audit
Committee’s request to review certain employee expense reports for reasonableness
and attendance at the 2006 Annual Meeting of the Shareholders.
|
|
|
|
(3)
|
|
In Fiscal 2007, Audit Related Fees consisted of fees relating to travel and the
Audit Committee’s request to review certain employee expense reports for
reasonableness.
|
|
|
|
(4)
|
|
In Fiscal 2006, Tax Fees consisted of fees relating to review of our 2005 tax return
prepared by another accounting firm.
|
|
|
|
(5)
|
|
In Fiscal 2006, All Other Fees related to preparation and reviews of a Registration
Statement on Form S-1, capital leases accounting, Colorado unemployment issues and
CFO changes.
|
|
|
|
(6)
|
|
In Fiscal 2007, All Other Fees related to a review of accounting related matters
regarding our AMO segment with our prior independent accounting firm.
|
Audit Committee Pre-Approval Policy
The Audit Committee of the Board has adopted a formal policy concerning approval of audit and
non-audit services to be provided by the independent registered public accounting firm engaged to
audit the Company’s consolidated financial statements. The policy requires that all services to be
provided by the Company’s auditor, including audit services and permitted audit-related and
non-audit services, must be pre-approved by the Audit Committee. The Audit Committee pre-approved
all audit and non-audit services provided by Virchow Krause during Fiscal 2007.
14
Part IV
Item 15.
Exhibits, Financial Statement Schedules.
|
(a)
|
|
The following documents are filed as part of this report:
|
|
|
|
(1)
|
|
Financial Statements — See Part II, Item 8 of this Annual Report on Form 10-K.
|
|
|
|
(b)
|
|
Exhibits:
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Articles of Incorporation of HEI, Inc.
|
|
Note 1
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of HEI, Inc.
|
|
Note 1
|
|
|
|
|
|
|
|
3.3
|
|
Amendments to the Amended and Restated Bylaws of HEI, Inc., effective
as of March 19, 2003
|
|
Note 6
|
|
|
|
|
|
|
|
3.4
|
|
Articles of Amendment of the Amended and Restated Articles of
Incorporation of HEI, Inc.
|
|
Note 13
|
|
|
|
|
|
|
|
3.5
|
|
Second Amended and Restated Bylaws of HEI, Inc.
|
|
Note 14
|
|
|
|
|
|
|
|
4.1
|
|
Certificate of Designation of Common Stock of HEI, Inc.
|
|
Note 7
|
|
|
|
|
|
|
|
4.2
|
|
Second Certificate of Designation of Common Stock of HEI, Inc.
|
|
Note 15
|
|
|
|
|
|
|
|
4.3
|
|
Certificate of Designation of Series A Convertible Preferred Stock of
HEI, Inc.
|
|
Note 15
|
|
|
|
|
|
|
|
4.4
|
|
Form of Stock Certificate for shares of Series A Convertible Preferred
Stock of HEI, Inc.
|
|
Note 16
|
|
|
|
|
|
|
|
*10.1
|
|
Form of Indemnification Agreement between HEI and officers and directors
|
|
Note 2
|
|
|
|
|
|
|
|
*10.2
|
|
HEI, Inc. 1989 Omnibus Stock Compensation Plan, adopted April 3, 1989,
and as Amended and Restated effective November 15, 1991, and as amended
effective April 29, 1992, May 11, 1994, and October 31, 1996
|
|
Note 3
|
|
|
|
|
|
|
|
*10.3
|
|
HEI, Inc. 1998 Stock Option Plan, adopted November 18, 1998, and
amended effective January 20, 2000, January 24, 2001, February 20, 2002
and January 12, 2006.
|
|
Note 4
|
|
|
|
|
|
|
|
*10.4
|
|
HEI, Inc. 1998 Stock Option Plan for Nonemployee Directors, adopted
November 18, 1998, and amended effective June 7, 1999 and December 12,
2002.
|
|
Note 6
|
|
|
|
|
|
|
|
10.12
|
|
Accounts Receivable Agreement, dated May 29, 2003, by and between HEI,
Inc. and Beacon Bank.
|
|
Note 5
|
|
|
|
|
|
|
|
10.14
|
|
Promissory Note, dated October 14, 2003, by HEI, Inc. in favor of
Commerce Bank.
|
|
Note 6
|
|
|
|
|
|
|
|
10.15
|
|
Term Loan Agreement, dated October 14, 2003, by HEI, Inc. and Commerce
Bank.
|
|
Note 6
|
|
|
|
|
|
|
|
10.16
|
|
Combination Mortgage, Security Agreement, Assignment of Rents and
Fixture Financing Statement, dated October 14, 2003, by HEI, Inc. in
favor of Commerce Bank.
|
|
Note 6
|
|
|
|
|
|
|
|
10.17
|
|
Environmental Investigation Letter, dated October 14, 2003, by HEI,
Inc. in
|
|
Note 6
|
15
|
|
|
|
|
|
|
|
|
favor of Commerce Bank.
|
|
|
|
|
|
|
|
|
|
10.18
|
|
Promissory Note, dated October 28, 2003, by HEI, Inc. in favor of
Commerce Financial Group, Inc.
|
|
Note 6
|
|
|
|
|
|
|
|
10.19
|
|
Term Loan Agreement, dated October 28, 2003, by HEI, Inc. and Commerce
Financial Group, Inc.
|
|
Note 6
|
|
|
|
|
|
|
|
10.20
|
|
Commercial Security Agreement, dated October 28, 2003, by HEI, Inc. in
favor of Commerce Financial Group, Inc.
|
|
Note 6
|
|
|
|
|
|
|
|
10.21
|
|
Combination Mortgage, Security Agreement, Assignment of Rents and
Fixture Financing Statement, dated October 28, 2003, by HEI, Inc. in
favor of Commerce Financial Group, Inc.
|
|
Note 6
|
|
|
|
|
|
|
|
10.22
|
|
Environmental Investigation Letter, dated October 28, 2003, by HEI,
Inc. in favor of Commerce Financial Group, Inc.
|
|
Note 6
|
|
|
|
|
|
|
|
10.24
|
|
Amendment dated December 12, 2003, to Accounts Receivable Agreement,
dated May 29, 2003, by and among HEI, Inc. and Beacon Bank.
|
|
Note 6
|
|
|
|
|
|
|
|
10.30
|
|
Amendment dated July 1, 2004, to Accounts Receivable Agreement, dated
May 29, 2003, and previously amended on December 13, 2003, by and among
HEI, Inc. and Beacon Bank.
|
|
Note 11
|
|
|
|
|
|
|
|
10.31
|
|
Lease Agreement, dated October 1, 2004, by and between HEI, Inc. and
Boulder Investors LLC.
|
|
Note 8
|
|
|
|
|
|
|
|
10.32
|
|
Waiver and Amendment, dated November 30, 2004, and executed as of
December 3, 2004, by and between HEI, Inc. and Commerce Bank.
|
|
Note 9
|
|
|
|
|
|
|
|
10.33
|
|
Waiver and Amendment, dated November 30, 2004, and executed as of
December 3, 2004, by and between HEI, Inc. and Commerce Financial
Group, Inc.
|
|
Note 9
|
|
|
|
|
|
|
|
10.34
|
|
Amendment dated December 7, 2004, to Accounts Receivable Agreement,
dated May 29, 2003, and previously amended on December 13, 2003, and
July 1, 2004, by and among HEI, Inc. and Beacon Bank.
|
|
Note 10
|
|
|
|
|
|
|
|
10.36
|
|
Amendment dated July 7, 2005, to Accounts Receivable Agreement, dated
May 29, 2003, and previously amended on July 1, 2004 and December 13,
2003, by and among HEI, Inc. and Beacon Bank.
|
|
Note 17
|
|
|
|
|
|
|
|
10.37
|
|
Consulting Agreement, dated January 12, 2005, between Emerging Capital
and HEI, Inc.
|
|
Note 12
|
|
|
|
|
|
|
|
10.39
|
|
Waiver and Amendment dated as of December 29, 2004, and executed as of
January 5, 2005, by and between HEI, Inc. and Commerce Bank.
|
|
Note 18
|
|
|
|
|
|
|
|
10.40
|
|
Waiver and Amendment dated as of December 29, 2004, and executed as of
January 5, 2005, by and between HEI, Inc. and Commerce Financial Group,
Inc.
|
|
Note 18
|
|
|
|
|
|
|
|
10.41
|
|
Notice, Waiver and Amendment dated as of December 29, 2004, and
executed as of January 5, 2005, by and between HEI, Inc. and Beacon
Bank.
|
|
Note 18
|
|
|
|
|
|
|
|
10.42
|
|
Amendment dated January 12, 2005 to the Accounts Receivable Agreement
dated May 29, 2003, and previously amended December 12, 2003, July 1,
2004, December 7, 2004 and December 29, 2004 by and between HEI, Inc.
and Beacon Bank.
|
|
Note 19
|
16
|
|
|
|
|
|
|
10.43
|
|
Waiver and Release Agreement dated January 26, 2005 between HEI, Inc.
and Douglas Nesbit.
|
|
Note 20
|
|
|
|
|
|
|
|
*10.44
|
|
Engagement Letter dated January 12, 2005, effective as of February 28,
2005, between HEI, Inc. and Emerging Capital.
|
|
Note 21
|
|
|
|
|
|
|
|
*10.45
|
|
HEI, Inc. 2006 Nonemployee Director Stock Purchase Plan, dated January
13, 2006.
|
|
Note 22
|
|
|
|
|
|
|
|
*10.46
|
|
Nonemployee Director Stock Purchase Agreement.
|
|
Note 22
|
|
|
|
|
|
|
|
10.47
|
|
Form of Commercial Loan Agreement and Note dated as of April 18, 2006
by and between HEI, Inc. and Beacon Bank.
|
|
Note 23
|
|
|
|
|
|
|
|
10.48
|
|
Waiver and Amendment dated as of May 27, 2006 by and between HEI, Inc.
and Commerce Bank.
|
|
Note 24
|
|
|
|
|
|
|
|
10.49
|
|
Waiver and Amendment dated as of May 27, 2006 by and between HEI, Inc.
and Commerce Financial Group, Inc.
|
|
Note 24
|
|
|
|
|
|
|
|
10.50
|
|
Waiver dated as of May 27, 2006 by and between HEI, Inc. and Commerce
Leasing Corporation, a division of Commerce Financial Group, Inc.
|
|
Note 24
|
|
|
|
|
|
|
|
*10.51
|
|
Independent Contractor Agreement dated June 26, 2006 between HEI, Inc.
and Mark Thomas Enterprises, LLC.
|
|
Note 25
|
|
|
|
|
|
|
|
*10.53
|
|
Employment Agreement dated July 10, 2006 between HEI, Inc. and Scott
Stole.
|
|
Note 26
|
|
|
|
|
|
|
|
*10.54
|
|
Severance and Release Agreement dated October 20, 2006 between HEI,
Inc. and Mack V. Traynor III
|
|
Note 27
|
|
|
|
|
|
|
|
*10.55
|
|
Promissory Note dated November 3, 2006 made payable to Thomas F. Leahy
in the original principal amount of $5,000,000.
|
|
Note 28
|
|
|
|
|
|
|
|
*10.56
|
|
2005 Employee Stock Purchase Plan.
|
|
Note 29
|
|
|
|
|
|
|
|
*10.57
|
|
2006 Amendment to 1998 Stock Option Plan
|
|
Note 30
|
|
|
|
|
|
|
|
21
|
|
Subsidiaries of the Registrant.
|
|
Note 31
|
|
|
|
|
|
|
|
†23.1
|
|
Consent of Virchow, Krause & Company, LLP.
|
|
|
|
|
|
|
|
|
|
†31.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
†32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
Notes to Exhibits above:
|
|
|
|
(1)
|
|
Filed as an exhibit to the Definitive Proxy Statement on Schedule 14A for the 2002 Annual
Meeting of Shareholders, filed with the Securities and Exchange Commission on January 23,
2002, and incorporated herein by reference.
|
|
|
|
(2)
|
|
Filed as an exhibit to the Registration Statement on Form S-2 (SEC No. 33-37285), filed with
the Securities and Exchange Commission on October 15, 1990, and incorporated herein by
reference.
|
17
|
|
|
|
|
(3)
|
|
Filed as an exhibit to the Annual Report on Form 10-KSB for the fiscal year ended August 31,
1996, and incorporated herein by reference.
|
|
|
|
(4)
|
|
Filed as an exhibit to the Annual Report on Form 10-KSB for the fiscal year ended August 31,
1998, and incorporated herein by reference.
|
|
|
|
(5)
|
|
Filed as an exhibit to the Quarterly Report on Form 10-Q for the quarterly period ended May
31, 2003, and incorporated herein by reference.
|
|
|
|
(6)
|
|
Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended August 31,
2003, and incorporated herein by reference.
|
|
|
|
(7)
|
|
Filed as an exhibit to the Registration Statement on Form S-3 (SEC No. 333-115982), filed
with the Securities and Exchange Commission on May 28, 2004, and incorporated herein by
reference.
|
|
|
|
(8)
|
|
Filed as an exhibit to the Current Report on Form 8-K, filed with the Securities and
Exchange Commission on December 21, 2004.
|
|
|
|
(9)
|
|
Filed as an exhibit to the Current Report on Form 8-K, filed with the Securities and
Exchange Commission on December 9, 2004, and incorporated herein by reference.
|
|
|
|
(10)
|
|
Filed as an exhibit to the Current Report on Form 8-K, filed with the Securities and
Exchange Commission on December 10, 2004, and incorporated herein by reference.
|
|
|
|
(11)
|
|
Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended August 31,
2004, and incorporated herein by reference.
|
|
|
|
(12)
|
|
Filed as an exhibit to the Current Report on Form 8-K, filed with the Securities and
Exchange Commission on January 18, 2005, and incorporated herein by reference.
|
|
|
|
(13)
|
|
Form of which was filed as Appendix C to the Definitive Proxy Statement on Schedule 14A for
the 2006 Annual Meeting of the Shareholders filed with the SEC on December 12, 2005
|
|
|
|
(14)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on March 8, 2005.
|
|
|
|
(15)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on May 11, 2005.
|
|
|
|
(16)
|
|
Filed as Exhibit 3.6 to the Registration Statement on Form S-1 filed with the SEC on June
23, 2005.
|
|
|
|
(17)
|
|
Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended August 31,
2005, and incorporated herein by reference.
|
|
|
|
(18)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on January 5, 2005.
|
|
|
|
(19)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on January 13, 2005.
|
|
|
|
(20)
|
|
Filed as an exhibit to the Current Report on Amendment No. 1 to Form 8-K filed with the SEC
on February 1, 2005.
|
|
|
|
(21)
|
|
Filed as an exhibit to the Current Report on Amendment No. 1 to Form 8-K filed with the SEC
on March 4, 2005.
|
|
|
|
(22)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on January 13, 2006.
|
|
|
|
(23)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on April 18, 2006.
|
18
|
|
|
|
|
(24)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on June 22, 2006.
|
|
|
|
(25)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on June 30, 2006.
|
|
|
|
(26)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on July 11, 2006.
|
|
|
|
(27)
|
|
Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended September 2,
2006, and incorporated herein by reference.
|
|
|
|
(28)
|
|
Filed as an exhibit to the Current Report on Form 8-K filed with the SEC on November 3, 2006.
|
|
|
|
(29)
|
|
Filed as Appendix B to the Definitive Proxy Statement on Schedule 14A for the 2006 Annual
Meeting of the Shareholders filed with the SEC on December 12, 2005.
|
|
|
|
(30)
|
|
Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended September 2,
2006, and incorporated herein by reference.
|
|
|
|
(31)
|
|
Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended September 1,
2007, and incorporated herein by reference.
|
|
|
|
*
|
|
Denotes management contract or compensation plan or arrangement.
|
|
|
|
†
|
|
Filed herewith.
|
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
HEI, INC.
|
|
|
|
By:
|
/s/
MARK B. THOMAS
|
|
|
|
|
Mark B. Thomas
|
|
|
|
|
Chief Executive Officer, Chief Financial Officer,
Treasure and Secretary Principal Executive Officer
and Principal Financial Officer
|
|
|
|
Date: December 28, 2007
20
INDEX TO EXHIBITS
The following exhibits are filed with this Amendment No. 1 to the annual Report on
Form 10-K
:
|
23.1
|
|
Consent of Virchow, Krause & Company, LLP
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer/Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer/Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
21
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