-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LlfoADCO7NVROgNq1Z6eXZibFHKUs0uIAKMSVTH6+NrR3HHHMZyYTnth1k1FM5rr pzQgxZxhqc5skCFRWmFd2w== 0000905148-00-000262.txt : 20000203 0000905148-00-000262.hdr.sgml : 20000203 ACCESSION NUMBER: 0000905148-00-000262 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000127 EFFECTIVENESS DATE: 20000127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEI INC CENTRAL INDEX KEY: 0000351298 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 410944876 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-95529 FILM NUMBER: 514993 BUSINESS ADDRESS: STREET 1: 1495 STEIGER LAKE LN STREET 2: P O BOX 5000 CITY: VICTORIA STATE: MN ZIP: 55386 BUSINESS PHONE: 6124432500 MAIL ADDRESS: STREET 1: P O BOX 5000 STREET 2: 1495 STEIGER LAKE LANE CITY: VICTORIA STATE: MN ZIP: 55386 S-8 1 T:\EDGAR\SANDERSO\633324.TXT As filed with the Securities and Exchange Commission on January 27, 2000 Registration No. 333-_____ =============================================================================== =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM S-8 REGISTRATION STATEMENT under THE SECURITIES ACT OF 1933 ------------------------ HEI, Inc. (Exact name of registrant as specified in its charter) Minnesota 41-0944876 - ------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) PO Box 5000 1495 Steiger Lake Lane Victoria, Minnesota 55386 (612) 443-2500 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------ HEI, Inc. 1998 Stock Option Plan for Nonemployee Directors As amended through January 20, 2000 (Full title of the plan) ----------------------- Anthony J. Fant Chairman and Chief Executive Officer HEI, Inc. PO Box 5000 1495 Steiger Lake Lane Victoria, Minnesota 55386 (612) 443-2500 (Name, address, including zip code, and telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE ============================================================================================================================== Title of Securities Amount to Proposed maximum Proposed maximum Amount of to be registered be registered offering price per unit aggregate offering price registration fee - ------------------------------------------------------------------------------------------------------------------------------ Common Stock, par value $.05 per share........... 425,000(1) $10.75(2) $4,568,750(3) $1,206(4) ==============================================================================================================================
(1) Plus such additional number of shares as may be required pursuant to the 1998 Stock Option Plan for Nonemployee Directors, as amended through January 20, 2000, with respect to which no additional consideration will be paid (i) in the event of a stock dividend, reverse stock split, split up, recapitalization or capital adjustments and (ii) that are issuable pursuant to dividend equivalent rights relating to stock options issued under the 1998 Stock Option Plan for Nonemployee Directors, as amended through January 20, 2000. (2) Calculated pursuant to Rule 457(h) under the Securities Act of 1933, as amended (the "Securities Act"). (3) Calculated pursuant to Rule 457(c) and (h) under the Securities Act based on the average of the high and low prices for the Common Stock reported by the Nasdaq National Market on January 24, 2000. (4) In accordance with Rule 457(h), the filing fee is based on the maximum number of the registrant's securities issuable under the 1998 Stock Option Plan for Nonemployee Directors, as amended through January 20, 2000, that are covered by this Registration Statement. =============================================================================== =============================================================================== PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The document(s) containing the information specified in Part I of Form S-8 will be sent or given to participating employees as specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act"). Such documents and the documents incorporated by reference herein pursuant to Item 3 of Part II hereof, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. HEI, Inc. (the "Company") hereby incorporates by reference the documents listed in (a), (b), (c) and (d) below which have previously been filed with the Securities and Exchange Commission. (a) The Annual Report on Form 10-K for the fiscal year ended August 31, 1999. (b) The Quarterly Report on Form 10-Q for the quarter ended December 4, 1999. (c) The Company's Definitive Proxy Statement filed on November 24, 1999. (d) The description of the Company's Common Stock contained in the Company's Registration Statement, registering the Company's Common Stock under Section 12(g) of the Exchange Act, including any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities remaining unsold shall be deemed to be incorporated by reference herein and to be part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference 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 hereof. ITEM 4. DESCRIPTION OF SECURITIES. Not Applicable. ITEM 5. INTERESTS OF EXPERTS AND COUNSEL. None. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 302A.521 of the Minnesota Statutes (the "Minnesota Business Corporation Act") requires, among other things, the indemnification of persons made or threatened to be made a party to a proceeding by reason of acts or omissions performed in their official capacity as an officer, director, member of a committee of the board, or employee of the registrant against judgments, penalties, fines (including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan), settlements, and reasonable expenses (including attorney's fees and disbursements) incurred by the person in connection with the proceeding if, with respect to the acts or omissions of the person complained of in the proceeding, the person is not otherwise indemnified by another organization or employee benefit plan, acted in good faith, received no improper benefit, believed that such conduct was in the best interests of the registrant, and, in the case of criminal proceedings, had no reason to believe that the conduct was unlawful. In addition, Section 302A.521, Subd. 3, requires payment by the registrant, upon written request, of reasonable expenses in advance of final disposition of a proceeding in certain instances. A decision as to required indemnification is made by the board by a majority of a quorum (not including, for purposes of determining either a majority or the presence of a quorum, any directors who are parties to the proceeding), by a majority of a designated committee of the board, consisting solely of two or more directors who are not parties to the proceeding, by special legal counsel, by the shareholders (not including, for purposes of determining the presence of a quorum, the shares held by any person who is a party to the proceeding and not including the vote of any such person) or by a court. Article IX of the Bylaws of the Company, as amended, and indemnification agreements between the registrant and certain of its officers and directors, provide for indemnification of officers and directors and certain other persons against liabilities and expenses to the fullest extent authorized by the Minnesota Business Corporation Act, as the Act exists or is amended (but in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than were permitted under the Act prior to its amendment) ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not Applicable. ITEM 8. EXHIBITS 4(a)* Restated Articles of Incorporation of the Company, as amended. 4(b)** By-Laws of the Company, as amended. 4(c) HEI, Inc. 1998 Stock Option Plan for NonEmployee Directors, as amended through January 20, 2000. 5 Opinion of Gray, Plant, Mooty, Mooty & Bennett, P.A. 23(a) Consent of Gray, Plant, Mooty, Mooty & Bennett, P.A. (included as part of Exhibit 5). 23(b) Consent of KPMG LLP. 23(c) Consent of PricewaterhouseCoopers LLP. 24 Power of Attorney (included on page 6). * Previously filed as an exhibit to Annual Report on Form 10-K for the year ended August 31, 1990, and incorporated herein by reference. ** Previously filed as an exhibit to Annual Report on Form 10-K for the year ended August 31, 1998 and incorporated herein by reference. ITEM 9. UNDERTAKINGS The undersigned registrants hereby undertake: (a)(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, represent 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 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 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 the 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) 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 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (c) 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 provisions referred to in Item 6 of this registration statement, 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 in connection 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. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, HEI, Inc. certifies that is has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on January 20, 2000. HEI, INC. By: /s/ Anthony J. Fant --------------------------------- Anthony J. Fant Chairman of the Board and Chief Executive Officer (Principal Executive Officer) POWER OF ATTORNEY KNOWN ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of HEI, Inc. hereby severally constitute Anthony J. Fant, Jerald H. Mortenson and Edwin W. Finch, III and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Registration Statement filed herewith and any and all amendments to said Registration Statement, and generally to do all such things in our names and in our capacities as officers and directors to enable HEI, Inc. to comply with the provisions of the Securities Act of 1933, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Registration Statement and any and all amendments thereto. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date /s/ Anthony J. Fant Chairman of the Board and Chief Executive Officer January 20, 2000 - --------------------------- (Principal Executive Officer) Anthony J. Fant /s/ Jerald H. Mortenson Vice President of Finance and Administration, Chief Financial January 20, 2000 - --------------------------- Officer and Treasurer Jerald H. Mortenson (Principal Financial Officer and Principal Accounting Officer) /s/ Edwin W. Finch, III Director January 20, 2000 - --------------------------- Edwin W. Finch, III /s/ David W. Ortlieb Director January 20, 2000 - --------------------------- David W. Ortlieb /s/ Steve E. Tondera, Jr. Director January 20, 2000 - ------------------------- Steve E. Tondera, Jr. Director - ------------------------ Mack V. Traynor, III
EXHIBIT INDEX Exhibit No. Description Page 4(a)* Restated Articles of Incorporation of the Company, as amended. 4(b)** By-Laws of the Company, as amended. 4(c) HEI, Inc. 1998 Stock Option Plan for NonEmployee Directors, as amended. 8 5 Opinion of Gray, Plant, Mooty, Mooty & Bennett, P.A. 13 23(a) Consent of Gray, Plant, Mooty, Mooty & Bennett, P.A. (included as part of Exhibit 5). 23(b) Consent of KPMG LLP. 14 23(c) Consent of PricewaterhouseCoopers LLP. 15 24 Power of Attorney (included on page 6). * Previously filed as an exhibit to Annual Report on Form 10-K for the year ended August 31, 1990, and incorporated herein by reference. ** Previously filed as an exhibit to Annual Report on Form 10-K for the year ended August 31, 1998 and incorporated herein by reference. EX-4 2 EXHIBIT 4 EXHIBIT 4(c) HEI, INC. 1998 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS As amended through January 20, 2000 1. Purpose. The purpose of this Plan is to attract and retain qualified individuals to serve as nonemployee members of the Board of Directors of HEI, Inc. (the "Company") and to provide such persons with appropriate incentives. The Company has adopted the Plan effective as of November 18, 1998, subject to the approval of the Company's stockholders, and unless extended by amendment in accordance with the terms of the Plan, no Option Rights will be granted hereunder after the tenth anniversary of such effective date. Upon the approval of the adoption of the Plan by the Company's stockholders, the Plan will replace and supersede the Company's prior Stock Option Plan for Nonemployee Directors (the "1991 Plan"). 2. Definitions. As used in this Plan, "Board" means the Board of Directors of the Company. "Change in Control" means a change in control of the Company, which will be deemed to have occurred after the effective date of this Plan if: (i) any "person" as such term is used in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof except that such term shall not include (A) the Company or any of its subsidiaries, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, (D) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Shares, or (E) any person or group as used in Rule 13d-1(b) under the Exchange Act, is or becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of the combined voting power of the Company's then outstanding securities. (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than (A) a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this definition or (B) a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; (iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 75% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company's then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect) other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Common Shares" means (i) shares of the voting common stock of the Company and (ii) any security into which Common Shares may be converted by reason of any transaction or event of the type referred to in Section 6 of this Plan. "Date of Grant" means the date specified by the Board on which a grant of Option Rights shall become effective, which shall not be earlier than the date on which the Board takes action with respect thereto. "Disability" means any physical or mental illness, injury or condition that would qualify a Participant for benefits under any long-term disability benefit plan maintained by the Company or any Subsidiary and applicable to such Participant (or, if the Participant is not eligible for any such plan, to senior executive officers of the Company). "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. "Market Value per Share" means the fair market value of the Common Shares as determined by the Board from time to time. "Option Price" means the purchase price payable upon the exercise of an Option Right. "Option Right" means the right to purchase Common Shares from the Company upon the exercise of a nonqualified stock option granted pursuant to Section 4 of this Plan. "Participant" means an individual who, at the time of any automatic award of Option Rights pursuant to Section 4 below, is a member of the Board and both a "non-employee director" within the meaning of Rule 16b-3 and an "outside director" within the meaning of Section 162(m) of the Code. "Rule 16b-3" means Rule 16b-3, as promulgated and amended from time to time by the Securities and Exchange Commission under the Exchange Act, or any successor rule to the same effect. "Subsidiary" means a corporation, partnership, joint venture, unincorporated association or other entity in which the Company has a direct or indirect ownership or other equity interest. 3. Shares Available under the Plan. (a) Subject to adjustment as provided in Section 6 of this Plan, the number of Common Shares which may be issued or transferred upon the exercise of Option Rights shall not in the aggregate exceed 425,000 Common Shares (including any Common Shares remaining under the 1991 Plan), which may be Common Shares of original issuance or Common Shares held in treasury or a combination thereof. For the purposes of this Section 3(a): (i) Upon payment in cash of the benefit provided by any award granted under this Plan, any Common Shares that were covered by that award shall again be available for issuance or transfer hereunder; and (ii) Upon the full or partial payment of any Option Price by the transfer to the Company of Common Shares or upon satisfaction of tax withholding obligations in connection with any such exercise or any other payment made or benefit realized under this Plan by the transfer or relinquishment of Common Shares, there shall be deemed to have been issued or transferred under this Plan only the net number of Common Shares actually issued or transferred by the Company less the number of Common Shares so transferred or relinquished. 4. Option Rights. Subject to adjustment as provided in Section 6 of this Plan, the Board shall automatically grant to each Participant Option Rights to purchase Common Shares upon such terms and conditions as the Board may determine in accordance with the following provisions: (a) Effective as of November 18, 1998, each individual who was then a Participant shall be granted Option Rights to purchase 55,000 Common Shares. Thereafter, commencing with the annual meeting of the Company's stockholders in January 2000, each individual who is a Participant upon the adjournment of an annual meeting of the Company's stockholders shall be granted Option Rights to purchase 10,000 Common Shares, effective as of the date of such annual meeting. (b) Each grant shall specify an Option Price per Common Share, which shall equal the Market Value per Share on the Date of Grant. (c) Each grant shall specify the form of consideration to be paid in satisfaction of the Option Price and the manner of payment of such consideration, which may include (i) cash in the form of currency or check or other cash equivalent acceptable to the Company, (ii) nonforfeitable, unrestricted Common Shares, which are already owned by the Participant, (iii) any other legal consideration that the Board may deem appropriate, on such basis as the Board may determine in accordance with this Plan and (iv) any combination of the foregoing. (d) Any grant may, if there is then a public market for the Common Shares, provide for deferred payment of the Option Price from the proceeds of sale through a broker of some or all of the Common Shares to which the exercise relates. (e) Successive grants may be made to the same Participant regardless of whether any Option Rights previously granted to the Participant remain unexercised. (f) Each grant shall specify that the Option Rights awarded thereby shall become exercisable in full upon the earliest to occur of (i) the seventh anniversary of the Date of Grant, (ii) the first date after the Date of Grant on which the Market Value per Share of the Common Shares (as adjusted as provided in Section 6 of this Plan) equals or exceeds $25.00, (iii) the date of the Participant's death or Disability, and (iv) the effective date of a Change in Control. (g) Option Rights granted pursuant to this Section 4 shall be nonqualified stock options. (h) No Option Right granted pursuant to this Section 4 may be exercised more than 10 years from the Date of Grant. (i) Each grant shall be evidenced by an agreement, which shall be executed on behalf of the Company by any designated officer thereof and delivered to and accepted by the Participant and shall contain such terms and provisions as the Board may determine consistent with this Plan. 5. Transferability. No Option Right granted under this Plan may be transferred by a Participant, except (i) by will or the laws of descent and distribution, (ii) to one or more members of the Participant's immediate family, or (iii) to a trust established for the benefit of the Participant and/or one or more members of the Participant's immediate family. Option Rights granted under this Plan may not be exercised during a Participant's lifetime except by (i) the Participant, (ii) a transferee of the Participant described in the preceding sentence, or (iii) in the event of the legal incapacity of the Participant or any such transferee, by the guardian or legal representative of the Participant or such transferee (as applicable) acting in a fiduciary capacity on behalf thereof under state law and court supervision. 6. Adjustments. (a) The Board may make or provide for such adjustments in the number of Common Shares covered by outstanding Option Rights granted hereunder, the Option Prices per Common Share applicable to any such Option Rights, and the kind of shares (including shares of another issuer) covered thereby, as the Board may in good faith determine to be equitably required in order to prevent dilution or expansion of the rights of Participants that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or similar change in the capital structure of the Company or (ii) any merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of warrants or other rights to purchase securities or any other corporate transaction or event having an effect similar to any of the foregoing. In the event of any such transaction or event, the Board may provide in substitution for any or all outstanding awards under this Plan such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all awards so replaced. Moreover, the Board may on or after the Date of Grant provide in the agreement evidencing any award under this Plan that the holder of the award may elect to receive an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect, or the Board may provide that the holder will automatically be entitled to receive such an equivalent award. The Board may also make or provide for such adjustments in the maximum numbers of Common Shares specified in Section 3 of this Plan as the Board may in good faith determine to be appropriate in order to reflect any transaction or event described in this Section 6. (b) If another corporation is merged into the Company or the Company otherwise acquires another corporation, the Board may elect to assume under this Plan any or all outstanding stock options or other awards granted by such corporation under any stock option or other plan adopted by it prior to such acquisition. Such assumptions shall be on such terms and conditions as the Board may determine; provided, however, that the awards as so assumed do not contain any terms, conditions or rights that are inconsistent with the terms of this Plan. Unless otherwise determined by the Board, such awards shall not be taken into account for purposes of the limitations contained in Section 3 of this Plan. 7. Fractional Shares. The Company shall not be required to issue any fractional Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement thereof in cash. 8. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for the withholding are insufficient, it shall be a condition to the receipt of any such payment or the realization of any such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of any taxes required to be withheld. At the discretion of the Board, any such arrangements may without limitation include voluntary or mandatory relinquishment of a portion of any such payment or benefit or the surrender of outstanding Common Shares. The Company and any Participant or such other person may also make similar arrangements with respect to the payment of any taxes with respect to which withholding is not required. 9. Administration of the Plan. (a) This Plan shall be administered by the Board. A majority of the Board shall constitute a quorum, and the acts of the members of the Board who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Board in writing, shall be the acts of the Board. (b) The interpretation and construction by the Board of any provision of this Plan or any agreement, notification or document evidencing the grant of Option Rights, and any determination by the Board pursuant to any provision of this Plan or any such agreement, notification or document, shall be final and conclusive. No member of the Board shall be liable for any such action taken or determination made in good faith. 10. Amendments and Other Matters. (a) This Plan may be amended from time to time by the Board; provided, however, that except as expressly authorized by this Plan, no such amendment shall cause this Plan to cease to satisfy any applicable condition of Rule 16b-3 without the further approval of the stockholders of the Company. (b) With the concurrence of the affected Participant, the Board may cancel any agreement evidencing Option Rights or any other award granted under this Plan. In the event of any such cancellation, the Board may authorize the granting of new Option Rights or other awards hereunder, which may or may not cover the same number of Common Shares as had been covered by the cancelled Option Rights or other award, at such Option Price, in such manner and subject to such other terms, conditions and discretion as would have been permitted under this Plan had the cancelled Option Rights or other award not been granted. (c) This Plan shall not confer upon any Participant any right with respect to continuance of service with the Board, the Company or any Subsidiary and shall not interfere in any way with any right that the Company, its stockholders or any Subsidiary would otherwise have to terminate any Participant's service at any time. (e) Any award that may be made pursuant to an amendment to this Plan that shall have been adopted without the approval of the stockholders of the Company shall be null and void if it is subsequently determined that such approval was required under the terms of the Plan or applicable law. (f) Unless otherwise determined by the Board, this Plan is intended to comply with Rule 16b-3 at all times that awards hereunder are subject to such Rule. EX-5 3 LETTER EXHIBIT 5 3400 CITY CENTER 33 SOUTH SIXTH STREET MINNEAPOLIS, MN 55402-3796 612 343-2800 FAX: 612 333-0066 WEB SITE: www.gpmlaw.com January 27, 2000 HEI, Inc. P.O. Box 5000 1495 Steiger Lake Lane Victoria, Minnesota 55386 Ladies and Gentlemen: We have acted as special counsel for HEI, Inc., a Minnesota corporation (the "Company"), which has filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, a Registration Statement on Form S-8 (the "Registration Statement") for the purpose of registering 425,000 shares of Common Stock, par value $.05 per share (the "Common Stock"), of the Company initially issuable upon the exercise of stock options granted pursuant to the HEI, Inc. 1998 Stock Option Plan for Nonemployee Directors as amended through January 20, 2000 (the "Plan"). We have examined such documents and have reviewed such questions of law as we have deemed necessary and appropriate for the purposes of this opinion. Based upon the foregoing, we are of the opinion that the shares of Common Stock initially issuable pursuant to the Plan have been duly authorized and, upon issuance, delivery and payment therefor in accordance with the terms of the Plan and its associated stock option agreements, will be validly issued, fully paid and nonassessable. Our opinions expressed above are limited to the laws of the State of Minnesota. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Gray, Plant, Mooty, Mooty & Bennett, P.A. GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A. ATTORNEYS AT LAW EX-23.B 4 AUDITORS' CONSENT EXHIBIT 23(b) INDEPENDENT AUDITORS' CONSENT The Board of Directors HEI, Inc.: We consent to the use of our report dated October 6, 1999, except as to note 5 which is as of October 22, 1999, incorporated by reference in this Form S-8. /s/ KPMG LLP Minneapolis, Minnesota January 21, 2000 EX-23.C 5 AUDITORS' CONSENT EXHIBIT 23(c) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 (HEI, Inc. 1998 Stock Option Plan for Nonemployee Directors) of our report dated September 26, 1997, relating to the financial statements for the year ended August 31, 1997, which appear in HEI, Inc.'s Annual Report on Form 10-K for the year ended August 31, 1999. /s/ PRICEWATERHOUSECOOPERS LLP Minneapolis, Minnesota January 21, 2000 -----END PRIVACY-ENHANCED MESSAGE-----