-----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, DmBF90UiJBD1zJjFeq5RPtJPMk6iAT6i8gOGhnJQmqiVkbhmvZSqnLR8XQXAOTS+ hEhu4/07j+TpKuVTBN/Tig== 0000905148-98-000223.txt : 19980218 0000905148-98-000223.hdr.sgml : 19980218 ACCESSION NUMBER: 0000905148-98-000223 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980217 SROS: NASD GROUP MEMBERS: ANTHONY J. FANT GROUP MEMBERS: FANT ANTHONY J SUBJECT COMPANY: 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: SC 13D SEC ACT: SEC FILE NUMBER: 005-33908 FILM NUMBER: 98542906 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 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FANT ANTHONY J CENTRAL INDEX KEY: 0001055933 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2154 HIGHLAND AVENUE CITY: BIRMINGHAM STATE: AL ZIP: 35205 BUSINESS PHONE: 2059331030 MAIL ADDRESS: STREET 1: 2154 HIGHLAND AVENUE CITY: BIRMINGHAM STATE: AL ZIP: 35205 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a) (AMENDMENT NO.____)* HEI, Inc. - ----------------------------------------------------------------------------- (Name of Issuer) Common Stock, Par Value $.05 Per Share - ----------------------------------------------------------------------------- (Title of Class of Securities) 404160103 - ----------------------------------------------------------------------------- (CUSIP Number) Michael A. King, Esq. Brown & Wood LLP One World Trade Center New York, New York 10048 (212) 839-5300 - ----------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 4, 1998 - ----------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13D to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 15 Pages) _____________ *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP NO. 404160103 PAGE 1 OF 1 PAGES --------- ----- -----
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Anthony J. Fant 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS* PF, OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / / PURSUANT TO ITEMS 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States NUMBER OF 7 SOLE VOTING POWER SHARES 594,900 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY -0- EACH 9 SOLE DISPOSITIVE POWER REPORTING 594,900 PERSON 10 SHARED DISPOSITIVE POWER WITH -0- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 594,900 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.6% 14 TYPE OF REPORTING PERSON* IN
*SEE INSTRUCTION BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION SCHEDULE 13D ITEM 1. SECURITY AND ISSUER This schedule relates to the common stock, par value $.05 per share ("Shares"), of HEI, Inc. a Minnesota corporation (the "Issuer"). The address of the principal executive office of the Issuer is P.O. Box 5000, 1495 Steiger Lake Lane, Victoria, MN 55386. ITEM 2. IDENTITY AND BACKGROUND (a)-(f) This Schedule 13D is being filed by Anthony J. Fant pursuant to Rule 13d-1(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Mr. Fant's business address is 2154 Highland Avenue, Birmingham, AL 35205. Mr. Fant's present principal employment is President and Chief Executive Officer of Fant Broadcasting Company Inc. and affiliated entities engaged in television and radio broadcasting and other diversified businesses. Mr. Fant has not, during the last five years, been convicted in a criminal proceeding and has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. Mr. Fant is a citizen of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Mr. Fant has purchased in the aggregate 594,900 Shares for cash in the amount of approximately $3,430,653, including brokerage commissions. Such Shares were purchased with personal funds and funds borrowed in a margin account. A copy of the form of margin agreement pertinent to this filing on Schedule 13D is attached hereto as Exhibit 1, and incorporated herein by reference. ITEM 4. PURPOSE OF TRANSACTION Mr. Fant acquired the Shares because he believed they were undervalued. Mr. Fant currently intends to seek to gain control of the Issuer in whatever manner and through whatever means he may determine to be most effective and most efficient. In seeking control of the Issuer, Mr. Fant does not wish to prejudice any third party proposal for any corporate transaction involving the Issuer. Mr. Fant currently anticipates that the most desirable means of gaining control of the Issuer will involve the replacement of some or all members of the Issuer's Board of Directors. Mr. Fant believes the existing Board of Directors has failed to take appropriate actions to realize the true value of the Issuer's business. If successful in gaining control of the Board, Mr. Fant will evaluate alternative courses of action with an overriding view toward maximizing shareholder value. Mr. Fant also intends to reform the manner in which stock compensation is paid to the Issuer's Board of Directors and senior management. Specifically, Mr. Fant plans to link stock compensation more closely to the Issuer's operating results and stock price performance, avoid the dilutive effects that the current practices can have on non-management shareholder value, and eliminate certain compensation arrangements that promote entrenchment of management. Mr. Fant has set forth these proposals in a letter to the Issuer's Board of Directors that was delivered earlier today, a copy of which is attached hereto as Exhibit 2 and incorporated in its entirety herein by reference. At present, Mr. Fant is not soliciting the support of fellow shareholders for any plans or proposals and will not do so except in compliance with applicable laws. Mr. Fant specifically reserves the right to continue to acquire securities of the Issuer from time to time in the open market or otherwise and to sell any securities of the Issuer at any time and from time to time in the open market or otherwise. In addition, subject to applicable laws, Mr. Fant specifically reserves the right as a shareholder of the Issuer to discuss with other shareholders of the Issuer matters that may be of common concern. Mr. Fant specifically has no present intention to pursue, nor would his purpose in seeking changes on the Issuer's Board of Directors be to effect, directly or indirectly, a business combination with the Issuer. No agreements, arrangements or understandings exist between Mr. Fant and third persons with respect to the foregoing. Except as set forth in this Item 4, Mr. Fant has no plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) Mr. Fant is the beneficial owner of 594,900 shares of Issuer Common Stock, or approximately 14.6% of Issuer Common Stock based on a total of 4,068,576 shares of Issuer Common Stock stated to be outstanding as of December 16, 1997 by Issuer in its Quarterly Report on Form 10-Q, which was filed with the Securities and Exchange Commission on January 13, 1998. (b) Mr. Fant has sole power to vote or direct the vote and dispose or direct the disposition of 594,900 shares of Issuer Common Stock. (c) Transactions in the Shares effected by Mr. Fant during the past sixty (60) days are described in Schedule A attached hereto and incorporated herein by reference. All such transactions were effected in the open market on the Nasdaq National Market, except as otherwise noted in Schedule A. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The Reporting Person does not have any contract, arrangement, understanding or relationship with any other person with respect to any security of Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit No. Description - ----------- ----------- 1 Form of margin agreement. 2 Letter from Mr. Fant to the Issuer's Board of Directors, dated February 17, 1998. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: February 17, 1998 By:/s/ Anthony J. Fant --------------------------------- Anthony J. Fant SCHEDULE A Schedule of Transactions in the Shares
No. of Shares Name Date Purchased Price Per Share/1/ - ---------------------------------------------------------------------------------------------------------- Anthony J. Fant 12/19/97 10,000 4.7500 12/22/97 2,100 4.6250 12/23/97 1,200 4.6875 12/23/97 3,000 4.6875 12/23/97 7,500 4.6875 12/23/97 10,000 4.6875 12/29/97 2,000 4.6250 12/29/97 3,000 4.6250 01/02/98 18,500 4.7500 01/16/98 10,000 5.0000 01/21/98 4,500 4.8750 01/27/98 10,000 4.8750 01/27/98 3,000 4.8750 02/04/98 6,000 4.8750 02/04/98 5,000 4.8750 02/04/98 5,000 4.8750 02/05/98 10,000 5.1875 02/05/98 8,000 5.1875 02/05/98 4,000 5.1250 02/05/98 2,500 5.0000 02/05/98 2,000 5.1875 02/06/98 40,000 5.3750 02/06/98 2,000 5.1875 02/09/98 25,000 5.5625 02/09/98 25,000 5.4375 02/09/98 10,000 5.8750 02/09/98 10,000 5.8125 02/09/98 2,000 5.3750 02/10/98 20,000 5.8750 02/11/98 15,000 5.8125 02/11/98 7,000 5.8125 02/12/98 20,000 6.7500 02/12/98 3,500 6.7500 02/12/98 1,000 6.6875 02/12/98 2,000 6.6875 02/12/98 2,000 6.6250 02/12/98 5,000 6.7500 02/12/98 25,000 6.6875 02/12/98 20,000 6.3125 02/13/98 2,000 6.6250 02/13/98 2,000 6.5000 02/13/98 10,000 6.5625 02/13/98 10,000 6.5625 02/13/98 25,000 7.1250 02/13/98 5,800 7.1250 02/17/98 30,000 7.4375 02/17/98 30,000 7.5625
- ------------------------- /1/ Does not include brokerage commission. EX-1 2 EXHIBIT 1 SECURITIES ACCOUNT MARGIN AGREEMENT CONSENT TO LOAN OF SECURITIES: In consideration of the acceptance by J.C. Bradford & Co. ("Bradford") of the account(s) in which the undersigned applicants(s) (all such signatories hereto, whether acting in their individual or representative capacities, are referred to in this Agreement as "you") have an interest, alone or with others, which you have opened or open in the future, with Bradford for the purchase and sale of securities, or commodities you agree as follows: 1. RULES AND REGULATIONS: All transactions for your account shall be subject to the then applicable constitution, rules, regulations, customs and usages of the exchange or market and its clearing house, if any, where executed by Bradford or its agents; and, where applicable, the Securities Exchange Act of 1934, as amended; the Commodity Exchange Act, as amended; the rules and regulations of the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System and the Commodity Futures Trading Commission. 2. WAIVER: You agree that no provision of this Agreement shall be waived, altered, modified or amended unless committed to in writing and signed by a partner of Bradford. No waiver of any provision of this Agreement shall be deemed a waiver of any other provision, nor a continuing waiver of the provision(s) so waived. 3. SEVERABILITY: If any provision of this Agreement is held to be invalid, void or unenforceable by reason of any law, rule, administrative order or judicial decision, that determination shall not affect the validity of the remaining provisions of this Agreement. 4. SECURITY INTEREST: All monies, securities, commodities or contracts relating thereto and all other property in any account in which you have an interest (held either individually, jointly or otherwise) or which may at any time be in Bradford's possession for any purpose, including safekeeping, shall be subject to a general lien for the discharge of all obligations you may have to Bradford, however and whenever arising. All securities and other property shall be held by Bradford as security for the payment of all such obligations or indebtedness in any account in which you may have an interest. 5. LOAN OR PLEDGE OF SECURITIES: All monies, securities and commodities or contracts relating thereto and all other property which Bradford may at any time be carrying for you or in which you may have an interest, may from time to time and without notice be carried in Bradford's general loans and may be pledged, repledged, hypothecated or rehypothecated, separately or in common with other securities or any other property for the sum due Bradford thereon or for a greater sum without retaining in Bradford's possession and control for delivery a like amount of similar securities or commodities. Subject to applicable law, Bradford, without notice to you, may apply and/or transfer any or all monies, securities, commodities or contracts relating thereto and all other property interchangeably between accounts or to accounts in which you have an interest or which are guaranteed by you (except regulated commodity accounts). Bradford is hereby specifically authorized to transfer to your cash account on settlement day any excess funds available in any of your other accounts, including but not limited to any free balances in any margin account, sufficient to make full payment of cash purchases. You agree that any debit occurring in any of your accounts may be transferred at Bradford's option to your margin account. You hereby authorize Bradford, from time to time, to lend, separately or together with property of others, to itself or others, any property it may be carrying for you on margin. This authorization shall apply to all accounts for you. 6. INTEREST CHARGES: Debit balances in your accounts shall be charged interest or service charges in accordance with Bradford's policies and at prevailing rates determined by Bradford. 7. LIQUIDATION: You understand that, notwithstanding a general policy of giving customers notice of a margin deficiency, Bradford is not obligated to request additional margin from you in the event your account falls below minimum maintenance requirements. More importantly, there may be circumstances where Bradford will liquidate securities and/or other property in the account without notice to you to ensure that minimum maintenance requirements are satisfied. Bradford shall have the right in accordance with its general policies regarding margin maintenance requirements to require additional collateral or the liquidation of any securities and other property whenever in its discretion it considers it necessary for its protection, including in the event of, but not limited to: Your failure to promptly meet any call for additional collateral; the filing of a petition in bankruptcy by or against you; the appointment of a receiver is filed by or against you; an attachment is levied against any account in which you have an interest or; your death. In such event, Bradford is authorized to sell any and all securities and other property in any account of yours, whether carried individually or jointly with others, to buy all securities or other property which may be short in such Account(s), to cancel any open orders and to close any or all outstanding contracts, all without demand for margin or additional margin, other notice of sale or purchase, or other notice of advertisement each of which is expressly waived by you. Any such sales or purchases may be made at Bradford's discretion on any exchange or other market where such business is usually transacted or at public auction or private sale, and Bradford may be the purchaser for its own account. It is understood a prior demand, or call, or prior notice of the time and place of such sale or purchase shall not be considered a waiver of Bradford's right to sell or buy without demand or notice as herein provided. 8. MARGIN: You will at all times maintain positions and margins in your accounts as Bradford, in its discretion, may from time to time require and will pay on demand any debit balance owing with respect to such accounts. 9. GOVERNING LAW: This agreement shall be governed by the laws of the State of New York, and shall inure to Bradford's successors and assigns, and shall be binding on you, your heirs, executors, administrators and assigns. 10. ARBITRATION DISCLOSURES: - ARBITRATION IS FINAL AND BINDING ON THE PARTIES. - THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL. - PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT PROCEEDINGS. - THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED. - THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY. 11. ARBITRATION: I AGREE, AND BY CARRYING AN ACCOUNT FOR ME, BRADFORD AGREES, THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN US CONCERNING ANY TRANSACTION WHETHER CONSTRUCTION, PERFORMANCE OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN US, WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT TO THE DATE HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS AGREEMENT SHALL BE GOVERNED BY THE ARBITRATION AND SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, BEFORE THE NEW YORK STOCK EXCHANGE, INC. OR AN ARBITRATION FACILITY PROVIDED BY ANY OTHER EXCHANGE OF WHICH BRADFORD IS A MEMBER, OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. AND IN ACCORDANCE WITH THE ARBITRATION RULES PERTAINING TO THE SELECTED ORGANIZATION. I MAY ELECT IN THE FIRST INSTANCE WHETHER ARBITRATION SHALL BE BY AN EXCHANGE OR SELF-REGULATORY ORGANIZATION OF WHICH THE BROKER IS A MEMBER, BUT IF I FAIL TO MAKE SUCH ELECTION BY REGISTERED LETTER OR TELEGRAM ADDRESSED TO BRADFORD AT ITS MAIN OFFICE, BEFORE THE EXPIRATION OF FIVE (5) DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM BRADFORD TO MAKE SUCH ELECTION, THEN BRADFORD SHALL MAKE SUCH ELECTION. THE AWARD OF THE ARBITRATORS, OR OF THE MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION. 12. SALE ORDERS/DELIVERIES: You agree that when placing a sell order, all "short" sale orders shall be designated as "short" and all "long" sale orders shall be designated as "long". You represent that any sell order which you designate as "long" shall be for securities then owned by you and if such securities are not then deliverable from your account, that you will deliver them on or before settlement date. In the case of the sale of any security, commodity or other property by Bradford at your direction, Bradford's inability to deliver the same to the purchaser by reason of your failure to supply Bradford therewith, you authorize Bradford to borrow such security, commodity or other property necessary to make delivery thereof and you agree to be responsible for any loss which Bradford may sustain thereby and any premiums which it may be required to pay thereon and for any additional loss which it may sustain by reason of its inability to borrow the security, commodity or other property sold on your behalf. 13. BROKER: You understand that in all transactions between you and Bradford, Bradford shall be acting as broker for you except when Bradford discloses to you that, with respect to such transaction, it is acting as dealers for its account or as broker for some other person. 14. COMMUNICATIONS: Confirmations of transactions and statements of your account shall be conclusive if not objected to in writing to Bradford within 5 days and 10 days respectively after transmitted to you by mail or otherwise. Communications may be sent to you at the address shown on Bradford's records for your account or at such other address as you may hereafter provide to Bradford in writing. All communications sent, whether by mail, telegraph, messenger or otherwise will be deemed given, whether actually received or not. 15. REPRESENTATIONS: You represent that you are of legal age, are not an employee or member of any exchange or a member firm or any corporation of which any exchange owns a majority interest or the NASD or of a bank, trust company, insurance company or other employer engaged in the business of a broker-dealer and that you will promptly notify Bradford if you become so employed. You further represent that, unless otherwise disclosed to Bradford in writing, no one except you has an interest in the account or accounts maintained with Bradford in your name. 16. AGREEMENT CONTAINS ENTIRE UNDERSTANDING/ASSIGNMENT: This Agreement contains the entire understanding between you and Bradford concerning the subject matter of this Agreement. You may not assign the rights and obligations hereunder without first obtaining the prior written consent of Bradford. BY SIGNING THIS AGREEMENT YOU ACKNOWLEDGE THAT: 1. THE SECURITIES IN YOUR MARGIN ACCOUNT MAY BE LOANED TO BRADFORD OR LOANED OUT TO OTHERS; AND 2. THAT YOU HAVE RECEIVED A COPY OF THIS AGREEMENT; AND 3. THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH 11. MARGIN INTEREST RATES We are furnishing the following information in order that you may be informed of the terms and conditions governing our charges for credit extended to or maintained for you. 1. CASH ACCOUNTS: Generally, interest is not charged on debit balances in cash accounts, unless there is also a margin debit balance in your account, in which case interest is charged on the total debit balance. However, interest may also be charged on cash account debit balances in unusual circumstances, such as: a prepayment (payment prior to settlement date) of the proceeds of a sale, in which case there would be interest charged for the number of days of early payment; a late payment (after settlement date) for securities purchased; or a debit balance arising from a sell-out or buy-in following a customer's failure to pay for securities purchased or to deliver securities sold. 2. RATE: The annual rate of charge will be determined in accordance with the following: AVERAGE DEBIT BALANCE MAXIMUM CREDIT RATE Less than $25,000 Base Rate + 1.75% $ 25,000 - $ 49,999 Base Rate + 1.50% $ 50,000 - $ 99,999 Base Rate + 1.00% $100,000 - $499,999 Base Rate + .50% Over $500,000 Base Rate + .25% Our Base Rate will generally be Prime Rate as quoted in the Wall Street Journal. When your interest rate is to be increased for any reason, other than to adjust to changes in the base rate, at least 30 days prior written notice will be given. 3. COMPUTATION OF CHARGES: As stated in our margin agreement, our margin accounts and related finance charges are governed by the laws of the State of New York. In computing credit charges, balances are calculated daily for all types of accounts of a customer, except credit balances in short accounts (Type 5). In computing credit charges, cash and margin (Type 1 & 2 Daily Balances) are netted against each other. Each net debit is added to obtain an aggregate debit for the period. This aggregate is multiplied times the interest rate and then divided by 360 days to obtain the interest charges. For those days that have a net credit, this net of cash and margin accounts is carried over and netted against other accounts carried for you (other than short accounts). The same method is then used (adding, multiplying by the rate and dividing by 360). If you sell short (or short against the box), and the market value of the security you sold increases above your selling price, the increase will be charged to your Margin Account (Type 2) with an offsetting credit to your Short Account (Type 5) and interest will be charged in the Margin Account on the increase. Conversely, interest is reduced by any decrease in market value. This is known as "Marking to the Market." Our interest is calculated and posted on the last business day of the month with the last day of the period being the previous day. Interest for December will similarly be calculated and posted on the last working day of the calendar year. To enable you to confirm the accuracy of the monthly interest charge as shown on your statement, the following information will be shown on the statement: the interest rate, the average balance, the beginning and ending dates of the interest period, and the ending debit balance. 4. COLLATERAL: Your Customer Agreement with us provides a lien on all securities which we hold for you to secure the discharge of all your obligations to us, and gives us the right at any time to require you to deposit such additional collateral as, in our sole discretion, we determine is necessary as security for your obligations to us. Without limiting our aforesaid discretionary authority, we have some general guidelines which may be changed or discontinued by us at any time. For instance, if your account should fall below 30% equity at any time, a call will be sent to you for additional cash or collateral to bring your equity up to 30%. We may also decline to extend credit on certain securities because of price, market conditions, concentration; etc., which we feel would be both to your interest and the Firm's to be on a fully paid basis. There may be times also when the firm is extending credit on particular securities, but due to market or other conditions may feel it necessary to call on you for sufficient cash or collateral in the order to make that security fully paid for. EX-2 3 EXHIBIT 2 Anthony J. Fant 2154 Highland Avenue Birmingham, Alabama 35205 February 17, 1998 To the Board of Directors c/o Mr. Eugene W. Courtney HEI, Inc. 1495 Steiger Lake Lane Victoria, Minnesota 55386 Gentlemen: I am filing today with the Securities and Exchange Commission a Schedule 13D relating to my beneficial ownership of the Common Stock of HEI, Inc. (the "Company"). In the Schedule 13D, I disclose my intent to seek to gain control of the Company's Board of Directors. I have purchased 594,900 shares (approximately 14.6%) of the Company's outstanding Common Stock based on my belief that the stock has been undervalued. When I began acquiring shares in December, 1997, the price was $4.50, which I consider to be the stock's undisturbed price. I have noted a marked decline in the Company's operating results and stock price since early 1997 and believe that the Board of Directors has failed to take appropriate actions to realize the Company's true value. Meanwhile, the directors and top management have continued to reward themselves with stock compensation that bears no relationship to operating results or the stock price and is on terms more favorable than those made available to non-management employees. Upon gaining control, I intend to evaluate a number of constructive alternatives with a view toward maximizing value for all shareholders. I also intend to reform the manner in which stock compensation is paid to directors and top executives. Specifically, I plan to link stock compensation more closely to the Company's operating results and stock price performance, avoid the dilutive effects that current practices can have on non-management shareholder value, and eliminate certain compensation arrangements that promote entrenchment of management. As the Company's single largest shareholder, I trust that you will respect my interest in leading an honest dialogue concerning the Company's future direction. Additionally, as I continue taking steps to gain control, I will expect you to recognize and fulfill your fiduciary duties to all shareholders and to refrain from taking any action that may adversely affect our rights as shareholders or impede the maximization of shareholder value. Please recognize that any additional entrenchment-motivated actions you might take would result in signficant costs to the Company and would reduce value for all shareholders. Very truly yours, /s/ Anthony J. Fant ---------------------------- Anthony J. Fant -----END PRIVACY-ENHANCED MESSAGE-----