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{ } Soliciting Material Pursuant to Section 240.14a-11 or Section 240.14a-12
HEI, Inc.
(Name of Registrant as Specified In Its Charter)
FANT INDUSTRIES INC.
(Name of Person(s) Filing Proxy Statement)
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FANT INDUSTRIES INC.
2154 Highland Avenue
Birmingham, Alabama 35205
June 5, 1998
[address]
Dear [ ]:
In response to our demand - and some persistent urging - to hold a
special meeting of the shareholders of HEI, Inc. to replace the current HEI
Board of Directors with our nominees and remove obstacles to our $8.00 per share
cash tender offer, the Board has called the meeting for August 4, 1998. Holders
of record as of June 9, 1998 will be eligible to vote. Please notify your
clients to return the GREEN proxy cards as soon as possible.
As you know, we had urged the Board to hold the special meeting in
early June. Predictably, they chose instead to continue down the
entrenchment-motivated path of delay, calling the meeting for the last
permissible date. Once again, they have delayed the immediate cash value and
change in leadership that a majority of shareholders support.
Apart from the meeting date, I am pleased to announce to you today two
very positive developments.
AN ADDITIONAL DIRECTOR NOMINEE
First, I would like to announce the addition of Mack Traynor to our
slate of nominees. Mack, who resides in Shorewood, Minnesota, is a director of
Telident, Inc., a publicly-held telecommunications products and services
company, and Eltrax Systems, Inc., a publicly-held networking products and
managed services company. Mack has served as an executive officer with US West
Enterprises, Military Communications Center, Inc. and Eltrax. Mack will join
David Ortlieb, Ed Finch, Steve Tondera and me if Eugene Courtney chooses not to
continue to serve as a director. We continue to invite Mr. Courtney to remain on
the Board, and if he chooses to stay on, we will seek to add Mack, through
expansion, in the near future.
OUR PROPOSAL FOR DIRECTOR COMPENSATION REFORM
Second, I am pleased to announce for the first time specifically how we
propose to reform the Company's existing director stock compensation system,
which has rewarded the Board and senior management in the face of poor operating
results and stock market performance, including the dramatic decline of the
stock price during 1997. If elected as directors, our first action will be to
initiate the adoption of a highly incentive-based director compensation plan
under which each director will be granted stock options exercisable at the
current stock price ($6 1/6 as of the close on June 2, 1998), BUT NONE OF THESE
OPTIONS WILL BE EXERCISABLE UNLESS AND UNTIL HEI'S STOCK PRICE REACHES $25.00
PER SHARE WITHIN 5 YEARS. This is how WE believe an incentive plan should work.
No longer will HEI directors be able to reward themselves in the face of poor
operating performance and poor shareholder return. Under our plan, directors
will be rewarded if, and only if, the shareholders have been rewarded first.
I thank you for your support as we continue our proxy solicitation
efforts and work towards completing the tender offer. PLEASE NOTIFY YOUR CLIENTS
TO RETURN THE GREEN PROXY CARDS AS SOON AS POSSIBLE. If you have any questions
on the voting procedures, please contact Richard Grubaugh of Beacon Hill
Partners at (800) 755-5001.
Sincerely yours,
Anthony J. Fant
FANT INDUSTRIES INC.
