##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Amendment No. 1 to
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended September 1, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 0-10078
 
 HEI, Inc.
 (Exact name of registrant as specified in its Charter)
 Minnesota(State or other jurisdiction of 
incorporation or organization)
    
    41-0944876(I.R.S. Employer
Identification No.)P.O. Box 5000,1495 Steiger Lake Lane,Victoria, MN(Address of principal executive offices)
    
    55386(Zip Code)
 Registrants telephone number, including area code:
 (952) 443-2500
 Securities registered pursuant to Section 12(b) of the Act:
 Common Stock, Par Value $.05 Per Share
    
    NASDAQ Capital Market(Title of Each Class)
    
    (Name of Each Exchange on WhichRegistered)
 Securities registered pursuant to Section 12(g) of the Act:
 None
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ




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##### 



Explanatory Note
  
    
    Item 10 (Directors, Executive Officers and Corporate Governance),
    
    Item 11 (Executive Compensation),
    
    Item 12 (Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters),
    
    Item 13 (Certain Relationships and Related Transactions, and Director Independence),
    
    Item 14 (Principal Accountant Fees and Services),
    
    Item 15 (Exhibits and Financial Statement Schedules) and
    
    Exhibit 23 (Consent of Independent Registered Public Accounting Firm).
  TABLE OF CONTENTS
 PagePART IIIITEM 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    3ITEM 11.
    
    Executive Compensation
    
    
    6ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    11ITEM 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    12ITEM 14.
    
    Principal Accountant Fees and Services
    
    
    13PART IVITEM 15.
    
    Exhibits and Financial Statement Schedules
    
    
    15Signatures
    
    
    20Consent of Virchow, Krause & Company, LLP302 Certifications of CEO and CFO906 Certifications of CEO and CFO
 Documents Incorporated By Reference






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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Directors
  Name
    
    Age
    
    PositionThomas F. Leahy
    
    
    65
    
    
    Chairman of the BoardRobert W. Heller
    
    
    61
    
    
    DirectorMichael J. Evers, Ph.D.
    
    
    72
    
    
    DirectorMark B. Thomas
    
    
    45
    
    
    Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and
DirectorTimothy F. Floeder
    
    
    49
    
    
    DirectorGeorge M. Heenan
    
    
    68
    
    
    Director
 Thomas F. Leahy
 Robert (Bob) W. Heller
 Michael J. Evers, Ph.D.
 3




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##### Table of Contents



Mark B. Thomas
 Timothy F. Floeder
  George M. Heenan,
  Meetings of the Board
  Audit Committee
  4




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##### Table of Contents



Compensation Committee
  Nominating and Corporate Governance Committee
 http://www.heii.com/investor.aspx
 Shareholder Communication with the Board
  5




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##### Table of Contents



Executive Officers
  Name
    
    Age
    
    PositionMark B. Thomas
    
    
    45
    
    
    Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and Director
 Mark B. Thomas
 Code of Business Conduct and Ethics
 http://www.heii.com/investor.aspx
 Section 16(a) Beneficial Ownership Reporting Compliance
   
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
   6




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##### Table of Contents



Elements of Compensation
  Base Salary
  Annual Management Bonus Program
  Long-Term Incentive Compensation
 Restricted Stock.
  
    
    restricted stock and the related vesting period help attract and retain executives;
    
    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
    
    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.
   Other Benefits
 Compensation Committee Report
   
 Compensation Committee Interlocks and Insider Participation
  Summary Compensation Table
  7




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##### Table of Contents



Non-EquityOption
    
    Incentive Plan
    
    All OtherName and Principal
    
    
    
    
    
    
    
    
    
    Bonus
    
    Awards
    
    Compensation
    
    CompensationPosition
    
    Year
    
    Salary ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    Total ($)Mark B. Thomas (1)
    
    
    2007
    
    
    
    195,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,577Chief Executive Officer and Chief
Financial OfficerScott M. Stole (2)
    
    
    2007
    
    
    
    137,534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    167,534Vice President- RFID DivisionMack V. Traynor, III (3)
    
    
    2007
    
    
    
    31,538
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145,000
    
    
    
    176,538Former Chief Executive Officer
 
 (1)
    
    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.(2)
    
    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.(3)
    
    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. Grants of Plan-Based Awards
  Grants of Plan-Based Awards
 All Other
    
    All Other OptionStock
    
    Awards:
    
    ExerciseEstimated Future Payouts
    
    Estimated Future Payouts
    
    Awards:
    
    Number of
    
    or Base
    
    Grant DateUnder Non-Equity Incentive
    
    Under Equity Incentive Plan
    
    Number of
    
    Securities
    
    Price of
    
    Fair ValuePlan Awards
    
    Awards
    
    Shares of
    
    Underlying
    
    Option
    
    of StockThreshold
    
    Target
    
    Maximum
    
    Threshold
    
    Target
    
    Maximum
    
    Stock or
    
    Options
    
    Awards
    
    and OptionName
    
    Grant Date
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    (#)
    
    (#)
    
    Units (#)
    
    (#)
    
    ($/Sh)
    
    AwardsMark B. Thomas
    
    
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0 Chief Executive
Officer and Chief
Financial OfficerScott M. Stole
    
    
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0 Vice President
 RFID DivisionMack V. Traynor, III
    
    
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0 Former Chief
Executive Officer
 8




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##### Table of Contents



Employment Contracts
  Equity Incentive Plans
 1998 Plan.
 1989 Plan.
  Directors Plan.
 2005 HEI, Inc. Employee Stock Purchase Plan.
 Change of Control.
 Outstanding Equity Awards
  9




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year-End Table
 Option Awards
    
    Stock AwardsEquityIncentiveEquity
    
    PlanIncentive
    
    Awards:Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan
    
    Market orIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards:
    
    PayoutPlan
    
    
    
    
    
    
    
    
    
    Number
    
    Market
    
    Number of
    
    Value ofAwards:
    
    
    
    
    
    
    
    
    
    of
    
    Value of
    
    Unearned
    
    UnearnedNumber of
    
    Number of
    
    Number of
    
    
    
    
    
    
    
    
    
    Shares
    
    Shares
    
    Shares or
    
    Shares orSecurities
    
    Securities
    
    Securities
    
    
    
    
    
    
    
    
    
    of Stock
    
    of Stock
    
    Other
    
    OtherUnderlying
    
    Underlying
    
    Underlying
    
    
    
    
    
    
    
    
    
    That
    
    That
    
    Rights
    
    RightsUnexercised
    
    Unexercised
    
    Unexercised
    
    Option
    
    
    
    
    
    Have
    
    Have
    
    That Have
    
    ThatOptions
    
    Options
    
    Unearned
    
    Exercise
    
    Option
    
    Not
    
    Not
    
    Not
    
    Have Not(#)
    
    (#)
    
    Options
    
    Price
    
    Expiration
    
    Vested
    
    Vested
    
    Vested
    
    VestedName
    
    Exercisable
    
    Unexercisable
    
    (#)
    
    ($)
    
    Date
    
    (#)
    
    ($)
    
    (#)
    
    ($)Mark B. Thomas 
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    $
    0
    
    
    
    0
    
    
    $
    0Chief Executive
Officer and Chief
Financial OfficerScott M. Stole
    
    
    50,500
    
    
    
    0
    
    
    
    0
    
    
    $
    8.85
    
    
    
    11/29/07
    
    
    
    0
    
    
    $
    0
    
    
    
    0
    
    
    $
    0Vice President 
RFID DivisionMack V. Traynor, III
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    $
    0
    
    
    
    0
    
    
    $
    0 Former Chief
Executive Officer
 Option Exercises and Shares Vested
  Option Exercises and Stock Vested
 Option Awards
    
    Stock AwardsNumber ofNumber of
    
    
    
    
    
    SharesShares Acquired
    
    Value Realized
    
    Acquired
    
    Value Realized onName and Principal Position
    
    on Exercise (#)
    
    on Exercise ($)
    
    on Vesting (#)
    
    Vesting ($)Mark B. Thomas 
    
    
    0
    
    
    
    
    
    
    
    0Chief Executive Officer and
Chief Financial OfficerScott M. Stole
    
    
    0
    
    
    
    
    
    
    
    750
    
    
    $
    1,1250Vice President  RFID DivisionMack V. Traynor, III 
    
    
    0
    
    
    
    
    
    
    
    0Former Chief Executive
Officer
 Pension Benefits
  Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
  10




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##### Table of Contents



Compensation of Directors
   Director Compensation Table
 FeesEarned
    
    Restrictedor Paid
    
    Stockin Cash
    
    Awards
    
    TotalName
    
    ($)
    
    ($)
    
    ($)Thomas Leahy
    
    $
    12,000
    
    
    $
    8,000
    
    
    $
    20,000Robert Heller
    
    
    12,000
    
    
    
    8,000
    
    
    
    20,000Michael Evers
    
    
    12,000
    
    
    
    8,000
    
    
    
    20,000Mark Thomas
    
    
    
    
    
    
    
    
    
    
    Timothy Floeder
    
    
    12,000
    
    
    
    8,000
    
    
    
    20,000George 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
   NumberName
    
    of Shares(1)
    PercentageMark 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
    
    
    
    9.3All current directors and executive officers as a
group(4 persons) (11)
    
    
    1,191,196
    
    
    
    12.4
    %
 11




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##### Table of Contents



(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
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
 Certain Relationships and Related Transactions
  12




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Director Independence
   
 Item 14. Principal Accountant Fees and Services
  Audit Fees
  13




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Fiscal 2006
    
    
    Fiscal 2007Audit 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
  14




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##### Table of Contents



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 13.2
    
    Amended and Restated Bylaws of HEI, Inc.
    
    Note 13.3
    
    Amendments to the Amended and Restated Bylaws of HEI, Inc., effective
as of March 19, 2003
    
    Note 63.4
    
    Articles of Amendment of the Amended and Restated Articles of
Incorporation of HEI, Inc.
    
    Note 133.5
    
    Second Amended and Restated Bylaws of HEI, Inc.
    
    Note 144.1
    
    Certificate of Designation of Common Stock of HEI, Inc.
    
    Note 74.2
    
    Second Certificate of Designation of Common Stock of HEI, Inc.
    
    Note 154.3
    
    Certificate of Designation of Series A Convertible Preferred Stock of
HEI, Inc.
    
    Note 154.4
    
    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 610.12
    
    Accounts Receivable Agreement, dated May 29, 2003, by and between HEI,
Inc. and Beacon Bank.
    
    Note 510.14
    
    Promissory Note, dated October 14, 2003, by HEI, Inc. in favor of
Commerce Bank.
    
    Note 610.15
    
    Term Loan Agreement, dated October 14, 2003, by HEI, Inc. and Commerce
Bank.
    
    Note 610.16
    
    Combination Mortgage, Security Agreement, Assignment of Rents and
Fixture Financing Statement, dated October 14, 2003, by HEI, Inc. in
favor of Commerce Bank.
    
    Note 610.17
    
    Environmental Investigation Letter, dated October 14, 2003, by HEI,
Inc. in
    
    Note 6
 15




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##### Table of Contents



favor of Commerce Bank.10.18
    
    Promissory Note, dated October 28, 2003, by HEI, Inc. in favor of
Commerce Financial Group, Inc.
    
    Note 610.19
    
    Term Loan Agreement, dated October 28, 2003, by HEI, Inc. and Commerce
Financial Group, Inc.
    
    Note 610.20
    
    Commercial Security Agreement, dated October 28, 2003, by HEI, Inc. in
favor of Commerce Financial Group, Inc.
    
    Note 610.21
    
    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 610.22
    
    Environmental Investigation Letter, dated October 28, 2003, by HEI,
Inc. in favor of Commerce Financial Group, Inc.
    
    Note 610.24
    
    Amendment dated December 12, 2003, to Accounts Receivable Agreement,
dated May 29, 2003, by and among HEI, Inc. and Beacon Bank.
    
    Note 610.30
    
    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 1110.31
    
    Lease Agreement, dated October 1, 2004, by and between HEI, Inc. and
Boulder Investors LLC.
    
    Note 810.32
    
    Waiver and Amendment, dated November 30, 2004, and executed as of
December 3, 2004, by and between HEI, Inc. and Commerce Bank.
    
    Note 910.33
    
    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 910.34
    
    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 1010.36
    
    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 1710.37
    
    Consulting Agreement, dated January 12, 2005, between Emerging Capital
and HEI, Inc.
    
    Note 1210.39
    
    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 1810.40
    
    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 1810.41
    
    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 1810.42
    
    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




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##### Table of Contents



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 2210.47
    
    Form of Commercial Loan Agreement and Note dated as of April 18, 2006
by and between HEI, Inc. and Beacon Bank.
    
    Note 2310.48
    
    Waiver and Amendment dated as of May 27, 2006 by and between HEI, Inc.
and Commerce Bank.
    
    Note 2410.49
    
    Waiver and Amendment dated as of May 27, 2006 by and between HEI, Inc.
and Commerce Financial Group, Inc.
    
    Note 2410.50
    
    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 3021
    
    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




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##### Table of Contents



(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




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##### Table of Contents



(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




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##### Table of Contents



SIGNATURES
  HEI, INC.By:
    /s/ MARK B. THOMASMark B. ThomasChief Executive Officer, Chief Financial Officer,
Treasure and Secretary Principal Executive Officer
and Principal Financial Officer  20




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##### Table of Contents



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, LLP31.1
    
    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