SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TSI Incorporated
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SOLICITATION OF PROXIES
1999 ANNUAL MEETING OF SHAREHOLDERS
OF
TSI INCORPORATED
SUPPLEMENT OF JULY 12, 1999 TO PROXY STATEMENT
OF
TSI INCORPORATED
This supplements the proxy statement sent to the stockholders of TSI
Incorporated ("TSI") on July 2, 1999, by TSI. TSI is soliciting proxies from its
stockholders to be voted at the Annual Meeting of Stockholders of TSI, which is
to be held at TSI's corporate offices, 500 Cardigan Road, Shoreview, Minnesota
55126, at 9:30 a.m., Central Daylight Time, on Thursday, July 22, 1999,
including adjournments or postponements, continuations or reschedulings thereof.
This Supplement and a WHITE proxy card are being sent to TSI's stockholders on
or about July 16, 1999.
SUPPLEMENTAL INFORMATION
VOTING REQUIREMENT FOR EQUAL VOTING RIGHTS PROPOSAL (PROPOSAL THREE ON THE WHITE
PROXY CARD)
Due to a recent amendment to the Minnesota Control Share Acquisition Act,
Minn. Stat. 302A.671 (the "Act"), adoption of the Equal Voting Rights Proposal
to "opt out" of the Act will require both (1) the affirmative vote of the
holders of a majority of the voting power of all shares of outstanding common
stock entitled to vote, and (2) the affirmative vote of the holders of a
majority of the voting power of all shares of outstanding common stock entitled
to vote, excluding all "interested shares" (in this case meaning the shares of
common stock owned by John J. Fauth or the JJF Group, by any officer of TSI or
by any member of the Board who is employed by TSI). The amendment to the Act
means that adoption of the Equal Voting Rights Proposal will require approval of
50.1% of the outstanding shares of TSI, rather than a majority of the shares
present or represented by proxy at the Annual Meeting.
<PAGE>
TSI Incorporated
500 Cardigan Road
P.O. Box 64394
St. Paul, MN 55164-0394
[LOGO]==========================================================================
July 16, 1999
Dear Fellow Stockholder:
On July 15, 1999, your Board of Directors met with representatives of our
investment banking firm William Blair & Company and our counsel to consider John
J. Fauth's revised $14.00 offer to purchase your shares. At this meeting your
Board was unanimous in its decision to reject Fauth's offer. The Board believes
it is not in the best interest of TSI or its stockholders, it is highly
contingent and there are no assurances that financing would be available to
carry it out.
DO NOT TENDER YOUR SHARES TO FAUTH! WE HAVE INSTRUCTED OUR INVESTMENT BANKERS TO
SEEK ALTERNATIVES, INCLUDING OTHER OFFERS.
Let me explain some of our reasoning as to why we determined that Fauth's offer
should be rejected.
o TSI's Board believes it can obtain a more attractive offer. We have
instructed our investment banker to explore strategic alternatives,
including seeking offers of greater value and undertaking further
discussions with Fauth and his representatives.
o Among other things, the offer is contingent upon stockholders at the Annual
Meeting approving Fauth's proposals, which would waive several hostile
takeover provisions. The Board believes that the removal of these
provisions would strip the Board of its ability to control the acquisition
process in order to obtain the maximum price for TSI's stockholders. As a
result of your Board's firm rejection of the $12.50 proposal and earlier
proposal at an even lower price, Mr. Fauth has raised his price to $14.00
per share and commenced a tender offer. These provisions work to benefit
stockholders!
o We believe Fauth's financing package is incomplete and highly contingent.
Even if he can obtain the financing, your Board believes that a highly
leveraged acquisition of TSI by Fauth would have significant adverse
effects on the Company's relationships with its employees, customers,
suppliers and other constituencies.
o TSI's Board continues working on its goal of maximizing stockholder value.
We just came off a record first quarter posting increases in sales and
earnings of 28% and 108%, respectively. Further proof that TSI's growth
strategy of internal development and acquisitions is working. In our
opinion, TSI has excellent short and long-term prospects!
VOTE THE WHITE PROXY CARD TO ALLOW YOUR BOARD TO CONTINUE WORKING TO MAXIMIZE
STOCKHOLDER VALUE
Consider that after your Board rejected his $12.50 per share proposal, which he
termed "attractive," Fauth purchased 357,000 shares in a private transaction at
a price of $13.50 per share. This represented an 8% premium over what he was
offering to pay to all stockholders. It has been your Board's firm rejection of
his prior inadequate offers that has demonstrated what we believe all our
stockholders already know - TSI stock has been severely undervalued in the
recent past!
<PAGE>
If Fauth's current tender offer at $14.00 per share is successful, our efforts
to further increase stockholder value will be limited. Your Board believe its'
efforts will be a much better avenue to maximize stockholder value.
YOUR BOARD'S GOAL IS TO SEE TSI FULLY VALUED
Support your current Board by signing, dating and mailing the WHITE PROXY CARD.
Discard Fauth's green proxy card and DO NOT TENDER YOUR SHARES. Time is running
short and it is very important that you vote today, regardless of the number of
shares you own.
Thank you for your continued trust and support.
On behalf of your Board of Directors,
/s/ James E. Doubles
James E. Doubles
Chairman, President and
Chief Executive Officer
- --------------------------------------------------------------------------------
IMPORTANT
Regardless of the number of shares of TSI Incorporated you own, your vote is
important. Please vote FOR management's nominees by signing, dating and mailing
the enclosed
WHITE PROXY CARD.
Do not tender your shares to Fauth and do not vote the green card. If you have
done either, you can change your mind. To change your proxy vote, simply sign
and return a later dated WHITE PROXY CARD. You may withdraw any tender you
instructed previously by sending written notice to the Depositary of the offer.
Call our proxy solicitor at the toll-free number below to ensure that your
withdrawal is submitted timely and in correct form.
If you own your shares in the name of a brokerage firm, your shares will not be
voted unless you give your broker specific instructions. So please sign, date
and mail the enclosed WHITE PROXY CARD in the postage paid envelope provided. If
you prefer, you may fax your card to our proxy solicitor at the number below.
Corporate Investor Communications, Inc.
Toll free: (877) 460-9337
Fax: (201) 804-8693
- --------------------------------------------------------------------------------
MAKE THE RIGHT CHOICE
VOTE THE WHITE PROXY CARD AND DO NOT TENDER YOUR SHARES
<PAGE>
EXCERPTS FROM TSI INCORPORATED SCHEDULE 14D-9
This document contains excerpts from TSI Incorporated Schedule 14D-9;
Solicitation/Recommendation pursuant to Section 14(d)(4) of the Securities Act
of 1934 regarding the $14.00 per share tender offer of John J. Fauth, JJF
Acquisition, Inc. and JJF Group, Inc., all located at 3100 Metropolitan Centre
333 South Seventh Street, Minneapolis, Minnesota 55402, to purchase a minimum of
50.1%, on a fully diluted basis, of the outstanding common stock, $.10 par
value, of TSI Incorporated, a Minnesota corporation, with its principal office
at 500 Cardigan Road, Shoreview, Minnesota 55126.
On July 15, 1999, the Company's Board met with representatives of William
Blair & Company and the Company's counsel to consider the Fauth Offer. At this
special meeting, the Company's Board of Directors unanimously determined to
reject the Fauth Offer, based upon the Board's determination that the offer is
not in the best interest of the Company and its stockholders. The Board
considered the Fauth Offer to be highly contingent and without adequate
assurances that financing would be available to carry it out. In addition, the
Board concluded that acceptance of the Fauth Offer and the Fauth proxy proposals
would make it extremely difficult for the Company to seek out alternative
transactions at a greater value.
Accordingly, based upon its deliberations over the past six months, as
summarized above, the Board of Directors unanimously recommends that the
Company's stockholders reject the offer and not tender their shares. In reaching
its determinations and recommendations described above, the Board of Directors
considered a number of factors, including the following:
1. The numerous contingencies contained in the Fauth Offer, including many
that are within Fauth's exclusive control. Other contingencies would require the
shareholders at the Annual Meeting to waive anti-takeover provisions which have
been in effect for Minnesota public corporations since the mid-1980's. The Board
believes that these and other actions to be presented by Fauth at the Annual
Meeting would strip the Board of its ability to control the acquisition process
and obtain the maximum price for the Company's stockholders. In the last month
alone, as a result of your Board's firm rejection of the $12.50 proposal, Mr.
Fauth has raised his tender offer to $14.00 per share.
2. The extremely vague and incomplete financing package set forth in the
tender offer.
3. The Company's business, assets, financial condition and future
prospects, strategic direction of the Company's business, current conditions in
the instrumentation industry, and the historical and current market prices for
the Company's Shares.
4. The Company's carefully structured long-term plan of independent growth
through internal expansion and selective, strategic, negotiated acquisitions.
5. The financial advice of the Company's independent financial advisor,
William Blair & Company. This financial advice included extensive stock market
information, discussion of possible future prices for the Company's Shares if
the Company's plans are achieved, and discussion of other companies which have
expressed an interest in the Company.
6. The opinion of the Company's management that the terms of the Fauth
Offer are inadequate based on its knowledge of the Company's business, its views
as to the long-term financial plan and future prospects of the Company, the
Company's long-term research and development efforts, and the Company's recent
acquisitions, including Environmental Systems Corporation.
7. Fauth's background and the companies he had previously acquired.
8. The Board of Directors belief that the highly leveraged acquisition of
the Company by Fauth, as contemplated by the Fauth Offer, would have a
significantly adverse effect on the Company's relationships with its employees,
customers, suppliers and other constituencies.
The Company's Board also authorized William Blair to continue its efforts
to explore strategic alternatives, including seeking offers of greater value and
undertaking further discussions with Fauth and his representatives.
The following transactions in shares of the Company's common stock have
been effected during the past 60 days by the Company or any executive officer,
director, affiliate or subsidiary of the Company:
o On July 13, 1999, Kenneth J. Roering, a director of the Company, acquired
3,000 Shares at $8.00 per share for a total of $24,000 upon the exercise of
stock options;
o On July 15, 1999, Lawrence J. Whalen, a director of the Company, acquired
3,000 Shares at $8.00 per share for a total of $24,000 upon the exercise of
stock options;
o On July 15, 1999, Donald M. Sullivan, a director of the Company, acquired
3,000 Shares at $8.00 per share for a total of $24,000 upon the exercise of
stock options;
o During the period May 28, 1998 through May 27, 1999, a total of 68,189
Shares were purchased under the Employee Stock Purchase Plan of 1994 (the
"1994 Plan") at a price per share of $7.04 (85% of fair market value of
$10.875). The number of employees participating during the period under the
1994 Plan is 163.
o During the period commencing June 22, 1999, and ending June 21, 2000, a
total of 120,000 Shares have been elected for purchase under the 1994 Plan
at initial price per share of $9.56 per share (85% of fair market value of
$11.25). The number of employees participating during this period under the
1994 Plan is 289, including James E. Doubles and Robert F. Gallagher,
executive officers of the Company.
To the best of the Company's knowledge, none of its executive officers,
directors, affiliates or subsidiaries presently intends to tender into the Fauth
Offer any Shares which are held of record or beneficially owned by such persons.
The Company, directly or through William Blair, is engaged in preliminary
exploratory discussions with a number of companies concerning a possible
business combination. The Company also is discussing the sale of one of its
subsidiaries. William Blair also is assisting the Company as described in Item 5
above in exploring options for enhancing stockholder value. Except for the
foregoing activities, no negotiation is underway or is being undertaken by the
Company in response to the Fauth Offer which relates to or would result in (1)
an extraordinary transaction, such as a merger or reorganization, involving the
Company or any of its subsidiaries; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries; (3) a
tender offer for or other acquisition of securities by or of the Company; or (4)
any material change in the present capitalization or dividend policy of the
Company.
Please see the Company's Proxy Statement dated July 2, 1999, for additional
information.
