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:
|X| Preliminary Proxy Statement |_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| 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>
TSI INCORPORATED
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
TSI INCORPORATED
-------------------------------------
To the Stockholders of TSI Incorporated:
PLEASE TAKE NOTICE that the Annual Meeting of stockholders of TSI Incorporated
will be held on Thursday, July 22, 1999, at 9:30 a.m., Central Daylight Time, at
500 Cardigan Road, Shoreview, Minnesota 55126 for the following purposes:
1. To elect three directors of TSI nominated by TSI.
2. To ratify the appointment of KPMG Peat Marwick LLP as the independent
auditors of TSI for the fiscal year ending March 31, 2000 which would
facilitate his efforts to purchase or sell TSI at less than it's true
value.
3. To consider all proposals presented by John J. Fauth or his
affiliates in their proxy statement dated June ___, 1999, which would
facilitate his efforts to purchase or sell TSI at less than its true
value.
4. To transact such other business as may properly come before the
meeting.
Accompanying this Notice are a Proxy, Proxy Statement and a copy of the
Company's Annual Report for the fiscal year ended March 31, 1999. Whether or not
you expect to be present at the meeting, please sign and date the white Proxy
and return it in the enclosed envelope provided for that purpose. The white
Proxy may be revoked at any time prior to the time that it is voted. Only
stockholders of record at the close of business on May 27, 1999, will be
entitled to vote at the meeting.
By Order of Your Board of Directors
/s/ Laura J. Cochrane
Laura J. Cochrane
Secretary
June __, 1999
<PAGE>
TSI INCORPORATED
500 CARDIGAN ROAD
SHOREVIEW, MINNESOTA 55126
ANNUAL MEETING OF STOCKHOLDERS
JULY 22, 1999
--------------------
PROXY STATEMENT
--------------------
GENERAL
The Annual Meeting of stockholders of TSI Incorporated will be held on
Thursday, July 22, 1999, at 9:30 a.m., Central Daylight Time, at TSI's
corporate offices, 500 Cardigan Road, Shoreview, Minnesota 55126, for the
purposes set forth in the Notice of Annual Meeting of Stockholders.
Your Board of Directors of TSI solicits the enclosed Proxy. Such
solicitation is being made by mail, and may also be made by directors, officers,
and regular employees of TSI personally or by telephone. Any Proxy given
pursuant to such solicitation may be revoked by the stockholder at any time
prior to the voting thereof by so notifying TSI in writing at the above
address, attention: Robert F. Gallagher, Vice President and Chief Financial
Officer, or by appearing in person at the meeting. Shares represented by Proxies
will be voted as specified in such Proxies, and if no choice is specified, will
be voted:
* FOR of your Board of Directors' nominees named in this Proxy
Statement (this is Proposal 1 on your white proxy card);
* FOR of ratifying the appointment of KPMG Peat Marwick LLP as the
independent auditors of TSI for the current fiscal year (this
is Proposal 2 on your white proxy card); and
* AGAINST all bylaw amendment proposals presented by John J. Fauth or
his affiliates in their proxy statement dated June ___, 1999. Voting
against these amendments will inhibit Mr. Fauth's efforts to buy or
sell TSI at less than its value (these are Proposals 3 through 8 on
your white proxy card).
Under TSI's Bylaws, at all stockholder meetings with a quorum present,
matters shall be decided by the vote of holders of a majority of our shares
present in person or by proxy and entitled to vote. Abstentions are not
counted as "for" or "against" votes, but are counted in the total number of
votes present and entitled to vote for passage of a proposal. This has the
effect of abstentions being treated as "no" votes. Broker nonvotes are not
considered shares entitled to vote, are not counted in the total number of
votes, and have no effect on the outcome of voting.
Common Stock, $.10 par value ("Common Stock"), of which there were 11,166,793
shares outstanding on the record date, constitutes the only class of outstanding
voting securities issued by TSI. Each stockholder will be entitled to
cast one vote in person or by proxy for each share of Common Stock held by the
stockholder. Only stockholders of record at the close of business on May 27,
1999, will be entitled to vote at the meeting.
All of the expenses involved in preparing, assembling and mailing this Proxy
Statement and the material enclosed herewith shall be paid by TSI. The
Company may reimburse banks, brokerage firms, and other custodians, nominees,
and fiduciaries for reasonable expenses incurred by them in sending proxy
material to beneficial owners of stock.
THIS PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY ARE BEING MAILED TO
STOCKHOLDERS ON OR ABOUT JUNE __, 1999.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
TSI's Articles of Incorporation establish the maximum number of
directors at nine and provide that the exact number of directors shall be
established by resolution by a majority of the entire Board of Directors. The
Board of Directors has adopted a resolution establishing the number of directors
at eight, effective as of the 1998 Annual Meeting. There are no vacancies on the
Board of Directors.
All directors of TSI serve for a term of three years or until their
successors are elected and qualified. The three-year terms are staggered. The
terms of office of Joseph C. Levesque and Donald M. Sullivan expire upon the
election of
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directors at the 2001 Annual Meeting of Stockholders; the terms of office of
Frank D. Dorman, Kenneth J. Roering, and Lawrence J. Whalen expire upon election
of directors at the 2000 Annual Meeting of Stockholders; and the terms of office
of John F. Carlson, Lowell D. Nystrom, and James E. Doubles expire upon the
election of directors at the 1999 Annual Meeting of Stockholders scheduled for
July 22, 1999. Further information about each of TSI's current directors is set
forth below.
Your Board of Directors recommends that MESSRS. CARLSON, NYSTROM, AND DOUBLES be
re-elected to serve as directors of TSI, each for a term expiring at the
Annual Meeting of Stockholders in 2002. Unless otherwise specified, proxies
solicited by your Board of Directors will be voted FOR the election of MESSRS.
CARLSON, NYSTROM, AND DOUBLES.
As you may be aware, John J. Fauth, the Chairman, President and Chief Executive
Officer of Churchill Industries, Inc., is planning to nominate himself and two
of his subordinate officers at Churchill in opposition to the nominees
recommended by your Board.
Since Mr. Fauth's two other nominees work for him at Churchill and apparently
own no shares of TSI. Whose interest do you think they will be looking out for?
Yours or his? We think there is a clear conflict of interest of Mr. Fauth's
announced intention to either buy TSI or have it sold to someone else. Please do
not vote for Mr. Fauth or his two hand-picked nominees to sit on your Board.
WE URGE YOU TO VOTE IN FAVOR OF THE ELECTION OF YOUR BOARD RECOMMENDED DIRECTOR
NOMINEES BY VOTING FOR PROPOSAL NO. 1 ON THE ENCLOSED WHITE PROXY CARD.
The election of each Board recommended nominee requires the affirmative vote of
the stockholders holding at least a majority of Common Stock voting in person or
by proxy at the Annual Meeting. Although your Board of Directors has no reason
to believe that Mr. Carlson, Mr. Nystrom, or Mr. Doubles will be unable to serve
as a director, if that contingency should occur, it is intended that the shares
represented by the proxies will be voted, in the absence of contrary indication,
for any substitute nominee designated by your Board of Directors, unless the
Board determines to reduce its size appropriately.
NAME, AGE,
AND POSITIONS DIRECTOR PRINCIPAL OCCUPATION AND TERM OF
WITH TSI SINCE CERTAIN OTHER DIRECTORSHIPS DIRECTOR*
- --------------------------------------------------------------------------------
John F. Carlson 1987 Chairman, Excorp Medical, Inc., a 2002
60, Director medical technology company. Mr. Carlson
was Chairman and CEO of Cray Research,
Inc. from 1993 to May 1995, and an
officer and director of Cray Research,
Inc., for more than five years through
May 1995. Mr. Carlson is a director of
Ancor Communications, Inc. and Ultradata
Corporation.
Frank D. Dorman 1961 Part-time employee of TSI and 2000
64, part-time employee Consultant to Biomedicus-Medtronics for
and a Director more than five years. Prior to February
1997, Mr. Dorman was a part-time
Scientist at the University of Minnesota
for more than five years.
James E. Doubles 1990 Chairman, President and CEO since July 2002
58, Chairman, President, 1998. President and Chief Executive Officer
Chief Executive Officer of TSI since July 1997, President and Chief
and a Director Operating Officer of TSI from
July 1992 until July 1997.
Joseph C. Levesque 1997 Chairman, President and Chief Executive 2001
54, Director Officer of Aetrium Incorporated for more
than five years. Aetrium Inc. is a
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manufacturer of electro-mechanical
devices for automatic testing and
handling processes in semiconductor
manufacturing.
Lowell D. Nystrom 1961 Senior Vice President of TSI 2002
63, Senior Vice President since December 1997; Vice President,
and a Director Treasurer and Chief Financial Officer of
TSI from 1961 to December 1997.
Kenneth J. Roering 1987 Paul S. Gerot Chair in Marketing, 2000
57, Director Professor of Marketing in the Carlson
School of Management at the University
of Minnesota for more than five years.
Mr. Roering is a director of Arctic Cat,
Inc., Sheldahl Inc., and Transport
Corporation of America.
Donald M. Sullivan 1977 Self-employed as director and 2001
63, Director consultant. Mr. Sullivan was Chairman of
MTS Systems Corporation, a manufacturer
of factory automation and testing
equipment, prior to January 1999, and
was President and Chief Executive
Officer of MTS Systems Corporation for
more than five years until March 1998.
Mr. Sullivan is a director of ADC
Telecommunications, Inc. and N. T.
International.
Lawrence J. Whalen 1983 Principal, Lawrence Whalen Associates, 2000
64, Director Management Consultant specializing in
medical products and high technology
businesses. Mr. Whalen was Chief
Executive Officer of Minneapolis
Children's Medical Center, a tertiary
care pediatric hospital, from March 1992
to June 1994.
- --------------------
*Assuming the Reelection or Election of your Board's Nominees
John F. Carlson and Donald M. Sullivan are members of your Board of Director's
Audit Committee. Kenneth J. Roering is an alternate member of the Audit
Committee. During fiscal 1999, this Committee met two times. The functions of
the Audit Committee include recommending to your Board of Directors, subject to
stockholder approval, the independent auditors; reviewing the results of the
annual audit; reviewing the adequacy of accounting and financial controls; and
instructing the auditors, as deemed appropriate, to undertake special
assignments.
James E. Doubles, Lawrence J. Whalen, and Joseph C. Levesque are members of the
Board of Director's Director Affairs Committee. Kenneth J. Roering is an
alternate member of the Director Affairs Committee. This newly formed Committee
did not meet in fiscal 1999. The functions of the Director Affairs Committee
include reviewing committee assignments and performance of Board members.
John F. Carlson, Joseph C. Levesque, Kenneth J. Roering, Donald M. Sullivan, and
Lawrence J. Whalen are members of the Committee of Outside Directors. During
fiscal 1999, this Committee met two times. The Committee of Outside Directors
reviews and recommends to your Board of Directors salaries and incentive
compensation plans for senior management. The Committee of Outside Directors
also administers TSI's Stock Option Plan of 1992 in which employee
directors participate.
During fiscal 1999, your Board of Directors of TSI met eight times.
During this period all directors attended 87% or more of the aggregate of the
total number of meetings of your Board of Directors and all committees of the
Board of Directors on which they served.
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PROPOSAL NO. 2
AUDITORS
Your Board of Directors has appointed KPMG Peat Marwick LLP, who served as
independent auditors of TSI for the fiscal year ended March 31, 1999, as
independent auditors of TSI for the fiscal year ending March 31, 2000, it being
intended that such appointment would be presented for ratification to the
stockholders. Your Board of Directors recommends that the stockholders vote in
favor of ratification of the appointment of KPMG Peat Marwick LLP by voting FOR
Proposal No. 2 on the enclosed white proxy card. The affirmative vote of
stockholders holding at least a majority of Common Stock voting in person or by
proxy at the Annual Meeting is necessary for approval. Unless otherwise
specified, proxies solicited by your Board of Directors will be voted FOR
ratification of the appointment of KPMG Peat Marwick LLP. A representative of
KPMG Peat Marwick LLP, who will have an opportunity to make a statement if he or
she so desires, will be present at the meeting and will be available to respond
to appropriate questions.
WE URGE YOU TO VOTE AGAINST THE JJF GROUP PROPOSALS
Your Board of Directors has been engaged in discussions with Mr. John J. Fauth
and his representatives for some time. They have carefully analyzed his two cash
proposals and rejected his offers as seriously undervaluing TSI, based upon the
Company's history, its growth plans, and the case of the second cash offer, a
preliminary analysis provided by TSI's investment banker, William Blair &
Company. Your Board intends to continue to retain control of the process to
protect and enhance shareholder value.
Mr. Fauth is upset with your Board of Directors because TSI rejected his offer
as inadequate. Subsequently, Mr. Fauth has initiated a proxy fight to wrest
control of TSI away from the current Board of Directors in order to facilitate a
quick sale to himself at a low price or to force an auction of TSI in the
immediate future. He stands to benefit personally from either course of action,
a sale to himself at an inadequate price or a quick sale to someone else at a
price in excess of his average purchase price of $9.07 per share for his current
stock.
In an attempt to facilitate his efforts, Mr. Fauth is also asking you to approve
a number of changes to TSI's bylaws. Rather than succumb to Mr. Fauth's attempt
to make a quick profit from the sale of TSI, we urge you to reject each and
every one of his proposals. We are aggressively pursuing our strategic plan to
enhance shareholder value. We have an attractive growth history with a compound
growth rate of 19% per year over our 31 years as a public company. We recently
acquired Environmental Systems Corporation which had $23 million in sales and
$1.9 million in after-tax profits during calendar 1998. We also consolidated two
under-performing divisions late in fiscal 1999, which are projected to be
profitable in fiscal 2000. These factors combined with growth in our core
businesses give us reason for optimism.
Current economic conditions make it possible for outside financial buyers to
purchase small cap companies (those in the $50-$250 million market
capitalization range), at prices which do not reflect the underlying values of
these companies. If the public market turns around and small cap companies
outperform larger companies, as has occurred in various periods, including
1991-94, the current stockholder loses out if TSI is sold now. The financial
buyers take such companies private, leverage the balance sheet with heavy debt
loads, cut long-term spending, such as research and development, and then, after
a few years, resell the companies at prices far in excess of their investment.
The current stockholders receive a premium over the current market price of the
stock, but they fail to realize the true value of TSI and give up its future
growth. The stockholders who have held the stock for a long period of time pay a
capital gain tax of up to ___%, depending on their state of residence, and have
only the after-tax proceeds to reinvest. The local community often loses the
corporate responsibility and charitable giving which TSI previously contributed,
and employees and managers with long histories with TSI are set adrift because
their contribution does not result in IMMEDIATE bottom line benefit to the
acquirer.
YOUR VOTE IS VERY IMPORTANT. NO MATTER HOW MANY SHARES YOU OWN, PLEASE COMPLETE,
SIGN, DATE AND MAIL (OR FAX BOTH SIDES OF) THE ENCLOSED WHITE PROXY CARD TO VOTE
* FOR OUR DIRECTOR NOMINEES (PROPOSAL 1 ON THE WHITE PROXY CARD)
* FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS OUR
INDEPENDENT AUDITORS (PROPOSAL 2 ON THE WHITE PROXY CARD);
* AGAINST ALL OF THE JJF GROUP PROPOSALS TO AMEND OUR BYLAWS
(PROPOSALS 3 THROUGH 8 ON THE WHITE PROXY CARD).
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Adoption of each of the bylaw amendment proposals presented by Mr. Fauth and his
affiliates (often referred to in this Proxy Statement as the "JJF Group
Proposals") in their proxy statement dated June ___, 1999, requires the
affirmative vote of the stockholders holding at least a majority of the Common
Stock voting in person or by proxy at the Annual Meeting, provided that at least
25% of the outstanding shares of Common Stock are voted for that proposal.
PROPOSAL NO. 3
JJF GROUP EQUAL VOTING RIGHTS PROPOSAL
TSI, like other Minnesota corporations, is subject to the Control Share
Acquisition Act which has been included in the Minnesota Business Corporation
Act since 1984. The law was enacted by the Minnesota Legislature in response to
the proliferation of abusive takeover activity in the 1980s and is intended to
provide information to TSI's stockholders and to enable your Board of Directors
to take a central role in protecting the company and its stockholders if an
unfriendly takeover is threatened. One of the requirements is to have our
stockholders approve these acquisitions. This Act protects TSI and other
Minnesota companies from hostile takeovers such as that proposed by Mr. Fauth by
requiring disclosures and a stockholder vote on the would-be acquiror's ability
to vote its shares over certain thresholds. Keeping the Control Share
Acquisition Act in place for our shares certainly is one way for the
stockholders to continue "to decide TSI's future" by exercising their
shareholder approval rights under the Act.
Mr. Fauth wants you to believe that continuing to have the Act apply to TSI will
cause you to lose out on opportunities to sell your shares at a premium price.
This is blatantly false. The truth is that Minnesota corporations are able to
engage in appropriate transactions that bring value to stockholders while
subject to the Act. If this were not the case, how has the Act would not have
survived for 15 years? Mr. Fauth wants to override the Control Share Acquisition
Act so that he can take over control of TSI without your approval or the
approval of our Board of Directors. It is nothing more than a self-serving
proposal and should be rejected.
WE URGE YOU TO VOTE AGAINST THE ADOPTION OF PROPOSAL 3 - JJF GROUP
EQUAL VOTING RIGHTS PROPOSAL ON THE ENCLOSED WHITE PROXY CARD.
PROPOSAL NO. 4
JJF GROUP DEFENSIVE ACTION PROPOSAL
Under most circumstances, our bylaws can be amended by the affirmative vote of a
majority of your Board of Directors or by the affirmative vote of stockholders
owning a majority of voting shares entitled to vote on such a matter. Mr. Fauth
would like to impose a super-majority voting requirement on your Board and the
stockholders in order to amend our bylaws to include so-called "defensive
actions" which would purportedly impede a change of control of TSI. This is bad
corporate governance. If an inadequate offer were made, your Board would be
limited in its ability to protect your interests. You and your Board of
Directors need the flexibility to take all appropriate action in light of
hostile takeover attempts, such as the one presented by Mr. Fauth. While we have
no present plans to adopt or propose for adoption a so-called "defensive
action," TSI should preserve the right to take such action if necessary in the
future without the need of obtaining a super-majority vote in favor of such
amendment. This is just another self-serving proposal by Mr. Fauth to further
his plans to seize control of TSI and you should reject it.
WE URGE YOU TO VOTE AGAINST THE ADOPTION OF PROPOSAL 4 - JJF GROUP
DEFENSIVE ACTION PROPOSAL ON THE ENCLOSED WHITE PROXY CARD
PROPOSAL NO. 5
JJF GROUP MEETING DATE PROPOSAL
For over 30 years we have held our annual meeting of stockholders not later than
July 25th. Our bylaws require us to hold our annual meeting in this time frame
and we intend to stick by this provision. Mr. Fauth is asking you to adopt a
proposal that would require that we hold the annual meeting for 2000 not later
than July 20, 2000 and that notice of such meeting will be given not later than
June 5, 2000. Given our long-standing track record and bylaw requirements, this
proposal is unnecessary and you should reject it. We
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would like the flexibility to select the date we first mail notice and the date
for the meeting, in compliance with our bylaws, without having to comply with
Mr. Fauth's unnecessary and artificial deadlines.
WE URGE YOU TO VOTE AGAINST THE ADOPTION OF PROPOSAL 5 - JJF GROUP
MEETING DATE PROPOSAL ON THE ENCLOSED WHITE PROXY CARD.
PROPOSAL NO. 6
JJF GROUP ENTRENCHMENT BYLAW REPEAL PROPOSAL
Our Board of Directors has not amended our bylaws since May 29, 1999. Your Board
of Directors is not considering any proposals to amend our bylaws at this time
or at any time before the 1999 Annual Meeting. Simply put, Mr. Fauth's proposal
to repeal bylaw amendments adopted by your Board since May 29, 1999, is bad
corporate governance, is unnecessary and should be rejected.
WE URGE YOU TO VOTE AGAINST THE ADOPTION OF PROPOSAL 6 - JJF GROUP
ENTRENCHMENT BYLAW REPEAL PROPOSAL ON THE ENCLOSED WHITE PROXY CARD
PROPOSAL NO. 7
JJF GROUP BYLAW AMENDMENT PROTECTION PROPOSAL
Mr. Fauth wants to prohibit your Board of Directors from amending or repealing
any provision of our bylaws adopted by the stockholders. Under current Minnesota
law and our bylaws, stockholders have the right to adopt, amend or repeal bylaws
adopted, amended or repealed by your Board. You do not need this amendment to
protect your rights to change our bylaws. Furthermore, sensible corporate
governance policies support your Board of Directors' ability to have the right
and flexibility to amend the bylaws without the need to obtain shareholder
approval for each and every amendment. Having to do so would be very costly and
in cases where timing is an issue, could be damaging. This is simply another
self-serving proposal which represents bad corporate governance and is designed
to assist Mr. Fauth's attempts to take over TSI and should be rejected.
WE URGE YOU TO VOTE AGAINST THE ADOPTION OF PROPOSAL 7 - JJF GROUP
BYLAW AMENDMENT PROTECTION PROPOSAL ON THE ENCLOSED WHITE PROXY CARD.
PROPOSAL NO. 8
JJF GROUP ANTI-POISON PILL PROPOSAL
Mr. Fauth wants to prohibit your Board of Directors from adopting a so-called
"poison pill" or "shareholder rights plan" which is an anti-takeover device that
can be used to prevent coercive and hostile takeover attempts such as Mr.
Fauth's present approach to acquiring TSI. While your Board has in the past
considered adopting such a plan, it has to date elected not to do so. If your
Board adopted a "poison pill," you would be entitled to purchase or receive one
or more of our shares or other securities if someone acquired a large block of
our shares or in the event certain other events designed to take over control of
TSI occurred. The effect of the poison pill is to dilute the share ownership of
the person acquiring us on a hostile basis and to discourage the hostile
takeover.
Mr. Fauth's proposal is designed to facilitate his efforts to acquire TSI on a
hostile basis. It also will prohibit your Board of Directors from adopting this
defensive measure at any time in the future without the approval of a majority
of stockholders. Here again Mr. Fauth is attempting to take away the ability of
your Board to protect your interests. Your Board of Directors need the
flexibility to deploy appropriate defensive strategies against hostile takeover
attempts without incurring the time, delay and expense of obtaining shareholder
approval for such strategies. It is simply bad corporate governance to prevent
your Board of Directors from successfully defending against hostile takeover
attempts in this fashion. You should reject this proposal.
WE URGE YOU TO VOTE AGAINST THE ADOPTION OF PROPOSAL 8 - JJF GROUP
ANTI-POISON PILL PROPOSAL ON THE ENCLOSED WHITE PROXY CARD.
SOLICITATION OF PROXIES
We have retained Corporate Investor Communications Co., Inc. ("CIC") to solicit
proxies pursuant to our Proxy Statement and to provide us with related advisory
services. In addition to the methods of solicitation described above under
"General" we may use advertisements, facsimile or telegraph to solicit proxies.
We have agreed to pay CIC a fee of up to $_________ together with reimbursement
of out-of-pocket expenses. CIC will solicit proxies from
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individuals, brokers, banks, bank nominees and other institutional holders. It
is anticipated that approximately ___ persons will be used by CIC to solicit our
stockholders for the 1999 Annual Meeting.
The entire expense of soliciting proxies on behalf of TSI will be paid by TSI.
Costs of this solicitation of proxies are estimated to be approximately $____ to
$_____.
VOTING METHODS
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR OUR PROPOSAL 1 AND 2
AND THAT YOU VOTE AGAINST MR. FAUTH'S AND THE JJF GROUP PROPOSALS 3-8.
No matter how many shares you own, your vote is important. Please vote by
signing, dating and mailing your white proxy card today. If you wish you
can fax both sides of your completed proxy card to our proxy solicitor,
Corporate Investor Communications, Co., Inc. at fax number (201)804-8693.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING OR REQUIRE ADDITIONAL INFORMATION
CONCERNING OUR PROXY STATEMENT, PLEASE CONTACT CIC AT THE ADDRESS AND TOLL
FREE PHONE NUMBER LISTED BELOW.
CORPORATE INVESTOR COMMUNICATIONS CO., INC.
111 COMMERCE ROAD
CARLSTADT, NEW JERSEY 07072
1-877-460-9337
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EXECUTIVE COMPENSATION
The following table shows, on an accrual basis, the aggregate compensation
received from TSI and its subsidiaries for the fiscal years ended March
31, 1999, 1998, and 1997, by each person who was an executive officer of the
Company (a total of three people) and whose total remuneration for fiscal 1999
exceeded $100,000:
TABLE OF SUMMARY COMPENSATION(1)
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------------------------ --------------------------------
Awards
----------------
Number of Shares All Other
Name and Underlying Stock Compensation
Principal Position Year Salary($) Cash Bonus(2) Total Salary Options Granted ($)(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James E. Doubles, 1999 236,980 11,941 248,921 33,174 10,000
Chairman, President & CEO 1998 219,348 0 219,348 32,071 10,493
1997 192,980 0 192,980 13,736 10,237
Robert F. Gallagher, Vice 1999 139,044 7,129 146,173 17,491 8,654
President & CFO(4) 1998 108,639 0 108,639 16,596 6,680
Lowell D. Nystrom, 1999 93,426 4,780 98,206 15,617 5,803
Senior Vice President 1998 154,310 0 154,310 7,621 9,566
1997 170,480 0 170,480 11,973 10,048
</TABLE>
- ---------------
(1) No other annual compensation was paid, no restricted stock was awarded
and no payouts were made under any long-term incentive compensation
plan.
(2) TSI also made payments of $966,000 for fiscal 1999 under the TSI
Incorporated Cash Profit Bonus Program based on a formula adopted by
your Board of Directors which specifies an amount equal to 15 percent
of the pretax operating earnings above 12 percent of non-cash assets
employed, paid to all eligible employees. For fiscal 1999, TSI's
payments under this program for Mr. Doubles, Mr. Gallagher, and Mr.
Nystrom were $11,941, $7,129, and $4,780, respectively.
(3) During fiscal 1999, TSI maintained a 401(k) profit sharing plan (the
TSI Incorporated Employee Retirement and Profit Sharing Plan) for which
substantially all regular employees of TSI and certain of its
subsidiaries who have been employed for at least one year are eligible.
Employees may make salary reduction contributions to the plan in
accordance with Section 401(k) of the Internal Revenue Code. For fiscal
1999, TSI matched 50 percent of such contributions up to three percent
of each employee's compensation and 25 percent of such contributions
over three percent but not greater than six percent of each employee's
compensation. In addition, TSI makes annual profit-sharing
contributions to the plan as determined by your Board of Directors of
TSI. For fiscal 1999, TSI made a profit-sharing (retirement)
contribution equal to four percent of compensation paid to all eligible
employees. In total, for fiscal 1999, TSI contributed
$1,048,000 to the TSI Incorporated Employee Retirement and Profit
Sharing Plan, of which $363,000 was contributed as the four percent of
eligible compensation and $685,000 was contributed as matching funds
for salary reduction contributions by employees. For fiscal 1999, the
Company's profit-sharing and matching contributions to the plan for Mr.
Doubles, Mr. Gallagher, and Mr. Nystrom were $10,000, $8,654, and
$5,803, respectively.
PAGE 9
<PAGE>
(4) Mr. Gallagher became Vice President and Chief Financial Officer of the
Company in December 1997. Mr. Gallagher was the Controller of the
Company for more than five years prior to December 1997.
TABLE OF OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Options Granted in Last Fiscal Year
- ----------------------------------------------------------------------------------------------------------------------
Number of Shares % of Total Potential Realizable Value at
Underlying Options Granted Assumed Annual Rates of Stock
Options Granted to Employees in Exercise or Base Price Appreciation For Option
Fiscal Year Price ($/Sh)(3) Expiration Date Term(4)
Name 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James E. 10,210(1) 4 8.0315 Jan 22, 2006 33,383 77,796
Doubles
13,344(2) 6 8.0625 April 1, 2006 43,798 102,069
Robert F. 4,731(1) 2 8.0315 Jan 22, 2006 15,469 36,048
Gallagher
7,995(2) 3 8.0625 April 1, 2006 26,242 61,154
Lowell D. 3,507(1) 1 8.0315 Jan 22, 2006 11,467 26,722
Nystrom
5,342(2) 2 8.0625 April 1, 2006 17,534 40,861
</TABLE>
- ---------------
(1) Options were granted under the Stock Option Plan of 1992 with an
exercise price equal to the market price on the date of grant and
become exercisable in 33 1/3 percent annual installments commencing one
year from the date of grant.
(2) Referenced options are grants of Management Performance Options which
are made after TSI's financial results for the fiscal year are
available, but relate to performance in the fiscal year to which this
table relates and are, therefore, disclosed herein. Such options are
immediately exercisable and were granted pursuant to the Management
Performance Option Plan under the Stock Option Plan of 1992.
(3) The number, kind, and price of the shares subject to each outstanding
option will be proportionately and appropriately adjusted in the event
of any stock dividend, stock split, recapitalization, reclassification,
or similar change in TSI's outstanding securities.
(4) Based on actual option term and annual compounding.
TABLE OF OPTION EXERCISES AND YEAR-END VALUE
Aggregated Options Exercised in Last Fiscal Year and Year-End Option Value(1)
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at Fiscal Year End(1) at Fiscal Year End(2)
------------------------------ ----------------------------
Shares Acquired
on Exercise(#) Value Exercisable Unexercisable Exercisable Unexercisable
Name Realized($) (#) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James E. 0 0 48,505 25,926 1,126 4,464
Doubles
Robert F. 0 0 22,460 13,037 15,875 2,069
Gallagher
</TABLE>
PAGE 10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Lowell D. 5,286 23,315 49,768 4,693 105,872 1,534
Nystrom
</TABLE>
- ---------------
(1) Does not include Management Performance Options granted as of April 1,
1999, to the named executives based on their performance during fiscal
1999.
(2) Represents the difference between the midpoint between the high and low
reported trades on the Nasdaq National Market system of TSI's
Common Stock on March 31, 1999, $8.4688, and the exercise price of the
options.
EMPLOYEE STOCK PURCHASE PLAN
TSI's Employee Stock Purchase Plan of 1994 provides for the offering of
Common Stock of TSI to employees of TSI and certain of its
subsidiaries under the Plan at a price lower than current market price (not less
than 85 percent of the lesser of the fair market value of TSI's Common
Stock on the date the option is granted or on the date the option is exercised),
and provides for purchase of such shares through payroll deduction. During
fiscal 1999, stock options for an aggregate of 70,124 shares of Common Stock of
TSI were granted under this plan. During fiscal 1999, Mr. Doubles and
Mr. Gallagher were the only executive officers who participated in the plan. Mr.
Doubles exercised his option to purchase 2,130 shares and Mr. Gallagher
exercised his option to purchase 2,000 shares.
DIRECTOR COMPENSATION
Each director who is not also an employee of TSI currently receives cash
compensation at a rate of $12,000 per year for serving on your Board. Under the
Company's Stock Option Plan of 1992, directors who are not employees of the
Company annually receive a nonstatutory option, granted on the date of the
Company's annual meeting, to purchase 1,500 shares of Common Stock at the fair
market value at the date of TSI's Annual Meeting. On July 23, 1998,
outside directors, Messrs. Sullivan, Levesque, Whalen, Carlson, and Roering,
were each granted options to purchase 1,500 shares of Common Stock at an
exercise price of $7.22 per share.
EMPLOYMENT CONTRACTS
TSI does not have long-term employment contracts with its executive officers.
Each of the three executive officers (Messrs. Doubles, Gallagher and Nystrom)
has a stay in place agreement which is designed to encourage their continued
employment with TSI notwithstanding offers which may come to them during the
current period of instability caused by Mr. Fauth's takeover attempt. These
agreements provide that if any of the three executive officers is terminated
without cause, his responsibility substantially diminished, or he is required to
make a geographic relocation (a "Termination Event") within two years following
a change of control of TSI, in addition to any other benefits payable, he will
receive a lump sum severance payment based upon his current salary, plus average
bonus and fringe benefits (exclusive of stock options) received during the
two-year period prior to the change of control. With respect to Mr. Doubles, the
severance payment would be equal to two years' compensation and fringe benefits
if the Termination Event occurs within one year of the change of control, and
one year's compensation and fringe benefits if the Termination Event occurs more
than one year but less than two years following the change of control. With
respect to Messrs. Gallagher and Nystrom, the severance payment would be equal
to one year's compensation and fringe benefits if the Termination Event occurs
within one year of the change of control, and six months' compensation and
fringe benefits if the Termination Event occurs more than one year but less than
two years following the change of control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no compensation committee interlocks with other companies within the
meaning of the SEC proxy rules and none of the members of the Committee of
Outside Directors has been an officer or employee of TSI or its
subsidiaries.
REPORT OF THE COMMITTEE OF OUTSIDE DIRECTORS
The Committee of Outside Directors recommends to your Board the salary levels,
benefit programs, and incentive compensation plans of all executive officers.
Committee members consist of the five outside board members.
PAGE 11
<PAGE>
To maintain a consistent philosophy of compensation throughout TSI,
almost all compensation programs apply to all employees of TSI. This is
based on the philosophy that Company success is based on the coordinated efforts
of all employees. As explained below, executive officers are compensated
similarly to all other employees of TSI, except that they also
participate in a performance stock option plan that provides rewards based on
the growth and profitability of TSI. In addition, a new cash management
compensation program, defined below, has been implemented for fiscal 1999 to
further align management objectives to TSI's performance.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with business
objectives and performance, and to enable TSI to attract, retain, and
reward employees who contribute to the long-term success of TSI. The
Company's compensation program for executive officers is based on the same three
principles applicable to compensation decisions for all employees of the
Company:
TSI PAYS COMPETITIVELY.
TSI is committed to providing a pay program that helps attract and
retain the best people in the industry. To ensure that pay is competitive, the
Company regularly compares its pay practices with those of other comparable
companies and sets its pay parameters based on this review.
TSI PAYS FOR PERFORMANCE.
The performance-based stock option program rewards executive officers
based on corporate growth and profitability. In addition to comparing salaries
with those of other comparable companies, salary levels are established by
considering corporate performance and individual factors that take into account
management effectiveness in areas not directly related to financial performance.
TSI STRIVES FOR FAIRNESS IN THE ADMINISTRATION OF PAY.
TSI applies its compensation philosophy worldwide. TSI strives to
achieve a balance of the compensation paid to a particular executive and the
compensation paid to other executives both inside TSI and at comparable
companies.
COMPENSATION VEHICLES
TSI's compensation program includes cash and equity-based compensation.
It has permitted TSI to successfully attract and retain key employees,
the result being the ability to provide useful products and services to our
customers, to enhance stockholder value, to motivate technical innovation, to
foster teamwork, and to adequately reward employees.
LIMITS ON DEDUCTIBLE COMPENSATION PAYABLE TO EXECUTIVE OFFICERS
The Omnibus Reconciliation Act of 1993 added Section 162(m) to the Internal
Revenue Code of 1986, as amended (the "Code") limiting corporate deductions to
$1,000,000 for certain compensation paid to the chief executive officer and each
of the four other most highly compensated executives of publicly held companies.
TSI does not believe it will pay "compensation" within the meaning of
Section 162(m) to such executive officers in excess of $1,000,000 in the
foreseeable future. Therefore, TSI does not have a policy at this time
regarding qualifying compensation paid to its executive officers for
deductibility under Section 162(m), but will formulate a policy if compensation
levels ever approach $1,000,000.
CASH-BASED COMPENSATION
SALARY
TSI sets base salary for all employees, including executive
officers, by considering the responsibilities of each position and
reviewing performance. Salaries are surveyed and compared with the
mid-ranges of the aggregate of base salary and annual bonus for competitive
positions in the market.
PROFIT SHARING/RETIREMENT
TSI provides an annual retirement contribution of four percent of
credited compensation for all employees, including executive officers, or
100 percent of TSI's pre-tax income for the fiscal year, whichever
is less. In
PAGE 12
<PAGE>
addition, TSI provides matching contributions of 50 percent of
employee salary reduction contributions up to three percent of such
employee's compensation and 25 percent of such contributions over three
percent but not greater than six percent of such employee's compensation.
In addition, if the return on average assets, excluding cash, exceeds 12
percent, a cash bonus equal to 15 percent of pretax profits over the 12
percent threshold is paid to eligible participants. Executive officers and
senior management participated in this cash bonus program during fiscal
1999.
EQUITY-BASED COMPENSATION
INCENTIVE STOCK OPTION PROGRAM
Approximately 40 percent of TSI's employees, including executive
officers, have incentive stock options, the number depending primarily on
responsibility level. This program grants options each year totaling up to
one percent of the outstanding stock.
MANAGEMENT PERFORMANCE STOCK OPTION PROGRAM
Executive officers participate in a Management Performance Stock Option
program. The number of shares granted is based on return on equity,
performance against plan, and the size of TSI. The options granted
fall within the one percent of outstanding stock allowed under the
Incentive Stock Option Plan.
The intent of this program is to provide executive officers with an
incentive program dependent upon both the performance of TSI for the
current year (number of shares) and the future performance of the Company
(growth in value of shares). Under this plan the number of shares available
for executive officers depends on the total sales level of the Company and
the performance of TSI in achieving return on equity for each fiscal year,
based on a formula adopted by your Board of Directors. Granting of option
shares begins at a level of 10 percent return on equity and reaches a
maximum at 22 percent return on equity. For fiscal 1999, at a total sales
level of $85,352 million, a maximum of 39,060 shares would have been
available to grant to executive officers. Because performance under this
plan was at 68.3 percent of maximum potential, the option shares granted to
executive officers was 26,652 shares.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
At a given date each year, all employees who own less than five percent of
TSI's outstanding stock can set aside a certain percentage of their
salary for purchase of Company stock under a qualified Employee Stock
Purchase Plan. Twelve months later, the employee can use the money set
aside to purchase Company stock at 15 percent less than the market price at
the beginning of the year or at the end of the year, whichever is less. Two
of the three executive officers were eligible to participate in this plan
in fiscal 1999.
RATIONALE FOR CEO COMPENSATION
Mr. James E. Doubles, Chairman, President and Chief Executive Officer was
elected CEO of TSI in July 1997 and Chairman in July 1998. Mr. Doubles was
President and Chief Operating Officer of TSI from July 1992 to July 1997. His
base compensation is determined using comparisons to industry data and he
participates in exactly the same plans as other key executives. The committee
reviews the mid-ranges of executive compensation survey data, current, and
historical Company performance and establishes a base salary that is considered
fair and equitable. Mr. Doubles' participation in the Management Performance
Stock Option Program provides incentive compensation tied to Company performance
that emphasizes long-term growth of stockholder value. For fiscal 1999, Mr.
Doubles was granted stock options for 13,347 shares of Company stock under this
plan. A maximum of 19,556 shares could have been granted to him if performance
had reached 100 percent under this plan.
COMMITTEE OF OUTSIDE DIRECTORS
Kenneth J. Roering, Chair
John F. Carlson
Joseph C. Levesque
Donald M. Sullivan
Lawrence J. Whalen
PAGE 13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
Set forth on page __ is a line graph comparing the yearly percentage change in
the cumulative total stockholder's return on TSI's Common Stock with the
cumulative total return on the Nasdaq Stock Market (U.S.) and a Peer Group Index
for the period of five fiscal years starting April 1, 1994, and ending March 31,
1999. The Peer Group Index includes all the Nasdaq U.S. companies referenced
under the three digit SIC code number 382, Laboratory and Analytical
Instruments. A total of 123 companies fell into this category during the
five-year period ended March 31, 1999, with 79 of these companies still active
on March 31, 1999. TSI selected this Peer Group Index because it
includes many similar companies engaged in comparable markets. Calculations and
preparation of index data were done for TSI by the Center for Research
in Securities Prices (CRSP) at the University of Chicago, using market value
weighted stock prices and assuming dividend reinvestments over the five-year
period, as required by the Securities and Exchange Commission. The graph also
shows the appropriate broad market index, which is the Nasdaq Stock Market
(U.S.), as prepared by CRSP.
PAGE 14
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
TSI Incorporated
[PLOT POINTS CHART]
LEGEND
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 03/31/94 03/31/95 03/31/96 03/31/97 03/29/98 03/31/99
- ------ ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TSI Incorporated 100.0 110.9 218.2 235.6 219.5 206.9
Nasdaq Stock Market (US Companies) 100.0 111.3 151.1 167.8 254.4 342.4
Nasdaq Stocks (SIC 3820-3829 US Companies) 100.0 122.6 159.3 207.1 251.9 214.0
Lab Apparatus & Analyt, Opt, Measuring, &
Controlling Instr
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 03/31/94.
PAGE 15
<PAGE>
PRINCIPAL STOCKHOLDERS
Information as to the name and holdings of each person known by TSI to
be the beneficial owner of more than five percent of its Common Stock as of May
27, 1999, each director of TSI, each of TSI's executive officers
named in the Summary Compensation table in the Proxy Statement, and all
executive officers and directors of TSI as a group, is set forth below.
Except as indicated below, TSI believes that each of such persons or
their spouse has the sole voting and investment powers with respect to such
shares:
Name and Address Amount of Common Percent
Title of Class of Beneficial Owner Stock Beneficially Owned of Class
- --------------------------------------------------------------------------------
Common Stock Mairs and Power, Inc. 1,196,105 10.7
332 Minnesota Street
Suite W-2062
St. Paul, MN 55101
Common Stock Leroy M. Fingerson 775,043(1) 6.9
1612 Oak Avenue
Arden Hills, MN 55112
Common Stock John J. Fauth 652,000 5.8
3100 Metropolitan Centre
333 South Seventh Street
Minneapolis, MN 55402
Common Stock Lowell D. Nystrom 650,057(2) 5.8
500 Cardigan Road
Shoreview, MN 55126
Common Stock Frank D. Dorman 470,474(3) 4.2
Common Stock James E. Doubles 135,849(4) 1.2
Common Stock Donald M. Sullivan 47,000(5) 0.4
Common Stock Kenneth J. Roering 33,750(5) 0.3
Common Stock Robert F. Gallagher 49,293(6) 0.4
Common Stock Lawrence J. Whalen 31,500(5) 0.2
Common Stock John F. Carlson 23,048(5) 0.2
Common Stock Joseph C. Levesque 4,500(7) --
Common Stock All directors and executive 1,445,471 12.9
officers as a group(9 persons)
PAGE 16
<PAGE>
- -------------------
(1) Includes 55,655 shares of Common Stock which Dr. Fingerson has the
right to acquire by the exercise of stock options he holds under the
Stock Option Plan of 1992.
(2) Includes 55,110 shares of Common Stock which Mr. Nystrom has the right
to acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
(3) Includes 9,564 shares of Common Stock which Mr. Dorman has the right to
acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
(4) Includes 61,849 shares of Common Stock which Mr. Doubles has the right
to acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
(5) Includes 6,000 shares of common stock that each outside director has
the option to acquire under the Stock Option Plan of 1992.
(6) Includes 30,455 shares of common stock which Mr. Gallagher has the
right to acquire by the exercise of stock options he holds under the
Stock Option Plan of 1992.
(7) Includes 4,500 shares of common stock which Mr. Levesque has the right
to acquire by the exercise of stock options he holds under the Stock
Option Plan of 1992.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires TSI's
directors and executive officers, and persons who own more than ten percent of a
registered class of TSI's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of TSI. Officers,
directors and greater than ten percent stockholders are also required by SEC
regulation to furnish TSI with copies of all Section 16(a) forms they
file.
To TSI's knowledge, based solely on review of the copies of such reports
furnished to TSI and written representations that no other reports were
required, during the fiscal year ended March 31, 1999, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
PROPOSALS OF STOCKHOLDERS
Any stockholder proposal intended to be considered for inclusion in the proxy
statement for presentation at the 2000 Annual Meeting must be received by the
Company by 2000. The proposal must be in accordance with the provisions of Rule
14a-8 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934. It is suggested the proposal be submitted by certified
mail, return receipt requested. Stockholders who intend to present a proposal at
the 2000 Annual Meeting without including such proposal in TSI's proxy statement
must provide TSI notice of such proposal no later than 2000. TSI reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
OTHER MATTERS
Your Board of Directors does not intend to bring before the meeting any business
other than the election of directors and the ratification of our independent
auditors as set forth in this Proxy Statement and has not been informed that any
other business (other than the JJF Group Proposals discussed above) is to be
presented to the meeting. However, if any matters other than those referred to
above should properly come before the meeting, it is the intention of the
persons named in the enclosed white Proxy to vote such Proxy in accordance with
their best judgment.
If any matters properly come before our 2000 Annual Meeting, but we did not
receive notice of it prior to ________, 2000, the persons named in our proxy
card for that Annual Meeting will have the discretion to vote the proxies on
such matters in accordance with their best judgment.
Please sign and return promptly the enclosed white Proxy in the envelope
provided voting FOR of our Proposals 1 and 2 and voting AGAINST the JJF Group
Proposals 3 through 8. The signing of a Proxy will not prevent your attending
the meeting and voting in person.
By Order of your Board of Directors
Laura J. Cochrane
Secretary
June 24, 1999
PAGE 17
<PAGE>
TSI INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JULY 22, 1999
9:30 A.M. CENTRAL DAYLIGHT TIME
500 CARDIGAN ROAD
SHOREVIEW, MINNESOTA 55126
TSI INCORPORATED PROXY
- --------------------------------------------------------------------------------
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
- -- JULY 22, 1999
The undersigned stockholder of TSI Incorporated appoints James E. Doubles,
Robert F. Gallagher, Laura J. Cochrane, and each of them, as attorneys, agents
and proxies of the undersigned with full power of substitution in each of them,
to vote in the name and on behalf of the undersigned at the Annual Meeting of
Stockholders of the Company to be held on July 22, 1999, at 9:30 a.m. Central
Daylight Time, at TSI's corporate offices, 500 Cardigan Road, Shoreview,
Minnesota 55126, and until adjournments thereof, all of the shares of common
stock of the Company which the undersigned would be entitled to vote if
personally present, with the powers the undersigned would possess if personally
present.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, JUST SIGN
ON THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED. UNLESS MARKED OTHERWISE,
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS.
PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY. YOUR COOPERATION WILL BE
APPRECIATED.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
COMPANY #
CONTROL #
THERE ARE THREE WAYS TO VOTE YOUR PROXY
Stockholders of TSI Incorporated may vote their shares for matters to be
covered at the Company's 1999 Annual Meeting of Stockholders in three ways.
Below are the instructions for voting by phone, Internet or mail.
VOTE BY PHONE -- TOLL FREE -- 1-800-999-9999
Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week. Have your proxy card in hand when you call. You will be prompted to
enter your 3-digit Company Number and your 7-digit Control Number which is
located above and then follow the simple voting instructions. Your telephone
vote authorizes the named proxies to vote your shares in the same manner as
if you marked, signed and returned your proxy card.
VOTE BY INTERNET -- www.9999.com
Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have your
proxy card in hand when you access the web site. You will be prompted to
enter your 3-digit Company Number and your 7-digit Control Number which is
located above to obtain your records and create an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope.
IF YOU VOTE BY PHONE OR INTERNET PLEASE DO NOT MAIL YOUR PROXY CARD.
THANK YOU FOR VOTING
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS: Nominees are: John F. Carlson
Lowell D. Nystrom
James E. Doubles
[ ] VOTE FOR [ ] Vote WITHHELD
all nominees from all nominees
(except those listed below)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THE NAME OF THE INDIVIDUAL(S) IN THE BOX PROVIDED TO THE RIGHT)
------------------------
| |
------------------------
2. RATIFYING THE APPOINTMENT of KPMG Peat Marwick LLP as the independent
auditors of the Company for the fiscal year ending March 31, 2000.
[ ] For [ ] Against [ ] Abstain
THE BOARD RECOMMENDS A VOTE "AGAINST" PROPOSALS 3, 4, 5, 6, 7 AND 8.
3. PROPOSAL TO ADOPT a bylaw provision to eliminate the effect of the
Minnesota Control Share Acquisition Act on an acquiror of the Company's
stock.
[ ] For [ ] Against [ ] Abstain
4. PROPOSAL TO ADOPT a bylaw provision that requires the approval of at least
80% of the non-employee directors to adopt a defensive action unless the
defensive action is approved by a majority of the outstanding shares.
[ ] For [ ] Against [ ] Abstain
5. PROPOSAL TO REQUIRE the Company to hold its 2000 annual meeting no later
than July 20, 2000, and to set a meeting date for the 2000 annual meeting
by June 5, 2000. [ ] For [ ] Against [ ] Abstain
6. PROPOSAL TO REPEAL any bylaws adopted by the Board since May 29, 1999.
[ ] For [ ] Against [ ] Abstain
7. PROPOSAL TO AMEND TSI's Bylaws to prohibit your Board of Directors from
amending or repealing any provision of TSI's Bylaws adopted by the
stockholders.
[ ] For [ ] Against [ ] Abstain
8. PROPOSAL TO AMEND the Company's bylaws to require the Board to immediately
terminate any stockholders' rights plan and redeem any rights issued
thereunder, unless approved by a majority of the outstanding shares.
[ ] For [ ] Against [ ] Abstain
9. THE PROXIES are authorized to vote in their discretion upon such other
business, if any, as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2 AND
"AGAINST" ITEMS 3, 4, 5, 6, AND 7.
[ ] I PLAN TO ATTEND THE MEETING
Address Change? Mark Box [ ] Indicate changes below: Dated: __________________
------------------------------
| |
------------------------------
Signature(s) in Box
Please sign exactly as your name appears on proxy. When signing as attorney,
guardian, executor, administrator or trustee, please give title. If the
signer is a corporation, please give the full corporate name and sign by a
duly authorized officer, showing the officer's title. EACH joint owner is
requested to sign.
PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY. YOUR COOPERATION WILL BE
APPRECIATED.
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT OUR PROXY SOLICITOR, CIC, AT THE
FOLLOWING TOLL FREE NUMBER 1-877-460-9337.
