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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
TSI INCORPORATED
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(Name of Issuer)
COMMON STOCK, $.10 PAR VALUE
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(Title of Class of Securities)
872876107
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(CUSIP Number)
Richard D. McNeil, Esq.
Lindquist & Vennum, PLLP
4200 IDS Center
Minneapolis, MN 55402
Telephone: (612) 371-3266
Fax no.: (612) 371-3207
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
June 14, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Section 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
Page 1 of 13 Pages
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CUSIP No. 872876107 13D Page 2 of 16 Pages
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1 NAME OF REPORTING PERSON
John J. Fauth
JJF Group, Inc., a Minnesota corporation (FEIN applied for)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF,OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Mr. Fauth is a citizen of the United States.
JJF Group, Inc. is a corporation organized under the laws of the
State of Minnesota.
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7 SOLE VOTING POWER
NUMBER OF
Mr. Fauth - 652,000 shares
SHARES JJF Group, Inc. - 0 shares
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING Mr. Fauth - 652,000 shares
JJF Group, Inc. - 0 shares
PERSON ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
652,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8%
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14 TYPE OF REPORTING PERSON
Mr. Fauth - IN; JJF Group, Inc. - CO
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Page 2 of 13 Pages
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ITEM 1. SECURITY AND ISSUER.
This Schedule 13D (the "Statement") relates to the Common Stock, par
value $.10 per share (the "Common Stock"), of TSI Incorporated, a Minnesota
corporation (the "Company"). The principal executive office of the Company is
located at 500 Cardigan Road, Shoreview, MN 55126.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This Schedule 13D is being filed on behalf of John J. Fauth, an
individual, and JJF Group, Inc., a Minnesota corporation.
(b) The business address of each of Mr. Fauth and JJF Group, Inc. is
3100 Metropolitan Centre, 333 South 7th Street, Minneapolis, MN 55402.
(c) Mr. Fauth's present principal employment is as Chairman and Chief
Executive Officer of Churchill Industries, Inc. and Chairman of Churchill
Capital, Inc., both of which are located at the address set forth in 2(b) above.
Mr. Fauth is also President and Chief Executive Officer of JJF Group, Inc.
(d)-(e) During the last five years, neither Mr. Fauth nor JJF Group,
Inc. (1) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or (2) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which either was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
(f) Mr. Fauth is a citizen of the United States. JJF Group, Inc. is
a corporation organized under the laws of the State of Minnesota.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Fauth reported on the original filing of this Schedule 13D, that
he had purchased a total of 652,000 shares of Common Stock for cash in the
amount of approximately $5,915,716, including brokerage commissions. All of
these shares were purchased in open market transactions with personal funds and
funds borrowed in a margin account). A copy of the form of margin agreement
pertinent to this filing is attached as Exhibit 1 and incorporated by reference
in the original filing of this Schedule 13D.
Page 3 of 13 Pages
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ITEM 4. PURPOSE OF TRANSACTION.
Mr. Fauth acquired the shares of Common Stock that are the subject of
this Schedule 13D in order to obtain an equity position in the Company with a
view toward acquiring the Company. On November 25, 1998 Mr. Fauth met with two
members of the Company's Board of Directors to discuss his interest in the
Company and on March 1, 1999 he met with James Doubles, the Company's President,
to make his acquaintance and discuss Mr. Fauth's interest in the Company. On
approximately March 11, 1999 Mr. Fauth wrote a letter to the Company
communicating an interest in commencing negotiations to acquire all of the
Company's outstanding Common Stock in a negotiated transaction for a cash price
above the price per share at which the Common Stock has historically traded. A
copy of the letter is attached as Exhibit 2 to the original filing of this
Schedule 13D. On April 27, 1999 Mr. Fauth received a letter from the Company
stating that the Board of Directors of the Company did not wish to pursue
discussions with Mr. Fauth at that time. A copy of that letter is attached
hereto as Exhibit 3 to the original filing of this Schedule 13D.
On June 14, 1999, Mr. Fauth sent a formal offer letter to the Company
proposing to purchase the Company at a price of $12.50 per share. Included with
the offer was notice of various proposals which Mr. Fauth intends to raise at
the upcoming annual meeting of the Company's shareholders. These include
election of nominees to the Company's Board of Directors and various amendments
to the Company's Bylaws. A copy of his letter and the notice are attached to
this Amendment No. 1 to Schedule 13D as Exhibit 4.
Mr. Fauth believes that to optimize shareholder value the Company
should be privately held. Mr. Fauth is currently planning to attempt to elect
persons to the Company's Board of Directors at the next regular meeting of
shareholders who will seek to maximize the value of the Common Stock through a
sale of the Company. Such a sale, if implemented, would likely involve a tender
offer for some or all of the Common Stock or a merger with an acquiring entity,
and would likely result in termination of the Company's registration as a public
company under the Securities Exchange Act of 1934, as amended, and delisting of
the Common Stock from the Nasdaq National Market. Mr. Fauth has incorporated JJF
Group, Inc. to serve as an acquisition vehicle should either a tender offer or
merger occur. Mr. Fauth is also proposing amendments to the Company's bylaws
which would make it more difficult for the Company's current Board of Directors
to impede an acquisition of the Company. At present Mr. Fauth is not soliciting
the support of fellow shareholders for any plans or proposals, although he may
do so in the future in compliance with applicable laws. Mr. Fauth specifically
reserves all his rights as a shareholder of the Company to discuss with other
shareholders of the Company matters that may be of common concern.
Depending upon the course of action he decides to pursue, Mr. Fauth
may continue to increase his investment in the Company through the acquisition
of additional shares of Common Stock in the open market or otherwise, subject to
availability at prices deemed favorable by him. Alternatively, he may decide to
sell any or all of the shares of Common Stock beneficially owned
Page 4 of 13 Pages
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by him in the open market or otherwise. The foregoing represents the range of
activities presently contemplated by Mr. Fauth, and his plans, proposals and
activities are subject to change at any time depending on, among other things,
the actions of the Company's Board of Directors, the Company's performance and
conditions in the public securities markets.
Except as set forth above, Mr. Fauth has no present plans or
intentions that would result in or relate to any of the transactions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date this filing is made, Mr. Fauth beneficially owns
652,000 shares of Common Stock, representing approximately 5.8% of the
outstanding shares of Common Stock of the Company. The foregoing percentage is
based upon 11,249,647 shares of Common Stock reported outstanding as set forth
in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1998, as filed by the Company with the Securities and Exchange
Commission. At present, JJG Group, Inc. beneficially owns no shares of the
Company.
(b) Mr. Fauth has the sole power to vote and dispose of the shares of
Common Stock which he beneficially owns. JJF Group, Inc. holds no shares of the
Company and has no power to vote or dispose of shares of its Common Stock.
(c) Transactions in the Common Stock effected by Mr. Fauth in the
last 60 days are described on the attached Schedule A and incorporated herein by
reference. All such transactions were purchases effected in the open market. JJF
Group, Inc. has had no transactions in the Common Stock of the Company.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Neither Mr. Fauth nor JJF Group, Inc. has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Company.
Page 5 of 13 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION
1 Form of Margin Loan Agreement*
2 Letter to TSI Incorporated dated March 11, 1999*
3 Letter from TSI Incorporated dated April 27, 1999*
4 Letter to TSI Incorporated dated June 14, 1999
5 Joint Filing Agreement
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* Previously filed.
Page 6 of 13 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
Dated: June , 1999
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/s/ John J. Fauth
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John J. Fauth
JJF GROUP, INC.
By: /s/ John J. Fauth
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Its: President and Chief Executive Officer
Page 7 of 13 Pages
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SCHEDULE A
<TABLE>
<CAPTION>
No. of Shares Purchased
Date in the Last Sixty Days Price Per Share
------- ---------------------- ---------------
<S> <C> <C>
5/24/99 42,000 10.0908
5/26/99 2,500 10.50
5/27/99 80,000 10.9375
</TABLE>
Page 8 of 13 Pages
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EXHIBIT 4
JOHN J. FAUTH
June 14, 1999
Board of Directors DELIVERED BY MESSENGER
TSI Incorporated
c/o James Doubles, Chairman and CEO
500 Cardigan Road
Shoreview, Minnesota 55126
Gentlemen:
As you know, over the past six months I have expressed an interest in
pursuing discussions concerning a transaction in which the TSI shareholders were
paid cash for their stock and TSI became a private company. Your unwillingness
to date to discuss such a transaction has been disappointing.
Because of your unwillingness to date to negotiate in person, I am
using this letter to make a formal offer, which is based upon publicly available
information concerning TSI. I hereby propose a cash merger between TSI and a
company I would form to hold my TSI stock. In that merger each share of TSI
common stock would be converted into the right to receive payment of $12.50 in
cash at the closing. This represents a substantial premium over TSI's current
stock price, and a 56% premium over the $8 per share stock price which prevailed
before I started accumulating a significant number of shares this Spring. I
believe my $12.50 per share proposal will be attractive to other TSI
shareholders.
The details of the merger would be reflected in a formal merger
agreement containing provisions which are customary in transactions of this
nature. Consummation of the merger would be subject to your Board's and TSI
shareholders' approval, which I am confident can be obtained. I am hoping my
representatives and I can sit down promptly with your representatives to
negotiate the terms and conditions of the merger agreement.
I want to assure you of the seriousness of my interest in TSI. I intend
to file preliminary proxy materials with the SEC for several proposals described
in the attached notice that I intend to raise at the upcoming annual meeting. I
also intend to comply with the provisions of Rule 14a-4(c)(2)(I)-(iii), which
means that TSI may not exercise discretionary voting on my proposals. Beacon
Hill Partners has been retained as a proxy solicitor. If we can reach a
definitive merger agreement promptly, then undertaking such a proxy solicitation
may not be necessary.
Page 9 of 13 Pages
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I hope to hear a prompt response to this letter. I hope that we can
agree on a friendly transaction that will optimize shareholder value.
Sincerely,
/s/ John J. Fauth
John J. Fauth
cc: Richard Flint, Esq. by facsimile
Page 10 of 13 Pages
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TO: Board of Directors of TSI Incorporated
FROM: John J. Fauth
RE: Notice of Intent to Present Proposals at Next Annual Meeting of
Shareholders
This is to notify you that I or an entity affiliated with me intend to
present the proposals described below for shareholder consideration and voting
at the next regular (annual) meeting of TSI's shareholders. The exact wording of
the proposals is subject to possible change, depending on actions taken by TSI
prior to the meeting or other factors.
I am providing this advance notice even though TSI's Bylaws do not
require any advance notice of such proposals. I am advised that TSI's proxy
statement for last year's annual meeting did not specify any deadline (as is
required by SEC Rule 14a-5(e)) for notice of shareholder proposals that are not
contained in TSI's proxy statement. I am also advised that TSI's subsequent SEC
filings do not specify any deadline for such proposals, as is contemplated by
SEC Rule 14a-5(f). Thus there is no basis on which this voluntary notice could
be considered untimely.
Although I reserve the right to add or delete proposals based on TSI's
actions, the proposals that I presently intend to raise are as follows:
1. The nomination of John Fauth, Joseph Kohler and G. Richard Haun, Jr.
for election to the seats on TSI's Board of Directors which are to be filled by
election in 1999 and have terms expiring in 2002, and the nomination of John
Kopchik for election to the seat on TSI's Board of Directors which is now vacant
and has a term expiring in 2001.
2. A proposal to amend TSI's Bylaws by adoption of a resolution
stating:
"RESOLVED, that the existing text of Article II, Section 6 of the
Bylaws of the Company be designated as Section 6(a) and that a new Section 6(b)
be added as follows: '(b) EQUAL VOTING RIGHTS. The provisions of Section
302A.671 of the Minnesota Business Corporation Act shall not apply to
acquisitions of shares of this corporation.'"
3. A proposal to amend TSI's Bylaws by adoption of a resolution
stating:
"RESOLVED, that Article III, Section 2 of the Bylaws of the Company is
hereby amended to add a new paragraph at the end, which shall read as follows:
'Notwithstanding any provision to the contrary contained in these Bylaws,
adoption of any Defensive Action (as defined below) requires the approval of
either (i) 80% of the members of the Board of Directors who are not (and in the
past five years have not been) employed by the Company as an employee or
consultant, or (ii) a majority of the outstanding shares of this corporation's
stock entitled to vote. "Defensive Action" shall mean any action by the Board
with the purpose or effect, in whole or in part, of impeding a change in control
of this corporation or increasing the Board's power to impede such a change in
control in the future; provided however, that if an offer is made to acquire
this corporation or all of this
Page 11 of 13 Pages
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corporation's Shares, and the Board determines that such offer will maximize
this corporation's value at a sale for the shareholders' benefit, no action
taken by the Board to facilitate such offer shall be a Defensive Action within
the meaning of this Section 2. This Bylaw may not be amended or repealed except
by vote of at least a majority of the outstanding shares of this corporation's
stock entitled to vote.'"
4. A proposal to amend TSI's Bylaws by adoption of a resolution
stating:
"RESOLVED, that Article II, Section 1 of the Bylaws of the Company is
hereby amended by removing the period from the end of the first sentence and
adding the following: 'provided, that the annual meeting of shareholders for the
year 2000 shall be held not later than July 20, 2000 and the Board of Directors
shall give public notice of that meeting on or before June 5, 2000.'"
5. A proposal to amend TSI's Bylaws by adoption of a resolution
stating:
"RESOLVED, that Article V of the Bylaws of the Company be amended by
the addition of the following sentence: 'Any By-Laws adopted by the Board of
Directors between May 29, 1999 and the date of the adoption of this amendment to
Article V of the By-laws are repealed.'"
6. A proposal to amend TSI's Bylaws by adoption of a resolution
stating:
"RESOLVED, that Article V of the Bylaws of the Company be amended by
adding the following: 'Notwithstanding the foregoing or any other provision of
these By-Laws, any By-Laws adopted by the stockholders of this corporation shall
not be amended or repealed by the Board of Directors.'"
7. A proposal to amend TSI's Bylaws by adoption of a resolution
stating:
"RESOLVED, that Article III, Section 2 of the Bylaws of this
corporation is hereby amended to add a new paragraph at the end, which shall
read as follows: 'Notwithstanding anything to the contrary contained in these
Bylaws, the shareholders of this corporation hereby demand that the Board of
Directors of the corporation terminate any and all so-called shareholder rights
agreements, poison pills or similar anti-takeover devices adopted by the Board
of Directors and immediately redeem any rights or other securities distributed
thereunder, unless such shareholder rights agreement or similar plan is approved
by an affirmative vote of a majority of the shareholders at a meeting of
shareholders called for such purpose, and that this policy of shareholder
approval apply to all "rights plans" considered at any time by the Board.'"
Date: June 14, 1999
Page 12 of 13 Pages
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EXHIBIT 5
JOINT FILING AGREEMENT
The undersigned, John J. Fauth and JJF Group, Inc., hereby agree that
this Schedule 13D relating to securities of TSI Incorporated shall be filed on
behalf of each of them.
June , 1999 /s/ John J. Fauth
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John J. Fauth
JJF GROUP, INC.
By: /s/ John J. Fauth
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Its: President and Chief Executive Officer
Page 13 of 13 Pages
