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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
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)
JULY 7, 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 '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 10 Pages
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CUSIP No. 872878107 13D Page 2 of 10 Pages
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(1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
John J. Fauth
JJF Group, Inc., a Minnesota corporation; FEIN: 41-1942813
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(2) Check the Appropriate Box if a Member (a) / /
of a Group* (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 if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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(6) Citizenship or Place of Organization
Mr. Fauth is a citezen of the United States.
JJF Group, Inc. is a corporation organized under the laws of the State
of Mennesota.
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Number of Shares (7) Sole Voting Power
Beneficially Owned Mr. Fauth - 1,009,000 shares
by Each Reporting JJF Group, Inc. - 0 shares
Person With --------------------------------------------------
(8) Shared Voting Power
-D-
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(9) Sole Dispositive Power
Mr. Fauth - 1,009,000 share
JJF Group, Inc. - 0 shares
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(10) Shared Dispositive Power
-D-
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,009,000
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
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(13) Percent of Class Represented by Amount in Row (11)
9.0%
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(14) Type of Reporting Person*
Mr. Fauth -IN; JJF Group, Inc. - Co
Page 2 of 10 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. On July 7,
1999, Mr. Fauth purchased an additional 357,000 shares of Common Stock for cash
in the amount of approximately $4,819,500. All of the 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 10 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 was attached 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 were attached as
Exhibit 4 to Amendment No. 1 to this Schedule 13D.
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.
On July 2, 1999, Mr. Fauth and JJF Group, Inc. filed with the
Commission and commenced distribution of a definitive proxy statement to the
Company's shareholders to solicit proxies for the Company's annual meeting
scheduled for July 22, 1999. In the proxy statement, which is incorporated by
reference as Exhibit 6 hereto, Mr. Fauth is proposing himself and two other
candidates for election to the Company's board and various amendments to the
Company's articles of incorporation and bylaws which would make it more
difficult for the Company's current Board of Directors to impede an acquisition
of the Company.
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
Page 4 of 10 Pages
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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 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
1,009,000 shares of Common Stock, representing approximately 9.0% of the
outstanding shares of Common Stock of the Company. The foregoing percentage is
based upon 11,232,816 shares of Common Stock reported outstanding as set forth
in the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1999, 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 other than the following:
On July 7, 1999, Mr. Fauth entered into a Stock Purchase Agreement
dated July 7, 1999 with First American Asset Management and purchased 357,000
shares of Common Stock of TSI Incorporated at a purchase price of $13.50 per
share, for a total purchase price of $4,819,500. A copy of the Stock Purchase
Agreement is attached hereto as Exhibit 7.
Page 5 of 10 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
6 Definitive Proxy Statement of John J. Fauth and JJF Group,
Inc. for the Annual Meeting of Shareholders of TSI
Incorporated (SEC file number: 000-02958), as filed with the
Commission on July 2, 1999 and as amended from time to time,
incorporated herein by reference to such filing.
7 Stock Purchase Agreement dated July 6,1999 between John J.
Fauth and First American Asset Management.
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* Previously filed.
Page 6 of 10 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: July 7, 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 7 of 10 Pages
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SCHEDULE A
<TABLE>
<CAPTION>
No. of Shares Purchased
Date in the Last Sixty Days Price Per Share
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<S> <C> <C>
5/24/99 42,000 10.0908
5/26/99 2,500 10.50
5/27/99 80,000 10.9375
7/07/99 357,000 13.50
</TABLE>
Page 8 of 10 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.
July 7, 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
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EXHIBIT 7
STOCK PURCHASE AGREEMENT
This Agreement is entered into by and between First American Asset
Management, a division of U.S. Bank National Association, on behalf of its
clients (the "Seller") and John J. Fauth, an individual resident in the State of
Minnesota (the "Purchaser"), on this 7th day of July, 1999.
1. PURCHASE AND SALE OF STOCK. The Seller hereby agrees to sell to
Purchaser on the date hereof in a transaction on the NASDAQ National Market an
aggregate of 357,000 shares (the "Shares") of the Common Stock of TSI
Incorporated, a Minnesota corporation ("TSI"), at $13.50 per share for a total
purchase price of $4,819,500. The sale of the Shares shall be consummated by
J.P.Morgan & Company on behalf of Purchaser. Settlement will occur in the normal
course. Seller warrants that its clients have good and merchantable title to the
Shares free and clear of all adverse claims, liens, security interests, voting
trusts or agreements, proxies (other than as set forth below) and other
encumbrances; that the Seller has the corporate power and all necessary
authority to sell, transfer, deliver and convey the Shares to the Purchaser; and
that the Seller has the sole voting and dispositive power with respect to the
Shares.
2. PROXY. As additional inducement for the Purchaser to purchase the
Shares from the Seller, the Seller hereby grants to, and appoints, John J.
Fauth, his successors and assigns, the Seller's irrevocable proxy and
attorney-in-fact (with full power of substitution) to vote all of the Shares,
and any other shares of the Common Stock as to which Seller has voting power,
to the extent of any and all voting power which such Shares or other TSI
common stock may have based on any record date prior to the date hereof,
including without limitation all voting rights relating to TSI's annual
meeting of shareholders presently scheduled for July 22, 1999 and any
adjournments or reschedulings of that meeting. The Seller agrees that this
proxy is irrevocable and coupled with an interest and agrees to take such
further action and execute such other instruments as may be necessary to
effectuate the intent of this proxy, and hereby revokes any proxy previously
granted by the Seller to any party other than the Purchaser with respect to
any shares of TSI's Common Stock which the Seller has a right to vote. This
paragraph 2 shall be void in the event that the purchase price of the Shares
is not paid. Notwithstanding the foregoing, the parties have agreed that
Seller's voting rights as to 15,000 of the Shares are subject to
confirmation, and will be included in the above referenced proxy if such
voting rights are confirmed.
3. MISCELLANEOUS. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral. This Agreement may
not be modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Minnesota. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which, when delivered, shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be duly executed as of the day and year first above written.
First American Asset Management, a
division of U.S. Bank National Association,
on behalf of its clients
By:
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John J. Fauth Its:
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Page 10 of 10 Pages
