This excerpt taken from the TBAC DEF 14A filed Sep 22, 2006.
Board of Directors Response to Stockholder Proposal
The Board of Directors believes, and independent evidence suggests, that rights plans actually enhance value for stockholders. For example:
The Companys current preferred share purchase rights plan (the Rights Plan) is designed to strengthen the Board of Directors ability, in the exercise of its fiduciary duties, to protect our stockholders interests and to ensure that each stockholder is treated fairly in any transaction that involves a change of control of the Company. The Rights Plan does not prevent suitors from making offers to the Board or our stockholders, nor is it a deterrent to a stockholders initiation of a proxy contest. Instead, it is designed to encourage potential purchasers to negotiate directly with the Board and to give the Board sufficient time to evaluate the merits of every takeover proposal it receives, consistent with its fiduciary duties. This affords the Board the ability to respond to acquisition proposals, and the ability to attempt to negotiate a higher bid from a suitor, and flexibility to develop and pursue alternatives that may better enhance stockholder value. The Board believes that as the elected representative of the stockholders, it is in the best position to assess the intrinsic value of the Company and to negotiate on behalf of all stockholders, evaluate the adequacy of any potential offer, and protect stockholders against potential abuses during the takeover process.
Potential takeover abuses that the Companys Rights Plan is designed to protect against include the following:
The Companys Rights Plan was adopted by the Board in order to enhance its ability, in a manner consistent with its fiduciary duties, to preserve and enhance the value of every stockholders investment in the Company. The Board carefully reviewed the arguments for and against adopting such a plan before making its decision and continues to periodically review the matter, in consultation with outside counsel, to consider whether maintaining the Rights Plan continues to be in the best interests of the Companys stockholders. In fact, on October 18, 2005, the Board of Directors considered whether maintaining the Rights Plan was in the best interests of stockholders, and determined that it was. The Board of Directors, following receipt of this stockholder proposal, again considered whether maintaining the Rights Plan was in the best interests of stockholders, and determined that it was.
The Board of Directors believes redemption of the Rights Plan at this time would be premature and would remove any incentive for a potential purchaser to negotiate with the Board of Directors, leaving the stockholders unprotected from potentially coercive and unfair offers. In addition, the Company stockholders should understand that stockholder approval of the adoption or maintenance of our Rights Plan is not required by any applicable law, regulation or rule or any rule of The NASDAQ Stock Market. The stockholder approval process is long and costly, and a requirement to seek stockholder approval for a rights plan could seriously jeopardize the Companys negotiating position and leverage in a hostile situation, leaving the stockholders vulnerable to coercive and unfair acquisition tactics.
Finally, it is not clear how giving up the important bargaining tool created by our Rights Plan would respond to any of the corporate governance issues raised by the proponent. The Board of Directors is comprised entirely of independent outside directors, with the exception of the Companys President and Chief Executive Officer. The Board of Directors believes that this independence, in conjunction with the requirement to maintain a majority of independent directors on the Board of Directors, and the Board of Directors duty to act in good faith and in the best interests of Company and its stockholders, provides adequate assurance against the Rights Plan being utilized for management entrenchment. In addition: the office of Chairman of the Board of Directors is separate from the office of President and is held by an independent director; all of the key committees of the Board of Directors consist solely of independent directors; we have adopted a Code of Business Conduct and Ethics applicable to the Board of Directors, a copy of which is posted on our website; and the Board evaluates its effectiveness and performance on an annual basis.
Based on the foregoing reasons, the Board of Directors believes the proposal is not in the best interests of the Companys stockholders and recommends a vote AGAINST it.