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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 Company’s 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
stockholder’s 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 Company’s Rights Plan is
designed to protect against include the following:
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The Company’s 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
stockholder’s 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 Company’s 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 Company’s 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 Company’s 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
Company’s stockholders and recommends a vote AGAINST
it.
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