since such earliest date, up to the amount of such interest, (ii) the highest
preferential amount, if any, such class or series is entitled to receive on
liquidation, or (iii) the market value of the shares on either the date the
business combination is announced or the date when the interested stockholder
reaches the 10% threshold, whichever is higher, plus interest thereon less
dividends as noted above.
The Tennessee Control Share Acquisition Act (the "Acquisition Act")
prohibits certain stockholders from exercising in excess of 20% of the voting
power in a corporation acquired in a "control share acquisition," as defined in
the Acquisition Act, unless such voting rights have been previously approved by
the disinterested stockholders of the corporation. AmSurg has not elected to
make the Acquisition Act applicable to AmSurg. No assurance can be given that
such election, which must be expressed in a charter or bylaw amendment, will or
will not be made in the future.
The Tennessee Greenmail Act (the "Greenmail Act") prohibits AmSurg from
purchasing or agreeing to purchase any of its securities, at a price in excess
of fair market value, from a holder of 3% or more of any class of such
securities who has beneficially owned such securities for less than two years,
unless such purchase has been approved by the affirmative vote of a majority of
the outstanding shares of each class of voting stock issued by AmSurg or AmSurg
makes an offer of at least equal value per share to all holders of shares of
The effect of the Greenmail Act may be to render more difficult a change of
control of AmSurg.
Other Change-of-Control Provisions. For a description of certain other
change-of-control provisions, see "MANAGEMENT OF AMSURG -- Employment
Agreements; and -- Stock Incentive Plans."
SHARES ELIGIBLE FOR FUTURE SALE
Following the Distribution, AmSurg will have outstanding an aggregate of
3,803,943 shares of Class A Common Stock and 5,530,131 shares of Class B Common
Stock based on the number of outstanding shares of AmSurg Common Stock on
January 31, 1997. Of the total outstanding shares of Common Stock, the shares of
Class B Common Stock issued to holders of AHC Common Stock in the Distribution
will be freely tradable without restriction or further registration under the
Securities Act, unless held by "affiliates" of AmSurg, as that term is defined
in Rule 144 under the Securities Act (which sales would be subject to certain
volume limitations and other restrictions described below).
The shares of Class A Common Stock issued and outstanding as of the
Distribution were issued in transactions unrelated to the Distribution. Under
current law, absent registration or an exemption from registration other than
Rule 144, such shares will be "restricted securities" as that term is defined in
Rule 144 under the Securities Act and will be eligible for sale or transfer only
in accordance with Rule 144. All of the shares of Class A Common Stock expected
to be outstanding as of the Distribution will be "restricted securities."
The Series A Preferred Stock is convertible into Class A Common Stock upon
the earlier to occur of (a) 60 days following a Spin-off (the Distribution will
constitute a Spin-off) or (b) a Qualified IPO. A Qualified IPO, prior to a
Spin-off, means a public offering of Class A Common Stock yielding net cash
proceeds of at least $25,000,000. The Series B Preferred Stock is automatically
convertible in the event of an AmSurg Sale or Qualified IPO, as those terms are
defined in the AmSurg Charter. In addition, the Series B Preferred Stock may be
converted upon the Distribution and certain other events specified in the AmSurg
Charter. The shares of Class A Common Stock issued upon conversion of the Series
A Preferred Stock and Series B Preferred Stock will be "restricted securities"
as that term is defined in Rule 144 under the Securities Act and will be
eligible for sale or transfer only in accordance with Rule 144 absent
registration or an exemption from registration.
In general, under Rule 144 as currently in effect, a person (or persons
whose share are aggregated), including an affiliate, who has beneficially owned
shares for at least one year (including, if the shares are transferred, the
holding period of any prior owner except an affiliate) is entitled to sell in
"broker's transactions" or to market makers, within any three-month period
commencing 90 days after the date of this