improperly received. Notwithstanding the foregoing, the TBCA provides that a
court of competent jurisdiction, unless the corporation's charter provides
otherwise, upon application, may order that an officer or director be
indemnified for reasonable expenses if, in consideration of all relevant
circumstances, the court determines that such individual is fairly and
reasonably entitled to indemnification, notwithstanding the fact that: (a) such
officer or director was adjudged liable to the corporation in a proceeding by or
in the right of the corporation; (b) such officer or director was adjudged
liable on the basis that personal benefit was improperly received by him; or (c)
such officer or director breached his duty of care to the corporation.
AmSurg's Charter and Bylaws require AmSurg to indemnify its directors and
officers to the fullest extent permitted by law with respect to all liability
and loss suffered and expense reasonably incurred by such person in any action,
suit or proceeding in which such person was or is made, or threatened to be
made, a party, or is otherwise involved by reason of the fact that such person
is or was a director or officer of AmSurg.
In addition, AmSurg's Charter provides that AmSurg's directors shall not be
personally liable to AmSurg or its stockholders for monetary damages for breach
of any fiduciary duty as a director of AmSurg except to the extent such
exemption from liability or limitation thereof is not permitted under the TBCA.
Under the TBCA, this provision does not relieve AmSurg's directors from personal
liability to AmSurg or its stockholders for monetary damages for breach of
fiduciary duty as a director, to the extent such liability arises from a
judgment or other final adjudication establishing: (a) any breach of the
director's duty of loyalty; (b) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; or (c) any
unlawful distributions. Nor does this provision eliminate the duty of care and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Tennessee law. Finally,
this provision does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.
AmSurg has entered into indemnification agreements with all of its
directors and executive officers providing that it will indemnify those persons
to the fullest extent permitted by law against claims arising out of their
actions as officers or directors of AmSurg and will advance expenses of
defending claims against them. AmSurg believes that indemnification under these
agreements covers at least negligence and gross negligence by the directors and
officers, and requires AmSurg to advance litigation expenses in the case of
actions, including stockholder derivative actions, against an undertaking by the
officer or director to repay any advances if it is ultimately determined that
the officer or director is not entitled to indemnification.
AmSurg believes that its Charter and Bylaw provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors
At present, there is no litigation or proceeding involving a director or
officer of AmSurg as to which indemnification is being sought, nor is AmSurg
aware of any threatened litigation that may result in claims for indemnification
by any officer or director.
Pursuant to the Management Agreement, AmSurg will indemnify and hold AHC,
its directors, officers, employees and agents and any person who controls AHC
within the meaning of the Securities Act in the absence of gross negligence,
harmless from and against any and all liabilities, claims or damages (including
the cost of investigating any claim and reasonable attorneys' fees and
disbursements) in connection with any services performed by AHC pursuant to the
Management Agreement or any transactions or conduct in connection therewith. See
"THE DISTRIBUTION -- The Management Agreement."
Following the Distribution, AmSurg will have in effect an executive
liability insurance policy which will provide coverage for its directors and
officers. See "THE DISTRIBUTION -- Indemnification." Under this policy, the
insurer will agree to pay, subject to certain exclusions (including violations
of securities laws), for any claim made against a director or officer of AmSurg
for a wrongful act by such director or officer, but only if and to the extent
such director or officer becomes legally obligated to pay such claim or AmSurg
is required to indemnify the director or officer for such claim.