<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13D-1(A)
AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A)
(Amendment No. )/1/
MedPlus, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
585 04P 103
- --------------------------------------------------------------------------------
(CUSIP Number)
Victor I. Chang, Esq. (617) 248-7000
c/o Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston, MA 02110
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 25, 1999
- --------------------------------------------------------------------------------
(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 Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
- ---------------------
/1/ 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 disclosures provided in a prior cover page.
The information required on 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 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).
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 585 04P 103
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Edward L. Cahill
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
USA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
-0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,595,115
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,595,115
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,595,115
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 585 04P 103
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
David L. Warnock
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
USA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
-0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,595,115
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,595,115
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,595,115
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 585 04P 103
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Cahill, Warnock Strategic Partners, L.P.
IRSN: 52-1970604
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware Limited Partnership
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
-0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,595,115
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,595,115
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,595,115
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 585 04P 103
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Cahill, Warnock Strategic Partners Fund, L.P.
IRSN: 52-1970619
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware Limited Partnership
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
-0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,595,115
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,595,115
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,595,115
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
30%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
5
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 585 04P 103
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Cahill, Warnock & Company, LLC
IRSN: 52-1931617
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Maryland Limited Liability Company
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
-0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,595,115
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,595,115
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,595,115
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
30.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
OO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
6
<PAGE>
SCHEDULE 13D
- -----------------------
CUSIP NO. 585 04P 103
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Strategic Associates, L.P.
IRSN: 52-1991689
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware Limited Partnership
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
-0-
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 2,595,115
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-0-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
2,595,115
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,595,115
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [X]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
30.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
7
<PAGE>
ITEM 1. SECURITY AND ISSUER:
--------------------
This statement relates to the common stock, no par value per share, of
MedPlus, Inc., an Ohio corporation (the "Issuer"). The address of the Issuer's
principal executive offices is 8805 Governor's Hill Drive, Suite 100,
Cincinnati, OH 45249.
ITEM 2. IDENTITY AND BACKGROUND:
------------------------
This statement is being filed by (i) Cahill, Warnock Strategic Partners Fund,
L.P. ("Strategic Partners Fund"), (ii) Cahill Warnock Strategic Partners, L.P.
("Strategic Partners"), the sole general partner of Strategic Partners Fund,
(iii) Strategic Associates, L.P. ("Strategic Associates"), (iv) Cahill, Warnock
& Company, LLC ("Cahill, Warnock & Co."), the sole general partner of Strategic
Associates, (v) Edward L. Cahill ("Cahill"), a general partner of Strategic
Partners and a member of Cahill, Warnock & Co., and (vi) David L. Warnock
("Warnock"), a general partner of Strategic Partners and a member of Cahill,
Warnock & Co. Strategic Partners Fund, Strategic Partners, Strategic
Associates, Cahill, Warnock & Co., Cahill, and Warnock are sometimes referred to
collectively herein as the "Reporting Persons."
The address of the principal business and principal office of Strategic
Partners Fund, Strategic Partners, Strategic Associates and Cahill, Warnock &
Co. is 1 South Street, Suite 2150, Baltimore, MD 21202. The business address
of Cahill and Warnock is 1 South Street, Suite 2150, Baltimore, MD 21202.
The state of organization for Strategic Partners Fund, Strategic Partners and
Strategic Associates is Delaware. The state of organization for Cahill, Warnock
& Co. is Maryland. Both Cahill and Warnock are citizens of the United States of
America.
The principal business of Strategic Partners Fund and Strategic Associates is
to make private equity investments in micro-cap public companies seeking capital
for expansion or undergoing a restructuring of ownership. The principal
business of Strategic Partners is to act as the sole general partner of
Strategic Partners Fund. The principal business of Cahill, Warnock & Co. is to
act as the sole general partner of Strategic Associates and Camden Partners,
L.P. ("Camden Partners") and to manage the activities of Strategic Partners
Fund, Strategic Associates, and Camden Partners. The principal occupations of
Cahill and Warnock are their activities on behalf of Strategic Partners Fund,
Strategic Partners, Strategic Associates, Cahill, Warnock & Co. and Camden
Partners.
The principal business of Camden Partners is to make passive investments in
public companies. The principal office of Camden Partners is 1 South Street,
Suite 2150, Baltimore, MD 21202.
During the five years prior to the date hereof, none of the Reporting Persons
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or has been a party to a civil proceeding ending in a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws, or finding
a violation with respect to such laws.
8
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION:
--------------------------------------------------
On June 25, 1999 Strategic Partners Fund acquired 2,192,494 shares of the
Issuer's Series A Convertible Preferred Stock, par value $.01 per share (the
"Series A Preferred Stock") and warrants to purchase 668,905 shares of the
Issuer's Series A Preferred Stock for an aggregate purchase price of
$3,790,019.63. In addition, on June 25, 1999 Strategic Partners Fund acquired a
warrant to purchase 266,377 shares of the Issuer's Series A Preferred Stock in
partial consideration for the purchase of a subordinated note due 2004 in the
principal amount of $1,895,000. The working capital of Strategic Partners Fund
was the source of funds for this purchase. No part of the purchase price was or
will be represented by funds or other consideration borrowed or otherwise
obtained for the purpose of acquiring, holding, trading or voting such
securities.
On June 25, 1999 Strategic Associates acquired 121,484 shares of the Issuer's
Series A Preferred Stock and warrants to purchase 37,064 shares of the Issuer's
Series A Preferred Stock for an aggregate purchase price of $210,001.37. In
addition, on June 25, 1999 Strategic Associates acquired a warrant to purchase
14,760 shares of the Issuer's Series A Preferred Stock in partial consideration
for the purchase of a subordinated note due 2004 in the principal amount of
$105,000. The working capital of Strategic Associates was the source of funds
for this purchase. No part of the purchase price was or will be represented by
funds or other consideration borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting such securities.
ITEM 4. PURPOSE OF TRANSACTION:
----------------------
Strategic Partners Fund and Strategic Associates acquired the Issuer's
securities for investment purposes. Depending on market conditions, their
continuing evaluation of the business and prospects of the Issuer and other
factors, Strategic Partners Fund and Strategic Associates may dispose of or
acquire additional securities of the Issuer. Except as otherwise described
herein or as expressly stated below, none of the Reporting Persons has any
present plans which relate to or would result in:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or of
any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy
of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the Issuer by any person;
9
<PAGE>
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national
securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
Exception. Pursuant to the terms of a certain Securities Purchase
---------
Agreement dated as of June 8, 1999 and closed on June 25, 1999 (the "Purchase
Agreement," attached hereto as Exhibit 7) by and among the Issuer, Strategic
Partners Fund, Strategic Associates and Double Black Diamond II, LLC ("DBD II,"
collectively with Strategic Partners Fund and Strategic Associates, the "Series
A Purchasers"), the Issuer agreed to increase the number of its board of
directors by two and granted the Series A Purchasers the right to designate, in
the aggregate, two persons to serve as directors of the Issuer.
Exception. Pursuant to the terms of a certain Registration Rights
---------
Agreement dated June 8, 1999 and closed on June 25, 1999 (the "Registration
Rights Agreement," attached hereto as Exhibit 3) by and among the Issuer,
Strategic Partners Fund and Strategic Associates, Strategic Partners Fund and
Strategic Associates are granted, subject to certain restrictions and
limitations, certain required and incidental registration rights with respect to
the MedPlus Conversion Shares (as defined below).
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER:
----------------------------------------
(a) Strategic Partners Fund is the record owner of 2,192,494 shares of the
Issuer's Series A Preferred Stock (the "Fund Preferred Shares") and warrants to
purchase a total of 935,282 shares of the Issuer's Series A Preferred Stock (the
"Fund Warrants"). Strategic Associates is the record owner of 121,484 shares of
the Issuer's Series A Preferred Stock (the "Associates Preferred Shares")
warrants to purchase 51,824 shares of the Issuer's Series A Preferred Stock (the
"Associates Warrants"). As of the date hereof, the Fund Preferred Shares are
convertible into 2,192,494 shares of the Issuer's common stock (the "Fund
Conversion Shares") and the Associates Preferred Shares are convertible into
121,484 shares of the Issuer's common stock. As of the date hereof, the Fund
Warrants are exercisable in exchange for 266,377 shares of the Issuer's Series A
Preferred Stock (the "Fund Warrant Shares") and the Associates Warrants are
exercisable in exchange for 14,760 shares of the Issuer's Series A Preferred
Stock (the "Associates Warrant Shares"). The Fund Warrants and the Associate
Warrants will be exercisable in exchange for an additional 668,905 shares and
37,064 shares of the Issuer's common stock, respectively, on the first day after
June 25, 1999 that the fair market value of one share of the Issuer's common
stock equals or exceeds $7.17.
As of the date hereof, the Fund Preferred Shares, the Associates Preferred
Shares, the Fund Warrant Shares and the Associates Warrant Shares are
convertible into 2,595,115 shares of the Issuer's common stock (the "MedPlus
Conversion Shares").
Because of their relationship as affiliated entities, both Strategic
Partners Fund and Strategic Associates may be deemed to own beneficially the
MedPlus Conversion Shares. As general partners of Strategic Partners Fund and
Strategic Associates, respectively, Strategic Partners and Cahill, Warnock & Co.
may be deemed to own beneficially the MedPlus Conversion Shares. As the
individual general partners of Strategic Partners and
10
<PAGE>
as the members of Cahill, Warnock & Co., both Cahill and Warnock may be deemed
to own beneficially the MedPlus Conversion Shares.
By virtue of the Purchase Agreement (attached hereto as Exhibit 7), each of
---------
the Reporting Persons may be deemed to share voting power with respect to each
share of the Issuer's stock subject to the agreement. Consequently, the
Reporting Persons may be deemed to beneficially own, in addition to the MedPlus
Conversion Shares, an additional 73,570 shares of the Issuer's common stock (the
"Agreement Shares")
Strategic Partners Fund disclaims beneficial ownership of the Associates
Conversion shares, the Associates Warrant Shares and the Agreement Shares.
Strategic Associates disclaims beneficial ownership of the Fund Conversion
Shares, the Fund Warrant Shares and the Agreement Shares. Strategic Partners,
Cahill, Warnock & Co., Cahill, and Warnock each disclaim beneficial ownership of
the MedPlus Conversion Shares and the Agreement Shares, except with respect to
their pecuniary interest therein, if any.
Each of the Reporting Persons may be deemed to own beneficially 30.0% of
the Issuer's Common Stock, which percentage is calculated based upon (i)
6,055,267 shares of the Issuer's common stock reported as outstanding by the
Issuer in its Quarterly Report on Form 10-QSB for the quarterly period ended
April 30, 1999, and (ii) the number of shares issuable upon the exercise of the
MedPlus Conversion Shares (2,595,115 shares of the Issuer's common stock). Such
calculation of deemed beneficial ownership does not reflect potential deemed
beneficial ownership of the Agreement Shares.
In Amendment No. 1 to the Limited Partnership Agreement of Strategic
Partners Fund, dated July 26, 1996 (attached hereto as Exhibit 2), Strategic
---------
Partners and the limited partners of Strategic Partners Fund agreed that any
securities of a particular issuer that are acquired by both Strategic Partners
Fund and Strategic Associates shall be sold or otherwise disposed of at
substantially the same time, on substantially the same terms and in amounts
proportionate to the size of each of their investments. As a consequence,
Strategic Associates and Strategic Partners Fund may be deemed to be members of
a group pursuant to Rule 13d-5(b)(1) of the Securities Exchange Act of 1934.
Strategic Partners, Cahill, Warnock & Co., Cahill and Warnock each disclaim
membership in the aforementioned group.
(b) Number of Shares as to which each such person has
(i) Sole power to vote or direct the vote:
0 shares for each Reporting Person;
(ii) Shared power to vote or direct the vote:
2,595,115* shares for each Reporting Person;
(iii) Sole power to dispose or to direct the disposition:
0 shares for each Reporting Person;
(iv) Shared power to dispose or to direct the disposition:
2,595,115* shares for each Reporting Person.
11
<PAGE>
* Does not reflect potential deemed beneficial ownership of the Agreement
Shares.
(c) Except as set forth above, none of the Reporting Persons has effected
any transaction in the Shares during the last 60 days.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or any proceeds from the sale of, the
Shares beneficially owned by any of the Reporting Persons.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER:
In Amendment No. 1 to the Limited Partnership Agreement of Strategic
Partners Fund, dated July 26, 1996 (attached hereto as Exhibit 2), Strategic
---------
Partners and the limited partners of Strategic Partners Fund agreed that any
securities of a particular issuer that are acquired by both Strategic Partners
Fund and Strategic Associates shall be sold or otherwise disposed of at
substantially the same time, on substantially the same terms and in amounts
proportionate to the size of each of their investments.
Pursuant to the terms of the Purchase Agreement (attached hereto as
Exhibit 7), (a) Strategic Partners Fund acquired 2,192,494 shares of the
- ---------
Issuer's Series A Preferred Stock, a warrant to purchase 266,377 shares of the
Issuer's Series A Preferred Stock void after June 25, 2004 and a warrant to
purchase 668,905 shares of the Issuer's Series A Preferred Stock void after June
25, 2009, and (b) Strategic Associates acquired 121,484 shares of the Issuer's
Series A Preferred Stock, a warrant to purchase 14,760 shares of the Issuer's
Series A Preferred Stock void after June 25, 2004 and a warrant to purchase
37,064 shares of the Issuer's Series A Preferred Stock void after June 25, 2009.
Pursuant to the terms of the Purchase Agreement, the Issuer agreed increase the
size of its board of directors by two, and granted Strategic Partners Fund,
Strategic Associates and DBD II the right to designate, in the aggregate, two
directors to the board of directors of the Issuer.
Pursuant to the terms of the Registration Rights Agreement (attached hereto
as Exhibit 3), Strategic Partners Fund and Strategic Associates are granted,
---------
subject to certain restrictions and limitations, certain required and incidental
registration rights with respect to the MedPlus Conversion Shares.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS:
Exhibit 1 - Agreement regarding filing of joint Schedule 13D.
Exhibit 2 - Amendment No. 1 to the Limited Partnership Agreement of
Strategic Partners Fund.
Exhibit 3 - Execution Copy of the Registration Rights Agreement dated as
of April 30, 1999 by and among MedPlus, Inc., Cahill, Warnock
Strategic Partners Fund, L.P., Strategic Associates, L.P. and
Double Black Diamond II, LLC.
Exhibit 4 - Form of Certificate of Amendment to the Articles of
Incorporation of MedPlus, Inc. (filed June 25, 1999 with the
Secretary of the State of Ohio).
Exhibit 5 - Form of Series A Convertible Preferred Stock Purchase Warrant
dated June 25, 1999 issued by MedPlus, Inc. to Cahill,
Warnock Strategic Partners Fund, L.P. and Strategic
Associates, L.P.
Exhibit 6 - Form of Series A Convertible Preferred Stock Warrant dated
June 25, 1999 issued by MedPlus, Inc. to Cahill, Warnock
Strategic Partners Fund, L.P., Strategic Associates, L.P. and
Double Black Diamond II, LLC.
Exhibit 7 - Amended and Restated Securities Purchase Agreement dated as
of June 8, 1999 by and among MedPlus, Inc., Cahill, Warnock
Strategic Partners Fund, L.P., Strategic Associates, L.P. and
Double Black Diamond II, LLC (filed as Exhibit 99.1 to the
Issuer's Current Report on Form 8-K filed with the Securities
and Exchange Commission on June 9, 1999 and incorporated
herein by reference).
12
<PAGE>
SCHEDULE 13D
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 6, 1999
/s/ Edward L. Cahill
-----------------------------
Edward L. Cahill
/s/ David L. Warnock
-----------------------------
David L. Warnock
CAHILL, WARNOCK STRATEGIC
PARTNERS FUND, L.P.
By: Cahill, Warnock Strategic Partners,
L.P., its Sole General Partner
By: /s/ Edward L. Cahill
---------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
---------------------------
David L. Warnock, General Partner
CAHILL, WARNOCK STRATEGIC
PARTNERS, L.P.
By: /s/ Edward L. Cahill
-----------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
-----------------------------
David L. Warnock, General Partner
STRATEGIC ASSOCIATES, L.P.
By: Cahill, Warnock & Company, LLC, its
sole General Partner
By: /s/ Edward L. Cahill
-----------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
-----------------------------
David L. Warnock, Member
CAHILL, WARNOCK & COMPANY, LLC
By: /s/ Edward L. Cahill
-----------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
-----------------------------
David L. Warnock, Member
13
<PAGE>
EXHIBIT 1
---------
AGREEMENT
Pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, the
undersigned hereby agree that only one statement containing the information
required by Schedule 13D need be filed with respect to the ownership by each of
the undersigned of shares of stock of MedPlus, Inc.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
Executed this July 6, 1999
/s/ Edward L. Cahill
-----------------------------
Edward L. Cahill
/s/ David L. Warnock
-----------------------------
David L. Warnock
CAHILL, WARNOCK STRATEGIC
PARTNERS FUND, L.P.
By: Cahill, Warnock Strategic Partners,
L.P., its Sole General Partner
By: /s/ Edward L. Cahill
--------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
--------------------------
David L. Warnock, General Partner
CAHILL, WARNOCK STRATEGIC
PARTNERS, L.P.
By: /s/ Edward L. Cahill
--------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
--------------------------
David L. Warnock, General Partner
STRATEGIC ASSOCIATES, L.P.
By: Cahill, Warnock & Company, LLC, its
sole General Partner
By: /s/ Edward L. Cahill
--------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
--------------------------
David L. Warnock, Member
CAHILL, WARNOCK & COMPANY, LLC
By: /s/ Edward L. Cahill
--------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
--------------------------
David L. Warnock, Member
<PAGE>
Exhibit 2
---------
AMENDMENT NO. 1 TO
LIMITED PARTNERSHIP AGREEMENT
OF
CAHILL, WARNOCK STRATEGIC PARTNERS FUND, L.P.
AMENDMENT NO. 1 dated as of the 26th day of July, 1996, by and among
Cahill, Warnock Strategic Partners, L.P., a Delaware limited partnership, as
general partner (the "General Partner") of Cahill, Warnock Strategic Partners
Fund, L.P., a Delaware limited partnership (the "Partnership"), and the Limited
Partners of the Partnership listed on Schedule A to the Limited Partnership
Agreement of the Partnership, dated as of April 11, 1996 (the "Partnership
Agreement"), at least 66 2/3% in interest of whom have executed a counterpart
signature page to this Amendment No. 1:
WHEREAS, immediately prior to the admission on the date hereof of
additional Limited Partners to the Partnership pursuant to Section 8(c) of the
Partnership Agreement, the parties hereto desire to amend the Partnership
Agreement and approve Amendment No. 1 to the Management Agreement, the form of
which Management Agreement is attached to the Partnership Agreement as
Schedule B.
NOW, THEREFORE, the parties hereto, in consideration of the premises
and the agreements herein contained and intending to be legally bound hereby,
agree as follows:
1. Section 4(k)(2) of the Partnership Agreement is amended by deleting
the second sentence thereof in its entirety and substituting the
following:
"Notwithstanding Section 4(e)(1) to the contrary, the Principals
may organize, after the date of this Agreement, other investment
funds and client investment vehicles for the benefit of
employees, associates and advisors of the General Partner and the
Principals and for investors who may be strategically important
to the Partnership, specifically for the purpose of co-investing
with the Partnership; provided that the aggregate amount of
capital committed to such other investment funds and client
investment vehicles does not exceed $7 million; and provided,
further, that any such investment funds or client investment
vehicles which are
<PAGE>
managed by the General Partner or the Principals shall sell or
otherwise dispose of each such co-investment at substantially the
same time and on substantially the same terms as the Partnership
in amounts proportionate to the relative size of the investments
made by such investment funds and client investment vehicles and
the Partnership."
2. Section 7(a) of the Partnership Agreement is amended by deleting the
first sentence thereof in its entirety and substituting the following:
"The Partnership shall have a Valuation Committee which shall
consist of at least three (3) but not more than five (5) members,
none of whom shall be an officer, director, member or employee of
the General Partner, the Management Company or any affiliate
thereof, and none of whom shall be related to any Principal."
3. Section 8(a) of the Partnership Agreement is amended by adding the
following text at the end thereof:
"Each notice for an Additional Capital Contribution from the
General Partner shall include a general description of the
purposes and uses for which the Additional Capital Contribution
is being called including, for example, the payment of
Partnership expenses (including the Management Fee) and the
purchase of Portfolio Company Securities; provided that the
General Partner shall not be required to identify the purposes
and uses of 100% of any Additional Capital Contribution or be
required to identify the name of any particular Portfolio Company
or proposed Portfolio Company. After the fourth anniversary of
the last admittance of any additional Limited Partners pursuant
to Section 8(c) hereof, the General Partner shall not make any
further calls for Additional Capital Contributions for the
purpose of investing in the Securities of any entity that was not
a Portfolio Company (including as a Portfolio Company for such
purpose, any predecessor of such entity) on such anniversary
date, except with the approval of the Valuation Committee. After
the fifth anniversary of the last admittance of any additional
Limited Partners pursuant to Section 8(c) hereof, the General
Partner shall not make any further calls for Additional Capital
Contributions for the purpose of investing in the Securities of
any entity that was a Portfolio Company (including as a Portfolio
Company for such purpose, any predecessor of such entity) on such
anniversary date, except with the approval of the Valuation
Committee."
2
<PAGE>
4. Section 11(b) of the Partnership Agreement is amended by adding the
following subsection (8) at the end thereof:
"(8) An amount equal to 50% of all distributions made to the
General Partner, other than (A) Tax Distributions plus (B)
distributions the General Partner would have received if it had
made its Capital Contributions as a Limited Partner and did not
hold an interest as a General Partner (excluding any Tax
Distributions on account thereof which are included in (A)),
shall be used by the General Partner immediately upon
distribution thereof to prepay any promissory notes contributed
by the General Partner to the Partnership."
5. Section 16 of the Partnership Agreement is amended by adding the
following text at the end thereof:
"No Principal will voluntarily assign, pledge, mortgage,
hypothecate, sell or otherwise dispose of or encumber (a
"Disposition") all or any part of his interest in the allocations
made to the General Partner of "20% of such additional Net
Realized Gain" pursuant to Section 10(b)(1)(A)(iv) (the "20%
carried interest"), except for (a) Dispositions to members of his
immediate family or trusts for the benefit of such general
partner or members of his immediate family (and, in the case of
any Dispositions to such family members or such trusts, the
transferee shall thereafter be subject, as to further transfers,
to the same restrictions on transfer as were applicable to the
transferor), (b) Dispositions to other persons who are associated
with or employed by the General Partner, the Principals or the
Management Company, and (c) Dispositions to another Principal;
provided, that, the Dispositions of all Principals pursuant to
clauses (a) and (b) shall not exceed in the aggregate 45% of
their aggregate interests in the 20% carried interest."
6. Section 19(c) of the Partnership Agreement is amended by adding the
following text at the end thereof:
"The General Partner shall transmit to each Partner within sixty
(60) days after the close of each fiscal year, a report
describing any fees and other remuneration which, pursuant to
Section 4(b) of the Management Agreement, reduced the Management
Fee payable in such fiscal year. Such description will be
organized by the type of such fees and other remuneration (e.g.,
director's fees and consulting fees) and the dollar amount
attributable to each such category."
7. Pursuant to Section 7 of the Management Agreement, the Limited
Partners hereby consent to Amendment No. 1 to the Management Agreement
dated
3
<PAGE>
the date hereof, which amends Section 4(b) of the Management Agreement
by adding the following text at the end thereof:
"If in any year such reductions exceed the Management Fee
otherwise payable, the excess amount of such reductions shall be
carried forward on a year-by-year basis."
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 as
of the day and year first above written.
GENERAL PARTNER
CAHILL, WARNOCK STRATEGIC
PARTNERS, L.P.
By: /s/ Edward L. Cahill
-----------------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
-----------------------------------
David L. Warnock, General Partner
4
<PAGE>
AMENDMENT NO. 1 TO
LIMITED PARTNERSHIP AGREEMENT
OF
CAHILL, WARNOCK STRATEGIC PARTNERS FUND, L.P.
LIMITED PARTNER SIGNATURE PAGE
------------------------------
The undersigned Limited Partner hereby executes Amendment No. 1 to
Limited Partnership Agreement of Cahill, Warnock Strategic Partners Fund, L.P.
and hereby authorizes this signature page to be attached to a counterpart of
such document executed by the General Partner of Cahill, Warnock Strategic
Partners Fund, L.P.
Please type or print exact
name of Limited Partner *
-------------------------------------
Please sign here By
-----------------------------------
Please type or print exact
name of signer
-------------------------------------
Please type or print
title of signer Title
-------------------------------------
* Signature pages of the limited partners will be provided upon request.
5
<PAGE>
Exhibit 3
---------
REGISTRATION RIGHTS AGREEMENT
April 30, 1999
To each of the several Purchasers named in Exhibit 1.01 to the Securities
Purchase Agreement dated April 30, 1999
Ladies and Gentlemen:
This will confirm that in consideration of your agreement on the date
hereof to enter into the Securities Purchase Agreement of even date herewith
(the "Purchase Agreement") between MedPlus, Inc. (the "Company") and you, and as
------------------
an inducement to you to consummate the transactions contemplated by the Purchase
Agreement, the Company covenants and agrees with each of you as follows. All
capitalized terms not defined herein shall have the meanings assigned to them in
the Purchase Agreement.
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
----------
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, no par value, of the
------------
Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued upon
-----------------
conversion of the Preferred Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Managing Shareholder" shall mean Richard A. Mahoney.
--------------------
"Managing Shareholder Shares" shall mean shares of Common Stock now or
---------------------------
hereafter owned beneficially and of record by the Managing Shareholder.
"Notes" shall mean the Company's subordinated notes, due 2004, in the
-----
aggregate principal amount of $2,000,000 issued pursuant to the Purchase
Agreement.
"Note Warrants" shall mean the warrants to purchase shares of Common
-------------
Stock or Preferred Stock issued pursuant to the Notes.
"Preferred Shares" shall mean the shares of Preferred Stock issued
----------------
pursuant to the Purchase Agreement, any shares of Preferred Stock issued upon
exercise of the Warrants and any additional shares of Preferred Stock hereafter
acquired by the Purchasers.
<PAGE>
-2-
"Preferred Stock" shall mean the Series A Convertible Preferred
---------------
Stock of the Company, $.01 par value.
"Purchase Warrants" shall mean the warrants to purchase an aggregate
-----------------
of 759,562 shares of the Preferred Stock to be issued pursuant to the Purchase
Agreement.
"Registration Expenses" shall mean the expenses so described in
---------------------
Section 8.
"Restricted Stock" shall mean the Conversion Shares, the Warrant
----------------
Shares and any additional shares of Common Stock which the Purchasers hereafter
acquire, excluding Conversion Shares, Warrant Shares and shares of Common Stock
held by the Purchasers which have been (a) registered under the Securities Act
pursuant to an effective registration statement filed thereunder and disposed of
in accordance with the registration statement covering them or (b) publicly sold
pursuant to Rule 144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 8.
----------------
"Warrants" shall mean the Purchase Warrants and the Note Warrants.
--------
"Warrant Shares" shall mean the shares of Common Stock issued upon
--------------
exercise of the Note Warrants.
2. Restrictive Legend. Each certificate representing Preferred Shares,
------------------
Conversion Shares or Warrant Shares shall, except as otherwise provided in this
Section 2 or in Section 3, be stamped or otherwise imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND
ALL SUCH APPLICABLE LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that Testa, Hurwitz & Thibeault,
LLP shall be satisfactory) the securities represented thereby may be publicly
sold without registration under the Securities Act and any applicable state
securities laws.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
---------------------------
Preferred Shares, Conversion Shares or Warrant Shares (other than under the
circumstances described in Sections 4, 5 or 6), the holder thereof shall give
written notice to the Company of its intention to effect such transfer. Each
such notice shall describe the manner of the proposed transfer and, if requested
by the Company, shall be accompanied by an opinion of counsel satisfactory to
the Company (it being agreed that Testa, Hurwitz & Thibeault, LLP shall be
satisfactory) to the effect that the proposed transfer may be effected without
registration under the Securities Act and any applicable state securities laws,
whereupon the holder of such stock shall be entitled to transfer such stock in
accordance with the terms of its notice;
<PAGE>
-3-
provided, however, that no such opinion of counsel shall be required for a
- -------- -------
to one or more partners of the transferor (in the case of a transferor that is a
partnership) or to an affiliated corporation (in the case of a transferor that
is a corporation). Each certificate for Preferred Shares, Conversion Shares or
Warrant Shares transferred as above provided shall bear the legend set forth in
Section 2, except that such certificate shall not bear such legend if (i) such
transfer is in accordance with the provisions of Rule 144 (or any other rule
permitting public sale without registration under the Securities Act) or (ii)
the opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 3 shall not apply to securities which are not required to bear the
legend prescribed by Section 2 in accordance with the provisions of that
Section.
4. Required Registration.
---------------------
(a) At any time after the date hereof, the holders of Restricted
Stock constituting at least a majority of the total shares of Restricted Stock
then outstanding may request the Company to register under the Securities Act
all or any portion of the shares of Restricted Stock held by such requesting
holder or holders for sale in the manner specified in such notice, provided that
--------
the shares of Restricted Stock for which registration has been requested shall
constitute at least 20% of the total shares of Restricted Stock originally
issued if such holder or holders shall request the registration of less than all
shares of Restricted Stock then held by such holder or holders (or any lesser
percentage if the reasonably anticipated aggregate price to the public of such
public offering would exceed $5,000,000). For purposes of this Section 4,
Section 5 and Section 6, the term "Restricted Stock" shall be deemed to include
the number of shares of Restricted Stock which would be issuable to a holder of
Preferred Shares or Warrants upon the exercise of all Warrants and the
conversion of all Preferred Shares held by such holder (assuming such exercise)
at such time, and for purposes of Sections 12(a) and 12(d), the term "Restricted
Stock" shall be deemed to include the number of shares of Restricted Stock which
would be issuable to a holder of Preferred Shares or Warrants upon exercise of
all Warrants and conversion of all Preferred Shares held by such holder
(assuming such exercise) at such time, provided, however, that the only
-------- -------
securities which the Company shall be required to register pursuant hereto shall
be shares of Common Stock, and provided, further, however, that, in any
-------- ------- -------
underwritten public offering contemplated by this Section 4, Section 5 or
Section 6, the holders of Preferred Shares shall be entitled to sell such
Preferred Shares to the underwriters for conversion and sale of the shares of
Common Stock issued upon conversion thereof. In the event that any registration
pursuant to this Section 4 shall be, in whole or in part, an underwritten public
offering of Common Stock, the number of shares of Restricted Stock to be
included in such an underwriting may be reduced (pro rata among the requesting
holders based upon the number of shares of Restricted Stock owned by such
holders) if and to the extent that the managing underwriter shall be of the
opinion that the inclusion of all such shares would adversely affect the
marketing of the shares to be sold therein, provided, however, that such number
-------- -------
of shares of Restricted Stock shall not be reduced if any shares are to be
included in such underwriting for the account of any person other than
requesting holders of Restricted Stock. Notwithstanding anything to the
contrary contained herein, no request may be made under this Section 4 within
120 days after the effective date of a registration statement filed by the
Company covering a firm commitment underwritten public offering in which the
holders of Restricted Stock shall have been entitled to join pursuant to Section
5 and in which there shall have been effectively registered all shares of
Restricted Stock as to which registration shall have been requested.
(b) Following receipt of any notice under this Section 4, the Company
shall immediately notify the Managing Shareholder and all holders of Restricted
Stock and Warrants from
<PAGE>
-4-
whom notice has not been received and shall use its best efforts to register
under the Securities Act, for public sale in accordance with the method of
disposition specified in such notice from requesting holders, (i) the number of
shares of Restricted Stock specified in such notice (and in all notices received
by the Company from other holders within 30 days after the giving of such notice
by the Company), and (ii) subject to Section 4(d), the number of Managing
Shareholder Shares specified in any notice received by the Company from the
Managing Shareholder within 30 days after the giving of such notice by the
Company. If such method of disposition shall be an underwritten public offering,
the holders of a majority of the shares of Restricted Stock to be sold in such
offering may designate the managing underwriter of such offering, subject to the
approval of the Company, which approval shall not be unreasonably withheld or
delayed. The Company shall be obligated to register Restricted Stock pursuant to
this Section 4 on two occasions only, provided, however, that such obligation
-------- -------
shall be deemed satisfied only when a registration statement covering all shares
of Restricted Stock specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting holders,
shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold. Except for registration statements
on Form S-4, S-8 or any successor thereto, the Company will not file with the
Commission any other registration statement with respect to its Common Stock,
whether for its own account or that of other stockholders, from the date of
receipt of a notice from requesting holders pursuant to this Section 4 until the
completion of the period of distribution of the registration contemplated
thereby.
(d) Notwithstanding anything herein to the contrary, with respect to
any single registration, (i) the Company shall not register more than that
number of Managing Shareholder Shares as is equal to twenty percent (20%) of the
aggregate shares of Restricted Stock registered in such registration, and (ii)
in no event shall the Company shall not register any Managing Shareholder Shares
if such registration is, in whole or in part, an underwritten public offering of
Common Stock and the managing underwriter is of the opinion that the inclusion
of such Managing Shareholder Shares would adversely affect the marketing of the
shares to be sold therein.
5. Incidental Registration. If the Company at any time (other than
-----------------------
pursuant to Section 4 or Section 6) proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms S-4, S-8 or another form not available for
registering the Restricted Stock for sale to the public), each such time it will
give written notice to all holders of outstanding Restricted Stock and Warrants
of its intention so to do. Upon the written request of any such holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of its Restricted Stock, the Company will use its
best efforts to cause the Restricted Stock as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder of such
Restricted Stock so registered. In the event that any registration pursuant to
this Section 5 shall be, in whole or in part, an underwritten public offering of
Common Stock, (i) then the holders of a majority of the shares of Restricted
Stock to be sold in such offering may designate a co-managing underwriter of
such offering, and (ii) the number of shares of
<PAGE>
-5-
Restricted Stock to be included in such an underwriting may be reduced (pro rata
among the requesting holders based upon the number of shares of Restricted Stock
owned by such holders) if and to the extent that the managing underwriter shall
be of the opinion that such inclusion would adversely affect the marketing of
the securities to be sold by the Company therein, provided, however, that such
-------- -------
number of shares of Restricted Stock shall not be reduced if any shares are to
be included in such underwriting for the account of any person other than the
Company or requesting holders of Restricted Stock. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement referred to in
this Section 5 without thereby incurring any liability to the holders of
Restricted Stock. The Company hereby agrees that it will not register any of its
securities under the Securities Act for sale to the public for the account of
any security holder other than a Purchaser without the prior written consent of
the Purchasers.
6. Registration on Form S-3. If at any time (i) a holder or holders of
------------------------
Preferred Shares or Restricted Stock request that the Company file a
registration statement on Form S-3 or any successor thereto for a public
offering of all or any portion of the shares of Restricted Stock held by such
requesting holder or holders, the reasonably anticipated aggregate price to the
public of which would exceed $1,000,000, and (ii) the Company is a registrant
entitled to use Form S-3 or any successor thereto to register such shares, then
the Company shall use its best efforts to register under the Securities Act on
Form S-3 or any successor thereto, for public sale in accordance with the method
of disposition specified in such notice, the number of shares of Restricted
Stock specified in such notice. Whenever the Company is required by this
Section 6 to use its best efforts to effect the registration of Restricted
Stock, each of the procedures and requirements of Section 4 (including but not
limited to the requirement that the Company notify all holders of Restricted
Stock and Warrants from whom notice has not been received and provide them with
the opportunity to participate in the offering) shall apply to such
registration, provided, however, that there shall be no limitation on the number
-------- -------
of registrations on Form S-3 which may be requested and obtained under this
Section 6, and provided, further, however, that the requirements contained in
-------- ------- -------
the first sentence of Section 4(a) shall not apply to any registration on Form
S-3 which may be requested and obtained under this Section 6.
7. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of Sections 4, 5 or 6 to use its best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each
underwriter, and to the Managing Shareholder if any Managing Shareholder Shares
are included in such registration, such number of copies of the registration
statement and the prospectus included therein (including each
<PAGE>
-6-
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted Stock and
Managing Shareholder Shares, if any, covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted Stock
and the Managing Shareholder Shares, if any, covered by such registration
statement under the securities or "blue sky" laws of such jurisdictions as the
sellers of Restricted Stock or, in the case of an underwritten public offering,
the managing underwriter reasonably shall request, provided, however, that the
-------- -------
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to list the Restricted Stock and the
Managing Shareholder Shares, if any, covered by such registration statement with
any securities exchange on which the Common Stock of the Company is then listed;
(f) immediately notify each seller of Restricted Stock and each
underwriter, and the Managing Shareholder, if any Managing Shareholder Shares
are included in such registration, under such registration statement, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has knowledge
as a result of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any seller
of Restricted Stock, use its best efforts to furnish on the date that Restricted
Stock is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein) and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
and
(h) make available for inspection by each seller of Restricted Stock,
any underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees
<PAGE>
-7-
to supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement.
For purposes of Section 7(a) and 7(b) and of Section 4(c), the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 120 days
after the effective date thereof.
In connection with each registration hereunder, the sellers of Restricted
Stock will furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws. In connection with any registration of Managing Shareholder
Shares pursuant to the terms hereof, the Managing Shareholder will furnish to
the Company in writing such information with respect to himself and the proposed
distribution by him as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5 or 6
covering an underwritten public offering, the Company and each seller agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
8. Expenses. All expenses incurred by the Company in complying with
--------
Sections 4, 5 or 6, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of insurance and reasonable fees
and disbursements of one counsel for the sellers of Restricted Stock, but
excluding any Selling Expenses, are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock and Managing Shareholder Shares are called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 4, 5 or 6. All Selling Expenses in
connection with each registration statement under Sections 4, 5 or 6 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree.
9. Indemnification and Contribution.
--------------------------------
(a) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Sections 4, 5 or 6, the Company will
indemnify and hold harmless each seller of such Restricted Stock thereunder,
each underwriter of such Restricted Stock thereunder and each other person, if
any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such
<PAGE>
-8-
Restricted Stock was registered under the Securities Act pursuant to Sections 4,
5 or 6, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each such seller, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Company will not be liable in any such case
-------- -------
if and to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished by any such
seller, any such underwriter or any such controlling person in writing
specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Sections 4, 5 or 6, each seller of such
Restricted Stock thereunder, and the Managing Shareholder, to the extent a
seller of Managing Shareholder Shares thereunder, severally and not jointly,
will indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Restricted Stock was, and Managing Shareholder Shares were,
registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that such seller will be liable hereunder in any such case if
- -------- -------
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus, and
provided, further, however, that the liability of each seller hereunder shall be
- -------- ------- -------
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of the shares
sold by such seller under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to exceed
the net proceeds received by such seller from the sale of shares covered by such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 9 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 9 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with
<PAGE>
-9-
counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
- -------- -------
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Restricted Stock exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 9 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
9; then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its shares of Common Stock offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
-------- -------
required to contribute any amount in excess of the public offering price of all
such shares of Common Stock offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
10. Changes in Common Stock or Preferred Stock. If, and as often as,
------------------------------------------
there is any change in the Common Stock or the Preferred Stock by way of a stock
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
11. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, at all times
after 90 days after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
<PAGE>
-10-
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Restricted Stock without
registration.
12. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Charter or Code of Regulations of the Company or any provision
of any indenture, agreement or other instrument to which it or any or its
properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
13. Miscellaneous.
-------------
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Preferred Shares, Warrants or Restricted Stock),
whether so expressed or not, provided, however, that registration rights
-------- -------
conferred herein on the holders of Preferred Shares, Warrants or Restricted
Stock shall only inure to the benefit of a transferee of Preferred Shares,
Warrants, or Restricted Stock if (i) there is transferred to such transferee at
least 20% of the total shares of Restricted Stock originally issued pursuant to
the Purchase Agreement to the direct or indirect transferor of such transferee
or (ii) such transferee is a partner, shareholder or affiliate of a party
hereto, and provided further that registration rights conferred herein on the
----------------
Managing Shareholder shall not inure to the benefit of any transferee of
Managing Shareholder Shares.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by telecopier or
telex, addressed as follows:
if to the Company or any other party hereto, at the address of
such party set forth in the Purchase Agreement;
if to any subsequent holder of Preferred Shares, Warrants or
Restricted Stock, to it at such address as may have been furnished to the
Company in writing by such holder;
<PAGE>
-11-
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares, Warrants
or Restricted Stock) or to the holders of Preferred Shares, Warrants or
Restricted Stock (in the case of the Company) in accordance with the provisions
of this paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the holders
of at least two-thirds of the outstanding shares of Restricted Stock.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) The obligations of the Company to register shares of Restricted
Stock under Sections 4, 5 or 6 shall terminate on the fifteenth anniversary of
the date of this Agreement.
(g) Notwithstanding the provisions of Section 7(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 24-month period if there exists at the time material non-
public information relating to the Company which, in the reasonable opinion of
the Company, should not be disclosed.
(h) The Company shall not grant to any third party any registration
rights substantially equal to or more favorable than or inconsistent with any of
those contained herein, so long as any of the registration rights under this
Agreement remains in effect.
(i) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
[Remainder of Page Intentionally Blank]
<PAGE>
- Registration Rights Agreement -
Please indicate your acceptance of the foregoing by signing and returning
the enclosed counterpart of this letter, whereupon this Agreement shall be a
binding agreement between the Company and you.
Very truly yours,
MEDPLUS, INC.
By:____________________________
Title:_________________________
AGREED TO AND ACCEPTED as of the date first
above written.
Purchasers named in Exhibit 1.01 to the Purchase
Agreement:
CAHILL, WARNOCK STRATEGIC PARTNERS FUND, L.P.,
By: CAHILL, WARNOCK STRATEGIC PARTNERS, L.P.,
its General Partner
By:__________________________________
Title:_______________________________
STRATEGIC ASSOCIATES, L.P.,
By: CAHILL, WARNOCK & COMPANY, LLC,
its General Partner
By:__________________________________
Title:_______________________________
DOUBLE BLACK DIAMOND II LLC
By:__________________________________
Title:_______________________________
Managing Shareholder:
_____________________________________
Richard A. Mahoney
<PAGE>
Exhibit 4
---------
C-106 J. KENNETH BLACKWELL Charter # _______________
Secretary of State Approved by _____________
Date ___________________
Fee ____________________
CERTIFICATE OF AMENDMENT
(By Shareholders)
TO THE ARTICLES OF INCORPORATION OF
MedPlus, Inc.
The undersigned, the President and Secretary of the above named Ohio
corporation, with its principal location at 8805 Governor's Hill Drive,
Cincinnati, Ohio, do hereby certify that:
At a meeting of the shareholders of MedPlus, Inc. held on June 18, 1999 at which
a quorum was present, the following resolution was adopted to amend the
Articles:
RESOLVED, that Article Fourth of the Articles of Incorporation of the
Company be amended to read in its entirety as follows:
FOURTH: The aggregate number of shares which the Corporation shall have
the authority to issue shall be (a) 15,000,000 shares of Common Stock without
par value; and (b) 5,000,000 shares of Series A Convertible Preferred Stock as
follows:
1. Number of Shares. The series of Preferred Stock designated and known
----------------
as "Series A Convertible Preferred Stock" shall consist of 5,000,000 shares.
------------------------------------
2. Voting. Except as may be otherwise provided in these terms of the
------
Series A Convertible Preferred Stock or by law, the Series A Convertible
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation as a single class on all actions to be taken by the
stockholders of the Corporation, including, but not limited to actions amending
the Certificate of Incorporation of the Corporation to increase the number of
authorized shares of Common Stock. Each share of Series A Convertible Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of shares of Common Stock (including
fractions of a share) into which each share of Series A Convertible Preferred
Stock is then convertible; provided, however, that if the number of such number
-------- -------
of votes is greater than such number of shares of Series A Convertible Preferred
Stock and is consequently a violation of the rules of the Nasdaq Stock Market
applicable to the Company, then the number of votes shall equal the number of
shares of Series A Convertible Preferred Stock.
3. Dividends. The holders of the Series A Convertible Preferred Stock
---------
shall be entitled to receive, out of funds legally available therefor, quarterly
cash dividends at the rate per annum of $0.06916 per share until June 23, 2002
and thereafter at the rate of $0.1729 per share (the "Accruing Dividends").
------------------
Accruing Dividends shall accrue from day to day, whether or not earned or
declared, and shall be cumulative. Accruing Dividends shall be declared by the
Board of Directors and paid by the Corporation quarterly on January 31, April
30, July 31 and October 31 of each year with respect to each share of Series A
Convertible Preferred Stock then issued and outstanding. At the sole option of
the holder of shares of Series A Convertible Preferred Stock, the Accruing
Dividends may be paid in the form of additional shares of Common Stock. Upon
declaration by the Board of Directors of the Accruing Dividends, notice shall be
sent to each holder of Series A Convertible Preferred Stock of such declaration
and notifying each such holder (such notice, the "Dividend Notice") that the
---------------
Accruing Dividends shall be paid in cash unless such holder elects, by notice to
the Corporation within 15 days of receipt of the Dividend Notice, to have the
Accruing Dividends paid in the form of additional shares of Common Stock. If any
holder so elects, such holder shall receive in payment in full of the Accruing
Dividends that number of shares of Common Stock as is equal to the aggregate
value of the Accruing Dividends to be paid divided by the Fair Market Value (as
defined in subparagraph 6Q below) of one share of Common Stock on the date such
Accruing
<PAGE>
Dividends were declared (a statement as to such Fair Market Value shall be
included in the Dividend Notice). If payment of the Accruing Dividends as
provided above would violate applicable law, the Corporation's Articles of
Incorporation or its Code of Regulations, then the Corporation shall notify the
holders of shares of Series A Convertible Preferred Stock of such fact and at
the election of at least a majority of the holders of the Series A Convertible
Preferred Stock, the Accruing Dividends shall be declared and paid in the form
of additional shares of Common Stock as provided above. The holders of the
Series A Convertible Preferred Stock shall also be entitled to receive, out of
funds legally available therefor, dividends at the same rate as dividends (other
than dividends paid in additional shares of Common Stock) are paid with respect
to the Common Stock (treating each share of Series A Convertible Preferred Stock
as being equal to the number of shares of Common Stock (including fractions of a
share) into which each share of Series A Convertible Preferred Stock is then
convertible).
4. Liquidation. Upon any liquidation, dissolution or winding up of the
-----------
Corporation, whether voluntary or involuntary, the holders of the shares of
Series A Convertible Preferred Stock shall be entitled, before any distribution
or payment is made upon any stock ranking on liquidation junior to the Series A
Convertible Preferred Stock, to be paid an amount equal to the greater of (i)
$0.1729 per share plus, in the case of each share, an amount equal to all
Accruing Dividends unpaid thereon (whether or not declared) and any other
dividends declared but unpaid thereon, computed to the date payment thereof is
made available, or (ii) such amount per share as would have been payable had
each such share been converted to Common Stock pursuant to paragraph 6
immediately prior to such liquidation, dissolution or winding up, and the
holders of Series A Convertible Preferred Stock shall not be entitled to any
further payment, such amount payable with respect to one share of Series A
Convertible Preferred Stock being sometimes referred to as the "Liquidation
-----------
Preference Payment" and with respect to all shares of Series A Convertible
- ------------------
Preferred Stock being sometimes referred to as the "Liquidation Preference
----------------------
Payments". If upon such liquidation, dissolution or winding up of the
- --------
Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of Series A Convertible Preferred Stock shall be insufficient
to permit payment to the holders of Series A Convertible Preferred Stock of the
amount distributable as aforesaid, then the entire assets of the Corporation to
be so distributed shall be distributed ratably among the holders of Series A
Convertible Preferred Stock. Upon any such liquidation, dissolution or winding
up of the Corporation, after the holders of Series A Convertible Preferred Stock
shall have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Series A Convertible Preferred Stock.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the Liquidation Preference Payments and the place where said
Liquidation Preference Payments shall be payable, shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, not less than 20 days prior to the payment date stated
therein, to the holders of record of Series A Convertible Preferred Stock, such
notice to be addressed to each such holder at its address as shown by the
records of the Corporation. Any of (i) the consolidation or merger of the
Corporation (other than a merger to reincorporate the Corporation in a different
jurisdiction) into or with any other entity or entities in which the shares of
the Corporation outstanding immediately prior to the closing of such event
represent or are converted into shares of the surviving or resulting entity that
represent less than a majority of the total number of shares of the surviving or
resulting entity that are outstanding or are reserved for issuance upon the
exercise or conversion of outstanding securities immediately after the closing
of such event, (ii) the sale or transfer of fifty percent (50%) or more of the
capital stock of the Corporation in a single transaction or series of related
transactions, and (iii) the sale, lease, exchange or transfer of all or
substantially all of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
the provisions of this paragraph 4, unless the holders of at least sixty percent
(60%) of the then outstanding Series A Convertible Preferred Stock otherwise
agree. For purposes hereof, the Common Stock shall rank on liquidation junior
to the Series A Convertible Preferred Stock.
5. Restrictions. At any time when shares of Series A Convertible
------------
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Articles of Incorporation, and in addition to any other vote required by
law or the Articles of Incorporation, without the approval of the holders of at
least two-thirds of the then
2
<PAGE>
outstanding shares of Series A Convertible Preferred Stock, given in writing or
by vote at a meeting, consenting or voting (as the case may be) separately as a
series, the Corporation will not:
5A. Create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or increase the authorized amount
of the Series A Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the Series A Convertible Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, or create or
authorize any obligation or security convertible into shares of Series A
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to the Series A Convertible Preferred Stock as to
the distribution of assets on the liquidation, dissolution or winding up of the
Corporation, whether any such creation, authorization or increase shall be by
means of amendment to the Articles of Incorporation or by merger, consolidation
or otherwise;
5B. Consent to any liquidation, dissolution or winding up of the
Corporation or consolidate or merge into or with any other entity or entities or
sell, lease, abandon, transfer or otherwise dispose of all or substantially all
its assets;
5C. Amend, alter or repeal its Articles of Incorporation if the
effect would be detrimental or adverse in any manner with respect to the rights
of the holders of the Series A Convertible Preferred Stock;
5D. Purchase or set aside any sums for the purchase of, or pay any
dividend or make any distribution on, any shares of stock other than the Series
A Convertible Preferred Stock, except for dividends or other distributions
payable on the Common Stock solely in the form of additional shares of Common
Stock and except for the purchase of shares of Common Stock from former
employees of the Corporation who acquired such shares directly from the
Corporation, if each such purchase is made pursuant to contractual rights held
by the Corporation relating to the termination of employment of such former
employee and the purchase price does not exceed the original issue price paid by
such former employee to the Corporation for such shares; or
5E. Redeem or otherwise acquire any shares of Series A Convertible
Preferred Stock except as expressly authorized in paragraph 7 hereof or pursuant
to a purchase offer made pro rata to all holders of the shares of Series A
Convertible Preferred Stock on the basis of the aggregate number of outstanding
shares of Series A Convertible Preferred Stock then held by each such holder.
6. Conversions. The holders of shares of Series A Convertible
-----------
Preferred Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of this
----------------
paragraph 6, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series A Convertible Preferred Stock (except that upon any liquidation
of the Corporation the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amount distributable on
the Series A Convertible Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of Series A Convertible Preferred Stock so to be converted by
$1.729 and (ii) dividing the result by the conversion price of $1.729 per share
or, in case an adjustment of such price has taken place pursuant to the further
provisions of this paragraph 6, then by the conversion price as last adjusted
and in effect at the date any share or shares of Series A Convertible Preferred
Stock are surrendered for conversion (such price, or such price as last
adjusted, being referred to as the "Conversion Price"). Such rights of
----------------
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series A
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the
3
<PAGE>
holders of the Series A Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected. Promptly
--------------------------------------------------
after the receipt of the written notice referred to in subparagraph 6A and
surrender of the certificate or certificates for the share or shares of Series A
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series A Convertible Preferred Stock. To the extent
permitted by law, such conversion shall be deemed to have been effected and the
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder of such share or shares
of Series A Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No fractional
------------------------------------------------
shares shall be issued upon conversion of Series A Convertible Preferred Stock
into Common Stock and no payment or adjustment shall be made upon any conversion
on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall pay in cash
an amount equal to all dividends accrued and unpaid on the shares of Series A
Convertible Preferred Stock surrendered for conversion to the date upon which
such conversion is deemed to take place as provided in subparagraph 6B. In case
the number of shares of Series A Convertible Preferred Stock represented by the
certificate or certificates surrendered pursuant to subparagraph 6A exceeds the
number of shares converted, the Corporation shall, upon such conversion, execute
and deliver to the holder, at the expense of the Corporation, a new certificate
or certificates for the number of shares of Series A Convertible Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted. If any fractional share of Common Stock would, except for the
provisions of the first sentence of this subparagraph 6C, be delivered upon such
conversion, the Corporation, in lieu of delivering such fractional share, shall
pay to the holder surrendering the Series A Convertible Preferred Stock for
conversion an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of the
Corporation.
6D. Adjustment of Price Upon Issuance of Common Stock. Except as
-------------------------------------------------
provided in subparagraph 6E, if and whenever, after the date one or more shares
of Series A Convertible Preferred Stock is first issued, the Corporation shall
issue or sell, or is, in accordance with subparagraphs 6D(1) through 6D(7),
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Conversion Price in effect immediately prior to the time
of such issue or sale, then, forthwith upon such issue or sale, the Conversion
Price shall be reduced to the price at which the Corporation issued or sold, or
is deemed to have issued or sold, such shares of Common Stock.
For purposes of this subparagraph 6D, the following subparagraphs 6D(1) to
6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
-----------------------------
Corporation shall in any manner grant (whether directly or by assumption in
a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or
-------
exchangeable stock or securities being called "Convertible Securities")
----------------------
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities (determined
by dividing (i) the total amount, if any, received or receivable by
4
<PAGE>
the Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or sale
of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be
less than the Conversion Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion
or exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such Options
or the issuance of such Convertible Securities and thereafter shall be
deemed to be outstanding. In the event that all Options referred to in this
subparagraph 6D(1) are terminated or expire without any such Options having
been exercised, the Conversion Price shall be increased to the Conversion
Price which would have been in effect at the time of such expiration or
termination had all such Options never been issued. Except as otherwise
provided in subparagraph 6D(3), no adjustment of the Conversion Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
----------------------------------
Corporation shall in any manner issue (whether directly or by assumption in
merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
total amount received or receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the
Conversion Price in effect immediately prior to the time of such issue or
sale, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed
to have been issued for such price per share as of the date of the issue or
sale of such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in subparagraph
6D(3), no adjustment of the Conversion Price shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities, (b) if any such issue or sale of such Convertible Securities is
made upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of the Conversion Price have been or are
to be made pursuant to other provisions of this subparagraph 6D, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale, and (c) in the event that all Convertible Securities referred to in
this subparagraph 6D(2) are terminated or expire without any such
Convertible Securities having been converted or exchanged, the Conversion
Price shall be increased to the Conversion Price which would have been in
effect at the time of such expiration or termination had all such
Convertible Securities never been issued.
6D(3) Change in Option Price or Conversion Rate. Upon the
-----------------------------------------
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subparagraph 6D(1) or 6D(2),
or the rate at which Convertible Securities referred to in subparagraph
6D(1) or 6D(2) are convertible into or exchangeable for Common Stock shall
change at any time (including, but not limited to, changes under or by
reason of provisions designed to protect against dilution), the Conversion
Price in effect at the time of such event shall forthwith be readjusted to
the Conversion Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for
5
<PAGE>
such changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold, but only
if as a result of such adjustment the Conversion Price then in effect
hereunder is thereby reduced; and on the termination of any such Option or
any such right to convert or exchange such Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be increased to
the Conversion Price which would have been in effect at the time of such
termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
---------------
dividend (other than the Accruing Dividends) or make any other distribution
upon any stock of the Corporation (other than the Common Stock) payable in
Common Stock, Options or Convertible Securities, then any Common Stock,
Options or Convertible Securities, as the case may be, issuable in payment
of such dividend or distribution shall be deemed to have been issued or
sold at a price per share equal to $.00001.
6D(5) Consideration for Stock. In case any shares of Common
-----------------------
Stock, Options or Convertible Securities shall be issued or sold for cash,
the consideration received therefor shall be deemed to be the amount
received by the Corporation therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Corporation in connection therewith. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
-----------
of the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purpose of
this subparagraph 6D.
6E. Certain Issues of Common Stock Excepted. Anything herein to
---------------------------------------
the contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Conversion Price in the case of the issuance from and after
the date of filing of these terms of the Series A Convertible Preferred Stock of
up to an aggregate of [remaining option pool] shares (appropriately adjusted to
reflect the occurrence of any event described in subparagraph 6F) of Common
Stock to directors, officers, employees or consultants of the Corporation in
connection with their service as directors of the Corporation, their employment
by the Corporation or their retention as consultants by the Corporation, plus
such number of shares of Common Stock which are repurchased by the Corporation
from such persons after such date pursuant to contractual rights held by the
Corporation and at repurchase prices not exceeding the respective original
purchase prices paid by such persons to the Corporation therefor.
6
<PAGE>
6F. Subdivision or Combination of Common Stock. In case the
------------------------------------------
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased. In the case of any such subdivision, no further
adjustment shall be made pursuant to subparagraph 6D(4) by reason thereof.
6G. Reorganization or Reclassification. If any capital
----------------------------------
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series A Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series A Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
receivable upon such conversion had such reorganization or reclassification not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Conversion
--------------------
Price, then and in each such case the Corporation shall give written notice
thereof, by delivery in person, certified or registered mail, return receipt
requested, telecopier or telex, addressed to each holder of shares of Series A
Convertible Preferred Stock at the address of such holder as shown on the books
of the Corporation, which notice shall state the Conversion Price resulting from
such adjustment, setting forth in reasonable detail the method upon which such
calculation is based.
6I. Other Notices. In case at any time:
-------------
(1) the Corporation shall declare any dividend upon its
Common Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock;
(2) the Corporation shall offer for subscription pro rata
--------
to the holders of its Common Stock any additional shares of stock of any
class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with or into another entity or
entities, or a sale, lease, abandonment, transfer or other disposition of
all or substantially all its assets, or any Change of Control (a defined in
paragraph 7);
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; or
(5) the election by at least a majority of the holders of
Series A Convertible Stock to have the Corporation redeem the outstanding
of Series A Convertible Preferred Stock pursuant to paragraph 7 hereof;
then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier or
telex, addressed to each holder of any shares of Series A Convertible Preferred
Stock at the address of such holder as shown on the books of the Corporation,
(a) at least 20 days' prior written notice of the date on which the books of the
Corporation shall
7
<PAGE>
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation,
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, disposition, dissolution, liquidation, winding up, Change
of Control or redemption, at least 20 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto and such notice in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times reserve
--------------------
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series A Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the Conversion Price in effect at the time. The Corporation will take
all such action as may be necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or regulation, or
of any requirement of any national securities exchange upon which the Common
Stock may be listed. The Corporation will not take any action which results in
any adjustment of the Conversion Price if the total number of shares of Common
Stock issued and issuable after such action upon conversion of the Series A
Convertible Preferred Stock would exceed the total number of shares of Common
Stock then authorized by the Articles of Incorporation.
6K. No Reissuance of Series A Convertible Preferred Stock. Shares
-----------------------------------------------------
of Series A Convertible Preferred Stock which are converted into shares of
Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of Common
---------
Stock upon conversion of Series A Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series A Convertible
Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close its
----------------
transfer books against the transfer of any Series A Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series A Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6, the
--------------------------
term "Common Stock" shall mean and include the Corporation's authorized Common
------------
Stock, no par value per share, as constituted on the date of filing of these
terms of the Series A Convertible Preferred Stock, and shall also include any
capital stock of any class of the Corporation thereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon conversion
of shares of Series A Convertible Preferred Stock shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets provided for in
subparagraph 6G.
8
<PAGE>
6O. Mandatory Conversion. If at any time the Corporation shall
--------------------
effect a firm commitment underwritten public offering of shares of Common Stock
in which (i) the aggregate price paid for such shares by the public shall be at
least $25,000,000 and (ii) the price paid by the public for such shares shall be
at least $5.00 per share (appropriately adjusted to reflect the occurrence of
any event described in subparagraph 6F), then effective upon the closing of the
sale of such shares by the Corporation pursuant to such public offering, all
outstanding shares of Series A Convertible Preferred Stock shall automatically
convert to shares of Common Stock on the basis set forth in this paragraph 6.
If at any time after June 23, 2002 the Fair Market Value (as defined below) of
one share of Common Stock exceeds $3.458 (appropriately adjusted to reflect the
occurrence of any event described in subparagraph 6F), then effective upon
delivery of a notice of such Fair Market Value to each holder of any shares of
Series A Convertible Preferred Stock, such delivery to be in person, certified
or registered mail, return receipt requested, telecopier or telex, to the
address of such holder as shown on the books of the Corporation, all outstanding
shares of Series A Convertible Preferred stock shall automatically convert to
shares of Common Stock on the basis set forth in this paragraph 6. Holders of
shares of Series A Convertible Preferred Stock converted pursuant to this
subparagraph 6O may deliver to the Corporation at its principal office (or such
other office or agency of the Corporation as the Corporation may designate by
notice in writing to such holders) during its usual business hours, the
certificate or certificates for the shares so converted. As promptly as
practicable thereafter, the Corporation shall issue and deliver to such holder a
certificate or certificates for the number of whole shares of Common Stock to
which such holder is entitled, together with any cash dividends and payment in
lieu of fractional shares to which such holder may be entitled pursuant to
subparagraph 6C. Until such time as a holder of shares of Series A Convertible
Preferred Stock shall surrender his or its certificates therefor as provided
above, such certificates shall be deemed to represent the shares of Common Stock
to which such holder shall be entitled upon the surrender thereof.
6P. Additional Adjustment to Conversion Price. If on June 23, 2001,
-----------------------------------------
the product of (A) the Fair Market Value of one share of Common Stock,
multiplied by (B) 2,371,313, is less than the difference of (i) $6,250,000,
minus (ii) the aggregate total of all Accruing Dividends which have been
declared and paid until such date, then the Conversion Price shall be reduced to
the price which equals two-thirds of the Conversion Price in effect immediately
prior to such reduction.
6Q. Fair Market Value. For the purposes of paragraph 3 and
-----------------
subparagraphs 6O and 6P, "Fair Market Value" of one share of Common Stock on any
-----------------
specified date shall mean:
(i) If shares of Common Stock are traded on an exchange or are
quoted on the Nasdaq National Market, the average of the last reported sale
price of the Common Stock on the twenty trading days before such date;
(ii) If shares of the Common Stock are not traded on an exchange
or on the Nasdaq National Market but are traded in the over-the-counter market,
the average of the mean of the last bid and asked prices reported on the twenty
trading days before such date (1) by the Nasdaq or (2) if reports are
unavailable under clause (1) by the National Quotation Bureau Incorporated; and
(iii) If shares of the Company's Common Stock are not publicly
traded, then as determined in good faith by the Board of Directors upon review
of relevant factors.
6R. Adjustment for Dividends in Other Stock, Property, etc.;
--------------------------------------------------------
Reclassification, etc. In case at any time or from time to time, the holders of
- ---------------------
Common Stock shall have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) shall have become entitled to
receive, without payment therefor:
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
9
<PAGE>
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock issued as a stock dividend or in a
- ----- ----
stock-split, then and in each such case each holder of shares of Series A
Convertible Preferred Stock shall be entitled to receive such stock and other
securities and property (including cash in the cases referred to in
subparagraphs 6R(b) and (c)) at the same rate as such stock and other securities
and property (including cash in the cases referred to in subparagraphs 6R(b) and
(c)) are paid with respect to the Common Stock (treating each share of Series A
Convertible Preferred Stock as being equal to the number of shares of Common
Stock (including fractions of a share) into which each share of Series A
Convertible Preferred Stock is then convertible).
7. Amendments. No provision of these terms of the Series A Convertible
----------
Preferred Stock may be amended (whether by merger, consolidation or otherwise),
modified or waived without the written consent or affirmative vote of the
holders of at least two-thirds of the then outstanding shares of Series A
Convertible Preferred Stock.
IN WITNESS WHEREOF, the above-named officers, acting for and on behalf of
the corporation, have subscribed their names as of this 18th day of June, 1999.
By: __________________________________
Philip S. Present II
Title: President
By: __________________________________
Daniel A. Silber
Title: Secretary
NOTE: Ohio law does not permit one officer to sign in two capacities. Two
separate signatures are required, even if this necessitates the election of a
second officer before the filing can be made.
10
<PAGE>
Exhibit 5
---------
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT
Warrant No. PA-1 Right to Purchase 266,377 Shares of
Series A Convertible Preferred Stock of
MedPlus, Inc.
MedPlus, Inc.
Void after June 25, 2004
1. Issuance. This Warrant is issued to Cahill Warnock Strategic
--------
Partners Fund, L.P. by MedPlus, Inc., an Ohio corporation (hereinafter with its
successors called the "Company").
2. Purchase Price; Number of Shares. (a) Subject to the terms and
--------------------------------
conditions hereinafter set forth, the registered holder of this Warrant (the
"Holder"), commencing on the date hereof, is entitled upon surrender of this
Warrant with the subscription form annexed hereto duly executed, at the office
of the Company, 8805 Governor's Hill Drive, Suite 100, Cincinnati, OH 45249, or
such other office as the Company shall notify the Holder of in writing, to
purchase from the Company at a price per share (the "Purchase Price") of $1.66,
266,377 fully paid and nonassessable shares of Series A Convertible Preferred
Stock, $.01 par value, of the Company (the "Series A Preferred Stock"). Until
such time as this Warrant is exercised in full or expires, the Purchase Price
and the securities issuable upon exercise of this Warrant are subject to
adjustment as hereinafter provided.
(b) If on the date of the second anniversary of the date hereof, the
Fair Market Value (as defined below) of one share of Common Stock, no par value,
of the Company (the "Common Stock") is less than $2.70 (adjusted appropriately
to reflect the occurrence of any (i) subdivision, by stock split, stock dividend
or otherwise, of shares of Common Stock into a greater number of shares, or (ii)
combination of shares of Common Stock into a smaller number of shares), then the
Purchase Price shall be reduced to the price which equals two-thirds of the
Purchase Price in effect immediately prior to such reduction.
(c) For purposes of this Warrant, "Fair Market Value" of a share of Common
Stock on any specified date shall mean:
(i) If shares of the Company's Common Stock are traded on an
exchange or are quoted on the Nasdaq National Market, the average of the last
reported sale price of the Common Stock on the twenty trading days before such
date;
<PAGE>
-2-
(ii) If shares of the Company's Common Stock are not traded on an
exchange or on the Nasdaq National Market but are traded in the over-the-counter
market, the mean of the last bid and asked prices reported on the twenty trading
days before such date (1) by the Nasdaq or (2) if reports are unavailable under
clause (1) by the National Quotation Bureau Incorporated; and
(iii) If shares of the Company's Common Stock are not publicly traded,
then as determined in good faith by the Board of Directors upon review of
relevant factors.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash
-------------------------
or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (iv) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause
(iii) above.
4. Net Issue Election. The Holder may elect to receive, without the
------------------
payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Series A
Preferred Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where
X= the number of shares to be issued to the Holder pursuant to this
Section 4.
Y = the number of shares covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Series A Preferred Stock,
as determined in good faith by the Board, as at the time the net
issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Series A Preferred Stock.
5. Partial Exercise. This Warrant may be exercised in part, and the
----------------
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
<PAGE>
-3-
6. Issuance Date. The person or persons in whose name or names any
-------------
certificate representing shares of Series A Preferred Stock is issued hereunder
shall be deemed to have become the holder of record of the shares represented
thereby as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company shall
be closed.
7. Expiration Date; Automatic Exercise. This Warrant shall expire at
-----------------------------------
the close of business on June 25, 2004, and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 4 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
8. Reserved Shares; Valid Issuance. The Company covenants that it
-------------------------------
will at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Series A Preferred Stock and Common Stock
free from all preemptive or similar rights therein, as will be sufficient to
permit, respectively, the exercise of this Warrant in full and the conversion
into shares of Common Stock of all shares of Series A Preferred Stock receivable
upon such exercise. The Company further covenants that such shares as may be
issued pursuant to such exercise and conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
9. Stock Dividends. If after the date hereof the Company shall
---------------
subdivide the Series A Preferred Stock, by split-up or otherwise, or combine the
Series A Preferred Stock, or issue additional shares of Series A Preferred Stock
in payment of a stock dividend on the Series A Preferred Stock, the number of
shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
10. Mergers and Reclassifications. If after the date hereof there
-----------------------------
shall be any reclassification, capital reorganization or change of the Series A
Preferred Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 9 hereof), or any consolidation of the Company
with, or merger of the Company into, another corporation or other business
organization (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the outstanding Series A Preferred Stock), or any sale or conveyance
to another corporation or other business organization of all or substantially
all of the assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Series A Preferred Stock which
might have been purchased by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance (or, if there are no holders of Series A Preferred Stock at such
time, by a holder of the number of shares of Common Stock which might have been
acquired by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale or conveyance upon the
exercise of this Warrant in full and the conversion into shares of Common Stock
of all shares of Series A Preferred Stock receivable upon such exercise), and in
any such case appropriate provisions shall be made with respect to the rights
and interest of the Holder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable
<PAGE>
-4-
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof.
11. Fractional Shares. In no event shall any fractional share of
-----------------
Series A Preferred Stock be issued upon any exercise of this Warrant. If, upon
exercise of this Warrant as an entirety, the Holder would, except as provided in
this Section 11, be entitled to receive a fractional share of Series A Preferred
Stock, then the Company shall issue the next higher number of full shares of
Series A Preferred Stock, issuing a full share with respect to such fractional
share.
12. Certificate of Adjustment. Whenever the Purchase Price is
-------------------------
adjusted, as herein provided, the Company shall promptly deliver to the Holder a
certificate of a firm of independent public accountants setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
13. Notices of Record Date, Etc. In the event of:
---------------------------
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company,
capital reorganization of the Company, consolidation or merger involving the
Company, or sale or conveyance of all or substantially all of its assets, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
14. Amendment. The terms of this Warrant may be amended, modified or
---------
waived only with the written consent of the Company and the holder of this
Warrant.
15. Warrant Register; Transfers, Etc.
---------------------------------
(a) The Company will maintain a register containing the names
and addresses of the registered holders of the Company's warrants. The Holder
may change its address as shown on the warrant register by written notice to the
Company requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed,
<PAGE>
-5-
for transfer of this Warrant as an entirety by the Holder, the Company shall
issue a new warrant of the same denomination to the assignee. Upon surrender of
this Warrant to the Company, together with the assignment hereof properly
endorsed, by the Holder for transfer with respect to a portion of the shares of
Series A Preferred Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the
Holder hereof, and shall issue to such Holder a new warrant covering the number
of shares in respect of which this Warrant shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as the original holder hereof is the registered
holder of this Warrant, no indemnity shall be required other than its written
agreement to indemnify the Company against any loss arising from the issuance of
such new warrant.
16. No Impairment. The Company will not, by amendment of its
-------------
Articles of Incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.
17. Governing Law. The provisions and terms of this Warrant shall
-------------
be governed by and construed in accordance with the internal laws of the State
of Ohio.
18. Successors and Assigns. This Warrant shall be binding upon the
----------------------
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
19. Business Days. If the last or appointed day for the taking of
-------------
any action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Ohio, then such action may be taken or
right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
Dated: June 25, 1999 MEDPLUS, INC.
(Corporate Seal) By:
____________________________
Attest: Name:
Title:
___________________________
<PAGE>
-6-
Subscription
To: MedPlus, Inc. Date:________________________
The undersigned hereby subscribes for __________ shares of Series A
Preferred Stock covered by this Warrant. The certificate(s) for such shares
shall be issued in the name of the undersigned or as otherwise indicated below:
___________________________________
Signature
___________________________________
Name for Registration
___________________________________
Mailing Address
_______________________________________________________________________________
Net Issue Election Notice
To: MedPlus, Inc. Date:________________________
The undersigned hereby elects under Section 4 to surrender the right
to purchase _______ shares of Series A Preferred Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
___________________________________
Signature
___________________________________
Name for Registration
___________________________________
Mailing Address
<PAGE>
-7-
Assignment
For value received ____________________________ hereby sells,
assigns and transfers unto ______________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
_________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:_______________________
_____________________________
In the Presence of:
_____________________________
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT
Warrant No. PA-2 Right to Purchase 14,760 Shares of
Series A Convertible Preferred
Stock of MedPlus, Inc.
MedPlus, Inc.
Void after June 25, 2004
1. Issuance. This Warrant is issued to Strategic Associates, L.P. by
--------
MedPlus, Inc., an Ohio corporation (hereinafter with its successors called the
"Company").
2. Purchase Price; Number of Shares. (a) Subject to the terms and
--------------------------------
conditions hereinafter set forth, the registered holder of this Warrant (the
"Holder"), commencing on the date hereof, is entitled upon surrender of this
Warrant with the subscription form annexed hereto duly executed, at the office
of the Company, 8805 Governor's Hill Drive, Suite 100, Cincinnati, OH 45249, or
such other office as the Company shall notify the Holder of in writing, to
purchase from the Company at a price per share (the "Purchase Price") of $1.66,
14,760 fully paid and nonassessable shares of Series A Convertible Preferred
Stock, $.01 par value, of the Company (the "Series A Preferred Stock"). Until
such time as this Warrant is exercised in full or expires, the Purchase Price
and the securities issuable upon exercise of this Warrant are subject to
adjustment as hereinafter provided.
(b) If on the date of the second anniversary of the date hereof, the
Fair Market Value (as defined below) of one share of Common Stock, no par value,
of the Company (the "Common Stock") is less than $2.70 (adjusted appropriately
to reflect the occurrence of any (i) subdivision, by stock split, stock dividend
or otherwise, of shares of Common Stock into a greater number of shares, or (ii)
combination of shares of Common Stock into a smaller number of shares), then the
Purchase Price shall be reduced to the price which equals two-thirds of the
Purchase Price in effect immediately prior to such reduction.
(c) For purposes of this Warrant, "Fair Market Value" of a share of
Common Stock on any specified date shall mean:
(i) If shares of the Company's Common Stock are traded on an exchange
or are quoted on the Nasdaq National Market, the average of the last reported
sale price of the Common Stock on the twenty trading days before such date;
<PAGE>
-2-
(ii) If shares of the Company's Common Stock are not traded on an
exchange or on the Nasdaq National Market but are traded in the over-the-counter
market, the mean of the last bid and asked prices reported on the twenty trading
days before such date (1) by the Nasdaq or (2) if reports are unavailable under
clause (1) by the National Quotation Bureau Incorporated; and
(iii) If shares of the Company's Common Stock are not publicly
traded, then as determined in good faith by the Board of Directors upon review
of relevant factors.
3. Payment of Purchase Price. The Purchase Price may be paid (i)
-------------------------
in cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (iv) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause
(iii) above.
4. Net Issue Election. The Holder may elect to receive, without
------------------
the payment by the Holder of any additional consideration, shares equal to the
value of this Warrant or any portion hereof by the surrender of this Warrant or
such portion to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the Company shall issue
to the Holder such number of fully paid and nonassessable shares of Series A
Preferred Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where
X = the number of shares to be issued to the Holder pursuant to this
Section 4.
Y = the number of shares covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Series A Preferred Stock,
as determined in good faith by the Board, as at the time the net
issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Series A Preferred Stock.
5. Partial Exercise. This Warrant may be exercised in part, and the
----------------
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
<PAGE>
-3-
6. Issuance Date. The person or persons in whose name or names any
-------------
certificate representing shares of Series A Preferred Stock is issued hereunder
shall be deemed to have become the holder of record of the shares represented
thereby as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company shall
be closed.
7. Expiration Date; Automatic Exercise. This Warrant shall expire at
-----------------------------------
the close of business on June 25, 2004, and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 4 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
8. Reserved Shares; Valid Issuance. The Company covenants that it
-------------------------------
will at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Series A Preferred Stock and Common Stock
free from all preemptive or similar rights therein, as will be sufficient to
permit, respectively, the exercise of this Warrant in full and the conversion
into shares of Common Stock of all shares of Series A Preferred Stock receivable
upon such exercise. The Company further covenants that such shares as may be
issued pursuant to such exercise and conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
9. Stock Dividends. If after the date hereof the Company shall
---------------
subdivide the Series A Preferred Stock, by split-up or otherwise, or combine the
Series A Preferred Stock, or issue additional shares of Series A Preferred Stock
in payment of a stock dividend on the Series A Preferred Stock, the number of
shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
10. Mergers and Reclassifications. If after the date hereof there
-----------------------------
shall be any reclassification, capital reorganization or change of the Series A
Preferred Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 9 hereof), or any consolidation of the Company
with, or merger of the Company into, another corporation or other business
organization (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the outstanding Series A Preferred Stock), or any sale or conveyance
to another corporation or other business organization of all or substantially
all of the assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Series A Preferred Stock which
might have been purchased by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance (or, if there are no holders of Series A Preferred Stock at such
time, by a holder of the number of shares of Common Stock which might have been
acquired by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale or conveyance upon the
exercise of this Warrant in full and the conversion into shares of Common Stock
of all shares of Series A Preferred Stock receivable upon such exercise), and in
any such case appropriate provisions shall be made with respect to the rights
and interest of the Holder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable
<PAGE>
-4-
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof.
11. Fractional Shares. In no event shall any fractional share of
-----------------
Series A Preferred Stock be issued upon any exercise of this Warrant. If, upon
exercise of this Warrant as an entirety, the Holder would, except as provided in
this Section 11, be entitled to receive a fractional share of Series A Preferred
Stock, then the Company shall issue the next higher number of full shares of
Series A Preferred Stock, issuing a full share with respect to such fractional
share.
12. Certificate of Adjustment. Whenever the Purchase Price is
-------------------------
adjusted, as herein provided, the Company shall promptly deliver to the Holder a
certificate of a firm of independent public accountants setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
13. Notices of Record Date, Etc. In the event of:
---------------------------
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the Company, or
sale or conveyance of all or substantially all of its assets, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
14. Amendment. The terms of this Warrant may be amended, modified or
---------
waived only with the written consent of the Company and the holder of this
Warrant.
15. Warrant Register; Transfers, Etc.
---------------------------------
(a) The Company will maintain a register containing the names and
addresses of the registered holders of the Company's warrants. The Holder may
change its address as shown on the warrant register by written notice to the
Company requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed,
<PAGE>
-5-
for transfer of this Warrant as an entirety by the Holder, the Company shall
issue a new warrant of the same denomination to the assignee. Upon surrender of
this Warrant to the Company, together with the assignment hereof properly
endorsed, by the Holder for transfer with respect to a portion of the shares of
Series A Preferred Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the
Holder hereof, and shall issue to such Holder a new warrant covering the number
of shares in respect of which this Warrant shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as the original holder hereof is the registered
holder of this Warrant, no indemnity shall be required other than its written
agreement to indemnify the Company against any loss arising from the issuance of
such new warrant.
16. No Impairment. The Company will not, by amendment of its
-------------
Articles of Incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.
17. Governing Law. The provisions and terms of this Warrant shall
-------------
be governed by and construed in accordance with the internal laws of the State
of Ohio.
18. Successors and Assigns. This Warrant shall be binding upon the
----------------------
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
19. Business Days. If the last or appointed day for the taking of
-------------
any action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Ohio, then such action may be taken or
right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
Dated: June 25, 1999 MEDPLUS, INC.
(Corporate Seal) By:________________________
Name:
Attest: Title:
___________________________
<PAGE>
-6-
Subscription
To: MedPlus, Inc. Date:________________________
The undersigned hereby subscribes for __________ shares of Series A
Preferred Stock covered by this Warrant. The certificate(s) for such shares
shall be issued in the name of the undersigned or as otherwise indicated below:
___________________________________
Signature
___________________________________
Name for Registration
___________________________________
Mailing Address
_______________________________________________________________________________
Net Issue Election Notice
To: MedPlus, Inc. Date:_________________________
The undersigned hereby elects under Section 4 to surrender the right
to purchase _______ shares of Series A Preferred Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
___________________________________
Signature
___________________________________
Name for Registration
___________________________________
Mailing Address
<PAGE>
-7-
Assignment
For value received ____________________________ hereby sells,
assigns and transfers unto ______________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
_________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:_______________________
___________________________________
In the Presence of:
_____________________________
<PAGE>
EXHIBIT 6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT
Warrant No. PA-3 Right to Purchase 668,905 Shares of
Series A Convertible Preferred
Stock of MedPlus, Inc.
MedPlus, Inc.
Void after June 25, 2009
1. Issuance. This Warrant is issued to Cahill Warnock Strategic
--------
Partners Fund, L.P. by MedPlus, Inc., an Ohio corporation (hereinafter with its
successors called the "Company").
2. Purchase Price; Number of Shares. Subject to the terms and
--------------------------------
conditions hereinafter set forth, the registered holder of this Warrant (the
"Holder"), commencing on the Effective Date (as defined below), is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the office of the Company, 8805 Governor's Hill Drive, Suite 100,
Cincinnati, OH 45249, or such other office as the Company shall notify the
Holder of in writing, to purchase from the Company at a price per share (the
"Purchase Price") of $1.66, 668,905 fully paid and nonassessable shares of
Series A Convertible Preferred Stock, $.01 par value, of the Company (the
"Series A Preferred Stock"). Until such time as this Warrant is exercised in
full or expires, the Purchase Price and the securities issuable upon exercise of
this Warrant are subject to adjustment as hereinafter provided. "Effective
Date" shall mean the first day after the date hereof on which the Fair Market
Value (as defined below) of one share of the Common Stock, no par value, of the
Company (the "Common Stock") equals or exceeds $7.17 (adjusted appropriately to
reflect the occurrence of any (i) subdivision, by stock split, stock dividend or
otherwise, of shares of Common Stock into a greater number of shares, or (ii)
combination of shares of Common stock into a smaller number of shares).
For purposes of this Preferred Stock Purchase Warrant, "Fair Market
Value" of a share of Common Stock on any specified date shall mean:
(i) If shares of the Company's Common Stock are traded on an
exchange or are quoted on the Nasdaq National Market, the average of the last
reported sale price of the Common Stock on the twenty trading days before such
date;
(ii) If shares of the Company's Common Stock are not traded on an
exchange or on the Nasdaq National Market but are traded in the over-the-counter
market, the mean of the last bid and asked prices reported on the twenty trading
days before such date (1) by the Nasdaq or (2) if reports are unavailable under
clause (1) by the National Quotation Bureau Incorporated; and
<PAGE>
-2-
(iii) If shares of the Company's Common Stock are not publicly
traded, then as determined in good faith by the Board of Directors upon review
of relevant factors.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash
-------------------------
or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of shares of
Common Stock, with such shares of Common Stock being credited against the
Purchase Price in an amount equal to the Fair Market Value thereof on the date
of surrender, (iv) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (v) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause (iv)
above.
4. Net Issue Election. The Holder may elect to receive, without the
------------------
payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Series A
Preferred Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where
X = the number of shares to be issued to the Holder pursuant to this
Section 4.
Y = the number of shares covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Series A Preferred Stock,
as determined in good faith by the Board, as at the time the net
issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Series A Preferred Stock.
5. Partial Exercise. This Warrant may be exercised in part, and the
----------------
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. Issuance Date. The person or persons in whose name or names any
-------------
certificate representing shares of Series A Preferred Stock is issued hereunder
shall be deemed to have become the
<PAGE>
-3-
holder of record of the shares represented thereby as at the close of business
on the date this Warrant is exercised with respect to such shares, whether or
not the transfer books of the Company shall be closed.
7. Expiration Date; Automatic Exercise. This Warrant shall expire at the
---------------
close of business on June 25, 2009, and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 4 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
8. Reserved Shares; Valid Issuance. The Company covenants that it will at
-------------------------------
all times from and after the date hereof reserve and keep available such number
of its authorized shares of Series A Preferred Stock and Common Stock free from
all preemptive or similar rights therein, as will be sufficient to permit,
respectively, the exercise of this Warrant in full and the conversion into
shares of Common Stock of all shares of Series A Preferred Stock receivable upon
such exercise. The Company further covenants that such shares as may be issued
pursuant to such exercise and conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
9. Stock Dividends. If after the date hereof the Company shall subdivide
---------------
the Series A Preferred Stock, by split-up or otherwise, or combine the Series A
Preferred Stock, or issue additional shares of Series A Preferred Stock in
payment of a stock dividend on the Series A Preferred Stock, the number of
shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
10. Mergers and Reclassifications. If after the date hereof there shall be
-----------------------------
any reclassification, capital reorganization or change of the Series A Preferred
Stock (other than as a result of a subdivision, combination or stock dividend
provided for in Section 9 hereof), or any consolidation of the Company with, or
merger of the Company into, another corporation or other business organization
(other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
outstanding Series A Preferred Stock), or any sale or conveyance to another
corporation or other business organization of all or substantially all of the
assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Series A Preferred Stock which
might have been purchased by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance (or, if there are no holders of Series A Preferred Stock at such
time, by a holder of the number of shares of Common Stock which might have been
acquired by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale or conveyance upon the
exercise of this Warrant in full and the conversion into shares of Common Stock
of all shares of Series A Preferred Stock receivable upon such exercise), and in
any such case appropriate provisions shall be made with respect to the rights
and interest of the Holder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable
<PAGE>
-4-
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof.
11. Fractional Shares. In no event shall any fractional share of Series A
-----------------
Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise
of this Warrant as an entirety, the Holder would, except as provided in this
Section 11, be entitled to receive a fractional share of Series A Preferred
Stock, then the Company shall issue the next higher number of full shares of
Series A Preferred Stock, issuing a full share with respect to such fractional
share.
12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as
-------------------------
herein provided, the Company shall promptly deliver to the Holder a certificate
of a firm of independent public accountants setting forth the Purchase Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
13. Notices of Record Date, Etc. In the event of:
---------------------------
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the Company, or
sale or conveyance of all or substantially all of its assets, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
14. Other Warrants. This Warrant is one of a series of warrants
--------------
(collectively, the "Warrants") that were originally issued by the Company on
June 25, 1999 pursuant to an Amended and Restated Securities Purchase Agreement
(the "Securities Purchase Agreement"), dated June 8, 1999, among the Company and
the other parties thereto. All capitalized terms not defined herein shall have
the meanings assigned to them in the Securities Purchase Agreement.
15. Amendment. The terms of this Warrant may be amended, modified or
---------
waived only with the written consent of the Company and the holders of Warrants
representing at least two-thirds of the number of shares of Series A Preferred
Stock then issuable upon the exercise of the Warrants. No such amendment,
modification or waiver shall be effective as to this Warrant unless the terms of
such amendment, modification or waiver shall apply with the same force and
effect to all of the other Warrants then outstanding.
<PAGE>
-5-
16. Warrant Register; Transfers, Etc.
---------------------------------
(a) The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may change its
address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed, for
transfer of this Warrant as an entirety by the Holder, the Company shall issue a
new warrant of the same denomination to the assignee. Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the shares of Series A
Preferred Stock purchasable hereunder, the Company shall issue a new warrant to
the assignee, in such denomination as shall be requested by the Holder hereof,
and shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as the original holder hereof is the registered
holder of this Warrant, no indemnity shall be required other than its written
agreement to indemnify the Company against any loss arising from the issuance of
such new warrant .
17. No Impairment. The Company will not, by amendment of its Articles of
-------------
Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
18. Governing Law. The provisions and terms of this Warrant shall be
-------------
governed by and construed in accordance with the internal laws of the State of
Ohio.
19. Successors and Assigns. This Warrant shall be binding upon the
----------------------
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
<PAGE>
-6-
20. Business Days. If the last or appointed day for the taking of any
-------------
action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Ohio, then such action may be taken or
right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
Dated: June 25, 1999 MEDPLUS, INC.
(Corporate Seal) By:_________________________
Name
Attest: Title:
___________________________
<PAGE>
-7-
Subscription
To: MedPlus, Inc. Date:_________________________
The undersigned hereby subscribes for __________ shares of Series A
Preferred Stock covered by this Warrant. The certificate(s) for such shares
shall be issued in the name of the undersigned or as otherwise indicated below:
____________________________
Signature
____________________________
Name for Registration
____________________________
Mailing Address
================================================================================
Net Issue Election Notice
To: MedPlus, Inc. Date:_______________________
The undersigned hereby elects under Section 4 to surrender the right to
purchase _______ shares of Series A Preferred Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
____________________________
Signature
____________________________
Name for Registration
____________________________
Mailing Address
<PAGE>
-8-
Assignment
For value received ___________________________ hereby sells,
assigns and transfers unto ______________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
_________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:___________________
____________________________
In the Presence of:
_________________________
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT
Warrant No. PA-4 Right to Purchase 37,064 Shares of
Series A Convertible Preferred
Stock of MedPlus, Inc.
MedPlus, Inc.
Void after June 25, 2009
1. Issuance. This Warrant is issued to Strategic Associates, L.P. by
--------
MedPlus, Inc., an Ohio corporation (hereinafter with its successors called the
"Company").
2. Purchase Price; Number of Shares. Subject to the terms and
--------------------------------
conditions hereinafter set forth, the registered holder of this Warrant (the
"Holder"), commencing on the Effective Date (as defined below), is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the office of the Company, 8805 Governor's Hill Drive, Suite 100,
Cincinnati, OH 45249, or such other office as the Company shall notify the
Holder of in writing, to purchase from the Company at a price per share (the
"Purchase Price") of $1.66, 37,064 fully paid and nonassessable shares of Series
A Convertible Preferred Stock, $.01 par value, of the Company (the "Series A
Preferred Stock"). Until such time as this Warrant is exercised in full or
expires, the Purchase Price and the securities issuable upon exercise of this
Warrant are subject to adjustment as hereinafter provided. "Effective Date"
shall mean the first day after the date hereof on which the Fair Market Value
(as defined below) of one share of the Common Stock, no par value, of the
Company (the "Common Stock") equals or exceeds $7.17 (adjusted appropriately to
reflect the occurrence of any (i) subdivision, by stock split, stock dividend or
otherwise, of shares of Common Stock into a greater number of shares, or (ii)
combination of shares of Common stock into a smaller number of shares).
For purposes of this Preferred Stock Purchase Warrant, "Fair Market Value"
of a share of Common Stock on any specified date shall mean:
(i) If shares of the Company's Common Stock are traded on an exchange
or are quoted on the Nasdaq National Market, the average of the last reported
sale price of the Common Stock on the twenty trading days before such date;
(ii) If shares of the Company's Common Stock are not traded on an
exchange or on the Nasdaq National Market but are traded in the over-the-counter
market, the mean of the last bid and asked prices reported on the twenty trading
days before such date (1) by the Nasdaq or (2) if reports are unavailable under
clause (1) by the National Quotation Bureau Incorporated; and
<PAGE>
-2-
(iii) If shares of the Company's Common Stock are not publicly
traded, then as determined in good faith by the Board of Directors upon review
of relevant factors.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash
-------------------------
or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of shares of
Common Stock, with such shares of Common Stock being credited against the
Purchase Price in an amount equal to the Fair Market Value thereof on the date
of surrender, (iv) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (v) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause (iv)
above.
4. Net Issue Election. The Holder may elect to receive, without the
------------------
payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Series A
Preferred Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where
X = the number of shares to be issued to the Holder pursuant to this
Section 4.
Y = the number of shares covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Series A Preferred Stock,
as determined in good faith by the Board, as at the time the net
issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time the
net issue election is made pursuant to this Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Series A Preferred Stock.
5. Partial Exercise. This Warrant may be exercised in part, and the
----------------
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. Issuance Date. The person or persons in whose name or names any
-------------
certificate representing shares of Series A Preferred Stock is issued hereunder
shall be deemed to have become the
<PAGE>
-3-
holder of record of the shares represented thereby as at the close of business
on the date this Warrant is exercised with respect to such shares, whether or
not the transfer books of the Company shall be closed.
7. Expiration Date; Automatic Exercise. This Warrant shall expire at the
-----------------------------------
close of business on June 25, 2009, and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 4 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
8. Reserved Shares; Valid Issuance. The Company covenants that it will at
-------------------------------
all times from and after the date hereof reserve and keep available such number
of its authorized shares of Series A Preferred Stock and Common Stock free from
all preemptive or similar rights therein, as will be sufficient to permit,
respectively, the exercise of this Warrant in full and the conversion into
shares of Common Stock of all shares of Series A Preferred Stock receivable upon
such exercise. The Company further covenants that such shares as may be issued
pursuant to such exercise and conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
9. Stock Dividends. If after the date hereof the Company shall subdivide
---------------
the Series A Preferred Stock, by split-up or otherwise, or combine the Series A
Preferred Stock, or issue additional shares of Series A Preferred Stock in
payment of a stock dividend on the Series A Preferred Stock, the number of
shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
10. Mergers and Reclassifications. If after the date hereof there shall be
-----------------------------
any reclassification, capital reorganization or change of the Series A Preferred
Stock (other than as a result of a subdivision, combination or stock dividend
provided for in Section 9 hereof), or any consolidation of the Company with, or
merger of the Company into, another corporation or other business organization
(other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
outstanding Series A Preferred Stock), or any sale or conveyance to another
corporation or other business organization of all or substantially all of the
assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Series A Preferred Stock which
might have been purchased by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance (or, if there are no holders of Series A Preferred Stock at such
time, by a holder of the number of shares of Common Stock which might have been
acquired by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale or conveyance upon the
exercise of this Warrant in full and the conversion into shares of Common Stock
of all shares of Series A Preferred Stock receivable upon such exercise), and in
any such case appropriate provisions shall be made with respect to the rights
and interest of the Holder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable hereunder)
<PAGE>
-4-
shall thereafter be applicable in relation to any shares of stock or other
securities and property thereafter deliverable upon exercise hereof.
11. Fractional Shares. In no event shall any fractional share of Series A
-----------------
Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise
of this Warrant as an entirety, the Holder would, except as provided in this
Section 11, be entitled to receive a fractional share of Series A Preferred
Stock, then the Company shall issue the next higher number of full shares of
Series A Preferred Stock, issuing a full share with respect to such fractional
share.
12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as
-------------------------
herein provided, the Company shall promptly deliver to the Holder a certificate
of a firm of independent public accountants setting forth the Purchase Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
13. Notices of Record Date, Etc. In the event of:
---------------------------
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the Company, or
sale or conveyance of all or substantially all of its assets, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
14. Other Warrants. This Warrant is one of a series of warrants
--------------
(collectively, the "Warrants") that were originally issued by the Company on
June 25, 1999 pursuant to an Amended and Restated Securities Purchase Agreement
(the "Securities Purchase Agreement"), dated June 8, 1999, among the Company and
the other parties thereto. All capitalized terms not defined herein shall have
the meanings assigned to them in the Securities Purchase Agreement.
15. Amendment. The terms of this Warrant may be amended, modified or
---------
waived only with the written consent of the Company and the holders of Warrants
representing at least two-thirds of the number of shares of Series A Preferred
Stock then issuable upon the exercise of the Warrants. No such amendment,
modification or waiver shall be effective as to this Warrant unless the terms of
such amendment, modification or waiver shall apply with the same force and
effect to all of the other Warrants then outstanding.
<PAGE>
-5-
16. Warrant Register; Transfers, Etc.
--------------------------------
(a) The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may change its
address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed, for
transfer of this Warrant as an entirety by the Holder, the Company shall issue a
new warrant of the same denomination to the assignee. Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the shares of Series A
Preferred Stock purchasable hereunder, the Company shall issue a new warrant to
the assignee, in such denomination as shall be requested by the Holder hereof,
and shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as the original holder hereof is the registered
holder of this Warrant, no indemnity shall be required other than its written
agreement to indemnify the Company against any loss arising from the issuance of
such new warrant.
17. No Impairment. The Company will not, by amendment of its
-------------
Articles of Incorporation or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder.
18. Governing Law. The provisions and terms of this Warrant shall
-------------
be governed by and construed in accordance with the internal laws of the State
of Ohio.
19. Successors and Assigns. This Warrant shall be binding upon the
----------------------
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
<PAGE>
-6-
20. Business Days. If the last or appointed day for the taking of
-------------
any action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Ohio, then such action may be taken or
right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
Dated: June 25, 1999 MEDPLUS, INC.
(Corporate Seal) By: _________________________
Name
Attest: Title:
___________________________
<PAGE>
-7-
Subscription
To: MedPlus, Inc. Date:_________________________
The undersigned hereby subscribes for __________ shares of Series A
Preferred Stock covered by this Warrant. The certificate(s) for such shares
shall be issued in the name of the undersigned or as otherwise indicated below:
_______________________________
Signature
_______________________________
Name for Registration
_______________________________
Mailing Address
_______________________________________________________________________________
Net Issue Election Notice
To: MedPlus, Inc. Date:_________________________
The undersigned hereby elects under Section 4 to surrender the right to
purchase _______ shares of Series A Preferred Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
_______________________________
Signature
_______________________________
Name for Registration
_______________________________
Mailing Address
<PAGE>
-8-
Assignment
For value received ____________________________ hereby sells,
assigns and transfers unto ______________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
_________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:_______________________
____________________________________
In the Presence of:
_____________________________
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT
Warrant No. PA-4 Right to Purchase 37,064 Shares of
Series A Convertible Preferred Stock of
MedPlus, Inc.
MedPlus, Inc.
Void after June 25, 2009
1. Issuance. This Warrant is issued to Strategic Associates, L.P. by
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MedPlus, Inc., an Ohio corporation (hereinafter with its successors called the
"Company").
2. Purchase Price; Number of Shares. Subject to the terms and conditions
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hereinafter set forth, the registered holder of this Warrant (the "Holder"),
commencing on the Effective Date (as defined below), is entitled upon surrender
of this Warrant with the subscription form annexed hereto duly executed, at the
office of the Company, 8805 Governor's Hill Drive, Suite 100, Cincinnati, OH
45249, or such other office as the Company shall notify the Holder of in
writing, to purchase from the Company at a price per share (the "Purchase
Price") of $1.66, 37,064 fully paid and nonassessable shares of Series A
Convertible Preferred Stock, $.01 par value, of the Company (the "Series A
Preferred Stock"). Until such time as this Warrant is exercised in full or
expires, the Purchase Price and the securities issuable upon exercise of this
Warrant are subject to adjustment as hereinafter provided. "Effective Date"
shall mean the first day after the date hereof on which the Fair Market Value
(as defined below) of one share of the Common Stock, no par value, of the
Company (the "Common Stock") equals or exceeds $7.17 (adjusted appropriately to
reflect the occurrence of any (i) subdivision, by stock split, stock dividend or
otherwise, of shares of Common Stock into a greater number of shares, or (ii)
combination of shares of Common stock into a smaller number of shares).
For purposes of this Preferred Stock Purchase Warrant, "Fair Market
Value" of a share of Common Stock on any specified date shall mean:
(i) If shares of the Company's Common Stock are traded on an
exchange or are quoted on the Nasdaq National Market, the average of the last
reported sale price of the Common Stock on the twenty trading days before such
date;
(ii) If shares of the Company's Common Stock are not traded on an
exchange or on the Nasdaq National Market but are traded in the over-the-counter
market, the mean of the last bid and asked prices reported on the twenty trading
days before such date (1) by the Nasdaq or (2) if reports are unavailable under
clause (1) by the National Quotation Bureau Incorporated; and
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(iii) If shares of the Company's Common Stock are not publicly
traded, then as determined in good faith by the Board of Directors upon review
of relevant factors.
3. Payment of Purchase Price. The Purchase Price may be paid (i) in
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cash or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, (iii) through delivery by the Holder to the Company of shares of
Common Stock, with such shares of Common Stock being credited against the
Purchase Price in an amount equal to the Fair Market Value thereof on the date
of surrender, (iv) through delivery by the Holder to the Company of other
securities issued by the Company, with such securities being credited against
the Purchase Price in an amount equal to the fair market value thereof, as
determined in good faith by the Board of Directors of the Company (the "Board"),
or (v) by any combination of the foregoing. The Board shall promptly respond in
writing to an inquiry by the Holder as to the fair market value of any
securities the Holder may wish to deliver to the Company pursuant to clause (iv)
above.
4. Net Issue Election. The Holder may elect to receive, without the
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payment by the Holder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the net issue election notice annexed hereto duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Series A
Preferred Stock as is computed using the following formula:
X = Y (A-B)
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A
where
X = the number of shares to be issued to the Holder pursuant to
this Section 4.
Y = the number of shares covered by this Warrant in respect of
which the net issue election is made pursuant to this Section 4.
A = the fair market value of one share of Series A Preferred
Stock, as determined in good faith by the Board, as at the
time the net issue election is made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time
the net issue election is made pursuant to this Section 4.
The Board shall promptly respond in writing to an inquiry by the Holder as to
the fair market value of one share of Series A Preferred Stock.
5. Partial Exercise. This Warrant may be exercised in part, and the
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Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. Issuance Date. The person or persons in whose name or names any
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certificate representing shares of Series A Preferred Stock is issued hereunder
shall be deemed to have become the
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holder of record of the shares represented thereby as at the close of business
on the date this Warrant is exercised with respect to such shares, whether or
not the transfer books of the Company shall be closed.
7. Expiration Date; Automatic Exercise. This Warrant shall expire at
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the close of business on June 25, 2009, and shall be void thereafter.
Notwithstanding the foregoing, this Warrant shall automatically be deemed to be
exercised in full pursuant to the provisions of Section 4 hereof, without any
further action on behalf of the Holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding sentence.
8. Reserved Shares; Valid Issuance. The Company covenants that it
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will at all times from and after the date hereof reserve and keep available such
number of its authorized shares of Series A Preferred Stock and Common Stock
free from all preemptive or similar rights therein, as will be sufficient to
permit, respectively, the exercise of this Warrant in full and the conversion
into shares of Common Stock of all shares of Series A Preferred Stock receivable
upon such exercise. The Company further covenants that such shares as may be
issued pursuant to such exercise and conversion will, upon issuance, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
9. Stock Dividends. If after the date hereof the Company shall
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subdivide the Series A Preferred Stock, by split-up or otherwise, or combine the
Series A Preferred Stock, or issue additional shares of Series A Preferred Stock
in payment of a stock dividend on the Series A Preferred Stock, the number of
shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
10. Mergers and Reclassifications. If after the date hereof there
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shall be any reclassification, capital reorganization or change of the Series A
Preferred Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 9 hereof), or any consolidation of the Company
with, or merger of the Company into, another corporation or other business
organization (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the outstanding Series A Preferred Stock), or any sale or conveyance
to another corporation or other business organization of all or substantially
all of the assets of the Company, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, lawful
provisions shall be made, and duly executed documents evidencing the same from
the Company or its successor shall be delivered to the Holder, so that the
Holder shall thereafter have the right to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant in full, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Series A Preferred Stock which
might have been purchased by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance (or, if there are no holders of Series A Preferred Stock at such
time, by a holder of the number of shares of Common Stock which might have been
acquired by the Holder immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale or conveyance upon the
exercise of this Warrant in full and the conversion into shares of Common Stock
of all shares of Series A Preferred Stock receivable upon such exercise), and in
any such case appropriate provisions shall be made with respect to the rights
and interest of the Holder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Purchase Price and the
number of shares issuable
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hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof.
11. Fractional Shares. In no event shall any fractional share of
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Series A Preferred Stock be issued upon any exercise of this Warrant. If, upon
exercise of this Warrant as an entirety, the Holder would, except as provided in
this Section 11, be entitled to receive a fractional share of Series A Preferred
Stock, then the Company shall issue the next higher number of full shares of
Series A Preferred Stock, issuing a full share with respect to such fractional
share.
12. Certificate of Adjustment. Whenever the Purchase Price is
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adjusted, as herein provided, the Company shall promptly deliver to the Holder a
certificate of a firm of independent public accountants setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
13. Notices of Record Date, Etc. In the event of:
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(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the Company, or
sale or conveyance of all or substantially all of its assets, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
any such reclassification, reorganization, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record in respect of
such event are to be determined. Such notice shall be mailed at least 20 days
prior to the date specified in such notice on which any such action is to be
taken.
14. Other Warrants. This Warrant is one of a series of warrants
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(collectively, the "Warrants") that were originally issued by the Company on
June 25, 1999 pursuant to an Amended and Restated Securities Purchase Agreement
(the "Securities Purchase Agreement"), dated June 8, 1999, among the Company and
the other parties thereto. All capitalized terms not defined herein shall have
the meanings assigned to them in the Securities Purchase Agreement.
15. Amendment. The terms of this Warrant may be amended, modified or
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waived only with the written consent of the Company and the holders of Warrants
representing at least two-thirds of the number of shares of Series A Preferred
Stock then issuable upon the exercise of the Warrants. No such amendment,
modification or waiver shall be effective as to this Warrant unless the terms of
such amendment, modification or waiver shall apply with the same force and
effect to all of the other Warrants then outstanding.
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16. Warrant Register; Transfers, Etc.
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(a) The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may change its
address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at its address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed, for
transfer of this Warrant as an entirety by the Holder, the Company shall issue a
new warrant of the same denomination to the assignee. Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the shares of Series A
Preferred Stock purchasable hereunder, the Company shall issue a new warrant to
the assignee, in such denomination as shall be requested by the Holder hereof,
and shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company,
provided, however, that so long as the original holder hereof is the registered
holder of this Warrant, no indemnity shall be required other than its written
agreement to indemnify the Company against any loss arising from the issuance of
such new warrant.
17. No Impairment. The Company will not, by amendment of its Articles of
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Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
18. Governing Law. The provisions and terms of this Warrant shall be
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governed by and construed in accordance with the internal laws of the State of
Ohio.
19. Successors and Assigns. This Warrant shall be binding upon the
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Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
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20. Business Days. If the last or appointed day for the taking of
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any action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Ohio, then such action may be taken or
right may be exercised on the next succeeding day which is not a Saturday or
Sunday or such a legal holiday.
Dated: June 25, 1999 MEDPLUS, INC.
(Corporate Seal) By: ___________________________
Name
Attest: Title:
___________________________
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Subscription
To: MedPlus, Inc. Date:_________________________
The undersigned hereby subscribes for __________ shares of Series A
Preferred Stock covered by this Warrant. The certificate(s) for such shares
shall be issued in the name of the undersigned or as otherwise indicated below:
_____________________________________
Signature
_____________________________________
Name for Registration
_____________________________________
Mailing Address
_______________________________________________________________________________
Net Issue Election Notice
To: MedPlus, Inc. Date:_________________________
The undersigned hereby elects under Section 4 to surrender the right
to purchase _______ shares of Series A Preferred Stock pursuant to this Warrant.
The certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
_____________________________________
Signature
_____________________________________
Name for Registration
_____________________________________
Mailing Address
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Assignment
For value received ____________________________ hereby sells,
assigns and transfers unto ______________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
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the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:_______________________
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In the Presence of:
_____________________________
