MEDPLUS, INC.
8805 Governor's Hill Drive, Suite 100
Cincinnati, Ohio 45249
NOTICE OF AMENDMENT TO PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
JUNE 18, 1999
TO THE SHAREHOLDERS OF MEDPLUS, INC. (the "Company"):
The following amendments have been made to the Proxy Statement
mailed to you on or about May 15, 1999 with respect to the Special
Meeting of the Shareholders of MedPlus, Inc. to be held on June
18, 1999:
As noted in the Proxy Statement, on April 30, 1999, the Company
entered into an Agreement (the "Agreement") with three investment
firms (the "Investors") to obtain $6,100,000 in debt and equity
financing. The Agreement was filed with the SEC as an exhibit to
the Company's Annual Report on Form 10-KSB for fiscal 1999 (see
"Incorporation of Certain Documents by Reference"). The terms of
the Agreement provide for financing of $4,100,000 in Series A
Convertible Preferred Stock (the "Preferred Stock") and $2,000,000
in subordinated debentures (the "Notes"). The proceeds of the
financing will be utilized to fund working capital requirements
and continue the market penetration of certain of the Company's
core products. Certain terms of the Agreement, including the
authorization of the Preferred Stock, are subject to shareholder
approval.
The Agreement has since been amended and restated as of June 8,
1999. Amendments which alter the information provided in the
Proxy Statement are provided below. The Amended and Restated
Agreement in its entirety will be filed on or before June 10, 1999
with the SEC as an exhibit to the Company's Periodic Report on
Form 8-K (see "Incorporation of Certain Documents by Reference").
Amendments to Proxy Statement:
1. Amendments to Notes. The Notes (as defined in the Section
entitled "Proposals to Amend The Company's Articles Of
Incorporation to Create a Class of Series A Convertible Preferred
Stock; Approve the Issuance of Shares of Such Preferred Stock; and
Approve the Subsequent Issuance of Common Shares upon Conversion
Thereof,") have been amended and restated as of June 8, 1999. The
Notes, due 2004, previously had a coupon rate of 10% in the first
year and 12% thereafter. The Notes, still due 2004, now have a
coupon rate of 10% in the first year, a rate of 12% from May 1,
2000 through October 31, 2000 and a rate of 14% thereafter. In
addition, the Company is now obligated to pay the payee of the
Notes, on each anniversary of October 31, 1999, a premium in an
amount equal to two percent (2%) of the entire amount of the
principal of the Notes which then remains unpaid. Finally, the
Company has agreed that in every instance where the Company
receives any cash from, or any cash is made available to it by,
any event or source including but not limited to a corporate
partnering up-front payment of any nature, equity financing or
sale of assets, but specifically excluding (i) a sale of accounts
receivable, (ii) any sales or licenses of Company products and/or
services in what has heretofore been the ordinary course of
business, (iii) any bank financing, credit facility or similar
lending arrangement (including "Senior Debt" as defined in the
Agreement) and (iv) any sale by DiaLogos Incorporated ("DiaLogos")
of equity securities of DiaLogos, the Company shall immediately
pay to the holders of the Notes an amount equal to the lesser of
(1) the total amount of principal and interest remaining unpaid
under the Notes and (2) the total amount of cash received by the
Company or made available to it in such instance. The remaining
terms of the Notes remain the same, including the provision
allowing the Company to redeem the Notes at any time during their
term without penalty.
2. Amendment to Terms of Preferred Stock. The terms of the
Preferred Stock (as defined in the Section entitled "Proposals to
Amend The Company's Articles Of Incorporation to Create a Class of
Series A Convertible Preferred Stock; Approve the Issuance of
Shares of Such Preferred Stock; and Approve the Subsequent
Issuance of Common Shares upon Conversion Thereof,") have been
amended. Previously, in the event of a Change of Control (as
defined in Exhibit A to the Proxy Statement), the holders of a
majority of the shares of the Preferred Stock could require the
Company to redeem such shares. The Preferred Stock was to be
redeemed by paying for each share an amount in cash equal to 110%
of the original purchase price per share plus an amount equal to
certain dividends declared but unpaid thereon. The terms of the
Preferred Stock have now been amended such that the "Optional
Redemption" feature described above and in the Proxy Statement has
been deleted. Thus, Exhibit A to the Proxy Statement has now been
amended by (a) the deletion in its entirety of Section 7 thereof
and (b) by changing the Section entitled "Amendments" from Section
"8" to Section "7."
3. Amendment to Terms of Ten-Year Warrants. The terms of the
ten-year warrants have been amended. Subject to shareholder
approval on or before July 30, 1999, the Company initially agreed
to issue to the Investors ten-year warrants for the purchase
(subject to adjustment as provided therein) of 759,562 shares of
Preferred Stock. These warrants could not be exercised unless the
value of the Company's stock price as traded on the NASDAQ over a
twenty-day period exceeded $7.28. The Company has now agreed to
issued to the Investors ten-year warrants for the purchase of
721,702 shares of the Preferred Stock (still subject to
shareholder approval on or before July 30, 1999). The revised
warrants cannot be exercised unless the value of the Company's
stock price as traded on the NASDAQ over a twenty-day period
exceeds $7.17.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Periodic Report on Form 8-K as filed with the SEC on
or before June 10, 1999 is incorporated by reference into this
Amendment to Proxy Statement. Upon written request and payment of
a copying charge of $.10 per page, the Company will provide any of
its shareholders a copy of any document, or exhibit thereto,
incorporated herein or in the Proxy Statement by reference.
Requests for such copies should be directed to: Investor
Relations, MedPlus, Inc., 8805 Governor's Hill Drive, Suite 100,
Cincinnati, Ohio 45249.
By Order of the Board of Directors
Robert E. Kenny III
Secretary
June 8, 1999
IMPORTANT
A Proxy Statement and proxy were mailed to you on or about
May 15, 1999. The amendments to the Proxy Statement described
above will not alter the text of the proxy mailed to you on or
about May 15, 1999. As a shareholder, you are urged to complete
and mail the proxy promptly whether or not you plan to attend this
Special Meeting in person. If you previously mailed your proxy
and, as a result of the amendments to the Proxy Statement
described above, desire to change your vote on any of the items to
be acted upon a the Special Meeting on June 18, 1999, you mail
either (1) contact MedPlus, Inc. as described herein for a new
proxy or (2) attend the Special Meeting on June 18, 1999 and
change your vote in person (shareholders attending the meeting may
personally vote on all matters that are considered in which event
their signed proxies are revoked). It is important that your
shares be voted. In order to avoid the additional expense to the
Company of further solicitation, we ask your cooperation in
mailing your proxy promptly. The record date of the meeting has
not changed; as such, shareholders of record at the close of
business on April 26, 1999 remain entitled to vote at the meeting.