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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _______)*
U.S. MEDICAL SYSTEMS, INC.
(Name of Issuer)
10% VOTING CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE PER SHARE
(Title of Class of Securities)
902958107
(CUSIP Number)
DARRYL M. BURMAN, 1900 W. LOOP SOUTH, STE. 1100, HOUSTON, TEXAS 77027
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications.
FEBRUARY 27, 1998
(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.
* 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 ("Act") 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).
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CUSIP No. 902958107
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1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Parris H. Holmes, Jr., Social Security Number: ###-##-####
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ] (b) [ ]
In addition to individually owning shares of common and preferred stock
of the Issuer, the reporting person is the trustee for The Courtney Ann
Holmes Meier Trust, The Darren Shelton Holmes Trust, The Staci Nicole
Holmes Trust, and The Chance Ashley Steven Holmes Trust which each own
preferred stock in the Issuer.
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3. SEC USE ONLY:
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4. SOURCE OF FUNDS*
PF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
United States
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 4,566,855 (includes 369,153 shares
of common stock)
8. SHARED VOTING POWER:
9. SOLE DISPOSITIVE POWER: 4,197,702
10. SHARED DISPOSITIVE POWER:
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
369,153 Common Stock 119,285.717 Preferred Stock
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
12.3% of Common Stock 11.9% of Preferred Stock
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14. TYPE OF REPORTING PERSON:
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
10% Voting Preferred Stock, $.01 par value per share, of U.S.
Medical Systems, Inc. the President of which is Carlton L. Cooke,
Jr., 7600 Burnett Road, Suite 350, Austin, Texas 78734.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Parris H. Holmes, Jr.
(b) 7411 John Smith Drive, Suite 200, San Antonio, Texas 78229
(c) Investments; Chairman and CEO of Billing Concepts Corp.
(d) Not Applicable
(e) Not Applicable
(f) United States
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On or about October 5, 1997, the reporting person initially
acquired 15% of the total issued and outstanding common stock
of Sharps Compliance, Inc., a privately held Texas
corporation, in consideration for certain business and
financial services. On or about February 18, 1998, the
reporting person invested an additional $50,000 to acquire
25,000 shares in Sharps Compliance, Inc., in conjunction with
a private placement that was made by Sharps Compliance, Inc.
in which it raised $4,000,000. Upon consummation of the
private offering, the reporting person owned approximately 11%
of the total issued and outstanding shares of common stock of
Sharps Compliance, Inc. On or about February 27, 1998, all of
the stockholders of Sharps Compliance, Inc. exchanged their
shares of common stock for shares of preferred stock of the
Issuer, and Sharps Compliance, Inc. became a wholly owned
subsidiary of the Issuer (the "Reorganization"). Upon
consummation of the Reorganization, the reporting person
beneficially owns 369,153 shares of common stock, equaling
approximately 12.3% of the total class of common stock, and
beneficially owns 119,285.717 shares of preferred stock,
equaling approximately 11.9% of the total class of preferred
stock. The reporting person currently has no plans to acquire
any additional securities of the Issuer. As discussed in item
3 above,
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the Issuer recently consummated the Reorganization which is
the basis for this filing. The reporting person anticipates
that there will be a change in the present Board of Directors
of the Issuer, but should not include changing the number or
term of Directors. The Issuer intends to have its annual
shareholders meeting on or about May 27, 1998, and will at
that time elect two (2) new Board Members, amend the Company's
Certificate of Incorporation to change its name to Sharps
Compliance Corp., amend the Certificate to eliminate Article
10 relating to stockholder rights, effect a 1-for-5.032715
reverse stock split of the Issuer's common stock, and approve
an amendment to the Company's 1993 Stock Plan to increase the
number of shares of common stock subject to issuance under the
plan from 59,609 shares of common stock to 1,000,000 shares
(after giving effect to the reverse stock split described
above).
ITEM 4. PURPOSE OF TRANSACTION.
The reporting person acquired the securities in the Issuer for
investment purposes only, and has no plans or proposals, other
than those described in Item 3 above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) In the aggregate, the reporting person beneficially
owns 369,153 shares of common stock, equaling
approximately 12.3%, and owns 119,285.717 shares of
preferred stock, equaling approximately 11.9%.
(b) The reporting person has the sole power to 4,566,855 votes
(after giving effect to the right of all preferred
shareholders to 35.190319 votes for each share of
preferred stock). As described in item 3 above, the
reporting person acquired an additional 50,000 shares of
common stock in Sharps Compliance, Inc., a subsidiary of
the Issuer, on or about February 18, 1998 for the
purchase price of $2.00 per share in connection with a
private offering of Sharps Compliance, Inc.
Additionally, the reporting person exchanged 750,000
shares of common stock of Sharps Compliance, Inc. for
107,142.8601 shares of preferred stock of the Issuer.
Additionally, on or about February 27, 1998 the Issuer
acquired all of the outstanding shares of Sharps
Compliance, Inc. which then became a wholly owned
subsidiary of the Issuer.
(c) On or about December 6, 1997, the reporting person
exercised the right to purchase 35,000 shares of
common stock of the Issuer, $0.01 par value, at a
purchase price of $0.50 per share. This purchase was
in connection with that certain Stock Purchase
Warrant entered into between the Issuer and the
reporting person on or about December 6, 1996.
Additionally, the reporting
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person had entered into that certain Consulting
Agreement dated January 7, 1997 with the Issuer to
render certain services in connection with financial
and investment consulting matters. The reporting
person received options to acquire 50,000 shares of
common stock of the Issuer at a purchase price of
$0.60 per share. As of the date hereof, the reporting
person has not exercised any options in connection
with the Consulting Agreement. A copy of the
Consulting Agreement is attached hereto.
(d) Not Applicable
(e) Not Applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
On or about January 29, 1998, the reporting person exercised 70,000
warrants to acquire 35,000 shares of common stock of the Issuer at
a price of $0.75 per share. The reporting person owns options to
acquire 75,000 shares of common stock of the Issuer which became
vested upon the Reorganization, and has until January 21, 2002,
to exercise the options at a price of $60.00 per share before any
splits, reorganizations or recapitalizations. On or about October
6, 1997, the reporting person entered into a letter agreement with
Sharps Compliance, Inc., John W. Dalton and Dr. Burt Kunik
concerning certain financial advisory services rendered and to be
rendered on behalf of Sharps Compliance, Inc. In return, the
reporting person received 15% of the issued and outstanding shares
of Sharps Compliance, Inc. Such Agreement also provides for certain
lending accommodations by Mr. Holmes and places certain
restrictions on the transferability of the shares of Sharps
Compliance, Inc. owned by the reporting person.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Consulting Agreement
(b) Stock Purchase Warrant
(c) Letter Agreement with Sharps Compliance, Inc.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
May 7, 1998 /s/ Parris H. Holmes, Jr.
- ----------------- --------------------------------------
Date Name: Parris H. Holmes, Jr.
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EXHIBIT INDEX
(a) Consulting Agreement
(b) Stock Purchase Warrant
(c) Letter Agreement with Sharps Compliance, Inc.
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EXHIBIT 99(a)
CONSULTING AGREEMENT
THIS AGREEMENT is made as of the 7th day of January, l997.
BETWEEN
U.S. Medical Systems, Inc.,
7600 Burnet Road, Suite 350
Austin, Texas 78757
(hereinafter referred to as the "Company")
AND
Parris H. Holmes, Jr.
9311 San Pedro, Suite 200
San Antonio, Texas 78216
(hereinafter referred to as the "Consultant")
WHEREAS:
A. The Consultant has been providing and continues to provide the Company with
significant financial advice and services; and
B. The Company wishes to compensate the Consultant for advice and services
previously provided; and
C. The Company wished to contract for the future services of the Consultant as
financial and investment management consultant and general management advisor;
and
D. The Consultant has agreed to accept such contract for services upon the terms
and conditions as hereinafter set forth.
NOW, THEREFORE, THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants herein contained, the parties hereto agree as follows:
1. ENGAGEMENT
1.1 Appointment: The Company hereby contracts for the services of the
Consultant, and the Consultant hereby agrees to perform the services for the
Company, in accordance with the terms and conditions of this Agreement. The
Consultant shall report to the Chairman of the Board of the Company.
1.2 Past Services: the Consultant has previously provided the following
services:
(a) advised the Company concerning strategic financial planning;
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(b) assisted with the due diligence review of the Company and analyzed the
Company's capital needs:
(c) advised the Company concerning various financing alternatives and analyzed
such alternatives:
(d) assisted the Company with introduction to, meetings with, and appointment
of investment bankers, facturing representatives etc.;
(e) assisted in the preparation of a business plan and private placement
memorandum(s);
(f) assisted with the due diligence review of possible acquisitions for the
Company; and
(g) assisted with the analysis of possible new products for the Company,
(h) assisted in the sale to third parties if existing products of the Company.
1.3 Scope of Duties: The Consultant shall have the following ongoing
responsibilities and duties:
(a) advise the Company with regard to possible reverse take over of a private
or public company, of such candidates and assist with negotiation with
such candidates, and
(b) analyze and advise the Company with respect to the various merger
strategies alternatives available to the Company, especially in the January
to September 1997, time frame
(c) provide analysis and make recommendations with respect to the Company's
existing and potential capital needs;
(d) provide assistance in the strategy to dispose of any or all current
operational assets should these medical assets be at odds with the merger/
reverse take over of a company in a completely different field.
1.4 Best Efforts: The Consultant shall at all times use his best efforts to
advance the interest of the Company and shall faithfully, industriously and to
the best of his abilities perform the responsibilities and duties described
above.
1.5 Reports: The Consultant shall deliver to the President on a monthly basis a
report detailing all activities and services provided to the Company for that
period.
1.6 BOD APPROVAL: PERFORMANCE BY THE COMPANY OF ITS DUTIES PURSUANT TO THIS
AGREEMENT. INCLUDING PAYMENT OF ANY REMUNERATION PURSUANT TO PARAGRAPH 3 HEREOF,
IS SUBJECT IN ALL
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RESPECTS TO APPROVAL BY THE BOARD OF DIRECTORS OF THE COMPANY. IF SUCH APPROVAL
IS NOT OBTAINED, THIS AGREEMENT SHALL BE NULL AND VOID AND OF NO FORCE AND
EFFECT.
2. TERM
Initial Term: This Agreement shall continue until December 31, 1997,
subject to earlier termination as hereinafter provided.
3. REMUNERATION
3.1 Remuneration: The Company shall compensate the Consultant for services
already rendered and for services to be rendered as follows:
(a) 50,000 options for conversion to shares of the Company's common
stock, $.60(US) value. These shares will not be registered
pursuant to state or federal securities laws and will be subject
to substantial restriction for resale. The Company will not be
obligated to register the shares. $20,000 will also be paid in
October 1997.
3.2 Payment: The remuneration set forth in Paragraph 3.1 shall be paid as
follows:
(a) The Company shall deliver to the Consultant the options described in
Paragraph 3.1(b); at the rate of 50,000 options for assistance in a merger or
reverse take over, effective February 3, 1997.
3.3 Expenses: The parties agree that the fee provided for in Paragraph 3.1(a)
hereof is intended to include reimbursement for all expenses incurred by the
Consultant in connection with his duties hereunder, and the Consultant shall
bear the cost of his own expenses over such amount.
4. CONFIDENTIALITY
The Consultant shall not, either during the course of his engagement
hereunder or at any time thereafter, disclose to any person, other than the
directors of the Company or the Company's professional advisors, any
confidential information concerning the business or affairs of the Company, or
its subsidiaries, which the Consultant may have acquired in the course of or
incidental to his appointment hereunder or otherwise, and the Consultant shall
not directly or indirectly use (whether for his own benefit or the detriment or
intended detriment of the Company) any confidential information he may acquire
with respect to the business and affairs of the Company, or its subsidiaries.
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5. NON-COMPETITION
be engaged in or concerned with or interested in or advise, lend money to,
guarantee the debts or obligation of or permit his name to be used or employed
by any other person or persons, including, without limitation, any individual,
firm, association, syndicate, company, corporation or other business enterprise,
engaged in or concerned with or interested in an operation or undertaking which
is in any way competitive with the business of the Company, without having
obtained the express written consent of the Company.
6. TERMINATION
6.1 Termination by the Company for Cause: The Company may terminate this
Agreement at any time for just cause by providing the Consultant with thirty
(30) days notice in writing.
6.2 Termination by the Company without Cause: The Company may terminate this
Agreement at any time for just cause by providing the Consultant with thirty
(30) days notice in writing.
7. OTHER PROVISIONS
7.1 Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. Notwithstanding the foregoing,
it is agreed that the Consultant may commence an action in respect of the
enforcement of his rights hereunder in any jurisdiction in which the Company
carries on business, has an office or has assets.
7.2 Notice: Any notice required or permitted to be given under this Agreement
shall be in writing, and may be delivered personally or by telex or telecopier
or by prepaid registered post addressed to the parties at the above-mentioned
addressed or at such other address of which notice may be given by either of
such parties. Any notice shall be deemed to have been received, if personally
delivered or by telecopier, on the date of delivery and, if mailed as aforesaid.
then on the seventh business day after and excluding the day of mailing.
7. 3 Personal Nature: This Agreement is a contract for services and may not be
assigned in whole or in part by the Consultant.
7.4 Indemnity: The Consultant shall indemnify the Company and save harmless from
and against any and all claims, actions, damages, liabilities and expenses
arising out of or in connection with a breach of any kind by the Consultant of
any provisions, covenants, conditions and warranties contained in this
Agreement, or any other matter arising whatsoever out of this Agreement.
7.5 Prior Agreements: This Agreement supersedes any previous agreement,
arrangement or understanding, whether written or oral, between the parties
hereto.
7.6 Time of the Essence: Time is of the essence of this Agreement.
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7.7 Independent Contractor: The Consultant is an independent contractor, and the
Company shall not exercise any control or direction over the methods by which
the Consultant shall perform his services pursuant to this Agreement.
Notwithstanding anything contained herein to the contrary, this Agreement does
not create and is not intended to create a relation of master-servant or
employer-employee between the parties hereto.
7.8 Amendment: No amendment, alteration, or waiver of any of the terms of this
Agreement shall be binding upon either party to this Agreement unless it is in
writing and executed by such party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
seventh day of January, 1997.
COMPANY:
U.S. Medical Systems, Inc.
By: /s/ LEE COOKE
------------------------------------
Lee Cooke, Chairman of the Board
and President
CONSULTANT:
/s/ PARRIS H. HOLMES, JR.
------------------------------------
Parris H. Holmes, Jr.
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SCHEDULE "A"
NEITHER THIS WARRANT NOR THE SECURITIES THAT MAY BE PURCHASED PURSUANT TO THIS
WARRANT HAVE BEEN REGISTERED WITH OR APPROVED BY THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE. THIS WARRANT AND THE SECURITIES THAT MAY BE PURCHASED
PURSUANT TO THIS WARRANT ARE BEING OFFERED AND SOLD IN RELIANCE UPON CERTAIN
EXEMPTIONS AFFORDED BY SUCH ACTS AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN ELECTIVE REGISTRATION STATEMENT UNDER SUCH ACTS OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
70,000 Share Purchase Warrants Warrant No. 2
MEDICAL POLYMERS TECHNOLOGIES, INC.
STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT PARRIS H. HOLMES, JR. is entitled to purchase at
any time or from time to time after the date hereof 35,000 post-consolidated
shares of common stock with a $0.01 par value at a Purchase Price of $0.50
(U.S.) per share if purchased prior to 5:00 p.m., Austin Time, on December 6,
1997 and at a price of $1.00 (U.S.) per share if purchased after 5:00 p.m.
Austin Time on December 6, 1997 and prior to 5:00 p.m. Austin Time on December
6, 1998. On the date hereof, each two warrants represented herein are equal to
one share post-consolidated of the common stock with a $0.01 par value, of
Medical Polymers Technologies, Inc., a Delaware corporation (the "Company"),
subject to adjustment pursuant to Section 6 of the Warrant Agreement (defined
below). This Warrant is issued pursuant to a Warrant Agreement dated as of
December 6, 1996 (the "Warrant Agreement"), between the Company and certain
subscribers, and all rights of the holder of this Warrant are subject to the
terms and provisions of the Warrant Agreement, copies of which are available to
inspection at the offices of the Company.
TRANSFER OF THIS WARRANT IS RESTRICTED AS PROVIDED IN THE WARRANT
AGREEMENT.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND ANY SHARES
ACQUIRED UPON THE EXERCISE THEREOF ARE SUBJECT TO A
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2
HOLD PERIOD AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE
HOLD PERIOD EXCEPT AS PERMITTED BY THE SECURITIES ACT (BRITISH COLUMBIA) AND
REGULATIONS MADE UNDER THE ACT.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and
its corporate seal to be hereunto affixed in Austin, Texas by its proper
corporate officers thereunto duly authorized as of this 6th day of December,
1996.
MEDICAL POLYMERS TECHNOLOGIES, INC.
By: /s/ LEE COOKE
-------------------------------
Lee Cooke,
Chairman
PACIFIC CORPORATE TRUST COMPANY
By:
/s/ SIGNED PCTC
-----------------------------------
Authorized Signatory
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
TO U.S. MEDICAL SYSTEMS, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, 35,000 Units to purchase Underlying Securities of U.S.
Medical Systems, Inc. and herewith makes payment of $ 26,250 therefor, and
requests that the certificate or certificates for such shares be issued
in the name of and delivered to the undersigned.
Dated: January 29, 1998
/s/ PARRIS H. HOLMES, JR.
- -----------------------------------
Parris H. Holmes, Jr.
7411 John Smith Drive. Ste 200
- -----------------------------------
San Antonio, Texas 78229
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(Address)
- -------------------
*Insert here the number of Units called for on the face of the Warrant, without
making any adjustment for additional Common Stock, Preferred Stock or any other
stock or other securities or property or cash which, pursuant to the adjustment
provisions of the Warrant Agreement pursuant to which the Warrant was granted,
may be deliverable upon exercise.
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EXHIBIT 99(c)
SHARPS COMPLIANCE, INC.
P.O. BOX 34595
HOUSTON, TEXAS 77235
October 3, 1997
Mr. John W. Dalton
1330 Post Oak Boulevard
Suite 2300
Houston, Texas 77056
Mr. Parris H. Holmes, Jr.
7411 John Smith Drive
Suite 1500
San Antonio, Texas 78229
Dr. Burt Kunik
Sharps Compliance, Inc.
P.O. Box 35495
Houston, Texas 77235
Gentlemen:
This letter, when accepted by each of you in the manner as hereinafter
set forth, will evidence an agreement by and between John W. Dalton
("Dalton"), Parris H. Holmes, Jr. ("Holmes"), Dr. Burt Kunik, ("Kunik") and
Sharps Compliances, Inc., ("SCI"), in regards to the following terms and
conditions:
1. Issuance of SCI stock to Dalton and Holmes. - Immediately upon execution of
this letter, SCI shall increase its authorized capital stock from 1,000,000
to 10,000,000 and cause to be issued to Dalton, 1,250,000 shares of common
stock of SCI in consideration of services rendered to SCI ("Dalton Stock"),
750,000 shares of common stock of SCI to be issued to Holmes in
consideration of certain financial consulting services ("Holmes Stock"),
and Kunik shall forward split his 1,000 shares into 3,000,000 shares of the
outstanding common stock of SCI. Dalton and Holmes agree to execute
appropriate subscription documents evidencing certain representations in
regards to the issuance of the shares described in this Section 1.
2. Loan by Holmes. - Within thirty (30) days from the date of this letter,
Holmes agrees to loan (the "Loan") to SCI an amount equal to $400,000.00 to
be evidenced by a Promissory Note bearing interest at 8% and, to be payable
upon the sooner of (i) the subsequent completion of a Business Transaction
(as defined in Section 6 below) in which the use of proceeds shall
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October 3, 1997
Page 2
provide for such repayment, or (ii) six (6) months from the date Kunik
shall exercise his option as provided in Section 6 below.
3. Merger of SCI into U.S. Medical Systems, Inc. ("US Medical"). - Immediately
upon execution of this Agreement, SCI agrees to begin negotiations to enter
into a merger agreement with US Medical (the "Merger Agreement") on terms
and conditions which shall be acceptable to SCI and its legal counsel. As a
result of the merger of SCI into U.S. Medical (the "Merger"), all board
members of U.S. Medical shall resign and be replaced with the board of
directors of SCI (which board shall include Kunik, Holmes and Dalton). Such
Merger Agreement shall be executed no later than November 15, 1997. The
Merger Agreement shall also provide that as a result of such Merger, Kunik,
Dalton and Holmes shall own no less than the following percentages of total
issued and outstanding common stock of SCI/US Medical, 52.6%, 21.9%, and
13.24%, respectively. Additionally, the Merger Agreement shall provide that
Kunik, Holmes and Dalton agree to enter into a Lockup Agreement whereby
each of them agree that 90% of their total issued and outstanding shares of
common stock of SCI/US Medical after consummation of the Merger shall not
be sold for eighteen (18) months from the date of effectiveness of a public
offering. There shall be no prohibitions on the remaining ten percent
(10%,) except those which may be imposed by applicable state and federal
securities laws. Such Merger Agreement shall also require Burt Kunik to
enter into an Employment Agreement on terms and conditions mutually
agreeable to the Board of Directors of U.S. Medical/SCI, Kunik and his
counsel.
4. Private Equity Funding. - Holmes agrees to assist SCI/US Medical in raising
a minimum of $2,000,000 of additional equity. Such offering shall be made
only to "accredited investors," as that term is defined by Item 501 of
Regulation D of the Securities and Exchange Commission. As a result of
such equity offering, Kunik shall not own less than 44.8% of the total
issued and outstanding stock of SCI/US Medical.
5. U.S. Medical Annual Meeting. - Holmes agrees to cause U.S. Medical to
complete and file its 10K and Proxy Statement with the Securities and
Exchange Commission no later than November 30, 1997, with the intent that
the annual meeting of U.S. Medical shall be held prior to December 31,
1997. All parties agree that the Merger Agreement shall become effective on
the same day as the annual meeting, and that the private equity funding
provided by Holmes shall also be completed upon consummation of the Merger
at the annual meeting.
6. Failure to Consummate Merger. - In the event the Merger is not consummated
by December 31, 1997, all parties agree that Holmes and Dalton shall be
provided an additional three months until March 15, 1998 to complete either
the Merger, or a "business transaction." For purposes of this Agreement,
the term "business transaction" shall mean any sale, merger, acquisition or
series or combinations of transactions, other than in the ordinary course
of trade or business, whereby, directly or indirectly, control of a
material interest in SCI or any of its business or a substantial portion of
its or their respective assets, is transferred for consideration,
including, without limitation, a sale or exchange of capital stock or
assets, a lease of assets with or without a purchase option, a leverage buy
out, the formation of a joint venture, a public offering or any similar
transaction. In the event a "business transaction"
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October 3, 1997
Page 3
has not taken place by March 15, 1998, Kunik shall have the option of (i)
agreeing to repay the Loan within six (6) months from the date of his
election in equal principal and interest payments, at a rate of 8% per
annum, and repurchase Dalton's Stock for $1,250 and repurchase Holmes Stock
for $750.00 or (ii) repurchase only 500,000 shares of stock held by Dalton
for the sum of $500.00 Holmes shall agree to forgive repayment of the Loan
and as a result thereof, Dalton and Holmes would each own 750,000 shares of
common stock of SCI. In the event Kunik repurchases all of the Dalton Stock
and Holmes Stock and the Loan is to be repaid as provided above, Kunik
shall agree that in the event SCI shall enter into a commitment to
consummate any "business transaction" within six (6) months from the date
thereof, Kunik shall offer Dalton and Holmes the right to acquire 16 1/2%
each of the outstanding capital stock of SCI immediately prior to the
effectiveness of any such "business transaction" for the aggregate purchase
price of 400,000. Furthermore, the parties agree that if, on March 15, 1998
SCI shall (i) be a party to any "business transaction" which has not been
consummated as of that date, or (ii) have filed with the Securities and
Exchange Commission a registration statement for the registration of shares
of SCI, all parties agree that Kunick may delay the option discussed
hereinabove for an additional sixty (60) day period, it being the intent of
all parties that any pending transaction must be completed within such time
frame. Failure to complete such transaction by May 15, 1998 shall entitle
Kunik to exercise one of the above options discussed herein.
While it is not the intention of the parties to discuss all terms and
conditions of the transactions contemplated herein, it is the intent to reach
an understanding of the form by which the parties will go forward to consummate
a transaction. Therefore, if you are in agreement with the terms and conditions
contained herein, please execute in the spaces provided below.
Very truly yours,
SHARPS COMPLIANCE INC.
By: /s/ BURTON KUNIK
----------------------------
Dr. Burton Kunik, President
<PAGE> 4
October 3, 1997
Page 4
Accepted and Agreed to this
______day of __________, 1997.
- -------------------------------------
John W. Dalton
/s/ PARRIS H. HOLMES, JR.
- -------------------------------------
Parris H. Holmes, Jr.
- -------------------------------------
Dr. Burt Kunik
<PAGE> 5
October 3, 1997
Page 4
Accepted and Agreed to this
6 day of October , 1997.
/s/ JOHN W. DALTON
- ------------------------------------
John W. Dalton
- ------------------------------------
Parris H. Holmes, Jr.
/s/ DR. BURT KUNIK
- ------------------------------------
Dr. Burt Kunik
