-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EmSDVhHgn0137om839jgCbDRXzNpWJd3zsTAVJVevDYh5Bj/TyA6vd+/v/37lCxN YaTuC0gAk+oWQ2EGervdHQ== 0000950129-98-001942.txt : 19980511 0000950129-98-001942.hdr.sgml : 19980511 ACCESSION NUMBER: 0000950129-98-001942 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980508 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: US MEDICAL SYSTEMS INC CENTRAL INDEX KEY: 0000898770 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 680206382 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-53975 FILM NUMBER: 98613113 BUSINESS ADDRESS: STREET 1: 7600 BURNET RD STREET 2: STE 350 CITY: AUSTIN STATE: TX ZIP: 78757 BUSINESS PHONE: 5124583335 MAIL ADDRESS: STREET 1: 7600 BURNET RD STREET 2: STE 350 CITY: AUSTIN STATE: TX ZIP: 78757 FORMER COMPANY: FORMER CONFORMED NAME: MEDICAL POLYMERS TECHNOLOGIES INC DATE OF NAME CHANGE: 19930916 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DALTON JOHN W CENTRAL INDEX KEY: 0001061270 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1330 POST OAK BLVD STREET 2: STE 2300 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7136239216 SC 13D 1 JOHN W. DALTON FOR U.S. MEDICAL SYSTEMS INC. 1 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). 2 Page 2 of 5 CUSIP No. 902958107 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: John W. Dalton, Social Security Number: ###-##-#### - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY: - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* PF - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7. SOLE VOTING POWER: 6,304,885.6 (includes 20,900 shares of common stock) 8. SHARED VOTING POWER: 9. SOLE DISPOSITIVE POWER: 6,304,885.6 10. SHARED DISPOSITIVE POWER: - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 31,350 Common Stock 178,571.43 Preferred Stock - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 1.1% of Common Stock 17.9% of Preferred Stock - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON: IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 2 3 Page 3 of 5 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) John W. Dalton (b) 11325 Somerland Way, Houston, Texas 77024 (c) Investments, First Vice President Dain Rauscher (d) Not Applicable (e) Not Applicable (f) United States ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On or about October 1, 1997, the reporting person initially acquired 25% 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. Upon consummation of a $4,000,000 private offering in February of 1998, 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 owned 31,350 shares of common stock, equaling approximately 1.1% of the total class of common stock, and beneficially owned 178,571.43 shares of preferred stock equaling approximately 17.9% 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, the Issuer recently consummated the Reorganization, which is the basis for this filing. 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 3 4 Page 4 of 5 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 31,350 shares of common stock, equaling approximately 1.1%, and owns 178,571.43 shares of preferred stock, equaling approximately 17.9%. (b) The reporting person has the sole power to 6,304,885.6 (after giving effect to the right of all preferred shareholders to 35.190 319 votes for each share of preferred stock). The reporting person exchanged 1,250,000 shares of common stock of Sharps Compliance, Inc. for 178,571.428 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) Not Applicable. (d) Not Applicable (e) Not Applicable ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. On or about December 6, 1996, the reporting person entered into that certain Subscription Agreement to acquire 20,900 units at a price of $0.50 per unit which entitled the reporting person to receive 20,900 shares of common stock of the Issuer at a price of $0.50 per share and additionally, the reporting person received 10,450 warrants to acquire 10,450 shares of common stock of the Issuer at various exercise prices until January 3, 1999 before taking into account any stock splits, reorganizations or recapitalizations. On or about October 6, 1997, the reporting person entered into a letter agreement with Sharps Compliance, Inc., Parris H. 4 5 Page 5 of 5 Holmes, Jr. 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 approximately 25% of the issued and outstanding shares of Sharps Compliance, Inc. Such Agreement provides for certain lending accommodations by Mr. Holmes and places certain restrictions the transferability of the shares of Sharps Compliance, Inc. owned by the reporting person. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. (a) Subscription Agreement (b) Letter Agreement with Sharps Compliance, Inc. 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/ John W. Dalton - ----------------- ---------------------------------- Date Name: John W. Dalton 5 6 EXHIBIT INDEX (a) Subscription Agreement (b) Letter Agreement with Sharps Compliance, Inc. EX-99.A 2 SUBSCRIPTION AGREEMENT 1 EXHIBIT 99(A) SUBSCRIPTION AGREEMENT MEDICAL POLYMERS TECHNOLOGIES, INC. 550,000 UNITS 550,000 SHARES OF COMMON STOCK WITH STOCK PURCHASE WARRANTS TO PURCHASE 275,000 SHARES OF COMMON STOCK ------------------------ Medical Polymers Technologies, Inc. 7600 Burnet Road, Suite 350 Austin, TX. 78757-1267 Gentlemen: The undersigned subscriber has been informed that Medical Polymers Technologies, Inc., a Delaware corporation (the "Company"), is currently in the process of obtaining capital through the private offer and sale of a minimum of 400,000 units and up to a maximum of 550,000 units at $0.50 (US) consisting of one share of Common Stock and one non-transferable share purchase warrant, two of such warrants entitling the holder to acquire one additional share of Common Stock at a price of $0.75 (US) per share in year one and at a price of $1.00 (US) in year two. Such Units are being offered to accredited investors (as defined under the Securities act of 1933, as amended (the "Act")). The undersigned acknowledges receipt of the Subscription Agreement, 10-KSB/A1 and 10-QSB of September 30, 1996 and the opportunity to obtain additional information from the Company on the basis of which the undersigned submits this offer. The undersigned hereby acknowledges that he has had full and complete access to all information regarding the Company and its current operations, financial position and prospects, and has had the opportunity to review documents in the possession of the Company regarding the proposed financing, the reorganization approved November 19, 1996 by the Stockholders and other corporate matters. The undersigned also has had the opportunity to ask questions of the Company's officers or directors and to receive information satisfactory to the undersigned in response to such questions and inquiries. 1. Subscription. The undersigned hereby irrevocably tenders this subscription (the "Subscription") for Units as indicated on the signature page hereto and cash or a cashier's check in payment therefor. 2 Subject to the terms of the Subscription Agreement, the Investor hereby irrevocably subscribes for and agrees to purchase the number of Units indicated on the signature page hereto at a purchase price of $.050 (US) per Unit (the "Subscription"). Simultaneously with the delivery of the combined signature page (the "Signature Page") to this Subscription Agreement, the Questionnaire referred to below, and the Warrant Agreement referred to below, the Investor shall deliver to the Company the appropriate completed questionnaire (the "Questionnaire"), a completed and signed Vancouver Stock Exchange Form 11-1A - Private Placement Questionnaire and Undertaking ("VSE Form 11-1A"), a completed Internal Revenue Service Form W-9 (IRS Form W-9"), a completed British Columbia Securities Commission Form 20, and payment in the amount set forth on the Signature Page below (the "Payment"), in the form of a check payable to "Medical Polymers Technologies, Inc." or any bank wire transfer to the account of the Agent referred to below at: NationsBank of Texas Dallas, Texas ABA No. 111000025 For future credit to: Account No. 2140449207 The Investor understands that the Payment will be held in escrow for his or its benefit by NationsBank, N.A. (the "Agent") in Austin, Texas. The Payment will be promptly returned to the Investor, without interest, in the event that for any reason the purchase and sale of all of the Unit has not been consummated by January 15, 1997 (the "Closing Date"). It is excepted, however, that the Closing Date will occur on or about December 16, 1996. It is understood and agreed that the Company shall have the right, in its sole and absolute discretion, to accept or reject this Subscription, in whole or in part, and that this Subscription shall be deemed to be accepted by the Company only when it is signed by the Company. The undersigned understands that this Subscription constitutes an absolute obligation for him, that it is independent of any of subscription by any other party, and that only the Company may accept this Subscription. 2. Representations and Warranties of the Undersigned. The undersigned hereby represents and warrants to the Company as follows: (a) THE INVESTOR RECOGNIZES THAT AN INVESTMENT IN THE COMPANY INVOLVES SUBSTANTIAL RISK. THE INVESTOR UNDERSTANDS ALL OF THE RISK FACTORS RELATING TO THE PURCHASE OF UNITS. (b) he has not retained or consulted with a Purchaser Representative; (c) he had such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company and the suitability of the units subscribed for an investment for him; (d) he has a net worth in excess of five times the amount of the purchase price tendered herein. 3 (e) the Units for which her hereby subscribes will be acquired for his own account for investment and not with the view toward resale or redistribution; also, the undersigned is not buying Units as a nominee for any other person, and he does not presently have any reason to anticipate any change in his circumstances or other particular occasion or event which would cause hi to sell his Units; (f) he has received no representations or warranties from the Company or the officers, directors, employees, or agents of the Company other than those set forth in the 10-KSB/A-1 and 10-QSB; (g) he is able to bear the economic risk of the investment in the Units subscribed for and he has sufficient net worth to sustain a loss of his entire investment in the Company without material economic hardship if such a loss should occur; (h) he has received and read and is familiar with the 10-KSB/A1, including all exhibits annexed thereto and the Company's 10-QSB for September 30, 1996, and he confirms that all documents, records, and books pertaining to his proposed investment in the Company have been made available to him; (i) he has had an opportunity to ask questions of and receive satisfactory answers from the Company or any person or persons acting on the Company's behalf, concerning the terms and conditions of this investment, and all such questions have been answered to the full satisfaction of the undersigned; (j) he represents that (I) it has been called to his attention by those individuals with whom he has dealt in connection with his investment in the Company, that his investment in the Company is speculative and involves a high degree of risk of loss by him and his entire investment in the Company and that he must bear economic risk of such investment for an indefinite period of time because the Units have not been registered under the Act or applicable state securities laws and therefore cannot be sold unless subsequently registered under the /act and such state laws or unless an exemptions form such registration is available, (ii) no assurances are or have been made regarding any economic advantages (including tax) which may inure to the benefit of the undersigned, (iii) no assurances have been made concerning return on investments, and (iv) he is aware that this Subscription constitutes an absolute obligation for him and is independent of any other subscription for Units; (k) he acknowledges and is aware that it never has been represented, guaranteed, or warranted to him by the Company, its officers, directors, agents or employees, or any other person, expressly or by implication, as to any of the following: (I) the approximate or exact length of time that he will be required to remain as owner of his Units; (ii) the percentage of profit and/or amount of or type of consideration, profit or loss to be realized, if any, as a result of this investment; or (iii) that the past performance or experience on the part of the Company, or any future projections will in any way indicate the predictable results of the ownership of Units or of the overall financial performance of the Company; 3 4 (l) he has made other risk capital investments or other investments of a speculative nature and, by reason of his business and financial experience or the business and financial experience of those persons he has retained to advise him with respect to his investment in the Company, has acquired the capacity to protect his own interest in investments of this nature; (m) he acknowledges that all information made available to him and/or his personal advisor(s) in connection with his investment in the Units, including the information contained in the Memorandum and exhibits thereto, is and shall remain confidential in all respects and may not be reproduced, distributed or used for any other purpose without prior written consent of the Company; (n) the undersigned, if an individual, represents he is a bona fide resident and domiciliary, not a transient or temporary resident, of the state and country shown below. If the undersigned is a corporation, trust or other entity, it represents that it was incorporated or organized and is existing under the laws of the state shown below; if the undersigned is a partnership, it represents that all of its general partners are bona fide residents and domiciliaries, not transient or temporary residents, of Texas; and if the undersigned is a corporation, trust, partnership or other entity, it represents it was not organized for the specific purpose of acquiring the Units; (o) he has received, complete and returned to the Company the Confidential Purchaser Questionnaire accompanying this Subscription and relating to his general ability to bear the risks of an investment in the Company and his suitability as an investor in the private offering, and the undersigned hereby affirms the correctness of his answers to such questionnaire; (p) by executing in the space provided below, the undersigned accepts the terms of, and agrees to abide by, the Warrant Agreement, and at the request of the Company, he agrees to complete and return to the Company an investment letter, upon the exercise of the Warrants for the Common Stock, containing representations in support of a private placement exemption under applicable federal and state securities law; and (q) he acknowledges and agrees that he is not entitled to cancel, terminate, or revoke this Subscription or any agreements of the undersigned hereunder, once accepted by the Company, and that such Subscription and agreements shall survive changes in the transactions, documents and instruments described in the Memorandum which, in the aggregate, are not material or which are contemplated by the Memorandum. (r) The Investor is aware that the Units will be distributed pursuant to certain exemptions under the Securities Act (British Columbia) and its regulations and the Investor is not acquiring these securities as a result of any information about the materials affairs of the Company that is not generally known to the public save the knowledge of his particular transaction. 4 5 (s) This subscription for the Units has not been induced by any representations or warranties by any person whatsoever with regard to the future value of the Company's securities. (t) The Investor is acquiring the Units as principal for the Investor's own benefit. (u) Pursuant to the Securities Act (British Columbia) and its regulations, the Investor will hold the Common Stock and any shares acquired upon the exercise of the Warrant and such shares will be non-transferable in British Columbia for a period of one year from the date of the Subscription Agreement, and thereafter such shares may be subject to restrictions or notice or requirements under such Act upon disposition. (v) The Units were not advertised in printed media and general and regular paid circulation, radio or television. (w) No person has made to the Investor any written or oral representations: (i) that any person will resell or repurchase the Common Stock and/or the Warrant; (ii) that any person will refund the purchase price of the Common Stock and/or the exercise price of the shares comprising the Warrant; (iii) as to the future price or value of the Common Stock and/or the shares issuable upon the exercise of the Warrant; or (iv) that the Common Stock and/or the shares issuable upon the exercise of the Warrant will be listed and posted for trading on a stock exchange or that application has been made to list and post the shares and/or the shares issuable upon the exercise of the Warrant for trading on a stock exchange other than Vancouver Stock Exchange. 3. Indemnification. The undersigned acknowledges that the representations and warranties in paragraph 2 are being relied upon by the Company and individuals to whom such representations and warranties are made, and he hereby agrees to indemnify and hold harmless to Company, and its officers, directors, attorneys and agents from and against any and all loss, damage or liability due to, or arising out of, a breach of any such representations or warranties. Notwithstanding the foregoing, however, no representation, warranty, acknowledgment, or agreement made herein by the undersigned shall in any manner be deemed to constitute a waiver of any rights granted to him under federal or state securities laws. 4. Limitation on Transfer of Units. The undersigned acknowledges that he is aware that there are substantial restrictions on the transferability of the Units. Since the securities will not be, and the undersigned has no right to require that they be registered under the Act or any applicable state or provincial securities laws, the securities may not be, and the undersigned agrees that they shall not be, sold unless such sale is exempt from such registration under said Act and such laws. The undersigned also acknowledges that he shall be responsible for compliance with all conditions on transfer imposed by any blue sky or securities law administrator and for any expenses incurred by the Company for legal or accounting services in connection with reviewing such proposed transfer. 5 6 5. Restrictions and Limitations. The undersigned understands and agrees that the following restrictions and limitations are applicable to his purchase and his resale, pledge, hypothecation, or other transfer of the Units subscribed: (a) the undersigned agrees that the securities shall not be sold, pledged, hypothecated, or otherwise transferred unless either (i) the securities are registered under the Act and applicable state or provincial securities laws, or (ii) the sale, pledge, hypothecation, or transfer of the securities is exempt therefrom; (b) resale or transfer of Units may be permissible only if such transferee meets the applicable standard for initial investment; and (c) if a transfer agent for the Company is utilized, stop transfer instructions to such transfer agent of the Company will be placed with respect to the securities so as to restrict the resale, pledge, hypothecation, or other transfer thereof. 6. Miscellaneous. (a) All notices or other communications give or made hereunder shall be in writing and shall be delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, if to the undersigned, at his address set forth below and if to the Company, at 7600 Burnett Road, Suite 350, Austin, Texas 78757-1267. (b) This Subscription shall be construed in accordance with and governed by the laws of the State of Texas, excluding choice of law and conflicts of law principles. (c) This Subscription constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by all parties. (d) This Subscription and the representations and warranties contained herein shall be binding upon the heirs, executors, legal representatives, administrators, successors, and assigns of the undersigned. (e) The recitals are incorporated in and made a part of this Subscription. Title of articles, paragraphs and all subparagraphs are used for convenience only and are not a part of the text. All terms used in any one number or gender shall be construed to include any other number or gender as the context may require and the terms "he" and "him" shall mean and include "it", "she", "they" or "them" if the context requires. 6 7 IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as of the 16th day of December, 1996. Dollar Amount of Unit Subscribed For: $10,450.00 /s/ JOHN W. DALTON -------------------------------- Signature of Subscriber John W. Dalton -------------------------------- (Type or Print Name) /s/ RAUSCHER PIERCE REFSNES, INC. ###-##-#### - ------------------------------------ -------------------------------- Name of Business Social Security or Tax ID Number 1330 Post Oak Blvd., Suite 2300 11325 Somerland Way - ------------------------------------ -------------------------------- Business Address City, State, ZIP Code (713) 623-9216 (713) 464-6057 - ------------------------------------ -------------------------------- Business Telephone Number Residence Telephone Number All correspondence addressed to the above named person should be sent by the Company to his [ ] business [X] home address (check one). Capacity of Subscriber (check one) Individual [X] Corporation [ ] Company [ ] Other [ ] ________ (please specify) - ------------------- 7 8 Accepted: Medical Polymers Technologies, Inc. By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- Date: Time: ------------------ -------------- 8 9 9 Agreement, together with the forms of instruments annexed hereto as Exhibit A, constitutes the full and complete agreement of the parties hereto with respect to the subject matter hereof. THIS WARRANT AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE WARRANT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be executed as of the 6th day of December, 1996, by its proper corporate officers, thereunto duly authorized. MEDICAL POLYMERS TECHNOLOGIES, INC. By: /s/ LEE COOKE ----------------------------------- LEE COOKE, Chairman CONFIRMED: /s/ JOHN W. DALTON ----------------------------------- SIGNATURE Printed Name: JOHN W. DALTON Title (if applicable): --------------------- (Each co-owner or joint owner must sign.) EX-99.B 3 LETTER AGREEMENT WITH SHARPS COMPLIANCE, INC. 1 EXHIBIT 99(b) 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 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 2 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" 3 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 4 October 3, 1997 Page 4 Accepted and Agreed to this ______day of __________, 1997. - ------------------------------------- John W. Dalton PARRIS H. HOLMES, JR. - ------------------------------------- Parris H. Holmes, Jr. - ------------------------------------- Dr. Burt Kunik 5 October 3, 1997 Page 4 Accepted and Agreed to this 6 day of October , 1997. JOHN W. DALTON - ------------------------------------ John W. Dalton - ------------------------------------ Parris H. Holmes, Jr. DR. BURT KUNIK - ------------------------------------ Dr. Burt Kunik -----END PRIVACY-ENHANCED MESSAGE-----