S-3/A

Registration No. 333-163073

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1

to

Form S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Sharps Compliance Corp.

(Exact name of Registrant as specified in its charter)

Delaware	74-2657168
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9220 Kirby Drive, Suite 500 Houston, Texas 77054 (713) 432-0300 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)	David P. Tusa 9220 Kirby Drive, Suite 500 Houston, Texas 77054 (713) 432-0300 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy to:

Fulbright & Jaworski L.L.P.
Fulbright Tower
1301 McKinney, Suite 5100
Houston, Texas 77010
(713) 651-5151
Attention: Gene G. Lewis

Approximate date of commencement of proposed sale to the public:  After this registration statement becomes effective.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  o

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.  o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.  o

If this form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o Accelerated filer  o Non-accelerated filer  o Smaller reporting company  þ

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum	Amount of
Title of Each Class of	Amount to be	Offering Price	Aggregate	Registration
Securities to be Registered	Registered(1)(2)	Per Share	Offering Price(3)	Fee(4)(5)
Common Stock, par value $0.01 per share	3,703,000 shares	$9.44	$34,956,320	$1,951

(1)	Includes 483,000 shares of common stock that the underwriters have the option to purchase to cover over-allotments, if any.
(2)	Includes common stock issuable upon exercise of options held by the selling stockholders.
(3)	Estimated solely for the purpose of determining the registration fee.
(4)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The calculation of the registration fee is based on the average of the high and low prices of the common stock as reported on The Nasdaq Capital Market on November 9, 2009.

(5) Previously paid.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2009

PROSPECTUS

3,220,000 Shares

Sharps Compliance Corp.

Common Stock

This is a public offering of common stock. We are offering 500,000 shares of our common stock and the selling stockholders identified in this prospectus are offering 2,720,000 shares of our common stock. See “Selling Stockholders.” We will not receive any of the proceeds from the sale of shares by selling stockholders under this prospectus.

The underwriters have an option to purchase a maximum of 77,146 additional shares from us and 405,854 additional shares from certain selling stockholders on the same terms and conditions to cover over-allotments of shares, if any.

Our common stock is listed on The NASDAQ Capital Market under the symbol “SMED.” The last reported sale price of the common stock on November 24, 2009 was $9.09 per share. As of November 24, 2009, the aggregate market value of our outstanding voting and nonvoting common stock held by non-affiliates was $60,282,289, which was calculated based on 6,631,715 shares of outstanding common stock held by non-affiliates and on a price per share of $9.09, the closing price of our common stock on November 24, 2009. We have not offered any securities pursuant to General Instruction I.B.6. of Form S-3 during the 12 calendar month period ending on, and including, November 12, 2009. So long as the aggregate market value of our outstanding voting and non-voting common equity held by non-affiliates remains below $75.0 million, we will not sell our securities in primary offerings under one or more registration statements filed pursuant to General Instruction I.B.6 of Form S-3 where the aggregate market value of such securities sold in such offerings exceeds one-third of the aggregate market value of the voting and non-voting common equity held by our non-affiliates in any 12-month period.

Investing in our securities involves risks. We urge you to carefully review and consider the information under the heading “Risk Factors” beginning on page 11 of this prospectus before investing in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Offering Price	$	$
Discounts and commissions to underwriters	$	$
Offering proceeds to Company, before expenses	$	$
Offering proceeds to selling stockholders, before expenses	$	$

The underwriters expect to deliver the shares of common stock to purchasers on or about     , 2009.

Sole Book-Running Manager

William Blair & Company

Barrington Research

The date of this prospectus is          , 2009.

TABLE OF CONTENTS

	Page
About this Prospectus	i
Information Regarding Forward-Looking Statements	i
Summary	1
Risk Factors	11
Use of Proceeds	17
Capitalization	17
Price Range of Common Stock	18
Dividend Policy	18
Selling Stockholders	19
Underwriting	21
Description of Common Stock	24
Legal Matters	26
Experts	26
Where You Can Find More Information	26
Incorporation of Certain Information by Reference	27
EX-1.1
EX-5.1
EX-23.1

ABOUT THIS PROSPECTUS

You should rely only on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information, and you should not rely on any information not contained in or incorporated by reference into this prospectus. We, the selling stockholders and the underwriters, are offering to sell shares of our common stock and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date hereof regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations or prospects may have changed between the date hereof and the date of delivery of this prospectus or any sale of shares of our common stock. In case there are any differences or inconsistencies between this prospectus and the information incorporated by reference herein, you should rely on the information in the document with the most recent date.

Statements contained in this prospectus as to the contents of any contract or other document are not complete, and in each instance we refer you to the copy of the contract or document filed or incorporated by reference as an exhibit to the registration statement of which the accompanying prospectus constitutes a part or to a document incorporated or deemed to be incorporated by reference in the registration statement, each of those statements being qualified in all respects by this reference.

Market data and industry statistics used in this prospectus are based on independent industry publications and other publicly available information.

As used in this prospectus, the terms “Company,” “we,” “our,” “ours” and “us” refer to Sharps Compliance Corp. and its subsidiaries, except where the context otherwise requires or as otherwise indicated.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this prospectus and the documents and information incorporated by reference in this prospectus contain certain forward-looking statements and information relating to the Company and its subsidiaries that are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. When used in this report, the words “anticipate”, “believe”, “expect”, “estimate”, “project” and “intend” and words or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are intended to

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identify forward-looking statements. Such statements reflect the current risks, uncertainties and assumptions related to certain factors, including without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, governmental regulation and supervision, distribution networks, product introductions and acceptance, technological change, changes in industry practices, one-time events and other factors described herein. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, projected or intended. The Company does not intend to update these forward-looking statements.

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SUMMARY

This summary highlights selected information about us contained elsewhere or incorporated by reference in this prospectus and about this offering of shares. Because this is only a summary, it does not contain all of the information you should consider before investing in our common stock. This prospectus includes specific terms of the offering and information about our business and financial data. You should read carefully this entire prospectus, including the matters set forth under the caption “Risk Factors” beginning on page 11 and the information incorporated by reference in this prospectus before making an investment decision.

Company Overview

We are a leading full-service provider of cost-effective disposal solutions for medical waste and unused dispensed medications generated outside of the hospital and large healthcare facility setting, serving more than 4,000 customers in all 50 states. Our solutions facilitate the proper disposal of numerous types of medical waste and unused dispensed medications, including hypodermic needles, lancets and other devices or objects used to puncture or lacerate the skin, or sharps, and unused dispensed prescription drugs and medications. We serve customers in multiple markets such as government (federal, state and local), home healthcare, retail clinics and immunizing pharmacies, pharmaceutical manufacturers, professional offices (physicians, dentists and veterinarians), hospitality (including assisted living facilities, hotels, motels and restaurants), consumers, commercial, industrial and agriculture, and distributors to many of the aforementioned markets. We assist our customers in determining which of our 15 distinct solution offerings best fits their needs for the collection, storage, return transportation and treatment of their or their patients’ medical waste and unused dispensed medications. Our differentiated approach provides our customers the flexibility to return and ultimately dispose of their or their patients’ medical waste or unused dispensed medications through pre-paid mail services primarily through the United States Postal Service, or USPS, or to a lesser extent the United Parcel Service, or UPS. We believe our easy-to-use and convenient solutions cost up to 50% less than traditional pick-up services for treatment of medical waste outside of the hospital or large healthcare facility setting. Furthermore, we provide comprehensive tracking and reporting tools that enable our customers to meet complex medical waste disposal and unused dispensed patient medication compliance requirements. The Company’s fully-integrated operations are a key factor leading to its success and continued growth. Since 2008, our revenue growth has accelerated significantly, increasing from $12.8 million for the fiscal year ended June 30, 2008 to $20.3 million for the fiscal year ended June 30, 2009, representing a year-over-year growth rate of 58.1%. Revenues for the most recent quarter ended September 30, 2009 were $15.4 million, up 260.2% from $4.3 million during the same quarter in 2008.

In February 2009, we signed a five year contract (one year plus four option years) with a federal government agency for a $40 million program to provide our comprehensive Medical Waste Management System^tm, or Sharps^®MWMS^tm, which is a rapid-deployment solution offering designed to provide medical waste collection, storage and treatment in the event of natural disasters, pandemics, man-made disasters, or other national emergencies. Sharps^®MWMS^tm is unique in that the solution also offers warehousing, inventory management, training, data and other services necessary to provide a comprehensive solution. The Company received a $28.5 million purchase order for products and services to be provided during the first contract year of which $3 million was billed in the quarter ended March 31, 2009, $3 million in the quarter ended June 30, 2009 and $11 million in the quarter ended September 30, 2009. Based upon the current production schedule, we expect to recognize $11.5 million of revenue in the quarter ending December 31, 2009. The remaining $11.5 million is expected to be recognized during fiscal years 2011 through 2014 as the program moves from the production phase to the maintenance phase. The successful launch of this program demonstrates the attractiveness of our integrated, full-service system that enables government agencies and commercial organizations to completely outsource the planning and execution of their emergency preparedness and disaster relief planning as it relates to medical waste handling and rapid response capabilities. We believe this program will generate additional demand from other government agencies at the federal, state and local level as well as commercial organizations looking to address medical waste as part of their emergency preparedness programs. In addition, we continue to add similar full-service, patient support programs with major pharmaceutical manufacturers whereby we provide a customized Sharps Disposal by Mail System^® along with fulfillment,

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inventory management, storage and data services, as well as provide critical patient usage data that assists the manufacturers in assessing drug effectiveness and compliance.

The Centers for Disease Control and Prevention, or CDC, and the United States Environmental Protection Agency, or EPA, estimate that there are over three billion used syringes disposed of annually outside of the hospital setting in the United States. In addition, industry experts estimate that as much as 40% of dispensed medications outside of the hospital setting in the United States goes unused, generating an estimated 200 million pounds of pharmaceuticals potentially polluting our environment and placing our citizens at risk for accidental poisonings. We estimate the market for our solutions (outside of the hospital and large healthcare facilities) to be over $1 billion per year for medical waste disposal and over $1 billion for the proper disposal of unused dispensed medications.

We believe that demand for our cost-effective medical waste management solutions has been increasing due to several factors. First, communities, consumers, government and healthcare and commercial organizations are increasingly becoming aware of the need to properly dispose of medical waste and unused dispensed medication as federal and state regulatory bodies continue to provide guidance and enact legislation which mandate the proper disposal of medical waste outside the hospital setting to protect the general public and workers from potential exposure to contagious diseases and health and safety risks. Second, there is heightened public awareness and growing demand for influenza and H1N1 vaccines that are driving demand for our solutions both in the short-term to address immediate flu shot needs and in the long-term as the public increasingly obtains its immunizations from retail locations and clinics. Finally, we believe that customers in many of the sectors we serve, such as physicians, dentists, veterinarians, clinics and assisted living facilities, are becoming aware of alternatives to the traditional medical waste pick-up service and the lower cost (up to 50% savings) and convenience associated with the Sharps Disposal By Mail System^®.

According to the CDC, the percentage of patients reporting influenza like illness increased to 5.1% for the first week of October 2009, up from only 1.0% for the same period in 2008. Increased public awareness of the spread of the H1N1 flu strain has driven record numbers to get flu shots, and the popularity of flu shots at non-hospital retail locations has grown rapidly as well. Walgreens reported that in the first two weeks of offering flu shots in September, it administered more than 1 million immunizations, nearly matching the 1.2 million immunizations it administered for the entire 2008-2009 flu season. These trends should drive increased demand for our solutions both in the short-term to address immediate flu shot needs and in the long-term as the public increasingly obtains its immunizations other than from hospitals or large healthcare facilities.

Our principal executive offices are located at 9220 Kirby Drive, Suite 500, Houston, Texas. Our telephone number at that location is (713) 432-0300. We currently have 48 employees. We have warehouse operations in Houston, Texas and College Park, Georgia, and own and operate a primary treatment facility in Carthage, Texas that houses our processing and treatment operations. We are committed to mitigating the effects of medical waste and unused dispensed medications on the environment and our citizens through our environmentally conscious treatment process. Our incinerator located within this facility has a capacity to treat up to 30 tons of waste per day, and is currently permitted for a capacity of 11 tons of waste per day. We also operate an autoclave system that is permitted to treat up to seven tons of medical waste per day at the same facility. Autoclaving is a process that treats medical waste with steam at high temperature and pressure to kill pathogens, and is a cost-effective alternative to traditional incineration. This system supplements the disposal treatment capacity of the facility and is utilized alongside the incinerator for day-to-day operations. We believe that our facility is one of only ten permitted commercial disposal facilities in the United States capable of treating all types of medical waste and unused dispensed medications.

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Solutions Overview

We offer a broad line of product and service solutions to meet the medical waste and unused dispensed medications disposal management needs of our customers. Our primary solutions include the following:

Sharps Disposal by Mail System^®: a comprehensive solution for the containment, transportation, destruction and tracking of medical waste generated outside the hospital and large healthcare facility setting. The Sharps Disposal by Mail System^® includes a securely sealed, leak and puncture resistant sharps container in several sizes ranging from one quart to eighteen gallons; USPS approved shipping carton with pre-paid priority mail postage; absorbent material inside the container that can safely hold up to 150 milliliters of fluids; a red bag for additional containment; and complete documentation and tracking manifest. The Sharps Disposal by Mail System^® is transported to our treatment facility for disposal. Upon destruction of the waste, we provide electronic proof of destruction documentation to the customer through our proprietary SharpsTracer^tm system.

RxTakeAway^tm: a comprehensive solution that facilitates the proper disposal of unused dispensed medications. The solution provides a means for individual consumers, communities and facilities, such as pharmacies, assisted living facilities, long-term care facilities, mail-order pharmacies and correctional operations, to dispose of unused dispensed medications other than controlled substances and consists of customized containment, transportation, destruction and tracking services. Our proprietary tracking system, DrugTracer^tm, is designed for tracking unused dispensed medications, which assists pharmaceutical manufacturers in monitoring drug usage and provides critical data for patient management and compliance. Our proprietary tracking system is a highly value-added component of our solution as it enhances pharmaceutical manufacturers’ ability to monitor patient drug usage.

Sharps^®MWMS^tm: a comprehensive solution designed for rapid deployment in emergency situations that features the Sharps Disposal By Mail System^® and RxTakeAway^tm products combined with warehousing, inventory management, training, data and other services. Sharps^®MWMS^tm is designed to be an integral part of governmental and commercial emergency preparedness programs for large scale or catastrophic situations such as natural disasters, pandemics, terrorist events, or other national emergencies. Also available with the Sharps^®MWMS^tm is the Sharps^® Rx Recovery and Reporting System, which delivers a turn-key approach to the collection, storage, audit, treatment and documentation of unused dispensed medications. The Medical Waste Management System^tm can be used in virtually any location where patients may be treated or shots administered. This system is designed to be portable, allowing medical waste to be collected where it is generated, properly stored, and transported with no special pick-up arrangements.

SharpsTracer^tm: a comprehensive solution that provides customers with an electronic record of receipt and destruction of their waste to meet regulatory requirements. SharpsTracer^tm eliminates the need for traditional paper-based methods of tracking and is designed to enhance customer efficiencies with automatic evidence of proof of destruction and market data capabilities. This cost-effective and regulatory compliant tracking and documentation system is an important part of our full-service and comprehensive suite of solutions.

Other Solutions: a wide variety of other logistical products solutions including Pitch-It^tm IV Poles, Trip LesSystem^®, Sharps Pump Return Box, Sharps Enteral Pump Return Box, Sharps Secure^® Needle Disposal System, Sharps SureTemp Tote^®, IsoWash^® Linen Recovery System, Biohazard Spill Clean-Up Kit and Disposal System and Sharps Environmental Services.

Market Overview

The CDC and the EPA estimate that there are over three billion used syringes disposed of annually in the United States outside of the hospital setting. We estimate that it would require 30 to 50 million Sharps Disposal by Mail System^® products to properly dispose of all such syringes, which would equate to a market opportunity of over $1 billion. We estimate that we have penetrated approximately 1% of this market. Additionally, we believe that there has been and will continue to be a significant increase in self-injectable

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medications utilized by patients, further increasing the number of syringes used and disposed of in the United States.

Industry experts estimate that approximately 40% of the dispensed medication from four billion annual prescriptions in the United States goes unused, resulting in over 200 million pounds of pharmaceuticals which can adversely affect the environment if disposed of improperly. Most unused dispensed medications are either (i) disposed of untreated in the garbage or flushed down the toilet, ending up in landfills and polluting rivers and water supply systems, lakes and streams with trace amounts of unused dispensed medications or (ii) stored in medicine cabinets that are accessible to children and teenagers. Improperly disposed of or diverted unused dispensed medications have been shown to increase the risk of accidental poisoning of citizens, including children and teenagers. The Company has estimated that the market for the proper disposal of unused dispensed medications outside the hospital setting is over $1 billion.

We continue to take advantage of the many opportunities in our markets served as communities, consumers, governments and industries become more aware of the need for the proper disposal of medical sharps and unused dispensed medications. There have been several key events that have contributed to this education process, including:

•  in December 2004, the EPA issued its new guidelines for the proper disposal of medical sharps, revising the previous guidance that advised patients to dispose of used syringes in the trash;

•  in July 2006, the states of California and Massachusetts passed legislation designed to mandate appropriate disposal of sharps waste necessary to protect the general public and workers from potential exposure to contagious diseases and health and safety risks;

•  beginning September 1, 2008, California’s legislation regulating sharps disposal became effective and began to be enforced, making it illegal to dispose of used sharps through the normal garbage disposal system. Other states, such as Massachusetts and Louisiana, have enacted similar measures that became effective in 2008 and 2009, respectively. Currently, seven states ban the disposal of used syringes in the trash and five states are considering or have introduced similar legislation, while the remaining states operate under the EPA guidance noted above;

•  in August 2008, the United States House of Representatives and Senate introduced bills which, if enacted, would provide for Medicare reimbursement, under part D, for the safe and effective disposal of used needles and syringes; and

•  in October 2009, California passed Senate Bill 486 requiring drug companies that market and sell prescribed medications that are routinely injected at home to submit plans to the California Integrated Waste Management Board on or before July 1, 2010 (and annually thereafter) describing how they support safe needle collection and disposal programs for patients using their drugs.

Among the methods of disposal recommended as part of the above noted regulatory actions are mail-back programs such as the solutions we offer. We believe that other states will continue introducing similar legislation and that these developments will drive additional demand for our solutions.

Competitive Strengths

We believe our competitive strengths include the following:

Leading comprehensive provider of cost-effective medical waste management solutions.

We offer a broad line of solutions to meet the medical and pharmaceutical waste management needs of our customers. Through partnerships with the USPS and UPS, we are able to offer our mail-based services at a significantly lower cost to customers as compared to the traditional model of physical pick-up from individual locations. In contrast to route-based service providers which generally make periodic pick-ups whether customers need them or not and charge higher prices to cover transportation and labor expenses, our mail-based service is a convenient, on-demand, reduced cost option to better serve our customers. Our proprietary

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SharpsTracer^tm tracking and documentation systems provide customers a comprehensive electronic record of receipt and destruction of their waste to meet regulatory requirements. Our Medical Waste Management System^tm provides a complete solution for customers seeking to completely outsource the management of all aspects of their waste management, including warehousing, inventory management, training, and data collection in addition to disposal services. While competitors may attempt to replicate our mail-based return services, we believe the ability to offer such a comprehensive, value-added turnkey solution is a significant competitive advantage.

Environmentally-conscious solution provider.

In addition to providing cost-effective solutions for our customers, we are committed to mitigating the effects of medical and pharmaceutical waste on the environment through our disposal processes and marketing efforts. Most used sharps and unused dispensed medications are currently disposed of untreated in the garbage, ending up in landfills and polluting rivers, lakes and streams with trace amounts of pharmaceuticals. Our products and services provide an environmentally cleaner alternative disposal process. Additionally, rather than simply incinerate all of the medical waste received at our destruction facility, we use an autoclave system to clean, sanitize and shred the waste, reducing its volume by up to 85%. Salvageable material can then be recycled, and incineration of the remaining waste is much less harmful to the environment. The use of recycled paper and plastic materials for our products further demonstrates our total commitment to environmentally sound business practices. As an organization, we are a leading proponent for the development of solutions for the safe disposal of sharps and unused dispensed medications in the community and continually work to raise public awareness of the issue.

Vertically integrated full-service operations.

Our products and services encompass the entire range of the medical waste and unused dispensed medications disposal life cycle. We provide our customers with a wide variety of products and sizes to meet their individual needs. Various sizes of RxTakeAway^tm boxes provide similar customizability for our pharmaceutical customers. Once filled, these containers are shipped back to our treatment facility which has the capacity to process up to 37 tons of waste per day (currently permitted to process up to 18 tons of waste per day). We carefully track the movement of each shipment from mailing to ultimate disposal and provide confirmation to the customer for their records. By controlling all aspects of the process internally, we are able to provide a one-stop solution and simplify the tracking and record-keeping processes to meet regulatory requirements. Other products such as Pitch-It^tm IV Poles and pump return boxes meet additional specialized needs for the home healthcare industry.

Well-positioned to capitalize on the growing need for government and commercial preparedness to address emergency and disaster relief situations.

Federal and state government agencies as well as commercial organizations are increasingly focused on having programs in place for emergency and disaster relief situations such as natural disasters (hurricanes, flooding and earthquakes), pandemics (H1N1 flu strain), acts of terrorism (September 11) and other national emergencies. The Sharps^®MWMS^tm is designed to be an integral part of governmental and commercial emergency preparedness programs. The successful launch of our government agency program demonstrates the attractiveness of our integrated, full-service solution that enables government agencies and commercial organizations to completely outsource the planning and execution of their emergency preparedness and disaster relief planning as it relates to medical waste handling and rapid response capabilities. We believe this program will generate additional demand from other government agencies at the federal, state and local level.

Increased state and federal regulatory attention.

As the movement to increase regulation of sharps and unused dispensed medications disposal gains momentum at both the state and federal level, we believe we are well positioned to benefit given our strict adherence to established standards and extensive documentation and records. Currently, seven states restrict the disposal of used sharps in household trash and 17 states have also introduced legislation to regulate the

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disposal of pharmaceuticals to reduce pollution of the environment. As state and federal enforcement of these statutes increases, more companies will turn to solutions such as ours to help manage their medical waste and regulatory compliance.

Diverse product markets.

We offer services and products to a wide variety of end markets. Our primary end markets ranked by revenue in fiscal year 2009 were home healthcare companies (36%), federal, state and local government agencies (30%), retail pharmacies and clinics (9%), pharmaceutical manufacturers (8%), professional physician, dental and veterinary clinics (5%), hotel, retirement and assisted living facilities (4%), commercial and industrial (2%) and agriculture (2%). Our primary end markets ranked by revenue in the quarter ended September 30, 2009 were federal, state and local government agencies (71%), home healthcare companies (10%), retail pharmacies and clinics (10%), professional physician, dental and veterinary clinics (3%), pharmaceutical manufacturers (2%), hotel, retirement and assisted living facilities (2%), agriculture (0.5%) and commercial and industrial (0.4%).

Highly scalable business model.

Because of our mail-based service model, we can add new business while leveraging our existing fixed cost structure. Until capacity limitations are reached on our incinerator and autoclave systems, our disposal facilities can accommodate significant additional volume, incurring only variable costs of transportation, storage and processing. Once we gain a new customer, our business typically increases as our customer grows without additional sales and marketing efforts due to the embedded nature of our products and the ease with which we can accommodate additional volume through larger container sizes or faster cycle times.

Experienced and accomplished management team.

Our senior management team has extensive industry experience, and is committed to the continued growth and success of our company. Dr. Burton Kunik, our Chairman and CEO, founded Sharps Compliance, Inc., now a wholly owned subsidiary of the Company, in 1994 and also founded two other medical waste management companies. In 2004, he was awarded the International Sharps Injury Prevention Award. Mr. David Tusa, CPA, Executive Vice President, CFO and Business Development, has over 25 years of financial, accounting, business and public company experience in multiple industries and in companies with revenues up to $500 million. Mr. Claude Dance, Senior Vice President of Sales and Marketing, has broad healthcare and reverse logistics industry experience at a variety of firms including Pharmerica, Cardinal Health and Wyeth Pharmaceuticals.

Growth Strategies

We plan to grow our business by employing the following primary growth strategies:

Further penetrate existing customers.

Many of our customers who currently use the Sharps Disposal by Mail System^® could also benefit from the RxTakeAway^tm products or other specialized products. Although currently focused primarily on sharps disposal, pharmacies (including chains and mail order), assisted living facilities and other related organizations will develop needs for our other product lines as they expand their patient service offerings. As an entrenched and value-added supplier of disposal solutions, we believe we are well-positioned to capture incremental business from our existing customers.

We believe the recent passage of new regulations, such as California Senate Bill 486, will generate the sale of additional patient support programs with pharmaceutical manufactures as they respond to the requirements of the legislation. We have programs in place with six pharmaceutical manufacturers and we believe we are the leader in providing solutions of this type to this market.

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Increase adoption of our product lines among federal, state and local government agencies.

We believe that our recent successful launch of a $40 million MWMS^tm program for a federal government agency could lead to additional business from other government agencies at the federal, state and local level. In addition, we believe there are additional sales opportunities with the current federal government agency, including additional products and services, as well as the potential for more Medical Waste Management System^tm orders. These successful orders demonstrate the attractiveness of our integrated, full-service system that allows government agencies to completely outsource the planning and execution of their disaster relief programs as they relate to medical waste handling and rapid response capabilities, which can be an asset to government agencies at all levels. Once the system has been proven at the government level, we expect additional growth through commercial emergency preparedness programs as well.

Enhance sales and marketing efforts.

Through the expansion of our sales force, development of additional marketing materials, increased use of trade magazine advertising and implementation of a call center for direct marketing efforts, we believe we can drive significant additional growth. Capitalizing on the increased regulatory attention directed at medical waste management initiatives, we have had significant contract wins at the state government level and received significant press coverage of our new RxTakeAway^tm product line. Additionally, given the recent H1N1 flu concerns and subsequent demand for flu shots and vaccines, our sales and marketing efforts are gaining substantial traction and our products are quickly becoming a more standard fixture in the retail channel.

Improve product and service awareness to attract new customers.

As we grow, we intend to focus additional marketing and sales efforts toward educating home healthcare providers, physician and dental clinics, pharmaceutical manufacturers, communities and government agencies of the benefits of our products and the need for safe and environmentally-friendly methods of medical waste disposal. We believe that the full-service nature of our product offerings, ease of our mail-based delivery system and convenience of our products will attract new customers who are not yet aware of the services we provide. In addition to providing a convenient, cost-effective solution to waste disposal, we believe future growth will be driven by the need for our customers to properly document and track the disposal of their hazardous waste to maintain compliance with new and existing legislation. We believe our participation in the legislative process and focus on accurate and thorough electronic tracking of waste disposal will provide substantial benefits to new customers looking to comply with new standards and promote environmentally cleaner business practices.

Develop new products and services.

We continue to develop new products and services including the Sharps^® Medical Waste Management System^tm, the RxTakeAway^tm line of products and the 18 gallon Medical Professional Sharps Disposal by Mail System^®. These new product and service offerings allow us to gain further sales from existing customers as well as gain new customers who have a need for more comprehensive products. We will continue our efforts to develop new products and services designed to facilitate the proper and cost effective disposal of medical waste and of unused dispensed medications to better serve our customers and the environment. Additionally, we will continue to seek out and identify new small quantity medical waste generators and develop solutions to meet the needs of these new customer segments.

Recent Developments

On July 16, 2009, Cathedral City received a special award from the California Resource Recovery Association for its innovative, first-in-the-nation partnership with us to implement a free and confidential program to help residents safely dispose of used needles and syringes. It is estimated that approximately 1,400 Cathedral City residents have participated and prevented more than 480,000 used needles and syringes from unsafe disposal in landfills. We believe this to be a successful example of our partnerships with local

7

governments and will continue to work with governments of all levels to implement similar programs utilizing our products across the nation.

On October 12, 2009, California passed Senate Bill 486 which requires pharmaceutical manufacturers who sell or distribute medications that are routinely injected at home to submit plans to the California Integrated Waste Management Board on or before July 1, 2010 describing how they support and provide safe syringe and needle collection and disposal programs for their patients. In California, approximately 389 million sharps a year are disposed of outside of traditional health care facilities by an estimated one million self-injectors. Although current laws in California prohibit the disposal of sharps in the solid waste or recycling stream, the majority are still disposed of improperly, causing damage to the environment and posing a severe risk of injury and disease to those who come in contact with used hypodermic needles, syringes and lancets. We provide several comprehensive and differentiated solutions for pharmaceutical manufacturers that support their efforts to ensure the safe and effective use of the medications they have developed while also providing the patients a convenient means of disposing of their sharps.

8

The Offering

Common stock offered by us	500,000 Shares
Common stock offered by the selling stockholders	2,720,000 Shares
Common stock to be outstanding after the offering	14,075,605 Shares
NASDAQ Capital Market symbol	SMED
Use of proceeds	We intend to use the net proceeds from the sale of shares by us in this offering for general corporate purposes. We will not receive any proceeds from the shares sold by the selling stockholders. See “Use of Proceeds” on page 17.
Risk factors	An investment in our common stock involves a high degree of risk. Before making an investment decision, investors should carefully consider the “Risk Factors” beginning on page 11 of this prospectus, as well as the other risks and uncertainties described in the documents that we file with the Securities and Exchange Commission, or SEC, that are incorporated herein by reference.

The number of shares of our common stock that will be outstanding after the offering is based on the number of shares of common stock outstanding as of November 24, 2009 and does not include:

•  1,519,863 shares of common stock issuable upon exercise of outstanding options and having a weighted average exercise price of 2.21 per share; and

•  284,006 additional shares of common stock that are reserved for future grants, awards or sale under our stock plan.

Unless otherwise indicated, the information in this prospectus reflects and assumes no exercise by the underwriters of their option to purchase additional shares of common stock from us and certain selling stockholders to cover over-allotments.

9

Summary Consolidated Financial Data

The following table shows our summary consolidated statement of income for each of the fiscal years ended June 30, 2007, 2008 and 2009 and for the three months ended September 30, 2008 and 2009 and our summary consolidated balance sheet data as of September 30, 2009. The summary consolidated statement of income data for the fiscal years ended June 30, 2007, 2008 and 2009 are derived from our audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States, which are incorporated herein by reference. The summary consolidated statement of income data as of September 30, 2008 and 2009 and the balance sheet data as of September 30, 2009 have been derived from our unaudited financial statements, which are incorporated herein by reference and include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of such data. Our historical results are not necessarily indicative of our results for any future period. This information should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended June 30, 2009, and our quarterly Report on Form 10-Q for the quarter ended September 30, 2009, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes appearing in each of those reports.

									Three Months Ended
	Fiscal Year Ended June 30,								September 30,
	2007		2008			2009			2008		2009
									(Unaudited)
	(In thousands, except per share data)
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenues	$	11,956	$	12,841		$	20,297		$	4,270	$	15,379
Costs and expenses:
Cost of revenues		6,943		7,770			9,841			2,420		4,488
Selling, general and administrative		3,946		4,783			6,092			1,163		1,814
Special charge(1)		138		68			512			—		—
Depreciation and amortization		203		221			388			77		95
Total costs and expenses		11,229		12,842			16,833			3,660		6,397
Operating income (loss)		727		(1	)		3,464			610		8,982
Other income
Interest income, net		46		85			27			12		4
Other income		33		0			6			2		—
Total other income		79		86			33			14		4
Income before income taxes		806		85			3,497			624		8,986
Income tax expense (benefit)
Current		21		3			121			19		1,849
Deferred		—		—			(821	)		—		1,318
Total income tax expense (benefit)		21		3			(700	)		19		3,167
Net income	$	785	$	82		$	4,197		$	605	$	5,819
Net income per common share
Basic	$	0.07	$	0.01		$	0.33		$	0.05	$	0.44
Diluted	$	0.06	$	0.01		$	0.30		$	0.04	$	0.40
Weighted average shares used in computing net income per common share:
Basic		11,161		12,313			12,908			12,662		13,373
Diluted		12,338		13,540			13,996			13,704		14,527

	As of September 30, 2009
	Actual		As Adjusted
	($ in thousands)
CONSOLIDATED BALANCE SHEET DATA (unaudited)
Cash and cash equivalents	$	8,441		12,413
Working capital(2)	$	13,248		17,220
Total assets	$	23,001		26,973
Stockholders’ equity	$	16,107		20,079

(1)	Special charge related to severance expenses.
(2)	Working capital is calculated by subtracting total current liabilities from total current assets.

10

RISK FACTORS

An investment in our common stock involves a high degree of risk and uncertainty. You should carefully consider the risks described below, in addition to the other information contained or incorporated by reference in this prospectus and the documents incorporated or deemed to be incorporated by reference in this prospectus, before making an investment decision. Realization of these risks could materially adversely affect our business, financial condition or results of operations. The trading price of our common stock could decline due to any of these risks and you may lose all or part of your investment in our common stock.

Risks Related to Our Business

Our business is dependent on a small number of customers. To the extent we are not successful in winning additional business mandates from our government and commercial customers or attracting new customers, our results of operations and financial condition would be adversely affected.

We are dependent on a small group of customers. In addition, there is an inherent concentration of credit risk associated with accounts receivable arising from sales to our major customers. For the quarter ended September 30, 2009, four customers represented approximately 82% of revenues, of which the contract with the government represented 71% of revenues. Those same four customers represented approximately 76%, or $5,046,479, of the total accounts receivable balance at September 30, 2009, of which the contract with the government represented 67% of receivables which was collected in October 2009. To the extent these significant customers are delinquent or delayed in paying or we are not successful in obtaining consistent and additional business from our existing and new customers, our results of operations and financial condition would be adversely affected.

We may be unable to manage our growth effectively.

We have experienced significant growth, with revenues increasing more than 58% for the fiscal year ended June 30, 2009 from the prior fiscal year and 260% for the three months ended September 30, 2009 from the first quarter of the prior fiscal year. This growth has placed and will continue to place significant demands on our financial, operational and management resources. In order to continue our growth, we may need to add operations, administrative and other personnel, and may need to make additional investments in the infrastructure and systems. There can be no assurance that we will be able to find and train qualified personnel, or do so on a timely basis, or expand our operations and systems to the extent, and in the time, required.

The loss of the Company’s senior executives could affect the Company’s ability to manage the business profitability.

Sharps’ growth and development to date has been largely dependent on the active participation and leadership of its senior management team consisting of the Company’s Chairman and CEO, Executive Vice President and CFO and Senior Vice President of Sales. The Company believes that the continued success of the business is largely dependent upon the continued employment of the senior management team and has, therefore, (i) entered into individual employment agreements with key personnel and (ii) granted equity-based stock compensation to senior management members in order to provide an incentive for their continued employment with the Company. The unplanned loss of one or more members of the senior management team and our inability to hire key employees could disrupt and adversely impact the Company’s ability to execute its business plan.

The lack of customer long-term volume commitments could adversely affect the Company’s profits and future growth.

Although the Company does enter into exclusive contracts with the majority of its enterprise customers, these contracts do not have provisions for firm long-term volume commitments. In general, customer purchase orders may be canceled and order volume levels can be changed or delayed with limited or no penalties. Canceled, delayed or reduced purchase orders could significantly affect the financial performance of the Company.

11

An inability to maintain existing government contracts or win additional government contracts over an extended period could have a material adverse effect on our operations and adversely affect our future revenue.

A material amount of our revenues are generated through the contract with an agency of the U.S. government. Our revenues for the first year of the five year contract (one year plus four option years) are approximately $28.5 million ($6 million of which was recognized in fiscal year 2009, $11 million of which was recognized in the quarter ending September 30, 2009 and $11.5 million of which is expected to be recognized in the quarter ending December 31, 2009). The annual revenue attributable to this contract for years two through five is expected to be approximately $2.9 million. All contracts with, or subcontracts involving, the federal government are terminable, or subject to renegotiation, by the applicable governmental agency on 30 days notice, at the option of the governmental agency. If we fail to maintain or replace these relationships, or if a material contract is terminated or renegotiated in a manner that is materially adverse to us, our revenues and future operations could be materially adversely affected.

The inability of the Company to operate its treatment facility would adversely affect its operations.

The Company’s business utilizes a treatment facility for the proper disposal of medical waste and unused pharmaceuticals. The Company’s treatment facility has both incineration and autoclave technologies. The Company’s owned treatment facility is located in Carthage, Texas (Panola County). Prior to the purchase of the facility in January 2008, the Company operated the treatment facility since 1999 under a lease arrangement. The Company believes it operates and maintains the facility in compliance in all material respects with all federal, state and local laws and/or any other regulatory agency requirements involving solid waste disposal and the operation of the incinerator facility. The failure to maintain the permits for the treatment facility or unfavorable conditions contained in the permits could substantially impair our operations and reduce our revenues. Although the Company has an agreement with a secondary treatment facility to provide services in the event both the incinerator and autoclave are unavailable, any disruption in the availability of a disposal facility whether as a result of action taken by governmental authorities, natural disasters or otherwise would have an adverse affect on the Company’s operations and results of operations.

The Company is subject to extensive and costly federal, state and local laws and existing or future regulations may restrict the Company’s operations, increase our costs of operations and subject us to additional liability.

Sharps is subject to extensive federal, state, and/or local laws, rules and regulations. We are required to obtain permits, authorizations, approvals, certificates and other types of governmental permission from the EPA, Texas and the local governments in Carthage, Texas with respect to our treatment facility. Such laws, rules and regulations have been established to promote occupational safety and health standards and certain standards have been established in connection with the handling, transportation and disposal of certain types of medical and solid wastes, including mailed sharps. Sharps believes that it is currently in compliance in all material respects with all applicable laws and regulations governing its business, including the permits and authorizations for its incinerator facility. Our estimated annual costs of complying with these laws, regulations and guidelines is currently less than $100,000 per year. In the event additional laws, rules or regulations are adopted which affect our business, additional expenditures may be required in order for Sharps to be in compliance with such changing laws, rules and regulations. Furthermore, any material relaxation of any existing regulatory requirements governing the transportation and disposal of medical waste could result in a reduced demand for Sharps’ products and services and could have a material adverse effect on Sharps’ revenues and financial condition. The scope and duration of existing and future regulations affecting the medical and solid waste disposal industry cannot be anticipated and are subject to change.

In November 2005 and September 2009, the EPA and the Texas Commission on Environmental Quality promulgated new regulations under the Clean Air Act and associated state statutes which will affect the operations of the incineration facility located in Carthage, Texas. These regulations modify the emission limits and monitoring procedures required to operate an incineration facility. The new rules will necessitate changes to the Company’s owned incinerator and pollution control equipment at the facility or require installation of an

12

alternative treatment method to ensure compliance. These regulations will also require the Company to obtain a Title V permit and conduct additional monitoring. Such changes will require the Company to incur significant capital expenditures in order to meet the requirements of the regulations. The Company has studied these amended regulations and their options, and decided in the interim to move forward with the process of adding alternative technology, autoclaving, which meets the EPA Clean Air Act requirements, for medical waste disposal which became fully operational in February 2009 at its current facility in Carthage, Texas. Autoclaving is a process that treats regulated waste with steam at high temperature and pressure to kill pathogens. Combining the autoclaving with a shredding or grinder process allows the waste to be disposed in a landfill operation. The Company believes autoclaving is environmentally cleaner and a less costly method of treating medical waste than incineration. Due to its continued growth, the Company anticipates that it will incur additional capital expenditures needed in order to meet the new air emission regulations. The additional capital expenditures are estimated to range from approximately $1.0 million to $2.5 million. These expenditures may allow the Company to increase the facility’s permitted incineration capacity from eleven tons per day to 40 tons per day. The amount of medical waste which can be treated through the incinerator is capped at 10% of the permitted capacity. As a result, the amount of medical waste we treat could potentially increase from 1.1 tons per day to four tons per day.

Aggressive pricing by existing competitors and the entrance of new competitors could drive down the Company’s profits and slow its growth.

There are several competitors who offer similar or identical products and services that facilitate the disposal of medical waste outside the hospital and large healthcare setting. There are also a number of companies that focus specifically on the marketing of products and services which facilitate disposal through transport by the USPS (similar to the Company’s products). These companies are typically smaller organizations or divisions of larger medical or solid waste companies. While Sharps does not believe it currently faces significant competition in the sharps disposal by mail business, it is likely that this could change as the Company continues its success and the awareness of the need for the proper disposal of medical waste and unused pharmaceuticals increases. As a result, we could experience increased pricing pressures that could reduce our margins. In addition, as we expand our business into other markets, the number, type, and size of our competitors will expand. Potential competitors could include large medical waste organizations, solid waste companies or reverse distributors. Many of these potential competitors may have greater financial and operational resources, flexibility to reduce prices and other competitive advantages that could reduce our current competitive advantages and market leadership position.

The Company’s stock has experienced, and may continue to experience, low trading volume and price volatility.

The Company’s common stock has been listed on The NASDAQ Capital Market (“NASDAQ”) under the symbol “SMED” since May 6, 2009. The daily trading volumes for the Company’s common stock are, and may continue to be, relatively small compared to many other publicly traded securities. Since trading on the NASDAQ, the Company’s average daily trading volume has been approximately 70,000 shares. It may be difficult for you to sell your shares in the public market at any given time at prevailing prices, and the price of the Company’s common stock may, therefore, be volatile.

The possibility of postal work interruptions and restrictions on shipping through the mail would adversely affect the disposal element of the Company’s business and have an adverse effect on our operations, results of operations and financial condition.

Sharps currently transports (from the patient or user to the Company’s treatment facility) the majority of its disposal products using USPS; therefore, any long-term interruption in USPS delivery services would disrupt the disposal element of the Company’s business. Postal delivery interruptions are rare. Additionally, since USPS employees are federal employees, such employees may be prohibited from engaging in or continuing a postal work stoppage, although there can be no assurance that such work stoppage can be avoided. As noted above, the Company entered into an arrangement with UPS whereby UPS transports the

13

Company’s Sharps Disposal by Mail System^® products from the non-healthcare facility end user to the Company’s owned treatment facility. The Company began selling a UPS product to select markets in fiscal year 2007. Additionally, the Company is studying the feasibility of the use of a consolidator to transport the Sharps Disposal By Mail System^® products from the patient or user to the Company’s treatment facility. The ability to ship items, whether through the USPS or UPS, is regulated by the government. Any change in regulation restricting the shipping of medical waste and unused pharmaceuticals through these channels would be detrimental to Sharps’ ability to conduct its operations. Notwithstanding the foregoing, any disruption in the transportation of disposal products would have an adverse effect on our operations, results of operations and financial condition.

As a government contractor, we are subject to extensive government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.

Governmental contracts or subcontracts involving governmental facilities are often subject to specific procurement regulations, contract provisions and a variety of other requirements relating to the formation, administration, performance and accounting of these contracts. Many of these contracts include express or implied certifications of compliance with applicable regulations and contractual provisions. If we fail to comply with any regulations, requirements or statutes, our existing governmental contracts or subcontracts involving governmental facilities could be terminated or we could be suspended from government contracting or subcontracting. If one or more of our governmental contracts or subcontracts are terminated for any reason, or if we are suspended or debarred from government work, we could suffer a significant reduction in expected revenues and profits. Furthermore, as a result of our governmental contracts or subcontracts involving governmental facilities, claims for civil or criminal fraud may be brought by the government for violations of these regulations, requirements or statutes.

The handling and treatment of regulated waste carries with it the risk of personal injury to employees and others.

Our business requires us to handle materials that may be infectious or hazardous to life and property in other ways. Although our products and procedures are designed to minimize exposure to these materials, the possibility of accidents, leaks, spills, and acts of God always exists. Human beings, animals or property could be injured, sickened or damaged by exposure to regulated waste. This in turn could result in lawsuits in which we are found liable for such injuries, and substantial damages could be awarded against us. While we carry liability insurance intended to cover these contingencies, particular instances may occur that are not insured against or that are inadequately insured against. An uninsured or underinsured loss could be substantial and could impair our profitability and reduce our liquidity.

Risks Related to this Offering

Our stock price has been and may continue to be volatile, and you may not be able to resell your shares at or above the offering price.

The price of our common stock after this offering may fluctuate widely, depending on many factors, including:

•  general economic conditions;

•  differences between our actual financial and operating results and those expected by investors and analysts;

•  the liquidity of our stock; and

•  the operating results of other companies in the medical waste industry.

In addition, renewed terrorist attacks, or threats of attacks, may contribute to global unrest, an economic slowdown and to instability in the United States and other global equity markets. All of these factors may

14

increase the volatility of our stock price and could have an adverse effect on your investment in our common stock. As a result, our common stock may trade at prices significantly below the offering price, and you could lose a significant part of your investment in the event you choose to sell your shares.

If securities or industry analysts do not publish research or reports about our business or publish negative reports, our stock price and trading volume could decline and affect the price at which you could sell your shares.

The trading market for our common stock may be affected by the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. No analyst currently publishes regular reports on us. If analysts do not cover us on a regular basis or if one or more of these analysts cease coverage of us or fail to regularly publish reports about us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. If one or more of such analysts publish negative reports about us, our stock price would likely decline. These occurrences could affect the price you could receive from the sale of your shares.

We do not intend to pay dividends or other distributions to our stockholders.

We currently do not, and do not intend to, pay cash dividends on our common stock in the foreseeable future. We expect that we will retain cash generated from operations, if any, for working capital purposes and to fund the continued expansion of our business.

Our amended and restated certificate of incorporation authorizes the issuance of shares of blank check preferred stock which may prevent a change in control that stockholders may otherwise consider favorable.

Our amended and restated certificate of incorporation provides that our board of directors will be authorized to issue from time to time, without further stockholder approval, up to 1,000,000 shares of preferred stock in one or more series and to fix or alter the designations, powers and preferences, and the relative, participating, option or other rights and any qualifications, limitations or restrictions of the shares of each series, including the dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, including sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of any series. Such shares of preferred stock could have preferences over our common stock with respect to dividends and liquidation rights. We may issue additional preferred stock in ways which may delay, defer or prevent a change in control of us without further action by our stockholders. Such shares of preferred stock may be issued with voting rights that may adversely affect the voting power of the holders of our common stock by increasing the number of outstanding shares having voting rights, and by the creation of class or series voting rights. The issuance of the preferred stock could have the effect of delaying or preventing a change of control of the Company, which could adversely affect the market price of our common stock.

The sale of the shares registered in this offering could cause our stock price to decline.

All shares registered in this offering will be freely tradable upon effectiveness of the registration statement relating to this offering. The sale of a significant amount of shares registered in this offering at any given time could cause the trading price of our common stock to decline and be highly volatile.

Future sales of our common stock in the public market could adversely affect the trading price of our common stock that we may issue and our ability to raise funds in new securities offerings.

Future sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future offerings of equity or equity-related securities. We cannot predict the effect, if any, that future sales of shares of common stock or the availability of shares of common stock for future sale will have on the trading price of our common stock. Additionally, we have several large holders of

15

our common stock. The sale of a significant amount of shares held by any of these stockholders at any given time could cause the trading price of our common stock to decline and be highly volatile.

We may issue a substantial amount of our common stock in connection with future acquisitions, and the sale of those shares could adversely affect our stock price.

As part of our growth strategy, we may issue additional shares of our common stock, preferred stock and other securities, including debt that is convertible or exchangeable for other securities, including our common stock, or that has rights, preferences and privileges senior to our common stock. We may file future shelf registration statements with the Commission that we may use to sell shares of our common stock, preferred stock and other securities from time to time in connection with acquisitions. To the extent that we are able to grow through acquisitions and are able to pay for such acquisitions with shares of our common stock or other securities convertible into our common stock, the number of outstanding shares of common stock that will be eligible for sale in the future is likely to increase substantially. Persons receiving shares of our capital stock in connection with these acquisitions may be more likely to sell large quantities of their capital stock, which may influence the price of our common stock. In addition, the potential issuance of additional shares of common stock in connection with anticipated acquisitions could lessen demand for our common stock and result in a lower price than would otherwise be obtained.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business and the trading price of our common stock.

If we fail to maintain the adequacy of our internal controls, in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Failure to achieve and maintain effective internal controls could have an adverse effect on the price of our common stock.

16

USE OF PROCEEDS

We estimate our net proceeds from the sale of shares by us in this offering will be approximately $3,972,300 (or $4,631,482 assuming full exercise of the underwriters’ over-allotment option), based on an assumed offering price of $9.09 per share, the last reported sale price of our common stock on The NASDAQ Capital Market on November 24, 2009, and after deducting the estimated underwriting discount and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares by the selling stockholders.

We intend to use the net proceeds we receive from this offering for general corporate purposes, including expansion of our product offerings, facilities and infrastructure to meet the continued expected growth of the Company. We may also use a portion of the net proceeds to acquire or invest in businesses and products that are complementary to our own, although we have no current plans, commitments or agreements with respect to any acquisitions as of the date of this prospectus. Pending the uses described above, we intend to invest the net proceeds in short-term, interest-bearing, investment-grade securities.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2009. The “Actual” column gives our capitalization on an actual basis without giving effect to this offering or any other transactions. The “As Adjusted” column gives pro forma effect to:

•  the sale of 500,000 shares of common stock by us in this offering at an assumed offering price of $9.09 per share; the estimated proceeds from the offering are $3,972,300, net of our estimated offering expenses and underwriting discounts; and

•  our anticipated use of the net proceeds from this offering, general corporate purposes.

You should read the following capitalization data in conjunction with “Use of Proceeds,” the consolidated financial statements and related notes and the other financial information included or incorporated by reference in this prospectus.

	As of September 30,
	2009
	Actual		As Adjusted
	(In thousands)
Cash and cash equivalents	$	8,441	$	12,413
Total debt, including current portion		—		—
Stockholders’ Equity:
Common stock, $0.01 par value per share; 20,000,000 shares authorized actual and adjusted; 13,445,105 and 13,257,507 shares issued and outstanding, respectively, at September 30, 2009 and 13,945,105 and 13,757,507 shares issued and outstanding, respectively, as adjusted		135		140
Additional paid in capital		12,422		16,389
Retained earnings		3,550		3,550
Total Stockholders’ Equity		16,107		20,082
Total Capitalization	$	16,107	$	20,079

17

PRICE RANGE OF COMMON STOCK

Our common stock currently trades on The NASDAQ Capital Market under the symbol “SMED.” The last reported sales price of our common stock on The NASDAQ Capital Market on November 24, 2009 was $9.09.

Prior to our listing on The NASDAQ Capital Market, our common stock was listed on the over-the-counter (“OTC”) Bulletin Board, under the symbol “SCOM.” Our common stock commenced trading on The NASDAQ Capital Market on May 6, 2009. The table below sets forth the high and low closing prices of the Company’s common stock on the OTC Bulletin Board and NASDAQ (May 6, 2009 through November 24, 2009) for each quarter within the last two fiscal years.

	High		Low
Fiscal year ended June 30, 2008
First Quarter	$	3.65	$	2.50
Second Quarter	$	3.10	$	2.30
Third Quarter	$	2.85	$	2.20
Fourth Quarter	$	2.80	$	2.30
Fiscal year ended June 30, 2009
First Quarter	$	3.07	$	2.35
Second Quarter	$	2.80	$	1.50
Third Quarter	$	3.80	$	1.60
Fourth Quarter	$	6.36	$	3.21
Fiscal year ending June 30, 2010
First Quarter	$	10.18	$	6.21
Second Quarter (through November 24, 2009)	$	11.91	$	7.97

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We currently intend to retain cash generated from operations for working capital purposes and to fund the continued expansion of our business and do not anticipate paying any dividends on our common stock in the foreseeable future.

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SELLING STOCKHOLDERS

We have included up to 3,125,854 shares owned by the selling stockholders in the registration statement of which this prospectus is a part. The footnotes to the table below and the information incorporated herein by reference describe the material relationships that each selling stockholder has had with us within the past three years.

The information is based on information provided to us by the selling stockholders and is as of November 24, 2009. The address for each selling stockholder is c/o Sharps Compliance Corp., 9220 Kirby Drive, Suite 500, Houston, Texas 77054.

									Number of
							Number of		Shares of
							Shares of		Common		Shares of Common Stock Beneficially Owned After the Offering
							Common		Stock Offered					Number						Percent of
							Stock Offered		Assuming the		Number			Assuming the			Percent			Assuming the
	Shares of Common Stock						Assuming No		Exercise of the		Assuming No			Exercise of the			Assuming No			Exercise of the
	Beneficially Owned						Exercise of the		Overallotment		Exercise of the			Overallotment			Exercise of the			Overallotment
	Before the Offering						Overallotment		Option in		Overallotment			Option in			Overallotment			Option in
Name of Selling Stockholder	Number(1)			Percent(2)			Option(1)		Full(1)		Option(1)			Full(1)			Option(2)(3)			Full(2)(4)
John W. Dalton(5)		1,672,803	(10)		11.48	%		527,500		608,889		1,145,303	(10)		1,063,914	(10)		7.60	%		7.02	%
Claude A. Dance(6)		116,666	(11)			*		100,000		115,429		16,666	(19)		1,237	(22)			*			*
Ramsay Gillman(5)		801,096	(12)		5.50	%		250,000		288,573		551,096	(12)		512,523	(12)		3.66	%		3.38	%
John R. Grow(7)		295,833	(13)		2.03	%		89,583		89,583		206,250	(13)		206,250	(13)		1.37	%		1.36	%
Parris H. Holmes, Jr.(5)		1,398,348	(14)		9.60	%		550,000		634,861		848,348	(14)		763,487	(14)		5.63	%		5.04	%
Dr. Burton J. Kunik(5)(8)		2,613,355	(15)		17.94	%		950,000		1,096,578		1,663,355	(15)		1,516,777	(15)		11.04	%		10.01	%
F. Gardner Parker(5)		187,157	(16)		1.27	%		50,000		57,715		137,157	(20)		129,442	(23)			*			*
David P. Tusa(9)		436,400	(17)		3.00	%		152,917		176,511		283,483	(21)		259,889	(24)		1.88	%		1.72	%
Philip C. Zerrillo(5)		403,000	(18)		2.77	%		50,000		57,715		353,000	(18)		345,285	(18)		2.34	%		2.28	%

*  Indicates less than 1.0%

⁽¹⁾ Unless otherwise noted each of the persons named in the table has sole voting and investment power with respect to the shares reported, subject to community property laws where applicable and the information contained in this table and these notes.

⁽²⁾ The percentages indicated are based on (i) 13,575,605 shares of Common Stock issued and outstanding on November 24, 2009 and (ii) outstanding stock options exercisable within 60 days thereof.

(3)	Assumes the issuance of 500,000 shares of common stock which may be offered by the Company pursuant to this prospectus.
(4)	Assumes the issuance of 577,146 shares of common stock which may be offered by the Company pursuant to this prospectus.
(5)	Selling Stockholder is a member of the Board of Directors of the Company.
(6)	Mr. Dance is Senior Vice President of Sales and Marketing of the Company.
(7)	Mr. Grow served as the Company’s President and Chief Operating Officer from October 27, 2008 through April 27, 2009. Mr. Grow also served as a member of the Board of Directors from September 2005 to October 2009.
(8)	Dr. Kunik is Chairman of the Board, Chief Executive Officer and President of the Company.
(9)	Mr. Tusa is Executive Vice President, Chief Financial Officer and Business Development.
(10)	Includes 14,938 shares of restricted stock, subject to vesting.
(11)	Includes 116,666 shares that Mr. Dance has the right to acquire within 60 days upon the exercise of stock options.
(12)	Includes 26,000 shares of restricted stock, subject to vesting.
(13)	Includes 215,833 shares of restricted stock of which 206,250 shares are subject to the terms of the April 27, 2009 Separation Agreement which provides that 75,000 of the 206,250 shares cannot be sold prior to April 1, 2010 and 131,250 of the 206,250 shares cannot be sold prior to October 31, 2010.
(14)	Includes 27,000 shares of restricted stock, subject to vesting.
(15)	Includes 250,000 shares that Dr. Kunik has the right to acquire within 60 days upon the exercise of stock options.
(16)	Includes 107,407 shares that Mr. Parker has the right to acquire within 60 days upon exercise of stock options and 27,750 shares of restricted stock, subject to vesting. Mr. Parker has pledged 53,164 shares of Company common stock as collateral for a personal loan with a commercial bank.
(17)	Includes 383,900 shares that Mr. Tusa has the right to acquire within 60 days upon the exercise of stock options.
(18)	Includes 35,000 shares that Dr. Zerrillo has the right to acquire within 60 days upon the exercise of stock options and 33,000 shares of restricted stock, subject to vesting.

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(19)	Includes 16,666 shares that Mr. Dance has the right to acquire within 60 days upon the exercise of stock options.
(20)	Includes 57,407 shares that Mr. Parker has the right to acquire within 60 days upon exercise of stock options and 27,750 shares of restricted stock, subject to vesting.
(21)	Includes 230,983 shares that Mr. Tusa has the right to acquire within 60 days upon the exercise of stock options.
(22)	Includes 1,237 shares that Mr. Dance has the right to acquire within 60 days upon the exercise of stock options.
(23)	Includes 49,692 shares that Mr. Parker has the right to acquire within 60 days upon exercise of stock options and 27,750 shares of restricted stock, subject to vesting.
(24)	Includes 207,389 shares that Mr. Tusa has the right to acquire within 60 days upon the exercise of stock options.

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UNDERWRITING

The underwriters named below, for which William Blair & Company, L.L.C., is acting as the representative, have severally agreed, subject to the terms and conditions set forth in the underwriting agreement by and among the underwriters, the selling stockholders and us, to purchase from the selling stockholders and us the respective number of shares of common stock set forth opposite each underwriter’s name in the table below. William Blair & Company, L.L.C. is acting as the Sole Book Running Manager and Barrington Research Associates, Inc. is acting as Co-Manager for this offering.

	Number
Underwriter	of Shares
William Blair & Company, L.L.C.
Barrington Research Associates, Inc.
Total		3,220,000

This offering will be underwritten on a firm commitment basis. In the underwriting agreement, which we will file as an amendment to the registration statement or as an exhibit to a current report on Form 8-K, the underwriters have agreed, subject to the terms and conditions set forth therein, to purchase the shares of common stock being sold pursuant to this prospectus at a price per share equal to the public offering price less the underwriting discount specified on the cover page of this prospectus. According to the terms of the underwriting agreement, the underwriters either will purchase all of the shares or none of them. In the event of default by any underwriter, in certain circumstances, the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. In the underwriting agreement, we and the selling stockholders have made certain representations and warranties to the underwriters and have agreed to indemnify the underwriters and their controlling persons against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect thereof.

The representative of the underwriters has advised us that the underwriters initially propose to offer the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus and to selected dealers at such price less a concession of not more than $           per share. The underwriters may allow, and such dealers may re-allow, a concession not in excess of $           per share to certain other dealers. After commencement of the public offering, the underwriters may change the public offering price and other selling terms.

The underwriters will offer the shares subject to prior sale and subject to receipt and acceptance of the shares by the underwriters. The underwriters may reject any order to purchase shares in whole or in part. The underwriters expect that we and the selling stockholders will deliver the shares to the underwriters through the facilities of The Depository Trust Company in New York, New York on or about          , 2009. At that time, the underwriters will pay us and the selling stockholders for the shares in immediately available funds.

We have granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to an additional 77,146 shares of common stock at the same price per share to be paid by the underwriters for the other shares offered hereby solely for the purpose of covering over-allotments, if any. If the underwriters purchase any such additional shares pursuant to this option, each of the underwriters will be committed to purchase such additional shares in approximately the same proportion as set forth in the table above. The underwriters may exercise the option only for the purpose of covering excess sales, if any, made in connection with the distribution of the shares of common stock offered hereby. The underwriters will offer any additional shares that they purchase on the terms described above.

The selling stockholders have also granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to an additional 405,854 shares of common stock at the same price per share to be paid by the underwriters for the other shares offered hereby solely for the purpose of covering over-allotments, if any. If the underwriters purchase any such additional shares pursuant to this option, each of the underwriters will be committed to purchase such additional shares in approximately the same proportion as

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set forth in the table above. The underwriters may exercise the option only for the purpose of covering excess sales, if any, made in connection with the distribution of the shares of common stock offered hereby. The underwriters will offer any additional shares that they purchase on the terms described above.

The following table summarizes the compensation to be paid by us and the selling stockholders to the underwriters. This information assumes either no exercise or full exercise by the underwriters of their over-allotment option:

		Total
		Without	With
	Per	Over-	Over-
	Share	Allotment	Allotment
Public offering price	$	$	$
Underwriting discounts and commissions paid by us	$	$	$
Underwriting discounts and commissions paid by the selling stockholders	$	$	$
Proceeds, before expenses, to us	$	$	$
Proceeds to selling stockholders	$	$	$

We will pay the offering expenses of the selling stockholders, except for the portion of the SEC registration fee, the FINRA filing fee and the underwriting discounts and commissions associated with the shares of common stock sold by the selling stockholders and the selling stockholders’ legal expenses. We estimate that our total expenses for this offering, excluding the underwriting discounts and commissions, will be approximately $300,000.

We and our directors and the selling stockholders have agreed, subject to limited exceptions described below, for a period of 180 days after the date of this prospectus, not to, without the prior written consent of William Blair & Company, L.L.C.:

•  directly or indirectly offer, sell, pledge, contract to sell, grant an option to purchase or otherwise dispose of any shares of our common stock, or any options or warrants to purchase any shares of common stock or any securities convertible into or exchangeable for shares of our common stock (“common stock equivalents”) held of record or beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”));

•  enter into any short sale or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from shares of our common stock; or

•  exercise any registration rights with respect to any of our common stock or common stock equivalent.

The 180-day lock-up period applicable to us and to our directors and selling stockholders will automatically be extended if (1) during the last 17 days of the lock-up period, we issue an earnings release or material news or a material event relating to us occurs, or (2) prior to the expiration of the lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the lock-up period, then the lock-up period will automatically be extended and the restrictions described above will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or the occurrence of the material event, as applicable, unless William Blair & Company, L.L.C. waives, in writing, such extension. This extension will not apply if the publication of research reports by the underwriters during the period around the expiration of this lock-up period is no longer restricted by applicable law or regulation.

The lock-up agreement does not extend to transfers of shares of common stock (i) which will be sold by a selling stockholder in this offering, (ii) acquired in open market transactions after the completion of this offering, (provided that no filing with the Commission under the Exchange Act will be permitted or required as a result of or in connection with subsequent sales of shares of our common stock acquired in open market transactions), (iii) which are issuable upon the exercise of options or warrants to purchase common stock or

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the conversion of a security which shares of common stock are sold in this offering, (iv) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions in the lock-up agreement, or (v) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions in the lock-up agreement.

We may grant options and issue common stock under existing stock option plans and issue shares in connection with any outstanding convertible securities or options during the lock-up period.

In determining whether to consent to a transaction prohibited by these restrictions, William Blair & Company, L.L.C. will take into account various factors, including the length of time before the lock-up expires, the number of shares requested to be sold, the anticipated manner and timing of sale, the potential impact of the sale on the market for the common stock, the restrictions on publication of research reports that would be imposed by FINRA rules, market conditions generally, and the reason for the requested release.

The representative has informed us that the underwriters will not confirm, without client authorization, sales to their client accounts as to which they have discretionary authority. The representative has also informed us that the underwriters intend to deliver all copies of this prospectus via electronic means, via hand delivery or through mail or courier services. A prospectus in electronic format may be made available on Internet websites or through other online services maintained by the underwriters or their affiliates. Other than the prospectus in electronic format, the information on any underwriter’s or any of its affiliates’ websites and any information contained in any other website maintained by an underwriter or any of its affiliates is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.

In connection with this offering, the underwriters and other persons participating in this offering may engage in transactions which affect the market price of the common stock. These may include stabilizing and over-allotment transactions and purchases to cover syndicate short positions. Stabilizing transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock. An over-allotment involves selling more shares of common stock in this offering than are specified on the cover page of this prospectus, which results in a syndicate short position. The underwriters may cover this short position by purchasing common stock in the open market or by exercising all or part of their over-allotment option. If the underwriters sell more shares than they have the right to purchase from us pursuant to the underwriting agreement, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

In addition, the representative may impose a penalty bid. This allows the representative to reclaim the selling concession allowed to an underwriter or selling group member if shares of common stock sold by such underwriter or selling group member in this offering are repurchased by the representative in stabilizing or syndicate short covering transactions. These transactions, which may be effected on The NASDAQ Capital Market or otherwise, may stabilize, maintain or otherwise affect the market price of the common stock and could cause the price to be higher than it would be without these transactions. The underwriters and other participants in this offering are not required to engage in any of these activities and may discontinue any of these activities at any time without notice. We and the underwriters make no representation or prediction as to whether the underwriters will engage in such transactions or choose to discontinue any transactions engaged in or as to the direction or magnitude of any effect that these transactions may have on the price of the common stock.

In connection with this offering, the representative may engage in passive market making transactions in our common stock on The NASDAQ Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act during the period before commencement of offerings or sales of common stock and extending through the completion of the distribution. A passive market maker must display its bids at a price not in excess of the highest independent bid of the security. However, if all independent bids are lowered below the passive market maker’s bid, that bid must be lowered when specified purchase limits are exceeded. Rule 103

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of Regulation M promulgated by the SEC limits the amount of net purchases that each passive market maker may make. Passive market making may stabilize the market price of the common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

Our common stock is listed on The NASDAQ Capital Market under the symbol “SMED.”

In the ordinary course of business, some of the underwriters and their affiliates have provided, and may in the future provide, investment banking, commercial banking, and other services to us for which they have received, and may in the future receive, customary fees or other compensation.

DESCRIPTION OF COMMON STOCK

The following discussion is a summary of the material terms of our common stock and provisions of our certificate of incorporation and bylaws. We encourage you to review complete copies of our certificate of incorporation and bylaws, which we have previously filed with the SEC. For more information regarding our common stock, please refer to our certificate of incorporation and bylaws, which are incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.

Our authorized capital stock consists of 20,000,000 shares of common stock, $0.01 par value per share, and 1,000,000 shares of undesignated preferred stock, $0.01 par value per share. As of November 24, 2009, we had outstanding 13,575,605 shares of our common stock. As of November 24, 2009, we had 190 common stockholders of record.

Voting Rights

Each holder of common stock is entitled to one vote per share of common stock held on all matters submitted to a vote of stockholders. Holders of common stock have no cumulative voting rights.

Dividend Rights

Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to received dividends out of assets legally available at the times and in the amounts that our board of directors may determine from time to time.

Right to Receive Liquidation Distributions

Subject to preferences that may apply to shares of preferred stock outstanding at the time, in the event of a liquidation, dissolution or winding up of the Company, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities.

No Preemptive, Conversion, Redemption or Sinking Fund Rights

Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common stock.

Indemnification of Directors and Officers

Certificate of Incorporation

The amended and restated certificate of incorporation of the Company provides that a director shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) payment of a dividend or approval of a stock purchase or redemption in violation of Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper benefit.

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Bylaws

The Bylaws of the Company provide that the Company shall indemnify and advance expenses to any and all persons who may serve or who have served at any time as directors or officers, or who at the request of the Board of Directors of the Company may serve or at any time have served as directors or officers of another corporation in which the Company at such time owned or may own shares of stock or of which it was or may be a creditor, and their respective heirs, administrators, successors and assigns, against any and all expenses, including amounts paid upon judgments, counsel fees and amounts paid in settlement (before or after suit is commenced), actually and necessarily incurred by such persons in connection with the defense or settlement of any claim, action, suit or proceeding in which they, or any of them, are made parties, or a party, or which may be asserted against them or any of them, by reasons of being or having been directors or officers or a director or officer of the Company, or of such other corporation, except in relation to matters as to which any such director or officer or former director or officer or person shall be adjudged in any action, suit or proceeding to be liable for his own negligence or misconduct in the performance of his duty. The Bylaws also provide that such indemnification shall be in addition to any other rights to which those indemnified may be entitled under any law, by-law, amendment, vote of the stockholders or otherwise.

Employment Agreements

The Company has entered into employment agreements with David P. Tusa, the Company’s Executive Vice President, Chief Financial Officer & Business Development, and Claude A. Dance, the Company’s Senior Vice President of Sales and Marketing, which provide that the Company shall indemnify and hold such person harmless from any and all claims (whether in court or before a regulatory or administrative body), liabilities, damages and expenses, including without limitation reasonable attorneys’ fees, incurred by such person or his agents, arising out of or related to the acts or omissions of such person in the provision of services or performance of duties under his employment agreement.

Delaware General Corporation Law

Section 145 of the Delaware General Corporation Law generally provides that a corporation may indemnify any person who was or is made a party to any action by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another entity, (1) in the case of a non-derivative action, against judgments, fines, amounts paid in settlement, and reasonable expenses (including attorneys’ fees) incurred by him as a result of such action, and (2) in the case of a derivative action, against expenses (including attorneys’ fees), if in either type of action he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. In the case of criminal actions and proceedings, the person also must not have had reasonable cause to believe that his or her conduct was unlawful. This indemnification does not apply, in a derivative action, to matters as to which it is adjudged that the director, officer, employee or agent is liable to the Company, unless upon court order it is determined that, in view of all the circumstances of the case and despite such adjudication of liability, he is fairly and reasonably entitled to indemnity for expenses. A person sued as a director, officer, employee or agent of a corporation who has been successful in defense of the action must be indemnified by the corporation against expenses.

Provisions of Delaware Law that Could Delay or Prevent a Change in Control

The provisions of Delaware law and our amended and restated certificate of incorporation and bylaws may have the effect of delaying, deferring or discouraging another party from acquiring control of our company in a coercive manner as described below. These provisions, summarized below, are expected to discourage and prevent coercive takeover practices and inadequate takeover bids. These provisions are designed to encourage persons seeking to acquire control of our company to first negotiate with our board of directors. They are also intended to provide our management with the flexibility to enhance the likelihood of continuity and stability if our board of directors determines that a takeover is not in our best interests or the best interests of our stockholders. These provisions, however, could have the effect of discouraging attempts to acquire us, which could deprive our stockholders of opportunities to sell their shares of common stock at

25

prices higher than prevailing market prices. We believe that the benefits of these provisions, including increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our Company, outweigh the disadvantages of discouraging takeover proposals, because negotiation of takeover proposals could result in an improvement of their terms.

The Company is subject to the provisions of Section 203 of the General Corporation Law of Delaware. With some exceptions, this law prohibits the Company from engaging in some types of business combinations with a person who owns 15% or more of the Company’s outstanding voting stock for a three-year period after that person acquires the stock. A business combination includes mergers, consolidations, stock sales, assets sales and other transactions resulting in a financial benefit to the interested stockholder.

Our amended and restated certificate of incorporation provides that our board of directors will be authorized to issue from time to time, without further stockholder approval, up to 1,000,000 shares of preferred stock in one or more series and to fix or alter the designations, powers and preferences, and the relative, participating, option or other rights and any qualifications, limitations or restrictions of the shares of each series. We may issue additional preferred stock in ways which may delay, defer or prevent a change in control of us without further action by our stockholders. Such shares of preferred stock may be issued with voting rights that may adversely affect the voting power of the holders of our common stock by increasing the number of outstanding shares having voting rights, and by the creation of class or series voting rights.

Our amended and restated certificate of incorporation and bylaws do not provide for cumulative voting in the election of directors. Cumulative voting allows a minority stockholder to vote a portion or all of its shares for one or more candidates for seats on the board of directors. Without cumulative voting, a minority stockholder will not be able to gain as many seats on our board of directors based on the number of shares of our stock the stockholder holds as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board of directors’ decision regarding a takeover.

LEGAL MATTERS

Certain legal matters relating to the validity of the issuance of the shares of common stock offered hereby have been passed upon for us by Fulbright & Jaworski L.L.P., Houston, Texas. McDermott Will & Emery LLP, Chicago, Illinois, will act as counsel for the representative of the underwriters in connection with the offering of the common stock.

EXPERTS

The consolidated financial statements of Sharps Compliance Corp. as of June 30, 2009 and 2008, and for the years then ended incorporated herein by reference have been audited by UHY LLP, independent registered public accounting firm, as set forth in their report thereon and are incorporated in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-3 under the Securities Act with respect to the shares being offered under this prospectus. This prospectus, which is included in the registration statement, does not contain all of the information in the registration statement. For further information regarding the Company and our securities, please see the registration statement and our other filings with the SEC, including our annual, quarterly and current reports and proxy statements, which you may read and copy at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public on the SEC’s Internet website at http://www.sec.gov.

We furnish holders of our common stock with annual reports containing audited financial statements prepared in accordance with accounting principles generally accepted in the United States following the end of

26

each fiscal year. We file reports and other information with the SEC pursuant to the reporting requirements of the Exchange Act.

Descriptions in this prospectus of documents are intended to be summaries of the material, relevant portions of those documents, but may not be complete descriptions of those documents. For complete copies of those documents, please refer to the exhibits to the registration statement and other documents filed by us with the SEC.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The SEC allows us to “incorporate by reference” the information we have filed with the SEC, which means that we can disclose important information to you without actually including the specific information in this prospectus by referring you to those documents. The information incorporated by reference is an important part of this prospectus and later information that we file with the SEC will automatically update and supersede this information. Therefore, before you decide to invest in a particular offering under this registration statement, you should always check for reports we may have filed with the SEC after the date of this prospectus. We incorporate by reference into this prospectus the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the applicable offering under this prospectus is terminated, other than information furnished to the SEC under Item 2.02 or 7.01 of Form 8-K and which is not deemed filed under the Exchange Act and is not incorporated in this prospectus:

•  Our Annual Report on Form 10-K for the fiscal year ended June 30, 2009, filed with the SEC on September 22, 2009;

•  Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed with the SEC on October 30, 2009;

•  Our Current Reports on Form 8-K filed with the SEC on July 31, 2009, September 29, 2009, October 5, 2009 and October 30, 2009; and

•  The description of our Common Stock contained in our Registration Statement on Form 8-A, filed with the SEC on March 23, 2009.

We will provide, without charge, to each person to whom a copy of this prospectus has been delivered, upon written or oral request of such person, a copy of any or all of the documents incorporated by reference herein (other than certain exhibits to such documents not specifically incorporated by reference). Requests for such copies should be directed to:

Corporate Secretary
Sharps Compliance Corp.
9220 Kirby Drive, Suite 500
Houston, Texas 77054
(713) 432-0300

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3,220,000 Shares

Sharps Compliance Corp.

Common Stock

Prospectus

          , 2009

Sole Book-Running Manager

William Blair & Company

Barrington Research

Until          , 2009, all dealers that effect transactions in the common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.   Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses (other than underwriting discounts and commissions) to be incurred by the Company in connection with the issuance and distribution of the shares of common stock being registered hereby, including the shares being offered for sale by the selling stockholders. Each selling stockholder will pay the portion of the SEC registration fee and the FINRA filing fee and the underwriting discounts and commissions associated with the common stock sold by such selling stockholder pursuant to this registration statement and such selling stockholder’s legal expenses.

SEC registration fee	$	1,951
FINRA filing fee	$	3,996
NASDAQ Capital Market listing fees	$	5,000
Printing expenses	$	10,000
Legal fees and expenses	$	250,000
Accounting fees and expenses	$	25,000
Miscellaneous expenses	$	4,053
Total	$	300,000

Item 15.   Indemnification of Directors and Officers.

The discussion under the heading “Description of Common Stock — Indemnification of Directors and Officers” in the prospectus is incorporated by reference herein in its entirety.

Item 16.   Exhibits.

The exhibits listed in the Exhibit Index are filed as part of this registration statement.

Exhibit
Number			Description of Exhibit
	1	.1	Form of Underwriting Agreement.
	3	.1	Bylaws of Company (incorporated by reference from Exhibit 3.4 to Form 10-KSB, dated June 30, 1994).
	3	.2	Amended and Restated Certificate of Incorporation of U.S. Medical Systems, Inc. (incorporated by reference from Exhibit 3.5 to the Registrant’s Transition Report on Form 10KSB40 filed on September 29, 1998).
	3	.3	Certificate of Elimination of the Series A 10% Voting Convertible Preferred Stock of Sharps Compliance Corp. (incorporated by reference from Exhibit 3.6 to Form 10-KSB, filed September 29, 1998).
	4	.1	Specimen Stock Certificate (incorporated by reference from Exhibit 4.4 to Form 10-KSB, filed September 29, 1998).
	4	.2	See Exhibits 3.1, 3.2 and 3.3 for provisions of the Bylaws of the Company, the Articles of Incorporation of the Company and the Certificate of Elimination defining the rights of holders of common shares.
	5	.1	Opinion of Fulbright & Jaworski L.L.P.
	23	.1	Consent of UHY LLP.
	23	.2	Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1).
	24		Power of Attorney (included in signature page).

Item 17.   Undertakings.

The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to

II-1

Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on November 25, 2009.

Sharps Compliance Corp.

By:
/s/  Dr. Burton J. Kunik

Dr. Burton J. Kunik

Chairman of the Board,

Chief Executive Officer and President

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:

Signature		Title	Date
/s/  Dr. Burton J. Kunik Dr. Burton J. Kunik		Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)	November 25, 2009
/s/  David P. Tusa David P. Tusa		Executive Vice President, Chief Financial Officer and Business Development (Principal Financial and Accounting Officer)	November 25, 2009
* John W. Dalton		Director	November 25, 2009
* Ramsay Gillman		Director	November 25, 2009
* Parris H. Holmes, Jr.		Director	November 25, 2009
* F. Gardner Parker		Director	November 25, 2009
* Philip C. Zerrillo		Director	November 25, 2009
*By:	/s/  David P. Tusa David P. Tusa Attorney-in-fact

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EXHIBIT INDEX

Exhibit
Number			Description of Exhibit
	1	.1	Form of Underwriting Agreement.
	3	.1	Bylaws of Company (incorporated by reference from Exhibit 3.4 to Form 10-KSB, dated June 30, 1994).
	3	.2	Amended and Restated Certificate of Incorporation of U.S. Medical Systems, Inc. (incorporated by reference from Exhibit 3.5 to the Registrant’s Transition Report on Form 10KSB40 filed on September 29, 1998).
	3	.3	Certificate of Elimination of the Series A 10% Voting Convertible Preferred Stock of Sharps Compliance Corp. (incorporated by reference from Exhibit 3.6 to Form 10-KSB, filed September 29, 1998).
	4	.1	Specimen Stock Certificate (incorporated by reference from Exhibit 4.4 to Form-10-KSB, filed September 29, 1998).
	4	.2	See Exhibits 3.1, 3.2 and 3.3 for provisions of the Bylaws of the Company, the Articles of Incorporation of the Company and the Certificate of Elimination defining the rights of holders of common shares.
	5	.1	Opinion of Fulbright & Jaworski L.L.P.
	23	.1	Consent of UHY LLP.
	23	.2	Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1).
	24		Power of Attorney (included in signature page).

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EX-1.1

Exhibit 1.1

[                    ] Shares

SHARPS COMPLIANCE CORP.

Common Stock

(Par Value $.01 Per Share)

UNDERWRITING AGREEMENT

[                    ], 2009

William Blair & Company, L.L.C.
          As Representative of the
          Several Underwriters
222 West Adams Street
Chicago, Illinois 60606

Ladies and Gentlemen:

          Sharps Compliance Corp. (the “Company”) a Delaware corporation, proposes, subject to the terms and conditions of this underwriting agreement (this “Agreement”), to issue and sell to the several underwriters named in Schedule I attached hereto (collectively, the “Underwriters”) for whom William Blair & Company, L.L.C. is acting as representative (the “Representative”), 500,000 shares of its authorized but unissued common stock, par value $.01 per share (“Common Stock”) and certain stockholders of the Company listed on Schedule II attached hereto (collectively, the “Selling Stockholders”) propose, subject to the terms and conditions of this Agreement, to sell an aggregate of 2,720,000 shares of the Company’s issued and outstanding Common Stock to the Underwriters. Collectively, such total of 3,220,000 shares of Common Stock proposed to be sold by the Company and the Selling Stockholders is hereinafter referred to as the “Firm Shares.” In addition, the Company and certain of the Selling Stockholders have granted to the Underwriters an option to purchase up to 77,146 additional shares of Common Stock and 405,854 additional shares of Common Stock, respectively (collectively, the “Option Shares”), as set forth on Schedule III. The Firm Shares and, to the extent such option is exercised, the Option Shares, are hereinafter collectively referred to as the “Shares.”

          As the Representative, you have advised the Company and the Selling Stockholders that (i) you are authorized to enter into this Agreement on behalf of the several Underwriters; and (ii) the several Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Shares set forth opposite their respective names in Schedule I, plus their pro rata portion of the Option Shares if you elect to exercise the over-allotment option in whole or in part for the accounts of the several Underwriters.

          In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:

          1. Representations and Warranties of the Company. The Company represents and warrants to each of the Underwriters as follows:

                    (a) A registration statement on Form S-3 (File No. 333-[163073]) with respect to the Shares has been prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations (the “Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder and has been filed with the Commission. Copies of such registration statement, including any amendments thereto, the preliminary prospectuses (meeting the requirements of the Rules and Regulations) contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to you. Such registration statement, including the amendments thereto, together with any registration statement filed by the Company pursuant to Rule 462(b) under the Act and the exhibits and schedules thereto and the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act at such time and the documents otherwise deemed to be a part thereof or included therein by the Rules and Regulations, is herein referred to as the “Registration Statement,” which shall be deemed to include all information omitted therefrom in reliance upon Rules 430A, 430B or 430C under the Act and contained in the Prospectus referred to below. The Registration Statement has become effective under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement. Promptly after execution and delivery of this Agreement, the Company will prepare and file a prospectus in accordance with the provisions of Rule 430A (“Rule 430A”) of the Rules and Regulations and paragraph (b) of Rule 424 (“Rule 424(b)”) of the Rules and Regulations. Any information included in such prospectus that was omitted from the Registration Statement at the time it became effective but that is deemed to be part of and included in the Registration Statement pursuant to paragraph (b) of Rule 430A is referred to as “Rule 430A Information.” Each prospectus used in connection with the offering of the Securities that omitted Rule 430A Information is herein called a “Preliminary Prospectus.” The final prospectus in the form first furnished to the Underwriters for use in connection with the offering of the Securities, including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act at the time of the execution of this Agreement and any Preliminary Prospectuses that form a part thereof, is herein called the “Prospectus.” For purposes of this Agreement, all references to the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”). All references in this Agreement to financial statements, schedules and other information which is “contained,” “included” or “stated” in the Registration Statement, any Preliminary Prospectus or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements, schedules and other information which are incorporated by reference in or otherwise deemed by the Rules and Regulations to be a part of or included in the Registration Statement, any Preliminary Prospectus or the Prospectus, as the case may be (except for any financial statements, schedules and other information which is incorporated by reference in or otherwise deemed by the Rules and Regulations to be a part of or included in the Registration Statement, any Preliminary Prospectus or the Prospectus to the extent modified or superseded by any financial statements, schedules or

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other information included in the Registration Statement, any Preliminary Prospectus or the Prospectus prior to the date hereof). All references in this Agreement to amendments or supplements to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is incorporated by reference in or otherwise deemed by the Rules and Regulations to be a part of or included in the Registration Statement, such Preliminary Prospectus or the Prospectus, as the case may be.

                    (b) As of the Applicable Time (as defined below) and as of the Closing Date or the Option Closing Date, as the case may be, neither (i) the General Use Free Writing Prospectus(es) (as defined below) issued at or prior to the Applicable Time, the Statutory Prospectus (as defined below) and the information included on Schedule IV, all considered together (collectively, the “General Disclosure Package”); nor (ii) any individual Limited Use Free Writing Prospectus (as defined below), when considered together with the General Disclosure Package, included or will include any untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through the Representative, specifically for use therein, it being understood and agreed that the only such information is that described in Section 13 herein. As used in this subsection and elsewhere in this Agreement:

          “Applicable Time” means [          ] (New York time) on the date of this Agreement or such other time as agreed to by the Company and the Representative.

          “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 under the Act, relating to the Shares [that is (i) required to be filed with the Commission by the Company, (ii) a “road show for an offering that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission or (iii) exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Shares or of the offering that does not reflect the final terms, in each case] in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

          “General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as identified on Schedule V to this Agreement.

          “Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.

          “Statutory Prospectus” as of any time means the Preliminary Prospectus relating to the Shares that is included in the Registration Statement immediately prior to that time, including any document incorporated by reference therein and any Preliminary Prospectus or other prospectus deemed to be a part thereof.

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                    (c) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Shares, or until any earlier date that the Company notified or notifies the Representative, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus.

                    (d) The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the offering and sale of the Shares other than any Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the Act and consistent with Section 5(b) below. To the extent it is required to do so, the Company will file with the Commission all Issuer Free Writing Prospectuses in the time required under Rule 433(d) under the Act. The Company has satisfied or will satisfy the conditions in Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show.

                    (e) (i) At the time of filing the Registration Statement and (ii) as of the date hereof (with such date being used as the determination date for purposes of this clause (ii)), the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Act, without taking into account any determination by the Commission pursuant to Rule 405 under the Act that it is not necessary that the Company be considered an ineligible issuer), including, without limitation, for purposes of Rules 164 and 433 under the Act with respect to the offering of the Shares as contemplated by the Registration Statement.

                    (f) Each of the Registration Statement and any post-effective amendment thereto has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto have been issued, no order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus relating to the proposed offering of the Shares has been issued, and no proceeding for those purposes or pursuant to Section 8A of the Act has been instituted or, to the Company’s knowledge, threatened by the Commission. The Registration Statement conforms, and any further amendments or supplements thereto will conform at the time they become effective, in all material respects to the requirements of the Act and the Rules and Regulations. The Prospectus, as of its date, conforms and will conform on the Closing Date and on the Option Closing Date in all material respects to the requirements of the Act and the Rules and Regulations. The Registration Statement and any amendment thereto do not, and will not at the time they become effective and on the Closing Date and on the Option Closing Date, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Each Preliminary Prospectus when so filed complied in all material respects with the Rules and Regulations, and each Preliminary Prospectus and the Prospectus delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. The Prospectus and any amendments and supplements thereto do not, and will not as of its date and on the Closing Date and on the Option Closing Date, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, in reliance

4

upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through the Representative, specifically for use therein, it being understood and agreed that the only such information is that described in Section 13 herein.

                    (g) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus. Each of the subsidiaries of the Company listed in Exhibit 21.1 to Item 15 of the Company’s Annual Report on Form 10-K filed September 22, 2009 (collectively, the “Subsidiaries”) has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus. The Subsidiaries are the only subsidiaries, direct or indirect, of the Company. The Company and each of the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification and where the failure to be so qualified would either (i) have, individually or in the aggregate, a material adverse effect on the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and the Subsidiaries, taken as a whole; or (ii) prevent the consummation of the transactions contemplated hereby (the occurrence of any such effect or any such prevention described in the foregoing clauses (i) and (ii) being referred to as a “Material Adverse Effect”). The outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or another Subsidiary free and clear of all liens, encumbrances and equities and claims; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests in the Subsidiaries are outstanding.

                    (h) The documents incorporated by reference in the Prospectus, any Preliminary Prospectus or the Registration Statement, when they were filed with the Commission conformed in all material respects to the requirements of the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents, when read together with the other information in the General Disclosure Package, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus, any Preliminary Prospectus or the Registration Statement, or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

                    (i) The outstanding shares of Common Stock of the Company, including those Shares to by sold be the Selling Stockholders pursuant to this Agreement, have been duly authorized and validly issued and are fully paid and non-assessable; the Shares to be issued and sold by the Company have been duly authorized and when issued and paid for as contemplated

5

herein will be validly issued, fully paid and non-assessable; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement nor the offering or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock.

                    (j) This Agreement has been duly authorized, executed and delivered by the Company.

                    (k) The information set forth under the caption “Capitalization” in the Registration Statement and the Prospectus (and any similar section or information contained in the General Disclosure Package) is true and correct. All of the Shares conform to the description thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus. The form of certificates for the Shares conforms to the corporate law of the jurisdiction of the Company’s incorporation and to any requirements of the Company’s organizational documents. Subsequent to the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, except as otherwise specifically stated therein or in this Agreement, the Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect of its capital stock.

                    (l) Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, as each may be amended or supplemented, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise), or prospects of the Company and the Subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business, and there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Company or the Subsidiaries, other than transactions in the ordinary course of business and changes and transactions described in the Registration Statement, the General Disclosure Package and the Prospectus, as each may be amended or supplemented.

                    (m) The consolidated financial statements of the Company and the Subsidiaries, together with related notes and schedules as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, present fairly the financial position and the results of operations and cash flows of the Company and the consolidated Subsidiaries, at the indicated dates and for the indicated periods, subject, in the case of unaudited interim statements, to normal, year-end audit adjustments and the lack of footnotes. Such financial statements and related schedules have been prepared in accordance with generally accepted principles of accounting (“GAAP”), consistently applied throughout the periods involved, except as disclosed therein. The summary and selected consolidated financial and statistical data included in the Registration Statement, the General Disclosure Package and the Prospectus presents fairly the information shown therein and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company. All disclosures contained in the Registration Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the Rules and

6

Regulations) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Act, to the extent applicable. The Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations or any “variable interest entities” within the meaning of Financial Accounting Standards Board Interpretation No. 46), not disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.

                    (n) UHY LLP, who has certified the financial statements filed with the Commission as part of the Registration Statement, the General Disclosure Package and the Prospectus, is an independent registered public accounting firm with respect to the Company and the Subsidiaries within the meaning of the Act and the applicable Rules and Regulations and the rules and bylaws of the Public Company Accounting Oversight Board (United States) (the “PCAOB”).

                    (o) Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and each of the Subsidiaries maintain systems of “internal control over financial reporting” (as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, without limitation, internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no material weaknesses in the Company’s internal control over financial reporting, nor any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which have adversely affected or are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

                    (p) The Company has established and maintains “disclosure controls and procedures” (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act); the Company’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the Exchange Act, and that all such information is accumulated and communicated to the Company’s management as

7

appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.

                    (q) There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications.

                    (r) The statistical, industry-related and market-related data included in the Registration Statement, the General Disclosure Package and the Prospectus are based on or derived from sources which the Company reasonably and in good faith believes are reliable and accurate, and such data agree with the sources from which they are derived.

                    (s) There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of the Subsidiaries before any court or administrative agency or otherwise which if determined adversely to the Company or any of the Subsidiaries would have a Material Adverse Effect, except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus.

                    (t) The Company and the Subsidiaries have good and marketable title to all of the properties and assets reflected in the consolidated financial statements hereinabove described or described in the Registration Statement, the General Disclosure Package and the Prospectus, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such consolidated financial statements or described in the Registration Statement, the General Disclosure Package and the Prospectus or which are not material in amount. The Company and the Subsidiaries occupy their leased properties under valid and binding leases conforming in all material respects to the description thereof set forth in the Registration Statement, the General Disclosure Package and the Prospectus.

                    (u) The Company and the Subsidiaries have filed all material Federal, State, local and foreign tax returns which have been required to be filed (or have timely applied for an extension of the filing deadline) and have paid all taxes indicated by such returns (to the extent such returns have been filed) and all assessments received by them or any of them to the extent that such taxes have become due and payable, other than those being contested in good faith. All tax liabilities have been adequately provided for in the financial statements of the Company, and the Company does not know of any actual or proposed additional material tax assessments.

                    (v) Neither the Company nor any of the Subsidiaries is or with the giving of notice or lapse of time or both, will be, (i) in violation of its certificate or articles of incorporation, by-laws, certificate of formation, limited liability company agreement, partnership agreement or other organizational documents; or (ii) in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound and, solely with respect to this clause (ii), which violation or default would have a Material Adverse Effect. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of

8

the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any of their respective properties is bound, or of the certificate of incorporation or by-laws of the Company or any law, order, rule or regulation judgment, order, writ or decree applicable to the Company or any Subsidiary of any court or of any government, regulatory body or administrative agency or other governmental body having jurisdiction over the Company or any Subsidiary, except where such breach, violation or default (other than a breach or violation of, or default under, the Company’s certificate of incorporation or bylaws) would not, individually or in the aggregate, have a Material Adverse Effect.

                    (w) The execution and delivery of, and the performance by the Company of its obligations under, this Agreement has been duly and validly authorized by all necessary corporate action on the part of the Company, and this Agreement has been duly executed and delivered by the Company.

                    (x) Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement, the issuance and sale of the Shares to the Underwriters by the Company pursuant to this Agreement and the consummation of the transactions herein contemplated has been obtained or made and is in full force and effect, except such additional steps as may be required by the Commission, the Financial Industry Regulatory Authority, Inc. (“FINRA”) or such additional steps as may be necessary to qualify the Shares for public offering by the Underwriters under state securities or Blue Sky laws.

                    (y) The Company and the Subsidiaries each own or possess the right to use all patents, patent rights, trademarks, trade names, service marks, service names, copyrights, license rights, know-how (including trade secrets and other unpatented and unpatentable proprietary or confidential information, systems or procedures) and other intellectual property rights (“Intellectual Property”) necessary to carry on their businesses as now conducted in all material respects; neither the Company nor any of the Subsidiaries has infringed, and none of the Company or the Subsidiaries have received notice of conflict with, any Intellectual Property of any other person or entity that if determined adversely to the Company or any Subsidiary would, individually or in the aggregate, have a Material Adverse Effect. The Company knows of no infringement by others of Intellectual Property owned by or licensed to the Company.

                    (z) Neither the Company, nor to the Company’s knowledge, any of its affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares. The Company acknowledges that the Underwriters may engage in passive market making transactions in the Shares on the Nasdaq Capital Market in accordance with Regulation M under the Exchange Act.

                    (aa) Except as described in the Registration Statement and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any

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of its Subsidiaries is in violation of any applicable federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, air, surface water, storm water, wastewater, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, medical wastes, pharmaceutical wastes, biologic or infectious materials, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and its Subsidiaries have all permits, authorizations, approvals, orders and other concessions required (1) under any applicable Environmental Laws and (2) of and from all governmental agencies, in each case that are necessary to own or lease their properties and conduct their businesses as described in the Registration Statement, the General Disclosure Package and Prospectus, and are each in compliance with their requirements, (C) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its Subsidiaries and (D) the Company is not aware of any events or circumstances that would reasonably be expected to form the basis of an order, demand or claim for investigation, clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its Subsidiaries relating to Hazardous Materials or any Environmental Laws.

                    (bb) The Company and its Subsidiaries are in compliance with all laws, statutes, regulations, and other requirements applicable to its businesses and operations, except where such failures to be in compliance would not have a Material Adverse Effect.

                    (cc) The Company and each of the Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as the Company reasonably believes is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses.

                    (dd) Neither the Company nor any Subsidiary is or, after giving effect to the offering and sale of the Shares contemplated hereunder and the application of the net proceeds from such sale as described in the Registration Statement, the General Disclosure Package and the Prospectus, will be an “investment company” within the meaning of such term under the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations of the Commission thereunder.

                    (ee) To the Company’s knowledge, there are no affiliations or associations between any member of FINRA and any of the Company’s officers, directors or 5% or greater securityholders, except as set forth in the Registration Statement, the Prospectus or the General Disclosure Package.

                    (ff) The Shares have been listed for quotation on the Nasdaq Capital Market.

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                    (gg) None of the information on (or hyperlinked from) the Company’s website at www.sharpsinc.com includes or constitutes a “free writing prospectus” as defined in Rule 405 under the Act and the Company does not maintain or support any website other than www.sharpsinc.com.

                    (hh) Except as set forth in the Credit Agreement dated March 16, 2009 by and between Sharps Compliance, Inc. of Texas, a Texas corporation, and JPMorgan Chase Bank, N.A., no Subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company.

                    (ii) The Company is a “smaller reporting company” as such term is defined in Rule 12b-2 of the Exchange Act. The Company meets the eligibility requirements under General Instructions I.B.3 and I.B.6 of Form S-3 with respect to the offer and sale of the Shares.

          2. Representations and Warranties of the Selling Stockholders.

                    Each Selling Stockholder severally and not jointly represents and warrants to the Company and each of the Underwriters and agrees with the Underwriters as follows:

                    (a) Such Selling Stockholder has, and on the Closing Date or the Option Closing Date (as defined below), as the case may be, will have, good and valid title to the Shares proposed to be sold by such Selling Stockholder hereunder on such date and full right, power and authority to enter into this Agreement and to sell, assign, transfer and deliver such Shares hereunder, free and clear of all voting trust arrangements, liens, encumbrances, equities, claims and community property rights; and upon delivery of and payment for such Shares hereunder, the Underwriters will acquire good and valid title thereto, free and clear of all voting trust arrangements, liens, encumbrances, equities, claims and community property rights.

                    (b) Such Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to or which might be reasonably expected to cause or result, under the Exchange Act or otherwise, in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

                    (c) Such Selling Stockholder has executed and delivered a Power of Attorney (“Power of Attorney”) among the Selling Stockholder and                      (the “Agent”), naming the Agent as such Selling Stockholder’s agent and attorney-in-fact (and, by the execution by the Agent of this Agreement, such Agent hereby represents and warrants that he has been duly appointed as agent and attorney-in-fact by the Selling Stockholders pursuant to the Power of Attorney) for the purpose of entering into and carrying out this Agreement, and the Power of Attorney has been executed by such Selling Stockholder and a copy thereof has been delivered to you and is a valid and binding agreement of such Selling Stockholder.

                    (d) The execution and delivery of this Agreement, the Power of Attorney and the Custody Agreement (as hereinafter defined) and the sale and delivery of the Shares to be sold by such Selling Stockholder and the consummation of the transactions contemplated herein and

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compliance by such Selling Stockholder with its obligations hereunder do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default under, or result in the creation or imposition of any tax, lien, charge or encumbrance upon the Shares to be sold by such Selling Stockholder or any property or assets of such Selling Stockholder pursuant to any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, license, lease or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder may be bound, or to which any of the property or assets of such Selling Stockholder is subject, or any applicable treaty, law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over such Selling Stockholder or any of its properties.

                    (e) The Shares to be sold by such Selling Stockholder pursuant to this Agreement are certificated securities in registered form or are held in a securities account or by or through a securities intermediary within the meaning of the Uniform Commercial Code as in effect in the State of New York.

                    (f) Such Selling Stockholder further represents, warrants and agrees that such Selling Stockholder has deposited in custody, under a Custody Agreement in the form attached hereto as Exhibit B (“Custody Agreement”) with                     , as custodian (“Custodian”), certificates in negotiable form for the Shares to be sold hereunder by such Selling Stockholder, for the purpose of further delivery pursuant to this Agreement. Such Selling Stockholder agrees that the Shares to be sold by such Selling Stockholder on deposit with the Custodian are subject to the interests of the Company, the Underwriters and the other Selling Stockholders hereunder, that the arrangements made for such custody, and the appointment of the Agent pursuant to the Power of Attorney, are to that extent irrevocable, and that the obligations of such Selling Stockholder hereunder and under the Power of Attorney and the Custody Agreement shall not be terminated except as provided in this Agreement, the Power of Attorney or the Custody Agreement by any act of such Selling Stockholder, by operation of law, whether, by the death or incapacity of such Selling Stockholder or, in the case of a trust or estate, by the death of the trustee or trustees or the executor or executors or the termination of such trust or estate or by the occurrence of any other event. If any individual Selling Stockholder, trustee or executor should die or become incapacitated, or any such trust or estate should be terminated, or if any other event should occur before the delivery of the Shares hereunder, the certificates evidencing Shares then on deposit with the Custodian shall be delivered by the Custodian in accordance with the terms and conditions of this Agreement and the Custody Agreement and actions taken by the Agent pursuant to the Powers of Attorney shall be valid, in each case, as if such death, incapacity, termination or other event had not occurred, regardless of whether or not the Custodian shall have received notice thereof. The Agent has been authorized by such Selling Stockholder to execute and deliver this Agreement on behalf of such Selling Stockholder and the Custodian has been authorized to receive and acknowledge receipt of the proceeds of sale of the Shares to be sold by such Selling Stockholder against delivery thereof and otherwise act on behalf of such Selling Stockholder, including the delivery of any certificates to be delivered hereunder. The Custody Agreement has been executed by such Selling Stockholder and a copy thereof has been delivered to you and, assuming due authorization, execution and delivery by the other parties thereto, is a valid and binding agreement of such Selling Stockholder.

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                    (g) Each Preliminary Prospectus, insofar as it has related to such Selling Stockholder and as of its date, has conformed in all material respects with the requirements of the Act and, as of its date, has not included any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein not misleading; and the Registration Statement at the time of effectiveness, and at all times subsequent thereto, up to the Closing Date or the Option Closing Date, as the case may be, (i) such parts of the Registration Statement, the General Disclosure Package and the Prospectus and any amendments or supplements thereto as relate to such Selling Stockholder, contained or will contain all statements that are required to be stated therein in accordance with the Act and in all material respects conformed or will in all material respects conform to the requirements of the Act; and (ii) neither the Registration Statement, the General Disclosure Package nor the Prospectus, nor any amendment or supplement thereto, as it relates to such Selling Stockholder, included or will include any untrue statement of a material fact or omitted or will omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The preceding sentence applies only to the extent that any such statement in or omissions from any such document is made in reliance upon and in conformity with the written information furnished to the Company by such Selling Stockholder specifically for use therein. The parties hereto agree that the information relating to such Selling Stockholder under the caption “Selling Stockholders” and the footnotes thereunder is the only information made in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder for use in any Preliminary Prospectus, the Registration Statement, the General Disclosure Package and the Prospectus (the “Selling Stockholder Information”).

                    (i) Such Selling Stockholder is not prompted to sell the Shares to be sold by such Selling Stockholder hereunder by any information concerning the Company or the Subsidiaries which is not set forth in the Registration Statement, General Disclosure Package or the Prospectus.

                    (h) Such Selling Stockholder agrees with the Company and the Underwriters pursuant to a Lock-Up Agreement substantially in the form attached hereto as Exhibit A (the Lock-Up Agreement”), not to sell, contract to sell or otherwise dispose of any Common Stock for a period of 180 days after this Agreement becomes effective without the prior written consent of the Representative (except as otherwise provided in the Lock-Up Agreement) and such executed Lock-Up Agreement has been delivered to the Underwriters.

                    (i) In order to document the Underwriter’s compliance with the reporting and withholding provisions of the Internal Revenue Code of 1986, as amended, with respect to the transactions herein contemplated, such the Selling Stockholder agrees to deliver to you prior to or on the Closing Date, a properly completed and executed United States Treasury Department Form W-8 or W-9 (or other applicable form of statement specified by Treasury Department regulations in lieu thereof).

                    (j) Neither such Selling Stockholder nor any of his affiliates directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, or is a person associated with (within the meaning of Article I (rr) of the By-laws of FINRA), any member firm of FINRA.

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          3. Purchase, Sale and Delivery of the Firm Shares.

                    (a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Company and the Selling Stockholders, severally but not jointly, agree to sell to the Underwriters and each Underwriter agrees, severally and not jointly, to purchase, at a price of $[     ] per share, [       ] Firm Shares from the Company and the respective number of Firm Shares set forth opposite the name of each Selling Stockholder on Schedule II. The Underwriters shall purchase the respective number of Firm Shares from the Company and the Selling Stockholders set forth opposite the name of each Underwriter in Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.

                    (b) Payment for the Firm Shares to be sold hereunder is to be made in Federal (same day) funds to the accounts specified by the Company and each Selling Stockholder against delivery of certificates therefor by the Company and the Custodian to the Representative for the several accounts of the Underwriters. Such payment and delivery are to be made through the facilities of The Depository Trust Company (“DTC”), in New York, New York, at 10:00 a.m., New York time, on the third business day after the date of this Agreement or at such other time and date not later than five business days thereafter as you and the Company shall agree upon, such time and date being herein referred to as the “Closing Date.” (As used herein, “business day” means a day on which the Nasdaq Capital Market is open for trading and on which banks in New York are open for business and are not permitted by law or executive order to be closed.)

                    (c) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company and certain of the Selling Stockholders, severally but not jointly, hereby grant an option to the several Underwriters to purchase the Option Shares in the amounts set forth on Schedule III at the price per share as set forth in the first paragraph of this Section 3, and such Option Shares shall be sold by the Company and the Selling Stockholders to the Underwriters [in the same proportion as the Firm Shares]. The option granted hereby may be exercised in whole or in part by giving written notice (i) at any time before the Closing Date; and (ii) at any time, from time to time thereafter within 30 days after the date of this Agreement, by you, as Representative of the several Underwriters, to the Company setting forth the number of Option Shares as to which the several Underwriters are exercising the option and the time and date at which such certificates are to be delivered and payment is to be made. The time and date at which certificates for Option Shares are to be delivered and payment is to be made shall be determined by the Representative (such time and date being herein referred to as the “Option Closing Date”) but may not be earlier than the Closing Date nor later than five full business days after written notice of election to purchase Option Shares is given. If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date. The number of Option Shares to be purchased by each Underwriter shall be in the same proportion to the total number of Option Shares being purchased as the number of Firm Shares being purchased by such Underwriter bears to the total number of Firm Shares, adjusted by you in such manner as to avoid fractional shares. The option with respect to the Option Shares granted hereunder may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters. You, as Representative of the several Underwriters, may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company. To the extent, if any, that the option is exercised, payment for and delivery of the Option Shares

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shall be made on the Option Closing Date in Federal (same day funds) through the facilities of DTC in New York, New York.

                    (d) Certificates for the Firm Shares and the Option Shares, if any, shall be in such denominations and registered in such names as the Representative may request in writing at least one full business day before the Closing Date or the Option Closing Date, as the case may be. The certificates for the Firm Shares and the Option Shares, if any, will be made available for examination and packaging by the Representative in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Date or the Option Closing Date, as the case may be.

          4. Offering by the Underwriters. It is understood that the several Underwriters are to make a public offering of the Firm Shares as soon as the Representative deems it advisable to do so. The Firm Shares are to be initially offered to the public at the initial public offering price set forth in the Prospectus. The Representative may from time to time thereafter change the public offering price and other selling terms.

          5. Covenants of the Company. The Company covenants and agrees with the several Underwriters that:

                    (a) The Company will (i) prepare and timely file with the Commission under Rule 424(b) under the Act a Prospectus in a form approved by the Representative containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rules 430A, 430B or 430C under the Act; and (ii) not file any amendment to the Registration Statement or distribute an amendment or supplement to the General Disclosure Package or the Prospectus of which the Representative shall not previously have been advised and furnished with a copy or to which the Representative shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations.

                    (b) The Company will (i) not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Act) required to be filed by the Company with the Commission under Rule 433 under the Act unless the Representative approves its use in writing prior to first use (each, a “Permitted Free Writing Prospectus”); provided, that the prior written consent of the Representative hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included in Schedule IV hereto; (ii) treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus; (iii) comply with the requirements of Rules 164 and 433 under the Act applicable to any Issuer Free Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping; and (iv) not take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Act a free writing prospectus prepared by or on behalf of such Underwriter that such Underwriter otherwise would not have been required to file thereunder. Each Underwriter represents and agrees that it has not made and, without the prior consent of the Company and the Representative, it will not make, any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus other than the Issuer Free Writing Prospectus set forth on Schedule IV. The Company will satisfy the

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conditions in Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show.

                    (c) The Company will advise the Representative promptly (i) when the Registration Statement or any post-effective amendment thereto shall have become effective; (ii) of receipt of any comments from the Commission; (iii) of any request of the Commission for amendment of the Registration Statement or for supplement to the General Disclosure Package or the Prospectus or for any additional information; and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, or of the institution of any proceedings for that purpose or pursuant to Section 8A of the Act. The Company will use its best efforts to prevent the issuance of any such order and to obtain as soon as possible the lifting thereof, if issued.

                    (d) The Company will cooperate with the Representative in endeavoring to qualify the Shares for sale under the securities laws of such jurisdictions as the Representative may reasonably have designated in writing and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided, that the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent or to subject itself to taxation in any jurisdiction in which it would not otherwise be subject. The Company will, from time to time, prepare and file such statements, reports, and other documents, as are or may be required to continue such qualifications in effect for so long a period as the Representative may reasonably request for distribution of the Shares.

                    (e) The Company will deliver to, or upon the order of, the Representative, from time to time, as many copies of any Preliminary Prospectus as the Representative may reasonably request. The Company will deliver to, or upon the order of, the Representative, from time to time, as many copies of any Issuer Free Writing Prospectus as the Representative may reasonably request. The Company will deliver to, or upon the order of, the Representative during the period when delivery of a Prospectus (or, in lieu thereof, the notice referred to under Rule 173(a) under the Act) is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Representative may reasonably request. The Company will deliver to the Representative at or before the Closing Date, four signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Representative such number of copies of the Registration Statement (including such number of copies of the exhibits filed therewith that may reasonably be requested), and of all amendments thereto, as the Representative may reasonably request.

                    (f) The Company will comply with the Act and the Rules and Regulations, and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If during the period in which a prospectus (or, in lieu thereof, the notice referred to under Rule 173(a) under the Act) is required by law to be delivered by an Underwriter or dealer, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances existing at

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the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company promptly will prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus so that the Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with the law.

                    (g) If the General Disclosure Package is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the General Disclosure Package in order to make the statements therein, in the light of the circumstances, not misleading, or to make the statements therein not conflict with the information contained in the Registration Statement then on file, or if it is necessary at any time to amend or supplement the General Disclosure Package to comply with any law, the Company promptly will prepare, file with the Commission (if required) and furnish to the Underwriters and any dealers an appropriate amendment or supplement to the General Disclosure Package so that the General Disclosure Package as so amended or supplemented will not, in the light of the circumstances, be misleading or conflict with the Registration Statement then on file, or so that the General Disclosure Package will comply with law.

                    (h) The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the Act.

                    (i) Prior to the Closing Date, the Company will furnish to the Underwriters, as soon as they have been prepared by or are available to the Company, a copy of any unaudited interim financial statements of the Company for any period subsequent to the period covered by the most recent financial statements appearing in the Registration Statement, the General Disclosure Package and the Prospectus.

                    (j) No offering, sale, short sale or other disposition of any shares of Common Stock of the Company or other securities convertible into or exchangeable or exercisable for shares of Common Stock or derivative of Common Stock (or agreement for such) will be made for a period of 180 days after the date of the Prospectus, directly or indirectly, by the Company otherwise than hereunder or with the prior written consent of the Representative, except (i) the Company’s sale of the Shares as contemplated hereunder, (ii) issuances of shares of Common Stock upon conversion of existing convertible securities and exercise by employees of existing stock options and warrants disclosed as outstanding in the Disclosure Package, and (iii) the grant by the Company pursuant to the Company’s 1993 Stock Plan of stock options and shares of restricted stock that are not exercisable or vested, as the case may be, during the Lock-Up Period. Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period following the last day of the 180-day restricted period, then in each case the restrictions imposed by this Agreement shall continue to

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apply until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of material news or a material event relating to the Company, as the case may be, unless the Representative waives, in writing, such extension.

                    (k) The Company will use its best efforts, subject to official notice of issuance, to effect and maintain the listing of the Shares on the Nasdaq Capital Market.

                    (l) The Company has caused each director and executive officer of the Company and each Selling Stockholder to furnish to you, on or prior to the date of this Agreement, an executed Lock-Up Agreement.

                    (m) The Company shall apply the net proceeds of its sale of the Shares as set forth in the Registration Statement, General Disclosure Package and the Prospectus.

                    (n) The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Shares in such a manner as would require the Company or any of the Subsidiaries to register as an investment company under the 1940 Act.

                    (o) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the Common Stock.

                    (p) The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

          6. Costs and Expenses.

                    The Company will pay all costs, expenses and fees incident to the performance of the obligations of the Company under this Agreement, including, without limiting the generality of the foregoing, the following: (i) accounting fees of the Company; (ii) the fees and disbursements of counsel for the Company; (iii) any roadshow expenses; (iv) the cost of printing and delivering to, or as requested by, the Underwriters copies of the Registration Statement, Preliminary Prospectuses, the Issuer Free Writing Prospectuses, the Prospectus, this Agreement and any supplements or amendments thereto; (v) the filing fees of the Commission; (vi) the filing fees and expenses (including legal fees and disbursements) incident to securing any required review by FINRA of the terms of the sale of the Shares; (vii) the listing fee of the Nasdaq Capital Market; (viii) the costs and expenses (including, without limitation, any damages or other amounts payable in connection with legal or contractual liability) associated with the reforming of any contracts for sale of the Shares made by the Underwriters caused by a breach of the representation in Section 1(b); and (ix) the expenses, including the fees and disbursements of counsel for the Underwriters, incurred in connection with the qualification of the Shares under State securities or Blue Sky laws. Any transfer taxes, stamp duties or other taxes or duties imposed on the sale of the Shares to the several Underwriters will be paid by the Company. The Company shall not, however, be required to pay for any of the Underwriter’s expenses (other than those related to qualification under FINRA regulations and State securities or Blue Sky laws), except that, if this Agreement shall not be consummated because the conditions in Section 7 hereof are not satisfied, or because this Agreement is terminated by the Representative pursuant to Sections 11(a)(i) or 11(a)(vii) hereof, or by reason of any failure, refusal or inability

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on the part of the Company to perform any undertaking or satisfy any condition of this Agreement or to comply with any of the terms hereof on its part to be performed, unless such failure, refusal or inability is due primarily to the default or omission of any Underwriter, the Company shall reimburse the several Underwriters for reasonable out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing their obligations hereunder.

                    Each Selling Stockholder will pay all costs, expenses and fees incident to the performance of such Selling Stockholder’s obligations hereunder which are not specifically provided for in this Section 6, including (i) any fees and expenses of counsel for such Selling Stockholder; (ii) such Selling Stockholder’s pro rata share of the fees and expenses of the Agent and Custodian; and (iii) all expenses, stamp duties, transfer taxes and other taxes, and duties incident to the sale and delivery of the Shares to be sold by such Selling Stockholder to the Underwriters hereunder. The provisions of this Section shall not affect any agreement that the Company and the Selling Stockholders may make for the sharing of such costs and expenses.

          7. Conditions of Obligations of the Underwriters.

                    The several obligations of the Underwriters to purchase the Firm Shares on the Closing Date and the Option Shares, if any, on the Option Closing Date are subject to the accuracy, as of the Applicable Time, the Closing Date or the Option Closing Date, as the case may be, of the representations and warranties of the Company and the Selling Stockholders contained herein, and to the performance by the Company and the Selling Stockholders of their covenants and obligations hereunder and to the following additional conditions:

                    (a) The Registration Statement and all post-effective amendments thereto shall have become effective and the Prospectus and each Issuer Free Writing Prospectus required shall have been filed as required by Rules 424, 430A, 430B, 430C or 433 under the Act, as applicable, within the time period prescribed by, and in compliance with, the Rules and Regulations, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Representative and complied with to their reasonable satisfaction. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Act shall have been taken or, to the knowledge of the Company, shall be contemplated or threatened by the Commission and no injunction, restraining order or order of any nature by a Federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance of the Shares.

                    (b) The Representative shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Fulbright & Jaworski L.L.P., counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters in the form attached hereto as Exhibit C.

                    (c) The Representative shall have received from McDermott Will & Emery LLP, counsel for the Underwriters, an opinion dated the Closing Date or the Option Closing

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Date, as the case may be, substantially to the effect specified in subparagraphs (iv) and (x) of Paragraph (b) of this Section 7, and that (i) the Firm Shares and Option Shares, if any, to be sold by the Company have been duly authorized and will be validly issued, fully paid and non-assessable when issued and paid for, free and clear of any preemptive rights under the DGCL (as defined below) or the Company’s charter or bylaws, (ii) this Agreement has been duly authorized, delivered and executed by the Company, and (iii) the Company is a duly organized and validly existing corporation under the General Corporation Law of the State of Delaware and has the corporate power and corporate authority to execute and deliver this Agreement and the Firm Share and Option Shares, if any, to be issued and sold by the Company. In rendering such opinion, McDermott Will & Emery LLP may rely as to all matters governed other than by the laws of the States of New York and Illinois or Federal laws, or the General Corporation Law of the State of Delaware (the “DGCL”), on the opinion of counsel referred to in Paragraph (b) of this Section 7. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that (i) the Registration Statement, or any amendment thereto, as of the time it became effective under the Act (including the information deemed to be a part of the Registration Statement at the time it became effective pursuant to Rules 430A, 430B or 430C under the Act) as of the Closing Date or the Option Closing Date, as the case may be, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) the General Disclosure Package, as of the Applicable Time, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (iii) the Prospectus, or any supplement thereto, as of its date and as of the Closing Date or the Option Closing Date, as the case may be, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact, necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that such counsel need express no view as to financial statements and schedules and other financial data therein). With respect to such statement, McDermott Will & Emery LLP may state that their belief is based upon the procedures set forth therein, but is without independent check and verification.

                    (d) The Representative shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Fulbright & Jaworski L.L.P. dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters in the form attached hereto as Exhibit D.

                    (e) You shall have received, on each of the date hereof, the Closing Date and, if applicable, the Option Closing Date, a letter dated the date hereof, the Closing Date or the Option Closing Date, as the case may be, in form and substance satisfactory to you, of UHY LLP confirming that it is an independent registered public accounting firm with respect to the Company and the Subsidiaries within the meaning of the Act and the applicable Rules and Regulations and the PCAOB and stating that in their opinion the financial statements and schedules examined by them and included in the Registration Statement, the General Disclosure Package and the Prospectus comply in form in all material respects with the applicable accounting requirements of the Act and the related Rules and Regulations; and containing such other statements and information as are ordinarily included in accountants’ “comfort letters” to Underwriters with respect to the financial statements and certain financial and statistical

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information contained in the Registration Statement, the General Disclosure Package and the Prospectus.

                    (f) The Representative shall have received on the Closing Date and, if applicable, the Option Closing Date, a certificate or certificates of the Chief Executive Officer and the Chief Financial Officer of the Company to the effect that, as of the Closing Date or the Option Closing Date, as the case may be, each of them severally represents as follows:

                              (i) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement or no order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus has been issued, and no proceedings for such purpose or pursuant to Section 8A of the Act have been taken or are, to his or her knowledge, contemplated or threatened by the Commission;

                              (ii) The representations and warranties of the Company contained in Section 1 hereof are true and correct as of the Closing Date or the Option Closing Date, as the case may be, and confirming the performance by the Company of all of its obligations hereunder to be performed at or prior to the Closing Date or Option Closing Date, as applicable;

                              (iii) All filings required to have been made pursuant to Rules 424, 430A, 430B or 430C under the Act have been made as and when required by such rules;

                              (iv) He has carefully examined the General Disclosure Package and any individual Limited Use Free Writing Prospectus and, in his opinion, as of the Applicable Time, the statements contained in the General Disclosure Package and any individual Limited Use Free Writing Prospectus did not contain any untrue statement of a material fact, and such General Disclosure Package and any individual Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

                              (v) He has carefully examined the Registration Statement and, in his opinion, as of the effective date of the Registration Statement, the Registration Statement and any amendments thereto did not contain any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein not misleading, and since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement to or an amendment of the Prospectus which has not been so set forth in such supplement or amendment;

                              (vi) He has carefully examined the Prospectus and, in his opinion, as of its date and the Closing Date or the Option Closing Date, as the case may be, the Prospectus and any amendments and supplements thereto did not contain any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

                              (vii) Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and Prospectus, there has not been any

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material adverse change or any development involving a prospective material adverse change in or affecting the business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course of business.

                    (g) Each of the Selling Stockholders shall have furnished or caused to be furnished to the Representative at the Closing Date and Option Closing Date, as the case may be, a certificate reasonably satisfactory to the Representative that the representations and warranties of such Selling Stockholder set forth in Section 2 are true and correct and confirming the performance by such Selling Stockholder of each of its obligations hereunder.

                    (h) The Company and the Selling Stockholders shall have furnished to the Representative such further certificates and documents confirming the representations and warranties, covenants and conditions contained herein and related matters as the Representative may reasonably have requested.

                    (i) The Firm Shares and Option Shares, if any, have been approved for listing on the Nasdaq Capital Market subject only to official notice of issuance.

                    (j) FINRA has confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements.

                    (k) The Lock-up Agreements described in Section 2(h) have been executed and are in full force and effect.

                    The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects satisfactory to the Representative and to McDermott Will & Emery LLP, counsel for the Underwriters. If any of the conditions hereinabove provided for in this Section 7 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriters hereunder may be terminated by the Representative by notifying the Company of such termination in writing or by facsimile at or prior to the Closing Date or the Option Closing Date, as the case may be. In such event, the Company and the Underwriters shall not be under any obligation to each other (except to the extent provided in Sections 6 and 8 hereof).

          8. Indemnification.

                    (a) The Company agrees:

                              (i) to indemnify and hold harmless each Underwriter, the directors and officers of each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which such Underwriter or any such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto; (ii) with respect to the Registration Statement or any

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amendment or supplement thereto, 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; or (iii) with respect to any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto, 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 in the light of the circumstances under which they were made; provided, however, that the Company will not be liable in any such case 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 the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished by an Underwriter to the Company by or through the Representative specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 13 herein; and

                              (ii) to reimburse each Underwriter, each Underwriters’ directors and officers, and each such controlling person upon demand for any legal or other out-of-pocket expenses reasonably incurred by such Underwriter, each Underwriters’ directors and officers, or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering of the Shares, whether or not such Underwriter, each Underwriters’ directors and officers, or such controlling person is a party to any action or proceeding. In the event that it is finally judicially determined that the Underwriters, the directors and officers of the Underwriters or the controlling persons were not entitled to receive payments for legal and other expenses pursuant to this subparagraph, the Underwriters, the directors and officers of the Underwriters or the controlling persons, as the case may be, will promptly return all sums that had been advanced pursuant hereto.

                    (b) Each Selling Stockholder, severally and not jointly, agrees:

                              (i) to indemnify and hold harmless each Underwriter, the Company, the directors and officers of each Underwriter or the Company and each person, if any, who controls any Underwriter or the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which such Underwriter or any such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto; (ii) with respect to the Registration Statement or any amendment or supplement thereto, 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; or (iii) with respect to any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto, 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 in the light of the circumstances under which they were made; provided, however, that each Selling Stockholder will be liable in each case, to the extent, but only to the extent that that such untrue statement or alleged untrue

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statement, or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished by such Selling Stockholder to the Company specifically for use therein, it being understood and agreed that the only such information furnished by any Selling Stockholder consists of the Selling Stockholder Information; and

                              (ii) to reimburse each Underwriter, the Company, each Underwriters’ and the Company’s directors and officers, and each such controlling person upon demand for any legal or other out-of-pocket expenses reasonably incurred by such Underwriter, the Company, such Underwriters’ or the Company’s directors and officers, or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering of the Shares, whether or not such Underwriter, the Company, such Underwriters’ and the Company’s directors and officers, or controlling person is a party to any action or proceeding. In the event that it is finally judicially determined that the Underwriters, the Company, each Underwriters’ or the Company’s directors and officers, or the controlling persons were not entitled to receive payments for legal and other expenses pursuant to this subparagraph, the Underwriters, the Company, each Underwriters’ or the Company’s directors and officers, or the controlling persons, as the case may be, will promptly return all sums that had been advanced pursuant hereto.

The liability of each Selling Stockholder under the indemnity agreement contained in this Section 8(b) shall be limited to an amount equal to the proceeds (net of underwriting discounts and commissions but before deducting other expenses) received by such Selling Stockholder from the sale of the Shares sold by such Selling Stockholder hereunder.

                    (c) Each Underwriter severally and not jointly will indemnify and hold harmless each Selling Stockholder and the Company, each of its directors, each of its officers who have signed the Registration Statement, and each person, if any, who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which a Selling Stockholder, the Company or any such director, officer, or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto; (ii) with respect to the Registration Statement or any amendment or supplement thereto, 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; or (iii) with respect to any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or supplement thereto, 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 in the light of the circumstances under which they were made; and will reimburse any legal or other expenses reasonably incurred by a Selling Stockholder, the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that each Underwriter will be liable in each case to the extent,

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but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished by such Underwriter to the Company by or through the Representative specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 13 herein.

                    (d) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 8, such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing. No indemnification provided for in Section 8(a), (b) or (c) shall be available to any party who shall fail to give notice as provided in this Section 8(d) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a), (b) or (c). In case any such proceeding 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 therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel; (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them; or (iii) the indemnifying party shall have failed to assume the defense and employ counsel acceptable to the indemnified party within a reasonable period of time after notice of commencement of the action. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties, unless the counsel for such indemnified parties determines (A) that there may be a conflict between the positions of the indemnified parties in conducting the defense of such action, suit, investigation, inquiry of proceeding; or (B) that an indemnified party may be unable to assert any claim or defense otherwise available to such indemnified party. Such firm shall be designated in writing by you in the case of parties indemnified pursuant to Section 8(a) or (b) and by the Company in the case of parties indemnified pursuant to Section 8(c). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel as contemplated by this

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paragraph, the indemnifying party shall be liable for any settlement of any proceeding effected without its written consent if (A) such settlement is entered into more than 30 days after receipt by the indemnifying party of such request; and (B) the indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent includes (1) an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding; and (2) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

                    (e) To the extent the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under Section 8(a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying parties on the one hand, and the indemnified parties on the other, from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the indemnifying parties on the one hand and the indemnified parties on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The respective relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other in connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholders, and the total underwriting discount received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus bear to the aggregate initial public offering price of the Shares set forth on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, such Selling Stockholders or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters’ obligations in this Section 8(e) to contribute are several in proportion to their respective underwriting obligations and not joint. The liability of each Selling Stockholder under the contribution agreement contained in this Section 8(e) shall be limited to an amount equal to the proceeds (net of underwriting discounts and commissions but before deducting other expenses) received by such Selling Stockholder from the sale of the Shares sold by such Selling Stockholder hereunder.

                    The Company, the Selling Stockholders and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(e) were determined by pro

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rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 8(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter; and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or equity.

                    (f) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join it as an additional defendant in any such proceeding in which such other contributing party is a party.

                    (g) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 8 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred. The indemnity and contribution agreements contained in this Section 8 and the representations and warranties of the Company and the Selling Stockholders set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Underwriter, its directors or officers or any person controlling any Underwriter, the Selling Stockholders, the Company, its directors or officers or any persons controlling the Company; (ii) acceptance of any Shares and payment therefor hereunder; and (iii) any termination of this Agreement. A successor to any Selling Stockholder, Underwriter, its directors or officers or any person controlling any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8.

          9. Default by Underwriters and Selling Stockholders.

                    (a) If on the Closing Date or the Option Closing Date, as the case may be, any Underwriter shall fail to purchase and pay for the portion of the Shares which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company or a Selling Stockholder), you, as the Representative of the Underwriters, shall use your reasonable efforts to procure within 36 hours thereafter one or more of the other Underwriters, or any others, to purchase from the Company or the Selling Stockholders, as the case may be, such amounts as may be agreed upon and upon the terms set forth herein, the

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Shares which the defaulting Underwriter or Underwriters failed to purchase. If during such 36 hours you, as such Representative, shall not have procured such other Underwriters, or any others, to purchase the Shares agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of Shares with respect to which such default shall occur does not exceed 10% of the Shares to be purchased on the Closing Date or the Option Closing Date, as the case may be, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Shares which they are obligated to purchase hereunder, to purchase the Shares which such defaulting Underwriter or Underwriters failed to purchase; or (b) if the aggregate number of Shares with respect to which such default shall occur exceeds 10% of the Shares to be purchased on the Closing Date or the Option Closing Date, as the case may be, the Agent, the Company or you as the Representative of the Underwriters will have the right, by written notice given within the next 36-hour period to the parties to this Agreement, to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company or any Selling Stockholder except to the extent provided in Sections 6 and 8 hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or Option Closing Date, as the case may be, may be postponed for such period, not exceeding seven days, as you, as the Representative, may determine in order that the required changes in the Registration Statement, the General Disclosure Package or in the Prospectus or in any other documents or arrangements may be effected. The term “Underwriter” includes any person substituted for a defaulting Underwriter. Any action taken under this Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

                    (b) If this Agreement shall be terminated pursuant to Section 11 hereof, neither the Company nor the Selling Stockholders shall then be under any liability to any Underwriter except as provided in Sections 6, 8, and 9 hereof and except, if for any reason, any Shares are not delivered by or on behalf of the Selling Stockholders as provided herein, the defaulting Selling Stockholders will reimburse the Underwriters through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company and the Selling Stockholders shall then be under no further liability to any Underwriter in respect of the Shares not so delivered except as provided in Sections 8 and 9 hereof.

                    (c) If on the Closing Date or the Option Closing Date, as the case may be, a Selling Stockholder shall fail to deliver the number of Firm Shares or Option Shares which such Selling Shareholder is required to deliver, then the Underwriters may, at option of the Representative, by notice from the Representative to the Company and the non-defaulting Selling Stockholders, either (i) terminate this Agreement without any liability on the fault of any non-defaulting party except that the provisions of Sections 8 and 9 shall remain in full force and effect or (ii) elect to purchase the Shares which the non-defaulting Selling Stockholders and the Company have agreed to sell hereunder. No action taken pursuant to this Section 9 shall relieve any Selling Stockholder so defaulting from liability, if any, in respect of such default.

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          10. Notices.

                    All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered, telecopied or telegraphed and confirmed as follows: if to the Underwriters, to William Blair & Company, L.L.C., 222 West Adams Street, Suite 3000, Chicago, Illinois 60606, Attention: Britton W. Trukenbrod; with a copy to (which shall not constitute notice): William Blair & Company, L.L.C., 222 West Adams Street, Suite 3000, Chicago, Illinois 60606, Attention: Jeffrey Burtelow; if to the Company, the Selling Stockholders or the Agent, to Sharps Compliance Corp., 9220 Kirby Drive, Suite 500, Houston, Texas, 77054, Attention: David P. Tusa; with a copy to (which shall not constitute notice): Fulbright & Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas 77010, Attention: Gene G. Lewis.

          11. Termination.

                    This Agreement may be terminated by you by notice to the Company and the Agent at any time prior to the Closing Date or any Option Closing Date (if different from the Closing Date and then only as to Option Shares) if any of the following has occurred:

                    (a) (i) since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and the Subsidiaries, taken as a whole, whether or not arising in the ordinary course of business; (ii) any outbreak or escalation of hostilities or declaration of war or national emergency or other national or international calamity or crisis (including, without limitation, an act of terrorism) or change in economic or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States would, in your judgment, materially impair the investment quality of the Shares; (iii) any material change in economic or political conditions, if the effect of such change on the financial markets of the United States would, in your reasonable judgment, make it impracticable or inadvisable to market the Shares or enforce contracts for the sale of the Shares; (iv) suspension of trading in securities generally on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Capital Market or the Nasdaq National Market or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on any such exchange; (v) the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other governmental authority which in your opinion materially and adversely affects or may materially and adversely affect the business or operations of the Company; (vi) the declaration of a banking moratorium by United States or New York State authorities; (vii) the suspension of trading of the Company’s Common Stock by the Nasdaq Capital Market, the Commission or any other governmental authority; or (viii) the taking of any action by any governmental body or agency in respect of its monetary or fiscal affairs which in your opinion has a material adverse effect on the securities markets in the United States; or

                    (b) as provided in Sections 7 and 9 of this Agreement.

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          12. Successors.

                    This Agreement has been and is made solely for the benefit of the Underwriters, the Selling Stockholders and the Company and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign merely because of such purchase.

          13. Information Provided by Underwriters.

                    The Company, the Selling Stockholders and the Underwriters acknowledge and agree that the only information furnished or to be furnished by any Underwriter to the Company for inclusion in the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus consists of [the information contained in paragraphs , and in the section captioned “Underwriters” in the Prospectus].

          14. Miscellaneous.

                    The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement; (b) any investigation made by or on behalf of any Underwriter or controlling person thereof, or by or on behalf of the Company or its directors or officers or controlling person thereof; or (c) delivery of and payment for the Shares under this Agreement.

                    The Company and the Selling Stockholders each acknowledge and agree that: (i) the purchase and sale of the Shares pursuant to this Agreement, including the determination of the public offering price of the Shares and any related discounts and commissions, is an arm’s-length commercial transaction between the Company and the Selling Stockholders, on the one hand, and the several Underwriters, on the other hand, and the Company and the Selling Stockholders are each capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to such transaction each Underwriter is and has been acting solely as an independent contractor and is not the financial advisor, agent, fiduciary or any other position of higher trust of the Company or any of its affiliates, stockholders, creditors or employees, any Selling Stockholder or any other party; (iii) no Underwriter has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Company or any Selling Stockholder with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) and no Underwriter has any obligation to the Company or any Selling Stockholder with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement; (iv) the several Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and/or the Selling Stockholders and that the several Underwriters have no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Underwriters have not provided any legal,

30

accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Company and the Selling Stockholders have each consulted their own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

                    The Company and the Selling Stockholders shall each consult with their own advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company or any Selling Stockholder with respect thereto. Any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company or any Selling Stockholder. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Selling Stockholders and the several Underwriters, or any of them, with respect to the subject matter hereof. The Company and each Selling Stockholder hereby waive and release, to the fullest extent permitted by law, any claims that the Company or any Selling Stockholder may have against the several Underwriters with respect to any breach or alleged breach of agency or fiduciary duty.

                    This Agreement may be executed in two or more counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

                    This Agreement shall be governed by, and construed in accordance with, the law of the State of Illinois. Each of the parties hereto irrevocably (i) agrees that any legal suit, action or proceeding against the Company or the Selling Stockholders brought by any Underwriter or by any person who controls any Underwriter arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any court located in Chicago, Illinois, (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

                    The Underwriters, on the one hand, and the Company (on its own behalf and, to the extent permitted by law, on behalf of its stockholders) and the Selling Stockholders, on the other hand, waive any right to trial by jury in any action, claim, suit or proceeding with respect to the your engagement as underwriter or your role in connection herewith.

                    Any action by the Underwriters hereunder may be taken by the Representative, on behalf of the Underwriters, and any such action taken by the Representative shall be binding upon the Underwriters.

          15. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you jointly or by William Blair & Company, L.L.C. on your behalf; and in all dealings with any Selling Stockholder hereunder, you and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Stockholder made or given by the Agent.

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[signature page follows]

32

          If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Company, the Selling Stockholders and the several Underwriters in accordance with its terms.

Very truly yours,
SHARPS COMPLIANCE CORP.
By:
Name:
Title:
SELLING STOCKHOLDERS
By:
Name:
Title:	Agent and Attorney In Fact

The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.

As Representative of the several
Underwriters listed on Schedule I

WILLIAM BLAIR & COMPANY, L.L.C.
By:
	Authorized Officer

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SCHEDULE I

UNDERWRITERS

	Number of Firm Shares
Underwriter	to be Purchased
William Blair & Company, L.L.C.		[          ]
Barrington Research Associates, Inc.		[          ]
Total		3,220,000

[Schedule I]

SCHEDULE II

SELLING STOCKHOLDERS

			Option
Participant	Shares		Shares
Burton J. Kunik		950,000		146,578
John W. Dalton		527,500		81,389
Parris H. Holmes		550,000		84,861
Ramsay Gillman		250,000		38,573
David P. Tusa		152,917		23,594
F. Gardner Parker		50,000		7,715
Philip C. Zerrillo		50,000		7,715
Claude A. Dance		100,000		15,429
Randy Grow		89,583		0
Total Selling Stockholder Shares		2,720,000		405,854

[Schedule II]

SCHEDULE III

OPTION SHARES

	Maximum Number of		Percentage of Total
	Option Shares		Number of Option
Underwriter	to be Sold		Shares
William Blair & Company, L.L.C.		[          ]		[          ]
Barrington Research Associates, Inc.		[          ]		[          ]
Total		[          ]		[          ]

[Schedule III]

SCHEDULE IV

PRICING TERMS

[Price and other terms of the offering conveyed orally]

[Schedule IV]

SCHEDULE V

GENERAL USE FREE WRITING PROSPECTUS

[Identify each General Use Free Writing Prospectus.]

[Schedule V]

EX-5.1

Exhibit 5.1

Fulbright & Jaworski L.L.P.
A Registered Limited Liability Partnership
Fulbright Tower
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
www.fulbright.com

telephone: (713) 651-5151 facsimile: (713) 651-5246

November 25, 2009

Sharps Compliance Corp.
9220 Kirby Drive, Suite 500
Houston, Texas 77054

Ladies and Gentlemen:

     We have acted as counsel to Sharps Compliance Corp., a Delaware corporation (the “Company”), in connection with the preparation of a Registration Statement on Form S-3 (the “Registration Statement”), to which this opinion is an exhibit, filed by the Company with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Act”). The Registration Statement relates to the offering (the “Offering”) by the Company and certain stockholders of the Company (the “Selling Stockholders”), pursuant to the Registration Statement, and the form of prospectus contained therein (the “Prospectus”), of an aggregate 3,703,000 shares of common stock, par value $0.01 per share (the “Shares”) of which (i) up to 577,146 Shares (including 77,146 Shares issuable upon exercise of an over-allotment option granted by the Company) will be issued and sold by the Company and (ii) up to 3,125,854 Shares (including 405,854 Shares upon exercise of an over-allotment option granted by the Selling Stockholders) will be sold by the Selling Stockholders. Concurrent with each closing of the sale of Shares pursuant to the Underwriting Agreement (defined below), certain Selling Stockholders shall exercise options (the “Option Exercise”) to purchase shares of common stock, par value $0.01 per share, of the Company (the “Option Shares”) granted pursuant to the 1993 Sharps Compliance Corp. Stock Plan (the “Stock Plan”).

     The Shares are to be sold by the Company and the Selling Stockholders pursuant to an underwriting agreement (the “Underwriting Agreement”) to be entered into by and among the Company, the Selling Stockholders and William Blair & Company, L.L.C., as representative of the several underwriters named in the Underwriting Agreement, the form of which will be filed with the Commission as Exhibit 1.1 to the Registration Statement.

     In connection with the foregoing, we have examined the Registration Statement, including the Prospectus, originals or copies of such corporate records of the Company, certificates and other communications of public officials, certificates of officers of the Company and such other documents as we have deemed relevant or necessary for the purpose of rendering the opinions expressed herein. As to questions of fact material to those opinions, we have, to the extent we deemed appropriate, relied on certificates of officers of the Company and on certificates and other communications of public officials. We have assumed the genuineness of all signatures on, and the authenticity of, all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as copies thereof,

Houston • New York • Washington DC • Austin • Dallas • Los Angeles • Minneapolis • San Antonio
Dubai • Hong Kong • London • Munich • Riyadh

Sharps Compliance Corp.
Page 2

the due authorization, execution and delivery by the parties thereto other than the Company of all documents examined by us, and the legal capacity of each individual who signed any of those documents.

     Based on the foregoing, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that (i) the Shares to be issued and sold by the Company have been duly and validly authorized by the Company for issuance and, when issued and paid for in accordance with the terms of the Underwriting Agreement, such Shares will be legally issued, fully paid and nonassessable, (ii) other than the Option Shares, the Shares to be sold by the Selling Stockholders have been duly and validly authorized and are legally issued, fully paid and nonassessable, and (iii) the Option Shares to be sold by the Selling Stockholders have been duly and validly authorized and, after the Option Exercise in accordance with the terms of the applicable option agreements and the Stock Plan, will be legally issued, fully paid and nonassessable.

     The opinions expressed herein are limited exclusively to the laws of the State of Delaware and the federal laws of the United States of America and we are expressing no opinion as to the effect of the laws of any other jurisdiction. This opinion speaks as of its date and we undertake no, and hereby disclaim any, duty to advise as to changes of fact or law coming to our attention after the delivery hereof on such date.

     We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement and to the references to us under the caption “Legal Matters” in the Prospectus. This consent is not to be construed as an admission that we are a party whose consent is required to be filed with the Registration Statement under the provisions of the Act or the rules and regulations of the Commission promulgated thereunder.

Very truly yours,
 

/s/ Fulbright & Jaworski L.L.P.  

Fulbright & Jaworski L.L.P. 

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Amendment No.1 to the Registration Statement on Form S-3 (Registration No. 333-163073) of Sharps Compliance Corp. of our report dated September 22, 2009 with respect to the consolidated financial statements of Sharps Compliance Corp. as of June 30, 2009 and 2008, and for the years then ended.

We also consent to the reference to our firm under the caption “Experts” in such Registration Statement.

/s/  UHY LLP

Houston, Texas

November 24, 2009

CORRESP

Fulbright & Jaworski L.L.P.
A Registered Limited Liability Partnership
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
www.fulbright.com

telephone:	(713) 651-5151
facsimile:	(713) 651-5246

November 25, 2009

Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Mail Stop 3561
Washington, D.C. 20549

Via EDGAR and Federal Express

Attention: Pamela A. Long, Division of Corporation Finance
Errol Sanderson, Division of Corporation Finance

     Re: Sharps Compliance Corp.
Registration Statement on Form S-3 filed on November 12, 2009
File No. 333-163073

Ladies and Gentlemen:

     We write this letter on behalf of Sharps Compliance Corp. (the “Company”) to respond to the comments in the letter received from the Staff on November 24, 2009, relating to the above-referenced Registration Statement on Form S-3 (the “Registration Statement”), and in connection with the simultaneous filing with this letter of Amendment No. 1 to the Registration Statement (the “Amendment”). We have responded to each comment by number. For the convenience of the Staff, we have repeated the comment immediately preceding the applicable response.

About This Prospectus, page i

1. We note the statement in the third paragraph that “Neither we nor the underwriters have independently verified, and neither we nor the underwriters guarantee, the accuracy of any of this information.” Please remove this statement, as you are responsible for the information you include in the prospectus.

          The statement has been removed. Please see page i of the Amendment.

Houston • New York • Washington DC • Austin • Dallas • Los Angeles • Minneapolis • San Antonio • Hong Kong • London • Munich

Securities and Exchange Commission
November 25, 2009
Page 2

Risk Factors, page 11

2. Please remove the fourth sentence of the introductory paragraph, as you may not qualify risk factor disclosure in this manner. Refer to Staff Legal Bulletin No. 7A (June 7, 1999), sample comment #30.

The sentence has been removed. Please see page 11 of the Amendment.

Description of Common Stock, page 24

3. We note the statement in the introductory paragraph that the summary does not purport to be complete. Please revise to clearly indicate that the summary is “materially” complete.

The statement has been revised in response to this comment. Please see page 24 of the Amendment.

4. We note the statement in the introductory paragraph that the summary is “qualified in its entirety by the provisions of our amended and restated certificate of incorporation and bylaws.” Please be advised that you may not qualify information in the prospectus in this manner unless incorporation by reference or a summary of a document filed as an exhibit is required. See Rule 411(a) of Regulation C. Please revise accordingly.

The statement has been revised in response to this comment. Please see page 24 of the Amendment.

Item 16. Exhibits, page II-1

5. We note that you intend to file the legal opinion and underwriting agreement by amendment. Please be advised that these documents are subject to review and you should provide sufficient time after filing these documents for the staff’s review.

The legal opinion is filed as Exhibit 5.1 to the Amendment. The underwriting agreement is filed as Exhibit 1.1 to the Amendment.

     If any member of the Staff has questions regarding the foregoing or the Amendment, please contact Gene G. Lewis of this firm at (713) 651-5161.

     Very truly yours,

     /s/ Fulbright & Jaworski L.L.P.

     Fulbright & Jaworski L.L.P.