SEPARATION AGREEMENT AND MUTUAL RELEASE OF ALL CLAIMS

This Separation Agreement and Mutual Release of All Claims (“Agreement”) is entered into between John R. Grow (“Grow”) and Sharps Compliance Corp. (“Sharps”), for itself and its subsidiary, Sharps Compliance, Inc. (collectively “the Company”), to be effective as of April 27, 2009, and is made and done in consideration of the promises and agreements contained herein.

1.   Recitals

1.1.                  There now exist between Grow and Sharps two contracts, a Sharps Compliance Corp. Restricted Stock Award Agreement (“Stock Agreement”) of October 27, 2008, and an Employment Agreement (“Employment Agreement”) of the same date (collectively, the “Grow Agreements”).

1.2.                  The parties hereto agree that it is in their best interests to compromise and amend the Grow Agreements as provided for herein, to provide for the orderly resignation of Grow from his positions under the Employment Agreement, which resignations become effective with the execution of this Agreement, and to provide for certain benefits and releases, all as more particularly described and made herein.  The parties further agree that it is in their best interests, and is a quid pro quo of the agreement among the parties made hereby, that the terms, conditions, and facts of this Agreement, other than that required to be made public in Sharps’ filings with the Securities and Exchange Commission, be kept strictly confidential in accordance with the provisions hereof.

2.1.                   Stock Agreement :  Subject to the remaining express paragraphs of this Agreement, the Board of Directors of Sharps have voted to amend the Stock Agreement, and the Stock Agreement is hereby amended to provide that Grow shall retain upon his resignation, as hereafter provided, 206,250 unregistered shares of Sharps stock awarded by the Stock Agreement, despite anything seemingly to the contrary stated therein (i.e., Grow forfeits 93,750 unregistered shares).  Grow acknowledges and agrees that 75,000 of the 206,250 unregistered shares shall be considered vested under the Stock Agreement on April 1, 2009, and cannot be sold or offered for sale under the Securities Act Rule 144 of the Securities and Exchange Commission prior to April 1, 2010.  The parties acknowledge and agree that the remaining 131,250 of the 206,250 unregistered shares provided for by this paragraph shall vested in Grow (notwithstanding anything to the contrary in the Stock Agreement) on April 1, 2009, and cannot be sold or offered for sale under the Securities Act Rule 144 and Exchange Commission prior to October 31, 2010. The terms and provisions of this Agreement shall supersede and control over any of the terms and provisions of the Stock Agreement to the contrary.

2.2.                   Payments and Benefits Other Than Group Health :  (a) Sharps shall pay Grow a lump-sum settlement payment of $67,743.21 within seven (7) business days after the tendering of Grow’s resignation as herein provided, subject to the provisions of paragraph 2.9. hereof and (b) Sharps shall pay Grow a severance amount equal to four (4) months’  salary at Grow’s

current pay-rate and consistent with prior practices. This will be accomplished by the continuation of salary to Grow on a bi-weekly basis consistent with the current practice for a four (4) month period and with continued participation by Grow in the Company’s 401(k) and Flexible Spending Plan. All sums paid to Grow reflected in this section shall be subject to customary withholding and deductions as wages pursuant to Sharps’ customary payroll practices.

2.3.                   Resignation :  Contemporaneous with the execution by the parties of this Agreement, Grow shall tender to the Board of Directors of Sharps a letter evidencing his full, effective, and immediate resignation from all positions, including President and Chief Operating Officer, in which he was employed under the Employment Agreement.  Grow shall not be required to resign from the Board of Directors of Sharps.

2.4.                   Healthcare Benefits :  Grow will be eligible for the Continuation of Health Coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) beginning on May 1, 2009. Sharps agrees to reimburse Grow monthly an amount equal to the excess of the  COBRA-required premiums per month over Grow’s current group health insurance premium of $425.00 per month. Subsequent to the eighteen (18) month COBRA period, Sharps agrees to reimburse Grow monthly an amount equal to the excess of the premiums per month for a comparable individual health insurance policy (comparable deductible, limits, coverage, etc...)  over Grow’s group health insurance of $425.00 per month for an additional twenty-five (25) month period (i.e., a total of forty-three (43) months).  Grow agrees to use reasonable best efforts to minimize the cost of the individual insurance policy. The Company and Grow will mutually and reasonably agree to the individual health insurance carrier selected by Grow. Grow’s request for reimbursement must be supported by evidence of the actual health insurance premium paid by Grow. Any obligation for Sharps to make payments towards Grow’s health insurance premiums under this paragraph shall cease immediately in the event that Grow becomes eligible for health insurance under a subsequent employer’s health insurance plan.  Grow further agrees to provide written notice to Sharps within seven calendar days of  accepting employment during the forty-three month period following his resignation from employment at Sharps.

2.5.                   Apartment :  Grow shall vacate the corporate apartment in which he now resides by May 10, 2009.

2.6.                   Confidentiality :  The parties hereto, and their officers, agents, employees, representatives, and counsel, hereby agree to keep the fact, terms, and conditions of this Agreement (collectively the “Confidential Information”) strictly confidential and shall not disclose the Confidential Information to any person, firm, or other entity except as provided herein.  The parties hereto are authorized to make disclosure of the Confidential Information: (a) to the extent as is actually required by any local, state, or federal agency or regulatory authority; (b) to the extent as is actually required pursuant to any valid order of a court of competent jurisdiction respecting confidential materials; (c) to the extent as is actually required in any subsequent litigation seeking enforcement of or damages for breach of this Agreement; (d) to all other parties hereto; and, (e) only otherwise to the extent as is actually required to effectuate bona fide accounting, legal, or insurance purposes of the party making the disclosure.  Any party to this Agreement who is served with a court order, subpoena, or other similar process