EXECUTIVE
      INCENTIVE COMPENSATION PLAN 

    


    SHARPS
      COMPLIANCE CORP.

    


     

    The
      Compensation Committee of the Board of Directors (“Committee”) of Sharps
      Compliance Corp. (the “Company”) has adopted its Executive Incentive
      Compensation Plan effective for the fiscal years ended June 30, 2008 and
      2009.  The Executive Incentive Compensation Plan (the “Plan”) is designed
      to allow eligible executive full-time employees to share in achievements based
      on attainment of pre-established Company financial performance as well as
      achievement of individual goals.  The Plan is designed to motivate and
      reward eligible participants whose performance is considered by the Committee
      to
      be critical and integral to the overall success of the Company.

    


    Eligibility
      and Plan Year

    


    Plan
      eligibility is determined by the Committee. For the fiscal years ending June
      30,
      2008 and 2009 participation in the Plan is limited to the Company’s Chief
      Executive Officer and Chief Financial Officer.  The Committee may, at its
      sole discretion, add other Company executives as participants to the
      Plan.

    


    Elements
      of the Plan

    


    Each
      eligible participant has a target bonus, calculated as a specified percentage
      of
      that executive’s then current annual salary. For the fiscal years ending
      June 30, 2008 and 2009 the specified percentage of participant’s annual salary
      is 40% for both the Chief Executive Officer and Chief Financial Officer. The
      bonus amount will be computed based upon achievement of goals in three
      categories:  (1) positioning the Company for future growth, (2) the
      achievement of fiscal year budgeted earnings and (3) achievement of fiscal
      year
      budgeted revenues. 

    


    Individual
      Performance Element (determines 25% of target bonus)

    


    The
      computation of this portion of the target bonus will be based upon
      accomplishments of the Company and the executive participants designed to
      position the Company for future growth. The Committee will review
      accomplishments prepared by executive participants and determine achievement
      of
      the goal in their sole discretion.

    


    Earnings
      Performance Element (determines 25% of target bonus)

     

    Achievement
      of this element will be based upon the Company meeting the budgeted net earnings
      (from ongoing operations) goal for the respective fiscal year.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Revenue
      Performance Element (determines 50% of target bonus)

     

    Achievement
      of this element will be based upon the Company meeting the budgeted revenue
      (from ongoing operations) goal for the respective fiscal year.

     

    In
      addition to the above executive participants will recommend to the Committee
      a
      fiscal year bonus pool for non-executive employees.

    


    Eligibility
      and Payments to Participants

    


    The
      participant must be an active, full-time employee of the Company on the last
      day
      of the fiscal year for which the incentive award is earned to be entitled to
      the
      bonus.  

    


    Awards
      shall be paid in cash less applicable taxes, within five (5) days of the public
      release of the Company’s annual fiscal year end financial results.

    


    The
      Plan,
      as set forth in this document, represents the general guidelines the Committee
      presently intends to utilize to determine executive incentive
      compensation.  If, however, at the sole discretion of the Committee, the
      Company’s best interest is served by applying different guidelines in special or
      for unusual circumstances, it reserves the right to do so. The Committee
      reserves the right to amend or discontinue this Plan at any time in the best
      interests of the Company and its shareholders.  Without in anyway limiting
      the foregoing rights of the Company, should a material business event,
      significant customer contract, acquisition, disposition or change in control
      occur during the Plan period, the Committee reserves the right to amend or
      supplement the Plan following such event in such manner as the Committee, in
      its
      sole discretion, deems appropriate.

    


    The
      Committee shall have full power and authority to interpret and administer the
      Plan and shall be the sole arbiter of all manners of interpretation and
      application of the Plan and the Committee’s determination shall be final. 
Any inconsistencies that may occur between the Plan provisions and the
      calculation of the incentive results will be interpreted and resolved on an
      individual basis by the Committee.