SHARPS COMPLIANCE CORP. (NASDAQ:SMED) Files An 8-K Entry into a Material Definitive Agreement

Item 2.03

Creation of a Direct Financial Obligation or an Obligation Under an Off- Balance Sheet Arrangement of a Registrant.

On March 29, 2017, the Company entered into a credit agreement
with a commercial bank (Credit Agreement). The Credit Agreement,
which replaces, in its entirety, the Companys prior credit
agreement with another commercial bank, provides for a two-year,
$14.0 million line of credit facility, the proceeds of which may
be utilized as follows: (i) $6.0 million for working capital,
letters of credit (up to $2,000,000) and general corporate
purposes and (ii) $8.0 million for acquisitions. Indebtedness
under the Credit Agreement is secured by the Companys accounts
receivable and inventory with advances outstanding under the
working capital portion of the credit facility at any time
limited to a Borrowing Base (as defined in the Credit Agreement)
equal to 80% of eligible accounts receivable plus 50% of eligible
inventory. Advances under the acquisition portion of the credit
facility are limited to 75% of the purchase price of an acquired
company and convert to a five-year term note. Borrowings bear
interest computed at the One Month ICE LIBOR, plus two-hundred
and fifty (250) basis points (Margin). As of March 31, 2017, this
rate would be approximately 3.31%. The Margin could increase to
as high as three-hundred (300) basis points after September 30,
2017, depending on the Companys cash flow leverage ratio. The
Company will pay a fee of 0.25% per annum on the unused amount of
the line of credit.

The Credit Agreement contains affirmative and negative covenants
that, among other things, require the Company to maintain a
maximum cash flow leverage ratio and a minimum debt service
coverage ratio. The Credit Agreement, which expires on March 29,
2019, also contains customary events of default which, if
uncured, may terminate the Credit Agreement and require immediate
repayment of all indebtedness to the lenders.

The description of the Credit Agreement contained herein is
qualified in its entirety by reference to the Credit Agreement, a
copy of which is attached as Exhibit 10.1 to this Current Report
on Form 8-K and is incorporated herein by reference. A copy of
the press release issued by the Company is attached hereto as
Exhibit 99.1.

Item 9.01

Financial Statements and Exhibits

(d) Exhibits