EXHIBIT 10.4
 
PATENT SECURITY AGREEMENT
 
This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
4th day of September, 2009, among the Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), and DMRJ GROUP, LLC (together with its successors, the “Secured
Party”).
 
W I T N E S S E T H:
 
WHEREAS, the Secured Party is the holder of that certain Revolving Credit
Promissory Note bearing even date herewith in the principal amount of $3,000,000
(as may be amended, restated, supplemented, replaced or otherwise modified from
time to time, the “Note”) issued or to be issued by the Implant Sciences
Corporation (“Company”) pursuant to the terms of the Credit Agreement bearing
even date herewith (as may be amended, restated, supplemented, replaced or
otherwise modified from time to time, the “Credit Agreement”) by and between the
Company, as borrower, Secured Party, as lender, and C Acquisition Corp., Accurel
Systems International Corporation, and IMX Acquisition Corp. as guarantors
(collectively, the “Guarantors”) and
 
WHEREAS, pursuant to the terms and conditions of the Credit Agreement, the
Secured Party has agreed to extend a loan to the Company, repayment of which is
evidenced by the Note, and
 
WHEREAS, in order to induce the Secured Party to enter into the Note, the Credit
Agreement and the other Transaction Documents and to induce the Secured Party to
make financial accommodations to the Company as provided for in the Credit
Agreement, Grantors have executed and delivered to Secured Party that certain
Security Agreement of even date herewith (including all annexes, exhibits or
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security Agreement”);
 
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Party this Patent Security Agreement;
 
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
 
1. DEFINED TERMS.  All capitalized terms used but not otherwise defined herein
have the meanings given to them in the Security Agreement or the Note or the
Credit Agreement.
 
2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL.  Each Grantor hereby
unconditionally grants, assigns and pledges to Secured Party a Security Interest
in all of such Grantor’s right, title and interest in and to the following,
whether now owned or hereafter acquired or arising and wherever located
(collectively, the “Patent Collateral”):
 
(a) all of its Patents including those referred to on Schedule I hereto; and
 
 
 
 

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(b) all Proceeds of the foregoing.
 
3. SECURITY FOR OBLIGATIONS.  This Patent Security Agreement and the Security
Interest created hereby secures the payment and performance of the Secured
Obligations, whether now existing or arising hereafter.  Without limiting the
generality of the foregoing, this Patent Security Agreement secures the payment
of all amounts which constitute part of the Secured Obligations and would be
owed by Grantors, or any of them, to Secured Party whether or not they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.
 
4. SECURITY AGREEMENT.  The Security Interest granted pursuant to this Patent
Security Agreement is granted in conjunction with the Security Interest granted
to Secured Party pursuant to the Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Secured Party with
respect to the Security Interest in the Patent Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.  To the extent there is any inconsistency between this Patent Security
Agreement and the Security Agreement, the Security Agreement shall control.
 
5. AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. Grantors shall give prompt (and in any event within fifteen (15)
Business Days) notice in writing to Secured Party with respect to any such new
patent rights.  Without limiting Grantors’ obligations under this Section 5,
Grantors hereby authorize Secured Party unilaterally to modify this Agreement by
amending Schedule I to include any such new patent rights of
Grantors.  Notwithstanding the foregoing, no failure to so modify this Patent
Security Agreement or amend Schedule I shall in any way affect, invalidate or
detract from Secured Party’s continuing Security Interest in all Collateral,
whether or not listed on Schedule I.
 
6. TERMINATION AND RELEASE.  Upon indefeasible payment in full in cash of the
Obligations in accordance with the provisions of the Note and the Purchase
Agreement, the Security Interest granted hereby shall terminate and all rights
to the Patent Collateral shall revert to Grantors or any other Person entitled
thereto.  At such time, Secured Party shall execute and deliver, and authorize
the filing of, appropriate termination and release statements or other documents
to terminate and release such Security Interests.
 
7. COUNTERPARTS.  This Patent Security Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.  In proving this Patent Security Agreement or any other Transaction
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought.  Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
 
 
 
 

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8. CONSTRUCTION.  Unless the context of this Patent Security Agreement or any
other Transaction Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms
“includes” and  “including” are not limiting, and the term “or” has, except
where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar
terms in this Patent Security Agreement or any other Transaction Document refer
to this Patent Security Agreement or such other Transaction Document, as the
case may be, as a whole and not to any particular provision of this Patent
Security Agreement or such other Transaction Document, as the case may
be.  Section, subsection, clause, schedule, and exhibit references herein are to
this Patent Security Agreement unless otherwise specified.  Any reference in
this Patent Security Agreement or in any other Transaction Document to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein or in the other Transaction Documents).  Any reference herein
or in any other Transaction Document to the satisfaction or repayment in full of
the Obligations shall mean the repayment in full in cash (or cash
collateralization in accordance with the terms hereof) of all Obligations other
than unasserted contingent indemnification Obligations.  Any reference herein to
any Person shall be construed to include such Person’s successors and
assigns.  Any requirement of a writing contained herein or in any other
Transaction Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
 
9. GOVERNING LAW.  THE VALIDITY OF THIS PATENT SECURITY AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER
TRANSACTION DOCUMENT IN RESPECT OF SUCH OTHER TRANSACTION DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
 

 
[signature page follows]
 

{M0104992.1 }130355.01002/21806358v.1
 
 
 

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IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
 

 
IMPLANT SCIENCES CORPORATION
         
By:           /s/ Glenn D. Bolduc                                           
 
Name:           Glenn D. Bolduc                                           
 
Title:           President                                           
         
C ACQUISITION CORP.
         
By:           /s/ Glenn D. Bolduc                                           
 
Name:           Glenn D. Bolduc                                           
 
Title:           President                                           
         
ACCUREL SYSTEMS INTERNATIONAL CORPORATION
         
By:           /s/ Glenn D. Bolduc                                           
 
Name:           Glenn D. Bolduc                                           
 
Title:           President                                           
         
IMX ACQUISITION CORP.
         
By:           /s/ Glenn D. Bolduc                                           
 
Name:           Glenn D. Bolduc                                           
 
Title:           President                                           
         
ACCEPTED AND ACKNOWLEDGED BY:
     
DMRJ GROUP, LLC, as Secured Party
         
By:           /s/ David
Levy                                                      
 
Name:           David Levy                                           
 
Title:           

{M0104992.1 }[SIGNATURE PAGE TO PATENT SECURITY AGREEMENT]
 
130355.01002/21806358v.1
 
 
 

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