Exhibit 10.5

GUARANTY

This GUARANTY (the “Guaranty”), dated as of March 19, 2014, is executed and
delivered by C ACQUISITION CORP., a Delaware corporation (“C Acquisition”),
ACCUREL SYSTEMS INTERNATIONAL CORPORATION, a California corporation (“Accurel”),
and IMX ACQUISITION CORP., a Delaware corporation (“IMX” and together with C
Acquisition and Accurel, each a “Guarantor” and collectively, “Guarantors”) in
favor of BAM ADMINISTRATIVE SERVICES LLC, in its capacity as agent for the
Investors under the Purchase Agreement (as defined below) and as Secured Party
under the Security Agreement (as defined below) (in such capacities, and
together with its successors, transferees and assigns, the “Secured Party”).

 

W I T N E S S E T H:

WHEREAS, each Guarantor is a wholly owned subsidiary of Implant Sciences
Corporation (the “Borrower”); and

WHEREAS, the Borrower is party to that certain Note Purchase Agreement dated as
of the date hereof (as may be amended and restated, supplemented, replaced, or
otherwise modified from time to time, the “Purchase Agreement”) by and between
Borrower, the investors thereto (collectively, the “Investors” and each,
individually, an “Investor”) and the Secured Party, as agent for the Investors,
pursuant to which the Investors agreed to extend loans to the Borrower in the
principal amount of up to $20,000,000 (the “Loans”), repayment of which is
evidenced by certain Senior Secured Promissory Notes dated the date hereof
issued to each Investor (the “Notes”), and

WHEREAS, in order to induce the Secured Party and the Investors to enter into
the Purchase Agreement and other Transaction Documents (as defined in the
Purchase Agreement) and to induce the Investors to extend the Purchase
Agreement, each Guarantor  has agreed jointly and severally guarantee the
Guarantied Obligations (as defined below) and execute and deliver this Guaranty;
and

WHEREAS, the Loans will be beneficial to the Guarantors inasmuch as the proceeds
of the Loans to the Borrower will indirectly benefit the Guarantors.

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Guarantors, Each Guarantor hereby agree as follows:

1.

Guaranty of Payment and Performance.  Each Guarantor hereby jointly and
severally, irrevocably and unconditionally guarantees to the Secured Party and
the Investors the full and punctual payment when due (whether at maturity,
pursuant to a mandatory prepayment requirement, by acceleration or otherwise and
whether for principal, interest (including all

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interest that accrues after the commencement of any Insolvency Proceeding (as
defined in the Security Agreement) irrespective of whether a claim therefor is
allowed in such case or proceeding), fees, expenses or otherwise), and the
performance, of all liabilities, agreements and other obligations of the
Borrower to the Secured Party and the Investors, in each case, whether direct or
indirect, absolute or contingent, due or to become due, secured or unsecured,
now existing or hereafter arising or acquired (whether by way of discount,
letter of credit, lease, loan, overdraft or otherwise), including without
limitation all Obligations (as defined in the Security Agreement) and any other
obligations under the Purchase Agreement, the Notes and other Transaction
Documents (collectively, the “Guarantied Obligations”).  This Guaranty is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance of the Guarantied Obligations and not of their collectability
only and is in no way conditioned upon any requirement that the Secured Party or
the Investors first attempt to collect any of the Guarantied Obligations from
the Borrower or resort to any security or other means of obtaining payment of
the Guarantied Obligations.  Should the Borrower default in the payment or
performance of any of the Guarantied Obligations, the obligations of the
Guarantor hereunder shall become immediately due and payable to the Secured
Party and the Investors, without demand or notice of any nature, all of which
are expressly waived by the Guarantors.  Payments by the Guarantors hereunder
may be required by the Secured Party or the Investors on any number of
occasions.

2.

Guarantors’ Agreement to Pay.  Each Guarantor further agrees, as the principal
obligor and not as a guarantor only, to pay to the Secured Party and the
Investors, on demand, all costs and expenses (including court costs and
reasonable legal expenses) incurred or expended by the Secured Party or any
Investor in connection with enforcement of this Guaranty, together with interest
on amounts recoverable under this Guaranty from the time such amounts become due
under this Guaranty until payment, at the rate per annum equal to the default
rate set forth in the Notes; provided that if such interest exceeds the maximum
amount permitted to be paid under applicable law, then such interest shall be
reduced to such maximum permitted amount.

3.

Unlimited Guaranty; Covenant.  The liability of each Guarantor hereunder shall
be unlimited to the extent of the Guarantied Obligations and the other
obligations of the Guarantors hereunder (including, without limitation, under
Section 2 above).

4.

Waivers by Guarantors; Secured Party’s Freedom to Act.  Each Guarantor agrees
that the Guarantied Obligations will be paid and performed strictly in
accordance with their terms regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Secured Party or the Investors with respect thereto.  Each
Guarantor waives presentment, demand, protest, notice of acceptance, notice of
Guarantied Obligations incurred and all other notices of any kind, all defenses
which may be available to the Borrower by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshalling of assets of the Borrower, and all suretyship defenses
generally. Without limiting the generality of the foregoing, each Guarantor
agrees to the provisions of any instrument evidencing, securing or otherwise
executed in connection with any Guarantied Obligation and agrees that the
obligations of each Guarantor hereunder shall not be released or discharged, in
whole or in part, or otherwise affected by () the failure of the Secured Party
or any Investor to assert any claim or demand or to enforce any right or remedy
against the Borrower; () any extensions, renewals, increases, restatements,

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replacements, settlements or compromises of any Guarantied Obligation; () any
rescissions, forbearances, waivers, amendments or modifications of any of the
terms or provisions of any agreement evidencing, securing or otherwise executed
in connection with any Guarantied Obligation; () the substitution or release of
any entity primarily or secondarily liable for any Guarantied Obligation or of
any property or asset subject to a Lien in favor of the Secured Party or any
Investor; () the adequacy of any rights the Secured Party or any Investor may
have against any collateral or other means of obtaining repayment of the
Guarantied Obligations; () the impairment of any collateral securing the
Guarantied Obligations, including without limitation the failure to perfect or
preserve any rights the Secured Party or any Investor might have in such
collateral or the substitution, exchange, surrender, release, loss or
destruction of any such collateral; or () any other act or omission which might
in any manner or to any extent vary the risk of such Guarantor or otherwise
operate as a release or discharge of Borrower or any other guarantor, all of
which may be done without notice to such Guarantor.

5.

Unenforceability of Obligations Against Borrower.  If for any reason the
Borrower has no legal existence or is under no legal obligation to discharge any
of the Guarantied Obligations, or if any of the Guarantied Obligations have
become irrecoverable from the Borrower by operation of law or for any other
reason, this Guaranty shall nevertheless be binding on each Guarantor to the
same extent as if such Guarantor at all times had been the principal obligor on
all such Guarantied Obligations. In the event that acceleration of the time for
payment of the Guarantied Obligations is stayed upon the insolvency, bankruptcy
or reorganization of the Borrower, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of any agreement evidencing,
securing or otherwise executed in connection with any Obligation shall be
immediately due and payable by the Guarantors.

6.

Subrogation; Subordination.  Until the payment and performance in full of all
Guarantied Obligations, no Guarantor shall exercise any rights against the
Borrower arising as a result of payment by such Guarantor hereunder, by way of
subrogation or otherwise, (the Secured Party having no duty or obligation to
take any action at any time to protect or preserve any right of subrogation) and
will not prove any claim in competition with the Secured Party or any Investor
in respect of any payment hereunder in bankruptcy or insolvency proceedings of
any nature; no Guarantor will claim any set-off or counterclaim against the
Borrower in respect of any liability of such Guarantor to the Borrower; and each
Guarantor  waives any benefit of and any right to participate in any collateral
which may be held by the Secured Party.  The payment of any amounts due with
respect to any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the prior payment in full of the Guarantied
Obligations.  Each Guarantor agrees that after the occurrence of any default in
the payment or performance of the Guarantied Obligations, after the expiration
of any applicable grace period, if any, it will not demand, sue for or otherwise
attempt to collect after such time any such indebtedness of the Borrower to such
Guarantor until the Guarantied Obligations shall have been paid in full. If,
notwithstanding the foregoing sentence, any Guarantor shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Guarantor as trustee for the Secured
Party and the Investors and be paid over to the Secured Party on account of the
Guarantied Obligations without affecting in any manner the liability of the
Guarantors under the other provisions of this Guaranty.

7.

Further Assurances.  Each Guarantor agrees to do all such things and execute all

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such documents, as the Secured Party may consider reasonably necessary or
desirable to give full effect to this Guaranty and to perfect and preserve the
rights and powers of the Secured Party hereunder.

8.

Termination; Reinstatement.  This Guaranty shall remain in full force and effect
until the Guarantied Obligations are paid in full and not subject to any
recapture or preference in bankruptcy or similar proceedings.  This Guaranty
shall continue to be effective or be reinstated if at any time any payment made
or value received with respect to an Obligation is rescinded or must otherwise
be returned by the Secured Party or any Investor upon the insolvency, bankruptcy
or reorganization of the Borrower, or otherwise, all as though such payment had
not been made or value received.

9.

Successors and Assigns.  This Guaranty shall be jointly and severally binding
upon each Guarantor, its respective successors and assigns, and shall inure to
the benefit of and be enforceable by the Secured Party, the Investors, and their
respective successors, transferees and assigns.  The Secured Party may assign or
otherwise transfer any agreement or any note held by it evidencing, securing or
otherwise executed in connection with the Guarantied Obligations, or sell
participations in any interest therein, to any other person or entity, and such
other person or entity shall thereupon become vested, to the extent set forth in
the agreement evidencing such assignment, transfer or participation, with all
the rights in respect thereof granted to the Secured Party or an Investor
herein.

10.

Amendments and Waivers.  No amendment or waiver of any provision of this
Guaranty or consent to any departure by any Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Secured Party.
 No failure on the part of the Secured Party or an Investor to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.

11.

Notices.  All notices and other communications called for hereunder shall be
made in writing and, unless otherwise specifically provided herein, shall be
deemed to have been duly made or given when delivered by hand or mailed first
class mail postage prepaid or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to the
Guarantors, at the address set forth in the Purchase Agreement for the Borrower,
and if to the Secured Party or an Investor, at the address set forth in the
Purchase Agreement.

12.

Governing Law; Consent to Jurisdiction.  This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York without
reference to its conflicts of laws provisions. Each Guarantor agrees that any
suit for the enforcement of this Guaranty may be brought in the courts of the
State of New York or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in any such
suit being made upon such Guarantor by mail at the address specified in Section
11 hereof.  Each Guarantor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
was brought in an inconvenient court.  Any enforcement action relating to this
Guaranty may be brought by motion for summary judgment in lieu of a complaint
pursuant to Section 3213 of the New York Civil Practice Law

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and Rules.

13.

WAIVER OF JURY TRIAL.  EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THIS GUARANTY,
THE SECURED PARTY, HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF: (A) THIS GUARANTY OR ANY
OTHER INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH THE OBLIGATIONS;
(B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF; OR (C) ANY
OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN ANY GUARANTOR AND THE SECURED
PARTY.

14.

Certain References.  All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person, persons, entity or entities may require.  The terms “herein”,
“hereof” or “hereunder” or similar terms used in this Guaranty refer to this
entire Guaranty and not only to the particular provision in which the term is
used.  Capitalized Terms used but not defined herein shall have the meaning
ascribed to such terms in the Purchase Agreement.

15.

Miscellaneous.  This Guaranty, together with the Security Agreement executed and
delivered by the Guarantors as of the date hereof to the Secured Party (the
“Security Agreement”), constitutes the entire agreement of the Guarantors with
respect to the matters set forth herein.  The rights and remedies herein
provided are cumulative and not exclusive of any remedies provided by law or any
other agreement, and this Guaranty shall be in addition to any other guaranty of
the  Guarantied Obligations.  The invalidity or unenforceability of any one or
more sections of this Guaranty shall not affect the validity or enforceability
of its remaining provisions. Captions are for the ease of reference only and
shall not affect the meaning of the relevant provisions.  The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural, masculine, feminine and generic forms of the terms defined.  

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and
delivered as of the date appearing in the introductory paragraph of this
Guaranty.

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

 

 

 

 

 

 

 

 

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