Exhibit 10.77


 


THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IMPLANT SCIENCES CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.


 


Right to Purchase 100,000 shares of Common Stock of
Implant Sciences Corporation (subject to adjustment as provided herein)


 


COMMON
STOCK PURCHASE WARRANT


 


	
  No. 2003-2

  	
   

  	
  Issue Date:  November 25, 2003

  



 


IMPLANT SCIENCES CORPORATION, a corporation organized
under the laws of the State of Massachusetts (the “Company”), hereby certifies
that, for value received, LAURUS MASTER FUND, LTD., or its assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company
from and after the Issue Date of this Warrant and at any time or from time to
time before 5:00 p.m., New York time, through five (5) years after such date
(the “Expiration
Date”), up to 100,000 fully paid and nonassessable shares of Common
Stock (as hereinafter defined), $0.10 par value per share, of the Company, at
the Purchase Price (as defined below). 
The number and character of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided herein.


 


As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:


 


(a)                                  The
term “Company” shall include Implant Sciences Corporation and any corporation
which shall succeed or assume the obligations of Implant Sciences Corporation
hereunder.


 


(b)                                 The
term “Common Stock” includes (a) the Company’s Common Stock, $.10 par value, as
authorized on the date of the Securities Purchase Agreement of even date
herewith between the Company and the Holder (the “Securities Purchase Agreement”)
and (b) any other securities into which or for which any of the securities
described in (a) or (b) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.


 


(c)                                  The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the Holder at any time shall be entitled to receive, or shall have received, on
the exercise of the Warrant, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.


 

















 


(ii)                                  The
term “Purchase Price” shall be as follows:


 


a.                                       50,000
shares at $8.44 per share; and


 


b.                                      50,000
shares at $10.13  per share.


 


1.                                       Exercise
of Warrant.


 


1.1.                              Number
of Shares Issuable upon Exercise. 
From and after the date hereof through and including the Expiration
Date, the Holder hereof shall be entitled to receive, upon exercise of this
Warrant in whole in accordance with the terms of subsection 1.2 or upon
exercise of this Warrant in part in accordance with subsection 1.3, shares of
Common Stock of the Company, subject to adjustment pursuant to Section 4.


 


1.2.                              Full
Exercise.  This Warrant may be
exercised in full by the Holder hereof by delivery of an original or fax copy
of the form of subscription attached as Exhibit A hereto (the “Subscription
Form”) duly executed by such Holder, to the Company at its principal
office or at the office of its warrant agent (as provided hereinafter),
accompanied by payment, in cash, wire transfer, or by certified or official
bank check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is then
exercisable by the Purchase Price (as hereinafter defined) then in effect.


 


1.3.                              Partial
Exercise.  This Warrant may be
exercised in part (but not for a fractional share) by surrender of this Warrant
in the manner and at the place provided in subsection 1.2 except that the
amount payable by the Holder on such partial exercise shall be the amount
obtained by multiplying (a) the number of shares of Common Stock designated by
the Holder in the Subscription Form by (b) the Purchase Price then in
effect.  On any such partial exercise,
the Company, at its expense, will forthwith issue and deliver to or upon the
order of the Holder hereof a new Warrant of like tenor, in the name of the Holder
hereof or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may request, the number of shares of Common Stock for which
such Warrant may still be exercised.


 


1.4.                              Fair
Market Value.  Fair Market Value of
a share of Common Stock as of a particular date (the “Determination Date”) shall
mean.


 


(a)                                  If
the Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”)
National Market or the NASDAQ SmallCap Market, then the closing or last sale
price, respectively, reported for the last business day immediately preceding
the Determination Date.


 


(b)                                 If
the Common Stock is not traded on an exchange or on the NASDAQ National Market
or the NASDAQ SmallCap Market but is traded on the NASD OTC Bulletin Board,
then the mean of the closing bid and asked prices reported for the last
business day immediately preceding the Determination Date.


 


(c)                                  Except
as provided in clause (d) below, if the Common Stock is not publicly traded,
then as the Holder and the Company agree or in the absence of agreement by


 


2

















 


arbitration in accordance with the rules then standing
of the American Arbitration Association, before a single arbitrator to be
chosen from a panel of persons qualified by education and training to pass on
the matter to be decided.


 


(d)                                 If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to
the Company’s charter, then all amounts to be payable per share to holders of
the Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination
Date.


 


1.5.                              Company
Acknowledgment.  The Company will,
at the time of the exercise of the Warrant, upon the request of the Holder
hereof acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant.  If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Holder any such rights.


 


1.6.                              Trustee
for Warrant Holder.  In the event
that a bank or trust company shall have been appointed as trustee for the
Holder pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or
such successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.


 


2.                                       Procedure
for Exercises.


 


2.1.                              Delivery
of Stock Certificates, etc. on Exercise. 
The Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder hereof as
the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such shares
as aforesaid.  As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
7 business days thereafter, the Company at its expense (including the payment
by it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
Securities Laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one
full share, together with any other stock or other securities and property
(including cash, where applicable) to which such Holder is entitled upon such
exercise pursuant to Section 1 or otherwise.


 


3

















 


2.2.                              Cashless
Exercise.


 


(a)                                  Payment
may be made either in (i) cash or by certified or official bank check payable
to the order of the Company equal to the applicable aggregate Purchase Price,
(ii) by delivery of the Warrant, Common Stock and/or Common Stock receivable
upon exercise of the Warrant in accordance with Section (b) below, or (iii) by
a combination of any of the foregoing methods, for the number of shares of
Common Stock specified in such form (as such exercise number shall be adjusted
to reflect any adjustment in the total number of shares of Common Stock
issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon
be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.


 


(b)                                 Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share of
Common Stock is greater than the Purchase Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed
Subscription Form in which event the Company shall issue to the Holder a number
of shares of Common Stock computed using the following formula:


 


	
  X

  	
  =

  	
  Y (A-B)

  
	
   

  	
   

  	
    A

  



 


	
  Where

  	
   

  	
  X =

  	
   

  	
  the number of shares of Common Stock to be issued to
  the Holder

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of shares of Common Stock purchasable
  under the Warrant or, if only a portion of the Warrant is being exercised,
  the portion of the Warrant being exercised (at the date of such calculation)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A =

  	
   

  	
  the Fair Market Value of one share of the Company’s
  Common Stock (at the date of such calculation)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B =

  	
   

  	
  Purchase Price (as adjusted to the date of such
  calculation)

  



 


3.                                       Adjustment
for Reorganization, Consolidation, Merger, etc.


 


3.1.                              Reorganization,
Consolidation, Merger, etc.  In case
at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or (c)
transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, as a condition to the consummation of such a
transaction, proper and adequate provision shall be made by the Company whereby
the Holder, on the exercise hereof as provided in Section 1 at any time after
the consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in lieu
of the Common Stock (or Other Securities) issuable on such exercise prior to
such consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder


 


4

















 


would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.


 


3.2.                              Continuation
of Terms.  Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable on the exercise of this Warrant after
the consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may be,
and shall be binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4.


 


4.                                       Extraordinary
Events Regarding Common Stock.  In
the event that the Company shall (a) issue additional shares of the Common Stock
as a dividend or other distribution on outstanding Common Stock, (b) subdivide
its outstanding shares of Common Stock, or (c) combine its outstanding shares
of the Common Stock into a smaller number of shares of the Common Stock, then,
in each such event, the Purchase Price shall, simultaneously with the happening
of such event, be adjusted by multiplying the then Purchase Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event, and the product so obtained shall thereafter be the Purchase Price then
in effect.  The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4.  The number of shares of Common Stock that
the Holder shall thereafter, on the exercise hereof as provided in Section 1,
be entitled to receive shall be increased to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Purchase Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Purchase Price in effect on the date of such exercise.


 


5.                                       Certificate
as to Adjustments.  In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrant, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee
to compute such adjustment or readjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Purchase Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant.  The Company will forthwith
mail a copy of each such certificate to the Holder and any Warrant agent of the
Company (appointed pursuant to Section 11 hereof).


 


5

















 


6.                                       Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.  The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrant, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant. 
This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to
the holders of the Common Stock.


 


7.                                       Assignment;
Exchange of Warrant.  Subject to
compliance with applicable Securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered Holder hereof (a “Transferor”)
with respect to any or all of the shares of Common Stock.  On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
Securities Laws, the Company at its expense but with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor.


 


8.                                       No
Rights as Shareholders.  This
Warrant does not entitle the Holder hereof to any voting rights or other rights
as a shareholder of the Company prior to exercise hereof.


 


9.                                       Transferability;
Compliance with Securities Laws.


 


a.                                       The
Holder is experienced in evaluating companies such as the Company, is able to
fend for itself in transactions such as the one contemplated by this Warrant,
has such knowledge and experience in financial and business matters that the
Holder is capable of evaluating the merits and risks of an investment in the
Company, and has the ability to bear the economic risks of the investment.


 


b.                                      The
Holder is acquiring this Warrant and upon exercise the shares of Common Stock
for investment for such Holder’s own account and not with the view to, or for
resale in connection with, any distribution thereof.  The Holder understands that this Warrant (and the Common Stock
issuable upon exercise hereof) have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein.  The Holder does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to any third person with respect to the
Warrant (or any Common Stock issuable upon exercise hereof).  The Holder understands and acknowledges that
the offering of the Warrant and the Common Stock issuable upon exercise of this
Warrant will not be registered under the Securities Act on the ground that the
sale provided for in this Warrant and the issuance of securities hereunder is
exempt from the registration requirements of the Securities Act.


 


6

















 


c.                                       The
Holder acknowledges that the Warrant (and the Common Stock issuable upon
exercise of this Warrant) must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available.  The Holder is aware of Rule
144 promulgated under the Securities Act which permits limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions.  In the absence of
an effective registration statement covering the securities in question, the
Holder may sell, transfer, or otherwise dispose of the Warrant (and any Common
Stock issued on exercise hereof) only in a manner consistent with the terms
hereof and the Holder’s representations and warranties herein.  In connection therewith, the Holder
acknowledges that the Company will make a notation on its stock books regarding
the restrictions on transfer set forth in this Section 9 and will transfer
securities on the books of the Company only to the extent not inconsistent
therewith.


 


d.                                      The
Holder has received and reviewed information about the Company and has had an
opportunity to discuss the Company’s business, management and financial affairs
with its management and to review the Company’s facilities.  The Holder understands that such
discussions, as well as any written information issued by the Company, were
intended to describe the aspects of the Company’s business and prospects which
the Company believes to be material, but were not necessarily a thorough or
exhaustive description.


 


e.                                       The
Holder acknowledges that it  is an
“accredited investor” as defined in Rule 501 of the Regulation D as promulgated
by the Securities and Exchange Commission under the Securities Act and shall
submit to the Company such further assurances of such status as may be
reasonably requested by the Company. 
For state securities law purposes, the Holder is a resident of the
Cayman Islands.


 


f.                                         This
Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and transferee (including the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if requested
by the Company).  Subject to such
restrictions, prior to the Expiration Time, this Warrant and all rights
hereunder are transferable by the Holder hereof, in whole or in part, at the
office or agency of the Company referred to in Section 1 hereof.  Any such transfer shall be made in person or
by the Holder’s duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form attached hereto properly endorsed.


 


g.                                      This
Warrant may not be exercised except by an “accredited investor” as defined in
Rule 501(a) under the Securities Act of 1933, as amended, who makes the representations
and warranties to the Company as set forth on the notice of exercise attached
hereto.  Each certificate representing
the Common Stock or other securities issued in respect of the Common Stock upon
any stock split, stock dividend, recapitalization, merger, consolidation or
similar event, shall be stamped or otherwise imprinted with a legend
substantially in the following form ( in addition to any legend required under
applicable securities laws):


 


7

















 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IF
APPLICABLE, STATE SECURITIES LAWS. 
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT
AND APPLICABLE STATE LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM,
SUCH COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED


 


10.                                 Replacement
of Warrant.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of this Warrant, the Company
at its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.


 


11.                                 Registration
Rights.  The Holder of this Warrant
has been granted certain registration rights by the Company.  These registration rights are set forth in a
Securities Purchase Agreement.


 


12.                                 Maximum
Exercise.  The Holder shall not be
entitled to exercise this Warrant on an exercise date, in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common Stock
issuable upon the exercise of this Warrant with respect to which the
determination of this proviso is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Company on such
date.  For the purposes of the proviso
to the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. 
Subject to the foregoing, the Holder shall not be limited to aggregate
exercises which would result in the issuance of more than 4.99%.  The restriction described in this paragraph
may be revoked upon 75 days prior notice from the Holder to the Company and is
automatically null and void upon an Event of Default (as defined in the
Certificate of Vote of Directors Establishing a Class or Series of Stock).


 


13.                                 Warrant
Agent.  The Company may, by written
notice to the Holder, appoint an agent for the purpose of issuing Common Stock
(or Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.


 


14.                                 Transfer
on the Company’s Books.  Until this
Warrant is transferred on the books of the Company, the Company may treat the
registered Holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.


 


8

















 


15.                                 Notices,
etc.  All notices and other
communications from the Company to the Holder shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the last
Holder who has so furnished an address to the Company.


 


16.                                 Voluntary
Adjustment by the Company.  The
Company may at any time during the term of this Warrant reduce the then current
Purchase Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.


 


17.                                 Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.  This Warrant
shall be governed by and construed in accordance with the laws of State of New
York without regard to principles of conflicts of laws.  Any action brought concerning the
transactions contemplated by this Warrant shall be brought only in the state
courts of New York or in the federal courts located in the state of New York;
provided, however that the Holder may choose to waive this provision and bring
an action outside the state of New York. 
The individuals executing this Warrant on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant.  The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision. 
The Company acknowledges that legal counsel participated in the
preparation of this Warrant and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.


 


 


[THIS SPACE INTENTIONALLY
LEFT BLANK]


 


9

















 


IN WITNESS WHEREOF, the Company has executed this
Warrant under seal as of the date first written above.


 


 


	
   

  	
  IMPLANT SCIENCES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/Anthony J. Armini

  	
   

  
	
   

  	
  Name:  Anthony J. Armini

  
	
   

  	
  Title:  President

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Diane J. Ryan

  	
   

  	
   

  
					



 


10

















 


Exhibit A


 


FORM OF SUBSCRIPTION


(To be signed only on
exercise of Warrant)


 


TO:  Implant Sciences
Corporation


 


The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.        ), hereby
irrevocably elects to purchase (check applicable box):


 


o                                                   
shares of the Common Stock covered by such Warrant; or


 


o                                    the
maximum number of shares of Common Stock covered by such Warrant pursuant to
the cashless exercise procedure set forth in Section 2.


 


The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant, which is
$                .  Such payment takes the form of (check
applicable box or boxes):


 


o                                    $              
in lawful money of the United States; and/or


 


o                                    the
cancellation of such portion of the attached Warrant as is exercisable for a
total of            shares of
Common Stock (using a Fair Market Value of
$           per share for
purposes of this calculation); and/or


 


o                                    the
cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchaseable
pursuant to the cashless exercise procedure set forth in Section 2.


 


The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to
                             
whose address is
                                                                                                               .


 


In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon exercise hereof
are being acquired solely for the account of the undersigned and not as a
nominee for any other party, and for investment, and that the undersigned will
not offer, sell or otherwise dispose of any such shares of Common Stock except
under the circumstances that will not result in a violation of the Securities
Act of 1933, ad amended or any state securities laws.


 


Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:


 


	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  



 


11

















 


The undersigned represents that (a) he, she or it is an “accredited
investor” within the meaning of Rule 501(a) under the Securities Act of 1933,
as amended, and hereby ratifies and confirms as of the date hereof those
representations and warranties made by the undersigned in the securities
purchase agreement entered into by the undersigned at the time of the
undersigned’s purchase of the Warrant from the Company and (b) the aforesaid
shares of Common Stock are being acquired for the account of the undersigned
for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform to name of Holder as

  specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Address)

  



 


12

















 


Exhibit
B


 


FORM OF TRANSFEROR
ENDORSEMENT


(To be signed only on
transfer of Warrant)


 


For value received, the undersigned hereby sells,
assigns, and transfers unto the person(s) named below under the heading
“Transferees” the right represented by the within Warrant to purchase the
percentage and number of shares of Common Stock of Implant Sciences Corporation
to which the within Warrant relates specified under the headings “Percentage
Transferred” and “Number Transferred,” respectively, opposite the name(s) of
such person(s) and appoints each such person Attorney to transfer its
respective right on the books of Implant Sciences Corporation with full power
of substitution in the premises.


 


	
  Transferees

  	
   

  	
  Percentage
  Transferred

  	
   

  	
  Number
  Transferred

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that the
Assignee will not offer, sell or otherwise dispose of this Warrant or any
shares of Common Stock to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.  Further, the Assignee shall, if requested by the Company, confirm
in writing, in a form satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired for investment and not with a view toward
distribution or resale.


 


	
  Dated:

  	
   

  	
   

  	
  ,

  	
  200

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform to name of Holder as

  specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
  Signed in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  
	
  [TRANSFEREE]

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  



 


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