Exhibit
10.76


 


SECURITY
AGREEMENT


 


This Security Agreement, made as of the 25th of
November, 2003 is entered into by and between Laurus Master Fund, Ltd.
(“Laurus”) and Implant Sciences Corporation, a Massachusetts company (the
“Company”) (the “Agreement”).


 


1.                                       To
secure the payment of all Obligations (as hereafter defined), the Company
hereby grants to Laurus a continuing security interest in all of the following
property now owned or at any time hereafter acquired by the Company, or in
which the Company now has or at any time in the future may acquire any right,
title or interest (the “Collateral”): 
all accounts (the “Accounts”), inventory, equipment, goods, documents,
instruments (including, without limitation, promissory notes), contract rights,
general intangibles (including, without limitation, payment intangibles),
chattel paper, supporting obligations, investment property, letter-of-credit
rights, trademarks and tradestyles in which the Company now has or hereafter
may acquire any right, title or interest, all proceeds and products thereof
(including, without limitation, proceeds of insurance) and all additions,
accessions and substitutions thereto or therefor.  Terms used in this paragraph which are defined in the Uniform
Commercial Code as enacted and in effect from time to time in the Commonwealth
of Massachusetts (the “Code”) are used herein as so defined in the Code.


 


2.                                       The
term “Obligations” as used herein shall mean and include all debts, liabilities
and obligations owing by the Company to Laurus and all loans, advances,
extensions of credit, endorsements, guaranties, benefits and/or financial
accommodations heretofore or hereafter made, granted or extended by Laurus to
the Company or which Laurus has or will become obligated to make, grant or extend
to us or for the Company’s account or any of its accounts and any and all
interest, charges and/or expenses heretofore or hereafter owing by the Company
to Laurus and any and all renewals or extensions of any of the foregoing, no
matter how or when arising, direct or indirect, absolute or contingent,
liquidated or unliquidated, and whether under any present or future agreement
or instruments between the Company, Laurus and any or all subsidiaries or
otherwise, including, without limitation, all obligations owing by the Company
to Laurus under the Securities Purchase Agreement of even date herewith and
related Series C Preferred Stock in the original Stated Value of $2,500,000 (as
amended, modified and supplemented from time to time, the “Preferred Stock”).


 


3.                                       The
Company hereby warrants and covenants to Laurus that:  (a) it is a corporation validly existing, in good standing and
formed under the laws of the Commonwealth of Massachusetts and it will provide
Laurus thirty days prior written notice of any change in its state of
formation; (b) it is the lawful owner of the Collateral, and has the sole right
to grant a security interest therein and will defend the Collateral against all
claims and demands of all persons and entities; (c) it will keep the Collateral
free and clear of all attachments, levies, taxes, liens, security interests and
encumbrances of every kind and nature, except for liens granted in favor of
Laurus, or those previously disclosed by the Company on the date hereof as
required by applicable securities law; (d) it will not without Laurus’ prior
written consent, sell, exchange or otherwise dispose of the Collateral or any
of the Company’s rights therein or permit any lien or security interest to
attach to same, except that created by this Agreement or sales of inventory or
the disposition of obsolete or worn out equipment in the ordinary course of
business or otherwise


 

















 


4.                                       sell
the Collateral in excess of $150,000, in the ordinary course of business ; (e)
it will allow Laurus and/or Laurus’ representatives free access to and the
right of inspection of the Company’s premises where the books and records
relating to the Collateral are located; and (f) it hereby indemnifies and saves
Laurus harmless from all loss, costs, damage, liability and/or expense,
including reasonable attorneys’ fees, that Laurus may sustain or incur to
enforce payment, performance or fulfillment of any of the Obligations or in the
enforcement of this Agreement or in the prosecution or defense of any action or
proceeding either against Laurus or the Company concerning any matter growing
out of or in connection with this Agreement and/or any of the Obligations
and/or any of the Collateral.


 


5.                                       Laurus
agrees to terminate the security interest in the Collateral upon the Company
tendering the final payment in satisfaction of the Obligations.  Laurus agrees to join with the Company in
executing termination statements and other instruments pursuant to the Code in
form satisfactory to the Company and in executing such other documents or
instruments as may be required or deemed necessary by the Company for purposes
of terminating the security interest in the Collateral.


 


6.                                       The
Company shall be in default under this Agreement upon the happening of any of
the following events or conditions (each, a “Default”):  (a) it shall fail to pay when due or
punctually perform any of the Obligations; (b) any covenant, warranty,
representation or statement made or furnished to Laurus by the Company or on
its behalf was false in any material respect when made or furnished and such
failure shall have a material adverse effect on the Company; (c) it shall fail
to comply with any term or provision set forth in this Agreement and such
failure (to the extent not covered by any other clause of this Section 5) shall
remain uncured for a period of two (2) business days after the date on which
Laurus notified the Company of such failure unless the Company can not remedy
such default within such time period; (d) a default shall occur under the
Preferred Stock or (e) default shall occur under any other document, instrument
or agreement between Laurus and the Company and/or security issued in
connection therewith, which such default is not cured within any applicable
cure or grace period.


 


7.                                       Upon
the occurrence of any Default and at any time thereafter, Laurus may declare
all Obligations immediately due and payable and Laurus shall have the remedies
of a secured party provided in the Code, this Agreement and other applicable
law.  Upon the occurrence of any Default
and at any time thereafter, Laurus will have the right to take possession of
the Collateral and to maintain such possession on our premises or to remove the
Collateral or any part thereof to such other premises as you may desire,
including, without limitation, the right to contact account debtors liable in
respect of the Accounts for the purpose of engaging in collection activities
with respect thereto.  Upon Laurus’
request, the Company shall assemble the Collateral and make it available to
Laurus at a place designated by Laurus. 
If any notification of intended disposition of any Collateral is
required by law, such notification, if mailed, shall be deemed properly and
reasonably given if mailed at least ten business days before such disposition,
postage prepaid, addressed to us either at our address shown herein or at any
address appearing on Laurus’ records for the Company.  Any proceeds of any disposition of any of the Collateral shall be
applied by Laurus to the payment of all expenses in connection with the sale of
the Collateral, including reasonable attorneys’ fees and other legal expenses
and disbursements and the reasonable expense of retaking, holding, preparing
for sale, selling, and 


 


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the like, and any balance of such proceeds may be
applied by Laurus toward the payment of the Obligations in such order of
application as Laurus may elect, and the Company shall be liable for any
deficiency.


 


8.                                       If
the Company defaults in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on our part to be
performed or fulfilled under or pursuant to this Agreement, Laurus may, at its
sole option without waiving its right to enforce this Agreement according to
its terms, immediately or at any time thereafter and without notice to the
Company, perform or fulfill the same or cause the performance or fulfillment of
the same for the Company’s account and at its sole cost and expense, and the
cost and expense thereof (including reasonable attorneys’ fees) shall be added
to the Obligations and shall be payable on demand with interest thereon at the
highest rate permitted by law.


 


9.                                       Upon
the occurrence of an Event of Default, the Company appoints Laurus, any of its
officers, employees or any other person or entity whom Laurus may designate as
the Company’s attorney, with power to execute such documents in its behalf and
to supply any omitted information and correct patent errors in any documents
executed by the Company or on its behalf; to file financing statements against
the Company covering the Collateral; to sign the Company’s name on public
records; and to do all other things Laurus deem necessary to carry out this
Agreement.  The Company hereby ratifies and
approves all acts of the attorney and neither Laurus nor the attorney will be
liable for any acts of commission or omission, nor for any error of judgment or
mistake of fact or law.  This power
being coupled with an interest, is irrevocable so long as any Obligations
remains unpaid.


 


10.                                 No
delay or failure on Laurus’ part in exercising any right, privilege or option
hereunder shall operate as a waiver of such or of any other right, privilege,
remedy or option, and no waiver whatever shall be valid unless in writing,
signed by Laurus and then only to the extent therein set forth, and no waiver
by Laurus of any default shall operate as a waiver of any other default or of
the same default on a future occasion. 
Laurus’ books and records containing entries with respect to the
Obligations shall be admissible in evidence in any action or proceeding, shall
be binding upon the Company for the purpose of establishing the items therein
set forth and shall constitute prima facie proof thereof.  Laurus shall have the right to enforce any
one or more of the remedies available to Laurus, successively, alternately or
concurrently.  The Company agrees to
join with Laurus in executing financing statements or other instruments pursuant
to the Code in form satisfactory to Laurus and in executing such other
documents or instruments as may be required or deemed necessary by Laurus for
purposes of affecting or continuing Laurus’ security interest in the
Collateral.


 


11.                                 This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York and cannot be terminated orally.  All of the rights, remedies, options, privileges and elections
given to Laurus hereunder shall enure to the benefit of its successors and
assigns.  The term “Laurus” as herein used
shall include Laurus, any parent of Laurus, any of Laurus’ subsidiaries and any
co-subsidiaries of its parent, whether now existing or hereafter created or
acquired, and all of the terms, conditions, promises, covenants, provisions and
warranties of this Agreement shall enure to the benefit of and shall bind the
representatives, successors and assigns of each of the Company and them.  Laurus and the Company hereby (a) waive any
and all right to trial by jury in litigation relating to this Agreement and the
Company 


 


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agrees not to assert any counterclaim in such
litigation, (b) submit to the nonexclusive jurisdiction of the state and
federal courts located in the State of New York and (c) waive any objection
Laurus or the Company may have as to the bringing or maintaining of such action
with any such court.


 


12.                                 All
notices and other communications hereunder shall be deemed given three (3)
business days after delivered or deposited in the mails, first class postage
prepaid (provided, however, that notices given by telegram, telex or telefax
shall be deemed given when dispatched by telegram, telex or telefax, as the
case may be) and if to (a) the Company addressed as set forth beneath the
Company’s name on the signature page unless the Company shall give notice in
writing of a different address or telefax number in the manner provided herein,
with a copy to Ellenoff Grossman and Schole LLP, 370 Lexington Avenue New York,
New York 10017 Attention: Barry I. Grossman, Esq. Facsimile number (212)
370-7889 and (b) Laurus, at the address set forth for Laurus on the last page
of this Agreement unless Laurus shall give the Company notice in writing of a
different address.


 


13.                                 No
amendment, modification, termination, or waiver of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
Laurus, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


14.                                 No
course of dealing between Laurus and the Company, nor any failure or delay on
Laurus’ part in exercising any right, power, or remedy under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power, or remedy preclude any other or further exercise thereof
or the exercise of any other right, power, or remedy under this Agreement.  The rights and remedies provided in this
Agreement and the Preferred Stock are cumulative, and are not exclusive of any
other rights, powers, privileges, or remedies, now or hereafter existing, at
law or in equity or otherwise.  The
Company hereby waives in favor of Laurus all suretyship defenses and waives
notice of (a) acceptance hereof and of all notices and demands of any kind to
which the Company may be entitled and (b) presentment to or demand of payment
from anyone whomsoever liable upon the Accounts or the Obligations, protest,
notices of presentment, non-payment or protest and notice of any sale of the
Collateral or any default of any sort. 
The Company further waives all of the Company’s rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which
any of the Company or Laurus may now or hereafter have against any party liable
for the Obligations.


 


15.                                 Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.  In no event
shall any payments hereunder (if deemed interest under applicable law or
regulation) exceed the maximum rate permitted under applicable law or
regulation.  If any provision of this
Agreement is in contravention of any such law or regulation, then such
provision shall be deemed amended to provide for interest at said maximum rate
and any excess amount shall be applied to the Obligations in such order as
Laurus shall elect.


 


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IN WITNESS WHEREOF the
parties hereto have executed and delivered this Security Agreement as of the
date first written above.


 


 


	
   

  	
  IMPLANT SCIENCES
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony J. Armini

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anthony J. Armini

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
  Address:

  	
  107 Audubon Road, #5

  	
   

  
	
   

  	
   

  	
   

  	
  Wakefield, Massachusetts 01880

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LAURUS MASTER FUND,
  LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Grin

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Grin

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:  c/o Ironshore Corporate Services, Ltd.

  
	
   

  	
  P.O. Box 1234 G.T.

  	
   

  
	
   

  	
  Queensgate House

  	
   

  
	
   

  	
  South Church Street

  	
   

  
	
   

  	
  Grand Cayman, Cayman
  Islands

  	
   

  
										



 


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[Security
Agreement Signature Page]


 


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