Exhibit 10.10


    Exhibit
      10.10

     

    AUTHORIZED
      DISTRIBUTOR AGREEMENT

    


    This
      Authorized Distributor Agreement (the "Agreement") is entered into this 14th
      day
      of July 2005 (the "Effective Date"), by and between Implant Sciences Corporation
      (the "Company" or "Implant") having its principle place of business at 10
      Audubon Road, #5, Wakefield, MA 01880, and Homeland Integrated Security System,
      Inc. (the "Distributor"), having its principle place of business at I Town
      Square Boulevard, Suite 347, Asheville, NC 28803.

    


    IN
      CONSIDERATION of the following mutual terms, covenants and condition, the
      parties agree as follows:

    


    1.
      Products.

    


    "Products"
      shall mean those products manufactured and/or sold by Implant which are listed
      in Schedule I attached hereto. The Products are subject, at any time and a
      Implant's sole discretion, to deletion, modification or change in design or
      specification The inclusion of any future products of Implant hereunder is
      subject to Implant's sol discretion.

    


    2.
      Appointment of Distributor; Territory.

    


    2.1
      Appointment. Implant hereby appoints Distributor, and Distributor doe hereby
      accept such appointment, as its exclusive authorized distributor of the Products
      in the Territory (as defined by Section 2.2 below). For so long as Distributor
      performs it obligations hereunder, Implant shall not appoint any other
      distributor to sell the Product in the Territory.

    


    2.2
      Territory. Distributor shall sell, market, and distribute the Products in the
      geographic locations set forth in Schedule 2.2 (the "Territory"). In no event
      shall Distributor sell, market or distribute the Products outside the Territory
      without the prior express written consent of Implant.

    


    2.3
      Channels of Distribution. Distributor shall use its best efforts to sell,
      market, and distribute the Products to all end-users in the medical services
      market located in the Territory.

    


    2.4
      Good
      Standing Compliance. Distributor is a corporate entity duly organized and in
      good standing, and will remain in compliance with all applicable laws in the
      Territory.

    


    2.5
      Preexisting Organization. Distributor represents that it has, prior to entering
      this Agreement, substantial financial, marketing and other resources and a
      sales
      organization and market knowledge sufficient to effectively and successfully
      distribute the Products. Distributor will provide to Implant such reasonable
      financial and other information regarding Distributor as Implant may reasonably
      request, to support its qualifications to represent Implant as a
      distributor.

    


    2.6
      Direct Sales. Distributor acknowledges that Implant maintains the right and
      option to sell the Products directly or through its distributor organization,
      at
      its discretion. If Distributor is not in default of the terms or conditions
      of
      this Agreement or the Agreement has not been terminated in accordance with
      Section 9.3, in the event t at Implant, with the consent of Distributor, which
      consent will be timely given and not unreasonably withheld, should make any
      sales directly to customers in the Territory , Implant will compensate
      Distributor at a rate equal to the commission rate of 10% of et Collected Sales
      (price collected by Implant for the sale of Products in the Territory less
      freight, taxes, insurance, installation costs, discounts, rebates, refunds
      and
      returns), excluding OEM sales.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    


    3.
      Obligations of Distributor.

    


    3.1
      Advertising and Sales Efforts. Exclusivity. Distributor shall maintain active
      sales organization capable of the solicitation of sales of the Products in
      t e
      Territory. Distributor shall use all reasonable and customary methods of selling
      t Products in the Territory, including, without limitation, direct customer
      contact, trade shows, direct mail campaigns and the publication and distribution
      of all necessary advertising and promotional materials. Implant must approve
      all
      advertising a d promotional materials prior to release. Distributor must display
      the Implant authorized distributor logo on all advertising of the Products,
      at
      all trade shows where Products e shown and in an catalogs where Products are
      listed. Distributor must comply with e provisions of Section 4.1 to maintain
      its
      exclusivity.

    


    3.1.1
      Distributor recognizes that in order for it to satisfy its exclusive
      distribution and sales efforts obligations hereunder it is not possible to
      promote and s 11 products which compete with those of Implant. In partial
      consideration of Implant's grant of the distributorship hereunder, Distributor
      agrees to advise Implant in advance f any undertaking to represent, distribute,
      or otherwise handle competitive products of t e type, size and capability of
      the
      Products. Distributor acknowledges and agrees t Implant may at its option elect
      to terminate this Agreement under Section 9.3.2 in t e event Distributor
      represents, distributes or otherwise handles any such competitive
      products.

    


    3.1.2
      Distributor further recognizes that in order to satisfy its sales efforts
      obligations throughout the Territory it is not possible to promote and sell
      outside of the Territory, and the parties acknowledge that as partial
      consideration of Implant s grant of the distributorship hereunder, Distributor
      agrees not to promote, supply or s II Products which it knows, or has reason
      to
      believe, are intended for delivery or resale outside of the
      Territory.

    


    3.2
      Sales
      Reports. Distributor shall furnish Implant within 30 days of the end f each
      calendar quarter, a report in a format provided by Implant relating to sales
      f
      Product by type and by ZIP Code, where applicable, for such calendar quarter.
      Distributor shall keep Implant informed as to the general business conditions
      a
      activities in the Territory.

    


    3.3
      Insurance. Distributor shall maintain adequate insurance against all types
      of
      public liability, in such amounts and with such insurance companies as is
      customary in accordance with sound business practices, including general
      liability coverage f $1,000,000. Distributor shall upon the request of Implant
      furnish certificates of such insurance.

    


    3.4
      Compliance With Law. Distributor shall comply with all applicable laws a d
      regulations relating to the sale and distribution of the Products and the
      performance of Distributor's duties and obligations hereunder, including without
      limitation, 11 regulations as set forth by the applicable regulatory bodies
      within the Territory a d having any jurisdiction over the Territory, if
      applicable, including all import/export regulations and licensing, applicable
      record keeping and reporting requirements.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    


    3.5
      Training. Distributor shall be solely responsible for the training of its
      customers at the time of sale and after sale, on the proper use and recommend
      d
      maintenance of the Products. A designated number of Distributor's sales
      personnel shall complete the Implant Training Course as provided in Section
      5.4
      below. Distributor shall be solely responsible for its and its employees'
      expenses in connection with the Implant Training Course and such
      activities.

    


    3.6
      Service. Unless Distributor is also an Implant authorized service center, it
      shall direct all end-user inquiries regarding service to an Implant authorized
      service center. Notwithstanding, Distributor shall perform all first response
      service a d troubleshooting. Company shall provide a one (I) year, full parts
      and labor, return 0 factory warranty on Products (the "Warranty Period") and
      in
      accordance with t e warranty provisions set forth in Section 8. At the end
      of
      the Warranty Period, Company shall make available to Distributor a standard
      Service and Maintenance Contract :fl r ongoing maintenance and service
      requirements of the Products.

    


    3.7
      Inventory. Distributor shall maintain an adequate inventory of Products a d
      recommended spare or replacement parts to adequately service end-users in the
      Territory.

    


    3.8
      Financial Information. Distributor shall provide to Implant, on reasonable
      notice, such financial information regarding Distributor as Implant may
      reasonably request, including, but not limited to, any updates on the
      information originally submitted by Distributor in connection with its request
      to become a Implant authorized distributor.

    


    3.9
      Documentation. Distributor shall deliver to its customers along with Products,
      all documentation supplied by Implant with such Products.

    


    3.10
      Reputation. Distributor shall, at all times, conduct its business in a manner
      0
      as to promote and maintain the goodwill and reputation of Implant and the
      Product .

    Distributor
      shall bring to the notice of Implant any information received which is likely
      0
      be of use to Implant in marketing the Products.

    


    4.
      Purchase and Sale of the Products.

    


    4.1
      Sales
      Forecast. During the term of this Agreement, Distributor shall purchase from
      Implant the minimum annual amount of Products set forth on Schedule 4.
      Distributor acknowledges and agrees that the failure of Distributor to purchase
      t e amount of Products set forth on Schedule 4.1, subject to any adjustment
      required y Section 5.5 below, shall constitute grounds for the early termination
      of the Agreement y Implant as provided in Section 9.3.2 below. Distributor
      and
      Implant shall revise Schedule 4.1 on any renewal of this Agreement, but in
      no
      event will the new Schedule 4.1 amount be less that the initial Schedule 4.1
      amount increased 5% per year from t e Effective Date. Distributor further agrees
      that payments on amounts purchased as s t forth herein will be made in
      accordance with the provisions of Section 4.4 below.

    


    4.2
      Delivery and Taxes. Delivery of the Products purchased hereunder shall be made
      F.O.B. Implant's facilities, Wakefield, Massachusetts. Implant shall have the
      right to make partial shipments and each partial shipment shall be deemed a
      separate sale. Distributor shall take title to the Products upon such delivery
      and all risks of loss or damage and expenses shall thereafter rest upon
      Distributor including, without limitation, all risks and expenses incurred
      in
      the storage, cartage and transportation of the Products as well as all
      insurance, fees, charges and taxes, and all other charges and expenses of any
      nature thereafter incurred with respect to the Products. Distributor shall
      have
      0 right of return regarding any shipments of Products except for returns made
      in
      connect' on with Implant's standard warranty policies.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    


    4.3
      Price. The prices which Distributor shall pay for the Products shall be as
      specified on Implant's price list in effect from time to time less a discount
      as
      set forth n Schedule 4.3. Distributor acknowledges and agrees that Implant,
      in
      its sole discretion, shall have the right to change any of the prices on at
      least 30 days' advance written notice to Distributor. All shipments resulting
      from purchase orders accepted by Implant on or after the effective date of
      any
      such change shall be at the new price. Implant shall a so have the right to
      change any volume discount pricing schedule on 30 days' advance written notice
      to Distributor. Under unusual circumstances and in order to meet a specific
      competitive price, Implant may deviate from the price list for Products then
      in
      effect pursuant to the Implant policies then in effect.

    


    4.4
      Terms
      of Payment. Payment for shipments of Products purchased hereunder shall be
      in
      accordance with Implant's standard sales terms and conditions as may from time
      to time be supplied by Implant to Distributor, including payment of thirty
      percent (30%) of the gross sales amount at the time the order is placed with
      the
      balance due in advance of shipment. All payments are to be in US Dollars and
      are
      to be transacted via wire transfer or letter of credit acceptable to Implant.
      Distributor acknowledges t at noncompliance by Distributor with Terms of Payment
      is a material breach of t is Agreement. Implant will give Notice to Distributor
      of a Breach and Distributor will ha e five (5) business days after Notice to
      cure this breach.

    


    4.5
      Demonstration Units. Distributor agrees to purchase up to five (5) units oft
      e
      Quantum Sniffer, Model QS-HIOO (the "Demonstration Units") during the Term,
      as
      further described in this Agreement, at a purchase price equal to seventy
      percent (70%) of the Manufacturers Suggested Retail Price (the "MSRP") then
      in
      effect. Payment or shipments of the Demonstration Units shall be in accordance
      with the terms set forth in Section 4.4.

    


    4.6
      Governing Terms. In the event of any dispute between the terms of this Agreement
      and the terms of any purchase order, confirmation or invoice, the terms of
      t is
      Agreement shall govern.

    


    5.
      Obligations of Implant.

    


    5.1
      Delivery of Products. Implant agrees to manufacture and deliver, or cause 0
      be
      manufactured and delivered, in a timely manner, the standard Products purchased
      y Distributor hereunder.

    


    5.2
      Sales
      Literature~ Implant agrees to provide at no cost to Distributor such quantities
      of specification sheets, catalogs and other printed sales materials relating
      to
      e Products as shall be reasonably requested by Distributor.

    


    5.3
      Marketing Assistance. Implant agrees to provide such further marketing a d
      sales
      assistance as Implant, in its sole discretion, may deem necessary to facilitate
      t e marketing of the Products by Distributor in the Territory.

    


    5.4
      Training. Implant agrees to provide training for employees of Distributor t
      Implant's Wakefield, Massachusetts facility concerning the use, application,
      sale, a d distribution of the Products (the "Implant Training Course").
      Distributor shall be sole y responsible for the transportation, lodging and
      expenses of its employees while attending the Implant Training Course. In the
      event Distributor requires training of employees t locations other than
      Implant's Wakefield, Massachusetts facility (the "Off-Si e Training"),
      Distributor will incur all costs of transportation, lodging and expenses f
      Implant personnel for the provision of Off-Site Training.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    


    5.5
      Adjustment to Schedule 4.1. At its sole determination, Implant w II reasonably
      adjust Schedule 4.1 for the effect, if any, of Product recalls or other even
      s,
      which have a material effect on Distributor s ability to sell
      Products.

    


    6.
      Patents. Each party hereto shall immediately notify the other party if any
      legal
      action alleging a violation of any patent or other similar proprietary right
      affecting t e manufacture or sale of the Products is filed or threatened. In
      such event, Implant agrees that it will, at its own cost and expense,
      compromise, settle or defend any action, suit r claim in which such infringement
      is alleged; provided, however, that Distributor gives Implant prompt written
      notice of any such claim, tenders the defense (including the rig t of
      settlement) of any such claim to Implant and provides Implant with full
      cooperation for the defense or settlement of the claim. The failure of
      Distributor to give Implant prompt written notice shall not limit the
      obligations of Implant unless Implant shall e prejudiced by such failure. If
      Implant receives notice of an alleged infringement, or if Distributor's use
      or
      sale of the Products is prevented by permanent injunction, Implant may, in
      its
      sole option and expense, procure for Distributor the right to continue the
      s e
      and distribution of the Products, or provide Distributor with a different
      version of t e infringing Product(s) that substantially conforms to the
      specifications thereof that is n t infringing, or terminate this Agreement.
      The
      rights granted to· Distributor under t is Section 6 are the sole and exclusive
      remedy for any alleged infringement of any patent r similar proprietary right.
      Implant shall not have any obligation or liability 0 compromise, settle or
      defend any action, suit or claim in which liability for infringement arises
      from
      the use of the Products in a manner for which they were not designed or d e
      to
      the Products being combined with another product. Distributor acknowledges
      that
      0 licenses are granted or implied by this Agreement under any patents owned
      or
      controlled by Implant or under which Implant has any rights, except the right
      to
      sell and use t e Products specified in Schedule I hereto.

    


    7.
      Confidentiality. The parties agree to maintain in confidence and not to disclose
      0 any third party, either during or after the term of this Agreement, any
      information of a y nature whatsoever furnished by one party to the other, except
      for information which is, r becomes, public or general industry knowledge other
      than through default of the party 0 this Agreement receiving such information.
      The parties further agree not to use such information in any way, directly
      or
      indirectly, except as required in the course of t e performance of this
      Agreement. The terms and provisions of this Section 7 shall survive any
      termination of this Agreement.

    


    8.
      Warranty, Limitation of Liability. Implant warrants the Products as set forth
      n
      written materials which may be provided from time to time by Implant prior
      r
      concurrently with the shipment of Products. IT IS UNDERSTOOD AND AGREE THAT
      IMPLANT'S WRITTEN WARRANTY TO DISTRIBUTORS IS IN LIEU F ALL OTHER WARRANTIES,
      EXPRESSED OR IMPLIED, INCLUDING WITHO T LIMITATION, ANY IMPLIED WARRANTY OF
      MERCHANTABILITY FITNESS FOR A PARTICULAR PURPOSE. As set forth in the written
      warrant, Implant's sole obligation in the event of a breach or warranty shall
      be
      to repair or replace the defective product at its election. Distributor shall
      have no authority to make a y representations or warranties concerning the
      Products other than those set forth in written materials provided to Distributor
      by Implant pursuant to this Agreement. EXCEPT S EXPRESSLY PROVIDED IN THIS
      AGREEMENT, IMPLANT SHALL HAVE N OTHER RESPONSIBILITY OR LIABILITY WITH RESPECT
      TO THE PRODUCT , OR THE USE THEREOF, OR ANY SERVICES SUPPLIED HEREUNDER, AND
      I
      NO EVENT SHALL IT BE LIABLE FOR INCIDENTAL, SPECIAL 0 CONSEQUENTIAL
      DAMAGES.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    


    9.
      Term,
      Termination and Remedies.

    


    9.1
      Initial Term. This Agreement shall remain in place for three (3) years fro
      the
      Effective Date (the "Term") unless terminated earlier pursuant to Section 9.3
      below.

    


    9.2
      Renewal. This Agreement will be automatically renewed at the end of t e Term
      for
      successive one (1) year terms unless cancelled prior thereto in writing at
      lea t
      ninety (90) days prior to the expiration of the Term or subsequent renewal
      periods.

    


    9.3
      Termination. In addition, either party shall have the right to terminate this
      Agreement by written notice to the other party effective immediately upon the
      receipt f such notice, upon the occurrence of any of the following
      events:

    


    9.3.1
      In
      the event that the other party shall be adjudicated bankrupt or shall petition
      for or consent to any relief under any bankruptcy, reorganization, receivership,
      liquidation, compromise, or a y moratorium statute, whether now or hereafter
      in
      effect, or shall ma e an assignment for the benefit of its creditors, or shall
      petition for t e appointment of a receiver, liquidator, trustee, or custodian
      for all or a substantial part of its assets and is not discharged within thirty
      (3 ) days after the date of such appointment;

    


    9.3.2
      Upon any default in the performance of or breach of any agreement, covenant,
      obligation or undertaking of the other party made hereunder, including, without
      limitation, (i) the failure of Distributor to purchase the minimum amounts
      set
      forth in Section 4.1 and on Schedule 4.1, (n the failure of Distributor to
      pay
      invoices when due, or (Hi) the failure of Distributor, without justification,
      to
      take delivery of the Products, . f such default or breach shall not be remedied
      to the satisfaction of t e party giving notice of termination within thirty
      (30)
      days of delivery f such notice; except for a default under (ii) above for which
      a five( ) day cure period is required; or

    


    9.3.3
      In
      the event that Implant should sell its business, or any substantial part
      thereof, whether by merger, consolidation, reorganization, sale f assets, sale
      of stock, or otherwise, Implant may, at its option, give Distributor notice
      of
      termination of this Agreement effective upon t e consummation of any such
      sale.

    


    9.4
      Rights and Remedies on Termination. Upon the termination of this Agreement,
      the
      parties shall have the following rights, remedies and duties with respect to
      this Agreement and the Products:

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    


    9.4.1
      Subject to the qualifications and limitations set forth below, Distributor
      shall
      promptly deliver to Implant, or otherwise dispose as instructed by Implant,
      all
      of the Products, including parts a d materials, which Distributor has in its
      possession or under its control, all technical instruction books, technical
      pamphlets, catalog, advertising materials, specifications, and all other
      material, documents or papers, excluding correspondence between the parties,
      which Distributor has in its possession or under its control. With n ninety
      (90)
      days of return of the Products pursuant to this Section 9. , Implant shall
      reimburse Distributor an amount equal to the origin I purchase price paid by
      Distributor to Implant for such Products, less twenty-five percent (25%) of
      such
      original purchase price 'f termination is due to Distributor's breach or default
      of any terms r conditions of this Agreement, as a cancellation and restocking
      fee. Notwithstanding any of the foregoing, Distributor shall not return to
      Implant and Implant shall not be responsible for reimbursement for any of the
      following products: (i) any custom Products which are n t generally available
      to
      customers of Implant; (ii) any Products which have been purchased by Distributor
      more than twelve (12) months prior to the effective date of termination; and
      (iii) any Products 0 longer carried in Implant's product lines. All costs,
      including delivery and insurance, incurred in any such return or disposal,
      shall
      be borne by Distributor. In addition, Implant may deduct from such reimbursement
      any amounts due Implant from Distributor for a y reason; such amounts may
      include, at Implant's reasonable discretion, without limitation, refurbishment
      and/or upgrade costs relating 0 returned Products used for, and/or damaged
      during, demonstration r other purposes;

    


    9.4.2
      All
      of the Distributor's right to intangibles used or associated with t e Products
      shall immediately be transferred and assigned, without further action by
      Distributor, to Implant, and Distributor will immediately discontinue and
      refrain from all advertising and use of t e name "Implant", "Quantum Sniffer~,
      other Implant tradenames, trademarks, logos and designations and trade secrets
      information;

    


    9.4.3
      Distributor shall remain obligated to accept and purchase Products subject
      to
      all outstanding orders placed by Distributor with Implant, including, without
      limitation, work-in-progress, unless express y cancelled or terminated by
      Implant, and to perform any other ac s which are necessary or appropriate to
      the
      orderly winding up of t e dealings between the parties hereunder;
      and

    


    9.4.4
      The
      confidentiality and noncircumvention obligations of Sections 7 and 15,
      respectively, of this Agreement shall survive any termination , of this
      Agreement.

    


    10.
      Trademarks.

    


    10.1
      This
      Agreement shall not include any license or right to use any trade name r any
      other trademark or trade name used or claimed by Implant, except that during
      t e
      term of this Agreement, Distributor is hereby granted the right to use Implant
      s
      trademarks and trade names in, and only in, connection with the sale of Product
      .

    Distributor
      shall not alter or omit Implant's trademarks or trade names on the Products
      and
      shall use such trademarks and trade names on its advertising for the Products.
      Up n the termination of this Agreement, all such rights to the use of the names
      and marks cease and terminate, and Distributor shall return to Implant all
      materials which bear a y trademark or trade name of Implant.

    


    10.2
      Distributor shall not use the name "Implant", or any other of Implant s
      trademarks or tradenames, including variations and alterations thereof, in
      the
      name of a y legal entity, business, or association.

    


    11.
      Independent Contractor. Distributor is an independent contractor and nothing
      n
      this Agreement creates the relationship of partnership, joint venture, sales
      agency r principal and agent, and neither party is the agent of the other,
      and
      neither party may ho d itself out as such to any other party, and Distributor
      has no power or authority in any w y to bind Implant contractually. Distributor
      shall be free to manage and control its business as it sees fit without the
      management, control or assistance of Implant, except s otherwise prescribed
      herein.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    


    12.
      Force
      Majeure. The performance of the parties hereunder shall not be subject 0 force
      majeure and acts of God, including but not limited to insurrections, riots,
      war
      , explosions, governmental acts, epidemics, failure of contractors to perform,
      strikes, fire , accidents, inability to obtain required materials or supplies
      or
      qualified labor, and a y applicable law, regulation or restriction of any
      federal, state or local governmental entity or instrumentality. Nothing herein
      shall, however, relieve Distributor of its obligation 0 make the payments to
      Implant required hereunder at the times and in the manner
      specified.

    


    13.
      Notices. Any notice or other communication required or permitted to be given
      hereunder shall be in writing, and shall be deemed to have been duly given
      when
      delivered personally or sent by registered or certified mail, return receipt
      request, postage prepaid to the parties hereto at their addresses. Either party
      may change his or its address for the purpose of this paragraph by written
      notice similarly given.

    


    14.
      Publicity. Except as is necessary for governmental notification purposes or
      0
      comply with applicable laws and regulations or to enforce their respective
      rights und r this Agreement, and except as otherwise agreed to by the Parties
      hereto in writing, t e Parties shall (a) keep the material terms of this
      Agreement confidential and (b) agree upon the text and the exact timing of
      any
      press release or public announcement relating 0 the transactions contemplated
      by
      this Agreement.

    


    15.
      Non-Circumvention. During this Agreement, and for a period of no less than
      t 0
      (2) years after its termination, if the Company engages in sales of Products
      to
      a y Distributor Protected Party, as further defined herein, and where said
      Distributor Protected Party was not first known by Company or its agents, then
      the Company shall pay Distributor, immediately upon the sale of Products
      compensation in the amounts s set forth in Section 4.3. The term Distributor
      "Protected Party" shall mean any person r entity interested in purchasing the
      Products, either directly or through third parties, t at Distributor introduced
      to the Company in connection with this Agreement. Distributor shall notify
      Company from time-to-time, in writing, as to any potential customers so t at
      they may be evaluated for purposes of being considered a Distributor Protected
      Party. If the Company does notify Distributor that the potential customer is
      not
      acceptable as a Distributor Protected Party within ten (10) days of receipt
      in
      writing from Distributor then customer will be considered a Distributor
      Protected Party.

    


    16.
      Miscellaneous.

    


    16.1
      Assignment and Delegation. This Agreement shall not be assignable y Distributor
      nor shall the performance of the duties of Distributor hereunder be delegable
      nor shall this Agreement inure to the benefit of any successor, assignee,
      sub-licensee, trustee or other representative of Distributor, without the prior
      written consent of Implant, which Implant may withhold in its sole discretion.
      Any purported attempted assignment hereof without such written consent, either
      voluntary or by operation of law, shall be v id and of no force and effect.
      This
      Agreement shall be binding upon and shall inure to t e benefit of the permitted
      successors and assigns of the parties hereto.


    16.2
      Choice of Law. Arbitration. This Agreement shall be deemed to have be n made
      in
      the Commonwealth of Massachusetts, and shall, for all purposes, be governed
      y
      and construed under the laws thereof without regard for choice of law
      provisions. Any controversy or claim arising out of or relating to this
      Agreement, or the breach there f, shall be settled by arbitration in accordance
      with the Commercial Arbitration Rules of t e American Arbitration Association,
      and judgment upon the award rendered by t e arbitrator(s) may be entered in
      any
      court having jurisdiction thereof. Distributor here y consents to the
      jurisdiction of, and venue in, the courts of the Commonwealth of Massachusetts
      and the United States Federal District Court, located in Boston, Massachusetts
      for such purposes.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    


    16.3
      No
      Waiver. No waiver by either party of any breach or default of any of the
      covenants or agreements herein contained shall be deemed a waiver as to any
      subsequent or similar breach or default. No right or remedy herein conferred
      upon either party is exclusive of any other right or remedy herein or by law
      or
      in equity provided or permitted.

    


    16.4
      Severability. This Agreement is divisible, and in the event that any provisions
      herein are held to be invalid, the remaining portions of this Agreement shall
      remain in full force and effect.

    


    16.5
      Attorney's Fees. In the event of any controversy or claim or dispute between
      the
      parties hereto arising out of or relating to this Agreement or any purchase
      orders provided for herein, or the breach thereof, the prevailing party shall
      be
      entitled to recover, from the losing party, reasonable attorneys' fees, expenses
      and costs.

    


    16.6
      Entire Agreement. Amendment. This Agreement and the documents specifically
      provided for herein include the entire transaction between the parties hereto
      and shall not be changed or amended in any respect unless in writing and signed
      by the parties hereto.

    


    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
      and
      year first written above.

    


    IMPLANT
      SCIENCES CORPORATION

    


    


    By: /s/
      Anthony J. Armini 

    Name: Anthony
      J. Armini  

    Title: President
      & CEO 

    


    


    HOMELAND
      INTEGRATED SECURITY SYSTEMS, INC.

    


    


    By: /s/
      Brian Riley  

    Name: Brian
      Riley  

    


    Title: Sec/Treasurer

     

    


    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    


    SCHEDULE
      l

    


    PRODUCTS

    


    Quantum
      Sniffer QS-Hl 00 (portable, handheld explosives trace detection
      device)

    


    Quantum
      Sniffer QS-BTlOO (desktop explosives trace detection device) 

    


    


    SCHEDULE
      2.2

    


    TERRITORY

    


    Lebanon

    


    Sales
      projects in other areas will be negotiated on a "case-by-case"
      basis

    


    


    SCHEDULE
      4.1

    


    MINIMUM
      ANNUAL PURCHASES

    


    


    Distributor
      shall purchase a minimum of TWO HUNDRED (200) units annually of the Products
      as
      set forth in Schedule 1.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    


    SCHEDULE
      4.3

    


    DISTRIBUTOR
      PRICE DISCOUNT

    


    Discount
      Schedule*:

    


    Implant
      agrees to a twenty-five percent (25%) discount off of the MSRP, then in effect,
      of the Products for each twelve month (12) period beginning on the Effective
      Date and each anniversary date thereafter (each twelve month (12) period is
      hereinafter referred to as the "Annual Measurement Period"). However, in the
      event Distributor fails to purchase at least two hundred (200) units of the
      Products during each Annual Measurement Period (the "Minimum Preferential
      Discount Quantity"), then the discount offered will be in accordance with the
      discount schedule set forth as follows:

    


    1
      to 9
      units  Fifteen
      percent (15%) discount

    


    10
      to 99
      units  Eighteen
      percent (18%) discount

    


    100
      to
      199 units  Twenty-five
      percent (25%) discount 

    


    200
      units
      or greater Discount
      negotiated on a case by case basis

    


    *
      Discount schedule applies to Quantum Sniffer products: QS-HIOO and
      QS-BT100

    


    In
      addition, should the Distributor fail to meet the Minimum Preferential Discount
      Quantity, Distributor shall refund to Company, within ninety (90) days of each
      Annual Measurement Period, in cash or off-sets to each subsequent purchase,
      the
      difference between the preferential discount of twenty-five percent (25%) and
      the discount rate as set forth in the schedule above. In the event Distributor
      purchases in excess of two hundred (200) units of the Products during any Annual
      Measurement Period, then Company and Distributor shall negotiate in good-faith
      additional discounts for future purchases during the remainder of that Annual
      Measurement Period that will not result in an economic detriment to Company.
      

    


    SCHEDULE
      4.3 (continued)

    


    Product
      Base Price:

    


    As
      of the
      Effective Date, the MSRP for the Products are as follows:

    


    QS-HlOO: $29,900

    


    QS-BTlOO: $45,000

    


    The
      discounts as set forth herein will be applied to the MSRP for the Products
      and
      the Products shall be sold to the Distributor at said discounted prices.
      Notwithstanding, the MSRP for Products is subject to change at the sole
      discretion of the Company in accordance with the provisions of Section 4.2
      of
      the Agreement.

     

    
      
         

      

      
        11