Transition Agreement between the Company and AJ Armini


    Exhibit
      10.1

    


    


    TRANSITION
      AGREEMENT

    


    This
      Transition Agreement (the “Agreement”) is entered into as of September 27, 2007
      (the “Effective Date”), by and between Implant Sciences Corp. (“Implant” or the
“Company”) and Dr. Anthony Armini (“Armini”) (collectively, the
“Parties”).

    


    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the Parties agree as follows:

    


    1. Transition
      Period. 
      Effective September 27, 2007 (the “Transition Date”), Armini has resigned from
      (i) his positions as President and Chief Executive Officer of Implant, and
      (ii)
      all positions, offices and directorships with any subsidiaries of Implant. 
Armini agrees not to be nominated or serve as Director of the Company at the
      next annual meeting of the stockholders of the Company. Beginning on the
      Transition Date and ending on the earlier of September 30, 2009 or a termination
      of Armini’s employment pursuant to Paragraph 2 below (the “Transition Period”),
      Armini shall be employed by Implant in a non-executive capacity as a Science
      Advisor.  In that capacity, he shall report solely to Implant’s President
      and Chief Executive Officer (“CEO”).  During the Transition Period, Armini
      shall meet and/or communicate with Company management and senior Company
      technical and scientific personnel and provide such information and expertise
      as
      he may possess for the purpose of transitioning to senior Company technical
      and
      scientific personnel his knowledge and expertise relating to ion implantation
      and semiconductors and related activities conducted by the Company, upon the
      CEO’s reasonable request. In addition, Armini will cooperate with the Company in
      connection with the OSI Systems Inc. lawsuit, including but not limited to
      being
      available to meet with the Company’s counsel to prepare for discovery or trial,
      providing affidavits as necessary and to testify truthfully as a witness when
      reasonably requested by the Company at reasonable times and for reasonable
      time
      periods. Armini will also assist the Company in the divesture of the brachy
      therapy assets and providing such other assistance and advice as are mutually
      agreed to. The Parties agree that Armini shall not perform any work or take
      any
      action on behalf of the Company during the Transition Period except as
      explicitly directed and authorized by the CEO and, except for reasonable
      transition assistance as specifically set forth above.  The Parties further
      agree that Armini shall perform all work and provide all assistance hereunder
      at
      such times and locations as are mutually agreed to by the CEO and Armini and
      Armini shall be permitted to work from his home whenever possible.  It is
      understood that Armini’s position is not full-time and that, with the exception
      of the transition assistance specifically set forth above, his services will
      be
      subject to his availability and other obligations he may then have.

    


    During
      the Transition Period, the Company shall compensate Armini at the annual rate
      of
      $250,000, less applicable taxes and withholdings, to be paid pursuant to
      Implant’s normal payroll cycle with a Final Payment of $9,615.38 due upon
      execution, delivery and non-revocation of the Release of Claims attached hereto
      as Exhibit A (the “Release”), as further described in Paragraph 4.  For the
      duration of the Transition Period, the Company shall continue to provide Armini
      with insurance coverage under its group health, dental and other plans, under
      the same terms that applied to Armini on the Transition Date, subject to the
      terms of those plans.  During the Transition Period, Armini shall not be
      eligible for a bonus or other incentive compensation, nor shall he accrue
      vacation or sick time and shall not be entitled to the use of a Company car
      or
      for automobile payments. On the Transition Date the Company shall pay Armini
      for
      his accrued vacation until the Transition Date.

    


    2. Termination
      During the Transition Period. 
      The Company may not terminate Armini’s employment during the Transition Period
      other than for Cause, which shall be defined as (a) material breach in the
      performance of his duties under this Agreement or the agreements set forth
      in
      Section 9 herein which could cause material damage to the Company after a 10-day
      written notice and opportunity to cure period or such longer period as is
      reasonably required to cure such breach with diligence and good faith efforts;
      (b) willful misconduct which is materially injurious to the Company; or (c)
      the
      conviction of a fraud or felony or criminal offense involving dishonesty or
      moral turpitude or breach of trust.  

    


    Armini
      may terminate this Agreement for any reason on thirty (30) days prior written
      notice to the Company. Notwithstanding Armini’s termination of this Agreement he
      shall be required to continue to assist the Company in the OSI litigation,
      as
      before such termination. If the Company terminates Armini’s employment during
      the Transition Period with Cause, or if Armini shall terminate this agreement,
      Armini shall not be entitled to receive the Payments or benefits set forth
      herein, and any entitlement(s) Armini has, might have, had, or might have had
      to
      compensation, bonuses, wages, or participation in any benefit plan, policy,
      program, compensation agreement or practice of the Company shall cease. Such
      compensation shall terminate immediately, except as required by law and provided
      that his stock options shall be governed by the terms thereof.

    


    3. Separation
      From Employment. 
      Effective on the earlier of Armini’s termination in accordance with Paragraph 2
      or September 30, 2009 (the “Separation Date”), Armini’s employment with the
      Company shall cease.  On or shortly after the Separation Date, the Parties
      agree to execute the Release, which shall cover the duration of the Transition
      Period.

    


    4. Final
      Payment.  Upon
      the
      Separation Date, following the Company’s receipt of the fully-executed Release,
      and provided Armini’s employment was not terminated for Cause, or terminated by
      Armini for any reason, the Company will issue to Armini final payment of
      $9,516.38, less applicable taxes and withholdings (the “Final
      Payment”).

    


    5. Health
      and Life Insurance Benefits. 
      Armini may elect to continue his current group medical and/or dental insurance
      coverage following the Separation Date, provided he or his eligible dependent(s)
      remain eligible for such coverage under the federal law known as COBRA and
      provided that he makes the COBRA payments to the Company on or prior to the
      time
      they are due. Information outlining Armini’s rights and responsibilities under
      COBRA will be forwarded to him on or near the Separation Date.

    


    Following
      the Separation Date, any entitlement Armini has, might have, had, or might
      have
      had to compensation, bonuses, wages, or participation in any benefit plan,
      policy, program, contract or practice of the Company, shall terminate, except
      as
      required by federal or state law, by applicable plan terms, or by the express
      terms of this Agreement.

    


    6. Stock
      Options. 
On
      September 28, 2007, the Company will grant Armini qualified stock options to
      purchase an aggregate of 200,000 shares of Common Stock of the Company at an
      exercise price equal to 110% of the closing price (if he is a 10% shareholder)
      on September 28, 2007. The stock options shall vest in equal quarterly
      installments of 25,000 options with the first installment vesting on September
      28, 2007 and the remaining installments vesting every three months thereafter.
      The options shall expire ninety days from the Separation Date. The Parties
      acknowledge that Armini has been awarded prior to the date hereof options to
      purchase 212,200 shares of the Company’s common stock, 204,200 of which options
      are fully vested.  The grant dates, vesting dates and exercise prices of
      such options are set forth in Exhibit B hereto.  Armini shall have the
      right to exercise any or all of his option shares until the earlier of (a)
      ninety (90) days after the Separation Date or (b) the date they would otherwise
      expire by their terms.

    


    7. Property;
      Computers. 
      Armini represents and warrants that no later than September 28, 2007, he will
      return to the CFO any and all documents, products, files, notes, memoranda,
      records, reports, materials and information related to the Company and its
      business that may be at his home or in his possession, including all copies,
      extracts and summaries thereof, whether in hard copy or electronic format. 
He further agrees that prior to returning these items, he will not disclose
      them
      or their contents to any person or entity or use them or their contents for
      any
      purpose except for the benefit of the Company.  Armini also agrees that he
      will not attempt at any time in the future, for any purpose, to access or use
      any of Company’s computers or computer networks or systems, including their
      servers and electronic mail system, unless authorized to do so by the
      CEO.

    


    Armini
      further agrees to return, no later than September 28, 2007, to the CFO all
      property and equipment of the Company in his possession, including but not
      limited to the Company car, computer equipment,(other than his lap top) cellular
      phones, PDAs, access cards and/or keys, passwords or access 

    


    codes,
      calling cards and credit cards.  In turn, the Company agrees that it shall
      return to Armini, no later than September 28, 2007, any personal effects
      remaining in his Implant office.

    


    For
      the
      duration of the Transition Period, the Company shall make available to Armini
      such information and Company equipment as may be reasonably required to perform
      his services for the Company during that Period. In addition, Armini may keep
      the Company’s lap top that he was using prior to the Transition Date and his
      E-mail account until the Separation Date.

    


    8. Cooperation. 
      From the execution of this Agreement forward, Armini agrees to reasonably
      cooperate with the Company in the defense or prosecution of any threatened
      or
      actual claims or actions which may be brought by, against or on behalf of the
      Company, its predecessors or any of its current or former partners, agents,
      employees, directors or affiliates and which relate to events or occurrences
      that transpired or are alleged to have transpired during his tenure with the
      Company.  Such cooperation shall include, without implication of
      limitation, being available to meet with the Company’s counsel to prepare for
      discovery or trial and to testify truthfully as a witness when reasonably
      requested by the Company at reasonable times and for reasonable time
      periods.

    


    9. Confidentiality
      of Company Information; Restrictive Covenants. 
      The Parties agree that all of Section 7, Disclosure and Assignment of
      Intellectual Property, Section 8, Confidentiality, and Section 9, Restriction,
      contained in the Employment Agreement which Armini and the Company entered
      into
      as of June 30, 2004 are incorporated herein by reference and shall remain in
      full force and effect following the execution of this Agreement.

    


    10. Accord
      and Satisfaction. 
      Armini agrees that the payments and benefits set forth in this Agreement,
      together with all other payments and benefits previously provided to him by
      the
      Company, are complete payment, settlement, satisfaction and accord with respect
      to all obligations and liabilities of the Releasees to Armini, and with respect
      to all Claims that could be asserted by Armini against any of the Releasees
      regarding any relationship between Armini and the Company, and any change in
      or
      cessation of any such relationship, including, without limitation, all claims
      for wages, salary, expenses, incentive pay, bonuses, business expenses, paid
      time off, equity interests, severance pay, attorneys’ fees, compensatory
      damages, exemplary damages, or other compensation, benefits, costs or
      sums.  The Company agrees that Armini’s undertakings in this Agreement, and
      the performance of such undertakings, are complete payment, settlement,
      satisfaction and accord with respect to all obligations and liabilities of
      Armini to the Company.  Provided, however, that nothing in this Agreement
      is intended to release or discharge any of the Company’s insurance or indemnity
      obligations to Armini regarding Armini’s service as President, Chief Executive
      Officer and member of the Board of the Company or any other position with the
      Company or its subsidiaries he may have held.

    


    11. Non-Disparagement;
      References and Other Communications. 
      From the execution of this Agreement forward, Armini agrees not to make any
      statement, written or oral, which disparages the Company, its business and
      services, or any of its partners, members, directors, officers, employees,
      or
      agents.  Armini further agrees not to make any statement or take any action
      which has the intended or foreseeable effect of harming the business interests
      of the Company, and to refrain from engaging in any communications regarding
      the
      Company with shareholders, research analysts or others in the financial
      community.   In addition, Armini agrees that he will refrain from
      speaking to third parties on behalf of the Company unless requested to do so
      by
      the CEO.

    


    For
      its
      part, the Company agrees that its senior executive officers and the members
      of
      the Company’s Board of Directors will not make any statement, written or oral,
      to any person or entity not affiliated with the Company (excluding agents of
      the
      Company) which disparages Armini, his business reputation and qualifications,
      or
      his employment as Chief Executive Officer of the Company.

    


    Nothing
      in this Paragraph shall prohibit or bar the Parties from providing truthful
      testimony in any legal proceeding or in communicating with any governmental
      agency or representative or from making any truthful disclosure required under
      law; provided, however, that advance written notice is provided by either party
      of the intent to make such disclosures and provided that best efforts will
      be
      used to ensure that this Paragraph is complied with to the maximum extent
      possible.  Moreover, nothing herein shall prevent Armini from participating
      in any proceeding before any federal or state administrative agency to the
      fullest extent permitted by applicable law, provided that he will be prohibited
      to the fullest extent authorized by law from obtaining monetary damages in
      any
      agency proceeding in which he does so participate.

    


    The
      parties agree to issue a press release in the form attached hereto as Exhibit
      C
      and agree that any public statements will be in accordance with Exhibit C and/or
      with any SEC filings.

    


    12. General
      Release by Armini. 
      Armini, on behalf of himself and his spouse, heirs, children, successors,
      current and former agents, representatives, executors, beneficiaries,
      administrators, trustees, attorneys and assigns, voluntarily releases and
      discharges the Company and its predecessors, successors,  and current and
      former assigns, agents, officers, partners, members, directors, shareholders,
      employees, subsidiaries, representatives, insurers, investors, attorneys,
      affiliates, and any other related entities; and all persons acting by, through,
      under, or in concert with any of them (any and all of which are referred to
      as
“Releasees”), from any and all charges, complaints, claims, liabilities,
      obligations, promises, agreements, causes of action, damages, losses, expenses,
      and debts of any nature whatsoever, known or unknown (“Claims”), which Armini
      has, claims to have, ever had, or ever claimed to have had against Releasees
      through the Transition Date.  This general release of Claims includes,
      without implication of limitation, all Claims relating to Armini’s employment
      and separation from employment with the Company; all Claims relating to Armini’s
      relationship to, interest, equity or investment in, memberships in, or
      partnerships with the Company; all Claims of discrimination, harassment and
      retaliation prohibited by any federal, state, or local statute, regulation,
      or
      ordinance, including without implication of limitation, Title VII of the Civil
      Rights Act of 1964, the Age Discrimination in Employment Act, the Americans
      With
      Disabilities Act, the Family and Medical Leave Act, the Employee Retirement
      Income Securities Act and Massachusetts General Laws Chapter 151B; and all
      other
      statutory or common law Claims.  Armini also waives any Claim for
      reinstatement, attorneys’ fees, interest, or costs, and all Claims for wages or
      other compensation, provided that this Release shall not be construed to (a)
      impair his right to enforce the terms of this Agreement, or (b) release or
      discharge any of Implant’s insurance or indemnity obligations to Armini
      regarding Armini’s service as President, Chief Executive Officer, and member of
      the Board of the Company and any subsidiary and such other positions with the
      Company as he may have held.  Additionally, nothing in this Agreement shall
      be interpreted to prohibit Armini from filing an age discrimination claim with
      any anti-discrimination agency, or from participating in an age discrimination
      investigation or proceeding conducted by any such agency.  However, by
      signing this Agreement, Armini acknowledges that he is waiving any and all
      rights to money damages and any other relief that might otherwise be available
      should he or any other entity pursue claims arising out of or relating to his
      employment with the Company against the Releasees.

    


    13. General
      Release by the Company. 
      The Company, on behalf of itself, subsidiaries and its predecessors, successors,
      current and former assigns, agents, officers, partners, members, directors,
      shareholders, employees, representatives, insurers, investors, attorneys,
      affiliates, and any other related entities; and all persons acting by, through,
      under, or in concert with any of them, voluntarily releases and discharges
      Armini and his spouse, heirs, children, successors, current and former agents,
      representatives, executors, beneficiaries, administrators, trustees, attorneys
      and assigns, from any and all charges, complaints, claims, liabilities,
      obligations, promises, agreements, causes of action, damages, losses, expenses,
      and debts of any nature whatsoever, known or unknown, which the Company has,
      claims to have, ever had, or ever claimed to have had against Armini, through
      the Effective Date, arising out of (a) Armini’s employment relationship with or
      service as an employee, officer or director of the Company or the termination
      of
      such relationship or service or (b) any event, condition, circumstance or
      obligation that occurred, existed or arose on or prior to the date the Company
      signs this Agreement; provided that this release of claims shall not (i) include
      or extend to any claim based upon, arising out of, or relating to any act or
      omission by Armini about which the Company did not know as of the date the
      Company signs this Agreement, but is discovered within one year from the date
      hereof; or (ii) include or extend to any shareholder derivative claims against
      Armini; or (iii) be construed to impair the Company’s right to enforce the terms
      of this Agreement.

    


    14. Non-Filing
      of Complaints or Charges. By
      signing this Agreement, the Parties represent that they have not filed any
      complaint or charge against each other or against any of the Releasees with
      any
      local, state or federal agency or court, or assigned any of the released Claims
      to any third party.

    


    15. Binding
      Nature of Agreement. 
      This Agreement shall be binding upon, and inure to the benefit of, the Parties
      and their respective heirs, administrators, representatives, executors,
      successors and assigns.  This Agreement may be assigned by the Company, but
      may not be assigned by Armini.

    


    16. Remedy
      for Breach. 
      The Parties understand and agree that a material breach of Paragraphs 7, 8,
      9,
      11, 12, 14 and/or 17 herein could result in irreparable harm to the other Party
      and that money damages would not provide an adequate remedy.  Therefore,
      the Parties agree that in addition to any other rights that either Party may
      have, either party shall have the right to seek specific performance and
      injunctive relief in the event that the other party materially breaches any
      of
      those Paragraphs of this Agreement.

    


    17. Voting
      Proxy.
      Armini
      shall provide the Board of Directors with an irrevocable voting proxy in the
      form of Exhibit D which will provide that for a period beginning on the
      Transition Date and ending on September 30, 2009, all shares of Common Stock
      owned by him on the record date of such vote shall be voted in favor of all
      resolutions recommended by the Board of Directors. All shares owned by Armini
      on
      the Transition Date and acquired prior to September 30, 2009 will be subject
      to
      the proxy. Any shares transferred to a non-affiliate of Armini for fair
      consideration shall not be subject to the proxy. 

    


    18. Use
      of the Agreement as Evidence. 
      This Agreement may not be used as evidence in any subsequent proceeding of
      any
      kind, except one in which the Releasees or Armini allege a breach of the terms
      of this Agreement or elect to use this Agreement as a defense to any
      claim.

    


    19. Entire
      Agreement; Modifications. 
      With the exception of Section 7, Disclosure and Assignment of Intellectual
      Property, Section 8, Confidentiality, and Section 9, Restriction, contained
      in
      the Employment Agreement and the stock option agreements applicable to the
      grants set forth herein and in Exhibit B hereto, which will survive and remain
      in full force and effect, this Agreement contains the entire agreement among
      the
      Parties hereto with respect to the matters covered hereby, and supersedes all
      prior and contemporaneous communications, e-mails, agreements, representations,
      understandings or negotiations between Armini, the Company and/or their agents
      and attorneys, including but not limited to the Employment Agreement between
      the
      Parties dated as of June 30, 2004, other than Section 7, Disclosure and
      Assignment of Intellectual Property, Section 8, Confidentiality, and Section
      9,
      Restriction, contained in the Employment Agreement dated as of June 30, 2004
      and
      all prior employment agreements.  This Agreement may be modified only by a
      written agreement signed by an authorized representative of each of the Parties
      hereto.  No waiver of this Agreement or any provision hereof shall be
      binding upon the Party against whom enforcement of such waiver is sought unless
      it is made in writing and signed by or on behalf of such Party.

    


    20. Further
      Assurances. 
      The Parties agree to execute, acknowledge (if necessary), and deliver such
      documents, certificates or other instruments and take such other actions as
      may
      be reasonably required from time to time to carry out the intents and purposes
      of this Agreement, provided they do not create any material additional
      obligations upon either Party.

    


    21. 
      Notice and Right to Consider. 
      Armini has been advised to consult with and has consulted with an attorney
      before executing this Agreement.  He acknowledges that he has been given
      the opportunity, if so desired, to consider this Agreement for twenty-one (21)
      days before executing it.  The Parties agree that any changes to this
      Agreement, whether material or not, will not re-start the 21-day period. 
If Armini does not sign this Agreement and return it to the Company so that
      it
      is received within the 21-day period, it will not be valid.  In the event
      that Armini executes this Agreement within less than twenty-one (21) days,
      he
      acknowledges that such decision was entirely voluntary and that he had the
      opportunity to consider this Agreement for the entire 21-day period.  The
      Parties acknowledge that, for a period of seven (7) days from the date that
      Armini signs this Agreement (the “Revocation Period”), he will retain the right
      to revoke this Agreement by written notice to the Company received before the
      end of the Revocation Period, and that this Agreement will not become effective
      or enforceable until the expiration of the Revocation Period.

    


    22. Acknowledgments
      and Other Terms. 
      Armini agrees that he has carefully read and understands all of the provisions
      of this Agreement, that he has been advised to consult with and has consulted
      with an attorney, and that he is voluntarily entering this Agreement. 
Armini further represents and acknowledges that in executing this Agreement,
      he
      is not relying and has not relied upon any representation or statement made
      by
      the Company (including its partners, members, agents, representatives,
      directors, employees and attorneys) with regard to the subject matter, basis
      or
      effect of this Agreement. 

    


    23. Interpretation. 
      The language of all parts of this Agreement shall in all cases be construed
      as a
      whole, according to its fair meaning, and not strictly for or against any of
      the
      Parties.  This Agreement shall be interpreted in such a manner as to be
      effective and valid under applicable law, but if any provision hereof shall
      be
      prohibited or invalid under any such law, such provision shall be ineffective
      to
      the extent of such prohibition or invalidity without invalidating or nullifying
      the remainder of such provision or any other provisions of this Agreement. 
The captions of the sections of this Agreement are for convenience of reference
      only, and in no way define, limit or affect the scope or substance of any
      section of this Agreement.

    


    24. Counterparts. 
      This Agreement may be executed in any number of counterparts and may be
      delivered by facsimile, each of which shall be deemed to be an original but
      all
      of which together shall constitute one and the same instrument.

    


    25. Governing
      Law. 
      This Agreement shall take effect as an instrument under seal and shall be
      governed and construed in accordance with the laws of Massachusetts, without
      regard to its conflicts of laws principles.  Except as otherwise provided
      in Paragraph 12 of this Agreement, any disputes and claims arising under or
      relating to this Agreement and/or the rights, obligations and performance of
      the
      Parties hereunder shall be settled by a single arbitrator sitting in Boston,
      Massachusetts under the applicable Employment Arbitration Rules and Procedures
      of the American Arbitration Association.  In the event arbitration is
      brought with respect to this Agreement by either Party, the prevailing Party
      shall be entitled to recover from the losing Party his or its reasonable
      attorneys’ fees and expenses.

    


    


    IN
      WITNESS WHEREOF, the Parties hereto have executed this Agreement as an
      instrument under seal as of September 27, 2007.

    


    
      	
              IMPLANT
                SCIENCES CORP.

            	
               

            
	
               

            	
               

            	
               

            
	
              By:

            	 /s/
              Diane J. Ryan	
               

            
	
               

            	
               

            	
               

            
	
              Name
                and Title:

            	 Diane
              J. Ryan, VP and CFO	
               

            
	
               

            	
               

            	
               

            
	 /s/
              Anthony J. Armini	
               

            
	
              ANTHONY
                ARMINI

            	
               

            
	
               

            	
               

            	
               

            	
               

            


    

    


     

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      A

    


    RELEASE
      OF CLAIMS

    


    This
      Release of Claims (this “Release”) is entered into as of the last date indicated
      on the signature page of this Release by and between Implant Sciences Corp.
      (“Implant” or the “Company”) and Anthony Armini (“Armini”).  Armini and
      Implant agree as follows:

    


    1.   
      Release by Armini. 
      For and in consideration of the receipt of the Final Payment and other benefits
      set forth in the September 27, 2007 Transition Agreement between Armini and
      Implant (the “Agreement”), which is hereby incorporated by reference, the
      sufficiency of which is hereby acknowledged, Armini, on behalf of himself and
      his spouse, heirs, children, successors, current and former agents,
      representatives, executors, beneficiaries, administrators, trustees, attorneys
      and assigns, voluntarily releases and discharges Implant, its subsidiaries
      and
      its predecessors, successors,  and current and former assigns, agents,
      officers, partners, members, directors, shareholders, employees,
      representatives, insurers, investors, attorneys, affiliates, and any other
      related entities; and all persons acting by, through, under, or in concert
      with
      any of them (any and all of which are referred to as “Releasees”), from any and
      all charges, complaints, claims, liabilities, obligations, promises, agreements,
      causes of action, damages, losses, expenses, and debts of any nature whatsoever,
      known or unknown (“Claims”), which Armini has, claims to have, ever had, or ever
      claimed to have had against Releasees through the date last written below. 
This general release of Claims includes, without implication of limitation,
      all
      Claims relating to Armini’s employment and separation from employment with
      Implant; all Claims relating to Armini’s relationship to, interest, equity or
      investment in, memberships in, or partnerships with Implant; all Claims of
      discrimination, harassment and retaliation prohibited by any federal, state,
      or
      local statute, regulation, or ordinance, including without implication of
      limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination
      in
      Employment Act, the Americans With Disabilities Act, the Family and Medical
      Leave Act, the Employee Retirement Income Securities Act and Massachusetts
      General Laws Chapter 151B; and all other statutory or common law Claims. 
Armini also waives any Claim for reinstatement, attorneys’ fees, interest, or
      costs, and all Claims for wages or other compensation, provided that this
      Release shall not be construed to (a) impair his right to enforce the terms
      of
      the Agreement and this Release, or (b) release or discharge any of Implant’s
      insurance or indemnity obligations to Armini regarding Armini’s service as
      President, Chief Executive Officer, Treasurer and member of the Board of the
      Company and such other positions with the Company as he may have held. 
Additionally, nothing in this Release shall be interpreted to prohibit Armini
      from filing an age discrimination claim with any anti-discrimination agency,
      or
      from participating in an age discrimination investigation or proceeding
      conducted by any such agency.  However, by signing this Release, Armini
      acknowledges that he is waiving any and all rights to money damages and any
      other relief that might otherwise be available should he or any other entity
      pursue claims arising out of or relating to his employment with Implant against
      the Releasees.

    


    2.   
      Release by Implant. 
      The Company, on behalf of itself, its subsidiaries and its predecessors,
      successors, current and former assigns, agents, officers, partners, members,
      directors, shareholders, employees, representatives, insurers, investors,
      attorneys, affiliates, and any other related entities; and all persons acting
      by, through, under, or in concert with any of them, voluntarily releases and
      discharges Armini and his spouse, heirs, children, successors, current and
      former agents, representatives, executors, beneficiaries, administrators,
      trustees, attorneys and assigns, from any and all charges, complaints, claims,
      liabilities, obligations, promises, agreements, causes of action, damages,
      losses, expenses, and debts of any nature whatsoever, known or unknown, which
      the Company has, claims to have, ever had, or ever claimed to have had against
      Armini, through the date last written below, arising out of (a) Armini’s
      employment relationship with or service as an employee, officer or director
      of
      the Company or the termination of such relationship or service or (b) any event,
      condition, circumstance or obligation that occurred, existed or arose on or
      prior to the date the Company signs this Agreement; provided that this release
      of claims shall not (i) include or extend to any claim based upon, arising
      out
      of, or relating to any act or omission by Armini about which the Company did
      not
      know as of the date the Company signs this Release, but was discovered within
      one year of such date ; (ii) include or extend to any shareholder derivative
      claims against Armini; or (iii) be construed to impair the Company’s right to
      enforce the terms of this Release or the Agreement.

    


    3.   
      Consideration. 
In
      consideration of Armini’s execution of this Release, the Company will provide
      him with the consideration set forth in the Agreement, which consideration
      Employee would not otherwise be entitled to receive.  Except as set forth
      in this Paragraph 3, and subject to any right or claim Employee may have under
      Paragraph 1, it is expressly agreed that the Company does not have any
      obligation to provide Employee at any time in the future with any payments,
      benefits or other consideration.  This Release shall not supersede any
      continuing obligations the Employee may have under the terms of the
      Agreement.

    


    4.   
      Non-Filing of Complaint or Charges. 
By
      signing this Agreement, the Parties represent that they have not filed any
      complaint or charge against each other or against any of the Releasees with
      any
      local, state or federal agency or court, or assigned any of the released Claims
      to any third party.

    


    5.   
      Voluntary Waiver and Acknowledgement. 
      Armini acknowledges that he has consulted with the attorney of his choice in
      connection with executing this Release, and that he has been given the
      opportunity, if so desired, to consider this Release for twenty-one (21) days
      before executing it.  If Armini does not sign this Agreement and return it
      to the CEO at Implant so that it is received within twenty-one (21) days of
      the
      Separation Date as defined in the Agreement, it will not be valid.  In the
      event that Armini executes this Release within less than 21 days, he
      acknowledges that such decision was entirely voluntary and that he had the
      opportunity to consider this Release for the entire 21-day period.  The
      Parties acknowledge that, for a period of seven (7) days from the date that
      Armini signs this Release (the “Revocation Period”), he will retain the right to
      revoke this Release by written notice to the CEO at Implant, received before
      the
      end of the Revocation Period, and that this Release will not become effective
      or
      enforceable until the expiration of the Revocation Period.

    


    6.   
      Other Terms. 
      The Parties acknowledge that the performance of the promises of each are
      contingent upon the fulfillment of the obligations of the other Party as set
      forth in this Release and the Agreement.  The Parties agree that this
      Release is not, and shall not be construed to be, an admission of any violation
      of any federal, state or local statute or regulation, or of any duty owed by
      either Party.  This Release shall take effect as an instrument under seal
      and shall be governed and construed in accordance with Massachusetts law. 
If any provision of this Release is deemed invalid, the remaining provisions
      shall not be affected and shall be enforced to the maximum extent permitted
      by
      law.

    


    


    IN
      WITNESS WHEREOF, the Parties have executed this Release as of the date last
      written below.

    


    


    


    
      	
              /s/
                Anthony J. Armini

            	
               

            	
               9/27/07

            
	
              ANTHONY
                ARMINI

            	
               

            	
              DATE

            
	
               

            	
               

            	
               

            
	
              IMPLANT
                SCIENCES CORP.

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              By

            	
              /s/
                Diane J. Ryan

            	
               

            	
              9/27/07

            
	
              Title:

            	
               VP
                and CFO

            	
               

            	
              DATE

            
	
               

            	
               

            	
               

            	
               

            	
               

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    Exhibit
      B

    


    Armini
      Stock Option Grants

    


    
      	 	 	 	 	 	 	 	 
	
              Grant Date

            	
              Term
                (yrs)

            	
              Option
                Price

            	
              Vesting
                Rate

            	
              Option
                Grant

            	
              Option
                Balance

            	
              Vested
                Balance

            	 
	 	 	 	 	 	 	 	 
	
              11/11/2002

            	
              5

            	
              4.65

            	
              50%
                / 3 yrs

            	
              50,000

            	
              48,000

            	
              48,000

            	 
	 	 	 	 	 	 	 	 
	
              3/4/2003

            	
              5

            	
              2.31

            	
              100%

            	
              12,200

            	
              6,200

            	
              6,200

            	 
	 	 	 	 	 	 	 	 
	
              8/22/2003

            	
              5

            	
              6.96

            	
              3
                years

            	
              50,000

            	
              50,000

            	
              50,000

            	 
	 	 	 	 	 	 	 	 
	
              12/13/2005

            	
              5

            	
              4.50

            	
              100%

            	
              100,000

            	
              100,000

            	
              100,000

            	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 


    

    


    
 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    Exhibit
      C

    


    IMPLANT
      SCIENCES CORPORATION APPOINTS NEW PRESIDENT AND CEO

    


    DR.
      ANTHONY ARMINI, FOUNDER AND CHAIRMAN, RETIRES AS PRESIDENT AND CEO AFTER
      TWENTY-THREE YEARS OF DISTINGUISHED SERVICE

    


    WAKEFIELD,
      MA...October 1, 2007...Implant
      Sciences Corporation (AMEX: IMX)
      today
      announced Dr. Anthony J. Armini has stepped down as President and CEO of Implant
      Sciences approximately twenty three years after founding the Company. In
      connection with Dr. Armini’s retirement, the Company’s Chief Operating Officer,
      Phillip C. Thomas, has been appointed President and CEO. Dr. Armini will serve
      as the Chairman of the Board of the Company until the 2007 annual meeting of
      stockholders when his current term is completed later this year.

    


    Commenting
      on his retirement, Dr. Armini, stated, “Over a year ago, the Company embarked
      upon a multi-pronged strategy to focus on its security business, streamline
      operations, and build a management team to execute its business plan. As part
      of
      this strategy, and in preparation for my retirement, Phil Thomas joined our
      management team as COO in March of this year. During the past seven months,
      he
      has taken on increased responsibilities in the execution of our corporate plan.
      His demonstrated success in leading the business has made this transition all
      the easier. I hand over the reins of the Company to him with the utmost
      confidence that he will continue to execute on the plan, grow the Company and
      increase shareholder value.”

    


    Mr.
      Thomas added, “I joined Implant Sciences with very specific objectives for the
      Company in mind. These included improving our market share within the security
      products and services arena, increase revenues and profitability, and
      significantly improve our balance sheet, all intended to maximize shareholder
      value. I have enjoyed working with Dr. Armini over these past seven months
      as we
      endeavored to execute our business strategy. On behalf of everyone at Implant
      Sciences, I want to thank him for his lifelong dedication to the Company. His
      personal investments of time and money, accompanied by many personal sacrifices
      along the way, have created a firm foundation to build upon.”

    


    About
      Implant Sciences

    Implant
      Sciences develops, manufactures and sells products through its primary business
      units: (i) explosives trace detection (ETD) systems for homeland security,
      defense, and other security related applications and (ii) state of the art
      services for the medical and semiconductor industries. The Company has developed
      proprietary technology used in its commercial portable and bench-top ETD
      systems, which ship to a growing number of locations around the world and
      domestically, and is developing several next-generation ETD
      systems.

    


    The
      Company’s ETD products and developments address many important security needs in
      aviation, cargo, transportation, and other related elements of the government
      and commercial infrastructure. In addition to its security market focus, the
      Company provides high technology coatings for a variety of medical products
      at
      its main facility in Wakefield, Massachusetts and provides ion implantation
      services to the semiconductor industry in a state-of-the-art facility in
      Sunnyvale, California. For further details on the Company and its products,
      please visit the Company’s new website at www.implantsciences.com.

    


    Implant
      Sciences believes this press release contains forward-looking statements as
      that
      term is defined in the Private Securities Litigation Reform Act of 1995. Such
      forward-looking statements are subject to risks and uncertainties. Such
      statements are based on management's current expectations and are subject to
      facts that could cause results to differ materially from the forward-looking
      statements. 

    


    For
      further information you are encouraged to review Implant Sciences’ filings with
      the Securities and Exchange Commission, including its Annual Report on Form
      10K
      for the period ended June 30, 2006 and Quarterly Reports on Form 10Q for the
      periods ended September 30, 2006, December 31, 2006 and March 31, 2007. The
      Company assumes no obligation to update the information contained in this press
      release.

    


    For
      further information contact:

    


    Implant
      Sciences Corporation

    Investor
      Relations

    (781)
      246-0700 or (508) 523-3141

    david@implantsciences.com

    www.implantsciences.com

    Catalyst
      Financial Resources

    Thomas
      T.
      O’Brien, 503-757-4903

    Thomas@catalystresearch.com


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      D

    


    Form
      of
      Proxy

    


    


    IRREVOCABLE
      PROXY

    


    The
      undersigned stockholder of Implant Sciences, Corp., a Massachusetts corporation
      (the "Company"), hereby irrevocably (to the fullest extent permitted by law)
      appoints and constitutes the Board of Directors of the Company, the attorneys
      and proxies of the undersigned with full power of substitution and
      re-substitution, to the full extent of the undersigned's rights with respect
      to
      (i) the shares of stock of the Company owned by the undersigned as of the date
      of this proxy, and (ii) any and all other shares of stock of the Company which
      the undersigned may acquire after the date hereof until September 30, 2009
      (the
“Termination Date”). (The shares of the capital stock of the Company referred to
      in clauses (i) and (ii) of the immediately preceding sentence are collectively
      referred to as the "Shares.") Upon the execution hereof, all prior proxies
      given
      by the undersigned with respect to any of the Shares are hereby revoked, and
      no
      subsequent proxies will be given with respect to any of the Shares.

    


    This
      proxy is irrevocable, is coupled with an interest and is granted in connection
      with the Transition Agreement, dated as of the date hereof, between the Company
      and the undersigned (the "Agreement"), and is granted in consideration of the
      Company entering into the Agreement. Capitalized terms used but no otherwise
      defined in this proxy have the meanings ascribed to such terms in the
      Agreement.

    


    The
      attorney and proxy named above will be exclusively empowered, and may exercise
      this proxy, to vote the Shares in favor of any resolution or nomination approved
      by the Board of Directors of the Company, at any meeting of the stockholders
      of
      the Company however called, and at any adjournment thereof, or in any written
      action by consent of stockholders of the Company, where the record date of
      the
      meeting of Stockholders is between the date hereof and the Termination
      Date.

    


    This
      proxy shall not apply to shares that the undersigned sells to a non-affiliated
      person in an arms length sale for valid consideration. Other than as stated
      in
      the forging sentence, any obligation of the undersigned hereunder shall be
      binding upon the heirs, successors and assigns of the undersigned (including
      any
      transferee of any of the Shares).

     

    This
      proxy shall terminate upon the Termination Date.

    


    


    Dated:
      September 27, 2007 

     

    /s/
      Anthony J. Armini

    Name:
      Anthony Armini

    Number
      of
      Shares of Company

    Common
      Stock: ____________