Exhibit 10.5
FUNDS ESCROW AGREEMENT
This Agreement (this "Agreement") is dated as of the 6th day of July 2005 among
Implant Sciences Corporation, a Massachusetts corporation (the "Company"),
Laurus Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb LLP (the "Escrow
Agent"):
W I T N E S S E T H:
WHEREAS, the Purchaser has advised the Escrow Agent that (a) the Company and the
Purchaser have entered into a Securities Purchase Agreement (the "Securities
Purchase Agreement") for the sale by the Company to the Purchaser of a secured
term note (the "Term Note"), and (b) the Company will issue to the Purchaser a
common stock purchase warrant (the "Term Note Warrant") in connection with the
issuance of the Term Note,;
WHEREAS, the Company and the Purchaser wish the Purchaser to deliver to the
Escrow Agent copies of the Documents (as hereafter defined) and the Escrowed
Payment (as hereafter defined) to be held and released by Escrow Agent in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to the
terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1.
DEFINITIONS.
WHENEVER USED IN THIS AGREEMENT,
THE FOLLOWING TERMS SHALL HAVE THE MEANINGS SET FORTH BELOW.
(A)
"AGREEMENT" MEANS THIS AGREEMENT, AS
AMENDED, MODIFIED AND/OR SUPPLEMENTED FROM TIME TO TIME BY WRITTEN AGREEMENT
AMONG THE PARTIES HERETO.
(B)
"CLOSING PAYMENT" MEANS THE CLOSING PAYMENT
TO BE PAID TO LAURUS CAPITAL MANAGEMENT, LLC, THE FUND MANAGER, AS SET FORTH ON
SCHEDULE A HERETO.
(C)
"DISBURSEMENT LETTER" MEANS THAT CERTAIN
LETTER DELIVERED TO THE ESCROW AGENT BY EACH OF THE PURCHASER AND THE COMPANY
SETTING FORTH WIRE INSTRUCTIONS AND AMOUNTS TO BE FUNDED AT THE CLOSING.
(D)
"DOCUMENTS" MEANS COPIES OF THE DISBURSEMENT
LETTER, THE SECURITIES PURCHASE AGREEMENT, AND THE TERM NOTE, .
(E)
"ESCROWED PAYMENT" MEANS $3,000,000.
1.2.
ENTIRE AGREEMENT.
THIS AGREEMENT CONSTITUTES
THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE MATTERS
CONTAINED HEREIN AND SUPERSEDES ALL PRIOR AGREEMENTS, UNDERSTANDINGS,
NEGOTIATIONS AND DISCUSSIONS OF THE PARTIES, WHETHER ORAL OR WRITTEN.
THERE ARE
NO WARRANTIES, REPRESENTATIONS AND OTHER AGREEMENTS MADE BY THE PARTIES IN
CONNECTION WITH THE SUBJECT MATTER HEREOF EXCEPT AS SPECIFICALLY SET FORTH IN
THIS AGREEMENT.
1.3.
EXTENDED MEANINGS.
IN THIS AGREEMENT WORDS
IMPORTING THE SINGULAR NUMBER INCLUDE THE PLURAL AND VICE VERSA; WORDS IMPORTING
THE MASCULINE GENDER INCLUDE THE FEMININE AND NEUTER GENDERS.
THE WORD "PERSON"
INCLUDES AN INDIVIDUAL, BODY CORPORATE, PARTNERSHIP, TRUSTEE OR TRUST OR
UNINCORPORATED ASSOCIATION, EXECUTOR, ADMINISTRATOR OR LEGAL REPRESENTATIVE.
1.4.
WAIVERS AND AMENDMENTS.
THIS AGREEMENT MAY BE
AMENDED, MODIFIED, SUPERSEDED, CANCELLED, RENEWED OR EXTENDED, AND THE TERMS AND
CONDITIONS HEREOF MAY BE WAIVED, IN EACH CASE ONLY BY A WRITTEN INSTRUMENT
SIGNED BY ALL PARTIES HERETO, OR, IN THE CASE OF A WAIVER, BY THE PARTY WAIVING
COMPLIANCE.
EXCEPT AS EXPRESSLY STATED HEREIN, NO DELAY ON THE PART OF ANY
PARTY IN EXERCISING ANY RIGHT, POWER OR PRIVILEGE HEREUNDER SHALL