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Exhibit 10.1    
    

IBASIS, INC.

2007 STOCK PLAN  

1.     DEFINITIONS.  

        Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this iBasis, Inc. 2007 Stock Plan, have the following
meanings: 

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means
the Committee. 

Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect. 

Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve. 

Board of Directors means the Board of Directors of the Company. 

Cause means dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement
between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between the
Participant and the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time of such termination, shall supersede this definition
with respect to that Participant. The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company. 

Change of Control means the occurrence of any of the following events: 

	(i)
	Ownership.
Any "Person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than Royal KPN N.V. or one or more of its subsidiaries becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the
Company's then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or by any employee benefit plan of the Company) pursuant to a
transaction or a series of related transactions which the Board of Directors does not approve; or

	(ii)
	Merger/Sale
of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving
entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case
may be, outstanding immediately after such merger or consolidation; or (B) the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets; or

	(iii)
	Change
in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who (A) are directors of the Company as of October 1, 2007, (B) are elected, or nominated for election, to the Board of Directors with the
affirmative 

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votes
of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company) or (C) are elected or nominated in accordance with Section 3.2 of the iBasis Second Amended and Restated
By-laws; or 

	(iv)
	Going
Private. The Company ceases to be a reporting company pursuant to the Exchange Act. 

Code means the United States Internal Revenue Code of 1986, as amended. 

Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions
of the Plan. 

Common Stock means shares of the Company's common stock, $0.001 par value per share. 

Company means iBasis, Inc., a Delaware corporation. 

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the
Code. 

Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director
of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan. 

Exchange Act means the Securities Exchange Act of 1934, as amended. 

Fair Market Value of a Share of Common Stock means: 

	(1)
	If
the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or, if not applicable, the last price of the Common Stock on the composite tape or other comparable reporting system for the trading day on the applicable date and if such
applicable date is not a trading day, the last market trading day prior to such date;

	(2)
	If
the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported
for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the
Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded on the applicable date and if such applicable date is
not a trading day, the last market trading day prior to such date; and

	(3)
	If
the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good
faith, shall determine. 

ISO means an option meant to qualify as an incentive stock option under Section 422 of the Code. 

Non-Qualified Option means an option which is not intended to qualify as an ISO. 

Option means an ISO or Non-Qualified Option granted under the Plan. 

Participant means an Employee, director or consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As
used herein, "Participant" shall include "Participant's Survivors" where the context requires. 

Plan means this iBasis, Inc. 2007 Stock Plan. 

Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which
the Shares are changed or for which they 

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are
exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both. 

Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award which is not an Option or a Stock Grant. 

Stock Grant means a grant by the Company of Shares under the Plan. 

Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan—an ISO, a Non-Qualified
Option, a Stock Grant or a Stock-Based Award. 

Survivor means a deceased Participant's legal representatives and/or any person or persons who acquired the Participant's rights to a Stock Right by
will or by the laws of descent and distribution. 

2.     PURPOSES OF THE PLAN.  

        The Plan is intended to encourage ownership of Shares by Employees and directors of and certain consultants to the Company and its Affiliates in order to attract
and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate.
The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards. 

3.     SHARES SUBJECT TO THE PLAN.  

        (a)   The
number of Shares which may be issued from time to time pursuant to this Plan shall be 3,500,000, or the equivalent of such number of Shares after the Administrator,
in its sole discretion, has interpreted the effect of any future stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 24 of the Plan. 

        (b)   If
an Option ceases to be "outstanding", in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price)
any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the
unissued Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in
whole or in part, by tender of Shares or if the Company's tax withholding obligation is satisfied by withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes of
the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion thereof, and not the net number of Shares actually issued and any
stock appreciation rights to be settled in shares of Common Stock shall be counted in full against the number of Shares available for issuance under the Plan, regardless of the number of exercise gain
shares issued upon the settlement of the stock appreciation right. 

4.     ADMINISTRATION OF THE PLAN.  

        The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case
the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to: 

	a.
	Interpret
the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;

	b.
	Determine
which Employees, directors and consultants shall be granted Stock Rights; 

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	c.
	Determine
the number of Shares for which a Stock Right or Stock Rights shall be granted, provided, however, that in no event shall Stock Rights with respect to more than 300,000 Shares
be granted to any Participant in any fiscal year;

	d.
	Specify
the terms and conditions upon which a Stock Right or Stock Rights may be granted; and

	e.
	Adopt
any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other
laws applicable to the Company or to Plan Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions
applicable to Stock Rights or Shares issuable pursuant to a Stock Right; 

provided,
however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of not causing any adverse tax consequences under
Section 409A of the Code and preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is
the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee. 

        To
the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members
and may delegate all or any portion of its responsibilities and powers to any other person selected by it. The Board of Directors or the Committee may revoke any such allocation or delegation at any
time. 

5.     ELIGIBILITY FOR PARTICIPATION.  

        The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be an Employee, director or
consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an
Employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a
Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to Employees. Non-Qualified Options, Stock Grants and
Stock-Based Awards may be granted to any Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to,
nor disqualify him or her from, participation in any other grant of Stock Rights. 

6.     TERMS AND CONDITIONS OF OPTIONS.  

        Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by
the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the
Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject
to at least the following terms and conditions: 

	a.
	Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and
conditions which the Administrator determines to be appropriate and in the 

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best
interest of the Company, subject to the following minimum standards for any such Non-Qualified Option: 

	i.
	Option Price: Each Option Agreement shall state the option price (per share) of the Shares covered by each Option, which option price
shall be determined by the Administrator but shall not be less than the Fair Market Value per share of Common Stock.

	ii.
	Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains.

	iii.
	Option Periods: Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may
no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the
attainment of stated goals or events.

	iv.
	Option Conditions: Exercise of any Option may be conditioned upon the Participant's execution of a Share purchase agreement in form
satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

	A.
	The
Participant's or the Participant's Survivors' right to sell or transfer the Shares may be restricted; and

	B.
	The
Participant or the Participant's Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable
restrictions.

	v.
	Option Term: Each Option shall terminate not more than ten years from the date of the grant or at such earlier time as the Option
Agreement may provide.

	b.
	ISOs: Each Option intended to be an ISO shall be issued only to an Employee and be subject to the following terms and conditions, with
such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal
Revenue Service:

	i.
	Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in
Paragraph 6(a) above, except clause (i) thereunder.

	ii.
	Option Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules
in Section 424(d) of the Code:

	A.
	10%
or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the
Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Shares on the date of the grant of the Option; or

	B.
	More
than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less
than 110% of the Fair Market Value on the date of grant.

	iii.
	Term of Option: For Participants who own:

	A.
	10%  or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more
than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or 

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	B.
	More
than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or
at such earlier time as the Option Agreement may provide.

	iv.
	Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar
year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by the Participant in any calendar year does not exceed $100,000. 

7.     TERMS AND CONDITIONS OF STOCK GRANTS.  

        Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock Grant must be accepted by the Participant, and the principal terms of
each Stock Grant shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum
standards: 

	(a)
	Each
Agreement shall state the purchase price (per share), if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall
not be less than the minimum consideration required by the Delaware General Corporation Law on the date of the grant of the Stock Grant;

	(b)
	Each
Agreement shall state the number of Shares to which the Stock Grant pertains; and

	(c)
	Each
Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time and events upon which such rights
shall accrue and the purchase price therefor, if any. 

8.     TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.  

        The Administrator shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Administrator may
determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock
awards or stock units. The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by
the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of
the Company. Notwithstanding the foregoing, each stock appreciation right shall (i) have a base price which shall not be less than the Fair Market Value per share of Common Stock and
(ii) terminate not more than ten years from the date of the grant or at such earlier time as the Agreement may provide. 

        The
Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs
(2), (3) and (4) of subsection (a) of Section 409A of the Code (and any successor provisions of the Code) and the regulations and other guidance issued thereunder (the
"Requirements"), to the extent applicable, and be operated in accordance with such Requirements so that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall
not be included in income under Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8. 

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9.     EXERCISE OF OPTIONS AND ISSUE OF SHARES.  

        An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee, together with provision for payment of
the full purchase price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement.
Such notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement. Payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or
(b) at the discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option
and held for at least six months, or (c) at the discretion of the Administrator, by having the Company retain from the shares otherwise issuable upon exercise of the Option, a number of shares
having a Fair Market Value equal as of the date of exercise to the exercise price of the Option, or (d) at the discretion of the Administrator, by delivery of the grantee's personal recourse
note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (e) at the discretion of the
Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (f) at the discretion of the Administrator, by
any combination of (a), (b), (c), (d) and (e) above or (g) at the discretion of the Administrator, payment of such other lawful consideration as the Administrator may determine.
Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code. 

        The
Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant's Survivors, as the case may be). In
determining what constitutes "reasonably promptly," it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation
(including, without limitation, state securities or "blue sky" laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery,
be fully paid, non-assessable Shares. 

        The
Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any
installment of any Option granted to an Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 27) without the prior approval of the
Employee if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv). 

        The
Administrator may, in its discretion, amend any term or condition of an outstanding Option provided (i) such term or condition as amended is permitted by the Plan,
(ii) any such amendment shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant, the Participant's Survivors, if
the amendment is adverse to the Participant, and (iii) any such amendment of any Option shall be made only after the Administrator determines whether such amendment would constitute a
"modification" of any Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of any Option including, but not
limited to, pursuant to Section 409A of the Code. 

10.   ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.  

        A Stock Grant or Stock-Based Award (or any part or installment thereof) shall be accepted by executing the applicable Agreement and delivering it to the Company
or its designee, together with provision for payment of the full purchase price, if any, in accordance with this Paragraph for the Shares as to which such Stock Grant or Stock-Based Award is being
accepted, and upon compliance 

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with
any other conditions set forth in the applicable Agreement. Payment of the purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made
(a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months and having a Fair
Market Value equal as of the date of acceptance of the Stock Grant or Stock Based-Award to the purchase price of the Stock Grant or Stock-Based Award, or (c) at the discretion of the
Administrator, by delivery of the grantee's personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b) and (c) above; or (e) at the discretion of the
Administrator, payment of such other lawful consideration as the Administrator may determine. 

        The
Company shall then, if required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant
(or to the Participant's Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes "reasonably promptly," it is expressly
understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or "blue sky" laws)
which requires the Company to take any action with respect to the Shares prior to their issuance. 

        The
Administrator may, in its discretion, amend any term or condition of an outstanding Stock Grant, Stock-Based Award or applicable Agreement provided (i) such term or condition
as amended is permitted by the Plan, (ii) any such amendment shall be made only with the consent of the Participant to whom the Stock Grant or Stock-Based Award was made, if the amendment is
adverse to the Participant, and (iii) any such amendment shall be made only after the Administrator determines whether such amendment would cause any adverse tax consequences to the
Participant, including, but not limited to, pursuant to Section 409A of the Code. 

11.   RIGHTS AS A SHAREHOLDER.  

        No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right, except after due
exercise of the Option or acceptance of
the Stock Grant or as set forth in any Agreement, and tender of the full purchase price, if any, for the Shares being purchased pursuant to such exercise or acceptance and registration of the Shares
in the Company's share register in the name of the Participant. 

12.   ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.  

        By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement provided that no Stock Right may be transferred by a Participant for value.
Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a
Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above,
a Stock Right shall only be exercisable or may only be accepted, during the Participant's lifetime, by such Participant (or by his or her legal representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and
void. 

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13.   EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.  

        Except as otherwise provided in a Participant's Option Agreement, in the event of a termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate before the Participant has exercised an Option, the following rules apply: 

	a.
	A
Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination for Cause, Disability, or death for which
events there are special rules in Paragraphs 14, 15, and 16, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination
of service, but only within such term as the Administrator has designated in a Participant's Option Agreement.

	b.
	Except
as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event may an Option intended to be an ISO, be exercised later than three months after the
Participant's termination of employment.

	c.
	The
provisions of this Paragraph, and not the provisions of Paragraph 15 or 16, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of
employment, director status or consultancy; provided, however, in the case of a Participant's Disability or death within three months after the termination of employment, director status or
consultancy, the Participant or the Participant's Survivors may exercise the Option within one year after the date of the Participant's termination of service, but in no event after the date of
expiration of the term of the Option.

	d.
	Notwithstanding
anything herein to the contrary, if subsequent to a Participant's termination of employment, termination of director status or termination of consultancy, but prior to
the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participant's termination, the Participant engaged in conduct which would constitute Cause, then
such Participant shall forthwith cease to have any right to exercise any Option.

	e.
	A
Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability
as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide; provided however that for
ISOs any leave of absence granted by the Administrator of greater than ninety days unless pursuant to a contract or statute that guarantees the right to reemployment shall cause such ISO to become a
Non-Qualified Option.

	f.
	Except
as required by law or as set forth in a Participant's Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant's status within or
among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate. 

14.   EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.  

        Except as otherwise provided in a Participant's Option Agreement, the following rules apply if the Participant's service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have been exercised: 

	a.
	All
outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for Cause will immediately be forfeited. 

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	b.
	Cause
is not limited to events which have occurred prior to a Participant's termination of service, nor is it necessary that the Administrator's finding of Cause occur prior to
termination. If the Administrator determines, subsequent to a Participant's termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant's
termination the Participant engaged in conduct which would constitute Cause, then the right to exercise any Option is forfeited. 

15.   EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.  

        Except as otherwise provided in a Participant's Option Agreement: 

	a.
	A
Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:

	(i)
	To
the extent that the Option has become exercisable but has not been exercised on the date of Disability; and

	(ii)
	In
the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have
accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

	b.
	A
Disabled Participant may exercise such rights only within the period ending one year after the date of the Participant's Disability, notwithstanding that the Participant might have
been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become Disabled and had continued to be an employee, director or consultant or, if earlier,
within the originally prescribed term of the Option.

	c.
	The
Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for by the Company. 

16.   EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.  

        Except as otherwise provided in a Participant's Option Agreement: 

	a.
	In
the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate, such Option may be exercised by the
Participant's Survivors:

	(i)
	To
the extent that the Option has become exercisable but has not been exercised on the date of death; and

	(ii)
	In
the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued
on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant's date of death.

	b.
	If
the Participant's Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant,
notwithstanding that the decedent might have been able to exercise the Option as to some or 

10

 

all
of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option. 

17.   EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.  

        In the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate for any reason before the Participant
has accepted a Stock Grant, such offer shall terminate. 

        For
purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant has been offered and accepted under the Plan who is absent from work with the
Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant's employment, director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly provide. 

        In
addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of employment or other service within or among the Company and any Affiliates shall not be
treated as a termination of employment, director status or consultancy so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate. 

18.   EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.  

        Except as otherwise provided in a Participant's Stock Grant Agreement, in the event of a termination of service (whether as an employee, director or consultant),
other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 19, 20, and 21, respectively, before all forfeiture provisions or Company rights of
repurchase shall have lapsed, then the Company shall have the right to cancel or repurchase that number of Shares subject to a Stock Grant as to which the Company's forfeiture or repurchase rights
have not lapsed. 

19.   EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE.  

        Except as otherwise provided in a Participant's Stock Grant Agreement, the following rules apply if the Participant's service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated for Cause: 

	a.
	All
Shares subject to any Stock Grant that remain subject to forfeiture provisions or as to which the Company shall have a repurchase right shall be immediately forfeited to the
Company as of the time the Participant is notified his or her service is terminated for Cause.

	b.
	Cause
is not limited to events which have occurred prior to a Participant's termination of service, nor is it necessary that the Administrator's finding of Cause occur prior to
termination. If the Administrator determines, subsequent to a Participant's termination of service, that either prior or subsequent to the Participant's termination the Participant engaged in conduct
which would constitute Cause, then the Company's right to repurchase all of such Participant's Shares shall apply. 

20.   EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.  

        Except as otherwise provided in a Participant's Stock Grant Agreement, the following rules apply if a Participant ceases to be an employee, director or consultant
of the Company or of an Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company's rights of repurchase have 

11

 

not
lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights
shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of Disability as would have lapsed had the Participant not become Disabled. The proration
shall be based upon the number of days accrued prior to the date of Disability. 

        The
Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another
agreement between
the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for by the Company. 

21.   EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.  

        Except as otherwise provided in a Participant's Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant
is an employee, director or consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the Company's rights of repurchase have not lapsed on the date of death, they shall
be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of
the Shares subject to such Stock Grant through the date of death as would have lapsed had the Participant not died. The proration shall be based upon the number of days accrued prior to the
Participant's death. 

22.   PURCHASE FOR INVESTMENT.  

        Unless the offering and sale of the Shares to be issued upon the particular exercise or acceptance of a Stock Right shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled: 

	a.
	The
person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the Company, prior to the receipt of such Shares, that such person(s) are acquiring such Shares for their
own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound
by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant: 

"The
shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to
it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws." 

	b.
	At
the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise or acceptance in
compliance with the 1933 Act without registration thereunder. 

23.   DISSOLUTION OR LIQUIDATION OF THE COMPANY.  

        Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants
and Stock-Based Awards which have 

12

 

not
been accepted will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant's Survivors have not otherwise terminated and expired, the
Participant or the Participant's Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is
exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall
immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement. 

24.   ADJUSTMENTS.  

        Upon the occurrence of any of the following events, a Participant's rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in a Participant's Agreement: 

        a.     Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater
or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or
other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, the number of shares of Common Stock deliverable upon the exercise of
an Option or acceptance of a Stock Grant shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made including, in the purchase price per share, to reflect
such events. The number of Shares subject to the limitations in Paragraph 3(a) and 4(c) shall also be proportionately adjusted upon the occurrence of such events. 

        b.     Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in or a Change of Control
is otherwise to be effected by a merger, consolidation, or sale of all or substantially all of the Company's assets other than a transaction to merely change the state of incorporation (a "Corporate
Transaction"), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the "Successor Board"), shall, as to outstanding Options, either
(i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with
respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity provided that such securities are registered pursuant
to the Exchange Act; or (ii) upon written notice to the Participants provide that all Options must be exercised, within a specified number of days of the date of such notice at the end of which
period the Options shall terminate (all Options shall for purposes of this clause (ii) be made fully vested and exercisable immediately prior to their termination); or (iii) terminate
such Options in exchange for a cash payment equal to the excess of the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction over
the exercise price of such Options without regard to the vesting schedule provided for in the Option Agreement. 

        With
respect to outstanding Stock Grants, the Administrator or the Successor Board, shall either (i) make appropriate provisions for the continuation of such Stock Grants on the
same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock
in connection with the Corporate Transaction or securities of any successor or acquiring entity provided that such securities are registered pursuant to the Exchange Act; or (ii) terminate such
Stock Grants in exchange for a cash payment equal to the excess of the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction over
the purchase price of the shares subject to the Stock Grant, if any (without regard to forfeiture or repurchase rights of the Company). In addition, in the event of a Corporate Transaction pursuant to
clause (i) above, the Administrator may, in its discretion, waive any or all Company forfeiture or repurchase rights with respect to outstanding Stock Grants. 

13

 

        c.     Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a
Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option
or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to receive for the purchase price paid upon such exercise or acceptance of the number of replacement
securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization. 

        d.     Adjustments to Stock-Based Awards. Upon the happening of any of the events described in Subparagraphs a, b or c above, any
outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator or the Successor Board shall determine the specific adjustments
to be made under this Paragraph 24, including, but not limited to the effect if any, of a Change of Control and, subject to Paragraph 4, its determination shall be conclusive. 

        e.     Modification of Options. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph a, b or c above with
respect to Options shall be made only after the Administrator determines whether such adjustments would constitute a "modification" of any ISO (as that term is defined in Section 424(h) of the
Code) or would cause any adverse tax consequences for the holders of such Options, including, but not limited to, pursuant to Section 409A of the Code. If the Administrator determines that such
adjustments made with respect to Options would constitute a modification or other adverse tax consequence, it may refrain from making such adjustments, unless the holder of an Option specifically
agrees in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such "modification" on his or her income tax treatment with respect
to the Option. This paragraph shall not apply to the acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the annual vesting limitation contained in
Section 422(d) of the Code, as described in Paragraph 6b(iv). 

        f.      Change of Control other than in a Corporate Transaction. In the event of a Change of Control that does not also constitute
a Corporate Transaction that has been approved by a majority of the Incumbent Directors, all Options outstanding under the Plan shall become fully vested and immediately exercisable as of the date of
the Change of Control, unless in any such case an Option has otherwise expired or been terminated pursuant to its terms or the terms of the Plan and any forfeiture or repurchase rights of the Company
with respect to outstanding Stock Grants that have not lapsed or expired prior to such Change of Control shall terminate as of the date of the Change of Control. 

25.   ISSUANCES OF SECURITIES.  

        Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be
made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right. 

26.   FRACTIONAL SHARES.  

        No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares
equal to the Fair Market Value thereof. 

14

 

27.   CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.  

        The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant's ISOs (or
any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the
Participant is an employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant's ISOs converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such
conversion. 

28.   WITHHOLDING.  

        In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other amounts are
required by applicable law or governmental regulation to be withheld from the Participant's salary, wages or other remuneration in connection with the exercise or acceptance of a Stock Right or in
connection with a Disqualifying Disposition (as defined in Paragraph 29) or upon the lapsing of any forfeiture provision or right of repurchase or for any other reason required by law, the
Company may withhold from the Participant's compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company's Common Stock or a promissory note, is authorized
by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner set forth under the
definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the fair market value of the shares withheld is less than
the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer. The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on the Participant's payment of such additional withholding. 

29.   NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.  

        Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any shares
acquired pursuant to the exercise of an
ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such shares before the later of (a) two years after
the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code.
If the Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter. 

30.   TERMINATION OF THE PLAN.  

        The Plan will terminate on September 28, 2017, the date which is ten years from the earlier of the date of
its adoption by the Board of Directors and the date of its approval by the shareholders of the Company. The Plan may be terminated at an earlier date by vote of the shareholders or the Board of
Directors of the Company; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination. 

15

 

31.   AMENDMENT OF THE PLAN AND AGREEMENTS.  

        The Plan may be amended by the shareholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent
necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment as may be afforded incentive
stock options under Section 422 of the Code (including deferral of taxation upon exercise), and to the extent necessary to qualify the shares issuable upon exercise or acceptance of any
outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities
dealers. In addition, if Nasdaq amends its corporate governance rules so that such rules no longer require stockholder approval of "material amendments" of equity compensation plans, then, from and
after the effective date of such an amendment to the Nasdaq rules, no amendment of the Plan which (i) materially increases the number of shares to be issued under the Plan (other than to
reflect a reorganization, stock split, merger, spinoff or similar transaction); (ii) materially increases the benefits to Participants, including any material change to: (a) permit a
repricing (or decrease in exercise price) of outstanding Options, (b) reduce the price at which Shares or Options may be offered, or (c) extend the duration of the Plan;
(iii) materially expands the class of Participants eligible to participate in the Plan; or (iv) expands the types of awards provided under the Plan shall become effective unless
stockholder approval is obtained. Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or
her. With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not
inconsistent with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant. Notwithstanding the
foregoing, the Administrator shall not allow either (a) the cancellation of outstanding Options or stock appreciation rights and the grant in substitution therefore of new Stock Rights having a
lower exercise price or (b) the amendment of outstanding Options or stock appreciation rights to reduce the exercise price thereof without shareholder approval. 

32.   EMPLOYMENT OR OTHER RELATIONSHIP.  

        Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a
Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by
the Company or any Affiliate for any period of time. 

33.   GOVERNING LAW.  

        This Plan shall be construed and enforced in accordance with the law of the State of Delaware. 

16

QuickLinks

Exhibit 10.1Transition 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: ____________

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