Document:

THIS DEBENTURE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE “
SECURITIES”), HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.  THE SECURITIES ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S AND/OR REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMEMDED (THE “ACT”). THE SECURITIES ARE “
RESTRICTED” AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO REGULATION S AND/OR REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING TRANSACTION INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.

 

 
DEBENTURE
 

 
UNICO, INCORPORATED
 

 
8% Convertible Debenture
 

 
Due May 27, 2010
 

 
No. 231
 $5,000.00

 This Debenture is issued by
Unico, Incorporated, an Arizona corporation (the “Company”), and Moore Investment Holdings, LLC. (together with its permitted successors and assigns, the “Holder”) pursuant to exemptions from registration under the Securities Act of 1933, as amended.

 
ARTICLE I.
 

 Section 1.01

Principal and Interest.  For value received on November 27, 2009, the Company hereby promises to pay to the order of Holder in lawful money of the United States of America and in immediately available funds the principal sum of $5,000.00, together with interest on the unpaid principal of this Debenture at the rate of eight percent (8%) per year (computed on the basis of the 365-day year and the actual days elapsed) from the date of this Debenture until paid.  At the Company’s option, the entire principal amount and all accrued interest shall be either (a) paid to the Holder on or before the due date of this Debenture or (b) converted in accordance with Section 1.02 herein.

 Section 1.02

Optional Conversion.  The Holder is entitled, at its option, to convert, at any time and from time to time, until payment in full of this Debenture, all or any part of the 

 1

 

 

principal amount of this Debenture, plus accrued interest, into shares (the “
Conversion Shares”) of the Company’s common stock, par value $0.0010 per share (“
Common Stock”), at a price per share equal to fifty percent (50%) of the closing bid price of the Common Stock on the date that the Company receives notice of conversion. To convert this debenture, the Holder shall deliver written notice (the “
Conversion Notice”) thereof, such Conversion Notice containing such information necessary including amount of conversion and number of shares, to the Company at its address set forth herein.  The date upon which the conversion shall be effective (the “
Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.  The Conversion Shares shall be delivered to the Holder at the address indicated herein.

 The Company is entitled, at its option, to convert, at any time and from time to time, until payment in full of this Debenture, all or any part of the principal amount of this Debenture, plus accrued interest, into shares (the “
Conversion Shares”) of the Company’s common stock, par value $0.0010 per share (“
Common Stock”), at a price per share equal to fifty percent (50%) of the closing bid price of the Common Stock on the date that the Company issues such notice of conversion. To convert this debenture, the Company shall deliver written notice (the “
Conversion Notice”) thereof, such Conversion Notice containing such information necessary including amount of conversion and number of shares, to the Holder at its address set forth herein.  The date upon which the conversion shall be effective (the “
Conversion Date”) shall be deemed to be the date set forth in the Conversion Notice.  The Conversion Shares shall be delivered to the Holder at the address indicated herein.

 Section 1.03

Reservation of Common Stock.  The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Debenture, such number of shares of Common Stock as shall from time to time be sufficient to effect such conversion, based on the Conversion Price.  If at any time the Company does not have a sufficient number of Conversion Shares authorized and available, then the Company shall call and hold a special meeting of its stockholders within sixty (60) days of that time for the sole purpose of increasing the number of authorized shares of Common Stock.

 Section 1.04

Registration Rights.  The Company is obligated to register the resale of the Conversion Shares under the Securities Act of 1933, as amended, or provide Holder with an appropriate exemption from registration.

 Section 1.05

Interest Payments.  The interest so payable will be paid at the time of maturity or conversion to the person in whose name this Debenture is registered.  At the time such interest is payable, the Company, in its sole discretion, may elect to pay interest in cash or in the form of Common Stock.  If paid in Common Stock, the amount of stock to be issued shall be calculated in accordance with the formula and procedure set forth in Section 1.02 above. 

 Section 1.06

Right of Redemption.  The Company shall have the right to redeem, with thirty (30) business days advance notice to the Holder, any or all outstanding Debentures remaining in its sole discretion (“
Right of Redemption”).  The redemption price shall be equal to 100% of the face amount of the Debenture redeemed plus all accrued interest (“
Redemption Price”).   
 

 2

 

 

 Section 1.07

Subordinated Nature of Debenture.  This Debenture and all payments hereon, including principal or interest, shall be subordinated and junior in right of payment to all accounts payable of the Company incurred in the ordinary course of business and/or bank debt of the Company not to exceed $30,000.

 

 
ARTICLE II.
 

 Section 2.01

Amendments and Waiver of Default.  The Debenture may be amended with the consent of Holder.  Without the consent of Holder, the Debenture may be amended to cure any ambiguity, defect or inconsistency, to provide assumption of the Company obligations to the Holder or to make any change that does not adversely affect the rights of the Holder.

 
ARTICLE III.
 

 Section 3.01

Events of Default.  An Event of Default is defined as follows: (a) failure by the Company to pay amounts due hereunder within fifteen (15) days of the date of maturity of this Debenture; (b) failure by the Company for thirty (30) days after notice to it to comply with any of its other agreements in the Debenture; (c) events of bankruptcy or insolvency; (d) a breach by the Company of its obligations under the Registration Rights Agreement which is not cured by the Company within ten (10) days after receipt of written notice thereof.  The Holder may not enforce the Debenture except as provided herein.

 Section 3.02

Failure to Issue Unrestricted Common Stock. As indicated above, a breach by the Company under its obligation under the Registration Rights Agreement shall be deemed an Event of Default, which if not cured with ten (10) days, shall entitle the Holder accelerated full payment of all debentures outstanding.  The Company acknowledges that failure to honor a Notice of Conversion shall cause hardship to the Holder.

 
ARTICLE IV.
 

 Section 4.01

Anti-dilution.  In the event that the Company shall at any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on the outstanding Common Stock, the Conversion Price in effect immediately prior to such subdivision of the issuance of such dividend shall be proportionately decreased and, in the event that the Company shall at any time combine the outstanding shares of Common stock, the Conversion price in effect immediately prior to such combination shall be proportionally increased, effective at the close of business on the date of such subdivision, dividend or combination as the case may be.

 
ARTICLE V.
 

 Section 5.01

Notice.  Notices regarding this debenture shall send to the parties at the following addresses, unless a party notifies the other parties, in writing, of a change of address:

 

 3

 

 

If to the Company:

Unico, Incorporated

Attn:  Mark A. Lopez, CEO

8880 Rio San Diego Drive, Suite 800

San Diego, CA 92108

Telephone: (619) 209-6124 

 

 If to the Holder:

Moore Investment Holdings, LLC

Attn: Joseph Lopez

1575 Delucchi Lane, Ste. 115

Reno, Nevada 89502

 

 Section 5.02

Governing Law.  This Debenture shall be deemed to be made under and shall be construed in accordance with the laws of the State of California without giving effect to the principals of conflict of the laws thereof.  Each of the parties consents to the jurisdiction of the U.S. District Court sitting in the District of the State of California or the state courts of the State of California sitting in Riverside in connection with any dispute arising under this debenture and hereby waives, to the maximum extent permitted by law, any objection, including the objection based on
forum non conveniens to the bringing of any such proceeding in such jurisdictions.

 Section 5.03

Severability.  The invalidity of any of the provisions of this Debenture shall not invalidate or otherwise affect any of the other provisions of this Debenture, which shall remain in full force effect.

 Section 5.04

Entire Agreement and Amendments.  This Debenture represents the entire agreement between the parties hereto with respect to the subject matter hereof and there are no representations, warranties or commitments, except as set forth herein.  This Debenture may be amended only by an instrument in writing executed by the parties hereto.

 Section 5.05

Counterparts.  This Debenture may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to constitute and instrument.

 
IN WITNESS WHEREOF, with the intent to legally bound hereby, the Company has executed this Debenture as of the date first written above.

 

 

 
UNICO, INCORPORATED
 

 

 By:
/s/ Mark A. Lopez
 Name: Mark A. Lopez

Title: Chief Executive Officer

 

 4imxform8k100114_ex10-1.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.1

        

      

    

    OMNIBUS
WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT AND

     

    THIRD AMENDMENT TO NOTE AND
WARRANT PURCHASE AGREEMENT

     

    This
Omnibus Waiver and First Amendment to Credit Agreement and Third Amendment to
Note and Warrant Purchase Agreement (“Amendment”) is made as of the
12th day of January, 2010 between Implant Sciences Corporation, a Massachusetts
corporation (the “Company”), and DMRJ Group LLC,
a Delaware limited liability company (the “Lender”).

    

    BACKGROUND

     

    A. Company
and Lender are parties to a certain Note and Warrant Purchase Agreement dated as
of December 10, 2008 (as modified or amended from time to time, the “Purchase Agreement”), pursuant
to which, among other things, Lender purchased that certain Amended and Restated
Senior Secured Convertible Promissory Note dated March 12, 2009 in the original
aggregate principal amount of $5,600,000 (the “March 2009
Note”).

     

    B. Pursuant
to the Purchase Agreement, Lender subsequently purchased that certain Senior
Secured Promissory Note dated July 1, 2009 in the original aggregate principal
amount of $1,000,000 (the “July
2009 Note” and together with the March 2009 Note, the “Term Notes” and each a “Term Note”).

     

    C.   The
Purchase Agreement and all instruments, documents and agreements executed in
connection therewith, or related thereto, including, without limitation, the
March 2009 Note and the July 2009 Note, are referred to herein collectively as
the “Purchase
Documents”.

     

    D. Company
and Lender are also parties to a certain Credit Agreement dated September 4,
2009 (as modified or amended from time to time, the “Credit Agreement”), pursuant
to which, among other things, the Company executed and delivered to Lender that
certain Promissory Note dated September 4, 2009 in the original aggregate
principal amount of $3,000,000 (the “Revolver Note” and together
with the March 2009 Note and the July 2009 Note, each a “Note” and collectively, the
“Notes”).

     

    E.   The
Credit Agreement and all instruments, documents and agreements executed in
connection therewith, or related thereto, including, without limitation, the
Revolver Note, are referred to herein collectively as the “Credit Documents” and together
with the Purchase Documents, each a “Transaction Document” and
collectively, the “Transaction
Documents”.

     

    F. The
Company has notified Lender that the following Events of Default have occurred
and are continuing under the Transaction Documents: (i) the Company’s failure to
comply with Section 3.29(a) of the Purchase Agreement and Section 5.1(q)(i) of
the Credit Agreement for each week commencing the week ending July 3, 2009 and
each week thereafter; (ii) the Company’s failure to comply with Section 3.30 of
the Purchase Agreement and Section 5.1(r) of the Credit Agreement at all times
after September 4, 2009 through the date hereof; (iii) the Company’s failure to
comply with Section 3.32 of the Purchase Agreement and Section 5.1(t) of the
Credit Agreement at all times after September 4, 2009 through the date hereof;
and (iv) the Company’s failure to comply with Section 3.33 of the Purchase
Agreement and Section 5.1(u) of the Credit Agreement at all times after
September 4, 2009 through the date hereof (the “Existing
Defaults”).

     

    G. Company
has requested that Lender waive the Existing Defaults and modify certain
definitions, terms and conditions in the Transaction Documents, and Lender is
willing to do so on the terms and conditions hereafter set forth.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    H. All
capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Transaction Documents.

     

    NOW,
THEREFORE, with the foregoing Background incorporated by reference and made a
part hereof and intending to be legally bound, the parties agree as
follows:

     

    1. Waiver.  The
Company acknowledges and agrees that as of this date, the Existing Defaults have
occurred and remain outstanding under the Transaction Documents.  Upon
the effectiveness of this Amendment and in specific reliance on the
representations and warranties made herein and subject to the terms and
conditions herein, Lender hereby waives the Existing Defaults.  Such
waiver shall in no way constitute a waiver of any other default or Event of
Default which may have occurred but which is not specifically referenced as an
“Existing Default” nor shall this waiver obligate Lender to provide any further
waiver of any other default or Event of Default (whether similar or dissimilar,
including any further defaults or Events of Default resulting from a failure to
comply with Sections 3.29(a), 3.30, 3.32 and 3.33 of the Purchase Agreement and
Sections 5.1(q)(i), (r), (t) and (u) of the Credit Agreement).  This
waiver shall not preclude the future exercise of any right, power, or privilege
available to Lender whether under the Purchase Agreement, the Notes, the Credit
Agreement, the other Transaction Documents, at law or at equity or
otherwise.

     

    2. Amendments to the
Transaction Documents.  Upon the effectiveness of this
Amendment:

     

    (a) Maturity
Date.  Notwithstanding anything to the contrary contained in
any of the Transaction Documents (including, without limitation, any of the
Notes), effective as of December 10, 2009, the “Maturity Date” (as defined in
the March 2009 Note, the July 2009 Note and the Credit Agreement) shall be
defined as June 10, 2010.

     

    (b) Prepayment of March 2009
Note.  Notwithstanding anything to the contrary contained in any of
the Transaction Documents (including, without limitation, Section 1.3 of the
March 2009 Note), Company may not prepay, and Lender shall be under no
obligations to accept any proposed prepayment of more than $3,600,000 of the
principal amount of the March 2009 Note.

     

    (c) Interest on the Term
Notes.  Notwithstanding anything to the contrary contained in
any of the Transaction Documents (including without limitation, Section 1.2 of
either of the Term Notes), Company shall pay interest to Lender, on the Maturity
Date or at such earlier time as payment is made pursuant to the terms of the
applicable Term Note, at a rate equal to the lesser of fifteen percent (15%) per
annum and the maximum applicable legal rate, computed on the basis of a 360-day
year of twelve (12) thirty-day months, on the outstanding principal balance of
each of the Term Notes. Furthermore, upon and
from the occurrence of an Event of Default (as defined in the applicable Term
Note) described in Sections 2.1(a), (h) or (i) of the applicable Term Note,
Company shall also be obligated to pay Lender, on demand, additional default
interest at a rate equal to the lesser of three percent (3%) per month (prorated
for partial months) and the maximum applicable legal rate, computed on the basis
of a 360-day year of twelve (12) thirty-day months, on the outstanding principal
balance of such Term Note and on all unpaid interest.

     

     

    
      
         

      

      
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    (d) Amendments to Credit
Agreement.

     

    (i) Article I
of the Credit Agreement is hereby amended by deleting the following terms: “Net
Profits Interest” (Section 1.74), “Net Profits Paid” (Section 1.75), “Net
Profits Payment Date” (Section 1.76) and “Net Profits” (Section 1.77) and
restating the title of each of such Sections as “[Reserved]”.

     

    (ii) Section
1.45 of the Credit Agreement is hereby amended and restated as
follows:

     

    1.45           Facility Limit means
$5,000,000.

     

    (iii) Section
1.81 of the Credit Agreement is hereby amended and restated as
follows:

     

    1.81           Obligations shall mean,
without duplication, all present and future obligations, Indebtedness and
liabilities of any Loan Party to Lender or any of its affiliates at any time and
from time to time of every kind, nature and description arising under any
Transaction Document or Note and Warrant Purchase Agreement Document, whether
direct or indirect, secured or unsecured, joint and/or several, absolute or
contingent, due or to become due, matured or unmatured, now existing or
hereafter arising, contractual or tortious or liquidated or unliquidated,
including, without limitation, all principal, interest, fees, charges, expenses
and indemnities, all amounts paid or advanced by Lender to, on behalf of or for
the benefit of any such Loan Party in accordance with the terms of the
Transaction Documents, for any reason at any time, and all obligations of
performance and further including all obligations for payment of interest, fees
and other amounts that accrue after the commencement of any receivership,
insolvency or bankruptcy proceeding by or against any such Loan Party or its
Properties, whether or not such obligations represent allowed claims in any such
case or proceeding.

     

    (iv) Section
2.2 of the Credit Agreement is hereby amended and restated as
follows:

     

    2.2           Borrowing
Procedures.  Borrower shall request each Advance by delivering
to Lender a written notice (by facsimile or an electronic format acceptable to
Lender) (an “Advance
Request”) to Lender specifying (i) the amount of the requested Advance
and (ii) the proposed date of funding of the Advance (which shall be a Business
Day) (the “Advance
Date”).  Each Advance Request shall be in substantially the
form attached hereto as Exhibit E, shall be

     

     

    
      
         

      

      
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    delivered
together with an executed current Borrowing Certificate and must be received by
Lender no later than noon (New York City time) five (5) Business Days prior to
the applicable Advance Date.  In the event that Lender elects to fund
the Advance and the Funding Conditions are satisfied, Lender shall remit the
amount of the Advance in immediately available funds to the Funding Account by
3:00 p.m. (New York City time) on the Advance Date.

     

    (v) Section
2.5(a)  of the Credit Agreement is hereby amended and restated as
follows:

     

    (a)           Borrower
shall pay to Lender interest on the outstanding principal amount of the Advances
at a rate equal to the lesser of 15% per annum and the Maximum Rate (which
interest accruing at the Maximum Rate shall compound at the maximum frequency
permitted under Applicable Law).

     

    (vi) Section
2.7 of the Credit Agreement is hereby amended and restated as
follows:

     

    2.7           [Intentionally
Omitted]

     

    (vii) Section
2.8 of the Credit Agreement is hereby amended and restated as
follows:

     

    2.8           Principal
Payments.  Notwithstanding anything to the contrary contained
herein, any unpaid principal balance of the Advances and any accrued and unpaid
interest and all other Obligations shall be due and payable on the Termination
Date.

     

    (viii) Section
2.9(b)(i) of the Credit Agreement is hereby amended and restated as
follows:

     

    (b)           (i)  Subject
to Section 2.9(b)(ii), on each Payment Date, Lender shall distribute, or cause
to be distributed, the funds on deposit in the Concentration Account
representing the cash proceeds of Collateral in the following
order:

     

    first, to Lender an amount
equal to all costs and expenses then owing to Lender;

     

    second, to Lender all amounts
owing under Section 2.5 herein;

     

    third, to Lender all amounts
consisting of accrued but unpaid interest owing pursuant to or under the Note
and Warrant Purchase Agreement Documents;

     

     

    
      
         

      

      
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    fourth, to Lender an amount
equal to the aggregate principal amount of the Obligations outstanding under
this Agreement; and

     

    fifth, unless otherwise
required by Applicable Law, to the Borrower’s Operating Account, an amount equal
to any surplus after giving effect to the distributions made pursuant to clauses
first through fourth of this Section
2.9(b)(i), for use by the Borrower.

     

    (ix) Section
2.13(b) of the Credit Agreement is hereby amended and restated as
follows:

     

    (b)           Upon
the reasonable request of Borrower and at reasonable intervals, Lender shall
render to Borrower a statement setting forth the balance in the Borrower’s loan
account(s) maintained by Lender for Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, expenses and any other amounts
owing to Lender under the Transaction Documents, within a reasonable period of
time following the request of Borrower.  Each such statement shall be
subject to subsequent adjustment by Lender but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Lender receives a written notice from Borrower of any specific exceptions
of Borrower thereto within thirty (30) days after the date such statement has
been mailed by Lender.  Until such time as Lender shall have rendered
to Borrower a written statement as provided above, the balance in Borrower’s
loan account(s) shall be presumptive evidence of the amounts owing to Lender by
Borrower.

     

    (x) Section
3.2(a) of the Credit Agreement is hereby amended and restated as
follows:

     

    (a)           Lender
shall have received an Advance Request with respect to such proposed Advance
together with a completed Borrowing Certificate, and each statement or
certification made by Borrower in the Advance Request and the Borrowing
Certificate shall be true and correct on the Advance Date;

     

    (e) Notwithstanding
anything to the contrary contained in the Purchase Agreement, the Credit
Agreement and the Transaction Documents, Lender and the Company agree and
acknowledge that the financial covenants contained in Sections 3.29(a), 3.30,
3.32 and 3.33 of the Purchase Agreement and Sections 5.1(q)(i), (r), (t) and (u)
of the Credit Agreement shall not be

     

     

    
      
         

      

      
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      tested
from the date hereof through June 10, 2010 (it being understood that any failure
to comply with such covenants during such period shall not cause or result in
any default or Event of Default).

    

     

    3. Representations and
Warranties.  Company represents and warrants to Lender
that:

     

    (a) All
warranties and representations made to Lender under the Transaction Documents
are true and correct, in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified by materiality, Material Adverse Effect or dollar
thresholds in the text thereof), as to the date hereof unless they specifically
relate to an earlier date in which case they shall be true and correct as of
such date, other than as set forth on the disclosure schedules (the “Updated Disclosure Schedules”)
to be delivered to Lender pursuant to Section 5(a) below (the numbers of which
shall correspond to the numbers of the disclosure schedules to the applicable
Transaction Document); notwithstanding the foregoing, the representations and
warranties made as of the Closing Date (as defined in the Purchase Agreement) in
Section 2.1(c) of the Purchase Agreement shall be made as of the date
hereof.

     

    (b) The
Company and the Guarantors (as applicable) have the requisite corporate power
and authority to enter into and perform this Amendment in accordance with the
terms hereof.  The execution, delivery and performance of this
Amendment by the Company and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, no further consent or authorization of the Company, its Board
of Directors, stockholders or any other third party is required.  When
executed and delivered by the Company and the Guarantors, this Amendment shall
constitute a valid and binding obligation of the Company and the Guarantors
enforceable against the Company and the Guarantors in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general
application.

     

    (c) This
Amendment, the A&R Revolver Note (as defined below), all other documents,
instruments and agreements executed in connection with this Amendment and any
assignment, instrument, document, or agreement executed and delivered in
connection herewith, will be valid, binding, and enforceable in accordance with
its respective terms.

     

    (d) Upon the
effectiveness of this Amendment, no default or Event of Default is outstanding
under any of the Transaction Documents.

     

    4. Effectiveness
Conditions.  This Amendment shall be effective upon completion
of the following conditions precedent (all documents to be in form and substance
satisfactory to Lender and Lender’s counsel):

     

    (a) Execution
and delivery by Company and each Person who delivered a Guarantee to Lender in
connection with the Transaction Documents (each a “Guarantor” and collectively,
the “Guarantors”) to
Lender of this Amendment;

     

     

    
      
         

      

      
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    (b) Execution
and delivery by Company to Lender of an Amended and Restated Promissory Note
(the “A&R Revolver
Note”) which A&R Revolver Note shall amend and restate the Revolver
Note;

     

    (c) Delivery
by Company to Lender of a secretary’s certificate, dated as of the date hereof,
as to (i) the resolutions adopted by the Board of Directors approving the
transactions contemplated hereby, (ii) the Articles of Organization, (iii) the
Bylaws, each as in effect as of the date hereof, and (iv) the authority and
incumbency of the officers of the Company and the Guarantors executing this
Amendment, the A&R Revolver Note and any other documents required to be
executed or delivered in connection therewith; and

     

    (d) Execution
and/or delivery by Company of all agreements, instruments and documents
requested by Lender to effectuate and implement the terms hereof and the
Transaction Documents.

     

    5. Additional
Covenants.

     

    (a) Promptly,
but in any event not less than fifteen (15) days after the date hereof, the
Company shall deliver to Lender the Updated Disclosure Schedules, in form and
substance satisfactory to Lender.

     

    (b) Notwithstanding
anything contained in the Transaction Documents to the contrary, the Company
covenants and aggress with Lender, so long as any of the Transaction Documents
shall remain in effect and the principal of or interest on any Note, or any
other Obligation, shall remain unpaid, the Company shall not issue in one or
more related or unrelated transactions any Common Stock or securities of the
Company or any Subsidiary which entitle the holder thereof to acquire Common
Stock at any time, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock (other than shares of Common Stock issuable upon
conversion or exchange of securities of the Company outstanding on the date
hereof or Options that may be granted to employees and consultants pursuant to
any employee stock benefit, option, purchase or similar plan approved by the
Company’s Board of Directors prior to the date hereof and the shares underlying
such Options), unless in all cases such securities are issued at, or entitle the
holder to receive Common Stock at, a price of not less than thirteen cents
($0.13) per share.

     

    6. Expenses.  The
Company shall pay any and all costs, fees and expenses of Lender (including
without limitation, attorneys’ fees) in connection with this Amendment and the
transaction contemplated hereby.  The Company acknowledges that the
Lender has incurred $38,000 in costs, fees and expenses to
date in connection with the preparation, negotiation and completion of
this Amendment and the transactions contemplated hereby.  The
Company shall pay this amount upon execution of this Amendment .

     

    7. No
Waiver.  Lender reserves all of its rights and remedies arising
with respect to any and all defaults or events of defaults under the Transaction
Documents that may be in existence on the date hereof, regardless of whether
such defaults or events of default have been identified, or which may occur in
the future.  Lender has not modified, is not waiving and has not
agreed to

     

     

    
      
         

      

      
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      forbear
in the exercise of, any of its present or future rights and remedies other than
as expressly set forth herein with respect to the Existing
Defaults.  No action taken or claimed to be taken by Lender will
constitute such a waiver, modification or agreement to forbear.  This
Amendment does not obligate Lender to agree to any other extension or
modification of the Transaction Documents nor does it constitute a course of
conduct or dealing on behalf of Lender or a waiver of any other rights or
remedies of Lender except as and only to the extent expressly set forth
herein.  No omission or delay by Lender in exercising any right or
power under the Transaction Documents, this Amendment or any related
instruments, agreements or documents will impair such right or power or be
construed to be a waiver of any default or Event of Default or an acquiescence
therein, and any single or partial exercise of any such right or power will not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver will be valid unless in writing and then only to the extent
specified.

    

     

    8. Ratification of Loan
Documents.  Except as expressly set forth herein, all of the
terms and conditions of the Purchase Agreement, the Credit Agreement and the
other Transaction Documents are hereby ratified and confirmed and continue
unchanged and in full force and effect.  All references to any of the
Transaction Documents shall mean the applicable Transaction Document as modified
by this Amendment.

     

    9. Confirmation of
Indebtedness.  Company confirms and acknowledges that as of the
close of business on January 10, 2010, Company was indebted to Lender without
any deduction, defense, setoff, claim or counterclaim, of any nature, in the
aggregate principal and interest in the amount of $7,570,411 of which $4,597,733
is due on account of the March 2009 Note, $1,164,333 is due on account of the
July 2009 Note and $1,808,345 is due on account of Advances (as defined in the
Credit Agreement), plus all fees, costs
and expenses incurred to date in connection with the Purchase Agreement, the
Credit Agreement and the other Transaction Documents.

     

    10. Collateral.  Company
and Guarantors hereby confirm and agree that all security interests and liens
granted to Lender pursuant to the Transaction Documents continue in full force
and effect and shall continue to secure the Obligations (as defined in the
Security Agreements (as defined in the Purchase Agreement and as defined in the
Credit Agreement)), including all liabilities and obligations (primary,
secondary, direct, contingent, sole, joint or several) due or to become due, or
that are now or may be hereafter contracted or acquired, or owing, under the
Notes and any other instruments, agreements or other documents executed and/or
delivered in connection herewith or therewith, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Lender as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.

     

    11. Acknowledgment of
Guarantors.  By execution of this Amendment, each Guarantor
hereby acknowledges the terms and conditions of this Amendment and confirms that
Guarantors jointly and severally and absolutely and unconditionally guarantee,
as surety, all of Guarantied Obligations (as defined in the Guaranty from
Guarantors to Lender dated December 10, 2008 and in the Guaranty from Guarantors
to Lender dated September 4, 2009) including all liabilities and obligations
(primary, secondary, direct, contingent, sole, joint or several) due or to
become due, or

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

       

      that are
now or may be hereafter contracted or acquired, or owing, under the A&R
Revolver Note and covenants that each such Guaranty remains unchanged and in
full force and effect and shall continue to cover the existing and future
Obligations of Company to Lender.

    

     

    12. Governing
Law.  This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction.  This
Amendment shall not be interpreted or construed with any presumption against the
party causing this Amendment to be drafted.

     

    13. Signatories:  Each
individual signatory hereto represents and warrants that he or she is duly
authorized to execute this Amendment on behalf of his or her principal and that
he or she executes the Amendment in such capacity and not as a
party.

     

    14. Duplicate
Originals:  Two or more duplicate originals of this Amendment
may be signed by the parties, each of which shall be an original but all of
which together shall constitute one and the same instrument.  This
Amendment may be executed in counterparts, all of which counterparts taken
together shall constitute one completed fully executed
document.  Signature by facsimile or PDF shall bind the parties
hereto.

     

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
        
          
 

           

        

         

      

      
        9

        
          

        

      

      
         

      

    

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

     

    

    
      	
              COMPANY:

            	
              IMPLANT
      SCIENCES CORPORATION

               

              By:
      /s/ Roger P. Deschenes

              Name:
      Roger P. Deschenes

              Title:
      Vice President, Finance

               

            
	
              GUARANTORS:

            	
              C
      ACQUISITION CORP.

               

               

              By:
      /s/ Roger P. Deschenes

              Name:
      Roger P. Deschenes

              Title:
      Vice President

               

            
	 
      	
              ACCUREL
      SYSTEMS INTERNATIONAL CORPORATION

               

               

              By:
      /s/ Roger P. Deschenes

              Name:
      Roger P. Deschenes

              Title:
      Vice President

               

            
	 
      	
              IMX
      ACQUISITION CORP.

               

               

              By:
      /s/ Roger P. Deschenes

              Name:
      Roger P. Deschenes

              Title:
      Vice President

               

            
	
              LENDER:

            	
              DMRJ
      GROUP LLC

               

              By:
      /s/ D. J. Small

              Name:
      D. J. Small

              Title:
      M.D.

               

            

    

     

     
 

    [SIGNATURE
PAGE TO OMNIBUS AMENDMENT]

    
      
        
          

          130355.01002/11963496v.4

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