ASSET PURCHASE AGREEMENT

            THIS ASSET PURCHASE AGREEMENT (the “ Agreement ”) is made and entered into as of this 18 ^th day of July, 2008 (the “ Effective Date ”), by and between IMPLANT SCIENCES CORPORATION, a Massachusetts corporation, with its principal place of business at 107 Audubon Road, Wakefield, MA 01880 (“ Seller ”) and BEST MEDICAL INTERNATIONAL, INC., a Virginia corporation with its principal place of business at 7643 Fullerton Road, Springfield, Virginia 22153 (“ Purchaser ”).  Capitalized terms shall have the meanings ascribed to them in these recitals, throughout this Agreement.

            R-1               Seller has Ytterbium and Dura Plaque products, materials, inventory, and machinery for the treatment of cancer and other diseases (collectively referred to as “ Seller’s Ytterbium Business ”); and

            R-2               Purchaser is in the business of the manufacture and distribution of products and related inventory relating to vascular brachytherapy and radiation therapy for use in the medical specialties of Cardiology, Oncology and Urology, including brachytherapy seeds and related accessories (“ Purchaser’s Brachytherapy Business ”); and

            R-3               Seller desires to sell and Purchaser desires to acquire Seller’s Ytterbium Business, together with all related intellectual property, technology and know-how (“ Intellectual Property Rights ”) associated therewith, and all records and other documentation in the actual possession or control of Seller which are reasonably relevant to the Seller’s Ytterbium Business, including (i) information regarding the Intellectual Property Rights, (ii) information regarding vendors to the Seller’s Ytterbium Business, including pricing and ordering information, contact information, purchase orders and material correspondence, and (iii) regulatory records, including licensing records, permits, shipping records, contact information and material correspondence) (“ Records ”) (collectively referred to sometimes as the “ Acquired Assets ”) upon and in accordance with the terms and conditions of this Agreement.

            NOW, THEREFORE, in consideration of the mutual promises contained herein, the recitals set forth above, which are hereby incorporated by reference, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.1.   Purchase of Assets .  On and subject to the terms and conditions contained in this Agreement, at Closing, Seller shall sell, assign, convey, transfer and deliver to Purchaser the Acquired Assets including but not limited to those shown on Schedule 1.1 , including any Intellectual Property Rights, free and clear of any and all liens, encumbrances, mortgages, pledges, charges or other security interests (collectively, “ Security Interests ”) or unassumed liabilities and obligations, and all right, title, interest and goodwill therein of every kind and nature currently owned by the Seller, subject only to the patent license dated as of June 30, 2008, pursuant to which Seller has previously granted to International Brachytherapy S.A. (“ IBt ”) a perpetual, exclusive worldwide, royalty-free license (together with the related Security Agreement dated as of June 30, 2008, the “ Xenation License ”) to use and practice, solely in IBt’s business of using Xenation machines to implant Xenon-124 atoms and other ions into brachytherapy seeds for the treatment of diseases, of (i) U.S. Patent Number 6,183,409, for which the pertinent claims are 9 through 13; (ii) any foreign counterparts of the aforementioned patent; and (iii) any reissue, continuation, divisional or continuation-in-part applications claiming priority directly or indirectly from any such patent, and such patents as may issue from any such application, and also including the right to claim priority under any applicable statute, treaty or convention based on any of said patent applications. A true and correct copy of the Xenation License is attached hereto as Exhibit A .

1.2.   Assumed Liabilities .  At Closing, Purchaser shall assume all liabilities and obligations of Seller with respect to Seller’s Ytterbium Business agreements identified in Schedule 1.2 (“ Assumed Liabilities ”), which are not delinquent or in default as of the Closing Date.  Except for the Assumed Liabilities, Purchaser will not assume any of the liabilities or obligations of the Seller, including, but not limited to, liability for any debt, contract, claim, obligation or liability of Seller, of any kind or nature, whether known or unknown, contingent or absolute now or in the future.

1.3.   Purchase Price .  In consideration of the conveyance to Purchaser of the Acquired Assets, the Purchaser shall pay to Seller consideration in the amount of Four Hundred Thousand Dollars ($400,000.00) (“ Purchase Price ”).  Seller and Purchaser mutually agree that the Purchase Price shall be allocated as indicated in Schedule 1.3 and that neither Party shall take, for tax purposes, any position inconsistent with that allocation. Purchaser shall pay to Seller One Hundred Thousand Dollars ($100,000.00) of the Purchase Price upon the execution of this Agreement.  Purchaser shall pay to Seller an additional One Hundred Thousand Dollars ($100,000.00) within thirty (30) days after the Effective Date.  Purchaser shall pay to Seller the final Two Hundred Thousand Dollars within sixty (60) days after the Effective Date, the date of such payment to be mutually agreed between Purchaser and Seller and to be referred to in this Agreement as the “ Closing ” or the “ Closing Date .” All such payments shall be made by Purchaser in cash, by bank or certified check or by wire transfer of immediatley available funds to an account designated by Seller. None of the Purchaser’s payments shall be refundable except to the extent set forth in Article VI of this Agreement.

           As used in this Article II, the term “ Knowledge ” (or words of such import) means, respect to the Seller, the Knowledge of Matthew R. Hollows and any of Seller’s corporate officers; and the “Knowledge” of any of such corporate officers means the actual knowledge of such persons or the knowledge that such persons should have obtained after reasonable inquiry of the matter or during the course of the performance of such officer’s usual duties on behalf of Seller; provided, however , that no such person shall be required to consult any docket or public records or make any inquiry of any unrelated third parties.  Seller represents and warrants to Purchaser as follows:

2.1.   Corporate Organization .  Seller is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has full power and authority to transact business as it currently does.

2.2.   Authorization of Transaction .  Seller represents that the consummation of the transactions contemplated by this Agreement does not constitute a sale of substantially all of its assets or any other transaction that would require approval of Seller’s shareholders or the Securities and Exchange Commission in order to consummate the transactions contemplated in this Agreement.  Without limiting the generality of the foregoing:

(a)   Seller’s board of directors has duly authorized the execution and delivery of this Agreement and has approved the consummation of the transactions contemplated by this Agreement; and

(b)   Assuming the due authorization and execution of this Agreement by Purchaser, this Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the qualifications that enforcement of the rights and remedies created hereby is subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws of general obligation affecting the rights and remedies of creditors, (ii) general principles of equity (regardless of whether enforcement is considered in equity or at law), and (iii) the availability of specific performance or other equitable or legal remedies specified therein.

2.3.   Noncontravention .  Neither the execution, the delivery of this Agreement nor the consummation of the transactions contemplated hereby (including the assignment to be executed hereunder) will:

(a)   violate any constitution, statute, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any government, governmental agency, arbitrator or court to which Seller is subject; or

(b)   conflict with, result in breach of, or constitute default under, or result in any right to accelerate or result in the creation of any Security Interest pursuant to, or right of termination under, any provision of any agreement of Seller, or require the consent of any other party to any contract, note, loan agreement, indenture, mortgage, deed of trust or other contract, license, assignment, agreement or instrument to which Seller is a party or by which it is bound, which consent was not received, except as set forth on Schedule 2.3(b) ; or

(c)   conflict with the Articles of Organization or Bylaws of Seller; or

(d)   require the approval, authorization, consent of or notice to any government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement.

2.4.   Broker Fees . Except as set forth on Schedule 2.4 , Seller has no obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.  Seller has entered into no agreement and has taken no action that could cause Purchaser to become liable or obligated to pay any fees or commissions due and owing to any Person identified on Schedule 2.4 or otherwise.

2.5.   Title to Acquired Assets .  Seller has good and marketable title to all of the Acquired Assets, including tangible and intangible property rights and intellectual property rights relating thereto and none of the Acquired Assets or use thereof is subject to any Security Interest, restrictions, claims, licenses (except for (i) liens for unpaid taxes which are not yet due and (ii) the Xenation License) or rights of others of any kind or nature whatsoever.

2.6.   Business and Intellectual Property Rights .  With respect to the Seller’s Ytterbium   Business and Intellectual Property Rights to be acquired by the Purchaser hereunder, Seller represents that, subject only to the Xenation License:

(a)   Seller owns, has the unrestricted right to use, has sole and exclusive possession of and has good and valid title to, or possesses the right to use pursuant to a valid and enforceable license, sublicense agreement or permission, all of the Acquired Assets and all of the Intellectual Property Rights.  Seller has the full right and authority to transfer its right, title and interest in or to the Seller’s Ytterbium Business and the Intellectual Property Rights to Purchaser;

(b)   Schedule 2.6(b) identifies all portions of the Seller’s Ytterbium Business and Intellectual Property Rights which Seller owns or uses by right of a license, sublicense agreement or permission and true, correct and complete copies of any such licenses, sublicense agreements or permissions are attached to Schedule 2.6(b) (“ License Agreements ”).  All License Agreements are: (i) legal, valid, binding, enforceable and in full force and effect and will continue to be legal, valid, binding, enforceable and in full force and effect after the consummation of the transactions contemplated under this Agreement; (ii) no party to any License Agreement is in default, and no event has occurred that with notice or lapse of time would constitute a breach or default or permit termination, modification or acceleration thereunder; and (iii) no party to any License Agreement has repudiated any provision thereof;

(c)   Seller owns or possesses the right to use the Acquired Assets and the Intellectual Property Rights free and clear of any Security Interests (except for liens for unpaid taxes which are not yet due), licenses or assignments of any kind or nature whatsoever, or other restrictions or limitations regarding use or disclosure.  Seller is not obligated whatsoever to make any payments by way of royalties, fees or otherwise to any owner of, licensor of, or other claimant with respect to the Acquired Assets or the Intellectual Property Rights;

(d)   Seller has taken all reasonable actions to maintain and protect the confidential and proprietary nature of the Seller’s Ytterbium Business and the Intellectual Property Rights, including generally requiring that employees and agents sign non-disclosure or confidentiality agreements, or have confidentiality clauses in their agreements. The non-disclosure or confidentiality agreements signed by Matthew R. Hollows and John Munro are attached to this Agreement as Schedule 2.6(d) ;

(e)   The Seller’s Ytterbium Business and the Intellectual Property Rights are not subject to any outstanding injunction, judgment, order, decree, ruling or charge.  There is no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand currently pending or, to Seller’s Knowledge, threatened by any Person that challenges the legality, validity, enforceability, use or effectiveness of Seller’s ownership interest in the Seller’s Ytterbium Business and the Intellectual Property Rights, and Seller knows of no grounds for the same;

(f)   To Seller’s Knowledge, the conduct of the Seller’s Ytterbium Business and the use of the Intellectual Property Rights by the Seller do not infringe the rights of any Person nor, to Seller’s Knowledge, is any infringing use of the Intellectual Property Rights ongoing by any Person.  To the Seller’s Knowledge, the Business and the use of the Intellectual Property Rights does not infringe or violate any trade secrets, plans and specifications, patents, copyrights, trade names, registered and common law trademarks, trademark applications, service marks, service mark applications, computer programs and other computer software, inventions, know-how, technology, proprietary processes and formulae or other intellectual property rights of any other Person.  To the Seller’s Knowledge, the Seller has not and is not using any confidential, copyrighted, patented and trade secret information or other intellectual property rights of any other Person in the Seller’s Ytterbium Business or in the maintenance, operation and use of the Intellectual Property Rights;

(g)   Except as set forth on Schedule 2.6(g) , Seller has never agreed to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to the Intellectual Property Rights;

(h)   No approval of any third party will be required for the Seller to transfer Seller’s rights in the Acquired Assets and the Intellectual Property Rights to Purchaser, except as set forth on Schedule 2.6(h) ;

(i)   No person or entity other than the Seller owns, has any rights in, including any Intellectual Property Rights, or claims any ownership of, any portion or part of the Seller’s Ytterbium Business;

(j)   Schedule 2.6(j) sets forth a list of all license agreements, royalty agreements, development agreements, security instruments and any other agreements or writings whereby the Seller has given any currently enforceable interest, license, Security Interest, exclusive or otherwise, in the Seller’s Ytterbium Business and the Intellectual Property Rights to any Person.  Copies of such agreements are attached to Schedule 2.6(j) ;  

(k)   Seller has no Knowledge that any patent or patent application included within the Intellectual Property Rights is unenforceable or invalid; and Seller has no Knowledge that any patent application (or claim within any application) included within the Intellectual Property Rights has been or will be rejected by the United States Patent and Trademark Office;

(l)   To the Knowledge of Seller, Schedule 1.1 sets forth a list of all of the material tangible items in the Seller’s possession or control that are used in or relate to the Sellers Ytterbium Business or the Intellectual Property Rights.

2.7.   Records . With respect to the Records, Seller represents that it has exercised commercially reasonable efforts to maintain accurate records. Seller has taken all commercially reasonable steps necessary and desirable to maintain the confidential and proprietary nature of its Records. No approval of any third party will be required for Purchaser to acquire, exclusively use, own, transfer, sell or convey the Records.  Seller has provided, or will provide prior to the Closing, full and complete access to the Purchaser to inspect such Records, during normal business hours and upon reasonable notice.

2.8.   Employee/Third Party Confidentiality/Agreements .  Seller has obtained written confidentiality or non-disclosure agreements from its employees and consultants to whom it has disclosed information of a confidential, proprietary or trade secret nature concerning any of the Acquired Assets reasonably deemed to be necessary given the proprietary nature of the Seller’s Ytterbium Business.

2.9.   Transfer of Acquired Assets .  The transfer, sale and conveyance of the Acquired Assets is not made with the intent to delay, hinder or defraud creditors, purchasers or other Persons.

2.10.   Claims and Proceedings .  There is no legal action, suit, arbitration or governmental proceeding or investigation pending or, to Seller’s Knowledge, threatened against or affecting Seller that could reasonably be expected to adversely affect the Acquired Assets or prevent the consummation of the transactions contemplated hereby.

2.11.   No Litigation .  There are no actions, suits, investigations or proceedings pending or to the actual knowledge of the Seller threatened against or affecting Seller with respect to the Acquired Assets in any court or before any arbitrator, or before or by any governmental department, commission, bureau, board, agency or instrumentality, domestic or foreign.  Furthermore, there are no defaults by Seller under any order, writ, injunction, decree or award of any court or arbitrator or any governmental department, board, agency or instrumentality that could reasonably be expected to adversely affect the Acquired Assets or prevent the consummation of the transactions contemplated hereby.

2.12.   Conduct of Business .  Seller has at all times relevant hereto and up to the Closing, conducted Seller’s Ytterbium Business in the ordinary course, without incurring any obligations or liabilities that would affect its obligations under this Agreement, or without taking any actions that would cause any customer or vendor of or to Seller’s Ytterbium Business to discontinue doing business with Seller up to the Closing or cause said customers or vendor not to consider doing business with Purchaser after Closing. No representation or warranty is made, however, with respect to whether any such customer or vendor will in fact do business with Purchaser. The Seller’s Ytterbium Business has not had any commercial sales.

2.13.   Product Liability .  The Seller has no Knowledge of any, and there is no basis for any present or future, action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against Seller giving rise to any liability arising out of any injury to individuals or property as a result of the ownership, possession or use of any of the Acquired Assets.

2.14.   Disclosure .  No representation or warranty of Seller contained in this Agreement, and no statement contained in any other document, schedule or certificate furnished or to be furnished by or on behalf of Seller by any of its representatives pursuant to this Agreement, when taken together as a whole, contains or will contain any untrue statement of a material fact, or intentionally and knowingly omits to state any material fact necessary to make the statements provided in any such document, certificate or schedule not misleading.

           Purchaser represents and warrants to Seller as follows:

3.1.   Corporate Organization . Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia and is duly qualified to do business in the Commonwealth of Virginia to execute this Agreement and to consummate the transactions contemplated herein.

3.2.   Corporate Authority .  The execution and delivery of this Agreement to Seller and the carrying out of the provisions hereof have been duly authorized by the Purchaser’s board of directors.

3.3.   Brokers .  The Purchaser has not become obligated to pay or has taken any action that might result in any Person claiming to be entitled to receive, any brokerage commission, finder’s fee or similar commission or fee in connection with any of the transactions contemplated by this Agreement.

3.4.   Noncontravention .  Neither the execution, the delivery of this Agreement nor the consummation of the transactions contemplated hereby (including the assignment to be executed hereunder) will:

(a)   violate any constitution, statute, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any government, governmental agency, arbitrator or court to which Purchaser is subject; or

(b)   conflict with, result in breach of, or constitute default under, or result in any right to accelerate or result in the creation of any Security Interest pursuant to, or right of termination under, any provision of any agreement of Purchaser, or require the consent of any other party to any contract, note, loan agreement, indenture, mortgage, deed of trust or other contract, license, assignment, agreement or instrument to which Purchaser is a party or by which it is bound, which consent was not received; or

(c)   conflict with the Certificate of Incorporation, Bylaws or Certificate of Authority of Purchaser; or

(d)   require the approval, authorization, consent of or notice to any government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement.

3.5            Available Funds .  Purchaser has on hand, and w