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SUBSIDIARY GUARANTY
New York, New YorkDecember 29, 2006
FOR VALUE RECEIVED, and in consideration of note
purchases from, or credit otherwise extended or to be extended by
Laurus Master Fund, Ltd. ("Laurus") to or for the account of
Implant Sciences Corporation, a Massachusetts corporation (the
"Parent") and each of C Acquisition Corporation, a Delaware
corporation (d/b/a Core Systems) and Accurel Systems International
Corporation, a California Corporation (together with the Parent,
the "Companies" and each, a "Company") from time to time and at any
time and for other good and valuable consideration and to induce
Laurus, in its discretion, to purchase such notes or make other
extensions of credit and to make or grant such renewals,
extensions, releases of collateral or relinquishments of legal
rights as Laurus may deem advisable, each of the undersigned (and
each of them if more than one, the liability under this Guaranty
being joint and several) (jointly and severally referred to as
"Guarantors" or "the undersigned") unconditionally guaranties to
Laurus, its successors, endorsees and assigns the prompt payment
when due (whether by acceleration or otherwise) of all present and
future obligations and liabilities of any and all kinds of each
Company to Laurus and of all instruments of any nature evidencing
or relating to any such obligations and liabilities upon which such
Company or one or more parties and such Company is or may become
liable to Laurus, whether incurred by such Company as maker,
endorser, drawer, acceptor, guarantors, accommodation party or
otherwise, and whether due or to become due, secured or unsecured,
absolute or contingent, joint or several, and however or whenever
acquired by Laurus, whether arising under, out of, or in connection
with (i) that certain Securities Purchase Agreement dated as of the
date hereof by and between the Parent and Laurus (the "Securities
Purchase Agreement") and (ii) each Related Agreement referred to in
the Securities Purchase Agreement (the Securities Purchase
Agreement and each Related Agreement, as each may be amended,
modified, restated and/or supplemented from time to time, are
collectively referred to herein as the "Documents"), or any
documents, instruments or agreements relating to or executed in
connection with the Documents or any documents, instruments or
agreements referred to therein or otherwise, or any other
obligations or liabilities of such Company to Laurus, whether now
existing or hereafter arising, direct or indirect, liquidated or
unliquidated, absolute or contingent, due or not due and whether
under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise (all of which are herein collectively
referred to as the "Obligations"), and irrespective of the
genuineness, validity, regularity or enforceability of such
Obligations, or of any instrument evidencing any of the Obligations
or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or
disallowance of any or all of the Obligations in any case commenced
by or against any Company under Title 11, United States Code,
including, without limitation, obligations or indebtedness of any
Company for post-petition interest, fees, costs and charges that
would have accrued or been added to the Obligations but for the
commencement of such case. Terms not otherwise defined herein shall
have the meaning assigned such terms in the Securities Purchase
Agreement, as applicable. In furtherance of the foregoing, the
undersigned hereby agrees as follows:
1. No
Impairment . Laurus may at any time and from time to time,
either before or after the maturity thereof, without notice to or
further consent of the undersigned, extend the time of payment of,
exchange or surrender any collateral for, renew or extend any of
the Obligations or increase or decrease the interest rate thereon,
or any other agreement with any Company or with any other party to
or person liable on any of the Obligations, or interested therein,
for the extension, renewal, payment, compromise, discharge or
release thereof, in whole or in part, or for any modification of
the terms thereof or of any agreement between Laurus and any
Company or any such other party or person, or make any election of
rights Laurus may deem desirable under the United States Bankruptcy
Code, as amended, or any other federal or state bankruptcy,
reorganization, moratorium or insolvency law relating to or
affecting the enforcement of creditors’ rights generally (any
of the foregoing, an "Insolvency Law") without in any way impairing
or affecting this Guaranty. This Guaranty shall be effective
regardless of the subsequent incorporation, merger or consolidation
of any Company, or any change in the composition, nature, personnel
or location of any Company and shall extend to any successor entity
to each Company, including a debtor in possession or the like under
any Insolvency Law.
2. Guaranty
Absolute . Subject to Section 5(c) hereof, each of the
undersigned jointly and severally guarantees that the Obligations
will be paid strictly in accordance with the terms of the Documents
and/or any other document, instrument or agreement creating or
evidencing the Obligations, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of any Company with respect thereto.
Guarantors hereby knowingly accept the full range of risk
encompassed within a contract of "continuing guaranty" which risk
includes the possibility that a Company will contract additional
obligations and liabilities for which Guarantors may be liable
hereunder after such Company’s financial condition or ability
to pay its lawful debts when they fall due has deteriorated,
whether or not such Company has properly authorized incurring such
additional obligations and liabilities. The undersigned acknowledge
that (i) no oral representations, including any representations to
extend credit or provide other financial accommodations to any
Company, have been made by Laurus to induce the undersigned to
enter into this Guaranty and (ii) any extension of credit to any
Company shall be governed solely by the provisions of the
Documents. The liability of each of the undersigned under this
Guaranty shall be absolute and unconditional, in accordance with
its terms, and shall remain in full force and effect without regard
to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation: (a) any waiver, indulgence, renewal,
extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction
under or in respect of the Documents or any other instruments or
agreements relating to the Obligations or any assignment or
transfer of any thereof, (b) any lack of validity or enforceability
of any Document or other documents, instruments or agreements
relating to the Obligations or any assignment or transfer of any
thereof, (c) any furnishing of any additional security to Laurus or
its assignees or any acceptance thereof or any release of any
security by Laurus or its assignees, (d) any limitation on any
party’s liability or obligation under the Documents or any
other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof or any
invalidity or unenforceability, in whole or in part, of any such
document, instrument or agreement or any term thereof, (e) any
bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any
Company, or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such proceeding,
whether or not the undersigned shall have notice or knowledge of
any of the foregoing, (f) any exchange, release or nonperfection of
any collateral, or any release, or amendment or waiver of or
consent to departure from any guaranty or security, for all or any
of the Obligations or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the
undersigned. Any amounts due from the undersigned to Laurus shall
bear interest until such amounts are paid in full at the highest
rate then applicable to the Obligations. Obligations include
post-petition interest whether or not allowed or allowable.
3. Waivers .
(a) This
Guaranty is a guaranty of payment and not of collection. Laurus
shall be under no obligation to institute suit, exercise rights or
remedies or take any other action against any Company or any other
person or entity liable with respect to any of the Obligations or
resort to any collateral security held by it to secure any of the
Obligations as a condition precedent to the undersigned being
obligated to perform as agreed herein and each of the Guarantors
hereby waives any and all rights which it may have by statute or
otherwise which would require Laurus to do any of the foregoing.
Each of the Guarantors further consents and agrees that Laurus
shall be under no obligation to marshal any assets in favor of
Guarantors, or against or in payment of any or all of the
Obligations. Each of the undersigned hereby waives all suretyship
defenses and any rights to interpose any defense, counterclaim or
offset of any nature and description which the undersigned may have
or which may exist between and among Laurus, any Company and/or the
undersigned with respect to the undersigned’s obligations
under this Guaranty, or which any Company may assert on the
underlying debt, including but not limited to failure of
consideration, breach of warranty, fraud, payment (other than cash
payment in full of the Obligations), statute of frauds, bankruptcy,
infancy, statute of limitations, accord and satisfaction, and
usury.
(b) Each of
the undersigned further waives (i) notice of the acceptance of this
Guaranty, of the extensions of credit, and of all notices and
demands of any kind to which the undersigned may be entitled,
including, without limitation, notice of adverse change in any
Company’s financial condition or of any other fact which
might materially increase the risk of the undersigned and (ii)
presentment to or demand of payment from anyone whomsoever liable
upon any of the Obligations, protest, notices of presentment,
non-payment or protest and notice of any sale of collateral
security or any default of any sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned
by Laurus, the undersigned shall not be entitled to be subrogated
to any of the rights of Laurus against any Company or against any
collateral or guarantee or right of offset held by Laurus for the
payment of the Obligations, nor shall the undersigned seek or be
entitled to seek any contribution or reimbursement from any Company
in respect of payments made by the undersigned hereunder, until all
amounts owing to Laurus by each Company on account of the
Obligations are indefeasibly paid in full and Laurus’
obligation to extend credit pursuant to the Documents has been
irrevocably terminated. If, notwithstanding the foregoing, any
amount shall be paid to the undersigned on account of such
subrogation rights at any time when all of the Obligations shall
not have been paid in full and Laurus’ obligation to extend
credit pursuant to the Documents shall not have been terminated,
such amount shall be held by the undersigned in trust for Laurus,
segregated from other funds of the undersigned, and shall forthwith
upon, and in any event within two (2) business days o
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