Implant Sciences [IMX] and OSI Systems [OSIS] have resolved a legal dispute between the two firms over an agreement in 2005 for development, distribution, and manufacturing. Under the resolution, the companies have rescinded the previous agreement and entered into a new non-exclusive distribution agreement that calls for OSI’s Rapiscan Security Systems division to sell Implant Sciences’ security products worldwide. Terms of the settlement also call for Implant to pay OSI $200,000 in the form of its common stock. The agreement also requires Implant to pay OSI 2 up to $1 million in technology fees should Implant begin selling a passenger portal for explosives trace detection. That fee would be paid over time and accounted for each time Implant sells a passenger portal with OSI receiving 2 percent of the gross sale price. The arrangement also gives OSI the opportunity to sell components to Implant. Phillip Thomas, chairman and CEO of Implant Sciences, says, “The company has put an end to the distraction and drain on financial and human resources being expended on this dispute. As such, our team will now be more focused on increasing sales and accelerating the development of new products as we continue our push toward profitability. This resolution also places us in a position where we can work cooperatively with a recognized leader in the imaging portion of the security market and provides the opportunity to leverage Rapiscan’s distribution channels to enhance worldwide sales of our handheld and benchtop trace explosives detection products.” The original co-marketing and co-development agreement between the two companies foundered a year after it was agreed to when Implant sued in federal court to have it rescinded due to lack of performance. OSI countersued claiming breach of contract.