Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

between

CRDENTIA CORP.,

MATTHEW J. CAHILLANE

and

C. MICHAEL EMERY

Dated as of June 30, 2007

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

ARTICLE I

PURCHASE AND SALE OF ACQUIRED ASSETS

 

1

SECTION 1.1

Purchase and Sale

 

1

SECTION 1.2

Transfer of Assets

 

1

SECTION 1.3

Assumed Liabilities

 

3

SECTION 1.4

Consents of Third Parties

 

4

SECTION 1.5

Refunds and Remittances

 

5

 

 

 

 

 

ARTICLE II

CLOSING

 

5

SECTION 2.1

Closing

 

5

 

 

 

 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

6

SECTION 3.1

Authority

 

6

SECTION 3.2

No Conflicts; Consents

 

6

SECTION 3.3

Taxes

 

7

SECTION 3.4

Good and Valid Title

 

7

SECTION 3.5

Contracts

 

7

SECTION 3.6

Litigation

 

8

SECTION 3.7

DISCLAIMER

 

8

 

 

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CE

 

9

SECTION 4.1

Authority

 

9

SECTION 4.2

No Conflicts; Consents

 

9

SECTION 4.3

Actions and Proceedings

 

9

SECTION 4.4

Availability of Funds

 

9

SECTION 4.5

Title to Shares

 

10

SECTION 4.6

No Knowledge of Misrepresentation or Omission

 

10

 

 

 

 

 

ARTICLE V

COVENANTS OF CE

 

10

SECTION 5.1

Confidentiality

 

10

SECTION 5.2

No Additional Representations

 

10

SECTION 5.3

Non-Solicitation; Non-Interference

 

10

SECTION 5.4

Employees

 

11

 

 

 

 

 

ARTICLE VI

MUTUAL COVENANTS

 

11

SECTION 6.1

Consents

 

11

SECTION 6.2

Security Interest Release

 

12

SECTION 6.3

Cooperation

 

12

SECTION 6.4

Publicity

 

13

SECTION 6.5

Termination of Lease; Termination of Non-Competition Agreements

 

13

SECTION 6.6

Bulk Transfer Laws

 

13

SECTION 6.7

Transfer Taxes; Purchase Price Allocation; Entitlement to Tax Refunds and
Credits; Proration of Non-Income Taxes

 

13

 

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Page

 

 

 

 

 

SECTION 6.8

Mutual Release

 

14

SECTION 6.9

Litigation Standstill

 

15

 

 

 

 

 

ARTICLE VII

INDEMNIFICATION

 

15

SECTION 7.1

Indemnification by Seller

 

15

SECTION 7.2

Indemnification by CE

 

15

SECTION 7.3

Limitations on Liability; Cooperation

 

15

SECTION 7.4

Losses Net of Insurance, etc.

 

16

SECTION 7.5

Termination of Representations and Warranties

 

16

SECTION 7.6

Procedures Relating to Indemnification for Third Party Claims

 

16

SECTION 7.7

Procedures Related to Indemnification for Other Claims

 

17

SECTION 7.8

Tax Treatment of Indemnification Payments

 

17

SECTION 7.9

Remedies Exclusive

 

17

 

 

 

 

 

ARTICLE VIII

MISCELLANEOUS

 

17

SECTION 8.1

Assignment

 

17

SECTION 8.2

No Third-Party Beneficiaries

 

18

SECTION 8.3

Expenses

 

18

SECTION 8.4

Attorney Fees

 

18

SECTION 8.5

Amendments

 

18

SECTION 8.6

Notices

 

18

SECTION 8.7

Interpretation; Exhibits, Seller Disclosure Schedule and Other Schedules;
Certain Definitions

 

19

SECTION 8.8

Counterparts

 

24

SECTION 8.9

Entire Agreement

 

24

SECTION 8.10

Fees

 

24

SECTION 8.11

Severability

 

24

SECTION 8.12

Consent to Jurisdiction

 

24

SECTION 8.13

Waiver of Jury Trial

 

25

SECTION 8.14

GOVERNING LAW

 

25

 

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ASSET PURCHASE AGREEMENT dated as of
June 30, 2007, between CRDENTIA CORP., a Delaware corporation (“Seller”) and
Matthew J. Cahillane and C. Michael Emery (collectively “CE”)

Seller desires to sell to CE, and CE desires to purchase from Seller, the
Acquired Assets (as defined below), all upon the terms and subject to the
conditions set forth in this Agreement.

Certain capitalized terms used in this Agreement are defined in Section 8.7(b). 
Section 8.7(c) identifies other Sections of this Agreement in which capitalized
terms used in this Agreement are defined.

Accordingly, the parties hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF ACQUIRED ASSETS

SECTION 1.1         Purchase and Sale.  Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller shall, and shall
cause the Selling Affiliates to, sell, assign, transfer, convey and deliver to
CE, and CE shall purchase from Seller and the Selling Affiliates all the right,
title and interest of Seller and the Selling Affiliates in, to and under the
Acquired Assets (as defined below), for (a) a purchase price (the “Purchase
Price”) equal to (i) $300,000 in cash and (ii) 128,367 shares of Seller’s common
stock (the “Shares”), and (b) the assumption by CE of the Assumed Liabilities. 
The purchase and sale of the Acquired Assets and the assumption of the Assumed
Liabilities are referred to in this Agreement collectively as the
“Acquisition”.  Notwithstanding the foregoing, with respect to shifts for
professional services under the Transferred Contracts that commence prior to but
end after 11:59:59 p.m. on June 30, 2007, Assignor shall (a) be entitled to any
payments or other benefits due under and (b) be responsible for all obligations
with respect to payments to the professional service providers under such
Transferred Contracts with respect to such shifts through their termination on
July 1, 2007.

SECTION 1.2         Transfer of Assets.  (a)  The term “Acquired Assets” means
all of Seller’s and the Selling Affiliates’ right, title and interest in, to and
under those certain assets identified below:

(i)            all contracts, licenses, agreements, commitments and all other
legally binding arrangements, whether written or oral (“Contracts”) to which
Seller or any of the Selling Affiliates is a party that relate exclusively to
the Business, including the Contracts set forth in Section 3.5 of the Seller
Disclosure Schedule (the “Transferred Contracts”); provided, however, that
Transferred Contracts shall not include any Excluded Contract;

(ii)           all rights, claims and credits, including all guarantees,
warranties, indemnities and similar rights (“Other Rights”), in favor of Seller
and the Selling Affiliates, to the extent relating exclusively to any Acquired
Asset or exclusively to any Assumed Liability (the “Transferred Other Rights”);
provided, however, that Transferred Other Rights shall not include any Excluded
Other Rights;

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(iii)          all books and records, and any customers’ and suppliers’ lists
and other distribution lists (in all cases, in any form or medium) (“Records”)
of Seller and the Selling Affiliates that relate exclusively to the Business and
are stored upon the premises at 2011 Oak Street,Wyandotte, MI 48192 (the
“Premises”), in each case in existence on the Closing Date and within the
possession and control of Seller (the “Transferred Records”); provided, however,
that Transferred Records shall not include any Excluded Records; and

(iv)          all tangible personal property relating exclusively to the
Business and are located on the Premises (including the Existing Network Server
but not including the Additional Network Server) and any warranty rights
applicable to such tangible personal property, fixed assets and equipment.

(b)           The term “Excluded Assets” means:

(i)            all cash and cash equivalents of Seller, and any of its
Affiliates;

(ii)           all Accounts Receivable;

(iii)          all Contracts to which Seller or any of its Affiliates is a party
other than the Transferred Contracts described in Section 1.2(a)(i) (the
“Excluded Contracts”);

(iv)          all Permits of Seller or any of its Affiliates;

(v)           all Other Rights of Seller or any of its Affiliates other than the
Transferred Other Rights (the “Excluded Other Rights”);

(vi)          all of the following: (A) any and all books and records prepared
and maintained by Seller or any of its Affiliates that do not relate exclusively
to the Business or are not stored on the Premises, (B) any and all Tax records
that relate to Taxes that constitute Excluded Tax Liabilities, (C) all personnel
records, and (D) any and all books and records, files, correspondence or other
Records of Seller or its Affiliates other than the Transferred Records,
(collectively, the “Excluded Records”);

(vii)         all rights, claims and credits of Seller or any of its Affiliates
to the extent relating to any Excluded Asset or any Excluded Liability,
including any such items arising under insurance policies and all guarantees,
warranties, indemnities and similar rights in favor of Seller and its Affiliates
in respect of any other Excluded Asset or any Excluded Liability;

(viii)        any refund or credit of Taxes attributable to any Excluded Tax
Liability;

(ix)           all insurance policies and insurance contracts insuring the
Business or the Acquired Assets, together with any claim, action or other right
Seller or any of its Affiliates might have for insurance coverage under any past
and present policies and insurance contracts insuring the Business or the
Acquired Assets, in each case including any proceeds received from any such
policy or contract prior to, on or after the Closing Date;

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(x)            all rights of Seller and its Affiliates under this Agreement, the
Other Transaction Documents and the other agreements and instruments executed
and delivered in connection with this Agreement;

(xi)           the Additional Network Server; and

(xii)          except to the extent identified in a subsection of Section 1.2(a)
of the Seller Disclosure Schedule as included in the Acquired Assets, all other
properties, assets, goodwill and rights of Seller, the Selling Affiliates and
any of their respective Affiliates of whatever kind and nature, real, personal
or mixed, tangible or intangible, that are not used, held for use or intended to
be used exclusively in connection with, or that do not arise exclusively out of,
the Business or the Acquired Assets.

SECTION 1.3         Assumed Liabilities.  (a)  Upon the terms and subject to the
conditions of this Agreement, CE shall assume, effective as of 12:00:00 a.m.
(EDT) on the Closing Date (subject to the last sentence of Section 1.1 regarding
shifts for professional services under the Transferred Contracts that begin
prior to but end after the Closing), and from and after the Closing CE shall
pay, perform and discharge when due, all of the following liabilities,
obligations and commitments (“Liabilities”) of Seller and the Selling
Affiliates, other than any Excluded Liability (the “Assumed Liabilities”):

(i)            all Liabilities of Seller and the Selling Affiliates under or
otherwise arising out of or relating to the Transferred Contracts (including all
Liabilities arising out of or relating to any termination or announcement or
notification of an intent to terminate any such Contract), in each case arising
out of actions or circumstances occurring on or after the Closing Date;

(ii)           all accounts payable, expenses and other current liabilities
incurred on or after the Closing Date;

(iii)          all Liabilities in respect of any lawsuits, claims, actions or
proceedings arising out of or relating to the Business or the ownership, sale,
lease or use of any of the Acquired Assets, in each case based on actions or
circumstances occurring on or after the Closing Date;

(iv)          all Liabilities for warranty claims and product or service
liability or similar claims, including all suits, actions or proceedings
relating to any such Liabilities, in each case arising out of or relating to
Business with respect to actions or circumstances occurring on or after the
Closing Date;

(v)           all Liabilities for Taxes arising out of or relating to or in
respect of the Business or any Acquired Asset for any Post-Closing Tax Period,
other than any Excluded Tax Liabilities;

(vi)          all Liabilities for transfer, documentary, sales, use,
registration, value-added and other similar Taxes and related amounts (including
any penalties, interest and additions to Tax) incurred in connection with this
Agreement, any of the Other Transaction

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Documents, the Acquisition and the other transactions contemplated hereby and
thereby (“Transfer Taxes”); and

(vii)         all other Liabilities of Seller and the Selling Affiliates of
whatever kind and nature, primary or secondary, direct or indirect, absolute or
contingent, known or unknown, whether or not accrued, in each case arising out
of or relating to the Acquired Assets based on actions or circumstances
occurring on or after the Closing Date (including any claim, action, suit,
arbitration, inquiry, proceeding or investigation by or before any Governmental
Entity).

(b)           Notwithstanding any other provision of this Agreement, CE shall
not assume any Excluded Liability, each of which shall be retained and paid,
performed and discharged when due by Seller and the Selling Affiliates.  The
term “Excluded Liability” means:

(i)            all Liabilities, to the extent related to or arising out of any
Excluded Asset;

(ii)           any Tax payable with respect to any business, asset, property or
operation of Seller or its Affiliates (including any Taxes relating to or
arising out of the Acquired Assets) for any Pre-Closing Tax Period, other than
any Tax for which CE is responsible pursuant to Section 6.7 (“Excluded Tax
Liability”); and

(iii)          all Accounts Payable other than the accounts payable, accrued
expenses and other current liabilities assumed pursuant to Section 1.3(a)(ii).

(c)           Each of CE’s and Seller’s obligations under this Section 1.3 will
not be subject to offset or reduction by reason of any actual or alleged breach
of any representation, warranty, covenant or agreement contained in this
Agreement or any Other Transaction Document or any right or alleged right to
indemnification hereunder.

SECTION 1.4         Consents of Third Parties.  (a)  Notwithstanding anything in
this Agreement to the contrary, this Agreement shall not constitute an agreement
to assign any asset or claim or right or any benefit arising under or resulting
from such asset (including any Contract) or Permit or any claim, right or
benefit arising under or resulting from such asset or Permit if the assignment
or transfer thereof, without the consent of a third party, would constitute a
breach or other contravention of the rights of such third party, would be
ineffective with respect to any party to an agreement concerning such asset or
Permit, or, upon assignment or transfer, would in any way adversely affect the
rights of Seller or any Selling Affiliate or, upon transfer, CE.  If any
transfer or assignment by Seller or any Selling Affiliate to, or any assumption
by CE of, any interest in, or liability, obligation or commitment under, any
asset or Permit, or related claim, right or benefit requires the consent of a
third party, then such transfer or assumption shall be made subject to such
consent being obtained.

(b)           If any such consent is not obtained prior to the Closing, Seller,
the Selling Affiliates and CE shall cooperate (each at their own expense) in any
lawful and reasonable arrangement reasonably proposed by CE under which CE shall
obtain the economic claims, rights and benefits under the asset (including any
Contract), Permit or related claim, right or benefit with respect to which the
consent has not been obtained in accordance with this

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Agreement.  Such reasonable arrangement may include (i) the subcontracting,
sublicensing or subleasing to CE of any and all rights of Seller and the Selling
Affiliates against the other party to such third-party agreement arising out of
a breach or cancellation thereof by the other party and (ii) the enforcement by
Seller or the Selling Affiliates of such rights.  Seller and the Selling
Affiliates make no representation or warranty as to whether consent to
assignment of any Contracts or Permits will be obtained, CE shall bear the risk
of loss with respect to Contracts or Permits not assigned as of the Closing.

SECTION 1.5         Refunds and Remittances.  (a)  Received by Seller or the
Selling Affiliates.  After the Closing, if Seller or any of the Selling
Affiliates receives (i) any refund or other amount which is an Acquired Asset or
is otherwise properly due and owing to CE in accordance with the terms of this
Agreement, or (ii) any refund or other amount which is related to claims or
other matters for which CE is responsible hereunder, and which amount is not an
Excluded Asset, or is otherwise properly due and owing to CE in accordance with
the terms of this Agreement, Seller promptly shall remit, or shall cause to be
remitted, such amount to CE at the address set forth in Section 8.6(a).

(b)           Received by CE or its Affiliates.  After the Closing, if CE or any
of its Affiliates receives (i) any refund or other amount which is an Excluded
Asset or is otherwise properly due and owing to Seller or any of the Selling
Affiliates in accordance with the terms of this Agreement, or (ii) any refund or
other amount which is related to claims or other matters for which Seller is
responsible hereunder, and which amount is not an Acquired Asset, or is
otherwise properly due and owing to Seller in accordance with the terms of this
Agreement, CE promptly shall remit, or shall cause to be remitted, such amount
to Seller at the address set forth in Section 8.6(b).

ARTICLE II

CLOSING

SECTION 2.1         Closing.  (a)  The closing of the Acquisition (the
“Closing”) shall be held at the offices of Morrison & Foerster LLP, 12531 High
Bluff Drive, San Diego, California at 11:59:59 p.m. (EDT) on the date of this
Agreement.  The date on which the Closing shall occur is hereinafter referred to
as the “Closing Date”.

(b)           At the Closing, CE shall deliver to the Seller:

(i)            by wire transfer to a bank account designated in writing by
Seller in United States Dollars, immediately available funds in an amount equal
to $300,000;

(ii)           the Shares duly endorsed in blank;

(iii)          the Assumption Agreement and such other instruments of assumption
and such other instruments and documents as Seller or the Selling Affiliates may
reasonably request to effect or evidence the purchase of the Acquired Assets and
the assumption of the Assumed Liabilities; and

(iv)          the Other Transaction Documents to which CE is a party.

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(c)           At the Closing, Seller and each Selling Affiliate shall deliver to
CE:

(i)            a receipt for the Purchase Price paid by CE;

(ii)           the Bill of Sale and such other instruments and documents as CE
may reasonably request to effect or evidence the transfer to CE of the Acquired
Assets; and

(iii)          the Other Transaction Documents to which Seller and each Selling
Affiliate is a party.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the Seller Disclosure Schedule attached hereto (the
“Seller Disclosure Schedule”) with such specificity to give reasonable notice to
CE of the representation and warranty to which such exception relates, Seller
hereby represents and warrants to CE as follows:

SECTION 3.1         Authority.  Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.  Each
Selling Affiliate is a legal entity, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization.  Seller
has all requisite corporate power and authority to enter into this Agreement,
and Seller and each of the Selling Affiliates has all requisite corporate power
and authority to enter into the Other Transaction Documents to which it is, or
is specified to be, a party and to consummate the transactions contemplated
hereby and thereby.  All corporate acts and other proceedings required to be
taken by Seller and each of the Selling Affiliates to authorize the execution,
delivery and performance of this Agreement and the Other Transaction Documents
to which it is, or is specified to be, a party and to consummate the
transactions contemplated hereby and thereby have been duly and properly taken. 
This Agreement has been duly executed and delivered by Seller and, assuming this
Agreement has been duly authorized, executed and delivered by CE, constitutes,
and the Other Transaction Documents on the Closing Date will be duly executed
and delivered by Seller or the Selling Affiliates, as applicable, and will
constitute, a legal, valid and binding obligation of Seller or the Selling
Affiliates, as applicable, enforceable against such person in accordance with
its terms, subject, as to enforcement, to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors’ rights generally
and to general equitable principles.

SECTION 3.2         No Conflicts; Consents.  (a)  The execution and delivery of
this Agreement by Seller do not, and the execution and delivery of the Other
Transaction Documents by Seller and the Selling Affiliates specified to be
parties thereto will not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the terms and conditions hereof and
thereof will not, conflict with, or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any liens, claims,
encumbrances, security interests, options, charges or restrictions of any kind
(“Liens”) upon any of the Acquired Assets under, any provision of (i) the
certificate of

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incorporation or by-laws (or the comparable governing instruments) of Seller or
any Selling Affiliate, or (ii) any judgment, order or decree, or, subject to the
matters referred to in clauses (i) and (ii) of paragraph (b) below, Applicable
Law applicable to Seller or any Selling Affiliate or the Acquired Assets.

(b)           No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Seller or any
Selling Affiliate in connection with the execution, delivery and performance of
this Agreement, the Other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby other than (i) those that may be
required solely by reason of CE’s or any Affiliate of CE’s (as opposed to any
other third party’s) participation in the transactions contemplated hereby or by
the Other Transaction Documents, and (ii) such consents, approvals, licenses,
permits, orders, authorizations, registrations, declarations and filings the
absence of which, or the failure to make or obtain which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.

SECTION 3.3         Taxes.  No material Tax liens have been filed and no
material claims are being asserted in writing with respect to any Taxes due with
respect to the Acquired Assets.

SECTION 3.4         Good and Valid Title.  (a)  Seller and the Selling
Affiliates have, or as of the Closing Date will have, good and valid title to
all material Acquired Assets, in each case free and clear of all Liens, except
(i) such as are set forth in Section 3.4 of the Seller Disclosure Schedule;
(ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising
or incurred in the ordinary course of business and Liens for Taxes and other
governmental charges which are not due and payable or which may thereafter be
paid without penalty; and (iii) other imperfections of title or encumbrances, if
any, which do not, individually or in the aggregate, materially impair the
continued use and operation of the Acquired Assets to which they relate (the
Liens described in clauses (i), (ii) and (iii) above are hereinafter referred to
collectively as “Permitted Liens”).

(b)           This Section 3.4 does not relate to Contracts, such item being the
subject of Section 3.5.

SECTION 3.5         Contracts.  (a)  Section 3.5 of the Disclosure Schedule sets
forth each Transferred Contract that is or contains:

(i)            a continuing contract for the future provision of nursing
services.

(b)           Except as set forth in Section 3.5 of the Seller Disclosure
Schedule, each Transferred Contract set forth in Section 3.5 of the Seller
Disclosure Schedule is valid, binding and in full force and effect and, to the
knowledge of Seller, is enforceable by Seller or the applicable Selling
Affiliate in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
affecting creditors’ rights generally, general principles of equity and the
discretion of courts in granting equitable remedies and except to the extent
that the failure of a Transferred Contract to be valid, binding and in full
force and effect would not be reasonably likely to have a Material Adverse
Effect.  Seller and the Selling Affiliates have performed in all material
respects all material obligations

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required to be performed by them to date under the Transferred Contracts and is
not (with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder and, to the knowledge of
Seller, no other party to any of the Transferred Contracts set forth in
Section 3.5 of the Seller Disclosure Schedule, as of the date of this Agreement,
is (with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder, except to the extent that
such breach or default would not be reasonably likely to have a Material Adverse
Effect.

SECTION 3.6         Litigation.  There are no lawsuits or claims pending as of
the date of this Agreement, with respect to which Seller or any Selling
Affiliate has been contacted in writing by counsel for the plaintiff or
claimant, against any Acquired Asset or which seek any material injunctive
relief or seek any legal restraint on or prohibition against the transactions
contemplated by this Agreement.  To the knowledge of Seller, as of the date of
this Agreement, none of Seller or the Selling Affiliates is a party or subject
to or in default under any material judgment, order, injunction or decree of any
Governmental Entity or arbitration tribunal applicable to the Business or any
material Acquired Asset.

SECTION 3.7         DISCLAIMER.  CE ACKNOWLEDGES THAT EXCEPT AS SET FORTH IN
THIS ARTICLE III AND IN THE SELLER DISCLOSURE SCHEDULE, NEITHER SELLER NOR ANY
OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS
TO THE ACQUIRED ASSETS, THE BUSINESS OR THE ACCURACY AND COMPLETENESS OF ANY
INFORMATION REGARDING THE ACQUIRED ASSETS FURNISHED OR MADE AVAILABLE TO CE AND
THEIR REPRESENTATIVES AND CE HAS NOT RELIED ON ANY REPRESENTATION FROM SELLER OR
ANY OTHER PERSON WITH RESPECT TO THE ACQUIRED ASSETS, THE BUSINESS OR THE
ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE ACQUIRED ASSETS
FURNISHED OR MADE AVAILABLE TO CE AND THEIR REPRESENTATIVES IN DETERMINING TO
ENTER INTO THIS AGREEMENT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN THIS ARTICLE III AND IN THE SELLER DISCLOSURE SCHEDULE.  CE
ACKNOWLEDGES THAT SHOULD THE CLOSING OCCUR, CE SHALL ACQUIRE THE ACQUIRED ASSETS
WITHOUT ANY REPRESENTATION AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS AND CE SHALL BEAR THE
ECONOMIC AND LEGAL RISKS THAT ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO
VEST IN CE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY LIENS, THAT ANY
NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED AND THAT ANY
REQUIREMENTS OF APPLICABLE LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CE

CE hereby represents and warrants to Seller as follows:

SECTION 4.1         Authority.  This Agreement has been duly executed and
delivered by CE and, assuming this Agreement has been duly authorized, executed
and delivered by Seller, constitutes, and the Other Transaction Documents on the
Closing Date will be duly executed by CE, and upon the due authorization,
execution and delivery by each other party to the Other Transaction Documents,
will constitute a legal, valid and binding obligation of CE, enforceable against
CE in accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors’ rights generally and to general equitable principles.

SECTION 4.2         No Conflicts; Consents.  (a)  The execution and delivery of
this Agreement by CE does not, and the execution and delivery by CE of each
Other Transaction Document to which it is, or is specified to be, a party will
not, and the consummation of the transactions contemplated hereby and thereby
and compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of CE under,
any provision of (i) its certificate of incorporation or by-laws, (ii) any
Contract to which CE is a party or by which any of its properties or assets are
bound or (iii) any judgment, order, or decree, or, subject to the matters
referred to in paragraph (b) below, statute, law, ordinance, rule or regulation
applicable to CE or its properties or assets, other than, in the case of clauses
(ii) and (iii) above, any such items that, individually or in the aggregate,
would not be reasonably likely to have a material adverse effect on the ability
of CE to consummate the Acquisition.

(b)           No consent, approval, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is required
to be obtained or made by or with respect to CE in connection with the
execution, delivery and performance of this Agreement, the Other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby, other than (i) those that may be required solely by reason of Seller’s
or any Selling Affiliates’ (as opposed to any other third party’s) participation
in the transactions contemplated hereby or by the Other Transaction Documents
and (ii) such consents, approvals, licenses, permits, orders, authorizations,
registrations, declarations and filings the absence of which, or the failure to
make which, individually or in the aggregate, would not be reasonably likely to
have a material adverse effect on the ability of CE to consummate the
Acquisition.

SECTION 4.3         Actions and Proceedings.  There are no (a) outstanding
judgments, orders, injunctions or decrees of any Governmental Entity or
arbitration tribunal against CE, (b) lawsuits, actions or proceedings pending
or, to the knowledge of CE, threatened against CE, or (c) investigations by any
Governmental Entity which are pending or, to the knowledge of CE, threatened
against CE, which, in the case of each of clauses (a), (b) and (c), have had or
would be reasonably likely to have a material adverse effect on the ability of
CE to consummate the Acquisition.

SECTION 4.4         Availability of Funds.  CE has cash available or has
existing borrowing facilities which together are sufficient to enable it to
consummate the Acquisition.

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SECTION 4.5         Title to Shares.  CE owns beneficially and of record, free
and clear of any Liens, the Shares.  CE have the right and power to transfer the
Shares to Seller.  Upon the Closing, Seller shall receive good and valid title
to the Shares, free and clear of all Liens.

SECTION 4.6         No Knowledge of Misrepresentation or Omission.  CE has no
knowledge that any of the representations and warranties of Seller made in this
Agreement or any Other Transaction Document qualified as to materiality are not
true and correct, or that those not so qualified are not true and correct in all
material respects, and CE has no knowledge of any material errors in, or
material omissions from, any Section of the Seller Disclosure Schedule.

ARTICLE V

COVENANTS OF CE

CE covenants and agrees as follows:

SECTION 5.1         Confidentiality.  CE acknowledges that the information being
provided to CE in connection with the Acquisition and the consummation of the
other transactions contemplated hereby and by the Other Transaction Documents
(including the terms and conditions of this Agreement and the Other Transaction
Documents) constitutes Confidential Information.  Following the Closing, CE
covenants and agrees to hold in strict confidence, not disclose to any third
party and not use for any purpose (i) any Confidential Information obtained by
CE while CE was employed by Seller; and (ii) any and all other Confidential
Information and other information (other than information relating to the
Acquired Assets, the Business or the Assumed Liability) provided to CE by or on
behalf of Seller, any Selling Affiliate or Seller’s representatives concerning
Seller, the Selling Affiliates or any other Affiliate of Seller and the terms
and conditions of this Agreement and the Other Transaction Documents.

SECTION 5.2         No Additional Representations.  CE acknowledges that they
and their representatives have received or been afforded the opportunity to
review prior to the date hereof all written materials which Seller was required
to deliver or make available, as the case may be, to CE pursuant to this
Agreement on or prior to the date hereof.  CE acknowledges that they and their
representatives have been permitted full and complete access to the books and
records, facilities, equipment, Contracts and other properties and assets of
Seller and the Selling Affiliates to the extent relating to the Business or the
Acquired Assets that they and their representatives have desired or requested to
see and/or review, and that it and its representatives have had a full
opportunity to meet with the officers and employees of Seller and the Selling
Affiliates to discuss the Business, the Acquired Assets and the Assumed
Liabilities.  CE acknowledges that none of Seller, any Selling Affiliate or any
other person has made any representation or warranty, expressed or implied, as
to the accuracy or completeness of any information regarding the Acquired Assets
or the Assumed Liabilities furnished or made available to CE and their
representatives, except as expressly set forth in this Agreement or the Seller
Disclosure Schedule.

SECTION 5.3         Non-Solicitation; Non-Interference.  From and after the
Closing, CE and its Affiliates shall not, directly or indirectly: (i) at any
time, either for itself or for any other person, solicit or encourage, or take
any action intended to solicit or encourage, any current

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employee, director, partner, independent contractor or consultant of Seller (or
any Affiliate of Seller) or any future such person hired or engaged by Seller
(or any Affiliate of Seller) located outside the Detroit, Michigan metropolitan
area to terminate, discontinue or alter his, her or its relationship with Seller
or any such Affiliate, or in any other way interfere with the relationship
between any such person and Seller or any such Affiliate; (ii) at any time,
employ or otherwise engage as a contractor or consultant any person currently
employed or engaged as a contractor or consultant by Seller (or any Affiliate of
Seller) or employed or engaged in the future and located outside the Detroit,
Michigan metropolitan area during such person’s employment or engagement with
Seller or any such Affiliate or for eighteen months following termination of
such employment or engagement; or (iii) for a period of eighteen months, compete
with Seller (or any Affiliate of Seller) with respect to any business of any
kind (outside the Detroit, Michigan metropolitan area) in the states set forth
on Schedule 5.3 hereto; provided, however, parties agree that with the sole
exception to the prohibition contained in this subsection (iii) shall be that CE
shall have the ability to place nurses in hospitals or other healthcare
institutions in return for payment of a fee by CE to Seller in an amount equal
to 5% of the gross revenues generated by all nurses so placed for six months
following the Closing Date and 3% of gross revenues for nurses so placed for the
twelve (12) months thereafter (the “Fee”).  The Fee shall be payable quarterly
in arrears.  Payments must be made in immediately available funds by wire
transfer to such bank account as Seller will specify.  CE will prepare and will
cause CE’s certified public accountants to review and approve a statement in
respect to calculation of the Fee each quarter which shall include the
applicable nurses, rates, hours worked, state of placement and contractual
counterparty.  If Seller disputes the calculation of the Fee, CE will furnish
Seller such work papers and other documents and information relating to the
dispute at issue as Seller may reasonably request to enable Seller to audit and
determine the amount of the Fee, and the parties hereto shall cooperate to
resolve the dispute in accordance with the provisions of this Agreement.  The
parties agree that in the event of a breach by CE or its Affiliates of any of
the covenants set forth in this Section 5.3, monetary damages alone would be
inadequate to fully protect Seller from, and compensate Seller for, the harm
caused by such breach or threatened breach.  Accordingly, CE agrees that if it
breaches or threatens breach of any provision of this Section 5.3, Seller shall
be entitled to, in addition to any other right or remedy otherwise available,
injunctive relief restraining such breach or threatened breach and to specific
performance of any such provision of this Section 5.3.  Seller shall not be
required to post a bond or other security in connection with, or as a condition
to, obtaining such relief before a court of competent jurisdiction.

SECTION 5.4         Employees.  Upon the Closing Date, CE shall offer employment
to all Business —related employees of Seller and the Selling Affiliates.  Such
offers of employment shall be on terms substantially similar to the terms of
employment such employees had with Seller and the Selling Affiliates immediately
prior to the Closing Date.

ARTICLE VI

MUTUAL COVENANTS

SECTION 6.1         Consents.  CE acknowledges that certain consents and waivers
with respect to the transactions contemplated by this Agreement may be required
from parties to the Transferred Contracts in order to transfer such Transferred
Contracts to CE and that such

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consents and waivers have not been obtained.  CE agrees that, except for the
provision of Section 1.4(b), Seller and its Affiliates shall not have any
liability or obligation whatsoever to CE arising out of or relating to the
failure to obtain any consents or waivers that may be required in connection
with the transactions contemplated by this Agreement or because of the
termination of any Transferred Contract or Transferred Permit as a result
thereof.  CE further agrees that no representation, warranty, covenant or
agreement of Seller contained herein shall be breached or deemed breached, and
no condition shall be deemed not satisfied, as a result of (a) the failure to
obtain any such consent or waiver, (b) any such termination or (c) any lawsuit,
action, proceeding or investigation commenced or threatened by or on behalf of
any person arising out of or relating to the failure to obtain any such consent
or waiver or any such termination.  Seller shall, and shall cause the Selling
Affiliates to, cooperate with CE, upon the request of CE, in any reasonable
manner in connection with CE obtaining any such consents and waivers; provided,
however, that such cooperation shall not include any requirement of Seller or
any of its Affiliates (including the Selling Affiliates) to expend money,
commence, defend or participate in any litigation, incur any obligation in favor
of, or offer or grant any accommodation (financial or otherwise) to, any third
party.

SECTION 6.2         Security Interest Release.  CE acknowledges that the
Acquired Assets are subject to a first priority security (the “Security
Interest”) in favor of Systran Financial Services Corporation (“Systran”) and
that Systran has not yet released the Security Interest or consented to the
Acquisition in writing.  CE agrees that, except for the provision of this
Section 6.2, Seller and its Affiliates shall not have any liability or
obligation whatsoever to CE arising out of or relating to the failure to obtain
the release of the Security Interest or any other consent or waiver of Systran
that may be required in connection with the transactions contemplated by this
Agreement.  CE further agrees that no representation, warranty, covenant or
agreement of Seller contained herein shall be breached or deemed breached, and
no condition shall be deemed not satisfied, as a result of the failure to obtain
any such release, consent or waiver.  CE shall cooperate with Seller, upon the
request of Seller, in any reasonable manner in connection with Seller obtaining
any such releases, consents and waivers, including without limitation, by
executing any documentation reasonably requested by Systran; provided, however,
that such cooperation shall not include any requirement of CE to expend money,
commence, defend or participate in any litigation, incur any obligation in favor
of, or offer or grant any accommodation (financial or otherwise) to, any third
party.

SECTION 6.3         Cooperation.  (a)  CE and Seller shall cooperate with each
other, and shall cause their respective officers, employees, agents, auditors
and representatives to cooperate with each other, for a period of one (1) year
after the Closing to ensure the orderly transition of the Acquired Assets from
Seller to CE and to minimize any disruption to the respective businesses of
Seller, the Selling Affiliates, CE that might result from the transactions
contemplated hereby.  After the Closing, upon reasonable written notice, CE and
Seller shall furnish or cause to be furnished to each other and their employees,
counsel, auditors and representatives reasonable access, during normal business
hours, to such information and assistance relating to the Business and the
Acquired Assets as is reasonably necessary for financial reporting and
accounting matters, the preparation and filing of any Tax returns, reports or
forms or the defense of any Tax claim or assessment.  The obligation to
cooperate pursuant to the preceding sentence insofar as it concerns Taxes shall
terminate at the time the relevant applicable statute of limitations expires
(giving effect to any extension thereof).  Neither party shall be required by
this Section 6.3 to

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take any action that would unreasonably interfere with the conduct of its
business or unreasonably disrupt its normal operations.

(b)           Following the Closing, CE shall, and shall cause their respective
Affiliates to, cooperate fully with Seller in the prosecution, defense and/or
settlement of any litigation or dispute to which Seller and/or its Affiliates
may become a party, other than any litigation or dispute relating to the terms
and provisions of this Agreement and the transactions contemplated hereby.  Such
cooperation shall include (i) affording Seller, its counsel and its other
representatives full and complete access, upon reasonable notice during normal
business hours, to all relevant personnel, properties, books, contracts,
commitments and records, (ii) furnishing promptly to Seller, its counsel and its
other representatives any information reasonably requested by Seller, such
counsel or such other representatives and (iii) providing any other assistance
to Seller, its counsel and its other representatives reasonably requested by
such Seller, such counsel or such other representatives.  In addition, CE shall
promptly notify Seller of any communication or other contact they receive
regarding any litigation, potential litigation or dispute relating to Seller
and/or its Affiliates.

(c)           From time to time, as and when requested by either party hereto,
the other party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions (subject to the provisions of Section
6.1), as such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement.

SECTION 6.4         Publicity.  Seller and CE agree that no public release or
announcement concerning the transactions contemplated hereby shall be issued by
either party or its Affiliates without the prior written consent of the other
party (which consent shall not be unreasonably withheld), except as such release
or announcement may be required by Applicable Law or the rules or regulations of
any United States or foreign securities exchange to which such party is subject,
in which case the party required to make the release or announcement shall allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance.

SECTION 6.5         Termination of Lease; Termination of Non-Competition
Agreements.  Each party hereto agrees that effective upon the Closing, the Lease
shall terminate and be of no further force or effect, and Seller and the Selling
Affiliates shall have no further obligation thereunder.  Further, each party
hereto agrees that effective upon the Closing, the Non-Competition and
Non-Solicitation Agreements entered in connection with the Agreement and Plan of
Reorganization shall terminate and be of no further force or effect.

SECTION 6.6         Bulk Transfer Laws.  CE hereby waives compliance by Seller
and its Affiliates with the provisions of any so-called “bulk transfer law” of
any jurisdiction in connection with the sale of the Acquired Assets to CE.

SECTION 6.7         Transfer Taxes; Purchase Price Allocation; Entitlement to
Tax Refunds and Credits; Proration of Non-Income Taxes.  (a)  All Transfer Taxes
and any filing or recording fees applicable to the Acquisition shall be paid by
CE.  Each party shall use reasonable efforts to avail itself of any available
exemptions from any such Taxes or fees, and to cooperate with the

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other party in providing any information and documentation that may be necessary
to obtain such exemptions.

(b)           Seller shall allocate the Purchase Price among the Acquired
Assets, subject to CE’s consent, such consent not to be unreasonably withheld. 
Such allocation will comply with the requirements of Section 1060 of the Code. 
Each of Seller and CE agrees that it shall (i) report the sale and purchase of
the Acquired Assets for United States Tax purposes in accordance with such
allocations and (ii) not take any position inconsistent with such allocations on
any of their respective United States Tax returns.

(c)           Seller shall be entitled to any refunds or credits of Taxes
relating to any Excluded Tax Liability.  CE shall be entitled to any refunds or
credits of Taxes relating to the Acquired Assets, other than any such refunds or
credits of Taxes relating to any Excluded Tax Liability.

(d)           Any value-added, goods and services, stamp duties, ad valorem and
similar Taxes shall be allocated between portions of a tax period that includes
(but does not end on) the Closing Date (a “Straddle Period”) in the following
manner: (i) in the case of a Tax imposed in respect of property and that applies
ratably to a Straddle Period, the amount of Tax allocable to a portion of the
Straddle Period shall be the total amount of such Tax for the period in question
multiplied by a fraction, the numerator of which is the total number of days in
such portion of such Straddle Period and the denominator of which is the total
number of days in such Straddle Period, and (ii) in the case of sales, value
added and similar transaction-based Taxes (other than Transfer Taxes), such
Taxes shall be allocated to the portion of the Straddle Period in which the
relevant transaction occurred.

SECTION 6.8         Mutual Release.  Except for the rights and obligations
expressly set forth or excluded in this Agreement, each of CE on the one hand
and Seller on the other, for themselves and for each of their respective past
and present agents, assigns, transferees, heirs, spouses, relatives, executors,
attorneys, administrators, officers, directors, employees, predecessors,
subsidiaries, parents, Affiliates, successors, insurers, and representatives
(“Releasors”), hereby release and discharge the other and their respective past
and present agents, assigns, transferees, heirs, spouses, relatives, executors,
attorneys, administrators, officers, directors, employees, predecessors,
subsidiaries, parents, Affiliates, successors, insurers, and representatives
(“Releasees”) from any and all claims and causes of action, known or unknown,
which Releasors now have or may have against any of the Releasees arising
through the date of this Agreement, including but not limited to claims relating
to the Lease, the Agreement and Plan of Reorganization (and the transactions
contemplated thereby), the employment of CE by Seller or any of its Affiliates,
ownership of the Shares by CE, discrimination, harassment, retaliation, breach
of contract, breach of the implied covenant of good faith and fair dealing,
intentional and negligent infliction of emotional distress, violation of privacy
rights, violation of any other state or federal law, any charge of
discrimination filed by CE against Seller with any state or federal agency,
claims for unpaid wages, paid time off, and/or attorneys’ fees and costs
incurred in reaching this Agreement.  The parties expressly acknowledge and
agree that neither Seller nor CE would enter into this Agreement but for the
representation and warranty that CE and Seller are hereby releasing any and all
claims of any nature whatsoever arising through the date of this Agreement other
than any claims relating to

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the terms and provisions of this Agreement and the transactions contemplated
hereby, known or unknown, whether statutory or at common law, which CE or Seller
now has or could assert directly or indirectly against any of the Releasees.

SECTION 6.9         Litigation Standstill.  CE, individually, hereby covenants
and agrees that CE shall refrain from initiating, filing, instituting,
maintaining or proceeding upon any lawsuit, claim, demand, cause of action,
litigation, arbitration or any right of any nature whatsoever, against Seller
and its subsidiaries, Affiliates, officers, directors, stockholders, agents or
employees, arising out of any subject matter whatsoever through the date of this
Agreement other than claims relating to the terms and provisions of this
Agreement and the transactions contemplated hereby and from encouraging,
advising, preparing for or voluntarily assisting any other person or entity to
initiate, institute, maintain or proceed upon any lawsuit, claim, demand, cause
of action, litigation, arbitration or any right of any nature whatsoever,
against Seller and its subsidiaries, Affiliates, officers, directors,
stockholders, agents or employees, arising out of any subject matter
whatsoever.  Seller hereby covenants and agrees to refrain from initiating,
filing, instituting, maintaining or proceeding upon any lawsuit, claim, demand,
cause of action, litigation, arbitration or any right of any nature against CE
that was released pursuant to Section 6.8 above.

ARTICLE VII

INDEMNIFICATION

SECTION 7.1         Indemnification by Seller.  From and after the Closing,
Seller shall indemnify CE and its Affiliates and each of their respective
officers, directors, employees, agents and representatives against and hold them
harmless from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) (“Losses”) suffered or incurred by any such
indemnified party to the extent arising from (i) any breach of a covenant or
agreement of Seller contained in this Agreement; (ii) the operation of the
Business or the Acquired Assets prior to the Closing Date; or (iii) the Excluded
Liabilities.  Notwithstanding the forgoing, (x) Seller’s liability under this
Section 7.1 shall in no event exceed $100,000.

SECTION 7.2         Indemnification by CE.  From and after the Closing, CE shall
jointly and severally indemnify Seller and its Affiliates and each of their
respective officers, directors, employees, agents and representatives against
and hold them harmless from any Loss suffered or incurred by any such
indemnified party to the extent arising from (i) any breach of a covenant or
agreement of CE contained in this Agreement; (ii) the operation of the Business
or the Acquired Assets on and after the Closing Date; or (iii) the Assumed
Liabilities.

SECTION 7.3         Limitations on Liability; Cooperation.  (a)  Notwithstanding
any provision herein, neither Seller nor CE shall in any event be liable to the
other party or its Affiliates, officers, directors, employees, agents or
representatives on account of any indemnity obligation set forth in Section 7.1
or Section 7.2 for any indirect, consequential, special, incidental or punitive
damages (including lost profits, loss of use, damage to goodwill or loss of
business).  Further, neither Seller nor CE shall have any liability to the other
party or its Affiliates, officers, directors, employees, agents or
representatives relating to the future or historic financial condition, or
results of operations of the Business.

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(b)           CE further acknowledges and agrees that, should the Closing occur,
their sole and exclusive remedy with respect to any and all claims relating to
this Agreement, any Other Transaction Document, the Acquisition, any document or
certificate delivered in connection herewith, the Business, the Acquired Assets
and the Assumed Liabilities or any Federal, state, local or foreign statute,
law, ordinance, rule or regulation or otherwise (other than claims of, or causes
of action arising from, fraud) shall be pursuant to the indemnification
provisions set forth in this Article VII.  In furtherance of the foregoing, CE
hereby waives, from and after the Closing, to the fullest extent permitted under
Applicable Law, any and all rights, claims and causes of action (other than
claims of, or causes of action arising from, fraud) they or any of their
Affiliates may have against Seller and its Affiliates arising under or based
upon this Agreement, any Other Transaction Document, the Acquisition, any
document or certificate delivered in connection herewith, the Business, the
Acquired Assets and the Assumed Liabilities or any Federal, state, local or
foreign statute, law, ordinance, rule or regulation or otherwise (except
pursuant to the indemnification provisions set forth in this Article VII).

SECTION 7.4         Losses Net of Insurance, etc.  The amount of any Loss for
which indemnification is provided under this Article VII shall be net of any
amounts recovered or recoverable by the indemnified party under insurance
policies with respect to such Loss and shall be reduced to take account of any
net Tax benefit (including as a result of any basis adjustment) actually
realized by the indemnified party arising from the incurrence or payment of any
such Loss.  In computing the amount of any such Tax benefit, the indemnified
party shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the incurrence or
payment of any indemnified Loss.

SECTION 7.5         Termination of Representations and Warranties.  The
representations and warranties in this Agreement shall terminate at the Closing.

SECTION 7.6         Procedures Relating to Indemnification for Third Party
Claims.  (a)  In order for a party (the “indemnified party”) to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim or demand made by any person against the indemnified
party (a “Third Party Claim”), such indemnified party must notify the
indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within ten (10) business days after receipt by such indemnified party of
written notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the indemnifying party shall have been prejudiced as a result of
such failure.  Thereafter, the indemnified party shall deliver to the
indemnifying party, promptly after the indemnified party’s receipt thereof,
copies of all notices and documents (including court papers) received by the
indemnified party relating to the Third Party Claim.

(b)           If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party; provided, however, that such counsel is not reasonably
objected to by the indemnified party.  Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party shall not be
liable to the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof.  If the indemnifying
party assumes

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such defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel (not reasonably objected to by the
indemnifying party), at its own expense, separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying party shall
control such defense.  The indemnifying party shall be liable for the fees and
expenses of counsel employed by the indemnified party for any period during
which the indemnifying party has failed to assume the defense thereof.

(c)           If the indemnifying party so elects to assume the defense of any
Third Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof.  Such cooperation
shall include the retention and (upon the indemnifying party’s request) the
provision to the indemnifying party of records and information which are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder.  Whether or not the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party’s prior written consent (which
consent shall not be unreasonably withheld).

SECTION 7.7         Procedures Related to Indemnification for Other Claims.  In
the event any indemnified party should have a claim against any indemnifying
party under Section 7.1 or 7.2 that does not involve a Third Party Claim being
asserted against or sought to be collected from such indemnified party, the
indemnified party shall deliver notice of such claim with reasonable promptness
to the indemnifying party.  The failure by any indemnified party so to notify
the indemnifying party shall not relieve the indemnifying party from any
liability which it may have to such indemnified party under Section 7.1 or 7.2,
except to the extent that the indemnifying party demonstrates that it has been
materially prejudiced by such failure.

SECTION 7.8         Tax Treatment of Indemnification Payments.  For all Tax
purposes, CE, Seller and each of their respective Affiliates agree to treat any
indemnity payment under this Agreement as an adjustment to the Purchase Price
received by the Seller for the transactions contemplated by this Agreement
unless a final determination (as defined in Section 1313 of the Code) provides
otherwise.

SECTION 7.9         Remedies Exclusive.  The remedies provided for in this
Article VII shall constitute the sole and exclusive remedy for any post-Closing
claims, except in the case of fraud.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1         Assignment.  This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by CE or Seller (including by
operation of law in connection with a merger, consolidation or sale of
substantially all the assets of CE or Seller) without the prior written consent
of the other party hereto; provided, that Seller may assign its rights and
obligations hereunder (a) to any direct or indirect wholly owned subsidiary of
Seller or (b) to any transferee of all or substantially all of the assets of
Seller, in either case without the consent of CE.  Any attempted assignment in
violation of this Section 8.1 shall be void.

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SECTION 8.2         No Third-Party Beneficiaries.  Except as provided in Article
VII, this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.

SECTION 8.3         Expenses.  Whether or not the transactions contemplated
hereby are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.

SECTION 8.4         Attorney Fees.  If any legal action is brought relating to
this Agreement or the breach hereof, the prevailing party in any final judgment,
or the non-dismissing party in the event of a voluntary dismissal by the party
instituting the action, shall be entitled to the full amount of all reasonable
expenses, including all court costs and actual attorneys’ fees paid or incurred
in good faith.

SECTION 8.5         Amendments.  This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.  By an
instrument in writing CE, on the one hand, or Seller, on the other hand, may
waive compliance by the other with any term or provision of this Agreement that
such other party was or is obligated to comply with or perform.

SECTION 8.6         Notices.  All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
shall be deemed given when so delivered by hand, telexed, cabled or telecopied,
or if mailed, three days after mailing (one business day in the case of
overnight mail or overnight courier service), as follows:

(a)           if to CE,

2011 Oak Street
Wyandotte, MI 48192

Attention: Matthew J. Cahillane and C. Michael Emery

with a copy to:

The Business Law Advisors
1900 South Boulevard, Suite 304
Charlotte, NC 28203

Attention: B. Andrew Pickens, Jr.; and

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(b)           if to Seller,

Crdentia Corp.
5001 LBJ Freeway, Suite 850
Dallas, TX 75244

Attention: Chief Executive Officer

with a copy to:

Morrison & Foerster LLP
12531 High Bluff Drive
San Diego, CA 92130

Attention: Steven G. Rowles, Esq.

SECTION 8.7         Interpretation; Exhibits, Seller Disclosure Schedule and
Other Schedules; Certain Definitions.  (a)  The definitions of the terms herein
shall apply equally to the singular and plural forms of the terms defined. 
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms.  The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. 
The word “will” shall be construed to have the same meaning and effect as the
word “shall”.  Unless the context requires otherwise, (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
therein), (ii) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iii) all references herein to
Articles, Sections, Appendices, Exhibits or Schedules shall be construed to
refer to Articles, Sections, Appendices, Exhibits and Schedules of this
Agreement and (iv) the headings contained in this Agreement, the Seller
Disclosure Schedule, other Schedules or any Appendix or Exhibit and in the table
of contents to this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.  Any matter
set forth in any provision, subprovision, section or subsection of the Seller
Disclosure Schedule shall be deemed set forth for all purposes of the Seller
Disclosure Schedule to the extent relevant and reasonably apparent.  The Seller
Disclosure Schedule, all other Schedules and all Appendices and Exhibits annexed
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.  Any capitalized terms used in the
Seller Disclosure Schedule, any other Schedule or any Appendix or Exhibit
annexed hereto but not otherwise defined therein, shall have the meaning as
defined in this Agreement.  In the event of an ambiguity or a question of intent
or interpretation, this Agreement shall be construed as if drafted jointly by
the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

(b)           For all purposes hereof:

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“Accounts Payable” means all accounts payable and liabilities, obligations and
commitments, regardless of when asserted, billed or imposed, of Seller or the
Selling Affiliates as of the end of the day immediately prior to the Closing
Date.

“Accounts Receivable” means all accounts receivable, notes receivable and other
indebtedness due and owed by any third party to Seller or the Selling Affiliates
as of the end of the day immediately prior to the Closing Date, including all
trade accounts receivable representing amounts receivable in respect of goods
shipped, products sold or services rendered prior to the day immediately prior
to the Closing Date and the full benefit of any security for such accounts or
debts.

“Additional Network Server” means the network server located at the principal
office of the Business that was purchased by Seller following the closing of the
transactions contemplated by the Agreement and Plan of Reorganization and
primarily runs Seller’s Austin and San Antonio offices.

“Affiliate” means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person; and for the purposes of this
definition, “control” when used with respect to any specified person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

“Agreement and Plan of Reorganization” means the Agreement and Plan of
Reorganization by and among Seller, HIP Holding, Inc. and the shareholders of
HIP Holding, Inc. dated March 28, 2005.

“Applicable Laws” means all applicable statutes, laws, ordinances, rules, orders
and regulations of any Governmental Entity

“Assumption Agreement” means the assumption agreement to be executed by CE to
evidence its assumption of the Assumed Liabilities.

“Bill of Sale” means a bill of sale and assignment with respect to the Acquired
Assets.

“Business” means Seller’s and the Selling Affiliates’ temporary nurse staffing
business in the Detroit, Michigan metropolitan area.

“business day” means any day, other than a Saturday or Sunday, on which
commercial banks are not required or authorized to close in the City of New
York.

 “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.

“Confidential Information” shall mean all Trade Secrets and other confidential
and/or proprietary information of a person, including information derived from
reports, investigations, research, work in progress, codes, marketing and sales
programs, financial projections, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings with any
state or federal agency, and all other confidential concepts, methods of doing

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business, ideas, materials or information prepared or performed for, by or on
behalf of such person by its employees, officers, directors, agents,
representatives, or consultants.

“dollars” or “$” means lawful money of the United States of America.

“Existing Network Server” means the network server that has been located at the
principal office of the Business since prior to the closing of the transactions
contemplated by the Agreement and Plan of Reorganization.

“Governmental Entity” means Federal, state or local government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality.

“including” means including, without limitation.

“knowledge of Seller” means the current actual knowledge of (i)  John Kaiser;
and (ii) James J. TerBeest.

“Lease” means the Building Lease dated March 2005 by and among Ladder Company,
LLC, a Michigan limited liability company and Seller, as amended.

“Material Adverse Effect” means a material adverse effect on (i) the Acquired
Assets and the Business, taken as a whole, or (ii) the ability of Seller to
consummate the Acquisition.  For purposes of this Agreement, “Material Adverse
Effect” shall exclude any effects to the extent resulting from (A) changes in
the United States or foreign economies in general, (B) changes in industries
relating to the Business in general and not specifically relating to the
Business, (C) the announcement by Seller of its intention to sell the Acquired
Assets, (D) the completion of the Acquisition or (E) the execution of this
Agreement (including the disclosure of the identity of CE) or any Other
Transaction Document and the consummation of the transactions contemplated
hereby or thereby.

“Other Transaction Documents” means (i)  the Bill of Sale, and (ii) the
Assumption Agreement.

“person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, Governmental Entity or other entity.

“Post-Closing Tax Period” shall mean all taxable periods beginning and ending
after the Closing Date and the portion beginning on the day after the Closing
Date of any Straddle Period.

“Pre-Closing Tax Period” shall mean all taxable periods ending on or before the
Closing Date and the portion ending on the Closing Date of any taxable period
that includes (but does not end on) the Closing Date.

“Selling Affiliate” means each Affiliate of the Seller identified in
Section 1(a)(i) of the Seller Disclosure Schedule.

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“subsidiary” of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, fifty percent (50%)
or more of the equity interests of which) is owned directly or indirectly by
such first person or by another subsidiary of such person.

“Tax” or “Taxes” shall mean all Federal, state, local and foreign taxes and
similar assessments (other than Transfer Taxes), including all interest,
penalties and additions imposed with respect to such amounts.

“Trade Secrets” shall mean all trade secrets under applicable law and other
rights in know-how and confidential or proprietary information, processing,
manufacturing or marketing information, including new developments, inventions,
processes, ideas or other proprietary information that provide Seller and the
Selling Affiliates with advantages over competitors who do not know or use it
and documentation thereof (including related papers, blueprints, drawings,
research data and results, flowcharts, diagrams, chemical compositions,
formulae, diaries, notebooks, specifications, designs, methods of manufacture,
processing techniques, data processing software, compilations of information,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals) and all claims and rights related thereto.

“United States” means the United States of America, including its territories
and possessions (excluding all military bases and other military installations
outside of the continental United States, Alaska, Hawaii and Washington, D.C.).

(c)           The following terms have the meanings given such terms in the
Sections set forth below:

Term

 

Section

Accounts Payable

 

8.7(b)

Accounts Receivable

 

8.7(b)

Acquired Assets

 

1.2(a)

Acquisition

 

1.1

Additional Network Server

 

8.7(b)

Affiliate

 

8.7(b)

Agreement and Plan of Reoganization

 

8.7(b)

Applicable Laws

 

8.7(b)

Assumed Liabilities

 

1.3(a)

Assumption Agreement

 

8.7(b)

Bill of Sale

 

8.7(b)

Business

 

8.7(b)

business day

 

8.7(b)

CE

 

Preamble

Closing

 

2.1

Closing Date

 

2.1

Code

 

8.7(b)

 

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Term

 

Section

Confidential Information

 

8.7(b)

Contracts

 

1.2(a)(i)

Dollars

 

8.7(b)

Excluded Assets

 

1.2(b)

Excluded Contracts

 

1.2(b)(iii)

Excluded Liabilities

 

1.3(b)

Excluded Other Rights

 

1.2(b)(v)

Excluded Permits

 

1.2(b)(iv)

Excluded Records

 

1.2(b)(vi)

Excluded Tax Liability

 

1.3(b)(ii)

Existing Network Server

 

8.7(b)

Fee

 

5.3

Governmental Entity

 

8.7(b)

including

 

8.7(a)

indemnified party

 

7.6

Knowledge of Seller

 

8.7(b)

Lease

 

8.7(b)

Liabilities

 

1.3(a)

Liens

 

3.2(a)

Losses

 

7.1

Material Adverse Effect

 

8.7(b)

Other Rights

 

1.2(a)(iii)

Other Transaction Documents

 

8.7(b)

Permits

 

1.2(a)(ii)

Permitted Liens

 

3.4(a)

Person

 

8.7(b)

Post-Closing Tax Period

 

8.7(b)

Pre-Closing Tax Period

 

8.7(b)

Purchase Price

 

1.1

CE

 

Preamble

Records

 

1.2(a)(iv)

Releasees

 

6.8

Releasors

 

6.8

Security Interest

 

6.2

Seller

 

Preamble

Seller Disclosure Schedule

 

Article III

Selling Affiliate

 

8.7(b)

Shares

 

1.1

Straddle Period

 

6.6(d)

Subsidiary

 

8.7(b)

Systran

 

6.2

Tax

 

8.7(b)

Taxes

 

8.7(b)

Third Party Claim

 

7.6

 

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Term

 

Section

Trade Secrets

 

8.7(b)

Transfer Taxes

 

1.3(a)(vi)

Transferred Contracts

 

1.2(a)(i)

Transferred Other Rights

 

1.2(a)(iii)

Transferred Permits

 

1.2(a)(ii)

Transferred Records

 

1.2(a)(iv)

United States

 

8.7(b)

 

SECTION 8.8         Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.

SECTION 8.9         Entire Agreement.  This Agreement contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.  Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein or in
the Seller Disclosure Schedule.

SECTION 8.10       Fees.  Each of Seller and CE hereby represents and warrants
to the other that no broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
Acquisition based upon arrangements made by or on behalf of Seller or CE, as
applicable.

SECTION 8.11       Severability.  If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.

SECTION 8.12       Consent to Jurisdiction.  Each of CE and Seller irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the State of Texas for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby or
thereby.  Each of CE and Seller agrees to commence any such action, suit or
proceeding either in the United States District Court in the State of Texas or
if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in state court of the State of Texas.  Each of CE and
Seller further agrees that service of any process, summons, notice or document
by U.S. registered mail to such party’s respective address(es) set forth above
shall be effective service of process for any action, suit or proceeding in
Texas with respect to any matters to which it has submitted to jurisdiction in
this Section 8.12.  Each of CE and Seller irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby or thereby in
(i) the state and federal courts sitting in the State of Texas, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in

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any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.

SECTION 8.13       Waiver of Jury Trial.  Each party hereto hereby waives to the
fullest extent permitted by Applicable Law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement or any transaction contemplated hereby or
thereby.  Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section 8.13.

SECTION 8.14       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.

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IN WITNESS WHEREOF, Seller and CE have duly executed this Agreement as of the
date first written above.

CRDENTIA CORP.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Matthew J. Cahillane

 

 

 

 

 

 

 

By:

 

 

 

C. Michael Emery

 

[Signature Page to the Asset Purchase Agreement]

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